Category: Press Releases

The press release issued by HM Treasury on 16 May 2000.

Paul Myners today launched his review of UK institutional investment with a consultation document setting out the main themes which the review will examine, and almost fifty issues for discussion. It invites comments on the current position and how this could be improved to remove unnecessary barriers to investment in growth and innovation in the UK economy.

A primary focus of the review will be to investigate whether there are factors distorting institutional investors’ decision-making, encouraging, for instance, excessive dependence on industry-standard investment patterns.

Paul Myners said:

“I have been concerned for some time that we are not making the best possible use of our capital markets.

“It is not appropriate for Government to second-guess institutions’ investment decisions. But if there are structural factors that are distorting rational decision-making, then there may be a role in helping to remove them. So when the Chancellor asked me to lead an inquiry into these issues, I was delighted to accept.”

The review will cover all types of institutional investment, including pension funds, insurance companies and unit trusts. It will consider issues such as the benchmarks against which investment performance is measured, the impact of public discussion of investment performance, and the regulatory environment in which decisions are made. The review will report to the Chancellor of the Exchequer in time for the next Budget.

Mr Myners added:

“I welcome views from as wide a range of organisations and individuals as possible. As well as the views of those in the investment industry itself, I would also like to hear the experiences and opinions of those who have looked, successfully or not, to institutional investors for funding to develop ideas and commercial opportunities.

“To get the best spread of views, the consultation document is available on the internet, and I very much look forward to receiving responses by e-mail if this is the most convenient way for contributors to contact me.”

The press release issued by HM Treasury on 25 May 2000.

Chancellor of the Exchequer Gordon Brown today formally renewed the Bank of England’s monetary policy remit, following an announcement in his Budget Speech on 21 March.

Answering a Parliamentary Question from Ms Jackie Lawrence (MP for Preseli Pembrokeshire), the Chancellor said:

In accordance with S.12 of the Bank of England Act 1998, I have today written to the Governor re-stating the MPC’s remit and how it will be held accountable for meeting the remit.My letter has been laid before Parliament and a copy has been sent to the Chairman of the Treasury Committee. Copies are also being deposited in the Libraries of both Houses….. The full text of the remit, and the Chancellor’s letter to the Governor of the Bank of England, is attached.

—–

Eddie George Esq
Governor
Bank of England
Threadneedle Street
LONDON
EC2R 8AH

25 May 2000

Dear Eddie

REMIT FOR THE MONETARY POLICY COMMITTEE

The Bank of England Act requires that I specify what price stability is taken to consist of and the Government’s economic policy objectives atleast once in every period of 12 months beginning on the anniversary of the day the Act came into force. I last wrote to you on this matter on 18 May last year.

As you know, I re-confirmed the target of 2.5 per cent for RPIX inflation in this year’s Budget. In accordance with the Act, I confirm that the MPC’s remit remains unchanged. I attach a copy of the remit, as first set out in 1998 (after the Act came into force), for ease of reference.

Yours sincerely

GORDON BROWN

—–

REMIT FOR THE MONETARY POLICY COMMITTEE

The Bank of England Act came into effect on 1 June 1998. The Act states that in relation to monetary policy, the objectives of the Bank of England shall be:

(a) to maintain price stability, and

(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.

In order to comply with the Act, this remit sets out what price stability shall be taken to consist of and what the economic policy of the Government shall be taken to be.

Price stability

I confirm that the operational target for monetary policy remains an underlying inflation rate (measured by the 12-month increase in the RPI excluding mortgage interest payments) of 2.5 per cent. The inflation target is 2.5 per cent at all times: that is the rate which the MPC is required to achieve and for which it is accountable.

My intention is to lock into our policy making system a commitment to consistently low inflation in the long term. The real stability that we need will be achieved not when we meet the inflation target one or two months in succession but when we can confidently expect inflation to remain low and stable for a long period of time.

The framework takes into account that any economy at some point can suffer from external events or temporary difficulties, often beyond its control. The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.

But if inflation moves away from the target by more than 1 percentage point in either direction I shall expect you to send an open letter to me, following the meeting of the Monetary Policy Committee and referring as necessary to the Bank’s Inflation Report, setting out:

the reasons why inflation has moved away from the target by more than 1 percentage point;
the policy action which you are taking to deal with it;
the period within which you expect inflation to return to the target;
how this approach meets the Government’s monetary policy objectives.

You would send a further letter after three months if inflation remained more than 1 percentage point above or below the target. In responding to your letter, I shall, of course, have regard to the circumstances prevailing at the time.

The thresholds do not define a target range. Their function is to define the points at which I shall expect an explanatory letter from you because the actual inflation rate is appreciably away from its target.

Government’s economic policy objectives

The Government’s central economic policy objective is to achieve high and stable levels of growth and employment. Price stability is a precondition for these high and stable levels of growth and employment, which will in turn help to create the conditions for price stability on a sustainable basis. In the recent past, instability has contributed to the UK’s poor growth performance, not least by holding back the long-term investment that is the foundation for a successful economy.

The monetary policy objectives of the Bank of England are to maintain price stability and subject to that, to support the Government’s economic policy, including its objectives for growth and employment.

Accountability

The Monetary Policy Committee is accountable to the Government for the remit set out in this letter. The Committee’s performance and procedures will be reviewed by the Court on an ongoing basis (with particular regard to ensuring the Bank is collecting proper regional and sectoral information). The Bank will be accountable to Parliament through regular reports and evidence given to the Treasury Select Committee. Finally, through the publication of the minutes of the Monetary Policy Committee meetings and the Inflation Report, the Bank will be accountable to the public at large.

Restatement of the Remit

The inflation target will be confirmed in each Budget. There is a value in continuity and I will have proper regard to that. But I will also need to consider the case for a revised target at these times on its merits. Any changes to this remit will be set out in the Budget. The Budget will also contain a statement of the Government’s economic policy objectives.

The press release issued by HM Treasury on 2 June 2000.

Three of the key areas covered by the Government’s Spending Review, social inclusion, productivity, and sustainability, will benefit from the first tranche of a new £4 million fund. The fund has been set up by the Treasury to ensure that the formulation of Government policy is adequately evidence based.

The ” Evidence-Based Policy Fund” aims to strengthen links between Universities or Research Institutes and Government, through the financing of applied research on some of the Government’s priority topics. A secondary aim is to improve channels of communication between researchers and Government, stimulating appraisals of Government policies and enabling Government priorities to influence research agendas.

The fund, to be administered by the Treasury, will operate in tranches. The first tranche will cover the following themes:

• reducing child poverty and local deprivation; the role of mainstream public services
• raising national productivity; the contribution of public services and other policies
• development in rural areas; reconciling welfare and environmental objectives

A second tranche with new themes will probably be launched in the Autumn.

The intention is that the research will be funded to complement Departments’ specific analytical strategies. Preference will be given to proposals that span conventional Departmental boundaries.

The press release issued by HM Treasury on 18 June 2000.

5 million families in Britain are set to gain up to £442 a year off their tax bills next year, when the new Children’s Tax Credit comes into force.

A national press and radio advertising campaign launched today by Paymaster General Dawn Primarolo alerts parents to the new Credit, and encourages them to claim it.

Dawn Primarolo said:

The Government’s ambition is that every child should have the best possible start in life. The new Children’s Tax Credit, which comes into force in April 2001, aims to get help and support to those taxpaying families who need it most. It will provide families with up to £442 a year off their tax bills, a £1.7 billion boost for Britain’s families.

I would urge every parent – whether married or unmarried – with children under the age of 16 to look out for the information soon to be sent out by the Inland Revenue. There is also a Helpline – 0845 300 1036 – for anyone who has any queries.

Building on the package of Government help already available – such as the Working Families Tax Credit, the National Minimum Wage and the recently announced £4.5 million worth of start-up grants for childminders – the new Credit is an important step in delivering a fairer tax system for families with children. It is part of the Government’s commitment to making work pay and giving children the best possible start in life.

The press release issued by HM Treasury on 23 June 2000.

Enterprise for all in every region should be a reality, not a dream, said Chancellor Gordon Brown today, as he announced a new package of help for anyone in Britain wanting to start up in business.

Speaking in Birmingham, the Chancellor set out the next stage of reform to equip Britain with the skills and knowledge needed to compete successfully in the modern global market place. He announced that making enterprise open to all will be a priority for the Government’s spending review, with:

•  a major new package to make sure that anyone anywhere who seriously wants to start a business can get the advice and assistance they need; deprived areas will get extra help;
• a new initiative aimed at getting more private sector investment to tackle the problems of our poorest communities, with an initial fund target of £20 million, including a matched contribution by Government;
• a new drive to encourage enterprise in schools, with a call to all businesses to ‘Adopt a School’, particularly in disadvantaged areas.

Speaking as figures published today show a sharp difference in business creation between different areas around the country, the Chancellor said:

“Opportunity for all means a Britain where all have the opportunity not just to work, but to work their way up, to gain promotion, start a business, become self-employed, upgrade their skills, and rise as far as their talents and potential can take them; a Britain where there is not so much a narrow ladder of opportunity for the few, but a broad and expansive highway of opportunity for all.

“When the most important resource of a firm or country is not its raw materials or favourable location, but the skills, talents and potential of its workforce, we need to develop the talents of the best people and get the best out of people. Only 16% of people in the UK think there are good opportunities to start a business, compared to 57% in the US. And figures published today show dramatic variations in business creation around the country. It is clear that the denial of opportunity has become a barrier to prosperity.

“We cannot stress enough the importance of individuals making the most of their talents and contributing to their community around them. The Government’s aim is to help people help themselves.

“That is why I can announce that in the spending review, we will make it possible for anyone anywhere who seriously wants to start a business to get a free package of advice, information and access to mentoring through the Small Business Service, worth up to £500. And in the high unemployment areas of the country, we will support intensive programmes of help worth up to £2000 for each business start-up. Our priority in the spending review will be to extend enterprise to all and finance new measures in the poorest areas.”

The Chancellor outlined the barriers to getting private sector investment into deprived areas, and announced a new scheme to help overcome this: “I have asked the Social Investment Taskforce, led by Ronald Cohen of Apax Partners & Co, to plan a new social venturing initiative targeted at promoting investment in our low income areas. As a first step we have agreed to invest £10 million on a matching basis, making an initial target fund of £20 million.”

The Chancellor stressed the need for a culture change, starting in our schools:

“I want to see all schools encourage our young people to consider enterprise as a career, and we have begun to improve the national network that brings schools and businesses together. But I want to see more businesses get involved with their local schools, especially in disadvantaged areas. So today I urge all businesses throughout the country to ‘Adopt a School’ – by taking students on work experience and teachers on work placements, sending employees into schools to help run enterprise classes, or being business governors. By adopting a school, every business in the country will be helping to build the new enterprise culture that we all want to see.

“Our mission is to make a reality of enterprise for all.”

The Chancellor also announced that:

“We will fund the new Regional Development Agencies to work on pilot projects with experts from the USA – learning from hands on experience of developing entrepreneurship in inner cities as part of urban renewal.

“We will also sponsor – with the private sector – a survey of the 25 fastest growing firms in deprived areas, to show that there is real growth potential here. For too long, that has been neglected.”

A table of VAT registration figures around the country is attached. These show a sharp regional and local divergence in small business creation, with VAT registration up to six times higher in richer than poorer areas.

The press release issued by HM Treasury on 27 July 1999.

Patricia Hewitt, Economic Secretary to the Treasury, Environment Minister, Michael Meacher and Trade & Industry Minister, John Battle, met representatives of the energy intensive sectors to discuss the Climate Change Levy at the Treasury today.

Commenting afterwards, Patricia Hewitt said:

“My ministerial colleagues and I were delighted to meet representatives of the high intensive energy users today to discuss the climate change levy.

“We had very useful discussions about the levy. Today’s meeting formed another important milestone in the ongoing process of consultation and dialogue over how we can practically implement the levy.

“We want to work with industry and other interested parties to ensure we design the climate change levy in a way that maximizes its environmental effectiveness whilst safeguarding competitiveness.”

Following the meeting, the Economic Secretary announced a new proposal which would exclude electricity used in chemical reactions from the levy, in addition to coal and gas.

The decision was formally announced in response to a Parliamentary Question from Ivor Caplin MP.

Patricia Hewitt said:

“As indicated in the consultation document published by Customs and Excise on Budget day coal and gas used in chemical reactions will not be subject to the levy.

“Officials at Customs are having useful discussions with industry about how to apply the exemption to fuels used both for chemical reaction and for heating, such as in the steel industry.

“In the light of the representations received on the treatment of electrolysis, we propose to extend this to electricity. We propose that electricity used for electrolysis, either for the production of chloralkalis or the primary smelting of aluminium, will be exempt from the levy to the extent that it is used in chemical reactions.

“Again, Customs will discuss precisely how this will work with the industries involved with a view to the revised treatment being included in the draft clauses to be published in the Autumn.”

The press release issued by HM Treasury on 22 July 1999.

The Government is to create a new private sector-led body to help increase and improve investment in the UK’s public services from private sources.

Partnerships UK will employ City experts to help the public sector get the best deal from the Private Finance Initiative and other forms of public-private partnerships.

A new Office of Government Commerce is also being set up as part of a shake up in how Whitehall goes about managing its £13 billion a year procurement budget.

The changes, which are expected to produce savings to taxpayers of up to £1 billion over three years, follow recommendations made in two separate but interrelated reports – one from Sir Malcolm Bates, Chairman of Pearl, about improving the Private Finance Initiative and the other from Peter Gershon, Managing Director of Marconi Electronic Systems Ltd, about improving Whitehall procurement processes.

Launching the reforms, Chief Secretary to the Treasury, Alan Milburn, said that Partnerships UK would provide the public sector with the key commercial skills to forge more and better partnerships with the private sector on equal terms.

The Government’s reforms to the Private Finance Initiative have already produced £4 billion worth of signed deals in services such as hospitals, schools and transport but Ministers want to push the initiative forward to help deliver the Government’s modernisation programme for public services.

Ministers also want to avoid a repeat of some of the problems they have inherited in large PFI computer deals where a lack of expertise in the public sector has led to contracts being signed without a proper assessment of risk.

Partnerships UK will act as a project manager for PFI deals, providing public sector organisations – from Whitehall departments to local education authorities – with expert advisory and implementation skills.

The new organisation follows the recommendations made by Sir Malcolm Bates in his second report on the PFI.

His first report in June 1997 resulted in the creation inside the Treasury of a PFI Taskforce, drawn from the City, to help build up PFI expertise in government. The Taskforce’s two year life is now drawing to a close and Sir Malcolm has now recommended that a permanent organisation be formed to replace it.

The ground breaking Partnerships UK will itself be formed as a partnership, with the private sector taking a majority stake in a joint venture with central government and with a Board Chairman drawn from the private sector.

Public sector bodies thinking of entering into PFI deals will be able to use Partnerships UK on a voluntary basis. It will have no monopoly and will seek to win business on the strength of its expertise.

Partnerships UK will not operate as a bank. Instead, as recommended by Sir Malcolm Bates it will be able to provide development funding to get PFI deals off the ground, where existing forms of private finance are not available. In these cases it will, where necessary, provide a range of financial products, tailored to the needs of public sector bodies in the early stages of the procurement process, which enhance, rather than undermine, existing flows of private finance.

Partnerships UK will be one of two new organisations formed as a result of the Bates and Gershon reports.Mr Gershon recommended that a new Office of Government Commerce should also be formed to maximise the Government’s buying power.

The public sector is the largest buyer of goods and services in the country but Mr Gershon found that procurement activity was too fragmented with 180 departments and agencies having separate dealings often with the same supplier.

The new Office of Government Commerce will aim to maximise the Government’s buying power in the case of routine items while bringing scarce professional expertise to bear on major capital projects. It will deliver over £1 billion of efficiency savings over the next three years while cutting project delays and overruns. It will be overseen by the Chief Secretary to the Treasury.

Speaking today Alan Milburn said:

“Sir Malcolm Bates and Peter Gershon have done an excellent job. We are actioning all of their recommendations.

The changes we are announcing today will mean more value for money in Whitehall and more investment in front line services.

The Government is modernising how we do business to provide a better deal for taxpayers and public service users alike.

Partnerships UK will provide the public sector with the expertise of the private sector. It is the final piece of the jigsaw in the modernisation of PFI that we promised in our manifesto.

We have turned the PFI around. Ending universal testing, providing certainty through new accounting treatment, offering staff a fairer deal and standardising contracts have reformed the PFI. In place of public versus private we now have public and private in partnership.

The challenge now is to use the new PFI to help drive forward the Government’s modernisation programme of our public services. We want to expand the PFI especially in sectors where it has not worked before.

Partnerships UK will help deliver that. It will help get more PFI deals done more quickly. And by enlisting private sector skills it will get the public sector better value for money deals. It will have world class project management skills to help deliver world class public services.”

Cabinet Office Minister Peter Kilfoyle said:

“I very much welcome Peter Gershon’s report and the creation of a stronger centre through the Office of Government Commerce. This new body will enable Government commercial relations to contribute fully to the modernising agenda and to improve service delivery. I am pleased that the transfer of three Cabinet Office agencies to OGC – CCTA, PACE and TBA – will enable them to play a more significant role in Government commerce.”

The press release issued by HM Treasury on 16 July 1999.

Taxpayers stand to benefit from savings agreed in the European Union’s draft budget for 2000, Economic Secretary to the Treasury, Patricia Hewitt, said today.

EU Finance Ministers meeting to establish the draft EU budget for 2000 agreed to reduce commitments by 4.7 per cent on the 1999 budget and increase payments by 2.8 per cent.

Welcoming the decision, Patricia Hewitt, said:

“Today’s decision is good news for the UK taxpayer and good news for the EU as a whole – it sends a clear signal that the EU takes budget discipline seriously.

“We have long argued that European expenditure must not be exempt from the same rigorous approach we apply to national expenditure. That’s why we are pleased that the EU is demonstrating that when it sets spending plans it keeps to them. This is critical if we are to build on the discipline we have inserted in the budget in recent years and in the new financial perspective agreed at Berlin.”