Procurement Act 2023

Baroness Kramer Excerpts

Tuesday 15th October 2024 Lords Chamber

[Baroness Twycross (Lab)]

I am happy to look into the point the noble Baroness raises. A new duty under the Procurement Act will require contracting authorities to have regard to small businesses, including ensuring 30-day payment terms on a broader range of contracts. We are keen to encourage more suppliers, particularly SMEs, to bid, which increases competition and should in turn support growth.

[Baroness Kramer (LD)]

On my noble friend’s point, I am not sure the Minister quite grasped the key issue, which is that if small businesses are required to make public their intellectual property and innovation—so that it then becomes available for much larger firms to take it over and use it without any payment—they are totally discouraged from putting forward their names for contracts to government.

[Baroness Twycross (Lab)]

I understood the point that was raised, but I did not have the answer. I apologise that I did not have the exact answer. I will go back and look into this, and I will make sure that I write to both noble Baronesses.

Bain & Company: Public Sector Contracts

Baroness Kramer Excerpts

Monday 13th June 2022 Lords Chamber

[Lord True (Con)]

My Lords, there are two aspects there. I have answered on the progress so far of the Cabinet Office review of the case following the Zondo commission. As far as the Procurement Bill is concerned, we will of course be discussing these things in Committee and later. In the Bill, we are expanding the scope of misconduct that can lead to exclusion; we are also increasing the time period within which misconduct can lead to exclusion, bringing subsidiary companies into scope of inclusion and making the rules clearer so that contracting authorities can undertake exclusions with more confidence. I look forward to engaging with the noble Baroness opposite and her colleagues in the course of the Bill, and I will seek to address the questions that she has raised as we go forward.

[Baroness Kramer (LD)]

My Lords, unless I have badly understood, which is quite possible, Bain & Co came close to purchasing Liverpool Victoria Financial Services—the bid was finally rejected last December. What powers would the regulators have had, with their oversight of Bain & Co’s behaviour in other countries, to intervene in that potential purchase?

[Lord True (Con)]

My Lords, I am not familiar with the specific case that the noble Baroness raises. I will seek information and write to her in response.

Coronavirus Grant Schemes: Fraud

Baroness Kramer Excerpts

Monday 24th January 2022 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, I think we have just witnessed one of the most dramatic moments we have ever seen in your Lordships’ House, from a Minister who felt his integrity meant that he could no longer ensure he remained a member of the Government. I do not know if the noble Lord on the Front Bench wishes to comment; there is nobody else to take questions, so he may wish to just move to the next business.

[Baroness Kramer (LD)]

My Lords, may I take this opportunity to say on behalf of these Benches how much we appreciate the honour and integrity that has just been displayed by the Minister’s resignation? His resignation has not yet been accepted, so he still remains the Minister, but I do not think anybody could have raised questions more forcefully, accurately or completely than he has. On a personal level, I want to say how much we will miss the noble Lord, Lord Agnew, in this role, not least because of his integrity.

[The Deputy Speaker (Baroness Fookes) (Con)]

My Lords, we must now move on.

Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021

Baroness Kramer Excerpts

Tuesday 30th November 2021 Grand Committee

[Lord Naseby (Con)]

My Lords, I declare a possible interest as a trustee of the Parliamentary Contributory Pension Fund. I want to put this on the record, as we are getting wide briefings at the moment. I also have some experience of the friendly society movement as a former chairman of the Tunbridge Wells Equitable Friendly Society and two Invesco investment trusts.

I particularly draw attention to paragraph 7.8 of the Explanatory Memorandum, which is key. It says that

“the framework in its current form does not appropriately cater for the differences between credit institutions and investment firms and can be disproportionate”

and “burdensome”, et cetera. That seems crucial. It then goes on to mention the consultation that has been carried out. When my noble friend winds up, could he make it clear whether all parts of Part 9C rules have been produced and circulated to the interested parties, or not? Certainly, implementation on 1 January 2022 does not fill me with enthusiasm. It is after Christmas and less than a month away, so I hope he will say that they have been produced, and when.

I am sure that my noble friend and all noble Lords would feel that there are some deficiencies in UK-retained law. I seek reassurance that we are confident that those deficiencies have been removed.

The other dimension I raise relates to paragraph 12.3. It will not surprise my noble friends that, once again, I feel very strongly about impact assessments and statements from Her Majesty’s Treasury that it considers that the net impact will be less than £5 million and very limited. Paragraph 14.1 says that

“the number of small businesses in scope is low.”

They may be small businesses, but they are important businesses to whoever is running them—and we are talking about financial firms.

It is always helpful to have a review of any legislation, particularly legislation relating to our coming out of the EU. That may not be proportionate in the judgment of the Treasury, but I do not know how many firms we are talking about. If my noble friend has that information, that will be helpful. I suppose that if we are talking of only three or four, that may be right, but I do not believe that that is the number—from my experience in the City, from some of the presentations we have recently had and, indeed, from some of the publicity about what is happening in the financial sector at the moment.

Is my noble friend absolutely confident that those firms do not want the SI reviewed after a period? If they all say no—that they do not want a review and are comfortable—fine, but my judgment is that, in life, it is helpful to have a review at some point.

[Baroness Kramer (LD)]

My Lords, obviously I will not oppose this statutory instrument, but it raises a number of issues which need to be explored, and I shall look forward to the Minister’s response to our concerns. We raised these concerns during the passage of the Financial Services Act 2021, but they have not been alleviated.

The Act and this SI transfer significant power to set the UK rules on Basel III standards to the financial regulators accompanied by minimal parliamentary oversight. It is a crucial process and has a fundamental impact on financial stability, as it sets the capital and risk management requirements for banks and other financial institutions. The PRA and the FCA are expected to consult on their decisions, and parliamentarians can contribute to those consultations, but as no more than ordinary consultees, despite their responsibilities to the public, and can at best hope for a few comments on their points as part of the general response.

Committees of Parliament can question the PRA and FCA and undertake reports but, in practice, on only a handful of issues each year, so they are likely to be visited exceedingly rarely and probably only at a time of crisis, which is rather too late. Even the SIs offer no meaningful accountability, because they cannot be amended. This SI, with the powers it gives the regulators, will mean that the issues of Basel III, so crucial to our financial structure, will probably never again come before either this House or the other place, except through that committee arrangement, which is, as I said, pretty minimal. Perhaps the Minister will confirm that.

When we were members of the EU—I know mentioning that is not popular with the Government—basic Basel standards were implemented through EU law, where the process was open and accountable and as different as day from night from our current circumstance. Before the EU Commission proposed draft legislation, it held many conferences and public meetings involving parliamentarians; parliamentarians were engaged in briefings, expert evidence sessions and discussions with a wide range of relevant regulators and supervisory authorities; and the Economic and Monetary Affairs Committee would be involved in scrutinising the main directive and regulations by way of co-decision. With Brexit, the power has transferred from the EU, but the Government have chosen to do it in a way that essentially removes any meaningful democratic accountability. I should like to hear for the record why the Minister has chosen such a route.

Money Laundering

Baroness Kramer Excerpts

Wednesday 24th November 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, we are certainly committed to that. I am afraid I cannot give a date yet. As the noble Lord will know, we are trying to put a huge amount of legislation through both Houses, but we recognise that it is a priority. In February this year the economic crime plan was set out. It listed seven priorities, and dealing with the issues he referred to is included there.

[Baroness Kramer (LD)]

My Lords, any money launderer worth his or her salt is no longer going through the banks. They are basically engaged in Web3 and using decentralised finance, known as DeFi for short. Does the Minister understand that this makes even more critical the kind of register the noble Lord, Lord Tunnicliffe, just described, but also a register of the beneficial owners of property in the UK, which is frequently the way in which criminals, dictators and others choose to wash out their money?

[Lord Agnew of Oulton (Con)]

My Lords, I refer again to OPBAS, whose role is to oversee all the regulators for supervision in this area, including those that the noble Baroness refers to. We will continue to be vigilant.

UK Cash Network

Baroness Kramer Excerpts

Monday 8th November 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My noble friend is right that access to cash can be more difficult for those less well off. However, as he will be aware, LINK has committed to protect free-to-use ATMs more than one kilometre away from the next nearest free ATM or post office and free access to cash on high streets. It remains a priority of this Government to ensure that cash is available.

[Baroness Kramer (LD)]

My Lords, I wonder if I can press the Government, because the Bank of England is looking closely at a central bank digital currency. Many have suggested that this will be the substitute for cash in the future, but its characteristics are quite different, in many ways, from cash. Can we have an assurance from the Government that they will keep in place a cash infrastructure running alongside—if they choose it—a digital sterling?

[Lord Agnew of Oulton (Con)]

My Lords, we are certainly looking at a digital system, but I reassure the noble Baroness that cash remains a key part of the ecosystem.

Budget Statement

Baroness Kramer Excerpts

Wednesday 3rd November 2021 Grand Committee

[Baroness Kramer (LD)]

My Lords, I start with a sad farewell to the right reverend Prelate the Bishop of Newcastle. I hope that her words today on the importance of investing in our children will be heard by all parties and all sides—not only by those sitting in this debate but by their colleagues. The work that she has done in this area has been important in driving the thinking within this House—again, on all Benches. So I say farewell and thank you from all of us.

On a very different note, I say to the Minister that I hope that the message has now been received that the Budget and the spending review are issues that should be debated in the main Chamber. I hope that we never see this decision to be in Grand Committee cited as a precedent for future debates on Budgets and spending reviews.

Many people who have spoken today have talked about the huge challenges facing our economy, whether they are recent through Covid or deeply embedded, and I want to capture a few of them as part of my winding summary. The OBR has confirmed that the economy is permanently severely scarred by 2% from Covid but, far more significantly, by 4% due to—as we heard in detail from the noble Lord, Lord Eatwell, and my noble friend Lord Razzall—a loss in tax receipts of £30 billion per year as a consequence just of the Brexit scarring. In fact, several noble Lords have stated that 4% is probably a rather conservative calculation of the level of permanent damage.

UK productivity continues its malaise, repeatedly growing at something in the area of only 1.3%. I completely agree with the noble Lord, Lord Londesborough, that this, in a sense, is the basis for the economic struggle that we face. Our rival economies have continued to do far better on productivity. We have to tackle that issue; it is a long-term deficiency, as the noble Lord, Lord Desai, essentially discussed.

I wanted to say, however—and I think that the noble Lord, Lord Londesborough, raised this question—that the Government talk about us being a high-wage economy. I know the noble Lord was afraid of the consequences if that is not driven by productivity, but may I refer him to the OBR? Its forecast shows that real wages will have grown just 2.4% between 2008 and 2024. That is not a high-wage economy, and is one of the fundamental problems that we have to address.

Business investment—mentioned by several people—continues to be weak; both foreign direct investment and domestic investment are at very low levels. According to the publication Credit Strategy,

“52% of businesses are now saddled with ‘toxic debt’”.

Of course, that is not even through all the various sectors, but many of our key sectors will be struggling with the debt burden for years to come, holding back their growth. UK corporate debt was up in 2020 from £1.9 trillion to £6.6 trillion. It is an eye-watering number.

To pick up the point from the noble Lord, Lord Razzall, exports to the EU are down sharply, but I say to others who have talked about new trade agreements, new opportunity and so on that, according to the forecasts, they are very far from being offset by new opportunities elsewhere. I am picking up on ONS figures. It has led to real concerns that the UK is losing overall competitiveness.

Again, as many have said, we have a rapidly ageing and increasingly dependent population. I was looking at the dependency ratio, which rose in 2020 to 57.6%, up from 51.7% in 2010; that comes from World Bank figures. The issue that lies behind this is that it is pretty much unsustainable, particularly when that dependency is coming from an older population and not a group of youngsters who will be future workers.

Taxes are the highest since the 1950s and on a path to exceed 36% of national income. However, I want to pick up the issue that my noble friend Lord Shipley raised, which is the tax burden of local councils and is not included in those tax numbers that are quoted by the OBR. There is a 5% increase in council taxes, which will be a burden distributed most unfairly under a regressive system. The noble Lord, Lord Turnbull, talked about completely reforming the council tax system and, again, my noble friend Lord Shipley raised the same issue. This is an area that must be fundamentally addressed because of the damage it does to many of the least well-off in our society at a critical time.

Public service net debt is forecast by the OBR to reach 98.2% of GDP and not to start falling until the end of the three-year period. It will just squeak through the Chancellor’s new rule, if the OBR numbers are right. The number that I think frightens most of us is that CPI is forecast to exceed 4%—many are now saying 5% or perhaps even higher. Because it seems to be based very much on essential purchases such as food and energy, its impact will be on the poorest in our society.

Facing all that, I hope—and I join the noble Lord, Lord Hain, in this—that the Government will now accept the amendment from the noble Baroness, Lady Altmann, which was passed yesterday. It would reshape the definition of the triple lock for this year in such a way that it does not leave pensioners utterly impoverished.

If all that were not enough, we have two of the greatest existential challenges of any age: the scourge of climate change and the challenge, which has hardly been spoken about, of the digital revolution. To me, that says one thing—that we needed a transformational Budget—and what we got was simply underwhelming. There was a sort of scattering of seed as if across the bird table. There were quite a number of good things in it, and quite a number of attractive things, but nothing that could sustain an economy in the long term, just as the feed on the bird table cannot sustain birds through the entire winter.

If anyone doubts the fundamental weakness of the Budget they just need to look at the OBR forecast. This was addressed by my noble friends Lord Fox and Lord Razzall, the noble Lord, Lord Lamont, and the noble Baroness, Lady Noakes. It forecast growth of GDP of 1.3% in 2024 and 1.6% in 2025. I know that the noble Baroness, Lady Noakes, is optimistic that those numbers are fundamentally wrong, but, my goodness, that is a long shot. These are the best numbers we have to work with, and we are scared. I mentioned a list of challenges: if we had just a few of them, they would be tough to deal with in that kind of limp economic growth, but when we look at the full list—and I suspect people will add others—we are looking at a serious risk to our standard of living and, frankly, not all the hot air of boosterism will change any of that.

I shall refer to a few particular policies because I think I must. I realise that I cannot go on too long. I join others in not understanding the cruelty to the 3.5 million people on universal credit who are unable to work or able to work only part-time. They are being pushed into penury by removal of the £20 universal credit uplift, which is made worse by the pressure of inflation. All the talk about optimism will not stop people being hungry, and I pick up the point made by the noble Baroness, Lady McIntosh of Pickering, that every one of them has the right to a warm home. These issues were addressed by the noble Lords, Lord Turnbull, Lord Horam and Lord Desai. That does not mean that I do not welcome the taper in the UC rate, which will help people in work full-time, and the boost to the national living wage, but I pick up the point made by the noble Lord, Lord Desai, that it still leaves those people facing effectively a 55% marginal tax rate, which is simply unsustainable and outrageous. I also pick up the issue recognised by the noble Lord, Lord Sikka, which is that national insurance starting at a much lower threshold is an additional pressure on those individuals. I quote the IFS:

“the working age benefit system is overall substantially less generous than it was in 2015.”

I am also very worried that the increases in spending for most government departments are a sort of unannouncement of previously announced budget cuts—perhaps the Minister can confirm this—and that most of the money that is being restored is for capital spend, when we desperately need day-to-day spend.

I shall finish by focusing on what I think is the key issue of the day, which is climate change. Our Government call themselves a global leader in tackling climate change. If that is their ambition, why is this not a proper net-zero Budget? It contains announcements of modest, scattergun green investments, which are all welcome, but they are insubstantial compared with our economic rivals. I shall give a direct comparison: £620 million over the next three years to encourage us to use electric vehicles and to walk and cycle. In Germany for the equivalent period there is €5.5 billion just for electric vehicle charging infrastructure. It is dramatic and transformational in Germany and in the margins in the UK.

Businesses are critical to net zero. They have told the CBI and anyone who will listen that they need a long-term fiscal plan of incentives and disincentives to reach net zero, including disincentives to support fossil fuels. Long-term fiscal certainty is the only way in which they will maximise their investment. There was no plan in the net-zero strategy. I think all of us thought it would be in the Budget but it is not.

The Chancellor’s proposals today are to use disclosure and embarrassment to get companies to push hard to net zero, but most of us in this Room are not naïve. To get businesses and the financial world to focus on delivering net zero to the timetable needs that combination of rewards and costs. It should have been in this, so we need to hear from the Government why there has been no such plan.

I would love to talk about other issues, such as reforming interest rates. I feel strongly about education. Many noble Lords said that spending per student is only just returning to 2010 levels. There is one suggestion I want to make to the Government on that: if they delayed that cut in the banker’s levy by one year, they could use that money to provide catch-up for all the kids who are struggling as a consequence of two years of inadequate education because of Covid. If they do not catch up, they will lose permanently. We have proposed that as a party and here is an opportunity to do it.

Just about everybody was displeased with this Budget in one way or another. For a brief second, I thought that the noble Lord, Lord Naseby, would be fully supportive, but then he talked about the dreadful track and trace system, which wasted something close to £37 billion. The noble Baroness, Lady Foster of Oxton, said she was glad that she was not the Chancellor, but it is the job of Chancellors, in times like this, to make the transformational change, to step up to the struggle the country faces and make those big shifts. That was what was required from this Budget, but it was not what was delivered.

Critical Benchmarks (References and Administrators’ Liability) Bill [HL]

Baroness Kramer Excerpts

2nd reading
Wednesday 13th October 2021 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I begin by welcoming the noble Lord, Lord Altrincham, to the House. I think that is a maiden speech that we are all going to remember. We particularly look forward to hearing him speak on Treasury issues but also very much on mental health issues. If one had to pick two issues pertinent to our time, I would say that those must be the two. I very much welcome him but have to warn him that to go from being a banker to being a politician is to go from one much-despised profession to another. I hope he recognises that he is unlikely to have any better reception in public today than he did as his former self. We recognise his capacities and honestly and sincerely welcome him.

I join others in thanking the Minister and the Economic Secretary to the Treasury for the briefings that they provided to us and particularly for the meeting that many of us were able to participate in yesterday with the relevant officials from the Treasury and the FCA. I know that I felt a much greater peace of mind at the end of that meeting. It was extremely helpful to have that level of expertise and people who have been so engaged in the process brought into that meeting with Peers.

We have always supported the essential tenets of this Bill—immunity for the administrator, synthetic Libor and provision of legal certainty that legacy contracts will remain valid. We in no way wish to challenge that. However, I am very much with my noble friend Lord Sharkey on the questions that he raised—I am not going to repeat them as this House and the Minister will now be fully aware of them—and on the questions raised by the noble Baroness, Lady Noakes, and the noble Lord, Lord Blackwell. We have to have some constructive responses to those.

I want to pick up on two questions that have particularly exercised me, although that is not to say that they are more important than the other questions. In a sense, both questions come down to the mechanism that the FCA has selected to determine synthetic Libor—how it determines the spread above the risk-free rate. As I say, I took a great deal of comfort from the conversation yesterday with the FCA but I think there must be some mechanism whereby this House should be able to scrutinise the process that leads to a mechanism of such significance. Again, it underscores the gap we have in making a regulator accountable to Parliament. I hope that the Minister will take that back. It is not a criticism of the regulator but points out the absence of an appropriate mechanism. We need to have that put in place.

My second concern has always been that cliff edge. On 31 December we will have a Libor rate created through the historic process and by the mechanism people expected to be used when they signed their various agreements. Then four days later synthetic Libor is likely to deliver a difference of something in the range of 10 basis points. I find that rather extraordinary. I hope it does not lead to the kinds of legal disputes that the noble Baroness, Lady Noakes, has indicated would be possible. I think it could. It also somewhat disturbs me that we have not found a better way to smooth that transition. Like others who have been bankers in this House, I suspect, I have fought hours through the night for one or two basis points; 10 basis points is such a significant differential. I am delighted if the financial services industry finds this entirely acceptable but I just wonder whether it will not be rather surprised when it actually sees the number.

One of my concerns has always been that that kind of gap as a result of two different approaches to creating a Libor benchmark also indicates the potential for various financial institutions to arbitrage and game in various ways because of the difference and the change. I have taken some reassurance from the FCA trying to explain that it does not think that small individuals will be the victims of any such gaming and arbitrage. I have concerns because loans to small businesses are not regulated and therefore the FCA’s ability to monitor them is very different from its ability to monitor loans to consumers. If it is the big boys all playing games with each other, I must admit my concerns are rather fewer, but I have concerns around that area.

I am going to close because so much of what has needed to be said has been said, but I want to pick up on the issue raised by the noble Lord, Lord Moylan. I, too, feel an incredible sadness in saying farewell to Libor. Back when I was in the United States, I spent more than 10 years structuring loans and a variety of transactions—some of the earliest swaps—around Libor, and I took great pride in a benchmark that was set in London not just for sterling but for every meaningful currency across the globe and all time zones. I confess the shock that I experienced, never having worked in the City of London, only in the United States in direct lending and structuring, to find that Libor had been manipulated, and so blatantly, by major financial institutions and that it was apparently well known to their chief executives.

I was on the Parliamentary Commission on Banking Standards. Those masters of the universe were very well aware of the manipulation that was going on and, frankly, the regulator was too weak or too deferential to intervene. It was a stain on London and on financial services in the UK and I am sad that that stain still overhangs this ending of Libor. I agree with the noble Lord, Lord Moylan, that there are consequences because of the loss of prestige and international standing that is attached to the disappearance of the role that London played in virtually every lending transaction across the globe. It is with sadness, and perhaps with a little bit of shame, that I stand here and speak to this Bill. We will support the Government, but we would like to see our questions answered, and we may press some of them when we get to Committee.

Net-zero Emissions Target

Baroness Kramer Excerpts

Monday 11th October 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, as I mentioned in an earlier answer, we need to do this transition in an orderly way. We need to ensure that our net-zero energy generation is sustainable. We are moving very quickly. We have seen, for example, the cost of offshore wind drop dramatically over the last five years, from over £100 per kilowatt hour to around £45, but we need to keep moving that along before we remove any more support to the traditional sources of energy.

[Baroness Kramer (LD)]

My Lords, according to the CBI, the obstacle that most frequently holds back business from taking action towards net zero is uncertainty, especially about the Government’s fiscal policy on the environment. Can the Minister assure the House that the Budget on 27 October will provide a clear net-zero fiscal strategy and road map, with a consistent environmental tax policy outlined, including principles and goals that business can rely on for the long term?

[Lord Agnew of Oulton (Con)]

My Lords, I cannot speak to the detail of the Budget in a few weeks’ time, but we have a strong message, which we have been consistent with over the last few years. We have made clear, for example, the recently announced emissions trading scheme, which provides a clear road map for heavy users of carbon. We are about to introduce the plastic packaging tax, which again is clear, for industry to get behind. We will continue to send those messages, but I think they are pretty clear. Indeed, we are seeing dramatic change by business. For example, coming up to COP 26, three huge companies have made very strong commitments: GSK, Hitachi and Microsoft have all committed to get to net zero in the next few years.

Health and Social Care Levy Bill

Baroness Kramer Excerpts

2nd reading & Order of Commitment discharged & 3rd reading
Monday 11th October 2021 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I am the first of the winding speakers. I have listened to many debates in this House, but it is very rare to hear speech after speech of the quality that we have had today. Frankly, it makes it even more galling that the other place dealt with this Bill so quickly, when there was so much that needed to be said and changed. It is galling that we cannot in any way directly impact the shape of the Bill, other than by hoping that we have persuaded the Government to reconsider an issue here or there, but that is the world in which we function. At least we can make sure that we are heard. I hope the Government will read today’s speeches because they have been quite extraordinary.

I come from a party that has been talking about a hypothecated tax to increase the funding of health and social care for years. We always assumed that that would be based essentially on income tax, as the broadest-based tax and the most progressive of the taxes available. Lots of other ideas have come from the Floor today, including a much more regular re-rating of property. There are many ideas to consider, but the essential principle that the increased funding for the NHS and social care should be funded by a very broadly based, progressive tax is to me fundamental and sensible.

One of the reasons we as a party have gone in the direction of a hypothecated tax is to keep the Treasury’s sticky fingers off the additional money. It will be important to hear an answer from the Minister on the question that the noble Lord, Lord Eatwell, raised about how long this levy will be hypothecated. We need some assurance and a fuller understanding of that issue.

When I first heard that the Government were going to consider a levy, never in my wildest dreams did I consider that it would be put on national insurance. It would be hard to find a more unsuitable basis for raising this kind of funding. Many people have made the fundamental point that the threshold for paying national insurance is much lower than that for income tax, so this falls on the poorest in our society. The levy has a rate step-down for people earning higher incomes and of course it does not touch unearned income. We understand that there will be some sort of dividend tax but, as others have said, unearned income, whether on property, pensions or savings, is not captured. The Government talk constantly about levelling up, but they plan to put a tax on those with the lowest incomes, while excluding the sources of income of many of those with the highest incomes. How on earth does this contribute to levelling up?

It is normal for us to see a distributional analysis—this was raised by the noble Lord, Lord Eatwell, and others—to show where the costs fall. I would be very interested to see an analysis which separates out where the costs and the benefits fall. That information will be critical. As many have pointed out, those who will be able to benefit from the cap will be some of the biggest winners in all this, rather than people who are currently struggling because the social care on offer to them is completely inadequate and needs to be better funded. We need that distributional analysis, broken out in an appropriate way.

Context matters when we consider increasing something such as national insurance. Context always matters. The context in this case is a rapidly rising cost of living. I read today that inflation is now anticipated to reach 6% by the spring and to fall back only to about 3% for the remaining decade. That will be an incredible hit for individuals, and much of that inflation will be embedded in essentials such as food and energy. Bitterest of all for almost everybody on low incomes is the £20-a-week cut in universal credit, coming as part of this overall package. It is described by the Resolution Foundation as a “toxic” combination, and that is perhaps the most accurate phrase.

If we look back at the work done by the House of Commons Library just to give people a sense of exactly how that works, we see that a typical NHS worker is on something like £19,330 a year, and many such workers rely on universal credit. They are about to see their income fall by almost £80 a month at this time of rising prices. That is despite the 3% pay increase that they have been awarded, because the increase in national insurance and the cut in universal credit are dwarfing the pay increase. The Government must have known that when they agreed to the 3% pay increase, and frankly, it makes me absolutely furious that we did not have full honesty, transparency and openness at that time.

I have a particular question to ask the Minister because I would like some clarity on this. The Government intend to reimburse government departments for the increase in national insurance contributions for those whom they employ directly. But many departments, and far more especially local government, contract out services, and indeed, the Conservative Government have pressured them to keep contracting out services for a long period. What happens when that increase in national insurance hits the cost of outsourced services? Will the Government pick up that added bill? As many others have said, we now see local authorities considering a 5% increase in council tax just to cover the underfunded cost of social care, and I do not think that includes the additional impact of the national insurance contribution on the cost of outsourced services. We absolutely have to get some sense of an answer.

We all know—we have heard again today from speaker after speaker—that this levy is far from adequate to solve the problem, not just of social care but even of the NHS, especially with its post-Covid backlog. Social care is again pushed into the Cinderella role. We know also that over the next three years, of the £36 billion raised, it is anticipated that at best only £5.4 billion will go to social care. That is a drop in the ocean in many ways, particularly listening to the numbers that the noble Lord, Lord Forsyth, quoted on the need for an £8 billion-a-year increase; others updated those figures to something closer to between £9 billion and £14 billion. Like many others, I am absolutely convinced that we will not see the NHS claim this money just for a short two or three-year period. When I talk to people in the NHS, they are very clear that they will need to claim the lion’s share of all that money for more than a decade to be able to bring the National Health Service to the level that will enable it to deal with its current and anticipated burdens.

Demographics are moving against us as well. Many people talked about the fact that half of those using social care presently are adults with various forms of disability. They will be moving into old age. The demographics mean that we will see an ever-increasing social care burden, so we need a comprehensive plan, as many said—a proper framework to be able to deliver social care. I would love to know what is in that famous White Paper which was apparently in the Prime Minister’s back pocket, but we have not even seen that at this time. I also agree with so many of those who say that when you look at this package, it is clear that not only does it not fund the social care reforms that we need to deal with the desperate staffing shortages—now well over 120,000 people—but those who think that their costs will be covered will find that they are not covered for “hotel costs”. May I say what an appalling term that is? These are costs of living, not costs of luxury holidays. They are not hotel costs in the sense that anybody would ever anticipate. In addition, that the cap will be tied to costs defined by local authorities’ assessment of cost rather than the real cost puts us in an absolutely extraordinary situation.

I know that I should finish very quickly. From all the voices that I have heard today, I have taken that there is a huge amount of common ground across parties, Benches and ideologies. We are not all absolutely in agreement on every single point. However, it is clear that it is possible to pull all parties together and establish an underlying policy and principle that everyone can sign up to and that then guarantees that both the schemes and the funding do not become political footballs in ensuing elections. It also means that we can have in place the kind of long-term planning that is fundamental to the answers that we are searching for. Could the Minister take back or even give us confirmation today that he will be genuinely pulling together all the various voices to both establish the framework and think through the funding? We all completely admired the statement made by the noble Lord, Lord Forsyth of Drumlean, right at the beginning. We are being asked in the Bill to pay a bill but have no idea what on earth is on the menu and what services will be provided. If we do not do this on an all-party basis, we will be doing something that, frankly, has very little future.

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[Lord Agnew of Oulton (Con)]

Yes, sorry. I lost my thread. There will be no changes to existing procedures.

Noble Lords asked about support for unpaid carers. Of course, they play a vital role in the care system. I suspect that there is hardly anyone here in the Chamber who has not been involved in the care of their parents at the end of their lives on an unpaid basis. I certainly had to—but luckily I am one of seven siblings and we all live in the same county. None the less, it is a considerable burden.

The Care Act encourages local authorities to support unpaid carers and to provide preventive care to stop people’s early care needs escalating. A new cap on care costs will offer greater certainty to unpaid carers and support informed decision-making and planning for the overall costs of care.

The Government will take steps to ensure that the 5.4 million unpaid carers have the support, advice and respite they need, fulfilling the goals of the Care Act. We will work with the sector, including unpaid carers, to co-develop more detail in our plans and will publish further detail in the White Paper for reform later this year—and on the matter of the White Paper, I say to noble Lords that it is not long now. It is only a couple of months; it has been promised before the end of the year, and I am perhaps a little more optimistic than some Members of the House.

[Baroness Kramer (LD)]

Before the Minister leaves this area of exploration, does he have an answer to my question on whether the Government will pick up the costs of the additional national insurance to be paid by those to whom local government outsources services? I believe it is a yes or no answer.

[Lord Agnew of Oulton (Con)]

I cannot give the noble Baroness a clear answer on that now. More detail will be available in the Budget and the spending review. If it does not transpire in those documents in the next couple of weeks, the noble Baroness can write to me and I will investigate further.

On the adult social care workforce, our investment is at least £500 million across the three years to deliver new qualifications, progression pathways and mental health support. This workforce package is unprecedented investment: it is something like a fivefold increase in public spending on skills and training for this sector.

The noble Lord, Lord Griffiths, asked about vaccines for NHS staff. He is correct that at the moment there is no requirement for NHS staff to be vaccinated. However, we have a consultation under way to try to find the best way through on that sensitive issue.

I have probably answered the noble Baroness, Lady Kramer, as much as I can on the compensating of NICs. Just to confirm, I say that the Government will compensate public sector bodies such as the NHS for the increased cost of employer NICs. If they did not, they would simply reduce the amount available. The Chancellor will set out more details in his spending review.

My noble friend Lord Bethell asked about NHSX funding. We remain absolutely committed to all aspects of technological improvement. Again, I am more optimistic over the long term because I believe we will find new ways of treating this sector more efficiently, and NHSX will play a part in that.

My noble friend Lord Naseby made a point about the structure of GPs’ surgeries. We will have to see some dramatic changes in that area. In my view, we cannot sustain surgeries in which five-sixths of the doctors are working only part-time, but again I think this will throw up opportunities. The two sectors will have to work much more closely together—