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Written Ministerial Statements

Thursday 21 July 2005



The Chancellor of the Duchy of Lancaster (Mr. John Hutton): I am today publishing revised guidance for Departments on the handling of Members' and Peers' correspondence.

Copies have been placed in the Libraries of both Houses.


Office for National Statistics

The Financial Secretary to the Treasury (John Healey): The Office for National Statistics' annual report and accounts for 2004–05 is being laid before Parliament today. It contains an assessment of how the Office for National Statistics performed against its key targets in 2004–05. Copies are available in the Libraries of both Houses and electronic copies are freely accessible on the National Statistics website.


The Chancellor of the Exchequer (Mr. Gordon Brown): On 12 July I chaired the first meeting of the Economic and Financial Affairs Council (ECOFIN) under the UK presidency. The Economic Secretary to the Treasury, my hon. Friend the Member for Bury, South (Mr. Lewis), represented the UK.

I set out the UK presidency's work programme, copies of which are available in the Libraries of both Houses, and highlighted measures to combat terrorist financing. ECOFIN agreed to offer advice and technical assistance to other countries which need to build up anti-terrorist finance capacity.

The Council took note of progress on financing for development. This will be discussed further at the Informal ECOFIN ahead of the UN Millennium Development Goals Summit in New York on 14–16 September.

The Council discussed support for the economic regeneration in the West Bank and Gaza Strip, and invited the Commission and the European Investment Bank to pursue their work on options for the economic regeneration of this area and to report back to the Informal ECOFIN meeting in September.

The Commission presented its Communication on a "Roadmap to an integrated internal control framework". Council conclusions were agreed on the process for taking this issue forward.
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The Council adopted an opinion on an updated stability programme presented by Portugal for the period 2005–09.

The Council reached political agreement on a decision, under article 104(6) of the EC treaty, on the existence of an excessive deficit in Italy and on a Recommendation, under article 104(7), on action to be taken for its correction. The Council will adopt the Decision and Recommendation by written procedure at the end of July, once Council Regulation (EC) No. 1056/2005, which implements the new rules on the excessive deficit procedure, has entered into force.

The Economic Secretary to the Treasury chaired a ministerial dialogue with the accession and candidate countries, approving joint conclusions on all four countries (Bulgaria, Romania, Croatia and Turkey), and joint opinions on Bulgaria's and Romania's 2004 pre-accession economic programmes.


I represented the UK the Economic and Financial Affairs Council (ECOFIN) in Brussels.

The Council agreed Conclusions:

The Council agreed to abrogate the existing excessive deficit procedure against the Netherlands.

The Council adopted the broad economic policy guidelines. The text was submitted to the European Council in June for approval.

The UK introduced a joint UK-Luxembourg Paper on "Financing for Development". The Council discussed the EU's strategy on financing for development. Member States confirmed their commitment to the ODA target of 0.7 per cent. GNI by 2015.

Political Agreement was reached by the Council on the Third Money Laundering Directive. The Council agreed a general approach on company law directives covering annual and consolidated accounts.

ECOFIN agreed that the Savings Tax Directive would apply from 1 July subject to final confirmations of bilateral agreements from European third countries and crown dependencies.

ECOFIN welcomed the progress achieved by the code of conduct group under the Luxembourg presidency.

Banknote Issue (Scotland and Northern Ireland)

The Economic Secretary to the Treasury (Mr. Ivan Lewis): The Treasury will publish a consultation paper on Monday 25 July seeking views on its proposals to strengthen and modernise the arrangements under which a limited number of commercial banks in Scotland and Northern Ireland are permitted to issue their own banknotes. Copies will be available in the Libraries of the House. Responses to the consultation will be requested by Friday 16 September.
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Pre-Owned Asset Regulations (Double Charges)

The Paymaster General (Dawn Primarolo): This is to announce regulations under section 104 Finance Act 1986 to provide relief from double inheritance tax charges in situations caught by the pre-owned assets provisions at Schedule 15, Finance Act 2004.

Double inheritance tax (IHT) charges can arise in certain circumstances when taxpayers who have used IHT avoidance schemes re-arrange their affairs in response to the income tax charge on "pre-owned assets" introduced by Schedule 15, Finance Act 2004.

My statement of 8 March 2005 announced regulations to provide relief from double charges where taxpayers have made an election to disapply the pre-owned asset income tax charge under paragraph 21, Schedule 15.

Comparable double charges can arise where taxpayers do not make this election, but instead dismantle their previous arrangements so that the pre-owned asset income tax charge is no longer due. In particular, many taxpayers have used a "double trust" scheme; this involves selling a valuable asset to one trust in which the vendor retains an interest, in exchange for an IOU, and then giving the IOU to a second trust. The gift is a potentially exempt transfer for IHT purposes, and the value of the IOU will be chargeable if the scheme user dies within seven years of implementing the scheme. If in the meantime the scheme has been reversed, so that the full value of the asset originally sold is back in the scheme user's ownership at the time of their death, that value will also be subject to IHT.

I am satisfied that scheme users can have legitimate non-avoidance reasons for arranging their affairs in this way, and the regulations already made will therefore be extended to provide relief from double charges which arise from their doing so. They will cover cases where:

In those circumstances, relief will be given so that tax will be due only on the more valuable of the two chargeable assets mentioned.

The regulations will be made as soon as practicable and made available in HM Revenue and Customs' website (www.hmrc.gov.uk).

Regional Funding Allocations

The Chief Secretary to the Treasury (Mr. Des Browne): "Regional funding allocations: Guidance on preparing advice" is today being published by the Deputy Prime Minister, the Secretary of State for Transport, the Secretary of State for Trade and Industry and myself. This is in response to the consultation launched at the time of the 2004 pre-Budget report, devolving decision making: A consultation on regional funding allocations. The publication includes indicative regional transport spending over the 2004 spending review period, and
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indicative longer-term funding assumptions for transport, economic development and housing. Regions are invited to provide advice on priorities within the three indicative funding allocations. Copies are available in the Libraries of both Houses. The report can also be obtained free on the HM Treasury website.

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