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Written Statements

Volume 549: debated on Tuesday 4 September 2012

Written Ministerial Statements

Tuesday 4 September 2012


Bilateral Loan to Ireland

I would like to update the House on the loan to Ireland.

Ireland completed the sixth quarterly review of its International Monetary Fund and European Union programme of financial assistance on 21 June 2012, following which, the utilisation period for the fourth instalment of the UK bilateral loan began.

Upon request, the Treasury disbursed the fourth instalment of £403.37 million on 1 August 2012, with a maturity date of 3 February 2020.

The Treasury will provide a further report to Parliament in relation to the bilateral loan as required under the Loans to Ireland Act 2010 as soon as is practicable following the next reporting period, which ends on 30 September 2012.

As my written statement of 11 June outlined, agreement has been reached in principle on a new, lower interest rate on the bilateral loan to Ireland. This is subject to the loan agreement being revised to reflect the new interest rate. I will update Parliament once the revised loan agreement has been finalised and signed.

The Government believe that it is in our national interest that the Irish economy is successful and its banking system is stable. The Government continue to support Ireland’s efforts to improve its economic situation.

Communities and Local Government

Correction to Parliamentary Question 90451

I regret to inform the House that the answer I gave to parliamentary question 90451 from my hon. Friend the Member for Thurrock (Jackie Doyle-Price) on 24 January 2012, Official Report, column 135W, could be inadvertently misleading.

The answer should read:

The Housing Health and Safety Rating System (HHSRS) allows local authorities to assess properties against 29 different hazards, including damp and mould growth. If following an inspection a property is found to contain a serious, “category 1”, hazard, we would expect the local authority to take action in relation to the hazard. The assessment for whether damp is a hazard takes into account factors such as the state of repair of the dwelling, the extent of existing dampness and the effect it could have on mould growth, and the consequent potential for harm.

Environment, Food and Rural Affairs

Dairy Industry

During the summer, the UK dairy industry suffered a major crisis caused by price cuts and I would like to update the house on events since then. Original price cuts were withdrawn, whilst processors, producers and retailers held discussions.

On Friday 31 August, industry leaders agreed a code of practice on contractual relationships in the dairy sector. This is a significant step forward. The code of practice is a robust and proactive basis for a more effective system of raw milk contracts that will provide greater certainty and clarity for all parties. It addresses issues of price, volume, timing of deliveries and duration, and it includes effective processes to analyse progress and review the impact of the code.

The Government will continue to work with industry to build on this progress. We will shortly consult on key elements of the European Commission’s proposals for the European dairy sector (the EU “Milk Package”). We will seek views on whether it should be compulsory for dairy producers and processors to have a written contract. But at this stage the Government consider that the new code of practice should be given proper time to take effect and deliver change for the benefit of the industry as a whole.

The Government also recognise the value of farmers working together in producer organisations to improve their profitability through efficiency and competitiveness gains as well as increasing their negotiating power. The Department for Environment, Food and Rural Affairs recently announced that £5 million-worth of new funding will be made available for farmers to collaborate and to support business-led innovation. We will consult on the arrangements needed to implement dairy producer organisations and work with industry to encourage participation and secure the benefits of effective collaboration.

The UK is one of the largest milk producers in the world. Dairy is the UK’s single largest sector of agriculture and its future prospects are positive. There is growing recognition that real changes are needed at all levels of the supply chain to drive greater confidence, innovation and investment and take advantage of the huge opportunities that exist—in domestic markets and abroad. Over the last few weeks, dairy farmers and buyers have faced up to some of the most challenging issues currently facing the UK dairy industry and taken steps to address the problems that are hindering its development.

There are potentially bright prospects for the UK dairy industry. Apart from Ireland, the UK has the best climate for growing grass in Europe and we should be producing more value-added products such as cheese, butter and yoghurt for the domestic dairy market. The UK currently has to import 50% of these products, which indicates that the sector is not yet reaching its full potential.

There are also major export opportunities with emerging markets such as China, whose growing middle classes are crying out for dairy products. Early in 2012 the Government published a food and farming exports action plan to encourage more food and drink companies to venture into overseas markets. This includes supporting and encouraging businesses at home and promoting British food abroad and opening up markets.

Securing a healthy future for the UK dairy industry is a real priority for the Government. We are confident about its longer-term prospects and the agreement of the industry code of practice is a genuine step forward which we support.


Fluoridation of Drinking Water (Consultation)

The Department of Health is publishing a “Consultation on the arrangements for consideration of proposals on the fluoridation of drinking water” today.

The Health and Social Care Act 2012 provides that, from 1 April 2013, responsibility for consultations on proposals on fluoridation will transfer from strategic health authorities to local authorities. The proposals could be for a new fluoridation scheme or the variation or termination of an existing fluoridation scheme. The consultation document sets out options for the making of water fluoridation regulations under the Act on the conduct of consultations, ascertaining public opinion and the decision-making process.

Our aim is to put in place a fair and practical way to amend powers for consideration of proposals on fluoridation schemes. The merits of fluoridation itself will be considered locally in accordance with the regulations. We welcome views and will use these views to inform our thinking on the regulations.

A copy of “Healthy Lives, Healthy People: Consultation on the arrangements for consideration of proposals on the fluoridation of drinking water” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

Home Department

Police Pension Scheme

On 27 March 2012, I issued a written statement to the House concerning remuneration and conditions of service in the police. Within that statement I explained that I would put forward a proposal on long-term reform of police pensions to the Police Negotiating Board, which I did on the same day. In common with changes which have been developed across public service pension schemes, my proposal reflected the principles for reform established last year by the report of the Independent Public Service Pensions Commission, led by Lord Hutton.

My officials have been engaged in detailed and constructive discussions with representatives of the Police Negotiating Board since 27 March, and I have received a number of written representations from the organisations represented. Having considered the outcome of those discussions, and the representations made during this period of consultation, I am announcing today my decision for the reform design framework for police pensions. This framework sets out the Government’s final position on the main elements of police pension reform and will form the basis for discussions on points of further detail in moving to implement these changes.

The main parameters of the new scheme design are set out below:

a. a pension scheme design based on career average revalued earnings;

b. a provisional accrual rate of 1/55.3 of pensionable earnings each year, subject to agreement on the outstanding issues;

c. there will be no cap on how much pension can be accrued;

d. a revaluation rate of active members’ benefits in line with the consumer prices index (CPI) + 1.25%;

e. pensions in payment and deferred benefits to increase in line with CPI;

f. average member contributions of 13.7% from April 2015. As announced by the Chief Secretary to the Treasury on 20 December 2011, the Government will review the impact of the 2012-13 contribution changes, including the effect of membership opt-outs, before taking final decisions on how future increases will be delivered in 2013-14 and 2014-15, and in the new scheme. Interested parties will have a full opportunity to provide evidence and their views to the Government as part of the review;

g. flexible retirement from the scheme’s minimum pension age of 55, built around the scheme’s normal pension age of 60—for all active members aged 55 or more at retirement, 2015 scheme benefits taken before normal pension age will be actuarially reduced with reference to the 2015 scheme’s normal pension age, rather than the deferred pension age (i.e. state pension age). Those members’ benefits will continue to be paid after age 60 at that actuarially reduced level. All other members will have their 2015 scheme benefits actuarially reduced on a cost neutral basis from the scheme’s deferred pension age;

h. the normal pension age of 60 will be subject to regular review, which will also consider the linked early retirement facility described at (g). These reviews will consider the increasing state pension age and any changes to it, alongside evidence from interested parties, including staff associations and employers. It will consider if the normal pension age of 60 remains relevant, taking account of the economical, efficient and effective management of the police service, the changing profile of the work force and the occupational demands of, and fitness standards for, police officer roles;

i. this regular review will be informed by scheme data and experience;

j. late retirement factors for members retiring from active service to be actuarially neutral from normal pension age;

k. a deferred pension age equal to the individual’s state pension age;

l. optional lump sum by commutation at a rate of £12 for every £1 per annum of pension forgone in accordance with HMRC limits and regulations;

m. abatement in existing schemes to continue;

n. ill-health retirement benefits to be based on the arrangements in the 2006 scheme;

o. all other ancillary benefits to be based on those contained in the 2006 scheme;

p. members rejoining after a period of deferment of less than five years can link new service with previous service, as if they had always been an active member;

q. members transferring between public service schemes would be treated as having continuous active service;

r. an employer contribution cap and floor, as described in the reform design framework.

Transitional and protection arrangements

There will be full statutory protection for accrued rights for all members as follows:

a. all benefits accrued under final salary arrangements will be linked to the member’s final salary, in accordance with the rules of the member’s current schemes, when they leave the reformed scheme;

b. full recognition of a member’s expectation to double accrual for service accrued under the police pension scheme 1987 (“the 1987 scheme”), so that a member’s full continuous pensionable service upon retirement will be used to calculate an averaged accrual rate to be applied to service accrued under the 1987 scheme;

c. members of the 1987 scheme to be able to access their 1987 scheme benefits when they retire at that scheme’s ordinary pension age (i.e. from 30 years’ pensionable service; age 50 with 25 or more years’ pensionable service; or the member’s voluntary retirement age), subject to abatement rules for that scheme. Pensionable service for the purpose of calculating the ordinary pension age will include any continuous pensionable service accrued under both the 1987 scheme and the 2015 scheme;

d. members of the police pension scheme 2006 (“the 2006 scheme”) to be able to access their benefits under that scheme when they retire at that scheme’s normal pension age (i.e. age 55);

e. members will continue to have access to an actuarially assessed commutation factor for benefits accrued under the 1987 scheme.

There will be statutory transitional protection for certain categories of members, as follows:

a. all active 2006 scheme members who, as of 1 April 2012, have 10 years or less to their current normal pension age (i.e. age 55) will see no change in when they can retire, nor any decrease in the amount of pension they receive at their current normal pension age. This protection will be achieved by the member remaining in their current scheme until they retire;

b. all active 1987 scheme members who, as of 1 April 2012, have 10 years or less to age 55 or have 10 years or less to age 48 and are 10 years or less from a maximum unreduced pension, will see no change in when they can retire, nor any decrease in the amount of pension they receive at their current normal pension age. This protection will be achieved by those members remaining in their current scheme until they retire;

c. there will be a further period of tapered protection for up to four years for scheme members. Members who are within four years of qualifying for transitional protection, as of 1 April 2012, will have limited protection so that on average for every month closer to qualifying for transitional protection they gain about 53 days of protection. The period of protected service for any member under these tapering arrangements will have finished by 31 March 2022. At the end of the protected period, they will be transferred into the new pension scheme arrangements. Further details on how the tapered protection will apply are set out in the reform design framework.

Areas for further detailed discussion

As set out in the reform design framework, there will be further discussion on specific areas of detail, responding in part to issues raised during consultation with the Police Negotiating Board. In particular there will be further consideration of equalities issues that have been identified, or any which may be identified during further discussion, as well as arrangements to ensure compatibility between the new scheme design and recognised existing or future schemes for police officers exiting the service before normal pension age.

I believe this represents a fair outcome, reflecting the range of issues raised during consultation on my original proposal. This will continue to offer valuable pension arrangements for police officers which will be affordable and sustainable in the future.

The Government Actuary’s Department has confirmed that this design does not exceed the cost ceiling set by the Government in my proposal of 27 March. Copies of the reform design framework and the Government Actuary’s Department verification report have been placed in the Libraries of both Houses.

International Development

Rwanda Budget Support

Following my visit to the Kivus region of the Democratic Republic of Congo in July, I delayed the disbursement of general budget support (GBS) to Rwanda because of concerns about the impact of the conflict on civilians in the region and reports of Rwandan involvement in the M23 mutiny. At this time I sought assurances from President Kagame that Rwanda was adhering to the strict partnership principles around GBS, which I strengthened in the summer of 2011.

Rwanda has engaged constructively with the peace process initiated through an international conference on the Great Lakes region and there is a continuing ceasefire in the Kivus. Given this progress and recognising that the Government of Rwanda have continued to demonstrate their strong commitment to reducing poverty and improving their financial management, Britain will partially restore its general budget support to Rwanda. We will now disburse half (£8 million) of the delayed GBS tranche and will re-programme the remaining £8 million. This decision reflects our responsibility to protect the poor, but also caution as concerns remain over Rwanda’s involvement with the M23 rebels. The re-allocated money will be directly channelled to programmes for education and food security, to ensure that the poorest people in Rwanda are not hurt by this change. It will put over 60,000 more Rwandan children into primary school, half of whom will be girls, and increase production of key food security crops by an estimated 5,130 metric tonnes.

There are still concerns that Rwanda could do more to meet our joint partnership principles in full. This is the first of two budget support payments scheduled for the financial year 2012-13. The next disbursement is due in December 2012. A decision on that disbursement will be made in due course. The UK will continue to closely monitor the Government of Rwanda’s role in bringing about peace in the eastern DRC region.


Parliamentary Question 106221 (Family Courts)

The written answer given to the hon. Member for Birmingham Yardley (John Hemming) on 30 April 2012, Official Report, column 1158W, did not fully address the question that was asked. The hon. Member asked, pursuant to the answer of 25 April 2012, Official Report, column 920W, on family courts: expert evidence, if the Secretary of State would bring forward proposals to allow non-legally qualified people who are not party to the proceeding to refer expert reports in family proceedings to regulators.

The full answer is as follows:

The Government have no plans to bring forward proposals of this kind. The Government do not consider it necessary, since it is already possible for someone who is not a party to the proceedings to refer an expert’s report to regulators provided certain conditions are met.

The Family Procedure Rules 2010 permit a party to the proceedings, or that party’s legal representative acting on the party’s instructions, to communicate information to another person where necessary to enable the party to make and pursue a complaint against a person or body involved in the proceedings, which would include disclosing an expert’s report to another person for the purpose of pursuing a complaint about that expert. That person is then permitted (with the party’s permission) to disclose this information to another person (who may, for example, be the regulator) provided it is for the same purpose. Neither the person to whom the information is disclosed in the first instance, nor the person to whom it is subsequently disclosed, need be legally qualified. The relevant rules (FPR 12.75 (3) and 12.75 (1) (c)) are set out in part 12 of the Family Procedure Rules.

Damages Act 1996 (The Discount Rate)

On 1 August 2012 the Ministry of Justice, the Scottish Government and the Department of Justice, Northern Ireland jointly published a consultation paper “Damages Act 1996: The discount rate—how should it be set?” (CP12/2012).

The paper seeks views on how the Lord Chancellor in relation to England and Wales, Scottish Ministers in relation to Scotland and the Department of Justice in Northern Ireland in relation to Northern Ireland should set the rate of return to be prescribed under section 1 of the Damages Act 1996.

The prescribed rate is taken into account by the court in determining the return to be expected from the investment of a sum awarded as damages for future pecuniary loss in actions for personal injury. This rate of return is referred to as “the discount rate” and is currently 2.5%.

The consultation period is 12 weeks from and including 1 August. Copies of the consultation paper have been placed in the Libraries of both Houses. The document is also available online at:

Independently of this consultation and the review of the amount of the prescribed discount rate of which it forms part, the Ministry of Justice intends to issue a consultation paper in the autumn of 2012 to review the present legal basis for the setting of the rate in England and Wales. The consultation will seek views on whether the restrictions on the factors that can be taken into account in prescribing a rate under section 1 of the Damages Act 1996 are still appropriate.