14 Oct 2008 : Column 33WS

14 Oct 2008 : Column 33WS

Written Ministerial Statements

Tuesday 14 October 2008


2008-09 Debt Management Remit to Facilitate Bank Recapitalisation (Revision)

The Economic Secretary to the Treasury (Ian Pearson): I am today revising the Debt Management Office’s (DMO) 2008-09 financing remit to raise £37 billion to facilitate bank recapitalisation. The £37 billion will be raised through:

The planned increase in gilt sales will be split by maturity/type as follows:

Seven additional gilt auctions will be scheduled, five of short-dated and two of medium-dated conventional gilts. The DMO has committed not to add any further gilt auctions in the third quarter of this financial year in the event of a further remit revision in the 2008-09 pre-Budget report.

The maximum size of conventional gilt auctions will be increased from £4 billion to £5 billion (cash). The revised gilt auction calendar to the end of 2008 is shown below.

The DMO also plans to supplement sales at auctions with a number of sales of gilts by mini-tenders, which are operations conducted directly with Gilt-Edged Market Makers by the DMO’s dealing desk.

The first such operation in this programme is being announced today to take place on Monday 20 October 2008, for £1 billion (nominal) of 4 per cent. Treasury Stock 2009, for settlement on Tuesday 21 October 2008.

Other mini-tender operations are planned for 41/4 per cent. Treasury Gilt 2055 in the week commencing 17 November, and for 11/4 Index-Linked Treasury Gilt 2055 in the weeks commencing 3 November and 1 December 2008.

14 Oct 2008 : Column 34WS
Gilt Auctions to End-2008 (£nom)

Currently ScheduledAdditional



4(1)/2 per cent. 2013 (£3.75bn)



41/4 per cent. 2011 (£4.75bn)



5 per cent. 2018 (£3bn)



New IL 2032



4 per cent. 2016



43/4 per cent. 2030



43/4 per cent. 2015



New December 2011



4(1)/2 per cent. 2019



03/4 per cent. IL 2047



5 per cent. 2012



41/4 per cent. 2049



New IL 2032



4(1)/2 per cent. 2013



New December 2011

This revision to the DMO’s remit does not take account of any other changes to the Government’s forecasts of the public finances. These forecasts will be updated in the pre-Budget report. An updated remit, incorporating the changes announced today, will be published, as usual, after the Chancellor’s statement.

This revision to the DMO’s financing remit is being made in accordance with paragraph 5.18 of the published remit which provides that:

Under the terms of its Operational Notice, the DMO is not obliged to give more than one hour’s notice of such an operation, but in this case, it is pre-committing to the week(s) in which the intended operations will take place, and also commits to give a minimum of 24 hours, notice of the actual size and timing of the planned tenders at the relevant time. Such decisions will be taken in the light of market feedback and conditions at the time.

Communities and Local Government

Local Authority Finances (Icelandic Bank Failures)

The Secretary of State for Communities and Local Government (Hazel Blears): A number of Icelandic banks went into administration in the middle of last week. It quickly became clear that many local authorities were among those who had deposits in those banks. The Government’s first priority has been to do everything we can to help local authorities, along with other creditors, get back the money which they had deposited in the banks. In parallel, my Department has been working closely with the Local Government Association to ensure that individual authorities who are experiencing severe short-term difficulty get assistance to help them through this period. We are doing this to protect individuals, communities and the local services on whom the most vulnerable people in our society depend.

We have put in place a five point plan:

Our guidance to local government on investments makes clear that “the general policy objective is that local authorities should invest prudently the surplus funds held on behalf of their communities”. It emphasises that “priority should be given to security and liquidity” and goes on to say that “it will be appropriate to seek the highest rate of return consistent with the proper levels of security and liquidity”. This guidance appears to have been adhered to.

Many authorities have already publicly stated that any risk is not a threat to frontline services—but a small number of authorities may have specific problems, which is why we have put in place support and expertise which is immediately available. No local authority has told the LGA that it is in such short-term difficulty that it cannot pay the wages of its staff.

The Government and international partners have already acted to support stability of the banking system. The LGA and the Government encourage all councils to continue managing their finances prudently and sensibly in difficult times. My hon. Friend the Minister for policing met the Association of Police Authorities last week and my right hon. Friend the Home Secretary is keeping in close touch with the situation to ensure that the steps we are taking are applied as necessary to police authorities.

We will continue to monitor the situation closely and to take appropriate action.

This set of actions should be seen in the context of the wider action taken last week by my right hon. Friend, the Chancellor of the Exchequer. Acting on the advice of the Bank and the Financial Services Authority, my right hon. Friend the Chancellor of the Exchequer last week took action to protect the retail depositors banking subsidiary of Landsbanki and Kaupthing Singer and Friedlander, a UK-based banking subsidiary of Kaupthing Bank. Using powers under the Banking
14 Oct 2008 : Column 36WS
(Special Provisions) Act 2008, retail deposits in Heritable and Kaupthing, Singer and Friedlander have been transferred to ING Direct. Savers’ money is safe and secure. The Chancellor has also guaranteed retail deposits in Icesave in full. The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their Deposit Insurance Scheme to ensure that depositors in Icesave are paid back as quickly as possible. The Bank of England has also provided a short-term secured loan of up to £100 million to the London branch of Landsbanki, to help ensure an orderly wind-down and maximize the returns to UK creditors. The Government have also frozen the funds and financial assets held by Landsbanki. This is a precautionary measure to protect UK economic interests and we are continuing to work closely with the Icelandic authorities to ensure a fair process for UK creditors.

Sustainable Communities Act 2007

The Secretary of State for Communities and Local Government (Hazel Blears): I would like to inform Parliament that we have issued today an invitation to local authorities to make proposals which they consider would encourage the improvement of the economic, social or environmental well-being of local areas. The invitation falls under section 2(1) of the Sustainable Communities Act 2007. A copy of the invitation has been deposited in the Library of the House.

Regulations relating to the Act were made on 9 October 2008 and laid before Parliament on 13 October 2008. They come into force on 3 November 2008. The regulations include further details about the procedure to be followed in relation to the submission of proposals under the Act. In particular, they require a local authority, before making any proposal, to establish or recognise a panel of representatives, consult it about the proposal, and to have regard to any guidance issued. The SI number is 2008/2694.

Statutory guidance relating to the Act was published on 9 July 2008, as an annex to statutory guidance on the Local Government and Public Involvement in Health Act 2007 (Creating Strong, Safe and Prosperous Communities: Statutory Guidance).

The text of the formal invitation letter is as follows:

A copy of the letter from the Director for Empowerment at CLG has been deposited in the Library of the House.

Culture, Media and Sport

Digital Switchover

The Secretary of State for Culture, Media and Sport (Andy Burnham): Digital switchover is the process by which the UK’s analogue television signals are switched off and replaced by digital television signals. Switchover will take place ITV region by ITV region. The next region to switch will be Border in November 2008.

In order to help those who may otherwise have difficulty in switching to digital, the Government, with the BBC, have established the Digital Switchover Help Scheme which provides digital equipment, installation and after-care support to those who:

Next Section Index Home Page