Tag: Treasury

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Speaking today Alan Milburn said:

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

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

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

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

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

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

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

Cabinet Office Minister Peter Kilfoyle said:

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

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

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

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

Welcoming the decision, Patricia Hewitt, said:

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

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

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

The reconstruction effort for Kosovo was given a massive boost today by EU Finance Ministers, including UK Economic Secretary to the Treasury, Patricia Hewitt, at a meeting in Brussels today.

The Budget Council agreed to set aside 500 million euros in the draft 2000 EU budget from which the EU’s contribution to the reconstruction effort can be funded.

Welcoming the decisions, Patricia Hewitt said:

“We strongly support the important decision made today to set aside 500 million euros in order to finance measures that will help rebuild Kosovo.

“The international community rightly expects the EU to play an important role in the rebuilding process, and today we have taken a major step forward in ensuring this is possible.

“However, the prioritisation of Kosovo within the EU budget does not mean that the EU is reducing its commitment to other regions. We have long argued that the EU can and should use its existing resources more effectively. That’s why I particularly welcome today’s decision to set aside funding for Kosovo from within the EU’s budget ceilings.”

The draft budget will now be forwarded to the European Parliament for its first reading.

The press release issued by HM Treasury on 9 July 1999.

Greater commercial freedom for the Royal Mint, making best use of new opportunities to expand its business into new areas and developing partnerships with the private sector, were announced by Economic Secretary Patricia Hewitt today.

Ms Hewitt said:

“More commercial freedom, to win more business : that is what we promised for the Royal Mint and that is what we have delivered.

“This is a bold step forward in the Government’s approach to managing its agencies. These measures – including steps to bring corporate governance and financial reporting more closely into line with best commercial practice – will enable the Royal Mint to update the way it is run in today’s modern commercial and business world and make it fit for the twenty first century

“The new framework will make the Treasury a better shareholder and the Royal Mint a better enterprise. It will also ensure that the Royal Mint makes the best possible use of the opportunities it faces. That includes the ability to offer an extended range of goods and services and to make fuller use of its expertise and capacity.”

The new framework includes provision for :

• a new Treasury panel of top private sector analysts and managers to provide more rigorous shareholder discipline and inject greater private sector expertise into the Treasury’s oversight of the Royal Mint as shareholder;
• a better defined role for non-executive directors of the Royal Mint, who, like the directors of private companies, will in future have a clear responsibility to enhance the prosperity of the business over time;
• bringing the Royal Mint board more closely into line with best private sector practice, in particular by bringing the number of executives and non-executives into more even balance;
• financial reporting that is more closely aligned with that of private companies, making it more easily understood by customers, potential partners and analysts;
• the expertise of the panel to be used to improve and sharpen the incentives on the Royal Mint, with the aim of making its decision making more transparent, and more commercial.

These changes complement a relaxation of controls which have previously restricted the Royal Mint’s activities. At present, the Royal Mint can only make coins and medals. In future it will be free to exploit its technical skills and assets by offering a wider range of products, such as jewellery, and expanding into non-coinage business, where it is commercially viable. It will also be able to participate in a wider range of ventures with the private sector. These changes will enable the Royal Mint to reach its full potential, on its own or in partnership with private sector firms.

Ms Hewitt added :

“The package is essential to the running of a good, modern forward-looking business. The Royal Mint has a successful track record. In recent years it has delivered ever-improving efficiency to the benefit of UK taxpayers, and has seen its business grow internationally, making it a world leader we can all be proud of.

“Today we have taken a first important step in laying the foundations for the Royal Mint’s future prosperity to the benefit of all stakeholders which marks the start of an ongoing process of improvement and development. The world coinage market is increasingly competitive, marked by constant innovation. The Royal Mint must be ahead and stay ahead of the game if it is to thrive. We cannot stand still if we want to maintain its position at the forefront in the global marketplace.”

The announcement follows a detailed review of a range of possible options for developing the Royal Mint. The review was wide ranging with the aim of identifying the actions needed to position the Royal Mint for closer partnership with the private sector.

The press release issued by HM Treasury on 2 July 1999.

Lord Trotman to Review Measures to Help the Small Business Sector

A review of the measures to support SMEs and entrepreneurs and what further incentives could help a thriving small business sector in Britain has been announced today by the Chancellor Gordon Brown.

Lord Trotman, former Chairman and Chief Executive of the Ford Motor Company, will undertake the review. It will look at the measures taken so far to support small and medium sized enterprises (SMEs), covering both tax and public sending programmes.

The Chancellor said:

“The Government places great store by creating the right environment in which enterprises can invest, raise finance and grow. Supporting a thriving business sector which can compete and innovate is one important component of the Government’s drive to improve UK productivity.”

Lord Trotman has been asked to look at the impact of existing policies and what other measures could be developed. This will involve liaison with officials from HM Treasury, Department of Trade and Industry and Inland Revenue. He will report to the Chancellor with interim findings by the end of December 1999 to inform the March 2000 Budget.

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

Proposals for increasing the commercial exploitation of science conducted in Government laboratories are at the forefront of an independent report published today by the Government.

“Creating Knowledge, Creating Wealth” by John Baker of Medeva plc calls for commercial exploitation to be given a much higher profile in the Government’s research establishments, but points out that industry also needs to take a closer interest in the commercial opportunities in Government laboratories.

Its key recommendations include:

– overcoming the Whitehall risk avoidance culture that inhibits entrepreneurial behaviour;
– giving Government laboratories greater financial and management freedoms;
– reforming civil service conduct rules so as to reward scientists for exploiting their work.

Financial Secretary Stephen Timms said:

“It is vital that the money we spend in Government laboratories creates not only new knowledge but also jobs and prosperity for Britain.

“We need to foster a more entrepreneurial spirit, building on the excellent work that is already going on in some of the laboratories.

“A useful start has already been made with the financial incentives the Treasury has given to Departments in its ‘Wider Markets’ guidance, but there is more to be done. I am grateful to John Baker for pointing the way forward in his report.”

Science Minister Lord Sainsbury said:

“John Baker’s excellent report will add much to our efforts to maximise the value that this country gets from our science base. I believe that innovation has to be the bedrock for the modern UK economy and that the scientific research done in Government laboratories has a great deal to contribute. He has recognised the importance of the knowledge transfer task.

“This is not about making money for the government but about maximising the contribution to the nation’s jobs, prosperity and quality of life, without compromising the vital independent advice that these laboratories provide.

“These laboratories and the scientists who work in them are an important resource for Government. We recognise that to get the most out of this resource we have to be clear about our objectives and give appropriate incentives. These are all factors that we will take into account in considering our detailed response to this report.”

John Baker, producer of the report said:

“I am delighted to have helped the Government identify ways of increasing the exploitation of research carried out in its laboratories . I saw much good practice during my study, but more could be done. Above all, Government has to recognise that commercialising research is not a risk-free business.

“If it wants to see the successes in terms of greater prosperity and quality of life – it needs a more mature attitude to risk-taking which tolerates the inevitable failures. That means the rules have to be changed – and be seen to change – so that laboratories and their scientists can manage risks and also be allowed to reap the rewards.”

Public sector research establishments spend £2.2 billion a year on research for the Government, but the report says that they need to do more to turn their research discoveries into wealth creating products. It argues that fear of criticism by the National Audit Office and the Public Accounts committee inhibits commercialisation, and the civil service management code prevents many Government scientists from making money out of their inventions, even though society and the economy would benefit too.

The Government will publish a detailed response to the Baker report in the autumn.

The press release issued by HM Treasury on 18 August 1999.

Listening to views and concerns on the design of the climate change levy is high on Stephen Timms’ agenda in his new role as Financial Secretary to the Treasury.

At his first official meeting in his new role, Mr Timms met representatives from the Confederation of British Industry to listen to their views and concerns on the climate change levy, which is due to be introduced in 2001.

Commenting after today’s meeting, Mr Timms said:

“I was delighted to meet the CBI today and discuss the important issue of the climate change levy.

“There are a number of outstanding design issues relating to the levy, which is why I have been very keen to meet representatives of industry at the earliest possible opportunity.

“I am confident that, by working with industry, we can design the levy in a way that maximises its environmental effectiveness whilst protecting the competitiveness of British firms.

“I look forward to continuing this useful and constructive dialogue with business representatives.”

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

The Treasury today published the Independent Enquiry into a Tonnage Tax, a report by Lord Alexander of Weedon QC. The report’s main recommendations have been accepted by the Chancellor and, subject to the necessary Parliamentary and EC approvals, will be worked up for implementation in the next Finance Bill.

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

Colleges, police services, housing departments, and hospitals are all being put under the spotlight by a top team of private sector managers to deliver improved productivity and efficiency in the public sector.

The Public Services Productivity Panel, drawn from leading private sector and consultant managers, has been established under the chairmanship of the Chief Secretary to the Treasury to help the Government hit its target of £8 billion a year of efficiency improvements in the public sector by 2001-02. Every pound of efficiency gains resulting from this work will be reinvested in frontline services.

Announcing for the first time details of the Panel’s work, Chief Secretary to the Treasury Alan Milburn said today:

“Delivering real tangible change for the better in Britain’s 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 worth of extra investment in health and education brings £40 billion 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.

It will focus on how we can tackle variations in performance in public services.

The Government wants to see excellence for the many not the few. ”

Examples of projects being overseen out by the panel include:

Housing: this Government is investing an extra £3.6 billion to improve the condition of local authority housing and is determined to see this extra cash spent effectively in meeting the needs of local people. But there is currently too much variation in the cost of repairs and the time taken to carry out repairs. This project will seek to find out why these differences exist and will carry out spot-checks on repair work to discover the level of customer satisfaction with repairs.

Staff: in seeking to ensure top quality efficient public services, the Government recognises the importance of well-motivated staff. We are therefore examining what motivates managers and staff in the public and private sectors and looking at ways in which we can provide the right incentives. That includes pay, but also other forms of recognition. This project is looking closely at four Government agencies that deal directly with the public – the Inland Revenue, Customs & Excise, the Benefits Agency, and the Employment Service.

The NHS: there are almost 11 million new NHS outpatient appointments each year, as well as around 27 million follow-up appointments, at a cost of over £4 billion. The performance of outpatient services is therefore vital to the quality and efficiency of the NHS. This project aims to identify ways in which we can improve the delivery of outpatient services across the NHS.

Schools: this project seeks to raise standards and save time in schools by improving communication between central Government and individual schools; enabling comparison in performance between schools more easily; spreading best practice between schools; and making individual schools more accountable for their own performance.

The police: The Government spends some £7.5 billion every year on policing in the UK. Ensuring the quality and efficiency of the police is therefore a priority. The Government has set tough new targets for reducing crime and the fear of crime. It has also set a 2% efficiency target, year on year for the next three years, for the police to focus more resources on the front-line fight against crime. This project will examine ways to measure the efficiency of police forces and how new approaches can ensure the most efficient use of police resources.

Customer service: a key objective of the Government’s modernisation agenda is to deliver public services that meet the needs of citizens. For many critical services, Government agencies are the first point of contact for members of the public. This project will assess the quality of service provided by three such services: the DVLA, the Driving Standards Agency, and the Highways Agency. The quality of customer service will be tested through a ‘mystery shopping’ exercise.

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

Annual cost of new medical retirements now estimated at £1 billion

The Chief Secretary to the Treasury, Alan Milburn MP, announced today a wide ranging review into the level of ill health retirement in the public sector.

About 25,000 staff working in the public sector retire on ill health grounds each year with an average extra cost to pension funds in excess of £35,000. It is estimated that the annual cost of each year’s new ill health retirements is now over £1 billion.

Ill health retirements hit a peak in the mid-1990s and are much greater than in previous decade.

For example the rate of ill-health retirements among NHS male administrators in their 30s and 40s rose fourfold between 1969 and 1994, before dropping off in the late 1990s.

Ministers are particularly concerned about the wide variations in the incidence of ill health retirement between different parts of the public sector and between different employers within the public sector:

• in the five years to 1996/7 the annual average of medical retirements as a percentage of all retirements ranged from 6 per cent in the armed forces to 73 per cent in the fire service. 22 per cent of civil servants retired on ill health grounds, 25 per cent of teachers, 33 per cent of NHS employees, 39 per cent of local government staff and 49 per cent in the police service;
• the Audit Commission has found that in some local authorities over 50 per cent of retirements are on ill health grounds, but in a few authorities the rate is less than 10 per cent;
• 70 per cent of firefighters retire early for medical reasons, although in some brigades the rate is less than 50 per cent;
• the rates of ill health retirement for individual police forces vary between over 60 per cent and less than 20 per cent.

The Review, among other issues, will look at the causes of ill-health retirements, including stress, and how to manage these better.

Speaking today Alan Milburn said:

“We need to find out why these levels vary so much and ensure ill health retirements are used appropriately.

“The review will look in particular at how better pension scheme and staff management can help avoid the need for ill health retirement in the first place.

“It will help employees by ensuring that employers adopt best practice to maintain their well being and their earning capacity.

“And it will help employers by helping ensure that the services of experienced staff are retained to provide the best standards of service to the public.”

“People working in the public sector have a right to retire on ill health grounds when there are good reasons for it.”

“In those circumstances it is vital that retiring staff get the pension benefits to which they are entitled.

“But the levels of medical retirement numbers and the high costs to the taxpayer mean that a review is now necessary.”