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Written Statements

Volume 556: debated on Monday 7 January 2013

Written Ministerial Statements

Monday 7 January 2013

Cabinet Office

Coalition Government (Mid-term Review)

Today, at the halfway point in the Parliament, the Government are publishing a mid-term document.

Two and a half years ago, the coalition came together and formed a Government at a time of significant economic danger. The Programme for Government, which was published in May 2010, described the decisions and policies that the Government believed were required to address the fiscal deficit, to rebalance the economy, to improve the public services, to build a better society and to reinforce Britain’s position in the world.

This mid-term review highlights the key actions of the coalition to date and illustrates the progress that has been made in taking forward the principal policies contained within the programme for government.

On all of its key aims the coalition Government remain steadfast and united.

As well as describing what has been done since the start of the Parliament, the review document also sets out the coalition’s priorities for the remainder of the Parliament—with the twin aims of enabling the UK to compete in the global race at a time of increasing international competition and of enabling all of our citizens to fulfil their aspirations.

The Government will, above all, prioritise reducing the deficit, rebalancing the economy, and reforming welfare and education. But the review identifies a large number of policies in other areas that will be implemented during the second half of the Parliament—including setting out some future policy directions.

I am placing a copy of the review document in the Libraries of both Houses.

Public Body Reform

Over the Christmas recess, the Cabinet Office published “Public Bodies 2012” which provides an update of the Government’s programme of public body reform and a directory of non-departmental public bodies (NDPBs), as well as summary information on the size and expenditure of the NDPB sector and information on public appointments.

Publication of “Public Bodies 2012” is a positive step for transparency; providing detailed information about every non-departmental public body in a single easy-to-use document. For the first time, the report is being released in parallel with an electronically searchable form of the directory.

“Public Bodies 2012” can be downloaded from the civil service website at: Copies have been provided to the Libraries of both Houses.


Income Tax and Corporation Tax (Anti-Avoidance)

The Government are committed to tackling aggressive and artificial tax avoidance to ensure the Exchequer is protected and fairness is maintained for the taxpayer.

In December, Her Majesty’s Revenue and Customs (HMRC) were notified of an avoidance scheme that seeks to generate loss relief from a property business which could then be used by corporate users of the scheme to reduce their corporation tax profits.

On 21 December the Government acted swiftly to tackle this scheme. It made a public announcement that targeted anti-avoidance rules will be introduced in the next Finance Bill. These rules will have effect from the date of that announcement (21 December 2012). The text of the public announcement is provided below.

The Government are extremely disappointed that this scheme has been designed and is being sold despite the Government making it clear that we will take swift action to prevent schemes like this being used by those who want to escape paying the tax they owe. The Government do not accept that these arrangements have the effect that is sought, but to remove any doubt prompt action has been taken to protect the Exchequer.

The legislation will have effect for both income tax and corporation tax purposes from 21 December 2012 and will protect significant amounts of revenue.

Draft legislation and further details of this measure were published on HMRC’s website together with the public announcement.

The text of the announcement:

“Anti-avoidance: trade and property business deductions

The Government is today announcing that it will introduce targeted anti-avoidance rules (“TAARs”) to the income tax and corporation tax provisions governing the relationship between rules prohibiting and allowing deductions from profits of a trade or property business. The TAARs will have effect from today’s date (21 December 2012).

The Government is acting today because HMRC was recently notified of an avoidance scheme that seeks to exploit the rules in relation to a property business to generate artificial loss relief for use by companies to reduce their corporation tax profits. The Government does not accept that the scheme has the effect intended but to remove any doubt, prompt action is being taken to protect the Exchequer.

The provisions in sections 31 and 274 of the Income Tax (Trading and Other Income) Act 2005 and sections 51 and 214 of the Corporation Tax Act 2009 govern the relationship between rules prohibiting and allowing deductions. They provide that certain business expenditure incurred by trades and property businesses, that would otherwise be disallowable, can be deducted from business profits.

Legislation will be introduced in Finance Bill 2013 to amend all of the above sections to include a TAAR. The TAAR will apply where a permissive rule would otherwise allow a deduction in calculating the profits of a trade or property business for an amount which arises from tax avoidance arrangements. The effect will be that the rules prohibiting a deduction take precedence over those allowing a deduction.

Tax avoidance arrangements are those to which the person is party and the main purpose, or one of the main purposes, is the obtaining of a tax advantage. The term “arrangements” will be widely defined.

The amendments will apply to amounts which arise directly or indirectly in consequence of, or otherwise in connection with, arrangements which are entered into on or after 21 December 2012, or any transaction forming part of arrangements which is entered into on or after that date, except where the arrangements are, or any such transaction is, pursuant to an unconditional obligation in a contract made before that date.”

Communities and Local Government

Department's Work (Christmas Recess)

I would like to update hon. Members on the main items of business undertaken by my Department since the House rose on 20 December 2012.

Helping hard-working families with council tax

On 1 January, my Department highlighted new legislation that takes effect in April 2013 which allows local taxpayers to choose to pay their bill over 12 months rather than 10, if they wish. This new right will make it easier for those on fixed incomes to manage their bills, and would lower the average band D council tax instalment by an average of £24 per month for 10 months.

This builds on the support that the coalition Government have already announced for local authorities and police and crime commissioners in England to help them freeze council tax for a third year and assist in keeping the cost of living down. The Government have set aside £450 million in the autumn statement. Taxpayers living in an average band D home in England could save up to £72 compared to a 5% increase, while the cumulative effect of the three years’ worth of freezes is potentially worth over £200 to band D residents. I hope hon. Members will encourage their local authorities to take up this year’s freeze offer.

Tackling council tax fraud helps reduce bills for law-abiding citizens. I intend to lay and publish this week draft affirmative regulations, including setting out the powers which local authorities will have to combat fraud in the council tax system and to prosecute those who commit criminal acts. These regulations will ensure that local authorities continue to be able to tackle fraud when council tax benefit is replaced by local council tax reduction schemes in April, and are consistent with those that prevent fraud in the welfare benefit system. Reflecting the coalition Government’s commitment to civil liberties, we have scaled back existing state powers which we believe to be disproportionate.

A fairer and simpler planning system

The coalition Government believe in fair play, with everyone abiding by the same rules. On 21 December, we launched a consultation on proposals to give councils greater freedom to prevent unauthorised traveller sites and the small minority who abuse planning rules. Under proposals, councils would be given greater freedom to determine whether to use temporary stop notices in relation to caravans that are in breach of planning control, and are used as a person’s main residence. This would be backed up with the potential for fines of up to £20,000 on a summary conviction or an unlimited fine on indictment. Subject to the outcome of the consultation, proposals will allow councils to act quickly to stop unauthorised sites before they become established, saving on the costs of enforcement and preventing long-term harm to the environment and local amenity.

The coalition Government are committed to making the planning system simpler, more efficient and more effective. On 21 December, my Department launched a consultation to consider the recommendations of the external review group on planning practice guidance led by Lord Taylor of Goss Moor, to rationalise the volumes of unwieldy and contradictory advice. The goal is to make practice guidance easier to understand for both practitioners and the public. This does not involve any change to planning policy, which is laid out in the national planning policy framework.

On 27 December, my Department outlined our response to the consultation paper on streamlining information requirements for planning applications. This will encourage a more proportionate approach to the information that applicants are required to provide with outline planning applications, reducing administrative costs to both applicants and councils, while ensuring that all interested parties continue to be well informed of the details of any proposed application.

A fairer deal for taxpayers on local government pensions

On 21 December, my Department published a consultation seeking responses from interested parties on draft regulations for the new local government pension scheme to come into force in April 2014 relating to membership, contributions and benefits. This represents a key step in the process of reform that began with the commitment given in the coalition Government’s programme to review the long-term affordability and sustainability of public service pension schemes.

Figures for the last financial year show that the local government pensions scheme cost £7.5 billion. Employers—i.e. taxpayers—contributed £5.9 billion towards maintaining staff pensions. The cost to the public is equivalent to £320 a year for average band D council tax. Yet, for the first year, the cost of local authority pension taxpayer-funded contributions has actually fallen, and these further reforms will protect taxpayers’ interests while protecting those on low and moderate incomes.

Cutting intrusive red tape

On 21 December, my Department wrote to local authorities to make clear that equality impact assessments are not a legal requirement. Indeed, they can be resource intensive and take staff away from planning and delivering important public services. We also reminded councils that statutory guidance makes clear that councils do not need to undertake unnecessary lifestyle or “diversity” questionnaires of their local residents and suppliers. I will shortly be giving guidance to my Department’s arm’s length bodies on the same issue.

On Boxing day, the media reported how residents in Stockport, Cheshire East and Manchester were being asked about their sexual preferences when they responded to a consultation on a proposed road improvement. This is a typical example of how the public sector wastes money on pointless and intrusive bureaucracy.

A helping hand on housing

On 20 December, my Department launched the new £200 million build to rent fund which will boost the construction of new homes specifically for private rent. By financing the construction of rental homes until they are built, let out and managed, the fund will give developers the freedom to build homes specifically for that market with confidence. An expert taskforce will also work to boost investor awareness of the fund and offer practical support to those interested in this new market. The prospectus for the fund has been published on the Homes and Communities Agency’s website.

Over Christmas, Ministers highlighted the help available to those sleeping rough through the new StreetLink hotline and website. StreetLink, run by charities Homeless Link and Broadway with funding from my Department, offers a valuable alternative to a cash handout for people sleeping rough. This will support the “no second night out” initiative as it is extended across the country. In London, where “no second night out” has been adopted, already 70% of rough sleepers have not spent more than one night on the streets.

On 2 January, my Department highlighted new deregulation that will cut red tape and costs for homeowners and businesses alike. Changes are being made to the building regulations regime in England to deliver an even better and more cost-effective way of ensuring our buildings remain safe and sustainable. The changes will deliver savings of around £50 million per year to business and will come into force from April 2013. Changes to remove the requirement to notify simple and low risk electrical works will mean that householders keen to improve their home no longer need to pay £240, or more, to their local council to have simple electrical jobs checked.

New Years Honours

I wish to congratulate to all those working in the local government, housing, fire and voluntary and community sector that were recognised in the new year’s honours list acknowledging their valued contribution to society.

I have placed in the Library of the House a copy of the associated documents and press notices relating to these announcements.

Culture, Media and Sport

Entertainment Licensing Reform

In late 2011, the Department for Culture, Media and Sport launched a consultation into reforming the regime that regulates many public and charitable entertainment activities.

The consultation was launched after many years of calls to reduce unnecessary regulation arising from the 2003 Licensing Act for low-risk activities that hamper cultural and community creativity, restrict charities and prevent small businesses from diversifying.

These activities, and many of the organisations and institutions that host them, play a pivotal role in our communities. We are determined to ensure that needless bureaucracy does not restrict these kinds of positive contribution to society. This is why we announced our intention to act in the coalition programme for Government, the growth review, the red tape challenge, and in the departmental business plan for the Department for Culture, Media and Sport.

The consultation received a very full response—around 1,350 responses—and the Department has examined every comment carefully. We are extremely grateful to everyone who responded.

This consultation has played a full part in shaping future policy. Its key findings were that there was considerable support for deregulation, but that certain protections needed to be retained, including an 11 pm end time for deregulated performance, and, in most circumstances, a lower audience cap than was originally proposed.

The new policy for entertainment is outlined below:

Performance of plays: no longer requires a licence between 08:00-23:00 for audiences of up to 500 people.

Performance of dance: no longer requires a licence between 08:00-23:00 for audiences of up to 500 people.

Indoor sport: no longer requires a licence from 08:00-23:00 for audiences of up to 1,000 people.

Live music has already been partially deregulated under the Live Music Act 2012, which came into force on 1 October 2012, with the following effect:

unamplified live music deregulated between 08:00-23:00 with no restrictions on audiences size;

amplified live music deregulated between 08:00-23:00 in premises licensed for sale and supply of alcohol, and in certain workplaces.

We will, additionally, retain the key protections of the Live Music Act 2012, but raise the permitted audience ceiling from 200 to 500, in on-licensed premises and workplaces in line with most other deregulated activities.

Recorded music: in line with live music deregulation, regulation for recorded music (mainly discos and DJs) will be suspended between 08:00-23:00 in premises licensed for the sale and supply of alcohol. This measure, like live music deregulation, is subject to controls from the local licence review process.

We also intend to exempt from most forms of entertainment licensing:

Community venues (including local authority)





Film exhibition: we will consult in the coming months on detailed proposals to partially deregulate community film exhibition whilst maintaining important age restriction protections for children.

We will bring the measures into effect as the parliamentary timetable allows.

I am arranging for a summary of responses, and the Government’s full response, to be made available on the DCMS website and be deposited in the Libraries of both Houses.

I will also place the impact assessment on the website and in the Libraries of both Houses in due course.

Environment, Food and Rural Affairs

EU Environment Council

My noble Friend the Parliamentary Under-Secretary for Resource Management, the Local Environment and Environmental Science, Lord de Mauley, represented the UK at the EU Environment Council in Brussels on 17 December 2012. Paul Wheelhouse (Scottish Minister for Environment and Climate Change) and John Griffiths (Welsh Minister for Environment and Sustainable Development) also attended.

After adopting the list of legislative and non-legislative A items, Environment Ministers adopted Council conclusions on “A Blueprint to Safeguard Europe’s Waters”. The UK welcomed the blueprint, praising its focus on implementation rather than new legislation, which is in line with principles of better regulation. Several other member states similarly supported the blueprint’s focus on implementation and greater integration.

Next, the presidency led an exchange of views on “Greening the European Semester”, based on the annual growth survey 2013. Discussion at Environment Council focused on the bottlenecks to achieving Europe 2020 resource efficiency objectives, and member states were asked to give their views as to which measures in the field of resource efficiency and climate action had the biggest potential to contribute to growth and job creation. A broad range of opinions were put forward. The UK made clear that actions needed to reflect the specificities of each member state; that any additional targets would need to be clearly justified; and highlighted our domestic actions to support resource efficiency. The Commission (Hedegaard) summarised the discussion by stating that the debate was timely, as the annual growth survey was increasingly becoming the key tool for setting economic priorities for the year to come. Discussions on the annual growth survey 2013 will take place at various EU-level Councils, and will inform debate at the spring European Council in March 2013.

Lord de Mauley attended a ministerial lunch, during which the outcomes of the COP18 climate change negotiations which recently took place in Doha were discussed. Member states recognised that overall a good outcome had been achieved at COP18 but, moving forwards, there is still much work to be done.

In the afternoon, an orientation debate on the seventh EU environment action programme (seventh EAP) was held. The Commission said that it had been a “difficult birth”, but that the seventh EAP should offer a clear-cut programme and a solid and pragmatic framework for years to come. The Commission said that there were only a few legislative gaps to be filled, and the main focus was on implementation. The tone of the discussion was generally positive. Many member states, including the UK, welcomed the focus on implementation. The UK said that they believed the environmental acquis was largely complete, and that any new proposals for legislation must be based on evidence and supported by a robust impact assessment. In that vein, the UK felt that the seventh EAP impact assessment was not quite fit for purpose, and stated that the UK would carry out further work to assess more accurately the ramifications of the programme. The specific concerns of other member states were wide-ranging, but several member states voiced a particular concern about proposed targets to reduce landfill.

Under environmental AOB items, a progress report was offered on the programme for the environment and climate action (LIFE), and the presidency provided information on environmental quality standards in the field of water policy (priority substances). The presidency also gave information on the assessment of the effects of certain public and private projects on the environment (the EIA directive). Belgium, Spain and the Czech Republic all intervened to air their concerns about the proposed measures, after which the presidency curtailed the discussion, highlighting that there would be further opportunities to discuss the proposal during the Irish Presidency.

In the afternoon, several climate change items were discussed under “Any Other Business”. The emissions trading scheme appeared on the agenda in the context of aviation, the recently published carbon market report and the Commission’s proposed measure for changing the auctioning profile for ETS allowances (known as “backloading”). With regards to backloading, Poland presented a paper, based on Commission data, which appeared to show the negative financial impact that backloading would have for certain member states. The Commission responded by questioning the validity of their analysis, and were supported by the Netherlands. A proposal to define the modalities for reaching the 2020 targets to reduce CO2 emissions from cars and vans was also presented. Most member states who intervened supported the proposal’s ambition in terms of target levels, and most supported looking at longer-term targets post-2020. The presidency also presented information on proposals for accounting rules and action plans on greenhouse gas emissions and removals relating from activities related to land use, land use change and forestry (LULUCF). Finally, the Irish presented their priorities for the forthcoming Irish Presidency.

The UK also held short bilateral meetings with Croatia, France, the Netherlands and Lithuania.


The period leading up to Christmas and in to the new year has again seen flooding across the country. This was particularly unfortunate in that it impacted on people and families during the festive season and I would like to offer my sincere sympathies to those who were affected.

The recent floods which began mid way through December affected much of the country. Following on from previous flooding in November and a very wet summer, the December rainfall quickly led to further flooding. Although rain is not unusual at this time of year we have experienced a prolonged period of heavier than usual rainfall during the year. 2012 was the wettest on record in England with some areas experiencing over 131% of average levels. This heavy rain led to flooding from rivers, groundwaters and surface water.

The December floods affected many parts of the country with 532 properties flooded, most notably in the south-west with 379 properties impacted. Nearly 22,000 properties were protected from flooding and over 135,000 properties were sent a warning about the potential risk of flooding giving people essential time to protect their homes and possessions. In total over 1.1 million people are signed up to receive Environment Agency flood warnings.

I would like to pay tribute to the work of the Environment Agency, fire, ambulance, police and other rescue services, local authorities, the voluntary sector and local communities who contributed to the flood response. This is particularly relevant for those who put aside their traditional Christmas and new year celebrations to help others and to them I offer my sincere thanks.

I saw for myself some of the magnificent work that results from this multi-agency response when I visited Upton-upon-Severn to see new flood defence schemes successfully keeping high river flows at bay. I also met some of the people who managed the response at the local incident room in Tewkesbury. Last Thursday the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon) visited Dorset and Wiltshire to gain a better understanding of the continuing groundwater flooding challenges and to meet some of the people who contributed to our operational response in the region.

As river levels fall, saturated ground continues to lead to potential groundwater flooding problems. The Environment Agency’s teams will be monitoring groundwater levels across England and Wales for many weeks to come and advising local authorities who lead on groundwater flooding. As the rain eases over the coming days slower responding rivers such as the Thames, Severn, Nene and the Ouse in Yorkshire, will continue to rise in their lower reaches. The Environment Agency will be monitoring these closely.

The recent heavy rain caused major disruption to the rail network in different parts of the UK, particularly in the south-west of England. Major flooding resulted in certain sections of the network being closed and this was compounded by landslips resulting in severe damage to tracks and signalling equipment. Where possible train operating companies either re-routed services or provided alternative means of transport, although this was not always possible due to local road conditions. On the roads there was some initial minor disruption to the strategic road network but the major impact was on local roads under the responsibility of local authorities.

In addition to the impacts on homes and businesses around the country, the current floods have been keenly felt among farmers. The Somerset Levels and Moors have been inundated for a large proportion of the year and continue to be under water. The Lower Hampshire Avon has been at flood risk since early July. In the north-east, there has been extensive and prolonged flooding of agricultural land in the Vale of York. I recognise the difficulties that this situation presents to farmers and offer my sincere sympathies to those who have been affected. It is important to note that investment in flood defence schemes has protected agricultural land. For example, 59 projects completed during 2011-12 provided an improved level of flood protection to more than 74,000 hectares of agricultural land. We recognise that concerns have been raised about clearance of water channels in rural areas and that the Department is working with the Environment Agency to examine the issue. My Department and its agencies will continue to do all that we can to issue warnings and to moderate the impacts of floods. We will assess the long-term impact of the recent saturation of agricultural land.

The Government recognise the adverse impacts that flooding has had on communities, both urban and rural, across the country throughout 2012. Continued Government investment means that during 2012 we have been able to protect a total of over 200,000 properties from flooding. We now expect to exceed our goal to better protect 145,000 homes from flooding and coastal erosion by March 2015. The autumn statement announced an extra £120 million for flood defences in England during this spending period allowing us to protect up to a further 60,000 properties.

We remain committed to ongoing discussions with the Association of British Insurers (ABI), on behalf of their members, and others about what replaces the statement of principles agreement. It would not be appropriate to comment in detail on their progress. A range of options are on the table and discussions have been very constructive. No final decisions have been taken. We are keen to improve on the statement of principles. We need a solution that ensures affordable insurance bills for those at flood risk but does not place unsustainable costs on wider policyholders and the taxpayer. The Secretary of State for Communities and Local Government is responsible for the Bellwin scheme of emergency financial assistance to help local authoritieswith the immediate costs associated with protecting life and properties in their areas. His Department stands ready to support all councils that have suffered from the devastating floods including financial support through the Bellwin scheme and we are monitoring the situation carefully. High river levels, groundwater flooding, standing water and surface water runoff continue to make conditions difficult in different parts of England. I encourage people to continue to take care and think about their own safety and that of friends, relatives and neighbours.

These floods, coming as they have after a long series of previous floods, have been a tragedy for those affected, and I want to conclude by paying tribute to the wonderful community spirit that I, my hon. Friend the Under-Secretary of State and Members across the House have seen around the country in their local communities. I shall, of course, keep the House informed of any further significant developments.


EU Transport Council

I attended the last Transport Council of the Cypriot Presidency in Brussels on Thursday 20 December.

The Council agreed a general approach on the proposal for a directive of the European Parliament and the Council on periodic road worthiness tests for motor vehicles and their trailers and repealing directive 2009/40/EC. Following widespread criticism of the Commission’s proposal at the October Transport Council, the UK has been an active and leading negotiator at the working group meetings chaired by the presidency. The presidency subsequently presented a compromise text that reflected the reality of member states’ road safety testing practices. We supported the change of the legal form of the proposal from a (directly applicable) regulation to a directive (which gives member states some flexibility in transposition).

I welcomed the many improvements in the presidency’s text which had substantially reduced the cost implications to a manageable level, and indicated that the UK could accept the presidency’s text. I made clear that as negotiations begin with the European Parliament, we would seek to provide Members of the European Parliament with as much information as possible to explain why the changes to the original proposal were both justified, and necessary.

The presidency provided progress reports on two proposals.

The first was the proposal for a regulation of the European Parliament and of the Council establishing the connecting Europe facility. This regulation will provide the legal basis for funding of trans-European transport, energy and telecoms networks for 2014-20. The text will not be finalised until the budget figures for 2014-20 have been agreed in discussions on the multi-annual financial framework (MFF).

The second was the proposal for a regulation of the European Parliament and of the Council on the implementation and exploitation of European satellite navigation systems. The Council’s position on this regulation, which will provide the legal basis for taking forward the Galileo satellite navigation programme from 2014, was agreed earlier in the year. However, technical discussions with the European Parliament since then have not led to much progress. The dossier will be passed to the Irish Presidency to conclude negotiations with the European Parliament once the budget for Galileo under the MFF has been confirmed.

The Council adopted conclusions on the Communication on “EU’s External Aviation Policy—Addressing Future Challenges”. The Commission welcomed the conclusions, highlighting in particular the worsening aviation relationship with Russia, especially Russia’s ongoing refusal to implement its commitments on Siberian overflight charges. The Commissioner called for collective action at EU level and said he would be producing a road map in the new year with a view to pursuing an EU/Russia comprehensive agreement in due course.

The Council also adopted a proposal for a decision on the comprehensive aviation agreement between the EU and its member states and Israel. The original plan had been for the agreement to be signed in the margins of the Council, but due to internal political reasons, Israel was not able to sign at this time. The Commission hoped that Israel would be in a position to sign this agreement shortly after national elections in the spring 2013.

A high level co-operation agreement with Eurocontrol (European Organisation for the Safety of Air Navigation) was signed in the margins of the Council.

Under any other business, the Commission provided an update on recent discussions at the International Civil Aviation Organisation to agree a global approach to tackling emissions from aviation. The Commission clarified that it was proposing a temporary derogation on enforcement of the aviation emissions trading system (ETS) relating to international flights and hoped the European Parliament and the Council would approve this through a decision in the first quarter of next year.

Also under any other business, France tabled a room document which called for a discussion to be held in the International Maritime Organization on the 2015 deadline for implementing the new requirements on the sulphur content of marine fuels. A number of member states intervened and stressed that they would be keen to discuss practical issues, such as the cost of low sulphur fuels to businesses.

The cleaner power for transport package which was due to be discussed as an AOB item was taken off the agenda.

Keith Brown MSP, Scottish Minister for Transport and veterans also attended.