Written Ministerial Statements

Friday 7th September 2012 Written Statements

Friday 7 September 2012

Brown Field Allowance

Friday 7th September 2012 Written Statements

[The Economic Secretary to the Treasury (Sajid Javid)]

The Government are today announcing that they will introduce a brown field allowance for companies undertaking additional development in certain older fields in the UK continental shelf.

This follows the announcement at Budget 2012 that the Government would introduce legislation in Finance Bill 2012 giving it the power to introduce targeted measures to support investment in brown fields. The Government also committed to engage further with industry on how any such allowance could be structured to unlock investment while protecting Exchequer revenues. This legislation was agreed by the House and was given Royal Assent on 17 July 2012.

This allowance will encourage companies to continue investing in vital North sea infrastructure, and to get the most out of ageing assets. It comes on top of the ambitious package of measures that the Government have already announced this year to support investment in the UK continental shelf.

The allowance will shield a portion of income in fields with qualifying projects from the 32% supplementary charge rate, and will be available from the accounting period in which incremental production from the qualifying project is expected to start. A qualifying project will be an incremental project increasing expected production from an offshore oil or gas field as described in a revised consent for development which is authorised by the Department of Energy and Climate Change (DECC) on or after 7 September 2012, and has verified expected capital costs per tonne of incremental reserves in excess of £60. Where a project forms part of a larger development, all elements of the development must receive authorisation consent on the same day.

The field allowance for a qualifying project will be £50 per tonne of expected incremental reserves for projects with a verified expected capital cost per tonne of incremental reserves of £80 or greater, with a straight-line taper to no allowance at a capital cost of £60 per tonne, and no allowance for projects with capital costs below that level. The maximum allowance for which a single project can qualify will be £500 million for projects in fields paying petroleum revenue tax, and £250 million for other projects (i.e. maximum tax relief of £160 million and £80 million respectively at the current 32% supplementary charge rate).

The Government will keep under review the inclusion of projects involving enhanced oil recovery using carbon dioxide. However, such projects will not initially fall within the scope of the allowance because of concerns around cost apportionment across the upstream/downstream boundary.

Changes to the field allowance regime may be made by order. The Government intend to lay the necessary order before the House of Commons later this year.

Further detail on how cost and reserve estimates are to be calculated for qualifying projects will be set out on the HMRC website and in the relevant secondary legislation later this year.

The Office for Budget Responsibility will publish the full scorecard costings of this measure over the forecast period at the time of its autumn forecast. Initial estimations are that the change will cost around £100 million a year in the forecast period.

As this is a new type of allowance, the Government will review its effectiveness in 2015 to ensure that the oil and gas fiscal regime continues to be structured in a way that stimulates investment while ensuring a fair return for the taxpayer.

Hargeisa (British Office)

Friday 7th September 2012 Written Statements

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

I am pleased to inform the House that the British Office in Hargeisa opened formally on 3 September, in line with my intent to establish a presence in Mogadishu and Hargeisa as soon as local conditions allow. This office enables officials to stay in Hargeisa for short periods to carry out diplomatic work in Somaliland. Because of the security situation, this office will not have any consular functions, and we have not changed our advice on travel to the region. Staff are already able to travel and stay in our office in Mogadishu, where work continues on plans to reopen the embassy as soon as local circumstances permit.

The new office in Hargeisa and future British embassy in Mogadishu are part of the expansion of Britain’s diplomatic network that I announced to the House on 4 September, Official Report, column 152. This involves the opening of up to 11 new embassies, up to eight new British consulates/British trade offices and the redeployment of around 300 extra staff in more than 20 countries in Asia, Latin America and Africa.

I will provide the House with a further update on UK diplomatic representation in Somalia as progress is made.

Terrorism (David Anderson Report)

Friday 7th September 2012 Written Statements

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

In accordance with section 14(3), 14(4) and 14(5) of the Prevention of Terrorism Act 2005, David Anderson QC prepared a report on the operation of the Act in 2011, which I laid before the House on 26 March 2012.

I am grateful to David Anderson QC for the final report on that Act, and the control order regime it provided for. Following consultation within my Department and with other relevant agencies, I am today laying before the House my response to David Anderson QC’s recommendations.

Copies of the Government response will be available in the Vote Office and a copy will also be placed on the Home Office website.

Now that the Prevention of Terrorism Act 2005 has been repealed, David Anderson QC has agreed to perform the role of independent reviewer of the Terrorism Prevention and Investigation Measures Act 2011.

I am grateful to David Anderson QC for accepting this invitation and for continuing his work as reviewer of the Terrorism Acts 2000 and 2006.

Terrorism Prevention and Investigation Measures

Friday 7th September 2012 Written Statements

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

Section 19(1) of the Terrorism Prevention and Investigation Measures Act 2011 (the Act) requires the Secretary of State to report to Parliament as soon as reasonably practicable after the end of every relevant three-month period on the exercise of her TPIM powers under the Act during that period.

The level of information provided will always be subject to slight variations based on operational advice.

Aviation

Friday 7th September 2012 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

International connectivity is vital to support economic growth. This Government have made it clear that their priority is returning this country to sustainable economic growth and our aviation networks and infrastructure have an important role to play.

The UK is an island nation dependent upon its transport links to the rest of the world for its prosperity. The aviation industry in the UK is extremely successful. It is a significant economic sector employing 220,000 directly and supporting many more indirectly and it contributes more than £16 billion of economic output. Some 35% of UK non-EU trade by value enters or leaves the country by aeroplane. Importantly, the industry also provides this country with the global connections which our businesses need to sell their products abroad and which inward investors to the UK demand.

The Government recognise the importance of aviation to the UK. We are taking forward the Civil Aviation Bill to reform the economic regulation of airports, to further the interests of passengers and to create a better environment for investment. We are implementing the recommendations of the South East Airports Taskforce, including a trial of operational freedoms at Heathrow airport to improve reliability and reduce delay. In July the Government published a draft aviation policy framework (APF) for consultation; a framework which will set the high-level policy parameters within which any new proposals for airport development may be considered. The final APF will be adopted by the end of March 2013. Alongside the draft APF the Government announced a number of short-term measures to deliver operational improvements and boost economic growth within existing airport capacity constraints including £500 million towards a western rail link to Heathrow, a review of the UK’s visa regime and the recruitment of 70 additional border staff at Heathrow.

Today the UK is among the best-connected countries in the world. Our airports, particularly those in the south-east, deliver direct flights to over 360 destinations, including those of greatest economic importance. London has more flights to more destinations than any other city in Europe. More flights to the important trading centres like New York, Hong Kong, and Singapore. The Government are determined to deliver a solution which will continue to provide that connectivity in the short, medium and longer term.

This is a very difficult debate, but the reality is that since the 1960s Britain has failed to keep pace with our international competitors in addressing long-term aviation capacity and connectivity needs. Germany, France and the Netherlands have all grown their capacity more extensively than the UK over the years, and so are better equipped, now and in the future, to connect with the fast-growing markets of emerging economies. The consequences are clear. Our largest airport and our only hub airport—Heathrow—is already operating at capacity. Gatwick, the world’s busiest single-runway airport, will be full early in the next decade, while spare capacity at Stansted airport is forecast to run out in the early 2030s.

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness. But the Government are also mindful of the need to take full account of the social, environmental and other impacts of any expansion in airport capacity.

Successive Governments have sought to develop a credible long-term aviation policy to meet the international connectivity needs of the UK. In each case the policy has failed for want of trust in the process, consensus on the evidence upon which the policy was based and the difficulty of sustaining a challenging long-term policy through a change of Government. The country cannot afford for this failure to continue.

The Government have asked Sir Howard Davies to chair an independent commission tasked with identifying and recommending to Government options for maintaining this country’s status as an international hub for aviation.

The commission will:

examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and

identify and evaluate how any need for additional capacity should be met in the short, medium and long term.

In doing so, the commission will provide an interim report to the Government no later than the end of 2013 setting out:

its assessment of the evidence on the nature, scale and timing of the steps needed to maintain the UK’s global hub status; and

its recommendation(s) for immediate actions to improve the use of existing runway capacity in the next five years—consistent with credible long-term options.

The commission will then publish by the summer of 2015 a final report, for consideration by the Government and Opposition parties, containing:

its assessment of the options for meeting the UK’s international connectivity needs, including their economic, social and environmental impact;

its recommendation(s) for the optimum approach to meeting any need;

its recommendation(s) for ensuring that the need is met as expeditiously as practicable within the required timescale; and

materials to support the Government in preparing a national policy statement to accelerate the resolution of any future planning application(s).

A decision on whether to support any of the recommendations contained in the final report will be taken by the next Government.

The Government intend this independent commission to be part of a process that is fair and open and that takes account of the views of passengers and residents as well as the aviation industry, business, local and devolved government and environmental groups. We would like, if possible, to involve the Opposition as part of our work alongside Sir Howard to finalise the arrangements for the commission. I will provide Parliament with further details on the full membership of the commission and the terms of reference for its work shortly.