Spending Review 2020
Baroness Bowles of Berkhamsted Excerpts(3 years, 5 months ago)
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Baroness Bowles of Berkhamsted (LD) [V]
My Lords, the Government’s spending on Covid has been generous—even if some has gone awry—and I do not underestimate the change in mindset that it needed in the Treasury. But lessons of history show that switching too soon into restoring finances slows recovery. The UK was not first in, or alone in, amassing Covid-related debt, and nor does it have to prove a point as it did in the financial crisis. Central banks are no longer seeing low interest rates as an abnormal blip and the IMF advises against an early return to austerity—so why take fright and cut previous growth plans now?
Much of the UK’s social infrastructure is already underfunded. Social care has been left on an unsustainable footing by Governments of all stripes, and universal credit has been cut to below liveable amounts. These are not bleeding-heart views but among the conclusions of reports from the Lords Economic Affairs Committee, chaired by the noble Lord, Lord Forsyth, of which I am a member. The very least that should be done on universal credit is to maintain the £20 increase. Post-Covid and post-Brexit life is not going to be any cheaper, and we cannot build a recovery on the backs of hungry children.
Over 1 million people are still not getting the care they need. Training more people to deliver social care and creating a valued career path can be a key route to providing jobs for the future. With an ageing population, it is time to turn the problem of social infrastructure into part of the solution. Building social infrastructure is faster at job creation than building physical infra- structure, and both are deserving.
Future of Financial Services
Baroness Bowles of Berkhamsted Excerpts(3 years, 6 months ago)
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Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I refer to my interests in the register.
A lot of time was used up seeking equivalence, and now it is right to move on with reforms and new matters. But what is the overall timeline, and will there be more democratic oversight than mere devolving of power? I welcome the unilateral equivalence decisions the UK has made. Many of them show that equivalence can benefit the granter; it is not all about benefits to those receiving equivalence.
I would also like to pursue the matter of pension funds investing in infrastructure. It is something we have envied in Australia and Canada for a long time. Has the Treasury considered how much more could be unleashed if there were not a systemic obsession of regulators with risk-free, liquid investment in government bonds? Post-Covid, is that not an even more outdated comfort blanket, which robs both public and pensioners?
Lord Agnew of Oulton (Con)
To reassure the noble Baroness, full disclosure will be made on any further progress with equivalence. The new Finance Bill, just starting its progress through both Chambers, will give opportunities to noble Lords to contribute.
On the issue of pension fund asset allocation, I agree that we have been too focused on pushing too many assets into government gilts or equivalent instruments and that enormous opportunity exists for investment in UK infrastructure.
Equivalence Determinations for Financial Services (Amendment etc.) (EU Exit) Regulations 2020
Baroness Bowles of Berkhamsted Excerpts(3 years, 8 months ago)
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Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I refer to my interest set out in the register as a director of the London Stock Exchange.
I thank the Minister for introducing the regulations, but I admit that I got off to a bad start when looking at them. Helpful though it is to have tables in the schedule, I found it very awkward to have the regulations themselves drafted as an adjunct to a table that requires simultaneous viewing on different pages. I thought that I was in a puzzle book and having to take a cheat peek at the answers at the back.
First, I must consult the Schedule 1 list in the 2019 SI, and then I must cross-reference to table 1 in Schedule 1 of this SI—although it is unclear from reading Regulation 3 whether this refers to Schedule 1 of the 2019 instrument, as has just been referenced, or, as happens to be the case, Schedule 1 of this SI. I can find that out by discovering that Schedule 1 of the 2019 SI does not have a table. I must then repeatedly consult the table and look at each column to find out which paragraph of Schedules 2 and 3 and Schedule 1 of the 2019 SI are relevant. All of these instructions distract greatly from the clarity of Schedules 2 and 3, which really did not need all this obfuscation.
Aside from the structure, the SI seems to do what is necessary—although I reckon that it should have been part of the 2019 regulations to give regulators clarity. Unfortunately, this is all part of a patchwork that replicates, and makes even more confusing, the already tangled web of EU equivalence provisions that has evolved over time.
I hope that one day soon an overarching policy will be outlined on how the UK will balance openness, competitiveness, security and public interest in our future equivalence regime. This must reflect the needs not just of financial service companies in large countries but also the real economy companies that they serve, and encompass issues such as enabling trade at reasonable cost for the less developed countries. There can be a lot more to equivalence than first meets the eye, as was eventually realised with EMIR. At times, the benefits of equivalence may be needed within the country giving equivalence rather than the country gaining equivalence.
A similar point can be found in one of the fixes in today’s SI, which creates equivalence-determining powers so that where EU legislation says a third country has to have a recognition regime, we have one that qualifies. For us, this is fine, but the subtext of the EU requirement is a reciprocity requirement, and it is the sort of provision that needs care before imposing in any generic way, should that idea arise in the future.
It has been discussed previously, and in the context of authorisations, that regulators have been busy making various co-operation arrangements with third-country regulators where they did not already exist. It would be good to have an update on the progress of those agreements and how complete they are, including the business volume covered and the countries or instances where requirements are being waived.
Finally, a lot of energy and time has been expended researching, debating and hoping for a broad equivalence deal with the EU on financial services. Maybe that kept some in the City sweet and had to be heard and tried, but it has always been my informed view that that was unrealistic. Taken collectively, and in practice, equivalence for the EU is not really a matter of co-operation; it is yielded only when essential or aimed at promoting EU regulatory prevalence. Both those tendencies meant that resisting giving the UK equivalence was always going to be tested to destruction. It is what rises from the destruction that will be interesting, but it is not a sit-and-wait game.
Finance Bill
Baroness Bowles of Berkhamsted ExcerptsFriday 17th July 2020
(3 years, 10 months ago)
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Baroness Bowles of Berkhamsted (LD) [V]
My Lords, the expansion of IR35 has been postponed for a year. That is a small mercy, but a fair balance between the employed and the self-employed needs a more thorough reckoning. First, for the same reasons as now, the economy will not be in sufficient shape by next year to take the IR35 risk to workforce flexibility, nor for companies to take the burden.
Secondly, the fix is simply a tax fix that ignores the reality, recognised by both the Office of Tax Simplification and the Taylor review: that there is a set of flexible, dependent workers who are part way between being employed and self-employed. The Government are roping them in to tax and NI as if they were employed, on the basis of tax fairness, but leaving them out in the cold when it comes to employment rights and benefits, which is clearly unfair if they pay the same.
Thirdly, along with the aid given to the self-employed during lockdown, the Chancellor has indicated that a revision of national insurance and the coverage it provides for the self-employed might be necessary. This must apply vice versa, to the situation of the self-employed and the dependent worker: you must get the security that you pay for. Notably, many self-employed have been left out of grant-based help, ironically because they are not companies.
Fourthly, there is no fair solution, other than banning dependent workers, if this is not taken in the round alongside employment and social security rights.
Fifthly, contract workers have other expenses that can be imposed on them by their clients. How are these to be treated? They can include public liability insurance and giving indemnities to the client. They come as part of the package terms, which often include unreasonable contract terms that are not applied to employees. What protections will the Government bring in to defend taxpayers equally?
There are more points to make but time is short. As a veteran of proceedings on the Corporate Insolvency and Governance Bill, I share now, as I did then, the concerns expressed by my noble friend Lady Burt about the new preferential status for HMRC in insolvency, making it even wider in scope than before the Enterprise Act 2002. The arguments about it relating to tax paid by employees and held by the company do not wash, given that the company does not apply that logic to pension schemes in the hierarchy.
Covid-19: Economy
Baroness Bowles of Berkhamsted Excerpts(3 years, 11 months ago)
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Baroness Bowles of Berkhamsted (LD)
Pandemics, like wars, change the path of history. This one has not only put into focus where austerity went too far but also changed perception of the role of the state, both here and internationally. Already, there are serious and credible suggestions for a post-war type of investment, taking advantage of low or negative interest rates to invest faster and more than was envisaged pre-pandemic. We will not be the only ones doing this, which adds a competitiveness angle.
Strategic self-sufficiency should pay a greater part, bringing environmental benefit along with security. The pandemic has also taught us that personal space matters. Inadequate and high-density housing, over- crowded public transport and excessive commuting are all promoters of illness, lost productivity and social misery as well as spreaders in pandemics; this affects, and infects, everyone in the end, and so it must change.
More economic support for business will be necessary, but it must work in a distributed and reinforcing way. Last week, the FT reported that Rolls-Royce threatened to chop any supplier that cannot give it a 15% discount. The same article points out that big manufacturers demanding cuts from suppliers are simultaneously using their need to support the supply chain as one of their pleadings to Ministers. I hope that the Minister has spotted this hypocrisy, and that BEIS will make it clear that help is for sharing and that squeezing the pips out of supply chains, unreasonable discount demands and paying late will count against them.
National Risk Register
Baroness Bowles of Berkhamsted Excerpts(3 years, 11 months ago)
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Baroness Bowles of Berkhamsted (LD)
What consideration of the risk register and preparedness plans is made in policy and financial decisions?
Beyond Brexit (European Union Committee Report)
Baroness Bowles of Berkhamsted Excerpts(4 years ago)
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Baroness Bowles of Berkhamsted (LD)
My Lords, beyond the time when we must follow EU rules, engagement and influence remain important. That is common sense wherever we have large trading relationships, but there is nowhere in the world more open and organised for receiving input than the EU. Beyond committees and agencies, Brussels is awash with consultations, conferences and evidence sessions. Good speakers are sought from around the world, and a well-presented case can be very influential. It is serious work. My record was speaking at six such sessions in one day, and making several speeches in a week was common. Getting the tone and content right is of paramount importance, and claiming that we are best in the world is not it. “World’s best” is often claimed in this House. We do not always believe it, even if we want to, but I have also head it in Brussels from Ministers and officials in multinational settings, listening in horror as it jeopardised relationships and carefully crafted compromises. I am glad UKREP is getting bigger, but I query whether it is enough and hope that those appointed are recognised, not passed over, when returning to London.
Co-ordination with industry is also welcome. We do not have the government and industry solidarity on policy that some countries display, and I doubt we ever will, but collective strategic activity is very effective. Others have long done it and at a larger scale.
Finally, one effectiveness factor that should not be underestimated is transparency to Parliament and the public. There is nothing as persuasive to any argument as their endorsements genuinely obtained.
Income Equality and Sustainability
Baroness Bowles of Berkhamsted Excerpts(4 years ago)
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Baroness Bowles of Berkhamsted (LD)
My Lords, income inequality is accompanied by a lack of security and inequalities in health and longevity. Keeping the poorest poor is not good value for society or the state. The financial crisis slightly levelled incomes but left millennials comparatively disadvantaged, and now they are the ones most likely to have younger children, hit by school closures and cut off from grandparental help.
Indices now show that inequality is back on the rise, and the pandemic has already created its own economic inequalities—those who can work and those who cannot, those qualifying for grants or furlough payments and those who are not, those who will have jobs to return to and those who will not.
In January, a World Economic Forum report indicated that increasing social mobility—a key driver of income inequality—could benefit the UK economy by $130 billion by 2030. Tell me a better way to help recovery.
We can use what we have learned in lockdown for good. The “new normal” should treasure the positives, keep them and reinforce them. Work from home has been enabled for so many more people—use that to enable a more sustainable work/life balance, cut transport, and open more jobs to the disabled, carers and other people who have not been given the chance to work entirely from home.
We can have a green recovery, a caring recovery, a better shared recovery—and find that it pays its way. Will the Government seize that opportunity?