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Written Ministerial Statements

Tuesday 27 January 2009


Finance Bill (Manufactured Interest)

The Financial Secretary to the Treasury (Mr. Stephen Timms): Legislation will be introduced in the next Finance Bill to prevent a recent decision of the High Court from affecting the tax treatment of real payments of manufactured interest. The legislation will ensure that tax treatment follows the treatment of the payments in company accounts prepared in accordance with generally accepted accounting practice (“GAAP”).

The recent High Court case involved the tax treatment of deemed manufactured payments, but the decision cast doubt on the tax treatment of real manufactured payments for both payers and recipients. The decision could result in payers being able to claim additional deductions for tax purposes that bear no relation to their economic position, and recipients being taxable on amounts in excess of their actual income.

Before the High Court decision, the tax treatment of real payments of manufactured interest had never been questioned. To ensure the decision does not have adverse consequences either for the Exchequer or for taxpayers this legislation will apply to past payments relating to open accounting periods as well as to payments made on or after today, and will ensure that existing practice is followed.

The legislation will not apply to deemed manufactured interest (which was the subject of the High Court case) treated as paid before today. Unlike actual payments, the tax treatment of deemed payments has been in doubt for some time. Accordingly for deemed payments the legislation will apply only to payments made on or after today.

A copy of the draft legislation together with draft explanatory notes and full background material will be published today on HMRC’s website.


Military Training (Dartmoor National Park)

The Parliamentary Under-Secretary of State for Defence (Mr. Kevan Jones): The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Ogmore (Huw Irranca-Davies) and I wish to make the following statement:

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Energy and Climate Change

New Nuclear Power Stations

The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): On 22 July 2008, Official Report, column 83WS, the then then Secretary of State for the Department of Business, Enterprise and Regulatory Reform, my right hon. Friend the Member for Barrow and Furness (Mr. Hutton) announced the publication of a consultation document on the Strategic Siting Assessment process and criteria for new nuclear power stations and an accompanying environmental study.

A year on from the Nuclear White Paper I am pleased to announce today the publication of the Government response to the consultation and study, which sets out the process for taking forward the siting of new nuclear power stations.

The Strategic Siting Assessment (SSA) is a process for identifying and assessing sites that are strategically suitable for the deployment of new nuclear power stations by the end of 2025. The SSA will provide an opportunity for the Government to assess the suitability of nominated sites at the national level. Sites that have been assessed as being suitable will be listed on the Nuclear National
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Policy Statement (NPS), which will provide guidance to the forthcoming Infrastructure Planning Commission (IPC).

The Government response contains an outline of the key themes that arose from the consultation on the SSA process and criteria, and the environmental study in relation to the criteria, together with the Government’s response and the finalised criteria. It also summarises comments on the habitats screening report and the Government’s response. The screening report was not the subject of public consultation. Views were instead sought from interested parties.

In response to points made in the consultation, the Government response contains guidance to nominators who wish to nominate a site to be assessed within the SSA, and a nomination form. Nominations to the SSA are due by 31 March 2009.

The Government will publish nominations and the public will have a month to give the Government their initial comments, prior and in addition to public consultation later in the year.

The assessment will be made by Government using the advice of specialists including regulators and others. The output of the SSA will be a draft list of the sites that Government have assessed to be strategically suitable, and these will form a key component of the draft Nuclear NPS, which will undergo public consultation and parliamentary scrutiny.

Today’s announcement underlines the Government’s commitment to the development of new nuclear capacity and maintains the necessary momentum towards our climate change and energy security goals.

Copies of the Government response will be placed in the Libraries of both Houses immediately following publication.

Nuclear Regulatory Review

The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): In January 2008, following publication of the White Paper on Nuclear Power the Government asked Dr. Tim Stone to conduct a review of nuclear regulation. Dr. Stone has now reported his findings, and today, 27 January 2009, we publish the recommendations of his review and the Government’s response.

Dr. Stone agrees with the UN’s International Atomic Energy Agency’s conclusion that the UK’s nuclear regulatory arrangements are mature and transparent, with highly trained and experienced inspectors. However, in the context of a rapidly changing nuclear environment, Dr. Stone was asked to provide a comprehensive assessment of the nuclear regulators’ immediate and longer-term needs. He recommends that in the short-term that the Health and Safety Executive’s (HSE) Nuclear Installations Inspectorate (NII) should have greater ability to recruit effectively in order to meet the short-term challenges of new build, such as generic design assessment, alongside the work on existing installations. Dr. Stone recommends that in the medium term, the NII and the wider nuclear directorate of the HSE be structured to give it greater financial and organisational flexibility so that it can remain a world-class regulator.

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In response to Dr. Stone’s proposals, the Department of Energy and Climate Change and the Department for Work and Pensions recognise that the NII, in order to meet its challenges, will need additional resources to boost recruitment and retention of staff and the recommendations are targeted at improving this. We have worked with colleagues at the Department for Work and Pensions, and at HM Treasury, to put the appropriate facilities in place to ensure that effective recruitment and retention measures can be taken. The Government also recognise that the organisation needs greater operational and financial flexibility within the auspices of the HSE to meet the challenges of nuclear regulation into the future. To this effect, the Government expect to bring forward legislative proposals that will address these issues.

Copies of the Dr. Stone’s summary recommendations and the Government’s response are today placed in the Libraries of both Houses.

Foreign and Commonwealth Office

Prospects for the European Union in 2009

The Minister for Europe (Caroline Flint): I will today lay before the House the Foreign and Commonwealth Office Command Paper on Prospects for the European Union in 2009. Copies will be placed in the Library of the House. Additional copies can also be obtained from the Vote Office and the Printed Paper Office. A copy will also be available on the Foreign and Commonwealth Office website (www.fco.gov.uk).

This Command Paper provides an overview of the priorities of the Czech presidency for the first half of 2009, as set out in their Work Programme, which is available at: www.eu2009.cz. Under the overarching theme of “Europe without Barriers”, the Czech presidency will focus on three key priorities: the economy, energy policy and “Europe in the world”.

The top priority for the Czech presidency is the EU’s response to the financial crisis. The presidency will promote market liberalisation as a fundamental means of boosting growth and competitiveness and thereby meeting the challenges of the economic downturn. The UK will work closely with the presidency to drive forward timely and targeted measures to lessen the impact of the downturn on families and businesses across Europe. A concerted and co-ordinated European approach will deliver a far greater impact on jobs and growth in each country than that which any country could achieve by acting alone.

In order to develop the foundations for the EU’s long-term energy security, the UK will work with the Czech presidency to hasten progress towards a well functioning internal market, the diversification of supply and the promotion of energy efficiency. Following the historic agreement on the 2020 climate package at the December European Council 2008, the presidency will also maintain the momentum on international negotiations in the run up to the United Nations framework convention on climate change in Copenhagen in December 2009.

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The Czech presidency has a varied external agenda, including a strong focus on the eastern partnership and the western Balkans. The UK fully supports the presidency in its commitment to strengthen co-operation between the EU and eastern Europe and the Caucasus. The presidency has also committed to holding summits with key partners including the US and Pakistan. The UK will be working closely with the Czech Republic to carry forward agreed priorities with these and other key international partners.



The Minister of State, Department of Health (Phil Hope): I wrote to a number of hon. Members in response to their letters regarding the Autism Bill. In my response, I set out details of section 64 funding my Department has provided for the National Autistic Society’s project “Brighter Horizons, Moving Towards Employment”. Funding has been committed over three years.

Due to an administrative error, I regret that the amount of funding was given incorrectly. The figures quoted in that letter should have read: £49,600 was provided in 2007-08, £50,500 will be provided in 2008-09, and £56,300 in 2009-10.

Personal Expenses Allowance

The Minister of State, Department of Health (Phil Hope): There have been calls by a number of organisations for us to significantly increase the level of the personal expenses allowance (PEA). The PEA is the amount that people whose care in a care home is arranged by a local authority are allowed to keep for personal expenditure on items not covered by the local authority contract.

The PEA was introduced in 1948 and since then successive Governments have taken steps to ensure it has maintained its value. We had undertaken to consult to seek views on whether the existing level of PEA is appropriate, in order to inform consideration of the future of the level of the PEA.

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My priority is to transform the adult social care system to ensure people have greater independence, choice and control over their lives. In December 2007 my right hon. Friend the Secretary of State for Health announced an extra £520 million of ring-fenced funding to transform social care over the next three years through the introduction of personal care budgets.

My aim is to focus finite social care resources on measures to extend services, improve the quality of care, and protect service users from abuse and neglect because these are what we see as the greater priorities. Work we have undertaken, so far, to achieve this includes:

The need to use finite resources to maximum benefit has removed any possibility of an increase to PEA of more than the annual uprating in line with average earnings.

I have, therefore, decided not to consult on the level of the PEA. A part 1 equality impact assessment relating to this decision has been placed in the Library and is available at: www.dh.gov.uk/en/Managingyourorganisation/ Financeandplanning/Residentialcare/index.htm

We are committed to reforming the care and support system. The forthcoming Green Paper on the future of care and support will consider how care should be funded in the future; some different systems for funding and delivery may not include the need for a PEA.

The estimated cost of raising PEA to £40 a week, as some organisations are calling for, is £250 million pounds a year. None of this extra expenditure would increase the availability choice or quality of care services or support the transformation of adult social care provision which must be our priority for the future.

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