Written Ministerial Statements
Wednesday 21 March 2012
The Chancellor of the Exchequer announced today as part of the Budget the removal of the VAT exemption for grants of facilities for the self storage of goods and the removal of the VAT zero rate for supplies of services and materials in connection with approved alterations of protected buildings. This will have effect from 1 October 2012. For approved alterations that are already contracted for or under way, transitional relief will be provided for supplies made before 21 March 2013.
The Government have taken this step to address inconsistencies in the treatment of these supplies and to prevent VAT avoidance that exploits the VAT exemption for supplies of self storage. To protect the public finances from artificial avoidance of the change in VAT liability, the Finance Bill 2012 will contain anti-forestalling legislation to ensure that the VAT liability changes are fully effective.
Anti-forestalling legislation will apply to these types of supplies made on or after 21 March 2012. This will ensure that the new VAT liability will apply to these supplies if they are performed (or, in the case of supplies of materials, incorporated in the building) on or after 1 October 2012, even if the supply is treated as being made earlier than this because of an advance payment or delivery of materials. The new VAT liability will also apply to grants of rights or options made on or after 21 March 2012 to receive supplies of self storage to be provided on or after 1 October 2012.
Whilst the attached anti-forestalling legislation will apply for supplies treated as taking place on or after 21 March 2012, any VAT arising from its operation will not become due until 1 October 2012. Until then, suppliers should continue to apply the current rules.
Further information on the anti-forestalling legislation is available at: www.hmrc.gov.uk.
Debt and Reserves Management Report
The “Debt and Reserves Management Report 2012-13” is being published today. Copies are available in the Libraries of both Houses.
Fuel Tax Policy
At Budget 2011, as part of a package of measures to help motorists facing high petrol prices, the Government announced a fair fuel stabiliser (FFS) that would be funded by higher taxation of the profits from oil and gas companies when oil prices are high. As a result, the rate of supplementary charge on oil and gas production is now 32%. The Government also stated that, if the oil price falls below a set trigger price on a sustained basis, we will reduce the supplementary charge back towards 20% on a one penny per litre in each such year.
The Government said at the time that it believed a trigger price of $75 per barrel would be appropriate, and that it would set a final level and mechanism after seeking the views of oil and gas companies, and motoring groups. Following this period of informal consultation, I can announce that the fair fuel stabiliser will be implemented with effect from 21 March 2012.
The trigger price will be set at £45 sterling (being the rounded sterling equivalent of $75 based on the latest OBR exchange rate forecast for 2012). The trigger price will be fixed in sterling, and reviewed every three years. Whether the trigger price is met will be assessed annually on the first working day of February, starting in 2013. This assessment will be based on two FFS reference prices:
The average daily dollar oil price (per barrel) in the three months immediately prior to the date of assessment, converted to sterling using the average daily Bank of England exchange rate across the period.
The average daily dollar oil price (per barrel) in the week before the date of assessment, converted to sterling using the average daily Bank of England exchange rate across the period.
Each FFS reference price will be calculated using the North sea average reference value as established in the Oil Taxation (Market Value of Oil) Regulations 2005 (SI2006\3313).
Both reference prices are required to be met for the trigger price to be met. Thus, under the current tax regime (i.e. with the supplementary charge at 32%), if at the assessment date either of the two FFS reference prices is £45 or above, the trigger price has not been met and supplementary charge will continue to be levied at 32%. If both reference prices are below £45, the trigger price is met.
If oil prices were at a level where the trigger price had previously been met and supplementary charge were being levied at a lower rate, both the FFS reference prices would need to rise to £45 or above for the trigger price to be met again.
Any changes to the rate of supplementary charge and fuel duty that result from the trigger price being met will be announced at Budget in the year in question.
Communities and Local Government
Today, my Department has published council tax figures for 2012-13 in England. It shows that thanks to the coalition Government’s council tax freeze initiative, the average change in band D bills will be just 0.3%—a significant real terms cut in council tax. The average band D bill will be £1,444 a year.
I am pleased to inform the House that the overwhelming majority (358 of 421) of eligible local, fire and rescue and police authorities in England have decided to freeze or reduce their band D council tax in 2012-13. The take-up rate was 90% among elected local councils. Participating local authorities will therefore be eligible to receive the additional grant offered by the Government for doing so.
Support for hard-working families and pensioners
This is good news for hard-working families and pensioners who previously experienced a doubling of council tax under the last Administration. This year, over 20 authorities have also cut council tax between 0.1% and 3.75%. Indeed, in London, all households will benefit from a cash terms cut in their bills.
As compared with the typical capping threshold under the last Government of a 5%) council tax rise, a freeze saves a typical household up to £72 in each of the two years of the council tax freeze schemes.
The Localism Act 2011 abolished central Government capping and instead gives local people the power to veto excessive council tax increases in a binding referendum. No authority has reported that it will be holding a referendum in 2012-13 by setting an excessive increase. The Localism Act measures will continue to ensure that local taxpayers are protected in future years.
Such action on keeping down council tax complements the measures already taken to help families—by stopping any council tax revaluation in this Parliament and by abolishing plans to impose bin taxes on family homes.
Council tax freeze grant
The Government set aside £675 million to help authorities in England freeze their council tax for a further year. A local authority that has done so will receive a grant equivalent to a 2.5% increase in its 2011-12 band D figure multiplied by the latest available tax base figure.
Police and single purpose fire and rescue authorities will receive a grant equivalent to a 3% increase. The City of London will receive a grant equivalent to a 2.75%) increase with slightly different arrangements applying to the Greater London Authority (based upon a combination of a 2.75%) and a 3% increase).
My Department will write to individual local authorities shortly informing them of the amount of freeze grant I propose to pay to them for meeting the terms of the new scheme for 2012-13. I intend that this one off grant will be paid in full in April 2012. All authorities which froze or reduced their council tax in 2011-12 will continue to receive a further grant in each year of the spending review.
Winterbourne View Hospital
I promised to update the House about ongoing activity in relation to Winterbourne View private hospital and other services for people with learning disabilities.
The House will wish to note that four people employed at Winterbourne View hospital appeared in Bristol Crown court on 16 March and pleaded guilty to offences under the Mental Capacity Act 2005. They have been referred for sentencing reports, alongside the three people who pleaded guilty on 9 February. A further four people are due back in court after Easter.
The Care Quality Commission (CQC) has now completed their focused inspections of 150 services for people with learning disabilities. The reports from these inspections are being published in batches, and a further 19 reports are being published today. They can be found at: http://www.cqc.org.uk/LDReports?1atest—86 inspection reports have been published so far. These reports have found poor practice in some of the units and frequent areas of concerns include limited person-centred care, limited appropriate activities and a lack of monitoring and learning from incidents of restraint.
Where CQC has identified concerns, the provider is required to inform CQC when its improvement actions have been completed. CQC will follow up to check that the improvements have been made, including further inspections where necessary. Where CQC has issued warning notices it has been back to inspect and found the locations to be compliant.
In the original proposal for the learning disability review the plan was to undertake two phases. Phase one was the inspection of 150 locations. These inspections have now been undertaken. Phase two was the inspection of registered services for people with learning disabilities covering a wider range of services than those included in phase one, notably adult care providers.
However, CQC has taken the opportunity within phase one to inspect 33 adult social care locations. Following discussion at the CQC inspection programme advisory group, CQC decided not to proceed with phase two at this time but wait until the national report on the findings from the LD inspection programme had been published and then reassess the options.
A programme of thematic inspections is starting this April looking at domiciliary care agencies. This will test the tools for inspecting this type of service so they can be used for other care groups. This programme of inspection will focus on older people.
Once the criminal proceedings are completed, we expect the serious case review, chaired by Dr Margaret Flynn, to be published. The serious case review is looking at:
i. the effectiveness of the multi-agency response to concerns raised and events
within Winterbourne View hospital since January 2008;
ii. the role of commissioning organisations in initiating patient admissions and
the role of the regulator; and
iii. the operational policies and practice, including the governance
arrangements of Castlebeck Care (Teesdale) Ltd.
The review is considering information submitted by Castlebeck, NHS South Gloucestershire PCT, NHS South West, South Gloucestershire council and Avon and Somerset police.
These reports will feed into the wider departmental review of Winterbourne View together with evidence from other investigations and reports. The review team are actively engaging with people with learning disabilities or autism and family carers, as well as with commissioners, professionals and providers to explore the emerging issues and possible options.
The review is considering all the evidence carefully and assessing the implications for policy and practice across the system, including for commissioners, providers, professionals, regulators and Government. Everyone has a part to play in addressing these issues to help prevent abuse and to drive up standards for people with learning disabilities or autism and challenging behaviour.
While these reviews and inspections are ongoing, we are taking action to address emerging issues. For example:
CQC has amended its whistle blowing policy;
the whistle-blowing helpline for NHS staff has been extended to staff and employers in the social care sector from 1 January;
on 18 October, the Secretary of State announced that the NHS constitution is being updated to include:
an expectation that staff should raise concerns at the earliest opportunity;
a pledge that NHS organisations should support staff when raising concerns; and
clarity around the existing legal right for staff to raise concerns about safety, malpractice or other wrong doing without suffering any detriment;
we are working on legislation that will require stronger local action in relation to safeguarding adults; and
where issues for local management are highlighted in the NHS review, they will be developing actions plans to deal with this.
Ministers will report findings from the departmental review to Parliament and determine what further action is necessary.
I will continue to update the House as things develop.
The Scotland Bill is a significant step forward in Scottish devolution. It provides for the biggest transfer of fiscal power from London since the creation of the United Kingdom—including a new Scottish rate of income tax, full devolution of stamp duty land tax and landfill tax, and new borrowing powers. Together, the Office for Budget Responsibility (OBR) forecast that these measures will enable the Scottish Government to raise between £5 billion and £6 billion of their budget in addition to around £4 billion they currently raise in council tax and non-domestic rates.
Since its introduction in November 2010, the Bill has had detailed scrutiny in the UK and Scottish Parliaments. In Westminster, it has passed successfully through its Commons stages and will soon complete Lords Committee consideration. In Holyrood, the Scottish Parliament voted overwhelmingly in support of the Bill last March.
After productive discussions with the Scottish Government in recent weeks, the Government are today announcing a package of measures in the Bill and supporting non-legislative arrangements to show that the powers will operate in a fair and sustainable way to the benefit of Scotland and the rest of the UK.
Agreement has been reached with the Scottish Government on both the finance and non-finance provisions included in the Bill and the Scottish Government will today table a legislative consent memorandum recommending that the Scottish Parliament votes in support of the Bill on a further legislative consent motion for the Bill.
Today’s announcement provides more detail about the operation of the new tax and borrowing powers and about the non-finance elements of the Scotland Bill. The Government are committed to:
Transferring tax and borrowing powers transparently
The Government will ensure that changes in the Scottish Government’s budget are closely linked to the performance of their economy by adjusting Scotland’s budget to reflect new tax powers using the model recommended to the Welsh Assembly in the Holtham report. This approach, agreed with the Scottish Finance Minister and the Chief Secretary to the Treasury, will help protect the Scottish Government’s budget from wider macro-economic shocks.
The Government will work together with the Scottish Government over coming months and years to give operational effect to the powers including the block grant adjustment, in a fair and sustainable way and should reach agreement on all implementation issues.
The Scotland Bill will be amended to require the Secretary of State for Scotland and Scottish Ministers to produce annual reports to the UK and Scottish Parliaments on the progress of transferring the tax and borrowing powers to the Scottish Government.
In line with long-standing principles of devolved funding, the Scottish Government will pay for their new income tax system of administration. The Government will explore the scope to offset some of the savings from HMRC ceasing its administration of stamp duty land tax and landfill tax.
Ensuring the new borrowing regime is sustainable
Borrowing limits will be reviewed regularly ahead of spending reviews through the Joint Exchequer Committee.
The Scottish Government will be given access to loans over a longer period in principle, subject to the ability to repay and the type of asset.
The Government will shortly launch a consultation on the Scottish Government issuing their own bonds.
Further devolution in the future
Aggregates Levy will be devolved once the legal challenges in the European and UK courts have been fully resolved.
The Government are open to considering what further powers might be devolved
after a referendum on independence.
Non-finance elements of the Scotland Bill
The clauses reserving the regulation of health professions and insolvency will be removed, following assurances from the Scottish Government that they will work closely with the Government to ensure consistent regulatory regimes apply to health professions and that insolvency procedures are kept up to date and operate effectively throughout the UK.
The clause allowing partial referral of Acts of the Scottish Parliament to the Supreme Court will be removed at the request of the Scottish Government. This means in the future—as at present—a full Act could be referred to the Supreme Court, even if only a single provision raised competence issues.
The clause on implementing international obligations will be removed following assurances from the Scottish Government that they will work closely with the Government to ensure that the UK continues at all times to implement its international obligations. If there is a failure to implement any international obligation the UK Government may use their powers under s.58 (2) of the Scotland Act to direct Scottish Ministers.
Additional amendments will be made to the provisions on appeals to the Supreme Court from Scottish criminal cases. A certification requirement will not be introduced. However, the new arrangements will be subject to a review, chaired by the Lord Justice General of Scotland, after three years of operation. Certification will be included within the scope of the review, and it will be possible for changes to be made to the arrangements by subordinate legislation following the review.
These announcements today meet the tests the Government have set for changes to the Bill package—they are based on evidence, maintain the cross-party consensus which supports the Bill, and will benefit Scotland without detriment to the rest of the UK.