TACKLING UK ALCOHOL FRAUD
Report by HM Customs.

THE Government takes the problem of spirits diversion fraud very seriously.  It is determined to tackle revenue losses by developing its strategic approach, through the introduction of regulatory and operational measures that will reduce fraud by half by 2008. The strategic approach, details of which were outlined in the Pre-Budget Report 2004, involves 3 distinct but mutually reinforcing elements:

Regulatory measures, including the introduction of duty stamps for spirits, to reduce opportunities for and profitability of alcohol fraud;

Enhanced, risk-based Customs operational activity to be supported by a new national intelligence unit; 

Close working with the alcohol industry to minimise the potential for fraudsters to infiltrate supply chains.

Central to the success of the strategy will be the introduction of Duty Stamps for spirits.

Duty stamps

In the 2004 Pre-Budget Report, the Government announced a number of decisions concerning the introduction of duty stamps for spirits in 2006. In particular, it was confirmed that:-

Spirits sold by Registered Mobile Operators (such as ferries and airlines) and export shops will be exempt from the requirement to bear duty stamps;

Duty stamps will not be required for spirits of less than 30% alcohol-by-volume;

Stamps could be incorporated into bottle labels.

It was also announced that more consideration would be given to a number of issues:-

Whether all liqueurs could be exempt from the requirement to bear duty stamps;

Whether to provide for additional flexibility in the format of stamps - specifically, whether to allow traditional strip stamps as well as label stamps and freestanding stamps;

Whether the benefits of duty stamps could be achieved without attaching financial liability to the stamps.

In the light of further discussion with spirits industry representatives since the PBR and the ongoing development of Customs' alcohol strategy, the Government is now able to announce final decisions on each of these issues.

Liqueurs

When announcing further consultation on this issue in the PBR, the Government said that it was attracted to the case for exempting liqueurs provided this could be achieved in a way that avoids complexity, uncertainty and revenue risk. The Government has given careful consideration to the industry's case for a class exemption for all liqueurs. It has also taken detailed legal advice on this issue and has reached the conclusion, that to exclude liqueurs by class would discriminate illegally against other classes of product for which duty stamps re required. The Government has therefore decided not to introduce a class exemption for liqueurs, since this would create unacceptable legal uncertainty in the duty stamps regime. It is important to remember that the vast majority of liqueurs, approximately 85%, will already be exempt from duty stamps as a result of the Government's decision to exclude products of less than 30% alcohol-by-volume.

Stamp format

Following further discussions with industry representatives and security printing experts, the Government has finalised plans on the formats of duty stamp that will be permitted. In particular, the Government has decided that businesses that are authorised by Customs will themselves be permitted to incorporate duty stamps in bottle labels. This means that most producers and bottlers of spirits will be able to have the work carried out by their existing label printers. This will greatly reduce complexity, lead times and therefore compliance costs across the industry. In the light of this decision and having discussed the issue with affected businesses. The Government has concluded that it is unnecessary to allow traditional strip stamps to be used. However, those businesses that do not wish to incorporate duty stamps in bottle labels will still have the alternative of freestanding stamps, which will be printed and securely distributed by Customs.

Financial liability for stamps

At the PBR, the Government said that it believed there is a case for not attaching a financial liability to duty stamps. Following further intensive work with the spirits industry, it was inclined to the view that many of the benefits of duty stamps - including the vital ability to identify illicit product - could be secured without the imposition of a penalty on legitimate traders in the event of fraudulent use of duty stamps by others in the supply chain. However, the Government said that it would work further with the industry to examine the implications of this for both fraud and compliance costs before taking a final decision.

The Government now confirms that there will be no financial liability attached to duty stamps. In reaching this decision, the Government has noted the renewed commitment on the part of the spirits industry to engage fully with Customs in the delivery of Customs' wider alcohol strategy. This is demonstrated in particular through enhanced cooperation with Customs on the basis of Memoranda of Understanding, industry's participation in the joint anti-fraud fora and the swift implementation of the other regulatory measures that are due to be introduced by Customs in 2005/06.

Duty stamps regulations

Customs will shortly make available draft Regulations on duty stamps. As well as the matters outlined above, the draft Regulations will include provisions on a range of issues, including the following:-

The design and appearance of duty stamps
Registering for and obtaining duty stamps
When and how duty stamps may be affixed to bottles
When and how stamps may be voided
Record keeping requirements
Implementation and transition

The design and appearance of duty stamps

The detailed design of the duty stamp will be determined as part of the procurement process which is due to commence shortly. Both formats of the duty stamp - the freestanding version and the label stamp - will have a consistent appearance and will contain a number of visible and hidden features. The freestanding format of the stamp
will contain a unique reference number and specify the product which will be contained in the bottle to which it will be attached. Both types of stamp are likely to take the form of a 25mm disc and include the words "For the UK market" or similar.

Registering for and obtaining duty stamps

A person will need to provide Customs with specific information before being able to register in order to obtain freestanding duty stamps or be authorised to incorporate duty stamps into bottle labels. Registration for using the label stamps will be available to
authorised warehousekeepers throughout the European Community and additionally in the UK to Registered Excise Dealers and Shippers (REDS), registered owners of warehoused goods and importers of spirits from countries outside of the European Community.

Registration for the freestanding stamps will be available to warehousekeepers throughout the European Community and additionally in the UK to REDS. Customs are also considering making registration for the freestanding stamps available to registered owners of goods in warehouse in the UK and to importers of spirits from countries outside of the European Community. Registration for both formats of the stamp will be available to warehousekeepers and owners of spirits outside the European Community who are eligible to register. There will be separate arrangements for Occasional Importers who will be able to obtain freestanding duty stamps without having to register.

There will be specific conditions which a person will need to comply with in order to be eligible to register e.g. a person will not be able to register if he is an undischarged bankrupt, has been convicted of fiscal offences or has failed to pay a civil penalty.

When and how duty stamps may be affixed to bottles Unless a specific exemption applies, all goods that fall within the duty stamping requirements will need to bear a duty stamp at the point they are removed to home use in the UK. In practice, this means that a registered person will be able to affix stamps, or arrange to have them affixed on his behalf, at any point between bottling and removal to home use.

In the case of overseas businesses, the duty stamp may be applied either before or after the goods enter the UK. In the case of REDS, duty stamps may be applied either before the goods arrive in the UK or within 7 days of their arrival at premises notified to Customs.
Similar arrangements will apply for Occasional Importers and commercial imports from outside the European Community that do not enter duty suspension on arrival in the UK.

Freestanding stamps will need to be affixed to bottles by either a self-adhesive or wet glue application so that they cannot be removed without damaging the stamp. Labels incorporating stamps will need to be affixed to bottles so that they cannot be removed without damaging the part of the label containing the stamp.

When and how stamps may be voided

Goods bearing a duty stamp will not be able to be exported under duty suspension arrangements unless the duty stamp has been voided i.e. removed in its entirety, obliterated or permanently obscured. Stamps must also be voided before drawback can be claimed. Those businesses that plan to void stamps, or export goods which have had stamps removed, will need to give Customs notice of their intention.

Record keeping requirements

There will be limited additional record keeping requirements beyond current commercial records for businesses using label stamps. However, there will be greater record keeping requirements for the freestanding stamps on account of their greater susceptibility to misuse. There will also be a requirement to notify the details of the loss or theft of either format of the stamp to Customs.

Implementation and transition

Customs aim to make freestanding duty stamps available from 1 April 2006, with the design specification for the label stamp being made available earlier to enable businesses to change the format of their labels to accommodate the stamp. The registration and relevant record keeping requirements will therefore be introduced by 1 January 2006.

To allow the large amount of unstamped stock to clear through the supply chain, the requirement for goods to bear duty stamps when removed to home use will not come into effect until 1 October 2006. However, the offences for possessing, transporting, displaying and selling or offering for sale unstamped product will not come into effect until 1 January 2007. This will give the industry a full nine months after stamps are made available to clear unstamped products through the supply chain.

SORRY STATE OF AFFAIRS

TARGETS missed, diagnoses delayed, and basic assessments not done. That is the sorry picture of stroke care revealed by the results of the Royal College of Physicians' (RCP) Sentinel Stroke Audit, according to The Stroke Association. 

Whilst the standard of care has improved nationally progress is still too slow and the Audit reveals that many local discrepancies exist. For a substantial proportion of patients fundamental elements of care are not being received. Government targets, set 4 years ago, and clinical recommendations for the treatment of stroke are not being met.

Results from the audit, the largest ever examination into care provided to stroke patients by NHS Trusts throughout England, Wales and Northern Ireland, highlight a concerning number of issues in the current treatment of stroke around the country.

Specialist stroke unit treatment is still an exception rather than the rule. Stroke units save lives, improve outcomes and enable people to leave hospital quicker, thus freeing up resources and beds that can be redirected elsewhere. Yet despite their overwhelming benefits, 54% of patients did not receive such care and 60% did not spend the majority of their stay in a stroke unit. This means the government's target for specialised stroke care has not been met, and patients are missing out on vital care.

Brain scans are vital to enable accurate diagnosis of stroke and to start essential treatment. However the reports highlight dangerous delays in this process, with 53% of suspected stroke patients waiting over 48 hours to receive a brain scan. This indicates yet another area where government directives are still waiting to be met even though the deadline for reaching them has passed. 

Aspirin is widely prescribed to prevent first or further strokes in at-risk patients. 33% of patients who were eligible for aspirin had not been started on treatment by 48 hours after their stroke, despite it being a key clinical recommendation. This is partially explained by stroke not being considered a medical emergency, resulting in delays in brain scanning that would highlight people who would most benefit from the treatment. 

Swallowing problems affect 33% of people with stroke and can increase the risk of choking and coughing, and in serious cases may lead to chest infections and pneumonia. It was of 'grave concern' in the report that 33% of patients are not having their ability to swallow assessed. 

"Standards in stroke care have vastly improved over the past twenty years thanks to the concerted efforts of health professionals on the ground and a real commitment from government." commented Jon Barrick, Chief Executive of The Stroke Association. 

"However it is extremely disappointing to see patients across the country are still waiting to get the essential care that they should receive according to government-set standards. How can the government possibly achieve their target of reducing deaths from stroke by 40% by 2010 if hospitals are not given the essential resources and support to achieve this? By getting this right, lives could be saved. 

Patients are still waiting to be promptly diagnosed and to have immediate access to specialist staff. We are all still waiting for stroke to be made the medical priority that it should be. This is scandalous when you consider that it is the third biggest killer and the biggest cause of long-term disability. It is staggering that something as basic as prompt diagnosis and treatment still needs to be highlighted and addressed. 

Someone has a stroke every five minutes in the UK. Its effects are devastating and often long-lasting. Poor funding and organisation of existing resources as well as inadequate staffing levels mean that health professionals are powerless to administer the level of care that they would like, and that patients deserve." 

BUDGET:- Small business welcomes inspectorate cull

A leading business pressure group is warmly welcoming the Government's commitment to slash the inspection burden on small businesses, simplifying of the tax regime and to encourage vocation based training. The FPB welcomed the commitment to continued economy stability but FPB Chief Executive Nick Goulding criticised the Chancellor's continued complication and burden of the tax regime saying there had been a number of missed opportunities. 

Missed opportunities

"The public sector is still monstrously big and squeezes out the private sector. Most new jobs have been created in the public sector and are devouring wealth rather than creating it. The investment that many business owners have made in private childcare facilities is being greatly undermined by this budget, which will reduce the quality and diversity of childcare. Inheritance tax remains a tax on the moderately wealthy, which reduces the ability of families to raise the hard cash to actually start a business. There is little in the budget to encourage individuals to take the giant leap and risk of establishing a business. In particular, women and other under- represented groups such as ethic minorities and those in inner cities who deserve and need more meaningful support.”

MINIMUM WAGE

"Small businesses are resolutely opposed to continued rises in the Minimum Wage, which have seen it increase by 34.7% in 5 years and become a major issue of concern to the small business sector."

JOBS AND SKILLS

"Business owners are crying out for pupils and graduates to have relevant skills to the workplace. The FPB has been campaigning hard to see more cash for employers to help work based training. The extension of the employer work place training pilot to is welcome but again FPB would demand greater investment in vocational training - delivered in the workplace. The £2000 return to work bonus for lone parents will help small businesses in recruiting mature and able staff."

MATERNITY LEAVE

"This will be greeted with a sense of utter dread by employers. Maternity leave creates massive operational and organisational headaches for small firms. Increasing paid maternity leave to a whole year is unwise and will only aggravate the problems small firms already face."

Hampton Review and Arculus recommendations 

"The reduction of inspection bodies from 35 to 9 will be wholly welcomed by small firms who have been confused by the monstrous bureaucracy of regulations. The Government is right to identify the onerous burden of continuous and unnecessary inspections on small firms. The food industry in particular should benefit from a having to deal with fewer regulatory bodies."

Gold plating

"The UK civil service has to change the way it implements EU law. The present method is fundamentally flawed. The Chancellor must deliver on this promise. As ever the devil is in the detail and small businesses will want to see less complex legislation as a matter of urgency." 

Transport 

"The FPB welcomes the delay in increasing fuel duty until December. However we would rather the duty increase was scrapped altogether for the entirety of the financial year." The Eddington review announced in the budget delays decision on the urgent need for continued investment in Britain's inadequate transport infrastructure. Small businesses desperately want to see greater investment in transport." 

TRUTH TELLING HEALS THE HURT

RESEARCH undertaken by an Edge Hill lecturer reveals that “truth telling” processes play an important role in helping communities recover from mass tragedy.

Edge Hill lecturer Dr Mark McGovern, from Aigburth who specialises in Irish history and sociology and Dr Patricia Lundy of the University of Ulster have spent the last 6 years studying how people in close knit communities deal with the loss of family and friends.

Their work as co-editors of Ardoyne: The Untold Truth, first published in 2002 was based on the testimonies and eye witness accounts of the Ardoyne area of North Belfast, where between 1969 and 1998 people in the small, working class, nationalist community were victims of political violence.

“This latest research was developed based on the 300 interviews carried out as part of the research for Ardoyne: The Untold Truth,“ said Dr McGovern. “We were keen to find out whether the people who were interview benefited from telling their stories and also whether there was an outcome on a wider political level. We’re also interested in looking at whether other communities could benefit from similar work.”

The results revealed that the truth telling process was an important factor in not only providing space for an individual’s story but also a system to record marginalised perspectives on events. Issues of healing and closure were also found to be closely related to those of justice and accountability. Another key finding was that local ownership, control and participation are crucial in the success of truth telling projects. 

“We are working on developing a model of truth telling that can be used by other communities. We have been working with human and civil rights organisations in Sri Lanka and in North America sharing our findings, particularly in challenging the culture of silence that can prevail in communities that have experienced trauma relating to taboo subjects.”

Afternoon tea at Sandy Lane Centre 

AFTERNOON tea marked the long-awaited re-opening of Sandy Lane Centre last week, after its closure for more than a year following a fire. Although the centre has been operational since November 2004, this was the official opening, which was attended by Parish and Ward Councillors. 

Former community groups have returned to use the centre and are delighted with the improvements. Community Centres Management has worked in partnership with Social Services to create a new structured Day Care service at Sandy Lane. New facilities have been installed during the refurbishment that include a small meeting room, available for hire by community groups, and automatic doors to improve accessibility and security for users together with good quality furniture to enhance the experience. A small extension has been added to the building, which has been funded by Stockton Heath Parish Council and provides modern office accommodation and a central location for the Parish. 

Cllr Mike Hannon, Executive Board Member for Community and Wellbeing, said:- "We have had an incredible amount of support from the community and Parish Council during this refurbishment. The Sandy Lane Centre is an integral part of community life in Stockton Heath and it is great to see it back in action and with improved facilities."

BUDGET 05

IN THE NORTH WEST

THE Budget takes new steps to stimulate regional growth in the North West, support improved local authority services, promote devolved decision making and strengthen regional institutions. The Government's long-term goal is for the UK to achieve sustainable and high levels of growth and employment and reduce disparities in regional economic performance.

The UK economy is forecast to grow at 3 to 3.5% in 2005 and the Government is meeting its fiscal rules for sound public finances over the economic cycle. The Government is committed to locking in this stability and making long-term decisions to invest in the UK's future, enabling all the countries and regions of the UK to meet the challenges and rise to the opportunities of the rapidly evolving global economy.

To increase regional involvement in national policies, the North West Regional Development Agency was asked to provide policy advice to feed into Budget 2005, in a number of areas: aligning regional transport, housing and economic development strategies and associated funding; business support; establishing the concept of science cities; the role of the Voluntary and Community Sector in regeneration of deprived communities; creating a culture of enterprise for all; sustainable development; and strengthening regional partnerships in adult skills provision. 

Measures to stimulate regional growth:-

* the RDAs' publication of High Growth Business Coaching, which sets out how the RDAs will develop and deliver focused coaching for new and existing businesses with high growth prospects and high-potential entrepreneurs in the pre-start-up phase in each region;

* the designation of new science cities to join Manchester, Newcastle and York;

* proposals for a new Local Enterprise Growth Initiative (LEGI) worth £150 million per year by 2008-09 to promote enterprise and economic activity in the most disadvantaged areas of England. The LEGI will follow the time-limited commercial stamp duty land tax disadvantaged areas relief which the Budget announces will end on 16 March 2005;

* measures to raise productivity through plans to reduce compliance costs for business by implementing the Hampton Review;

* measures to increase the contribution of creativity to productivity growth, including a review by George Cox of how SMEs can make better use of design.

Supporting improved local authority services: measures include new funding to enable every local authority to provide free local bus travel for people over the age of 60 and disabled people from April 2006, benefiting over 1,360,000 individuals in the region; refunding the VAT which local authorities incur in delivering services to meet a statutory obligation for adequate welfare provision; a single local services inspectorate acting as a gatekeeper and co-ordinator for all inspection activity; and the development of better procurement in accordance with the Compact Code of Good Practice on Funding and Procurement.

Further progress on the devolved decision making agenda: the Government has consulted on proposals to give the North West a stronger voice in future spending reviews, including establishing a North West regional transport funding allocation for the first time and providing guidance on long-term planning assumptions for regional transport, housing and economic development in the North West. The Government has held consultation events with stakeholders across the English regions, and received 107 written responses by the consultation deadline of 10 March, and is currently considering this feedback. The Government will set out how it intends to proceed in due course.

Strengthening regional institutions: today's measures announce the emerging proposals of the HMT/ODPM Review to improve the efficiency and effectiveness of the Government Office Network, including the Government Office of the North West.

In addition, an independent assessment for the North West Regional Development Agency (NWRDA), conducted by the National Audit Office, based on last year's Initial Performance Assessment of the London Development Agency, will be introduced during 2005/06.

Other key measures include:-

* increases in the minimum wage with 160,000 jobs in the North West covered by the increase from October 2005;

* measures to promote employment opportunity across the UK, including improvements to Incapacity Benefit rules and a review of JSA sanctions;

* an additional payment guaranteeing that council tax paying households with someone over 65 will receive £200 towards the cost of council tax, benefiting 4.7m pensioner households nationally;

* a doubling in the starting threshold for stamp duty land tax to £120,000

* a commitment to increase the child element of the Child Tax Credit at least in line with average earnings up to and including 2007-08, benefiting over 285,000 working families in the North West;

* measures to increase savings including keeping higher limits for ISAs to 2010;

* four projects in the North West have been allocated funding worth £3.5 million in the budget through the Invest to Save - Inclusive Communities fund. These include projects to recycle abandoned cars and to and to strengthen the ties between offenders and their families.

ANNEX:- RESPONDING TO THE RDAs' INPUT INTO BUDGET 2005 

This Annex outlines the input made by the RDAs for Budget 2005, and the Government's response to their recommendations.

1. ENTERPRISE IN DISADVANTAGED COMMUNITIES

RDA recommendation:- The national roll-out of successful pilot projects which have promoted the commercial benefits to businesses and the public sector of encouraging underrepresented businesses (including ethnic minority owned) as part of their supplier base.

Government response:- The Government announces today that, with the involvement of the RDAs, OGC and SBS will roll out nationwide measures to improve SMEs' ability to tender effectively for public sector contracts, including a focus on ethnic-minority owned businesses, building on the success of pilot projects in the West Midlands and Haringey. These involved 1,600 businesses, increasing the number of SMEs competing for public sector projects and increasing the overall success rates of SMEs. In the West Midlands pilot 25% of participating businesses were ethnic minority-owned.

RDA recommendation:- Better information for and cooperation between local authorities in order to improve the promotion and encouragement of potential offered for new businesses in the Enterprise Areas. This could be an area for work on piloting further Local Area Agreements.

Government response:- Since 1997 the Government has designated 1,997 Enterprise Areas in the most deprived wards in the UK, in which a number of specific policies to boost enterprise have been focused, including the Community Investment Tax Relief and the Phoenix Development Fund. The Government wants to empower local areas with the freedom and flexibility to develop local approaches to enterprise and growth in disadvantaged areas, which respond to local needs. Therefore, the Government is introducing a new Local Enterprise Growth Initiative worth £150m per year by 2008-09, to boost enterprise in the most deprived areas of England, following the end of the time-limited commercial stamp duty land tax credit disadvantaged areas relief. A consultation document is being issued today to determine the final details of the LEGI.

RDA recommendation:- Further improvement of incentives via tax relief to invest in starter businesses in Enterprise Areas and for firms to get involved in local employment and local purchasing schemes.

Government response:- Following consultation launched in the 2004 Pre-Budget Report, the Government will legislate in the Finance Bill for the introduction of the Business Premises Renovation Allowance. This will provide 100 per cent capital allowances in Enterprise Areas for the costs of renovating business properties that have been vacant for at least a year. The scheme will be brought into effect subject to state aids approval. Budget 2005 also announces £10 million over three years to provide additional New Entrepreneur scholarships and additional support for business incubators in Enterprise Areas.

Budget 2005 announces a number of measures to help small and medium sized firms become involved in procurement schemes. As well as the roll out of the West Midlands and Harringey procurement pilots, the OGC and the SBS will launch a national portal for low-value contracts in the summer, making it easier for SMEs to compete for business; and to improve the coverage and quality of information available on SMEs' participation in procurement opportunities, the SBS will publish an annual review of departments' spending, and explore how to extend this to local government. Furthermore, the SBS, OGC and others will review SME and other procurement information gathering across government to investigate opportunities for efficiencies and more robust data.

2. ADULT SKILLS

RDA recommendation:- Align business support and workforce development activity to build an integrated brokerage service that provides business with a range of services including access to training and skills development. This should build on the Employer Training Pilots, and include the RSPs having a role in increasing the vocational element of 14-19 education where regional partners agree.

Government response:- As announced in the 2004 Pre-Budget Report, the Government will rollout a national Employer Training Programme from 2006-07 to cover the whole country by 2007-08. This will build on the success of the Employer Trailing Pilots and guarantee that, where employers are prepared to offer their low-skilled employees paid time to train up to level 2 qualifications, the costs of this training will be fully subsidised. Budget 2005 announces further plans to enhance workforce skills including continued support for the Employer Training Pilots. The national programme will also include support from brokers to assess, design and source training needs for employers and employees. Brokers will work with Business Link services, managed by RDAs, to give a better integrated 'front end' of business support.

The Government also welcomes the publication of the RDAs' High Growth Business Coaching,1 which sets out how they will develop and deliver in every region focused coaching for new and existing businesses with high growth prospects and for high-potential entrepreneurs in the pre-start-up phase. Work over the next year will address the institutional arrangements to support coaching, and the Government welcomes plans for the RDAs and Learning and Skills Council (LSC) regions to develop the skills component as part of their wider arrangements to identify joint priorities and plans to deliver more demand-led skills provision in each region.

RDA recommendation:- Streamline and align planning cycles, so all Sector Skills Councils plan on the same timescales, and that RDA and LSC plans can be more closely linked.

Government response:- The Government recognises the importance of simplifying and integrating the way public sector agencies work at a regional and local level in providing adult skills training, and considers RSPs, led by the RDAs, to be the key mechanism for doing this. It is a challenging aim, as public support alone involves 3 million learners in 400 colleges and 800 other training providers, reflecting the needs of employers in 25 sectors, 9 regions and 47 local LSC areas.

On the SSC planning cycle, the Government recognises the need to better integrate their working into regional plans. In part this is because the SSCs are still in the process of establishing themselves of the 25 planned SSCs only 4 will have produced a Sector Skills Agreement by March 2005 and a further 6 by the end of 2005.

The Government welcomes the overall progress reported in the RDA Budget input to aligning regional priorities for adult skills provision, including through developing 'dual key' arrangements for planning and funding adult skills and expects all RSPs to agree skills priorities, and reflect these in adult skills provision over the 2004 Spending Review. The Government also remains committed to removing obstacles, where regional partners identify them, to further integration.

RDA recommendation:- Increase the flexibilities available to LSCs and Jobcentre Plus to allow the development of place based approaches to meet regional demand assessments and move people from benefits into sustainable work, rather than meeting short-term numerical targets.

Government response:- The LSC launched in December 2004 England's first annual statement of skills priorities. This set out what needs to be done to improve skills and boost productivity. That means that over time an increasing proportion of public funds for training at all levels will be allocated to the programmes that employers want. Although this is the first iteration of the LSC's annual Business Cycle it identifies as a priority the need to strengthen the LSC's capacity to work at regional level, particularly with Regional Development Agencies and Regional Skills Partnerships. Through this commitment the Government expects the LSC to strengthen its role in economic development so that it provides the skills needed to help all individual into jobs.

The Government welcomes the overall direction of travel and expects all RSPs to agree skills priorities, and reflect these in adult skills provision over the 2004 Spending Review.

The Government is committed to building on the success of New Deal, and to using its investment in staff, processes and information systems to enable the development of more locally-diverse labour market support. Building on New Deal: Local solutions meeting individual needs, published by DWP in June 2004, outlines proposals to give greater empowerment to local Jobcentre Plus staff, enhancing their ability to respond effectively to the needs of individuals and to challenges in their area.

3. SCIENCE AND INNOVATION

RDA recommendation:- We urge, as on previous occasions, that the Research Assessment Exercise gives added weight and higher scores to those university departments that work with industry.

Government response:- The Government recognizes the importance of working with business to encourage greater investment in R&D and innovation, and promoting closer collaboration between industry and the science base. In February 2005 the Higher Education Funding Council issued guidance to panels for the 2008 Research Assessment Exercise that included among its key criteria: ensuring that appropriate measures of excellence are developed which are sufficiently wide as to capture all types of research, including practice-based research, applied research, basic/strategic research, interdisciplinary research. Where possible users and commissioners of research will be involved in the assessment process to provide an external perspective on the range of research under consideration.

RDA recommendation:- The patenting approach needs to be simplified; the Patent Office could be more clearly tasked with strengthening IP in the regions, working with RDAs to build IP knowledge (of both registration and defence) into their business support infrastructure.

Government response:- The Government is committed to creating an effective Intellectual Property (IP) regime which encourages business and the science base to translate research into commercial benefit. Following the Lambert Review of university-business collaboration, the Government facilitated the creation of an Intellectual Property Working Group, chaired by Richard Lambert and comprising representatives from business and universities, to draw up a range of model collaborative contracts and undertake work to develop an IP protocol, designed to reduce cost and time in securing IP agreements between businesses and universities in collaborative research. Five model contracts, together with new guidance and a decision guide for users, were released on 21 February (available on www.innovation.gov.uk/lambertagreements/). These will support university-business collaboration in all of the UK's regions.

RDA recommendation:- Government could signal its support for science cities by taking into account regional development issues when making strategic research and development investment decisions (such as location of public R&D facilities); and give a clearer acknowledgement of the importance to regional economies of science and knowledge cities in national planning guidance.

Government response:- The Government welcomes the announcement today by the RDAs that three further science cities will be developed in Bristol, Birmingham and Nottingham, joining Newcastle, Manchester and York. The Government considers science cities to be a valuable model for targeting investment in science and technology in cities that have particular potential to benefit from higher growth in this area.

Developing science cities requires a range of complementary policies led by the region and local area to address the specific needs of research and development, to support university-business collaboration, and influence a wider spectrum of factors that contribute to the growth of knowledge-intensive industries, such as skills, transport, finance and infrastructure. By bringing these factors together in a concentrated space, science cities can attract a critical mass of innovative businesses and become drivers of regional growth.

The 2004 Spending Review confirmed that UK research funding from Research Councils and HE funding bodies will continue to be driven by excellence wherever that may be found. Within this framework, the Government is working to ensure that national funding streams for science and innovation better reflect regional priorities. It is currently developing an allocations procedure for the third round of the Higher Education Innovation Fund, supporting universities' collaboration with business, and will consult with stakeholders on how funding for knowledge transfer can best be aligned with regional priorities. The next round of the Science Research Infrastructure Fund, which provides capital funding of £500 million per annum to renew university infrastructure, will require universities to develop their implementation strategies in light of regional priorities, and make research facilities more accessible to businesses as well as academic users.

4. RDA COACHING FRAMEWORK

RDA recommendation:- We propose that in 2005/6 RDAs will establish a task and finish group to develop a model for the delivery of a demand led SME coaching framework in their regions. This work will feed directly into Treasury consideration for the development of the 2006 Spending Review.

Government response:- The Government welcomes the publication today of the RDAs' High Growth Business Coaching, setting out how they will develop and deliver in every region focused coaching for new and existing businesses with high growth prospects and for high-potential entrepreneurs in the pre-start-up phase. The Government supports the proposal to establish a task and finish group as above and will work with the RDAs in developing the new RDA coaching framework announced today.

5. ALIGNING REGIONAL STRATEGIES

RDA recommendation:- Better alignment of the time periods to be covered by each strategy, with a clearly stated consistent review process and timetable. However, we caution against overly prescriptive guidance on the content of strategies, it is for each region to decide on how best they are aligned.

Government response:- The Government is committed to helping regions align their strategies and welcomes the RDA input. We will produce a response to the call for alignment of timetables as part of our response in due course to the issues raised in the recent consultation on Regional Funding Allocations.

RDA recommendation:- On aligning spending within economic development, there continues to be a lack of any clear incentives for many spending bodies to get involved in a meaningful way with any attempts by RDAs and regional partners to co-ordinate investment. RDAs are keen to explore ways of working with Government to better align spending by other government agencies with RES priorities in each region.

Government response:- Building on the Regional Emphasis Documents which enabled regions and Departments to discuss spending priorities over 2005/6 to 2007/8, the Government has published proposals to give regions a stronger voice in decisions over regional transport and regional housing, as well as regional economic development. These would increase the influence of regional strategies, including the RES, on regional funding allocations for transport, housing and economic development. Following completion of the consultation, the Government is currently considering its response.

6. SUSTAINABLE DEVELOPMENT

RDA recommendation:- Support for fiscal incentives (designed to be fiscal neutral) to encourage use of sustainable material and processes including council tax rebates for homes meeting Eco-homes/BREEM excellent ratings standards and/or Stamp Duty relief for homes meeting Eco-homes/BREEM excellent ratings standards

Government response:- Budget 2005 announces a reduced rate for the installation of micro-combined heat and power (micro-CHP) and also extends the reduced rates to air source heat pumps. The Government is also committed to measures to support investment in energy efficiency in the private rented sector. The Landlord's Energy Savings Allowance (LESA) was introduced in 2004 to encourage investment in cavity wall and loft insulation, and Budget 2005 announces the extension of the LESA scheme to cover solid wall insulation.

The Government's strategy for housing places key housing, planning and regeneration policies in the context of wider requirements for sustainable communities. The Government has already taken a number of steps to improve the energy efficiency of housing, including, amending Building Regulations from 2005 onwards so that new homes must be at least 25 per cent more efficient in their use of energy and incentivising improvements in new and existing social housing.

The Government is developing, in consultation with the building industry, a voluntary Code for Sustainable Buildings, which will set new standards for resource efficiency in the build environment, focusing initially on new housing. Demonstrations of the Code will be in place by the end of 2005, followed by national rollout in 2006.

HM Treasury will host later in the year a summit to explore how Government and business can remove barriers to the development of energy services markets in the UK Energy services focus on the provision of heat, light and power rather than just units of energy.

RDA recommendation:- Leadership from the public sector nationally in procurement policies and its own use of resources.

Government response:- On 7 March the Government launched its revised Sustainable Development Strategy. As part of the strategy a business led task force chaired by Sir Neville Sims will develop a new action plan for sustainable procurement.