Letter to the Chairman of the Liaison
Committee from Rt Hon Tony Blair, a Member of the House, Prime
Minister
During my appearance before the Liaison Committee
on 8 February, I said that I would write to you on two issues.
TAX FORECASTING
MODELS (QUESTION
99)
There is no single model used to project tax
revenues. Instead, the Treasury work in partnership with the Inland
Revenue and Customs and Excise who produce forecasts for each
individual tax. The Revenue departments have forecasting models
for each individual tax. These models vary from complex econometric
models used for excise duties to detailed micro simulation models
based on individual tax records used for some Inland Revenue taxes.
All the assumptions used in these models are consistent with those
in the Treasury economic forecast.
Full details of the models cannot be published
because they include confidential information from tax records.
However the Government has published details on the methodology
and models used to forecast particular taxes:
— Forecasting the public finances in
the Treasury (IFS volume 19 February 1998).
— Eason, R (2000) "Modelling Corporation
Tax in the United Kingdom", in Microsimulation in Government
Policy and Forecasting, 2000, Gupta, A and Kapur, V (editors).
— "Consumers' Demand and Excise
Duty Receipts Equations for Alcohol, Tobacco, Petrol and Derv"
Marcus I Chambers, University of Essex, November 1998, Revised
August 1999. GES Working Paper No 138.
— "Improvements in VAT Forecasting"
End of Year Fiscal Report, Pre-Budget Report 2004.
Transparency is also enhanced by the independent
auditing and reporting of the key assumptions underlying the fiscal
projections, including trend growth, equity prices and oil prices.
In addition, the End of year fiscal report provides additional
information on the key drivers of projections for individual taxes,
and explains how differences between forecast and outturn for
the economic determinants contribute to differences between forecast
and outturn for receipts.
The Government will also continue to include
in every Budget and Pre-Budget Report an explanation of the main
factors affecting changes in receipts of the major taxes.
THE BUILDING
REGULATIONS AND
ENERGY EFFICIENCY
(QUESTION 130)
The Building Regulations apply mainly to new
buildings (including social housing), but have some impact on
the existing stock where work is carried out that affects the
structure or fire safety. In addition to this, if the windows
or central heating boiler are replaced, the new ones must reach
specified standards of energy efficiency. The Energy Regulations
(Part L) are currently under review, and ways of further improving
the energy efficiency of new buildings and the existing stock
are being considered: options for the existing stock include requiring
even more efficient condensing boilers and additional energy saving
measures such as cavity wall insulation, where other work is planned
and the energy saving work is cost effective; for new buildings,
the aim is to improve the energy efficiency by 25%. These new
Regulations are planned to come into force at the end of this
year.
The Building Regulations set minimum standards
which must be achieved by all buildings. However, there is nothing
to stop builders or providers of social housing working to higher
standards. There is also a voluntary scheme (Eco Homes) that gives
recognition to higher standards. In addition a Code for Sustainable
Building will be developed later this year with a trial in the
Thames Gateway; this will promote standards higher than those
in the Building Regulations. It is simply not true to say that
that the Building Regulations have reduced standards in social
housing.
The Building Regulations do set standards for
sound insulation between and within new dwellings, including hostel
types of accommodation and hotel bedrooms. The Sound Regulations
(Part B) were last revised in 2003 when both the standards and
their enforcement were improved.
New dwellings are protected from external noise
sources, such as road or air traffic, by insulation measures required
under the planning system, and which can be tailored to suit specific
situations. When new roads or airports expose existing houses
to significantly increased noise levels, the Department of Transport
and the airport operators run schemes to improve the insulation
against noise.
For the existing housing stock, provisions in
the Housing Act 2004 will replace the housing fitness standard
by the Housing Health and Safety Rating System (HHSRS) as the
means of assessing unacceptable housing conditions. HHSRS will
enable local authority environment health officers to assess hazards
arising from excessive noise. Local housing authorities will have
powers to intervene to require owners and landlords to take remedial
action in their properties where hazards present a health and
safety risk to occupants.
21 February 2005
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