Category: Press Releases

The press release issued by HM Treasury on 25 September 2003.

Following the Budget announcement that the annual revalorisation of fuel duties would be deferred for six months until 1 October due to international uncertainties, with the military conflict in Iraq and the volatility of oil prices, the Treasury today confirmed that, as planned, fuel duties will increase in line with inflation on 1 October by 1.28 pence per litre.

The legislation for this change was passed by Parliament in the Finance Act on 10 July 2003.  Since the Budget, the uncertainty for other regional oil-producing nations has lessened. The volatility of oil prices at the time of the Budget has now diminished and oil prices have become more stable.

Since 2001, fuel duty has been reduced by 13 per cent in real terms.

Notes to editors

1. The Chancellor said in his Budget speech in April: “Owing to the recent high and volatile level of oil prices as a result of military conflict in Iraq, I have decided to defer the 1.28 pence a litre annual revalorisation of fuel duties until six months from now – 1 October – and will legislate to this effect.  And if the current international uncertainties and volatility remain I will not proceed with the change at all.”

2. Yesterday’s OPEC meeting in Vienna agreed a small cut in output in response to the fall in prices expected to follow normalisation of Iraqi production, but OPEC expects prices to remain near the middle of the $22-$28 price band into 2004 and stresses the importance of “maintaining price and market stability in 2004 and thereafter”.  In its World Economic Outlook for 2004, the International Monetary Fund said: “Markets expect prices to be sustained through 2003.  By late next year, however, many analysts believe prices could fall sharply – to levels significantly lower than suggested by current futures”. The communiqué issued after Saturday’s meeting of the G7 countries in Dubai also stated that “Oil prices are expected to remain stable”.

3. Since March 1999, the duty rates on the main types of petrol and diesel have not risen in real terms. Duty rates rose in line with inflation in March 2000, were cut by 2 pence and 3 pence per litre in March 2001 and have been frozen since then, representing a cost to the Exchequer of £1.8 billion or a reduction in real terms of 13 per cent, while the switch to Ultra Low Sulphur Petrol during this period has helped progress towards environmental goals.

4. In the month before the Budget oil prices fluctuated within a range of $24 to $33 a barrel.  The price per barrel has remained more stable in the range $25 to $29 in the past month.

The press release issued by HM Treasury on 5 November 2003.

Following the statement of 24 October by the Office for National Statistics, the Treasury confirms that the premature publication by Reuters of the September retail sales figures arose because the information was obtained improperly by a Reuters trainee journalist from a junior Treasury official, without the knowledge of that official.

Reuters accepts that information improperly obtained should not have been published and have apologised for doing so.  For its part, the Treasury views this incident extremely seriously and is rigorously examining all its procedures to ensure that any repetition is avoided.  The Treasury’s Permanent Secretary has emphasised this point in discussions and correspondence with the National Statistician.

The press release issued by HM Treasury on 12 November 2003.

Professor Sir Andrew Likierman, Head of the Government Accountancy Service and Managing Director of the Treasury Financial Management, Reporting and Audit Directorate, will retire in the New Year after ten years in post.

Paying tribute to Sir Andrew, Chancellor Gordon Brown said:

“Andrew Likierman has made an outstanding contribution to improving financial management in Government over the course of a decade.”

Announcing Sir Andrew’s retirement, Treasury Permanent Secretary Gus O’Donnell said:

“Sir Andrew Likierman has been an outstanding public servant and a wonderful colleague.

“He has led successfully the development and implementation of the best practice accounting standards in Government through the resource accounting and budgeting project. This marked the most extensive modernisation of the public finances in more than a century.

“The improvement in financial management within Government over the last decade is due in no small part to Sir Andrew’s drive and determination. I wish him every success as he pursues his distinguished academic career in the future.”

Sir Andrew’s successor will be selected by open competition. Details of the vacancy for the renamed post of Head Of Financial Management In Government are currently being advertised.

The press release issued by HM Treasury on 17 November 2003.

New measures enabling local authorities to promote economic development, create jobs and support business were set out by the Treasury today.

Economic Secretary to the Treasury John Healey and Chief Economic Adviser Ed Balls set out the new measures designed to extend the role of local government in economic development and give local authorities greater incentives to promote enterprise at the opening of the Local Government Associations’ 2003 Annual Economic Regeneration Conference in Manchester.

Following an overwhelmingly positive response to an earlier consultation, John Healey and Ed Balls said that the Treasury will be announcing plans to proceed with the Local Authority Business Growth scheme in the Pre-Budget Report on 10 December with a view to publishing the full details in Budget 2004 and introducing the scheme in 2005.

The scheme, which could mean an additional £1 billion for local authorities across the country, including a possible £130m for the North West alone, will allow local authorities to retain a proportion of the growth in business rate income to spend on local priorities.  By giving local authorities a direct financial incentive in business creation the aim is to encourage them to work more closely with businesses and other partners, including the Regional Development Agencies, to boost business growth.

Speaking at the Local Government Association’s annual conference on economic regeneration John Healey said:

“Local authorities have a crucial role to play in our society, acting as community leaders, delivering services, and working with partners to promote economic development at the local level.  The Government is committed to doing more to give local authorities the resources and freedoms they need to tackle barriers to enterprise, employment and growth.  Here in Manchester, the City Council has shown the way, successfully reversing population decline in the city centre and strengthening the economic and social fabric of the city.  The Local Authority Business Growth scheme will ensure that in the future success in this role is recognised and rewarded. ”

Ed Balls added:

“Local authorities across the country stand to gain up to £1bn from Local Authority Growth Incentives which will provide a powerful incentive for authorities to promote local enterprise and growth. Councils here in the North West alone could gain £130 million, and Manchester itself could get an extra £25 million over three years. The response to the consultation has been excellent and has shown that both local authorities and businesses would welcome the additional resources and the freedom to spend them on local priorities. Here in Manchester, the Local Authority Business Growth scheme could mean an additional £25m over three years.”

A new Government prospectus on Enterprise Areas – the 2,000 most deprived areas in the UK – was also published today.  The prospectus highlights the toolkit of policy measures available to promote regeneration in the UK’s most deprived communities, including stamp duty exemptions on local property transactions and Community Investment Tax Relief to improve access to small business finance.  The Government is asking for feedback from those communities on how this toolkit can be further developed.

The Pre-Budget Report will also consider what more can be done to promote enterprise in these areas, including measures aimed at streamlining the planning process and encouraging the release of derelict land for the creation of new businesses.

The press release issued by HM Treasury on 25 November 2003.

Treasury Minister John Healey says the Government’s strategy to tackle VAT fraud has saved billions of pounds in revenue, as Customs today reported their latest success, arresting 12 fraudsters involved in a multi-million pound bullion and computer chip fraud.

Chairing an 11 Downing Street seminar with representatives from the mobile phone and computer chip industries and other stakeholders, Economic Secretary to the Treasury, John Healey MP, said Customs’ strategy to significantly reduce the losses from VAT Missing Trader Fraud was on track and was proving the value of the UK Government’s pioneering efforts to tackle the world-wide problem of tax fraud. Mr Healey said:

“VAT fraud is not a victimless crime. It lines the pockets of criminals, forces legitimate traders out of business, and robs the honest taxpayer of more than £2 billion a year. But we are showing we have the right strategies, the right skills and the right people to crack the crime gangs, and protect the revenue we need for our public services.”

“We were the first in the world to measure our VAT losses and bring forward a strategy to tackle them, and we are the first in Europe to address the problem by targeting action at the fraudsters not by imposing blanket regulation on every business. That is why the people I have spoken to today have applauded our efforts not criticized them.”

The fraud relies on bogus trade in high-value, low-volume consignments like  mobile phones and computer chips to steal huge amounts of tax in short spaces of time,  by not paying VAT over to Customs, and subsequently submitting  claims for VAT repayments. As well as describing the overall impact of Customs’ strategy, John Healey told the seminar about Customs’ success in cracking individual criminals and gangs.

In the latest such success, Customs reported 11 dawn searches of businesses and premises in London, Birmingham, Berkshire, Essex and, leading to the arrest of 12 people thought to have pocketed £25 million in a 25 day period last year by trading in computer chips and gold bullion on which VAT was never paid. Details of the investigation– codenamed Operation Devout – were released for the first time today.

The press release issued by HM Treasury on 3 December 2003.

The Task Force considering major operational disruption in the financial system has concluded that no new legislation is needed to cater for disruption in the financial sector.

The Task Force chaired by Sir Andrew Large, Deputy Governor of the Bank of England, today announced a number of recommendations for further improvements to preparations in other areas such as private contracts and the rules of market infrastructures, such as clearing-houses and stock exchanges, while also recommending further contingency planning work by the financial authorities (the Treasury, Bank of England and Financial Services Authority).

Financial Secretary Ruth Kelly:

“I support the Task Force conclusion that no new legislation is needed and accept those recommendations which apply to the financial authorities and support those which are for others to implement.

“I am pleased that the Task Force involved a wide range of people whose work would be affected by major disruption. Membership of the Task Force and its associated working groups was drawn from market practitioners, the legal community, the Bank of England, the FSA and the Treasury.  I am grateful to all those who contributed and to Sir Andrew and the staff of the Bank of England for producing the report.”

The press release issued by HM Treasury on 4 December 2003.

Increased collaboration between business and university research departments will bring significant economic benefits to the UK, according to an independent report published by the Government today. But concerted action by business, universities, and government will be required in order to grasp the opportunities for the UK economy.

The Lambert Review, commissioned by HM Treasury, the Department for Education and Skills and the Department for Trade and Industry in November 2002, makes a series of recommendations aimed at smoothing out the path between Britain’s strong science base and the business community. They include:

• a greater role for the Regional Development Agencies in facilitating knowledge transfer in their regions;
• a new funding stream for business-relevant research, along with increased and improved “third stream” funding for knowledge transfer;
• Universities to develop a code of governance and to demonstrate good management and strong performance in return for a lighter regulatory touch from Government and the Funding Councils
• development of model contracts and a protocol for intellectual property (IP) to speed-up IP negotiations;
• encouraging new forms of formal and informal networks between business people and academics, including the establishment of a business-led R&D employers’ forum; and
• Universities to provide more information on student employability, and businesses to take a greater role in influencing university courses and curricular.

Richard Lambert, who is a member of the Bank of England’s Monetary Policy Committee, concludes that the biggest single challenge lies in boosting the demand for research from business, rather in increasing the supply of ideas and services from universities. However, he suggests that there are reasons for hoping that business investment in research will strengthen in the future, and the Review cites examples of a wide range of companies that have profited from working alongside academic researchers.

Presenting the report to the Government today, Richard Lambert commented:

“I am very positive about the economic potential which business in the UK can harness through developing stronger collaboration with universities. I am also clear that realising this potential will require concerted action by universities and business, with support from Government. My recommendations pose a challenge to all those engaged in this increasingly important area of public policy.”

Welcoming the report on behalf of Government, the Chancellor of the Exchequer Gordon Brown said:

“At their best, businesses and universities in the UK produce world-class results and can build world-beating partnerships, helping to foster productivity growth throughout the British economy. Richard Lambert’s report celebrates success in this field and identifies how as a country we could capitalise on this, building on rising public investment in the university research base. As Richard Lambert suggests, ambitious businesses need universities to meet many of their future technology and skills needs, and regional development agencies should help foster university-business links.  He also suggests a strong case for a share of university research to be driven by the needs of business.  In response a centrepiece of our next budget and spending review will be government playing its part in helping universities and business face up to these new challenges – together we must enable our centres of excellence to succeed in the next wave of science and be at the heart of Britain’s future economic success.”

Patricia Hewitt, Secretary of State for Trade and Industry, added:

“Scientific excellence is at the heart of a competitive economy. We have an outstanding track record of scientific achievement in our universities and British companies are benefiting from this research. But we need to make a better connection between the science base and industry. Innovative products, services and ways of doing business are crucial for the UK in today’s global economy. The forthcoming DTI Innovation Report will set out the Government’s next steps in meeting the challenge of turning invented in the UK into made in the UK.”

Charles Clarke, Secretary of State for Education and Skills, said:

“Our universities are a major national economic asset. The UK’s university research base continues to perform strongly, and is now underpinned by significant real increases since 1997 in public investment. We must ensure that this investment pays off, and that universities can continue to deliver the research and skills which the economy demands. Richard Lambert’s report provides an invaluable assessment of what can be achieved by well-run universities engaging purposefully with business, to their mutual benefit. We will seek to support such good practice in taking forward the Government’s current reforms of higher education in England.”

The press release issued by HM Treasury on 4 December 2003.

The Employer Training Pilots (ETPs) have made a successful start in their first year, according to an  interim evaluation published today. Though still early days, the evaluations shows that, in the six pilot areas, over 14,000 low-skilled workers from 3,000 employers have benefited from training they would otherwise not have received.

Early signs of success led the Government this year to double the number of areas that are taking part in the pilots. It also extended the pilots for another year (to end August 2004) in the original areas: Birmingham and Solihull; Derbyshire; Essex, Greater Manchester; Tyne and Wear; and Wiltshire and Swindon.

The scheme has reached small firms, traditionally an area where training has not been a high priority. The evaluation shows that 70% of the workplaces  have fewer than 50 employees. Over 40% of employers had no previous involvement with Government agencies.

One highly popular feature of the scheme is that courses are run flexibly to suit businesses. For example a training course was run at 4.00 in the morning for a group of bakers.

Economic Secretary to the Treasury, John Healey, said:

“This is a win-win-win scheme as higher skills levels benefit the employee, the employer and the economy as a whole. It reaches employers and employees traditional training programmes have never reached. Employees can benefit through their pay, their job satisfaction and employment prospects.

“Employers gain with employees able to undertake a greater number of tasks, performing them more efficiently and adapting faster and more effectively to change. This will reduce costs and enable firms to produce more innovative products. Highly skilled workforces are more productive, which also benefits the whole economy.”

Department of Education and Skills Minister, Ivan Lewis, commented:

“It is good news that the Employer Training pilots are proving successful in engaging low-skilled employees in training. At the end of the first year we have had over 3,000 employers and 14,000 learners registered to take part, the latest figures show this has now risen to more than 5,000 employers and 20,000 learners.

“The evaluation shows that the pilots are not only attracting both small firms but those that have had no previous contact with Government agencies. Both employers and learners are also expressing high levels of satisfaction with the pilots.

“With the extension of the pilots for a further year and an increase in pilot areas from 6 to 12, this continued evaluation will allow us to draw clearer conclusions on their impact. It will help us work with training providers, employers, unions and individuals to deliver the right skills through our new national Skills Strategy.”

The Employer Training Pilots have proved very successful in placing low-skilled individuals in training courses through their employers. The Government welcomes, in particular, the progress that ETPs have made in attracting learners from small firms and those traditionally thought of as hard to reach.

The majority of learners are; female (55%), aged 25 – 45 (59%) and work full-time (75%). Three quarters of learners left school at or before the age of 16.

Both employers and learners have expressed high levels of satisfaction with the training, information and guidance being made available.

The press release issued by HM Treasury on 5 December 2003.

The Attorney General and Economic Secretary to the Treasury today announced the creation of an independent Customs and Excise Prosecutions Office (CEPO). The new office will be established by the end of 2004, and will be accountable to the Attorney General.

A Director for the new office, with full accounting officer responsibilities, will be appointed as soon as possible, and will be closely involved in the creation of a fully independent CEPO.

The establishment of CEPO as an entirely separate prosecuting authority, accountable to the Attorney General, was a key recommendation of the Butterfield Review, published in July 2003.

Attorney General Lord Goldsmith QC said:

”The independence of prosecutors is a bedrock of our system of justice and a key constitutional safeguard. It is essential for public confidence in the conduct of criminal cases. This move will further enhance the independence of Customs prosecutors.

“They will work closely with skilled Customs investigators to continue building strong cases and delivering robust prosecutions – similar to the way the Crown Prosecution Service does through its close collaboration with the police.

“To be most effective, prosecutors must be independent – and be seen to be independent – by judges, by their colleagues and by the wider criminal justice system. The creation of an independent CEPO, accountable to me, will institutionalise and further protect that independence.

“A fully independent CEPO, with a clear demarcation of responsibility between investigators and prosecutors, will give Customs a sound basis to continue its fight against crime.

“Mr Justice Butterfield said that whilst there has been a significant improvement in the Prosecutions Office, there is more to be done if HMCE prosecutions are to regain their reputation for excellence. Rebuilding that reputation through concrete improvements to the prosecution process is the key challenge for CEPO in the coming years.”

John Healey MP, Economic Secretary to the Treasury, added:

“There have been far-reaching changes made in Customs in recent years which have revolutionised the fight against organised crime. Independence for the prosecution office will consolidate the progress already made, and minimise the chances of past mistakes happening again.
“The new Office will be a strong, fair, accountable and effective prosecuting authority. It will help Customs continue its work to disrupt and convict those involved in drug trafficking, money laundering and other serious and organised crime.

“The ‘Mr Bigs’ of the organised criminal world drive the drugs trade on our streets and fuel an underground economy that steals money from our schools and hospitals. Since the Proceeds of Crime Act came into force, Customs has seized over £30 million from these criminals. In the last financial year it had £68 million in confiscation orders issued by the Courts.

“That is why it is so important that Customs gets it right, so cases are legally watertight and serve the interests of justice. This frees Customs to do what it does best – catching smugglers and hitting organised criminals where it hurts – in the pocket.”

The press release issued by HM Treasury on 9 December 2003.

Professor David Miles today published his interim report analysing why long-term fixed-rate mortgages currently account for only a small proportion of the UK mortgage market.

While many borrowers could benefit from longer-term fixed-rate mortgages few choose these products at the moment.  Mortgages in the UK are overwhelmingly either at variable rates or at rates fixed for around two years.  The report points to three key factors that account for the low take up of longer-term fixed-rate products:

1. Borrowers tend to attach much greater weight to the level of initial monthly repayments than to the overall cost of borrowing over the life of the loan.

2. Many borrowers have a poor understanding of risk and therefore pay little attention to the insurance which longer-term fixed-rate mortgages can provide against unexpected interest rate rises.

3. The way in which many mortgage lenders compete for new business results in cross-subsidisation from existing borrowers paying standard variable rates (SVR) to new borrowers taking out discounted variable and short-term fixed-rate mortgages.  This means that longer-term fixed-rate mortgages appear expensive when compared with discounted mortgages.

The development of a larger market in longer-term fixed-rate mortgages also depends on the efficiency with which mortgage lenders are able to raise funds to finance them, which in turn depends on a number of factors.   Some of these factors would probably prove temporary if greater demand emerged.  For example constraints due to insufficient liquidity or the inability of lenders to assess the pre-payment risk associated with fixed-rate products would ease as a market developed and lenders’ experience of pre-payments grew.  Others constraints, such as capital requirements, accounting rules and legislative constraints on building societies, might require a policy response to enable the market to develop properly.  In the light of further consultation on these funding issues specific recommendations will follow in the Final Report.

The report also presents evidence that borrowers’ tendency to attach too great a weight to the level of initial mortgage repayments can contribute to macroeconomic instability and can make monetary policy more difficult to operate.  Such macroeconomic problems would be much reduced if households in the UK were encouraged to take a more forward-looking approach to borrowing and to choosing between mortgages. This is clearly desirable in its own right, whether or not the UK adopts the euro.

On publication of his report Professor Miles said:

“In recent decades there has been little long-term fixed-rate mortgage lending in the UK.  This report analyses why that is so. For many households, particularly those borrowing a great deal and those whose incomes are uncertain, there are significant advantages of fixing the level of repayments for several years.  Yet few of such borrowers take out longer-term fixed-rate mortgages.

Borrowers need to be helped to understand risk better and to make more forward-looking decisions and lenders enabled to fund loans and handle risk in the most cost effective way. I look forward to consulting further with all interested parties before putting forward recommendations next year.”

Professor Miles will publish his Final Report, with recommendations, around the time of next year’s Budget.