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18. Maureen O’Neill19. Michael Smyth20. Jane Morrice21. Richard Adams22. Sukhdev Sharma23. Tom Jones24. Derek Osborn.
Financial Services: Regulation
Lord McKenzie of Luton: My honourable friend the Economic Secretary (Mr Ed Balls) has made the following Written Ministerial Statement.
Concerns have been expressed to the Government about the effects of a possible takeover of the LSE by a company based outside the UK on the LSE’s rules, in particular the rules applying to those companies whose securities are traded on the LSE’s markets. This is a concern that the Government share. In this statement I set out our approach.
The Government are neutral as to the nationality of the owners of recognised bodies (RBs)1. Of the current RBs, five are subsidiaries of overseas-based companies. Openness to overseas investment has been an important part of the success of the City in recent years and will continue to be in the future.
The Government would also not seek to intervene in the independent judgments of the Financial Services Authority (FSA) and the competition authorities in respect of any changes of ownership of RBs. The FSA and the competition authorities have specific tasks to perform on an independent basis within clear legislative frameworks set out by Parliament. Independence and indifference to nationality are key elements of the UK’s regulatory regime.
Investors, issuers of securities, and members of RBs all have an interest in RBs having rules which strike a balance appropriate to that body between the benefits of the restrictions, particularly in terms of investor protection and the impacts on issuers, members and other stakeholders. Such a balance is vital to ensuring exchanges play their role in creating deep and liquid capital markets which promote economic growth. In this respect, the Government believe it is essential that changes of ownership of RBs should not put at risk the achievement of such a balance by RBs.
Our current regulatory regime for RBs is based on high-level legislative principles supplemented by FSA guidance. Within this framework, RBs have the freedom to develop their own rule books in consultation with their members.
I have discussed these issues widely in recent months and made clear that I would expect any potential new owners of the LSE to want to provide certainty and reassurance to the exchange’s stakeholders. I welcome the statement which the US Securities and Exchange Commission issued on 16 June. This provided a helpful clarification of how the SEC sees the current position in respect of the scope of US securities laws.
However, as the FSA pointed out in its statement of 12 June, there is a degree of uncertainty about how overseas ownership of the LSE would affect its regulatory regime. It depends on exactly how any owner would attempt to integrate the LSE with its existing business and the legal framework in other countries, both of which can be subject to change.
It is important that there is certainty that the rules of RBs in the UK will continue to be proportionate, balancing the benefits of restrictions with the impacts on stakeholders.
The Government will now legislate to enhance the FSA’s powers in this area. This will confer power on the FSA to veto changes to the rules of an RB in defined circumstances. The aim would be to enable the FSA to stop RBs making rule changes whose effects on issuers and others were likely to be disproportionate to the public benefits. The Government will provide further details in due course.
The purpose of such a change to legislation is not to involve the FSA in the day-to-day commercial judgments of the RBs. The power will be a right of veto and not a right of approval of rule changes. It will provide a back stop to ensure that the RB’s stakeholders can be certain about the proportionality of the rules of the RB going forward.
This new provision will ensure that UK RBsremain open to overseas ownership. It makes the permissible outer limits of the RB’s rules blind to the nationality of their ownership by entrenching better regulation principles in respect of those rules.
It should also be clear that we will not allow this legislation to be evaded through abuse of our Recognised Overseas Investment Exchange and Clearing House regimes.
1 Under Section 18 of the Financial Services and Markets Act 2000 there are seven recognized investment exchanges (the London Stock Exchange, London International Financial Futures Exchange, EDX London, Virt-X, ICE Futures, the London Metal Exchange and NYMEX Europe) and two recognised clearing houses (CREST and LCH.Clearnet Ltd).
Housing: Employment Mobility Services
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My right honourable friend the Minister for Housing and Planning has made the following Written Ministerial Statement.
The Government have decided to terminate their agreement with Scout Solutions Projects Limited to deliver mobility services for social tenants.
The new services to be provided under the contract were a new website providing access to existing schemes such as LAWN and Seaside and Country Homes, and a link to the Jobcentre Plus Internet Job Bank. The cost for the development of the new software and IT infrastructure was £1.2 million and the department has paid £1.06 million to date.
The department has decided to terminate this agreement in the interests of the public and the taxpayer because of serious concerns about the performance and fitness for purpose of the software developed by SSPL to provide those services. The software was delivered by the contractor in final form more than a year behind schedule; and independent final testing which replicated SSPL's own test criteria discovered an unacceptable level of faults. Departmental officials worked with the company throughout the contract to address shortcomings, but came to the conclusion that this strong course of action wasthe only one available. This decision was communicated to SSPL on 20 July 2006. The department will be seeking to recoup the £1.06 million spent on the development of the new software as well as the associated costs.
Scout Solutions Projects Limited has also been providing existing mobility services alongside the development of the new services. They will continue to be paid to provide these services under the terms of the contract for a transitional period. The funding for these existing services which were delivered has been £9.7 million. Mobility services are important to tenants, and the department will be seeking to put alternative provision in place building on the success of choice-based letting schemes.
Throughout this period, social housing applicants and tenants have continued to use direct methods to move within social housing. For example, in 2004-05 alone, over 15,500 LA tenants completed mutual exchanges.
The matter is now the subject of discussions between DCLG and the contractor.
Housing: Home Reversion and Home Purchase Plans
Lord McKenzie of Luton: My honourable friend the Economic Secretary (Mr Ed Balls) has made the following Written Ministerial Statement.
The Treasury is today laying before Parliament the secondary legislation to introduce FSA regulation of activities relating to these products. Copies will be available in the Vote Office and the Library of the House, and will be accessible on the Treasury website (www.hm-treasury.gov.uk).
Immigration
The Minister of State, Home Office (Baroness Scotland of Asthal): My honourable friend the Minister of State for Immigration, Citizenship and Nationality (Liam Byrne) has made the following Written Ministerial Statement.
The Home Secretary has today published the Government’s response to the Home Affairs Committee's report into immigration control, copies of which have been deposited in the Libraries of the House and are also available from the Vote Office and the Printed Paper Office.
India: Reproductive and Child Health
The Lord President of the Council (Baroness Amos): My right honourable friend the Secretary of State for International Development has made the following Statement.
I have approved support of £252 million over five years for the second phase of the Government of India’s nationwide Reproductive and Child Health Programme. DfID will disburse £10 million in financial assistance plus a further £700,000 in technical assistance in 2006-07. Thereafter, annual disbursements will be subject to satisfactory reports on progress.
This programme will support the Government of India in tackling India’s huge burden of maternal and infant mortality. One-fifth (136,000) of all maternal deaths in the world, and one-quarter (1.8 million) of all infant deaths occur in India. Globally we will not reach the millennium development goals to reduce these deaths unless we succeed in India. The Reproductive and Child Health Programme is the Indian Government’s single biggest response to meet this challenge. The programme aims to reduce the maternal mortality ratio from 407/100,000 live births in 1998 to 100/100,000 in 2015, and the infant mortality rate from 70/1,000 live births in 1998 to 30/1,000 in 2015. If the programme achieves all its targets, over 1 million lives will be saved each year.
The programme will introduce new measures to tackle concerns about procurement irregularities in the first phase of the Reproductive and Child Health Programme, which was not funded by DfID. An action plan will help to strengthen competitive tendering procedures and increase transparency for the purchasing of drugs and equipment, and new standards will be introduced to improve the quality of products. Until these measures take effect, all procurement contracts over $200,000 will be handled by international agents.
The total cost of this second phase of the Reproductive and Child Health Programme is around £5 billion, which the Indian central and state Governments will meet the bulk of. External aid will be around 15 per cent of the overall budget, with the single largest contribution coming from DfID. Our aid is being fully co-ordinated with other development partners, including the World Bank.
The Reproductive and Child Health Programme is universal in coverage, and it will provide care through pregnancy, childbirth and childhood. But resources will be targeted on India’s poorest states, including Uttar Pradesh, Bihar, Orissa, and Madhya Pradesh and will especially target women and children among the poorest and most marginalised families, in scheduled castes and scheduled tribes.
DfID’s financial support will be used for upgrading maternity facilities; increasing skilled attendance at birth; the purchase of essential drugs, equipment, supplies and contraceptives; staff training; communications; the piloting of new ideas; and assessing the impact of the programme. DfID technical assistance will finance a national health systems resource centre, which will provide overall technical assistance to the programme at central and state level, and strengthen health sector procurement.
This second phase of the programme is ambitious and will require a huge expansion in the delivery of public sector health services to tackle some of the country’s biggest health problems. It also includes a number of additional accountability and financial management safeguards to strengthen the Government’s anti-corruption systems. The programme will be monitored closely by the Indian Government and development partners, through reviews every six months. A copy of the project memorandum for the DfID contribution has been deposited in the Library of the House.
Iraq: Roulement, Theatre Reserve Battalion
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Drayson): My right honourable friend the Secretary of State for Defence (Mr Des Browne) has made the following Written Ministerial Statement.
On 18 July in a Written Ministerial Statement I confirmed the details of the force package for the next routine roulement of UK forces in Iraq in November when the lead UK formation, currently 20 Armoured Brigade, will be replaced by 19 Light Brigade. I would now like to confirm some of the details of preparations for this roulement. As for previous roulements, elements of the theatre reserve battalion, currently the 2nd Battalion, the Royal Regiment of Fusiliers, will be deployed to provide additional security during what is always a period of intense activity for UK forces. There will also be some additional support aimed at contributing to improving security in Basra city.
In total this involves approximately 360 additional personnel. They will begin deploying shortly and complete their work not later than January 2007.
This is a critical period for the Iraqi people and their Government. There is an opportunity to improve significantly the security situation in Basra city—building on, and reinforcing, recent progress in Baghdad. Improved security in Basra will create the conditions for the important civil development work being led by the UK’s provincial reconstruction team. Therefore I have agreed that the deployment of troops from the theatre reserve battalion, while strictly time limited, should on this occasion be brought forward and extended by a short period. In addition, I have also authorised the deployment of Royal Engineers to assist with reconstruction and countering the threat from improvised explosive devices, a Royal Marine boat troop to assist in tightening security on the Shatt Al Arab waterway, and a troop of Royal Military Police to augment our training of the Iraqi police.
We ask our service men and women to discharge difficult and dangerous tasks. But over the next few months, through security operations and civil development projects, we have a key opportunity to make improvements to the lives of the people of Basra and lay the foundations for the departure, once the conditions are right, of coalition forces from front-line roles in Iraq.
Lebanon and Gaza
The Lord President of the Council (Baroness Amos): My right honourable friend the Secretary of State for International Development has made the following Statement.
The recent conflict in Lebanon caused great harm to the civilian populations in both Israel and Lebanon. A million people, a quarter of Lebanon’s population, were displaced by the fighting and in Israel 300,000 people were reported to have fled their homes or taken to shelters. Israel had every right to defend itself against Hezbollah, but from the beginning we expressed the need for a proportionate response. I believe that this requires all sides to respect international humanitarian law.
The ceasefire, reached after much diplomatic activity, including strenuous efforts by the British Government, is holding and has aided the relief effort but the humanitarian situation in Lebanon remains serious.
On 15 August, the day after the ceasefire came into effect, I visited Beirut to assess the situation for myself. The priorities for the humanitarian aid effort were to secure sustained access for humanitarian convoys to reach the most vulnerable; to ensure safe return for displaced citizens; to minimise the risk of injury and death from unexploded munitions for those returning and for aid workers; and to repair basic infrastructure, such as water and power supplies and bridges.
From early in the conflict, the UK responded to Lebanon’s call for help. Our total funding commitment now stands at £22.3 million, including our share of multilateral spending, making us one of the biggest bilateral contributors to the humanitarian effort. In line with our assessment of current priorities, this money is helping to provide shelter, healthcare, water and sanitation, and to clear unexploded munitions. We have agreed to provide urgently needed prefabricated bridges to open critical humanitarian supply routes. The first three bridges arrived in Lebanon on 1 September.
The Government have also urged Israel to lift all restrictions on normal shipping entering Lebanese ports, as set out in Resolution 1701. This is essential in order to help restore the economy. The partial lifting of the economic blockade last week has further enhanced the chances of avoiding a much bigger humanitarian crisis and will help Lebanon begin the path to recovery. We continue to push for further progress on the issue.
The international community has responded generously to Prime Minister Siniora’s appeal for assistance at the Stockhom conference on early recovery held on 31 August. Collectively we have pledged over $900 million to aid recovery. It will be important that these pledges are acted on as soon as possible.
Lebanon needed our aid, and we are ready to do more as needed, but more than anything else what Lebanon and the region need is peace. The conflict of this summer was a symptom of a wider collective failure to resolve the conflict that has affected the Middle East for decades. UNSCR 1701 was a step in the right direction, and must be implemented by all parties, but we need to encourage negotiation, compromise and above all political leadership to end the long-term suffering of people on both sides of the border.
Unfortunately, what has happened in Lebanon is not the only humanitarian crisis in the region. We cannot forget the plight of the Palestinians, especially in Gaza, where violence continues and people die. Since the start of the current conflict on 28 June, over 200 Palestinians have been killed and over 700 injured. The cost of damage to agriculture and industry is now estimated at around $46 million. Many households continue to receive only six to eight hours of electricity per day. However, there are plans to rebuild the Gaza power station and to supply electricity from Egypt, which should improve the situation. Intermittent electricity supply is affecting all key services. Water supply and sanitation services remain limited, with severe health implications. The UN now estimates a 65 per cent increase in the number of children with diarrhoea compared with this time last year. Hospitals are struggling to operate vital equipment and to store drugs and vaccines safely.
Food prices are rising and 70 per cent of Gazans are now considered to be food insecure. The World Food Programme reports a 72 per cent increase in numbers using their feeding programme. Gaza crossing points are open intermittently, primarily for humanitarian food supplies. Action is needed to ensure unrestricted humanitarian access, including the supply of medical equipment, fuel, food and electricity.
At the Stockholm donor conference on 1 September, donors pledged $500 million for the occupied Palestinian territories, of which $200 million was for humanitarian aid. The UK pledged £3 million to the temporary international mechanism (TIM) for operation, maintenance and repair work to keep water, sanitation and electricity services running. This follows an earlier contribution to the TIM of £3 million to fund essential health supplies. In addition, the UK made a contribution of £15 million to the United Nations Relief and Works Agency (UNRWA) in April. UNRWA provides healthcare and other basic services for Palestinian refugees, who comprise 70 per cent of Gaza’s population. The UK has also deployed two experts to the United Nations Office for the Co-ordination of Humanitarian Affairs to improve its capacity to monitor the humanitarian situation in Gaza. These two experts will assist donors and others to make sure help gets to those who need it the most.
Middle East
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman): My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs (Mrs Margaret Beckett) has made the following Written Ministerial Statement.
I welcome this chance to update the House on the situation in the Middle East since I wrote to Members of Parliament on 14 August.
Since the adoption of UN Security Council Resolution 1701 on 11 August, the Government have been focused on turning the cessation of hostilities between Israel and Hezbollah into a durable ceasefire and a long-term solution. And we have been working hard with key partners and the parties to re-energise the Middle East peace process, an issue of vital importance to the region and wider world. My right honourable friend the Prime Minister visited Lebanon—the first ever visit by a British Prime Minister—Israel and the Occupied Territories from 9 to 11 September and I visited Egypt from 7 to 9 September.
As the Prime Minister said during his visit to Lebanon, we must ensure the full implementation of UNSCR 1701 to support the Lebanese people’s desire for a stable, prosperous and democratic future for Lebanon.
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