Written Statements

Monday 27th February 2017 Written Statements

Monday 27 February 2017

Competitiveness Council: Post-Council Statement

Monday 27th February 2017 Written Statements

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

My noble friend, the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lord Prior) has made the following written statement:

The Competitiveness Council met recently in Brussels. I represented the UK at the meeting.

Council began with the approval of the legislative and non-legislative ‘A’ items.

The Council then reached agreement on a general approach for the proposed text on enforcement in the consumer protection co-operation regulation. Alongside most other member states, the UK supported the text of the regulation.

The next item was an exchange of views as part of the regular competitiveness check-up on the EU economy. This focused on investment in intangible assets. The Commission presented evidence to show that the gap between the EU and US on investment in intangible assets is growing, and highlighted its own efforts to help small and medium-sized enterprises. In the following discussion, member states shared best practice and identified areas where they felt the EU could add value.

The Council next discussed actions to modernise public procurement in the context of the European semester. The Commission set out its views on the state of public procurement across the EU as published in its annual growth survey 2017. Member states emphasised their efforts to promote environmentally friendly and socially responsible procurement, as well as ensuring access for SMEs.

Over lunch Ministers were joined by two guest speakers Markus Beyrer (Business Europe) and Hariolf Kotmann (Clariant) to debate the competitiveness of European industries. Member states were asked to consider the appropriate balance between pan-European, national and regional initiatives. Issues of investment and innovation capacity were also discussed. I explained the approach we are taking to development of the UK’s new industrial strategy and that we are seeking to address the cross-cutting, geographical and horizontal issues which impact businesses, rather than focusing on a purely sectoral approach.

The afternoon session began with a presentation from the Commission on its start-up and scale-up initiative (published last autumn). The Commission emphasised that the key challenge is supporting SMEs to scale up to become larger, job-creating enterprises. In the discussion, measures promoting access to finance received the greatest praise from the Council which perceives this as a key barrier to scaling-up. Some member states requested a single EU-wide definition of a “start-up”. Others emphasised that there was a barrier to scaling-up beyond national borders as the single market is not, in fact, a reality.

Next the presidency gave a progress report on the negotiations of the revised regulations on type approval and market surveillance of motor vehicles. The European Parliament has recently agreed on a text. The presidency said it hopes that an agreement in Council will be possible at the next Competitiveness Council meeting in May. The Commission reiterated its message that swift progress on this file was imperative in order to respond to the Volkswagen scandal and fix the systematic failures of the type approval system. Most member states supported the Commission’s proposal, although some had reservations about some of the provisions in the text.

Next the Council took note of information from the Commission on the European defence action plan. In November the Commission adopted the European defence action plan, which is the industrial pillar of the EU defence package. The Commission highlighted the need for more competitive defence technology. It outlined that it does not seek to replace member state action in this area, but is looking for a dialogue on where support is needed. Several member states supported the Commission’s plan.

The next item was information from the presidency on the implementation and entry into operation of the Unitary Patent and the Unified Patent Court (UPC). The Commission echoed calls for signatory states to ratify the agreement without delay, pointing out the barrier to innovation caused by the currently fragmented patent system. I updated the Council on the domestic processes required for entry into force of the UPC in the UK and the progress we are making.

This was followed by information from the Commission on its recent services package. Several member states, including the UK, welcomed the Commission’s package and called for rapid and ambitious consideration of it by the Council. Other member states expressed concerns about aspects of the package.

Next the Council discussed a joint paper from nine member states on the competitiveness of the single market. The group was concerned about potentially burdensome new regulatory measures, particularly on minimum wages, introduced at national level by some member states. They feared these measures discriminate against workers and businesses in other member states, reducing their competitiveness. This could lead to single market fragmentation, with the road transport sector particularly affected. The Commission, after taking note of the discussion, stated it would publish its road package later in the year.

Council concluded with an update from the presidency on the regulation on cross-border portability of online content services. The presidency expressed delight at having reached a full political agreement on the regulation. This will see subscribers able to take their subscriptions to online content abroad with them when they travel around the EU. The presidency declared this as an important step towards modernising copyright for the digital single market, removing some of the existing licensing and commercial barriers. The presidency thanked member states for their hard work and co-operation.

[HCWS504]

Justice Update

Monday 27th February 2017 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Elizabeth Truss)]

Earlier today, I notified the market via the London Stock Exchange group that I would today lay a statutory instrument to change the discount rate applicable to personal injury lump sum compensation payments, to minus 0.75%.

Under the Damages Act 1996, I, as Lord Chancellor, have the power to set a discount rate which courts must consider when awarding compensation for future financial losses in the form of a lump sum in personal injury cases.

The current legal framework makes it clear that claimants must be treated as risk averse investors, reflecting the fact that they may be financially dependent on this lump sum, often for long periods or the duration of their life.

The discount rate was last set in 2001, when the then Lord Chancellor, Lord Irvine of Lairg, set the rate at 2.5%. This was based on a three year average of real yields on index-linked gilts. Since 2001, the real yields on index-linked gilts has fallen, so I have decided to take action.

Having completed the process of statutory consultation, I am satisfied that the rate should be based on a three year average of real returns on index-linked gilts. Therefore I am setting it at minus 0.75%. A full statement of reasons, explaining how I have decided upon this rate, will be placed in the Libraries of both Houses. The statutory instrument to effect this change has been laid today, and will become effective on 20 March 2017.

There will clearly be significant implications across the public and private sectors. The Government are committed to ensuring that the NHS Litigation Authority has appropriate funding to cover changes to hospitals’ clinical negligence costs. The Department of Health will also work closely with general practitioners (GPs) and medical defence organisations to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of NHS care.

The Government will review the framework under which I have set the rate today to ensure that it remains fit for purpose in the future. I will bring forward a consultation before Easter that will consider options for reform including: whether the rate should in future be set by an independent body; whether more frequent reviews would improve predictability and certainty for all parties; and whether the methodology—which in effect assumes that claimants would invest only in index-linked gilts—is appropriate for the future. Following the consultation, which will consider whether there is a better or fairer framework for claimants and defendants, the Government will bring forward any necessary legislation at an early stage.

I recognise the impact this decision will have on the insurance industry. My right hon. Friend the Chancellor will meet with insurance industry representatives to discuss the situation.

[HCWS503]