Amendments will be tabled to schedule 6 to the Finance (No 2) Bill 2006 for Report stage to block a tax avoidance scheme used by companies and others to obtain relief against corporation tax or income tax for the capital element of loan repayments.

The scheme involves arrangements which in substance are loans and are accounted for as financial arrangements but in form involve the transfer of expected income or payment streams in exchange for a lump sum, with the income or payments continuing until they equal the amount of the lump sum plus interest.

The income transferred is not taxed on the transferor, so the effect is that relief is obtained for repayments of capital as well as interest.

The measures to be included in the Bill will treat the transferor for tax purposes as if it had taken out a conventional loan, so that relief will only be given for the interest element. Any chargeable gain arising on the transfer will be disregarded. It will also apply to more complex schemes where the income is shifted by adjusting partnership profit shares.

The legislation will replace the rent-factoring rules in section 43A to 43G ICTA.

Further details of the measure with draft legislation and explanatory notes are published on the HMRC website. The measure has effect in relation to transfers taking place on or after 6 June 2006. It will also apply to transfers that have taken place before that date but will only have affect in relation income or payments arising on or after that date.

Items on the agenda are as follows:

Enlargement of the Euro area—ECOFIN will discuss the convergence reports prepared by the Commission and the European Central Bank as well as the draft Council decision to abrogate Slovenia's derogation for fulfilling the necessary conditions for Economic and Monetary Union Membership.

EU-US Dialogue: Preparation of the EU-US Summit—Ministers will discuss economic issues in the run up to the EU-US summit on 21 June in Vienna. The Commission is also expected to report on the EU-US financial markets regulatory dialogue.

VAT—Presidency will seek agreement on its proposed package to modernise the VAT system, including a proposal on “Place Of Supply of Services”.

Combating Tax Fraud—Ministers will hear an oral presentation from the Commission on combating tax fraud, and will consider Council conclusions on further action to combat fraud in this field.

Company Tax—ECOFIN will discuss a Communication from the Commission examining company tax obstacles inhibiting the functioning of the internal market.

Code of Conduct— ECOFIN will consider a report from the code of conduct group on business taxation, which is chaired by the Paymaster General, on its work during the Austrian presidency.

I have today issued a consultation paper, “Draft Marine Minerals Dredging Regulations and Procedural Guidance”. This seeks comments on a proposed statutory scheme of regulation, which will formally transpose the Environmental Impact Assessment (EIA) and Habitats Directives, in relation to marine minerals dredging in waters around England and Northern Ireland. Subject to consultation comments, we are hoping that the final Regulations implementing the new statutory scheme will come into force by the end of 2006.

The Crown Estate owns most of the seabed out to the 12 mile territorial limit and has rights to all the non-energy minerals within the remainder of the UK share of the Continental Shelf. It currently licences marine minerals dredging from the seabed under its control on a commercial basis, but only if a favourable Government View (GV) on the environmental acceptability of the proposal has first been issued by the Secretary of State for Communities and Local Government. The GV procedure is a voluntary, informal process which already incorporates the various requirements of the EIA and Habitats Directives. The proposed Regulations will replace this informal procedure and formally transpose the Directives.

Separate Regulations transposing the Directives in relation to marine minerals dredging in Scottish waters and Welsh territorial waters are, respectively, being prepared and are intended to be prepared by the Scottish Executive and Welsh Assembly Government.

Copies of the consultation paper are being sent to a wide variety of organisations including marine dredging companies, organisations representing the fishing industry, environmental and amenity groups, coastal local authorities, Government Departments and agencies. Copies have been placed in the Libraries of both Houses. The paper is also available on the Department for Communities and Local Government website at: www.communities .gov.uk. The consultation period ends on Monday 28 August 2006.

To better support the RAF Hercules fleet a contract was awarded by the Ministry of Defence on the 30 May to Marshall of Cambridge Aerospace Ltd. valued at £1.52 billion. This contractual arrangement will provide integrated operational support over the next 20 years, saving in excess of £171 million for the defence budget. The contract represents a “partnered” approach, as envisaged in the defence industrial strategy, bringing together industrial collaboration with Lockheed Martin and Rolls-Royce, the Defence Logistics Organisation and the RAF. It will enable MOD to sustain the Hercules fleet as a key support to our operational activities.

I have set the State Veterinary Service (SVS) the following performance targets for 2006-07.

1. To contribute to the implementation of the Animal Health and Welfare Strategy for Great Britain by:

Carrying out surveillance and monitoring programmes to agreed standards.

Facilitating the development of regional action plans in England and supporting specific programmes in Wales and Scotland.

2. To implement specific animal and public health policies:

Scrapie: to contribute to a reduction in the level of Scrapie through the Ram Genotyping Scheme and the Compulsory Scrapie Flocks Scheme.

BSE: to identify and locate all traceable animals suspected of being exposed to BSE infection and prevent them from entering the food chain within agreed response times.

Bovine TB: to implement the surveillance testing and control regime to agreed standards in order to quickly identify and remove infected cattle, reducing the risk of transmission to animals and humans.

3. To strengthen emergency preparedness by:

Implementing a coordinated programme of large-scale contingency planning exercises involving operational partners.

Meeting agreed standards of readiness and resilience as set out in the Emergency Readiness Management Assurance Scheme by March 2007.

Enhancing poultry culling capability to agreed levels by September 2006.

4. To protect animal welfare by:

Responding to urgent welfare complaints by visiting the premises within one day.

Taking appropriate remedial action in all known cases where farmed welfare law has been breached but no unnecessary pain or unnecessary distress has occurred (‘C’ scores).

Ensuring that in cases where unnecessary pain or unnecessary distress is disclosed (‘D’ scores) the average time for resolution by the agency is no more than 21 days.

5. To facilitate international trade by:

Issuing 95 per cent. of export health certificates within agreed timeframes.

Issuing the necessary documentation for live cattle exports within agreed timescales.

6. To deliver business improvement by:

Benchmarking customer satisfaction levels and meeting key service standards.

Delivering the efficiency savings profiled for 2006-07.

Further details are given in the SVS business plan for 2006-07 copies of which will be placed in the Libraries of both Houses.

The following performance targets for 2006-07 have been set for the Centre for Environment, Fisheries and Aquaculture (CEFAS).

Science

1. Fulfil commitments on time, within budget and to agreed standards of quality: Delivery of R&D milestones to exceed 90 per cent. score.

2. Enhance scientific capability and reputation: Achieve high standard of excellence based on indicators of scientific and technical quality with an overall score to exceed 75 per cent.

Customers

3. Provide a high standard of services to the satisfaction of customers: Customer Satisfaction Survey overall score to exceed 82 per cent.

Organisational efficiency

4. Recover the full cost of our services and invest for the future: 100 per cent. cost recovery.

5. Operate with simple, reliable and effective processes: Achieve agreed Gershon Efficiency Plan savings.

People

6. Respect and help the agency's people to develop: Annual staff survey satisfaction score to exceed 63 per cent.

Further details are given in the CEFAS business plan 2006-07, copies of which will be placed in the Libraries of both Houses.

On behalf of the Home Secretary and the Minister for the Department of Health and Social Services and Public Safety for Northern Ireland, I am very pleased to announce the appointment of Dr. Peter Hunt and Dr. Mark Prescott as members of the Animal Procedures Committee from 1 April 2006, each for a four year term. Dr. Hunt is Biological Standards Officer at Cardiff University. He has experience in promoting and implementing the replacement, refinement and reduction in the use of animals in scientific procedures (the “three Rs”). Dr. Prescott is a programme manager at the National Centre for the three Rs. He has expertise in animal welfare, primatology and a strong interest in alternatives to the use of animals in scientific procedures. I welcome the contribution that each will bring to this important advisory Committee.

I have today laid before this House a copy of the Oversight Commissioner's first statutory report for the year 2006 which is being published today, in accordance with section 68(4)(a) of the Police (Northern Ireland) Act 2000.

This is the latest report compiled by Al Hutchinson as Oversight Commissioner and the sixteenth in the series of oversight reports published since 2001.

I welcomed the opportunity yesterday to hold my first meeting with Oversight Commissioner and discuss the contents of this report.

The Cabinet Secretary and the First Civil Service Commissioner are today launching a new civil service code. This follows a 12-week period of consultation on a draft code in which over 2,150 responses were received.

The civil service code was introduced in 1996, largely based on a draft provided by the Treasury and Civil Service Committee, and sets out the duties and responsibilities of civil servants. The new code is the result of work between the Government and the Civil Service Commissioners. The aim has been to make the new code more relevant and accessible to all civil servants, whatever their jobs and wherever they work. It is also more outward facing in terms of customers of public services than the previous version.

The new code also provides for the independent Civil Service Commissioners to take a complaint direct from a civil servant.

Copies of the new code, together with a summary of responses received in response to the consultation exercise, will be placed in the Libraries of both Houses.

I am pleased to announce that I have approved the appointment of the right hon. Sir Charles Mantell as a Surveillance Commissioner in accordance with section 91 of the Police Act 1997.

The appointment will be from 1 July 2006 until 30 June 2009. The remit of each Surveillance Commissioner covers the whole of the United Kingdom so that any Surveillance Commissioner can act in jurisdictions other than his own.

I will be representing the UK at the Telecoms Council in Luxembourg on the afternoon of 8 June 2006. This is the only Telecoms Council under the Austrian presidency of the EU.

The first item on the agenda will focus on EU e-Government policy. In response to a recently published Commission e-Government action plan, the presidency have prepared a set of Council conclusions looking at the priorities that need to considered in the area of e-Government policy. I intend to endorse these Council conclusions which are compatible with the UK Government's Transformational Government Strategy.

The presidency will then introduce a policy debate on the future challenges for the electronic communications regulatory framework. This anticipates the Commission's forthcoming review of the regulatory framework for electronic communications markets. A Communication on this issue is expected in July and negotiation will formally begin under the German presidency. I will highlight some of the specific challenges that the UK would like to see addressed in the review of the framework. In particular, I plan to stress the need for effective implementation of the existing regulations and the importance of striking the right balance between maintaining competition, encouraging investment and protecting consumers.

The Austrian presidency may also informally ask for the views of Ministers on the Commission's forthcoming International Mobile Roaming Regulation. If they do, I will present the UK's initial views on this dossier, that we support the objective of reducing charges to consumers but have reservations about the Commission's approach on the regulation of retail prices.

There will then be a short exchange of views on network and information security issues. If time allows, I may intervene under this agenda item to highlight the importance of discussions on this key issue and the need to consider carefully the most effective and proportionate way to address security concerns.

Finally, under “Any Other Business”, the Commission will provide some information on the first annual report on the i2010 strategy and on their recently published Communication on the World Summit on the Information Society. I do not expect to intervene under either of these items.

My noble Friend the Parliamentary Under-Secretary of State for Science and Technology (Lord Sainsbury of Turville) has made the following ministerial statement:

I attended the Competitiveness Council in Brussels on 29-30 May. The first day was chaired by Martin Bartenstein, Austrian Minister for Economics and Labour, with Ursula Haubner, Austrian Minister for Social Security and Consumer Protection chairing the consumer items.

Day 1 Monday 29 May

The first day was dominated by negotiations on the services directive, which started over lunch and continued into the evening. The other main items on Monday were discussions on Consumer Credit, Sustainable Development and Better Regulation.

Services Directive

The Council reached a political agreement on a common position on the Draft Services Directive, with the UK voting in favour. Lithuania and Belgium abstained. The agreement was based largely on the European Parliament's first reading opinion and the Commission's subsequent amended proposal, modified to take account of member states’ views in particular on the scope of the directive and on the country of origin principle. The revised proposal also contains stronger screening mechanisms, which oblige member states to review their legislation against the “better regulation” criteria in the directive.

Better Regulation

The Council took note of a presidency progress report on Better Regulation. The report gave a short account of work in progress under the Austrian presidency as regards impact assessments, simplification of legislation, screening of pending legislative proposals and assessing and reducing administrative costs. I welcomed the progress made by the Commission and the presidency in taking forward this important agenda and I led member state interventions by stressing the need to match rhetoric with action, in particular on special provisions for SMEs and setting targets for reducing burdens. A number of other member states also emphasised the importance of driving forward the Better Regulation agenda.

Sustainable Development

The Council held a policy debate on the review of the EU Sustainable Development Strategy. The strategy is being discussed in a number of formations of the Council, including the Energy and Environment Councils, with a view to reaching agreement at the European Council meeting on 15 and 16 June. The presidency had circulated a set of questions in advance of the Council to which member states responded in writing. The presidency provided a summary of these responses in the Council meeting.

Consumer Credit

The Council held a policy debate on a draft “Directive on Consumer Credit”. Again, the presidency had circulated a number of questions in advance of the Council to which member states responded in writing. The questions were on harmonisation, early repayment and cross-border comparability of consumer credit agreements. The discussion in the Council focused primarily on the central question of maximum harmonisation and mutual recognition within the directive. I welcomed the objective of opening up the single market in consumer credit, but emphasised that any directive would have to maintain levels of consumer protection, and should be based on a rigorous analysis of costs and benefits.

AOB agenda items:

The Council took note of information from the Polish delegation on EU import duties on primary aluminium: requesting the Commission to suspend import duties on raw aluminium. I supported this request along with a number of other member states.

On Euro V. the Council took note of information from the French delegation concerning the proposal for a Regulation aimed at limiting emissions from light vehicles. Several delegations intervened in support of the French delegation.

On Public Procurement, the Council took note of the information provided by Germany (along with France and Austria) asking the Commission to withdraw its draft interpretative communication on regimes for below-threshold procurements. I supported this request, along with a number of other member states.

The presidency gave short reports about conferences on REACH (Registration, Evaluation and Authorisation of Chemicals), Consumer Protection and Tourism. It also noted presentations by the presidency on Clusters, and by Commission Vice President Gunter Verheugen on the communication “A new tourism policy: towards a stronger partnership for European tourism”.

Day 2 Tuesday 30 May

The second day was devoted to research and space business. Elisabeth Gehrer, Austrian Minister for Education, Research and Culture chaired the Seventh Framework Programme (FP7) items. Hubert Gorbach, Austrian Vice Chancellor and Federal Minister for Transport, Innovation and Technology chaired the space item.

A General Approach was agreed on the draft Regulation laying down the Rules of Participation for the FP7. The UK voted in favour.

The Council also reached agreement on a general approach on the FP7 for research and technology development. The UK voted in favour. The Council also considered the Euratom framework programme, but did not reach agreement.

Lunch and other AOB items:

The Council took note of information from the Commission on its recent communication on modernising universities and on ITER but there was no discussion.

On Space Policy, the Council took note of information by the presidency on the main results of a conference on GMES (Global Monitoring for Environment and Security System) which was held in Graz on 19-20 April, as an input for the future elaboration of the European Space Programme. The Council also took note of information by the Commission on the state of play concerning developments towards European space policy and the roadmap foreseen for future developments in this area.

There is an Energy Council in Luxembourg in the morning of 8 June, at which the UK will be represented.

Informal discussion at the pre-Council dinner on 7 June will cover the European Commission's Green Paper: “A European Strategy for Sustainable, Competitive and Secure Energy”, published on 8 March. The need for a new European Energy policy was one of the main agreed outcomes from discussion between EU Heads of Government at Hampton Court last October during the UK's presidency of the EU. Before the Council, the UK intends to submit its initial written response to the Green Paper. The UK's final response to the Green Paper will await the conclusions of the UK's domestic energy review.

The main substantive item on the main Council agenda will be the internal energy (electricity and gas) market, on which Ministers will have a policy debate. The presidency has prepared questions to guide the debate and Ministers will be asked to agree Council conclusions on progress on the single market's implementation. The proper functioning of the single market in electricity and gas is a high priority for the UK. This item is expected to take up the bulk of the Council's time.

Under the agenda item of sustainable energy production and consumption, Ministers will be asked to agree Council conclusions on the Commission's Biomass action plan. Under the same heading, the Commission will provide information to the Council on two energy efficiency initiatives: the consultation process on the Commission's “Energy Efficiency” Green Paper and negotiations for an agreement between the US and European Community on the coordination of energy-efficient labelling programmes for office equipment (Energy Star II).

The presidency or Commission will also provide information on International Relations in the field of Energy, encompassing the conclusion of the Energy Community Treaty and the EU's relations with OPEC and with Russia.

The UK's railway system is a network made up of 2,500 stations and 11,000 miles of track. It carries one billion passengers a year. The British public understand that an aviation-style closed security system on a rail network of this size is unworkable.

However we must still aim to cut down the risks as much as possible, whilst still allowing people to go about their day to day business.

No single security measure is either foolproof or capable of mitigating every threat so we need to examine a range of available measures. It is therefore important that we not only consider both existing and emerging security solutions, but that we subject them to trials in authentic environments to see how effectively they can contribute towards keeping our networks as safe and efficient as possible.

We announced on 10 March 2005 that the Department for Transport had identified a package of short, medium and long-term measures to enhance rail counter-terrorist security.

As part of continuing work to investigate new ideas and ways of improving current measures, we intend to carry out two trials—at Waterloo and Victoria stations—to test the practicalities of deploying and maintaining portable access control barriers in an operational environment. These trials are scheduled to start during June and will last for about 11 weeks.

The sites for these trials were selected following consultation with the British Transport Police, and with Network Rail and the suppliers of these barriers we developed layout arrangements and deployment methodologies tailored to each site. However the objective is to cause minimal disturbance to the station's operations and the flow of passengers throughout the day.

I wish to emphasise that these trials are part of a much broader package of work being carried out by my Department and other stakeholders to determine practical and pragmatic solutions for the short and long-term protection of the public at rail stations. They are not in response to any specific threat information nor should they be viewed as indication of a heightened threat level.

The sole purpose of these trials is to test the application of the barriers in a genuine rail environment. They are not direct measures to enhance security at these stations. No decisions have been taken on the future use of this equipment, and the data and feedback we gain during the trials will inform the broader package of work to which I referred.

The former Parliamentary Under-Secretary of State for Transport announced publication of the second stage of a consultation exercise on night restrictions to apply at Heathrow, Gatwick and Stansted airports from October 2005 until the end of the summer season 2012, 9 June 2005, Official Report, column 58WS. That consultation paper took into account all relevant responses to the stage one consultation paper issued on 21 July 2004.

The stage 2 consultation paper also announced our intention to extend the current night restrictions regime for a further year to end on 29 October 2006. This decision was confirmed, when the former Parliamentary Under-Secretary of State for Transport announced the movements limits and noise quotas to apply for the summer 2006 season, 15 December 2005, Official Report, column 177WS.

I have now decided on the restrictions that will apply from 29 October 2006 to October 2012. Full details of the decision and the reasons for it are set out in the document “Night Flying Restrictions at Heathrow, Gatwick and Stansted” including Annex A, the final Regulatory Impact Assessment, and Annex B, Assessments to comply with European Directive 2002/30, copies of which have been placed in the House Library.

The decision takes account of all the responses that we received to the consultation. In order to remove uncertainty on an element which had given rise to particular concerns, the Parliamentary Under-Secretary of State for Transport announced on 8 May 2006, Official Report, columns 61-62 that we had decided not to increase the night-time movements limits at Heathrow during the period 2006 to 2012. This is but one aspect of the full decision that I am publishing today.

As in the previous regime, the new night restrictions regime for Heathrow, Gatwick and Stansted recognises both a night period, 2300-0700 hours, and a night quota period, 2330-0600 hours. During the whole of the night period, the noisiest types of aircraft (classified as QC/8 or QC/16) may not be scheduled to land or to take off and they are effectively banned from doing so (other than in the most exceptional circumstances) in the night quota period. The next noisiest types (QC/4) may also no longer be scheduled to operate in the night quota period. In addition, during the night quota period movements by most other types of aircraft (including the new QC/0.25 category) will be restricted by a movements limit and a noise quota, which are set for each season. The seasons change with the clocks.

Unlike previous night restrictions regimes, the new restrictions take account of environmental objectives and specific noise abatement objectives for each airport. These objectives have been decided following consultation and are an integral part of my present decision. The objectives are set out in the document “Night Flying Restrictions at Heathrow, Gatwick and Stansted”. The decision also includes the requirement for the airports to adopt the specified night-noise-related criteria to determine which residents should be offered sound insulation to be paid for or contributed to by the airport.

I consider that for each airport the decision strikes the appropriate balance between the need to protect local communities from excessive noise and the benefits that services can bring to the national, regional and local economy.

The restrictions will be implemented by notice under section 78 of the Civil Aviation Act 1982.

I have placed copies of the Government’s full response to the Ombudsman’s report in the Library.

On 16 March I advised Parliament of my intention to engage consultants to conduct a strategic review of the future business options for Remploy Ltd., in the context of the Government's strategy for supporting greater numbers of disabled people into employment. PricewaterhouseCoopers were subsequently appointed to carry out the review working with Stephen Duckworth of Disability Matters.

The consultants have provided regular updates to me and were due to present their final report on 31 May. However, before they submit their final report, I have asked the review team to do some more detailed work. This is to ensure that we are in the best possible position to be able to make robust decisions about Remploy’s future in full knowledge of the implications of those decisions.

While this will prolong uncertainty for Remploy employees, it would be wrong to make decisions that will impact on their future—and the many more disabled people we want to help into work—without all the relevant information and proper consideration of the implications of decisions. I will make a further statement before the summer recess.