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Written Statements

Volume 505: debated on Friday 5 February 2010

Written Ministerial Statements

Friday 5 February 2010

Treasury

Asset Purchase Facility (Contingent Liabilities)

A departmental minute from the Treasury on the contingent liabilities arising from the asset purchase facility is being published today. Copies are available in the Library of the House.

Terrorist Asset freezing

The Government are today introducing in Parliament the Terrorist Asset-Freezing (Temporary Provisions) Bill. As set out in my written ministerial statement of 4 February 2009, Official Report, column 21WS, this Bill is being introduced as an urgent temporary measure to prevent assets being unfrozen and returned to terror suspects as a result of the Supreme Court’s decision to quash the Terrorism Order 2006 without a stay.

The Government are also publishing today a draft Terrorist Asset-Freezing Bill. This Bill, modelled closely on our existing powers under the Terrorism Order 2009, is intended to provide a durable legal basis for the UK to freeze the assets of suspected terrorists in fulfilment of our United Nations obligations.

The Government have had urgent discussions with the relevant banks following the Supreme Court’s decision not to grant a stay. The banks have confirmed that in the light of the Government’s decision to bring forward immediate legislation providing retrospective legal authority for them to continue existing freezes, no funds will be unfrozen as a result of the Supreme Court’s judgment.

Asset-freezing licensing policy

In order to assist consideration of the Bills, the remainder of this statement sets out the Government’s approach to licensing exemptions to asset freezes in order to meet human rights and humanitarian needs.

UN Security Council Resolution 1267 (1999) requires all member states to implement asset freezes against persons associated with al-Qaeda and the Taliban. Targets are to be agreed by a Committee of the UN Security Council and the list is maintained by the United Nations.

UN Security Council Resolution 1373 (2001) requires all member states to freeze the assets of persons who commit, attempt to commit or facilitate terrorist acts. There is no central UN list and targeting is left to individual states, in accordance with their domestic legislation.

The relevant UN Security Council Resolutions concerning asset freezing require that financial sanctions against designated terror suspects be broad-based in nature, not merely freezing existing assets but preventing designated persons accessing funds or economic resources from other persons. The purpose is to ensure that designated persons cannot use or access the means of terrorist finance, principally funds or things that can be used to generate funds.

In order to ensure that the overall effect of the asset-freezing regime is proportionate and fair, UN Security Council Resolution 1452 (2002) allows member states to put in place a licensing regime to authorise, where appropriate, access to frozen funds or other financial assets or economic resources to meet “basic expenses” (that is, basic humanitarian needs which include payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, public utility charges and legal fees and expenses) and “extraordinary” expenses. The overall objective of the licensing system is to strike an appropriate balance between minimising the risk of diversion of funds to terrorism and meeting the human rights and humanitarian needs of designated persons and other third parties.

Licence requests for persons listed by the UN under the 1267 regime need to be submitted to the relevant UN sanctions committee under differing procedures for basic and extraordinary expenses.

Licence requests for persons listed domestically under the UN 1373 regime are not submitted to the UN Sanctions Committee and are purely a matter for the relevant member state to determine.

The UKs implementation of its licensing obligations

The Government recognise the importance of having an effective licensing system to ensure the overall proportionality and fairness of the asset-freezing regime. Our licensing regime has been developed and improved in recent years, in the light of the experience of operating it, to ensure that it remains as effective as possible in achieving its objective of ensuring proportionality and fairness.

Key features of the licensing regime that help ensure proportionality and fairness are as follows:

Our policy to issue at the point of designation a legal expenses licence, a licence to the benefits departments to pay any state benefits due and a licence allowing the designated person to access his funds to meet living expenses. By granting these licences at the point of designation, our intention is to ensure that the designation results in the minimum of interruption to the everyday lives of designated persons and their families in terms of being able to meet their everyday living expenses and to obtain legal representation.

Our policy to ensure that state benefits due to the designated person and his household are paid in full unless there are strong national security reasons why this would not be appropriate. Currently, all designated persons and their households are receiving their full entitlement of benefits.

In order to allow for the immediate granting of licences for persons listed by the United Nations under the UN 1267 regime, the Government have informed the UN Sanctions Committee that it will not submit requests for basic expenses licences to the UN for consideration on an individual basis.

While for procedural reasons, the UN Sanctions Committee does distinguish between basic and extraordinary expenses requests, the Government do not seek to limit designated persons or their families to basic expenses only. Our policy—consistent with taking a proportionate approach—is that designated persons should have access to their income and other property insofar as this can be arranged without giving rise to risk of terrorist finance.

The Treasury takes an active approach to granting licences. There are currently around 50 individuals resident in the UK whose assets are frozen under either the Terrorism Orders or the al-Qaeda Orders. In 2009, the Treasury granted around 121 licences in respect of those persons.

Licence conditions

Licence conditions are a key feature of the licensing regime, as they apply safeguards to ensure that funds or economic resources can be made available to designated persons in a way that protects against terrorist finance risks. In this way, appropriate conditions facilitate the granting of licences that it might otherwise not be possible to grant.

The conditions we apply to licences reflect two broad objectives:

to ensure that designated persons do not have access to large amounts of cash, which can be more easily diverted to terrorist activity; and

to ensure that there is a reasonable audit trail to address terrorist finance risks and that the Treasury can monitor compliance with the terms of the licence and identify if any breaches have occurred that could give rise to national security concerns.

The exact licence conditions are set on a case-by-case basis depending on the circumstances of the designated person and the terrorist finance risks involved. In order that controls are set in a way that is proportionate and risk-based, the Treasury takes advice from the police and Security Service about the terrorist finance risks involved in each case and the appropriate licence conditions to address them. Consistent with the objective of proportionality, the Treasury’s intention is to impose only those controls that are necessary to protect against terrorist finance risks.

Household benefits policy

EC Regulation 881/2002 states that it is an offence to

“make funds available directly or indirectly for the benefit of the designated person”

without a licence from a competent authority.

The Treasury’s interpretation of this provision, as set out in a written statement to Parliament by the then Economic Secretary, my right hon. Friend the Member for Normanton (Ed Balls) in 15 July 2006, Official Report, column 18WS, is that it includes the provision of state benefits to the spouses or partners of designated persons where they are living together in the same household as the designated person. It is on this basis that the Treasury licenses the payment of state benefits to the households of designated persons. It is usually a condition of these licences that all the household benefits are paid to the unfrozen account of a designated person’s spouse or partner. While a spouse or partner may spend these benefits on the household’s needs, he or she is required to report to the Treasury on the expenditure of those funds.

The Treasury’s interpretation of the relevant provision of the EC Regulation is the subject of litigation. The Treasury’s position was upheld in the UK by the High Court and then the Court of Appeal. The House of Lords has referred the case to the European Court of Justice, but made it clear that it would prefer to interpret the provision more narrowly than the Treasury’s position. The ECJ Advocate-General issued an opinion on 14 January 2010 indicating that in his view, the provision should be interpreted narrowly and should not include the payment of state benefits to the households of designated persons. A final ECJ decision is expected within the next few months.

Until the ECJ decides on the case, the interpretation of the relevant provision of the EC Regulation is unclear. Given this, and the fact that the most recent legal judgment on this matter, that of the Court of Appeal, upheld the Treasury’s position, it would be premature at this stage to remove licensing provisions relating to the payments of benefits to the households of designated persons. When the ECJ clarifies the interpretation of EC Regulation 881/2002 on this matter, the Treasury will review its policy and make any changes that are needed to give effect to the Supreme Court’s judgment.

In the meantime, the Treasury will continue to license the payment of state benefits to the spouses or partners of designated persons. However, the Treasury is mindful of the need for all licence conditions to be proportionate and of the need to limit as far as is possible the impact that the asset-freezing regime has on spouses or other family members of designated persons.

I have therefore looked again at how we implement the licensing of household benefits, taking particular account of comments expressed in the Supreme Court judgment. I have decided to make the following changes to ensure that our approach remains fair and proportionate.

While the Treasury will continue to apply appropriate safeguards in licences, which will be issued on a case-by-case basis and contain provisions appropriate to the level of risk posed by the individual concerned, the Treasury will no longer require all household benefits to be paid to the spouse or partner of the designated person. Families will be able to choose whether it is the designated person or their spouse or partner who receives the family benefits in order to manage their finances in a way that suits their individual circumstances.

There will now no longer be a general requirement on spouses or partners of designated persons to report to the Treasury on the expenditure of their household benefits. This will reduce any adverse impact the regime has on them by ameliorating the effect of licensing their household benefits.

We will continue to require the designated person to report on expenditure of any benefits paid directly to him or of any licensed funds given to him.

I believe that this approach will ensure that we continue to have appropriate controls in place to prevent the diversion of funds to terrorism, while limiting as far as possible the impact of the asset-freezing regime on the families of designated persons.

Health

Quality Accounts

I have today placed in the Library the Government’s response to the recent consultation on detailed proposals for Quality Accounts. Copies are available to hon. Members from the Vote Office and the response can also be seen at: www.dh.gov.uk/en/Healthcare/Highqualitycareforall/Qualityaccounts/index.htm

“High Quality Care for All”, published in June 2008, was the final report of the national health service next stage review, a year-long process led by the Department and the NHS which involved over 60,000 NHS staff, patients, stakeholders and members of the public.

“High Quality Care for All” committed the Department and the NHS to developing a quality framework to support local clinical teams and NHS organisations to improve the quality of care locally, a key part of which was publishing quality information—in Quality Accounts.

Quality Accounts are annual reports to the public from providers of NHS healthcare services about the quality of services they provide. The public, patients and others with an interest would look to a Quality Account to understand what an organisation is doing well; where improvements in service quality are required; what priorities for improvement are for the coming year; and how involved users of services, staff, and others with an interest in the organisation are in determining these priorities for improvement.

Quality Accounts will improve public accountability and engage the leaders of an organisation in their quality improvement agenda. Public accountability comes from the presentation of honest, rounded and meaningful information regarding quality of services into the public domain. The leaders of an organisation will be engaged in the quality improvement agenda both in order to achieve public accountability but also as a result of it.

Quality Accounts are therefore a key component of the overall framework. The purpose and proposed content of a Quality Account, and the processes that should be in place to produce one, have been shaped by a comprehensive stakeholder engagement process and the successful introduction of quality reporting for 2008-09 by NHS foundation trusts and by NHS trusts in the east of England. Work on this has been led by the Department, in partnership with Monitor, the Care Quality Commission and NHS East of England.

The primary legislation for Quality Accounts in the Health Act 2009 set out the broad principle that all NHS providers should produce an annual account of the quality of their healthcare services. Because we are committed to developing our approach to Quality Accounts in partnership with the NHS, and also with patients, their carers, the wider public as well as professional and academic stakeholders, the Health Act left detailed implementation to be achieved by way of secondary legislation.

Following the collaborative design work, we set out our proposals for Quality Accounts in a consultation document, “The Framework for Quality Accounts: a consultation on the proposals”, the public consultation on which ran from 17 September 2009 to 10 December 2009.

Around 170 individuals and organisations responded to the consultation, and proposals attracted wide support. In response to detailed representations, we modified and clarified our original proposals. In summary:

we made the regulations less prescriptive about the number of priorities for quality improvement that a provider should set by removing the maximum and leaving that to local discretion;

we simplified the statement on participation in clinical audit;

we made clear in our guidance that providers should explain how participation in clinical audit and research improves patient care;

the information on data quality (inclusion of valid NHS number) will be supplied separately by admitted patient care, outpatient and accident and emergency;

ensuring that both Local Involvement Networks (LINks) and Overview and Scrutiny Committees (OSCs) will be given the opportunity to comment on a provider’s Quality Account;

the regulations are now less prescriptive about the number of priorities for quality improvement that a provider should set. A minimum has been set but no maximum requirement—this allows larger organisation to set a higher number of priorities;

the statement on participation in clinical audit has been simplified. The Department’s response to the consultation acknowledges that there is limited benefit in asking providers to calculate what percentage of patients were covered by the audits undertaken;

departmental guidance will make it clear that providers when reporting on the number and type of clinical audits undertaken and the number of patients recruited to clinical research should explain how participation in both processes has improved patient care in their organisation;

the information on data quality (inclusion of valid NHS number) will be supplied separately by admitted patient care, outpatient and accident and emergency;

both LINks and OSCs will be given the opportunity to comment on a provider’s Quality Account as both organisations have roles to play in providing assurance over the content of a Quality Account; and

although some responses indicated that all providers, irrespective of their size, should produce a Quality Account, the majority view was that providers that do not have a significant NHS workload should be exempt. The definition of a small provider is based on the definition used in the Standard NHS Contract (those whose annual contract value is less than £130,000 and who employ 50 or fewer full-time employees) and will be used as the cut off for exemption from the requirement to produce a Quality Account.

These proposals will now be used to draft regulations that will shortly be laid before Parliament. These regulations will also set out the initial assurance mechanism for Quality Accounts—we will be consulting on proposals for a more formal mechanism later this year, the proposed content and manner of publication, and any exemptions that will apply in the first year.

For the first year of Quality Accounts all providers or sub-contractors of NHS services will have to produce a quality account unless they are exempted by the regulations. Their first Quality Accounts, covering activity in 2009-10, will be published this summer. We will also be publishing shortly a comprehensive toolkit to enable providers to produce Quality Accounts that their patients, the population they serve, and their own staff will recognise as a fair and balanced view of services.

The regulations exempt primary care and community health services from the quality account obligations. It is intended these services will be exempt only for the first year. We plan to introduce Quality Accounts for primary and community care sectors from 2011. An engagement and testing process, similar to that run within NHS foundation trusts and NHS East of England providers but focused on the particular needs of these two sectors, started in autumn 2009. The providers participating in the testing work are in NHS North East and NHS East Midlands, and a framework for test reporting will be published over the next few weeks, with a view to starting the pilots this spring and evaluating them in the summer. This exercise will help shape the development of Quality Accounts further as they begin to apply to all providers, and a further consultation on proposed regulations will therefore start later this year.

Work and Pensions

Informal Meeting of Employment and Social Policy Ministers

The Informal Meeting of Employment and Social Policy Ministers took place on 28 to 29 January 2010 in Barcelona, Spain. I represented the United Kingdom.

The priority for this informal meeting was to develop and deepen reflections on the employment strategy and social security issues under the post-2010 Lisbon strategy (EU 2020). This was accomplished through three plenary sessions.

The first session concentrated on the “crisis exit, and the maintenance of employment and inclusive labour markets”. The presidency emphasised the need to ensure that employment and social issues were properly addressed in EU 2020, although it was vital that these were considered in the wider economic context. During the discussion, member states stressed: the need for flexible labour markets alongside security for workers including active intervention to help those furthest from labour markets, especially women and the young; the importance of mainstreaming gender equality especially in the light of the demographic challenges of an ageing society affecting the whole European Union; and the focus on green jobs. I explained that the recent UK proposal for an EU Compact on Jobs and Growth supported the objective of more inclusive labour markets and investment in training, skills and education. I stressed that more collaboration on making work pay and pension reform will be important factors, and highlighted the need to work across all sectors of the European Council.

The second session focused on “new skills and changes in employment”. The presidency stressed the importance of investing in “human capital”; encouraging lifelong learning which would enhance the employability of workers. The delegations were in agreement that access to training was vital throughout working life, and that vocational training could often be more appropriate than academic. While the importance of developing skills in new sectors was emphasised, there was awareness that it could be difficult to predict the final impact of the recession, and that it would be important to ensure workers had transferable skills, making them more flexible and adaptable.

In the final session, “Social Security and social cohesion”, the presidency had asked how the European Union should approach social security strategy in the future.

Delegations argued for better use of the Open Method of Co-ordination and wanted advice from the International Labour Organisation, such as the Decent Work Agenda, to be considered wherever relevant.

On pensions, many thought that this would continue to be a key issue throughout the European Union and that work was needed to assess the sustainability of pensions systems and how these had been affected by the crisis. Delegations were looking forward to the Council conclusions on this topic to be presented at the Employment and Social Policy Council in June, although some emphasised that future work must take account of the different systems in the member states rather than being a standard, generalised model.

In conclusion, the presidency agreed that a summary of the debate would be presented to Employment and Social Policy Council in March and then sent on to the European Council.