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Statement
The Minister for Trade and Investment (Lord Davies of Abersoch): My honourable friend the Minister for Business and Regulatory Reform (Ian Lucas) has today made the following Statement.
The Government have today published a report on the Benefit-Cost Ratio of New Regulations Introduced in the Financial Year 2008-09.
The report shows that the benefits of new regulations enacted in the last financial year outweighed the costs by £9 billion, at a ratio of nearly 2 to 1 and confirms the Government's commitment to strengthening regulatory management.
The figures, published as part of a new benefit-cost ratio, showed that overall quantifiable benefits exceeded costs by about 80 per cent, meaning that government regulation is expected to deliver £1.85 in yearly benefits for every £1 of cost, or a ratio of 1.85 to 1. The publication of the ratio, covering the 2008-09 legislative programme, is a world first and will be published annually in the future.
The Pensions Act 2008, aimed at enabling and encouraging more people to build up a private pension income to supplement the money received from their basic state pension, is an exceptional piece of legislation, with the highest benefits and costs in 2008-09, which has a significant effect on the overall ratio. If removed from the ratio, the benefit to cost ratio would increase to 4 to 1.
The benefit-cost ratio is drawn from the detailed assessments of the impact of new regulation produced by government departments and regulators. All departments and regulators that introduce new regulation that has a significant cost or benefit must produce a full impact assessment which is published in an online library.
The Government are fully committed to ensuring that all new regulation is justified and proportionate and that the benefits outweigh the costs. It builds on
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Regulation provides essential protections to employees, employers and citizens. Striking the right balance between costs and benefits is vital to make sure the regulatory framework is fit for the 21st century.
A copy of the report is being placed in the Libraries of the House.
Legal Aid
Statement
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach ): On 20 July, I tabled a Written Ministerial Statement in respect of our earlier consultation paper, Family Legal Aid Funding from 2010, published by the Ministry of Justice (MoJ) and the Legal Services Commission (LSC) which set out proposals for legal aid payments for family work to apply from 2010 (Official Report, col. WS 156).
Although I remained convinced that it is right to proceed with a harmonised family advocacy scheme, I asked my officials to undertake further analysis of the assumptions that underpin the modelling of the fee schemes, to ensure the accuracy of that modelling. This additional work was necessary as there had been some significant changes made to our original consultation proposals following detailed discussion with stakeholders about the structure of both the advocacy and representation schemes.
In particular, we have introduced more graduation into the fee scheme structure to ensure that those advocates who take on the more difficult and complicated cases are fairly rewarded. In addition, I decided not to proceed with our proposal to remove independent social work from scope in private law cases but will continue to work with Cafcass to determine the best way to use our mutual resources for the benefit of vulnerable children.
I am now satisfied that the new fee schemes are based on robust data and accurate modelling, and that the final scheme allows us to achieve a reasonable balance between complexity and value for money.
The new fee schemes direct more money into public law cases to ensure that children and adults at risk of abuse take the highest priority for legal services. The fee schemes do not represent cuts to the family legal aid budget or to the services received by children and families, but some funding will be moved from barristers to solicitor advocates, as barristers and solicitor advocates will now receive the same fees for the same advocacy work. The fee schemes have been designed to be cost neutral against 2007-08 average case costs.
The LSC will shortly publish the response document and impact assessment on their website and the new schemes will be introduced with the new civil contracts in October 2010.
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National DNA Database
Statement
The Parliamentary Under-Secretary of State, Home Office (Lord West of Spithead): My honourable friend the Parliamentary Under-Secretary of State for Crime Reduction (Alan Campbell) has today made the following Written Ministerial Statement.
I have today placed the National DNA Database (NDNAD) annual report for 2007-08 and 2008-09 in the Library. The Government accept the need for ongoing accountability to the public on the operation of the NDNAD. The NDNAD annual report, which publishes details of its activities, is an important part of the aim to increase transparency and maintain and improve public confidence in the oversight, management and operations of the NDNAD.
Taxation: Avoidance Schemes
Statement
The Financial Services Secretary to the Treasury (Lord Myners): My right honourable friend the Financial Secretary to the Treasury (Stephen Timms) has made the following Written Ministerial Statement.
It is right that all taxpayers pay their fair share of tax. However, there are a minority who continue to seek ways to avoid paying their share. This is unacceptable. It is unfair on the majority of taxpayers, undermines fiscal sustainability, and reduces funding for public services. This Government will not tolerate tax avoidance or tax evasion in any form, and will act promptly to tackle both of these.
Several tax avoidance schemes have been notified to HM Revenue and Customs (HMRC) exploiting the sideways loss relief and double tax relief (DTR) rules, so I am today announcing changes to be made to legislation, with immediate effect, to counter these schemes.
As made clear by the Paymaster-General in her Written Statement on 2 March 2007 and the introduction of anti-avoidance legislation in subsequent Finance Acts, the Government will not tolerate avoidance schemes designed to exploit sideways loss relief rules. The Government have recently become aware of a contrived and aggressive avoidance scheme that seeks to generate losses in a professional partnership for offset by users of the scheme against their other income or capital gains by way of sideways loss relief. This scheme relies on the creation of losses through a series of arrangements that are established for the purposes of tax avoidance.
The Government do not accept that these arrangements have the effect that is sought, but to remove any doubt, and to prevent scheme providers continuing to devise and operate even more contrived schemes that seek to challenge the sideways loss relief rules, I am announcing prompt and decisive action to protect the Exchequer.
With effect from today a general rule will be introduced to prevent sideways loss relief being given where the loss arises from arrangements and a main purpose of the arrangements is to obtain a tax reduction by
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Legislation will be introduced in next year's Finance Bill. Full details of this measure including draft legislation will be issued on HMRC's website today.
Double tax relief: Unauthorised Unit Trusts
HMRC has been notified that unauthorised unit trusts are being used to avoid restrictions on double tax relief and to generate "repayments" of tax that the UK Exchequer has not received. To counter this, legislation will be introduced with the effect that to the extent any distribution treated as paid by a unauthorised unit trust is paid out of overseas income on which UK tax has been reduced by DTR, the distribution will be treated by the recipient as overseas income under deduction of overseas tax. The legislation will have effect from today.
A technical note setting out the details of this measure will be issued on HMRC's website today, with draft legislation to follow shortly.
Double tax relief: Manufactured Overseas Dividends
HMRC has been notified that some companies are using manufactured overseas dividends (MODs) instead of real overseas dividends in order to disapply the anti-avoidance rules in the DTR legislation.
To counter this, legislation will be introduced amending the relevant DTR anti-avoidance provision so that it applies to deemed overseas tax deducted from MODs in the same way that it applies to real overseas dividends. The amendment will ensure that the provision can also
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A technical note setting out the details of this measure will be issued on HMRC's website today, with draft legislation to follow shortly.
Double tax relief: Manufactured Interest
HMRC has been notified that UK manufactured interest payments are being used to avoid tax under the rules relating to controlled foreign companies (CFCs) by artificial generation of DTR.
To counter this, regulations, coming into force today, will be made repealing rules that deem companies to have received UK manufactured interest under deduction of tax. Instead, the recipient will simply be taxed on the amount of manufactured interest it receives with no relief for any notional tax credit.
HMRC has identified a provision in separate regulations dealing with MODs that would allow substantially the same scheme to be implemented using MODs. To prevent this, regulations coming into force today will also be made ensuring that the MOD rules cannot be used to claim relief for overseas tax in inappropriate circumstances. Instead, the recipient will be taxed on the amount of the MOD it receives with no relief for any notional tax credit.
Both sets of regulations will be available on HMRC's website today.
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