Category: Press Releases

The press release issued by HM Treasury on 21 April 1999.

The Chancellor Gordon Brown today called for work on the international financial architecture to move into a new phase.

He set our proposals in three areas including agreement on codes of conduct as set out in the G7 timetable for reform, a new IMF surveillance unit to assess publicly how well countries are doing in implementing these new rules of the game, and a new approach to crisis prevention including enhanced rights and responsibilities for the private sector.

The Chancellor said:

“I believe we need three interlocking reforms to rediscover the public purpose and high ideals of 1945 and to help create a new stability in the international financial system for the twenty first century.

“First we need a framework of internationally agreed codes and standards accepted and implemented by countries which participate in the international financial system. It is only by taking the right actions in their own jurisdictions that the countries of the international financial community can deliver financial stability at a global level. It is only in this way that we can achieve global stability consistent with national sovereignty. These codes and standards are the foundations of the new architecture. We must ensure that these are completed and agreed according to the timetable set out by the G7 in February.”

Following the G7 Declaration last October, the International Financial Institutions have been working to develop internationally agreed codes and standards:

• the IMF has finalised the code of good practice on fiscal transparency;
• a draft of the monetary and financial code will be presented to the interim committee next week;
• the IMF’s Special Data Dissemination Standard has been enhanced to require greater disclosure on reserves;
• the OECD has published its draft code of corporate governance, which will be discussed at the OECD Ministerial in May.

The Chancellor continued:

“Second, we must have a new enhanced surveillance process. We need to refocus our existing international institutions and make them work more coherently together to provide effective, transparent surveillance of the framework of internationally agreed codes and standards.

“To coordinate this surveillance, I will propose next week the creation of a new surveillance unit based at the IMF. This will be charged with ensuring that the Article IV process provides effective surveillance of all codes and standards, as well as ensuring effective coordination between the IMF, World Bank and other institutions to achieve this aim.

“The new Financial Stability forum which met for the first time last week in Washington demonstrates the ability of the international community to respond to new challenges through enhanced cooperation. In time, the Forum can become the world’s early warning system for regional and global financial risk.”

The UK has emphasised that the new framework of codes and standards requires an enhanced mechanism for international surveillance to ensure they are implemented:

• we need an enhanced mechanism for international surveillance of codes and standards. This should be centred on the IMF Article IV process, but involve enhanced cooperation between the IMF and other standard setting bodies. The results of this surveillance should be published. The Chancellor will propose next week the creation of a new surveillance unit based at the IMF to coordinate this work;
• the publication of the IMF’s Transparency report on the UK demonstrates the UK’s commitment to putting in place a mechanism for the transparent surveillance of codes and standards; and
• the IMF should undertake further Transparency Reports and make them a central part of the surveillance process.

The Chancellor also called for a new crisis prevention mechanism based on partnership between the public and private sector. He said:

“Third, I believe we should move beyond general statements on the importance of involving the private sector in crisis resolution. We need a new framework to provide the right incentives and ensure that all parties which benefit from the international financial system play their part in maintaining stability.

“Next week I will propose that the international community should draw up explicit rules of the game for involving public and private sectors in crisis resolution, and a new timetable for taking this forward.”

This would include:

• a new approach to crisis resolution: in which explicit rules of the game are set out in advance designed to promote orderly and co-operative management of crises; which addresses the creditor moral hazard concerns associated with public sector rescue packages; and in which both public and private sectors contribute to maintaining financial stability;
• the official community should provide enhanced support in times of trouble for countries making efforts to implement the codes and standards and to establish closer relationships with the private sector. The IMF precautionary facility will provide support for countries that are the victims of contagion, and provide incentives for all countries to implement sound policies.
• countries must forge regular contacts and lasting relationships with their private investors: modern investor networks;
• similarly, the IMF and other international institutions should do more to explain their practices and procedures to the public and the private sector;
• countries should increase their efforts to put in place high frequency debt monitoring systems, to enable national authorities to improve their surveillance of short-term capital flows and obtain early warnings of developing problems;
• we should encourage more countries and their creditors to agree contingent lines of credit which can be drawn down in the event of a deterioration in market conditions;
• we should encourage greater use of collective action clauses in bond contracts to promote orderly workouts for countries unable to meet their obligations even over time; and
• countries that do not follow these procedures or act on advice cannot expect that they and their private sectors will secure the same degree and speed of crisis support – the moral hazard would be to guarantee such support independent of whether they do the right things.

The press release issued by HM Treasury on 21 April 1999.

Improvements in UK economic decision making and transparency and accountability in four key areas of economic policy and decision making are highlighted in an International Monetary Fund (IMF) report published this week.

Welcoming the report, Chancellor of the Exchequer Gordon Brown said:

“Transparency provides a sound basis for policy. It ensures that both Parliament and public can scrutinise the Government’s economic and fiscal plans, and supports the efficient operation of financial systems.

“The IMF has taken the lead in developing international standards against which we, and other countries, can evaluate decision-making practice. Independent assessments of transparency, such as this report, can play an important role in promoting efficient financial markets and transparent policy.

“This report recognises the Government’s efforts to promote transparency, which have produced an open and accountable decision-making framework. We will continue to move in this direction to ensure that all policy decisions are made in Britain’s best interest.”

The IMF report identifies important strides in enhancing UK transparency practices in key areas of economic policy, with high levels of transparency in four areas assessed: data dissemination; fiscal policy; monetary and financial policy; and disclosure aspects of banking supervision.

It indicates that the UK exceeds many requirements of the IMF Code of Good Practices on Fiscal Transparency, and is highly transparent regarding underlying principles of the Code of Good Practices on Transparency in Monetary and Financial Policies.

The IMF also identified some areas where further improvements might be made: some aspects of the Special Data Dissemination Standard, better integration of information on contingent liabilities, and a more detailed breakdown of government spending.

The press release issued by HM Treasury on 19 April 1999.

The Treasury has issued a formal notice to financial institutions, drawing attention to deficiencies in the anti-money laundering system in the Caribbean state of Antigua and Barbuda.

Commenting on the notice, Economic Secretary Patricia Hewitt said :

“The UK is determined to take a global approach to combat money laundering. As part of the G7 initiative on financial crime, we have signalled our willingness to identify jurisdictions which fail to meet minimum standards.

In doing so, we also help protect UK financial institutions from corruption by criminal money, as well as helping to address the insidious influence of global organised crime.”

Also welcoming the move, Foreign Office Minister Baroness Symons said :

“The UK will continue to impress upon the government of Antigua the importance that we lace upon effective action to counter money laundering. We have also provided technical assistance to Antigua, and to the region as a whole; we welcome recent moves by the Antiguan government in respect of possible changes to its legislative and regulatory regime; and will continue to play a leading role in international initiatives to improve standards in this and other areas.”

The Treasury expresses concern about amendments to the anti-money laundering law, and to legislation governing international financial services in Antigua and Barbuda. These amendments strengthen bank secrecy, restrict cooperation with overseas law enforcement authorities, and seriously erode the ability of Antigua to counter the threat from money launderers. There are also, in the Treasury’s view, serious concerns about the independence and integrity of the system of financial regulation.

In the light of these concerns, financial institutions (including professionals – such as lawyers and accountants – engaged in financial business) are asked to pay particular attention to transactions involving Antiguan off-shore financial institutions, and other institutions for which the Antiguan authorities have sole supervisory responsibility.

Where financial institutions regard transactions as suspicious, taking into account the Treasury’s concerns about the anti-money laundering system in Antigua, they should report the transaction to the National Criminal Intelligence Service. It is not necessary to issue a suspicions ransaction  report in respect of all transaction involving Antigua, and financial institutions are not asked to avoid business with citizens of Antigua. But they should pay particular attention to large or unusual transactions for which their is no clear economic purpose.

The UK government will support actions that the Antiguan government agrees to undertake to address these concerns, and will continue the dialogue. In particular, the Caribbean Financial Action Task Force on money laundering, which the UK part-funds and on which we are an observer member, will be taking the lead in monitoring their compliance with international standards.

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

The UK Government has today called on the EU to make their contribution to meeting the costs of providing faster, wider and deeper debt relief for the world’s poorest countries.

The Chancellor Gordon Brown and the International Development Secretary Clare Short have written to the European Commission have written with two suggestions:

• an EC contribution, at country level, to the multilateral debt funds set up to help countries such as Mozambique meet their debt servicing costs in advance of receipt of Heavily Indebted Poor Countries (HIPC) debt relief; or
• an EC contribution directly to the HIPC Trust Fund.

The press release issued by HM Treasury on 14 April 1999.

Further Clauses of the draft Financial Services and Markets Bill were sent to the Joint Committee of the Houses of Lords and Commons by the Treasury today. This will enable the Committee to complete their deliberations on the basis of a more complete draft than was available when the Bill was published last Summer. The draft clauses relate to proposals in last July’s consultation document on the Bill but were not available for consultation at the time.

Commenting on the publication of the clauses, Economic Secretary Patricia Hewitt said,

“This is a further very important stage in getting into place comprehensive legislation to achieve our objectives in reforming financial regulation”.

The additional Parts of the Bill sent to the Joint Committee are:

• official listing
• collective investment schemes
• disclosure of information
• insolvency.

The Joint Committee is due to report on the Bill by the end of April, after which the Government intends that it will be introduced into Parliament as soon as possible.

The press release issued by HM Treasury on 14 April 1999.

New guidance on Trading Funds’ participation in Joint Ventures was launched today by Financial Secretary Barbara Roche to make it easier for some public research establishments and institutes to unlock the potential of science and to commercialise their research through equity joint ventures.

Speaking at a joint Treasury and Arthur Andersen conference at Islington’s Design Centre to promote the commercialisation of public sector intellectual property, Barbara Roche called for better use of public assets and for groups of public sector
research establishments to enter into partnerships through selling their services into the wider market place.

“Science is one area that offers huge potential for the development of new partnerships between public and private sectors. We need to develop ways in which they can work closer together to exploit our many under-used public sector resources.

“Links between university research and business are well advanced. But there are many research institutes and agencies run by departments and Research Councils. These institutes and the role they play is less widely understood than that of the universities but potentially very important for the economy.

“By making better use of publicly-funded research and development we can stimulate the development of leading edge British companies and high quality employment. Today’s conference marks another important step in the development of our science base.”

The purpose of the guidance note is to provide a source of reference on whether and how the operations of Government Departments financed through trading funds can be discharged through joint ventures under the terms of the Government Trading Funds Act 1973. It considers:

• the legal status of trading funds;
• the implications for joint ventures;
• some potential risks and difficulties associated with joint ventures;
• some pointers for minimising difficulties.

The press release issued by HM Treasury on 13 April 1999.

Investment in modernising Britain’s infrastructure is set to double over the next three years, the Government announced today.

Launching a summary of new Departmental Investment Strategies, Chief Secretary Alan Milburn highlighted capital funding for schools, hospitals, transport and housing as key priorities.

He commented:

“When this Government was elected we inherited a legacy of under investment in the nation’s infrastructure. Hospitals, schools, transport and housing had all been neglected.

“We are reversing that decline in a way that is consistent with our prudent approach to public spending.

“There is now an emphasis on long term capital investment as part of the Government’s modernisation programme for our key public services.

“We are investing for the future.”

Public sector net capital investment will double between 1999 and 2002, with an extra £12.5 billion being made available. On top of that, public private partnerships, including the Private Finance Initiative, will lever in a further £11 billion.

Each Government Department has drawn up a Departmental Investment Strategy (DIS) to set out how extra capital investment will be spent, assets managed and use of public private partnerships encouraged. Each DIS explains how capital investment will contribute towards tangible improvements in public services.

Today’s summary document highlights some of the key investment areas, including;

• £1.5 billion to modernise schools including £700 million on IT investment. This is on top of the £1.3 billion of windfall tax revenues allocated to the New Deal for Schools from which 7,500 schools have benefited
• an extra £1.0 billion for the NHS on top of the biggest ever new hospital building programme. Since May 1997, 31 major hospital projects have been given the go ahead. 8 of these will be in service by 2001
• an additional £1.7 billion to underpin a new integrated transport strategy
• over 1.5 million council houses to benefit from the extra £3.6 billion made available to start tackling a backlog of investment.

The Government’s new emphasis on long term capital investment will see public sector net investment rising from 0.4% of GDP to 1% of GDP by 2002.

This increased investment in Britain’s infrastructure will also help tackle the productivity gap that has opened up between this country and our competitors.

The press release issued by HM Treasury on 6 April 1999.

The new 10p rate of tax comes into force today – the lowest starting rate of tax for over 35 years.

Chancellor Gordon Brown today welcomed the new rate of tax:

“My Budget in March introduced tax cuts for a purpose – to make work pay, encourage enterprise and support families. And so from today, all taxpayers will see the benefit of the promises the Government has made to the British people. We are delivering on those promises to get a better deal for Britain.

“The new 10p rate – the lowest starting rate of tax in Britain for more than 35 years – will make work pay and help people, especially those who are low-paid, to keep more of the money that they earn.

“People will see the benefit of the new 10p tax rate in their first pay packet after 17 May – just a few weeks from now.

“As a result of the new 10p rate, 1.8 million low-paid workers will see their tax bills halved as a result – a gain of up to £150 a year. And from today too, every worker in Britain who pays national insurance will have their tax bills cut by £65 a year, because of the reforms we have made to national insurance contributions.

“When we make promises, we keep them.”

The press release issued by HM Treasury on 6 April 1999.

All charities helping refugees from Kosovo are to benefit from an extension to the Millennium Gift Aid scheme, announced Chancellor Gordon Brown today.

The extension means that donations to charities helping Kosovan refugees will from today come within the scheme, regardless of where the refugees are situated.

Chancellor Gordon Brown said:

“Everyone has been moved by the plight of the people of Kosovo. Many charities in the UK are already swinging into action in response to the crisis. This change to the Millennium Gift Aid scheme will enable taxpayers in the UK to do their bit to help and ensure that Government money backs up their donations.”

The press release issued by HM Treasury on 28 May 1999.

Measures to give incorporated friendly societies greater flexibility in extending the range of permitted services available to their members were announced by the Economic Secretary Patricia Hewitt today.

These proposed measures will allow friendly societies :

• own subsidiaries which may themselves, in turn, have a subsidiary or more than one level of subsidiary;
• to own subsidiaries formed in non-EC countries.

Commenting on the proposals, Ms Hewitt said :

“Friendly societies carry out invaluable work by encouraging saving, especially by those of modest means. The movement has asked for the restrictions on subsidiaries to be lifted. The Government has listened and acted. These changes will enable societies to more easily set up or acquire subsidiaries, providing a wider range of services for their members.”

The proposals are outlined in a consultation document, “Proposed Amendments To The Friendly Societies Act 1992”. The proposed changes can be made through a Deregulation Order under the Deregulation and Contracting Out Act 1994. The consultation period ends on 30 July 1999.