Money Laundering

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 24th November 2021

(2 years, 4 months ago)

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

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

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

UK Cash Network

Debate between Lord Agnew of Oulton and Baroness Kramer
Monday 8th November 2021

(2 years, 5 months ago)

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

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

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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My Lords, we are certainly looking at a digital system, but I reassure the noble Baroness that cash remains a key part of the ecosystem.

Health and Social Care Levy Bill

Debate between Lord Agnew of Oulton and Baroness Kramer
Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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Yes, sorry. I lost my thread. There will be no changes to existing procedures.

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

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

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

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

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

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

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

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

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

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

Net-zero Emissions Target

Debate between Lord Agnew of Oulton and Baroness Kramer
Monday 11th October 2021

(2 years, 6 months ago)

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

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

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

Kalifa Review of UK Fintech

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 27th April 2021

(2 years, 11 months ago)

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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The noble Lord is right: we do not want to see citizens excluded from the digital world into which we are heading, and that matter is under continual consideration. It is also worth stressing that, as a country, we are very much innovators and our consumers are keen for the sort of products that are coming out. For example, 2.5 million UK consumers and businesses now use open banking-enabled products; indeed, we were the first country to develop open banking standards, in 2018.

Baroness Kramer Portrait Baroness Kramer (LD) [V]
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Scale-up for our fintech sector requires access to international markets. The Government overlooked this in Brexit negotiations and equivalence from the EU now looks unattainable. Fintech is problematic in trade negotiations with the US because the UK industry risks being swamped. How will this Government deliver access for fintech to major and key international markets?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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My Lords, the Department for International Trade has just announced two initiatives which I hope will help to address the noble Baroness’s concerns: a new fintech cohort within the DIT Export Academy initiative to provide bespoke one-to-one advice to eligible UK fintechs that are ready to scale into key markets, and a DIT-led fintech champions scheme to promote UK fintech overseas and support UK fintechs to grow internationally through mentoring and peer-to-peer learning.

Global Minimum Corporate Tax Rate

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 14th April 2021

(3 years ago)

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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As I answered to an earlier question, we are not yet in a position to announce whether we support that specific rate. Our policy has always been to put the emphasis on pillar one, which is the allocation of profits in the countries in which they are generated. To go back to my earlier point, if a company is going to use the infrastructure of a country in terms of its affluent, well-educated population, and take profits from it, it must contribute to it, too.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, do the Government understand, having listened to the international response to the Biden Administration and Janet Yellen’s proposals, that pillars one and two hang together and that there is no serious prospect of getting a solution to the right of countries to tax multinationals appropriately for the activities in their country unless there is also a common agreement on a minimum global corporate tax? Do the British Government accept that underlying principle, even if they dispute the rate?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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The overriding position is that we welcome the American Government’s re-engagement in this process. As realists, we accept it will not happen without full American support. We agree with the noble Baroness that these things hang together, and it will be a cohesive result that will work.

Economic Update

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 12th January 2021

(3 years, 3 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD) [V]
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The Chancellor has once again responded to a long-term economic crisis with only very short-term measures. The evidence from the Resolution Foundation of sharply growing inequalities is scary, frankly, as low-income families have to spend more to survive the pandemic. Will the Government at least make permanent the £20 uplift in universal credit?

Economic recovery cannot take hold before the summer even with a successful vaccine rollout, so will the Government now extend furlough, SEISS, the loan and various other support schemes at least to July, if not beyond?

Why have the Government continued to exclude 3 million of the self-employed from help, especially now that the Federation of Small Businesses has devised a scheme that avoids the risk of fraud? The FSB has also pointed to the recapitalisation crunch that could destroy businesses in 2021. Where is the long-term economic plan for recovery that businesses need to enable them to hang in, protect jobs, invest and grow again?

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con) [V]
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My Lords, I am grateful to the noble Lord, Lord Tunnicliffe, for his comments. I shall to try to address some of his points.

It is clear that the UK, along with the rest of the world, continues to face economic disruption in the wake of the Covid pandemic. No major economy has avoided a dramatic fall in its GDP in the past year. In the face of the significant and far-reaching impact of Covid, the Government’s priority has been to protect lives and livelihoods with a flexible and adaptable response. This response is one of the largest and most comprehensive in the world, totalling more than £280 billion since March. The IMF judges the UK’s initial response as being aggressive, effective and an excellent example of well-co-ordinated action.

While we should expect the economy to get worse before it gets better, as my right honourable friend the Chancellor said yesterday, there are reasons to be cautiously optimistic for the future. The peak of the unemployment rate is expected to be significantly lower than that estimated earlier in the crisis. The OBR has revised down its central scenario from 12% in July’s estimate to 7.5% in November’s estimate. The household savings ratio has reached its highest level since records began in 1963. The corporate sector cash buffers have improved, with large businesses making large net repayments every month since May. The furlough scheme has seen some 1.2 million employers and almost 10 million employees supported and has been extended until April to provide certainty during these difficult times. We have provided significant support to the creative industries through the £1.5 billion Culture Recovery Fund and to the hospitality industry, which I recognise has been severely impacted by the restrictions. It has also been supported by cash grants, loans, VAT reductions and deferrals, and business rate holidays.

The support for the self-employed has been unprecedented and among the most generous of schemes in the world. It has so far supported almost 3 million people at a cost of nearly £20 billion. As the Chancellor has said, sadly we are not able to save every job and business and, in recognition of this, have boosted the welfare system by £7.4 billion in 2021.

I thank the noble Lord for mentioning the vaccine, which represents a significant sign of hope and a path out of the coronavirus. Vaccine rollout is our most important economic lever and we have made available more than £6 billion to facilitate that. We have now administered more than 2.4 million vaccine doses across the UK. By 15 February, we aim to have offered a first vaccine dose to everyone in the top four priority groups identified by the Joint Committee on Vaccination and Immunisation.

The road ahead remains tough, with significant uncertainties. The Chancellor and this Government will continue to work to support individuals, businesses and public services during this time. As the Chancellor said yesterday, he will provide an update on the next stage of our economic response to coronavirus and the economic outlook for the rest of the country in the Budget on 3 March.

On retaining the uplift in universal credit, referred to by the noble Baroness, Lady Kramer, as with all responses so far in the crisis, we have tried to adapt to changing circumstances and this matter will be kept under continual review. In the same vein, we have extended furlough until April, it already having been extended from an earlier time, and we will continue to be alert to the state of the economy.

On the noble Baroness’s point about the self-employed and the Federation of Small Businesses, my right honourable friend the Chancellor said yesterday that he was considering the ideas put forward by the FSB.

Future of Financial Services

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 11th November 2020

(3 years, 5 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD) [V]
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My Lords, I declare my interests as listed in the register. I agree with the Chancellor that financial services are fundamental to Britain’s economic strength. However, I recommend that anyone looking to assess their future ignore the hype in the Chancellor’s statement—he seems to have drunk the moonshot Kool-Aid—and look at reality. Our failure to negotiate mutual recognition, or at least equivalence-plus, with the EU is a serious problem. If only the Government had taken as much interest in this area as they do in fishing or, as Catherine McGuinness of the City of London Corporation is quoted as saying in today’s Times, finance risks being

“the neglected child of an acrimonious divorce”.

Over £1 trillion in assets have already transferred from the UK to the EU. Last year, Ministers seemed to think that half the financial services business with EU clients, which is about 15% of total UK financial services, had left or was in the process of leaving, including swathes of insurance and asset management. Is 15% still the number, I ask the Minister? The size of these asset transfers suggests that the actuality is well above those expectations. Job transfers are unclear because of Covid, but we do know that, even in 2019, the recruitment of graduates who do not have EU passports had pretty much collapsed for anything except retail banking.

The EU, which I once thought had a 10-year strategy to remove, slice by slice, most EU and euro-related financial services back to the 27, seems to have accelerated that programme. For example, Mr Dombrovskis has cautioned EU businesses to shift a significant portion of their clearing activity out of the UK in the next 18 months. Without dominance in clearing euro-denominated derivatives, the UK’s global role is seriously at risk. Does the Minister agree?

On fintech, many firms have made it clear that they will have to move EU business if we cannot agree on the rules that govern data. Where are negotiations on this, because at the last look they were pretty dire, with the UK determined to please the United States by watering down data protection?

I am delighted that we are finally going to issue a green sovereign. We may be a leader in green finance now, but every single significant financial centre is committed to the green agenda. I note that the EU is expected to issue €200 billion in green bonds as part of its Covid recovery fund, none of which will be issued through London. But will the Government replace the Green Investment Bank? The noble Lord, Lord Tunnicliffe, mentioned it; it was sold off in part because, along with the British Business Bank, it was associated with Vince Cable, but that was also a deliberate act of environmental vandalism. Will it be replaced?

We are entering a period of regional economic blocs. The United States has actively repatriated a great deal of dollar financial services. China and Asia generally, contrary to the expectations of George Osborne, are using Hong Kong and Singapore rather than London, even with all the disruption in Hong Kong. India is developing Mumbai, so I caution the Government not to misread the potential of dialogue with India. We are now outside all the regional blocs. We have capacity and skills in financial services, but everyone else has the clients and issues the major currencies. You can move capacity and skills, but you cannot move the clients. London will remain a global centre but, I fear, one of gradually less significance. Will the Government give us a reality check on the future of this crucial industry and a proper assessment of the damage that their hard-line Brexit is delivering?

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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I thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, for their thoughtful contributions. I will try to answer the questions as fully as I can.

Unlike the EU, the UK’s equivalence assessment of the EU’s regime was conducted on a proportionate basis, recognising that the UK and EU have the same rulebook. The EU sent us over 1,000 pages of questionnaires—not in a timely manner, with the last 248 pages arriving by 25 May, which is why we were not able to return them within a week, as I think the noble Lord, Lord Tunnicliffe, mentioned. We responded to the questions fully and comprehensively, with over 2,500 pages of response going back at the beginning of July. The EU has not come back with any questions on these responses.

In the absence of clarity from the EU, the Chancellor announced the package of decisions on Monday, which are in the UK’s interest and seek to support UK firms and ongoing cross-border activity with the EU. I assure both the noble Lord and the noble Baroness that we remain open and committed to a continuing dialogue with the EU about their intentions. The Government have taken all reasonable steps to co-operate in good faith with the EU throughout the equivalence process.

The noble Lord asks whether we feel that the EU is holding back, pending the progress of the Financial Services Bill. The measures in the Bill are consistent with a mutual equivalence outcome, and a number of cases actively support it. The UK played an instrumental role in the introduction of a lot of the EU’s regulation, particularly the investment firm regulation and directive, for example, so it is very supportive of the intended outcomes.

The noble Lord asked about TCFD. The UK is the first major country to go beyond comply or explain, or as far as able requirements, and our proposals contain a requisite level of prescription, supervision and enforcement mechanisms to mandate meaningful disclosure. The approach confirms the UK’s position as a global leader on robust climate-related financial disclosures that help investors to make informed decisions. We believe that the timelines set out in the road map provide the right balance between showing ambition and allowing businesses, investors and asset owners enough time to prepare to disclose meaningful information. Initial steps towards introducing TCFD-aligned disclosures have already been taken in respect of certain listed companies, banks and building societies. The FCA consulted in March on comply or explain rules for premium listed companies.

The noble Lord asked about green gilts. The UK’s sovereign green bond will identify specific government green projects that its proceeds will be used to finance, as per the International Capital Market Association green bond principles. These proceeds will then be tracked and reported in a regular and transparent manner to provide clarity to the public and investors.

The UK Government have always remained open to the introduction of new debt-financing instruments but needed to be satisfied that any new instrument would represent good value for money to the taxpayer. We have been regularly reviewing the case for introducing a sovereign green bond, as well as closely monitoring how the green and other ESG bond markets have developed over recent years. The noble Lord asked why we were slow. We have been watching the evolution of this market; indeed, Germany issued its first equivalent only in September this year.

The noble Lord and the noble Baroness asked about a Green Investment Bank mark 2. The Government are committed to ensuring that businesses and infrastructure projects continue to have access to the finance that they need. The UK has a number of existing tools available and we committed, in March last year, to an infrastructure finance review. We still intend to respond to that within the next few weeks.

The noble Baroness asked about asset transfers and the future role of the City. One of the advantages of leaving the EU’s regulation is that it gives us the opportunity to launch a number of initiatives. For example, we will review Solvency II. We will have a call for evidence on the overseas regime, some parts of which have not been reviewed since 1986. We are carrying out a task force on future listings given that there is, for example, quite a big discrepancy between the minimum size of a prospectus in this country and in the US. We are carrying out a consultation on the UK funds review to look at ways of making this country more attractive for international funds.

I remain more optimistic than the noble Baroness that there is a good future. She also asked about fintech and its role. We are a major player in the fintech market. We are developing an ecosystem that supports fintech firms to grow and reach scale. We are fostering partnerships between fintechs and incumbents to enable mainstream adoption of innovation. Being a large economy, we provide the opportunity for high levels of domestic demand; the British public tend to be early adopters of the opportunities that fintech throws up. We have the third-largest number of tech unicorns in the world, with 77 companies valued at over $1 billion. We are absolutely committed to supporting the growth of that market.

Economy Update

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 10th November 2020

(3 years, 5 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD) [V]
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My Lords, last week the Minister was not a bit keen on my call for an extension of the 80% furlough scheme to June. Now it looks as though I will get that until at least April, unless there is a poison pill in the January review—though I suspect, quite frankly, that the Government would not dare. I also called on the Government to feed the kids. What a difference a week makes. I am glad they have finally faced up to the realities and have U-turned on quite a range of issues.

They should still do more for the self-employed, whose income support grant ends at the close of December. They cannot be left out in the cold at the turn of the new year. Again, not a thing has been done for the 3 million excluded. The clue is in the name: excluded. There is no point in the Minister quoting programmes that these people cannot access and use. Letting them down is unacceptable.

On the same day the Chancellor made the furlough announcement, the Bank of England announced another £150 billion of QE, which will bring its holding of government debt to over £900 billion. There is a widespread market sentiment that this policy has come to the end of the road. Will the Government comment on that and the implications of negative interest rates, which are now being explored by the Bank? Are we really saying that savings are worth nothing, and that ordinary people need to take increased financial risk in a time of such uncertainty, created by not just Covid but an imminent economic Brexit?

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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I thank both noble Lords for their comments. I will first address the noble Lord, Lord Tunnicliffe.

The Government have always made it clear that economic support would continue past the end of October and had announced the Job Support Scheme to do just that. Extending the CJRS, or furlough, responds to the latest economic conditions and the national lockdown in England and similar restrictions in the devolved Administrations. The Government have acknowledged that they have not been able to support everyone in the exact way they would want, but they have been proactive in addressing gaps in the scheme where possible. This partially addresses the points of the noble Baroness, Lady Kramer; for example, under the second SEISS grant, self-employed traders facing reduced demand or who are temporarily unable to trade due to Covid were made eligible. It has not been practically possible to include certain groups without introducing unacceptable fraud risks.

The vast majority of the British public has come together, followed the law and helped to prevent the spread of the virus. We are confident that communities will rise to the next challenge and play their part as we come together to fight the second wave this winter. The noble Lord asked about compliance. To ensure that people can continue complying, we have introduced a comprehensive package of support, including extended SSP to employees when they are asked to self-isolate, and for workers on low incomes a one-off payment of £500 under the self-isolation support payment scheme.

Individuals who are asked to self-isolate by NHS Test and Trace because they have tested positive for coronavirus, or been identified as a contact, may be eligible for the test and trace support payment provided that they meet the other criteria. If individuals are identified as a contact by the NHS Covid-19 app but they have not been contacted by NHS Test and Trace, they cannot currently apply for the scheme. App users are anonymous, which means that the local authorities that administer the payment scheme cannot confirm that they have been asked to self-isolate. Further work is ongoing to determine if the scheme can be extended to individuals who have been identified as a contact only through the app, while adhering to data privacy requirements.

We have legislated to prevent employers from requiring workers, including agency workers, subject to the duty to self-isolate to attend work. Employers who breach this are subject to a £1,000 fine, rising to £10,000 for repeat offences.

The noble Baroness asked about the potential for negative interest rates. I cannot predict the future, but the noble Baroness will know that we are very against that at the moment. I hope that it can be avoided. I share her concern that negative interest rates put pressure on savers beyond that which has existed over the last 10 years of very low interest rates. It is illustrative of the balancing act that the Government must take between support for people during this crisis and the long-term impact on the Government.

Covid-19 Lockdown: Economic Support

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 4th November 2020

(3 years, 5 months ago)

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Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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My Lords, we are very aware of the pressure on self-employed people at the moment, and it is important to remind the House of the level of support that we have given. Up to 19 July, there were 2.7 million claims for SEISS, totalling £7.8 billion. On the second grant, up to 22 October, we had 2.3 million claims of up to £5.9 billion. We keep under review the whole issue of trying to protect those who have fallen through the cracks. As the noble Lord will know, in relation to the universal credit system, yesterday we announced that the removal of the minimum income floor has been put back until April, which will help. In relation to his very specific questions about linking the isolation payments to NHS Test and Trace, I will have to write to him, which I will do as soon as possible.

Baroness Kramer Portrait Baroness Kramer (LD) [V]
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My Lords, the Minister did not answer the question on the 3 million people excluded, who are largely self-employed and just seemed too complicated to deal with last spring but surely could be provided for now? Will he specifically address that? Businesses are under extreme pressure: they are being asked to cope with constant stopping, starting and change in support schemes. Will the Minister now commit to extend 80% furlough and related schemes until the end of June, when we expect a vaccine, so that any business that will be viable, if it can survive the pandemic, can cope with the short-term constraints and closures?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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As the noble Baroness will know, we have no certainty about when a vaccine will be available in quantity. She mentioned June next year, which is a possibility; it might be sooner or later. That is why we are not able to make long-term commitments. I tried to answer the questions that the noble Lord, Lord Tunnicliffe, asked about support for the self-employed and mentioned various mechanisms. She will know that, if they are businesses that have their own premises, we are providing support at £3,000 a month to go towards fixed costs like rates and running costs.

Covid-19: Economy Update

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 27th October 2020

(3 years, 5 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, this feels like déjà vu. Once again, the Government are forced to revise and increase their support for businesses. We need them to give up their bravado and recognise the depth of the economic crisis coming both from Covid and from the harmful economic realities of Brexit, undercutting investment and jobs, even with a deal. Frankly, we desperately need a new OBR forecast, even if without a Budget. While I understand the Government choosing just a one-year spending review, we should be getting open kimono on the long-term issues and choices for discussion in this House and elsewhere. This is not the time for secret spells cooked up in No.10. The situation that we face is far more dire and needs the resources of everybody’s minds and energy.

I want to make two pleas to the Government. First, feed the kids. I know that we have just taken a PNQ on that subject but the money provided to local government under the local authority welfare assistance fund and others was never intended to cope with the present scale of demand, when much of the country is necessarily closed down again, many people are facing redundancy at the end of the month in just a few days’ time, homelessness is rising, and mental health and other demands on local services are increasing exponentially. Many Liberal Democrat, Labour and Conservative councils have stepped in to provide food vouchers to children on free school meals, but that is at the price of financing other needs. Families who qualify for free school meals have by now exhausted any savings, borrowed anything that a respectable lender will let them have and tapped out family and friends. Please will the Government put in place a voucher system to at least carry us over to next Easter?

Secondly, will the Government finally step in to help the 3 million excluded people? They consist primarily of self-employed contractors with personal service companies but also include a range of other people in the self-employed arena. There has, by now, been plenty of time to set up appropriate schemes. The Government argued from the beginning that the issue was complicated, but there has been time to sort it out. As the Resolution Foundation pointed out, and as the noble Lord, Lord Tunnicliffe, described, the SEISS has been badly targeted. The self-employed have suffered an even bigger market shock than employees, and with so many people facing redundancy and needing to look to self-employment for any future income, it is absolutely crucial that proper support is put in place for the self-employed, under whatever arrangements they have established.

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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I thank the noble Lord and the noble Baroness for their comments. I shall try to deal quickly with the issues that they raised.

I completely accept that we are dealing with a fast-moving and difficult situation. The noble Lord, Lord Tunnicliffe, feels that we did not move quickly enough, and he made similar comments the last time we discussed this subject. However, we have moved quickly. We have acknowledged that, given the rolling lockdowns occurring across the country, we need to do more, which is why we are supporting more extensively businesses that have been forced to close as part of the lockdown. We are paying rate relief, which will include a portion of the rent of those businesses that are forced to close. Those that remain open but are affected by a fall-off in trade are receiving a great deal of extra support as well.

It might be worth summarising the extent of extra support announced since I was last here. The government contribution to payment of salaries has increased from 22% to 49%. The employer contribution has fallen from 22% to 4%, and the minimum-hours requirement has fallen from 33% to 20%. The noble Baroness asked about support for the self-employed. It has been a complicated group to support but we have essentially doubled the level of support with the recent announcements, taking the figure up from 20% to 40%. We will continue to monitor the situation.

The noble Lord asked about evictions. There are already provisions with lenders to ensure that they are handling those processes in a sensitive and reasonable manner, but, again, we will of course keep the situation under review.

It is extremely difficult to know how much longer this horror will continue. However, on the point made by the noble Baroness, Lady Kramer, about a more strategic response to the crisis, it is worth reminding her and the House that we have put into the system an unprecedented level of support over the past nine months—some £158 billion of direct fiscal support. That includes £69 billion for employment support, and £51 billion for public service spending, funding for charities and support for vulnerable people.

Economy

Debate between Lord Agnew of Oulton and Baroness Kramer
Monday 28th September 2020

(3 years, 6 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, the Government have not really grasped the double whammy of Covid and our departure from the single market and the customs union, even assuming that there is a free trade deal.

The measures announced last week, including job support modelled on the German Kurzarbeit, are welcome but fall far short. Many jobs in sectors such as the creative industries, sports and hospitality are long-term viable if they can survive the next six months, so can the Minister explain why the Chancellor has not targeted the necessary funds to get them through that six-month period? Three million members of our workforce were excluded from support the first time around, especially a swathe of independent contractors. Why are they excluded again, especially when so many who have become redundant will become independent contractors if they are to live?

The pace of companies being dropped from European supply networks is accelerating. Future FTAs outside the EU only marginally offset the lost business. This is completely aside from the issue of chaos at the borders. Why are these injured firms and workers not getting meaningful help? Are they now considered non-viable? Where are the scaled-up and innovative retraining schemes that are needed to deal with over a million redundancies by year end? Firms of all sizes are accruing levels of debt that will cripple their future growth. Where is the fund to recapitalise overindebted SMEs? Can the Minister explain how Scotland and Wales can meet their constitutional responsibilities to set a budget with no Budget this year from the UK? When will we hear from the OBR and get a good working forecast that deals with the situation as we now understand it? Being £2 trillion in debt may be something which the Government are comfortable with, but most of us would like to know what the principles are going to be on how that will be tackled and how it will eventually be reduced and repaid.

Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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My Lords, in replying to the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, I gently remonstrate with him on us being “reactive”. We have tried to move as quickly as possible at all stages of this crisis but, as we can see from across the world, it is extremely difficult to be ahead of the curve. The announcements made by my right honourable friend the Chancellor last week demonstrate that a lot of hard thinking has gone on over the last two or three months, and the fact that the Statement might have been prompted by a Question shows that the work had been done.

I do not accept that it is too little, too late. The amount of support that we have provided for the economy over the last few months is almost without precedent, with £39 billion on the furlough scheme protecting at one point up to 9.5 million jobs—that figure has now reduced to some 3 million because many millions have come back to work—and £5.6 billion for almost 2.2 million self-employed people under the second grant self-employment income support scheme. I could go on.

The noble Lord asked about the intention of the job support scheme to keep part-time workers rather than to just go for a single full-time worker. The idea is to keep as many people in work as possible with their skills so that, when the economy recovers, the skills have not been lost. While on a hard, simple basis, it might be more viable to keep one person, in the longer term any employer would try to keep part-time people. I suggest that the noble Lord takes on board the job incentive scheme: £1,000 for those coming back into work between now and January.

The noble Lord asked about good-quality training. Earlier in the year we announced the kick-start scheme, a £2 billion scheme for young people which subsidised employment, as it was a concern that 800,000 young people left school and education over the summer.

The noble Baroness, Lady Kramer, asked about the hospitality sector. We have extended the reduction in VAT for that sector. We also have in place the grants and rates support, again a very considerable sum of money. She asked about us formally leaving the European Union and customs. She will not like it, but that is a major employment opportunity for that sector. We have only 5,800 customs intermediaries. They all need to increase employment. We have provided grants for them to upscale. Another example of new training needed is police officers. Sectors of the economy will grow, and the Chancellor’s comments are to encourage people to move across to those over the next few years.

On the devolved authorities, we have made considerable grants to them under the Barnett formula. While the Budget has been postponed, we are working at pace on the comprehensive spending review which, I would suggest, is a more important long-term method of looking at how we are going to rewrite the economy after the crisis that we have faced over the past six months.

The noble Baroness also asked about the debt. The debt is very worrying. No one is going to pretend that it is not. It was last at 100% of GDP in the year I was born—1961—and, therefore, we are going to have to be very careful over the next few years about how we address that. We were fortunate that, having got the economy and the financial position into a relatively stable state over the past few years, we had the headroom to do what we have been able to do, which has all been about trying to reduce the impact on citizens over the past seven months.

Covid-19: Economic Package

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 13th May 2020

(3 years, 11 months ago)

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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My Lords, all the details that the noble Lord has asked about are being worked out at the moment. That is why we will not be able to announce the full details until the end of this month. However, as was set out in my right honourable friend’s Statement yesterday, our overriding priority is to protect jobs in this country and to protect businesses. A balance needs to be struck to achieve those two things.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, I have just three very quick questions for the Minister. First, will the Self-employment Income Support Scheme also be extended in the same way that the furlough scheme is being extended for those who have been in employment, which is obviously a vital decision? Secondly, in the light of leaked Treasury documents today, will he confirm or deny that the Government are looking at a two-year pay freeze in the public sector to deal with what will be an extremely high deficit, estimated at £337 billion this year? Lastly, he will be aware that alternate funders are finally getting accredited to participate in the Government’s Covid schemes, but many banks are now cornering the market because only they can access cheap money from the Bank of England. Will the Government level the playing field and open up the Bank of England’s term funding scheme to all accredited funders and do so rapidly to limit the damage?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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My Lords, the newly announced Self-employed Income Support Scheme, which opened today, will be kept open as long as it is needed. That is what we have said all along: we will do what is needed. We need to see how successful it is and how many people it gets to. I am not aware of any advanced thinking on a pay freeze on the public sector or any other measures. As my right honourable friend said yesterday, it is too early for us to be looking at these measures. We need to get through this stage of the crisis. On the noble Baroness’s third question, we have been increasing the number of lenders available on all schemes since they opened. I am sure that this will continue.

Tax Avoidance

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 29th April 2020

(3 years, 11 months ago)

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Lord Fowler Portrait The Lord Speaker (Lord Fowler)
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The noble Lord, Lord Leigh of Hurley, does not appear to be there. I call the noble Baroness, Lady Kramer.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, quite a number of companies will make extraordinary profits as a consequence of Covid-19. At this point in time it is hard to identify which they are, but we can see that it is happening with some traders and private equity players, and it may well be happening in the digital industry, which is becoming more and more dominant and, as others have said, pays almost no tax in the UK despite the size of its presence. Following our exit from lockdown and the pandemic, will the Government look at a windfall tax so that those who have sacrificed during the pandemic understand that the burden is being spread over everyone’s shoulders?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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The noble Baroness makes a sound point. It is just too early to make those sorts of assessments. I want to pick up on the point about digital companies. We have introduced the digital services tax, which came into play on 1 April this year; it is a 2% tax on the revenues which search engines and social media platforms derive if they generate more than £2 billion over the next five years. We have made a start on this but, as the noble Baroness will probably know, these things need international collaboration. If there are excessive profits over the next few months, we will of course review things.

Economy: Update

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 28th April 2020

(3 years, 11 months ago)

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Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, the bounce-back loans are clearly welcome, but I am going to press for more help for the self-employed who have fallen through the gaps in all the various rescue packages, especially the independent contractors who take much of their income in dividends and the newly self-employed. When we come out of lockdown, self-employment will be critical. It is a path for those who will have lost their jobs because of the pandemic and cannot return to them, and we will need innovation. As the Government know, a lot of innovation is embedded in these self-employed individuals, and I hope they will look again, because they must support this sector.

We all kept a minute’s silence today for key workers who have died, but many such key workers are very low earners with insecure work. Will the Government show their respect for these individuals by reviewing their funding of both social care and local government to ensure that those workers are properly paid, with proper employment rights, in recognition of the vital role they play and the vital contribution they make to all of us?

At the end of lockdown, public sector net debt will be at a historic high—certainly by the end of the pandemic. As the Government grapple with paying that debt down, will the noble Lord take action to tax the digital companies that have so far managed to pay very little tax in the UK though they now dominate large sectors of our economy? Indeed, they are doing well in the pandemic. I do not say that as an insult, but it increases the tax they should be contributing. Indeed, there are others who are, frankly, doing well out of the pandemic. Quite a number of traders have made windfall profits. Does the Minister agree that the Government should look for these companies to pay windfall taxes?

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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My Lords, first, I will address the questions from the noble Lord, Lord Tunnicliffe, on universal credit. I am not aware of specific IT problems, but if the noble Lord is aware of any and would like to write to me, I will certainly investigate them. However, the point that my right honourable friend made yesterday is that we have responded to this crisis by introducing a number of measures to support those in receipt of universal credit—the £20 increase, the increase in housing allowance rates and the relaxation of the minimum income floor—and they all help. There is additional support for the vulnerable through the hardship fund and things such as the mortgage holiday. Therefore, we are very focused on those at the bottom of the income hierarchy and, as ever, we will keep a careful eye on developments.

Nobody is more concerned than the Chancellor at the speed at which the CBILS loans are going out, but the speed is picking up. As at 24 April, 20,000 were approved, worth £3.3 billion—double the amount of the previous week. As at 17 April, only 10,000 had been approved. Therefore, the pace is increasing and we are confident that that will continue.

The noble Lord is right that it is very easy to get drawn into the day-to-day crisis and to lose focus of what the long term will look like. We have to be honest: at this stage it is impossible to tell. We know that this is the biggest crisis that this country has faced in 80 years, and we also know that the Chancellor’s response to the crisis in economic terms has been a potential 15% of GDP, which is a staggering sum of money. We know, too, that we are likely to come out of this with a debt level higher than that following the Second World War. These are all very important factors. How we go about dealing with that debt will probably depend on a number of factors, such as the speed at which the infection rate comes down and whether we are able to observe social distancing well in an unlocked economy to which people will have to adjust.

One reason for the steep decline in the number of deaths over the last couple of weeks has been the effectiveness of social distancing. I have sat in on a lot of the Prime Minister’s morning meetings over the last few weeks. At the beginning of this process, there was real concern that the population would not be keen to observe social distancing. However, people have done a magnificent job and we know the sacrifices that it has involved. I assure the noble Lord that these things have all been thought about but I do not think that we are yet in a position to set out a detailed plan. We know that in the next few days the Prime Minister will announce more details on exiting the lockdown.

The noble Lord is absolutely right that the entertainment, hospitality and pub sector has been terribly hard hit and is likely to be vulnerable going forward. We have created specific support for the sector, with the business rates relief and a 100% holiday for retail, hospitality and leisure businesses, worth approximately £11 billion. There are also retail, hospitality and leisure grants worth up to about £5 billion. Therefore, we are very much focusing on the sector but I think that it is too early to give a more specific view of the future.

Turning to the questions raised by the noble Baroness, Lady Kramer, I completely agree that the self-employed make up a vital sector. I have been self-employed—or the equivalent—for most of my working life, so I absolutely relate to the pressures that that sector is under. I respectfully do not agree with the noble Baroness about accepting dividend income as a part of people’s earnings. That method of income was chosen by people for the very simple reason that they would not have to pay the national insurance premium. However, they will be eligible for the bounce-back loans, as well as the other layers of support.

I absolutely accept that key workers, particularly those working in care homes, are not well remunerated. Our track record over the last few years of moving the minimum wage upwards as fast as we have done is an indication of our support for this very important group of people. We absolutely recognise—

Budget Statement

Debate between Lord Agnew of Oulton and Baroness Kramer
Wednesday 18th March 2020

(4 years, 1 month ago)

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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It is worth reassuring the noble Lord that we have acted pretty quickly. When you think where we have come over the last six or seven days, I do not believe there is any example in the history of modern government where a Government have reacted as quickly as we have. However, I take on board the challenge, and the noble Lord knows his way around the Treasury better than I do, so I am sure he will use his influence.

My noble friend Lord Lamont quite rightly makes the point that our borrowing costs are again at a 300-year low and that this provides opportunities. Indeed, with the current rate of inflation, we are borrowing at a cost below inflation, which provides some palliative to the very difficult situation that we face. That has partly reassured the Chancellor in his recent announcements. What will happen? The noble Lord, Lord Skidelsky, thinks that we could end up—

Baroness Kramer Portrait Baroness Kramer
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I should have said this when I spoke, so I apologise. While we have very low interest rates, because of QE a heck of a lot of that debt is being held by the Bank of England, so in a sense it is almost circular. It is not quite as benign as it looks on the surface.

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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I do not like debt at all, so I accept what the noble Baroness says. We have also not had a proper drains-up on the impact of the original QE 10 or 12 years ago. It seems to have enriched the rich—those with assets—but what did those at the bottom end of society get out of it? Also, the question no one has ever been able to answer is: what happened to all the money? Did it stay in the British economy? One figure I was given is that at least a third of it just disappeared completely. So I am certainly not in favour of another one of those kinds of QE.

Turning to the noble Lord, Lord Hain, I am afraid that there is not a lot I can agree with in his statements. He seems to think that there is a magic money tree, and seems to have forgotten that we inherited a budget deficit of 10% in 2010. As a huge Europhile, he seems to forget that the EU has a 3% ceiling on its budget deficit levels. We have had to bring that down, and it is one of the reasons why we have more flexibility in the current days to do some of the dramatic things that have been announced by the Chancellor.

Employment Allowance (Excluded Persons) Regulations 2020

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 3rd March 2020

(4 years, 1 month ago)

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Lord Agnew of Oulton Portrait The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
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My Lords, I draw the House’s attention to the fact that the Secondary Legislation Scrutiny Committee described this instrument as an “instrument of interest” in its third report of 30 January.

This draft legislation will allow the Government to target the national insurance and employment allowance at those businesses that need it most. Employers pay class 1 national insurance contributions on their employees’ earnings above the secondary threshold, set at £8,632 this year. That is charged at 13.8% and contributes the largest business tax by revenue in the UK.

The employment allowance was introduced in 2014 to help businesses with employment costs and to encourage businesses to grow and hire more staff. It is claimed by more than 1 million employers to reduce their employer NIC bill by up to £3,000. Since its introduction, it has taken 590,000 businesses out of paying NIC altogether.

I remind noble Lords that the employment rate is at an all-time high of 76.2%. Since 2010, youth unemployment has halved and 3.7 million more people are in employment. This is a nationwide phenomenon. In the past year, three-quarters of employment growth was outside London and the south-east.

At present, all businesses—from greengrocers to Goldman Sachs, butchers to Barclays and pubs to Primark—can receive a relief from the Government of up to £3,000 off their total employer NIC bill. Big businesses get the same benefit as small ones. However, for larger businesses, that £3,000 is a small amount relative to their total employment costs, and is therefore unlikely to encourage them to take on more staff. It is right to target the support at smaller businesses for which this £3,000 makes a difference to the cost of doing business. It is for this reason that the Government decided to restrict the employment allowance to smaller businesses in the 2018 Budget, which means that, from April 2020, only businesses with an employer NIC bill below £100,000 will be eligible for the employment allowance. More than 99% of micro-businesses with fewer than 10 employees and 93% of small businesses with fewer than 50 employees will remain eligible for the employment allowance. Around 80,000 employers will lose the employment allowance. This constitutes just 8% of businesses currently receiving it, all of which have a wage bill above £700,000 a year.

Targeting the employment allowance at smaller businesses means that it falls under EU de minimis state aid regulations, which relate to small amounts of aid that can be given without notifying the European Commission. Most businesses can receive up to €200,000 of de minimis state aid cumulatively in a three-year period. Under the de minimis regime, to claim the EA, businesses need to notify HMRC annually as part of the existing claims process and confirm that they can receive the employment allowance without exceeding their cap. After consulting widely, we removed the requirement to specify exactly how much state aid businesses receive, to make it easier for them to claim the reformed employment allowance. As the Prime Minister announced, we will develop our own separate and independent policy on subsidies when the transition period has ended. We will have a modern system for supporting British business in a way that fulfils British interests.

I hope that noble Lords will agree that while the employment allowance aids small businesses, giving large businesses with a wage bill of £700,000 or more £3,000 off their NIC bill is not good value for money. The Government have committed to go further with their support for small businesses. As the Government look to level up across the country, this reform will raise more than £1 billion over the course of this Parliament to fund vital public services and target support for small and medium-sized businesses.

I am grateful for the House’s consideration of these regulations and for any points that noble Lords may like to make.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, I will be extremely brief. I am supportive of this change. It seems appropriate that the employment allowance is focused on the smallest businesses. I fully accept what the Minister says: that small businesses will be far more motivated to take on additional staff than any large business by this—in effect—grant.

On reading this, it seems that one of motivations is to make sure that the employment allowance is covered by only the de minimis regulations in the EU. Am I correct that it is the Government’s long-term policy focus to direct this aid towards small businesses, and that this is not just an accommodation to what they see as an EU framework—in other words, that it portends the future? Can the Minister give us any further assurance that any money saved will be redirected into the small business community?

Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2020

Debate between Lord Agnew of Oulton and Baroness Kramer
Tuesday 3rd March 2020

(4 years, 1 month ago)

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Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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With the greatest respect to the noble Baroness, the policy of our Government, progressively over the past 10 years, has been to get people into work. We are now seeing some of the highest levels of employment since the war, and in the last year we saw earnings start to outstrip inflation. That has taken a long time, but that is what we have done. We strongly believe that, if we are to help the most vulnerable people in society, the best way is through the dignity of employment and earnings, which is why we have focused on that area.

The noble Lord, Lord Tunnicliffe, asked about the primary threshold and lower profits limits. Again, this comes back to what I said to the noble Baroness, Lady Kramer, which is that, yes, this is a manifesto promise. We said on page 15, as the noble Lord quite rightly said, that we were going to do this; this is what this statutory instrument achieves today; it will be a tax cut for around 31 million people; and it is £104 a year, which, for people at the bottom end, is a meaningful improvement in their lives.

Baroness Kramer Portrait Baroness Kramer
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Could the Minister explain why it is appropriate to do that through a statutory instrument, and to what extent that undermines the ability of Parliament to hold the Government accountable? I am sure that he has great respect for his Members in the other place, but they may well have had opinions on this issue. They may have had the opportunity to express them in the sense that the SI has gone through the other place, but I very much doubt that they have had the opportunity for any kind of detailed debate or challenge. In addition, they cannot possibly know what the consequences are, because it has to be in the context of a Budget, where, presumably, the loss of revenue is made up for in some other way or by borrowing, and those are major consequences. As the noble Lord, Lord Tunnicliffe, pointed out, the numbers are not de minimis but incredibly significant.

Lord Agnew of Oulton Portrait Lord Agnew of Oulton
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I respectfully repeat what I said to the noble Baroness: we are trying to focus support at the bottom end of the income scale. To deal with the noble Baroness, Lady Kramer, since 2010 we have seen over 700,000 fewer children living in workless households and over 1 million fewer workless households overall. We believe that that is how you deal with poverty and improve dignity.

The NIC regulations set the rates, limits and thresholds for the 2020-21 tax year. They allow for the collection of £120 billion of NICs to fund the state pension and contribute to NHS funding, and deliver on the Government’s promise to deliver a tax cut for 31 million working people. I commend the draft regulations to the House.