Economic Update

Debate between Baroness Kramer and Lord True

Wednesday 19th October 2022 Lords Chamber

[Lord True (Con)]

I do not know that I do agree. I fear that I am not the most assiduous reader of the Financial Times—certainly not its editorial copy. The Government’s aspiration is to serve the people, not the bond markets.

[Baroness Kramer (LD)]

My Lords, I just point out to the Minister that, even with the list of flimsy growth measures he just described, Goldman Sachs forecast a 1% drop in output in the UK next year—so a recession. That is on the back of these policy announcements. I push him on this: today at Prime Minister’s Questions, if I understood the Prime Minister correctly, she said that there would not be cuts to public spending. She even implied that there would be growth in public spending. Could the Minister clarify if, once again, she was talking in nominal terms—or cash terms, as it is sometimes called? If it is not in real terms, swingeing cuts are on the way.

[Lord True (Con)]

If it is £1 less in real terms, that is an interesting definition of a swingeing cut. A medium-term fiscal plan is going to be published shortly. The noble Baroness and I go back a long way and I have great respect for her, but I suggest she waits for that. I believe the noble Baroness still has interests in the lovely California, so she should understand, from her knowledge of the United States, that there are international issues at play.

Replacement of the Chancellor of the Exchequer

Debate between Baroness Kramer and Lord True

Tuesday 18th October 2022 Lords Chamber

[Lord True (Con)]

My Lords, on the question of mortgages, everyone will be sensible to the position of those seeking to buy—I have a son seeking a mortgage at the moment—in conditions where interest rates are rising, which they are internationally. On the more general question, the Chancellor is clear that the Government will need to take some very difficult decisions on spending and tax to place the public finances on a sustainable footing. Sound public finances are the bedrock on which future economic growth will be built. There is no trade-off here; the mini-Budget moved further and faster than the market expected, but this Government remain committed to growth and supporting families and the most vulnerable in society. We will continue to seek to perform that duty.

[Baroness Kramer (LD)]

My Lords, the change of Chancellor may have mollified the financial markets slightly and temporarily but ordinary people, frankly, are on the verge of being utterly distraught. In addition to soaring food prices, mortgages and rents, they have no idea at all what their energy costs will be after April next year. When will people know what the cost of energy will be after next spring, because they have to plan and think it through? It is also crucial for businesses to know as they sign contracts. Also, how much will the typical individual be paying in bills and additional public service cuts to cover the costs of the permanent scarring and damage that the Government’s appalling handling of the last few weeks has caused to the UK economy?

[Lord True (Con)]

My Lords, apart from the rhetoric, the main part of the noble Baroness’s question was on energy prices. I hope that your Lordships have heard with delight that a Bill, for which I expect the support of both parties opposite, has been presented to the House on which we will debate these matters in some detail.

On the specifics, I say that continuing with the planned level of support between now and 2023 will remain a landmark policy. It will support millions of people through a difficult winter and means that they will not have to face bills as high as they would have been. A Treasury-led review has been announced into how we support energy bills beyond April next year; its objective is to design a new approach that will cost the taxpayer significantly less than planned while ensuring enough support for those in need, which I think all noble Lords would like to see. Equally, any support for businesses will be targeted to those most affected. This new approach will better incentivise energy efficiency. However, it is important to underline that the support with energy bills that my right honourable friend the Prime Minister so swiftly announced is going ahead, and what is being provided between now and next April will not change.

Bain & Company: Public Sector Contracts

Debate between Baroness Kramer and Lord True

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.

Financial Services Bill

Debate between Baroness Kramer and Lord True

Committee stage
Monday 8th March 2021 Grand Committee

[Baroness Kramer (LD)]

My Lords, I read all the amendments in this group, and I found myself in support of every one of them. It is an excellent group. We all realise now that Amendment 136F, tabled by the noble Baroness, Lady Meacher, is in the wrong group, which I suspect is why she is not speaking on this group under the heading that I loosely call offences.

Picking up on that theme, I say to the noble Lord, Lord Leigh of Hurley, that he was the victim of an attempted fraud. It is astonishing that action did not follow. When we discuss that group of offences, one of my underlying concerns is about the lack of resources to pursue offences of any kind within the financial services spectrum, so I suspect that that is probably where the resistance has been coming from. It is an area that we need to resource properly, and we need to make sure that when a red flag is raised by an experience such as his there is follow-up, knowing that that will have been one of many attempts to defraud and that some of them will have succeeded. I hope that the Government will look at resourcing.

When I look at quite a number of the amendments in this group, whether on buy now, pay later, bills of sale or mortgage prisoners—which I think we will deal with in more detail later—it strikes me that all of them could have been headed off at the pass as problems if we had had an underlying duty of care. That takes me back to the first group of amendments that we dealt with, because with that in place we would not have had a regulator hanging back to see what the competitive implications were, whether or not various tests were reached and so on. It would have shaped very early the framework within which these activities sat. It really is a very strong argument for that duty of care.

On the excellent Amendment 79, I understand, following Chris Woolard’s report, that we are to expect action. The Woolard report raises the issues in detail; I will not repeat them here today but I will say this: if the FCA does nothing more than introduce an affordability test, which is how it tried to manage the payday lenders, we can guarantee that this House will intervene. We will expect stronger action than that, to make sure this problem is grasped—and not allowed to encourage people to fall into debt which frankly they cannot handle—and to put a proper framework around what is essentially a form of lending. I note in that context that Klarna is described today as the most valuable new start-up in Europe; its rate of growth and the appetite for buy now, pay later should set alarm bells ringing.

I thank the noble Baroness, Lady McIntosh, for supporting my Amendment 92. It is a probing amendment that deals with a crucial aspect of financial inclusion—I find echoes of this in some of the words of the noble Lord, Lord Holmes. The inadequacy of basic bank accounts and the reluctance of many of the banks that offer them to engage with the needs of basic bank account customers is an underlying problem. It certainly means that basic bank accounts do not lead to appropriate vehicles for people in the most disadvantaged end to borrow or save, or to engage much more broadly with financial service products. In this day and age, that is a serious issue.

The situation is better today than it was a few years ago; I remember listening to high-street banks who would encourage those coming in to open a basic bank account to go down the street to Nationwide, where they would receive a friendlier reception. Basic bank accounts were regarded just as cost; this was not only inappropriate but meant that those who were welcoming ended up with the greatest share of the burden. I have always taken the view that trying to make an institution provide a service to a customer that they do not want will mean a failed product. We have about 7.5 million people with basic bank accounts and some 1.2 million people completely unbanked. We have to grasp this nettle.

In the United States, intended or not, the approach to people who have been shut out of the financial services system has been different and rather more effective. I would like the Government as well as the regulators to go away and look at it. Under the Community Reinvestment Act 1977, any bank that sought permission to acquire or merge with another bank—something almost every bank was doing at the time—was required to demonstrate that it fully served the disadvantaged communities in its service area. As a civil rights measure, banks were basically red-lining African American, Latin American or Central American communities. They were allowed to serve those communities by supporting local institutions identified as much better fitted to the purpose. This gave a new lease of life to community development financial institutions—CDFIs—of all kinds, including credit unions and community banks. The major banks invested in them to pass that threshold and be able to do acquisitions and mergers, and supported them with expertise in marketing and technology.

I would very much like to see that model here; that is the purpose of my amendment. The DWP’s 2019 report on financial inclusion states:

“Social and community lenders such as credit unions and … CDFIs … provide a lower cost alternative to high-cost lenders, they are small in comparison and lack the visibility and capability to compete at scale. The UK needs a much larger, more vibrant social lending sector”.


CDFIs know the needs of their clients—that is where their work is targeted. They often work with local charities and civil society groups to provide money advice, business advice and a wide range of additional support to make people financially capable.

Some investors in the UK are developing new entities in this space. I am aware of two potential new mutuals, one in the south-west and one in London, targeted at this group of people. The recent report by Ron Kalifa on fintechs identified that new fintechs have the capability to provide a tailored, low-cost offering. But the reality is that very few new players have emerged to serve the excluded sector, which tells me that the system that we have at present is not working. I want all major UK banks to engage with this sector and for the regulator to make it a requirement, not just an act of charity or public relations. That could be done within the banking licence or through regulation, but that would change it from being a passive set of actions to an active way in which to make sure that this gap in the market is filled by people capable of doing it well.

I thank the noble Lord, Lord Naseby, and others who supported Amendment 93, which deals with the current and accelerating crisis of access to cash. The Government promised legislation at last year’s Budget, but there is no sign of it yet. Covid has driven a sharp drop in cash usage from three in 10 people before the crisis to just one in 10 people. That is a huge drop, but it still leaves about 5 million people who rely on using cash. Of course poverty and age are often a characteristic, but for many people it is a strong cultural preference; they want to use cash, and it is really their right.

As I understand it, the Government are going to follow the direction recommended by the noble Lord, Lord Holmes; they will be able to confirm whether that is correct. That would permit retailers to provide cash without a purchase, which would help, but it is still very hit and miss. The Access to Cash Review done by Natalie Ceeney in 2019 highlighted the fact that retailers’ reluctance to accept cash is driving a lot of the change. Bank branches are closing across the country, especially in rural and disadvantaged communities. LINK, the largest cash machine network, has a contract with the Post Office, but it has about 18 months or so to run. Free-to-use ATMs are disappearing fast; when I talked to the industry, the estimate that I was given was that, if we do not do something quickly, half the ATMs in the country will be pay to use within 18 months.

We will need intervention by the FCA. Lots of commercial companies are involved in the system and any change or rationalisation throws up competition issues. The banks, for example, could be given an obligation to provide free access to cash but then allowed to use a utility model whereby they combine to provide free, shared smart machines capable of a range of services, perhaps with an assistant present to help users to navigate the machines. That changes how we think about this issue quite dramatically—and normally we would have time to do that, but we are now faced with an urgent situation.

I quote one final phrase of Natalie Ceeney’s report, because to me it says it all:

“It is … critical that action is taken now, so that no-one is left behind.”


I recommend that the Government take urgent action to deal with access to cash.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, I thank all those who have spoken very genuinely, because we are considering an important group of amendments on consumer access to credit. I am very grateful for the continued and thoughtful interest of noble Lords in this area. I assure all those who have spoken that we are listening carefully and will read this debate.

Amendment 79 would require the Treasury to introduce legislation to bring buy now, pay later products into FCA regulation, to which all speakers referred. The Government are committed to protecting the interests of consumers and, since Second Reading, as the noble Lord, Lord Tunnicliffe, said in moving his amendment so ably, the Woolard Review has recommended that these products should be brought into the scope of FCA regulation. The Government are acting swiftly, following the outcome to this review, just as the Economic Secretary committed to do during this Bill’s passage through the other place. That is why, on 2 February, we announced our intention to legislate to bring them into regulation. However, it is important to know that these products are interest free and, therefore, inherently lower risk than most other forms of borrowing, so it is essential that regulation protects customers in a way that ensures that they can continue to use these products to manage their finances, rather than more expensive forms of credit on which they might otherwise rely. The Government therefore intend to consult stakeholders to ensure that a proportionate approach to regulation is achieved.

EU Exit: End of Transition Period

Debate between Baroness Kramer and Lord True

Thursday 24th September 2020 Lords Chamber

[Lord True (Con)]

My Lords, there are a number of questions wrapped up there, and I did not answer the noble Lord, Lord Kerr, on one question. The Government are not blaming anybody. We are certainly not blaming the haulage industry or any other industry. We are pleading for everybody to work together to achieve the best outcome. I have said to the House that the specific freight IT which we have been talking about will be being tested next month and be operational by April. We have already published an iteration of the border operating model. There will be a new iteration of that published very shortly.

[Baroness Kramer (LD) [V]]

My Lords, small manufacturing exporters have been put in an impossible position, with no clarity on an FTA, high costs to adapt to borders and blows from Covid-19, and they have no capacity to prepare for multiple outcomes. Will the Government at the very least provide a beefed-up advice service, and will they use these last days of negotiation to focus on a simplified export regime for the little guys—something that does not seem to have been on the table at all—less onerous rules of origin, no duplication of conformity assessments and a pared-back AEO scheme? Frankly, without immediate action, many small guys will lose the willingness to engage properly in the Christmas trading season. That would be very bad news and mean that many go out of business.

Northern Ireland Protocol

Debate between Baroness Kramer and Lord True

Thursday 21st May 2020 Lords Chamber

[Baroness Kramer (LD)]

Can the Minister confirm that after transition, Northern Ireland will have to conform with the EU level playing field rules and that UK companies with interests in Northern Ireland will de facto also have to conform?

[Lord True]

The status of Northern Ireland under the protocol is well known and often discussed. Northern Ireland will effectively be operating within the EU single market but also within the internal market of the United Kingdom. The arrangements that we have put in place are envisaged in the protocol but, at present, the details of their implementation are under discussion.