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Written Ministerial Statements

Tuesday 11 December 2007


Economic and Financial Affairs Council

The Economic Secretary to the Treasury (Kitty Ussher): On 23 November 2007, I represented the UK at the Budget Economic and Financial Affairs Council (ECOFIN).

Finance Ministers agreed to adopt Preliminary Draft Amending Budget No. 7 to the 2007 EC Budget, amending the 2007 Budget to reflect latest implementation capacity and thus reducing the level of funding required from member states in 2007.

Finance Ministers agreed to adopt Amending Letter No. 2 to the Preliminary Draft Budget for 2008, which reflected the latest information on agricultural market prices and other developments.

During a conciliation meeting between Council and the European Parliament agreement was reached on the 2008 EC Budget and on the multi-annual financing for the Galileo project and the European Institute of Technology. The agreement establishes total payment levels of €120.3 billion (0.96 per cent. of EU GNI). The European Parliament is scheduled to vote on its own second reading on 13 December, after which the 2008 EC Budget will be formally adopted.

Four joint statements relating to the Budget were also agreed at Budget ECOFIN. These concerned: the financing of Galileo and the European Institute of Technology; Joint Undertakings; and the procedure to implement the budget agreement reached by the Council and European Parliament. The Government are supportive of these statements, which affirm the principle of fair and open competition and call for sound financial management and budget discipline in the areas they concern.

Business, Enterprise and Regulatory Reform

Yorkshire Forward

The Minister for Competitiveness (Mr. Stephen Timms): I have decided to appoint the new board members listed below.

Mark Lovell

Cllr Mark Kirk

All the new appointments will be for a period of three years.

The appointments will begin on 14 December 2007 and will expire on 13 December 2010.

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I have placed further details of the appointments in the Libraries of both Houses. They were all made in accordance with the code of practice of the Commissioner for Public Appointments.


Councillor Mark Kirk: is the leader of North Lincolnshire Council. At a regional level Mark is the chair of the Yorkshire and Humber Assembly’s Regional Transport Board. In relation to the number sub-region he is a director of Urban Renaissance, director of Crosby Pathfinder, director of Humberside Airport and director of Humber Economic Partnership. At a local level he chairs the Local Ethnic Community Meetings; is a founder member of the Crosby Community Association; and was formerly vice chair of Lincolnshire Ambulance Service NHS Trust. No other ministerial appointments are held.

Mark Lovell:is the executive chairman of A4e Ltd and is a dynamic and successful entrepreneur/ business leader focused on high growth business in global public service markets. His company has grown from start-up to a £100 million turnover business over the last 15 years and has received a number of accolades.

Defence Exports

The Secretary of State for Business, Enterprise and Regulatory Reform (Mr. John Hutton): The Prime Minister’s statement of 25 July 2007, Official Report, column 83WS, announced a machinery of Government change moving responsibility for defence trade promotion from the Defence Export Services Organisation (DESO) to UK Trade and Investment (UKTI). Today I am announcing the arrangements under which this transfer will take place.

This statement is made in close consultation with my colleagues the Secretary of State for Defence, and the Secretary of State for Foreign and Commonwealth Affairs.

We fully recognise how important continued export success is to the health of this strategic sector of the economy. Defence equipment manufacture is highly important to the United Kingdom. The combination of expertise within both DESO and UKTI offers a major opportunity to enhance the way HM Government offer support to this successful industry. The ability to offer a complete package for prospective customer Governments, who often seek specialist assistance, will help the industry develop a compelling market proposition that positions the UK uniquely in the world.

The new organisation will build on the sector’s recent work which has produced a code setting out common standards of good business practice. We will work together to promote strong standards of business conduct and corporate governance in the sector.

The new organisation will be the UKTI Defence and Security Group. This is a working name. The group will be a UKTI business unit with expertise in defence services and products, operating under the UKTI brand and to UKTI strategic objectives. Ministerial responsibility will rest with the Minister of State for Trade and Investment. The group will be accountable
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to the UKTI board and its head will report to UKTI’s chief executive. Its head will be selected through open competition.

UKTI Defence and Security Group will have continued links to the MOD, in support of defence objectives. This will involve the active engagement of Defence Ministers, and the loan from the MOD to UKTI (via the Department of Business Enterprise and Regulatory Reform (BERR)) of armed forces and relevant civilian personnel to the group. Certain other civilian personnel will transfer from the MOD to UKTI (via BERR), and staff employed locally at overseas missions will transfer from MOD employment to UKTI (via the Foreign and Commonwealth Office).

The current export licensing function within the Defence Export Services Organisation will be retained within the MOD and so be separate from export support activities. And within BERR the separation between BERR export licence functions and trade promotion in UKTI will continue.

In line with the Prime Minister’s statement, no changes are envisaged to existing and planned agreements between the MOD and other Governments.

An implementation plan is in place. As a machinery of government change, the guiding principle is that business planning assumptions, and staffing and resources, will be taken on at their current levels from DESO by UKTI. This transfer to UKTI will take place on 1 April 2008.

EU Energy Council

The Minister for Energy (Malcolm Wicks): I represented the UK at the Energy Council in Brussels on 3 December.

The Council was dominated by exchanges on progress on the internal market. There was a positive outcome from a UK perspective, with growing support for ownership unbundling. The rest of the meeting was taken up by a policy debate on the Strategic Energy Technology (SET) Plan and information from the presidency and Commission on international relations.

On the SET plan, Ministers debated the recently adopted Commission communication and an associated presidency ‘vision statement’. The presidency said it was important the EU took a lead internationally to meet climate goals—the cost of inaction was greater than action. Investment in the development of energy technologies would be critical but there was no single solution—a wide range of technologies was needed. The Commission outlined the content of their communication. To meet our long-term climate objectives the EU had to be ambitious both on its own and in promoting greater international cooperation.

While welcoming the communication, member states demonstrated a wide range of views on the appropriate prescription, particularly when it came to identifying the most important technologies; energy efficiency was the most mentioned sector. There was general agreement on the need for more effective investment in R&D and the importance of the private sector. For the UK, I emphasised the need to translate the plan into early action; referring to the recent UK tender for demonstration of carbon capture and storage I underlined the importance of addressing policy and
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regulatory barriers to developing and demonstrating new energy technologies. The Commission emphasised the need to prioritise action.

Presenting the Third Internal Market Package, the Commission noted that while liberalisation had brought benefits, competitive markets were not yet complete. To meet the spring European Council mandate, real change was necessary to ensure non-discriminatory access, open and transparent markets, incentives to invest, and to improve the powers and independence of regulators. On the key issue of unbundling, the Commission noted that unbundled markets had experienced lower price rises (6 per cent. as against 29 per cent.) and higher investment. Though the Commission was open to considering alternatives, these had to involve structural separation that ensured the independence of the Transmission System Operator. The Commission called for swift progress in Council.

All member states welcomed the presidency progress report as fair and balanced. The presidency noted the broad consensus on regulators’ powers, objectives and independence as well as the need for greater co-operation, though not yet on the proposed agency model itself, and called on those member states wanting a third option on unbundling to present it soon.

For the UK, I supported the Commission’s analysis that full ownership unbundling was the best way to deliver the necessary network investment and benefits of a competitive market to EU consumers and business as UK experience demonstrated. I emphasised the importance of rapid progress, noting that any third option would have to meet the spring European Council mandate on effective separation of networks from supply/generation activities to ensure independent decisions on investment. I also recognised the special circumstances faced by small or isolated markets.

A large majority of member states supported the UK position in whole or in part. Several others supported the agency while others emphasised the importance of the third country clause.

Two member states in particular, supported by four others, rejected functional separation of networks and supply as a solution to the problem, seeing networks as a natural monopoly. They believed it caused problems for safety, investment, quality and prices, as well as weakening EU operators’ positions against third country companies. They would suggest an ambitious alternative solution next year. The Commission concluded by emphasising that the purpose was to promote the interests of EU consumers, not the energy industry.

On International Relations, the presidency reported on a variety of initiatives, focusing on Brazil and Africa in particular. Energy was now an important component of most EU external relations, for example with China, India and the EuroMed. The Commission agreed and noted the good progress made across the board. On Russia, they would investigate the impact of the third package on Russian companies and they would soon propose modalities for the accession of Moldova, Ukraine, Norway and Turkey to the Energy Community Treaty. The proposed Energy Efficiency Platform, in lieu of an international agreement, was also important; the Commission was looking at ways of supporting its development.

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Two member states raised their interest in pipeline developments. The Commission’s co-ordinator for the Nabucco pipeline reported on this project.

2007 Simplification Plans

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The Government are today publishing Simplification Plans for 19 Departments and Government agencies. The Health and Safety Executive published its plan on 3 December, taking the total number of plans published to 20.

The plans set out more than 700 initiatives which, when delivered, will result in reduced administrative burdens and policy costs for the UK economy as a whole.

They show how the Government are delivering the commitment they made 12 months ago to reduce administrative burdens on business and the third sector by 25 per cent. net by 2010, saving the economy £3.5 billion a year. They set out 288 simplification measures that Departments have delivered to date, saving business and the third sector more than £800 million net per year. And they show that work has begun on reducing the bureaucracy faced by frontline public sector workers.

These plans continue the Government’s commitment to transparent reporting of its simplification programme. Departments will continue to update plans annually in order to ensure on-going year-on-year reductions in the burdens they impose.

A report “Delivering simplification plans: A summary” has been deposited in both Houses which summarises this cross-Government effort.


Defence Storage and Distribution Centre

The Minister for the Armed Forces (Mr. Bob Ainsworth): My noble Friend the Minister for Defence Equipment and Support has now approved, effective from 11 December 2007, the early closure of the Defence Storage and Distribution Agency (DSDA) Regional Distribution Centres (RDCs) at Longmoor, Shorncliffe, Llangennech, Bulford, Catterick, Chilwell, Colchester and Stirling.

Under the Future Defence Supply Chain Initiative (FDSCi), the MOD assessed a range of options for managing and operating the defence supply chain, to reduce the cost of ownership, while maintaining or improving service levels, and enhancing operational capability. DSDA’s new plan makes greater use of Donnington and Bicester, cutting out the need for a number of RDCs. Much material will be delivered direct rather than through a regional hub and is more sophisticated in selecting how material flows are routed; DSDA has also opened a warehouse for fast-moving items at Donnington and more than 50 per cent. of all DSDA deliveries will be from this new facility. This will provide the opportunity for material to be delivered direct rather than through an RDC, and for flexible decisions to be taken as to whether an item is posted, handled by a parcel or pallet carrier, delivered direct, or delivered as part of a multiple delivery route.

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I recognise that this will not be a welcome prospect for those staff who stand to be affected. It is not possible to give an absolute assurance that compulsory redundancies can be avoided, although every effort will be made to do so. The MOD Outplacement Service (MODOPS) will be available to support staff affected by the closure, offering support with relocation and financial advice. Training will be available to assist staff with the transition to life in the private sector and services of the MOD Welfare organisation will also be available to help staff with personal circumstances.

Consultation with the trade unions has been completed, during which time a counter-proposal was received. However this was not operationally or financially viable. On this basis, I have decided to fully endorse the closures of the RDCs.

War Pensions Uprating 2008

The Parliamentary Under-Secretary of State for Defence (Derek Twigg): The new rates of war pensions and allowances proposed from April 2008 are set out in the tables below. The annual uprating of war pensions and allowances for 2008 will take place from the week beginning 7 April.

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War Pensions Rates
(Weekly rates unless otherwise shown)20072008


Disablement Pension (100% rates)

officer (£ per annum)



other ranks



Age allowances




over 50% but not over 70%



over 70% but not over 90%



over 90%



Disablement gratuity

specified minor injury (min.)



specified minor injury (max.)



unspecified minor injury (min.)



unspecified minor injury (max.)



Unemployability allowance




adult dependency increase



increase for first child



increase for subsequent children



Invalidity allowance

Higher rate



middle rate



lower rate



Constant attendance allowance

exceptional rate



intermediate rate



full day rate



Part-day rate



Comforts allowance

higher rate



lower rate



Mobility supplement



Allowance for lowered standard of occupation (maximum)



Therapeutic earnings limit



Exceptionally severe disablement allowance



Severe disablement occupational allowance



Clothing allowance (£ per annum)



Education allowance (£ per annum) (max)



Widow(er)s - private



Widow(er)s' (other ranks)



Widow(er) - Officer (£ p.a. max)



Childless widow(er)s' u-40 (other ranks)



Childless widow(er)s' u-40 (Officer max.£s pa)



Supplementary Pension



Age allowance

(a) age 65 to 69



(b) age 70 to 79



(c) age 80 and over



Children's allowance

Increase for first child



Increase for subsequent children



Orphan's pension

Increase for first child



Increase for subsequent children



Unmarried dependant living as spouse (max)



Rent allowance (maximum)



Adult orphan's pension (maximum)



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