The press release issued by HM Treasury on 8 July 1997.

Action needed to tackle Europe’s jobs crisis will be on the agenda when the Chancellor, Gordon Brown, flies to Luxembourg for talks tomorrow with the President of the European Council, Prime Minister Jean Claude Juncker.

Heads of State at Amsterdam agreed that there should be a Special European Conference on employment during the Luxembourg Presidency, provisionally scheduled for 22 November.  This  follows the Chancellor’s  Get Europe Back to Work’ initiative launched in May.

The Chancellor said:

“There is now a genuine momentum building up to get Europe back to work. The back-to-back Presidencies of Luxembourg and the UK offer a real opportunity to push forward the new European jobs agenda.

“At  yesterday’s Finance Minister’s meeting, Prime Minister Juncker called for Member States to offer contributions and suggestions on employment for our September  Informal Meeting.  That should kick-start the process.

“We will look for real progress at the summit in November. It will then fall to the British Government to carry this important work forward.

“Luxembourg holds the EU Presidency at a crucial time for the people of Europe.  I am delighted to have the opportunity to visit Luxembourg tomorrow for wide-ranging talks with Prime Minister Juncker who will be the key player in the coming
months.”

The Chancellor’s talks with Prime Minister Juncker will also cover other items on the agenda for the Luxembourg Presidency including Agenda 2000 (forthcoming proposals from the Commission on enlargement, policy reform and future financing).

The press release issued by HM Treasury on 8 July 1997.

PART 1

THE WINDFALL TAX

Clause 1 Schedule 1: imposes the charge to the windfall tax, at 23 per cent, on companies which, on Budget Day, were benefitting from a windfall from the flotation of an undertaking whose privatisation involved the imposition of economic regulation.  The schedule defines the amount of a company’s windfall as the difference between its value, calculated by reference to its profits after tax in a period of up to four years following privatisation and the value placed on the company at the time of its flotation.  (*REV 1)

Clause 2: defines the companies charged to windfall tax as companies, or demerged successors of companies, which received property, rights and liabilities of a public corporation by statutory transfer, were subsequently privatised by flotation and were regulated at the time of flotation (or had a subsidiary regulated) under certain privatising statutes. (*REV 1)

Clause 3 and Schedule 2: provide for the administration and collection of the windfall tax.  (*REV 1)

Clause 4: adds the windfall tax to the categories of items which may be taken into account or left out of accounting drawing up profit and loss accounts for any period ending on or after Budget day for the purposes of the income tax relief for profit-related
pay.  (*REV 1)

Clause 5: provides definitions of terms used in Part I of the Finance Bill, which is concerned with the windfall tax.

PART II

VALUE ADDED TAX AND EXCISE DUTIES

Value added tax

Clause 6: reduces the VAT rate for supplies of fuel and power for domestic, charity non-business and small business use from 8 per cent to 5 per cent, with effect from 1 September 1997.  (*C&E 2)

Alcoholic liquor duties

Clause 7: increases the rate of excise duty charged on spirits with effect from 1 January 1998.  (*C&E 7)

Clause 8: increases the rate of excise duty charged on beer, with effect from 1 January 1998.  (*C&E 7)

Clause 9: increases the rate of excise duty charged on all wine and made-wine with effect from 1 January 1998.  (*C&E 7)

Clause 10: increases the rates of excise duty charged on standard, strong and sparkling cider, with effect from 1 January 1998.  (*C&E7)

Hydrocarbon oil duties

Clause 11: increases the rates of excise duties on most hydrocarbon oils, with effect from 6pm on 2 July 1997.  (*C&E 3)

Tobacco products duty

Clause 12: increases the rates of excise duties on most tobacco products, but not hand rolling tobacco, with effect from 1 December 1997.  (*C&E 5)

Vehicle excise and registration

Clause 13: raises the rate of vehicle excise duty for licences taken out after 15 November 1997.  (*DETR 1)

Clause 14: amends the Vehicle Excise and Registration Act 1994 to enable the Secretary of State to charge vehicle fleet operators and motor manufacturers for the cost of setting up electronic links with the Driver and Vehicle Licensing Agency, and for the cost of processing licensing applications made via electronic links. (*DETR 1)

PART III

INCOME TAX AND CORPORATION TAX

Reliefs for interest and private medical insurance

Clause 15: sets the rate of mortgage interest relief, on loans for home purchase, at 10 per cent from 1998-99 (reduced from 15 per cent in 1997-98).  The clause will have effect from 6 April 1998. (*REV 10)

Clause 16: sets the limit on loans qualifying for mortgage interest relief at 30,000 Pounds for 1998-99.  The clause will have effect from 6 April 1998.  (*REV 10)

Clause 17: provides for the withdrawal of tax relief on premiums paid on annual contracts for private medical insurance (PMI) for the over 60s.  Subject to two exceptions, payments on policies taken out, or renewed, on or after 2 July will not qualify for relief.  The two exceptions apply to certain contracts made before 1 August 1997, where arrangements for the contract had been made before 2 July 1997, but where the contract itself was not finally in place before that date.  Existing annual contracts, and those which fall within the scope of the exceptions, will benefit from relief until the end of the contract although premiums must be paid on or before 5 April 1999 in order to qualify for tax relief.  (*REV 5)

Corporation tax

Clause 18: reduces the main and small companies’ rates of corporation tax for the financial year 1997 (the year beginning 1 April 1997).  The main rate is reduced from 33 per cent to 31 per cent.  The small companies’ rate is reduced from 23 per cent to 21 per cent.  The clause also allows tax to be repaid, assessments to be discharged or other adjustments to be made to give effect to the reductions.  (*REV 2)

Distributions, tax credits etc on and after 2nd July 1997

Clause 19: removes the entitlement of a pension fund to any payment of a tax credit in respect of dividends and other company distributions made after 1 July 1997.

Although pension funds will still be entitled to a tax credit on distributions, and will be able to set off the credit against any tax on the distribution to which the credit relates, new rules will prevent effective payment of the credit being obtained through set off against other tax liabilities. (*REV 2)

Clause 20: removes the entitlement of a company to claim to treat dividends and other distributions from a UK company as if they were part of its profits, and therefore to obtain payment of the associated tax credit, when losses or other reliefs are set against them.

No such claims can be made for accounting periods beginning on or after 2 July 1997, and claims in respect of periods straddling the 2 July will be restricted. The provisions under which such claims can be “unwound” in later accounting periods will cease to have effect. (*REV 2)

Clause 21: provides for amendments to be made to the treatment of non-qualifying distributions (that is, distributions that do not carry tax credits) received by the estate of a deceased person in the course of administration.  From 2 July 1997 payments to beneficiaries of the estate, funded out of such distributions, will be treated as a payment made under deduction of non-repayable tax at the lower rate.  This will ensure the beneficiaries are taxed on the payment from the estate in the same way as if they received the distribution direct.  (*REV 2)

Clause 22: withdraws the entitlement to tax credit on dividends and other company distributions made on or after 2 July 1997 on assets in a premiums trust fund at Lloyd’s.  It also provides for dividends and other distributions made on or after 2 July 1997 on
assets forming part of an ancillary trust fund of a corporate member or employed in its business to be included in the Case I profits.

Clause 23: introduces Schedule 3 which removes an insurance company’s entitlement to payment of tax credits relating to its pension business in respect of dividends and other company distributions made after 1 July.  It also rationalises existing rules about including dividends and other distributions when calculating the profit or loss an insurance company makes from its life assurance business (or any part of its life assurance business) so that all such payments made after 1 July are included in all circumstances.  (*REV 2)

Distributions, tax credits, etc: avoidance

Clause 24:  provides that where shares in UK companies are held as trading assets, not as investments, any dividends on those shares will be treated for tax purposes as part of the holder’s trading profits.  The clause extends the current tax treatment of share buy-backs and certain special dividends on UK shares to all dividends on UK shares held as trading assets.  These include dividends on certain fixed rate preference shares, which were previously exempt in some circumstances.  (*REV 7)

Clause 25: makes amendments to the Taxes Acts needed as the result of the removal by the previous clause of references to fixed rate preference shares.  (*REV 7)

Clause 26: modifies the anti-avoidance rules designed to counteract dividend stripping (the buying of a share just before a dividend is due and selling it on as soon as the dividend is received).  Since dividends on UK shares held as trading assets will now be taxed as part of the trading profits, these anti-avoidance measures are no longer needed for such dividends.  The clause also extends the exemption from the anti-avoidance measures for the purchase and sale of overseas shares where dividends are taxed, under existing rules, as part of the buyer’s trading profits.  (*REV 7)

Clause 27: provides for amendments to be made to the treatment of payments made to companies by trusts.  From 2 July 1997 some payments will not be chargeable to corporation tax, nor will companies be able to claim repayment or set off of the income tax treated as deducted from such payments.  This will prevent companies obtaining via trusts payments of tax credits to which they would not be entitled if they invested directly in UK equities.  (*REV 2)

Clause 28: provides for a restriction on the payment or set off of tax credits attached to UK dividend income paid or after 2 July 1997 where arrangements exist for the recipient to pass on all or part of the resulting benefit to someone who could not benefit had he or she received the UK dividend income.  Arrangements will only be covered by the restriction if at least one of the parties enters into them for an unallowed purpose.  Broadly, that means a purpose other than a business or commercial purpose.  The clause is thus intended to prevent tax avoidance by which a person obtains the benefit of tax credits to which he or she would not be entitled if invested direct in UK equities. (*REV 2)

Clause 29: provides that, subject to certain exceptions, where a qualifying distribution is made by a UK resident company on or after 2 July 1997 but before 6 April 1999 is received by an unauthorised unit trust, the distribution will be treated for tax purposes as a foreign income dividend in the hands of the trust. The treatment does not apply for unauthorised unit trusts which are court common investment funds or dedicated to investment by charities and other bodies which qualify for income tax exemption on the same basis as charities.  The effect of the measure is that the unauthorised unit trusts to which it applies will have no entitlement to the tax credit associated with the distribution, and will not be treated as having paid any income tax on the amount of the distribution.  The purpose of the provision is to prevent pension funds circumventing the provisions in Clause 19 by investing in UK equities through the medium of unauthorised unit trusts.  (*REV 2)

Distributions, tax credits etc. in and after 1999-00

Clause 30: provides for changes to be made to the treatment of dividends and other company distributions with effect from 6 April 1999, the year of assessment 1999/2000.

The clause reduces the amount of the tax credit accompanying any dividend or other distribution from a UK company made on or after 6 April 1999 from 20 per cent of the aggregate of the distribution and the tax credit to 10 per cent of that aggregate.  It also
removes from the legislation substantially all remaining entitlements to have tax credits paid, bringing taxpayers generally into line with the treatment of pension providers – from 2 July 1997 – provided for by clause 19 of the Bill.

The reduction of the rate of tax credit is matched by a reduction in the rate of charge for individuals and others in clause 31 of the Bill.  (*REV 2)

Clause 31: provides that the rates of charge to income tax on dividends and similar income will be reduced with effect from 6 April 1999, the year of assessment 1999-2000.

With effect from the 6 April 1999 the rate of income tax on such income will be reduced to 10 per cent, while the rate charged on those who are liable at the higher rate will be reduced to 32.5 per cent.  The change in rates is part of the general change made to the rate of tax credit, which is reduced to 10 per cent from the same date by clause 30 of the Bill.  (*REV 2)

Clause 32: provides for amendments to be made to the treatment of distributions received by discretionary and accumulation trustees.  From 6 April 1999 distributions will be taxed at a new rate of 25 per cent instead of at the rate applicable to trusts (currently 34 per cent).   This will compensate trustees for the reduction from 20 per cent to 10  per cent in the rate of tax credits.  The clause also inserts a new section into the Taxes Acts to ensure that company share buybacks, and other similar distributions,
received by trustees are taxed at the new 25 per cent rate after 6 April 1999.  (*REV 2)

Clause 33: provides for amendments to be made to the treatment of distributions received by the estate of a deceased person in the course of administration.  From 6 April 1999 payments to beneficiaries of the estate, will be funded out of distribution income, will be treated as made under deduction of non-repayable tax at the Schedule F ordinary rate.  The beneficiaries will be taxed on the payment from the estate in the same way as if they received the distribution income direct.  (*REV 2)

Clause 34: introduces Schedule 4 to the Bill which makes consequential amendments to the Taxes Acts arising from the changes to the rate of tax credit and taxation of distributions made by clauses 30 to 33 of the Bill.  The amendments all apply by reference to the 6 April 1999, the year of assessment 1999/2000, when those changes to the tax credit rate and taxation of distributions take effect.  (*REV 2)

Clause 35: provides compensation  payments to charities from 6 April 1999, for the loss of the  tax credit from dividends. The payments will be made on a sliding scale for a period of five years. (* REV 2)

Clause 36: and Schedule 6 provide for the abolition of the foreign income dividend scheme, as part of the changes to the treatment of distributions taking effect for distributions made on or after 6 April 1999.  Under the proposals no company will be able to elect for a dividend to be a foreign income dividend from that date, and any provisions under which a distribution is deemed to be a foreign income dividend also cease to have effect from the same date. (*REV 2)

Gilt-edged securities

Clause 37: enables anyone receiving gilt interest on or after 6 April 1998 to receive the interest without deduction of tax.  As a result, the existing arrangements enabling gilt interest to be paid gross to certain categories of gilt holder will no longer be needed, so the clause ends these arrangements from that date. (*REV 12)

Clause 38: makes changes to the rules about deduction of tax from gilt interest that are needed as a consequence of the changes made by the previous clause.

Relief for losses etc

Clause 39: amends the provisions under which a company may claim to carry-back trading losses to set against the profits of an earlier period. The amended rules apply to trading losses incurred in accounting periods ending on or after 2 July 1997. Under the amended rules a loss may, in general, be carried back only to an accounting period falling wholly or partly within 12 months of the start of the period in which the loss was incurred. Losses made in periods which straddle 2 July will be apportioned, with the new and previous rules being applied appropriately.

The clause provides for the 12 month period to be extended to three years in two circumstances. Firstly, where the trading loss arose in the 12 months immediately before the company ceased to trade. Secondly, where the losses result from the special allowances given for the costs of decommissioning North Sea oil and gas installations.(*REV 2)

Clause 40: amends the provisions under which a company may claim to carry-back deficits arising on loan relationships and financial instruments, or resulting from foreign exchange movements, to set against the profits of an earlier period. The amended rules, which mirror those for trading losses introduced by clause 31, apply to deficits arising in accounting periods ending on or after 2 July 1997. Under the amended rules, any accounting period to which the deficit is carried back must fall wholly or partly within the 12 months before the beginning of the period in which the deficit arose.

Deficits for periods which straddle 2 July will be apportioned. The new rules will apply to that part of the deficit which relates to the period ending on or after 2 July 1997; the previous rules, which allowed a carry-back of up to three years, will apply to the
remainder.  (*REV 2)

Clause 41 and Schedule 7: provide for amendments to be made to the group relief rules. These rules currently limit the relief where the claimant and surrendering companies have different but overlapping accounting periods by reference to the length of the period common to both. However, groups can circumvent the limit by making claims to, or surrenders from, more than one company, allowing group relief to be effectively carried back to earlier accounting periods.

The new rules will prevent the carry back of group relief in two ways. Firstly, the aggregate amount which can be claimed by a company for a particular accounting period from companies whose accounting periods correspond but do not wholly coincide with its accounting period will be restricted to the amount of its profits for the overlapping period. Secondly, the new legislation restricts the aggregate amount which can be surrendered by a company, when accounting periods do not coincide, to the amount of its losses or excess reliefs for that overlap period. This new regime will apply to all members of groups and consortia for periods after 2 July 1997.  (*REV 7)

Capital allowances for small and medium sized businesses

Clause 42: provides for first year allowances to be given to small and medium-sized businesses for expenditure on machinery and plant in the 12 months ending 1 July 1998 at double the normal rate of writing-down allowance, that is 50 per cent in general or 12 per cent where, exceptionally, the long life asset rules apply. (*REV 3)

Capital allowances and finance leases

Clause 43: sets out which businesses qualify for the new first year allowance  introduced by clause 42.  These are broadly companies and businesses carried on by individuals, either as sole traders or in partnership, which are small or medium-sized under the criteria in the Companies Act.  (*REV 3)

Clause 44: restricts the capital allowances available to lessors on machinery and plant leased out under a finance lease for the chargeable period in which the expenditure is incurred rateably from the date it is incurred eg if expenditure is incurred 3 months before the end of the period, the writing down allowance is restricted to 3/12 ths of the annual rate. It will apply to expenditure incurred on or after 2 July 1997 other than expenditure under a contract made before that date and incurred within 12 months after that date.  (*REV 7)

Clause 45:  restricts the capital allowances available to lessors on machinery and plant bought under a hire purchase agreement and leased out under a finance lease so as to prevent allowances from being given on expenditure before it has been incurred. It will
apply to expenditure incurred on or after 2 July 1997 other than expenditure under a contract made before that date and incurred within 12 months after that date.( *REV 7)

Clause 46: restricts the capital allowances available to lessors on machinery and plant which is sold and leased back under a finance lease to the notional written down value of the machinery and plant for the seller.  It also prevents any allowances from being given to the lessor in such cases if the lessor has substantially divested himself of any risk that the lessee will not meet his obligations under the lease. It will have effect where the sale giving rise to the sale and leaseback takes place on or after 2 July 1997 other than a sale under a contract made before that date which takes place within 12 months after that date.  (*REV 7)

Clause 47: defines the term “finance lease” used in clauses 44, 45 and 46 to have the same meaning as in UK accounting practice. It will apply to all cases affected by the changes introduced by those clauses.  (*REV 7)

Films

Clause 48: provides for 100% write-off for production and acquisition expenditure on British qualifying films completed after Budget day and costing 15 million Pounds or less to make.  The clause provides for the relief to be time limited to costs incurred during the three years from Budget day and to apply to production or acquisition costs of films completed after Budget day.  The measure is intended to stimulate the production of British films and promote growth, employment, investment and opportunities in the film industry.  (*REV 11).

PART IV

MISCELLANEOUS AND SUPPLEMENTAL

Stamp duty

Clause 49: introduces new rates of stamp duty for transfers of land, buildings and certain other property (except shares) where the price exceeds 250,000 Pounds.  There is no change in the current exemption threshold of 60,000 Pounds, nor in the 1 per cent on transfers of over 60,000 Pounds and not exceeding 250,000 Pounds.  The changes apply to instruments executed on or after 8 July, except for instruments in pursuance of contracts made on or before 2 July.  There will be a new rate of 1 1/2 per cent where the price is more than 250,000 Pounds but does not exceed 500,000 Pounds and a new rate of 2 per cent where the price exceeds 500,000 Pounds.  The new rates will be charged on the full price of the property, in the same way as the 1 per cent rate applies now.  (*REV 9)

Provisional collection of taxes

Clause 50: amends the rules in the Provisional Collection of Taxes Act 1968 for giving immediate (but temporary) statutory effect to tax and duty changes on the passing of a resolution by the House of Commons.  The amendments will allow any Budget resolution passed in February or March to remain effective until the following 5 August.
The clause also makes a consequential amendment to the advance corporation tax legislation.

*REV 1, *C&E 1, etc refers to the Budget Day Press Notices.

The press release issued by HM Treasury on 21 August 1997.

The UK today backed the economic programme being implemented by the Thai authorities, which the IMF today agreed to support with exceptionally large access to IMF financial resources.

Welcoming the IMF programme, Economic Secretary Helen Liddell said:

“As a major shareholder of the IMF, we believe    that acting with the support of the IMF in this way is the right way for the Thai authorities    to have handled their financial situation.  The IMF’s Emergency Financing Mechanism was set up to deal with just this sort of eventuality and we fully support its use on this occasion.

“The Government will continue to monitor developments in the Thai economy with a keen interest and will continue to give our full support through the IMF and World Bank so long as the programme is adhered to.

“Agreement on IMF support for this economic programme in Thailand is aimed at promoting greater financial stability throughout Asia, a region in which the UK has considerable economic and financial interests.”

The press release issued by HM Treasury on 18 August 1997.

Paymaster General Geoffrey Robinson today welcomed the arrival of Adrian Montague (formerly Co-Head of Global Project Finance at Dresdner Kleinwort Benson) as Chief Executive of the new Treasury Private Finance Taskforce.

The Taskforce is being established within the Treasury following the recent review of private finance by Malcolm Bates.  The Taskforce will be a driving force, in conjunction with spending departments, in bringing about PFI and other Public/Private Partnerships.

Mr Montague will report directly to the Paymaster.  His responsibilities will include signing off the commercial viability of all significant projects entering procurement for the next two years.

Welcoming Mr Montague to his new office, Mr Robinson said:

“I am delighted to welcome a Chief Executive of Adrian’s outstanding talents.  He faces a great challenge at an exciting time and I will give him all the help he needs.

“The commitment of this Government to realising the full potential from effective Public/Private Partnerships is second to none.  We took action to reinvigorate PFI within weeks of taking office and are now bringing into effect the principal agent for putting PFI on a firm long-term footing.”

Taking up his new challenge, Adrian Montague said:

“This is a unique opportunity for me to make a real contribution to the delivery of high quality services to the public.  My first step is to attract a top-quality Taskforce.  This will help deliver my ambition of making  the Taskforce an effective catalyst to promote the changes we need to make a success of PFI.

“I want to create close relationships with government departments, agencies and local authorities in order to develop a good flow of strong and well-structured projects.  I look forward to working with my new public sector colleagues to produce value for money for the taxpayer and good opportunities for business.”

The press release issued by HM Treasury on 10 August 1997.

The latest figures showing progress on clearing up pensions misselling were published today by Economic Secretary Helen Liddell.

The Treasury promised in June to publish information each month about the cases handled by the 24 firms with most cases to review.

Releasing the new figures, Mrs Liddell said:

“The July figures show most firms have improved on their June performance – though some have achieved more than others.  I am encouraged by anecdotal evidence of progress on the ground but,   overall, the figures are still disappointing.

“The first small steps that have been made must now be turned into a big step change in all firms’ performance.The next few months will be crucial – all firms must seize the opportunity to demonstrate their commitment and really get a move on in redressing
their victims.

“I will consider what further action is called for once I have seen some further figures to measure progress”.

The press release issued by HM Treasury on 4 August 1997.

The Treasury has today announced the appointment of Chris Wales and Paul Gregg as policy experts to work alongside the Treasury teams dealing with, respectively, taxation and employment. They are the first appointments to the Council of Economic Advisers. The Council’s terms of reference are:

“To advise the Chancellor of the Exchequer on the design and implementation of policies for the achievement of the Government’s economic objectives.”

The creation of the Council of Economic Advisers follows the disbandment of the Panel of Independent Forecasters established under the previous Government.

——

The Council of Economic Advisers is made up of individual policy experts who will bring their specialist experience to work alongside individual Treasury teams focussing on the Government’s key policy priorities.

Chris Wales moves from his position as tax partner in Arthur Andersen where he has worked in both the UK and Sweden. He has substantial experience of UK and international tax issues. His work has included projects involving financing structures and products, securitisation, cross-border leasing, acquisition finance and related structures, and treasury management.

He moved to Sweden in 1991, where he became head of the firm’s international tax practice there. In 1995 he returned full-time to London where he had a portfolio mainly comprising large corporate and financial sector clients, including US and European-based multinationals.

In addition to his work at the Treasury, Paul Gregg will continue to work part-time in his current position as Senior Research Associate at the Centre for Economic Performance at the London School of Economics. Before joining the LSE in 1995, he worked at the National Institute of Economic and Social Research from 1987-1994.

His current work at the LSE includes research into the dynamics of the UK labour market.

The press release issued by HM Treasury on 4 August 1997.

Better control of public spending through the introduction of best commercial practice into Government accounting moved closer today.

Financial reporting principles and standards which will underpin resource accounting were given the green light when the independent Financial Reporting Advisory Board (FRAB) approved the Treasury’s draft resource accounting Manual for use by Government departments.

This will improve the way the Government accounts for how taxpayers’ money has been spent, bringing it into line with best private sector practice.

Welcoming FRAB approval of the Manual, Chief Secretary Alistair Darling said :

“The Government is determined to put its accounting procedures on a proper and modern footing. This is the greatest reform to the public finances in over 100 years.

“Resource accounting is an important development in getting best value for money for the taxpayer. It will provide a better measure of the cost of the activities of central Government departments, and of their assets and liabilities.

“Resource budgeting will then build on that and improve the way in which we plan and control Government spending. FRAB approval of the resource accounting Manual means that progress towards that goal will continue to schedule.

“The Government is committed to carrying through this important initiative, which is already bearing fruit. Departments’ work on their resource accounts will help them to prepare the National Assets Register. This will show which assets departments own, and will enable more informed decisions on what should be done with them.

“Resource accounting and budgeting will play an important part in increasing the transparency and public understanding of the finances of departments and measuring their success  in meeting their targets. This is essential to improving public confidence in the effective management of public finance.

“I am grateful to FRAB for conducting their review, and I look forward to further advice as resource accounting develops.

The press release issued by HM Treasury on 30 September 1997.

All the 30 September deadlines set to the Treasury for progress in reinvigorating the Private Finance Initiative (PFI) have been met.

Welcoming successful progress against the agenda set by Malcolm Bates in June following his review of the PFI, Paymaster General Geoffrey Robinson said:

“Malcolm Bates set a tight timetable, but we are determined to deliver. “Our Taskforce is now in place. We will implement all 29 of his recommendations over the coming months in documents that will provide a sound basis for future business and where there is a Taskforce seal of approval on the cover, you can be sure it is authoritative advice.”

Four recommendations required central action by today. Progress means that :

* procedures for delivering Government support for local authority PFI projects will be streamlined and strengthened under a new framework, full details of which will be published soon. Under these :

• the PFI Taskforce will work closely with Government Departments to sign off good quality projects and offer expertise on those that are significant.
• the Public Private Partnerships Programme (4Ps) will continue to play a critical role on behalf of Local Government, advocating their interests and working up proposals so as to enhance their viability and thus increase the chances of securing endorsement.

* new Treasury guidance on the balance sheet treatment of PFI transactions for Central Government Departments and Agencies will apply immediately. It has already been positively received by the National Audit Office and Audit Commission.

* the Treasury has given written assurance that funding for contracts by central Government Departments will not be cut after signature of value for money contracts, provided contractual commitments continue to be met.

* the new Taskforce has circulated some draft guidance on Public Sector Comparators and when they should be used, on which it will now seek comment from experts.

In addition, good progress is being made by other departments in addressing the recommendations which fall to them. The Local Government (Contracts) Bill has cleared all its Commons Stages. Guidance to distributors of lottery funds is expected to be issued by DCMS soon. Departments have identified their PFI training needs and the Taskforce is now considering that information and possible delivery mechanisms.

The press release issued by HM Treasury on 26 September 1997.

The first three of a series of draft guidance documents to Government Departments preparing public sector construction projects have been forwarded to the Construction Industry Board (CIB) to take the views of their members, the Treasury announced today.

The consultation exercise between the Treasury and the construction industry is a significant step forward in public sector contracting with the construction industry.

It will lead to better value for money for the taxpayer as public sector building contracts become better and more consistently prepared and presented within a commonly used and understood framework.

Publication of the draft guidance marks clear progress by the Treasury in developing a practical dialogue between construction contractors and Government clients.

CIB Chief Executive Don Ward said :

“In the past, the construction industry has not had the opportunity to help Government get this sort of guidance right. The culture change evident in asking CIB members for their views is very welcome. I strongly commend the Treasury for it, and look forward to industry representatives making a positive input.

“I am also pleased to see that the Treasury draft guidance adopts the principles on which CIB’s own guidance is based. It is important that construction clients in both the public and private sector should be taking these Codes as their starting point to improve construction performance “.

The guidance covers :

• roles, responsibilities, qualifications and training of key client project team members.
• a value for money (VFM) framework to identify key activities for achieving VFM .
• a new “approval gateway” concept to prevent projects proceeding without specific management structures and key activities for achieving VFM.
• the appointment of consultants and contractors on the basis of quality and price.

The Government Construction Client Panel (GCCP) will endorse final drafts of the documents after receiving views from the construction industry. Further draft guidance will be issued for consultation in 1998.