Written Ministerial Statements
Monday 25 October 2010
Business, Innovation and Skills
“A Long-Term Focus for Corporate Britain”
I announced on 22 September that I would be undertaking a review into corporate governance and short-termism. Today’s publication of “A Long-Term Focus for Corporate Britain—a call for evidence” marks the first stage of this review.
The UK has benefited greatly from open, free and well functioning capital markets. Our companies and markets have been successful in attracting investment into the UK and providing wealth creation which we need to prosper as a nation. But recent events have exposed weaknesses. We must ensure that growth is not compromised by short-term volatility or its benefits captured by a few at the expense of the many who provide the capital, and the wider national interest.
Government intervention, both through regulation and other measures, seeks to address such failures, while maintaining markets which are as free and open as possible. The UK has led the world in developing high standards of corporate governance, most recently with the introduction of the stewardship code, setting out the role of shareholders in holding directors to account.
These are important steps to secure sustainable UK growth for the future. The review aims to establish whether there are further issues affecting the functioning of capital markets and, if so, what are the causes. It considers the role of directors and shareholders and asks fundamental questions; for example, about shareholder engagement, market short-termism and the functioning of the investment chain in the UK. It also considers directors’ remuneration and—following up the takeover panel’s recent announcement—the economic case for takeovers.
This review builds on the report published by the Business, Innovation and Skills Committee on “Mergers, Acquisitions and Takeovers: The Takeover of Cadbury by Kraft”. It is also closely linked to the Department’s recent consultation on the future of narrative reporting.
I am placing copies of this document in the Libraries of both Houses.
The Economic and Financial Affairs Council was held in Luxembourg on 19 October 2010. The following items were discussed:
Administrative Co-operation in the Field of Taxation
This directive aims to improve arrangements for exchange of information on request and bring the EU into line with OECD standards. It also extends automatic exchange of information, which the UK supports to the extent that this does not impose disproportionate burdens on business or on tax authorities at a time of fiscal consolidation. The Council agreed that they would aim to reach political agreement on this issue at their November meeting.
VAT Reverse Charge Derogation
The Council agreed that a new derogation should be provided, until the end of 2013, to Germany, Italy and Austria, allowing the application of a reverse charge to mobile telephones and computer chips. The Council also agreed to extend, until the same date, the UK’s VAT reverse charge to domestic trade in mobile phones and computer chips. The reverse charge has been a key component in reducing VAT fraud and has helped protect billions of pounds since 2007.
Stability and Growth Pact
The Council discussed Lithuania and Romania’s excessive deficit programmes. They agreed that the actions taken by both countries represented adequate progress towards the correction of excessive deficits within the deadlines set by the Council, and that no further steps under the excessive deficit procedure were required at the moment.
Debrief on the Informal ECOFIN Meeting
The Council briefly took stock of discussions held during the informal ECOFIN in Brussels on 30 September and 1 October.
Preparation of the G20 Ministerial Meeting
The Council endorsed the terms of reference for the G20 ministerial meeting in South Korea on 22 and 23 October. These will form the basis of the EU’s contribution to the meeting. The Government believe that these reflect UK priorities. However, since the UK’s views are represented through the separate UK seat in the G20, the UK is not bound by these terms of reference.
The Council adopted conclusions on a Commission report on tertiary education. The UK is content with the report, which was commissioned by the May ECOFIN Council to assess the efficiency and effectiveness of public spending on tertiary education.
Report on Fiscal Frameworks
Ministers adopted Council conclusions which welcome a report on fiscal frameworks. The Government support the report, which highlights common features of successful national experiences in the Netherlands, Sweden and Austria.
Preparation for European Council: Levies and Taxes on Financial Institutions
ECOFIN agreed a report to the European Council on levies and taxes on financial institutions. The Government are content with the report, which recognises that there is no consensus on how national Governments should deploy the proceeds from bank levies. It states that an EU-only financial transaction tax could result in significant distortion of competition and relocation of financial activity within the global financial system, so careful analysis needs to be carried out.
Alternative Investment Fund Managers Directive
The Council reached unanimous political agreement on the presidency’s compromise text on the alternative investment fund managers directive. This will now form the basis of further discussions with the European Parliament, which is due to vote in plenary session in November. This agreement represents a number of significant gains for the UK from the ECOFIN general approach of 5 May, including provision to extend the marketing passport to managers and funds outside of the EU. The Government also successfully ensured that the agreement limits the powers of the European Securities and Markets Authority to those already provided for in the package on financial supervision.
National Infrastructure Plan 2010
The Government have today published a national infrastructure plan outlining its vision for the future of UK economic infrastructure.
This is the first ever infrastructure plan for the UK. It outlines the scale of the challenge facing UK infrastructure and the major investment that is needed to underpin sustainable growth in the UK. It focuses on the networks and systems—in energy, transport, digital communications, flood water, waste management and in science—that provide the infrastructure on which our economy depends. The plan gives clarity on the role of Government in specifying what infrastructure we need and how they can remove barriers to mobilise both private and public sector resources to maintain our world class infrastructure.
Copies of the document have been deposited in the Libraries of both Houses and are available on the Treasury website at: www.hm-treasury.gov.uk.
Tax Information Exchange (Netherlands Antilles)
A tax information exchange agreement (TIEA) was signed with the Netherlands Antilles in The Hague on 10 September 2010.
The text of the TIEA has been deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
London Regional Committee Report (Government Response)
The report by the House of Commons London Regional Committee on their only inquiry into London’s population and the 2011 census was published on 31 March 2010 (HC 349). This Government did not re-establish the Regional Committees. They recognise the importance of providing a response to Parliament on the issues raised by the Committee. The majority of the recommendations in the report were for the Office for National Statistics (ONS). Two of the Committee’s recommendations were for Government and this written ministerial statement provides the Government’s response. The other recommendations were for ONS and I have placed today a copy of its response in the Library of the House.
This Government have serious concerns about the 2011 census introduced by the previous Parliament. Having given the issue serious consideration, and the costs already incurred, the 2011 census is the only way that unique information can be provided to meet essential UK and EU requirements in the given timeframe at no extra cost than that budgeted. It is important that the 2011 census goes ahead and this Government will continue to promote the importance of the public engaging with the 2011 census.
Given the highly mobile nature of the population, the UK Statistics Authority recognises the increasing difficulties and costs in carrying out a census. The authority has therefore instructed ONS to urgently work on developing alternatives, with the intention that the 2011 census is the last of its kind.
Recommendation 21 of the Committee’s report was dealt with by the previous Government, with my predecessor writing to the Chair of the Committee shortly before the report was published.
Recommendation 14 of the report was on the need for the census address register being developed by the ONS for the 2011 census to be maintained after the census. The previous Government failed to deliver a definitive address register, despite the demands for such a register and the associated costs of inefficiency in maintaining a number of similar registers. This Government are working with the parties concerned and will look to deliver a definitive register. Considerable progress has already been achieved. The work ONS has done will form part of the solution.
Communities and Local Government
Since the day we came into Government, we have been committed to finding a solution to the “ports tax”—the unfair backdated rates bills incurred by some businesses.
We announced in June that we would waive these backdated bills which businesses were telling us threatened jobs, investment and in some cases their solvency. However, we were clear that the waiver would require primary legislation.
I am today announcing that the Government intend to include in the forthcoming localism Bill, the necessary provisions to cancel certain significant and unexpected backdated business rates bills. This will allow affected businesses, in ports and others across England, to move forward confidently, unburdened by the crippling debt imposed by this liability.
Call-Out Orders: Reserves
With the expiry of the call-our order made on 24 October 2009, a new call-out order has been made under section 56 of the Reserve Forces Act 1996 to enable reservists to continue to be called out into service to support our wider efforts to counter the threat from international terrorism and piracy, and to assist our maritime security objectives. The order takes effect from 25 October 2010 and ceases to have effect on 24 October 2011. Some 250 reservists were called out under this order made last year and their continued support is greatly appreciated and valued.
Right to Information (Criminal Proceedings)
The Government have decided to opt-in to the directive on the right to information in criminal proceedings. The directive meets the criteria set out in the coalition agreement with regard to EU justice and home affairs measures.
The draft directive will provide minimum standards for individuals subject to criminal proceedings. British citizens abroad will benefit under the directive from increased confidence in procedural standards across the European Union. It will also increase security at EU level by supporting existing provisions which help combat crime and promote the rule of law.
The Government will approach forthcoming legislation in the area of criminal justice on a case-by-case basis, with a view to maximising our country’s security, protecting Britain’s civil liberties and preserving the integrity of our criminal justice system.
Work and Pensions
Cold Weather Payments
I am pleased to announce that the cold weather payment rate which was due to return to its default level of £8.50 will be permanently increased to £25.00 from this winter. Amending regulations were laid today and will come into force on 1 November 2010, in time for the beginning of this winter period.
Cold weather payments provide help for pensioners in receipt of pension credit and to certain vulnerable groups in receipt of income support, income-based jobseeker’s allowance and income-related employment and support allowance to meet heating costs incurred, or likely to be incurred, in cold weather.
Payments are triggered when the average of the mean daily temperature for a period of seven consecutive days at given weather stations is recorded as, or is forecast to be zero degrees Celsius or below.