Queen’s Speech

Baroness Jowell Excerpts

Wednesday 25th May 2016 Lords Chamber

[The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con)]

My Lords, it is a privilege to open this debate following Her Majesty’s gracious Speech last week. I thank in advance my noble friend Lord Ahmad of Wimbledon, who will be wrapping up the debate later today.

It has been a year since I had the honour of joining Her Majesty’s Government. In fact, it was the occasion of Her Majesty’s Speech that allowed me to deliver my maiden speech before noble Lords last year. That day, I spoke of my determination to put an end to the underperformance and wasted talents of our towns and cities beyond the capital, especially in the north. I said that I wanted to help the UK make the most of our relationships with the most important emerging economies across the globe. I also said that I would be continuing the work I started before I joined the Government to establish how the world ought to respond to the stark threat posed by antimicrobial resistance.

The rise of superbugs resistant to our current drugs is a huge problem, and one that is getting worse. If we do nothing, the human and economic costs will be dreadful indeed. In fact, as we have shown in our review, by 2050 superbugs could kill 10 million people a year—the equivalent of someone dying every three seconds. I am delighted to inform noble Lords that we published the recommendations of this review last week, setting out not only the areas where we need to take action but how we can pay for it. So on all these fronts, without doubt it has been a busy year for me.

The views of your Lordships—including at times robust ones—have been of considerable assistance to me throughout, because the issues that we have debated and discussed in this House are ones of genuine complexity. As noble Lords will be aware, there are no silver-bullet responses to such critical questions as how best we can strengthen our economy and plan ahead for the future. So I look forward to the discussions we will have over the course of today, and indeed this year.

I now turn to the measures set out by Her Majesty the Queen last week to reflect the determination of this Government to follow an economic plan that will lay the groundwork for the long-term good of the country. For me, there are three main parts to that plan. First, we need to strengthen our economy to guard against future shocks. To do this we must not only bring public finances under control but address some of the more persistent and enduring challenges we have faced in the UK, such as low productivity growth and our current account deficit, which I touched on earlier.

Secondly, we need to make the right investment choices now to keep our economy growing over the coming years and decades. Thirdly, we must continue to do more to give everyone in this country the opportunity to do well at all stages of their lives and in all parts of the UK.

Today we have the chance to take a broad look at the Government’s plans to achieve these three aims, particularly during the next legislative session, as we look at some of the measures being taken forward by the Treasury, the Department for Transport, the Department of Energy and Climate Change, the Department for Environment, Food and Rural Affairs, and the Department for Communities and Local Government.

I will start with the very foundation of our strategy for the future: the Government’s work to fix the public finances. There has been clear progress to date. The deficit as a share of GDP was at its post-war peak in 2009-10. The independent OBR currently forecasts that the deficit will be eliminated by 2019-20, so the UK can go into the 2020s with a surplus. However, despite the considerable deficit reduction achieved, our debt to GDP ratio still stands at a very high level—indeed, its highest level since the late 1960s—at 83.7% of GDP. Reducing this figure is important, and therefore aiming for a surplus remains the most sensible fiscal policy to prepare for the inevitable future economic shocks that will come our way.

This Government have repeatedly stated their commitment to making sure that we live within our means. That is why spending has been reduced to 40% of our GDP in 2015-16, compared to 45% in 2010-11. Welfare savings of £12 billion are being delivered, and a further £3.5 billion of efficiency savings will be made by 2019-2020 to make sure that the public get the highest possible value from every pound that is spent.

But while it is important to keep spending under control, that is only one part of a sensible economic plan for any country, ours included. On its own it is no guarantee of long-term security and prosperity. It is equally critical that we invest where investment is needed, and put the policies in place now that will unlock growth in the future. Indeed, we are accelerating capital expenditure of £1.5 billion to make sure that the public start to see the benefits of our investment somewhat earlier. We are also legislating to put the independent National Infrastructure Commission on a statutory basis. This will play a crucial role in setting out a clear vision of the future infrastructure needed to ensure that our economy is fit for 2050.

Beyond that, it is also worth summarising the main ways in which the Government are investing in the future. First, we are rebalancing the economy. Your Lordships will know by now, I hope, how strongly I believe in the importance of rebalancing our economy, so it will come as no surprise when I turn first to our plans to develop the northern powerhouse and the Midlands engine for growth, because I am clear that accelerating regional growth is one of the best policies to deliver game-changing benefits to the entire UK. That is why we are so focused on the north and Midlands.

We are making record levels of investment in the transport networks of these regions: over £18 billion in this Parliament. Let me add—I touched on this earlier in Oral Questions—that there are increasing signs of overseas private investment in infrastructure in those regions of the UK. We are also setting aside well over £0.5 billion to help small and medium-sized businesses. We are creating more enterprise zones, which have already attracted thousands of jobs and more than £1 billion in private sector investment. We are funding new flood defence schemes and improvements in educational attainment.

Secondly, I will touch on devolution, which is closely associated with this.

[Baroness Jowell (Lab)]

On the Minister’s point about educational attainment, does he accept that readiness for school in young children is one of the key indicators of subsequent achievement? Does he share my concern that, last September, 40% of children starting primary school for the first time were deemed to be unready for school? That is the most likely predictor of subsequent educational failure. Will he share with your Lordships’ House how he intends to address that as part of the wider commitment to maximising educational attainment?

[Lord O'Neill of Gatley]

My Lords, the noble Baroness raises a very interesting point which should perhaps be discussed later or looked at in a separate debate in this House. I would say that there are considerable data about many challenges here. Specifically as it relates to the northern powerhouse, for example, an interesting oddity in contradiction to that piece of evidence is that primary school attainment in places such as the north is not so dissimilar to that in London and the south-east. It is at the secondary level of education where the relative gap emerges. That is a topic worthy of considerable discussion in this and the other place.

Let me return to the issue of devolution. It is important not just in terms of what we spend or how we spend it but what we do to give local leaders more influence, along with greater accountability. Your Lordships will have followed the historic devolution deals and will know of my great personal involvement in them. We are very proud of that over the past 12 months in cities across the UK. At its highest level, that means that we are introducing elected mayors, including in my own home city area of Greater Manchester. Elected mayors are important because they provide the accountability needed if the fullest level of devolution is to be granted. This remains the Government’s direction of travel. The local growth and jobs Bill will allow the local government sector to retain 100% of its business rates to boost growth in local areas, with the Greater London Authority, Liverpool and Manchester piloting the way forward.

Transport is another essential way to prepare for future growth: making sure that we have the transport infrastructure in place that will support and enable it. In this Session, we will see the passage of the HS2 Bill through this House, following its receipt of a resounding majority in the other place.

Passenger demand for rail has more than doubled since privatisation in the 1990s, and it has risen even faster on certain popular intercity routes. So by linking London with the major cities of the north and Midlands, and freeing up considerable capacity on the existing rail network, HS2 will give us the space that we need to meet growing travel demand, which could not be possible through upgrades to existing lines alone. We have also given the green light to dramatically improving train journeys between Leeds and Manchester.

We will improve our buses through the Bus Services Bill. This will tie into our devolution agenda by giving more powers to local authorities to set the standards of service in their areas, as well as better informing passengers. Lastly, the modern transport Bill could change the face of transport both for the individual person and for our businesses. Whether that is the development of commercial spaceports, getting driverless cars on the road, or enabling deliveries by drones, this is a Bill which will support the emergence of exciting, cutting-edge technologies.

As I also mentioned, it will all be about helping people to get on in their lives. That is the final aim that I would like to touch on. From childhood, through their working lives and on to retirement, our aim is ultimately to help British people to get on in their lives. That means building our economy based on lower taxes, helping people to take home more of what they earn. That is why, of course, the personal allowance has been increased to £11,500 and the higher rate threshold will rise to £45,000 in 2017. Over the course of this Parliament, those measures will take over 1 million taxpayers out of income tax, and will see over 500,000 fewer people paying the higher rate.

This year also saw the national living wage come into effect, which will benefit over 1 million workers, with a full-time national minimum wage worker earning £900 more a year. We also want to provide better choice and flexibility over saving, as well as more incentives to do so. The lifetime savings Bill will introduce the lifetime ISA to help young people in this country to save for their future. It will also bring in another important government-backed savings scheme, help to save, designed to help people on low income save for a rainy day.

Her Majesty’s Speech also outlined our commitment to investing more in the health of our young people. Sugar consumption is a major factor in childhood obesity, and our soft drinks industry levy will mean more funding to support things that will help, not harm, young people, whether that means more money for physical education in schools, or getting children to have a nutritious start to the day at a breakfast club.

Lack of housing remains an important issue for people in this country, and we are investing billions in housing over the next few years, including in what will be the most ambitious affordable housing programme since the 1970s. The neighbourhood planning and infrastructure Bill will also be a crucial reform to building new homes, not only speeding up the planning process but giving local areas more of a say about planning decisions that will affect their neighbourhoods.

We also want people to have more rights as customers. That is why the better markets Bill will introduce legislation that will not only open up our markets and boost competition, but also give people more power and choice to switch between, for example, energy providers, as well as more protection when things go wrong.

Finally, as noble Lords will be aware, grass-roots charities often perform a vital role in extending the support and help people need to get on in life. To support them in raising the most money they can to do this, we will be reforming the gift aid small donations scheme through our small charitable donations Bill, making it easier for new charities, as well as smaller charities, to get the funding that they deserve.

In conclusion, we will continue to take action to ensure security, sustainability and strength in our economy for the long term. That rests, without doubt, on our work to control public spending, but it is equally dependent on the success of our work to rebalance the economy, put in place the infrastructure we will need in the future and help people get on in life. The legislative programme for the next parliamentary Session, as Her Majesty’s gracious Speech set out, represents important steps forward in achieving these aims. I look forward to hearing noble Lords’ comments and views on them throughout today’s debate.

International Money Transfer Charges

Baroness Jowell Excerpts

Wednesday 17th December 2014 Westminster Hall

[Dame Tessa Jowell (Dulwich and West Norwood) (Lab)]

It is a great pleasure to serve under your chairmanship, Ms Dorries.

This Christmas, millions of people will work extra hours in difficult and low-paid jobs so that they can send money to their relatives living abroad. Their remittances, particularly to sub-Saharan Africa but to many other parts of the world as well, now account for more money than donor aid. However, their money transfers will be hit by fees and charges that can be as high as 15%, and in some cases even higher. Five years ago, the G8 committed to reducing this “transfer tax” to 5%, but the deadline for international action has now passed and the target has not been achieved. People who seek to send relatively small amounts are being hit disproportionately by high fees; I am calling for concerted action to change that.

Take, for example, Dorothy Mukasa, who arrived in the UK from Uganda 34 years ago and, like so many thousands of migrants, works for the NHS. Over the years, her family in Uganda have needed her help. For example, she has sent money home to pay the school fees for her orphaned niece, and she currently pays for a nurse to attend to her elderly parents twice a week. Dorothy explained her anger at the extortionate charges that she has to pay, because sending relatively small amounts can incur higher charges. Her case was recently highlighted by The Observer newspaper.

I applied for this debate because of the circumstances of people like Dorothy who are being hit by the double effect of poor foreign currency exchange rates and high fees, of which a key driver in certain parts of the world is the lack of competition in the market. When chairing the Africa Progress panel earlier this year, Kofi Annan highlighted the control that money transfer companies have over the market. He said that the two largest such companies, Western Union and MoneyGram, both

“operate exclusivity agreements with their agents and commercial banks, which raises the cost of market entry.”

He went on to say that money transfer operators

“account for US$900 million taken from African migrants and their families through excessive charging.”

The situation was also illustrated in this year’s groundbreaking report from the Overseas Development Institute. The fees being charged are disproportionately high and far above the 5% level set by the G8 and the G20. The ODI showed that when the fee and, critically, the foreign currency exchange rate were combined the margin levied by MoneyGram would see someone sending £120 to Malawi incurring a 22.4% cost. Sending the same amount to Senegal and Ghana would have costs of 19.9% and 11.4% respectively. It is important to say, however, that MoneyGram disputes those figures.

In the case of Western Union, the other big money transfer company, the ODI’s research shows similarly high charges. The cost of sending £120 to Gambia was 14.2%, and to send the same amount to Uganda incurred charges of 13.4%. The ODI’s research showed that between them Western Union and MoneyGram control two thirds of the remittances market in sub-Saharan Africa. The problem affects not only those sending money to Africa, but large parts of Asia and Latin America as well.

A further challenge is the severe lack of transparency about the components of charges. For example, figures taken from MoneyGram on Saturday show that sending card-to-cash transfers of £100 to six countries in different parts of sub-Saharan Africa incurred a uniform fee of 12%, plus further currency exchange charges. The four countries have different market conditions and underlying factors, yet the basic fee of 12%—more than double the G8 standard of 5%—is the same for each of them. People do not understand why. Along with financial regulators, the UK Government should require companies to be more transparent about such charges, in the interest of consumers. I would like to commend TransferWise for its campaign, which I support, calling on the UK Government to put a stop to hidden fees and to stop banks and brokers overcharging consumers in foreign currency exchange.

The G20’s conclusions show that Governments are aware of the scale of the problem. At the G8 L’Aquila summit in 2009, world leaders agreed to bring the cost of remittances down to 5% within five years. The G20 formally adopted that objective in 2011, but the deadline was missed two weeks ago. At last month’s G20 summit in Brisbane, which was attended by the Prime Minister, world leaders reaffirmed the 5% commitment, but they appeared to weaken their ambition by failing to agree a deadline by which they would act. Perhaps the Minister can assure us that that is not the case for the UK Government. I am very concerned by that omission and I would like reassurance from the Minister on the Government’s determination to tackle the problem.

There are many issues surrounding remittances, and I fully accept their complexity. One such issue is the availability of accounts for money transfer companies. Earlier this year, owing to concern over lack of control of funds, Barclays announced that it would be closing 250 UK accounts held by money transfer companies that deliver remittances to families in developing countries. This year, my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) led the successful “Save Remittance Giving” campaign, which called on Barclays to reverse its decision and on the Government to throw a lifeline to families in developing countries—particularly Somalia, which faces significant challenges in this respect—by co-ordinating action between the Government and financial regulators in order to secure a long-term solution. Like other Members, I am sure, I want to put on the record my thanks to my hon. Friend for her continuing work on this issue.

A key issue that I have already mentioned is the lack of effective competition, which works against consumers. Between them, Western Union and MoneyGram control two thirds of the remittance market in sub-Saharan Africa. That market must be made more open to a wider ranger of companies, including smaller, secure companies, to ensure that there is a competitive market. The issue has been highlighted by the Association of UK Payment Institutions and its executive chairman, Dominic Thorncroft. The AUKPI represents 120 payment institutions in the UK, and it notes that, since the collective decision of the UK banks in 2013 to stop trading with money remittance firms, more than 150 Financial Conduct Authority-regulated UK money remittance firms have lost their bank accounts and since then struggled to be able to offer money remittance services to their customers.

Some firms are taking action to try to offer alternatives in the market. An example is Xendpay.com, which is a service set up by social entrepreneur Rajesh Agrawal in response to the high charges levied by the big and dominant money transfer companies. However, right now consumers have less choice, and overall fees and charges have inevitably increased. Policy makers, including the UK Government, are just not doing enough to encourage greater competition, which would begin to tackle very high charges. By analogy, we would not tolerate a situation in which two companies controlled two thirds of our energy or banking markets, and we must not tolerate that in the international remittance market either.

Remittances are big business, and the lack of transparency, effective regulation and competition means that very substantial profits can be made by just a few big players. In 2013, Western Union handled £52 billion of transfers between customers. It returned over £420 million to shareholders through dividends and share repurchases. I believe there needs to be a balance between the commercial interests and success of these important companies and the decency of the business, taking into account the population of consumers on whom they rely. That is why I have called on MoneyGram and Western Union particularly to halve their fees in the run-up to Christmas—a time of giving—as a gesture of good will, and as a small stepping stone towards a more permanent solution.

I hope that the Minister will be able to give a commitment that her Government, should the opportunity arise, will act between now and the general election to reaffirm the commitment of the G20 last month and begin to set out specific proposals on how the UK Government might offer leadership in this area to bring down transfer charges. I also hope that her Government, until the election, will agree to speed up the necessary action to force money transfer companies, banks and brokers to be more transparent in their charges and, in particular, their foreign currency conversion rates. Hundreds of thousands of very hard-working people, doing some of the toughest jobs in our country, just want to support their relatives in some of the poorest countries in the world, and I hope very much today that the House will show its support for them too.

National Minimum Wage

Baroness Jowell Excerpts

Wednesday 15th January 2014 Commons Chamber

[Dame Tessa Jowell (Dulwich and West Norwood) (Lab)]

Having listened closely, as I always do, to the Secretary of State for Business, Innovation and Skills, I am hard pressed to see how he can recommend voting against our motion, which focuses on the enforcement of the national minimum wage.

The existence of a national minimum wage is a major statement about the kind of country that we are. Beyond the clichés about hard-working families, what does hard work actually involve? Are we prepared to be citizens and representatives in a country where too many mothers ship their children from one childminder to another, often late at night and very early in the morning, because they work for employers who do not honour their statutory obligation to pay the national minimum wage? This is about decency, and if the Government are serious about the enforcement and enforceability of the national minimum wage, they must surely acknowledge that the proposals in the motion are unexceptional.

I am proud to have been part of the Government who introduced the national minimum wage, and I hope that that progressive change has now become irreversible. Over its lifetime, one of its most powerful effects has been to start to close the gender pay gap. It stood at more than 16% when the national minimum wage was introduced in 1999; its present level of 9.2% is still unacceptable. The greatest burden resulting from the lack of growth in the economy and from the Government’s tax and benefit changes has been borne by women. Women’s employment is also concentrated in poorly paid occupational groups that include care, cleaning and catering. Whatever low pay threshold is used, the proportion of working women who are low-paid is about twice that of working men on low pay.

The need for enforcement of the national minimum wage goes without saying, and the failure to enforce it is a stain on the stated ambition of the Government. I commend the next stage of the ambition, which is to move towards a living wage. I pay tribute to Citizens UK and, in particular, to London Citizens, which have been at the forefront of introducing the living wage since 2005—so much so that 214 London employers and 12 London councils have now signed up to pay it.

Many opportunities are open to the Government to urge more employers to pay the living wage: the leverage of procurement; the increased tax receipts for Her Majesty’s Revenue and Customs resulting from more people being in better-paid jobs; and the practical benefits that businesses that pay the living wage report, such as more corporate resilience and social purpose, reduced absentee rates, greater loyalty and enhancement of the quality of work. Good businesses know that the living wage is good for their business; this is about the interconnection between corporate success, commercial success and social purpose.

When we talk about changes to the benefits system, we must remember that the living wage is one way in which we move families off and out of tax credits, and shift the responsibility for decent levels of pay from the state—the social security system—to employers. Having rather curtailed my remarks, I wish to finish by saying that we can follow the example of the best of business, but we should also remember what the difference means to families. The mother whose child—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.