Category: Press Releases

The press release issued by HM Treasury on 10 November 1998.

Following the first UK-China Financial Dialogue meeting today, Chancellor Gordon Brown and Chinese Finance Minister Xiang Huaicheng welcomed agreement on the need for further strengthening of prudential regulation and financial systems in emerging markets. They also agreed on the scope for greater partnership between the two countries in financial sector development and commercialisation of state owned enterprises in China.

Mr Brown said :

“I was very pleased to welcome Finance Minister Xiang and his colleagues to London for the first in a regular series of meetings between the Finance Ministries, Central Banks  and Financial Regulators of our two countries.

“China’s economic transformation over the past twenty years has been remarkable.  It is now amongst the largest economies in the world, and is increasingly becoming integrated into the world economy.  As such we clearly have a common interest in pursuing greater dialogue on financial and economic issues.

“Indeed, with one quarter of the world in recession, the ongoing world economic turmoil has highlighted more than ever before the very real interdependence of national  economies and financial structures in today’s globalised economy.  Both the UK and China  therefore have a clear mutual interest in seeing a positive resolution to both  short-term problems facing the world economy today, as well as the challenges for the longer term.

“The meeting today with Minister Xiang sets the ground for increased cooperation and partnership on all then economic and financial challenges that both our countries face.”

The press release issued by HM Treasury on 10 November 1998.

A new trust fund for Honduras and Nicaragua, with #10 million backing from the UK, was proposed today by Chancellor of the Exchequer, Gordon Brown and International Development Secretary, Clare Short. It is one of three proposals for international
assistance put forward by the UK following the recent natural disaster in those countries.

The proposals, outlined in letters to G7, IMF and World Bank colleagues, are to consider urgently :

• a trust fund to which bilateral and multilateral creditors can contribute  assistance to meet short term debt service obligations, with a UK contribution of #10 million.
• shortening the timetable for completing debt relief programmes for post-catastrophe countries as for post-conflict countries
• a moratorium on official bilateral debts.

The #10m UK contribution is additional money for Nicaragua and Honduras. The Treasury has guaranteed access to the reserve for this extra money.

A copy of the joint letter is attached. Announcing these proposals, Gordon Brown said:

“In addition to emergency relief aid which many countries and agencies are already giving to the victims of Hurricane Mitch, it is essential to consider longer term assistance to help the countries affected back on track towards sustainable development.

“The proposals announced today will do a great deal to support the aid efforts. We shall continue to work closely with other Governments and international financial institutions to deliver practical, effective assistance.”

Clare Short said :

“We are willing to explore the possibility of providing help to Honduras and Nicaragua through some kind of moratorium on official bilateral debts with other bilateral creditors.

“It is essential that the post-catastrophe countries themselves, not other creditors, benefit from any actions taken. Any combination of IFI and bilateral aid will be designed to achieve this vital safeguard.”

Reminding members of the public how they can most effectively support Government efforts, the Chancellor said :

“Individual contributions to help Honduras and Nicaragua can be made free of tax through the Millennium Gift Aid scheme. This scheme, which came into effect earlier this year, enables anyone giving at least #100 to qualifying projects before the end of the year 2000 to reclaim tax on their gift.

“I know that many thousands of people have been moved by the plight of the people of these countries and wish to add their own contribution to that being provided directly by Government. Through Millennium Gift Aid, we shall help them to make their assistance go that much further.”

10 November 1998

M. Michel Camdessus

Managing Director

International Monetary Fund

700 19th Street N W

Washington DC 20431

WASHINGTON

USA

POST-CATASTROPHE COUNTRIES

We are all aware of the terrible devastation that Hurricane Mitch has caused to the social and economic infrastructure in Honduras and Nicaragua – two countries that were amongst the poorest in the world even before this disaster.

Many countries have already made emergency contributions to the international aid effort, and these donations must continue.  It is essential that emergency aid is delivered immediately to help the homeless and injured and to minimise the chances of further damage being caused through disease.

However, it is not too early to begin to think about how to put these countries back on a sustainable track towards development.  The catastrophe caused by Hurricane Mitch has left both Honduras and Nicaragua in need of substantial sums of money.  Given the drastic reduction in their exports as a result of the hurricane, this money is necessary to finance essential imports as well as to allow the necessary rebuilding of the countries’ infrastructure.  We must now consider how this money is best delivered.

For the reasons above, in addition to providing rapid disbursing assistance under existing mechanisms for disaster relief, we ask you to look urgently at possible mechanisms that could mitigate the debt service payments that these countries are due to make to International Financial Institutions over the coming months.  We would support the temporary suspension of debt service payments to the International Financial Institutions.

We suggest one way forward is to set up a Trust Fund for Honduras and Nicaragua into which bilateral and multilateral creditors could contribute to help meet the debt service obligations that these countries have to these Institutions in the near future.  The UK stands ready to provide money for any such fund alongside its continuing emergency aid donations.

In the longer term, it is also important to ensure that these post catastrophe countries receive the debt relief that they so desperately need.  We therefore urge you to look at how we might ensure that the HIPC initiative is used as effectively as possible as a means for providing debt relief for these post catastrophe countries, as you have constructively begun to do so for post conflict countries.  It is important that debt relief is not stalled for these countries because of Hurricane Mitch and that creditors are ready to provide the full debt relief necessary at the decision or completion points to ensure that their debt burdens are reduced to sustainable levels.  In particular we would press for consideration of shortening the timetable to permit an earlier completion point.

The UK is also willing to explore with other bilateral creditors the possibility of providing help to Honduras and Nicaragua through some kind of moratorium on official bilateral debts.  Any combination of IFI and bilateral aid will of course have to be designed so that the beneficiaries of any actions are the post catastrophe countries themselves, and not other creditors.

We have written in similar terms to James Wolfensohn and Enrique Iglesias, and am passing a copy of this letter to G7 and EU Finance Ministers.

GORDON BROWN

CLARE SHORT

The press release issued by HM Treasury on 9 November 1998.

Further details of the Public Service Agreements being entered into by each Government Department will be announced by Chief Secretary Stephen Byers later today.

Mr Byers will explain for the first time that each Agreement, to be published together in December, will contain an efficiency statement detailing specific efficiency targets and demonstrating how  each Department will improve its own productivity.

The efficiency statement will include substantive information on progress and plans in three key areas which will contribute to the overall effectiveness of the public services:-

• dealing with fraud against the taxpayer;
• better procurement practice;
•  reducing sickness absence amongst public employees.

Stephen Byers said:

“Public Service Agreements will be ground breaking documents. We have already said that they will include clear performance targets.  But we need to go further and ensure that we achieve value for money for every pound of taxpayers’ money spent. High quality public services and greater efficiency go hand in hand.

“Last Tuesday the Chancellor announced targets to cut down on public sector absenteeism. Each Government Department is now carrying out an audit of its own procedures, recognising the large variation in absence levels.

“Dealing with fraud has to be a key responsibility for each Department, and I want every Department to have a clear and effective strategy for tackling fraud. Every pound saved is a pound more for front-line public services. The Government is also a major purchaser of goods and services, and we should use our position to achieve savings for the public purse.”

Average Working Days Absence per Staff-Year by Civil Service Department, 1996

NOTES TO EDITORS

The attached table gives details of absences in major Civil Service Departments in 1996.

The Comprehensive Spending Review, published in July 1998, announced that each Government Department would agree a Public Service Agreement. The Agreement will include each Department’s objectives and measurable efficiency and effectiveness targets. Progress will be monitored by a continuous process of scrutiny and audit, overseen by a Cabinet committee  chaired by the Chancellor. The Committee will be advised by a Public Services Productivity Panel, drawn from business and the public sector, on ways of improving the productivity of public services and announced by the Chancellor in the Pre-Budget Report.

The Government has commissioned a review, announced in the Pre- Budget Report and to be led by Peter Gershon of GEC-Marconi, which will examine current arrangements for civil procurement and recommend any changes that would support the Government’s efficiency, modernisation and competitiveness objectives.

Data covers major departments (and their agencies) of 5,000 staff and over, plus the Cabinet Office and Treasury.  These account for 91% of all non-industrial civil service employees.

Source: Analysis of Sickness Absence in the Civil Service, 1996, BMI Health Services.

The press release issued by HM Treasury on 3 November 1998.

Seminar at No 11 to Learn Lessons from the US

A call for banks to exploit the opportunities that exist to help the unbanked in our poorer communities was made today by the Economic Secretary, Patricia Hewitt.

The Minister was speaking at a seminar at No 11 Downing Street where the Government and UK banks and building societies were listening to representatives from the US who were spelling out their experiences of community development banking.

The Minister stressed there were lessons to be learned from the US experience. She said:

“Community banking can offer a win-win solution – it improves services for people in the poorest communities, and can prove profitable for the banks.

“This Government believes strongly that wider access to financial services – through positive action by the banking community – is vital. And we also believe that the driving force will be banks and building societies searching for new, profitable market opportunities.

“US banks have found profitable market opportunities in areas they might have ignored.

“I should emphasise that we are not planning to copy the US legislation. But we are interested in increasing the response of UK banks to the opportunities that exist for profitable banking in our poorer communities.”

Ms Hewitt praised the work of credit unions in providing ccess to financial services for those on lower incomes and said there would be Government proposals published on how to encourage the credit union movement. The Minister said:

“Credit unions have an important role in tackling financial exclusion. They provide savings facilities, a source of low cost personal credit and financial education and advice.

“Our approach to credit unions is to encourage the movement to grow, while retaining and strengthening its traditional focus on the poorer members of society.

“This will be partly through legislative change, lifting some of the restrictions on Credit Union operations. We have also been thinking about how the movement should be regulated in future; and the scope for setting up a share protection scheme.”

The Government’s proposals for credit unions will be published shortly.

The Minister also set out other initiatives in the area of financial exclusion which are being undertaken by the Treasury. They include:

a taskforce, to explore ways in which banks can work more closely with credit unions to increase their effectiveness, and it is studying existing good practice here and in other countries. The taskforce is chaired by Fred Goodwin from the Royal Bank of Scotland; and
two action teams, set up following the Social Exclusive Unit report, Bring Britain Together. One of the teams is looking into the prospects for increased access to personal financial services for people living in poor neighbourhoods, especially retail banking, but also credit unions and insurance. The other team will concentrate on encouraging enterprise in deprived neighbourhoods: looking at access to capital for small firms especially those starting up in poor neighbourhoods and better access to appropriate advice.

The press release issued by HM Treasury on 22 December 1998.

Measures to ensure the enforcement procedures of the new financial regulator are fair and transparent, and that it is not seen to be ‘prosecutor, judge and jury’, were announced today by the Chief Secretary, Stephen Byers.

The measures are being introduced in the light of the consultation on the Financial Services and Markets Bill, which will establish the Financial Services Authority (the FSA) as the new single regulator. Today’s announcement clarifies the role of the FSA and the new tribunal. The FSA is responsible for conducting fair internal procedures before reaching a decision on a case that can, if the individual concerned wishes, be referred to the independent tribunal.

In addition, Mr Byers disclosed that the Lord Chancellor’s Department is to publish draft rules of procedure for the tribunal in the new year.

Mr Byers announced 4 changes to the Bill to clarify and support the basis on which the process would work:

• a statutory duty on the FSA to establish publish and procedures and to act in accordance with such procedures;
• an explicit right to request to see the evidence on which a case rests and a duty on the FSA to disclose such evidence;
• an explicit bar on the FSA publicising enforcement action until the full process, including any tribunal procedures, has been completed; and
• dropping the power to make rules on when relevant evidence might be inadvisable before the tribunal.

Mr Byers said:

“The consultation has been truly open and we are taking on board comments received. There is support for the basic model of effective, open and fair administrative procedures, backed up by the opportunity to refer cases to a fully independent tribunal.

“These measures will further clarify the role of the tribunal and reinforce the transparency of the FSA procedures, which must be simple and fair.

“Concern has been expressed that the FSA could act as ‘prosecutor, judge and jury’. This would clearly be unacceptable. I hope that the changes I’ve announced today will meet with broad approval and demonstrate that we are responding positively to the consultation process.”

The press release issued by HM Treasury on 21 December 1998.

The “strong economic performance in recent years” underpinned by “the shift in the focus of policy making towards setting and achieving clear medium-term goals” is highlighted today by the IMF in their annual assessment of the UK economy.

Commenting on the IMF’s statement the Chancellor, Gordon Brown, said:

“I welcome today’s assessment by the IMF which provides international support for the tough action this Government has taken across the full range of economic policy to ensure that the UK is well placed to steer a course of stability through the current difficulties in the world economy.”

The IMF note that “private sector fundamentals are strong; and past policies have ensured that monetary policy is well placed to respond appropriately, and fiscal policy to utilize fully the automatic stabilizers.” On this basis, they say that “it is likely, therefore, that the slowdown will be short-lived…”.

Other highlights of the IMF’s annual assessment include:

• welcoming the Government’s approach to the accountability and transparency of economic policy, where the UK is regarded as “in the vanguard”;
• supporting Bank of England independence and noting that ” the way the Bank and the MPC have responded to this charge is impressive”;
• praise for the Government’s fiscal policy, where they note that “the degree of fiscal consolidation achieved by the Government since coming to office can only be viewed as highly commendable”;
• a welcome for the “emphasis on policies to help vulnerable groups while encouraging greater individual responsibility, efficiency and flexibility”. In particular, they cite the New Deal, the Working Families Tax Credit, changes to National Insurance Contributions and proposed pension reform; and
• commendation for the Government’s “initiatives to relieve the poorest countries’ debt problem and for their commitment to reverse the downward trend in UK overseas aid.”

In line with the Government’s latest economic forecast, the IMF notes that the

“economy is now weakening, possibly more than needed for sustainability because of adverse external developments” in the world economy. In its interim World Economic Outlook, also published today, the IMF’s revised forecast for UK growth in 1999 is 0.9 per cent, in line with the Government’s Pre-Budget Report forecast.

The press release issued by HM Treasury on 18 December 1998.

A new drive to increase the number of companies offering share schemes to their workers was launched today by the Economic Secretary Patricia Hewitt.

The Minister launched a consultation document at the third Productivity Challenge Roadshow in Loughborough. The consultation seeks views on:

• how the Government can encourage more companies, particularly smaller and unquoted, to offer all-employee share schemes ;
• what are the existing barriers to participation in such schemes; and
• how the Government can encourage longer term holding of shares by employees.

Ms Hewitt said:

“Britain’s productivity lags behind that of our main competitors, as does the participation in employee share ownership schemes. These schemes have an important role to play in increasing that productivity by harnessing the ambition of employees to see the company where they work succeed.

“Currently, less than half of UK listed companies have at least one all-employee tax-advantaged scheme. We have to find out why the take-up for these schemes amongst the listed companies is as low as this. We also want to promote long term holding by the employees.

“This Government wants to see an increase in the number of companies, particularly smaller companies, that offer share schemes for all employees, and we would like to see employees building up their shareholdings in their companies over the longer term.”

There are currently three tax-advantaged schemes designed to promote employee share ownership. These are:

• the Approved Profit Sharing Scheme (APS);
• the Save As You Earn Sharesave Scheme (SAYE); and
• the Company Share Option Plan (CSOP).

At present around one million employees are given shares and a similar number are granted share options each year though these schemes. About 7 per cent of the workforce currently participates.

The press release issued by HM Treasury on 17 December 1998.

A revolution in the Government’s approach to public services was signalled today by the Chief Secretary, Stephen Byers, with the publication of a White Paper on Public Service Agreements (PSAs).

For the first time, the Government is setting out its strategic objectives for the long term in each area of Government and targets for the progress it aims to make during the rest of this Parliament and beyond.

The agreements require departments to meet over 500 clear, demanding targets. Improvements in efficiency will release over 8 billion Pounds per year by 2001-02 in savings to re-direct into front-line services – amounting to about 16 billion Pounds in total over the three years from 1999-00. Wherever possible, performance targets are SMART – specific, measurable, achievable, relevant and timed.

Commenting, Stephen Byers said, “Our manifesto committed us to five key pledges – on class sizes, young offenders, waiting lists, getting young people back to work, and tax – on which we said we will stand to be judged. Now we are setting out what the public can expect from across the full range of public services.

“For too long people have focused on how much money is spent on public services. It is now time to move on and consider the more important issue – how the money is spent and what people get in return for their money.

“The old days of throwing money at a problem and hoping that it goes away have gone. So has the slavish adherence to the belief that market forces can deliver the public services that people want.

“Our approach is to ensure that the extra investment we are putting into public services achieves real improvements, that standards will be raised and the quality of services enhanced.

“By setting measurable targets backed up by annual reports we shall be ensuring that the public knows exactly what progress we are making to achieve these ambitious and challenging targets.”

Over 350 new performance targets are set out in 28 separate PSAs covering each government department. Moreover, as part of the new “joined up” approach to the way Government tackles problems where departments need to work more closely together, there are also three cross-departmental PSAs setting out a strategic approach to the Criminal Justice System, Illegal Drugs and help for families with young children through the Sure Start programme.

The new performance targets are set in terms of improvements in services or in the results those services are designed to achieve. For example:

• a reduction in death rate from heart disease and stroke- related illness amongst people under 65 of 33% by 2010;
• to make 189,000 asylum decisions in total over the next three years compared with 33,700 in 1998-99;
• achieving a reduction in the long-run rate of the growth of crime, which has been growing on average by 5% a year since the 1920s;
• reducing the backlog of council house repairs by at least 250,000 with over 1.5 million council houses benefiting from new investment by 2002;
• 50% of 16 year olds to achieve 5 or more GCSE’s at grades A-C by 2002.

The PSAs also set out an ambitious programme for the modernisation and reform of government, with 175 targets for increasing the efficiency of public services so that this money can be reinvested in the services the public receive. In total over 8 billion Pounds per year will be saved and redirected to front line services by 2001-02. For example, the NHS has a target for saving 1 billion Pounds a year and some 70 million Pounds year is being released through lower unit costs in Further and Higher Education. The Treasury has agreed that every pound saved can be used for other service priorities. To achieve these improvements, departments have been asked to look specifically at fraud, procurement and sickness absence.