Written Ministerial Statements
Tuesday 17 July 2012
Business, Innovation and Skills
Competition and Markets Authority
I have decided to appoint Lord Currie as the chair-designate to the Competition and Markets Authority.
Lord Currie will commence his appointment in the summer which will be for an initial period of four years. His appointment as chairman will be subject to the Enterprise and Regulatory Reform Bill receiving Royal Assent and to scrutiny by the BIS Select Committee.
The appointment has been made in accordance with the Commissioner for Public Appointments’ code of practice (April 2012).
Lord Currie was chair of Ofcom from its inception in 2002 until 2009, dean of Cass Business School from 2001 until 2008 and before that deputy dean at London Business School.
He is currently chair of the International Centre for Financial Regulation and board member of Dubai Financial Services Authority. Lord Currie also holds a number of non-executive roles spanning academia, Government and the voluntary sector and sits as a cross-bencher in the House of Lords.
Lord Currie will be stepping down from his current non-executive directorships of Royal Mail, IG Group and BDO.
Green Technologies (UKTI/ECGD Support)
The 2010 coalition programme for government contained a commitment that:
“We will ensure that UK Trade and Investment and the Export Credits Guarantee Department become champions for British companies that develop and export innovative green technologies round the world, instead of supporting investment in dirty fossil-fuel production.”
UKTI set out in its strategy “Britain Open for Business” how it would promote low-carbon exports; this includes a green export campaign that aims to build the UK’s reputation in the green and low-carbon sector and to promote this capability overseas. UKTI is embedding this campaign into trade work in all markets where there is a clear opportunity to do so.
The Export Credits Guarantee Department (ECGD), operating as UK Export Finance, has been engaging with companies and trade bodies based in the UK which are involved in the development and export of green technology exports. The purpose has been to ensure companies are aware of the support that is available to them from ECGD if they require credit insurance, export working capital finance, contract bond support or if their buyers require export credit loan finance. Through engagement with overseas project sponsors ECGD has also promoted the availability of export credit finance to help to influence them to purchase supplies from companies based in the UK.
This work by UKTI and ECGD is intended to assist UK exporters of low-carbon technologies and support them in taking advantage of international opportunities.
As to support for dirty fossil fuel energy production, “dirty” should be taken as referring to projects which produce pollution in excess of international environmental standards. The standards which ECGD applies are those set out by the OECD in the OECD Council recommendation on Common Approaches on Officially Supported Export Credits and Environmental and Social Due Diligence and are usually those of the World Bank Group. ECGD will normally refuse support for exports to projects that do not meet those standards.
The UK will seek to promote the strengthening of the relevant World Bank Group international standards to include limits on emissions of greenhouse gases.
Capital for Enterprise Ltd (Triennial Review)
The triennial review of Capital for Enterprise Ltd will commence during October 2012.
The coalition Government made a commitment to review public bodies, with the aim of increasing accountability for actions carried out on behalf of the state.
BIS has agreed with the Cabinet Office that Capital for Enterprise Ltd will be one of the NDPBs for which the review will commence during the second year of the triennial review programme, financial year 2012-13.
The review will be conducted as set out in Cabinet Office guidance, in two stages.
Stage 1 will:
Identify and examine the key functions of the Capital for Enterprise Ltd and assess how these functions contribute to the core business of BIS.
Assess the requirement for these to continue.
If continuing, then assess delivery options and where the conclusion is that a particular function is still needed examine how this function might best be delivered, including a cost and benefits analysis where appropriate.
If one of these options is continuing delivery through Capital for Enterprise Ltd, then make an assessment against the Government’s “three tests”, which are: technical function; political impartiality; need for independence from Ministers.
If the outcome of stage 1 is that delivery should continue through Capital for Enterprise Ltd then the second stage of the project will be to ensure that it is operating in line with the recognised principles of good corporate governance, using the Cabinet Office “comply or explain” standard approach.
The report of the review should be completed within six months from commencement, and will be placed in the Libraries of both Houses.
Today my hon. Friend the Minister of State, Department for Business, Innovation and Skills, the Minister with responsibility for business and enterprise, the Member for Hertford and Stortford (Mr Prisk) and I are announcing a new approach to Government consultations.
The civil service reform plan commits the Government to improving policy making and implementation with a greater focus on robust evidence, transparency and engaging with key groups earlier in the process.
As a result the Government are improving the way they consult by adopting a more proportionate and targeted approach. The new approach to consultation is based on making the type and scale of engagement proportional to the potential impacts of the proposal. The emphasis is on understanding the effects of a proposal and ensuring real engagement rather than following the same bureaucratic process.
This guidance therefore replaces the code of practice on consultation issued in July 2008.
This will mean that Departments will follow a range of time scales rather than defaulting to a 12-week period, particularly where extensive engagement has occurred before. Policy makers will need to give more thought to how we consult with people. The aim is to replace potentially unproductive process with real engagement with those who are affected—in some cases earlier consultation so groups can shape policy earlier in the process.
Consultation can take different forms but the expectation is that it will be “digital by default.” This approach will need to be varied for vulnerable or other groups whose access to information technology is limited, but it should mean that Departments can be more, not less, effective at reaching particular groups affected by policies.
The principles of the compact between Government and the voluntary and community sector will continue to be respected.
The new consultation principles will be promoted within Whitehall now, and the public will begin to see new guidance take effect after recess. In line with the principles of open policy making we welcome views on how the new approach should operate in practice. Copies of the new guidance have been placed in the Library of the House.
The Government are today publishing their response to the consultation on proposed changes to the Money Laundering Regulations 2007 and an impact assessment on those changes. The 2007 regulations implement the European Union’s third money laundering directive in the UK.
The proposals being taken forward will both reduce the regulatory burden on firms and make the UK’s money laundering regime more effective and proportionate. The amendments are, for the most part, intended to benefit UK businesses by removing from the scope of the regulations those firms that are not at high risk of money laundering or terrorist financing and by enabling UK businesses to take full advantage of simplification measures provided in the European Union (EU) directive.
The Government committed to a post-implementation review of the 2007 regulations two years after they came into force. This review was undertaken in 2009-10, in conjunction with the Better Regulation Executive. The review entailed an extensive call for evidence, meetings, conferences and interviews with stakeholders. The Government’s response to the review was published in June 2011 and contained a consultation on 17 proposals to improve the UK’s anti-money laundering and counter-terrorist financing regime.
Following this consultation, which drew 72 responses and involved extensive engagement, the Government are taking forward proposals with a net annual benefit for businesses of £3 million.
The measures that will be taken forward are:
Extending the use of reliance: The Government will extend the permitted use of reliance, a mechanism by which a firm can rely on the customer due diligence (CDD) carried out by a different firm. This will minimise the duplication of CDD checks by the regulated sector and reduce the burden CDD places upon customers.
Exempting non-lending credit institutions: Only businesses that lend and advance money should be subject to the regulations. The regulations will be amended to exempt credit institutions that offer time to pay for non-refundable services, such as health and golf clubs. The Government do not consider that such businesses present a high risk of money laundering and terrorist financing, or that the global standards and EU directive require such businesses to be regulated.
Regulating overseas estate agents: Global standards and the EU directive require the regulation of estate agents because of the high money laundering risks in this sector. UK estate agents selling overseas properties will, therefore, now be within scope of the regulations.
Amending the fit and proper test: The “fit and proper persons” test is applied by Her Majesty’s Revenue and Customs (HMRC) to decide whether a person is suitable to run a money service business (MSB). This test will be amended in the regulations to ensure that individuals who are not fit and proper cannot run a business which is at high risk of money laundering, terrorist financing and proliferation of financing. This also ensures consistency with the financial action taskforce (FATF) global standards, the EU directive and the fit and proper test applied by the Financial Services Authority (FSA) under the Payment Services Regulations.
Right to appeal against HMRC decision: The Government will clarify the right to appeal, to ensure that individuals have easy and economic access to a fair hearing if they wish to challenge HMRC’s decision.
Regulatory enforcement measures: These measures support the Office of Fair Trading, HMRC and the FSA as supervisors in taking action to ensure compliance with the regulations.
A full explanation of the proposals being taken forward can be found in the Government’s response document and impact assessment. Copies have been placed in the Libraries of both Houses.
The Economic and Financial Affairs Council was held in Brussels on 10 July 2012. Ministers discussed the following items:
Economic governance—“two pack”
The incoming Cypriot presidency updated Ministers on the process to be followed for trilogue negotiations with the European Parliament on the “two pack” of economic governance proposals. The Parliament has suggested changes to the proposals. The Council confirmed that the general approach it agreed on 21 February would be the starting point for the negotiations: the first working-level meeting with the Parliament was scheduled for 11 July.
Revised capital requirements rules (CRD4)
The presidency briefed Ministers on progress made in trilogue negotiations, and expressed its wish to finalise the negotiations as soon as possible. It had already held its first trilogue and had scheduled further meetings very soon. It will aim to achieve adoption of both the directive and the regulation at first reading, though it acknowledges several outstanding issues requiring resolution—including the mechanism for member states to impose additional prudential requirements, remuneration policies, crisis management, sanctions, the balance of power between the authorities of “home” and “host” countries, corporate governance, and the powers of the European Banking Authority (EBA). The UK favours a full and faithful implementation of Basel 3 in the EU and member states having the flexibility to increase minimum standards in order to protect financial stability in their jurisdiction.
Proposal for Bank Recovery and Resolution Directive
The Commission presented its proposals for a directive, which the Council noted, and Ministers held a preliminary exchange of views. The presidency’s aim is for the Council to agree a general approach by December.
Presentation of the Cyprus Presidency Work Programme
The new presidency presented its work programme on economic and financial affairs for the next six months. It will prioritise implementation of recently adopted initiatives on economic governance, fiscal consolidation, strengthening the European financial services framework and accelerating structural reforms, as well as some tax issues. Ministers exchanged views on this: I highlighted the European Commission’s €15 billion upward revision to its June proposal for the 2014-2020 multi-annual financial framework, which was already unaffordable, and called for re-prioritisation of the EU budget. The Council took note of the presidency’s programme.
Follow-up to the European Council on 28-29 June 2012
Ministers discussed work required to follow up the June European Council discussions, on establishing what has been termed “genuine economic and monetary union” and a banking supervisor. On the latter, the Commission will present proposals, expected in the autumn: the Council held a preliminary exchange of views in advance of these. I intervened to welcome the European Council’s commitment to the integrity of the single market and to highlight the need to protect against its fragmentation—such as discrimination between the euro area and euro “outs”—and I pointed out that banking union makes sense for the euro area, as mutualised risk should be accompanied by mutualised control.
The Council adopted the recommendations to member states on their economic and fiscal policies, and the specific recommendation on the economic policies of the member states of the euro area. As required by the “comply or explain” principle established by economic governance legislation agreed last year, the Council provided explanations of its modifications of Commission proposals and recommendations.
Ministers also discussed the European semester more broadly and suggested ideas for improving the process in 2013. The presidency called for further discussions at Council meetings scheduled for the autumn.
Spain’s Excessive Deficit Procedure
In a late addition to the agenda. Ministers agreed to extend Spain’s deadline to correct its deficit under its excessive deficit procedure. Spain will now have until 2014 to bring its deficit below the EU’s 3% of GDP reference value.
The Council agreed to recommend the nomination of Yves Mersch (currently Head of Luxembourg’s central bank) to the executive board of the European Central Bank (ECB). This recommendation will be submitted to the European Council for a decision, after consultation with the European Parliament and the ECB’s governing council.
Tax Policy (Consultation)
Budget 2012 announced a number of tax policy changes that will be subject to consultation. HM Revenue and Customs is today publishing the following documents:
High-risk areas of the tax code: the stamp duty land tax (SDLT) “transfer of rights” or “subsale” rules—A consultation on broad options to address SDLT subsales avoidance.
VAT treatment of small cable-based transport—A consultation on the introduction of a reduced rate of VAT for small cable-based transport.
The following consultations are due to be published during summer recess:
Life insurance policies: time apportioned reduction —A consultation on reform to time apportionment reductions reflecting a policyholder’s period of residence outside the UK.
Foreign currency assets and chargeable gains—A consultation on whether to introduce a rule requiring companies with a non-sterling functional currency to compute their capital gains and losses in their functional currency.
Details of these and other planned consultations are included in a consultation tracker, available from the HM Treasury website:
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. Any changes to the dates mentioned above will be publicised on the tax consultation tracker.
Communities and Local Government
Local Government Finance
I am today publishing a consultation and informing the House of a number of steps we have taken to support our localism agenda and the important financial reforms we are delivering through the Local Government Finance Bill.
Business rates retention
The business rates retention scheme will enable local authorities to retain a proportion of locally collected business rates to help fund the services they provide, therefore creating a direct link between business rates collected and local authority income, and reducing local authorities’ dependency on central Government grants. The technical consultation document, also published today, sets out proposals for the detailed workings of the new business rates retention scheme that is to be introduced from April 2013.
The scheme will give councils a strong financial incentive to promote local business growth while ensuring that all local authorities have adequate resources to provide services to local people. Analysis undertaken by the Department for Communities and Local Government shows that the projected economic benefits of the new business rate retention scheme could add an additional £10 billion to national gross domestic product over the next seven years. And councils who succeed in growing their local economy get a direct boost to their coffers. This is not simply about redistributing the proceeds of growth—if these reforms lead to every council working as hard as it possibly can to help businesses thrive, then they have the potential to increase growth overall, which is good news for communities in as much as any increase in business rates means more money to invest in local services.
This publication follows the 2011 consultation on the proposals for business rates retention and extensive discussions on the proposals with the local government sector, as well as the associated statements of intent published on 17 May this year. I have placed copies of the consultation document in the Library of the House. The consultation document, a supporting equality statement, a Plain English Guide to Business Rates Retention, a step by step guide and a revised pooling prospectus are also available on the Department for Communities and Local Government website and the Local Government Finance website at:
We look forward to receiving views on our proposals. The consultation period will close on 24 September 2012. We will then put forward our proposals for local government funding for 2013-14 in a draft local government finance settlement later this year.
Council Tax Information Letter
The Government also today issued a council tax information letter to local authorities to make them aware that, when considering applications from service personnel for second homes discount on their private properties, they do make payments on their UK or overseas service accommodation in lieu of council tax. This payment is paid to the billing authority where the service accommodation is located by the Ministry of Defence.
Council tax support
To support the planning of local council tax reduction schemes, and to provide clarity on our plans for secondary legislation, I have also published, on 16 July 2012, key draft regulations regarding the localisation of council tax support, as we said we would in the detailed statement of intent on regulations published in May.
Under the reforms set out in the Local Government Finance Bill 2012, local authorities will be required to make their own council tax support schemes by 31 January 2013. The draft regulations I published yesterday will ensure all local schemes contain any requirements prescribed by the Secretary of State, including provision of support for vulnerable pensioners, and also set out the requirements for a default scheme, which will come into effect if a local authority fails to make a scheme by the prescribed deadline.
The publication of these regulations in draft form is intended to give authorities and interested parties the opportunity to make any comments or ask questions on the process and the draft regulations, to ensure that the final versions will enable local authorities to implement the prescribed requirements or default scheme smoothly.
It is essential that local authorities press ahead now with developing their schemes. Schemes have to be agreed by the end of January 2013 and will apply from 1 April 2013. This means local authorities need to start consulting now to ensure they can give full consideration to the views local people express, and provisions in the Local Government Finance Bill make clear that the billing authority can consult prior to the Bill coming into force.
Parish and community cheques
Today we have published a consultation paper proposing the removal of an outdated rule that limits the ability of parish and community councils to use modern methods of payment. The rule requires all cheques and other orders for the payment of money to be signed by two members of the council. It applies to all parish councils in England and community councils in Wales, as well as some charter trustees in England. As the rule is contained in primary legislation the paper proposes that the reform should be implemented by a legislative reform order made under the Legislative and Regulatory Reform Act 2006. The paper sets out the robust yet flexible control framework that will take the place of the two signature rules; this framework has been developed by the local council sector. Subject to the outcome of the consultation, the Government propose to lay a draft order before Parliament in the autumn. A copy of the consultation paper has been placed in the Library of the House.
Local Government Pension Scheme
My right hon. Friend, the Secretary of State for Communities and Local Government, made a statement to the House on 20 December 2011 setting out principles to govern the reform of the local government pension scheme agreed between the Local Government Association and local government trade unions. These reforms are designed to ensure the scheme is sustainable and affordable in the long term, while at the same time being fair to both scheme members and local taxpayers.
I can now report to the House that the Local Government Association and local government trade unions have begun informal consultations with their respective memberships on new design proposals for the scheme to be in place by 2014, within the 19.5% cost ceiling agreed by the Government. A favourable outcome will be followed by a statutory, national consultation by the Government in the autumn.
Details of the proposals are contained in a joint statement issued by the local government trade unions and the Local Government Association which can be found at www.lgps.org.uk. A copy of the statement has been placed in the Library of the House.
Defence Materiel Strategy
A core element of the transformation process under way in the Ministry of Defence (MOD) is reforming its acquisition system to drive better value from the defence budget. This includes changes to the Defence Equipment & Support (DE&S) organisation to ensure it has the structures, management and skills it needs to provide the right equipment to our armed forces at the right time, and at the right cost. This is essential to tackle the legacy problems in defence acquisition that led to cost and schedule overruns, and which have resisted previous reform. The people at DE&S work hard to provide battle-winning equipment, support and logistics, but the current system does not work for them, does not always support them, and is not delivering value for money for the taxpayer.
Over the last year, Bernard Gray, the Chief of Defence Materiel, has analysed the root causes of the current situation and identified three interlinked issues. These are: a historically overheated equipment programme, where far more projects were planned than could be paid for; a weak interface between DE&S and the wider Ministry of Defence with poor discipline and change control between those setting requirements for equipment and those delivering the programmes; and insufficient levels of business capability at DE&S for the scale and complexity of the portfolio it is asked to deliver. The result has been significant additional costs in the defence budget of the order of hundreds of millions of pounds each year, with money spent managing the consequences of delay rather than delivering maximum capability for the armed forces.
I was able to announce to the House on 14 May, Official Report, column 261, that we had finally balanced the defence budget. The MOD is now engaged in a process of transformation to deliver the behaviour-changing incentives and structures that will maintain the budget in balance in the fixture. The restructuring of DE&S is key to this process.
For decades the Ministry of Defence has wrestled with this issue without success, and it is clear that addressing it within current structures will be extremely challenging. Earlier this year, I therefore asked my officials to focus their efforts on considering the comparative benefits which could be derived from changing DE&S into either an executive non-departmental public body with a strategic partner from the private sector (ENDPB/SP), or a Government-owned, contractor-operated (GOCO) entity. The work done to date, suggests that the strategic case for the GOCO option is stronger than the ENDPB option. Further value-for-money work is under way to confirm this assessment. In the meantime, as resources and commercial appetite constrain our ability to pursue these two options simultaneously to the next stage, I have decided that MOD should focus its effort on developing and testing the GOCO option further.
The work to determine value for money between the options will take place over the next few months, and in parallel we will begin development of a commercial strategy, engaging industry to hone our requirement. This work will support decisions later in the year on whether to proceed with the GOCO option and whether to launch a competition for the private sector management company to run the organisation. Provided that the further work demonstrates that the value-for-money case for GOCO over ENDPB/SP is conclusive, this will be followed by an investment appraisal that will test the GOCO against a public sector comparator, following which a decision on whether or not to proceed will be taken.
Deputy Prime Minister
Individual Electoral Registration
I am announcing today that the Government have placed the implementation plan for individual electoral registration (IER) in the House Library. The plan has also been published on the Cabinet Office website.
The aim of this plan is to explain how the new system will affect citizens and electoral administrators and how this change will be delivered. In particular, it outlines the timetable for the work and how this will be managed alongside other activities electoral administrators will have to carry out over that period. This plan has been developed in consultation with key delivery partners, the Association of Electoral Administrators (AEA), the Electoral Commission (EC) and the Society of Local Authority Chief Executives (SOLACE).
We have been working with stakeholders throughout the process of developing our proposals for IER, and have already consulted on the overall policy and the Electoral Registration and Administration Bill, adapting our policy to reflect feedback from Parliament (notably the Political and Constitutional Reform Committee, which carried out pre-legislative scrutiny on our proposals), the public, and other stakeholders. We piloted data matching last year with 22 local authorities. We will continue the approach of working with stakeholders throughout the delivery of this change, to ensure that we have assurance that the new service will work effectively on the ground before we go live in 2014.
Education Services Reform
We need to reform the way that local authorities and academies are funded for central education services. We have inherited a complicated system which can no longer support the rapid growth in the number of academies and today I am announcing proposals to make it fairer, simpler and more transparent from 2013-14.
Academies are responsible for a range of education services such as school improvement, audit and HR, that local authorities perform on behalf of maintained schools. Academies receive a grant (known as the local authority central spend equivalent grant or LACSEG) to fund those additional duties. This gives academies greater freedom to secure the right services for their pupils.
Local authorities and academies receive funding for these responsibilities separately and the current method of calculating how much money each academy should receive is convoluted and bureaucratic. We have to wait until every local authority tells us how much they plan to spend on services for maintained schools in their area before we can calculate the grants for academies. This means that academies can receive vastly different levels of funding from one year to the next and the rates tend to vary starkly across the country.
Moreover, as more schools adopt the freedoms of academy status, basing this grant on the amount spent by the local authority is increasingly incongruous. In two local authorities, for instance, all state funded secondary schools are now academies and the funding for education services needs to be brought into line with this significant shift in school provision.
Local authorities fund central education services from the money they receive for schools from the Department for Education, as well as from their general funding. The Government believe that money intended for schools should be given straight to schools themselves so that they can decide how best to spend it. That is why I announced in March that, from 2013-14, it will be compulsory for local authorities to allocate all of the money that they receive specifically for schools (the dedicated schools grant) directly to the maintained schools and academies in their area.
I am also proposing that the money that is currently paid separately to local authorities and academies for central education services should be replaced by a single grant. This would be allocated on a simple national basis according to the numbers of pupils for which they are responsible. The new grant would be paid directly to individual academies and to each local authority for all the pupils in maintained schools. The funding for these functions will be transferred from the Department for Communities and Local Government, to be administered by the Department for Education, and so I am consulting on these proposals alongside the Secretary of State for Communities and Local Government’s consultation on the introduction of a business rates retention scheme from 2013-14.
Distributing this money on a clear and transparent basis will help to restore confidence in the system and will put an end to the dramatic year-on-year turbulence and national variation in funding levels. This will take us further in achieving our objective of raising the attainment of all pupils across the country.
I have also published the Government’s response to the consultation held late last year on the way that funding for central education services was removed from local authorities in 2011-12 and 2012-13 to reflect the transfer of responsibilities to academies. This sets out the steps we have taken to ensure that the amounts deducted better reflect the number of academies in each local authority over the two-year period.
Copies of these publications will be placed in the Libraries of both Houses.
Foreign and Commonwealth Office
British Council (Annual Report)
Copies of the British Council’s annual report and accounts for the 2011-12 financial year have been placed in the Libraries of both Houses. It can also be found at the British Council’s website www.britishcouncil.org.
During the period the British Council received £180,500,000 grant-in-aid from the Foreign and Commonwealth Office.
Building Stability Overseas
I, together with my right hon. Friends the Secretary of State for International Development and the Secretary of State for Defence, wish to update the House on the progress our three Departments have made in implementing the Building Stability Overseas Strategy (BSOS) that we launched on 19 July 2011. The BSOS is one of the cross-Government strategies adopted following the strategic defence and security review.
We launched the BSOS at the time of the Arab spring, which was a profound demonstration that genuine stability can only be achieved when societies have strong and legitimate institutions to manage tensions peacefully. The BSOS was the first cross-Government strategy on conflict issues. It sets out that it is in the UK’s interest to build capacities overseas that help prevent the conditions that lead to conflict before they develop; and to identify emerging crises early and to respond rapidly to prevent or mitigate them.
We have made good progress in implementing the new strategy since its publication. The BSOS has produced a range of different mechanisms that ensure that the different skills, perspectives and expertise across Government are brought together in an integrated way.
We have established new systems for early warning, to better identify rising risks. Senior officials from across Government meet regularly to systematically review and, if necessary, challenge the Government’s approach to selected priority countries.
We have increased the level of overall resources for conflict prevention in the tri-departmental conflict pool and are aligning the pool’s approach more towards upstream conflict prevention. I intend to place before the House details of proposed conflict resources allocations, through the conflict pool, for financial years 2012-13 and 2014-15 once the National Security Council has endorsed them.
Our aim is to ensure a clear fit between conflict pool allocations and the Government’s highest conflict and stability priorities. We have increased conflict pool funding for the middle east and north Africa region, aligning our work closely with that of our Arab partnership initiative which supports Arab-led efforts to build more open, prosperous and stable societies. We are increasing our support to Somalia and Pakistan, while continuing important commitments to the Balkans, the Caucasus and to the UK’s peacekeeping presence in Cyprus. Within the conflict pool, we have also created a new £20 million early action facility (EAF) to provide rapid funding for unforeseen crises or to address new opportunities for conflict prevention. The facility has already been used to support work on Syria.
For the first time, we have made conflict pool allocations across more than one financial year, increasing our ability to plan ahead, deliver better value for money and improve the impact of our work. We are strengthening the conflict pool’s focus on achieving results. Our reform programme will draw on recommendations from independent reviews this year by the National Audit Office and the Independent Commission for Aid Impact.
We commissioned an internal review of the tri-departmental stabilisation unit. The review concluded that there continues to be a clear need for the stabilisation unit. It will remain an important tool to help integrate the Government’s approach to conflict and to help build more stable states. We are working to implement the recommendations of the review, including strengthening the leadership of the unit and its oversight by our three Departments, moving the unit to a new location and driving value for money and efficiency changes (including headcount reductions).
Our development programme continues to prevent conflict upstream, supporting countries to make that vital transition towards a peaceful, stable and lasting future. Three-quarters of the Department for International Development’s (DFID) focus countries are fragile and conflict affected states. DFID is on track to direct 30% of UK Official Development Assistance (ODA) to such countries by 2014-15. In 2011-12 UK aid investments supported freer and fairer elections in four countries, helped 300,000 women to access justice through the courts, police and legal assistance and helped over 16 million people hold their authorities to account.
The UK can achieve a much greater impact to building stability and preventing conflict around the world when we work with others. We are well placed to do so, exploiting the UK’s established roles and networks at the UN, within the EU, NATO and other multilateral forum and with our traditional partners. We are working with the UN’s Department for Political Affairs to improve its capacity for conflict prevention. We have provided UK secondees to the European External Action Service conflict prevention team and we are ensuring conflict prevention features in EU budget negotiations. We are also engaging with a broader range of partners, including Brazil and South Africa. The BSOS has enabled the UK to remain at the heart of international thinking on conflict prevention. The London conference on Somalia in February was a good example of the way UK leadership can reinvigorate and galvanise international efforts.
We recognise that Government do not have all the answers and therefore we are seeking deliberately wider views beyond Whitehall to provide challenge and to ensure we access, reflect on and assimilate latest thinking. We have used the positive reaction to the publication of BSOS from NGOs and academics specialising in conflict to develop relationships further through joint initiatives.
The BSOS recognised the need to include the protection of women and children. I informed the House of the Government’s new initiative to tackle sexual violence in conflict on 12 June including the establishment of a new team of experts and an international diplomatic campaign during our G8 presidency in 2013. As well as directly supporting and undertaking investigations, this team will support upstream interventions by providing training to national authorities to strengthen their domestic response to rape and other crimes of sexual violence.
In post-conflict scenarios, holding those responsible for appalling crimes of sexual violence and removing the sense of impunity will contribute to the peace building process.
The new approach outlined in the building stability overseas strategy is already beginning to have real impact on way the UK tackles conflict and instability overseas. We have the tools in place and are now working on implementation. Addressing instability and conflict overseas is a sound investment in both our national interest and a better future for all.
Informal Health Council
EU Health Ministers met in Nicosia, Cyprus, on 10 and 11 July. The United Kingdom was represented at official level. The agenda included discussions on organ donation and transplantation, the health work force, and health security.
The meeting began with a discussion on organ donation and transplantation. This discussion was followed by a lunch debate on the health work force, centring on the priorities outlined in the EU’s action plan for the EU health work force. There was also broad consensus that the EU could support the pursuit of these priorities in member states by facilitating the sharing of experiences and best practices, but that member states alone were competent to define their own work force strategies.
Following presentations from the presidency, the Commission, the World Health Organisation (WHO) and Greece, health security was also discussed, in particular risk and crisis communication strategies.
Boundary Commission for England (Reappointment of Deputy Chair)
I should like to inform the House that I have made the following appointment under schedule 1 to the Parliamentary Constituencies Act 1986:
The Honourable Mr Justice Sales re-appointed as Deputy Chairman of the Boundary Commission for England effective until 30 June 2014.
Senior Civil Service Appointments (Correction to Parliamentary Answer)
I regret to inform the House that I have recently discovered that there was an inaccuracy in the answer I gave to a commons parliamentary question (85074) on 15 December 2011, Official Report, column 882W, about off payroll senior civil service appointments to the hon. Member for Harrow West (Mr Thomas).
I am now advised that the correct answer is that at the time of the question in December 2011, the Ministry of Justice had engaged nine senior managers working in senior civil service positions on an interim basis (deployed within the MOJ IT directorate). Within its executive agencies and non-departmental bodies, there were two senior managers engaged in a senior civil service position on an interim basis (one in the National Offender Management Service and the other in the Legal Service Commission).
Furthermore the answer described the process for the procurement of contractors and interims through a single managed service provider, Capita Resourcing Ltd. This was normally the case for the main Department and its executive agencies. However, it should have been made clear that the Ministry’s non-departmental public bodies have their own processes and are not obliged to use the Ministry’s single managed service provider. In addition, where the single managed service provider was unable to source specifically skilled individuals, then other providers are engaged.
Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Civil Litigation and Funding Costs)
This statement amends the one I made on 10 July 2012, Official Report, column 20WS. The wording in relation to the sanctions under part 36 of the civil procedure rules (offers to settle), paragraph (i), contained a factual error, which has now been corrected.
On 24 May 2012, Official Report, column 94WS, I announced the Government’s implementation plans for the provisions under part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 relating to civil litigation funding and costs. The Government have now considered further advice from the Civil Justice Council and I can therefore set out further details of those provisions.
A regime of qualified one-way costs shifting (QOCS) is to be introduced in personal injury claims, so that claimants conducting their case properly will not have to pay towards defendants’ costs if the claim fails. Rules will be drafted on the following basis:
i. QOCS will apply to all claimants whatever their means; there is to be no financial test to determine eligibility;
ii. Subject to the provisions below, claimants who lose will not have to contribute towards defendants’ costs (there is to be no minimum payment by a losing claimant);
iii. QOCS protection would be lost if:
(a) the claim is found to be fraudulent on the balance of probabilities;
(b) the claimant has failed to beat a defendant’s “Part 36” offer to settle; or
(c) the case has been struck out where the claim discloses no reasonable cause of action or where it is otherwise an abuse of the court’s process (or is otherwise likely to obstruct the just disposal of the proceedings).
iv. The principles set out in part 36 of the civil procedure rules override QOCS, but only up to the level of damages recovered by the claimant;
v. QOCS protection would apply in relation to claims that are discontinued during proceedings (subject to iii(a) above); and
vi. QOCS protection would be allowed for all appeal proceedings as the requirement for permission to appeal controls unmeritorious appeals.
The Ministry of Justice is considering further the practicality of QOCS protection not applying to elements of a claim for personal injury that are pursued for the benefit of a third party (such as a property damage insurer or a credit hire provider) in respect of goods, services or indemnity provided by a third party to the claimant as a consequence of the accident.
The sanctions under part 36 of the civil procedure rules (offers to settle) are to be reformed on the following basis in order to encourage early settlement:
i. There is to be an additional amount to be paid by a defendant who does not accept a claimant’s offer to settle where the court gives judgment for the claimant that is at least as advantageous as an offer the claimant made to settle the claim. This additional sanction is to be calculated as 10% of damages where damages are in issue, and 10% of costs for non-damages claims;
ii. In mixed (damages and non-damages) claims, the sanction will be calculated as 10% of the damages element of the claim;
iii. However, the sanction under these provisions is to be subject to a tapering system for claims over £500,000 so that the maximum sanction is likely to be £75,000; and
iv. There would only be one sanction applicable for split trials.
The new rule on proportionality has been agreed by the Civil Procedure Rule Committee (CPRC), and the test is intended to control the costs of activity that is clearly disproportionate to the value, complexity and importance of the claim. The senior judiciary are considering revisions to the costs practice direction to give effect to the new rule.
Changes to the civil procedure rules (CPR) will be considered by the CPRC in the autumn, in order for the necessary changes to come into effect for April 2013. The Ministry of Justice will continue to engage with key stakeholders throughout the implementation stage and will also work closely with the senior judiciary on other aspects of Lord Justice Jackson’s reforms, which are due to come into effect at the same time. Updates are provided on the judiciary website at:
Prison Capacity Management
The Government are determined to provide a fit-for-purpose modern custodial estate that can deliver high quality, cost-effective and secure regimes that protect the public and reform prisoners. While the prison population temporarily rose as a result of last summer’s civil disturbances, since April it has resumed falling. New modern prison places in the private estate at HMP Oakwood and HMP Thameside have begun to come on stream so that we now have an opportunity to close some of our more expensive and superfluous prison places.
I am therefore announcing the closure of HMP Wellingborough which will see a reduction of 588 prison places.
On Friday 13 July the gap between the prison population and our useable capacity stood at 3,500 places. The prison estate in England and Wales has not operated with this degree of headroom since early 2011 and there is more unused capacity in the prison estate now than there was before the announcement in July last year to close HMPs Latchmere House and Brockhill, or prior to the serious public disorder in August 2011.
Capacity continues to grow with the number of available prison places planned to reach 91,600 by the end of the year. This will ensure that our operational capacity continues to take account of prison population projections in a way which meets the need both for greater efficiency and ability to support a strengthened focus on protection of the public and rehabilitation.
The closure of these places will provide estimated cost savings of over £10 million in annual running costs and avoid significant capital costs on refurbishment of up to £50 million in the next few years. We would expect to be able to absorb most staff displaced by this process elsewhere in the system and to avoid the use of compulsory redundancies wherever possible.
Judicial Pensions Reform
On 5 July the Chief Secretary to the Treasury confirmed to the House that the Government will be taking forward legislation to introduce changes to pension schemes for the NHS, teachers and civil servants.
I have been considering the necessary reforms of the judicial pension scheme (JPS) in line with these wider public service pension reforms. The JPS is a critical element of the remuneration offered to the judiciary. Nevertheless we must ensure that the pensions provided are fair, sustainable and affordable. Accordingly, I have written to the heads of jurisdiction today setting out my proposals that will ensure that the pension provision for judges compares fairly with that offered to others in the public service. They also meet Government expectations for reform. This will be discussed with the judiciary over the summer and I will come back to the House further on the final detail.
In my statement on 18 January 2012, Official Report, column 751, announcing the Government’s decision to bring the detainee inquiry to a conclusion, I said that Sir Peter Gibson, the inquiry chair, had agreed to provide the Government with a report on its preparatory work to date, highlighting particular themes or issues which might be the subject of further examination. The inquiry sent its report to the Prime Minister on 27 June 2012. The Government are now looking carefully at its contents and remain committed to publishing as much of this interim report as possible. I will provide a further update when the House returns.
Military Medals Review
I have today placed a copy of Sir John Holmes’ interim review of the rules and principles governing the award of military medals in the Libraries of both Houses. The interim report brings welcome transparency to these arrangements. It finds that the overall approach is reasonably based. However, it also identifies areas where it is worth considering whether the rules could be applied with greater flexibility and transparency. It proposes ways forward to address some past grievances while maintaining the distinctive British tradition that military medals are hard earned. I hope this will help to draw a line under past campaigns and provide a more open decision-making process in future. I welcome the report and have asked Sir John to lead a second stage of work to make further recommendations using the principles he has proposed to implement his findings. This work will be completed as soon as possible in the autumn.
Listed below are the names of the special advisers in post at 17 July 2012, including each special adviser’s pay band, and actual salary where this is £58,200 or higher, together with details of the special advisers’ pay ranges for 2012-13.
The paybill for the period 2011-12 was £6.2 million1. This compares to £6.8 million for the period 2009-10 (excluding severance payments made at the general election to special advisers in the last Administration).
Special Adviser in Post
Salary if £58,200 or higher (£)
The Prime Minister
Within scheme ceiling
Within scheme ceiling
Within scheme ceiling
Isabel Spearman (p/t)
Deputy Prime Minister
No. 10 Advisers
First Secretary of State, Secretary of State for Foreign and Commonwealth Affairs
Chancellor of the Exchequer10
Lord Chancellor and Secretary of State for Justice
Secretary of State for the Home Department and Minister for Women and Equality
Secretary of State for Defence
Secretary of State for Business, Innovation and Skills
Secretary of State for Work and Pensions
Secretary of State for Energy and Climate Change
Secretary of State for Health
Secretary of State for Education
Henry de Zoete
Secretary of State for Communities and Local Government
Secretary of State for Transport
Secretary of State for Environment, Food and Rural Affairs
Secretary of State for International Development
Secretary of State for Northern Ireland
Secretary of State for Scotland
Secretary of State for Wales
Secretary of State for Culture, Media, the Olympics and Sport
Will de Peyer
Minister without Portfolio
Leader of the House of Lords, and Chancellor of the Duchy of Lancaster
Minister for the Cabinet Office, Paymaster General
Simone Finn (p/t)
Minister of State, Cabinet Office
Minister of State (Universities and Science), BIS
Leader of the House of Commons and Lord Privy Seal
Chief Whip (Commons)
1Includes salary, severance pay and pension contributions.
2Maternity leave cover for Polly Mackenzie.
3Maternity leave cover for Lena Pietsch.
4Covering work in the House of Lords.
5Covering work in the Department for Communities and Local Government, Department for Transport and the Department for the Environment, Food and Rural Affairs.
6Covering work in the Department of Health and Department for Work and Pensions.
7Covering work in the Cabinet Office, Department for Education and the Department for Culture, Media and Sport.
8Covering work in the Home Office and Ministry of Justice.
9Covering work in the Ministry of Defence, Foreign and Commonwealth Office and the Department for International Development.
10In addition, the Chancellor of the Exchequer has appointed Rupert Harrison (PB3, £80,000), and Eleanor Shawcross (PB2) to the Council of Economic Advisers.
Special Adviser Pay Bands for 2012-13
The pay bands and pay ranges for special advisers for 2012-13 are as follows:
Scheme Ceiling £142,668
Pay Band 4 £88,966 - £106,864
Pay Band 3 and Premium £66,512 - £103,263
Pay Band 2 £52,215 - £69,266
Pay Band 1 £40,3 52 - £54,121
Pay Band 0 up to £40,352
DVLA Office Closures (Correction to Parliamentary Answer)
There was an inadvertent error in the answer to the parliamentary question from Charles Kennedy on 9 July, , Official Report, column 69W. The answer indicated that Bangor, Beverley, Chester, Dundee, Exeter, Inverness, Maidstone, Peterborough, Sidcup, Theale, Truro, and Worcester Local Offices would close on 30 November 2012. The date should have read 30 November 2013.
Vehicle Identity Check Scheme
The Department has today published a consultation paper on the future of the vehicle identity check (VIC) scheme.
The purpose of the VIC scheme is to deter the crime of vehicle ringing. Typically, this involves the theft of a car often of significant value, which is then given the identity of a similar car (make, model, colour etc) which has been the subject of an insurance write-off. The written-off car is obtained cheaply; its identity (vehicle identification number (VIN) and registration numbers) is then transferred to a higher value stolen car which, now apparently genuine, can be sold at market price.
Since the introduction of the VIC scheme in April 2003, around 717,000 checks have been undertaken and 38 confirmed “ringers” detected, at a cost of around £30 million to the motorist. About 75% of the checks were undertaken on cars which were seven years or older, which were written off because the cost of even small repairs was greater than the very low market value of the vehicle, often meaning that the cost of the check fell on the less well-off members of society.
Although it is felt that the scheme has become, unintentionally, an unnecessary burden to many honest motorists, the police feel that it is still the only deterrent to “ringers”. The scheme also enables vehicle purchasers to be aware that the vehicle they are considering purchasing has previously been a write-off and confirms that the vehicle identity has been checked and therefore provides some protection against purchasing a stolen vehicle.
I intend to consult on whether to retain, re-scope or abolish the scope of the VIC scheme in a move to explore whether fewer vehicles can be checked in the future in order to remove unnecessary burden on law-abiding citizens, without jeopardising prevention of vehicle ringing.
The consultation documents can be found on the Department’s website. An electronic copy has been lodged with the House Library.
Red Tape Challenge
Last November, the Department for Transport launched the rail transport theme of the red tape challenge—part of the Cabinet Office’s project to review all of the outstanding regulations currently on the statute book. Following a rigorous process of challenge, stakeholder discussion and public consultation, I am now pleased to be able to announce the results.
The Department put forward every secondary regulation relating to rail transportation for public discussion under the rail transport red tape challenge. Some 198 of these were judged still to be live with a further 23 being identified as already “lapsed or spent”. Of these 221, I propose to scrap, merge, simplify, amend or improve 88 (40%).
The detailed breakdown I propose is:
* Moved regulations predominantly relate to another Red Tape theme and will be resolved in a different part of the Challenge.
Among the measures being pursued, we intend to:
harmonise and simplify the process for obtaining an operating licence;
reduce regulatory burdens and costs on historic cableways;
merge a number of instruments to make regulations easier to understand; and
remove a significant number of lapsed or redundant instruments.
The full list of regulations, including further information on the actions we are intending to take, is available on the Department’s website at: www.dft.gov.uk/consultations/gov-20111110.
Overall, this represents an important step forward in removing unnecessary regulatory burdens. Some elements of this programme will mark a major shift in the way the Department does business.
The outcomes also need to be viewed against the backdrop of the Government’s wider efforts to put an end to the micro-management that occurred under the last Government in relation to matters such as franchise management. Both our franchise reform programme and our Command Paper “Reforming Our Railways: Putting the Customer First” seek to transfer more decisions from Whitehall to the professionals who run our railways as part of our efforts to deliver a more financially sustainable and customer-focused railway.
The Department is already implementing the results of the roads transport red tape challenge (see: www.dft.gov.uk/consultations/gov-20110520) and aviation transportation, the final transport theme, is now open for public comment until 26 July.
High Speed 2 (Consultation Update)
On 10 January this year, I made a statement to the House announcing my decision to take forward proposals for a national high speed rail network following the completion of a major public consultation exercise.
On 29 May, the consultation responses were made available online. Subsequently, when it became clear that a small number of responses had not been published, my Department and HS2 Ltd reviewed how the consultation responses had been processed.
This review identified that 413 responses, amounting to less than 1% of the 55,322 responses received in total, had not been included in the part of the consultation response assessment carried out by the Government’s independent response analysis consultants, Dialogue by Design. The results of this analysis were summarised in their report published alongside my announcement of 10 January (“High Speed Rail: Investing in Britain’s Future—Consultation Summary Report”). This report formed just one of the elements supporting my decisions, alongside other evidence including analysis of issues raised in consultation responses carried out by my Department and HS2 Ltd, as well as engagement with the public, MPs and other stakeholders through roadshow events, seminars, visits and meetings.
Of the 413 responses identified, six had been incorrectly marked as duplicates by Dialogue by Design. The remaining 407 were among those sent in by email to my Department rather than via the direct channels set out in the consultation document and were unintentionally not forwarded to Dialogue by Design for analysis.
My Department commissioned a supplementary analysis from Dialogue by Design which concluded that these responses
“do not provide any information that was not already included in the previous consultation summary report or would have made a difference to the substantive content or balance of that report”.
Inclusion in the original analysis would not have changed the substance of Dialogue by Design’s findings, nor affected the considerations which informed me in taking my decisions following the consultation.
All affected respondents will be contacted with these details.
Work and Pensions
Jobseeking (Additional Support)
The Government have a strong offer of support to help young people find work: the Work programme, the Youth Contract and measures such as work experience and apprenticeships.
We know that lack of experience in the workplace can be a fundamental stumbling block for young jobseekers. This is compounded in difficult economic times when the labour market is even more challenging for those seeking their first job.
I will test the impact of providing additional support to young people with a limited work history from the very start of their benefit claim. This trial has been jointly developed with the Greater London Authority.
Further information on the details of this scheme will follow in due course.
Workplace Pension Reform
Later today I will be publishing the Command Paper “Government response to the consultation: Improving transfers and dealing with small pension pots, (Cm8402)”, along with an associated impact assessment.
From this month, the first savers will start to be automatically enrolled into workplace pension schemes. This will help many people to start saving, or save more into a pension. But bringing more people into pension saving will increase the numbers of small dormant pots, which are created as people move jobs.
Our updated figures, set out in the impact assessment, suggest that around 50 million dormant pots will be created by 2050 if no changes are made to the current transfers system. This could significantly undermine the Government’s commitment to encourage pension saving if people lose track of their pots, and so miss out on valuable retirement income
We need to reduce the number of small dormant pension pots in the system, making it easier for people to keep track of their savings. This will also reduce administrative burdens for providers, supporting low-cost pension provision. We issued a consultation document in December 2011 which set out ways to deal with a proliferation of small pots, ranging from small changes to the current system to encourage transfers, to automatic transfers of small pension pots. I am grateful to all those individuals and organisations who provided responses and participated in our workshops.
The overwhelming response to the consultation was that the small pots issue urgently needs to be resolved. The vast majority of our respondents agreed that an automated transfer system is the best way forward. Creating a system in which small pots follow people through employment is the preferred approach among savers, according to a recent survey by the Association of British Insurers. The Government’s analysis indicates that this option will achieve the most consolidation and generate the most administrative savings in the long run. We have outlined our preference for this approach in the Command Paper, ahead of essential work with all interested parties to firm up the policy and design an implementation strategy.
I will place a copy of the impact assessment in the House Library.