The Government announced a major package of reforms to the business tax system in Budget 2007. These reforms will enhance the international competitiveness of the UK, by encouraging investment, promoting innovation and ensuring fairness across the tax system.

The package announced a reduction in the main rate of corporation tax to 28 per cent. from 2008, making it the lowest in the G7 and below the OECD and EU15 average. It included reforms to deliver a simpler, two-rate system of capital allowances, to ensure the tax system better reflects the economic depreciation of capital assets. The package also included the introduction of a new annual investment allowance of £50,000 for all businesses, to promote investment particularly by smaller firms. This will allow 95 per cent. of businesses to write off all of their investment (excluding expenditure on cars) in the year in which it is made.

In July, the Government published “Business Tax Reform: Capital Allowances Changes”, a consultation on the Government’s proposals for the key design features of the new annual investment allowance, new rules on integral building features and the transitional rules for the move to the new rates of capital allowances.

The Government are today publishing a technical note including draft legislation on these changes, reflecting the support of the majority of respondents to this consultation for the Government’s proposals. As a result of the changes, the Government estimate that the administrative burden of the capital allowances system on business will be reduced by £15 million.

This technical note announces the Government’s intention to extend the provision that allows capital allowances to be claimed on thermal insulation added to existing industrial buildings to all commercial buildings, at a rate of 10 per cent., in line with the Government’s approach to environmentally beneficial features integral to buildings.

The Government also intend to withdraw the special industrial buildings allowances available in Enterprise Zones (EZAs) from April 2011, to coincide with the withdrawal of industrial buildings allowance. The Government consider that these allowances have now served their purpose, and that there is no case for retaining them. No business that has already claimed EZAs will be affected by this.

The publication of the draft legislation marks a significant milestone in the implementation of this major series of reforms, which will enable the UK’s tax system to encourage businesses to invest for the future.

Copies of the technical note and draft legislation have been deposited in the Libraries of both Houses.

The Economic and Financial Affairs Council was held on 4 December in Brussels. The items on the agenda were as follows:

Implementation of the Stability and Growth Pact:

The Council agreed that Poland had met the 27 August 2007 deadline to correct its excessive deficit procedure, as its 2007 deficit is expected to be below 3 per cent. of GDP. The UK supports a prudent interpretation of the Stability and Growth Pact (SGP) which takes into account the level of debt, the influence of the cycle and the level of public investment.

Lisbon multilateral surveillance:

Ministers agreed draft conclusions on the multilateral surveillance element of the Lisbon strategy national reform programmes. The Council discussed progress on innovation and SMEs, better regulation, competition, and labour markets. Ministers agreed that it was important to maintain the momentum behind reform. The UK welcomes multilateral surveillance under the Lisbon strategy, which encourages member states to focus on the implementation of the Lisbon strategy.

Globalisation: capital and labour flows:

Ministers prepared a contribution to the December European Council of 14 December on the economic dimension of migration. This follows from an exchange of views at November ECOFIN on the basis of a report on the economic impact of migration prepared by the European Commission. Ministers agreed that the economic and fiscal policy dimension of migration is important in the broader analysis of the issue.

Financial services:

a) Lamfalussy review

Ministers agreed a set of Council conclusions on the review of the Lamfalussy arrangements, and a roadmap for taking these forward. The UK believes the Lamfalussy framework has made a major contribution to improving the efficiency of the EU legislative process and enhancing the convergence of supervisory practices. The UK argued against proposals that could lead to moves towards a single European regulator and welcomed the Council conclusions and the roadmap, which should further develop supervisory co-operation and convergence.

b) Directive on the solvency of insurance companies (Solvency II)

Ministers discussed the proposed Solvency II directive on the prudential requirements for insurance and reinsurance companies. Ministers agreed on the need for further work on provisions in the directive dealing with group supervision. The UK supports work that will ensure more effective supervision of pan-European insurance groups.

c) Risk capital

Ministers agreed Council conclusions on cross-border risk capital which invite the European Commission to carry out further work on identifying and removing obstacles to cross-border investments by venture capital funds. The UK supports work to break down the key remaining barriers to development of European venture capital markets.

Taxation:

a) VAT package

Following on from its discussion at its November meeting, the Council reached political agreement on a set of measures that will modernise the EU VAT rules for the cross border supply of services, with particular focus on proposed changes to the rules for business to consumer supplies in the telecoms, broadcasting and e-services sectors. In particular, the Council’s political agreement was made possible by acceptance by all member states that such services should be taxed in the member state where the customer is located, rather than, as is presently the case, where the supplier is established. The UK has been a strong supporter of this package and welcomes the agreement.

b) Reduced VAT rates

i) Commission communication on VAT rates other than the standard rate

Ministers agreed Council conclusions regarding future work on reduced VAT rates and noted the Commission’s plans to present a legislative proposal on reduced VAT rates in 2008. The UK supports flexibility in applying reduced VAT rates where these will not materially affect the single market.

ii) Proposal for a Council directive amending Directive 2006/112/EEC with regard to certain temporary provisions concerning rates of VAT.

Ministers then discussed a Commission proposal to extend until 2010 some of the new member states’ derogations for reduced VAT rates. Council agreed a general approach, pending the opinion of the European Parliament, on a new directive to this effect. The UK supports the extension of most of the temporary derogations granted to those member states that acceded to the European Union after 1 January 1995. The directive will be adopted without discussion at a forthcoming Council meeting, once the Parliament has submitted its opinion.

c) Capital duty directive

Ministers agreed a general approach, pending the opinion of the European Parliament, of a Commission proposal for a directive concerning indirect taxes on the raising of capital. The UK abolished capital duty in 1988.

d) Combating tax fraud

Ministers agreed conclusions which provide guidance to the Commission on the direction of further work to improve the effectiveness of the existing VAT system in combating tax fraud. The Council has called on the Commission to produce legislative proposals for debate in the early part of 2008 on measures previously identified as priorities by ECOFIN and for progress reports during 2008 on other work. The UK is strongly supportive of work that will help in the fight against Missing Trader Intra-Community (MTIC) and other VAT fraud, while remaining committed to minimising the burdens on legitimate businesses.

e) Code of conduct group (business taxation)

Ministers discussed a forward workplan for the code of conduct group. The Council took note of a report from the group on its work under the Portuguese presidency and adopted conclusions on the future work of the group calling for all outstanding issues on its work programme to be resolved before the end of the Slovenian presidency. The code of conduct group is a ministerial group which looks to co-ordinate and share best practice on tax-related issues that are not directly covered by EU legislation. The UK is a strong supporter of the group.

Legislation governing public service pensions requires public service pensions to be increased annually by the same percentage as additional pensions (state earnings-related pension and state second pension). The Minister for Pensions Reform announced on 5 December 2007 (Official Report, column 841) that benefits such as additional pensions will be increased by 3.9 per cent., in line with the annual increase in the retail prices index up to September 2007. Public service pensions will therefore be increased by 3.9 per cent. from 7 April 2008, except those which have been in payment for less than a year, which will receive a pro-rata increase.

Following representations by political parties in Northern Ireland, the Government commissioned Sir David Varney in March 2007 to carry out a review of tax policy in Northern Ireland. His terms of reference were to examine “how current and future tax policy, including the tax changes announced in the Budget 2007, can support the sustainable growth of businesses and long-term investment in Northern Ireland”. The review has been published today and has been deposited in the Library of the House. I am very grateful to Sir David Varney and his team, and to all those who submitted evidence to the review. Sir David’s report provides a valuable assessment not only of business tax issues for Northern Ireland but also of how the opportunities and challenges facing the devolved administration in developing an investment strategy might best be approached. The Government are fully committed to supporting the Northern Ireland Executive in implementing such a strategy.

The Government recognise that, in developing their economic investment strategy, the question of business tax levels in the UK is a particularly important issue for the executive. I am therefore particularly grateful to Sir David and his team for the considerable depth in which this issue is analysed and explored in the report.

He concludes that a policy of a preferential corporation tax rate for Northern Ireland, as compared to the rest of the UK, does not offer the best way forward for building a strong investment strategy for Northern Ireland. He is not convinced that a cut would represent good value for money. In particular, the role of supply side factors needed to be paid due attention, and caution taken on the responsiveness of investment to a cut in the rate.

The review examines the tax position in Northern Ireland, in both its international context and in comparison with the Republic of Ireland. It finds that the UK compares favourably with its G7 partners in terms of corporate tax levels. It also finds that the UK has a lower rate of tax than the Republic in areas such as VAT and the top rate of income tax, and offers more generous R and D tax credits and tax relief on dividends.

The review recommends a strategy to develop private sector investment in Northern Ireland based on maximising the benefits of the competitive advantages that already exist in Northern Ireland, including current financial investment incentives, and realising the potential further to improve this competitive advantage.

The report notes that for many years the Northern Ireland economy has been over reliant on public sector investment for its growth but that political progress over the last ten years to end conflict and to transform Northern Ireland to a peaceful, stable society has already helped attract inward private sector investment. The restoration of devolution on 8 May is a major turning point and incentive for such further inward investment.

The report identifies Northern Ireland’s key competitive advantages as including:

Operating costs which are highly competitive and significantly lower than in the rest of the UK and the Republic of Ireland;

a well developed telecoms infrastructure providing important benefits for business;

one of the youngest populations in Europe and high educational achievements;

attractive financial incentives, recruitment and training, research and development and other development support tailored to each company’s needs.

The report recommends that these advantages can be maximised by a strategy to:

Further improve basic and technical skills and retaining the best and the brightest;

tackle the size of the public sector and efficiency of the administration;

foster innovation through better university and business collaborations; and

Prioritise trade and investment promotion across Government, including working links between Invest Northern Ireland, the Irish Investment and Development Agency and UK Trade and Investment.

In short, Sir David Varney’s report found that the conditions for economic success for Northern Ireland are more than a matter of tax incentives. There are lessons in terms of improving labour force participation, basic skills, and efficiency and organisation in the public sector; and Northern Ireland needs to move towards the execution of a strategy focused on business and economic development.

In the light of Sir David Varney’s report, the Government are working with the Executive to:

Strengthen trade and investment promotion by UK Trade and Investment reviewing with Invest Northern Ireland the scope for better marketing of Northern Ireland to higher value-added FDI; and

promote closer working between the UK Government, the Northern Ireland Executive and the Irish Government to promote a coherent overall science strategy, including considering the suggestion of creating ‘science cities’.

This will build on the May 2007 settlement, elements of which specifically focus on issues highlighted in the review as key to a sound and forward looking investment strategy:

An innovation fund focusing particularly on levering in private sector investment and promoting collaborative research. This includes matched funding of £36 million from the Irish Government targeted specifically on collaborative research and development;

a new Northern Ireland Corporate Tax Office to promote the competitive tax position;

a local employment partnership—that will help create 5,000 jobs for the unemployed in Northern Ireland—between five leading employers in the retail sector. The expansion of this initiative to other sectors, including security, hospitality and facilities management, offers the Northern Ireland Executive further opportunity to work with employers to maximise the opportunities for those in Northern Ireland who are inactive or unemployed;

a major conference in Northern Ireland for prospective investors from the USA, led by the Executive and fully supported by the Government.

The Northern Ireland Executive has put growing the economy at the top of its priorities. This is reflected in the draft Programme for Government that was published on 25 October 2007, along with a draft Investment Strategy and draft Budget for 2008-11. I welcome the strategy that this programme sets for building economic success to benefit all communities in Northern Ireland, including the good progress that is being made towards the planned US inward investment conference next year.

I have discussed the report and next steps with the Executive and I am today announcing that Sir David Varney has agreed to carry out a further review building on his first review and focusing on identifying policies and incentives for strengthening and sustaining private sector growth, investment and employment in Northern Ireland.

Against that background and the desire of the UK Government and Northern Ireland Executive to work in partnership to create the conditions for sustained economic growth and increased employment opportunities for all, the terms of reference for the second review are:

“In the light of Sir David Varney’s review of Tax Policy in Northern Ireland, published on 17 December and the Northern Ireland Executive’s draft Programme for Government and draft Budget published in October 2007, Sir David Varney will undertake a second review. Building on Sir David’s earlier analysis and agreement from all parties about the unique circumstances of Northern Ireland (in relation to the opportunities provided by the peace process, the need to strengthen the private sector, to create increased employment opportunities and to reform the public sector) this review will explore in more detail how to expand the private sector and to enhance Northern Ireland’s competitiveness. In this context, the review will look at incentives for supporting the sustainable growth of businesses, investment and employment in Northern Ireland and the implications for reducing the historic dependency on the public sector. This will include examination of incentives for growth in Northern Ireland that fall within the responsibility of the Northern Ireland Executive and the UK Government. Sir David will aim to report in good time for the US Investment Conference. He will be supported by a small secretariat and will receive direct and regular input from Northern Ireland Executive officials”.

I have published the reported mid-year output results for 2007-08 for England’s Regional Development Agencies.

The data show the progress made by the Regional Development Agencies between April and September 2007 in delivering against the core output targets set in RDA corporate plans for 2005-08. The figures cover employment creation and support, business creation and support, leverage of public and private sector infrastructure investment, brownfield land reclamation/ redevelopment, and skills development.

I am placing copies of the mid-year RDA output figures in the Libraries of both Houses, and the results have also been placed on the BERR website at:

http://www.BERR.gov.uk/regional/regional-dev-agencies/rda-performance/page42777.html

The Government set out their vision for postal services in the UK in its 1999 White Paper “Post Office Reform: A World Class Service for the 21st Century” and took this forward in the Postal Services Act 2000. The Act had as its prime objective the maintenance of the universal postal service. It was designed to provide both social and business consumers with a more efficient and effective postal service through the introduction of competition and greater commercial freedoms for the Royal Mail to operate within a fully liberalised market while maintaining the provision of the universal postal service. We remain committed to this vision.

It is now seven years since the Act passed through Parliament and there have been significant developments since then.

The postal services market was fully liberalised by Postcomm nearly two years ago on 1 January 2006. The Government believe that this has brought considerable benefits for the users of postal services. Royal Mail has, through the efforts of management and postmen and women up and down the country, significantly improved its performance, delivering quality of service levels that in the last full year were at record-breaking levels. New market entrants are providing increasing choice for consumers and pushing innovation in the industry.

The Government have demonstrated their commitment to seeing Royal Mail compete effectively in this new marketplace through an unprecedented level of additional investment (£2.1 billion in 2007) to enable the company to modernise. The result of the recent ballot on pay and modernisation means that management and staff have given the Royal Mail a mandate for modernisation.

It has become clear that the market conditions for all postal service operators are challenging, with growing evidence of e-substitution and more sophisticated use of mobile communication. Postcomm’s strategy review (“The Postal Market 2010 and Beyond—Emerging Themes”) published in August 2007 noted that the postal market is changing and that they expected market volumes to decline. The European Union, supported by the British Government, recently set a clear timetable for a fully liberalised European postal services market by the end of 2010.

In the light of these significant developments, and in line with its manifesto commitment, the Government is launching a review of the postal services sector. The review will be led by an independent panel chaired by Richard Hooper and comprising Dame Deirdre Hutton and Ian Smith.

Its terms of reference are:

To assess the impacts to date of liberalisation of the UK postal services market, including on the Royal Mail, alternative carriers and consumers.

To explore trends in future market development and the likely impact of these on Royal Mail, alternative carriers and consumers

To consider how to maintain the universal service obligation in the light of trends and market developments identified.

We are today issuing a call for evidence for the review so that the review panel’s analysis of the market can take into account the view of the widest possible range of interests.

It is expected that the review will report its conclusions next year.

My Department has today made regulations implementing many of the provisions of the Directive on Statutory Audits of Annual and Consolidated Accounts. (The Statutory Audit Directive—2006/43/EC).

These regulations have been developed following two consultations, the first on the policy and the second seeking comments on a draft of these regulations. Alongside these regulations we are therefore publishing a summary of the comments received on the draft regulations, and a statement of the Government’s conclusions.

This document will be placed in the Libraries of both Houses and will be available on the BERR website.

Last week’s Children’s Plan set an ambition for all new school buildings to be zero carbon by 2016, and announced the appointment of a taskforce to advise on how to achieve this ambition. I will set out the details of the membership and remit of the taskforce in the new year.

In the meantime, we are taking action now to reduce carbon emissions in new school buildings while we work towards the zero carbon goal. I am announcing today details of 200 or so projects that we expect to benefit from an additional investment of £1l0 million over the next three years, with the intention of reducing carbon emissions by around 60 per cent. This provides an additional £50 per m² (about £500 k for the average secondary school) to invest in energy efficiency and renewable energy measures on school sites.

I am today laying before Parliament, with the Secretary of State for Innovation, Universities and Skills, the joint command paper (Cm 7281) “Confidence in Standards: Regulating and Developing Qualifications and Assessment”. Copies have been placed in the Libraries of both Houses.

On 26 September I announced that the Government would establish an independent regulator of qualifications and tests in England. The Office of the Qualifications and Examinations Regulator will be the guardian of standards across the tests and qualifications systems, building on the regulatory work of the Qualifications and Curriculum Authority over the last 10 years. “Confidence in Standards” sets out the detail of these proposals and our plans to establish a development agency for curriculum, assessment and qualifications which will take forward the non-regulatory functions of the QCA. We are confident that these plans will give the public greater confidence in the standards of qualifications and assessments.

Our Departments have launched a consultation on these proposals. The consultation materials are available from the DCSF website at: www.dcsf.gov.uk/consultations/. This consultation will run until 10 March 2008.

I am launching a consultation on “Face-to-Face and Side-by-Side: A Framework for Interfaith Dialogue and Social Action”.

We have long recognised the contribution made by faith groups to local communities, in terms of charitable activity, social action, community cohesion, support in emergencies, as well as their spiritual and religious role.

The relations between every faith are integral to the success of each of them.

We want to take this opportunity to reflect on how Government should support this, where and in what circumstances interfaith works best and how we can work in partnerships with faith and non-faith based communities and organisations.

This consultation is part of the Government’s response to the independent Commission on Integration and Cohesion’s report “Our Shared Future” which set out a number of practical recommendations on how to build cohesion and a shared sense of belonging. The report outlined the important role that inter faith activity plays in building integration and cohesion, as well as the need for more constructive conversations between those of faith and those of none.

In particular the consultation will seek to:

Understand how to best build confidence in the benefits of partnership working and develop a greater understanding of the contribution that faith communities can make;

discover to what extent local authorities and other public bodies are already working with faith communities;

understand better the structures that aid interaction and social action and how can these be best developed;

learn about some of the barriers to inter faith activity—especially to the involvement of women and young people—and how we might best work together to overcome these;

look at what actions are needed to widen and deepen inter faith dialogue and social action.

Our society is deeply enriched by the presence of diverse faith groups, and our communities benefit from their local activity.

Copies of the consultation document have been deposited in the Libraries of both Houses.

I have today published a summary of responses received in response to the Government’s stakeholder consultation document “Modernising Empty Property Relief”, and have placed a copy in the Libraries of both Houses.

The Government’s proposals for reforms to empty property relief were part of a package of measures introduced in the Budget to help incentivise the efficient use of land, to help increase the supply of commercial property and to reduce costs for businesses. The Government consider that the reforms provide a strong incentive for owners to re-use, re-let or redevelop their empty shops, offices and factory buildings, and so improve access to property and reduce rents for businesses. The Rating (Empty Properties) Act 2007, which received Royal Assent on 19 July, gave effect to these reforms, and set a revised empty property rate of 100 per cent. of the basic occupied rate.

Having considered the responses received to our consultation document, I can confirm that the Government will now take forward a number of additional measures.

The consultation document sought views on whether the existing permanent exemption from empty property rates available to listed buildings and those with a statutory protection should continue, or whether it should be varied. I have concluded that, on the available evidence, there can be a greater degree of work involved in bringing empty listed properties back into beneficial use compared to other properties and that the evidence supports such properties continuing to benefit from an exemption from empty property rates.

I have also concluded that companies in administration should benefit from a permanent exemption from empty property rates. This will bring them into line with companies that are in liquidation and individuals subject to bankruptcy proceedings. We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible. A permanent exemption will remove any potential for decisions about whether to enter administration to be distorted by differences in rates liability.

I have considered carefully the responses to the consultation document about the potential risk of owners of empty property taking measures to avoid payment of rates on their property. The Rating (Empty Properties) Act 2007 gave the Secretary of State, and the Welsh Ministers, the power to make regulations to tackle any such activity. The consultation document set out a number of options as to how such regulations might be constructed if the Secretary of State were minded to make them.

There was a substantial body of comment about the proposed measures. I have concluded, on the basis of those responses, that the likely incidence of avoidance activity following the introduction of the reforms to empty property relief is low. It would be an extreme step for a property owner to go to the lengths of deliberately vandalising a potentially valuable asset so that it is beyond economic repair. This view was expressed by a number of respondents to the consultation document.

Having taken account of all the responses, I have concluded that the existing circumstances do not warrant the introduction of anti-avoidance regulations at this stage. However, I am clear that, if it appears that there is evidence of measures being taken by owners of empty property to avoid payment of empty property rates, the Government will not hesitate to use their powers. We will work with the Local Government Association, the Valuation Office Agency and the Institute of Revenues Rating and Valuation to monitor the impact of the reforms and assess whether regulations should be introduced in the future.

We are now working on drafting the relevant secondary legislation to give effect to our reforms on empty property relief. This includes introducing the new six-month exemption from empty property rates for vacant industrial and warehouse properties, as announced in the 2007 Budget. We intend to lay this secondary legislation before Parliament so that all aspects of our reforms to empty property relief can come into effect on 1 April 2008.

I am today announcing publication of the new Planning Policy Statement (PPS): “Planning and Climate Change” and a consultation draft of the new PPS: “Planning for Sustainable Economic Development”. Copies will be placed in the Libraries of both Houses.

Our economy must be prepared to meet the challenges of increasing global competition, and to seize the opportunities presented by rapid technological change. In the Planning White Paper, “Planning for a Sustainable Future”, we set out a vision of a planning system better able to support a dynamic economy. But this planning system must also respond to the urgent challenges presented by climate change.

Economic growth and higher environmental standards must go hand in hand. We want the planning system to do more to promote jobs and economic growth, but to do so in a way that is environmentally sustainable and that helps cut carbon emissions. Equally we want to ensure the programme to cut carbon emissions should also help support the jobs and homes we need for the future. Our reforms are designed to ensure that the planning system is flexible enough to support both, making a critical contribution to sustainable economic growth for the 21st century.

PPS “Climate Change” is being issued as a supplement to PPS1: “Delivering Sustainable Development”. This PPS is central to the entire series of planning policy statements. New requirements for local authorities will ensure that tackling climate change becomes a primary objective of the planning system, reflecting the emphasis in the White Paper. This will help to speed up the shift to renewable and low-carbon energy, supporting our ambitions on zero carbon development and helping shape places resilient to the impact of climate change.

First, this PPS confirms the central role of planning in helping to achieve zero carbon homes from 2016. We also believe we need to develop a similar approach for non-domestic buildings, and today we are publishing analysis from the UK Green Building Council, commissioned by the department to support significant cuts in carbon emissions from new non-domestic buildings.

Secondly, this PPS will help speed up the shift to renewable and low carbon energy, by challenging councils to do more to support delivery of local renewable or local low-carbon energy — including through setting percentages of energy for new development to be generated from local renewables or low carbon sources such as microgeneration or community schemes. It also expects councils to think about the potential for local low carbon energy generation and cutting carbon emissions when identifying the best sites for development.

Thirdly, local government has a critical role in ensuring that local communities and infrastructure are able to cope with the impact of climate change—not only the effects which are felt today, but also those that can be anticipated in the future. The PPS therefore reflects the central role of planning in shaping places that are resilient to climate change and habitats that sustain biodiversity.

We consulted on a draft of the climate change PPS at the beginning of the year and have considered very carefully the responses we received. The approach has received broad support. The final document being published today takes account of the detailed issues raised.

Moving towards a low-carbon economy is a huge challenge. It requires a revolution in the way that we design, heat and power our buildings, and a concerted effort from a huge number of organisations—from local authorities, to developers, to environmental groups and local communities themselves. It also requires collaborative and responsible working to ensure change takes place alongside delivering the additional homes as well as the new jobs and regeneration we need. The policy set out in the PPS provides a strong framework for that degree of co-operation.

We are also publishing a draft PPS on sustainable economic development. The Barker Review of Land Use Planning showed that planning authorities do not always give sufficient weight to the potential economic benefits of new developments. This draft PPS seeks to ensure that local planning authorities take these benefits into account alongside relevant environmental and social issues.

It would require local authorities to identify and maintain a supply of land which caters for existing employment and business needs while also delivering the infrastructure and housing we need. It would require local authorities to respond positively to new proposals to promote economic development. However, given increasing demands on the limited land available, it would also require planning authorities to make the most efficient use of land and buildings. It also emphasises the importance that we attach to excellence in design.

Together, the policies outlined in these PPSs will deliver economic growth sustainably, promoting job creation while also helping to tackle climate change.

On 12 June 2007, the Secretary of State for Communities and Local Government made a statement to the House in which she outlined the independent investigation procedure that was taking place into the incident and the availability of reports produced by the investigation board, including recommendations relating to design and operation of fuel storage sites. She said that a report with recommendations on emergency planning, response and recovery was in preparation.

In response to a recent request (business questions on 6 December) from the hon. Member for Hemel Hempstead (Mike Penning), the Leader of the House has asked for a further statement on progress.

The Buncefield Major Incident Investigation Board published its report and recommendations on emergency preparedness for, response to and recovery from major incidents on 17 July. It has also published a report on safety and environmental standards for fuel storage sites, and one from its Explosion Mechanism Advisory Group that advocates a joint industry research project be initiated to explain the severity of the explosion that occurred at the site. Copies of these, and other earlier reports, are available from the official investigation website at: www.buncefieldinvestigation.gov.uk.

The report published on 17 July made a number of recommendations in four areas: reassessing major incident scenarios; managing major incidents on-site; preparing for and responding to major incidents off-site; and planning for recovery from major incidents.

Although set in the context of the Buncefield incident, the recommendations, particularly those relating to emergency preparedness and response, can be applied beyond fuel storage and distribution sites. Many of these are complex and far-reaching. They need to be considered at a wider, national level and reflect the co-ordinated views of the different departments, and the Devolved Administrations, that have responsibility for them. The Government will be responding formally to these recommendations in due course.

I can comment on some issues that are specific to the Buncefield depot.

The report recommends that all relevant organisations should be involved with recovery at an early stage. Such joint working has already delivered financial and practical support to aid recovery through the Bellwin scheme (which was extended beyond its usual duration), and ongoing support from the East of England Development Agency which has also provided financial assistance of £4.4 million to date.

The East of England Development Agency is also working closely with stakeholders developing proposals to designate the area as a “New Town Improvement District”.

Under this programme local partners aim to bring together a combination of funding mechanisms that could help finance some of the major improvements identified in the Maylands Business Park masterplan.

Hemel Hempstead is one of 21 urban areas identified in the Secretary of State’s proposed changes to the East of England plan, the regional strategy, as “Key Centres for Development and Change” at which additional development will be focused. The proposed changes include a requirement for an additional 12,000 homes in Dacorum, including expansion of Hemel Hempstead.

As part of the comprehensive spending review outcomes, the Government announced £1.7 billion of investment in the growth areas, growth points and eco-towns over the CSR period. Local authorities in existing growth areas and growth points were invited to prepare programmes of development setting out what additional infrastructure and other funding they sought from Government to support housing delivery over the next three years (2008-2011). In view of the housing targets set out in the Secretary of State’s proposed changes Dacorum borough council was invited to submit a programme of development for the support it would require to deliver the proposed housing growth, with the intention that, subject to the final RSS, Dacorum would be brought into the growth areas programme to allow it to receive infrastructure and delivery support from the growth fund.

On 4 December, my right hon. Friend the Minister for Housing announced £732 million for local authorities in growth areas and growth points for infrastructure to support housing growth. Based on its submitted programme of development, Dacorum borough council has received a provisional award of £2,554,062 capital and £159,377 revenue in 2008-09, and an indicative provisional award of £3,575,687 capital and £239,034 revenue for the period 2009-10 to 2010-11. In line with Local Government White Paper principles, the Government’s new approach to growth funding gives local authorities flexibility in how they use the funding they receive, so it can be used where they judge it will be most effective. This provisional funding award is subject to Dacorum being brought into the growth areas as a result of the final form of the regional spatial strategy.

The hon. Member for St. Albans (Anne Main) recently asked about the re-opening of the Buncefield site. In his reply the Minister of State for Business Enterprise and Regulatory Reform stated that the Buncefield site is of strategic importance for the supply of aviation fuel to Heathrow and Gatwick airports. He stated that a number of applications for planning permission to restore operations at the Buncefield site had been submitted to Dacorum borough council and that at these had yet to be determined (26 November 2007, Official Report, column 119W).

On 29 November, Dacorum borough council’s development control committee considered these applications. The committee resolved that decisions on five of the six applications considered should be delegated to officials with a view to planning permission being approved, subject to completion of a planning obligation under section 106 of the Town and Country Planning Act 1990. Approval would be for storage and supply of aviation fuel only. The planning obligations would restrict storage and supply of ground fuels until a future date. Negotiations on the planning obligations are a matter for Dacorum and the oil companies, on which it would be inappropriate to comment. Similarly, the future use and development of the Buncefield site is matter for the oil companies and, in the first instance, Dacorum borough council, to whom applications for planning permission would be made.

The Health and Safety Executive and the Environment Agency are statutory consultees in the planning process and will ensure the planning authority has expert advice should applications be made. They are also joint competent authorities for major hazard sites, regulated under the Control of Major Accident Hazards Regulations, before operations were able to resume the site operators would have to satisfy these authorities that the site would adhere to the highest operating standards.

I have today placed in the Library of the House copies of the Ministry of Defence’s Autumn Performance Report. This shows that the Armed Forces, supported by their civilian colleagues, continue to achieve our highest priority: success on operations, particularly those in Iraq and Afghanistan.

I would like to report to the House that this morning Sir Michael Pitt published his interim independent report on the flooding that affected large areas of England in June and July this year.

Sir Michael’s final report will be published next summer following a further period of consultation with the public and interested organisations. As a result of the good progress already made, the Government have agreed with him that the remit for his review should be formally extended to cover the recovery arrangements put in place following the floods.

The Government welcome publication of this interim report and acknowledge the hard work that Sir Michael and his team have put into its publication to meet the timetable and terms of reference which we set. Sir Michael took evidence from a range of individuals and organisations, including people affected by the flooding, the emergency services, local MPs and councillors, local authorities, Government Departments and agencies, academics and the private sector. As well as many individual local reviews, separate national reviews have or are also being undertaken by, among others, the Environment Agency, the Local Government Association, the Association of British Insurers, the fire and rescue service and the water industry. I also know, and welcome, the considerable interest that Members have taken in relation to the floods, including the current inquiry by the Environment, Food and Rural Affairs Select Committee.

The House knows of the severe impact on those people and businesses whose lives were turned upside down by this summer’s floods and the costs that have been borne by them, insurers and the Government. While many people have now been able to return to their homes, some are still living in temporary accommodation while repairs continue. They are bearing their ordeal with considerable fortitude and I know that the thoughts of Members will be with them this Christmas and into the new year. Our particular sympathies are, of course, with the families of those who lost their lives during the floods.

The interim report confirms the extreme nature of the weather that gave rise to the floods and acknowledges the efforts that were made by everyone in responding. It identifies a number of urgent steps which it recommends should be taken straight away. These relate particularly to monitoring of specific flood risks, better information sharing and the practicalities of emergency response. The Government agree with all of the urgent recommendations and will work with all organisations involved in taking them forward as quickly as possible.

The report also sets out 72 interim conclusions, on which Sir Michael is seeking views before he publishes his final report. The Government will carefully consider these and respond to him. However, we are already taking action to address a number of the key issues raised in the report, including:

Defra officials have already met with Water UK and water companies in England to help ensure a wider take-up of the more immediate and practical lessons from the water supply emergency in Gloucestershire. We will now follow up those discussions in the light of the specific recommendations in the report, such as a review of the minimum supply requirement for water to be provided in the event of the loss of the piped supply.

The Department for Business, Enterprise and Regulatory Reform has asked electricity network operators to review the resilience of electricity substations to flooding. This work is underway under the leadership of the Energy Networks Association.

Sir Ken Knight, the Government’s chief fire and rescue adviser, is in the final stages of a review looking at the operational response and role of the fire and rescue service during national flooding incidents. His review will consider, amongst other issues, the need for inter-operability between fire and rescue services’ training and equipment and that of other local responders.

We have revised our flood emergency procedures to set out more clearly how Defra, as lead Government Department, will manage serious flooding in conjunction with the Environment Agency and operational responders on the ground. These procedures were tested during the east coast tidal surge on 9 November and we have refined them further after that event.

Developing proposals for better management of surface water, including resolving the current complex institutional arrangements and use of sustainable drainage systems, both of which we shall be considering early in the new year as part of our new water strategy.

Developing a strategic overview role for the Environment Agency for all sources of flooding and coastal erosion.

Finalising national guidance on multi-agency flood planning, upon which we will shortly be consulting key organisations before it is made more widely available in the new year.

A broader range of other work is in progress, under our “Making Space for Water” strategy, to ensure that our long term approach to managing flood and coastal erosion risk is sustainable and takes full account of climate change. As part of this, a series of pilot studies is under way to investigate integrated approaches to urban drainage management and improved resilience of properties.

The House will know that the Government are committed to increasing investment in flood and coastal erosion risk management. It will rise from its current level of £600 million to £650 million in 2008-09, £700 million in 2009-10 and £800 million in 2010-11. We are establishing new outcome measures to secure best value for investment and, through the Environment Agency, are considering whether a long-term investment strategy for the next 20 years is appropriate for this policy area.

Successive Governments have invested substantially in improving flood defences over many years and there have also been significant advances in flood warning and emergency planning. It is worthwhile recording that the Environment Agency estimate that these defences protected 100,000 properties from flooding this summer. The agency also state that, while some permanent defences were overwhelmed, in only nine locations was the defence structurally damaged, five of these after being overtopped, and that none of these failures made property flooding worse. Defences also protected many properties from flooding during last month’s east coast tidal surge.

I will report further to the House in due course.

My right hon. Friend the Foreign Secretary and Kim Darroch (UK Permanent Representative to the EU) represented the UK at the General Affairs and External Relations Council (GAERC) in Brussels. My hon. Friend the Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas) also attended for discussion of Economic Partnership Agreements.

The agenda items covered were as follows:

General Affairs

Preparation of the European Council on 14 December

The Council discussed the presidency’s draft European Council Conclusions. My right hon. Friend the Foreign Secretary intervened, together with other member states, to press for a positive and forward looking declaration on globalisation, conclusions language on Burma and for a firm commitment that the EU should take stock of progress on the Millennium Development Goals at the European Council’s meeting in June 2008.

The European Council was also expected to welcome the signature of the Lisbon treaty on 13 December and agree to set up a reflection group to discuss ways to address the EU’s longer-term challenges.

2007 Enlargement Package

My right hon. Friend the Foreign Secretary intervened to stress the importance of reaffirming our accession commitments. The Council Conclusions reiterate the December 2006 Conclusions setting out EU consensus on enlargement. This is based on consolidation of existing commitments, rigorous conditionality and improved communication on the benefits of enlargement. The Council agreed that chapters for which technical preparations have been completed will be opened, and reaffirmed that the pace of negotiations depends on accession states making the necessary reforms. The Council looks forward to the Accession Conferences with Turkey and Croatia next week. This demonstrates that the accession negotiations continue to make progress.

External Relations

European Neighbourhood Policy

External Relations Commissioner Benita Ferrero-Waldner briefed the Council on the Commission’s Communication of 5 December on the European Neighbourhood Policy (ENP) and work in taking forward the policy, including on economic integration and market access.

My right hon. Friend the Foreign Secretary intervened to welcome the Commission’s work on ENP as a framework for supporting our ENP partners in implementing their political and economic reforms including in the Middle East and Moldova.

Economic Partnership Agreements

Trade Commissioner Peter Mandelson briefed the Council on progress in negotiations on Economic Partnership Agreements (EPAs) with African, Caribbean and Pacific (ACP) countries.

The Council agreed a draft regulation on market access aimed at enacting the provisions of interim EPAs with certain ACP countries. This opens duty and quota-free access to the Community market, with improvements to the previous rules of origin provided for by the ACP-EU Cotonou partnership agreement, to those ACP countries that have initialled agreements with the Community that are compatible with World Trade Organisation rules.

My hon. Friend the Parliamentary Under-Secretary of State for International Development intervened to support the EPAs process while setting out the Government’s continued concerns about non-least developed countries that have yet to initial an agreement, encouraging flexibility in the EU’s approach to these countries and asking that time be made for further discussion. My hon. Friend the Parliamentary Under-Secretary of State for International Development is making a separate, fuller, statement on EPAs.

Western Balkans

Ambassador Wolfgang Ischinger, EU representative of the Troika (EU, Russia and US), briefed the Council on the outcome of the Troika process, which had ended without agreement between Belgrade and Pristina on Kosovo’s future status. My right hon. Friend the Foreign Secretary intervened to underline the importance of the EU taking on its responsibilities and moving forward to a resolution of the Kosovo issue.

The Council also adopted conclusions supporting the Western Balkans EU perspective and encouraging further progress on key reforms to allow the region to move forward from the conflicts of the 1990s.

Middle East Peace Process

Palestinian Prime Minister, Salam Fayyad, briefed the Council on the challenges following Annapolis and on the Palestinian Government’s Reform and Development Plan.

The Council adopted Conclusions, which the Government support, welcoming the Annapolis meeting and the understanding between President Abbas and Prime Minister Olmert, to immediately launch bilateral negotiations with a view to concluding a peace treaty by the end of 2008. The Council Conclusions underline the EU’s support for security through the early re-engagement and expansion of the EU Police Mission in the West Bank (EUPOL COPPS). The Council also underlined its commitment to work with international partners in supporting the Paris Donors’ Conference on 17 December in assisting economic development in the region post-Annapolis.

The Council adopted conclusions on Lebanon reiterating the importance of political parties reaching agreement on a presidential candidate through consensus and dialogue.

Burma

The Council discussed the situation in Burma in light of ongoing work in the UN by Special Envoy Ibrahim Gambari and special rapporteur on human rights, Sergio Pinheiro.

The Council noted the appointment of Piero Fassino as EU special envoy to Burma on 6 November and reaffirmed the EU’s commitment to supporting UN-led efforts to promote dialogue in Burma.

Sudan/Chad

The Council discussed the EU's planned military operation in Chad/Central African Republic. Several member states indicated that they were considering providing further contributions.

The Council adopted conclusions reaffirming the EU’s support for the ongoing efforts of the UN and the African Union to achieve a sustainable peace settlement in Darfur, including through mediation of the talks process begun in Sirte on 27 October. The conclusions also call on the parties to do all they can to ensure prompt deployment of an effective AU-UN peacekeeping force, UNAMID, which will assume authority from the current AU Mission in Sudan (AMIS) by 31 December 2007.

The Justice and Home Affairs (JHA) Council was held in Brussels on 6 and 7 December 2007. My right hon. Friend the Secretary of State for Justice and Lord Chancellor, the Parliamentary Under-Secretary of State for Justice my right hon. Friend the Member for Lewisham, East (Bridget Prentice); the Solicitor General for Scotland (Frank Mulholland) and I attended on behalf of the United Kingdom. The following issues were discussed at the Council:

The Council opened with a jumbo meeting of Interior and Employment Ministers who met to discuss the links between migration, employment and the Lisbon agenda. Commissioner Frattini highlighted legal migration as key to delivering the Lisbon agenda and addressing the demographic challenges facing the EU. The UK underlined our commitment to the Lisbon agenda and stated that the key to achieving it was to increase labour market participation, ensure national flexibility in legal migration, to combat illegal migration and to ensure integration and cohesion issues were taken into account in legal migration policy development. Every member state intervened and consistent themes emerged similar to those made by the UK but, in general, member states felt that these decisions were primarily for individual states.

The Council then moved on to the mixed committee which included Norway, Iceland and Switzerland. The presidency began by congratulating all concerned on the historic achievement of the extension of the Schengen acquis to the member states who joined the European Union in 2004. There were also updates on the Schengen Information System (SIS) communication network which was still on schedule to be completed within the prescribed timescale and the SIS II programme. The presidency spoke of the two key issues surrounding the SIS II programme: the overall timescale and the migration of data. The migration issue will be discussed at the informal JHA Council of the Slovenian presidency in January. The Commission said the timescale for delivery of SIS II in December 2008 was still technically possible.

There was a report on the progress made on the directive for common standards and procedures in member states for returning illegally staying third country nationals. As we are not yet convinced of the need for common standards in this area, the UK has not opted into this directive.

The main agenda began with agreement to Council Conclusions on mobility partnerships and circular migration in the framework of the global approach to migration. The presidency compromise was accepted after some textual amendments were made at the request of one member state to ensure references to circular migration were not becoming permanent.

Interior Ministers attended a presidency lunch with the UN High Commissioner for Refugees (UNHCR), Antonio Gutteres. He set out the UNHCR’s expectations of the next stage of the Common European Asylum System (CEAS) and urged greater international co-operation between countries in regions of origin, transit and arrival. The Commission announced the results of the Green Paper on the second phase of the CEAS and detailed their timetable for proposals next year. The UK urged caution in timing of the second phase of the CEAS.

The report on the implementation of the counter-terrorism strategy was introduced by the presidency and the new EU Counter-terrorism co-ordinator, Gilles de Kerchove. He focused on the exchange of information and emphasised the importance of member states fulfilling their commitments under the 2005 decision on sharing information with Europol and Eurojust. Gilles de Kerchove commented on the importance of creating synergies between, for example, police, customs and judicial information and outlined the development of “check the web”, common principles of data protection, and the implementation of Council decisions. The presidency agreed with Gilles de Kerchove on the importance of the relationship between Europol and Eurojust and work with the US. Work on these and other areas will continue under the Slovenian presidency.

The presidency welcomed the First Reading agreement on the weapons directive with the European Parliament. The UK congratulated the presidency on this outcome. There had been raids in Manchester seizing real and imitation firearms and this clearly underlined the importance of this issue. It is hoped this will be adopted under the Slovenian presidency.

The presidency hoped to conclude chapters vi, vii and ix of the Europol Council decision, subject to the outcome of decisions on budget neutrality, bold posts and immunity. However, after the UK and other member states confirmed their continuing parliamentary scrutiny reserves and member states raised further concerns about the voting regime, it was concluded that that these areas would need to be resolved at a later stage.

The incoming Slovenian presidency congratulated the Portuguese presidency for their achievements, particularly on SISOne4All. They announced that under their presidency, they would continue to take forward work on Europol, Prüm, the weapons directive, readmission agreements and CEAS. They also set out their future presidency programme and announced that their informal Council would take place in January at Brdl Castle.

The presidency also announced that the EU could now support the European Day against the Death Penalty as all reserves had been lifted. It would be celebrated on 10 October every year.

The presidency introduced the proposal to update the 2002 framework decision on combating terrorism to bring it in line with the Council of Europe convention. This was an important subject matter, and there was a delicate balance to be achieved to ensure that fundamental rights were protected whilst terrorism was effectively tackled. The Commission emphasised the importance of responding to terrorist use of the internet as a criminal matter not as freedom of expression. Most member states welcomed the proposed changes to the framework decision and the Commission’s comments on the dividing line between freedom of expression and criminal acts.

The presidency presented achievements so far in work on e-justice. The Commission will increase funding in 2008 and produce a communication in May or June setting up an overall e-justice strategy.

The presidency confirmed agreement to the latest text on choice of law in contractual obligations (Rome I). The Government consider that the text now improves on the Rome convention and addresses earlier concerns about potential loss of legal and financial services to other jurisdictions. The UK will consult its stakeholders as soon as possible as to whether it should now opt into the text.

The Council conclusions on Eurojust were adopted without debate. Slovenia announced it would address the issues raised during their presidency. The Government support the conclusions but have made clear previously that any future proposals should focus on ensuring that Eurojust fulfils its potential within its current powers.

A general approach was reached on mutual recognition of suspended sentences, alternative sanctions and conditional sentences. The Government considered that the text balanced the different interests of member states and respected the differences between legal systems, while remaining proportionate. Accordingly, the UK was able to support a general approach.

The presidency gave an update on the framework decision of the European supervision order and confirmed that it was finalising the draft text in co-operation with the Commission and the incoming presidencies on the basis of the mandate provided from the September JHA Council.

The presidency reported that the recent EU-Russia JHA ministerial had gone well and included discussions on narcotics, particularly from Afghanistan and the signature of a memorandum of understanding on financial crime.

The two common positions on the review mechanism and asset recovery in relation to the UN convention against corruption were noted briefly by the presidency but no member state intervened.

The presidency noted the successful outcome of the diplomatic session on The Hague convention on maintenance and observed that this text was a good basis for work on the Community’s draft regulation on the same topic.

The presidency announced the important outcomes achieved at the European-Mediterranean migration summit. The statement agreed at the Summit was balanced and comprehensive and included various projects to be taken forward. The Commission had announced €5 million to finance the projects agreed.

During the Justice Ministers’ lunch, the Commission reported on the first meeting of the Justice Future Group, on which common-law countries are represented by the Attorney-General of Ireland. There was a general discussion.

One member state noted that consistency was needed between security needs and the Community work to set a standard for the ammonium nitrate content of fertiliser. The Commission agreed and said work would start in the new year.

I wish to inform the house that the UK intends to make a contribution of £2134 million to the 15th replenishment of the International Development Association (IDA 15) which is the part of the World Bank group that provides assistance to low-income countries. This is the largest single contribution the UK has made to the World Bank. It represents a 49 per cent. increase over the UK’s commitment of £1430 million to IDA 14. IDA 15 will cover the period from July 2008 to June 2011.

Collectively donors agreed to a target level for IDA 15 of $42 billion (£21 billion) of which about 75 per cent. is expected to come from donors and the remainder from internal Bank finances. Other donors have yet to finalise their contribution to IDA 15. Final decisions on contributions are expected next week in Berlin.

The money provided to IDA will be used by the World Bank to help countries accelerate progress towards the millennium development goals by supporting primary education, basic health services, clean water and sanitation, environmental safeguards, business climate improvements, infrastructure and institutional reforms. This work paves the way toward economic growth, job creation, higher incomes and better living conditions.

The large UK contribution reflects evidence of the effectiveness of the World Bank in working with partner governments in helping to foster sustainable growth and improvements in the living standards of people in the poorest countries. The World Bank works through a country-based model of development aligning its support behind a country’s own poverty and growth strategy.

Negotiations on IDA 15 have been ongoing since March this year and the Bank and donors have agreed to a number of significant changes which will improve the way in which IDA works to deliver the MDGs—including:

Ownership—enhance country ownership by getting more staff in the field and increasing their decision-making authority, and continue to improve and monitor its performance on conditionality including the use of economic policy conditions;

Africa—over 50 per cent. of IDA’s resources are expected to be allocated to sub-Saharan Africa over the three years of IDA 15;

Climate change—agreement that IDA has a core role to play with an emphasis on adaptation and, where appropriate, mitigation;

Fragile states—more staff and funding to fragile states, including by extending the length of time post-conflict countries are given additional assistance (for example, Afghanistan); and agreeing a framework to clear the arrears for countries re-engaging with the international community (for example, Liberia)

Gender—intensifying gender mainstreaming and continuing to monitor progress.

The detailed outcomes of the negotiations are recorded in a replenishment report and available on the Bank’s website. Donors and borrowers meet midway through each IDA period to review progress and measure the performance of the Bank against the agreed benchmarks.

On 8 October my right hon. Friend the Minister for Children, Young People and Families (Beverley Hughes) and I announced the appointment of Andrew Williamson CBE and Peter Smallridge CBE as independent co-chairs of the review of restraint in juvenile secure settings. The Ministry of Justice and the Department for Children, Schools and Families have joint responsibility for the review.

My right hon. Friend and I undertook to report to the House on progress on the review.

On their appointment, the chairs and Ministers expressed a wish for the review to be open and transparent, and that they expected wide consultation. Since then, the chairs have met a wide range of interested parties. The chairs are also visiting all secure training centres and a range of young offender institutions and secure children’s homes to learn first hand about restraint and to hear of the experiences and views of both young people and staff.

The chairs have invited all interested parties to submit written evidence to the review by 7 December. They will now be considering that evidence. However, the chairs are prepared to receive written submissions after 7 December.

The chairs intend to continue consultation, with a view to reporting their recommendations to Ministers by 4 April 2008.

In my written ministerial statement of 26 July 2007, I referred to the actuarial review of employer contributions payable under the Principal Civil Service Pension Scheme (PCSPS). Hewitt, the PCSPS Scheme Actuary, has now completed its review.

The review concerns the level of contributions payable by employers who participate in the PCSPS. The review does not cover member contributions which are specified in the PCSPS rules.

The review recommends that employer contribution rates should fall from an estimated average of 19.4 per cent. of employers’ pay bills to an average of 18.9 per cent. This reduction will come into effect from April 2009.

Copies of Hewitt’s report “Review of the Accruing Superannuation Liability Charges (ASLCs) as 31 March 2007” together with a supporting report entitled “Analysis of Scheme Experience between 1 April 2003 and 31 March 2007” have been placed in the Library.

On 21 November, the Prime Minister announced that he had asked the Cabinet Secretary, with the advice of security experts, to work with Departments to ensure that all Departments and all agencies check their procedures for the storage and use of data.

The Cabinet Secretary has provided an interim progress report, which I have today placed in the Libraries of both Houses.

The report further sets out a number of initial recommendations relating to the framework within which data are handled, which the Government accept.

A final report on the work is expected in spring 2008.

The Dartford-Thurrock Crossing charging scheme account for 2006-07 is published today under Section 3(1)(d) of the Trunk Road Charging Schemes (Bridges and Tunnels) (Keeping of Accounts) (England) Regulations 2003. A copy of the accounts will be placed in the Library of the House.

The Government need to be sure at all times that the right measures are in place to counter the evolving threat from international terrorism. To achieve this, we need regularly to consider and evaluate specific security measures to ensure that we have the balance right in the light of changing circumstances.

In the last two years, the Department has been helped greatly in this process by the findings of two separate reviews into the management and application of security on transport infrastructure: “Policing at Airports” by Stephen Boys Smith and Lord West’s wider ranging “Review of the Protection of Crowded Places, Critical National Infrastructure and Transport Infrastructure”.

Following on from Lord West’s review, which focused on physical infrastructure, and to continue this process of ongoing appraisal of the security framework, the Government have commissioned an independent review of how personnel security is delivered across the transport sector, including through background and identity checks and related measures. The review will examine the extent to which current arrangements cover all and only the right transport workers, and whether they do so to the correct and proportionate degree. It will provide an important and timely health check of current personnel security arrangements across the sector.

The review will be conducted by a team led by Stephen Boys Smith, who led the 2006 independent review of airport policing. This new review team will engage closely with all relevant elements of the transport sector as it carries out its work. A summary of the review’s terms of reference has been placed in the Library of the House and published on my Department’s website.

I have asked Stephen Boys Smith to provide an initial report to me in the new year setting out in detail the scope of the work that he will carry out and a timetable for the delivery of his final conclusions. Following completion of the review, I will publish a summary of its recommendations.

I would encourage all parts of the transport sector to work with Stephen Boys Smith to ensure a full and effective review and maintain a robust, but proportionate, framework for transport security.

The Prime Minister announced last week that the Government would make a statement on the review of pension scheme assets undertaken by Andrew Young. The Prime Minister said that as a result of the review the Government would be able to announce that assistance from the Financial Assistance Scheme (FAS) would be guaranteed to 90 per cent.

Andrew Young’s report is published today and I am very pleased that we are able to announce a settlement that helps the 130,000 people already eligible for FAS—and an additional 11,000 people in some schemes with solvent employers. These have suffered losses, through no fault of their own, as a result of their pension schemes winding up underfunded between 1 January 1997 and 5 April 2005, before the introduction of the Pension Protection Fund.

In his interim report published in July, Andrew Young identified that there was approximately £1.7 billion in assets in affected pension schemes that had not been used for annuity purchase. He concluded that the current system of annuitisation was not the best use of these assets. He said alternative solutions could provide the basis for higher assistance for members.

The Government recognised in July that more needed to be done to help those who lost their pensions. Following the publication of Andrew Young’s interim report, we therefore committed to match the extra value identified by the review with the goal of moving towards 90 per cent. assistance. We also introduced regulations to protect the £1.7 billion, placing a temporary halt on the purchase of annuities.

Since July, Andrew Young has been considering how much additional value might be generated by alternative treatment of the assets. These are complex issues and I thank him for the clarity of the final conclusions in his report.

He has concluded that, to provide a guaranteed benefit level, the best value will come from Government absorbing all the residual assets in the schemes and then making the associated payments as they fall due¹. He has also said that members of schemes wound up by solvent employers are in similar circumstances to those in schemes wound up by insolvent employers.

Since receiving a draft of the report ten days ago, I have been working closely with the Chancellor to finalise the details of the Government response.

I can announce today the following extensions to the Financial Assistance Scheme:

All scheme members will be guaranteed 90 per cent. of their accrued pension at the date of commencement of wind-up, revalued to their retirement date².

This will be subject to a cap of £26,000, the value of which will be protected.

Payment of assistance derived from post-1997 service will be increased in line with inflation (subject to a 2.5 per cent. limit).

Assistance will be paid from the scheme’s normal retirement age, subject to a lower age limit of 60. (people who are unable to work due to ill health will also be able to apply for early access to their payments from the age of 60, subject to actuarial reduction)³

Where their share of scheme funds allows, members will be able to commute some portion of their pension to a lump sum⁴

Assistance will be extended to members of schemes which wound up underfunded (after 1 January 1997 and before the employer was required to meet the full buyout cost) where the employer is still solvent.

The final details of these proposals will be confirmed in the new year, when we will outline the legislation necessary to give effect to this package. We will do this as quickly as possible and call on all parties involved to work with the Government to ensure this commitment results in increased payments in the fastest possible time. Our priority will be to ensure that people who have already reached their scheme pension age receive payment at 90 per cent.

The additional costs of this package will be £935 million in Net Present Value (NPV) terms. This will be on top of the £2 billon NPV we have already committed—£8.6 billion in cash terms. This will take the total commitment to £2.9 billion NPV, or £12.5 billion in cash terms.

This exceeds the Government’s commitment to match the additional value identified by Andrew Young.

The Government recognise the difficulties experienced by those who lost their pensions through no fault of their own. We believe that the revised scheme we have announced today represents a generous and appropriate final settlement.

Notes:

1) HMG will take overpayments to some fully funded pensions and other benefits associated with the assets transferred. The figures referred to in this statement do not include such members.

2) Pensions accrued up to a member’s date of leaving will be revalued in line with scheme rules up to the start of wind-up. Pensions that would have been revalued under scheme rules will then be revalued in line with price inflation capped at 5 per cent. per year compounded for the period. These rules will broadly equate to the compensation revaluation offered by the PPF.

3) Payments will be backdated to the 14 May 2004 when the FAS was first announced.

4) Subject to share of fund and restrictions that may be placed on the commutation of Guaranteed Minimum Pension rights.

5) Inflation linking of pensions in payment will be capped at 2.5 per cent.