Tag: 1999

The press release issued by HM Treasury on 12 January 1999.

People and organisations on Merseyside had the opportunity to tell Patricia Hewitt, the Economic Secretary to the Treasury, about the problems of lack of access to financial services and possible remedies to the problem.

The discussion, hosted by Speke Community Credit Union, is part of a series around the country organised by the Treasury. They have been organised to help inform the work of the Treasury’s two policy action teams which are looking at the problems of financial exclusion – one on lack of access to personal financial services e.g. bank accounts and the other on finance and support for small firms.

The aim of the discussions is to draw on the experience of local people on Merseyside, encourage discussion of financial services problems of people in deprived neighbourhoods and explore possible solutions.

Speaking at the forum in Liverpool the Minister said:

“This Government’s aim is to create a modern and decent society where there are no forgotten people. That is why tackling social exclusion is a top priority.

“Financial exclusion is both a symptom and cause of that social exclusion. People in our most deprived neighbourhoods get locked into a cash economy and, too often, financial services mean cheque cashing shops, the pawnshop and illegal loan sharks. This Government is not prepared to accept a society where economic opportunity is restricted in this fashion.

“And we also want to encourage enterprise in deprived neighbourhoods – this means better access to capital for small firms, including those starting up. Just because a  neighbourhood may be poor in its physical and economic standing does not mean that it cannot be rich in people with ideas and initiative to start up and run their own business.

“The seminar today is an opportunity for the people on Merseyside to tell the Government about the problems on the ground and how we can increase access to financial services.”

The main issues for discussion will be:

• small firm finance;
• small firm support and mentoring;
• financial education;
• access to bank accounts and other personal financial
  services; and
• credit union development.

The press release issued by HM Treasury on 8 January 1999.

The Chancellor of the Exchequer, Gordon Brown has decided the following allocation of Ministerial responsibilities:

CHIEF SECRETARY, ALAN MILBURN MP

• Public expenditure planning and control (including local authorities and nationalised industries finance).
• Value for money in the public services, including Public Service Agreements.
• Departmental Investment Strategies including Capital
  Modernisation Fund and Invest to Save budget.
• Public/Private Partnerships including Private Finance
  Initiative.
• Procurement policy.
• Public sector pay, including parliamentary pay, allowances and superannuation.
• Presentation of economic policy and economic briefing.
• Welfare reform.
• Devolution.
• Strategic oversight of banking, financial services and
  insurance.
• PSX (Public services and expenditure), QFL (Forward Legislation), GL (local government), HS (home and social affairs), and EA (economic affairs) committees.
• Resource Accounting and Budgeting.

PAYMASTER GENERAL, DAWN PRIMAROLO MP

• Minister responsible for Inland Revenue, Customs and Excise and the Treasury and with overall responsibility for tax and the Finance Bill.
• Personal taxation, NI contributions, tax credits.
• Business taxation, including corporation tax.
• Capital gains tax.
• Inheritance tax.
• VAT.
• European and International tax issues.

FINANCIAL SECRETARY, BARBARA ROCHE MP

• Growth, with responsibility for the growth unit and
  productivity agenda.
• Small firms and venture capital.
• Science, Research and Development.
• Welfare to Work issues.
• Competition and deregulation policy.
• Export Credit.
• Customs and Excise taxes, except VAT and road fuel duties.
• North Sea Taxation.
• Support to the Paymaster General on the Finance Bill.
• Parliamentary financial business, PAC, NAO.
•  LEG Committee (Current Legislation).
• Support to the Chief Secretary on the Financial Services & Markets Bill.

ECONOMIC SECRETARY, PATRICIA HEWITT MP

• Banking, financial services and insurance and support to the Chief Secretary on the Financial Services & Markets Bill.
• Foreign exchange reserves and debt management policy.
• Support to the Chancellor on EU and International issues.
• Responsibility for National Savings, the Debt Management Office, National Investment and Loans Office, Office of National Statistics, Royal Mint and the Government Actuary’s Department.
• Environmental issues, including ‘green’ taxes and other environmental economic instruments.
• Taxation of company cars and road fuel; Vehicle Excise Duty.
• Financial services tax issues (eg ISAs, stamp duty,
  pensions).
• Support to the Paymaster General on the Finance Bill.
• ESOPs.
• Treasury interest in general accountancy issues.
• Support to the Chief Secretary on Resource Accounting and Budgeting.
• Charities and charity taxation.
• Women’s issues.

MINISTER OF STATE, LORD SIMON

• EMU business preparations.
• Economic reform in Europe.
• Chairman of the Inter-departmental taskforce on
  competitiveness in Europe.
• Member of the (E)DOP Ministerial Sub Committee on European Issues.

The press release issued by HM Treasury on 8 January 1999.

Possible new tax measures to encourage corporate venturing and more business investment in R&D form part of a package set out today by the new Paymaster General Dawn Primarolo, to tackle the UK’s productivity gap.

Speaking at the fourth joint Treasury/DTI Productivity Challenge Roadshow at the Nissan car plant in Sunderland, the Paymaster said:

“The Government has shown its determination to tackle the UK’s productivity challenge using all the levers at its disposal, including the tax system.  But to do so effectively, it needs the help of business to inform the debate and design effective policies.”

“Last autumn we set out our diagnosis of the UK’s productivity gap, and our emerging ideas for policies across the four key areas of innovation and enterprise, investment, competition and skills.  Today, I am taking the debate forward on business innovation and enterprise – two of the key driving forces in improving productivity.”

The Paymaster invited business to take part in consultation with Government on:

• specific proposals, to be announced later this month, on making existing tax incentives for R&D investment more user-friendly by clarifying the definition of R&D;
• further ideas, to be announced in the next few months, for a possible new tax measure to encourage small and medium sized enterprises to invest in R&D;
• how best to stimulate corporate venturing in the UK (whereby large companies invest in and form partnerships with smaller enterprises) and what scope there could be for a measure of tax relief to kick start this activity.

These measures form part of a wider productivity agenda, announced in November’s Pre-Budget Report, which include:

• a wide ranging review of the banking sector to examine current levels of innovation, competition and efficiency;
• a review of policies on employee share ownership, to encourage more employees to take a stake in their companies;
• a coordinated look at the impact Government departments have on productivity in the wider economy by a new Productivity and Competitiveness Cabinet Committee;
• examining how best to encourage sustained entrepreneurial investment; and
•  how to encourage business innovation through simplification of the tax treatment of intellectual property.

The Government will be bringing forward further specific proposals on this agenda over the coming months.

The Paymaster said:

“On all these tax issues, we will clearly need to weigh up the cost effectiveness of specific measures. But to do so, we first need a level-headed assessment of their impact on business innovation and enterprise. That means business and Government working together throughout the policy debate.”

Trade and Industry Minister Lord Simon, who hosted the roadshow, said:

“This roadshow is a unique opportunity for Government and business to exchange ideas and discuss solutions to close the productivity gap. Holding the roadshow here in  Sunderland at the Nissan plant is ideal, as Nissan are leaders in their industry in terms of productivity.”

The press release issued by HM Treasury on 25 February 1999.

A consultation document on the scope of regulated activities under the Financial Services and Markets Bill is published by HM Treasury today.

Announcing publication, Economic Secretary Patricia Hewitt said

“We are meeting our commitment to consult well in advance on key secondary legislation under the bill, so we have time to get it right.  We will take careful note of responses to this draft”.

The draft bill, published for consultation last year, proposes a single regulatory system in place of the existing separate arrangements for different sectors.  The Government does not intend to make major changes to the overall scope of regulation, although where there are good reasons for change, the Government will act, as with Lloyd’s.

Ms Hewitt added:

“Our objective has been to produce a single set of definitions and in doing so we have sought to make the law as clear as possible.  In particular, we are proposing a number of changes to deal with unnecessary authorisation by members of the professions.

“We are also anxious to anticipate the rapidly evolving nature of the financial services industry and setting out the scope of the bill in secondary legislation will allow us to keep up to date with market developments”.

Initial comments on the consultation document are sought by 30 April, although there will be opportunities to take account of subsequent comments before the statutory instruments become law.

The announcement was in response to a Parliamentary Question from Jackie Lawrence (Preseli Pembrokeshire).

The press release issued by HM Treasury on 23 February 1999.

The second six monthly report on the work of the Treasury Euro Preparations Unit (EPU), Getting ready for the euro : second report February 1999 is published today.

Welcoming the report, Lord Simon, the Minister for Trade and Competitiveness in Europe, said:

“This report reflects the substantial programme of work undertaken by the EPU and the many business representatives and public sector bodies with which it has liaised closely
in recent months.

“It shows that considerable progress has been made. The second EPU survey of SMEs shows  a doubling of awareness levels, and a trebling of action levels, in the run up to 1 January 1999,  following the Government’s business information campaign.

“But much more remains to be done to ensure that SMEs –  almost half of whom have direct or indirect trading links with the eurozone –  are prepared to maintain and improve their competitiveness in the new euro environment.

“This work has done a great deal to inform the outline national changeover plan, also published today, which sets out the practical steps which would be needed for the UK to join the euro.”

Getting ready for the euro : second report January 1999 offers a benchmark of progress on preparations in the UK and sets out further preparation activity planned over the next six months. It  focusses on preparations in individual sectors of the economy, including financial markets; retail financial services; retailers; travel and tourism; multinationals and subsidiaries; small businesses; business services; and public authorities.

The report includes case studies illustrating practical responses to the need to prepare for the euro in these sectors,  and contact points for further information. It also includes information about the successful EPU advertising campaign and direct mail contact with 1.6 million SMEs. The latter provided new information on regional levels of business awareness of the euro, and expanded data on estimated levels of use of the euro in the UK.

The report looks further ahead at preparations for the option of the UK joining the single currency.  There are some examples of organisations which are already taking steps to prepare for possible UK entry into the single currency. Future editions of Getting ready for the euro will focus increasingly on these preparations and report on progress on the areas of further work set out in the National Changeover Plan.

The press release issued by HM Treasury on 23 February 1999.

The opening of another non-EU overseas investment exchange in London will reinforce the attractiveness of the City as a major financial centre for overseas traders, Economic Secretary Patricia Hewitt said today.

Ms Hewitt was announcing the recognition by HM Treasury of the Cantor Financial Futures Exchange as an overseas investment exchange under sections 37 and 40 of the Financial Services Act 1986. Ms Hewitt said:

” I am pleased that the Cantor Financial Futures Exchange has been able to satisfy the conditions laid down in the Financial Services Act to be recognised as an overseas investment exchange. UK firms and financial traders will shortly be able to access the exchange through terminals based here in London.

“Increased competition between exchanges should benefit markets and investors, promoting improved efficiency and innovation and strengthening the UK financial services industry. Greater liquidity and depth will also reinforce London’s position as one of the world’s top international financial centres.

“More overseas exchanges do business in the UK than in any other country. London offers a wide range of choice for internationally mobile financial services firms, making it extremely attractive for them to base their operations here. “

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

All 41 of the largest firms reviewing pensions mis-selling have made sufficient progress with the priority review to be removed from the Treasury’s monthly list, the Economic Secretary Patricia Hewitt announced today.

Consistent with the treatment of the 20 firms already removed from the list, the Personal Investment Authority (PIA) have confirmed that the remaining 21 have now made sufficient effort and progress towards their targets to also be removed. Welcoming the PIA’s assessment, Ms Hewitt said:

“It is good news that it is no longer necessary to publish figures for the priority review. PIA are satisfied that all 41 firms have now devoted significant energy and resources to compensating their mis-sold customers, and I am pleased to take their advice and suspend publication of the list.”

But Ms Hewitt made it clear that she reserves the right to resume publication of firms’ progress, with phase 2 of the review, if necessary. She said:

“Firms should not draw much comfort from today’s decision. I still expect them all to conclude the priority review and make swift progress with phase 2. If there is any evidence of attempts to avoid or delay phase 2 I will not hesitate to resume publication of information about firms’ progress.”

With the regulators’ advertising campaign for phase 2 of the pension review now well underway, Ms Hewitt reminded younger people to take the opportunity of finding out whether they might be due redress for mis-selling:

“The pension companies are now writing to younger people who may be affected by pension mis-selling. I urge anyone who receives a letter with R U Owed on the envelope to read it carefully and decide whether they wish to put their case forward for review.”

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

A team of top private sector managers is being brought into Whitehall to help deliver a 8 billion Pounds annual efficiency plan as part of the Government’s drive to reform public services.

The Public Services Productivity Panel, which will be chaired by Chief Secretary to the Treasury Alan Milburn MP, will include leading figures from the world of business and audit.

Today the Prime Minister will hold a joint meeting of the Panel and PSX, the Cabinet committee charged with ensuring the delivery of the Government’s modernisation programme in public services.

Ministers believe that delivering real change for the better in schools, hospitals and other services is the priority for the remainder of this Parliament and the achievement against which the Government will be judged.

The focus for the Panel’s work will be on ensuring that new government investment such as the extra 40 billion Pounds for health and education brings modern, high quality services.

All government departments have been set demanding targets through new Public Service Agreements to improve performance and efficiency with funding tied to results.

This new approach to improving the quality and responsiveness of public services has involved the Government setting itself 500 targets covering all the major services.

Key targets include reductions in school class sizes, hospital waiting lists, and vehicle crime.

The Panel will look at departments’ systems for managing and monitoring performance against their 500 targets.

It will report to Ministers on where changes is needed and where productivity could be improved.

In particular, the Panel will advise the Government about how increased efficiency and value for money can be delivered in public services.

The Government’s efficiency targets aim to release over 8 billion Pounds a year by 2001-2.

The Treasury has agreed that every pound in efficiency gains can be reinvested in frontline services and other priorities.

Individual targets include:

• 1% unit cost savings in colleges and universities in 1999/2000 worth 70 million Pounds ;
• 2% rising to 3% efficiency and value for money gains in social services worth 200 Pounds million next year;
• 2.5% annual efficiency gains in the driving and vehicle licensing authority worth 4 million Pounds next year;
• 2% a year improvements in the police service worth 150 million Pounds next year;
• 2.5% annual efficiency gains in the Treasury worth 1.5 million Pounds next year.

Across Whitehall improvements in efficiency will feature a drive to improve procurement and a fight against fraud and days lost through staff sickness absence.

The Panel will also focus on how systems to spread best practice in public services can be improved.

Ministers are concerned about variable performance. They cite huge variations in cost and outcomes as evidence of the scope for dramatic improvements in efficiency and performance:

• for all surgical procedures, the lowest cost NHS Trust is 30 per cent below average, and the highest around 60 per cent above the average
• nationally, the reported percentage of emergency readmissions within 28 days of discharge for patients aged 75 and over is 8.1%. In the worst ten health authorities, 1 in 8 patients are readmitted; whereas in the best, around 1 in 30 patients are readmitted
• schools from parts of the country with similar social and economic characteristics produce differing GCSE attainment – with average scores as low as 25 points per pupil for some schools, and as high as 45 points per pupil in other
• Gwent force detected 44% of crimes in 1997-98; whereas Gloucestershire detected under 20% – compared to a national average of 26%.

Speaking today, the Prime Minister said: “These top British businessmen and women will play a major part in driving though greater efficiencies and freeing an extra 8 billion Pounds for front line services such as schools and hospitals.”

Alan Milburn said: “Delivering real tangible change for the better in the key public services is the priority for the remainder of this Parliament.

The Government is committed to delivering modern first class services which make the very best use of the extra cash the Government is providing.

We are determined that 40 billion Pounds worth of extra investment in health and education brings 40 billion Pounds worth of improvements.

The Panel will help identify the root and branch changes that are needed to ratchet up public service productivity and performance.

This new efficiency drive will free more resources for frontline services.”

NOTES FOR EDITORS

1.  The members of the Public Services Productivity Panel are:

• Alan Milburn MP,
• Chief Secretary (Chair) Byron Grote,
• Group Chief of Staff, BP (Vice Chair) John Dowdy,
• Principal, McKinsey & Co Andrew Foster,
• Controller, Audit Commission Dame Sheila Masters DBE,
• Partner, KPMG John Makinson,
• Group Finance Director, Pearson plc John Mayo,
• Finance Director, GEC Lord Sainsbury,
• Minister of State, DTI Lord Simon,
• Minister for Trade and Competitiveness in Europe,
• DTI/HM Treasury Clare Spottiswoode,
• Senior Vice President, Regulatory Affairs, Azurix

2.  The Panel’s terms of reference are “to advise the Government on ways of improving the productivity and efficiency of Government departments and public sector bodies”. The Panel will report to a Cabinet Committee (PSX) chaired by the Chancellor.

3.  Public Service Agreements in the full range of Government activity were published in a White Paper in December 1998 (“Public Services for the Future: Modernisation, Reform and Accountability” (Cm 4181)). The Agreements, containing over 500 measurable objectives and efficiency targets, set out what the Government will deliver in return for the extra resources provided in the Comprehensive Spending Review.

The press release issued by HM Treasury on 5 February 1999.

In a unique series of ‘productivity roadshows’, Treasury and other Government ministers have toured every region of the country seeking views and listening to business. This ground- breaking consultation will help to inform Budget decisions on how the UK should address the productivity challenge.

Speaking at Coventry University’s TechnoCentre at the tenth and final Productivity Challenge Roadshow, Chancellor Gordon Brown and Trade and Industry Secretary Stephen Byers hailed the roadshows as a major success, encouraging all business sectors to enter the debate.

The Chancellor said:

” Raising our productivity is not simply about working harder, it’s about working better – encouraging enterprise and innovation, increasing access to finance for investment, improving our education and our skills.

“Within our agenda for productivity, we are committed to investment in education, science and innovation and in our infrastructure to create a high productivity economy. Taken together with our sound public finances, low inflation and lower interest rates, this makes Britain the best place for investment for the future.

“We are determined that the extra 40 billion Pounds investment in health and education will deliver new standards, new targets and new disciplines. The long-term investment the country needs is being met with the additional 11 billion Pounds we are investing through the Private Finance Initiative.

“Businesses also need to invest in the skills of their employees with schemes such as Investors in People. The ‘them and us’ culture in British industry must be removed once and for all, and so we want to make it easier for all employees to become stakeholders in their companies. Employee commitment is a vital strength for companies competing and succeeding in the global economy.”

The press release issued by HM Treasury on 3 February 1999.

Stakeholder pensions came a step closer today with publication of proposals for more flexible management of pensions investments. This will enable members of the new stakeholder schemes to see where their money is invested, and how much that investment is worth.

The Government Pensions Green Paper set out the objective to ensure that all who can save for their retirement do so. Proposals for a second state pension will help low earners for whom a funded pension is not suitable. But, where appropriate, the Government aims to encourage moderate and high earners to take out funded pensions.

Previously the choice has been between occupational pensions, which are not always available, and personal pensions, which may not be appropriate for moderate earners. The proposed new stakeholder pension schemes – which will benefit form the new flexibility in investment announced today – were developed to meet this gap in pension provision.

The proposals for a new investment mechanism – set out in a consultation document announced by Alistair Darling, Secretary of State for Social Security, and Alan Milburn, Chief Secretary to the Treasury – will also help those who wish to move jobs. Instead of having to sell up their investments and re-invest them in a new company or personal pensions scheme, they can move their investments with them.

The new investment mechanism will be available to the whole range of personal and occupational pensions schemes as well as for stakeholder pensions when these become available. Subject to consultation, the new mechanism should be available from later this year for personal pensions.

Welcoming the proposals, Alistair Darling said:

“The pensions reforms which we published in December will mean far greater security for the future. Stakeholder pensions are a crucial part of our plans. They will provide the secure, flexible and value for money pensions that those on middle incomes lack under the current system.

“Today’s proposals for a new investment mechanism for pensions will help to ensure the success of stakeholder schemes, and those using other pensions vehicles.

“Both the pensions Green Paper and this consultation document make clear that the stakeholder pension schemes need to be run in a way that protects their members’ interests. That is why we shall legislate to enable stakeholder schemes to be set up under trust law. “But, as we made clear in the Green Paper, we also want to consider alternatives to a trust basis for stakeholder schemes provided the governance arrangements give sufficient protection to members’ interests, ensuring value for money, compliance with minimum standards and other regulatory requirements, high standards of service and good-quality information.”

The new investment mechanism for pensions will help stakeholder schemes which use it to deliver :

• value for money : because savers can invest in a range of ‘pooled’ savings products, including unit and investment trusts and open-ended investment companies (oeics), which have much lower overheads than individual investments.
• flexibility : because these products will be easy to value and transfer between different stakeholder, personal and occupational pension schemes, reducing the scope for misselling.
• security : because the investments in the pension must be held safe by an authorised firm independent of the fund manager.

Commenting on the greater flexibility of the scheme, Alan Milburn said:

“Pension schemes are not just significant in retirement. They often play an important part in career decisions throughout our working lives.

“The low upfront charges these investments offer should reduce the financial penalties frequently faced by people changing jobs. This will increase the freedom for individuals to follow new career paths without feeling locked into their current jobs.

“This should encourage flexibility in the job market and support the Government’s productivity agenda as well as benefiting millions of individual pension holders.”

Comments are invited by 31 March, the same timetable as for other issues covered in the Green Paper ‘A New Contract for Welfare: Partnership in Pensions’.