Written Ministerial Statements
Thursday 17 January 2013
Business, Innovation and Skills
Employment Law Review
The Government believe the UK economy should be supported by a framework of laws that ensures we have a strong and efficient labour market which is flexible, effective and fair. We are looking at the laws that affect all aspects of the relationship between employers and employees, and at each stage of the relationship, through the employment law review. Priorities for reform have been informed by the red tape challenge process, and the results of the 2011 resolving workplace disputes consultation.
Today the Government are publishing their response to the consultation on ending the employment relationship, and launching three further consultations relating to the employment relationship, covering:
How early conciliation should operate in practice;
A range of proposals to improve the TUPE regulations; and,
Reforming the regulatory framework for employment agencies and employment businesses.
Our response to the ending the employment relationship consultation details how we will support the legislative changes in the Enterprise and Regulatory Reform Bill regarding the inadmissibility of offers of settlement in unfair dismissal claims at employment tribunal, and a power to increase or decrease the limit on the compensation awarded in cases of unfair dismissal.
Settlement agreements offer a dignified, consensual and mutually beneficial way of ending the employment relationship without risking a long, costly and distressing employment tribunal claim. In support of the legislative change, we have consulted on the principles to underpin the system, and the best way for Government to enable employers and employees to approach settlement agreements confidently in a fair and appropriate way. We will ask ACAS to publish a statutory code of practice, which will include template letters for beginning the settlement discussion, and an explanation of the term “improper behaviour”. Accompanying guidance will supplement the code with more substantive practical advice, including guidance on good practice for employers to approach settlement within the broader context of management.
The Government intend to introduce the statutory code and guidance by the summer, in line with the legislative change coming into force. In relation to the unfair dismissal compensatory award cap, the Government intend to introduce a 12 months’ pay cap on the compensatory award for unfair dismissal, subject to parliamentary process. The introduction of a pay-based cap will run alongside a specified overall cap, with the limit the lower of the two figures.
With regard to the overall level of the cap, no consensus emerged in consultation either in terms of whether it should be changed, or, if so, how it should be changed. We are therefore not pursuing a change to the overall cap on the compensatory award for unfair dismissal at this time.
The Government will introduce the necessary secondary legislation to implement the change to the cap after the Enterprise and Regulatory Reform Bill receives Royal Assent.
We are also launching today a further consultation on early conciliation. We announced, in the Government response to the resolving workplace disputes consultation, our intention to introduce an early conciliation (EC) process that would make it a requirement for most prospective claimants to send the details of their claim to ACAS before they are able to lodge the claim with the employment tribunal. This proposal, which has received broad support from all stakeholders, will enable ACAS to offer the parties the opportunity to resolve their dispute without the need for tribunal involvement.
We are taking the necessary primary powers to introduce EC in the Enterprise and Regulatory Reform Bill. However, the implementation of EC requires secondary legislation and the development of the necessary administrative process. This consultation sets out how we intend that EC should operate.
Our consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) also launches today. TUPE legislation protects employee rights when the business or undertaking for which they work transfers to a new employer. The call for evidence identified concerns that the benefits intended from service provision changes to TUPE made in 2006 had not been achieved and that the provisions on employee liability information were not required.
The Government consider that there is scope to improve the regulations by removing unnecessary gold-plating and generally eliminating bureaucracy. Accordingly, we are consulting on a range of proposals designed to ease the transfer process, including the repeal of the service provision changes and the specific requirements regarding the notification of employee liability information.
In addition, we are consulting on a number of proposals to change the wording of particular provisions in TUPE to more closely reflect the acquired rights directive and the case law of the Court of Justice of the European Union.
One example of this is the provisions restricting changes to contracts. Other proposals will allow smaller firms, in some situations, to inform and consult employees about transfers directly and we will also improve guidance on a range of issues.
Additionally, we are launching today a consultation on reforming the regulatory framework for employment agencies and employment businesses. The recruitment sector plays an important role in the UK’s labour market by improving the efficiency of matching demand for jobs to demand for workers. However, the legislation which regulates the sector is complicated and difficult for businesses and individuals to understand.
We want to reform how the recruitment sector is regulated, ensuring that protections are in place for people looking for work, but removing costly and complex regulations.
We want to establish when it is appropriate for the Government to impose rules on the recruitment sector and when it is more appropriate for the sector and marketplace to decide the rules for themselves. The consultation will also seek views on different enforcement options and whether individual enforcement would be more effective than the current Government enforcement regime.
Copies of the “Ending the employment relationship” Government response, and of each of the consultation documents being launched today, have been placed in the Libraries of both Houses.
Regional Growth Fund
Today my right hon. Friend the Deputy Prime Minister will announce the opening of a fourth competitive round of the regional growth fund (RGF). A total of £350 million is available for applicants. Building on the RGF over the last two years, this money will continue to support businesses to expand and create jobs.
The additional funding was announced in the 2012 autumn statement as part of a range of measures to target help for businesses and rebalance the economy to drive growth. This brings the overall total of RGF to £2.6 billion—helping create and safeguard thousands of jobs and attract private sector investment.
RGF is delivering jobs and growth through good value-for-money projects and programmes—so round 4 will be a further competitive bidding process, with the same objectives as previous rounds. We still need to build growth in key parts of the country which are overly dependent on the public sector and the RGF is a key part of this because of its success in generating private sector investment.
Round 4 of the RGF is open now and will close to applicants on 20 March at noon. Bids will be appraised as quickly as possible. The accelerated timetable that I introduced for round 3 will be used which means the contracting process will be complete within six months of a bid being selected. Potential applicants should look out for expressions of interest events in their local area for support and further help with the application process. The first of these will be in Manchester on 31 January followed by meetings in Birmingham on 6 February, Leeds on the 19 February and Nottingham on 25 February. Other meeting dates, including one in London, will be announced shortly. These meetings are open to any organisation interested in bidding.
Further information for bidders is available at:
Progress to date
The contracting process for rounds 1 and 2 process is now complete and 89% of all round 1 and 2 projects and programmes have started. In total, 180 projects and programmes have agreed final terms. This means that over £1 billion has been released generating £5.8 billion of private sector investment. A small number of contracts are either at an advanced stage of due diligence or have specific strategic value so have been given a little more time. However, in order to retain the sense of urgency these have been moved onto the round 3 timetable which means that a final offer will have to be agreed by 19 April.
Selected bidders from round 3 are currently agreeing terms and conditions for their final offers from the accelerated timetable which was announced in October 2012. The deadline for agreeing a provisional offer is 19 January and I will be issuing a further statement following this deadline to update both Houses on progress in round 3.
Ministers have agreed that Government reserve the option to use RGF funding flexibly in order to respond quickly to economic shocks and opportunities or to ensure that viable growth-promoting projects are not terminated because of minor funding shortfalls which need to be met quickly. This will be in exceptional circumstances only and will take place outside the normal bidding process, although detailed due diligence requirements will still need to be met.
Exceptional RGF will be funded through money recycled back into the fund because selected projects or programmes have either reduced in scope or withdrawn. I will include updates on exceptional RGF in my regular statements to Parliament on RGF.
Standards in Public Life Committee (Fourteenth Report)
The fourteenth report of the Committee on Standards in Public Life (Cm 8519) has been published by the Committee today. Copies are available in the Libraries of both Houses.
The Government are today publishing draft legislation for inclusion in Finance Bill 2013, in addition to that published on 11 December. This will be open for technical consultation until Wednesday 6 February 2013.
Details of the clauses “Tax Information and Impacts Notes” and “Explanatory Notes” published today are available on both the HM Treasury and HM Revenue and Customs website.
The draft legislation includes clauses on the following policies announced at Budget 2012:
The removal of a tax charge under the remittance basis of non-domicile taxation which can arise inadvertently in certain circumstances;
The definition of trusts with vulnerable beneficiaries. This is a revision of legislation published on 11 December 2012 and contains detailed provisions originally planned to be introduced by secondary legislation but which will now be introduced via Finance Bill 2013.
The draft legislation also includes two other clauses:
As announced at autumn statement 2012, the Government are publishing draft legislation to raise the annual drawdown pension limit from 100% to 120% of the value of an equivalent annuity;
Legislation which amends the Corporation Tax Act 2010 to ensure that, as with police authorities before them, chief constables and the Commissioner of Police of the Metropolis are exempt from any liability to pay corporation tax on any profits from chargeable activities. This is a new announcement and the legislation will take effect from the dates the new legal entities came into existence. For the Commissioner of Police of the Metropolis the legislation will take effect from 16 January 2012, and for chief constables it will take effect from 22 November 2012.
Foreign and Commonwealth Office
Extraordinary Foreign Affairs Council
The High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, has called an extraordinary Foreign Affairs Council for Thursday 17 January in Brussels to discuss the situation in Mali, and take stock of possible EU action in support of the Malian Government and people. I will attend.
Baroness Ashton’s statement calling the extraordinary Foreign Affairs Council can be found at:
As set out in Baroness Ashton’s statement, the Foreign Affairs Council will discuss the proposed EU training mission, financial and logistical assistance for the deployment of African-led International Support Mission to Mali (AFISMA), and will consider other direct support to the Malian Government.
I will report to Parliament the outcome of the extraordinary Foreign Affairs Council, and will continue to update Parliament on future Foreign Affairs Councils.
Plasma Resources UK Limited
Further to the written ministerial statement made on 13 July 2012, Official Report, columns 84-85WS, I am announcing today that the Government have decided to seek private sector investment in the Government-owned limited company, Plasma Resources UK Ltd (PRUK) through the sale of the majority or all of the shares in the company. We are taking this action to support the company and its employees in the next phase of the company’s development.
We have carefully examined the strategic options that will best allow the company—which includes the UK-based fractionation facility Bio Products Laboratory Limited (BPL) and the US-based plasma supply company, DCI Biologicals Inc—to grow and be successful in an established and highly competitive global industry. It should fulfil its potential as part of the strategically important bioscience sector of the UK economy. Our conclusion is that this route will best meet those requirements.
Patients will also benefit, as investment will not only allow continued improvements to the existing products but also the potential development of new treatments to create a better product portfolio. Resources will also be used to ensure that the facilities keep pace with the latest technology so the company can achieve its full potential. Overall, the investment will play a key part in ensuring the continued supply of high-quality products to patients.
Potential investors will need to show not just the level of resources they are willing to make available but also set out a credible plan as to how the operations will be grown and how products will be developed.
Leader of the House
Public Reading Stage
The coalition programme for government undertook to introduce a new “Public Reading Stage” for Bills to give the public an opportunity to comment on proposed legislation online.
In pursuance of this aim the Government have conducted two pilot Public Reading Stages on the Cabinet Office website, in respect of the Protection of Freedoms Bill in February/March 2011 and the Small Charitable Donations Bill in August/September 2012. In addition, an online consultation was conducted by the Department of Health on the draft Care and Support Bill, which is currently undergoing pre-legislative scrutiny by a Joint Committee of both Houses.
Levels of participation in these consultations varied: for the Protection of Freedoms Bill 6,600 individuals visited the site; and 256 contributors made a total of 568 comments. Many of these were from members of the public rather than from organisations and made a helpful contribution to improving the content of the Bill. Participation on the Small Charitable Donations Bill was more limited: there were 85 comments from 23 organisations, most of which had already contributed to an earlier consultation on the Bill. There were no comments from individuals without a connection to interested organisations. The online consultation on the draft Care and Support Bill attracted a substantial number of responses, with over around 1,000 comments received. The detailed outcome of this consultation has been submitted to the Joint Committee scrutinising the Bill.
The comments from the Protection of Freedoms Bill and the Small Charitable Donations Bill were collated and presented to the Public Bill Committees, alongside an analysis by the Department responsible for the legislation. The comments and reports were referred to during the Committee Stage for each Bill, although they did not directly trigger any amendments.
The Government remain committed to promoting public engagement in Parliament and specifically in the legislative process. The pilot results indicate that approaches to consultation should be carefully tailored to the Bill. We will therefore seek to make our approach to consultation on legislation in line with the consultation principles introduced last year. These seek to ensure a more proportionate and targeted approach, so that the type and scale of engagement is proportional to the potential impacts of the proposal. We will not, at this stage, be introducing a Public Reading Stage as a matter of routine for Bills. Instead, an assessment will be made on a case-by-case basis of the type of public engagement and consultation that best fits the nature and timing of individual Bills, taking into account levels of stakeholder engagement in policy development. This decision does not preclude further consideration with a view to improving public engagement, particularly during Public Bill Committees, by this House.
The Government will draw upon the foil range of existing consultation and engagement mechanisms available, in line with the development of an open policy making model, as outlined in the civil service reform plan. These consultations may be conducted where it has not been possible to publish the legislation in draft, or either as part of or in addition to pre-legislative scrutiny where this would not duplicate work being undertaken by Select Committees.
I am today confirming a machinery of government change concerning the management of the Government’s stake in the uranium enrichment company URENCO.
Responsibility for this is moving from the Department of Energy and Climate Change to the Department for Business, Innovation and Skills.
Work and Pensions
Today the Government will publish a Command Paper giving their response to the independent review of sickness absence in Great Britain carried out by Dame Carol Black and David Frost. We are setting out a new strategy which will help people to stay in work, support employers to manage attendance more effectively, and reduce the number of people falling needlessly on to sickness benefits.
The review identified structural failings in the current system, which typically offers little support to either employees or employers in the early stages of sickness absence and brings significant state resources to bear only once the individual has become detached from the labour market and significant damage has been done to their future employability.
Our response sets out new measures to support employers, employees and healthcare professionals to minimise avoidable absences and keep more people attached to the labour market. We expect this to yield significant benefits for individuals, employers and the state.
At the centre of our approach is a new state-funded service which will carry out an independent assessment of employees after four weeks of sickness absence and provide advice to the employee, employer and GP. This service will be funded by the abolition of the percentage threshold scheme, which currently reimburses some elements of statutory sick pay but does nothing to encourage employers to reduce it. We agree with the reviewers that existing resources would be better used to support employers to manage sickness absence more effectively.
We will also support employers by retaining existing tax relief on employee assistance programmes and abolishing statutory record-keeping requirements for statutory sick pay. We will consider the introduction of a tax relief on interventions recommended by the new service, and make a decision at the 2013 Budget.
The response sets out how we will use the opportunity provided by wider reform of the welfare system to address the problems the reviewers identified with the way the current benefit system treats people with health or sickness issues. Under universal credit we will ensure that people receive appropriate support to assist their return to work from the start of their claim rather than waiting until they have undergone a work capability assessment. And we will use the universal jobmatch system to help people who are unable to return to their old job due to health issues to find more suitable employment.
The response also announces measures to strengthen sickness absence management within the public sector, following the progress made by the civil service in reducing absence and reviewing the terms of occupational sick pay policies. We will continue to work with public sector employers to bring transparency and accountability to the management of sickness absence.
The response has been informed by close working across Government and the devolved Administrations and input from employers, employee organisations and health care professionals across the country, who have all made an important contribution to the development of these proposals.