Economic and Financial Affairs Council

George Osborne Excerpts

Monday 20th December 2010 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

The Economic and Financial Affairs Council was held in Brussels on 7 December 2010. The following items were discussed:

Administrative Co-operation Directive

Ministers agreed a Council directive on administrative co-operation in the field of taxation. The directive will improve exchange of information and bring the EU into line with OECD standards, as well as making an important contribution to tackling cross-border tax evasion and avoidance. The UK supports exchange of information where this does not impose disproportionate burdens on business or on tax authorities at a time of fiscal consolidation.

Financial assistance to Ireland

Following an extra Council meeting on 28 November, ECOFIN formally agreed a Council recommendation to Ireland with a view to bringing an end to the situation of an excessive Government deficit. It also agreed a Council decision to grant financial assistance to Ireland according to Council Regulation 407/2010 establishing a European financial stabilisation mechanism. The Government believe that financial assistance to Ireland is in Britain’s national interest, helping one of UK’s closest economic partners to manage its way through difficult conditions.

Economic governance

Ministers were updated on the progress made on the six Commission legislative proposals on economic governance. Working group discussions have now begun, which are looking at the proposals in detail. Agreement on the final legislation is expected in spring 2011.

Preparation for the European Council on 16 and 17 December 2010

a) Impact of pension reforms on implementation of the Stability and Growth Pact (SGP)

ECOFIN discussed a report to the European Council on the impact of pension reforms on implementation of the SGP. The Government believe that the SGP framework should seek to encourage pension reform and long-term sustainability. However, it is important to strike the right balance between encouraging fiscal discipline in the short-term and incentivising systemic reforms to pension systems to boost long-term sustainability. The presidency will submit the report to the European Council.

b) Bank levies

Ministers endorsed a report to the European Council on bank levies, focused on the issue of double taxation. The Government support national levies on banks to complement wider reforms aimed at reducing the probability and impact of banking failures. They believe that the issue of overlapping scope can be resolved through double taxation agreements. The UK and French Governments have agreed on a mechanism that will ensure that there is no double taxation of banking groups subject to both the UK and French bank levies. This demonstrates the Government’s commitment to ensuring a level playing field for all banks subject to the UK bank levy. The Government will continue discussions with other international partners where there are also potential cases of double charging.

Public service in the field of healthcare

Council endorsed conclusions on a joint Commission and Economic Policy Committee report on public services in the field of healthcare. The conclusions summarise the main findings of the report and the main challenges facing member states. The main findings include: the need to assess the performance of health systems and implement sound and needed reforms to achieve both a more efficient use of public resources and the provision of high quality healthcare; and the need to get more value for money if countries are to ensure universal access under conditions of severe constraints on public budgets. The conclusions also invite member states and the Commission to factor these findings into their analysis and proposals in the framework of the Europe 2020 strategy.

Crisis management

Ministers endorsed conclusions on a Commission communication on crisis management. The Government welcome the Commission’s work in this area to strengthen the European framework and ensure that all member states have common and credible tools and powers to resolve failing banks.

Code of conduct in business taxation

The Council adopted conclusions welcoming the work of the code of conduct group in producing its biannual report under the Belgian presidency. The report highlights potentially harmful tax competition with regards to business taxation. The Council has asked the group to continue its monitoring of business taxation, as well as to carry on the work under the work package agreed by the Council in December 2008. The Commission is also invited to continue discussions with Switzerland and Liechtenstein on the application of the principles and criteria of the code. The UK supports the ongoing work of the group, which is beneficial in highlighting those practices which are potentially damaging to fair EU tax competition.