Written Ministerial Statements
Thursday 31 March 2011
Business, Innovation and Skills
Pre-packaged Sales in Administrations
Everyone who is affected by insolvency is entitled to have confidence that insolvency procedures are used fairly and that insolvency practitioners deliver the best possible outcome in what are often difficult and challenging circumstances. It is particularly important that suppliers, who often extend credit on unsecured terms, have confidence in the insolvency regime, as a lack of confidence is likely to restrict the availability of credit.
I am today announcing measures to improve transparency and confidence in pre-packaged (pre-pack) sales in administration. These will help ensure that in these cases as much is fairly returned to creditors as possible. These measures are in line with the policies of this Government to drive balanced and sustainable growth and will provide real benefits to business.
The merits of pre-pack sales have continued to be the subject of much debate. In response to the concerns raised, the previous Government launched a consultation exercise in March 2010. The responses make it clear that the greatest cause for concern is where the business and assets are sold back to the current management or a connected party—something that is often referred to as “phoenixism”.
I recognise that pre-pack sales offer a flexible and speedy means of rescue and can be the best way of maximising returns for creditors. I do not wish to outlaw them. But they must be done fairly and reasonably. Where such sales are at undervalue, creditors get less than they should. Competitors who pay their debts in full also suffer. I want to make sure that creditors have a fair chance to have their voice heard. I also want to enable others to scrutinise such transactions after the event to ensure that deals being struck are fair in the circumstances.
In order to inject greater transparency into the process I intend to require administrators to give notice to creditors where they propose to sell a significant proportion of the assets of a company or its business to a connected party, in circumstances where there has been no open marketing of the assets. This will enable creditors to express concerns, which the administrator would need to consider, or to make a higher offer for the assets, and in cases where the circumstances justify it, apply to the court for injunctive relief. These options can be exercised before the sale has taken place, and therefore reflect concerns raised by stakeholders in their responses to the consultation.
The new requirements will apply not just to pre-packs but to any sales back to connected parties in an administration where there has been no open marketing of the assets.
Administrators already need to provide a detailed explanation of why a pre-pack sale was undertaken to creditors in compliance with professional standard Statement Of Insolvency Practice 16. These will in future need to be included in their administration proposals which are lodged at Companies House, making the information available to business as a whole, including, for example, credit reference agencies. This information may be of particular interest to suppliers and others considering doing business with the purchasing company. Administrators will also need to confirm that the sale price represents, in their view, best value for the creditors.
We are today also publishing a report on compliance with the Statement Of Insolvency Practice 16 (a professional standard setting out what information must be disclosed to creditors in pre-packs) during 2010. Overall levels of compliance have increased, showing that in the great majority of cases necessary statements are now being given (after the event) to creditors. However in a minority of cases the information is insufficient, and in these cases the concerns have been reported to the relevant authorising body. My officials will be liaising with the various bodies to ensure that there is a consistent approach taken to lack of compliance.
A copy of the consultation and summary of responses, together with the report on compliance with the Statement Of Insolvency Practice 16, can be found on The Insolvency Service’s website at www.insolvency.gov.uk.
Local Enterprise Partnerships
The Minister of State for Communities and Local Government, my hon. Friend the Member for Tunbridge Wells (Greg Clark), the Minister responsible for decentralisation, and I would like to inform the House that today we have written to the proposed Heart of the South-West local enterprise partnerships, covering Devon, Somerset, Plymouth and Torbay, inviting them to put their governance arrangements in place.
Local enterprise partnerships see a real power shift away from central Government and quangos and towards local communities and the local businesses who really understand the barriers to growth in their areas. This announcement brings the total number of partnerships so far invited to put their governance arrangements in place to 32. We will continue to work with other areas with a view to establishing further local enterprise partnerships across England.
Tax Consultation Framework and Updated Consultation Tracker
Since the June Budget 2010 the Government have been developing a new approach to tax policy making, with consultation on policy and scrutiny of legislation as the cornerstones.
On 9 December 2010 the Tax Consultation Framework was published in draft for comment. Today the Government are publishing their response to the comments received including the finalised framework showing amendments made to the draft version.
Respondents have generally welcomed the framework as a positive step towards achieving the Government’s aims of predictability, stability and simplicity for the tax system. Many of the suggestions have been incorporated into the finalised framework, while others will be addressed through the guidance and training provided to policy officials.
Responding to feedback from interested parties the Government are also publishing today their updated tax consultation tracker which is available on the HM Treasury website at: http://www.hm-treasury.gov.uk/tax_updates.htm.
The new version of the tracker includes specific anticipated launch dates wherever possible, to help representative groups and others manage their engagement with the Government on tax policy development.
Government Profit Formula
I announced to the House on 26 January 2011 that I had asked my noble Friend Lord Currie of Marylebone to undertake a fundamental review of the Government’s single source pricing regulations, which include the Government Profit Formula (GPF) overseen by the review board for Government contracts. In the announcement I said that the review board has been asked to maintain the existing arrangements pending the outcome of Lord Currie’s review (which is due to report in July 2011), and to complete their 2011 annual review of the GPF.
The Government have subsequently considered and accepted the review board’s recommendations in their 2011 annual review, and all changes have been agreed with industry. This will reduce the profit and capital servicing allowances payable by the Ministry of Defence (MOD) on new single source work that is placed after 1 April 2011. An agreed change to the GPF methodology will be of benefit to small and medium-sized enterprises; and agreed changes to Government accounting conventions setting out the treatment of costs in single source pricing will improve the MOD’s negotiating position. The board’s recommendations will be implemented in accordance with arrangements subsequently agreed with the industry side and recorded in an addendum to the published report. I will be placing a copy of the report in the Library of the House. The recommendations will be implemented for new single source work with effect from 1 April 2011.
Service Complaints Commissioner's Report
I am pleased to lay before Parliament today the service complaints commissioner’s third annual report on the fairness, effectiveness and efficiency of the service complaints system.
The commissioner continues to provide an independent oversight of the system and has been effective in beginning to drive improvements in the way in which we handle service complaints. She has added value and challenged the services’ established ways of working.
The Ministry of Defence and the services have worked closely with the commissioner over the last three years to take practical steps to implement her recommendations for improving further the service complaints process. I and the service chiefs welcome the fact that this report acknowledges the progress that has been made, and the initiatives that have been implemented in a number of the areas since the first report was published in 2009.
While progress has been made, we recognise that we can improve further the manner in which we handle complaints.
I will provide a formal response to the commissioner once I and the services have had time to consider in full the findings of the report and the recommendations made.
UK Gulf Veterans (Mortality Data)
Today we have published the most recent figures on the mortality of veterans of the 1990-91 Gulf conflict, covering the period 1 April 1991 to 31 December 2010. These figures have been published as a national statistic notice on the Defence Analytical Services and Advice website.
The data for Gulf veterans are compared to that of a control group known as the “Era cohort” consisting of armed forces personnel of a similar profile in terms of age, gender, service, regular/reservists status and rank, who were in service on 1 January 1991 but were not deployed to the Gulf. As in the previous release, the “Era” group has been adjusted for a small difference in the age-profile of those aged 40 years and over, to ensure appropriate comparisons.
Key points to note in the data are:
There have been 1,193 deaths among the Gulf veterans and 1,216 in the age-adjusted Era comparison group.
The 1,193 deaths among Gulf veterans compare with approximately 1,998 deaths which would have been expected in a similar sized cohort taken from the general population of the UK with the same age and gender profile. This reflects the strong emphasis on fitness when recruiting and retaining service personnel.
These statistics continue to confirm that UK veterans of the 1990-91 Gulf conflict do not suffer an excess of overall mortality compared with service personnel that did not deploy.
The full notice can be viewed at the following address: http://www.dasa.mod.uk/applications/newWeb/www/index.php?page=66&pubType=1
A copy has been placed in the Library of the House.
Deputy Prime Minister
Service Voting (Afghanistan)
The Government have put in place an initiative to support the participation of members of the armed forces serving in Afghanistan who wish to vote in the referendum and elections on 5 May.
Following a dedicated registration push for those facing the most difficult of circumstances while serving in Afghanistan, service personnel will be able to use either a proxy or postal vote to take part in the polls.
Special forms produced by the Electoral Commission have been provided to relevant units, both for those going out to Afghanistan and those already there, to fill out to register to vote, and to choose how they wish to vote. The Ministry of Defence is undertaking targeted activity to encourage soldiers to register to vote before they leave the UK and each person arriving in Afghanistan will be briefed on the initiative.
Troops who fill out the forms and request a postal vote will be sent ballot forms via the British Forces Post Office (BFPO), utilising existing supply routes.
Once completed by the service voters, the ballot papers will be returned to the UK and distributed to returning officers using a network of BFPO, Royal Mail and local authority support put in place for the initiative.
Alongside this, counting officers and returning officers have been asked to prioritise the production of all postal ballot packs that are to be sent overseas. Those heading for BFPO addresses will be treated as a priority by BFPO to facilitate service personnel participation in the polls more widely.
This initiative builds on that put in place for the general election in 2010. It is right that we make it as easy as possible for our service personnel on operations in Afghanistan to take part in the referendum and elections on 5 May.
Energy and Climate Change
Departmental Expenditure Limits (Changes 2010-11)
I am announcing the following DEL budget switches, in accordance with the Treasury’s consolidated budgeting guidance. Resource DEL will be decreased by £64,000,000 from £1,290,579,000 to £1,226,579,000 and Capital DEL will be increased by £64,000,000 from £1,987,933,000 to £2,051,933,000. The impact of these non-voted DEL switches on the Resource and Capital DEL is as set out in the following table:
*Capital DEL includes items treated as resource in estimates and accounts but which are treated as Capital DEL in budgets.
**Depreciation, which forms part of Resource DEL, is excluded from the total DEL in the table above, since Capital DEL includes capital spending and to include depreciation of those assets would lead to double counting.
The transfer from voted Resource DEL to Capital DEL of £20,000,000 relates to the cost of keeping open the Warm Front scheme for two weeks longer than budgeted during a period of extreme bad weather.
The transfer from non-voted Resource DEL to Capital DEL of £44,000,000 is in respect of work by the Nuclear Decommissioning Authority at the Sellafield site, as a result of a final assessment of the split of the cost of decommissioning activities on the site between capital and resource expenditure in accordance with the ONS/ESA95 agreed definitions.
Environment, Food and Rural Affairs
Bovine TB Reactor Identification
I wish to inform the House that I have received evidence suggesting that a very small minority of farmers in the south-west and midlands have been illegally swapping cattle eartags to retain TB test-positive animals in their herds and sending other less productive animals to slaughter in their place. The suspected fraudulent activity is now subject to formal investigations.
If this kind of practice is taking place it is totally unacceptable. We are taking immediate action to prevent activity of this kind happening in future, and any farmer who tries to cheat the system should know that they will be identified and prosecuted. I should stress that the health risks to consumers from this suspected fraud are very low.
Anyone who retains TB test-positive cattle increases the risk of disease spread within their herd, to their neighbours’ herds, and to wildlife. We are moving quickly to introduce new measures to prevent this occurring in future.
In particular, from mid-April DNA tags will be applied immediately to cattle that test positive for TB. This quick action is only possible because of the commitment and support of the veterinary profession, for which I am grateful. Animal Health will then cross-check on a random sample basis and, where there is any suspicion of eartag tampering, the DNA of TB test-positive animals against the DNA of animals sent to slaughter.
I would emphasise that the vast majority of cattle farmers fully comply with TB control measures, but their considerable and tireless efforts to help us control this terrible disease risk being undermined by an irresponsible minority. I am confident that our quick and decisive action, including the DNA tagging of TB reactors, will help protect the interests of all cattle farmers.
Departmental Expenditure Limit (Budget Control Totals)
I wish to announce that for 2010-11 DEFRA will switch £9 million available Resource DEL budget to cover a forecast deficit against its Capital DEL control total, in accordance with HM Treasury’s consolidated budgetary guidance. Although the financial outturn for the year is not final, the current assessment of the required switch is £9 million. The movement in spend from Resource DEL to Capital DEL is in respect of flood defences where the exact nature and classification of the expenditure is determined by the Environment Agency, as they undertake the work.
*Capital DEL includes items treated as resource in estimates and accounts but which are treated as Capital DEL in budgets.
**Depreciation, which forms part of Resource DEL, is excluded from the total DEL, since Capital DEL includes capital spending and to include depreciation of those assets would lead to double counting.
Single Payment Scheme
In my statement of 4 March, Official Report, column 47-48WS, I updated the House on the Rural Payments Agency’s (RPA) progress in both addressing its daunting legacy of errors in relation to the single payment scheme (SPS) and ensuring that accurate payments under the SPS 2010 reached farmers as soon as possible. In that statement I explained I was considering additional measures to speed the flow of SPS 2010 payments and, following discussions in the RPA oversight board, I can now report on the decisions that have been reached.
Since 4 March, RPA has continued to make SPS 2010 payments as claims are validated, and to undertake further work to identify those that are ineligible and not, therefore, due a payment for this year. As a result, the agency calculates that there are now in the region of 6,300 eligible claims remaining to be paid, with a combined value of around £215 million. The frustrations felt by these farmers have been made very clear to me, both directly and through farmers’ representative bodies. They want both the remaining sums paid as soon as possible and a line to be drawn under the legacy issues so uncertainty over past years is removed and greater confidence is provided that subsequent scheme year payments will not be affected. The oversight board shares these aims and has been looking very closely at how the former can be achieved without significantly impacting on the latter.
Against that background, the oversight board has now approved two decisions which, between them, should ensure that less than 1% of the monetary value of SPS 2010 payments remains outstanding at the end of the regulatory payment window which closes on the 30 June. This would be in line with, or would better, performance in previous years and would ensure the EU requirement to make 95.238% of payments by 30 June is met, thus avoiding late payment penalties.
The first decision is that, after rigorous testing on a sample to ensure accuracy of the process, fully validated manual payments will be made to approximately 2,000 farmers under the 2010 scheme who would otherwise not be paid until after the payment window. These payments will be made over the next two months and take account of known entitlement corrections that have yet to be fully processed on the agency’s systems. Should there be any additional changes identified once payment has been made, the farmers concerned will be informed.
The second decision relates to those remaining SPS 2010 payments where there are outstanding queries on earlier scheme years. Where the SPS 2010 claim has been fully validated, payment for that scheme year will now be made. Should any changes be identified for earlier scheme year payments in due course, the farmers concerned will be informed. RPA plans to complete the work required before the opening of the SPS 2011 payment window on 1 December.
The net result of these decisions is that the flow of remaining SPS 2010 payments will now increase. The oversight board did additionally consider requests from various sectors of the industry to make partial payments. However, RPA’s analysis suggests that this would not significantly increase the speed at which remaining claims are paid to farmers, but would add disproportionately to the backlog of corrective work required and introduce additional risks of EU fines. Consequently, it was agreed that the agency should not make partial payments.
In order that all farmers with payments outstanding at the end of March understand how these decisions might affect them, RPA will be writing to each of those concerned next week to explain what issues remain on their claims and the likely month of payment.
Alongside this work, RPA will continue to review the remaining backlog of potential error cases that need to be reviewed. Corrective work undertaken to date, combined with earlier decisions by the oversight board on ensuring entitlements were regularised wherever legally possible, has made a real impact to date. The board will be monitoring these efforts closely to ensure a line is finally drawn under all the legacy data issues over the coming year.
I will continue to keep the House informed on the agency’s progress.
Foreign and Commonwealth Office
“Human Rights and Democracy: The 2010 Foreign and Commonwealth Office Report”
“Human Rights and Democracy: The 2010 Foreign and Commonwealth Office Report” will be published today. The report covers the period from 1 January to 31 December 2010, although some key events in early 2011 have also been included. It highlights what the Government are doing to promote our values around the world, the serious concerns we have, and the important human rights progress being made.
The report was laid before Parliament on 30 March. Copies are available in the Vote Office and Printed Paper Office in the House of Lords. The report will be available online at: www.fco.gov.uk/hrdreport. I commend the report to the House.
Civil Partnerships (Religious Premises)
The Government are committed to advancing equality for lesbian, gay and bisexual (LGB) people and to ensuring freedom of religion or belief for all people. To further both of these aims, the Government are committed to removing the legal barrier to civil partnerships being registered on the religious premises of those faith groups who choose to allow this to happen. This will be done by implementing section 202 of the Equality Act 2010. This is a permissive measure; section 202 makes it clear that there will be no obligation on faith groups to host civil partnerships.
Today we are publishing a consultation document setting out proposals to implement section 202. The proposals set out in the consultation document are designed to respect the wishes of faith groups whether they wish to host civil partnership registrations or not, and to keep burdens on local authorities to a minimum. To this end we are proposing a two-stage process. First, faith groups must agree whether to permit civil partnership registrations on their premises to enable individual religious premises to apply to host them. Secondly, individual religious premises must obtain approval from the local authority for their area by following a process similar to that for venues such as hotels where civil marriages and partnership registrations are held now. The consultation will run until 23 June.
This consultation document deals only with this specific measure and does not set out proposals for any other changes to civil partnerships or any changes to marriage. However, in our work on civil partnerships we have identified a desire from many to move towards equal civil marriage and partnerships, and will be consulting separately on how legislation can develop, working with all those who have an interest in this area.
Copies of the consultation document are being placed in the House Library and will also be available from the Vote Office.
Remuneration and Conditions of Service for Police Officers and Staff
On 8 March I issued a written statement to the House—Official Report, column 59WS—announcing that Tom Winsor had published the first report of his review of remuneration and conditions of service for police officers and staff in England and Wales.
We have the best police force in the world, but I said when the review was launched, it is vital that we have a modern and flexible service to meet the demands placed on it. The Government recognise and value the professionalism of the police and have made clear their commitment to supporting and maximising front line services to the public. Police officers and staff should be rewarded fairly and reasonably for what they do. They deserve to have pay and work force arrangements that both recognise the vital role they play in fighting crime and keeping the public safe and enable them to deliver effectively for the public.
The Government have also been clear that action is needed to tackle the deficit responsibly to ensure that the taxpayer gets a fair deal from all parts of the public sector. The police service has its part to play, and in an organisation like the police, where pay is 80% of police revenue expenditure, there is no question that pay restraint and pay reform must form part of the package. In this context, it is more important than ever that the police leadership has the flexibility to manage forces and protect the front line services.
The review has an important role in enabling the police service to do this. Tom Winsor was asked to look at how remuneration arrangements and conditions of service for police officers and staff can best support and enable the police service to serve the public and provide value for money for the public taxpayer.
In particular, the terms of reference asked for recommendations on how to:
use remuneration and conditions of service to maximise officer and staff deployment to front line roles where their powers and skills are required;
provide remuneration and conditions of service that are fair to and reasonable for both the public taxpayer and police officers and staff;
enable modern management practices in line with practices elsewhere in the public sector and the wider economy.
In recognition of the urgency of these matters, the review was asked to report in two stages: the first on short-term improvements and a second report on longer-term reforms.
The Government have now had the opportunity to consider the review’s first report. It sets out the following broad principles:
Fairness is an essential part of any new system of pay and conditions.
The Office of Constable is the bedrock of British policing.
The demands of policing should be given full and proper weight.
People should be paid for what they do, the skills they have and are applying in their work, and the weights of the jobs they do.
People should be paid for how well they work.
A single police service—distinctions in pay and other conditions of service between police officers and staff should be objectively justified.
Arrangements should be simple to implement and administer.
Phased introduction of reform.
We welcome these principles, and believe that they provide a framework for fair and sustainable arrangements for remuneration and conditions of service.
The review also sets out a package of specific recommendations for police officers’ and staff remuneration and conditions of service, based on these guiding principles. I have consulted the Independent Chair of the Police Negotiating Board and Police Advisory Board for England and Wales and I will direct those bodies to consider the proposals that are within their respective remits for police officers in England and Wales as a matter of urgency. I will also be writing to the Association of Police Authorities and the Police Staff Council to recommend that they consider the report’s recommendations in respect of police staff in England and Wales.
Changes in Immigration Rules
My right hon. Friend the Home Secretary is today laying before the House a statement of changes in the immigration rules that will bring about the first of the changes to the student visa system, which I announced on 22 March.
The changes will take effect on 21 April and will introduce an interim limit on those sponsors who do not currently meet the new accreditation criteria and will limit the number of students they can sponsor. These rule changes also implement the changes to the English language requirement so that those coming to study at degree level will have to speak English at an upper-intermediate level. Others will have to speak English at an intermediate level. We are also publishing a statement of intent on the UK Border Agency website which sets out the detail of the proposed policy changes to tier 4 and I will arrange for a copy to be placed in the House Library.
This statement of changes also includes some changes to the tier 4 rules to clarify some existing rules and to bring some requirements into the rules.
We are also making some minor amendments to rules laid on 16 March, relating to prospective entrepreneurs and tier 2 intra-company transfers. We are also correcting omissions from the new criminality requirements at settlement and to clarify the application of the new settlement rules for highly skilled migrant programme participants.
Her Majesty's Courts and Tribunals Service
I am announcing today the launch of Her Majesty’s Courts and Tribunals Service as an executive agency of the Ministry of Justice. It brings together Her Majesty’s Courts Service and the Tribunals Service into one integrated agency providing support to the judiciary in the administration of justice in courts and tribunals.
The agency is responsible for the administration of the criminal, civil and family courts and tribunals in England and Wales and non-devolved tribunals in Scotland and Northern Ireland. It provides for a fair, efficient and effective justice system delivered by an independent judiciary.
I believe that operating as a single organisation will provide the platform to improve accessibility, drive up quality and provide a better environment for service users. Integration will enable those who need to use the agency’s services to do so in a simple and straightforward way, using a single point of access. Bringing corporate functions together will remove duplication in management functions and enable efficiencies which do not impact on front line services. Integration will also enable more efficient use of the combined estate, using facilities flexibly across jurisdictions.
Her Majesty’s Courts and Tribunals Service uniquely operates on the basis of a partnership between the Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals as set out in Her Majesty’s Courts and Tribunals Framework Document. I have laid this document before Parliament today.
Dissolution of the Independent Monitoring Commission and Independent International Commission on Decommissioning
We have previously announced that the work of the Independent Monitoring Commission (IMC) and Independent International Commission on Decommissioning (IICD) has been nearing completion. We have agreed with the IMC and IICD that the time is now right to bring the commissions to a close and the necessary arrangements have been put in place to wind down both commissions. They will be dissolved on 31 March.
As requested by the UK and Irish Governments, the IMC and IICD have provided both Governments with reports on each commission’s experience and lessons learned. Due to the pre-election period, the reports will be published after the Assembly elections in May on a date to be agreed by both Governments.
I would like to take this opportunity to thank the IMC and IICD commissioners and commission staff who have played a crucial part in supporting and enabling historic changes over the years, assisting in Northern Ireland’s transition to a peaceful, stable and inclusive society.
Work and Pensions
Social Fund Allocations
I am pleased to announce that the gross discretionary Social Fund Budget for 2011-12 will be £732 million.
With the net funding available, I have been able to allocate a gross national Social Fund Loans Budget of £590 million and a national Community Care Grants Budget of £141 million from l April 2011.
To provide help to Jobcentre Plus budgets facing unexpected and unplanned expenditure I will retain centrally £1 million as a contingency reserve.
I will allocate a gross national Social Fund Loans Budget in line with the provisions in the Welfare Reform Act 2007. The aim is to control and manage the national allocation whilst providing consistency of outcomes for budgeting loan applicants wherever they live. All loans budget expenditure will be made from the gross national loans budget of £590 million.
The Community Care Grant annual allocations to social fund budget areas are provisional and will be subject to in year adjustment once the current review of the funding allocation methodology has been completed. The overall national budget will remain at £141 million. The purpose of the review is to determine a fairer distribution of resources between areas and to move to the optimal funding position for the new locally based service from 2013.
Details of individual Community Care Grant allocations will be placed in the House Libraries.
Background note about the discretionary Social Fund Budget
The discretionary social fund budget is cash limited. Funding for Community Care Grants is allocated to each budget area for management by Jobcentre Plus Social Fund Benefit Delivery Centres on 1 April each year. The gross discretionary social fund budget allocated for 2011-12 is £732 million. This is made up of:
New money (net AME)
Forecast loan recovery
This is to be allocated as follows: