Thursday 13 July 2017
The Finance Bill introduced in March 2017 provided for a number of changes to tax legislation that were withdrawn from the Bill after the calling of the general election. The then Financial Secretary to the Treasury confirmed at the point they were withdrawn that there was no policy change and that these provisions would be legislated for at the first opportunity in the new Parliament.
The Government confirm that intention. They expect to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions. Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.
The Finance Bill to be introduced will legislate for policies that have already been announced. In the case of some provisions that will apply from a time before the Bill is introduced, technical adjustments and additions to the versions contained in the March Bill will be made on introduction to ensure that they function as intended. To maximise certainty about the exact provisions that will apply, the Government are today publishing updated draft provisions.
The Finance Bill will include legislation for the Making Tax Digital (MTD) programme. Having listened carefully to the concerns raised by the Treasury Committee, parliamentarians and stakeholders, the Government are announcing policy changes that will be reflected in the legislation to be introduced. Businesses will not be mandated to use the MTD system until April 2019 and then only to meet VAT obligations. This will apply to businesses with turnover above the VAT threshold. Businesses with turnover below the VAT threshold will not be required to use the system but can choose to do so. Businesses will also be able to opt in for other taxes, benefiting from a streamlined, digital experience.
The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.
Fiscal Risks Report
The Office for Budget Responsibility (OBR) has today published its first fiscal risks report (FRR). The report highlights that although the Government have made significant progress in reducing the deficit, debt remains high leaving the economy and public finances vulnerable in the event of shocks. The FRR fulfils the OBR’s legal obligation to publish a statement setting out the main risks to the public finances at least once every two years. It was laid before Parliament earlier today and copies are available in the Vote Office and Printed Paper Office.
The Government welcome this first FRR which keeps the UK at the frontier of fiscal practice worldwide. The establishment of the OBR has ensured that policy is made on an unbiased view of future prospects, improving confidence in the fiscal forecasts, and the publication of this report represents a significant further step taken by this Government to enhance fiscal transparency and management. This Government’s commitment to fiscal openness was recognised by the IMF in its 2016 fiscal transparency evaluation which found the UK to be “at the forefront of fiscal reporting practices worldwide”. The publication of the FRR today addresses one of the recommendations of that evaluation as well as the findings of recent NAO reports on risks to the public finances. The Government will respond formally to the FRR within the next year, as required under the Charter for Budget Responsibility.
Over the past seven years, the Government have taken important steps to reduce the UK’s exposure to fiscal risks. The 2008 crisis was a dramatic illustration of the danger of ignoring potential threats to the public finances. Since 2010, the Government have reduced the country’s exposure to fiscal risks through cutting the deficit by three-quarters from its post-war high of 9.9% of GDP, while protecting public services and delivering improved outcomes across health, education and policing and overseen record levels of employment, with over 2.9 million more people into work. The Government have also delivered far reaching reforms to financial supervision which has significantly reduced the likelihood and impact of financial instability. Today, the Government are announcing a new approval regime for Government guarantees and other contingent liabilities representing a further enhancement to the UK’s public expenditure control framework which the IMF and other international commentators recognise as being one of the strongest in the world.
Despite this progress, the OBR’s report shows that the UK’s fiscal position remains vulnerable. The legacy of the great recession remains, with debt forecast to peak this year at almost 90% of GDP—its highest level in 50 years. The unprecedented deficit that the Government inherited in 2010, which the Government have been cutting since 2010, and which saw us spend £4 for every £3 we raised in tax, is the cause of the rapid increase in debt. This report examines a broad spectrum of risks, and illustrates the potential impact on the public finances of a number of these risks materialising at the same time through an innovative “fiscal stress test”. Failing to have a credible plan to get the debt down would expose the UK to greater risk, which could have devastating consequences for our public services in the event of a new shock. The report also highlights risks from an ageing society and the erosion of tax bases.
That is why the Government remain determined to learn the lessons of the past and bolster the UK’s fiscal resilience. The Government’s fiscal rules are designed to guide the public finances back to balance at a pace sensitive to the needs of the economy. The structural deficit must be below 2% of GDP and debt must be falling as a share of GDP by 2020-21. The OBR forecasts that the Government are on track to meet both of their fiscal targets and that debt will start falling as a share of GDP before the end of the decade. It is vitally important that we continue with our plan to get the debt to GDP ratio down to improve our resilience and address the risks highlighted by the report.
The Government are also working to ensure fiscal sustainability over the long term. The Government are taking important steps to enhance the UK’s long-run productivity. Since 2010 there has been over a quarter of a trillion pounds of public and private investment in infrastructure. Looking ahead, the Government are investing more in economic infrastructure, innovation and housing through the £23 billion national productivity investment fund by 2021-22. They are also transforming technical education for 16 to 19-year-olds through the introduction of T-levels, increasing by over 50% the number of hours of training, and including a high-quality three-month work placement for every student, giving young people the technical skills they need to succeed in the world of work, and businesses the edge they need to compete in the global economy. Stronger growth through raising productivity is the only sustainable way to deliver economic resilience, higher real wages and increased living standards in the long run.
Environment, Food and Rural Affairs
Agriculture and Fisheries Council
Agriculture and Fisheries Council will take place on 17 and 18 July in Brussels.
As the provisional agenda stands, the primary focus for fisheries will be a presentation by the Commission on the state of play of the common fisheries policy and consultation on the fishing opportunities for 2018.
On agriculture, there will be a debrief on the outcome of the recent trilogue discussions concerning the proposal for a regulation of the European Parliament and of the Council on organic production and labelling of organic products.
The Council will also exchange views on modernising and simplifying the common agricultural policy, implementation of the May 2015 Council conclusions, trade-related agricultural issues and wine labelling.
The Estonian presidency, whose presidency term commenced on 1 July, will present their six-month work programme to the Council.
There are currently 11 items scheduled under any other business:
A European One Health Action Plan against antimicrobial resistance (tabled by the Commission).
African swine fever: state of play (tabled by the Commission).
Symposium on the future of food in the EU (Brussels, 27 June 2017) (tabled by the Maltese, Slovak and Netherlands delegations).
The consequences of the mandatory food origin labelling on the internal market (tabled by the Belgian delegation).
Meeting on dual quality of foodstuffs (Bratislava, 30 May 2017) (tabled by the Slovak delegation).
Dual quality of foodstuffs—presentation of the latest study (tabled by the Czech delegation).
Meeting of the Ministers of agriculture of the Visegrad Group countries and Bulgaria, Romania and Slovenia (Nadarzyn near Warsaw, 2 June 2017) (tabled by the Polish delegation).
Trade practices applied by third countries vis-a-vis EU-responsible EU member states (tabled by the Czech delegation).
International ministerial conference on “GMO free agriculture: a chance for rural development in Central and South Eastern Europe” (Vienna, 9-10 May 2017) (tabled by the Austrian delegation).
AU-EU agriculture ministerial conference on “Making Sustainable Agriculture a Future for Youth in Africa” (Rome, 2 July 2017) (tabled by the Commission).
Drought in Portugal (tabled by the Portuguese delegation).
Until exit negotiations are concluded, the UK remains a full member of the European Union and all the rights and obligations of EU membership remain in force. The outcome of these negotiations will determine what arrangements apply in relation to EU legislation in future once the UK has left the EU.
United Nations Ocean Conference
I would like to update the House on the recent United Nations ocean conference, held in New York from 5 - 9 June. Although I was unable to attend due to the pre-election period Defra’s deputy director for marine policy led the United Kingdom delegation. I wish to convey to the House the global importance of the conference and summarise its key outcomes.
The UN Global Goals for Sustainable Development, commonly referred to as SDGs or the UN 2030 agenda, are a collection of 17 goals that set the global environment and development agenda from 2016 to 2030. They cut across all areas of Government, from ending poverty and achieving gender equality through to tackling climate change and using resources sustainably.
The conference was an attempt to galvanise international action on the implementation of SDG 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development. This SDG tackles a range of marine issues such as marine pollution and ocean acidification.
It produced two major outcomes: a call for action and a registry of over 1300 voluntary commitments made by the global community to support the implementation of SDG14.
I am pleased to report that, through our statement to the conference, the UK Government were able to demonstrate our continued support for the SDG process. We recognise the delivery of SDG 14 has a particular significance for small island developing states and least developed countries and that we would continue to support the Commonwealth marine economies programme, in developing sustainable ocean economies, alleviating poverty, and mitigating the effects of climate change and environmental threats.
The UK Government statement noted that climate change and ocean acidification continue to be significant threats to the long term health of our oceans. We highlighted the major role the UK played in securing the Paris Agreement and reiterated our commitment to its implementation.
I am also pleased to report that, recognising the need to take action on pollution from land-based sources, including the increasing amount of plastics and micro-plastics, the UK was able to sign up to the UN environment clean seas campaign.
The expertise of our marine science industry was demonstrated through the successful ocean acidification event led by the UK.
The UK also made four voluntary commitments to support the implementation of SDG14, highlighting our work on marine protected areas, including in the overseas territories; marine science; marine litter and the Commonwealth marine economies programme. These can be viewed on the conference website at:
The call for action was agreed by consensus at the conference although the United States dissociated itself from the language on the WTO and recalled the US administration position on the Paris Agreement. The call highlights particular action to be taken on a number of issues including: the need to increase scientific knowledge, prevention of pollution, in particular from plastics; delivering sustainable fisheries and improving access to market for small scale artisanal fisheries in developing countries; concluding negotiations in the World Trade Organisation (WTO) on fishery subsidies; and encouraging active engagement in the discussions on the development of an international legally binding instrument on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction. The call for action is available at:
Exiting the European Union
EU Exit: July Negotiating Round
Next week the UK’s negotiating team will travel to Brussels for the second round of talks, continuing our journey towards a new, deep and special partnership between the UK and the EU.
Today, in advance of those discussions, I am publishing three position papers that the UK negotiating team will discuss with our EU counterparts next week.
Ongoing Union judicial and administrative proceedings
The UK’s departure from the EU will end the jurisdiction of the Court of Justice of the European Union (CJEU) in the UK. However, there will be cases before the CJEU that involve the UK as a party on the day of the UK’s withdrawal, which by definition relate to the period when the UK was a member of the EU. These will need to be resolved satisfactorily as part of a smooth and orderly exit. A similar issue arises for EU administrative procedures involving the UK.
Nuclear safeguards and materials
The UK will withdraw from EURATOM when it leaves the EU. However, the UK and the EU have a strong mutual interest in continuing to co-operate on civil nuclear matters, harnessing shared expertise and maximising shared interests, for instance in nuclear research and development. As part of our orderly withdrawal and to provide certainty to industry, it is therefore important the negotiating teams work through issues relating to nuclear materials and non-proliferation (safeguards).
Privileges and immunities
The UK recognises the need for certain privileges and immunities to apply for a limited period after exit, in order to allow the EU a reasonable time in which to wind up its current operations in the UK. Looking ahead to the deep and special partnership, the UK wants to put in place a legally acceptable framework of privileges and immunities that allows for the smooth conduct of relations between the UK and the EU.
In addition to discussing these and other technical withdrawal issues next week, the two negotiating teams will also focus on citizens’ rights, the question of a financial settlement, and Northern Ireland and Ireland.
On citizens’ rights, the Government’s priority remains providing certainty as soon as possible to EU citizens living in the UK, and UK nationals in the EU. To that end, we will use next week’s round to review the technical elements of the EU and UK proposals, identifying areas of alignment and those where further work is required by both parties.
On the financial settlement, as set out in the Prime Minister’s letter to President Tusk, the Government have been clear that we will work with the EU to determine a fair settlement of the UK’s rights and obligations as a departing member state, in accordance with the law and in the spirit of our continuing partnership. The Government recognise that the UK has obligations to the EU, and the EU obligations to the UK, that will survive the UK’s withdrawal—and that these need to be resolved.
Finally, in June, I agreed with Michel Barnier to establish a dialogue on Northern Ireland and Ireland, which in recognition of its importance is led by the UK and EU co-ordinators. Both parties are committed to the Belfast agreement, avoiding a return to a hard border, ensuring that nothing is done that jeopardises the peace process, and preserving the common travel area and associated arrangements. Our focus next week will be on discussing how to ensure the preservation of the common travel area, and to restate our shared commitment to the Belfast agreement.
The position papers published today are available on the Government website, and I have arranged for copies to be placed in the Libraries of both Houses. The Government will publish further position papers on other issues in due course, providing more information to business and individuals, and informing our negotiations with the EU. In addition, the Government will publish technical notes shared with the EU, and may agree joint publications with the EU as part of the ongoing negotiations.
Ambulance Response Programme
I am today announcing the publication of the University of Sheffield report on the ambulance response programme and subsequent recommendations by Sir Bruce Keogh, NHS England’s national medical director. The report evaluates a series of pilots that I announced to the House in my written statement of 6 January 2015, intended to support ambulance services in England to maintain and improve clinical outcomes for patients in the face of unprecedented increases in demand. Copies of the report and Sir Bruce’s recommendations are attached.
Based on the extensive evidence base detailed in the report, NHS England is proposing a new framework of ambulance performance standards and related operational changes that are focused on patients’ clinical needs and will help the service to operate more efficiently. In particular:
enabling ambulances to dispatch resources much more clearly based on the clinical needs of patients ensuring the consistent delivery of very rapid responses to those who genuinely need them, through putting in place a four tier response time based on the clinical needs of patients;
introducing specific standards for stroke and heart attack, aimed at ensuring patients start the right treatment in hospital as quickly as possible;
improving performance management of “tail” waits by introducing mean and 90th centile measures; and,
achieving greater consistency and transparency for less urgent calls by bringing all response standards into a consistent national framework.
These ambulance response times are more stringent than anywhere else in the UK. Moreover, evidence from the pilots suggest that these changes will be beneficial for rural populations, narrowing the gap which currently exists in the time it takes for an ambulance resource to transport patients to hospital.
In my statement in January 2015 I said I would apply the following three tests before extending the ambulance response programme:
there is clear clinical consensus that the proposed change will be beneficial to patient outcomes as a whole, and will act to reduce overall clinical risk in the system;
there is evidence from the analysis of existing data and piloting that the proposed change will have the intended benefits, and is safe for patients; and,
there is an associated increase in operational efficiency. The aim is to reduce the average number of vehicles allocated to each 999 call and the ambulance utilisation rate.
I have accepted Sir Bruce’s advice that these tests have been met. I am authorising NHS England to implement the ambulance response programme recommendations in all ambulance services in England so that patients across the country will benefit from the improvements seen in the pilot ambulance services.
1. Report on Ambulance Response Programme (ARPReport_Final.pdf)
2. Letter with Sir Bruce Keogh's recommendations (13.7.17 Jeremy Hunt - Ambulance Response Programme letter.pdf)
The above documents can be viewed online at:
In October 2016, the Government selected a new north-west runway at Heathrow as its preferred scheme for delivering new airport capacity in the south-east.
In February a consultation on a draft airports national policy statement was launched, which set out the reasons for this preference, along with the mitigation and compensation measures the Government expect the promoter to put in place if planning permission is to be granted.
The consultation closed on 25 May and the work to analyse the over 70,000 responses is progressing well. I would like to thank all of those who contributed their views.
The Government are fully committed to realising the benefits that a new northwest runway at Heathrow would bring, in terms of economic growth, boosting jobs and skills, strengthening domestic links and critically, increasing and developing our international connectivity as we prepare to leave the European Union.
The timing of the election, in particular the need to re-start a Select Committee inquiry into the draft airports NPS means we now expect to lay any final NPS in Parliament in the first half of 2018, for a vote in the House of Commons.
I will provide a further update to the House after the summer recess on our next steps following analysis of the consultation responses.
Today I am also publishing a response to the consultation held earlier this year on a new night flight regime for Heathrow, Gatwick and Stansted. I am fully aware that noise is a major concern for those living near these airports, and that night noise is widely regarded as the most disturbing impact of aviation. While advances in new technology mean that aircraft are generally getting quieter, the limits governing night noise at these airports has not kept pace with these developments.
The new rules we are publishing today will encourage the use of quieter aircraft at all three airports by reducing the amount of noise these airports are legally allowed to make, and will give local residents a five year guarantee about the level of noise that they will be exposed to. This decision strikes a balance between managing the impacts on local communities by locking in the benefits offered by recent technological developments, with the economic benefits of night flights.
This decision should be seen as a signal that the Government take this issue very seriously, which is why we expect a ban on scheduled night flights of 6.5 hours at an expanded Heathrow. We will also explore whether there is more we can do, including considering further legislation to incentivise the industry more generally to invest in the quietest aircraft and operate them in the quietest way.
Strong international links are critical to the future prosperity of our country, with a world-class hub airport and thriving aviation sector central to this. We are committed to realising the economic and social benefits aviation has to offer, while taking seriously the need to balance this with managing the local and environmental impacts of aviation.
Work and Pensions
In February this year, the Department for Work and Pensions published a Green Paper looking at what more needs to be done to ensure consumer confidence and secure the future of defined benefit (final salary) pensions schemes.
Building on this Green Paper, the Department intends to publish a White Paper later this year which will set out proposed next steps on what reform is needed to support the sector. It will address the commitments in the Government’s manifesto in relation to the regulation and rules governing defined benefit private pensions. The paper will also consider innovative delivery structures, such as consolidation and measures to drive efficiency within the sector.
While the sector is broadly working as intended, the White Paper will consider the need to evolve and adapt the regulatory regime to improve security for members. With more than £1.5 trillion invested in these schemes, people need to have confidence that they are resilient and robustly regulated.
The Government wish to ensure that the defined benefit pensions system continues to balance the needs of consumers, the schemes themselves and business for the future.
Throughout the Green Paper process the Department has worked closely with a range of external stakeholders to develop sensible policy proposals. We are grateful to those who have contributed to the consultation and it is our strong intention that this collaboration should continue throughout the White Paper process.