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Written Statements

Monday 4 November 2013

Banks: Royal Bank of Scotland


The Commercial Secretary to the Treasury (Lord Deighton) (Con): My right honourable friend the Chancellor of the Exchequer (George Osborne) has today made the following Written Ministerial Statement.

Today I can report to the House that the Government has concluded its review into the case for a Royal Bank of Scotland (RBS) ‘bad bank’ and the new management of RBS is setting out a new direction for the bank.

The new direction for RBS, supported by the management and Board of RBS, UKFI, the Government (its biggest shareholder), and the Bank of England (its prudential regulator), will lead RBS to being a boost to the British economy instead of a burden. It is part of the Government’s economic plan for sustaining the economic recovery and creating a banking system that works for Britain. It will enable RBS to focus on its core British business, supporting British families and companies.

The new direction includes:

i) A bad bank to separate and wind down RBS’s poorly-performing and high-risk assets that are a legacy of what went wrong in its past. This will enable RBS to look to the future and deliver its new strategy. Instead of an ‘external’ bad bank that would require further support from the taxpayer, this will be an ‘internal’ bad bank funded by RBS itself. This will target the wind-down or sale of approximately £38 billion of assets within three years. ii) Fully selling Citizens Financial Group in the United States and continuing to shrink RBS’s investment banking arm, generating more capital that will support more UK lending; and iii) Creating a smaller bank with reduced costs and a new commitment to become the number one bank for small and medium-sized—measured by a newly-created independent survey to be run by the Federation of Small Businesses (FSB) and the British Chamber of Commerce (BCC).

This is a key part of re-building the banking system and brings us a step closer to returning RBS to the private sector. This is good news for British businesses, for the British taxpayer and for the British economy.

Already as a result of the measures announced today, the Bank of England has confirmed that the taxpayers’ exposure to the banking system can be further reduced by removing the £8bn Contingent Capital Facility for RBS one year early.

I have always been clear about the Government’s objectives for RBS: to support the British economy, to get the best value for money for the taxpayer, and to set RBS on a path towards return to private ownership. These were the reasons for conducting the bad bank review, which I commissioned in June. The publication

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of RBS’s new direction and the announcement of an internal bad bank today follows the conclusion of that review.

The review established on the basis of extensive independent advice that the benefits of an external bad bank would be marginal and uncertain. Rothschild advised that the creation of an external bad bank would do more harm than good to RBS as it would not contribute to a capital improvement, would distract management and would produce significant implementation challenges.

In contrast the announcement of this new direction for RBS demonstrates clear benefits: strengthening the firm’s balance sheet, dealing effectively with legacy assets, charting a path to improved profitability and retiring the Dividend Access Share (DAS), which will pave the way for eventual reprivatisation.

This internal bad bank, which will be based on international examples of where similar action has worked, such as the bad bank created by Citigroup in the US will help deliver the Government’s objectives for RBS, but without the extra risks to the taxpayer of an external, taxpayer-funded bad bank.

Rothschild has advised the Government that tackling RBS’s wider issues—the coherence of its strategy and the profitability of its ‘core’ businesses—is as important for meeting the Government’s objectives as tackling its poor-performing legacy assets. It also advised that the new strategy announced by RBS should over time address many of the bank’s challenges and areas of investor concern, which in the longer term should be reflected in an improved valuation and improve the prospects for an earlier return of RBS ownership to the private sector

When the DAS is retired—on which the Treasury and RBS are now in advanced negotiations with the European Commission—this should also make RBS shares more attractive to external investors and bring forward the day when taxpayers can get their money back.

The Bank of England will play a continuing role in overseeing the implementation of the new direction as part of its ongoing supervision of the firm. The shareholder value implications of this plan have been reviewed by UK Financial Investments (UKFI), who will oversee the development and implementation of RBS's strategy in line with their mandate to act commercially and in the best interests of the taxpayer as shareholder.

Civil Justice Council and Family Justice Council: Triennial Reviews


The Minister of State, Ministry of Justice (Lord McNally) (LD): In March 2011 the Government responded to the Public Accounts Select Committee report ‘Smaller Government: Shrinking the Quango state’ setting out the Coalition’s plans for reforming the public bodies sector. It included the requirement to undertake Triennial Reviews of Executive and Advisory Non Departmental Public Bodies (NDPBs).

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The Civil Justice Council was established under the Civil Procedure Act 1997. It is responsible for overseeing and coordinating the modernisation of the civil justice system and for providing advice to the Lord Chancellor and others on the effectiveness of aspects of the civil justice system. It also makes recommendations to test, review or conduct research into specific areas.

The primary role of the Family Justice Council is to promote an interdisciplinary approach to family justice and it is an advisory body to the Family Justice Board. The Council also monitors how effectively the family justice system delivers the service the Government and the public need, providing advice to the Family Justice Board. The FJC was not established under statute.

To deliver the Coalition Government’s commitment to transparency and accountability across our public bodies, the Civil Justice Council and the Family Justice Council will each be subject to a Triennial Review. The Judicial Office, which is undertaking the Triennial Reviews has today launched a consultation which will last until 25 November 2013 inviting views. In line with Cabinet Office guidance, the reviews will consider the following:

• the continuing need for the Civil Justice and Family Justice Councils – both their functions and their form; and • where it is agreed that the bodies should remain, to review the control and governance arrangements in place to ensure that these public bodies are complying with recognised principles of good corporate governance.

In conducting the Triennial Review, officials will be engaging with a broad range of stakeholders and users of the Civil Justice Council and the Family Justice Council. The review will be aligned with guidance published by the Cabinet Office: ‘Guidance on Reviews of Non Departmental Public Bodies’. The final report and findings will be laid in this House.

Education: English and Mathematics GCSEs


The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My honourable Friend Secretary of State for Education (Rt Hon Michael Gove MP) made the following announcement:

I announced in February my intention to reform GCSEs to ensure they are rigorous and robust and give students access to high quality qualifications which match expectations in the highest performing jurisdictions.

Today I am publishing the outcome of a consultation on subject content for new GCSEs in English literature, English language and mathematics, which will be taught in schools from September 2015. I have prioritised English and mathematics because they are both fundamental to facilitating learning in other subjects, and yet PISA evidence demonstrates that 15 year olds in nine other countries are, on average, at least half a year ahead of students in England in both reading and mathematics. Reform of these key subjects is, therefore, a matter of pressing urgency.

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The new mathematics GCSE will demand deeper and broader mathematical understanding. It will provide all students with greater coverage of key areas such as ratio, proportion and rates of change and require them to apply their knowledge and reasoning to provide clear mathematical arguments. It will focus on ensuring that every student masters the fundamental mathematics that is required for further education and future careers. It will provide greater challenge for the most able students by thoroughly testing their understanding of the mathematical knowledge needed for higher level study and careers in mathematics, the sciences and computing.

The new mathematics GCSE will be more demanding and we anticipate that schools will want to increase the time spent teaching mathematics. On average secondary schools in England spend only 116 hours per year teaching mathematics, which international studies show is far less time than that spent on this vital subject by our competitors. Just one extra lesson each week would put England closer to countries like Australia or Singapore who teach 143 and 138 hours a year of mathematics respectively. We announced on 14 October that mathematics, alongside English, will be double weighted in secondary school performance measures from 2016. This will also provide a strong incentive for schools to ensure that they are strengthening their mathematics provision.

My ambition is that the great majority of students should continue to study mathematics, post-16, by 2020. All students without a grade C or above will continue to study mathematics post-16. New high quality ‘Core maths’ qualifications will be introduced from 2015 for students who have passed GCSE, and want to continue to improve the mathematics skills they need for further education and work, but do not wish to take a full AS or A level. The new GCSEs will provide a firm foundation for this further study.

The English language GCSE will provide all students with a robust foundation of reading and good written English, and with the language and literary skills which are required for further study and work. It will ensure that students can read fluently and write effectively, and will have 20% of the marks awarded for accurate spelling, punctuation and grammar. It will also encourage the study of literature for those who do not take the English literature GCSE, with students reading high-quality texts across a range of genres and periods.

The new English literature GCSE will build on this foundation, and encourage students to read, write and think critically. It will involve students studying a range of intellectually challenging and substantial whole texts in detail including Shakespeare, nineteenth-century novels, Romantic poetry and other high quality fiction and drama. The new GCSE will also ensure that all students are examined on some “unseen” texts, encouraging students to read widely and rewarding those that can demonstrate the breadth of their understanding.

In September of this year Ofqual and I confirmed that, for the remaining subjects consulted on, new GCSEs will be ready for teaching from 2016. The content for those subjects will be published in spring 2014.

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The new GCSEs in English and mathematics set higher expectations; they demand more from all students and provide further challenge for those aiming to achieve top grades. Alongside the GCSE content we are publishing today, Ofqual is announcing its decisions on the key characteristics of reformed GCSEs, including new arrangements for grading and assessment.

The Government’s response to its consultation and the new subject content for GCSEs in English literature, English language and mathematics have been published on its website and I will place copies of these documents in the House Libraries.

Employment: Recruitment Sector


The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con): My Hon. Friend the Parliamentary Under-Secretary of State for Employment Relations and Consumer Affairs (Jo Swinson) has made the following statement.

On the 12 July 2013, following a public consultation, the Government announced its intention to reform the regulatory framework for the recruitment sector. We intend to replace the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 with a simplified regulatory framework which will continue to protect people who are looking for work but which will remove some of the burden from business.

As part of the Government’s ongoing commitment to review regularly the enforcement of the National Minimum Wage, we also announced a more targeted enforcement strategy for the recruitment sector, focusing on protecting the most vulnerable, low paid workers. We are now announcing that, from today, resources from the Employment Agency Standards Inspectorate (EAS) which is currently situated within BIS, will move to HM Revenue and Customs’ National Minimum Wage (NMW) team. They will form a new HMRC team and will focus mainly on enforcing non-payment of National Minimum Wage in the recruitment sector. By increasing HMRC’s NMW team we will ensure that the most vulnerable workers are protected and we will create a level playing field for the vast majority of agencies who play by the rules.

A small team will remain in BIS to enforce the recruitment sector regulations. Complaints will continue to be prioritised using a risk-based approach and the level of resourcing will be kept under review. The Pay and Work Rights Helpline will continue to be the first point of contact for individuals seeking help and advice.



The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con): My Honourable Friend the Minister of State for Europe (David Lidington) has made the following Written Ministerial Statement:

On Wednesday 30 October an incident occurred in British Gibraltar Territorial Waters (BGTW) involving dangerous manoeuvring by a Spanish Guardia Civil

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boat. Following media reporting of the incident, this statement sets out the facts and the Government’s response.

During a routine transfer of personnel between Royal Navy vessels in BGTW, a Guardia Civil vessel was observed approaching at speed. As the Spanish vessel approached, the Royal Navy and Defence Police vessels at the scene followed operational procedures, including forming a protective barrier. On arriving in the vicinity, the Guardia Civil vessel conducted several dangerous manoeuvres near to the British vessels. At one point a minor collision occurred between the Guardia Civil vessel and one of the Defence Police boats. There was no damage to either vessel, no shots were fired and there were no injuries.

The UK’s Defence Attaché in Madrid raised our concerns about the incident with the Spanish Navy on Thursday 31 October. We have also raised this at a high level with the Spanish Ministry of Foreign Affairs, making clear that the actions of the Guardia Civil were unacceptable and dangerous, with the potential to cause serious injury or damage. Once the full facts of the incident had been established, a formal written protest was also issued to the Spanish Government in Madrid.

Primary Authority Partnerships


The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con): My Rt. Hon. Friend the Minister for Business and Energy (Michael Fallon) has made the following statement.

The Government has committed to ending the culture of tick-box regulation and creating an environment that gives business confidence and certainty to grow.

Primary Authority promotes business confidence through the provision of robust, reliable and consistent advice on compliance issues. It also generates efficiency savings for local authorities, enabling them to target their resources more effectively. In short it enables better enforcement.

Since its introduction Primary Authority partnerships have delivered proven benefits to businesses and regulators. The Enterprise and Regulatory Reform Act 2013 demonstrates Government’s commitment to Primary Authority by strengthening the scheme and extending the scope

In response to the consultation ‘Transforming Regulatory Enforcement’, the Government committed to pilot the extension of Primary Authority to fire safety. In autumn 2012 two pilots were set up to examine how partnership working could help improve the delivery of fire safety regulation. One of the pilots looked at how Primary Authority would work for Fire Safety, and a second pilot looked at a scheme which was not backed by statute.

The pilots ended in July 2013 and an independent evaluation concluded that partnership working delivered benefits to both businesses and Fire and Rescue Authorities. Although there were positive elements to both schemes, the statutory Primary Authority Scheme represented ‘the most sensible way forward’.

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We are pleased to announce that Government intends to proceed with the extension of Primary Authority to Fire Safety with effect from 6th April 2014.

In order to effect this change and bring the Regulatory Reform (Fire Safety) Order 2005 within the scope of Primary Authority, we will amend the Co-ordination of Regulatory Enforcement (Enforcement Actions) Order 2009, by means of a Statutory Instrument, subject to a negative resolution process. We anticipate this happening in the new year.

I am sure that the House will welcome with me the extension of Primary Authority to include Fire Safety and the benefits and efficiency savings that this will bring to both businesses and Fire Safety Authorities.

Prison Service Pay Review Body


The Minister of State, Ministry of Justice (Lord McNally) (LD): My honourable friend the Parliamentary Under-Secretary of State for Justice (Jeremy Wright) has made the following Written Ministerial Statement.

I am pleased to announce that the Prime Minister has appointed Elaine Hartin as a member, and re-appointed Peter Knight as the Chair, to the Prison Service Pay Review Body, all for three years, commencing September 2013 and March 2014 respectively. The appointments have been conducted in accordance with the Commissioner for Public Appointments’ Code of Practice on appointments to Public Bodies.

Terrorism Act 2000 and Part 1 of the Terrorism Act 2006: Annual Report


The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con): My right hon Friend the Home Secretary (Theresa May) has today made the following Written Ministerial Statement:

The Government’s response to the report of Mr David Anderson QC on the operation in 2012 of the Terrorism Act 2000 and Part 1 of the Terrorism Act 2006 is being published today.

I thank David Anderson QC for his report and have carefully considered the detailed commentary and observations made.

The Government’s response is available in the Vote Office and online.

Wales: Infrastructure and Finance


The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD): My Rt Hon Friend the Secretary of State for Wales (David Jones) has made the following Ministerial Statement:

The Chancellor, Chief Secretary to the Treasury and I are pleased to set out the Government’s plans to facilitate infrastructure investment in Wales, in order to stimulate economic recovery and build growth in the Welsh economy.

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Infrastructure in Wales has suffered from years of under-investment that, since 2010, this Government has worked hard to put right. Wales is benefiting directly and indirectly from almost £2bn of investment to modernise the rail network, including electrifying the mainline to Swansea and the railways serving the South Wales Valleys; £250 million to build a new prison in North Wales; £57 million to bring superfast broadband to Wales; and Hitachi’s investment in new nuclear at Wylfa, which is a great opportunity to create jobs and drive economic growth in North Wales.

We have also been clear about the need to work with the Welsh Government to ensure it is able to invest in infrastructure in those areas in which it takes the lead, and in particular on those roads in Wales which form part of the trans-European road network—the M4 in South Wales and the North Wales Expressway.

Upgrading the M4 around Newport is an urgent priority for both Governments, and I am committed to working with the Welsh Government to deliver the improvements that are required.

In October 2012 the UK Government agreed in principle that the Welsh Government should be allowed access to capital borrowing powers to invest in infrastructure in Wales, subject to an independent revenue stream being available to it to repay the money it borrows.

That agreement has informed our consideration of the recommendations made last year by the Commission on Devolution in Wales (the Silk Commission), and I can confirm that the Government will implement the key proposals in the Commission’s first report. These are:

• We will give the Welsh Ministers borrowing powers, so that they can borrow money to invest in Wales; • We will devolve certain taxes, as the Silk Commission recommended to ensure the Welsh Government has an independent funding stream to pay back the money it borrows:• We will devolve Landfill Tax and Stamp Duty Land Tax in Wales;• And we will provide for a referendum to take place so that people in Wales can decide whether some of their income tax should be devolved, in the same way as it is in Scotland.

These measures will give the Welsh Government the tools to invest in infrastructure in Wales and, in doing so, will make the National Assembly for Wales and the Welsh Government more accountable to the people in Wales who elect them. Since devolution these institutions have been accountable for how they spend taxpayers’ money. As a result of my statement today, they will be more accountable for how they raise it.

We will legislate to implement these changes as soon as parliamentary time allows. As a first step, we will publish a draft Wales Bill in the next few months to allow Parliament to scrutinise the legislation in draft.

We will enable the Welsh Government to use its existing limited borrowing powers before the new tax and borrowing powers come on stream to get the improvements to the M4 underway as soon as possible.

Before the end of the year we will announce the Government’s response to all 33 recommendations made by the Commission in its first report.