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Written Statements

Volume 613: debated on Wednesday 13 July 2016

Written Statements

Wednesday 13 July 2016


Veterans' Healthcare

The Armed Forces Covenant is the Government’s commitment to service personnel, their families and veterans who have made enormous sacrifices on recent operations and to ensuring that those seriously injured receive the care and support they deserve. I would like to update the House on some of the steps we have taken to enhance this provision.

The Defence Medical Rehabilitation Centre (DMRC) at Headley Court has long provided world-class rehabilitation and prosthetic support to our serving personnel. I am pleased to tell the House that a number of veterans with amputation-related complications can now also receive prosthetic support at Headley Court, through the recent establishment of a veterans’ Complex Prosthetic Assessment Clinic (CPAC) at the DMRC. Access to the CPAC is being offered to veterans with the most complex needs on a case by case basis, after referral by and with the support of their NHS specialist. Early feedback has been good and the Government are working closely with BLESMA, the limbless charity, and other service charities to ensure veterans and NHS clinicians are aware of this initiative and its benefits.

A small number of those referred to the CPAC might also meet the clinical criteria for the direct skeletal fixation (DSF) pilot, for which the Government announced £2 million of LIBOR funding in November 2015. The DSF pilot, which is due to run for another two years, has already enabled some service personnel and veterans to have potentially life-changing surgery in this country at public expense.

I can also announce a plan to improve the care received by the most seriously injured service personnel and veterans. Currently such support is funded and delivered by a number of separate agencies, including the NHS, Ministry of Defence, local authorities and charitable organisations. A pilot, commencing in September will see care of this kind co-ordinated and delivered by a new Integrated High Dependency Care System (IHDCS), producing a joined-up and improved system of care for the individual. This will provide confidence for this small number of individuals, and their families, that their clinical, health and social support needs will continue to be met when they leave the armed forces and for the rest of their lives.

The Government and the nation will never forget the hard work, great bravery and sacrifice of all current and former service personnel and I will ensure the House is kept informed of this continuing and vital work.


Energy and Climate Change

Offshore Energy Strategic Environmental Assessment

I am today announcing the outcome of the offshore energy strategic environmental assessment (OESEA3) regarding future offshore energy developments.

The Department has completed an offshore energy strategic environmental assessment (OESEA) of a draft plan/programme to enable further offshore licensing/leasing for oil and gas, gas storage including carbon dioxide transport and storage as part of carbon capture and storage (CCS), and offshore marine renewables including wind, wave and tidal energy.

The renewable energy elements of the draft plan/programme cover the relevant parts of the UK exclusive economic zone (EEZ) and the territorial waters of England and Wales; for hydrocarbon gas storage it applies to UK waters (territorial waters and the UK EEZ), and for carbon dioxide storage it applies to UK waters (the UK EEZ and territorial waters excluding territorial waters in Scotland) and for hydrocarbon exploration and production it applies to UK territorial sea and the UK continental shelf.

An eight-week public consultation on the OESEA3 environmental report closed on 29 April 2016. All comments received on the draft plan/programme and the environmental report have been considered by the Department and a post-consultation report for OESEA3 has been prepared and placed on the website: This summarises stakeholder comments and the Department’s clarifications and responses to them. The environmental report and the comments received have informed the Department’s decision on whether to proceed with the draft plan/programme.

The Department has decided to adopt the draft plan/programme, with the area offered restricted spatially through the exclusion of certain areas together with a number of mitigation measures to prevent, reduce and offset significant adverse impacts on the environment and other users of the sea. On the basis of the evidence set out in the environmental report, which discussed the alternatives to the chosen approach, and the comments received during consultation, the Department concludes that there are no overriding environmental considerations that would prevent the achievement of our draft plan/programme of offshore marine renewables leasing (wind, wave and tidal technologies), offshore oil and gas licensing, and offshore gas storage and carbon dioxide storage leasing/licensing, provided appropriate measures are implemented that prevent, reduce and offset significant adverse impacts on the environment and other users of the sea. In all cases, the relevant competent authority should undertake any appropriate assessments(s) prior to awarding licences or leases, where screening shows this to be necessary. This meets the requirements of EU Council directive 2009/147/EC on “the conservation of wild birds” and Council directive 92/43/EEC on “the conservation of natural habitats and wild fauna and flora”, and UK implementing regulations. Although the UK has recently voted in favour of leaving the European Union, there will be no immediate changes in the way the UK undertakes its obligations under EU legislation. The adoption of the draft plan/programme demonstrates we are continuing to deliver on our energy and climate change agenda.

The environmental report sets out the environmental considerations relevant to the plan/programme in more detail and section 6.1 includes recommendations that take into account these environmental considerations. The post-consultation report responds to comments made on a number of environmental considerations, which have also been taken into account.

The Department will monitor the significant environmental effects of the implementation of the plan/ programme, as described in section 6.2 of the environmental report.

OESEA3 paves the way for the Oil and Gas Authority to make preparations for further rounds of offshore licensing for oil and gas and to consider future licence applications for gas storage and carbon dioxide storage to ensure that the UK continues to have a diverse, affordable and reliable mix of energy sources as we continue to move towards a low-carbon economy. The Oil and Gas Authority is currently an Executive agency of the Department, but it is expected to become a Government company later this year.

OESEA3 also paves the way for future leasing for offshore marine renewables, including wind, wave and tidal which will contribute to the UK renewable energy targets. The environmental report highlights that siting and consenting processes for offshore renewable energy developments must remain flexible to allow for technological innovation, including any mitigation measures.


International Development

GuarantCo: Callable Capital Agreement

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency.

I have today laid a departmental minute outlining details of the liability of up to £40 million which DFID has undertaken in respect of the Private Infrastructure Development Group (PIDG).

GuarantCo was established in 2003 as an investment facility of the PIDG. PIDG encourages and mobilises private investment in infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia. PIDG makes it viable for private investors to participate in infrastructure deals, using limited sums from its publicly funded trust to crowd-in many times that value in private capital. The US $1.2 billion committed by PIDG donors since 2002 has leveraged over US $20 billion in private investment and a further US $9 billion in investment from partner international and development finance institutions.

PIDG supports private investment throughout the project development cycle from its earliest stages, through a number of separate facilities or companies. GuarantCo supports local currency lending for infrastructure projects in developing countries by providing guarantees to banks and bond investors. This helps to remove the risk of currency devaluation for investors and allows them to structure tailored financial instruments. In this way, it helps to promote domestic infrastructure financing and self-sustaining capital market development in low and lower-middle income countries.

GuarantCo’s business model requires it to demonstrate the capacity to issue guarantees for transactions it is discussing with counterparties. GuarantCo expects to only have a minimal number of defaulting projects. However, it needs to have a legally solid call on sufficient capital for it to pay out against called guarantees.

Currently DFID supports GuarantCo through paid-in capital. To ensure better value for money for UK taxpayer funding, however, DFID is proposing to enter into an agreement with GuarantCo for callable equity (capital). This will allow cash to remain with HM Government. It also responds to a key recommendation of the National Audit Office in its report “Oversight of the Private Infrastructure Development Group” (HC 265) in July 2014 to improve how DFID

“critically reviews its funding of the activities of multilateral bodies such as PIDG, only releasing funds once there is a clear need for the money and the capacity to make good use of it. This will enable it to compare PIDG with other options and avoid large unused cash balances”.

GuarantCo will still be able to leverage its increased equity base as it will have a sovereign guarantee of callable capital. Consequently, it will be able to continue its development objectives and expand its pipeline of projects.

DFID’s total contingent liability for GuarantCo would be £40 million under this callable capital agreement. This is part of the overall approved budget for PIDG under its current business case. The sole purpose of this arrangement is to achieve better value for money for taxpayers by providing callable capital instead of cash while achieving the same development outcomes.

The agreement would be in place for 10 years and capital can be called by GuarantCo if the value of its guarantee portfolio is more than five times its equity. This would require GuarantCo to lose about 60% (or US $166 million) of its paid-in equity at a guarantee portfolio of US $1 billion. DFID considers the risk of this happening to be low but not negligible. Even if called towards the end of the agreement, it would still provide better value for money than DFID providing cash now. DFID will continue to review the financial performance with GuarantCo regularly and GuarantCo will be required to report quarterly on the risk of the capital being called. In the circumstance where the contingent liability is called, provision for any payment will be sought through the normal supply procedure.

The Treasury has approved the proposal in principle. If, during the period of 14 parliamentary sitting days beginning on the date on which this minute was laid before parliament (i.e. 13 to 21 July and 5 to 15 September), a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.