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House of Commons Hansard
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Written Statements
15 September 2016
Volume 614

Written Statements

Thursday 15 September 2016

Treasury

Joint Childcare Service: Trial

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Ahead of the introduction of tax-free childcare in early 2017 and the 30 hours extended entitlement for three and four-year-olds in September 2017, HM Revenue and Customs (HMRC) will trial a new, digital, joint childcare service later this year. The trial will involve around 1500 parents, including some who are eligible for both schemes. It will enable HMRC to extensively test the system and ensure it provides a smooth experience and quality service for parents.

Tax-free childcare and the extended free entitlement are a key part of the Government’s overall childcare offer which will provide over £6 billion per annum to working families and those on low incomes by the end of this Parliament.

The Government announced in November 2015 that parents will be able to apply online for both tax-free childcare and the extended free entitlement through a new joint childcare service being developed by HMRC, with their delivery partner National Savings & Investments (NS&I).

The joint childcare service will provide a simple and straightforward way for working parents to access both schemes, avoiding the need to provide the same information twice, and saving them valuable time.

In March 2016, the Government announced that tax-free childcare will be introduced and gradually rolled out during 2017. The service will be made available to all eligible families by the end of that year.

[HCWS160]

Notification of Contingent Liability

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The Monetary Policy Committee (MPC) of the Bank of England decided at its meeting ending on 3 August to raise the limit on purchases that may be undertaken by the asset purchase facility (APF). This will encompass further purchases of gilts, along with a new scheme to purchase private sector assets and a new funding scheme that will lend central bank reserves to banks and building societies for an extended period at a rate close to bank rate (the term funding scheme).

As set out in the MPC’s remit, active monetary policy has a critical role to play in supporting the economy. It is the MPC’s view that in the absence of monetary policy stimulus there would be undesirable volatility in output and employment, and it would be less likely to achieve a sustainable return of inflation to the target in the medium term.

The MPC has judged that it would be appropriate to impart further stimulus through additional asset purchases. The MPC expects that purchases of corporate bonds will improve the availability of credit to UK companies and that further purchases of gilts will reduce borrowing costs, raise asset prices, affect expectations and confidence, and thereby support demand in the economy. The term funding scheme should ensure that the very low level of bank rate is passed through to lending rates to households and businesses.

In line with the requirements in the MPC remit, the amendments to the APF that could affect the allocation of credit and pose risks to the Exchequer have been discussed with Treasury officials. The risk control framework previously agreed with the Treasury will remain in place, updated to reflect the changes to the APF.

Oversight arrangements for the expanded APF will be strengthened. These will include enhanced information sharing between the Bank and Treasury to monitor the operation and performance of the facility, and regular risk oversight meetings of Treasury and Bank senior officials. There will also be an opportunity for the Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.

I have therefore authorised an increase of £70 billion in the amount of assets that the APF is able to purchase financed through the issuance of central bank reserves, of which £10 billion can be eligible private sector assets, bringing the total amount for purchases to £445 billion. I have also authorised an extension of the definition of assets eligible to be held in the APF to include secured lending of central bank reserves. The MPC expects that the value of this lending would increase in line with the amount outstanding in the TFS, which will in turn be determined by usage of the scheme, and could reach around £100 billion. I have therefore authorised an increase in the total size of the APF of £170 billion. This will bring the maximum total size of the APF to £545 billion.

The Government will continue to indemnify the Bank and the APF from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.

On 4 August I wrote to the Chairs of Public Accounts Committee and Treasury Select Committee and invited them to raise any objections to my decision. A full departmental minute has been laid providing more detail on this contingent liability.

[HCWS164]

Tax: Draft Legislation

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The Chancellor of the Exchequer has announced that the date of the autumn statement will be 23 November 2016.

The Government remain committed to improving the tax policy making process through high levels of consultation and legislative scrutiny. Following the autumn statement, draft clauses to be included in Finance Bill 2017 will be published on 5 December 2016. This consultation on draft legislation will be open until 30 January 2017.

[HCWS165]

Communities and Local Government

Local Government Finance

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Today, I am publishing a technical consultation paper on the approach to the 2017-18 local government finance settlement. This will confirm the approach for 2017-18 already set out alongside the 2016-17 settlement, offering local authorities in England that are committed to reform, a four-year settlement offer, which will give funding certainty for the remainder of the Parliament.

The consultation reconfirms the Government’s commitment to the four-year settlement offer and seeks views on expanding this offer. It also outlines:

the proposed approach to distributing funding through the improved Better Care Fund to support adult social care, in line with the approach taken in the 2016-17 settlement;

the approach to council tax referendum principles for 2017-18, including once again a core principle of 2% (with additional flexibilities for shire district councils and lower-quartile police and crime commissioners), and a continuation of the adult social care precept of an additional 2%;

a proposal for a referendum principle of 2% for the larger, higher-spending town and parish councils, with consideration being given to extending the principle to all local precepting authorities;

the proposed approach for adjusting business rates retention tariffs and top-ups to cancel out, as far as is practicable, the impact of the 2017 business rates revaluation on local authorities’ income.

In line with the Government’s work to devolve power and budgets to local authorities, the consultation also proposes measures to enable certain local authorities to pilot 100% business rates retention, designed to ensure that other authorities are not adversely affected by these pilots, together with measures covering the allocation of funding streams within devolution deal areas, if all affected councils agree.

The consultation paper can be found at:

https://www.gov.uk/government/consultations/local-government-finance-settlement-2017-to-2018-technical-consultation.

[HCWS162]

Culture, Media and Sport

Historic Royal Palaces (Borrowing Facility)

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The departmental minute laid today is in respect of an extension to the period whereby Government act as a guarantor on behalf of Historic Royal Palaces (HRP) for a borrowing facility of up to £4 million to meet short-term cash-flow requirements.

The renewed guarantee will be available until 30 September 2021 and HRP will only enter into borrowing facilities at such times and within such monetary limits as the Department shall agree.

The guarantee provides a safeguard protecting HRP’s business from a sudden and serious decline in economic conditions affecting HRP’s admissions income until the savings from its planned rationalisation measures, if such an event should occur, could come through. It would only be used in extreme circumstances. The guarantee has been in place since 2002 and it has never yet been called upon.

Historic Royal Palaces is a charity established by royal charter. By virtue of a contract entered into on 1 April 1998, it carries out the functions of the Secretary of State for Culture, Media and Sport under section 21 of the Crown Lands Act 1851 of managing the unoccupied royal palaces.

I am arranging for the minute to be deposited in the Libraries of both Houses.

It can also be viewed online at: http://www.parliament. uk/business/publications.

[HCWS155]

Exiting the European Union

General Affairs Council (September 2016)

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On 23 June 2016 the UK voted to leave the European Union. Until we leave however, the UK continues to play a constructive role in EU business. The General Affairs Council (GAC) on Tuesday 20 September is expected to focus on the following: follow up to the June European Council; preparation of the October European Council; the European Commission’s 2017 Work programme; and the mid-term review of the multiannual financial framework.

Follow up to the June European Council

The presidency will present an update on the progress towards implementation of the June 2016 European Council conclusions on migration, jobs, growth and investment and external relations. GAC Ministers will then hold an exchange of views; this will not be a detailed discussion.

Preparation of the October European Council

Ministers will discuss the upcoming October European Council draft annotated agenda. The agenda currently covers migration, trade and external relations, and EU policy toward Russia. This is an opportunity for the UK to influence and shape the agenda of the October European Council.

European Commissions Work Programme 2017

On 14 September the European Commission sent a “Letter of Intent” outlining the broad content of the Commission Work programme for 2017 (CWP 2017) to the Council and European Parliament. GAC Ministers will have an exchange of views on the contents of the Commission’s letter of intent.

The CWP is adopted annually by the European Commission. It contains a list of the legislative and non-legislative priorities that the Commission intends to bring forward in the course of the following calendar year.

Multiannual financial framework

The GAC will discuss the Commission’s proposal on the mid-term review of the multiannual financial framework which was published on 14 September.

[HCWS159]

Health

NHS Blood and Transplant Triennial Review

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My hon. Friend the Parliamentary Under-Secretary of State for Health (Lord Prior) has made the following written statement:

The Department of Health has completed its triennial review of NHS Blood and Transplant, and is today publishing the associated review report. A copy of the review report can be found online.

The review, which commenced on 25 June 2015, consulted with a wide range of stakeholders. The review concludes that NHS Blood and Transplant is an efficient and high performing organisation, and in the future will seek to increase its contribution to the life sciences industry. The report contains a total of 18 recommendations; five are about the function and form of NHS Blood and Transplant, with the remaining 13 intended to support NHS Blood and Transplant’s future performance, efficiency, and governance.

Attachments can be viewed online at:

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2016-09-15/HCWS161/

[HCWS161]

Prime Minister

Committee on Standards in Public Life: Report

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“Striking the Balance: Upholding the Seven Principles of Public Life in Regulation”, the 16th report of the Committee on Standards in Public Life, has been published by the Committee today. I have laid the report before both Houses.

[HCWS156]

Intelligence Services Commissioner: Report

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I have today laid before both Houses of Parliament the Intelligence Services Commissioner’s supplementary report on concerns raised by the Intelligence and Security Committee of Parliament (ISC) about the Government’s responsibilities in relation to partner counter-terrorism units overseas. The statutory responsibilities of the Intelligence Services Commissioner, the right hon. Sir Mark Waller, include oversight of compliance with the consolidated guidance to intelligence officers and service personnel on the detention and interviewing of detainees overseas, and on the passing and receipt of intelligence relating to detainees (“the consolidated guidance”). I am grateful to Sir Mark for his detailed examination of the allegations regarding the detention of Michael Adebolajo in Kenya in 2010, which were raised in the ISC’s November 2014 report about the intelligence relating to the murder of Fusilier Lee Rigby. I welcome the fact that he has firmly rejected any suggestion of a conspiracy by the security and intelligence agencies in Mr Adebolajo’s detention and that he has found no evidence to support the allegation that he was subject to mistreatment at the hands of the Kenyan authorities. The Government will look carefully at Sir Mark’s detailed analysis of the handling of this case and will take steps to address the issues where he has identified shortcomings in the response at the time, drawing upon the report’s recommendations. In particular, Sir Mark has noted that the consolidated guidance, though still fit for purpose and carefully followed by intelligence officers and service personnel, could benefit from further clarification in certain aspects. The Government will consider further what changes could be made to the consolidated guidance to address the points Sir Mark raises.

[HCWS157]

Machinery of Government Change: Offender Learning

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Policy responsibility for education and training provision for those subject to adult detention in England will transfer from the Department for Education to the Ministry of Justice from 1 October 2016.

[HCWS158]

Work and Pensions

Housing Benefit

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Supported accommodation plays a vital role in the lives of many vulnerable people. A safe and stable and supportive place to live can be the key to unlocking better outcomes for people and for many it is a stepping stone to independent living in the longer term. The Government value the role supported housing plays and are committed to encouraging further development to meet future demand.

Over the past number of months, we have spoken to providers, local authorities, charities, representative bodies and the devolved Administrations about the future funding arrangements for the sector. We are also grateful for the extensive input from these groups into our evidence review of supported accommodation in Great Britain, jointly commissioned by my Department and the Department for Communities and Local Government at the end of 2014. The review has provided a helpful insight in to the scale, scope and cost of the sector and we will publish it shortly alongside a consultation document.

We have heard the concerns regarding the application of the local housing allowance (LHA) rates to social rents from 2018. So I can announce today that we will be deferring the application of this policy for supported housing until 2019-20. At this point we will bring in a new funding model which will ensure that the sector continues to be funded at current levels, taking into account the effect of Government policy on social sector rents. I can also confirm that the deferral until 2019-20 will extend to fully mutuals/co-operatives, almshouses and community land trusts while we consider whether any additional arrangements will be necessary for this group in the longer term.

It is our intention that from 2019-20 core rent and service charges will be funded through housing benefit or universal credit up to the level of the applicable LHA rate. This will apply to all those living in supported accommodation from this date. I can also confirm that the shared accommodation rate will not apply to people living in the supported housing sector, in recognition of the particular challenges this would have placed upon them.

For costs above the level of the LHA rate, Government will devolve in England an amount of funding for disbursement locally. In Wales and Scotland, an equivalent amount will be provided and it will be for those Administrations to decide how best to allocate the funding.

In England, we will devolve funding to local authorities to provide additional “top up” funding to providers where necessary, reflecting the higher average costs of offering supported accommodation, compared to general needs. This will give local authorities an enhanced role in commissioning supported housing in their area. This will also allow local authorities to ensure a more coherent approach to commissioning for needs across housing, health and social care, using local knowledge to drive transparency, quality and value for money from providers in their area.

Different types of supported housing provision and services are commissioned by different bodies locally, such as clinical commissioning groups. It will be important to ensure that these bodies can access funding to deliver their commissioning objectives. We will work with relevant agencies and Departments across Government to design this fund to make sure that we maximise the opportunities for local agencies to collaborate.

In recognition of the need to manage the transition to a new funding regime carefully, we will ring-fence the top-up fund to ensure it continues to support vulnerable people. The amount of top-up funding will be set on the basis of current projections of future need. This will also help to provide certainty for providers that reductions in funding via the benefits system can be met elsewhere as well as to give greater assurance to developers of new supported housing supply. We will also consult on appropriate safeguards to ensure that this funding continues to support vulnerable people and promotes supply of supported housing. We will also consider what level of new burdens funding would be appropriate to enable local authorities to fulfil their new role.

As the Prime Minister made clear, we are working to ensure that vulnerable people in refuges are not adversely affected as a result of the LHA rates. While we are confident that this model will meet the needs of the majority of the sector, we recognise some particular challenges may remain for very short-term accommodation, including hostels and refuges. We will work with the sector to develop further options to ensure that providers of shorter-term accommodation continue to receive appropriate funding for their important work. While the mechanism may be different, funding for this type of accommodation will benefit from the same protection as supported housing in general.

We recognise the vital importance of ensuring that providers are able to develop new, much needed, supported housing and we want the long-term funding model to support this. We will seek views through the consultation on how this objective might best be achieved through the design of the model.

In March 2016, we introduced a one-year deferral for supported housing, fully mutuals/co-operatives, almshouses and community land trusts from the reduction of social rents in England of 1% a year for four years from 2016. It is important that providers can continue to provide high-quality and cost-effective supported housing to meet the needs of their tenants. However, it is also important that supported housing should make efficiency savings in the same way as the rest of the social sector.

Therefore, I can confirm that, as planned, we will apply the rent reduction to supported housing, with rents in these properties decreasing by 1% a year for three years, up to and including 2019-20.

The existing exemption for specialised supported housing will remain in place and will be extended over the remaining three years of the policy for fully mutuals/co-operatives, alms houses and community land trusts and refuges.

For those affected by the social sector rent reduction policy, the Welfare Reform and Work Act 2016 includes provision that allows a social landlord to be exempted from the requirement to reduce rents by the Secretary of State for Communities and Local Government or the social housing regulator—in the case of private registered providers—if complying would result in serious financial difficulty or jeopardise their financial viability. This provision provides a safety net for those providers who do not have the capacity to offset the decrease through efficiencies or from elsewhere in their business.

Supported housing is of vital importance to vulnerable people and we want to continue to work with providers to ensure that services are as good as they can be. We want to build on the work of excellent providers to drive all quality and value for money up to the level of the best. These reforms, giving local areas greater control and strategic oversight, represent the first step towards that goal, while giving the sector the necessary certainty over the total amount of funding available nationally. We also want quality and a focus on individual outcomes to play a greater role in how we fund the sector.

We will continue to work with the sector to develop the detail that underpins the new funding model and to ensure that any accompanying regulatory reform is effective and proportionate. It is important that we get the detail right and we want to continue the extensive conversation we have begun with the sector to do this. A formal consultation document will be published shortly.

[HCWS154]

Pension Protection Fund/Financial Assistance Scheme: Long Service Caps

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I am pleased to announce that today I will launch a consultation on the draft regulations needed to ensure the long service cap in the Pension Protection Fund—the PPF—will operate as intended in all circumstances. The consultation will last for eight weeks and, after I have considered the responses, it is my intention to put before Parliament amending regulations, with the expectation that the PPF long service cap will be in place from April 2017.

I am also pleased to announce that it is the Government’s intention to introduce an equivalent cap for the financial assistance scheme—the FAS—from April 2018.

The PPF provides compensation based on 90% of the person’s accrued pension if they are below the scheme’s normal pension age when the company becomes insolvent. This 90% is subject to a maximum, which would, currently, mean a maximum amount of compensation of £33,678 per annum at age 65.

The Pensions Act 2014 contains provisions to increase this cap in the PPF at 3% for every year of pensionable service in the scheme above 20 years, subject to a new maximum of twice the standard cap. This legislation has not yet been brought into force, as some changes were needed to secondary legislation. It is these changes on which I am now consulting.

The FAS provides financial support for those who lost significant amounts of pension because their defined benefit occupational pension scheme collapsed underfunded. Generally the FAS helps those schemes which were affected before the introduction of the PPF and ensures a person gets at least 90% of the pension due at the point the scheme collapsed. This calculation is subject to a maximum cap. It is our intention to amend this cap so that it will, like the PPF cap, increase by 3% for each full year of pensionable service, over 20 years subject to a new maximum of twice the standard cap.

I will, in due course, be putting before Parliament regulations to implement this new cap. So that the FAS scheme manager has sufficient time to plan for these changes, it is our current intention that the FAS changes will apply from April 2018. Those already being paid assistance will get the uplift applied to their cap amount from the implementation date although, as in the PPF, this increase will not be backdated.

A copy of the consultation document will be placed in the Library.

[HCWS163]