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Written Ministerial Statements

Thursday 26 January 2012

Business, Innovation and Skills

Pre-packaged Sales in Insolvency

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey): In March 2011 I announced that we would be taking steps to improve the transparency and confidence of pre-pack sales in insolvency. We subsequently consulted interested parties on measures targeted at the sales of assets in insolvent companies where these are sold to connected parties (such as the directors or their close associates).

Pre-pack sales can offer a flexible and speedy means of business rescue and when used appropriately can be the best way of maximising returns for creditors. However, everyone who is affected by insolvency is entitled to have confidence that insolvency procedures are used fairly and that insolvency practitioners deliver the best possible outcome for all creditors.

It is apparent that concerns remain about the use of pre-pack sales, particularly where the assets are sold to a connected party—something that is often referred to as “phoenix-ism”. I am concerned about the potential for sales to be effected at an undervalue, particularly in smaller-value asset sales, where unsecured creditors may receive less than they should. I also believe that it is important to consider the effect of pre-pack sales on competitors in the market.

Following the announcement, BIS officials have discussed the merits and practical application of the proposed measures with a range of interested parties, including secured and unsecured creditors, insolvency practitioners, and business representatives.

Having taken account of all the issues, however, the Government are not convinced that the benefit of new legislative controls presently outweighs the overall benefit to business of adhering to the moratorium on regulations affecting micro-business which is an important plank of this Government’s deregulatory agenda. As much of the concern was related to small businesses, I do not consider that measures should be introduced just for businesses other than micro-businesses. It is for this reason that I am today announcing that the Government will not be seeking to introduce new legislative controls on pre-packs at this time.

The Insolvency Service, an Executive agency of BIS, already monitors compliance by insolvency practitioners with the professional standard statement of Insolvency Practice 16 (Pre-packaged Sales in Administrations) which requires administrators to provide creditors with early post-sale information on details of the sale and the justification for it. I have asked BIS officials to now undertake an urgent review in conjunction with stakeholders of how the existing controls on pre-packs have been

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working and whether, in the light of their experiences and the outcomes from the monitoring, more could be done within the existing regulatory framework to improve confidence and transparency. The issues raised by pre-packs are important matters that affect a wide range of stakeholders including business interests, and I look forward to discussing the findings of the review with stakeholders in the spring.

Energy and Climate Change

Feed-in Tariffs

The Secretary of State for Energy and Climate Change (Chris Huhne): As the House will be aware, the Government’s proposed changes to the feed-in tariffs (FITs) scheme are the subject of a judicial review. Specifically, the Government have been challenged regarding their proposal to apply new tariffs for solar photovoltaics (PV) from 1 April 2012 to all new installations with an eligibility date on or after an earlier “reference date”, which we proposed should be 12 December 2012.

Yesterday, the Court of Appeal handed down a negative judgment on the Government’s appeal against an earlier decision by the High Court. We respectfully disagree with the judgment and are seeking permission to appeal to the Supreme Court. In the light of that, we cannot rule out the possibility that lower tariffs could be applied to installations which became eligible for FITs on or after the proposed reference date. It is important that consumers are aware of this.

The reason for appealing is that we want to maximise the number of installations that are possible within the available budget for FITs, rather than use available money to pay a higher tariff to half the number of installations. Solar PV can have a strong and vibrant future in UK and we want a lasting FITs scheme to support that future and jobs in the industry.

We have already put before Parliament draft licence modifications that (subject to the parliamentary process) would bring a 21p rate into effect from April for solar PV installations which become eligible for FITs on or after 3 March, to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry.

In the meantime, we want as far as possible to minimise the uncertainty for PV and other technologies eligible for support under FITs. We are therefore still intending to publish the phase 2 consultation by 9 February. This will include proposed tariffs for other FITs technologies and a set of reform proposals for the scheme. We are also intending to publish the Government’s response to the other aspects of the phase 1 consultation that are not affected by the judicial review (namely the proposals on energy efficiency and for multi-installation tariff rates).


Nursing and Midwifery Council

The Parliamentary Under-Secretary of State for Health (Anne Milton): Today, I have asked the Council for Healthcare Regulatory Excellence (CHRE) to undertake a strategic review of the Nursing and Midwifery Council (NMC).

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With a view to further strengthening the NMC’s leadership and governance, the Department also plans to consult on re-constituting the NMC’s council to reduce its size. This is in line with a recommendation by the CHRE. The Department believes that this option now warrants consideration for the NMC.

On 11 March 2008, a debate took place in the House of Commons that raised concerns about the NMC and its performance, Official Report, columns 46-51WH. In response, the previous Government asked that the CHRE expedite its annual performance review of the body. The report found that the NMC was performing its statutory duties, but not to the standard that the public had the right to expect.

Following that report, the NMC agreed an action plan to address the concerns. A new council, made up of equal lay and registrant members was independently appointed from 1 January 2009. A new chair was appointed on the same date and a new chief executive took office later that year.

Subsequent reports by the CHRE have found some areas in which the NMC is improving. Regrettably, however, their most recent report on fitness to practise, published in November 2011, shows that the rate of improvement in this area falls below the standard that the public and registrants have the right to expect. That is why I have taken the decisions to commission the CHRE to conduct a wide-ranging review and to undertake a consultation on the constitution of the council.

The review will look at the NMC’s organisational structure, resource allocation and operational management. It will establish what further action is needed to ensure that the NMC is effectively carrying out its statutory duties to promote high standards of conduct and practice in order to protect the public. The NMC supports the review, which will report to Ministers by early summer.

How the NMC council might best be constituted to provide strong, strategic oversight will be the subject of a public consultation and views from all stakeholders will be welcomed and taken into account.

Home Department

Metal Theft

The Secretary of State for the Home Department (Mrs Theresa May): I am announcing today our intention to lay a Government amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill to tackle metal theft.

The Government consider that legislation is the only sustainable, long-term solution to the growing menace of metal theft. There is an urgent need to make stealing metal less attractive to criminals, and tackling the stolen metal market will act as a significant deterrent.

That is why I can confirm that we will lay amendments to:

create a new criminal offence to prohibit cash payments to purchase scrap metal; and

significantly increase the fines for all offences under the existing Scrap Metal Dealers Act 1964 that regulates the scrap metal recycling industry.

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Cash transactions for scrap metal are often completed without any proof of personal identification or proof that the individual legitimately owns the metal being sold. This leads to anonymous, low-risk transactions for those individuals who steal metal. In addition, the widespread use of cash facilitates poor record keeping by the metal recycling industry and can support tax evasion activity.

Today’s announcement follows the commitment outlined in the national infrastructure plan published in November 2011 when the Government announced £5 million to establish a dedicated metal theft taskforce to enhance law enforcement activity in this area.

These amendments are part of our wider attempts to tackle all stages in the illegal trading of stolen scrap metal, and we shall bring forward further measures in due course.


City of Liverpool Cruise Terminal

The Parliamentary Under-Secretary of State for Transport (Mike Penning): The Department consulted last year on a proposal from Liverpool city council to alter the use of the City of Liverpool Cruise Terminal. The Department proposed to lift its objection to the removal of a grant condition that precludes use of the City of Liverpool Cruise Terminal for turnaround (start or end of cruise) operations, in return for the phased repayment of £5.3 million of grants. In the light of that consultation, I find that there are persuasive arguments that this level of repayment would be insufficient to reflect the adverse impact on competition with other ports. I therefore intend shortly to seek independent advice on a more appropriate figure.

I will report further to the House when I have reached a decision on the DFT objection. As Liverpool city council is aware, turnaround operations would also require state aid clearance from the European Commission.

Meanwhile, turnaround cruise operations continue to be permitted at Langton Dock in Liverpool.

National Policy Statement for Ports

The Parliamentary Under-Secretary of State for Transport (Mike Penning): On 29 November and 19 January, the House of Commons debated the national policy statement for ports which I laid for parliamentary approval on 24 October 2011. In the light of the satisfactory completion of that process I am pleased to inform the House that I am today designating it as a national policy statement under the provisions of section 5(1) of the Planning Act 2008, and laying copies before you as required by section 5(9)(b) of the same Act.

The planning system is a key to the future timely development of the country’s port infrastructure. The designation of this policy statement marks a significant step forward, clarifying what is required to enable the successful major port developments that will be essential for trade and economic growth in the long term.

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Street Works (Lane Rental)

The Parliamentary Under-Secretary of State for Transport (Norman Baker): I am today publishing the outcome of the Government’s consultation on proposals to allow trials of lane rental schemes to be undertaken by a small number of “pioneer” local authorities. Lane rental would involve the local authority applying a daily charge where street works obstruct traffic at the busiest times, providing a clear financial incentive for works to be carried out in less disruptive ways.

The Government are now inviting applications from authorities wishing to operate “pioneer” schemes. The guidance I am publishing today makes clear that the Government are prepared to approve up to three such schemes, in areas where the local authority has already sought to achieve the desired effect through other means, including through a road works permit scheme. Lane rental charges would need to be targeted on those streets where works cause the greatest disruption, and would need to provide a genuine opportunity for works promoters to avoid charges by carrying out their works at less disruptive times. Evidence from the performance of the “pioneer” schemes will inform future decisions on whether lane rental should play a wider role. Any revenues raised from lane rental will have to be used for purposes that will help to reduce the disruption caused by works—for example, research and development into disruption-saving techniques and technologies.

The guidance and other documents are now being published on the Department for Transport’s website, and I will be laying the necessary regulations before Parliament shortly.

Work and Pensions

EU-Switzerland Agreement Opt-in Decision

The Minister of State, Department for Work and Pensions (Chris Grayling): The Government are committed to the free movement of workers within the European economic area and Switzerland, and also to protecting the sustainability and affordability of our welfare systems. As part of that commitment we want to ensure that non-active migrants from third countries outside the EU cannot gain access to welfare benefits if they have never worked or paid contributions in the United Kingdom.

The present decision replaced a Council decision of 6 December 2010, which cited the, in our view, correct legal base of article 79(2)(b) of the Treaty on the Functioning of the European Union (TFEU) which allows the EU to adopt measures concerning the free movement rights (in this case social security rights) of third country nationals. As article 79(2)(b) lies within title V of part III of TFEU, the Government considered whether it wanted to opt into the measures and we concluded that we did not. The content of the revised decision was identical to that of December 2010, but

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the legal base was changed to article 48 TFEU, on social security coordination for migrant workers in the EU.

A similar situation arose earlier in 2011 with proposals to amend the social security provisions of the analogous EEA agreement. Then, as now, we took the view that these proposals would have the effect of extending social security co-ordination rights to non-active persons moving between the EU and a third country (in this case, Switzerland); and that the revised legal base was inappropriate as it related only to free movement within the EU.

In negotiations, the UK expressed serious concerns over the legal base, particularly since there was an existing decision with identical content, and over the procedures under which the decision was being adopted. Negotiations were curtailed, and no justification was given for the change in legal base. The Council decision on the EU-Switzerland agreement was adopted in Council on 16 December 2011. The Government submitted a written minute statement setting out our objections.

In parallel with these processes, we considered across Government the options open to us, including legal action. To maintain a consistent approach in line with the action taken concerning the EEA agreement, we decided to take direct action in the European Court on the basis that the article 48 legal base is incorrect and that the Council decision is therefore invalid. In addition, we confirmed our earlier decision not to opt into the measure.

On the same day that the decision was adopted in Council, the UK lodged an application under article 263 TFEU with the European Court of Justice to annul the Council decision and a further application under article 278 TFEU to suspend the decision.

By taking legal action against the Commission in both the EEA and EU-Switzerland agreements, I believe the Government are able to underline an important point of principle concerning the interpretation of TFEU and this action demonstrates how seriously the Government take our obligation to protect our rights under the treaty.

Industrial Injuries Advisory Council

The Minister of State, Department for Work and Pensions (Chris Grayling): In accordance with the Cabinet Office’s recent guidance on public bodies, which took effect from 1 April 2011, I have launched a review of the Industrial Injuries Advisory Council (IIAC). This review will examine the council’s functions and whether it should exist at arm’s length from Government. If it does, the review will go on to examine whether the council’s control and governance arrangements continue to meet the recognised principles of good corporate governance. I will inform the House of the outcome of the review when it is completed. IIAC is also due to be reviewed as a Scientific Advisory Committee, and so, in the interests of proportionality and value for money, these reviews are being combined.