Financial Services: Mansion House Speech
Baroness Manzoor Excerpts(1 month ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Livermore (Lab)
The noble Baroness is kind enough to give me the opportunity to write, and I will happily do so.
Baroness Manzoor (Con)
My Lords, I have a very brief question. I put on record that I am the chairman of the Financial Ombudsman Service. I welcome the Mansion House speech from our perspective and, personally, the emphasis on financial reform. It is very important that there is much greater clarity around the rules and regulations that govern both the businesses and the responsibility of consumers. I am particularly concerned about the level of fraud and scam cases in the UK, which continues to rise. We have a call for input, put out by the FCA and the Financial Ombudsman Service. The Minister has already identified the importance of consumer protection, and that remains key, but are there plans to ensure that there is also much greater clarity around the responsibilities of consumers themselves, in terms of the reform measures?
Lord Livermore (Lab)
The noble Baroness raises a very important question and I am grateful for her support around the reforms of the Financial Ombudsman Service; she brings a great deal of expertise to it. Her point about the role of consumers is a good one, and I will write to her on that specific matter.
United Kingdom Declining Birth Rate
Baroness Manzoor Excerpts(1 month, 2 weeks ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Kennedy of Southwark (Lab Co-op)
My Lords, it is the turn of the Lib Dem Benches.
Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2016
Baroness Manzoor Excerpts(8 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Manzoor
At the end to insert “but that this House regrets that the draft Regulations reduce incentives for low-income working people to increase their salaries, will lead to an increase in overpayments of tax credits, and could place families in additional hardship at the end of the financial year”.
Baroness Manzoor (LD)
My Lords, I thank the noble Lord, Lord O’Neill, for that overview of the income disregard level applied to working people on tax credits. As I have said previously, I was delighted when the Chancellor decided not to move forward with his proposed cuts to tax credits; however, despite the perception that changes to tax credits were stopped entirely, the reality is somewhat different.
We all know that the cuts to universal credit, while they mirror precisely the tax credit cuts and matter more in the long run, will go ahead, despite the efforts of those on these Benches to stop them. They will, in the long term, affect millions of the low-income working people the Chancellor claims to support. There is also another hangover from the plan to cut tax credits—the change in the income disregard obliquely referred to in the Chancellor’s Autumn Statement. These regulations will reduce the additional amount a person can earn while claiming tax credits in any given year from £5,000 to £2,500, as we have just heard. That means that if a person’s salary exceeds their expectations by more than £2,500 they will face an overpayment at the end of the year.
Overpayments can cause real hardship for those on low incomes, who get what amounts to a bill at the end of the tax year. For those living week to week, this can prove catastrophic, forcing them into rent arrears or limiting their ability to put food on the table. So, the level of the disregard matters. If the Government truly cared about making work pay, they would ensure that the level of the disregard allows people to feel confident in taking on additional hours, or taking a promotion, without worrying that they are going to breach the tax credit disregard and face an overpayment charge at the end of the year.
The income disregard is particularly important for those taking on unpredictable work. I want people to take up a job, assuming they are able, regardless of the job. Unlike some, I do not think, for example, that zero-hours contracts are fundamentally wrong. Indeed, for some people they are a useful tool to balance their work and personal lives. While there are concerns about their exploitation in some sectors and by some businesses, ultimately, we want people to feel able to take up a job, even on zero hours, and feel confident that it is the right decision. So, the level of the income disregard matters in giving people confidence to take up work; setting it at a level where it hits only people whose salary increases substantially is important in giving that confidence.
I do not believe that £2,500 is enough of a disregard to prevent significant overpayments. What is the primary reason for that? We have been here before. The Minister is absolutely right that when tax credits were first introduced by the Labour Government in 2003, the disregard was set at £2,500. The result was £2.2 billion of overpayments, which affected 2 million households—a third of all tax credit claimants—who were hit with overpayment debts that year, many of which ran to thousands of pounds. That meant that millions of low-income working families faced unexpected changes that they struggled to pay for. Do we want to return to that state of affairs? The Labour Government, realising this problem, hugely increased the disregard, all the way up to £25,000. Many would see this as a sledgehammer to crack a nut, but it had the desired effect. Overpayments by HMRC fell significantly in the subsequent three years: from £2.2 billion to £1 billion for the years 2006 to 2009. The Government decided to reduce the size of the overpayment buffer zone: first, in 2010, from £25,000 to £10,000; and then to £5,000 from April 2013. Reports by HMRC show that as the income disregard has reduced in value, overpayments by HMRC, unsurprisingly, have increased. By 2013-14, when the disregard had returned to £5,000, the total amount of tax credit overpayments had again reached £1.9 billion—almost back to 2003 figures.
The £2,500 disregard proposed in the regulations would, in real terms, be the lowest threshold ever imposed on tax credits, given the inflationary changes since 2003. There is a risk that it will lead to further significant increases in overpayments and hardship for low-income working families. Yet in making this decision, the Government have offered little evidence as to what the impact of these changes will be. The original regional impact assessment, which was published alongside all the tax credit cuts, simply scored the savings of the change in disregard, which was mentioned only twice in the entire document. No further impact assessments have been made for these regulations.
In response to the Secondary Legislation Scrutiny Committee, the Government said that they expect that 800,000 people will be affected by this change. However, they seem to offer little explanation of this estimate or of what the average impact on each person will be. We should not allow the Government to make such big decisions, affecting so many people on low incomes, based on so little information. In the Commons, Ministers utterly failed to give further explanation, simply saying that the majority of those hit will be couples, and the majority of those will be male-female couples. That is simply the law of averages, not an adequate explanation of the impact of the Government’s policy. I also note, for those on the Labour Benches who are hesitant to support a Lib Dem Motion to Regret, that their own Front Bench in the Commons stated that the Opposition are seriously concerned about the impact of the reduced figure of £2,500 on low-income families, and rightly divided on the issue. It is therefore surely right for the House of Lords Opposition Front Bench to follow their Commons colleagues in voting against these regulations, albeit on a Motion to Regret rather than attempting to stop the Commons having its way.
The Minister was always likely to say that things have changed since 2003, and indeed he did. He said that this change is because of the new real-time information system, which will cut overpayments as RTI uses monthly pay figures to spot an income rise during the year, so that tax credit payments can be adjusted quickly instead of leaving a debt to be paid at the end of the year. However, organisations such as the Child Poverty Action Group say there is no mechanism allowing tax credit awards to react automatically to many of the changes in circumstances that currently affect entitlement to tax credits, such as a change in the presence of a partner, the number of dependent children, spending on formal childcare, or whether parents work more or less than between 16 and 30 hours a week. Entitlements to tax credits change on the day when these changes occur, yet awards cannot be adjusted until families tell HMRC, which recalculates the entitlement. Overpayments often arise during this intervening period but that will not be picked up by real-time information. How do we know that? Because it is not picked up at the moment. If real-time information worked, we would not have seen, as I noted earlier, the increases in overpayments that have occurred since the £5,000 disregard was put in place.
These regulations will have a big impact on families, but do they actually benefit the taxpayer? I suggest that the benefit is likely to be limited. There is real concern that, in the end, it will end up costing HMRC more in trying to claw back the overpayments than it will have saved in lowering the disregard. HMRC figures show that as of June 2014, no less than £5.6 billion in tax credit overpayments was owed by households, £89 million of which was from 2003-04. So these regulations are likely to put a significant financial burden on families and deter people from taking on additional hours of employment, and yet may not in the end result in the overpayments being returned to the Treasury. This is a badly thought through plan that runs counter to the Government’s supposed aim of incentivising people to take up work.
We must understand that this is only a short-term fix. Universal credit, as the Minister has said, will replace tax credits in a few years. That is very welcome, since that system will do away with the need for disregard altogether—exactly the right approach to the overpayment problem. As universal credit comes in, the scored savings from the cutting of the disregard reduce significantly, so these regulations are likely to hit millions of people over the next few years to no long-term end. This is bad law, poorly justified by the Government and running counter to their own stated aims. That is the reason for my Motion to Regret. I beg to move.
Lord Kirkwood of Kirkhope (LD)
My Lords, I am delighted to be able to follow my noble friend. She has done the House a service this afternoon in raising this very important issue. It is particularly important for the Liberal Democrats because, in our reduced circumstances in the Commons, it was impossible for us as a group to take part in the debate on Thursday 3 March when these draft Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2016 were discussed in the Delegated Legislation Committee. Now, we have a straightforward and excellent statement of what the Liberal Democrats in Parliament think about these regulations, and my noble friend did a tremendous job in that regard.
We also owe her a debt because she brings in front of us a Treasury Minister who is a significant figure, not just because he is a Minister in the Treasury but because of his background. I hope that more than anything else this afternoon he will say to us straightforwardly that he is going to take an interest in these regulations. His name is now on them. He is an experienced hand, he understands statistics and he understands how processes of administration work, and I have some questions for him.
Lord O'Neill of Gatley
I am not sure that that would be the only rational response, but it would certainly be one of a number of ideas that one should consider in the event of any evidence that would subsequently accumulate as a result of the implementation of this regulation. Other policies could be thought of as well.
Baroness Manzoor
On that, of course there will not be sufficient time to return and up-level the income disregard from £2,500 to £5,000 because obviously universal credit will come into play. We will have all this upheaval. Bearing in mind what my noble friend Lord Kirkwood has already indicated, we are talking about this being implemented from 6 April. By the time the Government assess their evidence, many people may well find that they are in debt.
While I have the Floor, I must pick up on what the Minister has said twice. This is not a special award for people. People have to pay this money back the following year. Whether it is set at £5,000 or £25,000 is just a matter of accountancy. I do not want noble Lords who may not be familiar with this issue to think that people are getting £5,000 or £25,000 in their pockets without any comeback. It is simply a buffer zone. But it is the impact of those overpayments that causes real problems because they can push quite a number of people into debt. That is the issue here.
Lord O’Neill of Gatley
Let me respond to the two specific points made by the noble Baroness, Lady Manzoor. The first is linked to the question put by the noble Lord, Lord Tunnicliffe. As I said, there are a number of ways one could think of to make a rational response, and one of the reasons I hesitated to go down the path that the question sought to take me is that it is important that this be seen in the context of what is happening with universal credit. Rather than prejudging what is implicit in both questions, which is that the real-time information system will not succeed in the way we believe it will, I think we should give it a chance.
In response to the second point made by the noble Baroness, I suspect that a number of noble Lords will not be aware of something that is technically quite complicated; there may not be sufficient awareness of what we are trying to deal with here. The reason why the disregard is being put back to its original level is because there are people who receive a significant increase in their income where there is no consequence without it coming back down. That is why all members of the coalition were perfectly happy to reduce it so significantly at the start of the last Government.
Lord O’Neill of Gatley
My Lords, I have not personally studied the RTI system in enormous detail, but I am confident in our officials’ advice and guidance that the system has been sufficiently upgraded to enable us happily to undertake this policy initiative.
Baroness Manzoor
My Lords, that may be the case, but we still have £1.9 billion of overpayments being made now—not before, but now—with more than £5 billion in overpayments and £89 million from 2003-04. Those are the latest figures. There is a real issue around the real-time information processed at the moment, and that is my concern. I do not feel that the Minister is reflecting his confidence that the systems are working as they should. I am married to an IT expert who works around the world on these major systems and he expressed concern when I told him about the scale of the problem that the DWP is trying to deal with. Some reassurance from the Minister would be really helpful because the system is not working now, and I am talking about now.
Lord O’Neill of Gatley
My Lords, I want to answer in part by referring to something that I have touched on already and I shall elaborate further on its purpose. I could bore noble Lords with the detailed estimates of overpayments going back to when tax credits were first introduced. The underlying purpose of this should be looked at in a broader manner. As I said a few moments ago, this is being done within the context of trying to encourage a higher employment, high wage-earning and more gratified society. Trying to undertake this initiative, despite what happened as a result of the remaining part of the original tax credits proposals, is a sign of the belief that this, to some degree, is a technical decision based on the fact that we have been persuaded that the quality of the IT system can improve this dilemma. By definition, narrowing the income increase to a lower level reduces the conceptual scope for the size of aggregates over payments. It is only appropriate, particularly in the circumstances where we are migrating to universal credit, that this proposal be given a chance.
That takes me directly to some of the more specific comments that I have not answered. In particular, the noble Lord, Lord Kirkwood, very thoroughly outlined the other attraction, against the background of what I have just said, as to why this is being pursued in terms of the aggregate savings over the lifetime of the Parliament. Again, I bring it back to the bigger purpose. The noble Lord correctly identified the £935 million in the last Budget proposals against the background where this is positioned. This is about the same amount of money being agreed with a number of cities around the country in devolution deals over 30 years. To answer all the questions implicit from what the noble Lord said, if more places have the ability to use that money and choose initiatives locally to support greater skills and greater training to help even more work, it is a relatively straightforward policy choice, which should not be seen as too similar to some of the issues debated on tax credits. In that sense it seems relatively straightforward.
The noble Baroness, Lady Manzoor, raised an interesting point, suggesting that the Labour Benches were not as supportive as she hoped they might be. She pointed out the irony, given that this was a policy originally brought in by a Labour Government. That might well be among the reasons why that is the case, because it is in the circumstances where we are migrating to universal credit, where assessments will, in any case, be adjusted on a monthly basis. As I said, if it allows some savings so that the Government can then feel more confident allocating to broader and more substantive initiatives to help real pockets of disadvantage to change their supply response to labour market conditions—which both the initiatives I mentioned, one of which was not tabled here, should be seen as—it seems an extremely logical thing to do and not as contentious as the noble Baroness implied.
I turn to the questions, which I am not surprised have come, about the impact assessment. It is fair to say that, as a result of that remarkable debate and subsequent vote in this House some time ago, the Treasury has provided a lot of information to the various appropriate committees, the exact names and acronyms of which I shall not attempt to repeat, because I am sure I will get them wrong. A lot of information has been provided as part of that process. That is where the figure of approximately 800,000 people comes from. After considerable discussion, it is not clear to me that any further special impact assessment on this technical measure will necessarily help to provide anything of substance beyond what has already been provided.
Lord O’Neill of Gatley
My Lords, I can be very clear: this is being done specifically to achieve deficit reduction. However, the goal and policy on deficit and debt reduction also contain a number of economic policy priorities, which include a very strong commitment to devolution in many parts of the country. I was merely trying to illustrate that the amount we estimate will be saved from this proposal is very similar in size to the sorts of figures that we are successfully negotiating in a number of parts of the UK. We hope to do more of that going forward.
This change aims to reduce the disregard to £2,500 because that is fair to claimants, reduces inequalities in the tax credits system and is fair to the taxpayer, reducing unnecessary costs. As I have said a number of times, there are no cash losers because these are people whose pay will go up by £2,500 or more. This change will reduce the incidence of temporarily inflated awards, because the system will respond sooner and further to people’s changes in income in-year. I commend the regulations to this House.
Baroness Manzoor
My Lords, I thank the Minister for summing up. I also thank my noble friend Lord Kirkwood and the noble Lord, Lord Tunnicliffe, for their support today, although I am very disappointed. I agreed with everything the noble Lord said, up to a point, but when he said that he would not be supporting the Motion to Regret my heart fell.
I have listened very carefully to what the Minister has said. He has said a number of times that there are no cash losers. We have to disagree on that, because it depends on how you classify cash losers. It is really important to say that this is not a pay rise by any means. This £2,500 is actually recouped back from the tax claimant. It is not a pay rise but can cause great difficulties because of the fluctuations for people who are working on low incomes.
I will not go over the debate again. The House has been very patient and I thank noble Lords for listening. I feel very strongly about this issue and wish to test the opinion of the House.
Budget: Household Impact
Baroness Manzoor Excerpts(9 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord O’Neill of Gatley
My Lords, I thank my noble friend for that important point. As I hoped to suggest at the appropriate moment—it is here—this Government were elected with the clear intention of reducing the burden of taxation and bringing us to a lower-tax and less welfare-dependent society. That is what is being done further in this latest Budget.
Baroness Manzoor (LD)
My Lords, does the Minister agree that going on the backs of the poorest and most vulnerable in our society cannot be the way forward, if we want a genuinely equal society that really looks after the very poor and most vulnerable—people with illnesses who cannot go out to work, or people who are on tax credits who already go out to work and are suffering because they do not get the wages due to them?
Lord O’Neill of Gatley
My Lords, I do not want to bore Members of the House by repeating things I have already said but the distributional analysis shows that the biggest burden has been on the highest quintiles. Let me highlight another important factor: this morning, we had the latest employment and earning statistics. In addition to the rather pleasant news that unemployment has fallen further, we have reached a new level of record full-time employment and, very encouragingly for all members of our earning and working society, average earnings have accelerated now to a level of 2.9% year on year, making it clear that the benefits for those in work are starting to increase more and more.
Medical Innovation Bill [HL]
Baroness Manzoor Excerpts(10 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Winston
My Lords, I apologise for my infelicity in getting the groupings wrong. I am very grateful to the Front Bench for making their proposal, which is very helpful.
I realise that I have been in your Lordships’ House since 1995 and this is the first time that I have ever proposed amendments at a Report stage. I should have learnt by now how to handle a Report stage, but I have to admit that, due partly to inexperience and partly to lack of attention to your Lordships during other Report stages of different Bills, I do not. Be that as it may, I shall not go on for long.
I was pleased to hear a degree of support for my Amendment 1, about emergencies, because I think that that approach is necessary. If the noble Lord, Lord Saatchi, is prepared to talk to me about that and see what we might do perhaps at Third Reading, I would be very happy to see how we might get more effective wording for some of these ambiguous areas in the Bill.
I am disappointed that we are not defining “innovation”. That is important because, clearly, these are issues which doctors will need to consider. It is clear from a large number of responses from doctors that there is very considerable confusion about the Bill. What is extraordinary is the number of bodies that show this confusion and say how right doctors are to be confused. Although the Royal College of Ophthalmologists is apparently worried about a particular drug—I bow to the knowledge of the noble Lord, Lord Saatchi, about this; I did not know that it was—the list of concerned bodies includes the Academy of Medical Sciences, of which I have the honour to be a fellow, the Academy for Healthcare Science, the Medical Research Council, the Wellcome Trust, the British Medical Association, the Royal College of Physicians, of which I am also a fellow and therefore I have an interest, the Royal College of General Practitioners, the Royal College of Radiologists, the Royal College of Psychiatrists, the Royal College of Surgeons of Edinburgh and, to some extent, the Royal College of Surgeons of England, the Association of Medical Research Charities, Action Against Medical Accidents, the Medical Defence Union and the Medical Protection Society. I know that it has been suggested, rather irrationally, that somehow the lawyers want to leave things as they are so that they can make more money but, in fact, the Medical Defence Union and the Medical Protection Society are most involved in litigation and they clearly want a reduction in litigation, which is why they are not in favour of the Bill.
Also concerned about the Bill are the British Pharmacological Society, the NHS Health Research Authority and the NHS Litigation Authority—I checked its website this morning to confirm that—Healthwatch and, rather importantly, Cancer Research UK, which raises about £700 million a year for the treatment of cancer in this country. Also concerned are the Motor Neurone Disease Association and, to some extent, the National Institute for Health and Care Excellence. They are mostly concerned about the confusion to doctors, but some would go further than that. They say that the Bill is unnecessary and, as I shall seek to explain, may endanger patient safety.
The reason why I tabled the two amendments about medical practitioners is that it is fair to say that, in future, the National Health Service will have to rely more and more on people who are graduates other than medical graduates. Therefore, the Bill should recognise that they will sometimes need to innovate. It may be worth clarifying their position at this stage.
For the moment, I will not divide the House on Amendment 1, but I would very much value further discussion with the noble Lord, Lord Saatchi.
Baroness Manzoor (LD)
My Lords, before the noble Lord sits down, will there be any consideration of the nursing profession and others to be included when he is thinking of medical practitioners who are not qualified?
Lord Winston
I personally think that that is very important. That is why I tabled the amendment, because I wanted discussion on the issue—in particular, for health visitors and more senior nurses, whose position means that they often have to be innovative. The real issue here concerns midwives, because midwives—particularly district midwives, when they do not have a medical practitioner with them—are often presented with horrendous situations where they have to act innovatively. We hear from the Department of Health that it would like to extend home delivery. That may be a very good thing—I do not know; although I am a qualified obstetrician, I have concerns about that—but if that extension happens, as seems likely given that the health service is strapped for income, it is important to consider other health professionals who may be confronted with those problems. At the moment, the Bill does not do that, and I think that that will cause problems in future.