Written Ministerial Statements
Thursday 20 November 2008
Business, Enterprise and Regulatory Reform
Transport, Telecommunications and Energy Council
The Minister for Trade, Investment and Consumer Affairs (Mr. Gareth Thomas): Today my noble Friend the Parliamentary Under-Secretary of State for Communications, Technology and Broadcasting made the following statement:
I am pleased to confirm the agenda items for which BERR has responsibility at the forthcoming Transport, Telecommunications and Energy Council (Telecoms Council) in Brussels on 27 November 2008.
The first substantive item on the agenda is the review of the EU regulatory framework for electronic communications networks and services, which is on the agenda for a political agreement. The French presidency is working hard to achieve agreement on the three elements of this package: amending the directives on a common regulatory framework, authorisation and access—often referred to as the Better Regulation directive; amending the directives on universal service, users rights and e-privacy—often referred to as the citizens’ directive; and the regulation on the new European Electronic Communications Market Authority.
Although at present we still expect a political agreement to be reached on the whole package, there remains some doubt whether concerns by some member states on individual issues, such as on functional separation, may lead to the better regulation package to be rejected. There is more confidence on the citizens’ rights package and on the authority, where there have been significant improvements over the last few months better reflecting UK objectives. The proposed authority no longer has a role in spectrum management or in security and is a smaller, more efficient and independent body intended to be a disseminator of best practice to the 27 national regulatory authorities (NRAs). However, the Commission continues to propose the creation of an agency, giving rise to concerns that it would not be properly independent, and would risk becoming bureaucratic and inefficient. This is unacceptable to the UK, and I shall confirm this point.
The French presidency compromise text proposes the formalisation of the European Regulators’ Group (ERG) in Community law and supported by a separate secretariat. This is much more concordant with UK objectives for the creation of a small and efficient source of independent regulatory expertise which would not be subject to external influence. I will consequently be strongly supporting the presidency compromise text at the Council, and urging other member states to do the same.
The citizens’ directive has also improved; it no longer risks extending privacy obligations on to private networks, includes greater powers for NRAs to protect citizens and consumers and contains more robust protection for disabled users.
The Better Regulation directive is where the French presidency is focusing its last minute efforts, and the UK is also been working extremely hard to realise our own objectives. However, given the potential this package has to deliver real economic benefits to every European citizen and enterprise, and the time pressures we are under to reach an agreement before the current term of the European Parliament expires, there is a real need to balance our outstanding concerns against the need to give the presidency—now the French, shortly to be the Czech Republic—the necessary mandate to negotiate of behalf of all member states with the European Parliament and the European Commission.
In my interventions on the regulatory framework I intend, while congratulating the presidency on its hard work and achievement in bringing forward these near agreed texts, to express concern that on several substantive issues the approach being taken is neither conducive to enhanced competition across the European Union nor better regulation. I will particularly highlight, though this will depend on the exact detail in the final texts, our disappointment that there is not more robust language on the political independence of regulators, the liberalisation of spectrum or on functional separation as an access remedy.
This package is subject to co-decision, so the final text voted upon at the Council will have to be negotiated and compromised with the European Parliament, who share many of the UK’s objectives. The Commission, who will also have a key role in these co-decision negotiations, also share many of the UK objectives.
I will endeavour to keep you informed at these key stages, but subject to developments over the coming days I am likely to reserve the UK position on these elements of the package, pending a better outcome in the forthcoming discussions with the European Parliament and the European Commission.
Following this, there will be discussion on the general approach of proposals for amending the regulations on roaming on public telephone networks.
I fully support the aims and objectives of the proposal, with its rationale of consumer benefit and protection. I consider that the proposed price caps for voice calls and SMS messages strike the right balance between the consumer’s interest in low prices, and the operators’ legitimate aspirations for the profit margins which are the foundation for sustainable and innovative services. It should be noted that these caps are concordant with those considered appropriate by both the European Regulators’ Group and our own telecoms regulator, OFCOM.
I also concur with the need to avoid ‘bill shock’ for those downloading data on their mobiles when abroad, albeit tempered by the need to ensure that transparency, meaning the customer being aware of what they might be billed, can be provided without disproportionate cost or complexity. The UK has consequently submitted alternative text introducing a flat-rate charge which we consider will reduce the need for costly and possibly ineffective systems changes. I will be speaking in support of this approach and the rationale for it.
I also agree with the Commission that the rapid evolution of the data market, coupled with the existence of alternative sources of supply—such as wi-fi hotspots—means that it would be inappropriate to consider retail price controls for data at this stage. I will be speaking in support of the Commission on this point at Council, should others move to include retail price controls for data.
At the House of Lords’ Scrutiny Committee hearing of 17 November 2008, I explained some of the history of the roaming regulation and that the national regulatory authorities had requested that the Commission act to address a cross-border issue that could not be tackled effectively by individual member states. I also explained why it was better to set a maximum price cap rather than an average one, as the latter would reduce the possibility of competitive pricing between suppliers. There are also practical difficulties associated with introducing an average cap as price controls effectively take money out of the market that could be used for investment and could lead to higher prices. We also discussed the possible ‘waterbed’ effect of roaming caps; and although the evidence is largely anecdotal at the moment, we have seen some increases in pre-pay domestic rates, but elsewhere competition has limited price increases. We will, of course, continue to monitor this situation.
This will be followed by a presentation from the Commission and discussion on second periodic review of the scope of universal services in communications networks. I am pleased that this is on the agenda as I recently deposited an explanatory memorandum about this communication. As Members will be aware, I have welcomed the initialisation of this debate on broadband as a universal service given the importance of broadband in the Digital Britain work the Department is engaged on. I am confident the debate will identify the best way forward for the European Union on this important issue, not least on such aspects of funding
options, whether there should be a minimum capacity for all citizens and how member states should avoid anticompetitive situations.
During the Council debate I intend to intervene briefly to welcome the Commission communication and to outline some of the thinking taking place in the UK around the importance of broadband as an economic and social driver.
The final item of substance is adoption of the Council conclusions on future networks and the internet. The UK objective for this agenda item is to ensure that the Commission proposals provide a suitable basis for ensuring that the future internet remains open and hence innovative and friendly. It is also necessary to set a marker ensuring that the six forthcoming proposals highlighted in the conclusions of the communication remain technology and service neutral.
I believe that it is important to engage all the relevant stakeholders in the broadband, next generation network debate and to examine all the relevant areas including private investment, economic and social value, regulation and the public sector. Currently I am of the view that roll-out of NGNs in the UK should be private sector led and that public sector should limit its interventions to addressing clear market failures.
On the ‘internet of things’ I believe that the seamless connection of devices and sensors to everyday items through fixed and wireless networks will have a profound impact on society in the future, particularly in the way that they interact with individuals, businesses and governmental organisations. I agree with the European Commission that security and privacy issues are of prime importance and that it is imperative that these features are designed into systems and infrastructures, and thus EU research and development funding should be directed into this area.
I do not plan to intervene in any debate there might be on this item unless there are any attempts to unpick the conclusions.
Treasury
European Union Emissions Trading Scheme
The Exchequer Secretary to the Treasury (Angela Eagle): Yesterday morning the Government successfully held the UK’s first auction of carbon allowances as part of phase II of the EU’s emissions trading scheme (ETS). The auction was also the first of its kind to take place in Europe, demonstrating the UK’s continuing leadership in the battle against dangerous climate change. Four million allowances were offered for sale and sold at a total value of £54 million excluding VAT, or £13.60 per allowance. The auction was over four times oversubscribed demonstrating that the auction was competitive and that it attracted a significant amount of market interest.
The ETS puts a cap on emissions from around 12,000 installations throughout the EU—including in the energy and heavy industrial sectors, which are collectively responsible for close to half of the EU’s emissions of carbon dioxide. Any of these installations that exceed its emissions cap will need to purchase the appropriate number of allowances.
Through auctions and the creation of a secondary market for allowances, the ETS is sending clear price signals. The carbon price will encourage Governments, businesses and individuals to factor the costs of emissions into their spending and investment decisions. A price for carbon creates an incentive to find products and processes that produce less carbon to achieve the same outcomes, which in turn encourages investment in the research and development of low carbon technologies.
Next month’s international climate change negotiations in Poznan present an opportunity for Governments around the world to consider innovative approaches like the ETS as means to counter the dangers of climate change. Norway, Liechtenstein and Iceland have already joined the ETS and work on other “cap and trade” schemes is under way in the USA, Australia, New Zealand, and Japan. The ETS is well positioned to form the basis of a global carbon market in the future.
During 2009 the Government plan to auction a further 25 million allowances. Dates for future auctions will be announced in due course.
Children, Schools and Families
Learner Support Schemes
The Minister for Schools and Learners (Jim Knight): Ensuring learners are able to access education and training post-16 is a key priority for this Government. I would like to update the House on the current situation in regard to the delivery of Education Maintenance Allowances (EMAs).
There have been processing and other related problems since Liberata won the contract to deliver helpline, assessment and payment functions for EMA and other learner support schemes in July 2007. The Learning and Skills Council (LSC) has been closely monitoring the situation and has been regularly providing me with updates, which I have shared with the Children, Schools and Families Select Committee.
As of Tuesday 18 November, 794,655 applications—237,826 more than 8 October, the date of my previous letter—have been processed. This has resulted in 485,396 young people—201,516 more than at that time—receiving notifications that they are entitled to EMAs, which means they can begin claiming the allowance. There are currently 12,016 applications in the process of being finalised—down from 111,000 on 8 October.
Despite this progress, the LSC’s view has been that in order to preserve the best interests of learners, a change in contractor was necessary. The LSC has been in talks with Liberata about the future of the contract for over four weeks and yesterday informed me that they intend to discontinue the Liberata contract. I have been clear from the outset that these delays have been totally unacceptable and I therefore fully back the LSC’s decision to change contractor to Capita.
The transfer of the EMA helpline, processing and payment service from Liberata to Capita will take effect from Friday 28 November. With effect from that date, Capita will bring in a new senior management team to oversee the staff and operations in Coventry, Manchester and Darlington. The transfer will place us in a stronger position to fix the helpline and processing problems, enabling us to improve the future service for young people, colleges and learning providers.
The migration of the learner support service programme contract from Liberata will have resulted in Liberata losing future revenues of over £60 million over the remaining term of the contract. In addition, in addressing the issues caused by the failure of their proposed IT system, Liberata rightly took the decision to employ significant numbers of additional temporary staff to deal with the backlog in applications. In doing so they
have incurred extraordinary additional costs and it has been judged inappropriate to impose further additional penalties.
In order to ensure a smooth and orderly transition to a new service, the LSC has secured the transfer of the interim payment service to the new service provider and the transfer of physical IT assets and applications software at a cost of £4 million. The cost of this is significantly lower than the extraordinary additional costs which Liberata has incurred.
These arrangements are within parameters approved by the Permanent Secretary in his principal accounting officer role, and by HM Treasury. The Permanent Secretary, in his principal accounting officer role, has reassured me that this agreement represents value for money for the tax payer and protects the interests of learners.
The payments being made to young people will continue and during the transfer period, outstanding applications will continue to be processed. As I have made clear before, all delayed payments will be backdated in full.
Throughout this period of unacceptable delays, our main priority has been to ensure learners get their payments. I am confident that the new arrangements the LSC have put in place are the best way to improve EMA delivery.
I am placing in the Library of the House copies of correspondence from me to the Chairman of the Children, Schools and Families Select Committee, to me from Mark Haysom, Chief Executive of the LSC, as well as the relevant statements from Liberata, the LSC and the Department.
Home Department
Money Laundering and Terrorist Financing
The Parliamentary Under-Secretary of State for the Home Department (Mr. Alan Campbell): I have placed in the Library of the House the second annual report to Home Office and HM Treasury Ministers on the Suspicious Activity Reporting (SAR) regime to combat money laundering and terrorist financing. The reporting system is a key element in the United Kingdom’s defences against money laundering and terrorist financing.
The report has been prepared by multi-agency Committee, under the chairmanship of the Serious Organised Crime Agency (SOCA), which includes the financial services sector, police, other law enforcement agencies, and the Financial Services Authority. As the report notes, awareness of the value of financial intelligence in fighting crime and countering terrorism continues to rise across the international community.
The Government welcome the steady progress that SOCA and the other participants have made to ensure that the reporting system is operating so as to help deter, detect and disrupt those involved in these crimes and in holding them to account. It is important to build on this progress by further improvements, including in the use made of the reports by law enforcement agencies.
The overall goal is a SARs system that addresses the threats to the UK from crime and terrorism, contributes to the reduction of harm and the recovery of the proceeds of crime while minimising the costs of compliance to industry and others.
Minorirty Ethnic Recruitment, Retention and Progression (Police Service)
The Secretary of State for the Home Department (Jacqui Smith): On 6 October, I asked the Minister for Policing, Security and Community Safety to undertake an assessment of minority ethnic recruitment, retention and progression nationally across the police service. This assessment gave us the opportunity to consider the recent cases as well as look to the future of minority ethnic recruitment, retention and progression when current race employment targets for the police service, set in 1999, come to an end in 2009.
The assessment is now complete and I am grateful to the Association of Chief Police Officers (ACPO), the Association of Police Authorities (APA), police staff associations, the national police diversity staff support associations, the Post-Lawrence Project Group—including Doreen Lawrence—and others who contributed to this work.
The assessment confirms that the police service has come a long way and made good progress since the Stephen Lawrence Inquiry report (1999) by Sir William Macpherson and the Secret Policeman Programme (2003). Over the years we have seen positive changes in relation to race equality which have also benefited other minority groups. These positive changes have been due to the commitment of many police officers and police staff and prominent community members such as Doreen Lawrence and other independent chairs of the Post-Lawrence Project Groups. It is important to emphasise that we are not starting from “point zero” on equality. A lot has been achieved but we should not be complacent and recognise that we still have a lot to do.
Copies of the assessment paper will be placed in the Library of the House today.
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