The Treasury has today issued a consultation paper on a Regulatory Reform Order which proposes to cut unnecessary consultation by the Financial Services Authority (FSA), to make it easier for the FSA to tailor regulation to industry's needs and to improve the FSA's operational efficiency in other areas. Copies of the consultation paper have been placed in both Libraries of the House and it is accessible at www.hm-treasury._gov.uk.

I have completed the annual review under section 141 of the Social Security Administration Act 1992. I propose the following changes to take effect from 6 April 2006. These rates and limits will also apply to national insurance contributions in Northern Ireland.

Employers and Employees

In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for primary Class 1 contributions is to be raised to £84 a week. It is set at the level of the basic state pension for a single person from April 2006 and rounded down to the nearest pound.

The primary and secondary thresholds for Class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be increased to £5,035 from April 2006. The primary and secondary thresholds will therefore be increased to £97 a week. This means that no tax or Class 1 contributions will actually be paid on earnings below this level.

The upper earnings limit for primary Class 1 contributions will be raised to £645.

The self-employed

The rate of Class 2 contributions will be frozen at £2.10 a week.

Self-employed people with earnings below the annual small earnings exception can apply to be exempted from paying Class 2 contributions. This limit will be raised by £120 to £4,465 in line with inflation.

The annual lower profits limit for liability to Class 4 contributions will increase to £5,035 a year (in line with the income tax personal allowance). The upper profits limit will increase by £780 to £33,540, to maintain the link with employees' earnings liable to Class 1 contributions.

Class 3

The rate of Class 3 voluntary contributions will be increased by 20 pence to £7.55 a week.

Share fishermen

The special rate of Class 2 contributions for share fishermen, which allows them to build entitlement to contributory Jobseeker's Allowance in addition to the other contributory benefits available to the self-employed, will be frozen at £2.75 a week.

Volunteer Development Workers

The special rate of Class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 10 pence to £4.20 in line with the statutory formula of 5 per cent. of the primary Class 1 lower earnings limit.

Treasury Grant

I need to ensure that the Fund can maintain a prudent working balance throughout the coming year. In accordance with section 2 (2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum Treasury Grant which may be made available to the Fund in 2006–07 shall not exceed 2 per cent. of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.

I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my right hon. Friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.

The following table sets out the rates, earnings limits and thresholds for National Insurance Contributions proposed for 2006–07.

National insurance contributions, proposed re-rating, April 2006

The Child and Working Tax Credits are today benefiting over 6 million families and 10 million children. Tax credits tailor support to families' specific circumstances, providing more support when their need is greatest. They represent a more generous and inclusive system of income-based financial support than any previous system.

Over the past seven years the Government have reformed Britain's tax and benefit system to achieve three over-arching aims: to provide adequate financial incentives to work; to reduce child poverty; and to recognise the responsibilities of parenthood by supporting families with children. These reforms have helped make work pay and reduce the numbers of children in absolute poverty by one and a half million. Tax Credits have been an important part of this success and they represent the best way to continue it in the future.

In my statement of May 26 I outlined six measures to improve the administration of tax credits. These aimed to improve HMRC's communications with tax credit recipients, reduce the risk of errors and improve the procedures for recovering overpayments. Significant progress has been made in each of these areas.

Building on these improvements to the administration of the system, the Government are today announcing a package of further improvements most of which will come into effect over the next 18 months. The measures reflect the experience of the first years of operating the tax credit system and strike a balance between providing more certainty and stability of financial support for families, while maintaining flexibility to respond to changes in their income and circumstances. The measures also include clear responsibilities for claimants to report changes affecting their award.

The tax credits system is an annual one—integrated with the tax system—within which payments can be adjusted to reflect changes in a family's circumstances and income. Under an annual system, given a family's final entitlement cannot be known until the end of the year, some level of end-year adjustment will be necessary. However, for some families, especially those on lower incomes, downward adjustments to tax credit payments—to reflect changes in circumstances reported within the year or when awards are renewed—can sometimes cause difficulties. This is a particular problem where claimants had not realised their payments were too high. Better communications, which is a key part of the measures announced on 26 May, will help by improving claimants' understanding of the system.

Today's measures will improve matters further, providing greater certainty for claimants, especially those on lower incomes, through measures to reduce the need for adjustments caused by rising income and to limit the effects of adjustments. These are supported by measures to reduce the likelihood of unexpected downward adjustments resulting from inaccurate or out of date information about a family's income or circumstances.

Analysis of overpayments suggests that they result from a number of factors: income rises from one year to the next; families overestimating the extent to which their income has fallen when they seek extra support during the year; provisional payments made at the start of the tax year, which are based on out-of-date information that is subsequently updated when the award is renewed; and delays in reporting changes in families' personal circumstances to HMRC.

The improvements announced today will provide greater certainty for claimants, particularly those on lower incomes, while maintaining flexibility to respond to falls in income and changes in circumstances.

To increase the flexibility of the system, from April 2006 there will be an increase in the limit on the amount that family income can rise over the current tax year without affecting tax credit entitlement for that year. The current annual income disregard of £2,500 will increase to £25,000. This will mean that, for instance, a family where a non-working partner moves into work on average earnings will not see their increased income lead to a fall in their tax credit entitlement during that year. This will maintain the incentives for people to move into work, while removing a major cause of the overpayments seen in the first two years of the system's operation.

To provide greater certainty of award for claimants, from November 2006, automatic limits will be imposed on the extent to which tax credit payments can be reduced to recover higher payments in the earlier part of the year which could lead to an overpayment for the year as a whole. These limits will be set at the same levels at which overpayments from a previous tax year are currently recovered. This will guarantee that low- to middle-income families do not face large and sudden falls in their tax credit income, and reassure people who report changes promptly.

To tackle the problem of families overestimating falls in income, from April 2007, when claimants report a fall in expected income during the year, their tax credit payments will be adjusted for the rest of the year to reflect their new income level, but will no longer include a one-off payment for the earlier part of the year. At the end of the year, their award will be finalised when their actual income is known. If they have been underpaid, a further payment will then be made. This approach will provide a buffer against any overpayment accumulated by the family during the year, especially where their estimate of income proves to have been too low.

Today's measures will also give claimants clear responsibilities to report changes promptly and more regularly. They will be helped to keep their records up to date, including through more proactive contact by HMRC, allowing HMRC to base tax credit awards on the best possible information.

In summer 2006 the deadline for providing information to finalise and renew tax credit awards will be brought forward by one month to shorten the period during which provisional payments may be made using out-of-date information.

From November 2006, the range of changes reducing entitlement that must be reported to HMRC within three months will be expanded to include changes in work status or in the number of children for which the family can claim support. From April 2007, the time allowed to report such changes will be reduced from three months to one.

In early 2007, towards the end of the tax year, HMRC will contact key groups of claimants to obtain more up-to-date income information on which to base the next year's payments while the finalisation process is completed. And from 2008–09, the income figure used in setting provisional payments will be uprated by average earnings where up to date information has not been provided.

In line with its commitment when tax credits were announced in 2002, the Government have looked to learn from the early operation of the system and will continue to do so. Together these measures, and the six measures currently being implemented by HMRC, will lead to steady and ongoing improvements in the tax credits system, allowing it to deliver support even more effectively to millions of families. Without the changes announced today, initial estimates suggest that subsequent years' overpayments would be of broadly the same level as in 2003–04. When fully implemented, it is anticipated that today's changes will reduce the value of overpayments by around one third. I am still considering whether there is more that can be done to alert claimants about the recovery of an overpayment before HMRC starts to collect it but the scale of changes to the computer system that would be needed mean that this could not be done quickly.

I believe that these further measures will help to ensure that tax credits strike the right balance between flexibility and certainty for claimants and give clear messages about the need to report changes to HMRC. They are a positive response to the issues raised by the Ombudsman and others and will go a long way to meet the concerns they have expressed.

A case has been made for a system of fixed awards, which within the framework of the annual tax credits system, would need to be based on the previous year's income. The Government will continue to listen to the case, but believe on balance that it is preferable to maintain the current system that flexibly responds to changing circumstances.

The PBR sets out the actions the Government are taking to continue improving compliance in the tax credit system. As announced on 2 December, as part of their ongoing compliance work, HMRC have identified and stopped attempts to defraud the tax credits system by making claims through the tax credits e-portal. HMRC has closed the e-portal while it develops new checks to ensure the system remains secure. A criminal investigation is also being undertaken into the apparent false use of a number of DWP staff identities in fraudulent tax credit claims. It would not be appropriate to make any further public statement at this stage.

DWP and HMRC are carrying out an in-depth investigation into how this happened. They are also working quickly to identify the records concerned and to ensure they are corrected.

I am pleased to inform the House that I have today formally published the interim report of an independent panel that has been set up to consider whether the licensing fees are set at the right level.

The panel's terms of reference are to:

consider whether the fees cover the full cost to licensing authorities;

identify the scale, extent and nature of any problems encountered by licensees/licence payers and licensing authorities;

make recommendations about how the existing fee structure and levels could be developed;

ensure best practice is being fully realised across all authorities; and

identify how the regime could be developed to address any other issues including impact of the fees scales on sports clubs, village and community halls.

While the panel, which includes representatives of local government, local communities and industry, has collectively concluded that it is too early to take a view on the current fee levels associated with the Licensing Act 2003, it has made the following initial recommendations to the Government:

There should be a central source of information on fees addressed to licence payers, which explains why the system has changed, what the new system does for licence payers and their duties and responsibilities, as well as what licensing authority responsibilities are to licence payers.

An annual date should be set for the payment of the annual fee with incentives for paying it.

Consideration should be given to simplifying the application process, particularly in relation to advertising applications and clarification of the requirement for "professionally" drawn premises plans.

There should be no impediment to licensing authorities making their monitoring, enforcement, and administration more efficient and cost effective.

We will now fully consider the panel's recommendations.

The interim report also identifies areas that the panel will now consider further, including:

Licensing Authority income and costs.

Licensing Authority inspection and enforcement regimes and the variability of Licensing Authority approach.

The model for calculating fees.

Simplification and number of applications.

Temporary event notices.

Not-for-profit groups (including sports clubs and village halls) and events and circuses

Large events and festivals.

The panel is due to publish a final report on the fee levels in the autumn of 2006. Where it is able to do so, it will make further recommendations in advance of its full report.

I can re-affirm today that costs incurred by local authorities in meeting their requirements under the new Licensing Act will (provided they have been incurred legitimately and efficiently) be fully met by fees within the national fee regime. There should therefore be no liability for the council tax payer because of the new licensing regime. My Department and the Local Government Association will work with the independent fees review panel as a matter of urgency to agree the process for verifying these costs.

Everyone involved in the new fees system can rest assured that, if evidence proves that the current system needs fine-tuning, we are fully committed to doing just that.

Copies of the report have been deposited in the Libraries of both Houses and are available at www.culture.gov.uk.

As part of our normal process of keeping force levels under review, the General Officer Commanding Northern Ireland (GOC NI), in consultation with the Secretary of State for Northern Ireland and Chief Constable of the Police Service of Northern Ireland (PSNI), has concluded that the remaining roulement battalion can be removed from his command as it is not required for routine support to the police in Northern Ireland. This follows a rundown in the requirement such that the tasks currently performed by this battalion can be delivered instead by resident battalions. Accordingly, the battalion known as Northern Ireland Battalion 1 (NIBAT 1) can be removed from the command of the GOC NI to Commander in Chief Land on the 16 January 2006.

This is a prudent measure to provide military support to the police efficiently and does not reflect the Army's ability to support the PSNI in countering the threat from terrorism and preventing potential public disorder. We will continue to keep force levels in Northern Ireland under regular review to match the support required by the PSNI.

I have today presented the provisional Local Government Finance Settlement for 2006–07. Included in the announcement was the distributable amount of National Non-Domestic Rates in England for 2006–07 to be redistributed to local authorities, which will be £17.5 billion.

The provisional national non-domestic rating multiplier for 2006–07 is 0.433 (43.3p in the pound) and the provisional small business non-domestic rating multiplier for 2006–07 is 0.426 (42.6p in the pound).

The calculation of the distributable amount for 2006–07 is set out in the table below.

Calculation of distributable amount for 2006–07 -- £ million

Notes:

The above calculation involves estimating several figures that are inherently difficult to forecast accurately, such as the gross rate yield and the prior year adjustments. The resulting figure of £17.413 billion has therefore been rounded to £17.500 billion exactly to avoid spurious accuracy.

For 2002–03, 2003–04 and 2004–05, the amounts shown are generally those reported on the outturn (NNDR3) returns, with those for 2003–04 and 2004–05 being regarded as provisional in advance of the receipt of audited returns from all billing authorities. For 2005–06, the amounts shown are the provisional outturn for the year based upon authorities' provisional contributions to the non-domestic rating pool, largely as reported on NNDR1 and—where submitted—NNDR2 returns. For 2006–07, the estimates are based on:

1. Item 1: The gross rate yield represents the estimated effective total rateable value of non-domestic hereditaments on local rating lists multiplied by the small business non-domestic rating multiplier of 42.6p. The supplement of 0.7p that is also applied to businesses paying for the small business rate relief is not included, and neither is the small business rate relief included within the reliefs at item l(i). This reflects the fact that the income from the supplement is intended to equal the cost of the relief nationally, resulting in a zero net effect upon the Distributable Amount.

2. Item l(i)(a): the cost of the transitional reliefs in 2006–07 is estimated to be £300 million, to reflect the fact that the increase in the multiplier for 2005–06 onwards to take account of expected losses from appeals has had an impact upon the in-year revenue neutrality of the transitional arrangements. At least part of this cost will be recouped once the appeals take effect, and the power exists to adjust the multiplier in later years as necessary.

3. Item l(i)(b): net small business rate relief. This is assumed to be zero: see note 1, above.

4. Item l(i)(c): The empty properties relief includes voids and partially occupied hereditaments.

5. Item l(i)(d): Charitable rate relief.

6. Item l(i)(e): Rural Shops and Post Office relief. Figures include mandatory relief for general stores and post offices under the Local Government and Rating Act 1997.

7. Item l(i)(f): Community Amateur Sports Clubs (CASCs). This is mandatory rate relief for sports clubs registered with HM Revenue and Customs (formerly Inland Revenue) as Community Amateur Sports Clubs under the Section 64 of the Local Government Act 2003, which came into effect on 1 April 2004.

8. Item l(i)(g): Discretionary relief granted to charities, non-profit making organisations and for other reasons including discretionary relief for village shops and post offices under the Local Government and Rating Act 1997.

9. Item l(ii)(a) and (b): The allowances for the costs and losses incurred by authorities in collecting non-domestic rates from ratepayers.

10. Item l(ii)(c): City of London offset—the amount which the City of London is not required to pay into the non-domestic rating pool. It has been set to zero for 2004–05 onwards.

11. Item l(iii): net adjustment in respect of appeals and other amendments to the rating list affecting liability for previous years rates settled in that year: comprising repayments and associated interest payments.

12. Item 2: a forecast of the rateable value of non-domestic hereditaments on the central rating list multiplied by the multiplier, less the net effect of transitional arrangements, and adjusted for appeals and other changes in respect of previous years.

13. Item 3: Almost all properties previously included in the Crown List are now included in the local list figures at item 1.

14. Item 4: the contribution from central government to offset the amount of the Secretary of State's estimate of income forgone as a result of transitional arrangements is assumed to be zero for 2006–07.

This statement concerns a package of changes to planning policy the Government are announcing today. We are consulting on draft "Planning Policy Statement (PPS) 3: Housing", draft "Planning Policy Statement (PPS) 25: Flooding" and we are publishing a new Green Belt Direction. Copies of these documents will be placed in the Libraries of both Houses.

Planning Policy Statement (PPS) 3: Housing

The Government's housing policy aims to deliver a step on the housing ladder for future generations of homeowners, quality and choice for those who rent, and, sustainable, mixed and inclusive communities. To do this, we need the planning system to provide for new homes which are well-designed and built to high environmental standards, in places that are well located, with good access to jobs and key services.

Draft PPS3, which the Office of the Deputy Prime Minister is publishing today, is a key component of our strategy to deliver more homes where they are needed. It provides a national policy framework for those at regional and local level responsible for developing planning policies. It advocates an evidence-based approach, including the use of sustainability appraisals, in order to ensure that development plans provide a sound framework for deciding planning applications.

Draft PPS3 introduces important changes in the approach to planning for housing. Planning needs to be more responsive to the housing market, and to take account of affordability alongside the social and environmental impacts of development. It continues the priority for brownfield sites. It attaches high importance to the design and mix of housing that is delivered in new developments to improve the quality of residential environments and contribute to the delivery of sustainable communities.

New Green Belt Direction

The Office of the Deputy Prime Minister is also today issuing through a circular to local authorities a new Town and Country Planning (Green Belt) Direction.

This new Direction will come into force on 3 January 2006 and will, for the first time, specifically require planning applications for inappropriate development of certain types and scale in the Green Belt which local planning authorities are minded to approve, to be referred to my right hon. Friend the Deputy Prime Minister. The Direction will ensure that the Secretary of State has the opportunity to consider whether to call in for public inquiry and his own determination the more significant and potentially most harmful development proposals in the Green Belt before they can be approved. However, the Secretary of State will continue to use his powers of intervention selectively, in line with his call-in policy.

The introduction of a new, free-standing Green Belt Direction demonstrates the continuing importance that the Government attach to the protection of the Green Belt.

Planning Policy Statement (PPS) 25: Flooding

To strengthen the key role of the planning system in managing flood risk we are publishing for consultation:

A new Planning Policy Statement (PPS)25: Development and Flood Risk;

A proposal for a flooding Direction; and

A proposal to make the Environment Agency a statutory consultee for planning applications in flood risk areas.

The draft PPS25 strengthens and clarifies planning policy on development and flood risk to:

ensure flood risk is taken into account at all stages in the planning process;

avoid inappropriate development in areas at risk of flooding; and

direct development away from areas at highest risk.

The proposed flooding Direction will provide greater scrutiny for major developments proposed in flood risk areas. Where local authorities intend approve applications that the Environment Agency still objects to, ODPM could consider whether to call them in for decision by a Minister.

Making the Environment Agency a statutory consultee for planning applications in flood risk areas will reinforce implementation of PPS25 by ensuring that the agency is able to advise on all applications where flood risk is an issue.

I chaired the Agriculture and Fisheries Council on 22, 23 and 24 November for the agriculture items on the agenda. My hon. Friend, the Parliamentary Under-Secretary, Ben Bradshaw, represented the United Kingdom and also chaired the Council for the fisheries items. My hon. Friend, the Parliamentary Under-Secretary, Jim Knight, represented the United Kingdom for fisheries items. Also in attendance was the Scottish Environment and Rural Affairs Minister, Ross Finnie.

The Council reached a general approach on the reform of the common market organisation of sugar ("general approach" being the term for an agreement reached before "European Parliament" has issued its opinion). The main elements of this are as follows: a 36 per cent. price cut on white sugar over four years and de-coupled compensation for farmers at 64.2 per cent. of the price cut alongside a voluntary restructuring scheme aimed at reducing EU production by around six million tonnes in the same period.

This will bring the sugar sector into line with other major CAP reforms and put the EU in a much stronger position for the Doha round talks in Hong Kong in December. It will also enable the EU to comply with the recent WTO Panel ruling limiting subsidised exports and allow the EU to fulfil its existing commitments on preferential imports from developing countries without new restrictions.

The Council also reached a general approach on rural development strategic guidelines. The guidelines suggest the priorities areas which Member States might address when preparing their rural development programmes for 2007–13.

The Council reached unanimous political agreement on technical conservation measures for the Baltic Sea, the Belts and the Sound. The regulation establishes measures for the conservation of fishery resources and includes restrictions on nets and conditions for their use; minimum landing size; and restrictions on fishing in specified areas. The measures contribute to sustainable fisheries in the Baltic.

The Council held exchanges of views on the forthcoming proposal for quotas in the Baltic Sea for 2006; and on effort control measures associated with total allowable catches and—quotas for 2006 in advance of the December negotiations.

Under "Any Other Business", the Fisheries Commissioner gave an update on negotiations on the annual fisheries agreement between the EU and Norway.

Ireland raised the possibility of introducing inter-annual flexibility in the management of certain fish quotas, in particular mackerel.

The Commissioner for Health and Consumer Protection updated the Council on the Commission's plans for revising the current safeguard measures on Avian Influenza and on international developments. He noted that the Commission would propose extending the emergency biosecurity safeguard measures currently due to lapse on 1 December, until next spring to take into account the spring migration of wild birds. As for the import restrictions on susceptible poultry, other captive birds and their products from Croatia, Romania and Turkey the Commission planned to ease the blanket restrictions and only prohibit susceptible animals and products from infected regions.

Poland drew the attention of the Council to the recent ban imposed by the Russian Federation on meat, meat products and plant products from Poland on the grounds that export certificates accompanying such goods had been found to contain irregularities. The Commission advised that Poland should hold bilateral talks with Russia as a first step to resolve the issues. The Commission also indicated that they would keep the situation under review and both the Commission and the Presidency offered to assist further if required.

The Agriculture Commissioner gave an update on the state of play of the WTO Doha Development Agenda negotiations, including the prospects for the WTO Ministerial meeting in Hong Kong.

Estonia, Latvia, Lithuania and Hungary, supported by Slovakia asked the Commission for amendments to the legislation to permit a smooth transition from their current scheme to the Single farm payment scheme. The Agriculture Commissioner indicated that she would consider the request constructively, and would come back with a response after it has been considered at technical level.

France asked the Commission to introduce safeguard measures against apple imports, under Article XIX of the GATT.

Cyprus presented to the Council a request for approval of a nationally funded aid to regularising farm debt. The Council has three months within which to give its decision.

As presidency of the European Union, Her Majesty's Government is today circulating to all member states of the European Union for discussion comprehensive proposals for the European Union budget in the next financial period 2007–13 inclusive. Copies of the proposal are available in the Library of the House and in the Vote Office.

This written ministerial statement outlines the context of the proposal. These budget proposals have four policy objectives:

The first is tough budget discipline. They are below the level proposed by the Luxembourg presidency in June and 17 per cent. below the level proposed by the Commission.

Second, they help the new member states in the enlarged EU by building their economies and societies, and they more fairly distribute the costs among the better off nations. The UK is offering an extra contribution to these costs of enlargement amounting to 8 billion euros over the budget period.

Third, these proposals keep the rebate. Indeed the rebate will rise, from an annual average over recent years of 5 billion euros to around 7 billion.

Fourth, these proposals ensure there can be no fundamental change in the rebate without fundamental reform of the Common Agricultural Policy. All spending, including on agriculture, will be subject to a review during the coming budget period.

Let me explain in more detail.

The budget overall

Last year the Commission proposed a budget of 1,025 billion euros, or 1.24 per cent. of the total national income of all member states (GNI). We said all along that this was far too high. There would be no chance of any serious budgetary reform in specific areas without strong downward pressure overall. Given this, and the demand of the six "budget disciplinarians" [France, Germany, Sweden, Austria, Netherlands and UK], the Luxembourg presidency reduced their proposed budget to 1.06 per cent. or 871 billion euros. This latest proposal would further reduce the budget to at 847 billion euros or 1.03 per cent. [on the commitments basis] and by the end of the budget period spending will be below the 1 per cent. level the six had proposed. This would be a major achievement.

It is important to see these proposals in a longer-term context. EU spending hit 1 per cent. of GNI in 1985 and rose rapidly under Baroness Thatcher and Sir John Major as a proportion of national income, by a quarter to 1.25 per cent. by the early 1990s. and it started to come down only in 1998. These proposals would bring it down further.

Enlargement

The new member states will receive 150 billion euros in structural and cohesion funding. That is an enormous amount and would represent very large new funds. Total funding through all EU programmes to the 10 new member states is worth twice the Marshall plan which funded the reconstruction of Western Europe nearly 60 years ago [at today's prices].

And we are ensuring that these countries will be able to spend much more of what they have been allocated. This is a very important point because the record shows that year by year both the existing and new member states have not been able to spend their full allocation for many technical reasons. We have included a series of very practical changes to ensure that they are better able to do so. This means that while headline entitlements are lower by 14 billion euros than in the June proposals, we are confident that all these countries will be better able to spend what they have been allocated. And we are proposing strengthened financial management arrangements.

Under our proposals, for example, Hungary would receive 22 billion euros in structural and cohesion funding the Czech Republic 23 billion euros and Poland 56 billion euros.

Of course there are those who ask why our taxpayers in western Europe should pay for roads, railways and other reconstruction projects in the east, the answer is that all enlargements have benefited all members economically by increasing the total volume of EU trade, investment and jobs in which all have a share. British trade with the new member states has already increased by 400 per cent. since 1990, 10 times the rate of growth with the rest of the world. That is an indication of the economic potential we will be helping to unlock by making this investment in Europe's future. It is very much in Britain's national interest for the world's largest single market to grow and become more prosperous. And the benefits of enlargement are not just economic. It must be in Britain's interest to have increasingly stable societies in Eastern Europe.

The UK contribution

As I have spelt out, and as these proposals make clear, the UK Government recognises its responsibility to pay a fair contribution to the cost of enlargement—an historic project supported across the political divide. It has been a strategic objective of successive British Governments and, happily, has enjoyed very active all-party support. The Opposition parties have called for significant increases in structural and cohesion funding in Central and Eastern Europe. This budget delivers that objective. But it has to be paid for. We all prepared to pay our fair share, but no more than our fair share.

As EU spending shifts from older member states to the new, the British contribution will inevitably rise, along with the contributions of all the EU 15 member states. But the proposals tabled by the Luxembourg presidency would have left us with a bill of more than 20 billion euros over and above the 50 billion euros that would be our contribution under existing arrangements. That was not acceptable then, nor is it now. The proposal we have tabled today will take our contribution to 58 billion over the seven-year period of the budget.

This is the equivalent of halving the value of the rebate in respect of structural and cohesion funding in the 10 new member states. This could be achieved either by not applying the rebate to a proportion of structural and cohesion funding in the new member states, or by a technical route to increasing our gross contributions.

The UK will in any event continue to receive the full value of the rebate as it applies to the Europe of 15, and to all CAP spending throughout the union. And the rebate will rise, because it increases in proportion to our net contribution. The rebate will increase from an annual average of 5 billion euros in the current financial period, to around 7 billion.

The rebate was negotiated in 1984, but it did not prevent a very significant rise in the EU's take of member states' national income. Nor did it deal with the underlying problem which made the rebate necessary. And it did not prevent the UK paying twice as much as France and Italy, countries with similar sized economies. With these proposals today, Europe's spending comes down as a proportion of income. And for the first time since the UK joined 30 years ago, we would pay roughly the same as France and Italy as a share of national income.

Reform

This is a budget which seeks to invest in Europe's future, and not only through enlargement.

Our proposals provide for a comprehensive and wide ranging review, covering all aspects of revenue and expenditure, including agriculture. This will be conducted by the Commission, which will submit a report in 2008. On the basis of the review, the EU would be able to make changes in the 2007–13 financial period.

Conclusion

We have always made clear our overall aim is to secure fundamental reform of spending which would remove the underlying justification for the rebate. The mechanism we propose for a review both of revenue and expenditure undertaken by the Commission would put us on a pathway to a reformed European Union better able to compete in the global economy. The budget we have circulated today is a tough package which recognises the responsibilities of all members of the EU to both pay a fair contribution towards the future well being of the Union.

It provides a sound basis on which all our citizens can thrive in an enlarged European Union.

A bigger, more prosperous European Union means a stronger, more prosperous Britain. These are good proposals for the UK and good proposals for Europe.

I have today placed in the Library a copy of the Home Secretary's proposals for allocation of police grant for England and Wales in 2006–07 and 2007–08. The Home Secretary and I intend to implement the proposals subject to consideration of any representations and to the approval of the House.

This Government have put unprecedented levels of investment into the Police Service in England and Wales in recent years. This investment has helped to expand local policing, reduce crime and help to make our communities safer. Police Officer, Police Staff and Community Support Officer numbers are all at record levels, police performance continues to improve and the police have never been better equipped with the tools and powers to respond to the needs of local communities. On a like for like basis Government grant and central spending on services for the police will have increased by 56 per cent. or almost £4.0 billion between 2000–01 and 2007–08.

Our ambitious police reform programme continues to produce real improvements but there is still more to do to ensure that the Police Service meets the challenges of the 21st century. People are safer now but we want them to feel safer too. Key elements of the reform programme are about building a responsive, accessible police service which successfully tackles local concerns about crime and anti-social behaviour. As part of this, we are committed to ensuring that every neighbourhood has a neighbourhood police team by 2008; to continuing to modernise the police workforce to ensure it is able to deliver a more responsive, citizen focused service that the public want; and to reshape the national policing landscape to ensure it is able to meet the policing challenges of the modern world. A key part of this is the reconfiguring of the service around larger strategic police forces which will have sufficient capacity and capability to provide the full range of protective services to the public alongside responsive neighbourhood policing.

The National Community Safety Plan, which incorporates the National Policing Plan 2006–09, was published on 16 November. Our key policing priorities are to reduce overall crime; bring more offenders to justice, provide dedicated, visible, accessible and responsive neighbourhood police teams, tackle serious and organised crime including improved intelligence and information sharing between partners and protect the country from both terrorism and domestic extremism. The police funding settlement for the coming two years will support the priorities outlined in the plan.

This year, for the first time, the Government are providing planning totals for two years. Total provision for policing grants and central spending in 2006–07 will be £10,570 million, an overall increase of 5.0 per cent. This includes an increase of 3.4 per cent. in general grant (including a small increase to take account of losses from Amending Reports).

Indicative figures for 2007–08 are an overall increase to £11,047 million (4.5 per cent.) with an increase of 3.7 per cent. in general grant.

In this statement, I want to outline provision for support for the Police Service in England and Wales.

The police grant settlement

We propose to distribute the settlement as set out below. The table includes funding for both local and central spending.

Table 1: Police funding settlements for 2006–07 and 2007–08 compared with 2005–06

(1) The transfer from general grant for police pensions and dedicated security are noted below.

(2) Details are set out later in the statement.

Police funding proposals within the Local Government finance system are being announced by my hon. Friend the Member for Oldham East and Saddleworth today, and by the Welsh Assembly Government.

Provisional general policing grants (ie Home Office Police Grant, Revenue Support Grant and National Non Domestic Rates) for English and Welsh police authorities in 2006–07 and 2007–08 compared with 2005–06 are given in Tables 2 and 3. The figures for 2006–07 take into account our proposed amendments to the settlements for 2004–05 and 2005–06.

With my right hon. Friend the Deputy Prime Minister, we have reviewed the Police Grant formula. We have decided to use the most comprehensive and technically robust option, on which we consulted during the summer, as a basis for formula change. We have updated the existing 1995 formula that used data from the early 1990s, to bring it in line with modern conditions. At the same time, we are concerned to maintain stability of funding during a period of major structural change. We have therefore decided to apply a broadly flat rate increase for all Police Authorities for 2006–07 and 2007–08. This will be 3.2 per cent. and 3.7 per cent.

The settlement continues to take account of our commitment to improve efficiency and effectiveness in the police service. We expect the police service to build on impressive efficiency gains of £316 million (3.24 per cent.) in 2004–05 and projected gains of £360 million (3.5 per cent.) for 2005–06 through continued focus on the target of £1,069 million of cumulative gains by the end of 2007–08. Half these gains are to be cashable. The greater certainty over funding for 2007–08 should help forces and authorities plan to meet this target. The Home Office, the Association of Chief Police Officers (ACPO) and the Association of Police Authorities (APA) will continue to work in partnership to deliver cumulative year on year improvements in the value for money to deliver the efficiency targets.

If Police Authorities deliver efficiency gains, and exercise judicious financial planning, there is no reason for them to set excessive increases in police precepts on council tax next year. The Government's policy in relation to average council tax increases of less than 5 per cent. in each year in 2006–07 and 2007–08 has been clearly set out by my hon. Friend the Minister for Local Government. The Government are prepared to take capping action if necessary.

Amending Reports

Details of the Amending Report for 2004–05, to take account of changes to ONS population data, and the Amending Report for 2005–06, chiefly to take account of changes to pensions' data from Derbyshire and Lancashire, were set out in my written statement of 31 October. The Government made clear in the Consultation Paper on formula grant distribution that they would apply the same approach to grant adjustment as they did in relation to the 2003–04 Amending Report. We have therefore adjusted 2006–07 grants to ensure that any authority owing money under the Amending Reports will be able to pay it back in 2006–07 and still be left with at least the broadly flat rate grant increase over 2005–06. The consultation period for both Amending Reports will end on the same date as the consultation on the funding settlement proposals 2006–07 and 2007–08 on 11 January 2006.

Welsh police authorities

We have for several years ensured that Welsh Police Authorities were treated in line with English Police Authorities with respect to the floor damping mechanism. In 2006–07 and 2007–08 we have adjusted the Home Office Police Grant of Welsh Police Authorities to maintain consistency with the English. The Home Secretary has provided additional support of £7.8 million in 2006–07 and £11.3 million on 2007–08 to ensure that Dyfed-Powys Police Authority, Gwent Police Authority and North Wales Police Authority receive at least a minimum increase in grant in line with English authorities. The shortfalls are further funded by scaling police grant to South Wales Police Authority which would otherwise have received a general grant increase of around 6 per cent. but now receives the equivalent increases to a police authority in England in both years.

Metropolitan Police funding

I have changed the provision for the Metropolitan Police special payment to reflect wider formula changes. I have allocated annual formula increases of £5 million in 2006–07 and 2007–08 and £15 million is added for the higher costs of Metropolitan Police Authority civil staff pensions. At the same time I have reduced the provision by £50 million as part of the consolidation of Counter Terrorism funding and this will be included within the Metropolitan Police Service's (MPS's) allocation within the Single Consolidated Fund.

Special formula grant

Over the past five years specific grants have been a very effective tool in delivering key aims and targets and funding new policing initiatives. We have made it clear over the past few months that we wanted to give police authorities more control over specific grants. We have therefore decided to consolidate four specific grants into a single pot for each authority. Each authority will get the actual or estimated level of funding it receives from these grants. We hope that this rationalisation will enable authorities to operate more flexibly. However we will expect authorities to honour commitments and agreed policy initiatives to build on the outstanding successes that these grants have so far achieved. Totals for each Police Authority are set out in the draft Police Grant Reports 2006–07 and 2007–08. The special formula grants are:

The Rural Policing Fund (£30 million)

The Rural Policing Fund was introduced in 2000–01 to target funds specifically at forces that police the most sparsely populated areas.

Special Priority Payments (£69 million)

Special Priority Payments are an integral part of the police pay system, enshrined in regulations following the Police Negotiating Board agreement in 2002.

London and South East Allowances (£48 million)

These allowances were introduced from 2001–02, following a recommendation by the Police Negotiating Board, to address specific recruitment issues in the South East.

Forensic Grant (£46 million)

The benefits to crime detection since this grant was introduced in 2000 have been enormous. It is important that the police service maintains the capacity that has been developed for the efficient and effective collection and use of DNA material from individuals and crime scenes. Without sampling of newcomers to crime and the collection of DNA samples from crime scenes, the benefits of the previous investment in the detection of crime and the benefits of legislative changes introduced by the Government allowing the DNA sampling of persons when arrested, will be reduced. The Home Office will continue to monitor and report on the use of forensics, particularly DNA, by forces in dealing with the investigation and detection of crime. Any significant changes will be highlighted and an explanation will be sought from the forces concerned.

Specific grants for police authorities

Police Authorities will continue to receive extra funding through a number of specific grants for particular schemes. Targeted grants were introduced as a direct response to what the police service and the public told us they wanted. Total provision for specific grants in 2006–07 is £588 million and in 2007–08 is £840 million (Table 4).

The main specific grants are:

Crime Fighting Fund:

£277 million will again be made available to forces to continue to support the costs of officers recruited through the Crime Fighting Fund. This Fund has been remarkably successful in helping the police service boost its strength which is at a historically high level of more than 141,000. In response to concerns raised by both Chief Constables and Police Authorities we have relaxed the terms of the Fund this year and are willing to discuss with the service further flexibility in the use of this money from 2006–07.

Community Support Officers (CSOs):

CSOs free up police officer time, provide reassurance and have powers to deal with aspects of anti-social behaviour and low level crime. This settlement honours our undertaking given in "Neighbourhood Policing—your police; your community; our commitment" (March 2005) to provide £88 million in 2006–07 and £340 million in 2007–08 to support our target of 24,000 CSOs by 2008. Details were set out in letters to Chief Constables and Police Authorities on 7 November 2005. In addition to this, for 2006–07, we have allocated £44 million for continuing support of CSOs recruited in the first three rounds from 2002 onwards and this support will continue in 2007–08.

Basic Command Unit (BCU) Fund:

£50 million will again be provided for BCUs. These are at the forefront of local policing. The grant will again be targeted towards forces with BCUs in high crime areas to help reduce crime in partnership with Crime and Disorder Reduction Partnerships. All forces in England and Wales will continue to receive a share of the grant. BCU Commanders will again have discretion locally to pool their allocations with the new Safer and Stronger Communities Fund.

Initial Police Learning and Development Programme (IPLDP):

We have worked with the Central Police Training and Development Authority (Centrex), to calculate the maximum savings that we believe can be transferred from their foundation training budget to IPLD programmes in forces next year and the following year. £13 million will be transferred to forces from Centrex's baseline in 2006–07, with the remaining foundation training budget becoming available in 2007–08. With this, and with funding that was removed from the Centrex baseline this year, we are able to increase substantially the funding per recruit that is available to forces for their initial police learning and development programmes. Some funding will remain with Centrex in 2006–07 so that they can continue to deliver foundation training for the first two months of the financial year. Each force, with the exception of the MPS (whose money for training is already included in their baseline funding, and who do not currently send recruits to Centrex for training), will receive £3,000 per IPLDP recruit in 2006–07 and 2007–08. Payment will be made up to the level of recruits that each force needs to maintain their force strength at 31 March 2005. This compares with just over £1,900 per recruit that we were able to make available to forces this financial year.

Counter Terrorism funding

As a result of recent events the Government consider that policy and funding for Counter Terrorism should be more closely linked to improve effectiveness. We have therefore drawn together existing grants, including the provision for Dedicated Security Posts formerly in general grant, into a single consolidated grant for Counter Terrorism. We will be augmenting the amounts transferred from general grant for counter-terrorism and the increase will be announced shortly. Within the increase in general grant to police authorities in 2007–08 we have made provision of £25 million to enable authorities to enhance further their counter-terrorism capability.

We are currently working very closely with ACPO on this matter. We see an important role for ACPO in the management of this grant and for ensuring coherence, strategic direction and for the provision of a nationally co-ordinated response. We will work closely with ACPO to ensure that both this uplift and funding from the new consolidated Counter Terrorism grant are used to create a significant increase in the strength of the police's counter-terrorism capability.

While we have included the MPS within the scope of this grant we are all conscious of the very important contribution that the MPS provides to our counter terrorist effort—not least its anti-terrorist investigation capability—and its vital role in protecting our capital city and its citizens from the terrorist threat. On that basis we believe that we should continue to fund the service separately so that Parliament is assured that the MPS's national capabilities are effectively funded.

Both we and ACPO are committed to ensuring that the Police Service both nationally and regionally has a robust, resilient and effective Counter Terrorist capability.

Police authority capital

The Home Secretary and I intend to allocate provision of capital grant for 2006–07 and 2007–08 later this month. We propose to plan grant allocation over the two years to take into account prospective force amalgamations.

Safer and Stronger Communities Fund

The newly created Safer and Stronger Communities Fund was rolled out to all Local Authorities in England in 2005–06. It brings together existing Home Office and ODPM funding streams. This Fund will total a minimum of £220 million in 2006–07, the Home Office contributing a minimum of £70 million resource and £20 million capital. The police service, subject to the agreement of other local partners, will be able to draw upon these funds to support local crime reduction initiatives. The Home Office Crime Team within the Welsh Assembly is currently liaising with the Home Office on establishing similar arrangements for Wales.

Asset Recovery Police Incentivisation scheme

This scheme boosts asset recovery by giving forces a direct stake in the proceeds they generate from the work. The police service received £13 million in 2005–06 (one third of the total assets recovered over and above £40 million in 2004–05). This will increase to one half in 2005–06 payable in 2006–07 with the maximum benefit available to the police of £65 million. From 2006–07, under a new incentive scheme, all asset recovery agencies including the police will receive back 50 per cent. of what they recover.

Serious Organised Crime Agency

Work is on track to launch the new Serious Organised Crime Agency (SOCA) on 1 April 2006. It is intended for the precursor agencies to begin transferring business to SOCA from January in order to ensure a smooth transition. SOCA's strategy for 2006–07 is based on a workforce strength of 4,250 staff and an initial budget of £400 million, including provisions to be made from HM Revenue and Customs and the UK Immigration Service.

National Policing Improvement Agency

We intend to establish the National Policing Improvement Agency (NPIA) on 1 April 2007, subject to legislation. The aim of the NPIA is to introduce a radically different model of police service leadership as well as producing greater efficiency, consistency and clarity of purpose in service delivery. The NPIA will be a new organisation that rationalises several other bodies. The agency's purpose will be to drive improvement in the police service. It will replace the existing organisations Centrex and the Police Information Technology Organisation (PITO). There will also be significant implications for the work of ACPO, the Home Office and the APA. Budgets for precursor agencies will be announced by 31 January.

Pensions

With effect from April 2006 a new financial arrangement for funding police pensions will commence. This will replace the present practice whereby each police authority is responsible for paying the pensions of its former employees on a "pay-as-you-go" basis. The new system will eliminate the effect of the volatility resulting from significant fluctuations in the number of police officers retiring in any given year and consequently reduce cost pressures being passed on to council tax precepts. It will also introduce greater transparency by making clear the actual level of resources available for service delivery.

Under the new arrangements Police Authorities will continue to be responsible for paying pensions to former police employees and to receive grant funding to support the employers' contributions. Any deficits on an authority's net pension costs will be met from a central specific grant managed by the Home Office. To create this central pension pot £313 million for 2006–07 and £328 million for 2007–08 has been held back from the funding settlement. The new arrangements will be cost neutral. The aggregate amount held back will be used to reimburse authorities for their actual pension costs shortfall.

Details of the new funding arrangements were set out in my statement of 29 November.

Conclusion

We have listened very carefully to all stakeholders in determining this settlement. We have provided the investment to deliver record numbers of Police Officers, Police Staff and an expanding number of CSOs and have provided the police with new tools to tackle the crimes that concern communities most. We will continue to work closely with the police to improve their efficiency and responsiveness to local communities. Our proposals will ensure that all forces in England and Wales receive a fair share of resources in the coming two years, in a time of radical restructuring that will give the police the organisation they need to face the challenges of the future.

Notes:

(1) Rounded to the nearest £100,000. Grant as calculated under the Local Government Finance Report (England) and Local Government Finance (Police) Report (Wales). This includes the Metropolitan Police special payment, and the effects of floors and ceilings.

(2) Base positions are adjusted for the transfer of pensions and security funding.

(3) Figures for the City of London relate to Home Office Grant only as calculated in the Police Grant Report (England and Wales). Revenue Support Grant is allocated to the Common Council of the City of London as a whole in respect of all its functions. The City is grouped with education authorities for the purposes of floors.

(4) Welsh figures include Home Office floor funding.

Table 2: Police grant allocations by English and Welsh police authority 2006–07

Table 3: Police grant allocations by English and Welshpolice authority 2007–08

Notes:

(5) Rounded to the nearest £100,000. Grant as calculated under the Local Government Finance Report (England) and Local Government Finance (Police) Report (Wales). This includes the Metropolitan Police special payment, and the effects of floors and ceilings.

(6) Figures for the City of London relate to Home Office Grant only as calculated in the Police Grant Report (England and Wales). Revenue Support Grant is allocated to the Common Council of the City of London as a whole in respect of all its functions. The City is grouped with education authorities for the purposes of floors.

(7) Welsh figures include Home Office floor funding.

Table 4: Specific grant allocations in 2006–07 and 2007–08 compared with 2005–06

On transition of the Forensic Science Service (FSS) from Trading Fund status to GovCo the Government will retain control of the National DNA Database (NDNAD). It is recognised to be a world leading crime intelligence database, and a key national criminal justice asset.

The standard setting and oversight of the National DNA Database, ensuring quality and integrity of the service, will be carried out by a dedicated unit initially in the Home Office, overseen by a tripartite board composed of the Home Office, ACPO and APA. We propose to increase Human Genetics Commission representation at board meetings from one to two to strengthen lay representation. Following initial consultation regarding established bio-medical ethics committees, it has been determined that a new and dedicated ethics group is required to provide independent oversight of Board decision-making. Plans for the creation of this group are being developed with Department of Health support. These transitional arrangements have been developed to improve the strength and transparency of NDNAD oversight.

The operational delivery of database services—the loading of DNA profiles and the reporting of subsequent matches—will continue to be provided under contract by the FSS initially to ensure continuity of service to the police. The separation of operational service delivery from the governance and standard setting will enable value for money to be maximised, while the control of oversight within the public sector will be retained. Wider consultation will take place about the most effective long-term oversight of the National DNA Database and other national forensic databases, which should enhance public confidence in the safeguards and ethical controls which are being developed.

The Government have today published for consultation draft guidelines setting out how community-based restorative justice schemes should work with the police and other statutory criminal justice agencies in dealing with low-level crime. The guidelines establish a framework for implementing recommendation 168 of the Review of the Criminal Justice System in Northern Ireland, which recommended that community-based restorative justice schemes could, subject to specific safeguards, have a role to play in this area. The safeguards include upholding the human rights of all participants; receiving referrals from the criminal justice system; being open to inspection by the independent Criminal Justice Inspectorate; and adhering to high standards.

The draft guidelines make clear that it is for the Police Service of Northern Ireland to investigate crime and for the Public Prosecution Service to decide how offences should be dealt with. Community-based restorative justice schemes must have an acceptable and appropriate relationship with the criminal justice system including the police, as envisaged in the Review.

I have placed a copy of the document in the Library of the House. It has been circulated to the main political parties, the Policing Board and other key stakeholders as part of a wider consultation process. Views on any aspect of the draft guidelines will be welcome, and some specific questions are posed covering human rights, the referral process, suitability of staff, complaints, and equality.

The Government will decide on the way forward after the consultation concludes on 24 February 2006 and we have had the opportunity to consider all the comments and views received.

I chaired my second Competitiveness Council of the UK's presidency in Brussels on 28–29 November 2005. My noble Friend, the Minister for Science and Innovation chaired the Council for the research items. He also chaired, with German State Secretary Mr. G-W Adamowitsch representing the European Space Agency (ESA) Council, the third meeting of the Space Council on 28 November 2005. The only interventions by the UK national seat were during the Space Council.

Monday 28 November 2005—Competitiveness Council (Research items)

The Council approved, by a large majority including the UK, a partial general approach on the 7th Framework Programmes (FP7) for research and technological development, based on a presidency compromise text. The Council debate focused on supporting the participation of small and medium sized enterprises in research projects and the implementation arrangements of the future European Research Council. This partial general approach will provide a good basis for adopting a Common Position once agreement has been reached on the financial perspectives.

The Council adopted conclusions on the recent Commission Communication "More research and innovation—investing for growth and employment". There was no substantive debate on this item.

Monday 28 November 2005—Space Council ¹

The Council adopted orientations on the Commission Communication on global monitoring for environment and security (GMES). It noted that the objective of GMES is to provide, on a sustained basis, reliable and timely information related to environmental and security issues in support of public policy makers' needs. My hon. Friend, the Minister for Competitiveness who sat in the UK national seat, intervened briefly to stress that it was important to utilise the existing capabilities of GMES alongside developing new ones. The Council also held an exchange of views on international collaboration based on a discussion paper tabled jointly by the EU and ESA presidencies. The debate focused on: the need to develop an overall cooperation strategy; EU/ES A roles and responsibilities; and the financial principles that should apply in funding. The UK intervened briefly to support the development of a collaborative approach but noted that this should pay due consideration to Community competence. Vice-President Verheugen (Commissioner for Enterprise and Industry) and ESA Director-General Dordain provided an oral report to the Council on the progress of European space policy.

Tuesday 29 November 2005—Competitiveness Council (Industry/Internal Market items)

I provided a Presidency summing-up of an exchange of views on EU industry policy and the recent Commission Communication "Implementing the Community Lisbon Programme: a policy framework to strengthen EU manufacturing—towards a more integrated approach for industrial policy" that was held over dinner on 28 November 2005. Ministers supported the Commission's approach to industrial policy—at both a sectoral and horizontal level, welcoming, in particular, the new High Level Group on Energy, Environment and Competitiveness. It was agreed that policies should focus on embracing and facilitating structural change.

The Council adopted conclusions on better regulation and recognised progress made at EU and Member State level. In particular, the conclusions welcomed recent Commission initiatives on simplification of existing legislation, screening of pending legislative proposals, impact assessment, and consultation.

The Council held a policy debate on the draft regulation for the registration, evaluation, authorisation and restriction of chemicals (REACH) and instructed the Permanent Representatives Committee to examine the remaining outstanding issues, principally authorisation and scope, with a view to achieving political agreement at the next session of the Competitiveness Council on 13 December 2005.

¹ A joint and concomitant meeting of the Competitiveness Council and the Council of ESA at ministerial level

The Council took note of a presidency progress report on a draft decision establishing a competitiveness and innovation programme (CIP) for 2007–13 and endorsed the approach to the horizontal issues that it sets out. The Council instructed the Permanent Representatives Committee to use the report as a basis for future discussions following agreement on the financial perspectives.

Based on a presidency progress report I chaired an exchange of views over lunch and in the Council on a draft directive on services in the internal market. The questions of scope, worker protection and free movement of services were discussed in order to provide political guidance for future discussions once the European Parliament has given its opinion.

The Council adopted conclusions on European Contract Law and the Review of the Consumer Acquis. There was no debate.

The Council took note of a presidency progress report on a proposal for establishing a programme of Community action in the field of health and consumer protection for 2007–13. The Council decided to return to this issue at a future session, as the programme is dependent on the outcome of the financial perspective negotiations and discussions in the European Parliament.

There were two "any other business" items taken at the Council, on which there was no debate. Vice-President Verheugen (Commissioner for Enterprise and Industry) provided information on the progress of the re-launched Lisbon Strategy related to the National Reform Programmes. Lithuania provided information about a conference they are organising in Vilnius on 1–2 March 2006 on the development of tourism in Europe after enlargement.

The Employment and Social Policy, Health and Consumer Affairs Council will be held on 8 and 9 December in Brussels. Employment and Social Policy issues will be taken on 8 December. Health and Consumer Affairs will be taken on the 9 December. The Council will be chaired by my right hon. Friend Secretary of State for Work and Pensions, apart from the agenda item on Working Time which will be chaired by my right hon. Friend, the Secretary of State for Trade and Industry. I will sit in the UK Seat apart from the Working Time Directive agenda item when my hon. Friend, the Minister for Employment Relations, Consumer and Fair Markets will represent the UK.

The first item is a Presidency Report from the informal meeting of Heads of State and Government, Hampton Court, 27 October.

There will be a policy debate on Demography and Human Capital. The discussion will focus on the following questions: Which steps should be taken by Member States and by the EU in order to increase the overall employment rate for people of working age? How should measures to improve human capital support this work? What specific measures should Member States pursue in order to maximise the employment opportunities for young people, older workers and disadvantaged groups and what are the specific barriers to raising the employment rates for these groups? The background to this discussion is provided by the Commission Green Paper on Demography and the EMCO report on Human Capital.

There will be a report from the Chairman of the Employment Committee on the Examination of National Reform Programmes. These are the annual reports on each Member States' progress towards achieving the Lisbon goals outlining their focussed policy objectives.

On the Directive of the European Parliament and of the Council amending Directive 2003/88/EC concerning certain aspects of the organisation of working time, the Presidency will be seeking political agreement on an amended proposal.

The Council will reach partial political agreement on a Decision of the European Parliament and of the Council establishing a Community Programme for Employment and Social Solidarity—PROGRESS. This is the EU-level spending programme for the period 2007–13, which will provide financial support for the implementation of the Community's objectives for employment and social affairs and the achievement of the Lisbon goals.

Ministers will be expected to endorse political agreement on the gender recast directive which will simplify, modernise and improve existing EU law on equal treatment between men and women.

The Commission and the Presidency will present information on the Directive on portability of supplementary pensions. This is intended to make it easier for workers with occupational pensions to move around the EU.

Under "Any Other Business" there will be four written items presented by the presidency. I do not expect any debate on these items: "Annual follow-up to the Beijing Platform", "Health and safety conference", "Round table on poverty and social exclusion", and "Corporate social responsibility".

There is one written item from the Luxembourg delegation reporting on their conferences on poverty held under the Luxembourg Presidency, and two written items from the Commission, one on their first biennial report on disability and the other on a memorandum of understanding between the European Commission and China on co-operation on employment and social affairs. None of these will generate discussion.