Autumn Statement

Lord Ashton of Hyde Excerpts

Thursday 3rd December 2015 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I say to the noble Lord, Lord Wakeham, that I have an American wife.

My noble friend Lord McFall spoke of a plethora of Chancellor’s Statements. He is absolutely right. In July, we were told to expect severe cuts in public spending; three months later, a small improvement in tax income is forecast, and this during an October which official figures show to be the worst for public finances in six years. The improvement is based not on healthy growth, as the noble Lord, Lord Shipley, pointed out, but, according to the OBR, on rising consumer credit—but never mind. Multiply this small expected rise over five years, and we are £27 billion better off. Wonderful.

The noble Lord, Lord Carrington, calls this luck. I call it creative accounting. It is the kind of accounting that I remember contributing to the collapse of industrial giants such as ICI and GEC. It is the kind of accounting which eventually led to the creation of the Investor Forum and the Financial Reporting Council to watch over it. It is wrong, it is dangerous and it is short termist. I suspect that the Chancellor and the Minister know this and have used it as an excuse to slow down austerity; to slow it down to Labour’s speed, if you like. However, universal credit will eventually do what the intended cuts in tax credits tried to do, but later. Even so, some low-income couples with three children will lose out now, so will single parents with one child working part time on the national minimum living wage, and women are again disproportionally adversely affected by the cuts. Is this balancing the books on the backs of the poor, as the noble Lord, Lord Shipley, suggested?

However, the noble Lord, Lord Carrington, and the right reverend Prelate told us to aim for a high skill, high pay, high tech, low welfare economy. How are we going to get there? In July, this journey was outlined by the Minister in the Government’s paper Fixing the Foundations: Creating a More Prosperous Nation. Well, I failed to find any mention of that in this Statement four months later. There is a passing mention of productivity on page 6 saying that it is growing, but we still lag behind most of our competitors. What the Chancellor did not say is that the OBR has revised down the growth in productivity next year and the year after that. So is that productivity paper history? Is it another victim of short termism? We must not let that happen. The Minister laughs. I think it is a serious matter because otherwise the rising national minimum wage will lead to serious job losses if it is not matched by rising productivity. If the route to increasing prosperity is productivity, surely the Statement should have said so.

The various changes should be put in the context of raising the nation’s productivity over the long term in the sense of the modern tangible and intangible world of work instead of in the context of short-term politics. For instance, the Autumn Statement commits to protecting the £4.7 billion science budget in real terms up to the end of the Parliament, but this needs to be within the culture of productivity to show that the culture is alive and well and that the state is engaging with industry in a positive way to rebalance the economy. This kind of government expenditure crowds in private investment; it does not crowd it out, as the noble Lord, Lord Carrington, suggested.

At the beginning of a five-year term, this Statement should have been forward looking. It should have been creative and pointed the way to a high wage, high skill, low welfare economy which unites us; it should have promoted productivity that in the long term is creative. Instead, the Government’s brand of austerity is short-term, divisive and destructive. What a lost opportunity.

[Lord Ashton of Hyde (Con)]

My Lords, I gently remind the House that this is a time-limited debate. Every speaker so far has gone over time, so we will cut into the Minister’s reply.

Economy

Lord Ashton of Hyde Excerpts

Thursday 10th September 2015 Lords Chamber

[Lord Haskel]

The Minister has asked Sir Charles Bean—Charlie Bean—to look into this whole question, so I will leave it to him to answer. It is called delegation.

At present, we have a growing system where public administration, business and trading, shopping and entertainment, travel and leisure, and running our offices, our homes and our health depend more and more on computers dealing with each other. Sometimes, we are the only human in the loop. This is what the age of productivity will eventually look like.

The danger lies in our ability to control this complexity and interdependence. The complexity defeated us in the financial sector and helped cause the crash in 2008. This is why we need management and leadership that will remember everything and learn from it.

There is also a need for government to understand that much of this investment is intangible—difficult to see, so hard to finance. It is confusing to accountants, statisticians and apparently to the Government, too—so they set up a committee to look into it. But it is crucial to the stronger policies needed to support innovation. This is why the age of productivity needs arm’s-length organisations such as Innovate UK and the alternative forms of funding which are arising.

So what are the implications for the age of productivity? Since productivity has become disconnected from pay, pay rates have hardly gone up in the past five years. The proceeds of this have accrued mainly to investors and managers. In an age of productivity, the benefits must balance out and both must prosper equally. If they do not, the age of productivity, pursued to its logical conclusion, will create an unequal society the like of which we have not seen for generations. Are we just going to allow this economic process to continue unopposed? Surely not.

The Government claim that austerity is necessary so as not to impose on future generations. I say that we have to move to an age of productivity so as not to penalise future generations. In this way, we will learn something as well as remember everything. I beg to move.

[Lord Ashton of Hyde (Con)]

My Lords, that was perfect timing from the noble Lord, but I remind other noble Lords that we have a very tight timetable if we are going get through this debate in two-and-a-half hours. There is absolutely no spare time, so, when the clock turns to five minutes, it means that your time is up.

EU Budget Surcharge

Lord Ashton of Hyde Excerpts

Monday 10th November 2014 Lords Chamber

[Lord Stoddart of Swindon (Ind Lab)]

My Lords, is the Minister aware—it was these Benches’ turn.

[Lord Ashton of Hyde (Con)]

Actually, my Lords, we have had one question from each.

[Lord Cormack]

My Lords, I was saying to my noble friend: is this not the most skilful manoeuvre we have seen since Disraeli caught the Whigs bathing and ran away with their clothes?

Assisted Dying Bill [HL]

Lord Ashton of Hyde Excerpts

Friday 7th November 2014 Lords Chamber

[Lord Alton of Liverpool]

My Lords, I am grateful to the noble Lord for giving way.

[Lord Ashton of Hyde (Con)]

My Lords, I think it is usual not to intervene before the noble Lord has moved the amendment.

[Lord Carlile of Berriew]

I believe that I moved the amendment right at the beginning of my speech, so I am very happy to give way to the noble Lord, Lord Alton.

Queen’s Speech

Lord Ashton of Hyde Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Ashton of Hyde]

My Lords, it is a privilege, but a rather daunting prospect, to address this House for the first time. I am lucky to have had the right reverend Prelate to pave the way with such an impressive speech. I thank the noble Lord, Lord Myners, for his kind words—I think they were kind. His facts were right, but the conclusions were wrong: I am not a confidant of the Prime Minister. In fact, he did actually write me a letter the other day, which was very kind of him, but he got my name wrong.

I echo the right reverend Prelate in thanking all those who have made my short time here so welcome and interesting, especially Black Rod and his staff, the clerks, the doorkeepers and particularly my mentor, my noble friend Lady Sharples. She has treated me with affectionate discipline, rather as one would treat a wayward spaniel, and I am very grateful to her.

In many ways, it would have been obvious to have spoken in the debate about constitutional affairs. My great-grandfather came to this House in 1911, at the height of the furore over what became the Parliament Act. He had for many years been a Liberal MP, from a long line of northern non-conformists. Just over 100 years later, we are still talking about many of the same issues.

Apart from my Liberal heritage, I am able to speak here today because I was elected—albeit, I must admit, not by a huge electorate. I was elected under the alternative vote system, so one could say that I should be a natural supporter of the coalition. It seems, however, that there is very little to say about constitutional affairs that has not been said in the past couple of days, so I thought I would talk about a subject near, if not dear, to my heart—regulation. In doing so, I should declare an interest as the chief executive of two insurance companies and a member of the Council of Lloyd’s.

At the beginning of the gracious Speech, Her Majesty said:

“Measures will be brought forward to further strengthen regulation of the financial services sector”.

I am certainly not advocating a return to light-touch regulation. This would be impossible, and we have seen only in the last week the sort of things that can go wrong at JPMorgan Chase. We expect regulation to be firm and consistent; no business that thinks it is any good wants to be undercut by cowboys acting irresponsibly. However, we also want it to be pragmatic, proportionate and targeted correctly. This is where the implementation of regulation as set out by Parliament is so important. It can make the difference between sensible, prudential regulation and expensive self-serving bureaucracy.

I shall give an example from my own industry, the insurance industry. It is labouring at the moment under the introduction of Solvency II, which is the most far-reaching reorganisation of the way insurance companies organise themselves and their accounts for 30 years. It is driven entirely by EU directives and has produced a tidal wave of bureaucracy and expense which seems to be largely unnoticed outside the industry. Lloyd’s alone reckons that it will spend £300 million on complying with the Solvency II requirements, not to mention the cost of ongoing compliance.

The Lloyd’s Internal Model application pack alone will be 6,000 to 7,000 pages long. It is estimated that the insurance industry is going to produce 500,000 pieces of paper to support the Solvency II application to the FSA. To put that into perspective, if you pile boxes of photocopying paper one on top of the other, 500,000 pages is almost exactly the height of Nelson’s column. Nor is this a light read: it is full of complicated mathematics and mind-numbing details—for example, verifying the complex assumptions in the very detailed and complex stochastic models.

I think that what Parliament might not realise, when it makes perfectly sensible regulations at a high level, is the cost of compliance with the detail. I do not see this improving if this House is full of 450 elected, professional politicians. Everything from minutes of meetings, policies, terms of reference and succession plans to detailed descriptions of the data in a company and all its interdependencies now has to be documented in minute detail. In the words of modern regulators, “If it isn’t written down, it hasn’t happened”. These documents have to be written, reviewed, signed off—often by the board—checked, monitored and reviewed regularly for ever more. The idea that more documentation in itself is useful regulation should, in my view, not be accepted as given.

There is a strong feeling that the FSA has lost its sense of proportion in implementing Solvency II. It is very sensitive to the charge of gold-plating regulation but many in the industry feel that, in its insistence on more and more documents, it has lost its perspective in regulating the process rather than the outcome. You cannot help wondering whether all this detail and the requirements are more to help the regulators regulate, and to attribute blame if something goes wrong, than being about proportionate, risk-based regulation. To cope with this regulatory burden, the FSA has proposed a whopping 37% increase in the annual funding requirement for 2012-13 for the insurance industry. That is on top of the huge cost of Solvency II.

I remind your Lordships that this is all for an industry which did not cost the taxpayer a penny during the financial crisis, employs 350,000 people and contributes £10 billion to the Exchequer each year. I very much hope that when my noble friend the Minister further strengthens regulation of the financial services sector, he will do his utmost to ensure that it is implemented at individual company level in a proportionate way under the new arrangements, and in a way which addresses the outcomes rather than the process itself.