Budget Responsibility Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 9th September 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, in introducing this Bill the Minister said that

“economic stability is … the rock on which all else must be built”.

I respectfully suggest that that is a reflection of what has been described as “Treasury brain”, a subject that the noble Lord, Lord Macpherson, and I have previously had some discussions on. I would posit that the rocks on which our society depends are the health, energy, talents and skills of its people; the state of its environment; and the capacity of its infrastructure and services, from the quality of the housing to the facilities of our NHS. I pick up here the points made by the noble Lord, Lord Eatwell, and the noble Baroness, Lady Wheatcroft.

There is also the question: what is the economy for? The economy is there to meet the needs of the people and to care for our environment. We are not all here to work for the economy; I fear that is all too often forgotten. Also too often forgotten is the fact that the economy is a complete subset of our physical and natural world, and the understanding that we cannot have infinite growth on a finite planet. The UK is now using its share of the resources of more than three planets. We have to go back to one-planet living fast and that is the frame in which we always have to think about the economy.

Mainstream economic thinking has a phrase that it is very attached to: “ceteris paribus”. That is the Latin for “all other things being unchanged or constant”. I welcome the fact that the Office for Budget Responsibility has been showing increasing awareness of the fact that things are not staying the same in terms of the environment, physical and human, that the economy is operating in. I note that, since 2017 it has been producing the Fiscal Risks and Sustainability report, the last of which was presented to Parliament in July 2023. That report now lists 57 risks, some of which may be described as purely economic, but many of which relate to the state of the physical and human world. The OBR is picking up on some of the risks we are facing.

I particularly draw to the attention of noble Lords in this House who like to question spending towards the country reaching net zero, that the OBR says that there is the risk of a

“delayed transition to net zero raising … fiscal cost”.

I also note that four risks have been added to this latest report:

“persistent and high inflation, rising global trade tensions, global security threats, and cyber-attacks”.

At least the first three of those are very much related to the climate emergency. We are seeing the impact that the climate emergency is having, for example, on food prices—which, I am afraid, is only going to keep getting worse. “Ceteris paribus” certainly does not apply to the state of our world; the old economic verities will not hold, if, indeed, they ever did.

It is also worth noting that the OBR report talks about one of the unchanged continuing risks being

“the risks of financial crises and … non-payment of taxes”.

I note that, in your Lordships’ House, with backing from the now-Government and now-Opposition, we recently passed the Financial Services and Markets Act. That contains a push to grow the financial sector, which the OBR has identified as a significant risk to all of our futures.

Picking up the point on climate spending, the OBR said that if we do not act and invest now, the

“public investments needed to support the decarbonisation of power, buildings, and industry could reach £17 billion a year”

by 2030. As our own independent Climate Change Committee has been making clear, if we invest now, we save ourselves—or if you want to phrase it that way we save “the economy” —very significant costs and risks in future.

Finally, I particularly note the OBR’s reference to the number of people of working age not being in paid employment. The figure in the 2023 report is 2.6 million people of working age not in the labour force for health reasons. That figure reached 2.83 million in April. If we are going to look at our economic future, we have to think about investing in a healthier society. The OBR says that, although there is much talk about people being on NHS waiting lists, it is only a small part of the problem. We have a deeply unhealthy society, and that is something the Treasury and Government need to be thinking about when looking at their spending plans.

Crown Estate Bill [HL]

Baroness Bennett of Manor Castle Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise, as I hope increasingly often to rise, to offer some kudos to the Government. We are seeing reflected in this Bill an increased ambition for offshore wind, and we are also seeing ambition for other renewables. That has to be applauded. Renewables are our energy future, together with energy conservation, on which I am afraid we have as yet seen sadly little ambition from the new Ministers. That does not mean that the Green group will not call out government actions when they need to be called out, so I have to note that while we are hearing about this admirable pursuit of renewables and the decarbonisation of our electricity supply, the Government have just given the go-ahead for the expansion of City Airport, which puts the interests of a small wealthy elite over the well-being of local people and the climate. It is a facility that operates planes flying on routes where rail is a very feasible alternative.

I also note that we are holding this debate in a setting where Ofgem has just raised the price cap for energy by 9.5%, just before the onset of winter, which is deeply worrying for people still strongly affected by the continuing cost of living crisis. The Government have said that establishing GB Energy will reduce bills in the future, but that aim will be achieved only if the Government invest in improving the energy efficiency of homes as well.

As a number of noble Lords have already said, this Bill is very closely linked to the creation of GB Energy, so it is unfortunate that we are not able to consider these two issues together. Your Lordships’ House will perhaps particularly understand the desire not to have Christmas tree Bills as we saw so often under the last Government, but we also need a joined-up legislative procedure.

As Greens, we would say that we need to see far more community-owned assets and schemes that genuinely benefit local people, rather than—often large, multinational—private companies seeking to use public funds, channelled through Great British Energy, to continue profiteering while the planet burns, and people’s bills remain too high. The very structure of the Crown Estate, which many noble Lords have already reflected on, is one of extreme centralisation and, as I will come back to later, extreme lack of transparency about its activities. It seems better aligned to work with giant multinational companies rather than a small, local community energy group, which might, want to develop run-of-stream local tidal energy schemes, for example.

I will reflect briefly on another couple of points that have also already been raised. For new offshore wind projects to be delivered, we need significant investment in grid capacity, yet that needs to be done with sensitivity to local environments and communities. Again, if that grid capacity is an issue for the Crown Estate, it seems ill-equipped to make good consultation and liaison with local communities.

I also want to raise an issue that no one has yet raised and which the Minister in his introduction did not raise either. We have seen in other references from the Government the suggestion that this Bill might allow for carbon capture and storage schemes offshore. I have to reflect, as I reflected to the previous Government, that this is an unproven, struggling technology. The claim that these will appear and work in the future must not be allowed to excuse the continued burning of fossil fuels.

I want, in particular, to bounce off the comments of the noble Baroness, Lady Hayman, who is not currently in her place—while joining in a number of declarations for my membership of Peers for the Planet—that we need to see in this Bill a much stronger focus and push towards nature recovery, alongside the ability to invest in related technology, infrastructure and research, as part of the Crown Estate’s role. It is worth noting that the Scottish Crown Estate Act 2019 led the way on this with a duty to manage its assets to improve environmental well-being.

When we think about wildlife, the parlous state of our land is often the focus, but nature in and on the seas is struggling just as badly, if not even more so. I note that the RSPB last week, for example, highlighted a major decline of herring and other gulls. As elsewhere, nature is in a terrible state. I want to focus, as I do not think anyone yet has, on the issue of sea-grass, which is a potential major carbon store as well as being hugely significant for the life cycle of many marine species. The majority of UK sea-grass beds, an estimated 92%, have been lost or damaged in the past century. Worldwide, 35% have been lost in just the last 40 years.

The noble Lord, Lord Teverson, raised a point about the seaweed farms in Cornwall. Industrial monoculture is just as bad in the seas and on our shorelines as it is on our land. The Crown Estate in Scotland, in particular, has been the site of significant fish farming. This is factory farming which has major environmental impacts. It involves taking protein to be fed to carnivores, to produce a tiny fraction of that protein. There are problems with the spread of disease and antimicrobial resistance. How are we going to ensure that the Crown Estate, under this Bill, considers all these issues?

Looking specifically at Cornwall, the noble Lord, Lord Teverson, raised the issue of bottom trawling, which is a huge environmental issue. Just in July this year, the BBC reported that large new—that is newly known to us—beds of maerl, calcified seaweed, have been discovered off the Roseland Peninsula and St Austell Bay. Natural England said these were irreplaceable habitats within sight of the shore. A spokesperson also reflected that it is incredible that we still have such “completely undiscovered” sites. We have to ask what kind of job the Crown Estate is doing to safeguard its assets if we have only just discovered that that is there. We come back to the question in this Bill of investing in research. Perhaps we need to make sure there is investment in research so that we know what is there before we wreck it. That is surely an essential point.

I would appreciate a response from the Minister on another point: how will this Bill, or how will the Government, by guidance or other action to the Crown Estate, ensure that these new activities happening offshore are part of a just transition, assisting offshore workers in particular to move from high-emission sectors to those that contribute to tackling the climate emergency?

The next issue I want to raise has been extensively canvassed, so I will be very brief. I have noted that the loudest “Hear, hears” around your Lordships’ House have been on the issue of the devolution of the Crown Estate for Wales, so that Welsh people are given control over their own resources to be used for local benefit. Those arguments were powerfully made by the noble Lord, Lord Wigley, and the noble Baroness, Lady Smith of Llanfaes, among others. This issue featured in the Green Party of Wales manifesto in the recent election and is an issue that I am pleased to say we will be supporting as strongly as possible. However, I note that, if that were to happen, as would appear to be the view of your Lordships’ House, it would only highlight the lack of democratic oversight that would remain in England.

As the noble Baroness, Lady Young of Old Scone, said, the Crown Estate is a big thing, with enormous amounts of resources under the control of a sort of public, but mostly private, corporation—the control of a handful of individuals appointed by the Crown. Like many others, I can applaud the small steps towards modernisation of an institution that dates back most immediately to the 1961 Act but originally to 1760. Like so many of our constitutional and legal arrangements, this would appear to be the result of historical accidents over centuries—except that, of course, one has to ask: are these accidents? I pick up here the points made by the noble Lord, Lord Berkeley. Somehow, these “accidents” often seem to put in the hands of the few the power to control what should be public resources, while the profits from public resources go to the few rather than to the many.

I finish, and round up those points about democracy and lack thereof, by raising, as did the noble Baroness, Lady Young of Old Scone, and the noble Lord, Lord Young of Cookham, issues—we are on land now—for tenants and leaseholders of the Crown Estate. A report in openDemocracy in July notes that the Crown Estate has earned more than £344,000 in housing benefit since the pandemic. It seems circular, given that the Crown Estate is, as some have said, an arm of the Treasury; it is paying housing benefit essentially to itself.

Over the same period, the Crown Estate delivered eviction notices and warnings to at least 31 tenants. I note that among the properties of the Crown Estate is a three-bedroom flat near Buckingham Palace, which was recently advertised for rent for £19,067 per month. I am not quite sure where the public benefit is here, but we are where we are. Reports in 2019 said that the Crown Estate had received more than 100 complaints about its residential properties in just two years, including grievances about rent hikes, leaks and faulty electrical goods. Here I come to one of my main points. When approached by openDemocracy, a spokesperson for the Crown Estate declined to comment. How much is this a public asset and working for public good?

We need the Crown Estate to be sensitive to the concerns and interests of local communities, across England as well as in Wales. What plans do the Government have, through this Bill or otherwise, to ensure that the Crown Estate—with this lack of accountability, and environmental and social responsibility, and with structures from the 18th century or, as the noble Lord, Lord Berkeley, said, sometimes going back further into the medieval period—can be made fit for the 21st century?

Bank of England (Economic Affairs Committee Report)

Baroness Bennett of Manor Castle Excerpts

Thursday 2nd May 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the noble Lord, Lord Bridges of Headley, for introducing this debate and thank the Economic Affairs Committee for its report, some of which I agree with and some of which I strongly disagree with.

There are two themes in my remarks, addressing two key elements of the committee’s report: the lack of intellectual diversity in the Bank and its climate remit. I must begin by noting the lack of diversity in the discussions in your Lordships’ House today. I would love to see more noble Lords who focus on poverty, workers’ rights, the environment and the place of small and medium-sized enterprises and regional economies in debates such as this. There has been a high degree of groupthink in our debate today—that is true across our politics, of course, and there is a lack of democracy across all our structures. I acknowledge that I am addressing these remarks to noble Lords who are not in this Chamber rather than those who are here and speaking today.

I want to address the committee directly, because I took a careful look at the list of those who gave testimony to it. One name stuck out—Positive Money—on whose works my remarks today draw, but other than that, I find it curious that no name that leapt out at me was a climate expert or a climate finance expert. I found no reference to the committee consulting with our own Environment and Climate Change Committee. I respectfully put to the committee that in future, if it is going to comment on climate issues and make them a central part of its report, it might want to focus on more diverse testimony.

That is in the intellectual context in which debate on the Bank of England is highly siloed. If we look at much of the commentary around the actions of the Bank in 2021 and 2022, the criticism that we have heard very often today is that, as inflation reached its peak, the Bank was too slow to act. However, interest rate rises cannot address the main driver of the inflation that we have seen—that is, the dependence of our economy on fossil fuels that are priced in a highly volatile way. Much of the criticism and some of what we have heard today has been based on the flawed theory that inflation has been due to a wage-price spiral.

It is too often ignored that rate hikes have highly unequal impacts. They attempt to bring down inflation by reducing spending. The poorest and most indebted are the most affected, while the incomes of those with savings and the profits of the banking sector are increased. Crucially, in the climate context, the rate rises have added to the downside of the investments that we desperately need, because many green projects require a large amount of upfront investment, despite the fact that we will all profit from the cheaper prices of the energy generation of the reductions in bills from insulation, et cetera. Also, we live in a society of crumbling infrastructure—housing, roads and many other issues.

The commentary of the Lords committee, with which I respectfully disagree, suggests that giving the Monetary Policy Committee and the relevant policy committee a remit on climate change risks drawing the Bank into the Government’s wider policy agenda and jeopardises the Bank’s ability to prioritise price and financial stability. It is worth going into the history of this. It is a demonstration that campaigning works that, in 2021, the Government’s target of reaching net zero was included in the Government’s letters to all key policy-making committees for the first time. It was a step signalling the Government’s support for ambitious action to steer the financial flows away from harmful sources such as fossil fuels and towards green and sustainable industries.

Critics will say, and I would entirely agree, that central bank policies alone are no silver bullet for environmental crises, but central banks have a central role. Think of those core priorities—those objectives of price and financial stability. There is no stability on a dying planet. The economy is a complete subset of the environment, 100% dependent on it, rather than on complex equations unattached to the real world or assumptions that all resources are either infinite or replaceable. No, they are not. The practical reality is that the UK financial sector continues to pour money into new fossil fuels despite the reality of the carbon bubble and the huge financial risk that represents, while relying on climate risk models that fundamentally do not accurately translate into the complexity of the financial risk. That is looking only at climate. I would also point to the fact that the Bank needs to look more widely at all the other planetary boundaries that we have exceeded. We are seeing a great deal of focus at the moment on novel entities—pesticides, pharmaceuticals and plastics—and there are huge financial risks in that area as well.

To put this in a broader frame, the UK financial and economic system remains highly vulnerable to “fossilflation” while at the same time the impacts of climate change, such as on our food supply, are already causing “climateflation”. I coin another word, “shockflation”. We are in an age of shocks—the geopolitics are very obviously extremely unstable—and all these things must be considered in the round rather than simply looking at the economy as a set of equations sitting outside this.

We also have too much finance, too much money going into the financial sector rather than the real economy, just as most of the money from quantitative easing went into raising inequality, making the few richer and the rest of us poorer—much as it was needed, at least at the start, to tackle the chaos created by the greed and fraud of the bankers. The Bank, the Treasury and the Government are far too dependent on failed, outdated models and mathematical equations which bear no resemblance to the real world.

I move to the present day and the open letter, dated 16 March, referring to the remarks made by the Governor of the Bank of England to the Lords Economic Affairs Committee, that the Bank has reduced its resourcing for climate emergency work, to which the noble Baroness, Lady Lane-Fox, referred. The timing of these remarks—this action—could not be worse in a world that is on fire, awash and melting. I have a direct question for the Minister and, indeed, the Labour Front Bench. Will they support the calls by so many eminent economists in a letter—I declare that the Green Party’s spokesperson, Molly Scott Cato, was among the signatories—to reprioritise work in the Bank to align the financial sector with the Government’s climate goals, reversing the resource cuts and to reassert the Bank of England as a climate leader, as a matter of urgency?

I shall briefly address the issue of the Bank’s intellectual diversity. It is not independent of failed ideology and a discipline that has simply run out of road. During the 2016 Brexit referendum campaign, I suggested to my now-House colleague, the noble Lord, Lord Cameron, that the remain campaign should stop saying “economists say”, because no believes them, and that is even more the case now. Neo-classical economics is the absolute opposite of systemic thinking; we need systematic, scientific, sociologically and politically literate thinking in the Bank and Treasury and across government. We are in the age of post-growth; not only can we not have infinite growth on a finite planet but we will not have growth in at least the coming decade. To quote the IMF chief, the “tepid twenties” are with us.

On diversity, they will not thank me for this, but I will suggest some names that the Bank of England should start drawing on: Jason Hickel; Kate Raworth; Julia Steinberger; Ann Pettifor; Tim Jackson and Judith Kirton-Darling. All of them spoke at the post-growth conference in the European Parliament last year that was backed by all but the far right group there. I shall hazard a prediction that there were several future economics laureates speaking there, with original thinking that is lacking in what is regarded as the economic mainstream.

I will quickly raise one final issue with the Minister. The New Economics Foundation states:

“The government could save £55bn over the next five years if it limits the amount of money the Bank of England pays interest on to commercial banks … The Treasury will pay out over £150bn to the Bank of England to fund its payments to the banking sector by 2028, this on top of the £30bn already paid out in 2023”.


Surely, this is something that other countries are not doing and that we did not do in the past, which we can reverse?

Spring Budget 2024

Baroness Bennett of Manor Castle Excerpts

Monday 18th March 2024 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, in introducing this debate and Bill, the Minister spoke—several times, I think—of a long-term plan. In the current political climate, that might be taken as a definition of optimism. Yet perhaps the Minister is right that what we are talking about is a long-term plan, because what we have heard and expect to hear from the Labour Benches is that they are broadly planning to follow the Tory economic plan. They will allow the rich to keep getting richer and to keep their ill-gotten gains, as my noble friend Lady Jones of Moulsecoomb so clearly and passionately set out. There are things that the Labour Party has said it will follow the Government on. It has pledged that it will not introduce a wealth tax if it forms the next Government, so it will not see the broadest shoulders bearing their fair share of the weight of repairing so many things that need to be repaired, as many noble Lords have said.

The Labour Party has said that it is not going to address the issues raised by the noble Lord, Lord Macpherson of Earl’s Court, about the inequality of taxation between wages and unearned income, something that has simply got worse and worse over the years to the benefit of the rentier class. Labour has also said it that does not plan to think about redistribution; instead, just like the Government, it is focused on growth. It does not acknowledge that borrowing to invest is sound economics. I find this, frankly, astonishing; the most recent Labour comments state that it intends to pay for its plans—for the NHS and school breakfasts —through savings to public spending. This is despite the state of our public services and our public infrastructure, as so many speakers reflected on. The noble Lord, Lord Lee, brought up potholes, which is in the traditional range of the Lib Dems, so I am going to refer to our public services being like ships holed below the waterline.

I have recently been reflecting a great deal on the NHS. Its treatment over recent decades is one of the great political failures in the UK. We have also seen, since Margaret Thatcher, an enormous failure from British politics to remember what the economy is for. It is there to serve people, to deliver a decent, healthy and economically and environmentally sustainable society. At the weekend, we had reports from head teachers from schools in the north-west about families that cannot afford a bed for their children to sleep in—that cannot afford cleaning products for the bathroom. We are talking big macroeconomic stuff, we are talking economic theory, we are talking figures—but we are doing that in a society where children do not have a bed to sleep in.

The noble Lord, Lord Lee, was just talking about the problems in our financial sector. The Labour Party has pledged to unashamedly champion the UK financial services sector, despite the fact that it is obvious we have too much finance—an unbalanced economy—and, of course, we are the global fraud capital. More finance means more fraud. That is a simple fact.

I am afraid even when it comes to the climate emergency, I find now, as opposed to a couple of years ago, considerable similarities between the plans of the Labour Party and those of the Government. The Labour Party had a green investment plan—£28 billion per year; you might remember it. It is not there any more. Yet a recent London School of Economics study from a group of leading economists said that the UK should invest £26 billion per year—a similar figure—to revive prosperity. It said that investment in energy infrastructure, transport and the natural environment would have a rapid boosting effect, with public investment at that level generating double the returns for the private sector.

That is the big-picture stuff, but what about something that really deserves more attention? That is fuel duty. I do not know where the sudden burst of optimism came from in the OBR after the last fiscal event, when it based its forecasts on the assumption that fuel duty would be raised despite the fact it has not been raised since a freeze was introduced as a temporary measure in 2011. That and the 5p cut in fuel duty have cost the Treasury £90 billion since 2021. Figures just out today point out that, with the rise in electric cars, 2025 will see the absolute level of fuel-duty returns to the Government fall. In 2011, fuel duty was 4.5% of gross receipts. In 2023, it was down to 2.4%—and all that for the grand saving for the median driver of £13 per month.

What could we be doing instead? One of the answers—beyond local buses, which desperately need investment—is railways. My noble friend Lady Jones and I have asked many Written Questions to the Government about railway upgrades that would allow hundreds of thousands of people to get off the roads and on to rail. I have a question for the Minister, who is currently not in her place: given that there were no announcements in the Budget about railways, am I wrong to suggest there will be no significant progress with the Restoring Your Railway Fund and other rail programmes before the general election? Practical examples include a rail capacity upgrade at Haughley and Ely junctions, where Adrian Ramsay and the Suffolk Chamber of Commerce have been calling for progress. The Government said that they are committed to these upgrades, but where is the money? Another area worth probing is the Stonehouse Bristol Road station, which will unlock a direct connection between Stroud and Bristol. The Green-led Stroud District Council submitted a strategic outline business case in autumn 2022, yet it has been stonewalled when asking for updates from Ministers. It hopes they will arrive in due course.

I declare my position as a vice-president of the Local Government Association. The household support fund was due to lapse on 30 March this year, but 190 council leaders wrote to the Government begging for this essential fund to continue for a year so that they could plan. What did we get? It was better than nothing: we got six months, so in six months the councils will have to come back with the begging bowl again. It is not exactly a long-term plan.

Buy Now, Pay Later: Regulation

Baroness Bennett of Manor Castle Excerpts

Wednesday 7th February 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

While it is fair to say that buy now, pay later itself is not regulated, many elements of getting out to consumers are regulated. The broader consumer protection legislation which exists provides such protections. For example, the FCA has rules and guidance on advertising and financial promotion. Only today, the FCA financial promotions gateway is in force. Buy now, pay later firms must also go through that gateway with all their marketing materials to ensure that they are not misleading, and that is to the benefit of consumers.

[Baroness Bennett of Manor Castle (GP)]

My Lords, a study last year by the Centre for Financial Capability found that a quarter of buy now, pay later users had been hit by late payment fees. That figure rose to 34% for users aged 18 to 34. Those young people are also facing the problems of the weight of student debt: about half of them go to university and, increasingly, they are carrying debt as well for further education. Is this not just one more way of laying a huge weight of debt on our young people?

[Baroness Vere of Norbiton (Con)]

I do not believe so, because, as I said, it is not a huge amount of debt. The average balance for younger people aged 25 to 34 is just £185. One experience that I think many users have of buy now, pay later is that they may, once, have a late fee—I know that my children certainly have—and then they learn, and they do not do it again. Those fees are not particularly expensive, but Experian, for example, would say that 99% of agreements were settled on time in January and February. We cannot shut off access to a form of interest-free credit which has saved consumers more than £100 million. It is really important that we get the balance right.

Financial Stability: Private Equity Firms

Baroness Bennett of Manor Castle Excerpts

Wednesday 13th December 2023 Lords Chamber

Asked by

[Baroness Bennett of Manor Castle]

To ask His Majesty’s Government what assessment they have made of risks to financial stability from private equity firms experiencing difficulty in the current high interest rate environment.

[The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)]

My Lords, the Bank of England’s Financial Policy Committee is responsible for identifying and addressing risks to the stability of the UK’s financial system. The committee’s most recent judgment is that the system of market-based finance, which includes private equity, has so far been able to absorb recent changes in macroeconomic conditions.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for her Answer; I think the key words in it may have been “so far”. If multiple private equity companies experience financial stress simultaneously, it could have systemic implications. This is especially true if those companies operate in interconnected industries, leading to a potential domino effect of financial distress that could spread to the broader economy. The UK is the second largest private equity market in the world, with nearly £80 billion of private equity going in in the last five years. Are the Government really assessing the situation and considering whether there need to be restrictions on the role of private equity in our economy and society, given how many companies have been taken over by private equity and subsequently closed down?

[Baroness Vere of Norbiton (Con)]

I am afraid I do not recognise the picture the noble Baroness paints, nor do I agree that private equity needs to be closed down. The Bank of England monitors the situation across the entire market-based financial system. The noble Baroness may be interested to know that the Bank of England is conducting a system-wide exploratory scenario, which will be a world first and will look at all the elements of the financial system and stress-test them in quite severe circumstances to ensure that there is no contagion. The noble Baroness is not right to say that there is a massive risk of contagion. The private equity sector is a very small part of our financial system.

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

I completely agree with my noble friend. Private equity is all about risk and returns, and not all firms will succeed in perpetuity. That is the way of a capitalist market, and it allows the correct allocation of capital within the system.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am glad that the noble Lord, Lord Young, pays such attention to the Green Party manifesto; it is pleasing to see. On the reference to so-called green environmental investments, does the Minister agree with me that it is essential for the future of the British economy, in meeting the needs of British society, that we invest in renewable energy and warm, comfortable, affordable-to-heat homes in order to effect the transformation we need for a healthy society?

[Baroness Vere of Norbiton (Con)]

Actually, I would flip that around the other way. I had a long conversation with the head of ESG at the FCA about this, and it is the public and investors in pension schemes who want to see investments in higher rated ESG organisations. That is the key driver: it is ensuring that the capital goes to the places the investors want to invest it in.

Autumn Statement 2023

Baroness Bennett of Manor Castle Excerpts

Wednesday 29th November 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I welcome the Minister to her new post at the Treasury. That is currently a hugely and unduly powerful department. We are all familiar with departmental Ministers at the Dispatch Box, when faced with an undeniable failing, shrugging and playing the “The Treasury just won’t give me the money” card. Look at where that has got us. We have heard from many noble Lords about the state of broken Britain, so I suggest that the Minister take note of the fact that the Treasury is increasingly being held responsible for the state of the country.

I am going to look at three ways in which our system is broken. I turn first to individual and household poverty, inequality and insecurity. The Resolution Foundation has calculated that this Parliament is set to be the worst on record for household income. Incomes are projected to fall by 3.1% in real terms from December 2019 to January 2025. Many noble Lords have focused on the triple lock, but the problem is not generational. The problem is poverty and inequality, and structural changes over decades that have left our society failing to meet the most basic needs. We have, very literally, a failing economy.

Figures out today from the National Housing Federation show that the number of pre-retirement private renters in the 55 to 64 age group has increased six times the rate of the population increase in the past decade. We are going to see a huge spike in pensioners living in private rental homes that they cannot afford. The Joseph Rowntree Foundation figures show that 1 million children experienced destitution last year—a number that has almost doubled since 2019.

What is in the Green Party’s alternative Autumn Statement, released before the Chancellor stood up, for individuals? Starting with the most vulnerable, the Green Party is proposing an increase in universal credit by £40 a week, which would cost £9 billion. It is also proposing to abolish the two-child benefit cap by increasing the welfare budget by £1.3 billion. I challenge the Government, in particular the Front Bench in front of me, to say why they would not do that in order to help some of the most vulnerable who are suffering so much now.

Secondly, I turn to public poverty, inequality and insecurity. The Productivity Institute has highlighted that there has been a decade of declining spending per capita on education at all levels above primary school. Yet overall, schools have somehow—all credit to them—broadly upheld performance, as measured by the Institute for Government. They are the only group of public services, of nine in total, that has not seen a deterioration since 2010. As the Institute for Government said:

“This Government has abdicated responsibility for public services”.


There is also the question of how realistic all these plans are. The OBR has publicly doubted that the plans for further swingeing austerity in public services are actually deliverable. The director of the Institute for Fiscal Studies has described these as “implausibly tight” spending plans. It stressed the sheer impossibility of not providing a drip of bare subsistence funding to our collapsing court system, to our financially staggering local councils—as the noble Baroness, Lady Pinnock, highlighted—and to a DEFRA that is regularly failing to meet even its basic statutory responsibilities.

What is the Green Party’s plan? It is to restore the public health budget by increasing spending by £1.4 billion; to immediately increase NHS spending by £8 billion; and to increase access to NHS dentists by increasing spending by 50%, or £1.5 billion. Crucially, as many noble Lords might appreciate, we would provide the necessary powers and funding to rural local authorities to take back control of bus services, so that they can increase routes and service frequencies. This would cost £3 billion. Will the Labour Front Bench consider matching that?

Thirdly, I turn to nature’s poverty, inequality and insecurity. There was precious little in this Statement on the climate emergency and nature crisis that is clearly already hitting us so hard. The £960 million investment fund by 2030 for the green industries growth accelerator, which does not even start until 2025, is proportionately orders of magnitude smaller than the plans of the US and EU. Words are only words, but there was even austerity in the nature element of the Chancellor’s Statement: the number of nature-related terms used by the Chancellor in his speech almost took us back to the era of “cut the green crap”.

The Green Party’s plan is to turn ISAs green by linking their tax exemptions to investments in green bonds, and to invest an additional £3 billion in green transition grants for small businesses to help them prepare for and take advantage of the opportunities offered by greening the economy. Noble Lords will be seeing much more in green spending in our general election manifesto, and I hope that the Labour Front Bench will be confirming very clearly plans to stick to its previously announced policies, about which there has been considerable doubt.

The question I am sure that noble Lords might ask is: where is the money coming from in the Green plans? We have calculated that around £30 billion of additional funds would be available from rebalancing the tax system so that the super-rich pay their fair share and both people and planet benefit. There is enough money in our economy to make our country fairer and greener. What is lacking is the political will to change priorities.

Finally, I have a direct question to ask the Minister. The revenue side of the fiscal projections assumes that the 5p per litre cut in fuel duty will end in April and that the levy will then rise in line with inflation. This comes to a total of £6 billion a year, but of course fuel duty has not risen since 2011. I know that I cannot ask the Minister what will be said in the spring, but I can ask her to acknowledge that there is a significant gap in the Chancellor’s figures if he does not put fuel duty up in the spring by 8p per litre.

King’s Speech

Baroness Bennett of Manor Castle Excerpts

Monday 13th November 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, last week the Hackney mayoral election saw the Green Party candidate, Zoë Garbett, take 25% of the vote, finishing second. On a rough calculation, my noble friend Lady Jones and I have about 0.5% of the time available, so here I go on economy, transport, energy and the environment.

On the climate emergency, I could just cross-reference the noble Lord, Lord Stern, and the noble Baronesses, Lady Hayman and Lady Sheehan. The Copernicus Climate Change Service has found that, following exceptional October temperatures, it is now virtually certain that 2023 will be the warmest year on record. Social media is full of climate scientists with graphics showing just how out of control our climate is. At current levels of emissions, the world has six years left before we bust through 1.5 degrees. Do the Government understand that?

The UN Environment Programme report on the discrepancy between the planned fossil fuel production of Governments around the world finds that they collectively plan to produce 110% more fossil fuels than is consistent with the 1.5 degree limit in 2030. The UNEP says there is

“no evidence that the UK government is actively winding down oil and gas production”.

Well, quite.

Local environmental questions are perhaps for our new Environment Secretary. I am sure he has great interest in these issues, although I have not found any evidence of that online. The Government appear to have promised two steps that demand primary legislation: a ban on the sale of horticultural peat by 2024 and UK ratification of the global oceans treaty. Can the Minister say whether the Government have taken into account the environmental principles in all the Bills in the King’s Speech, given that there is now a legal duty on Ministers to have due regard to the environmental principles policy statement? The Minister is from the Treasury; this applies to it as well.

I have two points on transport. First, in introducing this debate, the Minister repeated the fiction of the “war on the motorist”. To take just one comparison, we are actually talking about the burden on the bus user. According to Office for National Statistics data, the cost of travelling by bus has risen 30% more than the cost of car travel since 2014, the bus being used primarily by the poorest in our society.

Secondly, in responding, perhaps the Minister could tell me if she stands behind the briefing given by an unnamed government source that the first models of self-driving cars could be offered to motorists in the UK by 2026—if they are proved safe. Does she agree with me that that reflects the pie in the sky thinking that is shot through the announcements and actions of this Government?

Finally, I will use the Government’s favourite phrase, employ some “long-term thinking” and reflect on the speech of the noble Lord, Lord Livermore, who opened for the Labour Party. The noble Lord focused on tax generally being high and blamed the poverty of the many and the terrible destitution affecting so many households, particularly those with children. As the right reverend Prelate the Bishop of Durham highlighted, some 1 million people are suffering from destitution. Labour’s answer to this is the magic of growth, implying a return to historic levels that very few can see in our future. That means, however, that if we do not tackle the distribution of wealth, those who are living on crumbs now will get only a few more crumbs.

I came into the Chamber for this debate from a session titled “the economic common-sense case for taxing wealth as well as work”, run by groups including Patriotic Millionaires UK, the APPG on Anti-Corruption and Responsible Tax, and Tax Justice UK. It highlighted how the 50 richest families in the UK have wealth worth more than the bottom half of the whole population. That is 50 families versus 33.5 million people. I suggest that the Labour Party think harder about who is and who is not paying tax and the need for the redistributive effects of a wealth tax in our society.

Bank of England: Interest Rate Policy

Baroness Bennett of Manor Castle Excerpts

Wednesday 12th July 2023 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister has referred to the drivers of inflation, but she did not mention greedflation—the fact that, as the OECD figures which came out this week show, British company profits were boosted by almost one-quarter between the end of 2019 and early 2023, faster than nearly any other state’s. In the last Question, we referred to the fact that we have a huge lack of competition across our economy. Four, five or six big companies dominate all the sectors, often cross-owned by hedge funds. Are the Government going to do something about greedflation?

[Baroness Penn (Con)]

While the Government do not recognise the picture that the noble Baroness has painted, we are looking carefully at the data and ensuring that competition is working properly. That is why my right honourable friend the Chancellor met the major regulators last week or the week before, I believe, and agreed a plan of action in each of those areas to ensure that consumers are getting a fair deal.

Financial Services and Markets Bill

Baroness Bennett of Manor Castle Excerpts

Report stage
Tuesday 13th June 2023 Lords Chamber

[The Archbishop of Canterbury]

My Lords, I have joined the noble Baroness in supporting her Amendment 106, as I did her two amendments on this topic in Committee. This amendment seeks to prevent change which goes against the two years of work of the Parliamentary Commission on Banking Standards, which looked in detail at both issues and produced its final report, Changing Banking for Good, 10 years ago. I declare an interest: I sat on the commission along with the noble Baroness.

As I said in Committee on 21 March, the underlying motivation of this amendment is to ask us not to forget the hard lessons learned after the 2008-09 financial crash, for which the whole country, especially the poorest, paid, then and to this day. Recent events show that the memory in the markets is strong, even if it is not in the Government. Alarm spreads easily.

Both the ring-fence and the SMCR were designed to better align the incentives and risk calculations of the financial sector to avoid the privatisation of profits and the socialisation of losses, and to force the financial sector to be conscious of the cost its action has, not only on itself but on the wider economy. The SMCR enables us to make sure that those individuals who are making decisions which have significant consequences are held accountable. It goes some way to bringing individual incentives in line with high collective standards.

The electrification of the ring-fence, which the Parliamentary Commission on Banking Standards recommended, was designed to deter banks from the inevitable temptation to test it. The commission’s first report said:

“any ring-fence risks being tested and eroded over time”

and the new framework at that time

“will need to be sufficiently robust and durable to withstand the pressures of a future banking cycle”.

SVB showed that the concept of a non-systemic bank is a very dubious one, as even banks with good resolution plans, and of very moderate size in the global context and systemically, create a sense of contagious alarm. Banking, as we know—and some noble Lords know very well indeed—is not based on logic but on confidence. There is logic there somewhere, but the confidence is that the bank is secure, despite the fact that its equity is a very small part of its total balance sheet. The contagion caused by the failure of SVB is not yet over among US regional banks, which continue to fail or need rescuing. That moment may come, but let us wait and see.

The Swiss taxpayer is on the hook for Credit Suisse and the US taxpayer for several regional banks that were meant to be non-systemic. Not to learn from the past or the present is, frankly, reckless. Reform may come—there are good arguments for it—but it should not come outside a proper parliamentary process of primary legislation. People and sectors can have short memories. I urge the Government to accept this amendment, which would go some way to making sure that we remember the hard and bitter lessons learned and do not repeat the same mistakes.

[Baroness Bennett of Manor Castle (GP)]

I will speak very briefly to offer Green support for the amendment in the name of the noble Baroness, Lady Kramer, and the most reverend Primate. The amendment, in a way, is a smaller and lighter version of my attempt to strike out the competition clause, on setting a competitiveness objective, which has sadly remained in the Bill.

In November last year, City Minister Andrew Griffith told the Financial Times:

“The overall thrust of things is to allow more risk … you shouldn’t be risk”


averse;

“we just need to manage that in an appropriate way”.

He went on to say that the aim of reducing ring-fencing was

“to release some of that trapped capital over time”.

I acknowledge that the Minister said that before the collapse of SVB and Credit Suisse, and the other crunches in the American banking system.

In an April piece in the Financial Times, Martin Wolf said:

“A shock like this should make mindless deregulation less appealing to politicians”.


As has been clearly outlined already, the amendment does not actually make anything happen; it just ensures parliamentary oversight. When we get to the dinner break business, my noble friend will seek to ensure that parliamentary oversight is included there. Surely, this is what democracy is supposed to be about.

[Lord Davies of Brixton (Lab)]

My Lords, I support the amendment. We will return to these issues on Thursday, when we discuss the regulations in Grand Committee. However, it is worth mentioning to the House the clash today between this Bill and a meeting of the Economic Affairs Committee, of which the noble Baroness, Lady Kramer, and I are members. By chance, the committee was interviewing the Governor of the Bank of England. The issue of this arrangement arose, and the governor was quizzed on these very issues. It will be useful on Thursday to explore further why and how this action was taken. The governor provided a justification, but, in the light of his remarks, it will be worth while exploring these issues in more detail when we get the regulations.

--- Later in debate ---

[Viscount Trenchard (Con)]

My Lords, I am pleased again to support the noble Lord, Lord Sharkey, in his noble quest to protect mortgage prisoners, as I did when he tabled a similar amendment in Grand Committee.

I appreciated the commitment of my noble friend Lord Harlech in his winding up that the Government would consider the proposals of Martin Lewis, the LSE and the APPG on Mortgage Prisoners that have been put forward. As he said, mortgage prisoners are the forgotten victims of the financial crash. The banks were bailed out at the expense of these borrowers. Furthermore, the margins between the Bank of England base rate and typical standard variable rates have expanded by more than double.

The problem is that the unlicensed lenders that bought the mortgage books of this group of borrowers do not offer the fixed-rate products that are available to borrowers in the active market. I stress that my motive in supporting the noble Lord’s amendment is to support this group of genuine mortgage prisoners, who are unable to switch to a new fixed-rate mortgage despite having been up to date and not missed any payments.

The Government have acknowledged the detriment caused to mortgage prisoners. This Bill offers an opportunity to provide them with some relief from the difficulties that they are trying to cope with. I hope to hear from my noble friend some concrete plan to assist them as the Government have done for many disadvantaged groups—as a result of the Covid pandemic, for example. I look forward to the Minister’s reply.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly, having spoken on this issue both in Committee and back in the last financial services Bill, just to put a human face on this. In doing that, I remind the Minister of the representatives of the mortgage prisoners whom we heard from at the meeting in the Treasury a couple of months ago.

The face I have chosen to put on is that of 63 year- old Jacqueline Burns, who spoke to the I newspaper in April about what her life is like now that she is a mortgage prisoner. She said:

“I am cutting back on food because I can’t afford to eat … I am so stressed out right now, I am at the end of my tether”.


The story, as Ms Burns told the I, was that she bought her home in Cambridgeshire for £69,000 in 2006 from SPML, which was an arm of Lehman Brothers. Ms Burns remembers that the broker “was really nice” and “pushed me … towards SPML”. We can all probably imagine why that was. The situation in which Ms Burns now finds herself is that she is on the standard variable rate and owes £109,000; remember that she paid £69,000 for the house. Because of the rise in interest rates, her mortgage payments have gone up from £333 a month to nearly £700 a month. She simply cannot pay.

She is in this situation because of a failure of government regulation, and because of arrangements made by the Government that made a significant profit. There is a huge moral responsibility. If we think about the costs that must be being imposed on the NHS by people who eventually become homeless and need council homes et cetera, it is clear that the Government should look not just at their moral responsibility; they also need to ensure that people get a fair deal and do not end up—even if the Government are not thinking of anything else—costing the taxpayer a great deal.

[Baroness Chapman of Darlington (Lab)]

My Lords, we are grateful to the noble Lord, Lord Sharkey, for bringing back this amendment and for his persistence on this issue over many years. We are also grateful for the work of the APPG, particularly to Rachel Neale, who herself is a mortgage prisoner and has become a champion for those people who have been affected by this problem. I also want to mention my colleague in the Commons, Seema Malhotra, who is doing a lot of work on this issue.

We are hugely sympathetic towards mortgage prisoners, who have endured difficulties over so many years now, and wish that the Government had acted earlier to ease the burden on them. We were pleased to back this amendment during the passage of the Financial Services Bill in early 2021, when it passed by 273 votes to 235. However, we are mindful that at that point the House of Commons rejected that amendment, and did so at a time when a much larger proportion of the population was experiencing issues with mortgage affordability. In recent weeks, however, we have seen hundreds of mortgage products pulled and rates hiked on those that remain available. A number of major banks have even temporarily withdrawn offers for new customers, putting the brakes on the aspirations of many first-time buyers.

Of course, mortgage prisoners are in a different position, in that they have been facing problems for many years and are just not able to simply switch products in the way that others can. As the Minister will no doubt outline, while this amendment did not make it into the Financial Services Act 2021, it did prompt some new and welcome actions from the Treasury, regulators and banks. New advice was available and a number of lenders relaxed their criteria in certain cases. We know that the elected House has already rejected this proposal and, realistically, it is unlikely to reconsider in the current context, but more does need to be done. Can the Minister let us know whether the Government intend to respond to the recommendations that were made by the LSE in its report? If they are, when will that response be forthcoming? The Government urgently need to get a grip on the issues facing the mortgage market generally and, once that situation has calmed, we hope they will be able to do what they can to ease the difficulties faced by mortgage prisoners.