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Written Ministerial Statements

Monday 18 March 2013

Business, Innovation and Skills

Industrial Strategy

The Secretary of State for Business, Innovation and Skills (Vince Cable): In September last year, I set out the Government’s new industrial strategy for the UK. This would be a long-term, whole of Government approach, with partnership with industry at its heart.

As part of the UK’s new industrial strategy, I was clear that the Government will continue to support successful sectors.

Reflecting this commitment, today I am delighted to announce the Government are committing over £1.6 billion during the next 10 years to back our industrial strategy. This includes over £1 billion new money from Treasury and over £500 million from my Department’s budget. Working in partnership with business we will aim at least to double this with industry funding.

The first strategy we will support with this funding will be aerospace. Further strategies will be published in the coming months, including agri-tech in May and automotive in July.

The strategies will set out how our partnerships will help the UK respond to and seize the challenges of new forms of aircraft and low emission, low-noise engines; the cars of the future in a low-carbon environment and the challenge of harnessing agricultural science to achieve sustainable improvement of agriculture in the UK and overseas.

Today, we are publishing the aerospace industrial strategy. The delivery of the strategy will be supported through a joint, equally funded Government/industry investment of £2 billion over seven years to create a new UK Aerospace Technology Institute (ATI). Based on the UK’s potential to develop technology to sustain and grow its future market share in aerospace, the ATI could secure up to 115,000 jobs in the sector and its supply chains in the long term.

The strategy has been developed jointly with business through the aerospace growth partnership, which we established in 2010. It builds on the strategic vision published at the Farnborough air show last July. It sets out an ambitious programme to keep the UK firmly at the forefront of world aerospace manufacturing and ensure that we can address the challenges of increasing global competition and changes in technology. It is based on ensuring that the UK has the capabilities to be at the leading edge of the design, development and production of wings, engines, aerostructures and advanced systems.

The aerospace sector employs 230,000 people across the UK. It is a key part of our advanced manufacturing base providing work for around 3,000 companies of all

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sizes. With forecast demand for around 27,000 new large passenger aircraft, worth $3.7 trillion, between now and 2030 this is a sector with real growth potential. However, new manufacturing processes, new skills and a flexible and adaptable supply chain will be critical if the UK is to grasp these opportunities. This strategy sets out how Government and industry will work together to address these challenges.

(A step change in technology is needed if these aircraft are going to deliver the improvements in efficiency and environmental performance needed to make air travel sustainable. The UK is well placed to lead on developing many of these technologies, but we need to start now if we are to have the right capabilities in place. As part of the strategy we will build on our earlier investment in the UK Aerodynamics Centre and create a new Aerospace Technology Institute. Over the next seven years the Government will invest £1 billion in this initiative, a commitment that industry has pledged to match.

It can take up to 15 years to develop a new aircraft. This strategy gives industry the long-term certainty it needs to ensure that the UK remains ones of the world’s most attractive location for aerospace manufacturing).

A copy of the strategy has been placed in the Library of the House.

Treasury

Double Taxation Convention

The Exchequer Secretary to the Treasury (Mr David Gauke): New double taxation conventions with the Kingdom of Norway and the Kingdom of Spain were signed on 14 March 2013. The texts of the conventions have been deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The texts will be scheduled to draft Orders in Council and laid before the House of Commons in due course.

Economic Development

The Financial Secretary to the Treasury (Greg Clark): Today the Government are publishing their response to the Heseltine review, copies have been laid in the House. Lord Heseltine set out an ambitious vision in his review and the Government have responded, accepting the overwhelming majority of his recommendations.

At the centre of the Government’s response is action to tackle excessive centralisation. The Government will create a new single local growth fund from 2015 that will include the key economic levers of skills, housing and transport funding. Full details will be set out at the spending round. The Government will negotiate a local growth deal with every local enterprise partnership (LEP)—with the allocation of funds and flexibilities reflecting the quality of the LEP’s strategic economic plan and the capacity of the local area

Counter-Terrorism Act 2008 (Schedule 7)

The Financial Secretary to the Treasury (Greg Clark): My noble friend the Commercial Secretary to the Treasury, Lord Deighton, has today made the following written ministerial statement:

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Paragraph 38 of schedule 7 to the Counter-Terrorism Act 2008 requires the Treasury to report to Parliament after each calendar year in which a direction under the schedule is at any time in force. This report provides details of the Treasury’s exercise of their functions under schedule 7 during the calendar year 2012.

The Schedule 7 powers

Schedule 7 provides HM Treasury with powers to implement a graduated range of financial restrictions in response to certain risks to the UK’s national interests. The risks it addresses are those posed by money laundering, terrorist financing and the proliferation of chemical, biological, radiological and nuclear weapons.

Direction given under the powers in Schedule 7

The Financial Restrictions (Iran) Order 2011 (“the 2011 order”) came into force on 21 November 2011. The order contained a direction by the Treasury requiring all UK financial and credit institutions to cease business relationships and transactions with all banks incorporated in Iran, including all subsidiaries and branches of such banks, wherever located, and the central bank of Iran.

The 2011 order was issued on the basis that activity in Iran that facilitates the development or production of nuclear weapons posed a significant risk to the national interests of the UK. The decision was made because of the risk caused by the activity of Iranian banks in facilitating the development or production of nuclear weapons. Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes. Iranian banks can be exposed to the risk of being used by proliferators in Iran’s nuclear and ballistic missile programmes.

In accordance with paragraph 15(4) of schedule 7, the 2011 order ceased to have effect at the end of the period of one year beginning with the day on which it was made, on 20 November 2012.

The Financial Restrictions (Iran) Order 2012 (“the 2012 order”) was made and came into force on 21 November 2012, immediately on expiry of the 2011 order. The 2012 order contained a direction by the Treasury in the same terms as that in the 2011 order. The decision to give the direction in the 2012 order, in effect maintaining the restrictions in the 2011 order in place, was made because of the continued risk to the national interests of the UK caused by the activity of Iranian banks in facilitating the development or production of nuclear weapons. The direction mitigates the risk to the financial sector of being involved in proliferation financing.

Licensing

Under paragraph 17 of schedule 7, the Treasury can exempt acts specified in a licence from the requirements of a direction requiring the cessation or limiting of transactions or business relationships between UK and Iranian banks.

In operating the licensing regime in respect of the 2011 and 2012 order, the Treasury’s aim was to minimise the impact of the restrictions upon third parties, without compromising the objective of the direction.

Six general licences were issued by the Treasury exempting certain activities from the requirements of the 2011 order:

General Licence 1—permitted existing and new transactions involving transfers of under €40,000 for humanitarian purposes;

General Licence 2—allowed personal remittances under €40,000. (This licence included cover for payments of up to €40,000 to students studying in the UK);

General Licence 3—permitted existing or new transactions related to the provision of insurance permitted by EU regulation 267/2012;

General Licence 4—allowed UK banks to continue to hold accounts for asset-frozen Iranian banks and credit payment to those accounts in accordance with EU regulation 267/2012;

General Licence 5—allowed UK banks to continue to hold accounts of non-frozen Iranian banks, although they could not process any transactions on these accounts; and

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General Licence 6—provided a seven-day grace period to allow payments in progress under existing contracts to be completed.

On 21 November 2012 the Treasury issued six general licences exempting certain activities from the requirements of the 2012 order. General licences 1 to 5 replicated the provisions of those issued in respect of the 2011 order. The new general licence 6 permitted transactions or business relationships already authorised under the 2011 order.

Applications for licences in respect of transactions that fell outside the scope of the six general licences were assessed on a case-by-case basis.

Between 1 January 2012 and 31 December 2012, 142 licences were issued and none were refused:

Seventy-two licences were issued under the 2011 or 2012 order, and 70 licences were issued in relation to transactions that were caught under both the UK order and EU regulation 267/2012 (or EU regulation 961/2010 which it replaced in March 2012).

Over half of the licences were issued in connection with payments due by an agreement or contract concluded before the prohibitions. Licences were also issued to facilitate UK banks exiting their relationships with Iranian banks in accordance with the order and the winding down of frozen Iranian banks in the UK, for business relationships, and to permit specific transactions such as humanitarian payments, personal remittances, legal expenses and the repayment of loans.

The Financial Restrictions (Iran) Order was revoked on 31 January 2013. The Treasury will report further on the revocation in the 2013 report.


Tax Avoidance

The Chief Secretary to the Treasury (Danny Alexander): Autumn statement 2012 announced that HMRC would review the use of offshore employment intermediaries. As a result of that review, the Government will strengthen obligations to ensure the correct income tax and national insurance contributions are paid by offshore employment intermediaries. Cracking down on this avoidance will benefit the Exchequer by almost £100 million a year. HMRC will publish a consultation on the detail of the changes in May and the Government will legislate in Finance Bill 2014.

Communities and Local Government

Regional Planning (Abolition)

The Secretary of State for Communities and Local Government (Mr Eric Pickles): I am pleased to announce the coalition Government’s decisions to revoke the regional strategies for the east midlands and the north-east. These decisions follow region-specific assessments as outlined in the written ministerial statement of 25 July 2012, Official Report, House of Lords, columns WS66-68. Orders giving effect to these decisions will be laid in Parliament shortly.

The revocation of these regional strategies is another step forward for localism. It completes the decentralisation of planning powers in the former Government office regions of the east midlands and north-east and sends a powerful message to local councils and local people across those parts of the country. It says that we trust them and believe that they, and not central Government, are best placed to plan and deliver communities that reflect the aspirations of local people. Once the regional

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strategies are revoked, development plans across these two areas will comprise local plans, and where they exist, neighbourhood plans. This is a significant shift of power that will benefit the everyday lives of people.

Policy S5 of the Northumberland County and National Park Joint Structure Plan First Alteration (February 2005) will remain in place because it enables the extension of the green belt around Castle Morpeth and so plays an important role in preserving the cultural and environmental heritage of the local area. This reflects the Government’s commitment to safeguarding green belt protection.

The reasons for the decision to revoke these regional strategies are set out in the post-adoption statement for each region, which will be placed in the Library of the House and published on the Department’s website at:

East Midlands

https://www.gov.uk/government/consultations/strategic-environmental-assessment-about-revoking-the-east-midlands-regional-strategy-environmental-report.

North East

https://www.gov.uk/government/consultations/strategic-environmental-assessment-about-revoking-the-north-east-regional-strategy-environmental-report.

These decisions follow the revocation of the regional strategies for the east of England, Yorkshire and Humber and the laying of an order to revoke the regional strategy for the south-east.

Further decisions on the remaining regional strategies will be made in due course.

Transport

EU Transport Council

The Secretary of State for Transport (Mr Patrick McLoughlin): I attended the first Transport Council of the Irish presidency (the presidency) in Brussels on Monday 11 March.

The Council held a debate on the proposal for a directive of the European Parliament and of the Council on the interoperability of the rail system—part of the Commission’s fourth railway package. The aim of the

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proposal is to address concerns about significant delays and costs associated with vehicle authorisation that can occur in some member states (although this is not a problem within the UK). The proposal would also make a key change to the process for the authorisation of rail vehicles in the EU. It is proposed that this activity is only carried out by the European Railway Agency instead of by the national safety authorities within each member state. I noted that while there were clearly problems with the authorisation process which merited consideration, these were not causing particular problems in the UK. I suggested that the rail undertaking could be given a choice to go to either the national authority or the European Rail Agency for approval of rolling stock.

The Council also debated the recently published legislative proposal that would require member states to make available adequate infrastructure for alternative fuels. I welcomed the proposal and supported work to harmonise technical standards for alternative fuels, but noted that a technology neutral approach was needed.

The presidency reported on progress at official level discussions on the air safety reporting on occurrence. The Commission stated that the aim of the proposal was to provide a more efficient and uniform occurrence reporting system, focused on improving safety which would enable personnel in safety critical roles to freely report incidents without fear of recrimination.

Under any other business, the Commission gave an update on its “Stop the Clock” proposal on the aviation ETS directive. This proposal which is in the final stages of adoption, aims to facilitate a global agreement on tackling emissions from aviation at the General Assembly of the International Civil Aviation Organisation (ICAO) in September 2013.

Work and Pensions

State Pension Reform

The Minister of State, Department for Work and Pensions (Steve Webb): I shall shortly be making a statement about changes to the timetable for the introduction of state pension reform.