Written Statements

Wednesday 26th March 2014 Written Statements

Wednesday 26 March 2014

Lloyds Banking Group

Wednesday 26th March 2014 Written Statements

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

Today the Government have successfully completed the sale of a second tranche of shares in Lloyds Banking Group.

The Chancellor received advice from UK Financial Investments Ltd (UKFI) yesterday that it would be appropriate to begin the process to sell a second part of the Government’s shareholding in Lloyds.

Overnight the Government were able to place 7.78% of Lloyds shares with investors at a price of 75.5p. The proceeds from that sale total approximately £4.2 billion.

The Treasury estimates that the second sale has reduced the national debt by £788 million and that in total the programme of sales of Lloyds shares to date has reduced the national debt by just under £1.4 billion.

Future sales will always be subject to value-for-money considerations and market conditions.

Environmental Taxes

Wednesday 26th March 2014 Written Statements

[The Economic Secretary to the Treasury (Nicky Morgan)]

In May 2010, this Government committed to increasing the proportion of tax revenue accounted for by environmental taxes.

In 2012, the Government published their definition of environmental taxes which set the baseline for achieving that commitment. This statement provides an annual update of the Government’s progress against that commitment, using the independent Office for Budget Responsibility’s (OBR) forecasts published alongside the Budget.

The Government classifie environmental taxes as those that meet all of the following three principles:

The tax is explicitly linked to the Government’s environmental objectives; and

The primary objective of the tax is to encourage environmentally positive behaviour change; and

The tax is structured in relation to environmental objectives (for example: the more polluting the behaviour, the greater the tax levied).

The Government have defined the following as environmental taxes based on these principles:

Climate Change Levy;

Aggregates Levy;

Landfill Tax;

EU emissions trading system (EU ETS);

Carbon reduction commitment energy efficiency scheme;

Carbon price floor.

For Budget 2014, the OBR has changed the accounting methodology it uses for particular taxes, so that the revenue is scored at a later stage. The forecasts, using either the original or the new OBR scoring methodologies, both demonstrate that the coalition remain on track to achieve their commitment to increase the proportion of revenue accounted for by environmental taxes over the Parliament. Table 1 provides figures using the OBRs original methodology for ease of comparison with the figures released at Budget 2013. Table 2 provides an update using the OBRs new accounting methodology.

Revenue Raising Taxes and Fiscal Instruments with Environmental Benefits

These are taxes and fiscal instruments which are primarily designed to raise revenue or to achieve other objectives, and therefore do not qualify as environmental taxes on the basis of the Government’s three principles.

Differentiating environmental taxes from taxes which are designed to achieve other objectives provides greater clarity and transparency to the Government’s overall tax strategy. The Government also recognise that other taxes not included within its definition can deliver environmental benefits.

On that basis, the Government believe that it is important to make reference to transport taxes, levies and exemptions/reliefs in their overall assessment of environmental taxation.

Budget 2014 made several announcements that will act to sharpen the environmental signals of non-environmental taxes, including:

Ultra-low emissions vehicles—Budget 2014 announced that the Government are increasing the company car tax rate differential between ultra-low emissions vehicles (ULEVs) and non-ULEVs from 3 and 2 percentage points in 2017-18 and 2018-19 to 4 and 3 percentage points respectively.

Van benefit charge (VBC) exemption for electric vans—Budget 2014 announced that the Government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis. Zero emission vans will pay only 20% of the rate paid by conventionally fuelled vans in 2015-16, followed by 40% in 2016-17, 60% in 2017-18, 80% in 2018-19 and 90% in 2019-20, with the rates equalised in 2020-21.

Enhanced capital allowance (ECA) for zero emissions goods vehicles—Budget 2014 announced that the Government will extend the ECA for zero emission goods vehicles to 31 March 2018. To comply with EU state-aid rules the availability of the ECA will be limited to businesses that do not claim the Government’s plug-in van grant.

Enhanced capital allowances: energy-saving and water-efficient technologies—The list of designated energy-saving and water-efficient technologies qualifying for enhanced capital allowances will be updated during summer 2014, ensuring the most efficient technologies continue to be targeted.

Fuel duty incentives for methanol—From April 2015, the Government will apply a reduced rate of fuel duty to methanol. The size of the duty differential between the main rate and methanol will be maintained until March 2024. Like the road fuel gases already benefiting from a duty differential, methanol provides environmental benefits compared to conventional fuels. The Government will review the impact of this incentive alongside the duty incentives for road fuel gases at Budget 2018.

Council Tax

Wednesday 26th March 2014 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

Under the last Administration, council tax bills more than doubled. By contrast, this Government have been working to keep council tax down, giving hard-working people greater financial security. The coalition Government have provided total freeze funding of up to £5.2 billion up to 2015-16, which is an unprecedented five years of council tax freezes worth potentially up to £1,075 for an average band D taxpayer over the lifetime of this Parliament.

I am today publishing new official figures which show that the average council tax bill in England has fallen in real terms for the fourth year, as almost two thirds of councils have taken up the Government’s freeze offer.

National statistics released today reveal the average band D council tax level from this April to be £1,468, or a change of just 0.9%, one of the lowest changes ever and a cut in real terms. In London, council tax bills have fallen in cash terms by 0.4%.

By comparison, in Wales, which has not used Barnett funding to make a similar freeze offer, average bills are rising by twice the rate of inflation.

Since 2010, the Government have worked with local authorities to reduce council tax. This has cut average bills in England over four years by over 11% in real terms. In contrast the period between 1997 and 2010 saw council tax increase in real terms by 47%. This doubled a typical band D bill to £120 a month.

I am pleased so many councils understand the importance of keeping tax bills down and of giving families greater financial security and have chosen to freeze or even reduce their bills.

In total 251, or 60%, of local authorities signed up to the Government offer to freeze council tax for 2014-15: a similar proportion to last year. The Government have also handed local residents new rights to veto any excessive local tax hikes through a referendum. No council chose to put an increase to a local referendum.

Residents are also now able to pay their bill over 12 months rather than 10 to help spread the cost. From April, a new national council tax discount for family annexes also comes into effect, designed to support extended families and remove an unfair penalty tax surcharge on annexes.

The list of councils that have opted to take part in the Government’s 2014-15 council tax freeze initiative, and a table showing the potential financial savings in council tax by English local authority, have been published on my Department’s website and I am placing copies in the Library of the House.

FiReControl Legacy

Wednesday 26th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

I wish to update the House on my Department’s work to improve local fire control room services and on further progress on disposing of the regional control centre buildings—the main legacy asset of the terminated FiReControl project from the last Administration.

FiReControl failure

FiReControl was a poorly conceived and badly delivered top-down programme of the last Administration to create regional fire control rooms. It was terminated after running repeatedly over budget and behind schedule, and to avoid further taxpayers’ money being wasted.

The nine regional control centre buildings were procured through a private developer scheme from 2004 onwards and completed between June 2007 and February 2010. The leases run for 20 or 25 years from completion. As noted on 26 January 2009, Official Report, House of Commons, column 108W, the last Administration decided not to include break clauses in the contracts, forcing taxpayers to shoulder the ultimate liability for the empty buildings.

The National Audit Office, in their report “The Failure of the FiReControl project”, were highly critical of the top-down FiReControl project. They stated:

“The FiReControl project was flawed from the outset because it did not have the support of those essential to its success—local fire and rescue services. The Department rushed the start of the project, failing to follow proper procedures. Ineffective checks and balances during initiation and early stages meant the Department committed itself to the project on the basis of broad-brush and inaccurate estimates of costs and benefits and an unrealistic delivery timetable, and agreed an inadequate contract with its IT supplier. The Department underappreciated the project’s complexity, and then mismanaged the IT contractor’s performance and delivery. The Department failed to provide the necessary leadership to make the project successful, over-relying on poorly managed consultants and failing to sort out early problems with delivery by the contractor. The Department took a firmer grip of the project from 2009 and terminated the contract in December 2010 to avoid even more money being wasted.

The Department’s failure to manage the project as a whole has resulted in the creation of empty regional control centres. The nine regional control centres were purpose-built to house the new computerised equipment and were designed specifically for that purpose. The Department’s decision to prioritise the procurement of the centres over the IT system at an early stage meant that the first centres were completed in June 2007, just three months after the IT contract had been awarded.”

National Audit Office, “The Failure of the FiReControl project”, HC1272, 1 July 2011.

Supporting local control room improvements

This Government’s approach has been to support locally determined and delivered control room improvements. As today’s future control room update shows, the first of the projects, Tyne and Wear and Northumberland, has completed. The two fire and rescue authorities have worked in partnership to procure and implement a new resilient solution which went live on 25 November 2013. This enables both fire and rescue authorities to take the other’s calls and to act as a fallback for the other, while negating the need for secondary control rooms. This is a significant milestone in delivery of the future control rooms scheme. Furthermore, nine projects are on track to complete by the time of the September 2014 update, with an additional eight projects scheduled to complete by the end of this calendar year. Only one project is currently forecasting completion later than March 2015, and that by only eight weeks.

There has been significant progress in delivering the resilience benefits, with increases in delivery of nine of the 10 benefits identified, and significant increases in six of those. These non-monetarised benefits will improve the efficiency and effectiveness of control centres by introducing state of the art technology and effective back-up arrangements to cope with spate conditions or systems failure.

Forecasted savings now stand at £129 million. This is £2.5 million more than the September 2013 update and, significantly, £1 million more than the early estimates of March 2012. In summary, our assessment is that the future control room projects continue to remain on track to deliver the benefits outlined in the original national summary.

Dealing with the legacy buildings

The marketing and disposal of the remaining regional control centres has also made further progress.

First, the Department has reduced its overall estimated ongoing costs. Since 2012-13, facilities management costs have been reduced by approximately 45% and other running costs savings have been made, reflecting a reduction in cost from £3.8 million to £2.7 million annually. Since September 2013, electricity costs have also been reduced by approximately 40% annually. We have also taken steps to reduce energy consumption across the regional control centre sites, resulting in a reduction in costs of over 25%.

Five of the nine centres have now been sub-let or transferred. The letting of the fifth centre, Wolverhampton, in December 2013 was a considerable achievement as it was the first let to the private sector, an IT company. It is estimated that this letting will save the Department in the region of £11 million. Furthermore, heads of terms are being negotiated with public sector organisations for the Wakefield and Taunton regional control centres. The two remaining centres—Castle Donington and Cambridge—are being actively marketed and interest has been shown in both.

We will continue to market the centres and target specific sectors, for example data centres, and review our disposal and marketing strategy on a quarterly basis. Ministers will provide further updates in due course.

Both documents have been published on my Department’s website and I am placing copies in the Library of the House.

British Film Institute (Triennial Review)

Wednesday 26th March 2014 Written Statements

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)]

I am today announcing the start of the triennial review of the British Film Institute (BFI). Triennial reviews are part of the Government’s commitment to ensuring that non-departmental public bodies (NDPBs) continue to have regular independent challenge.

The review will examine whether there is a continuing need for the BFI’s function and its form and whether it should continue to exist at arm’s length from Government. Should the review conclude there is a continuing need for the body, it will go on to examine whether the body’s control and governance arrangements continue to meet the recognised principles of good corporate governance. The findings at both stages of the review will be examined by a challenge group.

I will inform the House of the outcome of the review when it is completed.