Written Ministerial Statements
Monday 4 April 2011
Corporate Capital Gains Degrouping Charges (Simplification)
I am announcing today the Government’s intention to present to Parliament a proposed legislative change to schedule 10 to the Finance Bill. This schedule simplifies the calculation of chargeable gains degrouping charges for companies. The change we are proposing, which will have effect from 1 April 2011, will allow companies the option to apply the new degrouping charge provisions to transactions occurring from 1 April 2011 rather than only after the passing of the Finance Act.
A degrouping charge is intended to prevent loss of tax on gains that arise on the disposal of assets, where a company owning the asset is sold. This can be used for tax avoidance. Companies identified it as one of the most burdensome tax rules that affect them when they are making an acquisition or disposal, or restructuring.
The new provisions in schedule 10 provide greater certainty to companies planning acquisitions and disposals. The changes will promote growth in the economy by removing some tax barriers to corporate transactions, reducing the costs of restructuring a business and simplifying the process.
The changes made by schedule 10 have already been welcomed by many businesses. I am announcing this new change in response to recent representations, to ensure that the benefits of the changes we are making are available to those groups that are currently in the process of a reconstruction, or considering making an acquisition or disposal.
HM Revenue and Customs will publish a technical note on its website setting out further detail, including the draft legislative amendments.
Office for Budget Responsibility
The provisions of the Budget Responsibility and National Audit Act 2011 which establish the Office for Budget Responsibility (OBR) have been brought into force today. The OBR is now established on a permanent, statutory footing.
The Treasury has also published and laid before Parliament the charter for budget responsibility. This charter addresses the comments made by Members during the passage of the Act. The charter must be approved by the House of Commons before it is brought into force. A debate will be scheduled shortly.
Alongside the charter, the Treasury and the OBR are publishing the OBR’s framework document and memorandum of understanding. The framework document sets out the broad governance and management framework within which the OBR will operate. The memorandum of understanding establishes a transparent framework for co-operation between the OBR, the Treasury and other parts of Government which the OBR will need to work closely with to perform its forecasting and analytical duties.
Each document has been deposited in the Libraries of both Houses. They are also available on both the Treasury’s and OBR’s websites. Copies of the charter are available in the Vote Office.
Communities and Local Government
New Homes Bonus Final Allocations (Year 1)
Today, I am announcing the final allocations for local authorities in England for the new homes bonus year 1 funding. This announcement follows my written statement of 17 February 2011, Official Report, columns 93-95WS, about the final design of the new homes bonus. The new homes bonus will fulfil the Government’s coalition agreement commitment to provide local authorities with real incentives to deliver housing growth.
Local authorities had until 10 March to make data representations on their provisional grant allocations. We received 27 representations of which 16 were revisions to the 2009 and 2010 council tax base statistics, three were banding corrections between 2009 and 2010 and eight were about other matters. The 2010 council tax base statistics were released as official statistics on 31 March and we have used the official statistics to calculate the final allocations. We have worked closely with authorities to resolve other data issues.
New homes bonus is a key part of our ambition, set out in the local growth White Paper, to create a fairer and more balanced economy through encouraging growth. The role of local areas in this rebalancing of growth is crucial—they are best placed to understand the drivers of, and barriers to, local growth and should lead their own development to release their economic potential. In so doing they should be able to benefit directly from the development they bring forward.
The new homes bonus is designed to address the disincentive within the local government finance system for local areas to welcome growth. Until now, increased housing in communities has meant increased strain on public services and reduced amenities. The new homes bonus will remove this disincentive by providing local authorities with the means to mitigate the strain the increased population causes. In addition, in doing so, the new homes bonus should help engender a more positive attitude to growth, and create an environment in which new housing is more readily accepted.
The new homes bonus scheme will be a powerful, simple and transparent incentive. Commencing in April 2011, the bonus will match fund the additional council tax potential from increases in effective housing stock, with an additional amount for affordable homes, for the following six years. It will ensure that the economic benefits of housing growth are more visible to the local authorities and communities where growth takes place.
A full list of the final allocations is being placed in the Library of the House. Further information on the final scheme design can also be found at: http://www.communities.gov.uk/housing/housingsupply/new homesbonus
We will continue to provide advice on the scheme via the Newhomesbonus@communities.gsi.gov.uk email account.
Armed Forces Redundancy Process
The Government announced in the strategic defence and security review last October that as part of moving to Future Force 2020 and due to the economic situation we have inherited, we would reduce the size of the Army by 7,000 personnel, and both the Navy and RAF by 5,000 personnel. We also made clear that regrettably an element of these reductions would need to be made through a redundancy process.
I set out in my statement of 1 March 2011 the process and timetable the armed forces redundancy scheme would follow. The RAF informed their personnel of the areas in which they would look to make reductions in tranche one on the same day. In accordance with the timetable set out in the 1 March statement the Army and Navy have today published to their personnel the equivalent information. In the first stage the Army are looking to reduce by around 1,000 personnel, and the Navy by 1,600. Like the RAF, individuals will not be selected for redundancy by the Army and Navy until 1 September 2011 and 30 September 2011 respectively.
While it is too early to know who will be selected for redundancy, the principles set out in the 1 March statement will be followed. First, both services will ask for volunteers although all personnel in the relevant areas will be considered. Secondly, the redundancy scheme will not impact adversely on the current operations in Afghanistan and Libya, where our armed forces are fighting so bravely on this country’s behalf. No-one who is preparing for combat operations, deployed on combat operations where they will receive the operational allowance or on post-operational tour leave on the day redundancy notices are issued will be made redundant unless they have volunteered.
The Government would rather not have had to reduce the size of the armed forces but the size of the fiscal deficit inherited left little choice. As we continue with the redundancy process we will ensure we retain the capability our armed forces require to be as effective in the future.
Energy and Climate Change
UK Oil and Gas (Regulation)
In his statement to the House on 14 June 2010 on the Gulf of Mexico oil spill, my right hon. Friend the Secretary of State for Energy and Climate Change indicated his intention to review our regulatory procedures once detailed analysis of the factors that caused the incident were available. Subsequently in their evidence to the Committee on Energy and Climate Change’s inquiry into deepwater drilling, my Department, the Health and Safety Executive and the Maritime and Coastguard Agency confirmed that the review would involve external experts to ensure that an independent perspective was brought to bear on this work. I am pleased to announce today the composition of the panel which has been established to review the UK’s oil and gas offshore regulatory regime.
The panel will be chaired by Geoffrey Maitland, Professor of Energy Engineering at Imperial College. He will be joined on the panel by two further independent members; Professor John Shepherd of the National Oceanography Centre at the University of Southampton, and Mr Mick Temple, who holds a range of positions and has extensive oil industry experience. Mr Jim Campbell (Director of Energy Development, DECC), Mr Kevin Myers (Deputy Chief Executive Health and Safety Executive), and Mr Philip Naylor (Director of Maritime Services , Maritime and Coastguard Agency) will represent the three regulatory bodies involved. The panel’s first formal meeting will take place on 7 April 2011. It will report later this year.
Foreign and Commonwealth Office
Afghanistan: Monthly Progress Report February 2011
I wish to inform the House that the Foreign and Commonwealth Office, together with the Ministry of Defence and the Department for International Development, is today publishing the fourth progress report on developments in Afghanistan.
The report focuses on key developments during the month of February.
The international security assistance force (ISAF) and Afghan National Security Forces (ANSF) continue to make steady progress on extending security. ISAF commanders are confident that ISAF and Afghan military operations over the winter have significantly reduced insurgent capability, but the rising numbers of weapons found indicate clearly that the insurgents have every intention of stepping up their attacks. Recruitment of Afghan army and police remains ahead of target, but the standard of Afghan national police leadership needs to be improved and the rate of turnover of recruits needs to be reduced. The Afghan Parliament’s election of a new Speaker, after a protracted process, is an encouraging step forward, but further appointments need to be confirmed before the Parliament can play a full role in the legislative process. Stronger links are beginning to develop between central and local government in Helmand, through governance, rule of law and economic development programmes and better access to Government -provided services including transport. This is essential to help the Afghan Government deliver basic services and win the support of the population. Concern remains over a lack of progress in certain areas, for example, women’s rights. Through the High Peace Council the Afghan Government are increasing their dialogue with their neighbours to promote regional engagement in the wider political process. This is an encouraging step forward towards building confidence across the region, which is clearly a long-term challenge.
As I place this report, the Government of Afghanistan have announced that the following provinces and districts will begin the process of transition to Afghan security responsibility: Kabul (excluding Sorobi district); Panjsher province; central Bamyan province; Western Herat; Lashkar Gah; Mazar-e-Sharif (Balkh province); Mehtarlam (Laghman province). Further details will be included in the progress report for March.
I am placing the report in the Library of the House. It will also be published on the Foreign and Commonwealth Office website (www.fco.gov.uk) and the HMG UK and Afghanistan website (http://afghanistan.hmg.gov.uk/).
FCO Services (Performance Targets 2011-12)
FCO Services operates as a trading fund of the FCO. I have set the following performance targets for 2011-12:
An in-year surplus before interest and tax producing a net margin of between 1% and 5%.
A return on capital employed of at least 3.5% (weighted average).
Finance, HR, ICT and procurement functions to sit within or above the second quartile in the Office for Efficiency and Performance benchmarking survey.
A utilisation rate for revenue earning staff of between 75%-80%.
Customer satisfaction rating to be within or above the second quartile in the customer satisfaction index, as produced by the Institute of Customer Service.
FCO Services will report to Parliament on its success against these targets through its annual report for 2011-12.
Work and Pensions
Disability Living Allowance Reform
I am publishing today the “Government’s response to the consultation on disability living allowance reform” (Cm 8051).
Disability living allowance (DLA) has not been fundamentally changed or updated since it was introduced, and no longer provides the framework for supporting disabled people that is needed in the 21st century. Over the last 18 years, DLA has failed to keep pace with the changing approach to disability in society. As it stands, DLA is complex to apply for and to administer, lacks consistency in the way it supports disabled people with similar needs, and has no systematic process for checking the ongoing accuracy of awards.
This is why we believe that now is the time to reform DLA by replacing it with a new benefit for working-age disabled people—personal independence payment. This new benefit will better reflect the desire from disabled people to live independent lives, not labelling individuals by a health condition or impairment but considering its impact on their everyday lives.
The importance of personal independence payment means that spending must remain sustainable for the future. Currently 3.2 million people receive DLA, an increase of around 30% in the past eight years. The announced budget for working-age spend by 2015-16 will bring that expenditure back to 2009-10 levels.
The Government response outlines the feedback received, from both individuals and organisations, and provides further information regarding the replacement of DLA and the introduction of personal independence payment for working-age people from 2013-14.
Copies of the Government’s response will be available in the Vote Office, and will be available shortly at: www.dwp.gov.uk/dla-reform.
Work and Pensions
State Pension Reform
I am today publishing the consultation document, “A State Pension for the 21st century” (Cm 8053), which looks at whether the existing pensions system is suitable for meeting the challenges of the future. We want to create a simple, decent state pension, that is easy to understand and efficient to administer, which gives people more clarity and certainty about what they will get from the state, thereby giving them a firm foundation for decisions about saving to fund their retirement.
A copy of the consultation document will be available on the Department’s website at: www.dwp.gov.uk/state-pension-21st-century, later today. Copies will also be available in the Vote Office and the Printed Paper Office later today.
We look forward to hearing the views of the many groups and individuals who will have an interest.