Written Ministerial Statements

Thursday 9th December 2010 Written Statements

Thursday 9 December 2010

EU Competitiveness Council (Pre-Council Statement)

Thursday 9th December 2010 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

My noble Friend the Under-Secretary of State for Business, Innovation and Skills, (Baroness Wilcox), has today made the following statement:

“The EU Competitiveness Council will take place in Brussels on 10 December 2010. I shall represent the UK on industry and internal market issues and Andy Lebrecht, the UK’s Deputy Permanent Representative to the EU will represent the UK when I am not in attendance.

The main agenda items will include the proposed adoption of two sets of Council conclusions: one on the Single Market Act and one on the EU framework for betting and gambling. There will be an exchange of views on the EU patent to consider the way forward and possible enhanced co-operation process. There will also be a ministerial lunchtime discussion on the use of EU impact assessments in the EU institutions to support the development of EU legislation. A proposed regulation on EU state aid to support the closure of coal mines in the EU and the adoption of Council conclusions on EU industrial policy will also be discussed.

The following items will be taken under any other business:

Presidency information on transposition of EU directives into national law;

Commission information on implementation and mutual evaluation of the EU services directive;

Commission information on the proposed EU consumer rights directive;

Commission information on the EU consumer market scoreboard;

The Government’s main aims will be to:

To agree Council conclusions on the Single Market Act.

Support progress on the EU patent.

Endorse Council conclusions on an EU framework for gambling and betting in member states.

Support the importance of impact assessments in the EU institutions to support EU decision making.

Accept the proposal on EU state aid for coal mines closure.

Agree Council conclusions on EU industrial policy.”

Anti-Avoidance: Disguised Remuneration

Thursday 9th December 2010 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

Following the written ministerial statement on 6 December 2010, Official Report, column 1WS, and as announced at the June Budget, the Government are introducing legislation to tackle arrangements involving trusts or other vehicles used to reward employees which seek to avoid or defer the payment of income tax or National Insurance Contributions (NICs). The arrangements covered include the provision of a tax-advantaged alternative to saving beyond the annual and lifetime allowances available in a registered pension scheme. In many cases, these third-party arrangements allow an employee to enjoy the full benefit of a sum of money paid or assets provided while arguing that, because of the structure of the arrangements, there is no legal right to the money or assets. This argument is used to support a proposition that income tax and NICs are due (if at all) only on the use of the money or assets during the period of the employee’s employment and not on their full value.

The legislation inserts a new part 7A into the Income Tax (Earning and Pensions) Act 2003. The legislation ensures that where a third party makes provision for what is in substance a reward or recognition, or a loan, in connection with the employee’s current, former, or future employment, an income tax charge arises. Income tax is charged on the sum of money made available and on the higher of the cost or market value where an asset is used to deliver the reward or recognition, for example by transferring or otherwise making available an asset for the employee’s use and benefit as if the employee owned the asset. The amount concerned will count as a payment of employment income and the employer will be required to account for PAYE.

There will be protection for specified types of arrangements involving third parties—including registered pension schemes, approved employee share schemes and ordinary commercial transactions. The tax treatment of benefits packages which are available across the employer’s work force will also be unaffected by the measure, provided that the benefits are genuinely available to substantially all employees and cannot be accessed by only specially selected individuals.

The legislation will take effect from 6 April 2011 and apply to rewards, recognitions or loans which are earmarked for the benefit of an employee, or former or prospective employee, or otherwise made available on and after that date.

In addition, anti-forestalling provisions apply to the payment of sums (including loans) and the provision of readily convertible assets for the purposes of securing the payment of sums (including loans) where the sum is paid or the asset is provided between 9 December 2010 and 5 April 2011 where, if paid or provided on or after 6 April 2011, they would be caught by the legislation.

The anti-forestalling charge will arise on 6 April 2012 if sums paid have not been repaid, or readily convertible assets used to secure the payment of a sum have not been returned before that date, or not otherwise charged to tax under section 62 of ITEPA 2003. Any sum paid to which these anti-forestalling provisions apply, less a deduction for any amount which has been repaid, will count as employment income and the employer will be required to account for income tax under PAYE as if the amount concerned was a payment made on 6 April 2012. The value of any readily convertible asset provided (to which the anti-forestalling provisions apply) will also count as employment income, subject to the operation of PAYE by the employer as if the amount concerned was a payment made on 6 April 2012.

Regulations will be brought forward to apply National Insurance Contributions to the amounts charged to tax by this legislation.

Further details are contained in a draft explanatory note published on HMRC’s website today, together with the draft legislation.

Tax Policy Making and Draft Finance Bill 2011

Thursday 9th December 2010 Written Statements

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

At the June Budget, the Government set out their commitment to build a new approach to tax policy making—one founded on predictability, stability and simplicity—with consultation on policy and scrutiny of legislation as the cornerstones.

Today the Government are publishing their response to the consultation “Tax policy making: a new approach”, which sets a number of concrete improvements to the way in which tax policy is developed, communicated and legislated. We have already taken steps to improve predictability of the tax system, for example through the “Corporate Tax Road Map” published on 29 November 2009.

We are also making further progress towards our objectives with the publication, in draft, of the majority of 2011 Finance Bill clauses. This practice will become an established feature in the tax policy making cycle. Confirming the majority of intended tax changes at least three months ahead of publication of the Bill supports predictability in the tax system and provides an opportunity for draft legislation to be properly scrutinised.

The draft clauses will be open to consultation until 9 February. HMRC will host an open day for tax practitioners and tax managers on 24 January 2011. The Finance Bill will be published in full on 31 March 2011.

In response to feedback received through the consultation on tax policy making, we have also published a supporting document that provides an overview of the draft clauses published today. This sets out, for each draft clause, the proposed change, why we seek the change and what we expect the impacts to be.

Alongside the relevant draft clauses, the Government are also publishing:

a response to the consultation on furnished holiday lettings;

a response to the consultation on pensions annuitisation;

a response to the consultation on taxation of gaming machines

a response to the consultation on the simplification of corporate capital gains;

a response to consultation on modernisation of investment trust companies; and

two consultations relating to HMRC’s powers review.

Draft clauses, the Government’s response to the consultation on tax policy making and other documents published today can be found on HM Treasury and HM Revenue and Customs websites.

The Government have also tabled two separate written statements today in relation to the following clauses:

Disguised remuneration; and

Restricting pensions tax relief.

Unfunded Public Service Pension Contributions

Thursday 9th December 2010 Written Statements

[The Chief Secretary to the Treasury (Danny Alexander)]

The Government announced at the spending review their plans to take forward recommendations made by the Independent Public Service Pension Commission in its interim report. These plans included a commitment to undertake a review of the discount rate used to set contributions in the unfunded public service pension schemes.

Today the public consultation on the discount rate has been launched and the Government would welcome comments from all interested groups. The consultation document has been placed in the Libraries of both Houses, can be found at: http://www.hm-treasury.gov.uk/consult_unfunded_pensions.htm and will end on 3 March.

Restricting Pensions Tax Relief

Thursday 9th December 2010 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

On 14 October the Government announced that, from April 2011, the annual allowance for tax-privileged pension saving will be reduced from £255,000 to £50,000 and that from April 2012 the lifetime allowance will be reduced from £1.8 million to £1.5 million, to ensure that pensions tax relief remains fair and affordable. Representations were sought on some specific policy issues around reducing the lifetime allowance and the Government are today setting out their proposals for the operation of a new protection regime for individuals who may have already built up pension savings in the expectation that the lifetime allowance would remain at its current level of £1,800,000.

This new “fixed protection” will give anyone the opportunity to apply for a lifetime allowance of £1,800,000 instead of the reduced lifetime allowance of £1,500,000 on the condition that they no longer actively contribute to their pension or actively accrue pension benefits (that is, broadly excluding annual inflationary uprating). Individuals who are already entitled to primary protection and/or enhanced protection will also continue to receive their current levels of protection.

Draft clauses and draft guidance are being published today on the reduced lifetime allowance, including the operation of “fixed protection”. It is intended that from 6 April 2012 individuals will be considered “inactive” if they do not make or receive any further contributions to a registered defined contribution pension scheme, or build up additional annual pension over an allowable “relevant percentage” in a registered defined benefit or cash balance pension scheme. In order to prevent pension scheme rules being amended following this announcement so as to allow for artificially inflated annual increases to pensions rates the “relevant percentage” is defined as being the rate of increase specified in the scheme rules as at today’s date, 9 December 2010. If no rate is specified in the scheme rules, the “relevant percentage” will be the annual percentage increase in the consumer prices index for September in the previous tax year.

A revised set of draft clauses on the annual allowance, that were previously published on 14 October, have also been published today. This contains some additions and amendments, including details of the proposed exemption from the annual allowance in cases of severe ill health.

Localism Bill and Social Housing

Thursday 9th December 2010 Written Statements

[The Minister for Housing and Local Government (Grant Shapps)]

Following the spending review, I am today announcing further details of the new “affordable rent” model to be offered by private registered providers of social housing (hereafter referred to as housing associations) from April 2011.

We must make far better use of existing social housing—ensuring that we target support where it is needed most. The Government published a policy paper, “Local decisions: a fairer fixture for social housing”' on 22 November 2010. The localism Bill will take forward radical reforms, including flexible tenancies and changes to the way social housing is allocated. The Government have given a clear commitment to ensure that the existing tenancies and rents of secure and assured tenants of social landlords are protected and respected in these reforms.

The Bill will contain a wide-ranging package of reforms that will devolve greater power and freedoms to councils and neighbourhoods, establish powerful new rights for communities, revolutionise the planning system, and give communities control over housing decisions.

Given the huge pressures on public finances we must also ensure that we get more for the money we invest in new social homes. Alongside the Bill, the introduction of affordable rent will represent a significant first step towards giving social landlords much greater freedom to respond to local housing need.

The Homes and Communities Agency will publish a full framework document early next year that will form the basis for bids from providers who are interested in offering affordable rent.

Overview

Affordable rent is designed to:

maximise the delivery of new social housing by making the best possible use of constrained public subsidy and the existing social housing stock; and

provide an offer which is more diverse for the range of people accessing social housing, providing alternatives to traditional social rent.

Affordable rent falls within the definition of social housing in section 68 of the Housing and Regeneration Act 2008 (and, in particular, the definition of low-cost rental accommodation in section 69 of that Act). Affordable rent properties will therefore be subject to regulation by the Tenant Services Authority—and its Homes and Communities Agency successor—where they are provided by a registered provider.

Affordable rent will offer housing associations the flexibility to convert vacant social rent properties to affordable rent at re-let, at a rent level of up to 80% of market rent. Housing associations will be able to convert vacant properties to affordable rent where they have reached an investment agreement with the Home and Communities Agency about how additional rental income will be reinvested in the supply of new affordable housing.

The Homes and Communities Agency has a capital budget of almost £4.5 billion over the spending review period to fund affordable housing supply, of which around £2 billion will support the delivery of new affordable rent homes (the total also includes £2.3 billion to meet existing commitments). While grant funding will primarily target affordable rent, there may be some scope for delivery of low cost home ownership as part of the agreements, where this is appropriate for local circumstances and helps to promote the overall supply of affordable homes. Ministers intend to make the payment of grant funding conditional on transparency.

Agreements could also involve approval in principle for future asset management plans that include social housing disposals, subject to the need for statutory consent and consultation with the relevant local authorities. The Tenant Services Authority will need to be engaged in the process to ensure that providers can continue to meet its regulatory standards, including on viability.

Allocation

We envisage that affordable rent properties will be allocated in the same way that social rent properties are now. The existing regulatory obligation on associations to co-operate with local authorities’ strategic housing function on the allocation of social rent properties will also apply to affordable rent. Similarly we envisage that existing lettings arrangements operated by local authorities and housing associations will continue to apply and that affordable rent properties will—where appropriate—be made available through choice-based lettings.

The statutory and regulatory framework for allocations provides scope for local flexibility. Local authorities and associations may wish to exercise this discretion in relation to affordable rent in order to meet local needs and priorities in the most effective way possible (for example, through the adoption of appropriate local lettings policies).

Rent

Affordable rent properties will not be subject to the rent restructuring policy that applies to social rented housing. This policy was originally outlined by the previous Government in March 2001 (in the “Guide to Social Rent Reforms”) and implemented by the then Housing Corporation (via the “Rent Influencing Regime Guidance” published by the Corporation in October 2001). The previous Government’s direction to the Tenant Services Authority issued in November 2009 required the regulator to set a standard on rent that reflected the same policy.

In particular, the direction required the Tenant Services Authority, when setting a standard on rents, to have regard to the social rent guidance. The direction defined the term “social rent guidance” as the guide to social rent reforms published in March2001 “and any guidance issued by the Department, or its successors, in relation to that document”. This statement should be treated as guidance issued in relation to the March 2001 document. The direction also obliged the Tenant Services Authority to set a rent standard with a view to achieving, so far as possible, the target rent policy set out in the rent influencing regime guidance.

This statement clarifies that affordable rent properties are not covered by the Government’s rent restructuring policy. Note that a property is only considered to be “affordable rent” for these purposes where it is linked to an agreement with the Homes and Communities Agency on investment.

Housing associations will be able to let an affordable rent property (whether a converted void or new build) at up to 80% of market rent for an equivalent property for that size and location. The association’s calculation of the market rent would need to be based on a residential lettings estimate for a property of the appropriate size, condition and area. Valuations should be in accordance with a RICS recognised method.

The maximum annual rent increase on an affordable rent property will be RPI + 0.5%. However associations will be required to rebase the rent on each occasion that a new tenancy agreement is issued (or renewed) for an affordable rent property. This requirement, which overrides the RPI + 0.5% limit, is designed to ensure that the rent set at the beginning of each new tenancy is no higher than 80% of the market rent.

Tenure

The Government have already published radical proposals to give greater flexibility to both local authority and housing association landlords over the types of tenure they can offer to social housing tenants¹. In particular, the Government believe that it is no longer right to require that every social tenancy should be for life—regardless of the household’s particular circumstances. The aim is to create a more flexible system so that scarce public resource can be focused on those who need it most.

The affordable rent model is the first step towards delivering these wider reforms. Housing associations will be able to offer affordable rent on fixed-term tenancies, but they will also retain the option to offer lifetime tenancies should they wish to do so. We would expect associations to use this additional flexibility to ensure that help and support are focused on those who need it most when they need it most, and to build strong and cohesive communities. They will need to meet the existing regulatory requirement to publish clear and accessible policies which outline their approach to tenancy management.

The Government are currently consulting on their wider tenure reform proposals for social housing, including on the rights and protections that should be available to tenants as part of these changes. These proposals include a minimum fixed-term of two years for all general needs social tenancies, the right to acquire for tenants with a fixed-term tenancy of two years or more (subject to the existing conditions and exceptions) and changes to succession rights². Some of the proposals will require primary legislation and we intend to deliver these through the localism Bill. The final proposals, once implemented (either by legislation or regulation), will apply to fixed-term tenancies that are subsequently issued for both affordable rent and traditional social rent.

However we envisage that the first affordable rent properties will be let during 2011-12, before the wider tenure reform proposals are due to come on stream. We have therefore considered which of the proposed conditions should be attached to the affordable rent model from the start. It should be noted that the proposals that require primary legislation (for example, on the right to acquire) cannot be brought forward in this way.

We wish to apply the following (non-statutory) conditions to the affordable rent model:

a minimum fixed term of two years for affordable rent tenancies; and

where a landlord decides, in line with its published policy, not to reissue an affordable rent tenancy at the end of the fixed-term, the landlord should provide advice and assistance to help the tenant find suitable alternative accommodation. Landlords and tenants may wish to consider a range of “end of tenancy” options depending on the needs of the household concerned. This could include selling the property to the tenant via conversion to shared ownership (subject to consent).

¹“Local Decisions: a fairer future for social housing” (22 November 2010).

²Full details of these proposals are set out in section 2 of the “Local Decisions” document

War Pensions: Uprating 2011

Thursday 9th December 2010 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

The new rates of war pensions and allowances proposed from April 2011 are set out in the following tables. The annual uprating of war pensions and allowances for 2011 will take place from the week beginning 11 April 2011. Rates for 2011 are increasing by 3.1% in line with the Consumer Price Index as outlined in the Budget.

Foreign Affairs Council and General Affairs Council

Thursday 9th December 2010 Written Statements

[The Minister for Europe (Mr David Lidington)]

The Foreign Affairs Council and General Affairs Council will meet in Brussels on 13 and 14 December. My right hon. Friend the Foreign Secretary will attend the Foreign Affairs Council. I will attend the General Affairs Council.

foreign affairs council (fac)

Western Balkans

We expect Ministers to focus on Bosnia and Herzegovina (BiH), and in particular the need for the new Government to focus on the EU and wider reform agenda, including constitutional reforms. There may be some discussion of the EU institutional presence in BiH; we remain committed to the completion of the “5+2” conditionality for the transition of the Office of the High Representative to an EU-only presence.

Additionally, the noble Baroness Ashton is likely to update Ministers on preparations for the EU-facilitated Belgrade/Pristina dialogue. We hope this begins as soon as possible. There may be an initial exchange of views on the outcomes of the 12 December parliamentary elections in Kosovo.

Sudan

We expect conclusions to be adopted on preparations ahead of the referendum on self-determination for southern Sudan in January 2011, as part of the final stages of the comprehensive peace agreement. We believe that these conclusions should emphasise the importance of focused, sustained efforts to ensure a timely, peaceful and credible referendum. We also expect Ministers to discuss humanitarian contingency planning for the referendum, and to underline our continuing collective long-term support for northern and southern Sudan, regardless of the referendum outcome.

Middle East Peace Process (MEPP)

Ministers will discuss latest developments in the region. We expect conclusions emphasising the EU’s support for US efforts, in conjunction with other members of the Quartet. Ministers may also discuss how best to improve access to Gaza.

Somalia/Horn of Africa

Ministers are expected to assess the effectiveness of EU efforts in the Horn of Africa, and in particular support to the peace process in Somalia.

We continue to support EU efforts to train the Somali security forces through the EU training mission Somalia. The existence of pay, command and control and infrastructure for returning troops is vital to the success of the mission. We encourage ongoing EU support to the African Union mission to Somalia, which provides the secure space within which political reconciliation can take place. On the political track, debate is likely to focus on support to Somalia’s regions: Puntland and Somaliland. We support EU work in these areas, building on a central tenet of the UK strategy: support to local and regional areas of stability.

Conclusions are likely to reaffirm the importance of work on Somalia, a UK priority in Africa; raise Somalia’s profile on the EU agenda; and task further work on scenarios for how to end the current transitional period and what should succeed it post-August 2011.

Afghanistan

We expect the noble Baroness Ashton to consider how to increase the effectiveness of EU assistance in Afghanistan, in the context of the EU action plan for Afghanistan. The discussion is expected to follow a briefing by the European Union Special Representatives (EUSR) Ambassador Usackas for Development Ministers at the 9 December FAC (on which my right hon. Friend the Development Secretary has already written to the House).

Strategic Partners

This discussion is likely to take place over dinner on 13 December. The noble Baroness Ashton will solicit views from Partners how to develop on the EU’s relationship with Russia, China and the US. We are keen for the noble Baroness Ashton to continue her work on these partnerships, devising a set of concrete objectives for the EU’s external action. We believe that trade is a central component of these relationships.

Moldova

Discussion will focus on the outcome of the 28 November parliamentary elections. These were largely conducted to internationally accepted standards. Despite the encouraging conduct of the elections, and a good turnout, neither the outgoing coalition Government nor any single party won enough seats to form a Government or to elect a permanent president. The prospect of further stalemate and political instability remains very real. We fully support the statement made by the noble Baroness Ashton and the Enlargement Commissioner, Stefan Füle (see link below).

http://www.consilium.europa.eu/uedocs/cms_ data/docs/pressdata/EN/foraff/11 8093.pdf

Iran

The noble Baroness Ashton is likely to report on the recent E3+3 talks with Iran in Geneva. Talks will continue in January 2011. The noble Baroness Ashton released a statement on behalf of the E3+3 on 7 December (see link below)

http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/l18263.pdf

Priorities for 2011

The noble Baroness Ashton will solicit views on priorities for her and the External Action Service in 2011.

AOB

A number of smaller issues are on the agenda under AOB. Ministers will hear reports back from the OSCE Summit in Astana, which I attended along with my right hon. Friend the Deputy Prime Minister. Some Partners have requested a general discussion on the plight of religious minorities in Iraq. We expect Ministers to agree (without discussion) short conclusions on the Democratic Republic of Congo, focusing on the forthcoming elections.

general affairs council (gac)

Enlargement

The presidency will chair a discussion on draft European Council Conclusions, taking stock of progress on EU enlargement and on the stabilisation and association process in the Western Balkans. These will be informed by the European Commission’s Communication of 9 November setting out an enlargement strategy and progress reports for candidates and potential candidates. I submitted this communication to Parliament on 30 November under an explanatory memorandum.

As I set out in that memorandum, the Government believe the Commission’s communication to be a broadly fair and balanced assessment. We will seek conclusions reconfirming support for EU enlargement and recognition that the accession process gives strong encouragement to political and economic reform in the enlargement countries and reinforces peace, democracy and stability in Europe. We agree with the Commission’s view that progress towards the EU should take place at the rate of reform of the (potential) candidate country and that key challenges remain for most enlargement countries, including on the rule of law, and the fight against corruption and organised crime. We further support the Commission’s view that bilateral disputes should not be allowed to hold up the accession process.

On individual countries, we will welcome progress made this year by Turkey with the recent constitutional reforms, and support the Commission’s recognition of Turkey’s role in the region. We will expect conclusions to indicate the EU’s readiness to intensify its foreign policy dialogue with Turkey. However, we share the Council’s disappointment that Turkey has not yet fulfilled its obligation to open its ports to trade with Cyprus under the additional protocol to the association agreement and agree that further efforts are needed to accelerate the pace of Turkey’s accession negotiations.

We support the Commission’s view that full co-operation with the International Criminal Tribunal remains a requirement for Croatia’s progress throughout the accession process, and that Iceland will need to address existing obligation, such as those identified by the European Free Trade Association (EFTA) Surveillance Authority (ESA) under the European Economic Area (EEA) agreement.

We will seek conclusions reaffirming the European perspective of the whole Western Balkans region. We support the European Commission’s recommendation to grant candidate status to Montenegro and to open accession negotiations with Macedonia (FYROM). We will seek balanced conclusions consistent with Kosovo’s European perspective. The Government are concerned about the situation in Bosnia and Herzegovina, and will seek conclusions urging its political leaders to put the reform agenda at the heart of their new government programmes.

Preparations for the December and February European Councils

The presidency has invited the President of the Council, Van Rompuy, to discuss preparations for the European Council of 16 and17 December. The Council agenda covers Economic Governance—the permanent crisis mechanism and pension reform, the EU budget and External Relations (Strategic Partnerships). The discussion on 14 December is likely to focus on economic and eurozone issues. The Prime Minister will report to Parliament on the Council in the normal way.

There will also be a short information point on the February European Council. No agenda has yet been issued, but we expect energy policy and innovation to feature.

Disaster Response

There is likely to be a further discussion of the Commission’s ideas for disaster response, following last month’s presentation by the Commissioner for International Co-operation, Humanitarian Aid and Crisis Response (Georgieva). The Commission’s proposals—with which we are broadly content—concern the response to disasters inside and outside the EU, considering both civil protection and humanitarian assistance, and seeking cost-effectiveness through use of common assets.

Cohesion Funds

The General Affairs Council will have a preliminary discussion of the Commission’s Report on Structural Cohesion Funds

http://ec.europa.eu./regional_policy/sources/docoffic/official/repor_en.htm

following the Liege informal Ministerial of 22 and 23 November. Baroness Wilcox represented the UK. The Commission will end its EU-wide consultations on the proposals on 31 January 2011.

Europe 2020

If there is time, we expect the presidency to give a short update on Europe 2020, the EU’s economic growth strategy.

Turks and Caicos Islands

Thursday 9th December 2010 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

My right hon. Friend the Minister of State for International Development and I wish to update the House about the situation in the Turks and Caicos Islands, a British overseas territory.

It has become clear to this Government since they assumed office that there is a serious and deteriorating problem in the Turks and Caicos Islands.

In August 2009, the previous Government suspended the Turks and Caicos Islands ministerial Government for an initial period of up to two years. A special investigation and prosecution team was appointed to undertake a criminal investigation into matters identified by Sir Robin Auld’s report, which concluded that there was a high probability of systemic corruption in the former Turks and Caicos Islands Government. The team is pursuing its work as rigorously and as quickly as possible.

On 1 July 2010, as an urgent initial response to the unfolding financial plight of the Turks and Caicos Islands Government, the Secretary of State for International Development stated that his Department was having to step in to design and put in place a package of financial support with commercial lenders, as well as providing an immediate short-term loan to help meet unavoidable commitments including staff salaries for the islands’ police, health and education services.

It has become clear to UK Ministers that the fiscal picture in the Turks and Caicos Islands represents an unacceptable collapse in the fiscal governance of the territory, which needs urgently to be addressed. While funding the immediate unavoidable costs of the Turks and Caicos Islands Government, the Department for International Development has provided a chief financial officer to the Turks and Caicos Islands Government, to meet the urgent task of addressing its structural deficit and putting it on a course towards a sustainable fiscal surplus in the financial year 2012-13. In addition, the Department is reaching the final stages of putting in place a medium-term financial package.

In September 2010, I announced in the Turks and Caicos Islands that the UK Government did not want to postpone elections any longer than necessary, but that they could not be held in 2011. We intend to submit to the 15 December meeting of the Privy Council an Order in Council continuing in force the Turks and Caicos Islands Constitution (Interim Amendment) Order 2009 beyond 14 August 2011.

I undertook to set out milestones that would need to be met before elections could once again take place. The Foreign and Commonwealth Office and the Department for International Development currently jointly assess these milestones to be as follows:

implementation of a new Turks and Caicos Islands constitution order, in support of recommendations of the Commission of Inquiry, which underpins good governance and sound public financial management;

introduction of a number of new ordinances, including those making provision for: (i) the electoral process and regulation of political parties; (ii) integrity and accountability in public life; (iii) public financial management;

establishment of robust and transparent public financial management processes to provide a stable economic environment and a strengthening of the Turks and Caicos Islands Government’s capacity to manage their public finances;

implementation of budget measures to put the Turks and Caicos Islands Government on track to achieve a fiscal surplus in the financial year ending March 2013;

implementation of a transparent and fair process for acquisition of belongership;

significant progress with the civil and criminal processes recommended by the Commission of Inquiry, and implementation of measures to enable these to continue unimpeded;

implementation of a new Crown land policy;

substantial progress in the reform of the public service.

Reaching these milestones will require time, care and hard work by the UK and the Turks and Caicos Islands Government, and particularly by the Turks and Caicos Islands public sector. It will need the encouragement of the community. There will be public consultation on a number of issues across Turks and Caicos Islands and, we hope, the engagement of the islands political parties. The milestones we have identified do not include everything that will have to be done before elections take place. In general the UK Government will have to be satisfied that the necessary reforms have been put in place to address the issues raised by the Commission of Inquiry, to prevent such maladministration being repeated, and to engender the confidence of the international community. It is our considered view at this stage, that the milestones listed above are the minimum preconditions before the Turks and Caicos Islands can return to elected government.

The UK Government have helped protect the Turks and Caicos Islands Government finances from complete collapse and intend to provide continuing financial support. However it is important that the islands make good use of this period of UK financial support to address the deep crisis in public finance and to achieve a fiscal surplus. The UK Government currently intend to retain sufficient control over public finances following elections in order to ensure that the Turks and Caicos Islands Government emerges from its financial crisis as soon as possible, and that the temporary package of UK support is no longer needed.

We hope achievement of these milestones will also help any future Turks and Caicos Islands Government to continue to embed good governance, with full respect for the rule of law and human rights, and zero tolerance of corruption.

Achieving these milestones will be a great challenge. As we now see things, the UK Government will only be able to set a date for the elections when the milestones have been reached. We hope that this will happen in time for elections to take place in 2012.

UK's Relationship with the Commonwealth

Thursday 9th December 2010 Written Statements

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

Her Majesty’s Government have undertaken to strengthen the United Kingdom’s relationship with the Commonwealth and to ensure that the United Kingdom is closely involved in plans to reinvigorate this unique organisation.

The purpose of this statement is to inform the House about the Government’s reasons and objectives for doing this.

The Commonwealth today is as important to the United Kingdom as ever. The coalition agreement sets out a vision

“to strengthen the Commonwealth as a focus for promoting democratic values and development.”

The Foreign and Commonwealth Office will lead a co-ordinated, cross-Whitehall approach to help the Commonwealth achieve its potential and which underlines the United Kingdom’s commitment to this unique global organisation.

Our relationship with the Commonwealth has been primarily based on its history, values and common bonds. But the modem Commonwealth, including countries that were never British colonies, has been transformed. Today’s Commonwealth bridges all the continents, embraces almost 2 billion people, and represents all of the world’s major faiths. Its membership includes many of the fastest-growing and increasingly technologically advanced economies in the world. These are the great markets of today and tomorrow. Equally important is the forum it provides for numerous smaller nations which may feel that their voice is lost in the wider United Nations structure and who find the more informal Commonwealth setting an ideal place to be heard.

The Commonwealth of the 21st century should stand for democracy, development, and human rights, and act as a recognised force for good on the issues of our times. It could also be used much more effectively to further the United Kingdom’s foreign policy priorities and worldwide economic interests. The United Kingdom is already at the heart of this ready-made network, which fits perfectly into the new global environment. In the words of the Head of the Commonwealth, Her Majesty the Queen, the Commonwealth is indeed “the face of the future”. It is a future in which the United Kingdom will play a full part.

To achieve this, the Foreign and Commonwealth Office will work closely with Whitehall partners to:

Define and develop ways in which the modern Commonwealth can add value to the delivery of United Kingdom policy goals and act as a global soft power network.

Use the Commonwealth to develop trade and investment opportunities for the United Kingdom and to promote intra-Commonwealth trade.

Support Commonwealth development programmes and bilateral assistance in Commonwealth countries.

Reform, strengthen and renew the Commonwealth structures and purposes through the Eminent Persons Group, the Commonwealth ministerial action group reform process, and in concert with key partners ahead of the Commonwealth Heads of Government meeting in 2011.

Focus Commonwealth activity where it has strengths and conclude activity where others are better placed and better resourced.

Strengthen the Commonwealth through expanded membership and partner and observer agreements.

Work with the Commonwealth secretariat better to demonstrate the benefits of membership to the public in Commonwealth nations

Use the Commonwealth in other international institutions (e.g. the United Nations, the Group of 20) where we can develop common foreign policy aims.

Connect with the “internal Commonwealth”, the many United Kingdom communities with close ties to Commonwealth countries, to the benefit of social cohesion within British society.

Justice and Home Affairs (Post-Council Statement)

Thursday 9th December 2010 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

The Justice and Home Affairs Council was held on 2 and 3 December in Brussels. My right hon. and learned Friend, the Secretary of State for Justice and I attended on behalf of the United Kingdom. The following issues were discussed at the Council:

The Council began with Mixed Committee with Norway, Iceland, Liechtenstein and Switzerland (non-EU Schengen States). The Commission provided an update on the progress of the second generation of the Schengen Information System (SIS II) focusing on agreeing the additional financial facility for member states to cover national implementation of the system.

The Commission then reported on the implementation of the Council conclusions on 29 measures for reinforcing the protection of the external borders and combating illegal immigration. Internal EU progress included the Frontex Rapid Border Intervention team (RABIT) at the Greece-Turkey border, the Asylum Support Office and the Frontex operational office in Piraeus. Externally, the EU had contributed to a regional protection programme in the Horn of Africa, concluded readmission agreements with Georgia and Pakistan, signed a mobility partnership with Georgia, and opened a migration dialogue with Libya. The Commission will report on the development of the European Surveillance System (EUROSUR) in spring 2011. The Commission highlighted the need by member states to adopt the new Frontex regulation; conclude further working arrangements between Frontex and third countries; develop EUROSUR and close ongoing readmission negotiations.

Under Mixed Committee AOB, Switzerland reported the results of last week’s referendum in which a majority of the population voted in favour of automatically deporting foreign national criminals.

Following Mixed Committee the main Council began with a debate on asylum and migration during which the presidency noted recent achievements from political agreement on the long-term residents’ directive to the first meeting of the Asylum Support Office and progress on the Greece action plan. The presidency welcomed the four incoming presidencies’ agreement to deliver the asylum package by 2012 and emphasised that all member states must meet their obligations under EU law. The Government welcomed the opportunity to discuss some of the most pressing challenges member states faced, and set out domestic plans to bring levels of non-EU migration down to sustainable levels. The Government were proud to share the EU’s strong tradition of protecting genuine refugees but noted there were clear weaknesses in the system. The Government stated that a focus on fast, efficient decision making; reluctance to see legislation as the solution; and emphasis on practical co-operation was needed. Delays in the negotiations so far demonstrated member states’ reluctance to compromise on proposals which would threaten their individual asylum systems. Instead, practical steps should be taken to provide quicker protection to those in need, and to support the safe return of those with no grounds to stay. The first meeting of the European Asylum Support Office was an important milestone. But the situation in Greece was the most pressing challenge and here the Government were pleased to see contributions to the national action plan were coming together; but a sustainable improvement would take years of commitment and substantial resources. More needed to be done. The EU had to take proactive action to stop new illegal immigration threats before they created this pressure. Commissioner Malmstrom updated Council on progress so far under the Greek action plan, set out next steps and urged Greece to take ownership of the plan.

The presidency updated Council on the results of its legal migration conference, which focused on the challenges of an older EU population, declining labour force, and weakening cultural identity in the face of immigration.

Over a private lunch Interior Ministers had an exchange of views on alternatives to the detention of children and agreed on the split-seat solution of the location of the IT Agency with infrastructure remaining in Strasbourg and its management in Tallinn.

After lunch the Council discussed air cargo security. Following the recent discovery of explosive devices in air cargo, a high-level group produced a report on strengthening air cargo security for both Council meetings on 2 December (Transport and Justice and Home Affairs). The presidency presented this report, which sets out ways to strengthen the security regime around air cargo coming into the EU. The Government broadly welcomed the report and the associated action plan. The presidency concluded orally that the Council had a “positive appreciation” of the report, and asked the Commission and member states to ensure a speedy implementation of the action plan. The Commission was asked to report back to the Council on progress made. A parallel discussion took place in the Transport Council.

The EU counter terrorism co-ordinator presented his regular assessment of progress against the EU’s CT action plan and noted in particular the importance of coherence between the internal and external dimension of CT. The Government broadly welcomed the report supporting the idea of a discussion of external CT in the JHA Council with the EU’s High Representative. However, the Government expressed concerns about plans to use article 75 of the treaty on the functioning of the EU as the legal base for an internal terrorist sanctions regime.

Next the Council agreed the three negotiating mandates to authorise the start of negotiations for agreements between the EU and the United States, Canada, and Australia for the transfer and use of passenger name records (PNR) to prevent and combat terrorism and other forms of serious cross-border crime. The Government welcomed the mandates but argued that we should also be collecting data on intra-EU flights. This would give the EU the best chance of avoiding future terrorist incidents.

The Council agreed the action plan on combating heavy arms trafficking, which recommends an integrated approach to combating arms trafficking and more particularly heavy fire arms, and adopted the conclusions on itinerant gangs which seek to define the problem of itinerant crime groups and agree an administrative approach to tackle the problem, including increased cross-border co-operation. The Council also agreed Council conclusions on preventing and combating identity-related crimes and on identity management with amendments which had been sought by the UK. The conclusions set out instructions for having a robust structure of identity management to combat the threat posed by identity-related crime.

Commissioner Malmström presented the communication on the EU Internal Security Communication to Council. The communication looks to translate the Council’s EU internal security strategy into action points.

Next the presidency updated the Council on the outcomes of and proposed follow-up to the EU-Russia Permanent Partnership Council (PPC) (freedom, security and justice) (18-19 November), and the Western Balkans ministerial forum (23-24 November). The presidency stated that there was an agreement to work on a stage-by-stage basis, to ensure that all commitments for data protection were met, as well as the fight against drugs, extradition and aid. On the Western Balkans, the presidency felt that there was mixed progress, with some countries doing much better than others; generally the legislation was good, but implementation was taking longer than hoped.

Under AOB Commissioner Georgieva (Humanitarian Aid) presented the recent Commission communication on civil protection, which was broadly welcomed by member states.

On the justice day, the presidency informed the Council that agreement on the text of the EU directive on human trafficking had been reached with the European Parliament. Commissioner Malmström welcomed the historic agreement of the first criminal law instrument since Lisbon, although she regretted the failure to extend extra-territorial jurisdiction to habitual residents.

Next, the Council agreed a general approach on the draft directive on combating sexual exploitation and sexual abuse of children and child pornography. This draft directive aims to update existing EU legislation in the area of combating child sexual exploitation and pornography in line with technological developments. The Government supported the presidency and agreed with the general approach.

The presidency noted they had made good progress on the draft directive on the European investigation order but that a number of issues still needed to be considered.

The presidency also sought a general approach on the draft directive on the right to information in criminal proceedings. This is the second measure in the road map to strengthen procedural rights in criminal proceedings. It aims to set common minimum standards and improve the rights of suspects and accused persons by ensuring that they receive information about their rights. The Government maintained their parliamentary scrutiny reservation on this proposal but also welcomed the efforts made by the presidency to find a compromise to the text. The presidency concluded that there was support for a general approach.

The Council adopted a negotiating mandate authorising the Commission to begin negotiations with the United States on a proposed EU-US agreement on the protection of personal data when transferred for law enforcement purposes. The Government support the proposed agreement in principle, but were unable to vote in favour of the draft negotiating mandate because we consider that the UK rather than the EU should negotiate rules concerning data exchanges between the UK and the US under their bilateral arrangements.

There was a discussion about the Commission’s recently published Communication on “a comprehensive approach on personal data protection in the European Union”. The Commission argued that, while the principles of the data protection directive are still valid, a more comprehensive approach to data protection is needed to bring the legislation in line with technological developments. The Commission will be bringing forward new proposals in 2011.

Next, the presidency obtained agreement among participating member states of the regulation implementing enhanced co-operation in the field of law applicable to divorce—Rome III. The Government are not participating in this measure.

The presidency provided information about a seminar held on 14 October about resolving international child abduction disputes through mediation.

The Council then considered a state-of-play report from the presidency about the progress made during its term in the area of e-justice.

Under AOB, the Commission presented their citizenship report highlighting the importance of citizenship rights and the need to ensure they are better communicated.

Over lunch, there was a discussion about the forthcoming directive on access to a lawyer in criminal cases. This will be the third measure on the road map to strengthening criminal procedural rights, which is likely to be published in June 2011. The Commission is still in the early stages of drafting the proposal.

Parliamentary Written Question (Correction)

Thursday 9th December 2010 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I regret to inform the House there was an inaccuracy in my answer to parliamentary question 20342 on 1 November 2010, Official Report, column 564W.

The response indicated that since 2006 credit unions have made over 262,056 loans to financially excluded people, with an additional 43,308 loans made through other community finance organisations. It also indicated that over 275,000 customers who took out a Growth Fund loan also opened a bank or savings account.

The figure quoted for customers who took out a Growth Fund loan and also opened a bank or savings account is a projection to the end of March 2011, but the response makes it appear that this is the figure to date. It is in fact estimated that the number of people who will have opened a bank or savings account to September 2010 is 216,000.

Skills Conditionality: Public Consultation

Thursday 9th December 2010 Written Statements

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

Today my hon. Friend the Minister for Further Education, Skills and Lifelong Learning and I have published a joint document setting out how we intend to implement skills conditionality when certain benefit claimants are referred to training as part of their journey back to work.

The Government believe that individuals who are able to look for or prepare for work should be required to do so as a condition of receiving benefit, and those who fail to meet their responsibilities should face a financial sanction. Improving someone’s skills is one of the key ways to help individuals prepare for and gain work.

This consultation proposes that claimants required to either actively seek, or prepare for, work could be mandated to undertake activity to address an identified skills need which will aid their movement into work. This puts activity to address a skills need on to the same basis as other conditionality requirements.

The proposed policy will require legislative changes. The purpose of this consultation is to seek views on the implementation of skills conditionality that will make it fair, consistent and as administratively straightforward as possible. The consultation will run until 3 February.

Copies of the consultation document are available on the Department’s website at: http://dwp.gov.uk/consultations/.

Benefits Uprating

Thursday 9th December 2010 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am pleased to announce the proposed rates of benefit for 2011, which are set out in the table below. The annual uprating of benefits will take place for state pensions and most other benefits in the first full week of the tax year. In 2011, this will be the week beginning 11 April. A corresponding provision will be made in Northern Ireland.