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Written Statements

Volume 524: debated on Thursday 3 March 2011

Written Ministerial Statements

Thursday 3 March 2011

Treasury

Pensions Consultation

The Independent Public Service Pensions Commission interim report, led by Lord Hutton of Furness, recommended that the Government undertake a review of the fair deal policy. The Government confirmed their plans to take forward this recommendation at the spending review and have today launched a public consultation.

The Government welcome contributions from all interested groups.

The consultation document has been deposited in the Libraries of both Houses and can be found on the HM Treasury website at:

http://www.hm-treasury.gov.uk/consult_fair_deal _policy_publicsector.htm

and will close on 15 June 2011.

Office of Tax Simplification

The Government created the Office of Tax Simplification (OTS) in July 2010 to provide independent advice on simplifying the tax system.

The Chancellor of the Exchequer asked the OTS to review a list of all reliefs, allowances and exemptions, applying to both businesses and individuals, within the taxes and duties administered by HM Revenue and Customs, and to identify those reliefs that should be repealed or simplified to support the Government’s objective for a simpler tax system.

In November 2010 the OTS published a list of all reliefs in the tax system—1,042 in total. Further work narrowed this to 155 reliefs that they have now reviewed in detail.

Today the OTS has published its final report into its review of tax reliefs. It recommends that 45 reliefs be abolished, 17 be simplified and 54 retained in their current form.

The Government will respond to this report at the Budget on 23 March 2011. A copy of the report has been deposited in the Libraries of both Houses.

Pension Tax Relief

As announced in October, from April 2011 the annual allowance (AA) for tax-privileged pension saving will be reduced from £255,000 to £50,000 and from April 2012 the lifetime allowance will be reduced from £1.8 million to £1.5 million. This is a simpler and fairer approach to making a more sustainable and affordable system of pensions tax relief than the previous Government’s complex and damaging proposals. The reduction of these allowances will generate around £4 billion annual revenue in the steady state while preserving incentives to save, and lessening the impact on the ability of UK business to attract and retain talent. This approach has been welcomed by pension and employer groups and the Government have continued to work in consultation with them to finalise the design of the new pensions tax regime.

The Government expect most individuals and employers to adapt their pension saving behaviour to avoid incurring a charge by exceeding the AA, and has put in place measures such as the carry forward of unused allowances to protect individuals further. However, recognising that in some circumstances individuals could still see high charges reflecting significant uplift in pension value in a given year, the Government have consulted on options to enable individuals to meet these charges from their pension benefits.

In line with the strong preference expressed by most respondents, the Government have decided that where AA charges are met from pension benefits, the tax should be paid at the point the charge arises. In effect, schemes will have a considerable amount of time to complete the payment process, with additional flexibility being granted in the first year. Individuals with AA charges above £2,000 will be able to elect for the full liability to be met from their pension benefit. Schemes will be required to operate this facility only where an individual has exceeded the AA outright within that scheme in the relevant year. The Government have given schemes flexibility in how they operate, but is clear that any adjustment to an individual’s pension benefit should be fair to all scheme members.

The detailed policy specification has been set out in a summary of responses document and draft clauses on which the Government welcome comment by 17 March. An update to the tax information and impact note has also been made. All documents are available on the Treasury website, and have been deposited in the Libraries of both Houses.

Communities and Local Government

Disabled Facilities Grant

Today the Department for Communities and Local Government is announcing the local authority allocations for the disabled facilities grant programme in England, making available £180 million, an increase of 11 million the amount allocated for 2010-11. Local authorities are being informed of their individual allocations. Details of the amount awarded to each authority will be available on the Department for Communities and Local Government website and a table detailing the funds provided to individual authorities has been placed in the Library of the House.

The disabled facilities grant programme has been protected within the spending review. The programme helps disabled people to live as comfortably and independently as possible in their own homes through the provision of adaptations. Entitlement to a disabled facilities grant is mandatory for eligible disabled people and the grant provides financial assistance for the provision of a wide-range of housing adaptations ranging from stair lifts and level access showers to home extensions. The programme is therefore key in delivering the Government’s objective of providing increased levels of care and support to people in their own homes.

The Department for Communities and Local Government wrote to all local authorities in January 2011 to announce a small change to the allocation methodology for the disabled facilities grant for the financial year 2011-12. In 2011-12 there is £180 million available to be distributed as disabled facilities grant to local authorities—an extra £11 million more than was available in 2010-11. All local authorities will, as a minimum, receive what they were allocated in 2010-11. The extra £11 million will then be shared between the local authorities using a relative needs weighted index.

The disabled facilities grant programme has improved the lives of many disabled people including disabled children and helped them avoid the need to leave family homes for specialist housing alternatives.

Olympic Stadium

My colleague the Minister for Sport and the Olympics and I have today given our approval to the recommendation of the Olympic Park Legacy Company to select the joint bid from West Ham United football club and the London borough of Newham as the preferred bidder for the legacy use of the Olympic stadium. We are therefore writing to the company informing it of our decisions as its joint Government founder members. The Mayor of London, as the other founder member of the company, will also write separately.

This completes the first stage of this process and means that the Olympic Park Legacy Company is now able to enter into negotiations with the consortium comprising West Ham United football club and the London borough of Newham to agree a lease for the Olympic stadium site on terms that are acceptable to Government and the Mayor of London and provide value for money to the public sector. We are delighted with the progress that has been made and very pleased we have reached this very significant milestone in determining the long-term legacy for the Olympic park following the games.

Education

Vocational Education (Wolf Review)

High-quality vocational education is crucial to enabling social mobility, generating growth and making opportunity more equal for all young people.

Sadly, the system we have inherited means that too many existing vocational qualifications are of poor quality or are offered inappropriately to young people. Too many young people are studying courses that do not enable them to progress.

It is essential, therefore, that we ensure the vocational routes offered to young people are high quality and are recognised by employers and further and higher education.

Professor Wolf’s recommendations will help us to do just that. They have set a clear direction of travel that will lead to a real and sustained improvement in the vocational education on offer to young people in this country.

She highlights how the system is failing hundreds of thousands of young people and says:

350,000 students aged 16 to 19 are on programmes which score well in league tables but do not lead to higher education or stable paid employment;

high-quality apprenticeships are too rare and a decreasing proportion are being offered to teenagers;

examples of good quality, innovation and success in vocational education today are achieved in spite of the current funding and regulatory system and not because of it.

Professor Wolf’s recommendations shift 14 to19 vocational education away from the

“expensive, centralised and over-detailed approach that has been the hallmark of the last two decades”.

Instead she says England should move towards the systems favoured by the best providers of vocational education—Denmark, France and Germany, which delegate a large amount of decision-making and design to a local level.

Professor Wolf says society has

“no business placing 14-year-olds in tracks which they cannot leave”,

and says options for all young people must be kept open. She suggests that 14 to16-year-olds should spend at least 80% of their learning time on a broad academic “core”. This is in line with the best models of vocational education in Europe, which delay specialisation until post-16.

We will immediately accept four recommendations:

to allow further education lecturers to teach in school classrooms on the same basis as qualified teachers;

to clarify the rules on allowing industry professionals to teach in schools;

to allow any vocational qualification offered by a regulated awarding body to be taken by 14 to 19-year-olds;

slash the red tape to temporarily allow high-quality, established vocational qualifications, which are valued by employers, to be offered in schools and colleges from September.

We will now consider how best to implement Professor Wolf’s remaining recommendations. These include:

anyone who fails to achieve a good pass in GCSE English or maths must continue to study those subjects post-16. Currently less than half of all students fail to get an A* to C pass at GCSE;

the Government should increase continuing professional development (CPD) for mathematics teachers, especially post-16;

the removal of the perverse incentives, created by both the funding system and performance tables, to enter students for numerous low-quality qualifications. Higher quality courses should have higher scores in performance tables than “dead-end” ones, and funding should be per pupil not per qualification;

employers should be subsidised if they offer 16 to 18-year-old apprentices high-quality, off-the-job training, and an education with broad transferable elements;

scrapping the duty on colleges and schools to provide every 14 to 16-year-old with work-related learning. Longer internships for older students should be prioritised instead;

employers should be more involved in local colleges to ensure vocational qualifications valued by business are offered to students and are taught to industry standards;

promote the right of under 16s to be enrolled in colleges so they can benefit from high-quality vocational training available there, in creative arts, commerce or catering.

We will publish a full Government response to Professor Wolf’s report shortly.

Copies of the Wolf review of vocational education will be placed in the House Library.

Foreign and Commonwealth Office

Libya: Consular Response

I wish to update the House on the efforts the Foreign and Commonwealth Office has made to help British nationals depart Libya.

As the Prime Minister reported to this House on Monday 28 February 2011, more than 600 British nationals have been evacuated from Libya on UK-provided flights and ships. Many others have been able to leave Libya through a variety of other means. I am pleased to report that since then 11 British nationals were able to leave Benghazi on board HMS York on 2 March. We have also assisted in the evacuation of 43 different nationalities, including French, US, Canadian and New Zealand citizens.

Evacuation

Six chartered aircraft, organised by the Foreign and Commonwealth Office, and an RAF C130 Hercules flight have brought out from Tripoli airport around 400 British nationals and 360 EU and other nationals.

HMS Cumberland made two voyages to Benghazi and evacuated 119 UK citizens and 303 EU and other citizens. HMS York has made one voyage to Benghazi and has evacuated another 11 UK and 32 EU and other citizens.

On Saturday 26 and Sunday 27 February RAF C130s were deployed in order to evacuate UK oil workers from the desert, and 95 British nationals and around 270 foreign nationals were evacuated.

Only a very few UK citizens remain in Libya who have asked to be evacuated. We are helping them to access the various evacuation options which remain. There are a number of other UK citizens who currently have chosen to stay in Libya. A significant number of these are dual nationals. Clearly these figures can change. We will continue to do all we can to ensure that those who wish to leave can do so.

For those who are evacuated to Valletta, in Malta, the FCO has arranged, for those who want it, onward transfer to the UK by charter flight or using existing commercial means.

All of these evacuations have been supported by staff reinforcements from within the region, as well as five rapid deployment teams.

The operations of the UK embassy were temporarily suspended on Saturday 26 February and since then our representation has been undertaken by the Turkish embassy in Tripoli. A locally employed UK vice-consul is currently working with them.

I would like to put on record the UK’s appreciation for all the support provided by our allies and partners during this difficult time and in particular the Turkish Government and the Government and people of Malta.

Consular Operation

This has been a consular crisis effort on an unprecedented scale. We have worked tirelessly to overcome the physical and logistical difficulties of co-ordinating the evacuation of hundreds of British nationals from a vast country and after the breakdown of law and order. Working with colleagues from across Government, most notably the Ministry of Defence and the United Kingdom Border Agency, FCO staff have been working round the clock to help bring home British nationals in Libya.

In total, since 21 February, more than 350 FCO staff have joined the consular and political efforts, including over 50 who were deployed to Libya or Valletta to work alongside our embassy teams. Of these, the majority have stepped forward as volunteers to ramp up our overall capacity and support their colleagues. They have done so above and beyond their normal day jobs.

As events in the middle east continue to develop, I wish to pay tribute to the determination and commitment of FCO staff to assist British citizens wherever they are in the world.

So long as British nationals remain in Libya, Foreign and Commonwealth Office staff stand ready to assist them.

Home Department

Age Discrimination

The Government are today publishing a consultation document containing a draft order setting out proposed exceptions to a ban on age discrimination in the provision of goods, facilities and services, the exercise of public functions and the activities of private clubs and other associations.

The Government are committed to tackling harmful age discrimination. Our society is changing as people live longer, and it is important to ensure that people of all ages are treated fairly when, for example, receiving healthcare or trying to buy insurance.

The Equality Act 2010 contains a ban on age discrimination in the provision of services, the exercise of public functions and by associations. Before we implement the ban, we want to make sure that the new law:

does not prevent service providers treating people of various ages differently when there are beneficial or justifiable reasons for doing so: for example, through the offering of age-based concessions, such as free bus passes or cheaper rates at leisure centres to the over-65’s and students;

takes into account how people of different ages live and their different needs; and

takes into account how businesses and other organisations operate in order to avoid disproportionate burdens and unintended consequences.

The consultation published today, “Equality Act 2010: Banning age discrimination in services, public functions and associations—A consultation on proposed exceptions to the ban”, sets out those areas where we believe that different treatment of people of various ages is justified, and proposes how the legislation will be drafted to take account of these.

One area where age-based decisions can be justified is financial services—providers will still be permitted to make decisions and set charges based on an individual’s age, if such a policy is reasonable and based on reliable evidence about risk.

The consultation is also very clear that there will be no specific exceptions to the ban on age discrimination for the health and social care sectors. Any use of age in decision-making within the NHS and in social care will, if challenged, need to be objectively justified. This approach has been informed by extensive work with health and social care organisations and professionals, user groups and others with an interest in this issue. Our aim is to eradicate harmful discrimination, while at the same time allowing service providers to continue to treat people of different ages differently where this is beneficial or justifiable. When services deal with individuals, they should therefore continue to focus on the individual, taking account of his or her age where it is appropriate to do so.

The consultation runs from 3 March 2011 to 25 May 2011.

I will place copies of the consultation document in the Libraries of both Houses and in the Vote Office. It has also been published on the Government Equalities Office website at: www.equalities.gov.uk.

Justice and Home Affairs Council

The Justice and Home Affairs (JHA) Council was held on 24 and 25 February in Brussels. My right hon. Friend the Minister of State for Justice, Lord McNally, and I attended on behalf of the United Kingdom. The following issues were discussed at the Council:

The interior day began with the Council adopting the ‘A’ points list. This included the adoption of the draft Council conclusions on the effective implementation of the charter of fundamental rights of the European Union. The conclusions set out how the Council will ensure that the charter is reflected accurately in future EU legislation.

The Council also adopted Council conclusions on the Commission’s communication on a comprehensive approach to personal data protection in the European Union. The conclusions set out the Council’s views on the general principles arising from the communication and do not prejudice the need for careful and detailed consideration of any legislative proposals.

After the adoption of the ‘A’ points list, the Council, in Mixed Committee with Norway, Iceland, Liechtenstein and Switzerland (non-EU Schengen states), received an update from the Commission on the go-live date for the Visa Information System (VIS) regulation. The Commission said preparations at border crossings and consular posts in the first-phase region (north Africa) appeared on track. VIS would only go live once all consular staff there had been trained but current developments in the region could adversely influence this. They expected the April JHA Council would decide on a start date. The UK does not participate in VIS.

The Commission provided its regular update on the delivery of the second generation Schengen Information System (SIS II) central system and stressed the importance of member state participation through the testing phases.

Frontex presented its annual work programme (AWP) for 2011 to the Council. The Frontex executive director said core objectives for 2011 were to enhance flexibility to respond to emerging situations, earlier detection of crime at external borders, and enhancing inter-agency co-operation and interoperability. The main challenge would be increasing effectiveness with decreasing resources. He mentioned that pledges so far had only met 50% of requirements for the post rapid border intervention team operation on the Greece-Turkey border. Frontex warned that progress could be put at risk. The Commission agreed and called for swift adoption of the new regulation.

The presidency gave an overview of Romanian and Bulgarian accession to Schengen and introduced its proposal for conclusions. While the technical evaluation process for Romania had been completed, Bulgaria required a further visit to its land border. The presidency acknowledged wider concerns expressed by some member states, but sought to avoid political discussion concluding that there was support for the conclusions.

The Commission gave an update on visa liberalisation road maps for the western Balkan countries, noting that abuses did have to be addressed and confirming they were looking into the possibility of a suspension mechanism that would not target specific counties or regions. Proposals would be brought forward in June.

Under Mixed Committee AOB, the Council received an update on the EU-Canada visa situation and noted an information-gathering visit had taken place at the end of January. Preliminary findings suggested no problems with the way Roma communities were treated. The report will be published in April.

The UN High Commissioner for Refugees (UNHCR), Antonio Guterres, used his presentation to urge member states to ratify the convention relating to the status of refugees and to increase their support for capacity building in the developing world. On the current situation in north Africa, he highlighted that the majority of arrivals to the EU were mainly economic migrants, but he warned member states to be prepared for a potentially massive flow from Libya. He asked member states to consider using the temporary protection directive but advised that the present situation should not distract attention from the significant structural problems with the EU asylum system, and particularly with Greece. The EU’s next financial perspective had to rise to the challenges of protection both outside and inside the EU. The UK welcomed the UNHCR’s work to help member states improve their asylum systems, and highlighted the close UK co-operation on resettlement and the quality initiative. The UK stated that although it did not always agree with the UNHCR on legislative solutions, it was essential to work together to ensure that real practical action happened on the ground, and to reinforce levels of protection in the region. The Commission said we were at a crucial moment and had a duty of solidarity to member states facing particular burdens. Protection in developing countries through regional protection programmes was important, and they urged the presidency to make progress on the EU resettlement programme.

There was also a presentation by Rob Visser, the newly appointed executive director of the European Asylum Support Office (EASO), who explained that the support office was already operational (before the 19 June deadline mentioned in the regulation). Providing support to Greece for the action plan was the top priority. Member states urged Greece to speed up its asylum reforms and called on the Commission to improve co-ordination of member state offers of assistance. The Commission was already providing co-ordination and would soon hand this over to EASO. On Dublin, the emergency mechanism would not apply in this situation; it was only proposed for member states fully implementing the asylum acquis.

The draft text of the EU-Turkey readmission agreement was presented alongside Council conclusions on visa liberalisation. The UK welcomed the text and called for its swift conclusion and implementation. Given the high level of transit migration through Turkey and into the EU, co-operation with Turkey was important to all member states. Although there were sensitive issues at stake, it made sense for member states to agree the text; further delay could result in no agreement being signed. Thanking the Commission for its declaration on territorial application, the UK submitted declarations relating to the application of the Title V opt-in protocol to future measures and stated that the Commission should act within its competence when undertaking, a dialogue on visas, mobility and migration with Turkey. The Council discussed the substance of the conclusions and a declaration was inserted at the end of the conclusions stating

“The Commission acknowledges that the last indent of the Council Conclusions does not legally constitute a negotiating mandate”.

The Commission concluded that it now approach Turkey to initial the readmission agreement.

During lunch Interior Ministers discussed the developments in the north African region (migratory flows and internal security). The UK pushed for a focus on practical responses. In the press conference after the Council, the Commission and presidency were careful to emphasise the difference between the existing situation (5,000 Tunisians who had arrived in Italy were largely economic migrants who should be returned) and the potential threat from instability in Libya. The Commission emphasised the need to strengthen protection in Tunisia and Egypt, for those already crossing the borders. Ministers had not considered invoking the temporary protection directive, but the Commission said it did form part of the toolbox. Article 78(3) of the treaty also enabled them to propose emergency measures including exceptional financial support to help member states receiving a mass influx. The next steps will depend on how the situation develops. The next planned discussion will be at the March European Council.

The Internal Security Council conclusions were adopted without amendment.

The Council did not discuss the Commission evaluation into EU readmission agreements, the new directive on passenger name records or remaining AOB items due to time constraints. The communication on EU readmission agreements will be discussed at working party level in March and depending on the outcome of these discussions the presidency will present draft Council conclusions to the April JHA Council. Passenger name records will be discussed by working groups in March and a substantive discussion will be held at the April JHA Council.

The justice day commenced with a discussion on the directive on attacks against information systems which demonstrated differences of view on whether to include use of false identity as an aggravating circumstance and the value of increasing sanctions. The presidency said they wanted the Council of Europe’s 2001 cybercrime convention to become the international benchmark and encouraged those who had not ratified to do so, noting there would be a conference on the 10th anniversary of the convention for signatories, including the USA, on 10-13 April. The UK thanked the presidency for leadership on this issue and highlighted concerns about the handling of identity theft in the text; the UK sought more discussion of the issue at expert level. It also noted the firm commitment of the Government to ratify the cybercrime convention this year. The Commission indicated openness to solutions to deal with concerns expressed and noted they would bring forward a communication on critical infrastructure protection in 2012.

Next, the Commission presented its proposal to revise the regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (known as Brussels I). The regulation lays down rules governing the jurisdiction of courts and the recognition and enforcement of judgments in civil and commercial matters in the member states of the European Union (EU). The objective of the revision of Brussels I is to update and improve the operation of the regulation by addressing certain problems that have arisen with the current measure since its implementation. The Government generally support this objective and are currently considering the detail of the proposal and the results of the Government’s consultation in order to determine whether or not to opt in to the negotiations.

The presidency gave a state-of-play report on the directive on the right to information in criminal proceedings. This proposal is the second measure in the road map to strengthen procedural rights in criminal proceedings and it aims to set common minimum standards and improve the rights of suspects and accused persons by ensuring that they receive information about their rights and about the accusation and evidence against them. Although a date has yet to be identified for the trilogue discussions, the Hungarians hope to reach a first reading deal before the end of their presidency. The Government noted the presidency’s report.

Next, the Council adopted Council conclusions on the inclusion of the website of the European judicial network in civil and commercial matters (civil EJN) in the e-justice portal. The website of the civil EJN has existed since 2001 providing information on the laws and procedures on a number of topics in each member state. The presidency and Commission highlighted the migration was an important step forward in securing a single online access point for justice issues for citizens.

Under any other business, the Council took note of a report by the Commission on the memory of the crimes committed by totalitarian regimes in Europe. The report presents, among other things, how the EU can play a meaningful role in the process of preserving the memory of totalitarian regimes and that there are a number of ways of maintaining that including through funding mechanisms. It also underlines that there are different national measures in place and therefore, the Commission currently has no plans to introduce EU-wide legislation on the subject. The Government agreed the importance of recalling the crimes committed by totalitarian states and welcomed the Commission’s report.

Ministers also received an update from the Commission on the subject of collective redress. The Commission informed Ministers that it had launched a public consultation on the issue and that by the end of 2011, a communication would be published. The Government welcome this consultation and have yet to make their response to it.

Finally, at the request of Slovakia, Ministers considered the rights of EU citizens as regards the enforcement of court decisions in third countries concerning custody laws, in particular, in cases of mixed marriages and parental child abduction. Slovakia stated that the EU should explore ways of improving co-operation with third countries on international custody disputes. The Government supported the Slovakian proposal.

Justice

Borders, Citizenship and Immigration Act 2009

I am pleased to announce the Government’s intention to commence section 53 of the Borders, Citizenship and Immigration Act 2009 with effect from 1 October 2011. Section 53 enables judicial review applications in “fresh claim” asylum and immigration human rights cases to be heard in the Upper Tribunal.

Currently, judicial review applications cannot be transferred from the High Court or Court of Session to the Upper Tribunal if they call into question decisions made under the Immigration Acts. The commencement of section 53 will allow the transfer of judicial review applications relating to a refusal of the Secretary of State for the Home Department to treat representations as a “fresh claim” in asylum and immigration human rights cases.

One of the conditions to enable the High Court in England and Wales to transfer a case to the Upper Tribunal is that the application falls within a class specified by the Lord Chief Justice under section 18 (6) of the Tribunals, Courts and Enforcement Act 2007. I understand that, following the commencement of section 53, the Lord Chief Justice is minded to make such a direction in respect of this class of judicial review application.

I also understand that while there are no immediate plans to transfer these cases to the Upper Tribunal in respect of Scotland or Northern Ireland, commencement of section 53 would allow that to happen at some point in the future should the Lord President and the Lord Chief Justice of Northern Ireland deem this to be appropriate. I understand that the Lord President has indicated that further consultation will be required in Scotland in relation to this matter.

The transfer of these judicial reviews will enable fresh claim asylum and immigration human rights applications to be dealt with by judicial members of the Upper Tribunal who have specialist skills and experience in asylum and immigration cases and will also relieve workload pressure on the High Court, freeing up judicial time to address the high volumes of other types of cases heard in the High Court.

I understand that the Tribunals Procedure Committee is currently considering whether any amendments will be required to the Upper Tribunal Procedure Rules to reflect this change and that it may decide to undertake public consultation on this matter in due course.

Transport

Airport Economic Regulation

In the Queen’s speech the Government announced their intention to reform the framework for the economic regulation of airports. Today I am announcing that legislation to implement these reforms will be introduced early in the next session.

Reforming the framework for airport economic regulation will help improve the quality of service that passengers receive at designated airports and contribute positively to economic growth.

As I set out in my statement to the House on 21 July 2010, Official Report, columns 20-22WS, we plan to replace the existing statutory framework for regulation at designated airports with a more flexible licence-based system. This will give the CAA the powers it needs to become a more responsive regulator, for example to deal with events such as the severe weather this winter. The reforms will also strip out unnecessary regulation and support passenger-focused investment in existing airport infrastructure.

I am keen to ensure that there is a smooth transition to the new regime and we will work with the CAA and industry to achieve this. In particular, the Government will not be making changes to the basis on which the current price caps at Heathrow, Gatwick and Stansted are set.

Work and Pensions

Cheque Replacement and Financial Inclusion

Since taking office the coalition Government have been working to reform the welfare system, providing a fairer deal for customers and taxpayers alike.

Well over 98% of all benefit customers are now paid directly into an account. But there is a relatively small number who cannot be paid into an account of any kind or who choose not to be. These customers currently receive their welfare payments by cheque and in total this amounts to fewer than 250,000 people in the UK.

Welfare cheques have become outdated, costly and too open to fraud. As a result, and in light of wider changes in the financial world, the previous Government set the terms of and invited bids on a procurement for a product to replace this payment method.

Following a competitive bidding process I can announce today that Citibank, working in partnership with PayPoint, will be awarded a seven-year contract to provide the new service that will replace the current girocheque service. The contract value is estimated to be a total of £20 million per year, shared between the two providers.

This new service will be free of charge to customers and accessible over the counter at PayPoint outlets. PayPoint outlets are already serving many of our customers and can be found in newsagents, community stores, and other local outlets.

DWP will ensure customers are moved across to the new payment method as seamlessly as possible. Information and advice will be made available so that customers know what will happen and when the change will take place.

Customers will still be able to collect their cash from the Post Office if this is important to them, either by switching to the Post Office card account or by using one of the many commercial bank accounts that are accessible at Post Office branches.

This Department values its relationship with the Post Office and we are working closely with them as we design the delivery of our future services. In particular we are setting up three pilots in partnership with the Post Office: verifying identity as part of the national insurance application process; support for those jobseekers who live in more rural areas, and verification of supporting documents such as birth and marriage certificates for customers of the pension service.

In addition, this Department will continue to work with the Post Office to explore further opportunities for them to support new ways of delivering welfare, including playing an important role in supporting the delivery of universal credit—building on the work on pilots already underway.

We also see real opportunities for the Post Office network in building closer links with credit unions. Credit unions have made great progress in recent years in bringing affordable financial services to people who would not otherwise be able to access them. I want to see credit unions—in partnership with the Post Office—providing more services, more efficiently, to more people.

I am therefore pleased to announce this Department’s continuing support for credit unions, building on the existing growth fund, and providing the new funding required for further expansion. This modernisation fund, worth up to £73 million over the next four years, will support those credit unions who are ready and prepared to step up to the plate—to expand their service to benefit more customers.

My Department will work with the credit unions to look at ways in which the future progress of this sector can best be supported. This includes the possible development of a shared banking platform, for which funding has already been set aside. Subject to successful feasibility studies, this will open up opportunities for many more people to access credit union services, including through the Post Office network.

Making credit union services available to more people who could benefit from them is an important part of our welfare reforms: making work pay; reforming crisis loans; making people better off for every pound they earn through universal credit; and simplifying the benefits system.

Employment, Social Policy, Health and Consumer Affairs Council

The Employment, Social Policy, Health and Consumer Affairs Council will be held on 7 March 2011 in Brussels. I will represent the United Kingdom on all agenda items.

There will be two policy debates at this meeting. The first discussion will focus on the EPSCO contribution to the European Council on issues relating to the implementation of the Europe 2020 strategy, the European semester and the annual growth survey. The presidency will present for adoption the first joint employment report under the new European semester process together with Council conclusions that draw on the main messages from the report and the employment guidelines. The UK will stress the importance that employment policies have been given within the context of the annual growth survey and in particular the emphasis on activation policies for the unemployed and inactive. The Council will also adopt the opinion of the Social Protection Committee on the flagship initiative and its report on the assessment of the social dimension of Europe 2020. Finally the presidency will present information on the preparations for the tripartite social summit, due to take place before the spring European Council.

The second discussion will be on the pensions Green Paper. The Commission will present a progress note on the analysis of the Green Paper responses. The UK will emphasise the importance of this issue but highlight the need to avoid imposition of insolvency requirements for pensions, particularly on grounds of costs and regulatory burden.

The Commission will present its annual report on “progress on equality between women and men during 2010”. The report acknowledges areas where progress has been made, both at national and European level.

Ministers will consider a number of other Council conclusions. These cover a European framework for social and territorial cohesion, the further development of an electronic exchange system facilitating the administrative co-operation in the framework of the posting of workers directive, and the European pact for gender equality (2011-2020).

Under any other business, the presidency will report on the informal meeting of the Ministers for employment, and will also provide an update on two legislative areas, “seasonal workers” and “intra-corporate transferees”. The Employment Committee and Social Protection Committee chairs will provide information on their work programmes for 2011, and there will also be a presentation from the French delegation on plans for their G20 Labour and Employment Ministers’ meeting, which will take place in September 2011.

Social Fund Crisis Loans

To meet genuine need, and in addition to continually recycling from the £1.3 billion fund, this Government are committed to maintaining core funding of £178 million a year for the discretionary social fund scheme over the spending review period.

However, since the introduction of remote telephone applications in 2006, there has been an unjustifiable growth in the use of crisis loans. The number of awards made has increased from around 1 million to 2.7 million while spending has almost tripled, reaching £233 million in 2009-10. In the last 12 months alone, over 17,000 people received 10 or more crisis loans.

On current forecasts, the resources for 2011-12 will only satisfy two-thirds of expected demand. Without corrective action to bring spending back under control the shortfall would need to be met from the budgeting loan scheme.

The situation is unsustainable, so I am announcing the introduction of three changes to the crisis loan system, to rebalance supply with affordable resources, to ensure funding for community care grants is protected, and to ensure we can continue to make budgeting loans throughout the year.

From 4 April 2011:

we will no longer pay crisis loans for items such as cookers and beds. There will be residual support for people following a disaster such as flooding;

we will reduce the rate paid for living expenses from 75% down to 60% of benefit rate. This will align with the position for jobseekers allowance cases paid at the hardship rate; and

we will implement a cap of three crisis loan awards for general living expenses in a rolling 12-month period.

Without these measures budgeting loans would need to be withdrawn before Christmas. This would leave significant numbers of people on low incomes with little alternative but to turn to high cost or illegal lending.