ECOFIN: 21 March 2017
David Gauke Excerpts(7 years ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 21 March 2017. EU Finance Ministers discussed the following items:
Early morning session
The Eurogroup president briefed Ministers on the outcomes of the 20 March meeting of the Eurogroup. Ministers discussed the current economic situation. The European Commission presented its review of national provisions adopted in compliance with the treaty on stability, co-ordination and governance in the economic and monetary union (the fiscal compact) conducted in accordance with article 8 of the fiscal compact, which was followed by an exchange of views by Ministers. Austrian Finance Minister Schelling explained his views as regard a proposed fine for the manipulation of debt statistics in Austrian land of Salzburg, and the Polish delegation, on behalf of the Chairman of the EIB’s board of governors, outlined the suggested process for the upcoming election of the EIB president.
Reduced VAT rate for electronically supplied publications (e-publications)
Ministers discussed political issues in relation to the proposal for a Council directive regarding rates of value added tax applied to books, newspapers and periodicals. The proposal would give member states the ability to apply reduced rates or a zero VAT rate to e-publications and physical publications.
General reverse charge mechanism
Ministers discussed the political issues in relation to the general reverse charge mechanism (GRCM). This is a proposal for an amendment to Council directive 2006/112/ on the common system of value added tax to allow the temporary application of a GRCM to supplies of goods and services above a certain threshold, with the aim of combatting VAT fraud.
Current financial service legislative proposals
The Council presidency provided an update on current legislative proposals in the field of financial services.
European Semester 2017:
a) 2017 country reports and in-depth reviews
b) Implementation of country-specific recommendations (CSRs)
Following a presentation by the Commission, Ministers discussed the country reports published by the Commission on 22 February, including the assessment of CSR implementation and, where relevant, the framework of the macroeconomic imbalance procedure. The Czech Republic, Italy and Slovenia were invited to reflect on their experiences of implementing reforms to the business environment, followed by an exchange of views.
Follow-up to the G20 meeting of Finance Ministers and Central Bank Governors on 17-18 March 2017 in Baden-Baden
The presidency and the Commission informed Ministers on the outcomes of the G20 meeting.
Any other business
a) European Defence Fund
The Commission informed Ministers about its European defence action plan, focusing in particular on the launch of a European defence fund. This item was delayed from February ECOFIN.
b) Status of implementation of financial services legislation
The Commission informed Ministers on the status of implementation of financial services legislation.
[HCWS614]
Cross-Government Prosperity Fund
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The Chief Secretary to the Treasury (Mr David Gauke)
I wish to update the House on how the Prosperity Fund has supported global and UK prosperity in its first year and its plans for future years. As we leave the European Union the Prosperity Fund is a vital part of how the UK will be a global, outward-looking nation that is confident on the world stage and has strong, fruitful relationships with countries around the world.
On 21 July 2016 I informed the House of the aims and objectives of the £1.3 billion Prosperity Fund (HCWS104) and a short paper was published on gov.uk that details how the fund operates. The fund uses primarily Official Development Assistance (ODA) resources to promote economic reform in ODA-eligible middle income countries, which are home to 70% of the world’s poor, contributing to a reduction in poverty. Shared prosperity is a key part of the UK aid strategy. The fund has a secondary benefit of opening up opportunities for international, including UK, business.
Projects are focused on countries and sectors identified through cross-Whitehall economic analysis as being those areas with large numbers of people living in poverty, potential for inclusive growth and where UK expertise can make a real difference.
As set out in the fund’s spending round 2015 settlement letter, the fund is 97% ODA with a small non-ODA allocation. ODA projects must meet the primary purpose to support poverty reduction and promote sustainable economic growth.
The strategic direction for the fund is set by a cross-Government Ministerial Board supported by a director level portfolio board composed of representatives from key departments. This structure reflects the cross-Government nature of the fund and ensures that programmes deliver value for money and support Government objectives. Accounting Officers remain responsible for ensuring the value for money of programmes funded by the Prosperity Fund.
The Ministerial Board has met nine times since January 2016. These regular meetings have allowed it to respond promptly and flexibly to changing circumstances—for example endorsing increased funds to trade related projects after the EU referendum.
The Prosperity Fund has continued to refine its systems and processes throughout the first year in order to ensure that it succeeds. It has acted on positive feedback and helpful advice from the Infrastructure and Projects Authority, the National Audit Office, and, most recently, the Independent Commission for Aid Impact (ICAI).
We welcome this external scrutiny as an opportunity to test the portfolio and management systems with independent experts. As stated in our formal management response to the ICAI review, the Prosperity Fund accepts and is implementing their recommendations, many of which it had already identified through its own internal reviews.
Year one of the Prosperity Fund was designed as a transition year. The Ministerial Board allocated £55 million of ODA to projects in a range of ODA eligible countries including China, India, Brazil, Mexico, Colombia, Indonesia, Nigeria and South Africa and in areas such as financial services, infrastructure, business environment, energy, and trade and regulation. It also allocated £5 million of non-ODA in support of Government prosperity objectives in both ODA-eligible countries and developed markets.
In South Africa, electricity shortages have cut GDP by 2% in recent years. The Prosperity Fund piloted an innovative British technology to help address this, enabling local government, universities, businesses and utilities to save a minimum of 15% on their electricity consumption.
In Brazil, the work of the Prosperity Fund has been recently celebrated in national media as an example of the importance of international co-operation to tackle transnational bribery and reduce corruption, and has helped to shape the recently approved “10 Measures against Corruption” law in Brazil.
The Prosperity Fund financed the former Prime Minister’s anti-corruption summit in May 2016 which brought together world leaders, business and civil society to agree measures to reduce corruption. The fund has also placed the UK at the forefront of delivering international commitments to tackle corruption such as setting up the International Anti-Corruption Co-ordination Centre, financed by the Prosperity Fund and hosted by the UK’s National Crime Agency.
The fund is committed to meeting the UK Government transparency commitments on ODA spend. Details of all year one programmes will be released on gov.uk in mid 2017 and an annual report on the first year will be issued by autumn 2017.
The majority of the Prosperity Fund will be allocated to large, high impact, multi-year programmes. To date 18 such programmes have been endorsed by the Ministerial Board and are now being developed by UK Government Departments including HM Treasury, the Department for International Development and the Foreign and Commonwealth Office. Many other Government Departments are involved in the design and delivery of individual programmes.
These programmes include country specific work in South America and Asia, regional programmes in South East Asia, and multi-country, sector specific programmes on trade reform, insurance, education and anti-corruption. The focus of all programmes is high impact and value for money. We expect the first of these to launch later in the year.
We will refresh our gov.uk page with more information on the fund following this update and will continue to develop these pages as the fund progresses, including with information on programmes as they launch.
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Section 5 of the European Communities (Amendment) Act 1993
David Gauke Excerpts(7 years ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
I beg to move,
That this House approves, for the purposes of Section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in the Budget Report and Autumn Statement, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook and Fiscal Sustainability Report, which forms the basis of the United Kingdom’s Convergence Programme.
The legal requirement to give the European Commission an update of the UK’s economic and budgetary position—our convergence programme—means there is a welcome opportunity for a wider economic debate, should we want one. [Interruption.] Clearly, since last year’s—[Interruption.]
Madam Deputy Speaker (Natascha Engel)
Order. If Members leaving the Chamber do so a little more quietly, we can hear the Minister. Thank you.
Mr Gauke
Clearly, since last year’s convergence programme debate there has been a momentous change in the UK’s relationship with the European Union. The article 50 process is now under way and the United Kingdom is leaving the European Union. There cannot, as some suggest, be any turning back from that. In accordance with the outcome of the referendum, we are leaving the European Union and will make our own decisions, take control of the things that matter to us and seize every opportunity to build a stronger and fairer Britain.
Given our decision to leave, some Members might find it odd that we are debating the UK’s convergence programme here today. It is right that we should do so, however, because we continue to exercise our full membership of the European Union until our exit and because to do so is a legal requirement that we must take seriously. I should, however, remind the House that the content of the convergence programme is drawn from the Government’s assessment of the UK’s economic and budgetary position. This assessment is based on the spring Budget report and the Office for Budget Responsibility’s most recent economic and fiscal outlook. It is that content, rather than the convergence programme itself, that requires the approval of the House.
I should also remind the House that although the UK participates in the stability and growth pact, which requires convergence programmes to be submitted, we are required—by virtue of our protocol to the treaty opting out of the euro—only to endeavour to avoid excessive deficits. The UK cannot be subject to any action or sanctions as a result of our participation.
John Redwood (Wokingham) (Con)
On that point, would my right hon. Friend like to comment on how much influence he thinks the convergence criteria and the deficit reduction requirements have had on successive UK Governments to drive more austerity and cuts?
Mr Gauke
In the seven years that I have been a Treasury Minister, I have not noticed the convergence programme having an influence on the decisions that we have taken. We have taken decisions to reduce the deficit because we believe that that is in the long-term interests of the United Kingdom, rather than because of any requirements under the EU treaties.
Let me provide a brief overview of the information that we will set out in the UK’s convergence programme. Members should note that this does not represent new information; rather, it captures the Government’s assessment of the UK’s medium-term economic and budgetary position, as we set out in the spring Budget. It is fair to say that in March 2017, we were in a better position economically than many had predicted. Growth in the second half of 2016 was stronger than the OBR had anticipated in the autumn statement. In fact, the UK economy grew faster last year than most other advanced major economies, and employment remains at a record high. So, following a period of robust economic growth, record employment and a falling deficit, we sought to safeguard that economic stability in the Budget. That is particularly important as we prepare our country to leave the European Union.
The OBR forecasts that business investment will remain subdued as we begin the period of negotiation with our EU friends and partners, and it continues to judge that, in the medium term, growth will slow due to weaker growth in consumer demand as a consequence of a rise in inflation. Accordingly, putting the public finances in good order will remain vital for the foreseeable future, and all the more so given that the deficit remains too high and that there is a range of potential risks in the global economy. That is why we are getting ourselves into a position of readiness to handle difficulties of any kind that might come our way. Our fiscal rules, which enable us to do that, strike the right balance between reducing the deficit, maintaining flexibility and investing for the long term.
Overall public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year. This means that we are forecast to meet our 3% stability and growth pact target this year for the first time in almost a decade. Borrowing is forecast to be 2.9% in 2017-18 and then to fall to 1.9% in 2018-19 before reaching 0.7% in 2021-22, which will be its lowest level in two decades. The economic forecasts are broadly unchanged since the autumn, but the OBR has substantially revised down its short-term forecast for public sector net borrowing. As a consequence, we are within sight of bringing to a halt the increase in the national debt as a proportion of GDP. Debt is forecast to peak at 88.8% of GDP in 2017-18, and then to fall in subsequent years.
John Redwood
On that point, it is important to remind the House that £435 billion of the debt is now owned by the state, so the state owes the money to itself, meaning that it is not a debt in any normal sense.
Mr Gauke
My right hon. Friend is correct about where the debt is owed, but as a country we must none the less be wary of a debt that is high by recent historical standards. It is right that we show determination to set out a plan for how the debt to GDP ratio can be reduced to ensure that the UK is in a more resilient place to absorb the shocks to our economy and to the public finances that occur from time to time.
Beyond our fiscal rules to protect the public purse and prepare our economy, the Budget also set out a wide range of things that this Government will be doing to invest in our future. That includes giving our children the chance to go to a good or outstanding school that sets them up to succeed; helping young people across the country get the skills they need for the high-paid, high-skilled jobs of the future; and investing in cutting-edge technology and innovation, so that Britain continues to be at the forefront of the global technology revolution—three things that will be at the heart of our efforts finally to address the country’s long-standing productivity challenges.
The Budget also promised greater support for our social care system, with substantial additional funding so that people get the care they deserve as they grow older. The Budget works to strengthen our public services over the long term, too, in our determination to bring down the deficit and get the UK back to living within its means, and to fund our public services for the long term through a fair and sustainable tax system. The spring Budget, therefore, was one that made the most of the opportunities ahead by laying the foundations of a stronger, fairer and better Britain.
Following the House’s approval of the economic and budgetary assessment that forms the basis of the convergence programme, the Government will submit the convergence programme to the Council of the European Union and the European Commission, with recommendations expected from the Commission in May. The submission of convergence programmes by non-euro area member states, and stability programmes by euro area member states, also provides a useful framework for co-ordinating fiscal policies. A degree of fiscal policy co-ordination across countries can be beneficial to ensure a stable global economy, which is in the UK’s national interest.
The UK has always taken part in international mechanisms for policy co-ordination, such as the G7, the G20 and the OECD. Although we are leaving the EU, we will of course continue to have a deep interest in the economic stability and prosperity of our European friends and neighbours, so we will continue to play our part in this process while we remain an EU member and in other international policy co-ordination processes once we have left the EU.
The Government are committed to ensuring that we act in full accordance with section 5 of the European Communities (Amendment) Act 1993, and that this House approves the economic and budgetary assessment that forms the basis of the convergence programme.
Mr Gauke
As I stated in my opening remarks—as much as 30 minutes ago—following this debate, and with Parliament’s approval, the Government will inform the Council of the European Union and the European Commission of our assessment of the UK’s medium-term economic and budgetary position. That is based entirely on information and documents already presented to Parliament. Presenting that information through the submission of the UK’s convergence programme is a legal requirement under the EU’s stability and growth pact.
Let me pick up on a couple of points made by the hon. Member for Bootle (Peter Dowd). First, he made the case for greater devolution. I remind him that it is this Government who have put in place the new metro Mayors—no doubt he is spending much of his weekends and constituency Fridays campaigning for the Labour candidate for Mayor of the Liverpool city region. We also have elections in Manchester and the West Midlands. That was not created by the previous Labour Government; it was created by this Government, recognising the need for decisions to be made at local level and for real powers to be devolved to that level. I am surprised that he was so unwilling to credit the Government for what we have done on that front.
Secondly, the hon. Gentleman accused me of not mentioning productivity in my remarks, and he made comments about the Chancellor not discussing it generally. In fact, the Chancellor regularly comments on the need to improve our productivity, and in my remarks a little while ago I drew attention to the measures we are taking on schools, skills, and technology and innovation, which, as I said a few minutes ago, are at the heart of our efforts to finally address the country’s long-standing productivity challenges. It is very difficult to see how the Labour party’s policies, which would drive away business investment and discourage enterprise and innovation, would do anything other than weaken our productivity. If the hon. Gentleman wishes to fight the next few weeks on the subject of productivity, I for one would welcome that.
In the Budget, we continued to prepare this country for long-term prosperity, first and foremost by putting our economic stability first and by continuing to improve the state of our public finances, but we also set out meaningful investment in our future productivity and our current public services. This is therefore a plan that strikes the right balance between reducing our deficit, preserving fiscal flexibility and investing in Britain’s future. Those are the foundations of a stronger, fairer and better Britain. Those are the foundations of a strong and stable platform for the upcoming exit negotiations. That is the basis of the convergence programme we present to the European Union. On that basis, I am pleased to commend the motion to the House.
Question put.
UK Bilateral Loan to Ireland
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The Chief Secretary to the Treasury (Mr David Gauke)
HM Treasury has today provided a further report to Parliament in relation to the bilateral loan to Ireland as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2016 to 31 March 2017.
A written statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 13 October 2016, Official Report, column 15WS.
[HCWS596]
Oral Answers to Questions
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Derek Thomas (St Ives) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The Government are protecting the core schools budget in real terms, reaching almost £41 billion this year. The Department for Education has consulted on a national funding formula to address the current postcode lottery in schools funding. The consultation lasted for 14 weeks, and received over 25,000 responses. The Government are considering the responses carefully, and will publish a response in the summer. For the St Ives constituency, the proposals would mean an increase in schools funding of 0.4%.
Derek Thomas
The majority of schools in my constituency are rated good or outstanding, due to the hard work and determination of teaching staff and their heads. However, Government funding for schools has not kept up with costs, which, according to the House of Commons Library, increased by 3.4% in 2016-17 and will increase by 8.7% by 2020. What message can I take back to my schools, which tell me they cannot maintain those standards if school funding does not keep up with these increased costs?
Mr Gauke
The Government do recognise that schools, like other organisations, face additional costs, such as salary increases. That is why the Department for Education is supporting schools to become more efficient, including with over £1 billion of savings from better procurement by 2019-20. It is also worth pointing out that, by protecting the total schools budget in real terms, as pupil numbers increase, so will the amount of money in our schools.
Helen Goodman (Bishop Auckland) (Lab)
If the Government are protecting the budget, why is the average cut in my constituency 8%, rising in some village schools, including to 22% in Butterknowle?
Matt Warman (Boston and Skegness) (Con)
Helen Hayes (Dulwich and West Norwood) (Lab)
The Chief Secretary to the Treasury (Mr David Gauke)
The Government are protecting the total core schools budget in real terms. That is possible only through careful management of the economy. As a result, school funding is at its highest ever level, at almost £41 billion in 2017-18. Spending will increase to £42 billion in 2019-20 as pupils numbers rise. We are also delivering our manifesto commitment to implement fairer schools funding. The recent national funding formula consultation includes generous transitional protections for schools that would see a reduction in their funding. The Government are carefully considering replies to the consultation and will respond in the summer.
Helen Hayes
The 2015 Conservative manifesto promised that
“the amount of money following your child into school will be protected”.
However, the National Audit Office found that schools face a real-terms cut of 8% per pupil by 2019-20, even before the cuts the new national funding formula will bring to more than 9,000 schools in England. Will the Government therefore confirm that the Tory manifesto pledge on per pupil funding is now in tatters?
Rachael Maskell (York Central) (Lab/Co-op)
The Government are clearly not protecting pupil per capita funding in York, which is currently the seventh-worst funded local authority and will experience a £288 per child cut in funding. How is that protecting the formula?
Mr Gauke
I would expect the hon. Lady to share my view that it is not right that we fund schools on the basis of what has happened historically. Every pupil in England should be assessed on the same basis. It cannot be right, for example, that pupils in Hackney receive 50% more than pupils in Barnsley. That does not seem to me to be fair and it is right that the Government address that.
Rishi Sunak (Richmond (Yorks)) (Con)
Chris Green (Bolton West) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
We recognise the importance of infrastructure provision in all regions of the United Kingdom. That is why at autumn statement 2016 we committed additional capital to fund high-value economic infrastructure through the national productivity investment fund. We are committed to putting local and regional needs at the heart of this fund. For example, we are spending £1.1 billion on local projects to improve our existing transport networks. That will deliver improvements to hundreds of roads across the country.
Sir David Amess
What further help can my right hon. Friend give to infrastructure projects in Southend West, including the A127 corridor improvement works?
Mr Gauke
My hon. Friend is a tireless advocate of the case for Southend. Indeed, we met in November to discuss some of these issues. It is worth pointing out that the Government have supported improvements to the A127, with more than £35 million of local growth funding. Furthermore, local authorities will have the opportunity to bid into the £490 million local transport pot as part of the national productivity investment fund.
Chris Green
I welcome the investment in the electrification of the rail line between Manchester and Preston, but what more can the Chancellor do to ensure that we have vital road links, such as the Westhoughton bypass?
Mr Gauke
The Government are investing more than £13 billion in transport projects in the north and supporting local road schemes such as the Manchester airport relief road and the Heysham M6 link road. The Government are also looking at options for the Highways England north-west quadrant that should ease congestion in places such as Westhoughton.
Mr Stephen Hepburn (Jarrow) (Lab)
This Government cannot even begin to pretend that they are interested in boosting infrastructure outside London and the south-east. We need only look at transport spending for proof of that. In London, transport spending is £1,000 per head; in the north-east it is not even £300. Does that not tell us about the Government’s record and their priorities?
Mr Gauke
As I said a moment or so ago, we are investing more than £13 billion in transport projects in the north. HS2 will benefit the north of England. We make no apologies for also wanting to ensure that we invest in Crossrail to deliver for London, yes, but also for the economy of the whole United Kingdom.
Greg Mulholland (Leeds North West) (LD)
Before the last general election, Conservative Ministers were committed to the electrification of the Leeds-Harrogate-York line, on which commuters still suffer from travelling on Pacer trains. Will we do any better after the next general election and finally see the electrification of this line?
Mr Gauke
As I said, we are investing in our infrastructure. We already had significant plans before the autumn statement, which involved further investment to give us scope to improve our transport infrastructure. It is worth pointing out, however, that aggregate investment in economic infrastructure will rise by almost 60% between 2016-17 and 2020-21.
Jason McCartney (Colne Valley) (Con)
Mr Gauke
My hon. Friend makes an important point about interconnection between northern towns. It is worth pointing out that we are putting local and regional needs at the heart of the national productivity investment fund. That is why we are spending £1.1 billion on local projects to improve our existing transport networks.
Hannah Bardell (Livingston) (SNP)
In the same vein, I congratulate the Economic Secretary to the Treasury’s local team on their success, and I hope that I will be joined in congratulating Livingston FC, who have also gained promotion.
On infrastructure spending, there is no doubt that Crossrail is an engineering feat, but it is costing nearly more than a third of Scotland’s national budget. When will we see more devolution of infrastructure funding—perhaps to fix some of the problems of the Minister’s colleagues?
Mr Gauke
Scotland benefits from the Barnett consequentials of investment in things such as HS2, which will provide a step change in rail connectivity along the east coast corridor, bringing significant benefits to the UK economy as a whole. However, we can afford to spend money on infrastructure only if we have a stable and strong economy to deliver it.
Stephen McPartland (Stevenage) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
The Government recognise the challenge that Britain’s productivity performance represents, and we are resolved to tackle the issue. At last year’s autumn statement we launched the national productivity investment fund to provide £23 billion-worth of additional spending, focused on areas key to boosting productivity. We went further at the Budget by investing an additional £500 million in technical education to ensure that businesses can access the skills they need.
Stephen McPartland
With the average worker spending 23% of their day on email, what assessment have the Government made of how the increasing reliance on email is stalling productivity?
Several hon. Members rose—
David Mackintosh (Northampton South) (Con)
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
The Chief Secretary to the Treasury (Mr David Gauke)
Improved rail resilience in the south-west is a priority, which is why we committed £5 million in Budget 2016 and £10 million in autumn statement 2016 to support that work. The Government will continue to work with Network Rail to develop options for future investment in the south-west in Network Rail’s control period 6.
Gareth Snell (Stoke-on-Trent Central) (Lab/ Co-op)
Martin Vickers (Cleethorpes) (Con)
Following the football theme of this afternoon, I am sure that everyone would wish to know that Cleethorpes Town has finished as champion of the Northern Counties East League, which means that even more people will want to travel to Cleethorpes. Infrastructure development was mentioned earlier. Will the right hon. Gentleman give an assurance that all roads will lead to Cleethorpes?
Chris Stephens (Glasgow South West) (SNP)
Can the Chancellor confirm that HMRC takes eight months to fill a vacancy in the national minimum wage compliance unit? If that is so, what will he do properly to resource that service so that workers can get a decent day’s pay for a decent day’s work?
Convergence Programme
David Gauke Excerpts(7 years, 1 month ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
Article 121 of the treaty on the functioning of the European Union (TFEU) requires the UK to send an annual convergence programme to the European Commission reporting upon its fiscal situation and policies. The UK’s convergence programme will be sent to the European Commission by 30 April. This deadline was set in accordance with the European semester timetable for both convergence and national reform programmes. The UK will continue to have all of the rights, obligations and benefits that membership brings up until the point we leave the EU, and as such the Government will continue to submit the UK’s convergence programme until that time.
Section 5 of the European Communities (Amendment) Act 1993 requires that the content of the convergence programme must be drawn from an assessment of the UK’s economic and budgetary position which has been presented to Parliament by the Government for its approval. This assessment is based on the Budget 2017 report and the most recent Office for Budget Responsibility’s economic and fiscal outlook and it is this content, not the convergence programme itself, which requires the approval of the House for the purposes of the Act.
Article 121, along with Article 126 of the TFEU, is the legal basis for the stability and growth pact, which is the co-ordination mechanism for EU fiscal policies and requires member states to avoid excessive Government deficits. Although the UK participates in the stability and growth pact, by virtue of its protocol to the treaty opting out of the euro, it is only required to “endeavour to avoid” excessive deficits. Unlike the euro area member states, the UK is not subject to sanctions at any stage of the European semester process.
Subject to the progress of parliamentary business, debates will be held soon in both the House of Commons and the House of Lords, In order for both Houses to approve this assessment before the convergence programme is sent to the Commission. While the convergence programme itself is not subject to parliamentary approval or amendment, I will deposit advanced copies of the document in the Libraries of both Houses and copies will be available through the Vote Office and Printed Paper Office.
The UK’s convergence programme will be available electronically via HM Treasury’s website prior to it being sent to the European Commission.
[HCWS582]
ECOFIN: 21 March 2017
David Gauke Excerpts(7 years, 1 month ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
A meeting of the Economic and Financial Affairs Council (ECOFIN) will be held in Brussels on 21 March 2017. EU Finance Ministers will discuss the following items:
Early morning session
The Eurogroup president will brief Ministers on the outcomes of the 20 March meeting of the Eurogroup. Ministers will discuss the current economic situation. The European Commission will present its review of national provisions adopted in compliance with the treaty on stability, co-ordination and governance in the economic and monetary union (the fiscal compact) conducted in accordance with Article 8 of the fiscal compact, followed by an exchange of views by Ministers.
Reduced VAT rate for electronically supplied publications (e-publications)
Ministers will discuss political issues in relation to the proposal for a Council directive regarding rates of value added tax applied to books, newspapers and periodicals. The proposal would give member states the ability to apply a reduced or zero VAT rate to e-publications and physical publications.
General reverse charge mechanism
Ministers will discuss the political issues in relation to the general reverse charge mechanism (GRCM). This is a proposal for an amendment to Council directive 2006/112/ on the common system of value added tax to allow the temporary application of a GRCM to supplies of goods and services above a certain threshold, with the aim of combating VAT fraud.
Current financial service legislative proposals
The Council presidency will provide an update on current legislative proposals in the field of financial services.
European Semester 2017:
a) 2017 country reports and in-depth reviews
b) Implementation of country-specific recommendations (CSRs)
Following a presentation by the Commission, Ministers will discuss the country reports published by the Commission on 22 February, including the assessment of CSR implementation and, where relevant, the framework of the macroeconomic imbalance procedure.
Follow-up to the G20 meeting of Finance Ministers and Central Bank governors on 17 to 18 March 2017 in Baden-Baden
The presidency and the Commission will inform Ministers on the outcomes of the G20 meeting.
Any other business
a) European defence fund
The Commission will inform Ministers about the Commission’s European defence action plan, focusing in particular on the launch of a European defence fund. This item was delayed from February ECOFIN.
b) Status of implementation of financial services legislation
The Commission will inform Ministers on the status of implementation of financial services legislation.
[HCWS546]
ECOFIN: 21 February 2017
David Gauke Excerpts(7 years, 1 month ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 21 February 2017. EU Finance Ministers discussed the following items:
Early morning session
Ministers were briefed on the outcomes of the 20 February meeting of the Eurogroup, and the European Commission presented an update on the current economic situation following the publication of the Commission’s winter forecasts on 13 February. Ministers also discussed points of clarification in relation to the intergovernmental agreement on the single resolution fund.
Anti-tax avoidance directive
Ministers reached a general approach to the second anti-tax avoidance directive (ATAD2).
Current financial service legislative proposals
The Council presidency provided an update on current legislative proposals in the field of financial services.
Criteria and process leading to the establishment of the EU list of non-co-operative jurisdictions for tax purposes
Following the Council conclusions agreed at ECOFIN on 8 November 2016, Council endorsed a state of play report by the Council secretariat.
Preparation of the G20 meeting of Finance Ministers and central bank governors on 17-18 March 2017 in Baden-Baden
Ministers mandated the Economic and Finance Committee (EFC) to finalise the EU terms of reference for the next meeting of G20 Finance Ministers and central bank governors.
Discharge to be given to the Commission in respect of the implementation of the budget for 2015
On the basis of a report from the European Court of Auditors, Ministers approved a Council recommendation to the European Parliament on the discharge to be given to the Commission in respect of the implementation of the 2015 budget.
Budget guidelines for 2018
Ministers adopted Council conclusions on the guidelines for the 2018 budget, which will serve as a point of reference in the forthcoming budgetary cycle.
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National Infrastructure Commission Report: 5G Strategy
David Gauke Excerpts(7 years, 1 month ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
My noble Friend the Commercial Secretary to the Treasury (Baroness Neville-Rolfe) has today made the following written statement.
The Chief Secretary to the Treasury deposited a copy of the National Infrastructure Commission’s report on 5G and telecommunication technology in the Libraries of both Houses on 24 January 2017. [DEP2017-0060]
Today I confirm the publication of the Government’s response to the National Infrastructure Commission’s report. This response is set out in the Government’s 5G strategy.
https://www.gov.uk/government/publications/next-generation-mobile-technologies-a-5g-strategy-for-the-uk
Copies of the document will be deposited in the Libraries of both Houses.
“Connected Future”, published on 14 December 2017, calls for Government to play an active role in ensuring that basic mobile services are available wherever we live, work and travel. The Government welcome the report as an opportunity to position the UK at the forefront of the deployment of 5G, and ensure we can take early advantage of the applications 5G networks may enable.
That is why, alongside this publication, the Government are providing £1.1 billion of funding to explore and incentivise the next generation of digital infrastructure for the UK—5G and full fibre. This will be a core part of our modern industrial strategy—helping to shape and establish an economy which is adaptive, resilient to change and fit for the demands of the 21st century.
The National Infrastructure Commission was announced in October 2015, to provide expert impartial analysis of the long-term infrastructure needs of the country. In January 2017 the commission was established on a permanent basis as an Executive agency of HM Treasury.
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Public Service Pension Indexation and Revaluation 2017
David Gauke Excerpts(7 years, 2 months ago)
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The Chief Secretary to the Treasury (Mr David Gauke)
Legislation governing public service pensions requires them to be increased annually by the same percentage as additional pensions (state earnings-related pension and state second pension). Public service pensions will therefore be increased from 10 April 2017 by 1%, in line with the annual increase in the consumer prices index up to September 2016, except for those public service pensions which have been in payment for less than a year, which will receive a pro rata increase. Scheme Police Fire Civil service NHS Teachers LGPS Armed forces Judicial Revaluation for active member 2.25% 2.6% 1% 2.5% 2.6% 1% 2.6% 1%
Separately, in the new career average public service pension schemes, pensions in accrual are revalued annually in relation to either prices or earnings depending on the terms specified in their scheme regulations. The Public Service Pensions Act 2013 requires Her Majesty’s Treasury to specify a measure of prices and of earnings to be used for revaluation by these schemes.
The prices measure is the consumer prices index up to September 2016. Public service schemes which rely on a measure of prices, therefore, will use the figure of 1% for the prices element of revaluation.
The earnings measure is the whole economy average weekly earnings (non-seasonally adjusted and including bonuses and arrears) up to September 2016. Public service schemes which rely on a measure of earnings, therefore, will use the figure of 2.6% for the earnings element of revaluation.
Revaluation is one part of the amount of pension that members earn in a year and needs to be considered in conjunction with the amount of in-year accrual. Typically, schemes with lower revaluation will have faster accrual and therefore members will earn more pension per year. The following list shows how the main public service schemes will be affected by revaluation:
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