Thursday 21 February 2019
Business, Energy and Industrial Strategy
Energy Capacity Market
As set out to the House in the statement of 6 December 2018, the European Commission was expecting to make its initial decision regarding the UK capacity market in early 2019. The Commission has today confirmed that it is moving on to the next phase of its investigation into the capacity market. This is an important first step as we work to reinstate state aid approval for the capacity market as soon as possible.
In its announcement the Commission confirms that the General Court of the European Union did not rule that the GB capacity market was incompatible with state aid rules. The Commission has also made clear that the Court ruled on procedural grounds. This was on the basis that the Commission should have opened an in-depth investigation on certain elements of the scheme related to participation by demand side response operators.
In accordance with the Court’s judgment, the Commission has therefore launched a further investigation focusing on particular elements of the capacity market. We understand that this investigation will cover past and future capacity payments, including deferred payments in respect of the standstill period. Since 2014 the Commission has approved state aid for six capacity markets similar to the GB scheme. We will continue to work closely with the Commission as its investigation progresses and will ensure that market participants are regularly updated.
Separately, the Commission has recently chosen to appeal the General Court’s judgment that it did not follow the proper process to conclude in 2014 that the capacity market was compatible with EU state aid rules. I can confirm today that the UK Government will be supporting this appeal. The appeal does not affect the Commission’s separate process for considering state aid approval for the current capacity market scheme.
Health and Social Care
NHS Prescription Charges
My right hon. Friend the Parliamentary Under-Secretary of State (Baroness Blackwood) has made the following written statement:
Regulations will shortly be laid before Parliament to increase certain national health service charges in England from 1 April 2019.
In the 2015 spending review, the Government committed to support the five year forward view with £10 billion investment in real terms by 2020-21 to fund frontline NHS services. Alongside this, the Government expect the NHS to deliver £22 billion of efficiency savings to secure the best value from NHS resources and primary care must play its part.
This year therefore, we have increased the prescription charge by 20 pence from £8.80 to £9 for each medicine or appliance dispensed. To ensure that those with the greatest need, and who are not already exempt from the charge, are protected, we have frozen the cost of the prescription pre-payment certificates (PPC) for another year. The 3 month PPC remains at £29.10 and the cost of the annual PPC will stay at £104. Taken together, this means prescription charge income is expected to rise broadly in line with inflation. Charges for wigs and fabric supports will also be increased in line with inflation. Details of the revised charges for 2019-20 can be found in the table below:
Prescription Charges Single Charge £9.00 £9.00 3 month PPC (no change) £29.10 12 month PPC (no change) £104.00 Wigs and Fabric Supports Surgical Brassiere £29.50 Abdominal or spinal support £44.55 Stock modacrylic wig £72.80 Partial human hair wig £192.85 Full bespoke human hair wig £282.00
Single Charge £9.00
3 month PPC (no change)
12 month PPC (no change)
Wigs and Fabric Supports
Abdominal or spinal support
Stock modacrylic wig
Partial human hair wig
Full bespoke human hair wig
Personal Budgets: Consultation Response
Today I am publishing the joint response from the Government and NHS England to a recent consultation exploring extending legal rights to personal health budgets and integrated personal budgets. The response is available at: https://www.gov.uk/government/consultations/personal-health-budgets-and-integrated-personal-budgets-extending-legal-rights and a copy has also been deposited in the Libraries of both Houses.
Across the health and social care system, there is an ever growing shift towards personalising care, including an increasing amount of people choosing to take on a budget. It is clear that people value being involved in the planning of their care, being able to make choices and personalise their support in a way that best meets their bespoke needs. The evidence is clear; through personalised care, people are more satisfied, have better outcomes, and are able to explore more innovative approaches that better meet their individual needs.
The Government are therefore committed to increasing the extent to which people can exercise greater choice and control over their care. Personal health budgets, and all other features of a personalised care approach as set out within the “Comprehensive model of Personalised Care”, including shared decision making and personalised care and support planning, are the key mechanisms for delivering this change.
Given this commitment, we consulted on potentially extending the legal rights to personal health budgets and integrated personal budgets, to the following five groups:
People with ongoing social care needs, who also make regular and ongoing use of relevant NHS services.
People eligible for section 117 aftercare services and people of all ages with ongoing mental health needs who make regular and ongoing use of community based NHS mental health services.
People leaving the armed forces, who are eligible for ongoing NHS services.
People with a learning disability, autism or both, who are eligible for ongoing NHS care.
People who access wheelchair services whose posture and mobility needs impact their wider health and social care needs.
The outcome of the consultation was hugely positive, with 87% of respondents, on average, agreeing with each proposal made. At the same time, respondents outlined their positivity for personalised care more broadly, citing the positive impacts personalised care can bring to people’s lives.
We are committed to delivering an ambitious package of personalised care that will enable up to 5 million people to benefit in the next decade. As part of this ambition, we now intend to take forward work to extend the legal rights to people eligible for section 117 aftercare services, and people who access wheelchair services whose posture and mobility needs impact their wider health and social care needs. We will also continue to further explore both the other groups we consulted on, and additional groups who we believe could also benefit from having a right to have a personal health budget.
We want personalised care to become business as usual; and the ambitious package set out in this response, the “NHS Long Term Plan”, and universal personalised care will enable us to do this.
No Deal: Trade Continuity
The Government are today publishing revised guidance to UK and international businesses that use preferential trade terms under existing agreements between the EU and third countries to advise them about a scenario in which the UK leaves the EU without a withdrawal agreement. While a number of our continuity agreements are likely to be concluded by exit day, it is the duty of the Government to produce a highly cautious list of those that both may and will not be in place in order that businesses and individuals ensure that they are prepared for every eventuality. A list of these agreements and related advice is available at: https://www.gov.uk/government/publications/existing-trade-agreements-if-the-uk-leaves-the-eu-without-a-deal.
If the UK leaves with a deal, under the withdrawal agreement the EU has agreed that it will notify treaty partners that the UK is to be treated as a member state for the purposes of its international agreements during the implementation period (IP), up until December 2020. This approach provides continuity and gives businesses and international partners the certainty and confidence they want and need.
Delivering a negotiated withdrawal agreement with the EU remains the Government’s top priority. Nevertheless, we continue to prepare for all eventualities, including no deal. Therefore, in recent months, the Government have refocused discussions with third countries to transition trade agreements to come into effect for day one after our EU exit, should the UK leave the EU without a withdrawal agreement. From the outset, we have been open and transparent with the EU about this programme of work.
Scope of the trade continuity programme
The Government are seeking continuity for existing EU trade agreements in which the UK participates as a member of the EU. These agreements constitute around 11% of our trade1. These agreements also cover a wide variety of relationships, including:
free trade agreements (FTAs);
economic partnership agreements (EPAs) with developing nations;
association agreements, which cover broader economic and political co-operation;
mutual recognition agreements (MRAs) and;
trade agreements with countries that are closely aligned with the EU.
Businesses in the UK and partner countries are eligible for a range of preferential market access opportunities under the terms of these agreements. These can include, but are not limited to:
preferential duties for goods, including reductions in import tariff rates and quotas for reduced or nil rates of payable duties;
quotas for the import of goods with more relaxed rules of origin requirements;
enhanced market access for service providers;
protection from discrimination in public procurement opportunities across a range of sectors;
allowing parties to mutually recognise conformity assessment procedures;
the ability to complete mandatory inspections and tests on products close to the place of production; and
common standards on intellectual property.
The Government have been in extensive and constructive discussions with partner countries to transition these agreements to maintain their benefits and deliver as much continuity and stability as possible in our trade with these partners for businesses, consumers and investors as we leave the EU.
To date, the Government have signed trade agreements with Switzerland, Chile, the Faroe Islands, members of the eastern and southern Africa (ESA) economic partnership agreement, Israel and the Palestinian Authority.
The Government are also close to formal agreement on text with Fiji and Papua New Guinea (Pacific) and arrangements are being made for their signature. It is likely these agreements will be transitioned in time for day one of exit.
We have also signed mutual recognition agreements that allow continuity of trade with Australia and New Zealand, and the United States. Total UK-US trade in sectors covered by the US MRA agreement is worth up to £12.8 billion, based on recent average trade flows. These important agreements boost trade as UK exporters can ensure goods are compliant with trading partners’ technical regulations before they depart the UK, saving businesses time, money and resources.
Discussions with other partners continue with the aim of replicating the effects of existing EU agreements as far as possible. We are continuing to engage with those other partner countries to conclude agreements in time for exit day. Particularly intensive discussions are, for instance, happening now with partners such as SACU+M, EEA, Canada and South Korea. Other discussions are ongoing.
Where agreements have been signed and there are significant changes to trade-related provisions of trade agreements, including to ensure operability in a UK context, they will be set out in reports to Parliament. As is already the case with the Chile, ESA and the Faroe Islands agreements, the reports will sit alongside the treaty text and explanatory memorandum, when these are laid in Parliament as part of the treaty ratification process, as set out in the Constitutional Reform and Governance Act 2010. These and other relevant documents will be also placed on gov.uk when signed. Implementing legislation, including on the preferential tariffs and related rules of origin in these agreements will also be laid before Parliament. Details of these agreements will be available on gov.uk.
If the full parliamentary scrutiny processes to ratify some UK-third country agreements have not concluded by the end of March, we are considering whether there are other means through which we can bring their provisions into effect to provide the same certainty and continuity to business and stakeholders from day one.
One such option is provisional application, where the UK and the third country agree to apply a treaty, in full or in part, “provisionally” for a period of time before the full domestic scrutiny processes have completed and the treaty enters into force. Where possible, this would bridge a potential gap in coverage of preferential trade terms. The UK has used provisional application on a number of occasions in its independent treaty relations. The use of provisional application is also common practice for the EU’s international agreements.
If the UK leaves the EU without a deal, some agreements will not be concluded in time and therefore will not be in place for exit day. There are a range of reasons for this. Those agreements that will not be in place for exit day are Andorra, Japan, Turkey, and San Marino.
Certain countries raise specific issues in the context of transitioning trade agreements. For example, Turkey is in a unique position, being in a partial customs union with the EU. This is not, therefore, a pre-existing free trade agreement relationship that can be technically transitioned to the UK. For this reason, should the UK leave the EU without a withdrawal agreement it will not be possible to transition these arrangements on day one of exit. However, Turkey is an important partner for the UK, and we want to strengthen our trading partnership once we leave the EU. The Government are committed to exploring all options for enabling continuity of trade and will progress these with Turkey as soon as possible. For the same reasons, we will not reach trade continuity arrangements with San Marino or Andorra by 29 March in the event of a no deal.
The EU-Japan economic partnership agreement only entered into force as of 1 February 2019. In a no-deal scenario, it will not be possible to have a bilateral agreement in place between the UK and Japan for 29 March. Therefore, UK-Japan trade will occur on a most-favoured nation basis under WTO terms, as it did up until 31 January 2019 The Prime Ministers of Japan and the UK have, however, already agreed to secure an ambitious bilateral agreement, building on the deal already agreed between Japan and the EU, and Japan is supportive of future UK membership of the comprehensive and progressive agreement for trans-Pacific partnership (CPTPP). We are continuing to work with Japan to realise these opportunities for a stronger trading relationship.
The UK’s trade relationships are not just determined by trade agreements; we also participate in the EU’s generalised scheme of preferences (GSP), which allows developing countries, including least developed countries and low to lower-middle income countries to receive preferential access to the UK market. The Government fully intend to continue the existing market access provided by these unilateral preference schemes.
To do so we have taken the necessary powers through the Taxation (Cross-border Trade) Act 2018 to allow us to continue providing non-reciprocal reductions in tariffs to developing countries. Through this, the current beneficiaries of the EU’s GSP will be able to export to the UK after our EU exit on the same terms as at present. We will shortly be laying the necessary secondary legislation in Parliament.
This means that some countries will continue to be eligible for preferential tariff treatment under the UK’s newly established independent trade preferences scheme even if the relevant EU-partner country trade agreement has not yet been transitioned into a UK-partner country agreement.
Details of non-EU countries with whom we currently have in place arrangements for preferential trade, including both free trade agreements and unilateral preferences can be found at: https://www.gov.uk/government/publications/uk-trade-tariff-preferential-trade-arrangements-for-countries-outside-the-eu/uk-trade-tariff-preferential-trade-arrangements-for-countries-outside-the-eu.
1 This 11% figure excludes Turkey (plus San Marino and Andorra) which is part of a customs union with the EU, and excludes Japan, as the economic partnership agreement only came into force on 1 February 2019 and therefore business have only very recently been trading under this agreement.
Work and Pensions
Employment and Support Allowance
This written statement is a fifth update to the House on progress in reviewing and, where necessary, correcting past employment and support allowance (ESA) underpayments and paying arrears following conversion from previous incapacity benefits.
Since my last update to the House in October 2018 we have made significant progress. Due to the complex nature of these cases they take considerably longer than the average ESA case to complete. To ensure we make rapid and accurate progress we have therefore increased the number of staff working on putting these cases right from around 400 to approximately 1,200. This additional resource has led to a substantial increase in the number of cases that we have reviewed, corrected and paid arrears where due.
We have made good progress and by 11 February had:
started 310,000 claimants on the reassessment journey;
paid arrears of over £328 million to 58,000 people; and,
completed action on 207,000 cases1.
Based on the progress made since October we believe we are on track to complete work on the majority of the original 320,000 cases by April 2019 (phase 1). Unfortunately, some cases where the claimant sadly died prior to the exercise starting, are taking a significant period of time to resolve due to difficulties in identifying the next of kin or executors. There are around 20,000 deceased cases included in phase 1 that require review. While we continue to progress this work, we expect that the Department will need until the end of 2019 to complete these cases.
Following our announcement in July 2018 that we will review and pay cases back to the date they were converted from incapacity benefits to ESA, we are reviewing a further 250,000 cases (phase 2), as set out in October. Activity in respect of this group is due to start shortly, and we aim to complete phase 2 by the end of this year.
The cases included in this exercise were largely converted between 2011 and 2014. Revised operational guidance was put in place in October 2014 after individual cases that had been incorrectly converted came to light. As part of our commitment to correct all cases affected by this error, we decided to undertake additional testing of cases converted in 2015. This testing has shown that the error rate did not improve as quickly as expected and we therefore believe that it is prudent to review around a further 30,000 cases, that were converted from 2015 onwards. This reflects our commitment to ensure all those who may have been affected are identified and paid the arrears they are due.
The Department is publishing an updated ad hoc statistical publication today setting out further detail on the progress it has made in processing cases, including an updated estimate on forecast expenditure and the numbers affected. This will be published on gov.uk.
These updated forecasts will feed into the spring statement 2019. The Department now estimates that around 600,000 cases require review and that by the end of the exercise around 210,000 arrears payments will have been made. The increase, compared to our previous estimate of 180,000, is based on assumptions made using evidence we have gathered from the checking exercise to date. The data shows an increase in the proportion of cases in error among some groups of claimants. In addition, based on sample testing we have also included an assumption of the proportion of errors likely to be identified in the further 30,000 cases that have been added to the exercise.
An updated frequently asked question guide will also be deposited in the Library of the House for further information.
1 Some of these cases which were originally completed prior to our announcement in July 2018 that we will review and pay cases back to the date they were converted from incapacity benefits to ESA, will require further action.