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Written Ministerial Statements

Thursday 19 November 2009


Tax Law Rewrite Project

The Financial Secretary to the Treasury (Mr. Stephen Timms): I am pleased to tell the House that today we are introducing the Corporation Tax Bill and the Taxation (International and Other Provisions) Bill. These two Bills complete a 13 year task of rewriting the majority of direct tax legislation for individuals and businesses that started in 1996. They are the Tax Law Rewrite project's final Bills and maintain the project's high standards in making tax legislation significantly easier to use. This would not have been possible without the expertise, time and commitment of all those involved in commenting on the provisions during consultation and I would like to thank them and the members of the Tax Law Rewrite project's steering and consultative committees for their invaluable help in making the project's work such a success.

The Bills were published in draft on 3 March 2009 for consultation and response documents reporting on the outcome of that consultation were published on 3 September this year.

The Corporation Tax Bill completes the rewrite of the main corporation tax provisions. The Taxation (International and Other Provisions) Bill rewrites a number of international tax provisions and also rewrites and relocates some provisions which would otherwise be left unhelpfully in the Income and Corporation Taxes Act 1988 or one of the Finance Acts. The scope of the Bills was agreed with the project's consultative and steering committees, which together include the main representative bodies and other users, and I am pleased by the wide support they have amongst the tax community. Like all previous Bills prepared by the project, they rewrite the law without changing its general effect. All the provisions have benefited from detailed consultation and the drafting style and structure is in line with that of the previous rewrite Bills.

Financial Services Compensation Scheme

The Economic Secretary to the Treasury (Ian Pearson): The Government are correcting an omission in section 214B of the Financial Services and Markets Act 2000 (FSMA), inserted by section 171 of the Banking Act 2009, relating to the calculation of the contribution of the Financial Services Compensation Scheme (FSCS) to Special Resolution Regime (SRR) costs. The necessary amendments are included in the Financial Services Bill but new regulations made under the revised power will have retrospective effect so they will take effect from today.

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In the event of a bank or building society ("an institution's") insolvency the FSCS provides statutory compensation to eligible depositors, up to a prescribed limit currently set (in rules made by the Financial Services Authority (FSA)) at £50,000. On paying the compensation, the FSCS takes over the depositors' claims against the estate of the insolvent institution. The FSCS is funded by levies on industry.

The SRR, established by part 1 of the Banking Act 2009, enables the authorities to resolve a failing institution, rather than allowing it to become insolvent. Under regulations made under section 214B FSMA, the FSCS may be required to contribute to the costs of the SRR, up to the net cost that the FSCS would have had to incur in a counterfactual scenario where the institution had instead gone into insolvency.

The change will mean that the Government can include the interest costs incurred in a resolution in the calculation of costs to which the FSCS may be required to contribute. It will also mean that the maximum contribution the FSCS can be required to make will include interest costs which the FSCS would have borne in the hypothetical scenario where the institution had gone into insolvency.

This will be achieved through the keeping of two separate accounts which record all costs (including interest), recoveries, and any interim contributions to SRR costs which the FSCS is required to make. The interest will be calculated by applying interest rates prescribed by the Treasury to the net balance in the relevant account at that time.

First, a real account will be kept which records all actual resolution outlays the authorities incur and all associated inflows (that is, the proceeds of the disposal of the assets of the failed institution and any interim contributions to SRR costs). Interest will be calculated periodically (on the net balance on the account) and added to the outlays.

Secondly, a hypothetical account will be kept based on the counterfactual scenario using data from the FSCS as to how much compensation would have been paid and when. Interest will be added to reflect the cost of the borrowing the FSCS would have needed to fund compensation payments. The timed recoveries that would have been received from the insolvent estate are to be determined by an independent valuer and will be included in the account and will reduce the balance on which interest is calculated. Any interim contributions the FSCS is required to make to the SRR and any compensation the FSCS has actually paid to depositors will also be included to reduce the balance on which interest is calculated.

When all recoveries have been made the real account will show the net cost of the resolution including interest incurred by that date; the hypothetical account will show the net cost of compensating depositors were the institution allowed to fail, including interest up to that date. After independent verification, the FSCS may be required to contribute up to the lower of the two accounts. Payment may be requested before all recoveries have been made based on an estimate of the payment required which, if included in the lower of the two accounts, would bring the balance when all recoveries have been made to zero. If, after all recoveries had been made, this turned out to be too large a contribution, the Treasury would make a balancing payment to the FSCS.

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Since this power is to have retrospective effect from today, this interest cost will be included in the two accounts kept in relation to Dunfermline Building Society from the date of this announcement. As announced on 30 March 2009 the FSCS will be required to pay a contribution to resolution costs at the end of the Dunfermline Building Society resolution; no interim contributions to SRR costs will be required.

The interest rate to be used on the two accounts in relation to Dunfermline Building Society is 4.50 per cent. This rate reflects the rate of interest the FSCS would have had to pay were the institution to become insolvent and funds were borrowed in order to make compensation payments to depositors, with recoveries made over an estimated five-year period.

Children, Schools and Families

Primary Schools

The Secretary of State for Children, Schools and Families (Ed Balls): Following the announcement in the Queen's speech yesterday about our intention to introduce a new primary national curriculum from September 2011, I am today publishing the details of what the primary curriculum will look like and announcing improved accountability arrangements for primary schools from 2010.

Primary Curriculum

The new national curriculum has been developed following an independent review of the primary curriculum by Sir Jim Rose. In January 2008, I asked Sir Jim to carry out the review, the first in 10 years, to update the primary curriculum and ensure that it is the very best it can be to meet the needs of all children in the 21st century. Sir Jim published his interim report in December 2008 and final report and draft new primary curriculum at the end of April 2009. In carrying out his review, Sir Jim drew on a wide range of responses including over 1,000 e-mails and letters, 50 primary school visits to see what is already happening in good schools to bring learning to life, and evidence of international best practice in other successful countries. He was supported by an advisory group made up of teachers and head teachers and an expert editorial group to write the new curriculum made up of subject experts.

His recommendations, which we accepted in full, were published and well received by the teaching profession in April this year. Underpinning Sir Jim's recommendations and the design of the new curriculum was attention to building on best practice, securing the essentials of literacy, numeracy, ICT capability and personal skills and development as part of every child's entitlement to a broad, balanced and well rounded primary education. And to achieve this through both rigorous and direct subject teaching and equally rigorous and enriching cross-curricular studies. To quote his final report:

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The proposed curriculum was the subject of extensive consultation over the summer by the Qualifications and Curriculum Development Agency (QCDA) and the results of that consultation are also being published today. QCDA received 1,057 responses to the general consultation survey; 507 responses from a consultation specifically designed for children; and 375 responses from a consultation specifically designed for parents. In addition, QCDA held 49 focus groups with head teachers, initial teacher training providers, local authorities, organisations concerned with inclusion issues, unions and professional representatives. They also ran a series of conferences with over 700 attendees made up of governors, education professionals, subject associations, teachers and head teachers.

The findings of the consultation showed high levels of support, between 70 per cent. and 80 per cent., for Sir Jim's main proposals. In addition:

In the light of such overwhelming support from teachers, parents and pupils, we have agreed with Sir Jim that the new primary national curriculum will be organised into six broad areas of learning, rather than the current subjects with less detailed programmes of learning to allow greater focus on strengthening literacy and numeracy skills and more time to study essential knowledge and skills in depth. There is also a greater emphasis on developing ICT capability and personal learning and thinking skills and smoothing transition to and from primary school.

The six areas of learning are:

While RE is not part of the statutory national curriculum it is no less important and we will be publishing an illustrative programme of learning alongside new non-statutory guidance in January.

Due to the positive response to Jim Rose's proposals, few changes have been made to the proposed areas of learning. However, after consulting with parents, teachers, the science community and other interested parties, pupils will be expected to explicitly cover evolution as part of their learning. Learning about evolution is an important part of science education, and pupils already learn about it at secondary school. The revised
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area of learning for historical, geographical and social understanding also confirms that learning about British history is a key feature.

The new primary national curriculum promotes:

It will also provide schools with a powerful tool to tackle continuous school improvement through self assessment, renewal, development and review of the effectiveness of their curriculum. The reduced prescription will encourage teachers to use their professional judgement and expertise to design the curriculum and allow schools to increase flexibility to tailor learning to their local circumstances and the needs of all children in their care.

Setting out the content of the new curriculum in three phases-early, middle, later primary-will aid planning for progression and help reduce the dip in performance in the middle years of primary school. It also recognises the opportunities that play-based learning offers for approaches into Key Stage 1 and encourages active learning in the whole primary phase.

Our new curriculum lies at the heart of our policies to raise standards and help every school to improve all of the time. It should help children become the very best they can be. We live in a changing world, and our new curriculum will ensure that our children are fully prepared for the opportunities and challenges of life in the 21st century.

Primary School Accountability

In May 2009, I accepted in full the recommendations of the expert group on assessment. They recommended that Key Stage 2 tests in English and mathematics should remain in place because they are vital for accountability and for providing information to parents about their child's progress.

They also made a number of recommendations to strengthen the quality of teacher assessment and said that:

In line with the expert group's recommendation that tests should remain in place, I have today approved QCDA's choice of preferred test operations contractor for delivering English and maths tests for 11-year-olds in 2010.

Following consultations with key stakeholders and with members of the expert group, I have also decided to take a further step in recognising the value of teachers' own assessments. From 2010, we will publish primary schools' teacher assessment data for pupils in year six in
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English, maths and science. This will be published alongside test data for English and maths in our achievement and attainment tables. It is also my intention, from 2011, to introduce a light touch local moderation process for this teacher assessment. We will consult with schools, local authorities, other stakeholders and the expert group on the introduction of a system that will best support teachers and strengthen their assessments.

I have always said that the assessment and testing system is not set in stone and that what is important is that it works best for pupils and schools and provides parents with the information that they need. To that end from 2011, we are introducing the new school report card, which will be underpinned by the new powers we are taking in the Bill. We are currently consulting with stakeholders on the school report card, and we will consider data on teacher assessments as part of that consultation. These changes taken together are further evidence of our commitment to strong accountability.

I am placing a copy of the correspondence between myself and the Chief Executive of the QCDA, Andrew Hall, concerning the contract for the 2010 tests in the Libraries of both Houses.


Service Personnel Command Paper (Annual Report)

The Secretary of State for Defence (Mr. Bob Ainsworth): I am today announcing the publication of the first annual report on the Service Personnel Command Paper, "The Nation's Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans". Copies are being placed in the Library of the House.

Our forces personnel are prepared to put their lives on the line in service of the country. They willingly accept restrictions to their lifestyle and the unique conditions of service that are required to do the job. But on becoming service personnel, they have not ceased to be citizens. Government have a moral obligation to ensure they are not disadvantaged as citizens by service life. The Service Personnel Command Paper was about meeting that obligation.

The measures we set out last year were well received by the services, by veterans groups and by the public at large. But we are determined to ensure that the commitment set out in that paper does not fade. One of the steps we took was to ask our external reference group (ERG) to monitor delivery, and to report annually. It is the first of these reports which is being published today.

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