Economy: Overseas Trade Deficit

Baroness Stowell of Beeston Excerpts

Wednesday 25th May 2016 Lords Chamber

[Lord Pearson of Rannoch (UKIP)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, I hesitate to intervene, but the House does seem to be calling for the noble Lord, Lord Pearson.

[Lord Pearson of Rannoch]

Do the Government accept that, according to their own Pink Book, we have had a growing trade deficit with the EU for the last five years totalling some £358 billion but a growing surplus with the rest of the world of £61 billion? Does not this also mean that the EU has many more jobs dependent on its free trade with us than we do on our free trade with it, which will therefore be in its interest to continue if we come to leave the European Union itself?

Taxation: Avoidance

Baroness Stowell of Beeston Excerpts

Monday 9th February 2015 Lords Chamber

[Lord Foulkes of Cumnock (Lab)]

My Lords, is this not a strange comparison—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, I could not help noticing that the noble Lord, Lord Foulkes, was not here at all for the Statement that my noble friend Lord Newby repeated at the beginning of this Urgent Question. It is our convention that it is appropriate for a noble Lord to be present in the Chamber if he wishes to ask a question about a Statement. As I have taken time in order to make this point, it is of course the turn of a Labour Peer to ask a question of my noble friend should they wish, but I think that the noble Lord, Lord Foulkes, would not be in line with the Companion if he was to ask that question himself.

[Lord Foulkes of Cumnock]

I heard the full Statement. Can I ask the noble Lord: is it not strange that in the United States—

[Baroness Stowell of Beeston]

My Lords, our convention suggests, as stated in the Companion, that noble Lords must be here in this Chamber to hear the Statement being repeated if they wish to ask a question of the Minister repeating that Statement. The noble Lord, Lord Foulkes, was not in the Chamber to hear my noble friend repeat the Statement.

[Lord Harris of Haringey (Lab)]

My Lords, the noble Lord, Lord Green, as everyone has said, is a man of great integrity. Can the Minister tell us whether the noble Lord was aware of the wrongdoing of the bank of which he was chairman? If he was aware, was the Prime Minister aware of that when he appointed him as a Trade Minister? If he was not aware, what judgment did the Prime Minister make about how effective he was as chairman of HSBC?

Defence: Budget

Baroness Stowell of Beeston Excerpts

Tuesday 11th November 2014 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, I am sorry for taking up time in the Chamber, but it is actually the turn of the noble Lord opposite.

[Lord Liddle]

My Lords, has the Minister read the analysis in Monday’s Financial Times which shows that, on the basis of what at least the Conservatives are proposing, the implications in the next Parliament for non-protected departments will be a budget cut of one-third? What might be the impact of this analysis on the defence budget? Does he believe that the Prime Minister’s assurances to the defence community carry any credibility whatever?

Money Laundering: UK Parliamentarians

Baroness Stowell of Beeston Excerpts

Tuesday 14th October 2014 Lords Chamber

[Lord Levene of Portsoken (CB)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, if we can be brief we will hear from the Cross Benches and then from the Liberal Democrats.

[Lord Levene of Portsoken]

My Lords, the Minister started his remarks by saying that those of us in this House should have little to worry about. I have to say, from personal experience of having an account in France to look after the small needs of the home that I own there, that one is treated as if it were the Spanish Inquisition. They really do not want to know any differently. Can the Minister give an assurance to the House that he will convey to his colleagues in Europe that these rules are meant to be applied reasonably and not draconically?

Welfare Benefits Up-rating Bill

Baroness Stowell of Beeston Excerpts

Tuesday 19th March 2013 Lords Chamber

[Baroness Stowell of Beeston]

My Lords, there have been some very powerful speeches in this debate. I am very grateful to all my noble friends for their contributions and for laying out so clearly and eloquently the economic case for this Bill and for what we seek to achieve. As they have been so clear, I will not repeat much of what they have said. However, I will start by making clear to your Lordships’ House that the amendments before us would, in simple terms, remove the commitment to a 1% uprating from the Bill. The noble Lord, Lord McKenzie, said in Committee:

“We fully intend these amendments to undermine and negate the purpose of the Bill”.—[Official Report, 25/2/13; col. 855.]

My noble friend Lord Newby said in reply that these are the sort of amendments that equate to,

“a vote against the Bill at Second Reading”.—[Official Report, 25/2/13; col. 866.].

It is important that we understand what these amendments seek to do.

As has been made clear by my noble friends, these are not decisions that we take lightly. I do not deny that they will have impacts on those who receive the benefits in question or that those impacts will not be easy. However, we have made a conscious decision to protect those benefits which reflect the additional costs that disabled people face, while also protecting pensioners through our commitment to the triple lock.

The right reverend Prelate the Bishop of Leicester is right to highlight those in need and I am glad that he does. It is important that we all remember and are conscious of the people affected by some of these changes. However, I ask him and all noble Lords not to forget that, as part of the Government’s wider reforms, we are prioritising resources towards measures and reforms that support families and help to change lives.

Let me name just a few of those measures. We are expanding early-years education to ensure that children have access to early education and to support parents in work. We are attaching additional funding to disadvantaged pupils through the pupil premium, which will rise to £2.5 billion a year by 2014-15. We have protected the schools and NHS budgets to ensure that these vital services continue to support families. More than £1 billion of investment will go into schools. We are introducing universal credit—a new, radically simpler benefit payment designed to ensure that work pays.

As my noble friend Lord Bates already has acknowledged, this last change is about transforming our welfare system. It will significantly increase the incentive that people have to work. Indeed, we estimate that it will lead to up to 300,000 more people moving into work. It is important that we focus on that point for a moment. As my noble friends have already indicated in their speeches, we must not look at the changes that we are discussing today in isolation; we must see them in the wider context of the changes that the Government are making. They reflect the fact that this Government’s focus is on how to help people off benefits and into work.

We need to be aware of the level of support that people can receive while they are on out-of-work benefits. For many, this is supposed to be a temporary state—an interruption between periods of work. By making the system simpler, by reducing the risks from people moving into work and by making work pay, we can reinforce that temporary nature and ensure that more and more people are moving into work. That is what we are seeking to achieve through universal credit and, as I have said, I ask noble Lords to bear these wider changes in mind when considering this Bill and all the amendments that we will debate today.

This Bill is a short-term change, made at a desperately difficult time, as we seek to rebalance the public finances. However, in our other reforms we have made a huge commitment to the long term, a commitment to changing lives through helping people back to work. Although we still have challenges in the labour market, the fact is that more people are moving into work already. Unemployment is falling. Private sector employment is up by more than 1 million since the election and the number of people employed is at its highest level ever.

We are continuing to provide for a 1% increase in these benefit rates. As my noble friends have said, this will mean that the value falls in real terms, which is not a decision that we take lightly, but it is an increase and we must compare this, as some of my noble friends already have, with what is happening elsewhere. Ireland has cut unemployment benefit by 4% a year for two years since 2010. Portugal has cut unemployment benefit by 6%. Spain has cut payments to people who are unemployed for more than six months by 10%. Let me remind noble Lords that the UK’s deficit in 2010 was larger—I repeat, larger—than the latter two countries. I am not saying that that justifies the measures we are discussing today; they are justified by the need to rebalance the public finances. However, it is, I hope, a reminder that these are very difficult times. The actions this Government have taken and continue to take to reduce the deficit are helping to secure economic recovery, but there are still tough decisions to make.

While this group of amendments seeks in simple terms to remove the 1% figure from the Bill, as many of my noble friends have already pointed out, it does not suggest an alternative. It should be noted that if the amendments before us were to pass, they would make it possible for the Government to increase benefits by any amount that they wanted in the years in question, without reference to prices or any specified factors, including uprating by less than 1%. Let us assume that the intention would be to upgrade in line with CPI. That would mean that the £3 billion in savings from the Bill would not be delivered. I appreciate that the decisions we have made in the Bill are not easy. We never claimed that they were. However, they are absolutely necessary. This was made clear by my noble friends, who made contributions that were much more powerful than I could have made.

Let us not forget that the central purpose of the Bill is to set out clear plans on uprating that deliver significant and vital savings that will help us on the road to economic recovery, along which we simply must travel if we are to preserve for the future the kinds of things that we value and from which we will all benefit: a stable economy, a growing labour market and opportunities for the next generation.

When the noble Lord, Lord McKenzie, moved the amendment, he said that all the amendments in the group were linked and were consequential one on another. Perhaps it is premature for me to make this point, but I will make it clear that in the Government’s view the amendments are not consequential one on another. If Amendment 1 is agreed, the Government will not oppose Amendment 5. However, we will oppose Amendment 7. It is important to make that clear.

I have made the case for seeing these changes in a wider context, and my noble friends have made powerful contributions about the wider economic context. It is clear that the changes, while painful, are necessary. Therefore I urge the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I start by thanking the noble Lord, Lord Low, for his support for the amendments in this group. He made the very important point that we are potentially moving into a period of greater inflation. This point was made last week by the FT, which talked about the risks of stagflation in this country. I also thank the right reverend Prelate the Bishop of Leicester for his support. He posed the key question: how will making these people poorer help the national interest? What we heard from noble Lords who oppose the amendment did not help us on that point.

I say to the Minister and to the noble Lord, Lord Bates, who prayed in aid universal credit, that it would be good to know that universal credit is on track because from everything we hear it is not. Even with universal credit as proposed, we know that something like 1.8 million people will have their benefits from work reduced in comparison to their current position.

I stress that the amendment challenges the locking-in over a three-year period of the restrictions on uprating. Uprating by less than the rate of inflation is a real-terms cut. We should recognise that it is a cut in people’s benefits. The fundamental proposition in the amendment is that these things should be looked at in the normal way on an annual basis by reference to what is happening to prices.

The noble Lord, Lord King, and the Minister said that other countries are cutting benefits. Benefits have been cut in this country, too. Council tax benefit, housing benefit, DLA, ESA and tax credits have been cut by something like £18 billion to date.

--- Later in debate ---

[Lord McKenzie of Luton]

It depends on what the alternative proposition would be. I have tried to stress that this amendment takes ESA outside this 1% fixed uprating—outside that collar—so we would have to judge the impact at each uprating period thereafter. A judgment would have to be made in the light of inflation and general economic circumstances at that point in time. That seems a very clear proposition, is it not? It is certainly a basis on which we are very happy to support this amendment.

[Baroness Stowell of Beeston]

My Lords, all of us want to protect those who are furthest from the labour market or who have additional costs because of disability, and I think that all of us who have contributed to this debate so far and all of us in the Chamber today share that view. There is no disagreement among us on that.

That is what the Government are doing. We have not included key disability benefits, including disability living allowance and attendance allowance in the 1% annual uprating decision in the Bill. Nor have we included the disability premiums in working age benefits or the disability elements of tax credits in the Bill. We have also excluded the support group component of employment and support allowance and the higher of the universal credit disabled child additions. All these benefits will continue to be uprated by CPI. We have protected them because they help support those who are furthest from the labour market or who have additional costs because of disability.

In one of the exchanges that has just taken place, the noble Lord, Lord McKenzie, referred to cancer sufferers and made the point that we want to make sure that we provide them with the support that they need. It is worth reminding noble Lords that earlier this year, in January in fact, we introduced changes that will mean that more people with cancer will now qualify for the support group, which is protected, whereas before they might have been placed in the work-related activity group. We have taken on board the concerns in that area. They were valid concerns, and we were glad to be able to act on them.

Finance Bill

Baroness Stowell of Beeston Excerpts

Monday 16th July 2012 Lords Chamber

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

[Baroness Stowell of Beeston]

My Lords, even though we have concluded all the business on the Order Paper, we expect to receive a message from the Commons tonight. At the moment I cannot offer guidance on a specific time, so I therefore beg to move that the House do adjourn during pleasure until a time to be announced on the annunciator.

Taxation: Avoidance

Baroness Stowell of Beeston Excerpts

Thursday 26th January 2012 Lords Chamber

[Lord Dykes]

My Lords, I am grateful to the usual channels for providing time for this debate and to the Treasury Minister for coming to the Front Bench at this time. I apologise to him that it is lunchtime—although a slightly late lunchtime because of the previous debate—and I welcome his visit to deal with this important and thorny matter. He is a very busy Treasury Minister and I wish that I could have saved him having to do without lunch on this occasion. I hope he can catch up with that later.

I declare an historic interest as a former member of the London Stock Exchange for many years and as a partner in a leading institutional stock broking firm, as well as a shareholder in other former City interests.

The title of the debate deliberately uses the word “avoidance” because of the grey area of avoidance leading into illegal evasion as well. The title focuses deliberately on the behaviour of business representatives and groups because that really covers almost the whole field. Most wealthy individuals, as well as companies, who seek to lower their tax liabilities tend to arrange schemes through accountants and other professional advisers. Equally, however, it would be reprehensible if non-business sector individuals were either avoiding tax unfairly or evading tax illegally through their own decisions without advisers. I have sought to raise this issue for some time because of the widespread public concern that one hears here, there and everywhere that improper tax avoidance is widespread in the UK. These matters are very sensitive right now because of the bank bonus season as well—we of course assume that our senior bank director colleagues declare and pay tax properly. Bank bonuses and whether they are justified are not within this subject. It is because rumours are so often an inadequate substitute for facts that HMG need to answer questions from Members of Parliament to allay concerns.

Of course, the concept of unfairness in the tax system is hard to grasp. The public as a whole has a strong and maybe unfair impression that ordinary taxpayers, mostly but not all subject to the deduction at source system, do not have the sophisticated advantages of professional and corporate taxpayers to soften what some people regard as the hammer blows of brutal tax demands. Add to this the widespread feeling that, unfortunately, our colleagues in the main part of the coalition seem psychologically far more interested in giving lower-income individuals rather a rough time by cutting into their social benefit payments than pursuing their—dare I say?—friends in the world of business over tax dodging, then we have an explosive political cocktail about the relentless growth of the unequal society. That is mercifully nowhere near the lamentable position in the USA, with its by-now medieval inequalities, obliging even Warren Buffett to complain yet again recently. Personally, I have a cousin in California who is a member of the Libertarian Party that regards any tax apart from defence spending and foreign affairs as positively poisonous and communistic.

In the excellent debate on financial crime legislation launched by my noble friend Lady Williams on 17 March last year, I raised what I called the “sad” case of Sir Philip Green—that is at col. 385 of Hansard—who was able to channel his £1 billion-plus dividend from his brilliant and skilful reorganisation of BHS through his wife as a resident of that little territory, Monaco, and thereby avoided paying, I think, £200 million or more in income tax on the dividend. Far from condemning outright this pathetic example of sheer greed, the new coalition Government later hired him as a totally ineffective adviser on efficiency in government. We do not find it hard to imagine how ordinary struggling families feel when they see such goings on in Britain. Could HMG ask HMRC to contact Sir Philip to see whether he could persuade his wife to reconsider and possibly make a voluntary donation to the Revenue as a gesture of social solidarity in these tough times, especially since apparently several hundred Topshop stores are now to close because of the fierce recession? No wonder this sad little saga spawned the UK Uncut movement.

I intend to stay within the time limit of my speech but unfortunately the monitor Clock is incorrect and I do not know when I started. I hope it will be adjusted as quickly as possible.

Of course, I expect the Minister to say on these matters, as ever, “We do not comment on individual cases”. I understand that, but the lack of accountability then speaks volumes and the public can draw their own conclusions. At least he might today try to reassure us that the colossal tax dodging that apparently occurs routinely in Britain nowadays is being dealt with. Despite some enlargement of the personnel at HMRC in recent times, it is by all accounts still struggling manfully—and womanfully, I assume—to cope with the huge backlog of dodgy schemes.

Why is it, as I hinted in that same debate in March last year, that if, for instance, you go to dinner parties in large houses in Wiltshire or Oxfordshire—I do not know about Chadlington but maybe elsewhere, too—around the table are people who appear to be in the UK a great deal but who scoff when someone says, “I pay full taxes”? Perhaps they are just boasting and making it up, but all sorts of rumours swirl around.

The absence of definitional precision helps that process of confusion and the shrugging of shoulders. Hence statistics on tax avoidance are fiercely contested and the interpretative basis is elusive. In a court of law for example, the judges presumably base their findings on what Parliament intended in any laws and regulations. That examination alone can spawn huge fees for yet more lawyers and accountants. For instance, I am assured by friends in so-called professional circles that a large number of senior broadcasters in both the public sector—that is, the BBC—and private TV and radio services routinely have corporate plans of their own that offer much bigger offsets than personal taxpayers can claim paying tax as individuals, even though these broadcasters are of course individuals. Can the Minister help here and give us any information that the Government might have to hand?

HMG have regularly referred to what they consider to be more than a £40 billion tax gap—“gap” is the word I use here. On the assumption that it would be somewhat higher because HMRC struggles to cover all cases, if everyone who should pay paid up—like ordinary mortals—that would cover a good chunk of the deficit. However, we are struggling philosophically because HMG keep banging on about corporation tax being too high. Is a 50 per cent income tax rate so excessive when it starts at such a high level? We must be careful in this country to avoid the worst horrors of the Tea Party lunacy in America that progressive taxes are worse even than communism or a proper national health service.

What is the latest development on redress policies in the many other secretive tax havens dotted around the world, partly as a result of our historical British Empire? Are the UK and other authorities locally in those areas getting to grips with the most severe abuses—and abuses in general?

Our newspapers, reflecting the reality that most—with some honourable exceptions—are owned and run by non-UK taxpaying moguls who live all over the place but not the UK, probably do not want to run too many stories about UK tax dodgers. They prefer benefit fraud, as in the Daily Mail. That is a much more attractive story for them to run. Naturally, the practical difficulties for the authorities here in dealing with these problems are huge. I sympathise entirely and once again express appreciation for what the Minister and his colleagues have been trying to do in the Treasury.

We know all too well from the world financial crisis of 2007-08 that business anywhere is truly international, global and incredibly complicated. It is hard to keep up with the worldwide legions of tax advisers—often themselves multimillionaires as well. Look how enormous the biggest UK-origin accountancy firms—the famous names—have become as worldwide entities, usually in very large towers. I remember the furore last spring when it was discovered that the Treasury had missed out on some £17 billion of tax due from companies disappearing, along with their directors, or banks and other groups not paying their taxes properly. More than half a million companies were dissolved in 2009-10, with most removed from the official register because they did not even bother to file accounts. Indeed, the Oxford University Centre for Business Taxation estimated last year that nearly a million companies failed to pay tax at all, even though presumably only a small proportion of those were not trading. Richard Murphy, a well-known director of the consultants Tax Research LLP, calculated that the total tax gap in Britain two years ago was over £120 billion. No one knows whether that is correct, but it is obviously likely to be significantly higher than the £40 billion mentioned by the Government on several occasions recently.

I hope that the Minister can reassure the House today that these estimates are ahead of the true figures. My anxiety is that, in reality, not even the Treasury, hardly known for its huge competence in guiding the ever-faltering British economy in recent decades, actually knows the truth. In replying to the debate, I hope that the Minister will also refer to the tax treatment of the overseas subsidiaries profits in UK-registered corporations which seem to be of special artificial help to the banks in recent times.

Finally, he may generously wish to guide us with his analysis of the cash-only economy—the black economy—which obviously deprives the Inland Revenue part of HMRC of yet more tax revenues, and how the authorities have managed to deal with VAT fraud and evasion. I am sure that the Government do not wish to give the impression that they are much keener on cuts in services than getting in more tax from what is apparently regarded in the City—some people repeat this again and again—as an army of tax dodgers in Britain.

[Baroness Stowell of Beeston]

I am sorry to interrupt my noble friend and that the Clock was not working properly. I thought he would find it helpful to know that he has exceeded his 10 minutes.

[Lord Dykes]

Because of the Clock, I conclude by referring to Danny Alexander, Chief Secretary to the Treasury, who said on Tuesday that tax dodgers have nowhere to hide and that we will get them. I would be grateful if the Minister commented on that comment from the other place.

European Union Membership (Economic Implications) Bill [HL]

Baroness Stowell of Beeston Excerpts

Friday 25th November 2011 Lords Chamber

[Lord Willoughby de Broke]

I am not sure that is right. The target of 20 per cent of our energy from renewable sources by 2020 is entirely an EU target, so I cannot agree with the noble Lord on that.

I think that the penny has finally begun to drop in the City of London, and I hope that it is indeed not too late for something to be grabbed back from all this. I wonder sometimes what UKREP is doing in Brussels. This tide of regulations, directives and thousands of rules seems to come almost entirely unamended, but UKREP is supposed to be looking after our interests in Brussels. I should like to find out whether that is what it is doing. I had a quick look at its website and saw that the EU flag was right at the top, with the Union Jack being almost invisible right at the bottom. I hope that that is not a sign of its priorities.

Leaving that aside, recent events have brought this whole debate into very sharp focus. The Government must recognise, however reluctantly, that we should stand back coolly and look at the economic benefits and disbenefits of our membership. Things have gone completely pear-shaped in the euro. What was supposed to be the cement is not even holding together the tottering edifice of the EU, which seems to be falling apart by the day. It is rather a cruel spectator sport to watch the daily news bulletins to see which domino is to fall next. All that the European politburo—the so-called élite—seem to be able to do is stand on one leg and sing “Ode to Joy”. They do not seem to have an answer at all to what is happening. Surely we have now reached a tipping point. The Government must take up the challenge in this Bill and try to identify where our interests lie. As my noble friend said, it is no longer good enough to say that the benefits of our membership of the EU are self-evident. That is simply no longer the case.

Let us take a brief look at the economics. The euro, as the noble Lord, Lord Ryder, said, was always a badly flawed project. The eurozone has turned out to be an economic disaster for the weaker members. They can never compete with Germany in the same currency—there is no chance of that at all. Ireland, Greece, Portugal and Italy have gone down the pan and Spain seems to be on the brink. However, for them—this was presciently put by Mr William Hague—the euro is,

“a burning house with no exits”.

The euro has turned out to be an incendiary device—a weapon of mass economic destruction.

However, almost incredibly, there are still voices telling us that we should be in the euro. From a padded cell in Conservative Central Office just last week the noble Lord, Lord Heseltine, said that we should join the euro. Frankly, I suggest that they throw away the key. However, cheerleaders such as the noble Lord, Lord Heseltine, and others—of whom there are examples in this House—owe it to us to explain how a system that was supposed to engender prosperity and democracy has turned into the very opposite: a Caliban that is causing hatred and conflict, and turning people against their Governments and against each other. Already we have in Greece anti-German jokes, perhaps regrettably. When the EU economic task force imposed on Greece by the EU arrived, one Greek newspaper had the headline “The prison guards have arrived”. Unfortunately and unluckily, the head of that task force was a German called Mr Horst Reichenbach, who was instantly dubbed “Mr Horst Thirdreichenbach” by the Greeks. That sort of thing may be amusing to read about but it is actually a disaster when it comes to democracy and co-operation between member states and democracy in those countries.

The fact is that the economic cost is enormous, as my noble friend and others have pointed out, but the political cost also has to be looked at in this context. Do we need to be part of an organisation that is not only an economic failure but a political failure as well? Do we want to be a member of an organisation that usurps elected leaders in member states? Do we want to be in an EU that is so terrified of having a referendum that it took the elected Prime Minister of Greece behind the bike shed wherever the meeting was and forced him to resign? Do we want to be part of an organisation that hand-picks the leaders of democratic countries—the ones who can be relied on to toe the line—never mind that Monti and Papademos were willing parties to both Italy’s and Greece’s accession to the euro? Their hands are not clean on this, yet they are the people who have been put in place by the European Union. Above all, the Government need to carry out this analysis to nail, once and for all, the threats that, by disengaging from the EU, Britain will somehow be left in the slow lane and will lose its place at the top table. That is what they like to tell us. If the food at the top table is rancid—

[Baroness Stowell of Beeston]

My Lords—

[Lord Willoughby de Broke]

I shall finish very shortly. I am going to finish my speech. This is an important debate, as the noble Baroness, Lady Noakes, said. I intend to finish my speech in a minute.

[Baroness Stowell of Beeston]

My Lords, I would like to make the point that I understand that different views were expressed at the start of the debate. The noble Lord, Lord Campbell-Savours, asked the government Whip to intervene when noble Lords had exceeded six minutes, and the noble Lord has exceeded eight minutes.

[Lord Willoughby de Broke]

Yes, I shall be as brief as I possibly can be, but this is an important subject. I am sorry, but I do not feel that there is a time constraint in a Second Reading debate.

I was saying that we should not be told that we are going to be in the slow lane or removed from the top table if we are out of the EU. The noble Lord, Lord Howell, is not in his place—

Banking: Savings Accounts

Baroness Stowell of Beeston Excerpts

Monday 23rd May 2011 Lords Chamber

Asked By

[Baroness Stowell of Beeston]

To ask Her Majesty’s Government what assessment they have made of the levels of interest set by banks on cash individual savings accounts as compared with other savings accounts.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the interest rates offered on savings accounts are a commercial decision for providers and, as such, vary. The Money Advice Service, which was set up by the Government, provides information and advice to encourage consumers to manage their finances proactively and to shop around for the best deal. The benefits of tax-free savings offered by cash ISAs allow the majority of savers to receive a tax advantage on all their cash savings.

[Baroness Stowell of Beeston]

My Lords, I thank my noble friend for his reply. Does he agree that the tax relief available on cash ISAs is offered by the Treasury as an advantage for savers, not a commercial opportunity for the banks? If he does agree, will he join me today in demanding two things from the banks? The first is that they should address immediately the discrepancy between the interest rates offered on some fixed-rate savings bonds and fixed-rate cash ISAs. The second is that they should give a guarantee to their customers that never again will they offer lower interest rates on fixed-rate cash ISAs than those they offer on fixed-rate savings bonds?

[Lord Sassoon]

My Lords, I am grateful to my noble friend for raising this important area of savings. We should remind ourselves that a total of 23 million people hold ISA accounts, and of those 15.5 million hold cash ISAs, so this very important part of the savings market is held by some 40 per cent of households. My noble friend’s Question prompted me to speak to the British Bankers’ Association today and I can confirm that the association is working on its own recommendations following on from those made last year by the Office of Fair Trading after it had looked at this area. For example, from early 2012, additional information about the interest rates being offered will be shown on all statements. Further, in line with the recommendation made by the OFT, the association’s members are working to significantly shorten or halve the time it takes to switch accounts. But the structure of interest rates being offered, which is increasingly transparent on the websites that are now available, is a matter of commercial competition. I would recommend all savers to take advantage of the tools that are out there in order to shop around.