Category: Press Releases

The press release issued by HM Treasury on 17 March 2004.

The Government has today accepted in full the recommendations of its review of the Revenue Departments, led by Permanent Secretary to the Treasury, Gus O’Donnell.  The recommendations, published today, represent an important contribution to the public service reform agenda.

Key recommendations include:

• creation of a new department, integrating HM Customs and Excise and the Inland Revenue, tasked with improving customer services, particularly reducing compliance costs, improving compliance with tax law, and increasing efficiency;
• clearer roles and responsibilities for tax administration within a new accountability framework and annual remit laid down by Ministers; and
• transfer of tax policy functions to the Treasury, to improve the ability of the Government to respond to modern tax challenges and create a greater delivery focus in the new department.

In responding to the review, Gordon Brown, the Chancellor of the Exchequer said:

“HM Customs and Excise and the Inland Revenue can and should be proud of their work, achievements and histories.  The changes announced today will modernise the institutions in line with international best practice.  They will enable them to use their expertise and experience to deliver better outcomes for the country, particularly improving the service to taxpayers, managing tax revenues, and improved efficiency.”

A NEW TAX DEPARTMENT FOR THE UK

When announcing the terms of reference for the review, the Chancellor paid tribute to the key roles played by Customs and the Revenue in support of the Government’s reforming agenda.  This has been further reinforced by the work of the review.  But the work has also highlighted the benefits in taking a new approach:

• joining up services to shared customers, particularly businesses.  In effect the UK currently has two separate business tax authorities;
• ensuring that effort in enforcing the tax rules reflects risk across the tax base, which will maximise the revenue for public services while reducing compliance costs for honest taxpayers; and
• sharing administrative tasks between the departments to improve efficiency and giving greater opportunity to allocate staff to different areas of work.

Today’s report does not set out a detailed blueprint for change.  New services and approaches will be developed by those in the new department in consultation with stakeholders in a long term programme.  The changes announced today create the institutional framework for this work and the flexibility to respond to future challenges.  The Government will legislate to establish the new department as soon as Parliamentary time allows.

The Chancellor announced that he will advertise this week for an Executive Chairman to run the new department who, pending legislation, will be appointed to both departments.

The review has worked closely with the ongoing Gershon efficiency review.  The reforms discussed as part of the efficiency work dovetail with the organisational and information reforms announced today.  This integration of HM Customs and Excise and the Inland Revenue along with existing plans and proposed efficiency reforms, could create scope for overall savings equivalent to up to 14,000 jobs by the end of 2007-08.  On the basis of policy commitments and existing spend to save packages this would result in a net reduction equivalent to 10,500 posts by 2008.

CLEARER ACCOUNTABILITY

The review has concluded that the new department should be governed by a new accountability framework setting out more clearly the respective roles of Ministers and officials.  This will be developed in partnership with the new senior management.

At the same time new accountability arrangements, set out in a framework document, will be introduced. The Chancellor will give an annual remit to the new department outlining its main new and on-going tasks, to be focussed on what should be achieved and why rather than how.  The new department will have lead responsibility and accountability for implementation, with clearer and greater discretion to manage itself.

This reflects the general approach of the Government to public service reform:

• clear long term goals, and division of responsibility and accountability;
• flexibility and discretion to develop and implement innovative approaches to delivery;
• devolution or decentralisation of power, with maximum transparency about goals and progress towards achieving them, and subject to scrutiny and accountability.

COORDINATING TAX POLICYMAKING

The report sets out a new division of work on policy between the Treasury and the new organisation.  Both departments will continue to work together, ensuring the close links between legislation and delivery that are essential to successful policy, but the Treasury will lead tax policy work and the new organisation will lead on policy maintenance and delivery issues.  The main drivers behind this change are:

• to increase capacity in the Treasury for strategic tax policy analysis;
• to improve the linkages between tax and non-tax economic policy making;
• to facilitate coherent policy making across types of tax, for example by introducing a greater focus on particular economic objectives such as productivity or macro economic stability; and
• to give the new organisation a greater operational focus, making it easier for the management to concentrate expertise on delivery challenges.

Over time the new department and the Treasury will work in partnership to examine tax services and law to ensure they reflect and take full advantage of the new customer centred structure.

The press release issued by HM Treasury on 18 March 2004.

Treasury Permanent Secretary Gus O’Donnell today held a meeting in 11 Downing Street with business representatives, and the accountancy and legal professions involved in work on tax.

The meeting was an opportunity to explain and discuss the outcome of Mr O’Donnell’s review of the revenue departments, and to set out further details of the Chancellor’s proposals for greater transparency in the market for tax avoidance schemes and arrangements, and of the steps which will be taken to prevent forestalling of the new regime.

The meeting was constructive, and focused on the importance of on-going dialogue between the Treasury, Inland Revenue, and HM Customs and Excise, and representatives of business and the professions.

The press release issued by HM Treasury on 24 March 2004.

Chancellor Gordon Brown today instructed the Bank of England, as agent for Her Majesty’s Treasury, to direct financial institutions that any funds which they hold for or on behalf of five senior members of Hamas must be frozen.  The individuals are; Musa Abu Marzouk, Imad Khalil Al-Alami, Usama Hamdan, Khalid Mishaal and Abdel Aziz Rantisi.

This action has been taken because the Treasury have reasonable grounds for suspecting that four of the individuals are, or may be, persons who facilitate or participate in the commission of acts of terrorism and one, Abdel Aziz Rantisi, is or may be a person who commits, facilitates or participates in such acts.

In addition, the Chancellor has instructed the Bank of England to add to its list of individuals and terrorist groups subject to an asset freeze the names “Kadek” and “Kongra-Gel” as aliases of the terrorist Kurdistan Worker’s Party (PKK),  which is already subject to such a freeze.

The UK has already taken extensive action to combat the financing of terrorism, including:

• Both before and after September 11, 2001 the UK froze a total of around £70 million of terrorist assets. The bulk of these assets have now been unfrozen, and made available to the legitimate government in Afghanistan.
• At present, 38 bank accounts are currently frozen in UK institutions under Treasury powers to implement UN measures against terrorist financing.
• New legal powers to target terrorist funds have been introduced, including the Terrorism Act 2000, the Anti-Terrorism Crime and Security Act 2001 and Orders in Council implementing UN Security Council Resolutions 1373 and 1390.
• The UK has so far funded £3.65 million of counter-terrorist training abroad.  UK financial investigators continue to work closely with their counterparts in the United States, Europe and in other countries.

Chancellor Gordon Brown said:

“The UK has been a leading country in implementing UN freezes of terrorist assets and taking appropriate domestic action. And I can announce that I have today instructed the Bank of England, under the Terrorism Order, to add further names to the list of those whose assets are to be frozen, including two aliases of a Kurdish terrorist group and five senior members of Hamas.”

Notes to Editors

1. The Chancellor has instructed the Bank of England to direct all financial institutions to take immediate action to freeze funds belonging to five senior leaders of Hamas. The individuals are:

• Musa Abu Marzouk
• Imad Khalil Al-Alami
• Usama Hamdan
• Khalid Mishaal
• Abdel Aziz Rantisi.

2. The asset freeze is authorised under the Terrorism (United Nations Measures) Order 2001.

3. The Order gives the Treasury power to freeze the funds of persons provided certain criteria set out in the Order are met. These include that there are reasonable grounds for suspecting that the person is or may be either:

within Article 4(1)(a) “a person who commits, attempts to commit, facilitates or participates in the commission of acts of terrorism”;

within Article 4(1)(b) “a person controlled or owned directly or indirectly by a person in (a)”; or

within Article 4(1)(c) “a person acting on behalf, or at the direction, of a person in (a)”.

4. The Treasury implement asset freezes by instructing the Bank of England, as their agent, to issue a notice directing financial institutions that any funds that they hold for or on behalf of the listed persons or entities must be frozen.  The Bank Notice is published on the Bank of England’s website and emailed to some 600 financial institutions and trade associations.

The press release issued by HM Treasury on 31 March 2004.

Christopher Allsopp’s Final Report to the Chancellor of the Exchequer, the Governor of the Bank of England and the National Statistician on his independent Review of Statistics for Economic Policymaking is published today.

Chancellor Gordon Brown said:

“I greatly welcome the Report’s review of the coverage and quality of economic statistics in the context of the changing structure of the UK economy, and its recommendations.

“Together with the First Report, it makes a significant contribution to the discussion of regional and national economic statistics for policy making. I would like to thank both you and your team for delivering a comprehensive examination of the wide range of issues.”

The Chancellor asked Christopher Allsopp in February 2003 to undertake a review of statistics for economic policymaking, examining the information needed to support the Government’s key regional policy objectives, and whether official economic statistics have properly reflected the changing economic structure of the UK.

The Review Team began its work in June 2003, and published its First Report on 10 December 2003.

The press release issued by HM Treasury on 1 April 2004.

The Chancellor today announced the reappointment of Kate Barker to the Bank of England’s Monetary Policy Committee (MPC) for a second term of three years. Kate Barker’s first term of office is due to expire on 31 May 2004.

The Chancellor said:

“I am delighted that Kate Barker has agreed to serve a second term on the Monetary Policy Committee. Her combination of industry, academic and public sector experience is of great value to the MPC.”

The press release issued by HM Treasury on 10 May 2004.

HM Treasury today announced that home reversion plans will be regulated by the Financial Services Authority (FSA). The decision is the result of a full public consultation.

Announcing the decision Ruth Kelly, Financial Secretary, said:

“Buying a home reversion policy is a huge financial decision involving the most important, and sometimes only significant, asset of elderly people. It can have significant implications for tax, benefits, inheritance and long-term financial planning. Regulation will help people to make informed choices, offer valuable consumer protection and ensure that there is a level playing field in the equity release market.

“Legislation to regulate home reversion plans will be brought forward as soon as parliamentary time allows.”

HM Treasury will shortly consult on the definition of home reversion plans for the forthcoming legislation. When the scope of regulation has been defined the FSA will consult on the details of the regulatory regime.

The press release issued by HM Treasury on 10 May 2004.

The Treasury, in consultation with National Savings and Investments (NS&I), the Financial Ombudsman Service (FOS) and the Parliamentary Ombudsman, has decided that the NS&I’s complaints procedure should be harmonised with that of other retail financial services providers.

As a first step, the FOS is today publishing a consultation paper which outlines the modifications required to its voluntary jurisdiction rules in order to accommodate NS&I.

The press release issued by HM Treasury on 13 May 2004.

The Chancellor of the Exchequer announced today that, following his decision to integrate HM Customs and Excise and the Inland Revenue into a single department, Her Majesty the Queen had been pleased to approve the name of the new department and the appointment of its first executive chairman.

The new department will be called Her Majesty’s Revenue and Customs, and following an open recruitment process, David Varney, outgoing chairman of MMO2 and chairman of Business in the Community, will become the executive chairman of the new department.

The Chancellor also announced that Paul Gray, currently Second Permanent Secretary in charge of pensions and disability at the Department for Work and Pensions, has been appointed as the department’s deputy chairman.

Both Mr Varney and Mr Gray will take up their posts on 1 September 2004.

Gordon Brown said:

“Mr Varney is an outstanding business leader with a first rate record proven across the private sector with a reputation for good management and effective delivery.  I know he will have the support of the existing management and staff in the two departments, who have my gratitude for the excellent job they continue to do”

David Varney commented:

“This is one of the biggest delivery jobs in Government and I am very excited about the challenge of making the new department a success. I look forward to working with Paul Gray and all the staff in the department”.

The press release issued by HM Treasury on 17 May 2004.

The Treasury announced today that Nick Macpherson, currently Managing Director of the Treasury’s Public Services directorate, has been appointed as the new Managing Director of the Budget and Public Finances directorate, taking over from Professor Nick Stern, whose appointment to the Commission for Africa was recently announced by the Prime Minister. Nick Macpherson will take up his appointment after the upcoming Spending Review.  Professor Stern will maintain his role as Second Permanent Secretary to the Treasury and Head of the Government Economic Service.

The Treasury also announced two appointments within the Budget and Public Finances directorate as part of the strengthening of its analytical policy function and the improvement of tax policy coordination across Government, in line with the recommendations of the Treasury Permanent Secretary Gus O’Donnell’s review of the revenue departments, announced by the Chancellor of the Exchequer alongside the March Budget.

Edward Troup, currently Managing Partner of the Tax and Pensions Group at Simmons and Simmons, has been appointed the Director of Business and Indirect Tax, and Mike Williams, currently Deputy Director on International issues at the Inland Revenue has been appointed Director of International Tax. They will join Dave Ramsden, Director of Budget and Tax Policy, and Nick Holgate, Director of Personal Tax and Welfare Reform, on the management team of the Budget and Public Finances Directorate.

Commenting on the appointments, Gus O’Donnell said:

“I am pleased to announce such a strong team, and I am particularly delighted to have brought Edward Troup back to the Treasury to take up this important post. He is one of the leading British authorities on tax, and his extensive experience of working with business on tax legislation will strengthen our efforts to simplify the tax system, help businesses start up and grow, and tackle avoidance.”

The press release issued by HM Treasury on 19 May 2004.

Chancellor of the Exchequer Gordon Brown and Secretary of State for Trade and Industry Patricia Hewitt today called on the EU to lead progress in removing barriers to trade, and set out the full costs of current protectionism.

In a paper launched today, ‘Trade and the Global Economy: the role of international trade in productivity, economic reform and growth’, the Treasury and DTI estimated that the world economy is losing $500 billion of income each year as a result of continuing barriers to trade.  Welcoming Commissioner Lamy’s recent proposals to put all EU export subsidies on the table for negotiation, Gordon Brown and Patricia Hewitt called on the Commission to go further. The EU should agree to significant further agricultural reform so that border protection is substantially reduced and export subsidies are no longer an issue for world trade by 2010 and to reduce all agricultural tariff peaks towards the maximum level for non-agricultural products.

The paper highlights the waste of the Common Agricultural Policy (CAP), which costs taxpayers within Europe 50 billion Euros per year, plus a further 50 billion Euros in artificially high food prices, the equivalent of over £800 every year for an average family of four. Whilst locking developing countries out of the international trading system, the CAP also fails to deliver on its core objectives, as EU farm incomes continue their steady relative decline and Europe’s poorest households face higher food prices.

Gordon Brown said he would make clear at this weekend’s G7 talks in New York that continued protectionism risks putting global economic recovery at risk whilst jeopardising the growth prospects of many poorer countries:

“We cannot proclaim ourselves supporters of development while preventing developing countries from selling us the products they can produce most efficiently. Protection is highest in agriculture and labour intensive goods – precisely those areas in which developing countries are most competitive. Reducing barriers to trade in agriculture could benefit developing countries by $240 billion a year – more than three times as much as current annual aid flows.”

Alongside real progress on reducing agricultural trade barriers in developed countries Gordon Brown and Patricia Hewitt suggested that developing countries need to design their own trade reform in a careful and sequenced way to be integrated into their own development and poverty reduction strategies. They also proposed supporting this by additional aid flows to ease capacity constraints, help capture the benefits of trade and manage change.

Speaking about the potential benefits of removing existing barriers, Patricia Hewitt said:

“We know from our own experience in Europe that countries that trade together also grow together. Following Pascal Lamy’s recent letter to WTO Members, we now have a opportunity to get the Doha Development Agenda back on track. Let’s all redouble our efforts to make the progress we need before this window closes in July.”