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Written Ministerial Statements

Thursday 17 July 2008

Business, Enterprise and Regulatory Reform

Regulatory Impact Assessment Command Paper

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): The Government are committed to ensuring that regulations are necessary, give effective protection, balance cost and risk, are fair and command public confidence.

In accordance with this, we require Departments to produce and publish (regulatory) impact assessments for all regulatory proposals likely to have an impact on business, charities or voluntary bodies and the public sector.

I have today presented to Parliament a Command Paper listing impact assessments published between 1 July 2007 and 31 March 2008.

Copies have been placed in the Libraries of the House for the reference of members and will be available in the Vote Office.

Government have now launched the impact assessment library, a central website that ensures increased transparency and accessibility to the analysis underpinning the Government’s decision to regulate. The impact assessment library can be found at www.ialibrary.berr.gov.uk.

As a result of the launch of the impact assessment library, this will be the last Command Paper published providing information on final impact assessments.


National Statistics Annual Report 2007-08

The Exchequer Secretary to the Treasury (Angela Eagle): The National Statistics annual report for 2007-08 is being published and laid before Parliament today. Copies are available in the Library of the House and can be accessed on the National Statistics web site.

Tax and Benefit Reference Manual 2008-09

The Financial Secretary to the Treasury (Jane Kennedy): Copies of the 2008-09 edition of the Tax Benefit Reference Manual (TBRM) are today being deposited in the Libraries of both Houses.

HM Treasury publishes the TBRM annually. It is a technical manual detailing the tax and benefit system, describing both the current and historic regimes.

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EU Funds (Consolidated Statement)

The Economic Secretary to the Treasury (Kitty Ussher): The Government announced in November 2006 that, as part of its work to improve accountability for EU funds across the EU, HM Treasury would prepare an annual consolidated statement, audited by the NAO, on the use of such funds in the United Kingdom. We are today laying before Parliament the first of these statements, along with the Comptroller and Auditor General’s (C&AG) audit opinion and report.

The purpose of this arrangement is to strengthen the audit and parliamentary scrutiny of the UK’s use of EU funds and help detect any weaknesses in the UK’s management of these funds so that these can be more effectively and rapidly tackled. The statement and C&AG’s first report sets an excellent basis for doing this.

The C&AG’s positive opinion on regularity clearly shows that the management of EU funds by UK authorities during the period covered by the statement has been sound and that there has be no evidence of material irregularity in the payments made to beneficiaries. The Government welcome this finding, as providing assurance on the management of EU funds in the UK was one of the statement’s key objectives.

The C&AG’s limitation of scope does make it clear that more needs to be done to improve the consistency of the recording and the accounting of EU funding by UK central government bodies. The Government are working to ensure these issues are addressed. In particular, improved guidance is being developed so that all future EU transactions and balances are recorded consistently and separately in the accounts of all the relevant entities. The actions taken this year will be the first in a rolling programme of improvement in this area.

This statement and the improvements that result from it will be important in building momentum for similar action to be taken by our EU partners. Such action is critical, as a positive “statement of assurance” from the European Court of Auditors on the reliability of the EU’s accounts will only ever be obtained if measures to improve the management of agricultural and structural funds are taken by member states as well as the Commission.

In this context, the Government warmly welcome the statements that have been published by the Dutch Finance Ministry and the Danish National Audit Office, as well the Swedish initiative to publish a statement in the spring of next year. In time, the UK hopes to welcome similar reports on the use of EU funds from other member states.

The Government hope this statement and the C&AG’s audit opinion will be helpful to the European Court of Auditors and the Commission when they are performing their own audits and controls. I will be sending copies of this statement to both institutions, as well as to my counterparts in other member states.

It is crucial that EU taxpayers are given the necessary assurance that EU money is being spent correctly. The UK’s initiative to publish this consolidated statement on its use of EU funds will make a positive contribution to ensuring this is the case. I will continue to work to encourage my counterparts in other member states to show a similar degree of commitment to providing such an assurance.

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Free Cash Machines (Low-income Areas)

The Economic Secretary to the Treasury (Kitty Ussher): Following the March 2005 Treasury Committee report on ATM (Automatic Teller Machine) charging, the Treasury invited the chairman of the Treasury Select Committee, the right hon. Member for West Dunbartonshire (John McFall), to chair a Working Group on ATMs to take forward work on key issues. The Working Group, which included banks, independent ATM operators and consumer groups, published its report on 13 December 2006.

The Working Group announced an agreement to provide around 600 new free cash machines across 1,707 target low-income areas that it identified as lacking convenient access to these machines. To achieve this, a market-based financial incentive—known as a “financial inclusion premium”—was introduced, to encourage ATM operators to place or retain free ATMs in deprived areas with a low expected volume of transactions. The Working Group also agreed to implement improved transparency rules for charging cash machines. Since publication of the Working Group report, LINK has assessed around 10 per cent. of the identified low-income areas as unsuitable for an ATM location as there is no centre of population.

The Government are pleased to report that the industry has, over the 18 months following publication of the Working Group’s report, made excellent progress towards its goals of placing around 600 non-charging machines in low-income areas across the UK, with around 2 million individuals on low incomes standing to benefit.

As of 30 June 2008, sites for 562 of the 600 new ATMs required have been identified. Of these, 419 new free machines are already in use and issuing cash to the public. Some 74 per cent. of these ATMs that are based in the target deprived areas receive the “financial inclusion premium”. Encouragingly, nine of these new cash machines have proved so popular that their level of withdrawals means that they have now graduated from the “financial inclusion premium” scheme.

Banks, building societies and independent ATM operators have all contributed new free-to-use cash machines; independent ATM operators have provided or are in the process of supplying around 35 per cent. of the confirmed new non-charging ATMs. The UK ATM network, LINK, is continuing to work with its member banks and ATM operators to identify suitable sites in the remaining target areas, and is engaging closely in this exercise with Members of Parliament, local authorities, consumer councils and retailers.

The benefits in terms of financial inclusion are clear. Data from LINK suggest that the new ATMs currently in operation or under contract will enable almost 1.3 million residents in the target low-income areas to access cash more conveniently and manage their money more effectively.

In terms of improved transparency, operators of cash machines that charge users for withdrawals and that can upload screens remotely, have met the end-June 2007 deadline to improve the onscreen standards of “at a glance” signage. This means that it is clear to a consumer when a charge is applied when withdrawing cash. Good progress was also made by operators in enhancing external signage by end December 2007.

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The Government are encouraged by the substantial progress achieved, and would like to take this opportunity to thank all of those involved in extending free access to cash to those who need it the most.

Full details about progress made is available on the LINK Internet

website at: http://www.link.co.uk/atm/access_to_cash _progress/index.html

I will be issuing a final statement on the progress stemming from this initiative this December.

Issuer Liability

The Economic Secretary to the Treasury (Kitty Ussher): The Treasury is today publishing “Extension of the Statutory Regime for Issuer Liability”. This sets out the Government’s response to the Davies review of Issuer Liability and contains proposals to extend the statutory civil liability regime for issuer misstatements to the market, established in section 90A of the Financial Services and Markets Act 2000.

Copies have been placed in the Library of the House.

HM Revenue and Customs (Office Reorganisation)

The Financial Secretary to the Treasury (Jane Kennedy): HM Revenue and Customs (HMRC) is today publishing the outcomes of a review of HMRC office accommodation housing around 7,500 staff outside its urban centres in the South East, East and West Midlands and North East regions.

These decisions are the latest to emerge from a nationwide series of reviews started in 2006 and designed to create the future shape of the Department. HMRC has engaged widely with trade unions, MPs, local authorities and a range of customer groups as well as with their own employees.

These have not been easy decisions. However, the overriding consideration has to be the Department’s need to address new and challenging customer demands by restructuring its business and estate in the most effective and efficient way possible.

Between now and 2011, HMRC plans to withdraw from locations as circumstances allow and at a pace which enables it to maintain and improve customer services.

All enquiry centres where customers can walk into an office and ask for assistance will remain in their current location or nearby.

Details of the decisions, impact assessments and equality impact assessments will be published on the HMRC website today and MPs will receive email confirmation of decisions relevant to their constituency along with copies of related assessments.


The Chancellor of the Exchequer (Mr. Alistair Darling): The Economic and Financial Affairs Council was held in Brussels on 8 July 2008. I attended for the UK. Items on the agenda were as follows:

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Presidency Work Programme

The French Presidency presented the ECOFIN work programme for the next six months followed by an exchange of views. As part of the agreed three-presidency approach, the French Presidency will begin the first stages of the common priorities agreed with the incoming Czech and Swedish Presidencies in 2009. These priorities include boosting confidence in the financial system, continuing the integration of the internal market, and responding to citizens’ concerns about the current economic situation. The UK supports the proposed work programme.

Implementation of the stability and growth pact

The Council adopted opinions on the updated stability programme for Belgium and the updated convergence programme for Poland. Ministers also agreed to a draft decision ending the excessive deficit procedure for Poland, repealing ECOFIN’s decision in 2004 noting the existence of an excessive Government deficit. In addition the Council agreed to a decision and recommendations under articles 104(6) and 104(7) of the EC treaty with regard to the UK, placing the UK in excessive deficit procedure.

Adoption of the euro by Slovakia

The Council adopted the legislative acts required for the adoption of the euro by Slovakia from January 2009, finalising the agreement at the June European Council, and adopted regulations for the conversion rate of 30.1260 Slovak korunas to the euro. The UK congratulates Slovakia on the substantial reforms made in order to meet the Maastricht criteria for entry into the single currency.

Oil price trends

Following the discussion at the June European Council, Ministers held an exchange of views on the situation in the oil and fuel markets and on the French Presidency work programme to prepare ECOFIN’s contribution to the October and December European Councils. This included reaching political agreement on the principle of weekly publication of oil stock information. The UK supports the work underway to better understand what is driving the development of oil prices under the guiding principles set out in the Manchester 2005 declaration on the need to avoid distortionary fiscal interventions in the oil markets.

Governance of the International Accounting Standards Board (IASB)

The Council welcomed the proposals by the International Accounting Standards Committee Foundation (IASCF) to enhance its governance structure and to improve the functioning of the IASB, and on that basis adopted conclusions that will be submitted as the European contribution to the public consultation on IASB. The UK supports the efforts to improve internal processes and governance within the IASB, principally through improving the oversight arrangements and the creation of a new monitoring board.

Financial markets: situation and implementation of the Council road map

The Commission presented the state of play on the October 2007 ECOFIN Council roadmap. Ministers agreed to conclusions calling for the fullest possible transparency in order to bring confidence to the market. Ministers also agreed conclusions supporting the need for a strengthened oversight regime for credit rating
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agencies, which will be based on Commission proposals to follow in the autumn. The UK continues to support work to improve the stability of financial markets, and will accordingly examine the Commission’s proposals in detail.

The Economic Secretary to the Treasury (Kitty Ussher): Budget ECOFIN will be held on 17 July in Brussels and the UK permanent representative will attend and represent the UK. Discussion will be on the preliminary draft budget for the European Communities for 2009 and the meeting will include conciliation with the European Parliament, during which Council and the European Parliament will discuss expenditure levels. Items on the agenda are as follows:

Equitable Life

The Economic Secretary to the Treasury (Kitty Ussher): The Parliamentary Ombudsman has today published the report of her investigation into the prudential regulation of the Equitable Life Assurance Society from 1988 to the end of November 2001.

The ombudsman’s investigation was launched in 2004 following the publication of Lord Penrose’s independent forensic investigation into the events at Equitable Life (HC 290). He concluded that Equitable Life’s own actions ultimately precipitated its financial difficulties in the summer of 2000.

The ombudsman has looked at the application of the now replaced prudential regulatory regime under the Insurance Companies Act 1982. Her investigation has covered issues of considerable factual and technical complexity.

Against this backdrop, it was necessary for the bodies subject to the ombudsman’s investigation to make detailed representations on a number of occasions throughout the investigation. Those representations were put forward at the ombudsman’s request to assist her review of the evidence. They highlighted substantive differences of view between the bodies and the ombudsman which she has responded to in the report published today.

The Government recognise that the ombudsman’s report raises issues of concern to all interested parties. The length and complexity of the report mean that the Government will need to consider the report carefully before giving their response to the House in the autumn.

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