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Written Ministerial Statements

Thursday 26 July 2007


Business Tax Reforms

The Financial Secretary to the Treasury (Jane Kennedy): The Treasury has today published a discussion paper entitled "Business Tax Reforms - capital allowances changes". Copies of the document are available in the Vote Office and the Libraries of both Houses.

Ultra-Low Sulphur Diesel

The Exchequer Secretary to the Treasury (Angela Eagle): Finance Bill 2008 will contain provisions amending the definition of ultra-low sulphur diesel (ULSD) in the Hydrocarbon Oil Duties Act 1979, to take retrospective effect from 4 September 2007.

The Motor Fuel (Composition and Content) (Amendment) Regulations (SI 2007/1608) issued by the Department for Transport require oil suppliers to supply sulphur-free diesel (SFD) to garage forecourts from 4 December 2007. While the current duty rate on both ULSD and SFD is 48.35p per litre, mixtures of the two fuels meet neither definition, and are liable to the heavy oil duty rate (currently 54.68 ppl).

In the transitional period before and after the DFT regulations come into force, there may be occasions when ULSD and SFD need to be mixed, and the high rate of duty may act as a disincentive for the industry to supply SFD. The provisions will remove the density and distillation requirements from the ULSD definition, so that mixtures of ULSD and SFD will meet the ULSD definition. Bringing forward the deregulatory changes to the definition of ULSD will ensure the smooth changeover from ULSD to SFD.

Small Businesses and Settlements Legislation

The Exchequer Secretary to the Treasury (Angela Eagle): The Government acknowledge the judgement given by the House of Lords in the Jones v Garnett (Arctic Systems) case.

The Government are committed to maintaining fairness in the tax system. The case has brought to light the need for the Government to ensure that there is greater clarity in the law regarding its position on the tax treatment of ‘income-splitting'.

Some individuals use non-commercial arrangements (arrangements that they would not reasonably enter into with an arms-length third party) to divert income (which would, in the absence of those arrangements, have flowed to them) to others. That minimises their tax liability, and results in an unfair outcome, increasing the
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tax burden on other tax-payers and putting businesses that compete with these individuals at a competitive disadvantage.

It is the Government's view that individuals involved in these arrangements should pay tax on what is, in substance, their own income and that the legislation should clearly provide for this. The Government will therefore bring forward proposals for changes to legislation to ensure this is the case. In the meantime, HMRC will apply the law as elucidated by the House of Lords and will be providing guidance in due course.

The Government would not want commercial arrangements to be caught by any change to legislation. Consultation should help to ensure this.

Flooding (Tax Help)

The Financial Secretary to the Treasury (Jane Kennedy): The Government have taken a series of steps to support individuals and communities affected by the recent flooding.

In addition to this, I want to ensure that people affected by flooding do not have to worry about tax and related issues at this difficult time and to make it easy for them to receive their tax credits. Individuals or businesses affected by the flooding should get in touch with HM Revenue and Customs (HMRC) who will be able to provide practical support and advice. For example, HMRC will consider:

HMRC will not charge penalties where they are satisfied that customers have missed deadlines as a result of the flooding. In addition the Government will bring forward legislation in next year's Finance Bill which will allow the Commissioners of HM Revenue and Customs to waive interest and surcharges on tax paid late due to the floods. The Government propose to make this legislation retrospective from the date of this announcement. The Commissioners will exercise their discretionary powers not to collect such interest and surcharges in the interim.

HMRC will also support those who have difficulty sending in their tax credit renewals on time or notifying HMRC of any change in circumstances. Individuals affected by the floods should contact HMRC who will take steps to ensure that tax credits continue to be paid at the right level.

Business, Enterprise and Regulatory Reform

OECD Innovation Review (North of England)

The Minister for Competitiveness (Mr. Stephen Timms): We welcome the announcement that the Organisation for Economic Co-operation and Development (OECD) is to carry out an Innovation Review of the North of England.

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The OECD launched the series "Reviews of Regional Innovation" to address a demand by national and regional governments for greater clarity on how to strengthen the innovation capacity of regions. These reviews are part of a wider project on competitiveness at the regional level. The North of England is one study in this series. The work builds on the OECD's existing areas of expertise including territorial reviews of regions (such as the recent territorial review of Newcastle) and reviews of national level policies.

To be successful, the UK has to continue to build a knowledge-based economy. Encouraging better innovation performance within our regions is pivotal to this end. The Government are committed to improving the economic performance of all UK regions. This regional review of innovation will help develop effective, realistic strategies to raise the rate of sustainable economic growth in the North of England. Greater insight into innovation in the North will directly aid the Northern Way's contribution to regional economic performance.

The review is co-funded by the Department for Business, Enterprise and Regulatory Reform and the Northern Way. The Department of Innovation, Universities and Skills is also heavily involved, due to its interest in regional innovation systems. In addition to the project sponsors, the OECD will work collaboratively with core partners across the North, including the three Regional Development Agencies (RDAs) and the N8, which is a powerful alliance of Northern England's eight research-intensive universities.

Objectives of the Study

The review will examine how innovation can be more effectively harnessed to benefit the Northern economy. Through clear recommendations and benchmarking, the review will provide guidance as to how the North can optimally develop its innovation capacity.

The specific aim is to help the North better understand the barriers and opportunities for innovation in the region. The report will look to:

The review will look at the innovation strategies of each of the three regions individually, and include site visits from international experts. However, it will also look at how common approaches and collaborations across the whole of the North may better capitalise on existing assets for the benefit of the Northern economy as a whole. The study will also specifically address whether the North has specific needs vis- -vis the rest of the UK.

The report will provide recommendations to national, regional and local institutions (in both the public and private sectors) on how to improve the efficacy of the regional innovation system.


A final report on Innovation in the North of England is expected to be submitted to the OECD's Territorial Development Policy Committee in June 2008. It is due for publication in autumn 2008.

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Informal Competitiveness Council (Lisbon)

The Minister for Competitiveness (Mr. Stephen Timms): The following statement provides information on the Informal Competitiveness Council in Lisbon on 20 and 21 July 2007, at which I represented the UK. The meeting was chaired by Manuel Pinho, Portuguese Minister for Economy and Innovation.

Friday 20 July

SME Policy

The mid-term review of the EU's SME Policy was discussed. The Presidency presented a discussion paper on four main topics:

Ministers agreed on the urgent need to tackle challenges identified in the Presidency's paper. There was strong support for ongoing work towards reducing EU admin burdens by 25 per cent. Several Ministers called for more to be done to encourage cross border investment and for more information to be provided to SMEs on third country markets. A few Ministers wanted more benchmarking, though I cautioned against duplication. I called for a re-focus on encouraging SMEs to grow and for more action on better regulation, access to finance and ensuring that SMEs could exploit opportunities provided by moves towards a low carbon economy.

There was good support for the role of the Competitiveness Council in monitoring developments in SME policy. G1/4nter Verheugen, Commission Vice-President urged the Competitiveness Council to evaluate effects of other policies on SME competitiveness.

Dinner—The State of the EU economy

Dinner was devoted to a discussion on “EU Growth: Cyclical or Structural?”, with guest speaker Professor Francesco Giavazzi of Bocconi University, Milan and Massachusetts Institute of Technology. I noted the impact of recent economic growth performance by the EU.

Saturday 21 July

Sustainable Industry Policy

Ministers debated sustainable industry policy, based on the Commission's recent Communication on the mid-term review of Industry policy. Discussion was focused on three key pillars of a sustainable industrial policy: 1) Acceleration of innovation and creation of lead markets; 2) Full exploitation of the European internal market for the development in sustainable goods, services and technologies markets; and 3) “first mover” advantage, exporting EU know-how in the low carbon economy to external markets.

Ministers agreed that a more efficient product policy could be a major contribution for competitiveness and sustainability of European enterprises. They also agreed that the promotion of lead market initiatives for low carbon and efficient products and services was an important way of speeding up transition towards a low carbon economy and to put Europe as a frontrunner in global markets. I stressed the need to identify market failures and supported wide ranging action on product policy, such as standards and labelling. There was general support from the Ministers.

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Regional Development Agencies

The Minister for Competitiveness (Mr. Stephen Timms): I have today laid before Parliament the Annual Reports and Accounts for 2006-07 for the eight Regional Development Agencies (RDAs) outside London. Copies have been placed in the House Library.

The Annual Report and Accounts for the London Development Agency are presented to the Mayor of London rather than to Parliament. I shall provide a copy to the House Library when these are available.

Also published today are the RDAs' reported outputs for 2006-07. These results are evidence that the RDAs continue to play a valuable role in improving the economic performance of the English regions and, through working with their partners, the RDAs are making a real difference to the individual regional economies concerned. The figures cover the number of jobs created and safeguarded, the number of people assisted to get a job, the amount of brownfield land brought back into use, the number of businesses created, the number of businesses assisted to improve their performance, the number of people assisted in their skills development and the amount of public and private sector regeneration infrastructure investment levered, all as a result of RDA activity.

Press releases on the outputs have been issued in each region. Copies of the output results have been placed in the House Library, and are also available on the website of the Department for Business, Enterprise and Regulatory Reform at http://www.berr.gov.uk/regional/regional-dev-agencies/rda-performance/page24205.html.


Communities and Local Government

Planning Consultation Papers

The Minister for Housing (Yvette Cooper): During the summer recess, the Government will issue consultation papers on proposals to reduce the Secretary of State's involvement in casework, streamline the arrangements for tree preservation orders and transfer a wider range of appeals from the Secretary of State to the Planning Inspectorate. These proposals will take forward commitments made in the White Paper “Planning for a Sustainable Future” (Cm 7120). In addition, the Government will issue a consultation paper on a possible amendment to Section 237 of the Town and Country Planning Act, to improve the implementation of regeneration projects by removing an impediment to the use of land once construction has finished. Copies of these papers will be made available in the Libraries of both Houses.

Tall Buildings Guidance

The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): In conjunction with my colleague the Minister for Culture, Creative Industries and Tourism, Department for Culture, Media and Sport, I would like to bring to the attention of the House the guidance note on tall buildings prepared jointly by English Heritage and the Commission for Architecture and the Built Environment (CABE), which
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is published today. This updates and supersedes previous guidance published in 2003 and reflects changes to the planning system since that time.

The Government's aim is to ensure local planning authorities are getting the right developments in the right places, which we consider to be a fundamental part of creating places where people will want to live and work, now and in the future. Recent reforms to the planning system have helped to reinforce this message, making clear that all new development should be of good quality and designed in full appreciation of its surroundings and context. Tall buildings, in the right places and appropriately designed, can make positive contributions to our cities.

The Government therefore welcome this updated guidance, which will assist local planning authorities when evaluating planning applications for tall buildings, including, importantly, the need for effective engagement with local communities. It also places a greater emphasis on the contribution that design can make to improving the character and quality of an area. It offers good practice guidance to a range of stakeholders in relation to tall buildings in the planning process, provides practical advice on achieving well-designed solutions in the right places, and is capable of being material to the determination of planning applications. Copies of the documents are being placed in the Libraries of both Houses.

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