Wednesday 6 September 2017
Business, Energy and Industrial Strategy
Green Investment Bank: Employee Indemnity
The Government completed the sale of the Green Investment Bank (GIB) to Macquarie on 18 August 2017. The Secretary of State for Business, Energy and Industrial Strategy has provided an indemnity for GIB employees in relation to a specific diligence and disclosure exercise conducted as part of the sale process. This indemnity created a notifiable contingent liability.
On 7 March 2017, Government notified the Chairs of the PAC and BEIS Committees of their intention to enter into this contingent liability in accordance with the non-standard notification procedure set out in “Managing Public Money” because the GIB sale process was subject to strict commercial confidentiality agreements that limited the information that could be disclosed publicly by either bidders or the Government. The indemnity was then entered into on 19 April 2017, the date on which the Government signed an agreement to sell GIB to Macquarie.
The indemnity is for GIB employees who were involved in a specific diligence and disclosure exercise, in their personal capacity and not for GIB as an organisation, as it was never intended that any individual GIB employee would assume personal liability for claims made as a result of the support that they have provided the Secretary of State, except where there has been fraud, wilful default or bad faith. The indemnity is uncapped and not time-limited. The prospect of a claim is assessed as remote and that of a claim against the Government’s indemnity very remote. This indemnity cannot be called upon by any of the parties to the sale as they have waived the right to bring a claim against GIB employees. A claim can only be brought by a third party.
If the liability is called upon, provision for payment will be made through the normal Supply procedure. The Treasury approved the proposal in principle prior to the then Chairs of the PAC and BEIS Committees being notified.
As a matter of record, I have today laid a copy of a departmental minute for both Houses explaining the procedure followed and containing a description of the liabilities undertaken.
Corporate Governance Reform Green Paper
One of the UK’s biggest assets in competing in the global economy is its reputation for being a dependable and confident place in which to do business. This has been maintained by keeping the corporate governance framework up to date.
The Government published the Green Paper on corporate governance reform last November. It focused on three specific aspects of corporate governance where the Government saw particular scope to strengthen the current framework—executive pay, corporate governance in large privately held businesses, and the steps that company boards take to engage and listen to employees, suppliers and other groups with an interest in corporate performance.
The Green Paper attracted 375 responses from a wide cross-section of business and society and have provided Government with a solid basis on which to take decisions. It has also benefited from the work of the Business, Energy and Industrial Strategy Committee which published recommendations for corporate governance reform in April.
Three key themes emerged from responses to the consultation.
First, in relation to executive pay, there were widely held concerns that a small minority of companies are not responding adequately when they encounter significant shareholder opposition to levels of executive pay and that remuneration committees need to do more to demonstrate that they are sensitive to pay and conditions across the wider workforce.
Second, a widely held view that large companies could do more to strengthen the employee, customer, supplier and wider stakeholder voice at boardroom level as a key factor in improving boardroom decision-making, delivering more sustainable business performance and building wider public confidence in the way businesses are run.
Third, there was a widely held view that there should be more transparency and accountability for corporate governance in large privately held businesses, reflecting their economic and social significance.
The Government have now published their response to the consultation setting out the proposals that they now intend to take forward to address these and other corporate governance issues. They involve a combination of secondary legislation, enhancements to the UK corporate governance code (which is overseen by the Financial Reporting Council) and voluntary, business-led action.
The Government intend to introduce secondary legislation to:
Require quoted companies to report annually the ratio of chief executive total remuneration to the average pay of the company’s UK employees, and to set out more clearly in remuneration policies the impact of share price growth on long-term executive pay outcomes;
Require all companies of significant size to explain how their directors comply with their requirements under Section 172 of the Companies Act 2006 to have regard to employee and other interests;
Require the UK’s largest companies, including privately-held businesses, to disclose their corporate governance arrangements, including whether they follow any formal code, except where they are already subject to an equivalent reporting requirement.
The Government have also invited the Financial Reporting Council (FRC), as part of their consultation on a revised UK corporate governance code later this year, to consider a number of new provisions including:
Giving company remuneration committees a broader responsibility for overseeing pay and incentives across the company and explaining how these relate to executive pay incentives;
Requiring companies to be more specific about the steps they should take to address significant shareholder dissent on executive pay (and other matters);
Requiring companies, on a comply or explain basis, to adopt one of three employee engagement mechanisms: a designated non-executive director, an employee advisory council or a director from the workforce.
The Government have asked business and professional bodies to take forward related business-led initiatives, including:
Inviting the CBI, the Institute of Directors, the British Venture Capital Association and the Institute of Family Businesses to work with the FRC to develop a voluntary set of corporate governance principles for large, privately held businesses; and
Asking the Investment Association to implement its proposal to establish and maintain a public register of companies receiving significant shareholder votes against resolutions, including on executive pay.
In addition, the Government have asked the FRC, the Financial Conduct Authority and the Insolvency Service to conclude new or, in some cases, revised letters of understanding with each other before the end of this year to ensure the most effective use of their existing powers to sanction directors and ensure the integrity of corporate governance reporting. The Government will consider, in the light of this work, whether further action is required.
Implementation of these measures will improve shareholder scrutiny of executive remuneration, strengthen the employee voice in board-rooms and build confidence in the way companies, both listed and privates are run. They will build on the UK’s corporate governance strengths and help ensure that we are equipped for the economic opportunities and challenges that lie ahead.
The Government’s full response to the Green Paper consultation is available on the gov.uk website and copies have been placed in the Library of the House.
Finance (No. 2) Bill: Draft Legislation
As has been previously announced, the Government will introduce a Finance Bill following the autumn Budget.
In line with the approach to tax policy making, set out in the 2010 “Tax Consultation Framework”, the Government are committed, where possible, to publishing most tax legislation in draft for technical consultation before the relevant Finance Bill is laid before Parliament.
The Government will publish draft clauses for the Finance Bill on Wednesday 13 September 2017, along with accompanying explanatory notes, tax information and impact notes and other supporting documents.
The consultation on the draft clauses will be open until Wednesday 25 October 2017.
Counter-Terrorism Asset Freezing Regime
Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council resolutions 1373 and 1452.
This report covers the period from 1 October 2016 to 31 December 2016.1 This report also covers the UK implementation of the UN’s ISIL (Daesh) and Al-Qaida asset freezing regime (ISIL-AQ) and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU.
Under the ISIL-AQ asset-freezing regime, the UN has responsibility for designations and the Treasury, through its Office of Financial Sanctions implementation (OFSI), has responsibility for licensing and compliance with the regime in the UK under the ISIL (Daesh) and Al-Qaida (Asset-Freezing) regulations 2011.
Under EU regulation 2580/2001, the EU has responsibility for designations and OFSI has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.
A new EU asset-freezing regime under EU regulation (2016/1686) was implemented on 22 September 2016. This permits the EU to make autonomous Al-Qaida and ISIL (Daesh) listings. Once a designation is made under this regime it will appear in the table available as an online attachment.
Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council resolution 1373.
The table, available as an online attachment, sets out the key asset-freezing activity in the UK during the quarter.
In November a Court of Appeal considered whether or not Begg met the minimum criteria for the grant of a protective costs order and concluded that he did. The Court of Appeal thereafter remitted the matter back to the High Court for the protective costs order to be granted.
Annex A: Designated persons under TAFA 2010 by name2
1. Hamed ABDOLLAHI*
2. Imad Khalil AL-ALAMI
3. Abdelkarim Hussein AL-NASSER*
4. Ibrahim Salih AL-YACOUB*
5. Manssor ARBABSIAR*
6. Usama HAMDAN
7. Hasan IZZ-AL-DIN*
8. Mohammed KHALED
9. Musa Abu MARZOUK
10. Khalid MISHAAL
11. Khalid Sheikh MOHAMMED*
12. Abdul Reza SHAHLAI*
13. Ali Gholam SHAKURI*
14. Qasem SOLEIMANI*
1. Basque Fatherland and Liberty (ETA)
2. Ejército de Liberación Nacional (ELN)*
3. Hizballah Military Wing, including external security organisation*
4. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)*
5. Popular Front for the Liberation of Palestine (PFLP)*
6. Sendero Luminoso (SL)*
Annex B: Persons designated by the EU under Council regulation (EC) 2580/20013
1. Hamed ABDOLLAHI*
2. Abdelkarim Hussein AL-NASSER*
3. Ibrahim Salih AL-YACOUB*
4. Manssor ARBABSIAR*
5. Mohammed BOUYERI
6. Hassan Hassan EL HAJJ
7. Hasan IZZ-AL-DIN*
8. Farad MELIAD
9. Khalid Sheikh MOHAMMED*
10. Dalokay SANLI
11. Abdul Reza SHAHLAI*
12. Ali Gholam SHAKURI*
13. Qasem SOLEIMANI*
Groups and Entities
1. Abu Nidal Organisation (ANO)
2. Al-Aqsa E.V.
3. Al-Aqsa Martyrs’ Brigade
4. Babbar Khalsa
5. Communist Party of the Philippines, including New People’s Army (NPA), Philippines
6. Devrimci Halk Kurtuluş Partisi-Cephesi—DHKP/C (Revolutionary People’s Liberation Army/Front/Party)
7. Ejército de Liberación Nacional (National Liberation Army)*
8. Gama’a al-Islamiyya (a.k.a. Al-Gama’a al-Islamiyya) (Islamic Group—IG)
9. Hamas, including Hamas-Izz al-Din al-Qassem
10. Hizballah Military Wing, including external security organisation
11. Hizbul Mujahideen (HM)
13. Islami Büyük Doğu Akincilar Cephesi (IBDA-C) (Great Islamic Eastern Warriors Front)
14. Khalistan Zindabad Force (KZF)
15. Kurdistan Workers Party (PKK) (a.k.a. Kongra-Gel)
16. Liberation Tigers of Tamil Eelam (LTTE)
17. Palestinian Islamic Jihad (PIJ)
18. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)*
19. Popular Front for the Liberation of Palestine (PFLP)*
20. Sendero Luminoso (SL) (Shining Path)*
21. Teyrbazen Azadiya Kurdistan (TAK)
1Financial institutions update OFSI on individual account balances annually. The figures in the first row of the table are based on account balances which were last reported to HM Treasury on 30 September 2016. At the end of each quarter HM Treasury will adjust the figures to reflect any accounts that have been frozen or unfrozen in that quarter.
2For full listing details please refer to: https://www.gov.uk/government/publications/current-list-of-designated-persons-terrorism-and-terrorist-financing.
3For full listing details please refer to: https://www.gov.uk/government/publications/current-list-of-designated-persons-terrorism-and-terrorist-financing.
*EU listing rests on UK designation under TAFA 2010
Attachments are available online: http://www.parliament.juk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-09-06/HCWS115/.
On 1 September 2017, 30 hours of free childcare for working parents of three and four-year-olds went live nationally in England, saving families up to £5,000 per year per child. Alongside the childcare support the Government provide through tax-free childcare and universal credit, this additional free childcare is easing working families’ budgets, helping them to balance the cost of childcare with work.
The Government investment programme will deliver a record £6 billion per year in childcare by 2020, which includes an extra £1 billion per year to deliver the free entitlements. In addition, a further £100 million in capital funding has been committed to help providers create additional 30 hours places.
More than 200,000 30 hours codes have been issued to eligible parents wishing to take up a place this autumn, which exceeds our target for this term. These families join the existing 15,000 families who are already benefiting from 30 hours’ free childcare in the 12 early delivery areas.
An independent evaluation of four of these early delivery areas, published on 31 August, found that 30 hours incentivised many parents to increase their working hours or move into work, and parents were overwhelmingly positive about the offer. The report can be found here: www.gov.uk/government/publications/early-rollout-of-30-hours-free-childcare-evaluation. These findings build on the evaluation of the first eight delivery areas, which found that 23% of mothers and around one in 10 fathers are working more as a result. The evaluation also shows that more than three quarters of parents reported greater flexibility in their working life as a result of 30 hours, enabling them to spend more time together at home with their children, reducing stress and improving family finances. Importantly, the report found that more than eight out of 10 childcare providers who are offering the existing 15 hours entitlements also went on to offer 30 hours. This demonstrates that the sector has responded very positively to the additional demand for childcare places from working families.
During the autumn, I will be closely monitoring delivery to ensure continued improvements to the offer for parents and providers. The Childcare Choices website has now received over 1 million visits since launching in March, and the Department for Education will continue to work with local authorities to ensure parents have high-quality information about accessing the offer.
I will continue to work closely with Her Majesty’s Treasury Ministers to ensure that parents are able to access the HMRC-run childcare service smoothly. The majority of parents have successfully applied using the childcare service. Some parents experienced difficulties accessing the service through the system by the 31 August application deadline but those parents who are eligible, and applied before the deadline, will have a code to allow them to access our 30 hours’ free childcare.
Infected Blood Inquiry
Following the announcement of the Government’s intention to hold an inquiry into infected blood on 11 July, I am writing to update the House on progress.
Bishop James Jones, former Chair of the Hillsborough Independent Panel and Chair of the Gosport Independent Panel, had a telephone meeting with the all-party parliamentary group on haemophilia and contaminated blood and a number of the campaign groups on 27 July. Following this meeting, the Bishop informed the Department of Health of the request to remove the 18 August deadline for views on the format and scope of the upcoming independent inquiry. The Government also heard this view from the correspondence we have received. It is important that the inquiry is informed by the views of the people who have been affected by contaminated blood.
The Government have therefore decided to extend the deadline to 18 October 2017, to ensure that we hear as many opinions as possible. The Government have written to the beneficiaries of the payment schemes directly to inform them of this change. We are grateful to those who have already sent their views; these will be taken into consideration.
We are also aware of the requests from some stakeholders to move the sponsorship of the inquiry to another Government Department. We can confirm that this is being considered as part of the consultation and that no decision has yet been taken on sponsorship.
The Government will provide a further update to the House after the consultation closes on 18 October.
Exiting the European Union
The UK’s Future Partnership with the EU: Publications
Over the summer, the Government have published a series of papers setting out key issues that form part of the Government’s vision for the future deep and special partnership between the UK and the EU.
Each paper reflects the engagement the Government have sought from external parties with expertise in these policy areas, drawing on the very extensive work undertaken across Government since last year’s referendum. Taken together, these papers are an essential step towards building a new partnership to promote our shared interests and values.
These future partnership papers published to date are:
Future customs arrangements (15 August);
Providing a cross-border civil judicial co-operation framework (22 August);
Enforcement and dispute resolution (23 August); and
The exchange and protection of personal data (24 August).
Today we are publishing the next paper in this series: Collaboration on science and innovation.
Since the start of summer recess, the Government have also published position papers in advance of formal negotiation rounds with the EU, and technical notes to support the negotiations.
The position papers are:
Northern Ireland and Ireland (16 August);
Confidentiality and access to documents (21 August); and
Continuity in the availability of goods for the EU and the UK (21 August).
The technical notes are:
Spent fuel and radioactive waste (28 August);
Existing contracts for the supply of nuclear material (28 August);
Functionality and Protocol 7 (28 August); and
The comparison of EU-UK positions on citizens’ rights (joint technical note) (first published 20 July; updated 31 August).
Copies of all these papers, and any further position and future partnership papers, will be deposited in the Libraries of both Houses.