Written Statements

Tuesday 2nd April 2019 Written Statements

Tuesday 2 April 2019

Contingent Liability Notification and Disclosure of Asset Sale

Tuesday 2nd April 2019 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I can today confirm that I have laid a Treasury minute informing the House of the contingent liability that HM Treasury has taken on in authorising the sale of a portfolio of NRAM (formerly part of Northern Rock) loans acquired during the financial crisis under the last Labour Government. This sale generates proceeds of £4.9 billion for the Exchequer and the portfolio will be sold to Citi. The majority of financing is being provided by PIMCO.

Rationale

The previous Government intervened in the financial sector to preserve financial stability; this policy objective has now been met, and these assets should be returned to the private sector. The proceeds from this sale will reduce public sector net debt. This marks a major milestone in the plan to recover taxpayers’ money and exit from the Government’s shareholdings in NRAM and Bradford & Bingley.

Format and Timing

The Government, UK Asset Resolution (UKAR) and UK Government investments concluded that this sale achieves value for money for the taxpayer having (i) conducted a rigorous analysis of whether market conditions were conducive for the sale of this portfolio; (ii) considered whether the transaction was likely to generate sufficient competitive tension to lead to a properly competitive process; and (iii) conducted an assessment of the fair market value for the assets. The sale made use of a two-round bidding process, which has been shown to create competitive tension through the bidding process and been used for previous sales of UKAR assets.

Contingent Liability

On this occasion, due to the sensitivities surrounding the commercial negotiation of this sale, it was not possible to notify Parliament of the particulars of the liability in advance of the sale announcement.

The contingent liability includes certain market standard time and value capped warranties and indemnities confirming regulatory, legislative and contractual compliance. The maximum contingent liability arising from these warranties and indemnities is approximately £1 billion. There are further remote fundamental market-standard warranties which are capped at £4.9 billion.

Fiscal Impacts

I can confirm that the sale proceeds of £4.9 billion are above the Government’s hold valuation. In 2019-20 the sale reduces public sector net debt (PSND) by £4.9 billion, as well as reducing public sector net liabilities (PSNL) by £182 million, and public sector net financial liabilities (PSNFL) by £149 million. PSNFL and PNSL are reduced by different amounts as PSNL also takes into account provisions against the loans that are being released. Public Sector Net Borrowing (PSNB) will increase by a total of £750 million by 2023-24. PSNB is increased by the sale as the Government will no longer receive the interest payments associated with these assets.

The impacts on the fiscal aggregates, in line with fiscal forecasting convention, are not discounted to present value. The net impacts of the sale on a selection of fiscal metrics are summarised as follows:

Agriculture and Fisheries Council

Tuesday 2nd April 2019 Written Statements

[The Minister for Agriculture, Fisheries and Food (Mr Robert Goodwill)]

I represented the UK at the Agriculture and Fisheries Council in Brussels on 18 March.

The main item on the agriculture-focused agenda was the reform of the Common Agricultural Policy (CAP) post-2020, covering three legislative files:

the regulation on CAP strategic plans,

the horizontal regulation, which is a regulation on the financing, management and monitoring of the CAP,

the regulation on common market organisation (CMO) of agricultural products.

Member states highlighted that further discussions were needed in areas such as the delivery model, wine labelling and greening. I intervened to introduce myself and expressed the UK’s interest to share thinking on our domestic arrangements as they develop. During the discussion Ministers also debated the outcome of the congress titled “CAP Strategic Plans - Exploring Eco-Climate Schemes” which took place in Leeuwarden, Netherlands on 6-8 February 2019, as well as the future of coupled income support in the CAP.

Council also held an exchange of views on the bioeconomy. Commissioner Hogan gave an overview of the implementation of the EU’s new strategy while member states exchanged examples of areas where the bioeconomy is being developed in their countries. I intervened on the item, welcoming the EU bioeconomy strategy and pointing to the UK’s national bioeconomy strategy which was published in December 2018.

A number of other items were discussed under ‘any other business’:

Slovenia informed Council about small-scale coastal fisheries and the European Maritime and Fisheries Fund.

The Netherlands informed Council about a decision by the Technical Board of Appeals of the European Patent Office regarding the possibility to patent the results of classical plant breeding.

The Commission provided an update about the outcomes of the workshops organised by the Commission Task Force for Water and Agriculture on 27 November 2018 in Sore, Denmark and on 5-6 February 2019 in Bucharest, Romania.

Poland provided an update on the potential impact on the meat market considering new trade challenges. As the discussion reflected on the possible impact of the UK leaving the EU, I intervened to set out the reasoning behind our recently published temporary tariff regime for no-deal.

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HMP Birmingham

Tuesday 2nd April 2019 Written Statements

[The Minister of State, Ministry of Justice (Rory Stewart)]

Today the Secretary of State and I can confirm the future plans for HMP Birmingham following the step in initiated by HMPPS and also the urgent notification received by the Secretary of State from HM chief inspector of prisons on 20th August 2018.

We have concluded with the full agreement of G4S that the best way forward now is for us to end the contract and bring back the prison under public sector management.

The situation at HMP Birmingham was totally unacceptable which is why we “stepped in” in August 2018 and why we continued to do so in February 2019. We were always clear that the prison would not be handed back until we were satisfied that sufficient progress had been made.

The prison has made some good progress—both we and G4S have however recognised that there is still much more to do to deliver further improvements. It has become increasingly clear that G4S alone is not able to make the improvements that were so badly needed, and that additional ongoing support from the public sector Prison Service is required to ensure that the prison gets the stability and continuity that will be necessary for sustained progress.

This means that on 1 July 2019, HMP Birmingham will return to public sector management. We have agreed a settlement with G4S of £9.9 million, which covers the additional cost to the MOJ of its “step in” action—meeting our previous public commitment and which also includes an amount to cover essential maintenance works.

Our responsibility is to make sure that prisons are properly run for prisoners and the public. At Birmingham, we must accelerate the good work that has already commenced to stabilise the prison for the longer term. The foundation for that is making sure that we have a clean, decent and safe prison. That is the foundation from which we can do all the other things we want to do—in particular, rehabilitate people, change lives and ultimately protect the public.

What we need to focus on now is building on the positive work achieved to date at HMP Birmingham. We are clear that we have made progress and got some of the necessary basics on the right track to drive improvement; specifically, with the deployment of experienced HMPPS staff, managers and specialists we have significantly increased staff confidence, gained greater order and control and improved day-to-day regime delivery. I am confident that we are beginning to get a grip on the issues driving violence and that we will see the results of this in the coming months.

Progress on decency has also been made; two of the three large Victorian wings which did not meet our expectations have been taken out of use. The third will also soon be fully out of use, as another newly refurbished wing builds to full occupancy. Cleanliness has improved across the site and the visitors centre is being refurbished. This work forms part of the family strategy supporting prisoners and their families to stay in touch, which is key to rehabilitation.

HMPPS staff are also tackling some of the key security risks. A dedicated search team has been introduced and improved, intelligence-led searching has been yielding good results. Specifically, a full lock down search was conducted recently in a major operation involving staff from across the wider service, which was successful in finding and confiscating contraband, and taking disciplinary action taken against the relevant prisoners as a result.

It is also important for staff and prisoners to know what the future of the prison looks like and to remove uncertainty. Paul Newton, the governor who has been running the prison during step in, will remain in post following the transfer back into the public. We will continue to work closely with G4S to support the prison and to make the transition as smooth as possible in the meantime for both staff and prisoners.

This is the right decision for HMP Birmingham but we continue to believe that prisoners and the public benefit from a mixed economy of provision. We are going to remain in a situation where the majority of our prisons will continue to be run by the public sector, but the private sector has a role to play. The private sector has delivered real value for money and some new approaches that have been really impressive.

We have now been running private prisons for 25 years. By and large, that experience has been positive. In fact, G4S’s itself, its performance at Oakwood, Parc and Altcourse has been impressive. They are good prisons. So are Bronzefield, Ashfield, Forest Bank and Thameside, run by other private sector providers.

It makes sense to us that for the next couple of new prisons we give the private sector a chance to bid, but we have set a public sector benchmark. We have explained what the costs would be of the public sector providing the quality of service we want at a prison, and if private sector bidders are not able to provide better value for money, we would look again at the public sector running those establishments.

We will of course be learning lessons from Birmingham which must support our approach to contracting for private prisons in the future.

I strongly believe that this decision is the right one for HMP Birmingham at this time. I am pleased that G4S have also recognised this and are working with us to deliver better outcomes for prisoners and a better working environment for staff. I look forward to being able to report further good progress at HMP Birmingham in the coming months.

[HCWS1475]

Social Security Benefits Uprating Order 2019: Ministerial Corrections

Tuesday 2nd April 2019 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)]

The Social Security Benefits Up-rating Order 2019 maintains the Government’s commitment to the triple lock for both the basic state pension and the new state pension. The order also increases benefits for carers, guardians and those with disabilities and long-term health conditions; sharing the proceeds of economic growth with some of the most vulnerable in society.

I would like to clarify the following points I made during the Social Security Benefits Up-rating 2019-20 debate on 4 March 2019 and apologise to the House for these inadvertent errors:

That the order reflects the Government’s continuing commitment to increase the full rates of the basic and new state pensions by the triple lock.

Regarding the pension credit standard minimum guarantee—the means-tested threshold below which pensioner incomes should not fall—from April 2019, the single person threshold of this safety-net benefit will rise to £167.25—over £1,800 a year higher than it was in 2010.

With this up-rating order, I am bringing forward plans to increase support for some of the most vulnerable people in society to the tune of £3.7 billion, with £3.6 billion alone to help those with disabilities and long-term health conditions, and pensioners—key people who the Government, as we share the proceeds of growth, will continue to target support towards.

The severe disablement allowance will increase from £77.65 to £79.50. The severe disability premia for a single person have increased from £64.30 to £65.85.

The transcript to the original debate can be found here:

https://hansard.parliament.uk/commons/2019-03-04/debates/1E3A4E87-E2BC-4C53-98D5-E4497A48722D/SocialSecurity.

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