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Written Ministerial Statements

Monday 9 October 2006


Tax Treatment of Capital Receipts

The Paymaster General (Dawn Primarolo): The Government intend to bring forward legislation in the Finance Bill 2007 to amend an omission which has been identified in the recent trusts modernisation legislation included in the Finance Act 2006.

Certain types of capital receipts received by trustees are treated for tax purposes in their hands as income. This includes where the trustees of a settlement receive a payment made by a company buying back its own shares. In that situation, the original legislation—section 686A of the Income and Corporation Taxes Act 1988—provided that what was taxable was only the distribution element, and excluded the original subscription price received by the company which issued the shares.

Paragraph 3 of schedule 13 of the Finance Act 2006 amended the existing section 686A of the Income and Corporation Taxes Act 1988 so that in addition to its original function it also introduces a common mechanism for the various types of capital receipt which are assessable to income tax in the hands of trustees receiving them to be charged at the special trust rates. There is however an omission in the wording of the new section 686A which has the result, in the situation of buy-back of shares, that the whole of the payment by the company to the trustees including the original subscription price is taxable and not just the element representing the distribution.

This result was not intended and therefore amending legislation will be brought forward, as part of the Finance Bill 2007, to amend section 686A appropriately. This amending legislation will be backdated to 6 April 2006 so that the position will be as it should have been from the start. The amending legislation is being drafted and will be put out to consultation.

ECOFIN (8-9 September 2006)

The Chancellor of the Exchequer (Mr. Gordon Brown): The Informal Economic and Financial Affairs Council (ECOFIN) took place in Helsinki on 8 and 9 September 2006.

The Informal Council discussed global competition, innovation and productivity, including the role financial markets can play in promoting innovation, productivity and research and development.

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Ministers discussed the economic and financial aspects of energy, including both external energy policy and the development of a single market for energy in Europe.

The Informal Council also discussed the working methods of ECOFIN; financial market and stability issues; the present economic situation and prospects for the global economy; and the preparation of the annual meetings of the Bretton Woods Institutions.

The UK was represented by the Economic Secretary to the Treasury.

ECOFIN (10 October)

The Chancellor of the Exchequer (Mr. Gordon Brown): Items on the agenda are as follows:

Price Stability Criterion—Finance Ministers will be briefed on the application of the price stability criterion used for assessing entry to the euro.

Stability and Growth Pact—Council will receive Commission communications regarding Germany and the UK, and will be invited to adopt an opinion on the updated Convergence Programme for Hungary and a Council Recommendation under Article 104(7).

Energy, Innovation, Financial Stability Arrangements and Working Methods—Finance Ministers will be invited to adopt conclusions taking into account the discussions held at the Informal ECOFIN Council meeting in Helsinki on 8-9 September.

Better Regulations, administrative burdens—Council will be invited to adopt conclusions to support the Commission’s approach to measuring and reducing administrative burdens resulting from EU legislation.

The Quality of Public Finances—Ministers will be invited to adopt conclusions on a report regarding the design of national fiscal rules and institutions in EU member states.

EIB External Lending Mandates—Following an initial debate at the July ECOFIN, Council will continue to discuss issues relating to the renewal of the EIB’s mandate for the lending it carries out outside the EU.

Clearing and Settlement—Ministers will hold an exchange of views on the Commission’s approach to tackling barriers in the clearing and settlement industry.

Single Euro Payments Area—Council will be invited to adopt conclusions on the single euro payments area initiative, which will deliver a common system for cross-border payments in euro.

Communities and Local Government

Local Authority Business Growth Incentives Scheme

The Minister for Local Government (Mr. Phil Woolas): The Government announced on 14 September 2006 the details of the second year of the Local Authority Business Growth Incentives scheme (LABGI). LABGI aims to
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encourage local authorities to increase business growth in their areas. The scheme is set to run for three years (2005-06 to 2007-08) and will allocate up to £l billion to eligible local authorities in England and Wales. The money is genuinely additional and unring-fenced.

In its first year, the scheme awarded £126.6 million to 278 local authorities in England. Changes being introduced for the second year make the scheme simpler and more rewarding for local authorities. The 70 per cent. scaling factor (that applied to revenues above the floor) and the ceiling (that set the maximum revenue that could be kept in the first year), have been removed. The awards for the second year of the scheme will be announced in February 2007. It is for local authorities themselves to decide how to use this additional money.

Constitutional Affairs

Legal Aid (Inquests)

The Parliamentary Under-Secretary of State for Constitutional Affairs (Vera Baird): With the agreement of the Lord Chancellor, I am pleased to announce the amendments to the Lord Chancellor’s authorisation on inquest funding and related changes to the Community Legal Service (Financial) Regulations 2000. These amendments came into force on 2 October 2006 and will streamline the process for providing legal aid in those exceptional inquests that require it.

Since 1 November 2001, the Legal Services Commission (LSC) has had the power to grant funding for advocacy to the immediate family of the deceased at certain inquests where the deceased has died in police or prison custody, or in the course of police arrest, search, pursuit or shooting.

From 2 October 2006, the LSC will also be able to grant funding for advocacy in certain inquests where the deceased has died while detained under the Mental Health Act 1983. The LSC will also have the power to waive the financial eligibility limits, and—where appropriate—financial contributions, for legal aid in these inquests. For all other inquests, the Lord Chancellor retains the power to authorise exceptional funding for advocacy, and to waive the financial eligibility limits.

These changes will simplify the current arrangement and help to provide prompt access to legal representation for the families of the deceased in those exceptional inquests where article 2 of the European convention on human rights requires it.

Copies of the amended authorisation and amendment regulations have been laid in the Libraries of both Houses.

Legal Services Bill - Draft

The Parliamentary Under-Secretary of State for Constitutional Affairs (Bridget Prentice): My right hon. and noble Friend the Secretary of State for
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Constitutional Affairs and Lord Chancellor has made the following written ministerial statement:

Freedom of Information Act 2000 (Implementation in Central Government)

The Minister of State, Department for Constitutional Affairs (Ms Harriet Harman): My noble Friend the Under-Secretary of State has made the following written ministerial statement:

Further to this statement, I would like to inform the House that as a result of the above revisions, the information contained in my answer to a written parliamentary question from the late previous Member for Blaenau Gwent on 25 January 2006, Official Report, columns 2156-57W, concerning the operation on the Freedom of Information Act during its first year, was inaccurate. The previous answer should read that in the third quarter of 2005, for those bodies whose performance is monitored by DCA, 58 per cent. of resolvable requests resulted in the full disclosure of information, not 67 per cent. as stated originally.


NHS Audited Accounts (2005-06)

The Secretary of State for Health (Ms Patricia Hewitt): My Department has today published the audited figures for the NHS for the financial year 2005-06. These show that the NHS recorded a deficit in 2005-06 of £547 million.

At the time of publication, the final figures for one trust, Whipps Cross Hospital NHS Trust, have not been agreed with auditors. However, London strategic health authority has confirmed to me that it does not expect the final figures from this trust materially to affect the national position.

My Department’s report on NHS finances at quarter one of 2006-07, indicates that the NHS is on track to achieve our aim of net financial balance by the end of the current financial year.

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Audited figures by organisation for each strategic health authority have been placed in the Library and will be published today on the Department’s website at http://www.dh.gov.uk/PublicationsAndStatistics/Publications/PublicationsPolicyAnd Guidance/Publications PolicyAndGuidanceArticle/fs/en?CONTENT_ID=413 9550&a mp;chk=MbVP%2BG

NHS Foundation Trusts

The Secretary of State for Health (Ms Patricia Hewitt): The chairman of Monitor (the statutory name of which is the Independent Regulator of NHS foundation trusts) announced last week that, in accordance with section 6 of the Health and Social Care (Community Health and Standards) Act 2003, Monitor had decided to authorise Chelsea and Westminster Healthcare NHS Trust as an NHS foundation trust from 1 October.

Monitor’s announcement brings the total number of NHS foundation trusts to 49. A copy of Monitor’s press notice has been placed in the Library.

The Government remain committed to offering all NHS acute and mental health trusts the opportunity to apply for foundation status as soon as practicable.

Further waves of NHS foundation trusts are set to follow.

International Development

Palestinian Basic Needs (Further Contribution)

The Secretary of State for International Development (Hilary Benn): I am gravely concerned about the latest increase in conflict between Fatah and Hamas in the Occupied Palestinian Territories. Such violence further damages the prospects for peace and worsens the humanitarian situation. I call on all parties to end the violence. The UK will work with the international community to do what we can to help the Palestinian people.

I wish to inform the House that the Government intend to make a further £3 million contribution to the temporary international mechanism for Palestinian basic needs. This is in addition to the £3 million for essential health supplies that I announced to the House in August and £3 million that I announced at the Stockholm donors’ conference for operation and maintenance of water, sanitation and electricity.

The situation in the Palestinian Territories remains very difficult. In Gaza many households continue to receive just 6 to 8 hours of electricity per day. Intermittent electricity supply is affecting all key services. Water supply and sanitation services remain limited, with severe implications for health. The Department for International Development will therefore provide £3 million through the temporary international mechanism for operation, maintenance and repair work to keep water, sanitation and electricity services running.

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DFID will also provide a further £3 million, again through the temporary international mechanism, to contribute towards providing allowances to teachers and others among the poorest Palestinian Authority workers. Many of these people, including many front-line services providers, have not been paid salaries for six months.

The temporary international mechanism was launched on 16 June, following an original proposal by the UK. To date, it has provided over 1.8 million litres of fuel for water, sanitation, hospitals and primary health care centres in Gaza. Using funding from the European Community the temporary international mechanism has made payments to 11,900 health workers. Payments have also been paid to 51,500 of the poorest Government workers and 33,000 social hardship cases.

DFID has made up to £12 million available for assistance through the temporary international mechanism. This new commitment means that £9 million of these funds have been allocated and will shortly be fully spent meeting Palestinian basic needs. The remaining £3 million will be apportioned as needs arise.

The European Commission has established a team in Jerusalem to manage the implementation of the TIM. Along with several EU member states, we have seconded expertise to this team.

Northern Ireland

Oversight Commissioner's Report

The Parliamentary Under-Secretary of State for Northern Ireland (Paul Goggins): I have today laid before this House a copy of the oversight commissioner’s second statutory report for 2006, which was published on 28 September, in accordance with section 68(4)(a) of the Police (Northern Ireland) Act 2000.

This is the eighth report compiled by Al Hutchinson as oversight commissioner and the 17th in the series of oversight reports published since 2001. This is a thematic report concentrating on devolution in policing.

Independent Monitoring Commission

The Secretary of State for Northern Ireland (Mr. Peter Hain): I have received the 11th and 12th reports of the Independent Monitoring Commission (IMC). These reports have been made under article 5 and articles 4 and 7 of the international agreement that established the commission and reports on security normalisation; and levels of paramilitary activity in Northern Ireland respectively. I have considered the content of the reports and I am today bringing them before Parliament. I have placed copies in the Library of the House.

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