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Written Ministerial Statements

Friday 2 December 2005


Budget ECOFIN: 24 November 2005

The Economic Secretary to the Treasury (Mr. Ivan Lewis): I chaired the Economic and Financial Affairs Budget Council (Budget ECOFIN) on 24 November 2005. The Permanent Representative to the European Union, Sir John Grant, represented the UK. The trilateral meeting with the European Parliament and the Commission, designed to reach an agreement on the 2006 EC Budget, was extended until 30 November since it was not possible to reach an agreement on 24 November. This was due to European Parliament not being able to continue negotiations after midnight on 24 November.

An agreement on the 2006 EC Budget was concluded between the Council and the European Parliament on 30 November. The agreement establishes total payment levels of €111,969 million (1.0100 per cent. of EU GNI), an increase to certain co-decided programmes of €100 million, and a mobilisation of the flexibility instrument of €275 million (of which €40 million is to be spent on CFSP). Agreement was also reached on the other agenda items carried forward from 24 November.

The Council duly concluded its second reading of the 2006 EC budget as an "A" point at the JHA Council on Thursday 1 December. The European Parliament is scheduled to vote on its own second reading on 15 December in Strasbourg, after which the 2006 EC Budget will be formally adopted.

Response to Globalisation

The Chancellor of the Exchequer (Mr. Gordon Brown): With companies, Governments and individuals all having to respond to the scale, speed and scope of a changing global economic environment, I am today announcing a package of measures to respond to the challenges and opportunities of globalisation.

I am today publishing a paper, "Globalisation and the UK—strength and opportunity to meet the economic challenge", that sets out Britain's policy response to the key challenges and opportunities of globalisation, in particular in skills, science, regulation, transport, and planning.

In the 2005 Budget I commissioned Sir George Cox to conduct a review into how best to apply creativity and innovation to improve UK firms' productivity and performance. His report is published today.

In the same Budget I asked Sir John Pattison to develop a 10-year strategy for UK stem cell research. He has published his report today.

Taking forward the goals from the 10-year science and innovation investment framework, I am announcing:
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Copies of the globalisation paper, the paper on discussions of the R&D tax credit and the reports of Sir George Cox and Sir John Pattison are available in the Vote Office and the Library of the House.


Gulf Veterans' Illnesses

The Parliamentary Under-Secretary of State for Defence (Mr. Don Touhig): A key principle of the Government's approach to addressing the health concerns of veterans of the 1990–91 Gulf conflict is that there should be appropriate research into veterans' illnesses and factors that may have a bearing on these.

In their 2003 Review of Research into 1990–91 Gulf veterans' illnesses, the Medical Research Council included the recommendation that information from existing epidemiological and mortality studies should be linked. The Ministry of Defence subsequently commissioned a study led by Professor Macfarlane, of the University of Aberdeen. A paper reporting the results of the study is available on the website of the International Journal of Epidemiology in advance of hard-copy publication. The study examined both the longer-term mortality of Gulf veterans and, for those veterans that participated in the main epidemiological surveys of UK Gulf veterans, whether there was any
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relationship between self-reported experiences during deployment or illness at the time of survey, and subsequent death. The researchers report that, 13 years after the end of the 1990–91 Gulf conflict, there is no difference in the overall mortality of Gulf veterans compared with a similar group that did not deploy. The paper also says that an increase in death associated with certain reported exposures is not statistically significant and that excess illness reported by veterans during health surveys was not related to an increased risk of death.

A summary of the findings is available on the journal website and via a link on the MOD website at: www.mod.uk/issues/gulfwar/whats—new.htm.


Local Government Pension Scheme

The Minister for Local Government (Mr. Phil Woolas): My statement to the House on 13 July made it clear that, taking account of costed assessments of the effect on the Local Government Pension Scheme (the LGPS) of reinstating the rule of 85 with effect from 1 April 2005, the Deputy Prime Minister would come forward with new regulations in the autumn to address the consequences for the scheme in time for the provisions to be in place from April 2006.

Careful consideration has been given to the representations and specialist actuarial advice received from interested parties involved with the Scheme, and to the helpful discussions involving the key stakeholders within the framework of the LGPS Tripartite Committee. The estimates provided by LGPS administering authorities of the anticipated cost pressures arising from the decision to reinstate the rule of 85 in the scheme with effect from 1 April 2005, have also been taken into account. Draft amending regulations will shortly be circulated for consultation to all LGPS interests in England and Wales and will be laid before Parliament in the New Year once they are finalised.

The combined scope of the consultation package and the subsequent regulations will secure the on-going solvency of the scheme without any additional calls on central or local government budgets. This meets the Government's intention to secure the continued affordability and long term viability of the scheme, and its acceptability to taxpayers.

Amending regulations, on which the necessary statutory consultation begins shortly, will directly contribute towards mitigating and managing the costs pressures arising from the decision to reinstate the rule of 85 in respect of pension liabilities accruing on the scheme for the period 1 April 2005 until 30 September 2006. Other amendments, based on the responses received from a previous consultation exercise carried out over the summer, will further extend the existing flexibilities in the LGPS linked to the new tax regime for occupational pension schemes already established by the Finance Act 2004.

Further scheme amendments are also necessary to implement the terms of the European Employment
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Directive 2000/78/EC which establishes a general framework for equal treatment in employment and occupation. To give effect to the Directive and compliance with the timetable for associated Government legislation on age discrimination and employment law being introduced by DTI, the effective date for the removal of the rule of 85 from the LGPS will be 1 October 2006. Subject to the outcome of the proposed consultation exercise, it will be necessary to put in place appropriate safeguards, which can be objectively justified, for those LGPS members closest to retirement to take effect from the same date. The statutory consultation will provide a framework for discussion between the local authority employers and the trades unions in particular about the precise terms of these safeguards, and to explore how these may be associated both with the current proposed scheme changes, and others which may be developed in the wider discussion about the future of the scheme.

Balancing the scope of such safeguards with the opportunity to develop the longer term reform of equality proofed scheme will form an integral part of the discussions and negotiations which the Tripartite Committee stakeholders have already agreed to undertake over the next six months. These will involve local authority employers, trades unions and other scheme interests in a programme of discussion and analysis to modernise and reform the scheme. These discussions will take account of wider pension policy developments, to ensure the LGPS can meet the challenges of a changing and flexible workforce, in and around local government, and deal effectively with the high incidence of part-time employees many of whom are female on lower incomes.

It is intended to consult widely on a policy discussion paper, about the proposed way forward for the LGPS in the summer of 2006 for analysis and comment. This will allow a subsequent statutory consultation to begin later in the autumn of 2006, leading to new scheme provisions for April 2007 with the ultimate objective of having a new-look LGPS in place for April 2008.

The continued affordability and viability of the scheme, as well as its acceptability to taxpayers, remains a central theme of the Government's intentions for the LGPS. So too is our commitment towards ensuring the scheme offers an equality proofed pension framework for all its increasingly diverse and part-time workforce. Delivering an effective and affordable balance between the cost of its provision to employers and tax payers on the one hand, and fairness to scheme members on the other, remains a priority, within the overall resource framework of local government and of other employers within the scheme. A flexible and attractive pension scheme for local government and employers associated with it is now required.

This statement is in effect, the beginning of a series of detailed consultations with all LGPS interests about the future of the scheme. Initially, the affordability of the existing LGPS must be established but, in doing that, it is essential to begin to move forward and begin to discuss and analyse the possible form and content of a new-look LGPS for 2008. All LGPS interests are committed to that intent and objective.
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