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Written Statements

Volume 713: debated on Tuesday 20 October 2009

Written Statements

Tuesday 20 October 2009

Banking: Credit Guarantee Scheme

Statement

The ECGD, the UK export credit agency, today launched a letter of credit guarantee scheme to assist UK exporters by boosting the availability of short-term export finance.

In the current economic climate, UK exporters are looking for secure forms of payment from their overseas buyers, particularly those in emerging economies. One of the most secure payment mechanisms for foreign trade transactions is a confirmed letter of credit. Under this a bank in the UK guarantees payment to its exporting customer, provided documents stipulated in the letter of credit issued by the buyer's overseas bank are presented to it. In this way, the UK exporter is able to eliminate the risk of non-payment by its buyer.

By sharing with banks the credit risks associated with confirmed letters of credit, the ECGD aims to increase the amount of short-term export finance which the banking sector can make available to UK exporters. This is particularly important at a time when the overall risk appetite of the trade market has been reduced due to the recent difficulties in the financial sector.

To start with, five banks—Barclays, RBS, HSBC, Lloyds TSB and Standard Chartered—are supporting the scheme and will be making arrangements in the coming weeks to allow exporters to participate. It will cover 282 overseas banks in 36 export markets. More banks and export markets are expected to be added to the scheme.

ECOFIN

Statement

My right honourable friend the Chancellor of the Exchequer has made the following Written Ministerial Statement.

The Economic and Financial Affairs Council will be held in Luxembourg on 20 October 2009. The following items are on the agenda:

Preparation for the G20 Finance Ministers meeting

Ministers will discuss and agree terms of reference which will form the basis of the EU’s contribution to the meeting of G20 Finance Ministers and Central Bank Governors in St Andrews on 6 and 7 November.

Preparation of the October European Council

Exit strategy

Following progress made at the October informal ECOFIN, Ministers will adopt a set of council conclusions outlining the specifications for the possible design and timing of a co-ordinated fiscal exit strategy. The Government believe that while at this stage it is important to design such exit strategies, the priority is to ensure that the recovery is fully secured through full implementation of fiscal support measures.

Financing of climate change

Ministers will discuss and adopt conclusions on financing aspects of climate change in order to inform heads at the European Council. The UK is committed to making progress in advance of the negotiations at the United Nations Framework for Climate Change Convention in December.

Financial supervision: state of play

The presidency will give an oral report on the state of play of financial supervision in order to inform the European Council of progress made, in line with the request of the June European Council.

European Systemic Risk Board

Ministers will discuss the draft legislative proposals establishing the European Systemic Risk Board (ESRB). As part of the wider package to improve financial regulation and supervision, the Government firmly support the establishment of the ESRB, which should assist with the identification of possible risks in the European and global financial systems.

Strengthening EU financial stability arrangements

Building on discussions at the informal ECOFIN, the council will agree a set of conclusions on financial stability arrangements, including cross-border crisis management. The UK supports the conclusions as they stand, and welcomes efforts by the EU to ensure a co-ordinated approach to crisis prevention, management and resolution in order to promote financial stability.

Taxation: Anti-fraud agreements with third countries

Liechtenstein

Ministers will be invited to reach political agreement on a draft anti-fraud agreement now in its final stages of negotiation with Liechtenstein. The Government look forward to making further progress on anti-fraud agreements, as part of the wider good governance agenda, which links closely with work by the G20 on tax transparency and exchange of information.

Other third countries

The council will be invited to consider a possible mandate for the Commission to open negotiations on anti-fraud agreements with Andorra, Monaco, San Marino and Switzerland. The Government welcome progress in this area, which should lead to significant improvements in tax co-operation with these countries.

Equitable Life

Statement

My right honourable friend the Chief Secretary to the Treasury (Liam Byrne) has made the following Written Ministerial Statement.

Last week, I promised to update the House on the Government’s response to the judgment handed down on 15 October 2009 in the claim for judicial review brought by the Equitable Members’ Action Group. The judgment was handed down last Thursday and I am now able to tell the House of the Government’s proposed approach.

The claim challenged several aspects of the Government’s response of 15 January 2009 to the Parliamentary Ombudsman’s report into the prudential regulation of Equitable Life. The Government have studied the terms of the judgment with care.

We welcome the court’s rejection of the challenge to our decision to establish a scheme to make ex gratia payments to policyholders who have suffered injustice. These payments will be to people who have suffered disproportionate impact, arising from maladministration and resulting in injustice accepted by the Government. The court accepted the Government were entitled to seek Sir John Chadwick’s advice in establishing the scheme, and recognised that it is legitimate to consider the public purse in its design.

The court went on to identify three instances where it held that the Government had focused too narrowly on the issue of regulatory compliance. It found that a wider interpretation of injustice was required, and thus ruled that the Government would need to reconsider its decision to reject the ombudsman’s findings of maladministration in relation to finding 5 and of injustice in relation to findings 2, 5, and parts of 4.

These three findings can be summarised as follows. Findings 2 and 4 relate to the failure to ask and resolve questions arising from Equitable Life’s regulatory returns for 1990-96, in particular in relation to policies around interest and bonus rates. The ombudsman’s view was, broadly, that any policyholder relying on these returns, who suffered either a financial loss or a loss of opportunity to take an informed decision, suffered an injustice.

Finding 5 found that, with regard to returns filed in 1995, the Government Actuary’s Department failed to ask for the necessary information from Equitable Life in order to ensure proper scrutiny of the company. The finding also found that the regulator failed to correct a misleading impression given by these returns when it knew independent observers were being misled.

The Government have decided that, in the interests of speed and their wish to act fairly for policyholders, they will accept the findings of maladministration in relation to finding 5, and of injustice with regard to findings 2, 5 and those parts of finding 4 dealt with by the court. I have asked Sir John to include these findings within those accepted cases of maladministration resulting in injustice upon which he is advising HM Treasury.

This will expand the scope of his work, primarily by bringing forward the start date for the findings he is considering from July 1995 to July 1991 (the time regulatory returns first had the potential to mislead users), but should not unduly delay it. His overall task remains the same, namely to advise the Government on those policyholders who have suffered disproportionate impact as a result of those cases of maladministration leading to injustice which the Government now accept. The Government remain firmly committed to introducing a fair ex gratia payment scheme as soon as possible, taking benefit from Sir John’s advice on the apportionment of responsibility and practicality of delivery, and having taken account of the public finances. Our goal is to introduce a scheme that is administratively quicker and simpler to deliver than that envisaged by the ombudsman.

In light of the timing of the judicial review judgment, Sir John has extended to 27 October his deadline for representations to his 18 August interim report. His task is considerable and complex, but he will advise as quickly as he is able, including by providing interim updates and conclusions on a continuing basis. I will update the House on his progress in due course.

Office of Qualifications and Examinations Regulation

Statement

My right honourable friend the Secretary of State for Children, Schools and Families (Ed Balls) made the following Written Ministerial Statement.

The Department for Children, Schools and Families sought an advance from the Contingencies Fund to meet the urgent cash requirement of recruiting the members of the Office of Qualifications and Examinations Regulation (Ofqual) before parliamentary approval of both the specific enabling legislation and the necessary estimate.

The Apprenticeships, Skills, Children and Learning Bill will, subject to Royal Assent, provide for the creation of Ofqual, a new non-ministerial department. We plan that commencement of Ofqual should be on 1 April 2010, before the summer 2010 examinations and national curriculum tests round that begin in May. An open and transparent appointment process to the board rightly takes time and needs to commence now in order for the appointments to take effect from 1 April 2010. The appointment process will make it clear to applicants that any appointments would be contingent on Royal Assent to the necessary provisions.

Parliamentary approval for additional resources of £70,000 for this new service will be sought in a supplementary estimate for the Department for Children, Schools and Families.  Pending that approval, urgent expenditure estimated at £70,000 will be met by repayable cash advances from the Contingencies Fund.

Prisoners: Temporary Transfer

Statement

My right honourable friend the Lord Chancellor and Secretary of State for Justice has made the following Written Ministerial Statement.

Her Majesty's Chief Inspector of Prisons, Dame Anne Owers, has today published two inspection reports concerning HMP Pentonville and HMP Wandsworth. The inspections took place in May and June this year.

A short time after the Wandsworth inspection, letters were sent to the inspectorate and HMP Wandsworth on behalf of two prisoners, which indicated that prisoners had been temporarily moved out of the prison for the duration of the inspection. The implication of these letters was that the transfers were an attempt to manipulate the inspections to secure a more favourable outcome. The chief inspector sent a team of inspectors back to Wandsworth to examine the claims. That team also investigated the involvement of HMP Pentonville, which was said to have received prisoners temporarily from Wandsworth and to have transferred prisoners to Wandsworth for the duration of its own inspection.

Ministers and senior management of the National Offender Management Service (NOMS) first learnt of these allegations on 30 July when the chief inspector's team was undertaking further inquiries into Wandsworth and Pentonville. The director-general of NOMS, Phil Wheatley, immediately launched a formal investigation and wrote to all governors to reiterate that the temporary transfer of prisoners to manipulate inspection outcomes is unacceptable. I issued a public statement reflecting Mr Wheatley's message, and wrote to inform my opposition counterparts of these investigations.

NOMS senior management received the completed investigation report on 2 October. The investigation found that 11 prisoners were subject to temporary transfers. Six were moved from Pentonville to Wandsworth immediately prior to the Pentonville inspection (11 to 15 May), and five from Wandsworth to Pentonville immediately prior to the Wandsworth inspection (1 to 5 June). Several were known to be vulnerable prisoners, and two prisoners self-harmed during this process. The investigation found that the 11 transfers had been arranged as deliberate attempts to manipulate the outcomes of the inspections.

As a result, on 13 October disciplinary charges under the Prison Service code of conduct were laid against a number of individuals. Disciplinary proceedings are currently under way.

During the course of the investigations, information emerged to suggest a similar incident may have occurred in HMP Brixton. A further investigation is under way and we are awaiting a formal report.

The Prisons and Probation Ombudsman and Her Majesty's Coroner are currently conducting separate investigations into the self-inflicted death of another prisoner transferred to Pentonville, following a court appearance, in the week before the inspection, and held there during the inspection before being returned to Wandsworth.

I have now asked Her Majesty's Chief Inspector of Prisons to work with the Ministry of Justice director of analytical services to investigate whether the temporary transfer of prisoners prior to inspection is more widespread across the estate. The chief inspector's reports have highlighted practices in two prisons which are quite clearly reprehensible and neither justifiable nor excusable. Those involved neglected one of their primary duties—to treat prisoners with decency and respect. As investigations and disciplinary proceedings are currently under way, there are obvious constraints until these are concluded. I will of course keep the House informed of further developments.

Rates: Business Rates

Statement

My honourable friend the Parliamentary Under-Secretary of State (Barbara Follett) has made the following Written Ministerial Statement.

Following the Motion “to regret that the Non-Domestic Rating (Deferred Payments) (England) Regulations 2009 (SI 2009/1597), laid before the House on 6 July, does not remove the retrospective application of a revaluation of non-domestic rates for port-side operators”, the Government are placing their response on record.

The business rates deferral scheme, which these regulations established, is not aimed at businesses that find themselves with significant and unexpected backdated rates liability, like some port businesses. Instead, this scheme allows all ratepayers who wish to apply to get help with their cash flow during the current economic climate, by enabling them to spread increases in their 2009-10 rates bills over three years, to 2011-12.

However, there have been a number of debates over the past year which refer to the occupiers of properties affected by the ratings review of ports. The Government have listened carefully to the concerns raised by affected businesses that, as a result of the review, they are being separately assessed for rates for the first time, and are now in receipt of unexpected and significant backdated rate bills.

In the current economic conditions, the Government are concerned about the impact that significant and unexpected backdated rates liability could have on businesses. The ratings system has to be fair and equitable to all, and waiving a tax liability for some would confer a disadvantage among other ratepayers who have paid their legally established rates.

Given the present economic circumstances the Government believe that there is a general case to be made for assisting all businesses liable to receive large, unexpected backdated bills that have to be paid immediately, as is the case with a number of companies, including some port-based businesses, across England.

Therefore, the Government have put in place the Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009 (SI 2009/204), to help all businesses, including some in port areas, to pay significant and unexpected backdated rates liabilities over a period of eight years.