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Written Ministerial Statements

Thursday 5 December 2002

OFFICE OF THE DEPUTY PRIME MINISTER

South Cambridgeshire District Council (Bellwin Scheme)

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): South Cambridgeshire District Council experienced exceptional flooding and consequential damage in the district on the weekend of 20–21 October 2001. Given these circumstances I am satisfied that financial assistance under the Bellwin scheme is justified. A scheme will therefore be established under section 155 of the Local Government and Housing Act 1989. Grant will be paid to the authority to cover 85 per cent of the eligible costs above a threshold, which it has incurred in dealing with the flooding.

TRANSPORT

Private Hire Vehicle Licensing

The Minister for Transport (Mr. John Spellar): Following a consultation exercise, I have decided to agree to the request from Plymouth City Council to make regulations which would enable (i) London licensed private hire operators to sub-contract bookings to Plymouth private hire operators; (ii) a Plymouth licensed private hire operator who accepts in Plymouth a hiring which starts in London, to use a Plymouth licensed private hire vehicle for that hiring; and (iii) a Plymouth licensed private hire operator who accepts in Plymouth a hiring which starts in London, to use a Plymouth licensed private hire driver for that hiring.

This decision will be effected by means of transitional regulations made under section 37 of the Private Hire Vehicles (London) Act 1998.

A decision note, containing a summary of responses and setting out my decision, has been placed in the Library.

CULTURE, MEDIA AND SPORT

News 24

The Secretary of State for Culture, Media and Sport (Tessa Jowell): I have today placed copies of the independent review of BBC News 24 by Richard Lambert in the Libraries of both Houses, together with a letter to Gavyn Davies setting out my response.

In response to the review, I have attached two further conditions to the approvals of BBC News 24. These require the Governors to publish their response to the Lambert report by the end of March 2003, and to

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promulgate revised commitments for the service, taking account of Richard Lambert's recommendations, by the end of May 2003.

A website version of the review can be found on the DCMS website at www.culture.gov.uk

OFFICE OF THE DEPUTY PRIME MINISTER

Local Government Finance

The Minister for Local Government and the Regions (Mr. Nick Raynsford): On 8 July 2002, the Government published a consultation paper asking for views on options for reforming the formula grant distribution system for local authorities. Responses for this paper were invited from local government and other interested parties by 30 September.

An analysis of responses received to the consultation has been published today. Copies have been placed in the Vote Office and the Library of the House. The Government's response to the consultation will be set out later today in our proposals for the 2003–04 local government finance settlement.

DEFENCE

Eurofighter Typhoon

The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): Progress towards the entry to service of Typhoon has been reviewed closely since the start, in April 2002, of test flying with the instrumented production aircraft. The process of gathering flight safety and performance data, which is necessary to accept aircraft into service, is taking industry longer than the agreed schedule. The large volume of work to resolve outstanding and arising design issues, although individually minor, has also progressed more slowly than expected. As a result, we have concluded with our international partners and with industry that the evidence required to permit contractual acceptance of the aircraft by the four partner nations will not be complete before the end of March 2003. Allowing for the joint, four-nation acceptance process, aircraft should then be ready for hand-over to the Royal Air Force by the end of June 2003. In any event, following the loss of a development aircraft in Spain on 21 November, it is essential that there is a time allowance for the realignment of test flying tasks. Further delay cannot be ruled out until the causes and implications of the crash are fully understood. This second delay, since the contract was placed with industry, to Typhoon's entry to service is extremely disappointing, but safety remains paramount, and we will only accept aircraft that meet the agreed specification. Every effort will be made to accelerate the entry to service and work-up process to prevent or minimise any delay to the operational employment of Typhoon, scheduled for the second half of the decade. It is this latter date, of course, when the RAF is able to use the aircraft on operations, that is so critical.

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QinetiQ

The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): On 1 July 2001 the Defence Evaluation and Research Agency was successfully divided into QinetiQ plc, a wholly Government-owned company, and the Defence Science and Technology Laboratory, which remains part of the Ministry of Defence.

On 6 March 2002, Official Report, column 313–314W I informed the House that we had decided to sell a substantial stake in QinetiQ to a strategic partner who would help to develop the company in preparation for a future flotation on the stock market. Our decision followed a detailed analysis of market conditions, which led us to conclude that this approach offered best value for the taxpayer, and would meet our objectives for a successful public private partnership.

Following the announcement in early September that The Carlyle Group had been chosen as preferred bidder in MOD's selection of a strategic partner, the MOD has now signed a deal with Carlyle. The transaction values QinetiQ at around £500 million. Following adjustments to reflect current assets and liabilities, MOD will receive between £140 million and £150 million from the transaction (the final amount will depend on the company's exact financial position at completion). This will be in addition to £50 million already received from QinetiQ as part of the purchase price for its assets.

The Carlyle Group will acquire a 33.8 per cent. economic interest in QinetiQ with a further 3.7 per cent. of the shares to be available for employees of QinetiQ. Management control and responsibility for setting future commercial strategy will now lie with QinetiQ and Carlyle, allowing them the freedom to make appropriate decisions to grow the business. MOD will retain those rights that are conventional for a major shareholder. QinetiQ's board of directors will be augmented by the appointment of two Carlyle nominees. MOD will also have the right to appoint two non-executive directors. QinetiQ employees will have the opportunity to invest in the future of the business through a staff equity scheme and will each receive a small free allocation of share options.

This is a good deal for the taxpayer, for QinetiQ and for the company's employees. At completion, the taxpayer will have received a total so far of around £200 million from the PPP and MOD's retention of a significant stake in the business will ensure that the taxpayer shares in the anticipated future growth in the value of the company. The company will benefit from the injection of new private sector capital together with The Carlyle Group's track record in assisting companies to grow and develop. As previously announced, our intention remains to sell our entire stake in QinetiQ within three to five years, probably through a flotation on the stock market.

QinetiQ will remain a British company based in the UK. MOD will retain a special share in the company to ensure that the nation's defence and security interests continue to be protected. There will also be robust safeguards to prevent conflicts of interest and to ensure that the integrity of the Government's procurement process is not compromised.

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Subject to the satisfactory fulfilment of a number of final conditions, we expect to achieve the formal completion of the sale process early in the new year.

HOME DEPARTMENT

Departmental Finance

The Secretary of State for the Home Department (Mr. David Blunkett): Subject to Parliamentary approval of the necessary Supplementary Estimate, the Home Office's Departmental Expenditure Limits (DEL) for 2002–03 will change as follows:

(a) the DEL will be increased by £168,713,000 from £10,340,772,000 to £10,509,485,000 and the administration cost limit will be increased by £66,928,000 from £2,681, 618,000 to £2,748,546,000. Within the DEL change, the impact on resources and capital,are set out in the following table:

(£'000)

	Resources		Capital
	Change	New DEL	Change	New DEL
Total DEL	45,000	9,430,783	123,713	1,078,702
Of which
Voted	8,085,505		901,307
Non voted	1,345,278		177,395

The change in the resource element of the DEL arises from:

(i) Take up of End Year Flexibility including £29,567,000 for anti drugs projects; £6,577,000 for National Probation Directorate's projects and £6,326,000 for anti drugs and crime reduction research projects.

(ii) Take up from the Capital Modernisation Fund of £173,000 for Evidence Based Policy fund.

(iii) Claims on the DEL reserve totalling £77,400,000 comprising £54,000,000 for community safety officers and other policing announced in the budget 2002 and £16,400,000 for juveniles.

(iv) Changes include an increase in the administration costs limit of £66,928,000.

The change in the capital element of the DEL arises from:

(i) Take up from the Capital Modernisation Fund of £37,700,000 for additional prison places.

(ii) Take up of End Year Flexibility including £76,641,000 for Police and crime reduction projects; £51,928,000 for Prison Service related projects and 20,324,000 for accommodation centres, scanners and removal projects for the Immigration Service.

The increases will be offset by inter-departmental transfers or charged to the DEL Reserve.

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