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Written Ministerial Statements

Thursday 22 November 2012

Business, Innovation and Skills

Kay Review

The Secretary of State for Business, Innovation and Skills (Vince Cable): I would like to inform the House that the Government are today publishing their response to the “Kay Review of UK Equity Markets and Long-Term Decision Making”. Copies of the response will be placed in the Libraries of both Houses.

In his final report, Professor John Kay concluded that short-termism is a problem in UK equity markets, principally caused by a decline of trust and the presence of misaligned incentives in the investment chain. The report sets out a vision for reform of UK equity markets to ensure that they support long-term investment, constructive relationships between companies and in their investors, and sustainable value creation by British companies. It has been widely welcomed by business and the investment industry.

The Government response welcomes the Kay report—accepting Professor Kay’s analysis and conclusions. It endorses 10 principles for equity markets to which market practitioners, Government and regulatory authorities should have regard, and the report’s directions for market participants which follow from these principles.

The Government also commit to working with relevant regulatory authorities to explore further the Kay report’s directions for regulatory policy, to identify to what extent these directions are practical, what changes in the law or in regulation might therefore be appropriate, and how these can best be delivered.

The response sets out a number of steps the Government are taking to deliver on the Kay report’s detailed recommendations, including:

completing reform of corporate narrative reporting to be higher quality, simpler, more relevant to users and more focused on forward-looking strategy;

pursuing reforms to the EU transparency directive which will remove mandatory quarterly reporting;

promoting the revised edition of the stewardship code which emphasises that stewardship should encompass engagement by investors on company strategy.

Many of the report’s recommendations are for market participants—in particular companies and institutional investors. The Government agree that the necessary changes in culture cannot simply be achieved through regulation, but rather through the development of good practice in the investment chain. The Government are promoting Professor Kay’s good practice statements for company directors, asset managers and asset holders, as the basis for industry-led standards of good practice.

The report’s recommendations, and the good practice statements, aim to deliver, among other things, more collective action by institutional shareholders via the establishment of an investors’ forum, better disclosure of costs in the investment chain, transparency and

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fairness around the lending of securities, and better alignment between pay and long-term performance for company directors and asset managers.

The Government response notes promising signs that market participants are responding to the challenge in each of these areas, but makes clear that more progress is required: delivering on this agenda will require a sustained commitment.

The response therefore makes clear the Government’s intention to publish an update, in summer 2014; setting out what further progress has been achieved by Government and others, to consider Professor Kay’s directions for regulatory policy and to deliver his specific recommendations.

Treasury

Banking Act 2009

The Financial Secretary to the Treasury (Greg Clark): The Treasury has laid before the House of Commons a report required under section 231 of the Banking Act 2009 covering the period from 1 April 2012 to 30 September 2012. Copies of the document are available in the Vote Office and the Printed Paper Office.

Culture, Media and Sport

Education, Youth, Culture and Sport Council

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey): The Education, Youth, Culture and Sport Council will take place in Brussels on 26-27 November. The culture and audiovisual issues will be taken on 26 November and the sport issues will be taken on 27 November. The deputy permanent representative to the EU, Shan Morgan, will represent the UK at the culture and audiovisual and sport sections of the Council.

Culture and Audiovisual

The Council will be invited to adopt a revised partial general approach on the proposal for a regulation establishing the creative Europe programme for 2014-20. The revised partial general approach incorporates the text relating to the proposed new loan guarantee facility into the partial general approach which was agreed at the Council meeting in May. It does not include the programme budget.

The UK will not be able to support the revised partial general approach. At present we are unable to support the loan guarantee facility, as we need to consider this in the context of the overall budget allocated to the programme and in relation to the amount of funding allocated to grant expenditure. These will not become clear until the negotiations on the multiannual financial framework for 2014-20 have been completed. Moreover, the revised partial general approach—like the previous partial general approach, which the UK did not support—does not provide for selection decisions, i.e. decisions

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about which projects will be awarded EU funding under the programme, to be subject to member state scrutiny through the formal comitology arrangements.

In the debate, we will make clear that the UK is able to support other elements of the revised partial general approach, and also that we will consider our position on the loan guarantee facility in the light of developments in the negotiations on the multiannual financial framework.

The Council will receive a progress report from the presidency on the Commission’s proposal for a decision establishing the European capitals of culture action for 2020-33. This action will follow on from the current European capitals of culture action which ends in 2019. The proposal is being discussed in the Council working group, and the presidency will inform the Council of the progress made to date and the key issues which delegations have identified.

The Council is expected to adopt conclusions on cultural governance. These conclusions note the importance of research and statistics in cultural governance and in developing policies and strategies for the cultural and creative sectors.

They also identify key issues for future work and propose some actions for the Commission and member states to maximise the use and benefits of current work in these areas. The conclusions take account of UK interests and concerns and we will support their adoption.

The Council is also expected to adopt conclusions on a European strategy for a better internet for children and hold a policy debate on the internet: a better and safer place for children as a result of a successful interplay between Government and industry. The UK will support the adoption of the conclusions, as in the main they are in line with UK policies in respect of online child safety. The debate is framed around two questions. Here, the UK will report on the work of the UK Council for Child Internet Safety and we will propose that there should be more effective discussion and co-ordination of member state initiatives and those proposed in the Commission’s communication on a better internet for children. Targeted discussion and co-ordination could assist the creation of a true pan-European digital single market for children.

Sport

The Council is expected to adopt conclusions on strengthening the evidence base for sport policy-making. This encourages member states to continue to develop sport satellite accounts as a means to strengthen evidence-based sport policies and to promote the role of sport as a driver in areas such as economic growth. The UK already actively participates in this strand of work and will therefore support the adoption of these conclusions.

The Council is also expected to adopt conclusions on establishing a strategy to combat the manipulation of sport results. These are based on recommendations produced by the EU expert group on good governance in sport which set out the relationship, roles and responsibilities needed between member states, the sports movement, betting operators and regulators. The UK is content with these conclusions as they are broadly in line with our approach in tackling match-fixing and we will support their adoption.

The Council is also expected to agree the three chosen candidates to be the EU representatives to the World Anti-Doping Agency (WADA) foundation board. The

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WADA foundation board is the 38-member supreme decision-making body composed equally of representatives from the Olympic movement and Governments. The presidency will also provide feedback to the Council from the recent WADA meetings that took place in Montreal on 17-18 November 2012.

The Council is expected to adopt conclusions on promoting health-enhancing physical activity (HEPA). The conclusions encourage member states to promote health-enhancing physical activity acknowledging the EU’s physical activity guidelines. They also promote closer co-operation between the sport and health sectors; awareness raising on the benefits of adopting a more active lifestyle; and physical activity in supporting active ageing. The conclusions are based on the work of the EU expert group on sport, health and participation and are, in the main, in line with UK policy. The UK will therefore support the adoption of these conclusions.

Related to the HEPA conclusions, the presidency has prepared a discussion paper on an annual European week of sport as the basis for a policy debate. The paper considers the challenges of having such a European week and how youngsters can be encouraged to participate in physical activity rather than playing sedentary virtual games. The debate is framed around three questions.

The UK will highlight how the number of similarly themed initiatives has lessened their overall impact. For the EU to add value in this area it would need to have a different concept, possibly engaging civil society and commercial partners. In addition, rather than trying to create a behavioural shift from virtual games, physical activity initiatives should embrace new technology.

Any Other Business

The presidency may present an update on the proposal for a regulation establishing the Europe for citizens programme 2014-20. This programme will follow on from an existing EU programme. The proposal is currently with the European Parliament, which must give its assent before the regulation can be adopted by the Council.

The French delegation will present a note expressing concerns about the Commission’s draft communication on state aid for films and other audiovisual work. While the UK recognises the concerns of other member states, we welcome the Commission’s revisions to the previous draft, particularly the confirmation that our film tax relief scheme does not restrict the free movement of goods and services in Europe. We urge a speedy resolution of outstanding issues to ensure that the film industry across the EU remains strong and healthy.

The Slovak and French delegations will present information on Kosice and Marseille-Provence which have been designated as the European capitals of culture for 2013.

Finally, the Irish delegation will inform the Council of the work programme and priorities for their forthcoming presidency of the Council.

Health

Warm Homes Healthy People

The Parliamentary Under-Secretary of State for Health (Anna Soubry): This is to inform the House of the award of funds from the warm homes healthy people fund (WHHP) 2012.

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On 13 September 2012, the Department issued a circular to upper-tier local authorities in England inviting them to apply for funding from the WHHP.

The aim of the WHHP fund of £20 million is to support local authorities and their partners in reducing the levels of death and morbidity in England due to cold housing in the winter of 2012. With this funding, local authorities and their partner organisations are encouraged to undertake a variety of projects to support a range of national and local initiatives.

The Department, along with other Government Departments, already provides a range of advice and support to help individuals, families and carers to prepare for cold weather, including the “Cold Weather Plan for England 2012” published on 26 October 2012, which is available at: www.dh.gov.uk/health/2012/10/cwp-2012/.

The evidence that the annual cost to the NHS due to cold private housing alone is over £850 million is compelling. More work is underway to improve the health and well-being of the most vulnerable, and the WHHP provides support to help vulnerable people deal with winter weather.

A list of successful proposals detailing recipients of the funding from the warm homes healthy people fund for this year has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. We are able to provide funding to 149 out of 162 local authority proposals.

Because of the success of the WHHP fund last year, we were oversubscribed with suggested proposals for 2012, and have had to reduce the funds provided across the board by 19% to stay within the limit of the total fund.

The process is similar to that of last year’s fund so that funding goes to local authorities quickly, in time to make a real difference this winter. Proposals display co-operation with local partners, from the voluntary and community sector, who have been fully engaged in the bidding process, as they will be with the delivery of the projects.

Home Department

Police (Complaints and Conduct) Bill

The Secretary of State for the Home Department (Mrs Theresa May): Last month I made a commitment to ensure that the Independent Police Complaints Commission (IPCC) has the powers and resources it needs to carry out its investigations into the Hillsborough disaster. This commitment was made in the knowledge that the families of the victims and the survivors have waited 23 years for the truth about the disaster to be revealed.

I have today published fast-track legislation that will enable the IPCC to conduct a thorough, transparent and exhaustive investigation into the Hillsborough disaster.

This legislation will provide the IPCC with two new powers:

The first is to compel individuals currently serving with the police or certain other policing bodies, to attend an interview in relation to any investigation managed or undertaken by the IPCC in the capacity of a witness.

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The second will allow the IPCC to investigate matters which were previously subject to investigation by its predecessor, the Police Complaints Authority. This power will only be exercised where the IPCC is satisfied that the exceptional circumstances of the case justify its use.

These enhancements are being made at the request of the IPCC and will ensure they can investigate the conduct of the police at Hillsborough in depth and without delay. The IPCC has indicated that as part of its ongoing investigations, it will likely be in a position to call witnesses early in 2013.

Immigration Rules

The Minister for Immigration (Mr Mark Harper): My right hon. Friend the Home Secretary is today laying before the House a statement of changes in immigration rules.

In April last year the Government made substantial changes to the tier 1 (Entrepreneur) and tier 1 (Investor) categories. The Home Office has been reviewing how effective these changes have been. As a result, a number of minor changes are being made to these two categories, including:

Providing for entrepreneurs with funding from Departments of devolved Administrations;

Lowering the English language requirement for entrepreneurs in response to concerns that the high requirement was a possible deterrent to potentially successful businesses;

Restricting the ability of students to switch into the entrepreneur route, due to concerns about abuse;

Restricting investors from working as professional sportspeople, to prevent them circumventing the sports governing body endorsement needed in the dedicated routes for sportspeople;

Additional controls to ensure entrepreneurs and investors genuinely have access to the funds they claim they do;

Providing for investors’ leave to be curtailed if they fail to maintain the required level of investment; and

Clarifications to confirm that points will not be awarded for investments against which applicants have taken out loans, or investments that are held in offshore custody.

I am making minor changes to tier 2, the route for skilled workers with a job offer. These include supporting business by allowing very senior intra-company transferees to extend their stay in the UK for up to nine years (other transferees are restricted to a maximum of five years); making provision for barristers to apply in tier 2; and making the operation of “cooling off periods” more flexible for migrants who leave the UK before their leave expires.

I am setting the annual allocations of places for participating countries and territories in the tier 5 (Youth Mobility Scheme), and widening the definition of a training programme under the tier 5 Government Authorised Exchange category to include training by HM armed forces and UK emergency services.

I am making changes to the international agreement sub-category of tier 5, to make more specific provision for contractual service suppliers (who do not otherwise have a UK presence) seeking admission under the relevant commitments in certain international trade agreements to which the UK is a party.

Applicants for settlement on the basis of work or economic activity in the UK must complete a continuous period of lawful residence in the UK—usually five

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years with exceptions for some tier 1 investors and entrepreneurs and some highly skilled migrant programme migrants. Although it has been our practice to permit some absences from the UK during this period, the length of the short absences has not been specified.

I am making changes to the Immigration Rules for indefinite leave to remain for work permit and other pre-points based system employment, for businesspersons, innovators, investors, self-employed persons, writers, artists and composers, those here on the basis of UK ancestry and for tier 1 general, tier 2 general, sportsperson and Minister of religion migrants and retired persons of independent means. These changes clarify that absences of up to 180 days in a 12-month period are permitted, provided the absence is for a reason that is consistent with the migrant’s purpose of stay in the UK or for serious or compelling reasons.

I am also making minor changes to the tier 4 immigration rules on students, including allowing students to start work on a business idea or as a doctor or dentist in training as soon as they have submitted an appropriate application; removing an avenue used by applicants to circumvent our rules that ensure an applicant has sufficient funds to cover their course and maintenance; and extending the period of the interim limit where educational institutions that have not achieved both a satisfactory educational oversight inspection from a specified body and highly trusted sponsor status are subject to an interim limit on the number of international students that can be recruited.

I am making a number of changes to the immigration rules on family and private life. These mainly reflect experience of the operation of the new rules since they were implemented on 9 July 2012 and will help to make those rules as clear and comprehensive as possible. The changes mainly concern the child and parent provisions of the rules and the specified evidence required to meet the financial requirements of the rides.

In addition to these changes, I am also creating a more robust, clear and transparent criminality framework against which immigration applications will be assessed. At present, there are few specific thresholds in the immigration rules. Much is left to discretion, except at the settlement stage where an unspent conviction results in mandatory refusal. There is some advantage to this flexibility in that it allows discretion to deal with hard cases, but it also means that there is a lack of consistency in dealing with offences. These changes will make it clearer about the level of offending that will lead to refusal.

The consequential changes will also:

change the periods before a deportation order will normally be revoked;

introduce a limited leave “route” for foreign and Commonwealth ex-armed forces personnel who fail to qualify for indefinite leave or citizenship because of a relatively minor conviction;

introduce a re-entry ban of five years for any offender who leaves the UK as a requirement of a conditional caution; and

introduce a discretionary power to curtail leave where a person commits an offence within the first six months of entering the UK.

Finally, I am also making a number of minor technical changes, corrections and updates to lists contained in the Immigration Rules. Details of these are set out in the explanatory memorandum being laid today to accompany the changes.

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Justice

Data Protection

The Parliamentary Under-Secretary of State for Justice (Mrs Helen Grant): Today, I will publish the Government’s impact assessment of the European Commission’s proposals for data protection.

In January this year, the European Commission published a draft data protection regulation which will impact on business, the public sector and charities and a draft data protection directive, covering the police and judicial sector. Coupled with the publication, the European Commission published its impact assessment of the proposals.

The Commission’s impact assessment estimates that the new regime would bring an administrative saving to the EU, totalling €2.3 billion each year. As the analysis published today shows, the Government disagree with this assessment and believe that the burdens the proposed regulation would impose far outweigh the net benefit estimated by the Commission. For the UK alone the annual net cost of the proposal (in 2012-13 earnings terms) is estimated to be between £100 million and £360 million a year.

The Government’s view is that the Commission both overestimates the benefits achieved through harmonised EU data protection law and fails to address the full costs and unintended consequences of its own proposals, by only considering administrative costs. Our analysis addresses some of these failings by considering in full the impact of the proposed regime, including the additional costs for businesses, including small and medium enterprises, the additional costs to supervisory authorities, conducting data protection impact assessments and complying with other new obligations.

This impact assessment focuses on the proposed regulation. Under article 6a of the UK’s Title V opt-in protocol we believe that the proposed directive will have a limited effect on the United Kingdom, in that it will only apply to data being processed under an EU instrument that binds the UK. Therefore, criminal justice system agencies within the UK will avoid being bound by the directive when processing personal data outside of such provisions.

It is worth noting that organisations which process criminal justice data will also process personal data covered under the regulation and so some of the monetised costs and benefits stemming from the regulation could be shared (for example, the cost of designating a data protection officer). The directive would require transposition into UK law, at which point domestic legislation would also be needed to cover that processing purely internal to the UK. There is therefore a degree of flexibility for member states in determining how the EU-level rules in the proposed directive would be transposed and a fuller assessment of the costs and benefits specific to the proposed directive will be produced nearer the point of transposition.

The UK Government are seriously concerned about the potential economic impact of the proposed data protection regulation. At a time when the eurozone appears to be slipping back into recession, reducing the regulatory burden to secure growth must be the priority

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for all member states. It is difficult therefore to justify the extra red tape and tick-box compliance that the proposal represents. For example, we estimate the costs for UK small businesses of simply demonstrating compliance with the new rules to be around £10 million (in 2012-13 earnings terms) every year. A further serious issue is the possibility of stifling innovation through prescriptive and inflexible rules on gaining individuals’ consent and informing them about the processing of their personal data, while offering people an unworkable “right to be forgotten”. Instead the focus must be on achieving the right ends: meeting people’s rightful expectation that their personal information is used lawfully, proportionately and securely, while being able to offer them the goods and services they want and need.

Negotiations on the proposals are ongoing in Brussels. With the evidence set out in the impact assessment published today, the UK Government will continue to push for a lasting data protection framework that is proportionate, and that minimises the burdens on businesses and other organisations, while giving individuals real protection in how their personal data is processed.

Copies of the impact assessment will be placed in the Libraries of both Houses and on the Department’s website at, www.justice.gov.uk.

Transport

Drink and Drug Driving

The Parliamentary Under-Secretary of State for Transport (Stephen Hammond): The Government have today launched a consultation on some enforcement issues relating to the current legislation on drink and drug-driving. This consultation encompasses the legislative changes the Government proposed in their response of March 2011 to the reports by Sir Peter North(1) and the Transport Select Committee(2) on drink and drug-driving (“the Government’s response”(3)). The changes covered in this consultation should not be confused with the legislation related to driving with a specified impairing drug in the body, which is currently passing through Parliament in the Crime and Courts Bill.

The consultation on enforcement of drink-driving will cover four potential legislative changes:

1) Withdrawal of the right people have to replace their breath alcohol specimens with either a specimen of blood or specimens of urine in cases where the lower of the two breath readings provided does not exceed 50 microgrammes (meg) of alcohol per 100 millilitres (ml) of breath (known commonly as the “statutory option”).

2) Removing the requirement for preliminary testing where evidential testing is undertaken away from a police station. This would mean that a preliminary breath test would not have to be taken in addition to two evidential breath tests, when mobile evidential breath testing devices are used away from a police station. While such devices are not yet available, it is expected that they may be type-approved within the next two years.

3) Streamlining the procedure for testing drink-drivers and drug-impaired drivers in hospital so that a wider range of registered health care professionals are allowed to take evidential blood specimens. This would make it consistent with other policing provisions.

4) The consultation asks for views on whether a health care professional other than a doctor should be able to assess whether a driver may be under the influence of a drug prior to evidential testing.

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The legislative changes proposed in this consultation would apply to the Road Traffic Act 1988. Subject to the outcome of the consultation, we intend to legislate as soon as parliamentary time allows on the matters covered in points 1 to 4 above.

Other proposals in the consultation

The Road Traffic Act 1998 (and other parallel legislative provisions) apply similar measures to the drink-drive offence to railways, shipping and aviation. The consultation seeks views about whether any changes here should also apply to these other transport sectors.

The consultation explores how further use can be made of vehicle forfeiture powers to get the most dangerous and irresponsible motorists off the road including those who drive while under the influence of alcohol.

The consultation document explores the scope for further research into the processes for reassessing whether a driver banned due to drink-driving should regain their licence. The research would develop the evidence base for longer-term solutions in this area.

The consultation seeks views about the way forward on three as yet un-commenced legislative provisions in the Road Safety Act 2006 relating to the training and punishment of certain road traffic offenders.

In line with the revised guidance on consultations, we propose to shorten the consultation time for this to just over five weeks. We are particularly interested in the views of the health care sector on points 3 and 4 and are planning to meet representative bodies for medical professionals in early December.

(1) Report of the Review of Drink and Drug Driving Law: Sir Peter North CBE, QC (June 2010)

http://webarchive.nationalarchives.gov.uk/20100921035225/http://northreview.independent.gov.uk/docs/NorthReview-Report.pdf.

(2) Report of the Transport Select Committee: Drink and Drug Driving Law (November 2010) http://www.publications. parliament.uk/pa/cm201011/cmselect/cmtran/460/46002.htm.

(3) The Government’s Response to the Reports by Sir Peter North CBE QC and the Transport Select Committee on Drink and Drug Driving: Command Paper 8050 (March 2011) at: http://www.official-documents.gov.uk/document/cm80/8050/8050.pdf.

Work and Pensions

“Reinvigorating Workplace Pensions”

The Minister of State, Department for Work and Pensions (Steve Webb): Later today I will publish the Command Paper “Reinvigorating Workplace Pensions”. Building on our coalition agreement commitment, this document sets out our strategy for putting in place arrangements that result in the provision of high quality pension schemes people can trust and take confidence in.

We need pensions that are affordable for employers and attractive to employees to ensure that automatic enrolment succeeds for the millions of new savers it creates. Our reinvigoration strategy covers a broad set of issues from how we increase the amount people are saving to how we ensure those savings go into high quality schemes that give people the income they expect in retirement.

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Research shows people want more certainty in pension saving. We have responded by encouraging more risk-sharing through the development of defined ambition pensions, outlined in this plan, and are working closely with the pensions industry to encourage innovation and explore possible options and models.

Promoting scheme quality is also critical. Savers need to be confident they are putting their money into stable, well-run, customer-focused schemes that will give them the income they expect in retirement. This strategy sets out the issues we are examining to achieve this, such as scale, charges and the regulatory regime.

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Part of the reason people lack confidence in pensions is they find them confusing, so we are looking at ways to increase engagement through improved information, and are considering putting in place simple mechanisms to support employers and consumers with scheme choice.

We will be working closely with consumers, employers and the pensions industry as we develop the plans set out in this strategy.

The document will also be available later today on the Department’s website.