23 July 2014 : Column WS135

23 July 2014 : Column WS135

Written Statements

Wednesday 23 July 2014

Energy: Oil and Gas


The Commercial Secretary to the Treasury (Lord Deighton) (Con): Following the announcement at Budget 2014 that the government would introduce a new allowance to support investment in ultra high pressure, high temperature (HPHT) oil and gas projects, HM Treasury is today publishing a consultation document —“Maximising economic recovery: consultation on a cluster area allowance”. Copies of the document have been deposited in the libraries of the House.

Sir Ian Wood’s review into increasing oil and gas production clearly set out the size of the prize that still remains in the North Sea. The government is committed to maximising the benefits these natural resources can bring to the UK economy. This includes incentivising investment in projects which generate jobs, supply a large portion of the UK’s primary energy needs and support a world-class supply chain which exports around the globe.

The consultation outlines a proposal for a cluster area allowance, to support the development of ultra HPHT projects and to encourage exploration and appraisal in the surrounding areas (or “clusters”). It builds on the structure of the onshore allowance, introduced at Autumn Statement 2013 and enacted in Finance Act 2014.

The deadline for responses is 30 September 2014. Where appropriate, legislation will be brought forward in Finance Bill 2015.

The consultation document is available here:


NHS: Modernisation


The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My hon Friend the Secretary of State for Health (Jeremy Hunt) has made the following written ministerial statement.

23 July 2014 : Column WS136

I announced in July 2013 that the costs of implementing policies in the Health and Social Care Act were likely to be closer to the estimate in the business case for the programme (£1.5 billion in today’s prices) rather than the £1.6 billion to £1.7 billion estimate reported in October 2012.

I can today confirm today that I am expecting the costs of NHS Modernisation to be no higher than £1.5 billion.

Up to 31 March 2013, costs of £1,096 million had been incurred across the health and care system on developing and establishing the new arrangements. During 2013-14 organisations in the new system reported that they had incurred a further £220 million to continue this work. Some of these costs will relate to the continuous improvements that all organisations are expected to make. So, at most, the costs to 31 March 2014 were £1,316 million, comprising:

- £456 million on staff redundancies;- £75 million on IT for the new organisations;- £88 million on estates costs of closing bodies and setting up new organisations;- £26 million on internal Departmental costs (e.g. programme management);- £323 million on setting up Clinical Commissioning Groups (excluding items above); and- £348 million on other costs of closing bodies (e.g. PCTs) and setting up new organisations.

In the impact assessment, long-term annual savings arising from the changes were estimated at £1.5 billion per year from 2014-15 onwards. Gross savings over the transition period (2010-11 to 2014-15) were estimated at £4.5 billion.

As I announced last year, annual savings are still expected to be £1.5 billion from 2014-15.

The reductions in administration costs up to 31 March 2014 are set out below. These are calculated on a basis consistent with the impact assessment for the Health and Social Care Bill (with the figures set aside any administrative spending on implementing the reforms).

2010-11 £m2011-12 £m2012-13 £m2013-14 £mTotal £m






The cumulative savings in administration costs arising from the reforms over the period 2010-11 to 2014-15 are therefore expected to be at least £6.4 billion.