Written Ministerial Statements
Tuesday 30 November 2010
Pensions Tax Discussion Document
On 14 October the Government announced that from April 2011, the annual allowance (AA) for tax-privileged pension saving will be reduced from £255,000 to £50,000 and that from April 2012 the lifetime allowance (LTA) will be reduced from £1.8 million to £1.5 million. These changes will generate around £4 billion annual revenue in the steady state, protecting the public finances.
As a result of measures taken in the design of the new pensions tax regime, the Government believe that few individuals will incur tax charges from exceeding the AA. However, it recognises that in some exceptional cases, typically of long-serving individuals in defined benefit schemes, it is possible that large charges could occur. These charges reflect a significant uplift in pension value in a given year. The Government have today published a discussion document on options to meet high annual allowances charges. These include payment from pension benefits or by the pension scheme. This document is now available online on the Treasury website, and has been deposited in the House Library.
The Government intend to publish draft clauses on the chosen approach by February 2011.
Alcohol Taxation Review
I am today publishing further information about potential tax measures following the review of alcohol taxation, I am making this update available on the HM Treasury website and a copy has been placed in the Libraries of both Houses.
These measures are part of the wider Government action to tackle problem drinking due to be announced this week by the Secretary of State for Health and the Secretary of State for the Home Department.
The Government recognise that in some areas taxation can have a role in helping to address the harms associated with problem drinking. For example, a change to the definition of cider has already been made resulting in increased duty on cheap, strong ciders strongly associated with public health concerns.
To complement this change, the Government intend to introduce a new additional duty on beers over 7.5% abv (alcohol by volume) in strength. This will help to address the consumption of cheap, “super strength” lagers that are also associated with high, and dangerous, levels of alcohol consumption.
Changes will also be made to introduce a reduced rate of duty on beers produced at an alcoholic strength of 2.8% abv or below. This measure will help encourage the production and consumption of lower-strength beers and give responsible drinkers additional choice.
These measures will continue to be developed with a final announcement made at Budget 2011. Draft Finance Bill clauses will be published alongside other Finance Bill measures on 9 December 2011 as announced recently by the Exchequer Secretary to the Treasury, Official Report, 9 November, column 10WS.
There are no further changes to the structure of the duty on alcohol as a result of this review. Decisions about duty rates remain a matter for the Chancellor at the Budget. The Treasury will continue to engage with industry and other interested groups ahead of the Budget.
Light Protected Patrol Vehicle
Following the announcement I gave on 12 October 2010, Official Report, columns 9-10WS, regarding the award of preferred bidder status to Force Protection Europe, I am pleased to announce the successful contract negotiation of the Light Protected Patrol Vehicle (LPPV) competition. The new vehicle, Foxhound, will replace the existing Snatch Land Rovers and Weapons Mount Installation Kit (WMIK) vehicles on operations in Afghanistan. An initial tranche of 200 vehicles is being procured through the urgent operational requirements process, and we expect the first vehicles to be delivered for training in late 2011 prior to their first operational use in spring 2012. Further buys of Foxhound will be subject to the confirmation of our wider requirement.
Force Protection Europe’s vehicle represents leading-edge technology and will provide an unprecedented balance of protection, weight and agility for a vehicle of its class. Foxhound is a new design developed specifically to meet the requirements of UK armed forces, and is only now possible due to the considerable investment by the Ministry of Defence and UK industry in this technology. Foxhound is designed and manufactured in the UK, creating or sustaining over 750 jobs. It is also ideally placed to take advantage of the export market, which the Government are fully committed to supporting.
Energy and Climate Change
Pre-EU Energy Council Meeting
In advance of the forthcoming Energy Council in Brussels on 3 December, I am writing to outline the agenda items to be discussed. I will represent the UK.
The main items on the agenda at the Energy Council will be the recently published Commission documents, the “Energy 2020” strategy and the communication on energy infrastructure priorities. The Commission will present the two communications, followed by a discussion by Ministers on the basis of questions provided by the Belgian presidency. This discussion is intended to help prepare for the debate among Heads of Government/State at the energy-themed European Council in February. At the Energy Council, I will welcome the publication of the communications, and support their strong emphasis on energy efficiency, the internal market, overcoming barriers to infrastructure investment and the development and deployment of low-carbon technologies. I will also emphasise the need for the debate at the February European Council to focus on the major issues facing EU energy policy as the EU moves to a low-carbon, energy-secure future while preserving its international competitiveness.
Ministers at the Energy Council will also adopt Council conclusions on a consumer energy policy and on the Commission’s recent communication on the safety of offshore oil and gas activities. We broadly welcome the conclusions and expect them to be adopted without discussion. The Commission will then update the Council on a number of international energy relations events and on the state of play of the European energy recovery programme. The Greek delegation will also inform the Council of a “green energy development initiative” adopted at a meeting of the Black Sea Economic Co-operation Organisation in October.
In the morning of the Council, I will sign a memorandum of understanding on the North sea offshore grid initiative with colleagues from Germany, France, Belgium, the Netherlands, Sweden, Ireland, Luxembourg, Denmark and Norway. The MOU commits the signatories to working together to identify the barriers and explore ways of tackling a more co-ordinated development of offshore grids. It recognises the role that the renewable energy resources of the North sea can play in meeting the EU’s climate and energy targets and the benefits it can bring in terms of security of supply and market integration.
Environment, Food and Rural Affairs
Agriculture and Fisheries Council
The Minister of State with responsibility for agriculture and food, my hon. Friend the Member for South East Cambridgeshire (Mr Paice), and the Under-Secretary of State with responsibility for natural environment and fisheries, my hon. Friend the Member for Newbury (Richard Benyon), are representing the United Kingdom at the Agriculture and Fisheries Council in Brussels on 29 and 30 November.
There are two fisheries and four agriculture items on the agenda. Discussion will take place on the following:
Total allowable catches and quotas for deep-sea species;
EU-Norway fisheries agreement: discussion with Norway about management of joint stocks in North sea/north Atlantic as part of the December fisheries package;
Plant protection product 1, 3—dichloropropene: the Commission has proposed banning this soil fumigant;
Report on possibility of the European Food Safety Agency charging fees:
Commission communication on the future of the CAP: this is the first chance of the Council to respond to this recently published communication
Communication on the Farm Advisory Service: routine report on its operation.
There are currently six items under any other business
1. Long-term fisheries management plans—information supplied by the Commission
2. Conference on the reform of the plant health regime: report from presidency
3. Conference on animal welfare: report from presidency
4. 2011 budget: update from the Commission on handling agriculture payments, should the EU 2011 budget not be agreed before the end of the year
5. Conference on food security: report back by the Dutch on their recent conference
6. G20 and agriculture: report from the French on their plans for their G20.
Greenhouse Gas Emissions
A report on “The contribution that reporting of greenhouse gas emissions makes to the UK meeting its climate change objectives” will be laid before Parliament today.
The report is laid to meet the requirement in section 84 of the Climate Change Act 2008. Copies will be made available in the Vote Office and can also be accessed on the Department for Environment, Food and Rural Affairs website at: http://www.defra.gov.uk/environment/business/reporting/index.htm.
Animals Scientific Procedures Inspectorate (Wickham Laboratories)
The Government have today published a report by the Animals Scientific Procedures Inspectorate (the Home Office inspectorate) of a review of compliance at Wickham Laboratories, a contract research laboratory designated as a scientific procedure establishment under the Animals (Scientific Procedures) Act 1986 (the 1986 Act). Copies of the report have been placed in the Library of the House and posted on the Home Office website.
Wickham Laboratories was the subject of a report published in November 2009 by the British Union for the Abolition of Vivisection (BUAV) in which a number of detailed issues and concerns were set out based on material gathered by an investigator. In the light of the BUAV report, my predecessor as Home Office Minister responsible for the implementation of the 1986 Act asked the Home Office inspectorate to review and report on the issues and concerns raised in it and for recommendations on any action required.
The review has been thorough and the review report addresses all of the key issues and concerns raised by the BUAV. The Government are grateful for the report and accept its main findings and conclusions. While the majority of concerns raised by the BUAV in their report have not been substantiated, the report identifies a number of potential breaches of the conditions of Wickham Laboratories’ certificate of designation and of one project licence held there. Action to deal with these issues is now in hand.
With regard to the monitoring of the establishment, the review has found that Home Office inspectors have maintained a regular programme of inspections and raised issues of compliance and best practice with staff in a number of areas of activity. However, relatively frequent changes of inspector over the last five years have led to some problems ensuring issues raised by inspectors were followed up by Wickham Laboratories.
It is also accepted that some potential breaches of licence and certificate conditions were not identified by the regular inspection programme. Accordingly, the review recommends measures for stricter oversight of Wickham Laboratories and to ensure that procedures for the handover of establishments between inspectors are always carried out fully. These are being taken forward as a matter of urgency.
Action is also in hand to identify and take forward wider lessons to be learned from the review with regard to the implementation of the Animals (Scientific Procedures) Act 1986 more generally.
Investigatory Powers Tribunal
I am pleased to announce that Her Majesty the Queen has reappointed members to the tribunal (including a president and vice president) by letters patent for a period of five years, as provided by the Regulation of Investigatory Powers Act 2000. The reappointed tribunal members are:
Lord Justice John Mummery - President
Mr Justice Michael Burton - Vice President
Sir Richard Gaskell
Sheriff Principle John McInnes QC
Mr Richard Seabrook QC
The tribunal considers proceedings brought under section 7 of the Human Rights Act 1998 against the intelligence agencies and, in respect of the investigatory powers covered by the Regulation of Investigatory Powers Act 2000, by all public authorities. It also considers all complaints against the intelligence agencies and all complaints against public authorities in respect of the powers in the Regulation of Investigatory Powers Act 2000. The tribunal, which is independent of Government, has full powers to investigate and decide any case within its jurisdiction.
Scotland Bill (Publication)
Today the Scotland Bill has been introduced in the UK Parliament. This Bill delivers the commitment in the coalition Government’s programme for government to strengthen and deepen the Scottish devolution settlement. Our proposals, based on the recommendations of the Commission on Scottish Devolution, will extend and develop the arrangements set out in the Scotland Act 1998, which established the first democratically elected Parliament for Scotland.
The Commission was set up by the Scottish Parliament and supported by the UK Government. The Commission’s remit was:
“To review the provisions of the Scotland Act 1998 in the light of experience and to recommend any changes to the present constitutional arrangements that would enable the Scottish Parliament to serve the people of Scotland better, improve the financial accountability of the Scottish Parliament, and continue to secure the position of Scotland within the United Kingdom”.
The Commission, under the chairmanship of Professor Sir Kenneth Caiman, produced a detailed report that was founded on a robust evidence base, sound analysis and extensive engagement with people in Scotland. The consensus arrived at by the Commission was clear: the devolution settlement in Scotland has been “a remarkable and substantial success”. The Commission’s key conclusion was that devolution has brought clear benefits for Scotland, ensuring that Scottish solutions can be developed for Scottish problems. The Scottish Parliament has established itself firmly in public life, bringing greater accountability to the people of Scotland, and innovation in both policy and working methods.
But crucially, the Commission also highlighted a number of areas for reform within the devolution settlement to ensure that it continues to deliver for people in Scotland. The key area of reform related to financial accountability. The Scotland Bill will ensure that from now on the Scottish Parliament and Government can be held to account not just for how they spend money, but also for how they raise it. This imbalance between power and responsibility within the existing Scotland Act will be addressed in the Bill introduced today.
The Scotland Bill creates a new Scottish rate of income tax. The current block grant funding from the UK Government to Scotland will be adjusted in exchange for power for the Scottish Parliament to raise its own taxes. This new tax-raising power will apply alongside the existing UK-wide income tax. In Scotland, the UK rates of income tax will be reduced by 10p from the lower, higher and top rates of income tax. The Scottish Parliament will then make a tax decision to levy a single additional rate, which can either match UK rates, or go higher, or lower. This will replace the Scottish Parliament’s existing power to vary income tax in Scotland by up to 3p, up or down.
In line with the Commission recommendations, the finance changes will be introduced carefully with transitional arrangements in place to ensure there is no windfall gain or adverse shock to the Scottish budget. This new tax-raising power will be in place for the Scottish Parliament elected in 2015. The Scotland Bill also devolves responsibility for two smaller taxes to the Scottish Government: stamp duty land tax and landfill tax. In addition, the Bill will provide the Scottish Government with a substantial power to borrow to finance capital expenditure and a power to borrow to finance current expenditure when tax receipts are less than expected.
The Scotland Bill also sets out a number of adjustments to the distribution of reserved and devolved responsibilities. The Scottish Parliament and Government will take on power to regulate air weapons, set the drink-drive limit and set national speed limits. The Commission, on the basis of the evidence, concluded that some areas would be better administered at the UK level and so in two areas—the regulation of health professions and the administration of corporate insolvency—the Scotland Bill will transfer power back to the UK Parliament and Ministers.
The Scotland Bill is just part of the Government’s response to the Commission’s recommendations. The Bill is accompanied by a Command Paper which sets out how the Government are responding to all the recommendations from the Commission, not only improving the legal framework that established devolution in Scotland, but also supporting the relationships between officials, Ministers and Parliaments to ensure its continuing success.
The Scotland Bill demonstrates the determination of the coalition Government to ensure that the Scottish Parliament is empowered to meet the needs of the Scottish people. Both the Bill and the accompanying Command Paper set out the bold reforms the Government are taking to strengthen the Scottish Parliament and the Scottish Government. Once the measures included in the Scotland Bill and this paper are fully implemented, a historic shift in power will have been accomplished. The Scottish Parliament and Scottish Ministers will have more powers, be more accountable, and be able to be more responsive to Scotland’s needs within the framework of a strong and stable United Kingdom.
Copies of the Command Paper which accompanies the Bill have been placed in the Libraries of both Houses and the Vote Office.
Work and Pensions
Housing Benefit Reform (Private Rented Sector)
In June 2010, the Government announced a number of measures that will contain housing benefit expenditure and create a fairer system of support by taking steps to ensure that people on benefit are not living in accommodation that would be out of reach of most people in work. In its first step to reform housing benefit, the Government are amending legislation in relation to customers living in the private rented sector, primarily affecting customers whose housing benefit is assessed according to local housing allowance rules.
I have today laid the Housing Benefit (Amendment) Regulations 2010 and amendments to the Rent Officers (Housing Benefit Functions) Order 1997 that will bring into effect measures to:
i. remove the five-bedroom local housing allowance rate so that the maximum level is for a four-bedroom property.
ii. introduce absolute caps so that local housing allowance weekly rates cannot exceed £250 for a one-bedroom property; £290 for a two-bedroom property; £340 for a three-bedroom property; £400 for a four-bedroom property.
iii. remove the up to £15 weekly housing benefit excess that some customers can receive under the local housing allowance arrangements.
iv. include an additional bedroom within the size criteria used to assess housing benefit claims in the private rented sector where a disabled person, or someone with a long-term health condition, has a proven need for overnight care and this is provided by a non-resident carer.
v. set local housing allowance rates at the 30th percentile of rents in each broad rental market area rather than the median.
The Government are convinced it is absolutely necessary to take urgent steps to manage housing benefit expenditure, and to ensure that people who make new claims for housing benefit in the private rented sector are prevented from claiming the higher rates of local housing allowance. The Government have listened to advice from the Social Security Advisory Committee and from key stakeholders in relation to the implementation of these measures and, clearly, it is essential that existing customers have sufficient time to adjust to their new circumstances. In order to ensure a smooth transition for the changes in 2011, the measures will come into force as follows:
The measure to provide an additional bedroom within the size criteria for some customers with a non-resident carer will proceed in April 2011. All claimants who meet the criteria will be entitled immediately from April.
All changes that will adjust the way local housing allowance rates are calculated will come into force from April 2011 for new claims to ensure the measures are fiscally neutral over the spending review period. Existing claimants affected by the changes to local housing allowance rules will continue at their current rate of benefit until their claim is reviewed by their local authority; they will then have a further period of transitional protection at their current local housing allowance rate of up to nine months if there has not been a relevant change of circumstances. No one will be able to receive more in benefit than they pay out in rent once their claim has been reviewed.
In addition to the funding announced to increase the discretionary housing payment fund, the Government have allocated a further £50 million over the spending review period to support the implementation of these measures. This will provide targeted support to help meet the housing needs of claimants who are affected by the changes, and we will work with local government on its allocation.
The Government intend that the measures they are introducing to adjust local housing allowance rates will act to reduce rents in the private rented sector. To support this, the Government are temporarily widening the discretion of local authorities to make direct payments to the landlord in some circumstances where it will support tenants in retaining or securing a tenancy. The Government will work closely with local authorities to ensure this provision is used only in very specific circumstances where landlords are reducing rents to a level that is affordable for claimants.