Introduction

Budget Statements are increasingly used to bring together policy announcements that involve public or stakeholder consultation. In this years Budget around** 26 consultations were announced.

To assist Institute members and others ensure that they are aware of consultations that may affect them, this Paper highlights references from the 2009 Budget Statement.

** we say ‘around’ as it is not clear yet if may overlap.

This paper was prepared by Martin Woodrow

On the following pages we show the context in which consultations were mentioned in the Budget Statement, chapter by chapter.

To assist users we have used colour-coding as follows:-

Consultation  Future consultation
Consultation Previous consultation
Consultation  In progress

To access the full text of the Budget Statement  click here

Economic and Fiscal Strategy Report

Chapter 1 Overview

No references

Chapter 2 Maintaining macroeconomic stability

No references

Chapter 3 Financial stability

p.57
The Walker Review of corporate governance – the Government announced in February 2009 that Sir David Walker would conduct an independent review to cover the effectiveness of risk management at board level (including the incentives in remuneration policy to manage risk responsibly and the balance of skills, experience and independence required on the boards of UK banking institutions); the effectiveness of board practices and the performance of audit, risk, remuneration and nomination committees; the role of institutional shareholders in engaging effectively with companies and monitoring  boards; and whether the UK approach is consistent with international practice and how national and international best practice can be promulgated. A consultation document will be published in summer 2009 with conclusions in autumn 2009.

 

p.63
the Government will also outline a programme of consultations to implement other parts of the Banking Act.

Chapter 4 Supporting business p.73 (Box 3.10)

extensive consultation on options for reform of stamp duty reserve tax (SDRT) Schedule 19.

p.75

To further support trade and short-term cashflow, the Export Credits Guarantee Department (ECGD) will consult shortly on a new facility to provide Government support for short-term trade finance through sharing risks with banks in confirming letters of credit

The Government will work to ensure that the regulations and procedures for dealing with troubled companies work to facilitate company rescues whenever they are appropriate, that the maximum economic value is rescued from companies that get into difficulties, and that the knock-on effects of company insolvencies on their creditors are minimised. Budget 2009 announces that the Insolvency Service will consult on:

• • providing for new funding lent to companies in Company Voluntary Arrangement (CVA) or administration to have absolute priority status, to allow firms in difficulties to access the funding they need to get back on track;

and

• • extending the moratorium on creditor action against small companies trying to agree a Company Voluntary Arrangement to medium and large companies, so giving them breathing space to try to reach agreement with creditors.

p.77

Following the consultation launched at the 2008 Pre-Budget Report, the Government announces a package of measures to encourage the economic recovery of the UK’s oil and gas reserves. This package will include the introduction of incentives to encourage investment in small and technically challenging fields, which could assist in unlocking around 2 billion barrels of the UK’s remaining oil and gas reserves. The package also includes measures to assist asset trades and give companies the certainty and stability they need to underpin investment.

p.78 (Box 4.5)

The Government welcomes the Review’s findings on competition and innovation and will now take them forward in England. The Government will consult with stakeholders on the implementation of:

• the legal separation of large companies’ retail operations to drive competition and deliver efficiencies in the supply of water to business users, following further work by Ofwat to establish whether it would be appropriate to introduce a threshold below which the Government would not mandate small companies to separate and, if so, the level at which this should be set;

• a package of further reforms to the upstream water supply licensing regime which includes the creation of new licenses and replacing the cost principle for supplies to incumbents, retailers, or large customers with a criteria to be determined by Ofwat outside legislation; and

• reforming the mergers regime for water and the inset regime that allow suppliers to  replace another under limited circumstances.

The Government agrees with the Review’s (Cave Review: Competition and Innovation in Water Markets, DEFRA, April 2009.) conclusions that the current case for extending competition to households is not convincing. Extending retail competition will remain a decision for the UK and Welsh Assembly Governments, on the basis of advice from Ofwat and industry stakeholders.

The Department for Environment, Food and Rural Affairs will, before the summer recess, issue a consultation on the retail competition package in its entirety so that its outcome can be included in the final Floods and Water Management Bill, and will also set out in detail how the Government intends to take forward the rest of the Review’s recommendations.

p.79

Maintaining a regulatory system that allows companies access to appropriate finance at affordable prices is a key priority for the Government. As part of a gradual approach to furthering competition in water markets, the Government will look to take forward measures following consultation with companies, investors, and other stakeholders.

p.83

The 2008 Pre-Budget Report signalled the Government’s intention to continue to examine longer-term options to reform the UK’s CFC rules. The reform aims to enhance UK competitiveness by seeking to improve the way the CFC rules achieve their objective of taxing profits diverted from the UK. Initial evidence gathering is under way and a liaison committee has been established to strengthen business involvement and complement wider consultation with stakeholders.

p.84

4.53 The Government announces further progress on tax simplification anti-avoidance legislation: the Government will consult this summer on proposed improvements to transactions in securities legislation and publish a discussion document on the greater alignment of purpose tests in tax law.

… corporation tax rules for related companies: the Government will simplify the corporate gains rules for notional transfers within a group of companies and will publish a discussion document on further simplification of group aspects of corporate gains by the summer. The Government will also consult this summer on further simplification of the associated company rules.

p.85

In addition, the Government announces four legislative changes to the Enterprise Investment Scheme (EIS), as a result of consultation last year, that will simplify and improve the operation of the scheme. One of the changes, relaxing the timing rules for employing money raised from an EIS share issue, will also be applied to the Venture Capital Trust and Corporate Venturing Schemes.

Chapter 5 Helping people fairly p.92 (Box 5.2)

In Ending Child Poverty: Making it Happen,1 published in January, the Government set out its proposals to legislate on the commitment to eradicate child poverty to ensure that it remains a national priority and that all parts of society are enabled to play their role in tackling child poverty. The Government will publish a summary of the consultation responses alongside the introduction of a Bill which will be published shortly. The Bill will:

• create a clear definition of success in primary legislation. Legislation will set • child poverty targets using relative low income; persistent poverty; and material deprivation combined with low income indicators. In addition, reflecting the views of many respondents, legislation will reflect the need to make progress on absolute low income;

• create a clear and transparent accountability framework. Legislation will require the Government to publish a child poverty strategy, to be refreshed every three years, evaluating progress towards the 2020 vision and setting milestones for future action across a wide range of policy areas. In recognition of stakeholders’ views, legislation will also require the Government to have regard to advice published by an expert commission ahead of each three-year strategy; and

• improve partnership working and collaboration to tackle child poverty at a local level. Legislation will require local authorities and delivery partners to work together to tackle child poverty and to set out the contribution that they will make in their local areas.

 

p.97

The joint Department for Work and Pensions and HM Treasury internal review of Housing Benefit was announced at Budget 2008, to examine its effectiveness in promoting work incentives, efficiency and fairness, and providing value for money. Indications from this internal work are that some claimants may be able to afford accommodation that is out of reach of working families on low incomes. Furthermore, costs of Housing Benefit have been rising above inflation despite static caseloads. Taking steps to address these challenges while ensuring that claimants continue to have access to suitable accommodation will be difficult.

The Government therefore intends to launch a consultation shortly on the measures it can take to improve the incentives for those returning to work and reduce total spending on Housing Benefit in the medium term, while maintaining access to suitable housing for those who cannot work.

p.101

Demographic trends will result in a substantial increase in the number of people in need of care and support. Delivering a care and support system that meets the aspirations of everyone who needs care, while coping with increased demand for support, requires more than incremental increases in social care funding – it requires a radical rethink of the way the state helps people with care needs. Following extensive public engagement, the Government will in June consult in a Green Paper on a range of options to reform the existing social care system and other forms of support, to create a new offer for people who need care and support.

p.106

To support the long-term growth of a thriving third sector, the Government will consult on the design and functions of a Social Investment Wholesale Bank the Office of the Third Sector will report back with substantive proposals.

The Government has considered its response to the consultation on the anti-avoidance rules around substantial donors to charity. Budget announces further informal consultation with the sector to develop new rules based around an effective anti-avoidance purpose test. The Government aims to bring forward proposals at the 2009 Pre-Budget Report, with a view to legislating in 2010.

 

The Government recognises the importance of Common Investment Funds and Common Deposit Funds to the charitable sector. The Government will consult shortly in conjunction with the Charity Commission on ways to bring these funds more fully under the FSA’s regulation whilst preserving their existing tax reliefs.

p.107

The Government will consult business, pension fund trustees, the insurance and pensions industries, and other stakeholders to ensure that defined benefit pension schemes are treated fairly in relation to defined contribution pension schemes and personal pensions.

It will want to arrive at the most appropriate method of valuing pension benefits of those with over £150,000 in defined benefit pension schemes and of valuing the related employer contributions. The Government will use this consultation to engage with stakeholders to introduce the new system in a way that minimises administrative burdens.

p.109

HMRC will shortly issue a draft code of practice on taxation for the banking sector, along with a consultation document.…

Following consultation, the Government will introduce principles-based legislation in the Finance Bill relating to disguised interest and transfers of income streams.

p.110

Consultation continues on a new Charter that will provide a clear statement of the principles governing HMRC’s relationship with citizens and businesses. The Government 2009 announces that HMRC will launch the Charter by autumn 2009.

The Government announces a first round of consultation looking at how HMRC can build on its relationship with tax agents and professional bodies.

p.111

Amusement Machine Licence Duty (AMLD) will increase on 22 April 2009. On 1 June 2009 AMLD categories will be recalibrated to reflect regulatory changes.
The Government will also consult on moving the taxation of gaming machines onto a gross profits tax basis.
The Government remains committed to addressing false self-employment in the construction industry. The Government will consult with a view to future legislation to ensure that construction workers and those they work for are taxed appropriately.

Budget 2009 announces changes to the offshore funds tax regime from 1 December 2009 by:

• • removing tax barriers impacting the development of offshore funds and legislating for a new definition of an offshore fund, following extensive

consultation; and

• • changing the tax treatment of investors in some contract-based offshore funds. The treatment for capital gains tax will be aligned with that of overseas unit trusts to reduce administrative burdens for UK investors. The Government will also discuss with industry how to make similar changes to the tax treatment of chargeable gains for investors subject to corporation tax.

Chapter 6 Improving public services

p.121

The Government remains committed to delivering educational transformation through the Building Schools for the Future (BSF) programme, where PFI is expected to contribute around one third of the total investment over the course of the 2007 CSR period.

Following the consultation last year on the future delivery of BSF, the Government has decided to move from the “wave” based model used to date, so that local authorities who are currently discussing new BSF projects with Partnerships for Schools can join the programme on a rolling basis, in line with available resources and only if Partnership for Schools assesses that they are ready.

p.122

Budget 2009 announces a number of spending measures that will create the conditions for future growth including:

…

In addition, and subject to consultation, Budget 2009 announces a £525 million uplift in investment support over the period 2011 to 2014, through the Renewables Obligation, for offshore wind projects reaching financial close in the next two years.

p.124

The local incentives and empowerment workstrand, led by Sir Michael Bichard, Executive Director of the Institute for Government, has examined how to provide the incentives for greater collaboration and innovation on the front line, with systematic front- line engagement alongside a reduction in burdens to create the space for progress. As a first step, the Government will launch the ‘Total Place’ initiative, looking at public spending and local leadership in 13 local areas to identify how collaboration and prioritisation can lead to greater efficiency and value for money. The areas taking part in ‘Total Place’ are: Birmingham; Bradford (with appropriate links to the city-region pilot); Coventry; Croydon; Dorset, Poole and Bournemouth; Durham; Leicester and Leicestershire; Lewisham; Luton and Central Bedfordshire; Kent; Manchester city-region; South Tyneside, Gateshead and Sunderland; and Worcestershire. The Government will report on the interim findings of this work in the 2009 Pre-Budget Report.

Chapter 7 Building a low-carbon recovery

p.137

The UK is on track to meet its carbon budgets, with emissions expected to fall by around one-third by 2020 since 1990 (Chart 7.1). While there is some uncertainty in predicting the exact path of future emissions, the latest Government modelling shows that UK emissions should be lower than required for the first and second budget periods, and well within the range of uncertainty for the third budget period. In the summer, as required by the Climate Change Act, the Government will publish an energy and climate change strategy, setting out the policies that will deliver these budgets, and continuing progress towards 2050 goals. The strategy will strengthen the long-term policy framework, taking account of recent consultations on heat and energy saving, renewable energy and zero-carbon homes.

p.139

As part of these policies, the Government is implementing a major £6.9 billion Home Energy Saving Programme to retrofit the existing housing stock, including the £1 billion package of new measures announced last September. As a result of this package, and the work of energy suppliers, the insulation industry and householders themselves, more than one million houses are estimated to have been insulated over the past year, saving each household up to £250 a year on their energy bills. The Government is now consulting on how to further increase energy efficiency through a new heat and energy saving strategy, with the aim of retrofitting the entire housing stock by 2030 and reducing emissions from existing buildings to approaching zero by 2050. (Heat and Energy Saving Strategy Consultation, HM Government, February 2009.)

p.141

The Government also supports strong regulation in this area. Ofgem has concluded that existing powers are insufficient to prevent abuse of market power, and is now consulting on options to deal with this issue. In addition, Ofgem is consulting on licence changes to prevent unfair price discrimination and to help consumers engage more effectively in the market.

The Government stands ready to consult on legislation to tackle unfair pricing differentials between different methods of payment for energy if there is not a speedy and satisfactory resolution of these issues.

p.148

At the same time, the Government is taking steps to ensure that the legislation and administrative arrangements underpinning landfill tax remain robust. The Government is legislating in Finance Bill 2009 to protect revenue following the Waste Recycling Group judgment last summer. This legislation, from 1 September 2009, will ensure that certain specified uses of material on a landfill site will be subject to tax and will remove redundant provisions. Today the Government is also launching a consultation on reforms to modernise landfill tax legislation in the longer term.

In addition, the Government is assessing the case for introducing further restrictions on the landfilling of biodegradable wastes and recyclable materials. Targeted restrictions on landfill could be a cost-effective means of achieving carbon and energy savings from waste. Defra and devolved administrations have commissioned further research on the options for such restrictions in the UK, including the costs, benefits and practical implications. The Government aims to consult on these options by the end of this year.

Financial Statement and Budget Report

Chapter A Budget policy decisions p.160

Following consultation, the Government will legislate a number of minor changes to the tax rules for non-domiciled UK residents to reduce their administrative complexity. The changes will include some anti-avoidance provisions. This will not change the underlying reforms made in Finance Act 2008.

p.163

Following consultation, measures dealing with additions to the long-term insurance fund and value shifting attributable to the transfer of business will be introduced with effect from 22 April 2009. Clarification of the rules applying to financing-arrangement-funded transfers to shareholders will apply retrospectively from 1 January 2008; and will also apply to foreign business assets for accounting periods beginning on or after 1 January 2009 and ending on or after 22 April 2009

p.170

A.150 Principles based legislation will be introduced with effect from 22 April 2009 to counter financial products avoidance, involving disguised interest and sales of income streams, following extensive consultation.

Chapter B The economy

No references

Chapter C The public finances

p.245

Auctions will remain the Government’s primary method by which to issue gilts. However, following a consultation by the Debt Management Office (DMO) the Government has decided to use supplementary methods to issue gilts in 2009-10. In particular, the Government has decided to use syndication, and to extend the use of mini tenders, which were first introduced in October 2008, to issue gilts. Further details on this decision and the amount of gilts to be issued by way of syndication and mini tender can be found in the Debt and reserves management report 2009-10.

This is the 16^th Briefing Paper; a full list of subjects covered is available for Institute members and is a valuable resource covering so many aspects of consultation and engagement