Written Ministerial Statements

Wednesday 20th October 2010 Written Statements

Wednesday 20 October 2010

EU Competitiveness Council

Wednesday 20th October 2010 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

The EU Competitiveness Council took place in Luxembourg on 11-12 October 2010. Baroness Wilcox, the Under-Secretary of State for Business, Innovation and Skills represented the UK on internal market issues and Andy Lebrecht, the UK’s Deputy Permanent Representative to the EU represented the UK when a Minister was not in attendance. A summary of the discussions follows.

Single Market Act

The Commission outlined its ambitions for the next steps on the Single Market Act. These would include measures to make the single market work for business and be at the service of citizens. The Commission said their document would be launched on 27 October followed by a three to four month public consultation. The UK stated its main priorities were free trade and ensuring that proposals would bring economic benefits to the EU. It proposed the Commission should identify the top 20 barriers to business and consumers as a way of identifying the success of the Act. This was widely welcomed.

The EU Patent

The presidency and the Commission reaffirmed their commitment to create a business friendly EU patent. The latest compromise on the proposal for a language translation regime was announced by the presidency, but some member states remain opposed. The UK and a majority of member states supported the proposal, but a few member states remain opposed. The presidency reiterated its desire to find a unanimous solution between member states, and announced that the issue would be discussed at an additional Competitiveness Council, now confirmed for 10 November.

Innovation

The Commission presented its recent Innovation Union strategy to industry and research Ministers separately. The strategy was largely welcomed. The UK highlighted the economic potential that could be realised by innovation, welcoming the aim to develop ways to influence more private sector financing. It suggested future R and D framework programmes to support research should have a clear outcome, but felt some initiatives in the Innovation Union could prove sensitive.

Other member states did not welcome a proposal to set up a new Innovation Council. Most preferred innovation work to be taken forward by the Competitiveness Council and were open to it playing an enhanced role in monitoring performance.

There was a discussion by research Ministers over lunch on Commission ideas to set up European innovation partnerships. Ministers felt these should be governed from the “bottom up” rather than driven by political priorities, and have a light touch with close private sector involvement.

The Council agreed conclusions on tourism, simplifying rules governing the EU’s R and D funding programmes, and approved the launch of three joint programmes on agriculture, food security and climate change; cultural heritage; and healthy eating.

Equitable Life Payment Scheme

Wednesday 20th October 2010 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

Our programme for government pledged to

“implement the Parliamentary…Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policyholders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”

It has been this Government’s priority to provide a swift resolution to policyholders who have been waiting 10 years for justice.

A commitment to fair payments must be founded on a fair assessment of the losses suffered by policyholders, and that must start with the ombudsman’s approach. She sets this out in her report. “Equitable Life; a decade of regulatory failure”, where she introduces the concept of “relative loss”: that is the difference between what Equitable Life policyholders actually received from their policies, and what they would have received if they had invested elsewhere .The representations I have received over the summer from policyholders and their representatives have overwhelmingly supported this definition, and I believe that it is the right basis for calculating loss.

I am aware that parts of Sir John’s analysis were controversial, and I have always said that I would consider representations from interested parties on his work alongside it. Last week’s inquiry by the Public Administration Select Committee and their subsequent report recommended that Sir John’s final findings could not be used in order to determine the payments due to policyholders as his terms of reference included only the findings of maladministration accepted by the previous Government.

I have therefore decided to reject the final findings of Sir John’s report, as the later parts of his methodology are dependent upon which of the parliamentary ombudsman’s findings were included in his terms of reference, and which were not.

However, Sir John’s methodology includes a calculation of total relative loss, calculated from the end of 1992, is not affected by the restrictions on his terms of reference. Although there is disagreement around some aspects of this figure, there is considerable consensus around the main tenets that produce it, including the “alternative approach” he advocates which removes the need for individual assessment of policyholders’ claims. The comparators chosen to reach it have generally been recognised as being appropriate by various interested parties. The parliamentary ombudsman has also told me that she broadly supports the manner in which Sir John has approached this calculation.



Therefore, I believe that it is a fair representation of the relative loss suffered by policyholders. Towers Watson calculate this figure as £4.3 billion.

As the parliamentary ombudsman and PASC have recognised, the Equitable Life payments scheme must deliver fairness to taxpayers as well as policyholders. Given the significant pressures on public finances, it would not be fair to taxpayers for the payments scheme to pay out the full value of relative loss. Taking into consideration other spending commitments , and the reduction in bonuses suffered by policyholders as a result of the policy value cuts in 2001 and 2003, the Government have decided that £1 billion should be allocated to the payments scheme in the first three years of this spending review period.

However, when affordability is taken into consideration, it is important that the position of those who have been hardest hit by their losses is recognised. Policyholders with with profits annuities were particularly vulnerable to reductions in the value of their policies because they were unable to move their funds elsewhere, or to mitigate the impact of their losses through employment. They have consistently been highlighted to me by all groups as those most in need of compensation.

In the light of these factors, the Government will cover the cost of the total relative loss suffered by with profits annuitants (WPAs) who took out policies after 1 September 1992, estimated at £620 million. WPAs will receive regular payments, based on their full past and future relative losses.

The £1 billion set aside for the first three years of this spending review period will cover both the cost of the first three years of WPA regular payments, and all payments to other policyholders. The Independent Commission on Equitable Life Payments will advise on the allocation of funding to policyholders other than WPAs. I have also asked the independent commission to advise me on the prioritisation of payments to policyholders within this group, to ensure that those whose need is greatest are paid first. WPAs will continue to receive regular payments beyond the spending review period, over the course of their lifetime. In this way, the payments will effectively replace the income that they would have received from their Equitable Life policies. Once these payments are taken into account, I expect that the total amount paid out through the scheme will be in the region of £1.5 billion.

I have further decided that these payments will be free of tax.

I have today written to the Independent Commission on Equitable Life Payments informing them of my decision and its implications for their work, and reiterating my request for their advice on how this funding should be distributed by the end of January. As I announced on 22 July, it is our ambition to make the first payments to victims by the middle of 2011, and I hope that all parties will work together to help meet this goal.

I am publishing alongside this the Government’s response to PASC’s Third Report on Equitable Life, copies of which are available in the Vote Office. I am further publishing an updated letter from Towers Watson providing their final calculation of relative loss figures. This is available on the HM Treasury website, along with further information.

Boundary Commission for Wales: Interim Reviews

Wednesday 20th October 2010 Written Statements

[The Deputy Prime Minister (Mr Nick Clegg)]

I have received notice in writing from the Boundary Commission for Wales of commencement of three interim reviews. The reviews will be of the boundaries of the parliamentary and assembly constituencies of:

Cardiff North County Constituency

Cardiff South and Penarth County Constituency

Ogmore County Constituency

Pontypridd County Constituency

Vale of Glamorgan County Constituency

And the Welsh electoral regions of:

South Wales Central Assembly Electoral Region

South Wales West Assembly Electoral Region.

Parliamentary Written Question (Correction)

Wednesday 20th October 2010 Written Statements

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

I regret that the written answers given to my hon. Friends the Members for Southend West (Mr Amess) on 10 June 2010, Official Report, col. 219W, and for Suffolk Coastal (Dr Coffey) on 13 July, Official Report, col.705-6W, were incorrect. They should not have included the line that information on these contracts is not collected centrally. I have been advised that the Department does collect limited information covering independent sector costs.

The correct reply to my hon. Friends the Members for Southend West and for Suffolk Costal is that the Department does collect limited information on the cost to NHS providers (NHS trusts and primary care trust provider arms) of contracting services from independent sector providers. A revised response to the questions is set out below.