Written Ministerial Statements
Tuesday 19 March 2013
High-quality, affordable child care is essential in improving children’s life chances and supporting parents back into work. The high cost of child care remains a significant disincentive to work for too many parents.
The Government will therefore introduce a new scheme to offer tax-free child care to working families. Support will ultimately be open to 2.5 million working families with children under 12, around five times as many as benefit from the current system. Support will be provided at 20%—equivalent to the basic rate of tax—of yearly child care costs up to £6,000 per child. This will be worth up to £1,200 per child, and so will save a typical working family with two children under 12 up to £2,400 a year.
To be eligible, families will have all parents in work, with each earning less than £150,000 a year, and will not already receive support through tax credits and later, universal credit.
The new scheme will be phased in from autumn 2015, replacing the existing system of employer-supported child care (ESC) and will build up over time to include all children under 12, with all children under five eligible from the first year of operation.
Tax-free child care will extend support compared to the current system of ESC, which provides a tax exemption for child care vouchers and directly contracted child care. ESC will continue for current members if they want to retain it and new claimants will be able to receive support through the new tax-free offer. ESC recipients who are eligible may choose to move into the new tax-free child care scheme if they wish, but will not be able to receive both. ESC will continue to be open to new joiners until tax-free child care is available. The tax exemption available for workplace nurseries will remain.
The Government will also increase child care support in universal credit to improve work incentives and ensure that it is worthwhile to work up to full-time hours for low and middle-income parents. A total of £200 million of support will be provided within universal credit, which is equivalent to covering 85% of child care costs for households qualifying for the universal credit child care element where the lone parent or both earners in a couple pay income tax. The details of how to provide this support will be determined as part of the consultation on the scheme for tax-free child care, to ensure the two schemes operate effectively together.
The new tax-free offer will be phased in from autumn 2015, partly funded by the phasing out of ESC. The £200 million universal credit offer is planned to be phased in from April 2016 as child care support moves from tax credits into universal credit and will be funded from within social security budgets at the time. Details will be set out in future spending reviews.
This announcement builds on support already announced by the Government, including increasing the free entitlement to 15 hours a week of free early education all three and four-year-olds; extending the free entitlement to around 40% of two-year-olds from 2014-15; and extending child care support in universal credit to parents working fewer than 16 hours.
At the same time, the Government are taking action to drive up the quality of child care and give more flexibility to professionals: improving qualifications through introducing early years teachers; increasing Ofsted’s focus on weaker provision, to drive up quality; and reducing bureaucracy for providers. Alongside improving standards in the early years, this will help ensure that parents’ money goes further.
The Government will shortly consult on the detail of the new tax-free child care scheme, including on how employers could continue to play a role in supporting their employees with child care costs within the new scheme.
Environment, Food and Rural Affairs
Agriculture and Fisheries Council
The next Agriculture and Fisheries Council is on Monday 18 and Tuesday 19 March in Brussels. I will be representing the UK. Richard Lochhead MSP, Alun Davies AM and Michelle O’Neill MLA will also attend.
The two-day meeting will concentrate on the CAP reform package. Negotiations will centre on the four regulations that make up the package. The Irish presidency is seeking to agree a mandate on the CAP reform package at this Council to enable it to start negotiations with the European Parliament. If this can be achieved it will pave the way for a full political agreement in June.
There is one item under any other business regarding a Dutch request to discuss EU trade in plants with Russia.
Foreign and Commonwealth Office
Foreign Affairs and General Affairs Councils
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Foreign Affairs Council (FAC) and I attended the General Affairs Council (GAC) in Brussels on 11 March. The FAC was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland. Commissioners Piebalgs (development), Georgieva (international co-operation, humanitarian aid and crisis response) and Fule (enlargement) were in attendance for some of the discussions. The United Nations and the League of Arab States Joint Special Representative for Syria, Lakhdar Brahimi, attended lunch with the Foreign Ministers.
The GAC was chaired by the Irish presidency, namely the Foreign Minister for Ireland, Eamon Gilmore.
Foreign Affairs Council
A provisional report of the meeting and conclusions adopted can be found at: http://www.consilium.europa. eu/uedocs/cms_data/docs/pressdata/EN/foraff/136004.pdf.
Baroness Ashton began the FAC by briefing on her activities on a range of issues. She started with an update on the Serbia-Kosovo dialogue and her clear message to the parties on the need for timely progress. Baroness Ashton then outlined the state of discussions with Iran following the February E3+3 (UK, France, Germany, China, Russia, US) talks with Iran in Almaty, Kazakhstan. Baroness Ashton updated on the situation on Mali, emphasising the importance of the political road map and elections as well as development assistance, on which the EU would host a donors’ conference in May. The Foreign Secretary briefed his colleagues on his visit to Mali earlier this month. Baroness Ashton briefly mentioned the elections in Kenya, stating that the process had been largely peaceful so far. She had noted Kenyatta’s statement in which he promised to work with international institutions.
Ministers discussed the EU-Russia relationship. While Russia was an important trading partner for the EU, and co-operated well with the EU on a number of international issues, there were worrying trends regarding human rights and democratic standards. The Foreign Secretary underlined the importance of the EU’s strategic relationship with Russia and the importance of Russia fulfilling WTO commitments and addressing human rights concerns. There was agreement that the EU position was stronger when it acted in unison.
Ministers discussed priorities for the EU-Japan summit on 25 March in Tokyo. Negotiations on the free trade agreement would be launched at the summit, which would help develop stronger economic and trade relations. Ministers also argued for broader political dialogue and collaboration on security and other international issues.
Ministers expressed their concern about the impact of the conflict in Syria upon Iraq. Ministers discussed the importance of the EU increasing its engagement, in close collaboration with the UN, US and other partners, and developing greater longer-term co-operation, including through the partnership and co-operation agreement currently being ratified.
Ministers discussed the EU response to the Arab spring, and the importance of the EU continuing to engage with countries in transition. The Foreign Secretary argued that EU support must remain consistent with its policy on conditionality, based on a credible assessment of partners’ progress on reforms. Baroness Ashton outlined EU efforts in Egypt, including recent visits by EU Special Representative for the Southern Mediterranean Bernardino Leon and the EEAS Deputy Secretary-General Helga Schmid. Ministers agreed on the importance of continuing to engage with Egypt, including on inclusive political dialogue, human rights and economic reform.
Ministers welcomed the recent formation of a new Tunisian Government, and noted ongoing socio-economic challenges facing the country. Baroness Ashton emphasised that the EU had committed significant programme funding in Libya and was progressing deployment of a civilian common security and defence policy (CSDP) mission on integrated border management. Commissioner Fule reported on how his recent visit to Lebanon had highlighted the difficulties posed by the continuing influx of Syrian refugees.
The UN/Arab League Joint Special Representative Brahimi attended lunch with Ministers. In the course of an extensive review of the situation, encompassing security, diplomatic, humanitarian and regional dimensions of the crisis. Ministers were reminded of the seriousness of the situation, and the need to bring the conflict to an end. Brahimi stressed that consistent and cohesive efforts by the international community were needed in support of conflict resolution.
Any other business
Romania briefed Ministers on the “Friends of Moldova” meeting held earlier that morning, which Moldovan Foreign Minister Iurie Leanca attended. The meeting had emphasised the importance of a swift return to political stability.
Democratic People’s Republic of Korea
Germany raised the DPRK, urging the EU to implement the UN Security Council sanctions as rapidly as possible and to explore further autonomous EU measures, given the recent extremely worrying developments, including the increased rhetoric. Baroness Ashton agreed on the importance of addressing this issue, and said that the EEAS was already looking at further options.
Ministers agreed without discussion a number of others measures, including:
The Council authorised the Commission to negotiate the arms trade treaty in the framework of the United Nations on those matters coming under the exclusive competence of the Union;
The Council adopted the annual update of the EU’s common military list, which defines the items subject to EU common rules on the control of exports of military technology and equipment;
The Council extended and reinforced the EU sanctions against Iran that were imposed in view of serious human rights violations;
The Council adopted conclusions on Pakistan;
The Council took note of the first common civilian-military annual CSDP lessons learned and best practices report for 2011 as well as of the lessons of CSDP support to security sector reform.
General Affairs Council
A provisional report of the meeting and conclusions adopted can be found at: http://www.consilium.europa. eu/uedocs/cms_data/docs/pressdata/EN/genaff/136013.pdf.
The GAC focused on preparation for the 14-15 March European Council, which was due to cover economic policy and relations with Russia within the context of the ongoing discussion on the EU’s strategic partners.
The plenary session of the GAC was followed by a meeting with President of the European Council, Herman van Rompuy, which continued the discussion on preparing the European Council.
14-15 March European Council Preparation
The Irish presidency presented the latest version of the draft conclusions. This text focused on competitiveness, jobs and growth, and highlighted the need for smart fiscal consolidation. Much of this was positive in encouraging member states to implement the necessary measures to put Europe on a path to recovery. However, I argued for more emphasis to be placed on the two areas with the greatest potential to unlock growth: trade and reducing unnecessary regulation.
The draft conclusions include language related to a discussion planned for the European Council on the European semester, the annual cycle of economic policy co-ordination in the EU. The March European Council will set growth and structural reform priorities for the EU and the member states for the year ahead. It will also take stock of member states’ progress in implementing reform commitments under the 2012 country-specific recommendations and will provide broad guidance to member states on the 2013 stability and convergence programmes and national reform programmes. Despite the weight given to the European semester in the European Council conclusions, most of the discussion at the GAC focused on more forward-looking elements of economic policy.
I argued that Europe faced a debt crisis and a crisis of competitiveness and that we needed to focus on these challenges. Reducing the burden of regulation could, for instance, realise immediate benefits to businesses promoting growth, but these benefits could also improve the long-term competitiveness of the EU.
The European Commission published its small and medium-sized enterprises scoreboard on 7 March. We discussed this useful publication and I argued for more concrete measures to follow up on this work. Specifically, I pressed for clear deadlines and progress on the work identifying the “Top 10” most burdensome pieces of EU legislation and tackling these burdens.
I argued that trade was also an area where EU collective action brought real value through our combined negotiating power, but we needed to realise these benefits by pursuing trade agreements with greater energy and determination. I underlined the significance of the US President’s State of the Union address, which gave momentum to the proposed EU-US transatlantic trade and investment partnership. I also emphasised that we needed to give impetus to an EU-India trade agreement.
I attended the European Council meeting held in Brussels on 14 and 15 March. The discussions focused on economic issues and growth and the situation in Syria. I also set out the three key economic issues of tax, transparency and trade; and the issues around terrorism that the UK will be pursuing at the G8 summit at Lough Erne in Northern Ireland in June.
Economic Issues and Growth
I have made the case at successive European Councils, alongside Chancellor Merkel and other like-minded leaders, for practical steps to strip away the red tape and EU directives that hamstring our businesses, especially small and medium-sized businesses—which have provided 85% of new jobs in the EU over the last decade. A fundamental principle for a reformed European Union has to be competitiveness. We cannot hope to succeed in the global race unless we tackle the self-inflicted weakness of excessive regulation and complex rules that stifle business.
In response, this European Council agreed that by June 2013, the Commission will set out proposals for how to reduce burdens on small and medium-sized enterprises including, for example, on rules on chemicals, product safety and customs. It also agreed that by the autumn of 2013, the Commission will produce a list of unnecessary EU rules to be reversed and removed from the statute book.
Britain and France have argued for several months that we need to amend the EU arms embargo to give us more flexibility to respond to events on the ground and to support the Syrian National Coalition. Last month, the Foreign Secretary secured agreement to amend the arms embargo so that we can provide non-lethal equipment; and technical assistance, advice and training to the National Coalition.
However, given the pace of events and the risk of deterioration on the ground, it is important to move now to create the option to go further if the National Security Council decides urgent action is necessary. President Hollande and I therefore secured agreement that, ahead of the deadline for renewing, amending or ending the embargo at the end of May, EU Foreign Ministers should consider further changes to the arms embargo to broaden support for the National Coalition.
Copies of the Council conclusions are available in the Libraries of both Houses.
Contingencies Fund Advance
The Ministry of Justice requires an advance to discharge its commitments which are set out in its supplementary estimate 2012-13, published on 13 February 2013 as HC 894 (CG supply estimates, supplementary estimates).
Parliamentary approval for additional resources of £1,157 million for existing services has been sought in a supplementary estimate for the Ministry of Justice. Pending that approval, urgent expenditure estimated at £70,000,000 will be met by repayable cash advances from the Contingencies Fund.
On 15 April 2011 a major fire below the M1 motorway caused significant disruption to the road network for several days. The safety of all who use our transport networks is paramount and the Department for Transport takes the potential risk of fire very seriously. Therefore, following the fire, the Department for Transport asked the Highways Agency and Network Rail to carry out a comprehensive audit of potential sources of fire risk from third party activities at locations beneath, or adjacent to their networks and report back.
The reports were sent to the Department in May 2011 and set out:
details of the audits and inspections carried out by the Highways Agency and Network Rail;
recommendations for further action to reduce the likelihood of similar incidents happening again.
The reports contained specific information about vulnerable locations, which is not being released because of the potentially sensitive nature of these sites. However, both the Highways Agency and Network Rail are today publishing redacted versions of the reports on their respective websites. Copies will be also placed in the Libraries of both Houses.
The reports concluded that significant incidents of fire under or adjacent to both Highways Agency and Network Rail networks are infrequent, with structural damage arising from such fire extremely rare.
As a result of the review the number of vulnerable sites identified by the Highways Agency has nearly halved. The Highways Agency has been working closely with landowners and tenants to eliminate the small number of remaining sites that are deemed to present a possible fire risk. The agency will continue to review all of the sites identified as part of the ongoing monitoring of the network. This will mitigate the future risk of major fire events and ensure road users are kept as safe as possible.
Network Rail continues to work with tenants operating potentially higher risk businesses close to the rail network. It has a robust management regime in place to reduce fire risk and we are grateful to them and the Highways Agency for carrying out this important work.
Work and Pensions
State Pension Reform
My noble Friend, the Minister for Welfare Reform, Lord Freud, tabled a written statement in the House of Lords yesterday because events prevented the Department from making an oral statement in the House of Commons as planned.
I am pleased to announce the Government will be able to launch the new single-tier state pension in April 2016, in keeping with the original timetable.
Our 2011 Green Paper “A state pension for the 21st century” set out the Government’s vision for a simpler state pension, which would reward retirement saving and be fairer for those who have historically had poorer state pension outcomes, such as women, the low-paid, the self-employed and those with caring responsibilities.
The work undertaken that resulted in our White Paper “The single-tier pension: a simple foundation for saving” took longer than anticipated, mainly because the existing system is so complicated, containing 60 years of modifications and tinkering, and the road to fundamental reform is not straightforward when we also need to recognise what people have built up under the existing system. Consequently, a start from 2017 reflected the additional 12 months it took to complete our plans.
However, given the positive response to our White Paper, we looked again to see if it would be possible to return to our original timetable and to deliver reform as soon as possible, to support the roll-out of automatic enrolment into workplace pensions and provide certainty for both individuals and their pension schemes at the earliest opportunity.
Therefore, I can confirm today that, from April 2016, those reaching state pension age will do so in the single-tier system. The individualised pension will reflect the lives and working patterns of today’s working-age population, and recognise the vital social contribution of those caring for children, elderly relatives or disabled people through crediting arrangements. The single tier will also mean that, for the first time in around 40 years, self-employed people will be treated the same as employees for the purposes of state pension entitlement.
Reform in April 2016 will mean that around 400,000 more people will reach state pension age under single tier, including every woman affected by the acceleration of the state pension age equalisation process in the Pensions Act 2011.
Arrangements will also remain in place to enable people to pay voluntary national insurance contributions and Her Majesty’s Revenue and Customs is reviewing the time limits for those who will receive a single-tier state pension so that, if they delay paying voluntary contributions until a pension statement based on the single-tier pension qualifying conditions is available, they will not lose out.
As the single tier is a flat-rate pension, a consequence of its introduction is the closure of the state second pension scheme and, with it, the ability to contract out of this element of the system. Those people who were contracted out will see their national insurance contributions equalise to the same rate as the rest of the population, but will also build up access to the same flat-rate state pension, set above the level of the basic means test. I can also confirm that 90% of affected individuals reaching state pension age in the first 20 years of the single tier will receive more state pension than the additional national insurance they pay.
As stated previously, this will result in additional national insurance revenue for the Exchequer. About £3.3 billion is employer national insurance contributions from the public sector and so in effect a transfer within the public sector. Of the rest of the revenue, around £0.6 billion is employer national insurance contributions from private sector, £1.4 billion is employee national insurance contributions from public sector and £0.2 billion is employee national insurance contributions from private sector—this money will not be used for net revenue raising. As per standard practice, the detail of these fiscal impacts will be accounted for in the Budget on Wednesday.