Written Ministerial Statements
Thursday 18 October 2012
Business, Innovation and Skills
Employee Owner Status (Consultation)
My right hon. Friend the Chancellor announced on 8 October the creation of a new employment status of “employee owner”.
Today I am launching a consultation on how the Government will establish this new employment status. This coincides with introduction of the Growth and Infrastructure Bill.
Under the new employment status, employee owners will have a different set of employment rights and they will be given shares in the company of between £2,000 and £50,000. Any increase in value of these shares will not be subject to capital gains tax.
The consultation ends on 8 November, copies will be available on the BIS website and in the Libraries of both Houses.
Post-Council EU Competitiveness Council
The EU Competitiveness Council took place in Luxembourg on 10 and 11 October 2012. I represented the UK on research issues on 10 October, and also for some items on 11 October on internal market and industry. Shan Morgan, Deputy Permanent Representative to the European Union, also represented the UK for a number of items on 11 October. A summary of those discussions follows.
The research session of the Competitiveness Council started with agreement being reached on a partial general approach (PGA) on the main elements (budget was excluded) of the European Institute of Innovation and Technology (EIT) amending regulation. The main focus of subsequent discussion was on the Horizon 2020 rules for participation regulation (“the Rules”), which sets out the rules under which participants in Horizon 2020 must operate and the arrangements through which they receive funding.
Following an initial roundtable, which confirmed member state positions on reimbursement (those that wanted only flat rates and those that wanted a full economic cost option for indirect costs) and remuneration of researcher salaries (where the EU12 were seeking to achieve greater harmonisation of salaries across Europe, either by means of coefficients or by relaxing the current guidelines on bonuses), the presidency broke for lunch with Ministers to begin negotiations towards a compromise deal. A further roundtable after lunch confirmed the offer of increasing the indirect cost flat rate to 25% (from the presidency’s text 23%) and placing a cap of €8,000 per researcher per year on bonuses that could be reimbursed. With the presidency on the point of conceding defeat on agreement of a partial general approach on the rules, the UK intervened to drop its request for a full economic cost option having secured sufficient concessions on flat rates. This was followed by Germany and Finland taking a similar position on the promise from the European Commission that it would produce guidance on high value infrastructure costs that could be counted as direct costs, which would be reimbursed at 100%. On this basis the presidency concluded that agreement had been reached.
Following the conclusion of negotiations on the rules for participation, delegations received a short presentation on the Commission’s proposals for the European research area and open access to scientific data. Member states were broadly supportive, although some member states would like to see a more ambitious approach to improving gender equality amongst European researchers.
This was followed by Commission presentations and brief interventions from member states on Commission policy initiatives in relation to implementing the European research area and open access to scientific data.
Finally, Ministers had a short discussion over lunch on the future of the European strategy forum on research infrastructures (ESFRI).
The main internal market and industry issues discussed on 11 October were: the European consumer agenda; European industrial policy, including Council conclusions on key enabling technologies and the European innovation partnership on raw materials; and; a debate on the state of play of Single Market Act I.
A Council resolution was agreed on the European consumer agenda, welcoming the Commission’s May 2012 communication which set out actions to boost consumer confidence and growth. There was no discussion on this item.
The European industrial policy item covered three communications from the Commission on industrial policy, sustainable construction and cultural and creative sectors for creative growth respectively. This was a round-table discussion, on which most member states intervened. I intervened to welcome the communications, but also to stress the challenges facing European industry. I emphasised that regulation was often holding us back, and that regulation needed to keep pace with progress and innovation, for example in biosciences and space related industry. I also drew the Council’s attention to the fact that other jurisdictions appear to have been more successful than the EU in creating and growing new and innovative companies. Finally, I also restated UK opposition to the proposed instrument on reciprocity in public procurement.
Most member states also supported the communications. There will be Council conclusions on European industrial policy for agreement at the December Competitiveness Council.
The second part of the European industrial policy item concerned Council conclusions on key enabling technologies and the European innovation partnership on raw materials. Heading into Council, there was one outstanding issue on the conclusions concerning matching aid and the ongoing state aid review, where new text had been proposed by the French delegation. A compromise text was agreed by the Council pertaining to the need for an “inclusive debate” on state aid, without specifically mentioning matching aid. Many member states supported the French proposals, but equally, a number of countries highlighted that they had agreed with the original text. There will now be a debate on state aid at the December Competitiveness Council.
Over lunch, there was a discussion on the role and functioning of the Competitiveness Council. The UK was represented by Shan Morgan over lunch, though I had raised the suggestion earlier in the morning that the Council could invite relevant speakers to address the Chamber. There was some support for an annual report on progress on the growth agenda, and an interest in linking in more closely to the European semester and European Council preparations in general.
The final substantive agenda item after lunch was a debate on the state of play of Single Market Act I. The UK intervened to thank presidencies past and present for their work on progressing the Single Market Act, but also stressed the importance of ensuring existing single market rules are properly applied, and the need to follow through on the proposals contained in the Commission’s June communications on the services directive and single market governance. The UK also took the opportunity at this point to welcome the publication of Single Market Act II, in particular the objective of more efficient and integrated networks.
Most other member states intervened to emphasise that priority must be given to those measures in the Single Market Act that will do most to boost growth, with the Dutch and Czech delegations, amongst others, highlighting the need for reducing red tape and better impact assessment of proposed measures. France and Italy alone mentioned the social dimension of the Single Market Act, with the French delegation specifically raising reciprocity.
Draft conclusions will be prepared for the December Competitiveness Council.
Four AOB points were covered. The first concerned the recent roundtable on the future of the European steel industry. Discussion was not expected, but several member states, including the UK, intervened to welcome the focus on the issues facing the steel industry and to highlight their wish to be involved in any follow up work from the roundtable. The second AOB point concerned results from the 12th European tourism forum and the third was a presentation by the German delegation on state aid for films—the UK intervened on neither issue. Finally, the Commission presented the SMA II package. There was no discussion on this item, most delegates had covered their intervention as part of the Single Market Act I discussions.
Narrative Reporting (Draft Regulations)
Today I have published draft regulations that will improve the quality of narrative reporting by Britain’s largest companies. These regulations will improve corporate accountability and transparency, and make it easier for shareholders to hold their companies to account.
This package of proposals recognises and encourages the best in reporting, of which there are many examples, and without stifling innovation, sets a model for others to follow.
These regulations will restructure the format of corporate reports. One important change will be the creation of a strategic report, based on the business review, which will contain the important information investors and other stakeholders want to see first. I believe this will result in confident strategic reporting where companies present a clear and succinct picture of themselves and their activities.
The regulations will remove some outdated and unnecessary requirements about what companies should cover in their annual reports. They will also enhance current reporting by making explicit the requirement for companies to consider human rights issues. The regulations also implement a recommendation from Lord Davies’ review of Women on Boards so that companies will be required to disclose the number of women and men within the organisation as a whole and at senior and board levels.
These regulations are not intended as a stand-alone method to improve corporate reporting. During our consultations it became clear that there is a greater role for guidance, not just on the content of annual reports, but also about how to ensure reports are meaningful and concise. The Financial Reporting Council will consult on the style of revised guidance early next year.
I believe that this package of reforms will reenergise annual reporting and send a strong signal in support of the best in annual reporting, while at the same time reshaping reports to guide others in the right direction, through regulation, best practice and guidance.
Communities and Local Government
I am today announcing the Government’s intention to postpone the next business rates revaluation in England to 2017. Primary legislation will be brought forward through the Growth and Infrastructure Bill, which will shortly be laid before Parliament.
Business rates are the third biggest outgoing for local firms after rent and staff costs. This decision will avoid local firms and local shops facing unexpected hikes in their business rate bills over the next five years. As business rates are linked to inflation, there will be no real-terms increase in rates over this period. This reform will provide certainty for business to plan and invest, supporting local economic growth.
Since the last revaluation (based on 2008 valuations), the economy and property market have faced exceptional changes. A revaluation at this point would be likely to result in sharp changes to business rate bills in many parts of the country and in many sectors. Tax stability is vital to businesses looking to grow and help improve the economy.
The Government are committed to maintaining up-to-date rate bills through regular five-yearly revaluations in England which will resume after 2017, once the economy has had a chance to recover fully from the financial and fiscal crisis this Government inherited from the last Administration.
These measures complement the local retention of business rates being introduced through the Local Government Finance Bill which will give councils new incentives to support local firms and local shops, and also complements the new power to introduce local business rate discounts, the automation of small business rate relief and the abolition of the unfair “ports tax” all enacted through the Localism Act 2011.
Culture, Media and Sport
Equality and Human Rights Commission
I am pleased to announce the appointment of Baroness Onora O’Neill of Bengarve as the new chair of the Equality and Human Rights Commission. Her appointment is for a period of three years, four months and 20 days, commencing on 12 November 2012 and ending on 31 March 2016.
The process by which Baroness O’Neill was appointed followed the Office of the Commissioner for Public Appointments (OCPA) code of practice for ministerial appointments to public bodies, and was scrutinised by an OCPA public appointments assessor throughout. Baroness O’Neill appeared before a parliamentary pre-appointment scrutiny hearing on 16 October, which was conducted by the Joint Committee on Human Rights and chaired by Dr Hywel Francis. The report confirmed that Baroness O’Neill was a suitable candidate for this appointment.
I am delighted that this rigorous open competition has resulted in the appointment of a very able chair to lead the Equality and Human Rights Commission to become the valued and respected national institution we all want to see.
Foreign and Commonwealth Office
NATO Parliamentary Assembly (Membership)
The right hon. the Baroness Taylor of Bolton has replaced Lord Sewel of Gilcomstoun CBE as a member of the United Kingdom delegation to the NATO Parliamentary Assembly.
I would like to inform the House of the latest developments in Syria since my statement of 3 September 2012.
The situation in Syria remains dire. More than 25,000 have died since March 2011. The UN estimates there are over 2.5 million people inside Syria in need of urgent humanitarian help and over 340,000 Syrian refugees who have fled from the brutality of the regime to neighbouring countries.
The British Government’s objective is a peaceful end to the violence and a political transition to a more democratic Syria. We believe that Assad must step aside in the interests of the Syrian people if a sustainable transition is to occur.
We are continuing intensive diplomatic efforts to make progress on a political transition. We are supporting the UN-Arab League Special Representative Brahimi in his efforts to implement the Geneva communiqué which sets out a process of political transition and which was agreed by the permanent five members of the Security Council and the Arab League in June. We continue to believe that there is a need for a chapter VII resolution putting the full weight of the Security Council behind a peaceful settlement and will continue our efforts to that end. However, in the absence of Russian and Chinese agreement to such a resolution we are intensifying our work in four areas: supporting the Syrian people and political opposition; increasing pressure on the Syrian regime; preparing for a political transition; and helping mitigate the humanitarian and regional effects of the crisis.
First, in our work to support the Syrian opposition, we have expanded our assistance to those in parts of Syria where the regime is no longer in control. With the £5 million non-lethal assistance that I announced in August we have trained citizen journalists and other activists in media skills; and in the coming weeks we will train civil society groups to document human rights violations; train doctors to gather evidence sexual and gender-based violence; and train a network of “active citizens” in peacebuilding and conflict resolution skills. We are also providing generators, communications equipment and water purification kits to unarmed opposition groups and civil society organisations in some of the areas worst affected by violence.
We are at the forefront of international community activity to support the international and external opposition to become a viable political alternative to the Assad regime. On 18 September the UK’s special representative to the Syrian opposition chaired a meeting of countries to agree a strategy to encourage the opposition to unify and present a common vision for Syria. We are working with Qatar to support an inclusive opposition conference in Doha at the start of next month. We have made clear the importance of the opposition reaching out to all elements of Syrian society to reassuring them of their place in the Syria of the future.
Secondly, the UK is leading efforts to increase pressure on the Assad regime and to deny it sources of finance with which to buy more weapons. We helped to secure the latest round of EU sanctions agreed on 15 October which targets senior members of the Assad Government we believe share responsibility for the regime’s violent repression of the Syrian people. We also remain at the forefront of the international community in calling for the situation in Syria to be referred to the International Criminal Court to ensure that the perpetrators of the most serious international crimes will be held to account. With our strong support, the Human Rights Council in Geneva adopted a resolution on 28 September which condemned the continuing violence in Syria and extended the mandate of the UN Commission of Inquiry to enable it to continue its invaluable work in documenting human rights violations and abuses.
Thirdly, we are working with international partners to ensure that the international community is ready to support the process of political transition in Syria. At the Foreign Affairs Council on 15 October, I encouraged the EU to start developing plans for how the EU can support a future Syrian transitional Government and to support peacebuilding initiatives with civil society inside Syria.
Fourthly, we are working to mitigate the impact of the crisis on Syria’s neighbours. The House will be aware the British Government have been clear about our diplomatic support for Turkey, including through NATO, following recent aggressive Syrian actions on the Turkey-Syria border. We have supplied practical assistance to Lebanon to help improve border security and provided stabilisation assistance to Palestinian camps in the region.
The British Government are also working to address the humanitarian impact of the crisis. The Secretary of State for International Development has increased our humanitarian support to assist people in desperate need in Syria and those who have fled to neighbouring countries. We are providing food to over 80,000 people a month in Syria, urgent medical care for over 50,000 people affected by the fighting, and help for more than 45,000 refugees. Humanitarian needs will increase as winter approaches. The Prime Minister and the Secretary of State for International Development last month announced an additional £8 million in humanitarian support to provide essential supplies to help the Syrian people over the coming months. The UK is the second largest bilateral donor with £39.5 million in funding for the Syrian people but UN appeals for assistance remain drastically underfunded. We are working closely with key donors to ensure that the international community stands by the Syrian people during their time of need.
Last month, at the United Nations General Assembly in New York, the Secretary of State for International Development and I urged other donors to provide more to address the escalating humanitarian crisis in Syria.
I will continue with my colleagues in Government and with international partners to pursue action in support of a resolution to the crisis in Syria. I will keep the House informed of developments.
The Government’s estimates of the costs and benefits of implementing those policies in the Health and Social Care Act 2012 that required legislation were contained in the “Coordinating Document for the Impact Assessments and Equality Analysis” published in September 2011. These estimates reflected the changes that the Government made to their proposals following the listening exercise and the report of the NHS Future Forum.
Officials have been tracking closely the actual costs and benefits of the changes. The publication of the Department’s annual report and accounts for 2011-12 provides an opportunity to give an update on these figures. I can now report to the House that the current estimate of costs is in the range £1.5 billion to £1.6 billion. Although higher than the most likely estimate made in the impact assessment (£1.2 billion to £1.3 billion), the costs remain within the wider possible range published in the co-ordinating document (£1.0 billion to £1.5 billion), after taking account of some costs (estimated at £127 million in total) that were excluded from the impact assessment either because they were out of scope (for example, because they related to measures not requiring legislation) or because they were redacted (for example, because they were commercially sensitive).
Within this forecast I now expect redundancy costs to be around £630 million, which is £360 million lower than the highest estimate in the impact assessment and some £180 million lower than the most likely estimate.
In the impact assessment, long-term annual savings arising from the changes were estimated at £1.5 billion per year from 2014-15 onwards. Gross savings over the transition period (2010-11 to 2014-15) were estimated at £4.5 billion.
Annual savings are still expected to be £1.5 billion from 2014-15 but the cumulative savings over the transition period are now forecast to be £1 billion higher, at £5.5 billion.
For comparability with the impact assessment, all the figures above are stated using 2010-11 prices.
Inter-Departmental Ministerial Group on Human Trafficking
The first annual report of the Inter-Departmental Ministerial Group on Human Trafficking is today being laid before Parliament.
The report will show that more work than ever before is being carried out both in the UK and internationally to prosecute criminals and stop trafficking gangs in their tracks.
The report is an assessment of the trends in human trafficking in the UK. It also sets out the work underway to reduce the threat posed by organised criminal gangs and the support mechanisms in place for victims.
Copies of the report are available in the Vote Office.
Court Estates Reform Programme
On 14 December 2010 my predecessor announced to Parliament the final decisions following the consultation on the potential closure of 103 magistrates courts and 54 county courts. This included the relocation of Rhyl county court to Prestatyn magistrates court (to be renamed Prestatyn law courts) in April 2013.
The work required to implement this decision has proved more difficult than anticipated. My officials are continuing to engage with local agencies and the judiciary about the best way to achieve this relocation. Pending the outcome of these discussions and any further consultation that may be required, I have deferred the relocation of Rhyl county court until no earlier than April 2014.