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Written Ministerial Statements

Tuesday 9 February 2010

Treasury

Corporate Taxation

The Financial Secretary to the Treasury (Mr. Stephen Timms): The Government plan to introduce legislation to clarify the corporation tax treatment of manufactured payments received by companies in the course of certain sale and repurchase-"repo"-transactions. The amendment will ensure that manufactured payments must be taken into account in calculating profits chargeable to corporation tax, if they are taken into account in computing accounting profits.

The clarification follows a recent challenge to the repo legislation in Chapter 10 of Part 6 of the Corporation Tax Act 2009-the "repo" legislation-that manufactured payments received by companies may not have to be taken into account for tax purposes if the securities to which they relate are not recognised on the companies' balance sheets.

That challenge could result in companies seeking to deduct, for tax purposes, manufactured payments that have contributed to their accounting profits. By excluding the payments, the companies' taxable profits could be much lower than their actual profits. The Exchequer consequences could be very significant.

To ensure that there is no possibility of adverse consequences for the Exchequer, the proposed legislation will apply from 1 October 2007-the date the repo legislation was introduced-and will ensure that existing practice is followed and the previous general understanding of the tax position is maintained. The legislation cannot result in any company being charged tax on more than its actual profits but prevents the possibility of relief for artificial losses.

A copy of the draft legislation together with draft explanatory notes and full background material will be published today on HM Revenue and Customs website.

Double Taxation Agreement (United Kingdom and Georgia)

The Financial Secretary to the Treasury (Mr. Stephen Timms): A new protocol to the double taxation agreement with Georgia was signed on 3 February 2010. The text of the protocol has been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

United Kingdom Listing Authority

The Exchequer Secretary to the Treasury (Sarah McCarthy-Fry): The Treasury has published today the UKLA's annual objectives for 2010. The Financial Services Authority, acting in its role as the competent authority
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for listing, is referred to as the United Kingdom Listing Authority. Copies of the document have been deposited in the Libraries of the House.

Culture, Media and Sport

Television Product Placement

The Secretary of State for Culture, Media and Sport (Mr. Ben Bradshaw): I would like to set out the Government's plans for product placement on television.

I announced on 9 November 2009 that the Government had decided to consult again on this issue, and we did so between that date and 8 January this year. We had approximately 1,480 responses to this consultation. I am publishing these on my Department's website today and we will make a summary report of them available shortly.

As a result of this consultation the Government have concluded that we will be able to allow television product placement in a way which will provide meaningful commercial benefits to commercial television companies and programme makers while taking account of the legitimate concerns that have been expressed.

We have therefore decided to legislate to allow UK television companies to include product placement in programmes which they make or commission to appear in their schedules.

Adherence to our current position in which UK TV programme making cannot benefit at all from the income potentially to be generated by product placement would lead to continuing damage to its finances at a time when this crucial part of our creative industries needs all the support we can give it.

It has become the more important to make this move now that every other EU member state, with the sole current exception of Denmark, has either allowed television product placement already or has expressed a firm intention to do so. Not to do so would jeopardise the competitiveness of UK programme makers as against the rest of the EU, and this is something which we cannot afford to do.

UK audiences have been used to product placement in films and, subject to them not being unduly prominent, imported television programmes, especially from the United States, for many years. However, allowing television product placement in domestic UK programming will be an important departure. It is right for us to proceed with caution and in particular to be very careful about the types of product for which it is permitted.

Our legislation will therefore specify some important exceptions, in particular the prohibition of the placement of alcohol and foods and drinks high in fat, salt or sugar (HFSS foods). The Government also fully share the concerns that have been expressed about the potential impact of product placement on the editorial independence of broadcasters and viewers' trust in what they see on television. We believe that our proposals will safeguard these.

Legislation

The Government will lay regulations under section 2 of the European Communities Act 1972, giving legal effect to the requirements of the EU audiovisual media services directive on TV product placement. However, TV product placement will not become permissible immediately the regulations come into effect.


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Their effect will be to allow Ofcom to permit product placement under its code regulating the content of TV programmes, and Ofcom will need to run a public consultation on the detailed changes to this code before these can come into effect.

Only after that has happened, and Ofcom has amended its code, will it be possible for TV companies to show programmes which they have made or commissioned and which include product placement. We envisage that this stage would be reached later this year.

The EU directive requires that member states prohibit product placement but permits them to derogate from that in the four separate genres of "cinematographic works, films and series made for television or on-demand services, sports programmes, and light entertainment programmes". Our legislation would therefore follow this pattern of imposing an overall ban on product placement except in these four genres.

The legislation will not provide more precise definitions of these terms. Instead, it will allow Ofcom to intervene in the event that broadcasters unacceptably stretch the envelope and include product placement in programming which cannot properly be seen as falling into any of these permitted categories. The existing powers, including the code-making powers, which Ofcom have allow them to do that in an appropriate and effective way.

The responses to our consultation have confirmed that there is concern about the possibility of product placement in current affairs, consumer and religious programming. The Government share these concerns, since some programmes in these categories could be seen as falling into the "series" genre specified by the directive, and we have concluded that it is important that our legislation ensures that product placement is not allowed in them. It will therefore contain specific prohibitions to that effect.

News programmes and bulletins are not covered by the four genres of programme which the EU directive permits to contain product placement. Our legislation will therefore have the effect of preventing product placement in any TV news programming, as the directive requires.

Our legislation will not permit product placement in the BBC's licence fee funded services. This will continue to be prevented by the BBC's charter and its agreement with the Government.

Products

The directive prohibits the placement of two specific types of product, that is tobacco products (as well as any other placement by or on behalf of a company whose principal activity is the manufacture or sale of tobacco products) and prescription medicines. The Government have decided to move significantly beyond this. Our legislation will specifically prohibit the placement of products and services in the following categories:

In reaching this decision the Government have had the issue of potential effects on health and welfare, and especially children's health and welfare, particularly in
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mind. The directive contains a ban on product placement in "children's programmes", and our legislation will enact that. However, children's viewing is not confined to children's programmes.

An alternative to a ban on placement of HFSS foods and alcohol might have been restrictions of some kind on their placement in shows which have a large child audience, or which are shown before the watershed. But this would be complex to administer and would not provide the certainty which the Government seek.

In the circumstances we intend to legislate for a complete bar on placing these products. This is an important aspect of the cautious approach that we need to take.

Other safeguards

Our legislation will also, as required by the directive, specify that product placement should not affect editorial independence, be unduly prominent, or directly encourage purchase. Ofcom will have the task of policing adherence to these requirements.

Ofcom will also be able to set further conditions for ensuring editorial integrity, including in relation to the prominence of products which have been placed in a television programme. The directive requires that audiences are alerted to the presence of product placement in a programme by "signalling" at the beginning and end and after advertising breaks. The legislation will contain this requirement and it will be for Ofcom to determine, after their own consultation, how it is met.

The legislation will not affect requirements in respect of the presence of product placement in imported, non-EU, programmes which are transmitted by UK television broadcasters. This will continue to be permissible within the boundaries set by the directive, provided that it meets Ofcom's overall requirements about, in particular, the avoidance of undue prominence.

Defence

Search and Rescue Helicopter (Preferred Bidder)

The Parliamentary Under-Secretary of State for Defence (Mr. Quentin Davies): I am delighted to announce, together with the Parliamentary Under-Secretary of State, Department for Transport, my hon. Friend the Member for Gillingham (Paul Clark), that the Ministry of Defence and the Department for Transport have chosen the Soteria Consortium as the preferred bidder for the joint search and rescue helicopter project following a competition under the private finance initiative.

The Government are committed to sustaining the effectiveness and high standards of the United Kingdom search and rescue helicopter service, currently provided by the Ministry of Defence and the Maritime and Coastguard Agency. The new service, which is anticipated to begin with a phased introduction from 2012, will replace the existing Ministry of Defence helicopters at the end of their service life, and the Maritime and Coastguard Agency service contract when it comes up for renewal.


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The new service will bring together the Ministry of Defence and Maritime and Coastguard Agency search and rescue helicopter provision into one highly effective and harmonised service under one single contract. The entire fleet of modern helicopters, some 30 per cent. faster than the current Sea Kings, will be able to attend low-level overland night-time incidents, will have forward-looking infrared equipment and be fitted with fully integrated de-icing equipment for much improved performance in severe winter conditions, thus providing the UK with an excellent SAR helicopter service with the ability to save lives well into the future.

The service will continue to be managed jointly by the Ministry of Defence and the Maritime and Coastguard Agency and will retain a proportion of military aircrew alongside civilian aircrew trained to the same high standards.

We will now be working with the Soteria Consortium to finalise the contract, which we expect to award later in 2010.

Ministry of Defence (Science and Technology)

The Parliamentary Under-Secretary of State for Defence (Mr. Quentin Davies): I announce changes to the internal arrangements for formulating and delivering science and technology (S and T) to the UK armed forces. From 1 April 2010, the science innovation and technology (SIT) top level budget (TLB) within the Ministry of Defence will stand down. The task of setting MOD's S and T policy and strategy will move to the centre TLB under the direct control of the MOD chief scientific adviser. This will ensure that this key aspect of defence is at the heart of future policy and decision making.

The MOD will continue to look to the broadest possible supplier base for the delivery of the majority of its S and T requirements. Delivery will be supported by an enhanced defence science technology laboratory (DSTL) which will continue to be the MOD's in-house focus for S and T knowledge, skills and advice. Under the new structure, DSTL will also be responsible for the planning and delivery of the defence research programme. However, DSTL, as now, will only undertake research activity which, by its sensitive, operationally critical or international nature, should only be performed in Government.

These changes will enable a clearer organisational structure for defence S and T and will reduce overheads within defence S and T management to reinvest in research. As a consequence of these changes, around 100 posts will be removed from the current S and T organisational structure.

Implementation of these changes will be undertaken by a project team, reporting to the chief scientific adviser, which will work with the MOD trade unions to ensure delivery of defence S and T, particularly for operations, is unaffected.

Environment, Food and Rural Affairs

Pesticides (European Legislation)

The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dan Norris): I would like to announce the publication today of a public consultation on the implementation of two key pieces of European pesticides legislation.


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In September 2009 the European Council of Ministers agreed two new pieces of legislation: the Plant Protection Products Regulation(1) (the Regulation) and the Directive on the Sustainable Use of Pesticides(2) (The Directive). These are part of the EU's thematic strategy on pesticides which aims to minimise the risks to health and the environment from the use of pesticides.

This consultation is the first of a two-stage consultation process; its purpose is to seek views on the transposition of the Directive, and two measures relating to the provision of public information on pesticides under the Regulation. We are also seeking views on how the UK should use charging arrangements provided by this legislation and another regulation on maximum residue levels of pesticides in food and feed. The second stage will be to consult on the draft legislation transposing the Directive.

Sustainable Use Directive 2009/128/EC

This directive will need to be transposed and implemented by member states by November 2011. Its overall objective is to establish "... a framework to achieve a sustainable use of pesticides by reducing the risks and impacts of pesticide use on human health and the environment and promoting the use of integrated pest management and of alternative approaches or techniques such as non-chemical alternatives to pesticides".

Key features of the Directive include: the establishment of national action plans; compulsory testing of application equipment, certification of operators and distributors, and access to certification for advisors; a ban (subject to derogations) on aerial spraying; special measures to protect the aquatic environment, public spaces and conservation areas; minimising the risks to human health and the environment through handling, storage and disposal; and the promotion of low-input regimes, including integrated pest management.

Plant Protection Products Regulation (EC) No 1107/2009

The Regulation is essentially a revision of directive 91/414/EEC that currently governs the approvals regime for plant protection products, but with some new elements. The Regulation's overall objective is to "... lay down rules for the authorisation of plant protection products in commercial form and for their placing on the market, use and control within the Community [and] ... ensure a high level of protection of both human and animal health and the environment and to improve the functioning of the internal market through the harmonisation of the rules on the placing on the market of plant protection products including active substances, while improving agricultural production."

The Regulation updates the existing regime and aims to increase the level of protection for people and the environment as well as speeding up decision making and providing clearer rules. The majority of the Regulation is directly binding and is not therefore included in this consultation. There are, however, two discretionary provisions in the Regulation where we have undertaken to consult.

The two provisions are:


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