Autumn Budget 2024

Baroness Warwick of Undercliffe Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, the Chancellor’s mission to deliver sustained growth brings a sense of purpose that the country needs so desperately. Investment in the UK has to increase, and the Chancellor has provided a clear sense of policy and governance stability that is essential to attracting that investment.

I was rather encouraged by the response of the CBI which, while acknowledging that in the short term they would be tough on business, went on to commend the Budget changes that will provide a predictable tax environment and support business confidence. The Chancellor said that she wanted to turn the page on the last 14 years. In its integrated focus on growth and the improvement in public services, the Budget Statement rang a very welcome and optimistic bell about the way the Government will do that.

I will call out just a few of the elements in the Budget which contribute to my sense of optimism: the increase in the national living wage; the prospect of rebuilding the NHS and cutting waiting lists; preserving the pension triple lock; investing £40 million in a growth and skills levy to replace the struggling apprenticeship levy; increased investment in R&D and capital investment for skills; and the commitment to deliver a lifelong learning entitlement to expand access to high-quality flexible education and training for adults throughout their working lives. I congratulate my noble friend Lord Vallance on protecting tomorrow’s economic opportunities in a science settlement that was more positive than many feared.

It is clear that the Chancellor had to be both bold and make some hard choices if she is to deliver the necessary growth and national well-being for the country. I found it immensely encouraging that she is so focused on increased private sector and government investment in UK infrastructure and productive assets, underpinned by supporting the net-zero transition in the longer term.

I was also pleased that, within the tough choices the Chancellor had to make, there were some very welcome announcements in the Budget on social and affordable housing, including a £500 million top-up for the affordable homes programme to prevent a sharp fall in social housing delivery. The Government’s decision to review right-to-buy discounts was right—with record levels of overcrowding and child homelessness, it is vital that we protect our existing social homes.

Also very welcome is the additional funding and action to solve the building safety crisis. The shortage of housing, the decline in the percentage of working-age people owning their own home, people bearing mortgages till much later ages, and ever-increasing rents for those in the private sector, impacting in turn on their ability to save for a home, all combine to increase the crisis of securing a decent home for ordinary people.

A significant part of the Budget was the announcement of a new consultation on social rents. Social housing providers and local authorities have faced 15 years of funding cuts. The previous Labour Government introduced a convergence settlement that led the way to a fairer, more transparent system for settling rents. Reintroducing it would unlock additional financial capacity to invest in homes and services, while ensuring that tenants can afford their rents. Can the Minister set out the Government’s view? Will they reintroduce the policy?

It was brilliant to have the Chancellor commit to “invest, invest, invest” after such a long period of underinvesting. I appreciate some of this will, in part, be from tax rises, but I wanted to point out one consequence of the changes to NI contributions. Homeless and supported housing services are not-for-profit organisations, and those additional contributions will make a significant hit on their funds. One in three have already been forced to close in the last year. Will the Minister consider a rebate or relief for those providing these much-needed housing schemes, particularly at a time when rough sleeping is at record levels?

Housing policy affects so many aspects of public services. Social housing can bring down the benefits bill and end reliance on the temporary accommodation that is so costly to local authorities. Looking ahead to the spending review, will the Government commit to a comprehensive housing strategy alongside ambitious financial commitments to build more social housing?

I want to end with one other tough but necessary decision in the Budget: to inflation-proof tuition fees and maintenance loans for higher education students. Some 7,000 jobs in higher education institutions have been lost this year because of financial constraints on them, and this step is a starting point for finding a longer-term solution.

Economy

Baroness Warwick of Undercliffe Excerpts

Thursday 10th September 2015 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I congratulate my noble friend Lord Haskel on securing this debate in our first week after the Recess. He focused on productivity and that word resonates with the debate we had on Tuesday on the Government’s plans to boost productivity. Indeed, much of what I want to deal with underpins productivity.

In his Budget speech, the Chancellor said that,

“our weak productivity shows that we do not train enough, build enough or invest enough”.—[Official Report, Commons, 8/7/15; col. 321.]

I will focus on the second leg of his argument: building enough. He talked about the confidence that comes from getting our house in order. I will talk literally about getting our houses in order and to rise to his challenge that one key to raising productivity is building more homes.

In doing so I declare an interest as the soon-to-be chair of the National Housing Federation. The NHF represent England’s housing associations, which provide homes for the most vulnerable and help so many people to get into home ownership and get on the housing ladder for the first time. They should be welcomed as a key player in driving Britain out of austerity and into a prosperous future, both as an economy and as a society. It is generally accepted that, for most people, having a stable place to live improves life chances and employment.

The Government have said that housing is a national priority. We are in the middle of a housing crisis. We need 250,000 new homes each year and the country is not building even half that number. Housing associations are a secret weapon in building a better Britain. I say “secret” because few people seem to realise what housing associations are and how much they do. I wonder how many members of this House, like me only a few months ago, do not realise that last year housing associations built one in three of all new homes.

They are the UK’s most successful social enterprises; they are independent of local authorities and government but work closely with both. They build houses for rent, for shared ownership and for outright sale. They are ambitious, they want to do so much more across every tenure, and they could do so if government would work with them—and indeed, to reassure the noble Lord, Lord Selsdon, if private investors would work with them as well.

In their plan for productivity, the Government complained that expenditure on physical investment had been persistently low. Yes, that is generally true, but housing associations are doing something about it. They have secured £75 billion in private investment for new homes over 30 years. Their efficiency and ability to create surpluses have persuaded the money markets to invest. So they have delivered desperately needed affordable homes in every part of the country. They are a great boost for the Treasury, too. For every £1 invested by government, associations put in £6. They add an extraordinary £14 billion to Britain’s economy every year.

In my new role, I have seen for myself some of the amazing developments they have made possible across the country. Time does not allow me to talk about how inspiring they are because I do want to ask some urgent questions of the Minister. I would add only that in areas where deprivation remains a huge problem, housing associations offer exciting developments and give local communities optimism and hope.

That is because they do more than build houses; they invest to build resilient communities. In partnership with the NHS, GPs and local authorities, they provide outreach health care and redesign local care services; they deliver government programmes for helping people back into work—which is, of course, the most effective way of cutting the overall benefits bill—and last year they supported 12,000 apprenticeships. They could do so much more with greater flexibility, so I will ask the Minister some specific practical questions in the new and tougher environment set by the Chancellor’s Budget.

Will he encourage the Government to invest to deliver homes that meet locally defined needs and customer choice, not inflexible national housing programmes? Will he undertake to look at extending the Affordable Homes Guarantees Programme beyond 2017, given its boost to long-term competitively priced finance and the fact that, because of the sector’s no-default record, it comes at no cost to the taxpayer?

Will he look at empowering local public bodies, which have shown that they are effective in using their assets, to take more control over mapping public land and property locally and setting out how much can be released to deliver the homes and infrastructure needed to make communities thrive?

I conclude by saying that housing associations stand ready to work with government to end the housing crisis and, with the right conditions, can help drive us out of austerity to economic growth.

Pension Schemes Bill

Baroness Warwick of Undercliffe Excerpts

Monday 12th January 2015 Lords Chamber

[Lord Monks]

I am sorry, I did not, but this one made for a nice change and I commend that example to the rest of your Lordships on those Benches and hope to hear more remarks of that kind.

The noble Lord, Lord Balfe, has admirably covered the BALPA case. Monarch Airlines is the current case, and BMI was the previous one. We are beginning to struggle as these airlines in trouble pass their pensions obligations over to the Pension Protection Fund. There are other similarly paid workers in the same category. I hope that the message of this amendment is that though this cap is essential—I understand that very well, as the noble Lord, Lord Balfe, does—in order to stop exploitation of the fund, which after all is contributed to by well run pension schemes around the country, it is very important that we take those obligations seriously.

The cost to the fund is not enormous; it is quite modest. I hope therefore that the Government will consider the idea of a review of the arrangements around the cap and that we can get extra justice for some people who are hard working, who do responsible jobs, who are not fat cats and who deserve rather better than they have had recently from the fund. I am very happy to support the amendment in the name of the noble Lord, Lord Balfe.

[Baroness Warwick of Undercliffe]

My Lords, I want to make a brief comment on this amendment since I am a non-executive director of the Pension Protection Fund. I declare that interest and hope that I can offer some thoughts that may be helpful to the Committee. The PPF was set up by the Pensions Act 2004 to be a lifeboat for members of defined benefit pension schemes whose sponsoring employer has become insolvent, leaving the scheme in deficit. The PPF saves thousands of members from potential penury who otherwise would have received only a small fraction of the pension promised to them in their employer’s scheme. The benefits it pays to insolvent scheme members are paid for, in large part, by a compulsory levy on other DB schemes with solvent employers, which of course is a cost on the employer.

When the PPF was set up, it was always recognised that there was a fine balance between on the one hand protecting those who had saved and who, through no fault of their own, were now the casualties of their employer’s insolvency, and on the other, not unduly penalising schemes which had made prudent assumptions or decisions, or employers whose businesses remain solvent, providing jobs and funding for their pension schemes. One way in which this was reflected was the benefit cap: the maximum benefits normally paid for someone who is not above the normal retirement age and drawing pension, are 90% of what the pension was worth, subject to a cap.

The cap at age 65 is currently £36,401 per year, which equates to just over £32,500 when the 90% level is applied. The earlier a person retired, the lower the annual cap is set, to compensate for the longer time the person will be receiving payments. So the full expectations of high earners who have built up a number of years in their schemes would not be met. The average annual compensation in payment per member in the PPF is just over £3,500 per annum, so the average PPF member has clearly received less than the amounts which would have been earned by high earners such as those who would be affected by this amendment.

The important point to note is that the PPF board has no role or responsibility in setting the financial limits in the fund. That is the responsibility of Governments. However, back in 2004 there was a general political consensus, which I believe still holds, that there was a need to balance the interests of members against the cost to those who fund the PPF—the levy payers, who ultimately are the employers and members of other pension schemes.

There is obviously a debate to be had about appropriate levels of compensation. I have every sympathy with those who have been made a pension promise that their scheme can no longer afford. However, that is a matter for the Government and I do not want to comment on it, except to say that the PPF board has an obligation to keep the fund’s finances on a sure footing in changing economic conditions. It has a particular responsibility to balance its liabilities within a reasonable framework of constraints so that it does not impose an undue burden on the pension schemes and businesses which pay its levy. The PPF also has to be sustainable over the very long term, and the level of protection given to pension scheme members has to be such as to make that possible. The PPF has faced some significant calls on its resources as a result of big household names going bust. At November 2014, the net deficit of the 6,000 PPF eligible schemes is £221 billion. PPF provides a protective wrap for these liabilities in the event of insolvency. The amount of levy that would need to be raised to cover all members’ benefits in these schemes would be much higher.

To add a final note of caution, requiring solvent employers with DB schemes to pay more levy for higher levels of compensation will not come without problems.

[Lord Balfe]

Is it true that the PPF currently has a surplus of £2.43 billion, out of which we are asking that this modest payment be made?

[Baroness Warwick of Undercliffe]

I do not think I should enter into a conversation about that and I do not think it is really relevant to this argument.

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Balfe, for giving us an opportunity to air this issue this evening and for organising a meeting with the Minister. I thank the Minister and his officials for participating in that meeting. No one can be comfortable with the position of employees in this situation, who approach retirement with a likely pension significantly below the expectation which is derived from an employer promise which can no longer be met. This is not diminished by the fact that, while the pension expectations would be well above average levels, they are commensurate with remuneration levels which reflect the skill of pilots and the responsible jobs they undertake. As we have heard, some 67 Monarch pilots will lose, in aggregate, some £900,000 a year in lost pension because of the operation of the PPF cap and other pilots are in a similar position.

We should acknowledge that the Pension Protection Fund introduced by the previous Government, but on a cross-party basis, protects millions of people throughout the UK, as we have heard, who belong to defined benefit pension schemes. According to the Purple Book, which monitors the risk of DB schemes, there are some 6,057 mostly private sector DB schemes covering more than 11 million scheme members with more than £1 trillion of assets. In broad terms, as we have heard, the fund takes over the responsibility of pension obligations in the event of employer insolvency, but it does not seek to replicate, in every respect, the employer promise. There is, in particular, a cap on levels of payment for those below normal retirement age when the scheme enters the PPF. This is a source of the problem we are discussing tonight.

We know that the PPF is a highly professional organisation dealing with a complex market situation with great skill. On recent data, some 745 schemes have been transferred, covering 217,000 members. Compensation paid to date amounts to £1.53 billion, but the average yearly payout is, as we have heard, some £3,500 only. Tens of thousands of people now receive compensation from the fund and hundreds of thousands will in the future, potentially making the difference between retirement in poverty and retirement in a degree of comfort. This may not be the occasion to discuss how the PPF will operate in shared risk schemes, but that is doubtless a matter we will return to at some stage.

The thrust of the amendment in the name of the noble Lord, Lord Balfe, is generally to improve the position of those whose compensation is limited by the cap. The position of those with significant pensionable service with one employer has already been improved under the Pensions Act 2014, but this does not cover pilots, who tend not to have pensionable service substantially in excess of 20 years. Of course, the origin of the cap was to address issues of moral hazard, as we have heard, but also to be some restraint on the overall costs of the arrangements—it is not just a moral hazard issue. It is accepted that the moral hazard is not present in the case of pilots and the amendments would not lead to 100% compensation. However, the amendments would not apply just to Monarch; we simply do not know who might be entering the scheme at some future date and therefore the costs associated with that. As an aside, I ask the Minister: if the levels of compensation were raised, what if anything would that mean for the arrangements entered into with Monarch that allow for continued trading? Would that arrangement have to be recast?

The bottom line is that amending the rules in the way suggested would lead to higher payouts from the PPF. That raises the question, as my noble friend Lady Warwick has made clear, of where the funding is going to come from. The answer, of course, is the levy, which ultimately feeds back to individual schemes and sponsoring employers. Although the amounts related to pilots may be relatively small in the context of the overall PPF scheme, we simply do not know how many more might be affected and what the overall costs would be. As I have just said, there was an attempt in the 2014 Act to ameliorate the effects of the cap for individuals whose pension entitlement was derived mainly from one source for at least 20 years, although this does not particularly help the matter in hand unless there were to be some recasting of the spread in coverage to affect it in a different way. However, presumably this would involve losers as well as gainers.

It seems that any improvement in the lot of the pilots who might find themselves in a similar position, now and in the future, would involve more resources for the PPF. So, while having great sympathy for those whose legitimate pension expectations have been significantly impaired, I do not think we have been presented with a compelling argument to make the specific changes that the amendments suggest. However, the Government may take the opportunity to reflect on and review how the cap is generally affecting entitlements, bearing in mind the need to ensure the sustainability of the PPF in the current, and future, DB environment.

Queen’s Speech

Baroness Warwick of Undercliffe Excerpts

Monday 13th May 2013 Lords Chamber

[Baroness Warwick of Undercliffe]

My Lords, I join with other noble Lords in congratulating the noble Baroness, Lady Lane-Fox of Soho, on a splendid maiden speech that was delivered with grace and feeling. I look forward very much to hearing more such contributions from her.

There was one piece of very good news in the gracious Speech. The Intellectual Property Bill will provide a new exemption within the Freedom of Information Act for pre-publication research. This is an amendment which I, together with several other noble Lords, notably the noble Baroness, Lady Brinton, argued for during the passage of the Protection of Freedoms Bill. It is true to say that the Government took some persuading. The Justice Committee of another place took up the argument, and the Government finally accepted that some real harm could flow from the premature exposure of ongoing research material. I want to congratulate the Government on taking this step and I shall certainly support the measures as the Bill progresses.

I am far less certain that we should wholly welcome the promised immigration Bill. In announcing the Bill in the Queen’s Speech, the Government made it clear that the purpose was to,

“ensure that this country attracts people who will contribute, and deters those who will not”.

I think that there is a danger in this description. It seems to play to popular notions of “good” and “bad” immigration. It also suggests that we can know absolutely what a migrant will bring to this country in the future. I can think of many examples of people who came to this country as refugees who have made enormous contributions, not least in academic fields. However, in framing the introduction of the Bill in this way, the Government have sought to emphasise the value of many migrants to the UK. We should welcome and not deter them.

I am sure that the Prime Minister and many of those close to him understand and share my view that international students are an enormous asset to the UK and make both an immediate and a long-term contribution to this country. Where I think we differ is in believing that the UK is doing the best it can to attract such people. Although the Prime Minister has gone some way to explaining that the UK welcomes international students, that has not been enough to counter the effect of recent policy restrictions and, perhaps more significantly, hostile rhetoric. If the Prime Minister wants to see growth in this important area of university activity, he is going to have to do more. Removing international students from the net migration target would send an important signal that the Government do not intend to meet that target by means of steadily tightening the rules for students. In that context, can the Minister explain how the measures in this Bill will affect students? Will they be affected by new restrictions on access to the NHS? Which appeal rights will be lost? What calculations have the Government made on the impact of requirements to check immigration status in regard to the supply of private rental accommodation?

If the Government’s aim is to achieve a balance in policy which ensures that the UK attracts migrants who contribute to the country, what plans are in place to increase our attractiveness, given the evidence that we are losing ground? The Minister may say that applications for visas to study in universities are up, and that UCAS figures are also up. There are a good many people in this House who understand these figures and know that the really important measure is the number of new enrolments. These figures, as the Minister will no doubt be aware, have shown a decrease recently, particularly for post graduate taught students. In the context of a rapidly growing market, this should be a cause for concern. While the Government are clearly doing what they feel they can to put off those who, in their view, are unlikely to contribute, where are the measures to attract those who clearly do make an unequivocal contribution?

Finally, I want to speak briefly about something which was absent from the gracious Speech. Last year, we were led to expect a higher education Bill. We now know that we will not see one this side of an election. However, even without a Bill, the Government will be taking decisions that will have a major impact on the future of our universities. The spending decisions that the Chancellor will make in the next couple of months for the years 2015-16 will be very challenging indeed, and I certainly do not envy him the task. But the biggest priority facing this Government is the return to growth. It would be economically short-sighted in the extreme to cut funding for teaching and research at this time. NESTA has shown that 54% of jobs growth between 2000 and 2005 was produced by innovative companies. It also showed that innovative companies employ more than double the share of graduates than non-innovative businesses. The UK now ranks second in the world for university-business collaboration. It amazes me that we still spend substantially below the OECD average on tertiary education in the UK, and we spend substantially less on research than many of our competitors. This would be precisely the wrong time to make that disparity even worse. The industries which are going to help us re-establish growth need graduates and they need a strong research base. I hope that the Government will not prioritise one at the expense of the other. Yes, we need to maintain expenditure on research, but not at the expense of student numbers or efforts to widen participation.

In that context, we know that part-time undergraduate numbers in England have decreased considerably, with a 40% drop in part-time enrolments compared with 2010. We really cannot afford to ignore this. I am pleased that the Government have asked Universities UK to lead a review into the reasons for this decrease. The fact is that although many in higher education have been aware of the issue, little public or political attention has been devoted to it. A recent meeting of the All-Party Parliamentary University Group heard some of the possible reasons for the fall, but we were all struck by the fact that if something like this happened to the full-time population, there would be an enormous reaction and great concern; there should be concern about part-time provision too. The changing demands of employers mean that we have to provide routes back into education for people long past their early twenties. I would like to ask the Minister what assessment has been made of the impact of the drop in part-time enrolments on the economy.

I hope that the Government will look carefully at the recommendations of the Universities UK review when they are published in the autumn. I hope, too, that in the difficult spending round ahead, we will see that the Government are committed to investing in both teaching and research. I know that many others in this House will join me in making that case over the next few months.

Economy: Growth

Baroness Warwick of Undercliffe Excerpts

Thursday 31st March 2011 Lords Chamber

[Baroness Warwick of Undercliffe]

My Lords, I am delighted to be able to contribute to this debate, in which we have enjoyed some marvellous maiden speeches. I congratulate my noble friend Lord Hollick on securing this opportunity to follow up last week's wide-ranging and illuminating debate on rebalancing the economy.

I strongly believe that a strategy for economic recovery must prioritise our strengths in innovation and high-level skills. High-level skills are the currency of today's knowledge economy, and I want to concentrate my remarks on the critical role played by the UK's higher education sector in providing and developing those skills. This is a subject on which I have spoken previously in this House and elsewhere, and which I explored on many occasions during my time as chief executive of Universities UK.

Higher education has been called a global powerhouse for knowledge economies. That is certainly the case in the UK. Our universities and higher education colleges have an unparalleled record in fostering innovation, enterprise and skills and in helping to create wealth and job opportunities. I know our Government understand this. Indeed, the coalition Government acknowledge that universities are essential for building a strong and innovative economy. This reflects a widespread political recognition of the importance of higher education to the UK achieved over the past decade and the unprecedented political and financial commitment given to this highly successful sector by the previous Government. This was achieved in part because the universities themselves were able to produce the evidence to convince government that higher education was a worthwhile investment, not a cost.

As we consider a growth strategy and await the higher education White Paper, I urge the Government not to lose sight of this essential point: if we are not to fall behind competitor nations, many of which are investing heavily in universities, we cannot afford to row back on our investment in knowledge and knowledge transfer. Despite the years of additional investment, we still spend less on higher education than the OECD average. Meanwhile China and India are already turning out more engineers and more university graduates than the whole of Europe and American combined. Of course the public funding climate has changed. Universities understand that they have to shoulder their share of the cuts, so last week’s Budget’s encouragement to our research base in the form of changes to R&D tax credits and an additional £100 million in capital expenditure for science was very welcome. The spending review also gave some protection to the science budget in cash terms. However, these chinks of light should not blind us to the scale of the cuts being applied to higher education. Universities are by their very nature long-term organisations. World-class research, the creation of new ideas, products and industries and the development of a highly skilled workforce are all long-term benefits. Like other noble Lords, I refer to the OECD 2010 innovation report which concluded that Governments must continue to invest in future sources of growth, such as education, infrastructure and research. Cutting back public investment in support of innovation may provide short-term fiscal relief but will damage the foundations of long-term growth.

I wish to make two further short points about how we can best nurture our high-level skills. We must continue to support ways of transforming research into innovation, build stronger links between the UK’s science and research base and industry, create more spin-out companies and attract overseas investment to the UK. We must provide an environment in which international collaboration can flourish. That means a student visa system that is understood to be welcoming to international scholars. Of course abuse must be tackled, but the Government must also ensure that our ability to attract the best students is not harmed as a consequence. As Vince Cable has acknowledged in another place, we cannot measure where our investment should be in monetary terms alone. If we are to be players in the global knowledge economy, we cannot afford to lose momentum in our investment in higher education. To stand still in this regard is to fall behind.