Economy: Purchasing Managers’ Index

Debate between Lord Bates and Lord Davies of Oldham

Thursday 11th April 2019 Lords Chamber

[Lord Bates]

Given that it is hard enough to answer for the UK Government in your Lordships’ House, I will not attempt to answer for other Governments. However, I believe that the resilience we are seeing in the British economy is a tribute to a number of factors: the fact that the UK remains a prime location for foreign direct investment—we have the largest stock in Europe and the third largest in the world—and Forbes identified the UK as the number one location to invest and set up a business in 2018 and in 2019. All those factors—low taxation, a competitive economy and great skills—are the reasons why people are backing Britain.

[Lord Davies of Oldham (Lab)]

My Lords, this Question started on the manufacturing industry, with a reference to the German motor car industry. Is it surprising that Germany is having some problems with its exports, first, in relation to Brexit, and secondly, to standards in the industry, which have caught the Germans out rather badly in recent years? However, four-fifths of the British economy is services, so what is all this jubilation—false jubilation—about manufacturing when in fact our service industries are showing the real pressure at present, and they are not in position to stockpile in quite the way that manufacturing is?

Government Debt

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 9th April 2019 Lords Chamber

[Lord Bates]

I am very happy to do that, and of course my noble friend will be aware that 32 million people have just enjoyed a tax cut as the tax thresholds were raised. There is a balance; we have seen net borrowing come down from a peak of about 10% in 2010 to under 2%, and overall net debt is beginning to fall after having peaked. However, at the same time, as he rightly says, we have seen half a trillion pounds of investment in infrastructure, and the prioritisation of public services, principally the National Health Service, which has had one of the largest budget increases in its history.

[Lord Davies of Oldham (Lab)]

My Lords, why does the Minister not confess that the noble Lord, Lord Hunt, got it absolutely right? The only thing is that it is completely contrary to what Conservative Governments over the last decade have pursued. Austerity has been pursued to the extent that people are poorer and our public services are on the point of breaking down in many areas. Even then the Government do not hit their target for reduction of debt, but are falling many years behind the famous promise made way back in 2010 that they would do it in about five years. Is not the Government both incompetent and wrongly focused?

[Lord Bates]

If the noble Lord is arguing that we should have gone further and faster in reducing the debt, he is somewhat at odds with his leader down the other end of the Corridor, who has come up with a plan to spend another £1 trillion. We are taking a balanced approach, protecting essential public services and delivering tax cuts while investing in infrastructure, and that is how we will go forward.

Retailers: Business Rates

Debate between Lord Bates and Lord Davies of Oldham

Monday 8th April 2019 Lords Chamber

[Lord Bates]

That is why the Chancellor took the action that he announced in 2018 and why potentially 90% of businesses can claim the retail discount that we announced for the next two years. We have taken 655,000 businesses out of paying business rates altogether through small business rate relief. These are complex problems, but we are mindful of them and are seeking to address them.

[Lord Davies of Oldham (Lab)]

My Lords, as well as shops being boarded up in high streets, the Minister must be aware that 100,000 jobs have gone in the last three years and that for many retailers the situation is at a crisis. I welcome the support for small businesses, but none of the measures that the noble Lord mentioned would have had any impact at all on House of Fraser, Debenhams or many Marks & Spencer stores. When these have closed, it has had repercussions for the economy of whole neighbourhoods. Why does the noble Lord not accept that online retailing is providing fierce competition for many other stores, which need some kind of support?

[Lord Bates]

Those businesses to which the noble Lord refers will have benefited from corporation tax falling from 27% to 19%—it is due to go down to 17%. It is also one of the reasons why, notwithstanding all the points highlighted by the noble Lord, levels of employment in this country are at a record high.

Female Entrepreneurship

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 3rd April 2019 Lords Chamber

[Lord Bates]

Indeed, that was one of the things which Alison Rose brought out, as she is doing in her present role, particularly in the finance sector. I pay tribute to my noble friend for being one of the pioneer female directors along with my noble friend Lady O’Cathain, who was one of the first female directors of a British retail bank. Lots more needs to be done, but we are standing on the shoulders of some very impressive people.

[Lord Davies of Oldham (Lab)]

My Lords, we are so far behind France, America and Canada in the numbers of women becoming entrepreneurs compared with men. This suggests that there is a rather significant fundamental bias at work in our society. Do we not need to look at the teaching of economics and financial issues in schools for girls, to create some degree of equity and confidence among young women?

[Lord Bates]

That was a particular focus of a report done by Vince Cable when he was Secretary of State. It was carried out by Lorely Burt MP, now the noble Baroness, Lady Burt. He came out very much on the side of more needing to be done for entrepreneurs. Alison Rose identified that the problems occur at school with not getting more females into STEM subjects. While some progress has been made, with a 25% increase since 2010, the report recognised that significantly more needed to be done to ensure that people had the skills necessary to set up their business and make a success of it.

Access to Cash

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 3rd April 2019 Lords Chamber

[Lord Bates]

My Lords, I pay tribute to the work of the mutuals. The noble Lord is right that a situation is emerging where people, particularly the most vulnerable, are seeing access to cash beginning to reduce as a payment option. One in six transactions used to be made in cash; at the moment it is one in three, and it will go down to one in 10. This is an inevitable consequence of the movement of technology. We need to adjust, but we are committed to supporting access to cash for the most vulnerable people, to whom he referred.

[Lord Davies of Oldham (Lab)]

My Lords, times they are a-changing. Tottenham Hotspur is playing its first match on Saturday—tonight, sorry—in its extremely expensive but attractive new stadium, and the stadium is cashless. They must have got their demography right in making that decision, but even if in urban areas there are sufficient cash points and access to cash, in rural areas and small towns there is a developing crisis. A very large number of people, as has already been mentioned, do not have ready access to cash. When will the Government appoint someone to monitor this situation and insist that the banks and other organisations supply cashpoints?

[Lord Bates]

That is partly within the role of the Payment Systems Regulator, although not entirely. On the point about cash and Link machines, Link is a network of banks that supervise these things. It has increased the intercharge fee between ATMs so that it can meet its obligation to ensure that ATMs are at least 1 kilometre from the next free ATM in rural areas. That is a very important commitment, which the regulator will hold them to account for.

Tax: Short-term Lets

Debate between Lord Bates and Lord Davies of Oldham

Monday 1st April 2019 Lords Chamber

[Lord Bates]

People already have to make that declaration via tax form SA105. For the latest two years for which numbers are available, the number of people in that position was 2.48 million, and that rose to 2.58 million, reflecting the increase in the number of people earning income from a property, to which my noble friend referred. However, the number of days for such lettings is limited to 90 in London. It is very important that people declare all income, because it is taxable.

[Lord Davies of Oldham (Lab)]

My Lords, Airbnb, a significant company in this field, is apparently being looked at closely by Her Majesty’s Revenue and Customs, but it seems to be engaging in a practice that we associate all too easily with multinationals: transferring profits outside the UK taxation regime. Are the Government tackling this fully, and do we not need international support in getting control over these companies?

[Lord Bates]

That is a good question. Whether it is Uber or Amazon, we are genuinely wrestling with how to capture the income due here. We have made some changes to taxing digital companies but, with the spread of technology and the sharing or online economy, all Governments will have to do more in this area.

National Insurance Contributions Holiday

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 27th March 2019 Lords Chamber

[Lord Bates]

The noble Baroness has looked at the Conservative Party manifesto, and I encourage her to read it all. On page 54, where this pledge is mentioned, it is under the heading, “More people in work”. Since the general election, 713,000 more people are in work— I call that quite a delivery.

[Lord Davies of Oldham (Lab)]

My Lords, the noble Lord will have appreciated the rather derisive laughter that greeted his first comment that he was out to fulfil manifesto commitments. Since the general election the Chancellor, who the noble Lord speaks for in this House, has discussed two Budgets and two Spring Statements—the last of which was only a couple of weeks ago—with ne’er a mention of this fundamental commitment in the manifesto. The noble Lord is hoping to escape today without making any precise commitment for the future.

[Lord Bates]

I thought I said in my Answer that we are committed to delivering the manifesto commitments. The noble Lord talks about manifestos, but I do not want to remind him of his party’s commitments on student debt, which did not seem to survive the election campaign. The reality is that we are significantly increasing employment: employment is at record levels and unemployment is at a historic low; more young people are in work; and the rate of youth unemployment has been halved. These are all steps in the right direction.

Sibling Couples

Debate between Lord Bates and Lord Davies of Oldham

Thursday 21st March 2019 Lords Chamber

[Lord Bates]

My noble friend makes his point. His point on the loan charge was debated here last night, when he and his representations were mentioned in dispatches by my noble friend Lord Wakeham. However, the point remains that we feel that there is a small number of cases. If a property is worth £1 million, and you divide it and take into account the personal thresholds of £325,000 times two, the liability on the death of one sibling will amount to some £70,000 in tax, which can be spread over 10 years.

[Lord Davies of Oldham (Lab)]

My Lords, I agree with a great deal of what the Minister has said. It is right that the Treasury should be concerned about the protection of inheritance tax. After all, avoidance of inheritance tax is basically a middle-class pastime in this country; any lawyer is likely to recommend that people should think about setting up a trust fund to avoid the consequences of certain aspects of the tax. We all have sympathy for the original Question and problem, but it is now, properly, with the Treasury, and I am glad that the Minister is taking the position that he is.

[Lord Bates]

I am grateful for the noble Lord’s support on this.

Supply and Appropriation (Anticipation and Adjustments) (No. 2) Bill

Debate between Lord Bates and Lord Davies of Oldham

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords
Thursday 14th March 2019 Lords Chamber

[Lord Bates]

That the Bill do now pass.

[Lord Davies of Oldham (Lab)]

My Lords, it is not customary for the Opposition to make any comments on the appropriations Bill and, in normal circumstances, we would not. There is no question of us seeking to delay the Bill as this is, appropriately, a House of Commons issue. But I ought to congratulate the Government in this week when their whole strategy has been an utter and total failure; I ought to congratulate the Minister on finding a Bill on which there is unanimous support.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

I am grateful for the noble Lord’s support. We would love to have his support on the withdrawal agreement, and then we could all have a happy future.

Brexit: Economic Impact

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 20th February 2019 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, is it not amazing, with the Government’s industrial strategy on the point of collapse and our car industry showing the enormous stresses and strains of the way the Government run the economy and their attempt to secure Brexit on appropriate terms, that Ministers can trot out these ridiculously optimistic propositions on how the economy will fare? Is it not the case that all the Government’s proposed options would have a serious, negative effect on the British economy? Has the Chancellor not already accepted that they will amount to a loss in GDP of at least 4%? Worse still, the Bank of England said that no deal would have an even more adverse effect than the financial crisis. The Government contemplate a considerable loss. Is it not totally irresponsible to threaten to act in a way that no proper Government would contemplate, in threatening the possibility of no deal?

[Lord Bates]

I do not accept that, as the noble Lord would anticipate. There are reasons to be positive about the UK’s prospects, particularly if we leave with a deal. The analysis showed the severely negative impact that no deal would have on the UK economy, which is why we want to avoid it at all costs and why a responsible approach from the Opposition, if they care about the economy and jobs, would be to support the deal.

Finance (No. 3) Bill

Debate between Lord Bates and Lord Davies of Oldham

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Thursday 7th February 2019 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, this has been an excellent debate, although the participation numbers are a long way below the usual ones. That is a reflection of the exhaustion which Brexit has brought on noble Lords as we have discussed whether we can see the future of the economy with any accuracy at all in the context of that issue. I think a number of noble Lords are holding their weapons ready for the point which the noble Baroness, Lady Kramer, referred to; we cannot be far off another Budget and a clear economic Statement which will take account of whatever deal the Prime Minister succeeds in bringing back to the nation before 29 March.

The Minister sought to put a number of issues in context—a context that I could scarcely recognise. When will the Government face up to the many failures in their economic strategy of nearly a decade? Their long-term economic plan disappeared as a concept embraced by their Members of Parliament and noble Lords, but a great many of its characteristics have persisted. In particular, the Government still follow a broad strategy of considering austerity to be good for the nation. It was directed, in the first instance, at clearing up the deficit, which was meant to be cleared by 2015. The latest target date appears to be somewhere around 2025. However, the OBR and a number of interest groups in the country think that remains a challenging target. It is a measure of the Government setting out a clear objective and falling many years short of reaching it.

The Government have presided over the slowest recovery since the 1920s. The key indicators of investment, growth and productivity still place us among the lowest of the advanced economies. The Minister referred to the growth rate of 1.6%. My goodness, what an achievement. It is lower than in any other advanced country and a long way below the levels of economic growth to which we had been accustomed before the financial crash. The Government have had nearly a decade to recover from that calamity, but have precious little to show for it.

We consider that the alternative strategy is obvious. We need to borrow in order to invest, so that instead of being starved of resources—particularly in respect of the regional imbalance of resources from the Government—our economy will be able to get the resources necessary for growth. There is no doubt that austerity is not yet over. This Bill offers tax cuts for the richest members of our society and welfare cuts for the less fortunate. We are facing the challenges of Brexit with low investment, low wages and low productivity. The Minister mentioned the recent increase in wage rates, but that is the first year in which the Government have been able to say that for a decade. It is quite clear that the Government’s progress is very slow.

Meanwhile, our public services are suffering. Our Armed Forces have had severe cuts; our police numbers are drastically down, while violent crime is up. But contrast the restrictions on public sector pay with what happens in the private sector. Last year, the chief executives of FTSE companies averaged an 11% pay increase on what was a pretty big number beforehand. When will the Government face up to the fact that they cannot expect to build a good society unless they build a fair society? In the real world, outside the FTSE top earners, homelessness has doubled, use of food banks has increased significantly and the number of rough sleepers has increased, and not just in our northern towns and cities, where it is sometimes suggested so many are neglected, but in London itself. Even Westminster has seen growth in these numbers.

The report of the United Nations special rapporteur on extreme poverty and human rights condemns the UK as a two-speed society, where the very richest flourish yet there are many in poverty. Two-thirds of children growing up in poverty are in households where there is at least one earner. That says something about the payment of wages at the lower end of society. I suggest it will not do for the Government to do anything other than take considerable responsibility for creating this situation. The rapporteur went on to say that it was absolutely scandalous for so many children to be poor in a 21st-century economy. It reflected “a social calamity” for our country and “an economic disaster”.

That is what we think in Her Majesty’s Opposition. We will halt the rollout of universal credit, which has been identified so accurately by noble Lords in this debate; particularly the noble Lord, Lord Morrow, who identified for the Minister some pretty challenging figures on how the Government address low-income families and those dependent on benefits. I hope the Minister will respond to what was, after all, an extremely detailed and significant contribution.

The Government’s record shows little success in improving productivity. I have stood at this Dispatch Box for the past 10 years opposite a succession of Ministers, including Ministers who certainly knew what they were talking about on productivity. They were not able to persuade their Governments and their colleagues to do anything about the appalling levels of British productivity that have sustained through to today. It means that, although the Government have put money into apprenticeships—there is much criticism in industry and commerce about the nature of these apprenticeships and the funding for them—they also slashed the improvement of vocational skills, for which they were directly responsible, and hammered the further education colleges. Although we have seen universities make considerable progress in tackling the tuition fees issue, FE colleges have had a devastating onslaught from this Government. It is clear that they are the biggest losers in education spending.

That is to say nothing of the fact that schools are stressed by inadequate resources. In an economy which needs new schools, it is depressing that adult learners—people who recognise that they need to improve their skills and change the potential of their economic role in society—are down from 5.1 million to 1.9 million. The Government should be ashamed of that figure. If the Government is serious about the tax take, it is clear we need a well-resourced HMRC.

I very much enjoyed the contribution of the noble Lord, Lord Turnbull. He asked specifically about loan charge schemes, and he also identified that the digitisation of tax was misdirected when it expected organisations with such small turnovers to be able to cope. The whole position needs to be rethought. We have a report coming out shortly, to which the noble Lord, Lord Turnbull, referred, but nevertheless, this is pretty obvious incompetence by the Government in this area.

The Government also have a very poor record on climate change. Their response has been to cut support for solar energy and slash the subsidies for onshore wind. This is done against a background where we all know that climate change is going to make big demands on the resources of our society. We are also all obliged to look through a glass darkly on the question of Brexit and its implications for the economy.

I am not expecting the Minister to respond on the Brexit issue at great length today. In the other place, they are going to get another dose next Wednesday. Many noble Lords have indicated that they have said pretty much all that can be said about Brexit. But we still have not entered the final act and cannot, at this stage, predict exactly what it will be. The one prediction we all hope will not be fulfilled is to crash out of the European Community without agreement.

My noble friend Lady Quin asked a specific question of the Minister on the taxation position of a museum. Having been a Member of the other place, she knows as well as anyone here that it is not within the power of this House to render a ready solution to this by any direct action we can take. Nevertheless, I hope the Minister can give some response.

I thank all noble Lords who have participated. I particularly appreciated the contributions of my noble friend Lord Chandos. He did what I thought was necessary at this stage in the debate: he looked at the wider issues to which the Government need to respond. The Minister has got quite a lot to answer, and I am sure he is looking forward to the opportunity as much as we are looking forward to listening to him.

[Lord Bates]

What a kind invitation from the noble Lord. I hope not to disappoint.

The noble Viscount, Lord Chandos, expressed the hope that we might get a day off from the relentless grind of Brexit. I am afraid that we were not quite able to deliver. Brexit was mentioned in the contributions of the noble Lords, Lord Tunnicliffe, who opened, and Lord Davies, as he wound up, and in between by the noble Baronesses, Lady Quin and Lady Kramer. They talked about the uncertainty of the times and the noble Lord, Lord Tunnicliffe, said that these were not normal times—to which the answer, which they have heard many times, is therefore to remove the uncertainty and back the deal, so that we can move on to negotiating the future economic relationship with our friends in the European Union. We could also then remove the necessity to plan for no deal, Yet, so long as no deal remains even as a possible option, it would be remiss of any Government acting responsibly not to plan for that eventuality—although we hope with all our hearts that that outcome does not occur.

This has been an excellent debate and I therefore want to use what time I have available simply to address some of the points raised during the course of it. First, the noble Lord, Lord Davies, talked about income inequality. I should say that income inequality is now lower than it was in 2010 and lower than at any point under the previous Labour Government, in which he was a distinguished Minister. Compared with 2010, there are 1 million fewer people, including 300,000 fewer children, in absolute low income. Moreover, in the context of this legislation the Government’s policy continues to be highly redistributive. In 2019-20, households in the lowest income decile will receive over £4 in public spending for every £1 they pay in tax, while those in the highest income decile will contribute on average over £5 in tax for every £1 that they receive in public spending.

The noble Viscount, Lord Chandos, asked about the reclassification of student loans and its impact. After its review of the treatment of student loans in government finances, the Office for National Statistics has decided that some of the spending on student loans will be included in the deficit when the money is first lent to students. This is a technical accounting decision by the ONS and, although the noble Viscount was very critical of it, I stress that we operate on independent advice in this respect. We support the independence of the ONS and commend its diligence in recognising this.

The noble Baroness, Lady Kramer, talked about Making Tax Digital. I will come back to some of the points raised by the noble Lord, Lord Turnbull, in this respect. She focused on the specific impact on SMEs, on behalf of which she has been a consistent advocate. As the noble Lord, Lord Turnbull, mentioned, that is why only businesses with a taxable turnover above the VAT threshold, which is currently £85,000, will be in the scope of Making Tax Digital. The noble Lord is of course a former distinguished Permanent Secretary at the Treasury, among other things, and he talked about the work done by the committee. He said—I think I have this right—that it would be nice if a Minister were to say, “You did us a good turn there” when the committee advised on making changes and delaying implementation. Having been given that invitation, I am very happy to say that it did a good job there. It did a good turn not just in giving advice to the Government but for small businesses, in terms of how they will be affected.

With respect to all noble Lords, I think that the House will have found the technical analysis of marginal tax rates by the noble Lord, Lord Morrow, very thought-provoking. I will want to take that away and reflect further on it with colleagues. However, the Government are committed to making work pay. The noble Lord said that hard work should be incentivised, and we can all echo that. He said that it was a key measure of aspiration; again, I think we would echo that. In fact, it was part of the rationale for the introduction of universal credit.

The Budget announced that the personal allowance would be increased to £12,500. We are also investing an additional £1.7 billion per year in universal credit to increase the work allowance for working families and disabled claimants. The national living wage will rise to £8.21 from April 2019. In total, it will have delivered a pay rise of £2,750 for a full-time minimum wage worker since its introduction in 2016.

I am hesitant about reading out more such responses, not because they are not right but because I sense that the mood of the House and, certainly, our mood on the Front Bench—my noble friend Lord Young is with me—is that the noble Lord’s analysis is worthy of further consideration. I am delighted that the Financial Secretary to the Treasury and Paymaster-General said in response to the Budget debate that he would write substantively and reflect on that matter. I will take back to him the noble Lord’s contribution today to ensure that that response encompasses some of the points which he has raised.

A number of comments were made on the health of the economy. The noble Viscount, Lord Chandos, talked about the wide range of allowances and then criticised me for not responding to my noble friend Lord Horam in the Budget debate on his point about the 1,200 allowances which exist. Allowances have been used by successive Governments to incentivise right behaviour in certain areas. This Budget is no different, because it increases the annual investment allowance to £1 million for two years, thus significantly increasing the amount of relief given to businesses that do the right thing by investing in their own businesses and therefore increase our productivity—which the noble Lord, Lord Davies, was concerned about—and increase our tax revenues and growth.

One of the allowances referred to related to the issue raised by the noble Baroness, Lady Quin, whom I thank for giving me advance notice. She declared her interest as the chair of the board, but I should declare an interest as having been a beneficiary of the museums of Tyne and Wear as a child and as an adult. I am a frequent visitor to the Shipley Art Gallery, which is a fantastic treasure trove of different art, from old masters to modern, contemporary and regional art, as well as crafts and ceramics. I have enjoyed that since I was taken there as a child at school—education is a key part of it. Anything which enhances the wonderful town of Gateshead, which she and I care for, and its cultural heritage—which is not just the Shipley but the Baltic Centre for Contemporary Art, the Sage, a music centre and the Angel of the North—is welcome. It really is becoming a cultural centre.

The noble Baroness came up with some innovative suggestions as to how the Interpretation Act 1978 could be invoked in the matter that she raised. We have looked carefully at that, and my advice is that the existing legislation is unambiguous and cannot be interpreted in any other way. Any changes would require primary legislation. However—the former Permanent Secretary will be watching carefully what I say here—I think that the spirit and intention behind that measure were clear. Manifestly, it was intended that organisations such as the Tyne & Wear Archives & Museums should be able to benefit from it. The challenge I ask her to leave me with—I have already commenced informal discussions with the Financial Secretary to the Treasury—is how we go about correcting that. Clearly, if it requires primary legislation, which is the current advice, that limits our options as to how quickly we can move, but if there are other ways to do it, we would want to do so. I know that the noble Lord, Lord Davies, echoed his support for efforts in that area and I give her a commitment that it is an anomaly that we want to resolve.

The noble Baroness, Lady Kramer, talked about local authorities. I am conscious that time is short, but loan charges is a hugely important issue that was also raised by my noble friend Lady Noakes in the Budget debate. I wrote to her, and copied in the noble Baroness, Lady Kramer, having gone back to the department and looked again at it. There is no requirement on an individual who is not an employee to use a disguised remuneration loan scheme. The tax system expects people to take responsibility for their own tax affairs and if an arrangement looks too good to be true, then it probably is. Hundreds of thousands of people work and pay tax as self-employed workers or through their company without using highly contrived tax avoidance schemes.

The noble Lord, Lord Turnbull, drew attention to what was new Clause 26. The Government chose to accept new Clause 26 during the passage of the Bill and will lay a report in line with the requirements of that new clause no later than 30 March—that is probably going to be a busy day in Parliament. The report will include a comparison with the time limits for the recovery of lost tax relating to disguised remuneration loans. HMRC is working to help people put things right but can only help those who come forward, so we encourage people to come forward. For those people who settle, there are schemes, depending on the income threshold, whereby people can make those tax settlements over a five to seven-year period. As for why taxpayers do not have the right to appeal against advance payment notices and follower notices, Parliament granted HMRC these powers to discourage tax avoidance. Advance payment notices prevent tax avoiders gaining an economic advantage by holding money during the time it takes to complete lengthy tax litigation. Importantly, these rules in no way affect a taxpayer’s right to appeal their tax liability.

The noble Baroness, Lady Kramer, and the noble Lord, Lord Turnbull, spoke about future plans for Making Tax Digital. The Government set out a vision for modernisation of the tax system through Making Tax Digital in 2015 and our vision remains unchanged. There will be no further Making Tax Digital mandation until the system has been shown to work well. The sub-committee recommended an independent review of HMRC’s powers. The Government agree that HMRC has to balance the collection of tax with important taxpayer safeguards—again, this was raised by the noble Baroness, Lady Kramer, and the noble Lord, Lord Turnbull. The powers review was a major project designed to support the merger of Her Majesty’s Customs and Excise and the Inland Revenue. It took seven years and concluded in 2012. There has been no such fundamental change to the department since which might justify a further review. However, the Government keep the tax system under review and note the sub-committee’s recommendation to update the power review in line with principles about the digital age.

I have tried to address noble Lords’ questions. I will review the record of the debate, which has been of a very high quality with lots of points of insight, and if I have missed anything, I will follow up in the usual way and write to those who spoke in the debate. I beg to move.

Financial Services (Implementation of Legislation) Bill [HL]

Debate between Lord Bates and Lord Davies of Oldham

3rd reading (Hansard): House of Lords
Wednesday 6th February 2019 Lords Chamber

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, that is a good question. We had hoped that it would be gazetted before then, in which case we could then have made the amendment that we talked about. I was grateful for the noble Lord’s suggestion on that. I cannot say that we have had an explicit conversation about this aspect, but it is going to arrive. Providing that it passes your Lordships’ House, it will be heard in the Commons I think on Monday next week. The same principle would apply—that if it is gazetted we will put it in there. That was certainly the spirit of what we agreed. I will make absolutely sure that the Economic Secretary and the Financial Secretary, who are dealing with this in the other place, are apprised of the commitment that I gave and which we will seek to honour.

[Lord Davies of Oldham (Lab)]

My Lords, I am grateful for that answer, which shows that the Government are on top of the issue—against a background where we must all recognise that time is somewhat short with regard to this legislation. The SI relates to a service industry that is a crucial part of our economy. We could not afford any situation in which a gap occurred; I am sure that the Minister is seized of that fact.

We are all aware of the fact that there are not many days left to the point where we are due to leave the European Community, yet there is still a very large number of SIs to be considered. Slips such as this, which are minor, can be remedied reasonably quickly by appropriate action, as the Minister indicated. But slips such as this could be costly if we are right up against the wire with regard to the legislation we are seeking to pass. We must all be conscious of the fact that the Government’s programme between now and the end of March is pretty demanding, to put it mildly. So, although I accept entirely what the Minister said and am reassured by the promptness of the Government’s response, this is an indication that there is many a slip between cup and lip, and the Government do not have much time for a monumental programme.

Brexit: Outstanding Commitments

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 6th February 2019 Lords Chamber

[Lord Bates]

In that sense, that is correct. The range of the figure in the financial settlement is between £35 billion and £39 billion. The OBR has put it at the top end of that range. When we went into that negotiation, one thing the European Commission wanted to do was discount the rebate, which is a significant element of our contributions and benefits the UK. That was included in the final calculations, so I believe it represents a good settlement, alongside the withdrawal agreement, and should command support on all sides of the House.

[Lord Davies of Oldham (Lab)]

My Lords, is it not right for us to assume that the majority of British people who voted to leave the European Union did so because they had a different perspective on the future of the United Kingdom—particularly on control over decisions? The idea that the country is full of animosity towards the European Union—when, after all, the initiative to leave was taken by us—is false. Therefore, the people expect us to meet the obligations that we entered into as far as the European Union is concerned.

[Lord Bates]

I am very happy to agree with that sentiment. We want a deep, ongoing relationship with our European friends; part of that means honouring what we signed up to. This was what we signed up to at the Council meeting back in November, and we should support it.

Financial Services (Implementation of Legislation) Bill [HL]

Debate between Lord Bates and Lord Davies of Oldham

Committee: 1st sitting (Hansard): House of Lords
Tuesday 8th January 2019 Lords Chamber

[Lord Bates]

My Lords, first, I am sure that I speak for the whole Committee in thanking the noble Lord for his succinctness in presenting his amendment. I recognise the old adage that everything needs to be said but not everyone needs to say it. That is a good principle. In following him in that spirit, I will put on the record a few comments that I believe will be helpful for our wider debates.

We appreciate the concerns across the Committee regarding the Henry VIII powers and, where they are proposed, it is clear that their necessity must be well evidenced. In the case of the financial services legislation, to which the power in this Bill will apply, I hope that noble Lords will accept the need for such a power.

An inability to amend existing primary legislation such as the Financial Services and Markets Act 2000 will render it impossible to implement this necessary body of legislation. Further, as noble Lords will be aware, the exercise of many functions under financial services legislation is carried out by the independent regulators—the Financial Conduct Authority and the Bank of England. The capacity and expertise of the financial regulators will be absolutely crucial to the effective implementation of these pieces of legislation and, consequently, to the resilience and prosperity of the financial services sector here in the UK.

The amendment would remove the ability to delegate to the regulators because, as a general rule, a power to make secondary legislation does not include a power to sub-delegate. An inability to effectively delegate powers to the regulators in implementing the legislation contained in this Bill would severely undermine the value of transposing the original legislation into UK law. In many cases, it would effectively render legislation unenforceable, and the Bill would simply not be able to achieve its central goal of ensuring that the UK continues to be an attractive and competitive place to do business in the immediate two-year period post exit, in the unwelcome and unlikely event of a no-deal scenario. Given this context and the context of the previous debate, I invite the noble Lord to consider withdrawing his amendment.

[Lord Davies of Oldham]

My Lords, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Davies of Oldham]

My Lords, it is time to be kind to Ministers when one gets to this end of the Bill. My advice to the Minister is to indicate what a logjam of SIs there would be four years on from the consequences of this strategy. I understand entirely, and sympathise very much with the intent behind the amendment, but if I were the Minister I think I would point out a few of the practical difficulties.

[Lord Bates]

There speaks the voice of experience. From his time speaking from this side of the Chamber, the noble Lord has perhaps pre-empted some of the concerns that we would have about this proposal, but let me put them on the record.

I am grateful to the noble Lord for giving us an opportunity to debate this important area. In implementing files under the Bill, it will be necessary to amend existing legislation to reflect updates to the regime. Should all powers under the Bill lapse at a stroke, without replacement, the legal effect on amended legislation would be unclear.

At a time when we should be seeking to provide industry with clarity and certainty, I am afraid that the amendment would have the unfortunate and unintended effect of providing just the opposite. Rather than minimising the cliff-edge risks, it would create a new series of cliff-edge challenges to be faced in the coming years. The potential for this legislation to lapse without replacement does not provide certainty to firms. Compliance with new regulatory regimes can be costly, and it would have a negative effect on firms’ confidence in the Government’s ability to set effective and proportionate regulation should we implement vital legislative reform only for it to drop away after a given period.

I appreciate the noble Lord’s concern that regulations made using this power will have a lasting effect on the structure of the UK’s financial services regulatory framework. This is why the power can apply only to a limited set of important files, which have been set out on the face of the Bill. In a no-deal scenario, implementing those files could be crucial to avoid conceding a competitive advantage to businesses operating in EU-based markets or to remain compliant with the Basel rules and meet our G20 commitment to international standards.

The noble Lord is clearly right, however, in pointing out that this cannot be a long-term model for a regulatory framework. Beyond this temporary solution, once we have left the EU in a no-deal scenario, the Government recognise the clear need for an approach that balances parliamentary oversight of financial services legislation with maintaining the flexibility and competitiveness of our regime. To that end, we will take forward proposals for a sustainable, long-term model in due course.

It is perhaps worth pointing out also that the Small Business, Enterprise and Employment Act 2015 requires the inclusion of a statutory review clause in secondary legislation that regulates business if the legislation continues to have effect five years after its entry into force. When taking forward SIs under the Bill, the Government will therefore be under a duty to make provision to undertake a post-implementation review after five years or to publish a statement that it is not appropriate in the circumstances to do so. In this light, I hope that the noble Lord will feel able to withdraw this amendment.

--- Later in debate ---

[Lord Davies of Oldham]

My Lords, I, too, raised this issue at the conclusion of my speech at Second Reading. I quite understood, with the vast range of issues that the Minister had to respond to on that day, his feeling unable to go into great detail on this one. That is why I was delighted to sign up to the amendment put forward by the noble Lord, Lord Sharkey. The Minister has a real case to answer here, and I hope that we will have a constructive response.

[Lord Bates]

My Lords, I hope I can oblige the noble Lord, Lord Davies, with a constructive response to end Committee. I thank all noble Lords who have taken part. I understand that several Members have received representations from the sustainable finance industry. This amendment seeks to add to the Bill’s Schedule two EU files that complete the European Union sustainable finance package.

As I have mentioned already, the Government acknowledge that the power being sought in this Bill is broad. That is why it has been designed with a number of safeguards and limitations in place. One of these is for the power to be limited to a specified set of EU legislative proposals, named on the face of the Bill. In order to focus the power as narrowly as possible, the list of files in the Schedule to the Bill was determined through an assessment of the importance of files to the stability and competitiveness of the UK’s financial services sector. The noble Lord, Lord Sharkey, highlighted this as one of his concerns when moving his amendment. In short, these are the files that we believe will be the most important for market functioning and UK competitiveness in a no-deal scenario.

I will, of course, be very happy to meet the noble Lord, and the noble Lord, Lord Davies, on this issue. I think we are already going to be meeting quite a bit between now and next week. I have listened carefully to the arguments in favour of the merits of adding these files to the Schedule, and I undertake to reflect on the matter ahead of returning to it on Report. In the light of this, and of the discussions that will take place, I invite the noble Lord to consider withdrawing his amendment at this stage.

High Street Banks

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 19th December 2018 Lords Chamber

[Lord Bates]

Modernisation is indeed happening and challenger banks are making a big contribution to the way that banking services are delivered. The reality is that digital online banking is now conducted by 71% of the population. Next year, mobile apps will overtake digital banking in service delivery. That is leading to changes in our high streets, communities and villages. They need to be taken into account, but so too does the changing way in which we pay for services.

[Lord Davies of Oldham (Lab)]

My Lords, the banks are closing 12 branches a week and yet those who are taking the decisions at the highest level are undoubtedly enjoying city bonuses which are well over 20% this year. Instead of talking about mitigation, why do the Government not think in terms of some machinery to control the situation and introduce an element of fairness to communities? We believe that banks should be permitted to close only after local consultation and the Financial Conduct Authority has given its assent.

[Lord Bates]

I understand the point about consultation but that was the whole point of Professor Griggs’ review and the new access to banking standard, which is upheld by the Lending Standards Board. We cannot be in the position of asking whether we are going to subsidise five of the six banks to remain open with taxpayers’ money. We have decided to respond by coming up with an arrangement for the Post Office to be the place of choice for people to transact their personal, face-to-face banking needs. I think that that is a better way forward.

Student Tuition Fees and Maintenance Loans

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 18th December 2018 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, this may be a technical issue but the decision helps to make the Government clean and honest in a crucial respect. The Minister will appreciate that what it does is to end the fiscal illusion of keeping student debt off government books.

The amount is not trivial: the ONS identifies £12 billion, which is just about equal to the sum the Chancellor treated as a windfall from the OBR when he was constructing his Budget. Of course, it gave him the chance to go on a small spending binge, mainly to the advantage of the better-off in our community, rather than those in greater need. Will the Minister explain how the Government will respond to this rupture in their fiscal targets? As I say, it is not a minor figure. What damage do the Government anticipate will be done to future student prospects and the service our higher education community provides? He will know that the decision has occasioned considerable anxiety in those circles. Does he welcome the end to the Government’s rather despicable practice of selling off part of the student loan book for a song, thereby ensuring that government coffers are filled but that the taxpayer foots the bill in the long run?

[Lord Bates]

It is not correct to say that student loans are not on the Government’s books. Of course, the national debt does take into account the full cost of student loans—they are listed there. The question at issue, which was addressed by the ONS, was whether the repayment rates should be reflected in the deficit—the total is in the debt but not in the deficit—and it came down on the side of believing that that ought to be recognised in the year in which the loan takes place, rather than waiting until the end of 30 years to figure that out.

We do not mark our own homework on this. We follow the existing rules, as all Governments have done. The ONS has offered a view and made a recommendation, and we will follow that through.

Brexit: Bank of England Report

Debate between Lord Bates and Lord Davies of Oldham

Thursday 29th November 2018 Lords Chamber

[Lord Bates]

Similar claims were made before the referendum took place. The choice that will be faced by Parliament—by the House of Commons on 11 December —is between the deal that the Prime Minister has negotiated and no deal. The focus should be on that. The Bank of England analysis and that produced by the Government yesterday to inform that debate show that the deal proposed is overwhelmingly better than no deal. That is what we will work towards.

[Lord Davies of Oldham (Lab)]

My Lords, in producing the report, the governor is fulfilling his obligation in preparation for the Treasury Select Committee, as the Minister has indicated. So let us have no nonsense about the fact that the governor is exceeding his powers in any respect. We would expect the Bank of England to be well informed about the present situation and to be in a position to offer warnings to the Government. The basis of the warnings is the preparedness of British industry and commerce to adjust to the catastrophic position of a no-deal Brexit and to the Government’s proposed position. Is it not clear that the Minister needs to convey to his colleagues that there is enormous anxiety about the lack of preparation for the development of deals, which will be far below the level anticipated when the negotiations began? The governor is quite right to have identified in his report the Bank of England’s anxieties.

[Lord Bates]

The noble Lord is absolutely right: the Bank of England has a statutory duty to inform its own analysis and to look at the worst-case outcomes to ensure that the economy is resilient to meet them. That is for the Financial Policy Committee and the Monetary Policy Committee to undertake, and they do so routinely. What is different about this analysis is that it was prepared at the request of the Treasury Committee in another place to inform the wider debate that it will have. Next week, the committee is taking evidence from the Chancellor of the Exchequer, and that will all be thoroughly debated ahead of the vote on 11 December.

Mortgages: Cerberus

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 28th November 2018 Lords Chamber

[Lord Bates]

The noble Lord is right to highlight that this traces back to 2008 and the financial crisis, when we had immense irresponsibility in the mortgage lending system. Some mortgages were offered at 120% of the value of the mortgage, allowing people to self-certify their income. Those mortgages, banks and institutions were then rescued. As a result of state aid rules, they were then unable to offer new mortgages. The mortgage prisoners, to use the noble Lord’s term, were then doubly blighted by the fact that in the intervening time, the European Union mortgage credit directive came into effect, which introduced an affordability test which meant that they could not apply to transfer to another lender to achieve a mortgage at a lower rate—they were indeed trapped.

We have tried to find how we can help that situation. We are working with the FCA—we are aware of the representations being made—and will continue to do so. My honourable friend the Economic Secretary to the Treasury will be writing further on this important issue.

[Lord Davies of Oldham (Lab)]

My Lords, the months and years slip by. The Minister says that every constructive effort is being made, but there is precious little in the way of a solution to this problem for these mortgage holders. When a question involves a number of people in considerable difficulty and relates to difficulties with the banking and mortgage sector over a decade, it behoves the Minister to produce a better response than that we are looking four or five years ahead before we have made even a significant gesture.

[Lord Bates]

There is that aspect to it. I do not want to make a partisan point, but it is part of cleaning up the mess of the irresponsible lending happening in the past. These people find themselves in this situation. We and the Financial Conduct Authority are asking how we can work with the industry to come up with solutions whereby there might be greater flexibility for some people who are trapped to move to lower interest rate mortgages. At the moment, people who are on UK Asset Resolution mortgages may be paying 4% to 5%, but there are better deals, potentially, at 3% to 4%. How do they get on to them? If they have equity in their property, are up to date with their mortgage and have the income to justify it under the new rules, they can already move. It is those people who do not fall into those three categories for whom we need to work for a solution within the new European rules. That is what we are turning our attention to.

Brexit: Economic Analysis of Various Scenarios

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 28th November 2018 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I am grateful to the noble Lord for that short series of comments on this important issue.

Of course Her Majesty’s Opposition respects the referendum result but no one can offer much respect to the botched Brexit negotiations, in which the Prime Minister neither meets our six points nor her own red lines. Do the Government accept that the choice cannot be between her deal and no deal? Do they not recognise that we need a deal to support jobs and the economy, and which guarantees that important standards are sustained and protections are clearly in place?

There is a real worry about the Government’s position as a result of the negotiations, and this House and the other place will hear a great deal about that in the next few weeks.

[Lord Bates]

The choice before us is clearly between a deal and no deal. Many people have speculated over the past two and a half years as to what would happen. They said that no agreement would be reached in December and that we would not get the EU (Withdrawal) Act through Parliament. Both those things have happened. Also, crucially, they said that we would not reach a deal this November, which the Prime Minister has secured. It is a good deal for this country, which is being put before Parliament as promised. Also as promised, we are supplying, in a transparent way, the economic analysis of that, included in technical notes, so that the House can come to an informed decision.

Brexit: Economic Effects

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 21st November 2018 Lords Chamber

[Lord Bates]

I agree wholeheartedly with my noble friend.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister’s Answer to my noble friend Lady Quin was somewhat elliptical and roseate in hue. When we come to the question of the Commons having to consider the issue of the meaningful vote, is it not the case that the Minister in the Commons confessed on Monday that the economic analysis would of course depend on aspects of withdrawal, but with Britain still a full member of the European Community? How on earth can that prove to be realistic in people’s judgment on the withdrawal position?

[Lord Bates]

That was the decision that Members of the other place came to in the debate on Monday. They introduced Amendment 14 to the Finance Bill, which called on the Government to consider the long-term costs and benefits of moving to a new trading relationship with the EU and the rest of the world. The Exchequer Secretary said:

“I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU”.—[Official Report, Commons, 19/11/18; col. 661.]


So we are doing what we have been asked to do by the other place.

Green Finance

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 31st October 2018 Lords Chamber

[Lord Bates]

The investment going in is substantial. We are a leader in this area. Since 2015, the rate of emissions has fallen faster in this country than in any other G20 country, which we can be proud of. The fact that one in five electric vehicles sold in Europe is manufactured here in the UK is again something that we can be proud of, and we are investing heavily in that. We have a clean growth strategy, and an industrial strategy that has these issues at its heart.

[Lord Davies of Oldham (Lab)]

My Lords, the Intergovernmental Panel on Climate Change emphasised just how urgent it is for Governments to act. The Minister cannot produce the gloss that we are doing rather well on investment when we have slipped from first place to third, behind the Netherlands and Sweden. He has to recognise that there are aspects of government policy, such as fracking and the fact that the Government are reducing their subsidies for green energy—I will not mention Brexit at this stage—that must cause concern among investors and help to produce a rather more depressing picture than the Minister has suggested.

[Lord Bates]

I do not accept the picture that the noble Lord is painting. In the index that we are talking about, the City of London was ranked number one in the world for the quality of green finance offered—something that we can be proud of. It has gone down to number three in terms of penetration, but look at other financial centres: Paris was fifth, Frankfurt 21st, Tokyo 29th and New York 39th. The City of London is leading the global agenda on leveraging private finance to meet the challenges identified by the IPCC, and we should celebrate that.

Housing: Rent Payment History

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 31st October 2018 Lords Chamber

[Lord Bates]

That is why the consultation is being extended, and it is open to all those parties to feed into it. I gave the example of Experian. By categorising the rental contributions of people in social housing, it was possible for 80% of the 1.2 million people included in the survey to increase their credit rating, meaning that they would have access to lower-cost credit. That is very much what we want, and we believe that, after a long time and a lot of pressure, we are beginning to head in the right direction.

[Lord Davies of Oldham (Lab)]

My Lords, first, we too congratulate the noble Lord, Lord Bird, on the progress that he has made on this issue and on the progress of his Bill. Her Majesty’s Opposition will of course be supporting the Bill in the Commons, as we did here. Will the Government? Secondly, if the Minister is committed to ensuring that advances are made on the basis of legislation such as this, has he or any other Minister participated in meetings with credit service providers to discuss how to use the data which is now being compiled and which ought to be used as rapidly as possible to the benefit of ordinary citizens?

[Lord Bates]

A review of high-cost credit was undertaken by the Financial Conduct Authority, which took evidence from a wide range of people. On the specific point about the Bill, the noble Lord will recall that when we discussed it, while being sympathetic with its ambitions, we chose to go another route and to introduce the Rent Recognition Challenge to see whether fintech companies could come up with a solution. We believe that that is beginning to bear fruit. The announcement made by Experian last week is evidence of that.

Brexit: Economic Forecasts

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 24th October 2018 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, the Minister is answering on a hope and a prayer. In this age of uncertainty, to claim categorically that Brexit will be beneficial to the nation is extraordinary. Will he not accept that economic predictors in the past have been broadly correct? They have been right over the last seven or eight years that the economic growth rate in the United Kingdom would decline to one of the lowest in the G7. They also got right that the people who would pay for austerity would be working people, as their wages would not increase over this period. But there was one prediction that the Government got wholly wrong; the Minister partially reflected on it a moment ago. That was for the Prime Minister to go post-haste to the President of the United States to take steps towards an advantageous trade deal after Brexit. What was the reply? “America first.”

[Lord Bates]

As far as we are concerned on this negotiation, we want a deal, we expect a deal and we want good, positive relations with our European friends. If it is important that we continue to have access for goods worth £423 billion into the EU, is it not also crucial that it continue to have access so that it can sell us goods worth £518 billion each year? It is in the enlightened self-interest of both parties to reach a deal, and that is what the Prime Minister seeks.

Brexit: Economic Effect

Debate between Lord Bates and Lord Davies of Oldham

Thursday 18th October 2018 Lords Chamber

[Lord Bates]

I do not accept my noble friend’s view that we have had little to say. I was in the Chamber earlier this week when the Leader of the House repeated the Prime Minister’s Statement and some people suggested we had too much too say. Some 106 technical notes have been put out, and we have had significant debates. The crucial thing is that businesses have known since the referendum took place, and certainly since the general election, what the outcome of the referendum was and the Government’s intention in implementing the outcome of that referendum. As a result, they have done incredible work in boosting their exports around the world. We are seeing that export growth is at record levels in terms of goods and that the fastest growth for those markets is in countries outside the European Union, such as India and China.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister knows that the north-east’s average disposable income is only three-quarters of the national average. That is why my noble friend has raised this issue at this point. The Minister’s reply that we will hear the Government’s analysis before the crucial vote gives no indication of just how much time there will be for it to be compiled and to be analysed by this House and the other House before the meaningful vote. He must recognise that there are great anxieties about the present situation, and the Government are doing nothing to give any reassurance.

[Lord Bates]

I accept that there will be anxieties, but we have to point to the hard facts: businesses are still coming here and people are still buying British goods in greater quantities than ever before. Furthermore, it is an incredible achievement that last year unemployment in the north-east fell faster than in any other region in the country. It is now lower in the north-east than in London or the West Midlands—something that we have never seen in our lifetime. Therefore, there is a lot for people in the north-east and in Britain to be confident about in the future.

Prudential Regulation Authority: Equity Release Sector

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 5th September 2018 Lords Chamber

[Lord Bates]

What it reflects better is an issue of pricing, which is a fair debate. The no negative equity guarantee, which is very important to lots of consumers, because they do not want to leave their families with the potential liability, is a key part of the offer. The pricing of that, depending on which measure you take, says either that we assume there will be house price growth over the next 15 to 25 years, or that there will be no growth at all, or that interest rates will accrue at 5% to 6% or at 1% to 2%. The variance that the noble Baroness has identified lies in whether you apply the effective value test at a different point between those two extremes to come up with a different number. The purpose of the consultation paper is to get clarity so that all interests are protected.

[Lord Davies of Oldham (Lab)]

My Lords, the rate of increase in the market has been exceptional over the past five years, and there are clear indications that this will carry on at a rate not dissimilar for the immediate future, so I do not know the extent to which the regulators are being effective in this respect. It is obvious that home owners will be eager to borrow in circumstances where incomes can scarcely keep up with inflation, but we have to guard against things going badly wrong. What if house prices shudder to a halt or even fall? There are reasons to think that such issues could arise in the economy and we would be back to Equitable Life, which caused such tremendous damage to people 20 years ago.

[Lord Bates]

That is of course why within the industry itself—and indeed with the regulator—the normal level at which borrowing is taken from the home is between 30% and 40%, to allow for that cushion. We have to recognise also that this has two benefits: to individuals as, for most people, their home is their largest asset and being able to release some capital to enhance their quality of life in later life is good; and to the annuity holders on the other side of the balance sheet from the equity release, who have been suffering badly as a result of gilt yields being around 1.5%. The ability of life insurance companies to match these two needs and to offer a better deal to both is something to welcome. The noble Lord is absolutely spot on when he says that we need to watch it; we need to watch it very carefully and what I have outlined is what the regulator is doing already and the rules that it has applied, and also the consultation that is open at this moment to see whether more needs to be done.

Royal Bank of Scotland

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 13th June 2018 Lords Chamber

[Lord Bates]

The point that the noble Baroness makes is right in terms of this particular focus. The FCA identified that there had been widespread inappropriate treatment of firms by RBS. We know that small and medium-sized enterprises are the backbone of the economy, therefore mistreatment of that type is taken extremely seriously. As the noble Baroness knows, the FCA has an ongoing inquiry, and is currently assessing what enforcement actions may be taken in the future, so I will be restricted in what I can say. The fact that the Royal Bank of Scotland has come forward and issued a profound apology, and has established a fund to start the process of providing compensation to the 12,000 firms affected, is a step in the right direction. However, we deplore the actions taken which led to that being necessary.

[Lord Davies of Oldham (Lab)]

But, my Lords, in addition to the appalling treatment by RBS of small and medium-sized enterprises, and the fact that of course the FCA report on what it did pointed out the appalling behaviour of the board, will the Minister also recognise that the Government chose to sell additional shares, not just after this development but as soon as the fine levied by the United States Department of Justice had been paid by RBS? Is it not quite clear, also given the incentive of reducing aspects of the share price, that the Government are out to reward those who could afford to purchase shares, while the taxpayer loses £3 billion on the transactions carried out by a bank which has let the nation down?

[Lord Bates]

First, on the share price, the noble Lord will be aware—he was on this side of the House at the time it happened—that the shares were purchased for £5 per share. Within three months they were worth £2.20 per share, and we sold them at £2.71. They flatlined for about nine years. Rightly, because of the instruments that were set up by the previous Labour Government, these sales are done by arms-length bodies, so UK Government Investments takes independent advice. They are strictly governed as regards when disposals can take place, to ensure, quite rightly, that we are not in possession of any information which the market is not aware of. Those are established practices; therefore, it was right that actions did not take place while the decision by the US Department of Justice about the scale of the fine was not in the public domain. They have followed those procedures, and we follow them independently, but we are dealing with the legacy issues of some very concerning behaviour.

Investment Banks: Client Protection

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 13th June 2018 Lords Chamber

[Lord Bates]

There is a complex process involving the courts, the Financial Services Conduct Authority and the creditors’ committee. The amount of the fees of the administrator must be agreed and presented. There must be a timely distribution plan for the proceeds, and this must be announced. Also, these are all matters that can be challenged through the courts by relevant parties, and the Financial Services Compensation Scheme has already indicated that it will be looking for an independent assessor to be appointed to look at the level of fees being charged by the administrator in this case.

[Lord Davies of Oldham (Lab)]

My Lords, I thought the Minister did rather well on this Question. Of course, it is the case that only 10 of the investors had to pay, because everyone else was covered by the scheme. But I hope he will put some pressure on and look again at the totality of the scheme, because it is the case that one category is effectively picking up the losses that have been partly incurred by the other category.

[Lord Bates]

I am slightly stunned by the noble Lord’s generous praise. It is very welcome, especially coming from him. As I say, the whole process of regulation in the City includes constant lesson learning. It is a fast-moving environment, and I am sure that lessons will be learned from this process. We will, of course, convey the lessons and the suggestions made by noble Lords back to the FCA for it to take into account.

Royal Bank of Scotland

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 5th June 2018 Lords Chamber

[Lord Bates]

I thank the noble Baroness for her questions. In response to the first one, it must be remembered that when the Government paid £5.02 per share for RBS in 2008 it was an essential injection of capital at a time of financial crisis. The bank whose shares we sold yesterday is a very different organisation. Its balance sheet is £1.5 trillion less. It is operating in nine countries instead of 38. Because we have changed the rules, its capital buffer is now 15.1%, which is greater than it was and well above the threshold required. The noble Baroness also touches on some other important factors. These had a bearing on UK Government Investments, which advised the Government about when to sell—we act on advice in these things. It pointed to the fact that, because a settlement of £3.6 billion with the Department of Justice in the United States, announced in early May, had now happened, it judged this to be a good time to exercise this sale. The Financial Conduct Authority rightly looked into the global restructuring group, where the circumstances are very concerning for the businesses affected. Its report recognised that a number of that group’s customers had been mistreated.

[Lord Davies of Oldham (Lab)]

My Lords, the Minister has made a good fist of a very poor case indeed. He must recognise that the bank is, in fact, being sold at a level massively below its value when it was bailed out in 2008. It is, therefore, the taxpayer who is bearing the cost of this situation. It will not do for the Government to say: “We now have a bank which can pay a dividend and which has made progress. We are therefore delighted to be able to sell it into private ownership, while the public which bailed it out loses significantly on the deal”.

[Lord Bates]

The noble Lord may say that we sold it too cheaply; I might say that he bought it too high, which is another way of looking at the £5.02. It is a fundamentally different bank to the one which was acquired then. The price which we sold at yesterday—271p—was near the top end of the present yearly average. We have signalled that we do not believe that a Government should be in the business of running these banks. The Chancellor announced in last year’s Autumn Budget that we would gradually dispose of our interest in the bank over the next five years, and that is what we are doing.

National Debt

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 14th March 2018 Lords Chamber

[Lord Bates]

My noble friend, who comes to this with immense experience, makes an interesting point. Even if the element of total debt covered by the quantitative easing programme initiated by the Bank of England—about £120 billion—is taken out, the debt figure is still continuing to fall. That is the point we are trying to emphasise: debt is beginning to fall and we are beginning to live within our means, which is the right thing to do.

[Lord Davies of Oldham (Lab)]

My Lords, the greatest asset which any country has is the capacity and willingness of the people to work. Construction workers have been waiting for this Government to recognise and act on the housing crisis for several years. Does the Minister agree?

[Lord Bates]

I wonder whether the noble Lord heard last week when we discussed the national infrastructure plan and announced the initiatives that we were taking to boost the housing market—some £43 billion over the spending period. We recognise that housing is a huge issue, not only of intergenerational fairness but also in terms of driving forward the economy. That is why we have announced the very substantial initiatives that we have to get that sector moving, including from the National Productivity Investment Fund, a large chunk of which is dedicated to housing.

Green Finance

Debate between Lord Bates and Lord Davies of Oldham

Monday 5th March 2018 Lords Chamber

[Lord Bates]

Many of those areas are for the local authorities concerned to look at. One thing that we have introduced is the clean air fund, which was announced by the Chancellor, and some £220 million will be available specifically to help local authorities in that area, but of course local authorities are able to come forward with their own proposals, should they choose to do so.

[Lord Davies of Oldham (Lab)]

My Lords, the House will be concerned that the Minister’s main reply was that we are looking at this issue. France, Belgium and Poland have already acted, and certainly the next Labour Government will act promptly on the question of a green fund for the necessary control of climate change. Why are the Government always thinking about and considering things and looking at proposals when others act?

[Lord Bates]

We are thinking about it because there is quite a lot to think about. The issue is, first of all, whether the Government should be launching these bonds while the market itself is growing quite dramatically. Five years ago, there were virtually no green bonds, or a very limited amount, but now their issuance is $160 billion globally, with some $200 billion predicted for this year. That is happening. Secondly, the Debt Management Office would have to look at whether there is a sustainable demand for hypothecated bonds, in this case. It is not something that we have tended to issue, nor have previous Governments—we tend to operate through gilts. Therefore, it is right that we listen to the expert advice that we receive and then act upon it.

Brexit: Customs Procedures

Debate between Lord Bates and Lord Davies of Oldham

Monday 15th January 2018 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, is the Minister aware that Parliament needs to be kept very fully informed about developments in this area? There is no way that Parliament can speak on behalf of industry and the workers in industry without a clear understanding of where the Government are at on these issues. Will he therefore recognise that there is an element of concern that the cross-border trade Bill, which is at present before the other House, may well be defined, in the way the Government have drawn it up, as a money Bill? Therefore, this House, with its expertise, will have a very limited ability to express its views on such matters.

[Lord Bates]

As the noble Lord will know, those are technical matters; it is officially for the Speaker in the other place to determine what is a money Bill and what is granted a certificate. On the importance of that Bill and debating it, he is certainly right. In the other place, the Treasury Select Committee and the Public Accounts Committee have been looking at and probing the system’s readiness, as they should. We published a trade White Paper, which had a tremendous amount of feedback that we have incorporated and learned from. We have also published working papers on future partnerships that we have shared with our European colleagues because we want to make sure that the borders work well together.

Paradise Papers

Debate between Lord Bates and Lord Davies of Oldham

Thursday 14th December 2017 Lords Chamber

[Lord Bates]

The Cayman Islands has work to do, as have all jurisdictions to meet the standards that have been set down. However, it is true to say that with its centrally held register, the Cayman Islands at the moment is going above and beyond what is required by the Financial Action Task Force. We are absolutely resolute about making sure that all UK citizens pay all tax due by them, wherever it is held in the world. That is a very important commitment, and we intend to ensure that all jurisdictions hold to it.

[Lord Davies of Oldham (Lab)]

My Lords, given the level of public shock at what was revealed in the Paradise papers, the Minister’s answers today follow the same emollient pattern of recent years, in which it has been said, “We are doing what we can and we are getting certain proceeds”. Yet, the Paradise papers reflected that a whole range of individuals and companies owe tax on a massive scale, and are putting themselves under the jurisdiction of these islands and escaping taxation that is owed to this country. I ask the Minister to respond to my noble friend’s Question with the degree of forthrightness it demanded.

[Lord Bates]

The question was about a public register. The UK is the first major economy to issue a public register of foreign-owned companies. We are leading in this; it was a landmark commitment given at the global Anti-Corruption Summit, which David Cameron initiated. So far, it is not required to make sure there is a public register in other jurisdictions. It has to be available to tax authorities and to security authorities in the case of counterterrorist finances. That is what is happening in those jurisdictions at present, but there is still more to do and we are far from complacent.

Brexit: Costs

Debate between Lord Bates and Lord Davies of Oldham

Wednesday 29th November 2017 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I was going to welcome the Statement, but I had hoped it would be a bit more definitive than the Minister has managed. We think that developments have gone a considerable way to securing the financial settlement, which of course is of great importance. I hope the Minister will accept that we expect the settlement to be a good deal for the nation, a fair settlement for the taxpayer and one that will meet our international obligations. The settlement will need to reduce the uncertainty that has obtained in the British economy over the period in which the Government have been negotiating so far. The Government must recognise that there is a real economic cost to those levels of uncertainty. Will the Minister accept that to get a good trade agreement in the next phase of the negotiations—the important phase—they should be based on trust and the Government should ensure that they earn that trust? Moreover, in circumstances where we may be negotiating positively in the wider world as well, such a reputation for trust will stand us in good stead for the future. The Government have so far pursued a negotiating strategy that has lacked transparency, which has caused considerable anxiety. I hope they will do better in the future.

[Lord Bates]

I welcome the support that the noble Lord offered to parts of the Statement, but the Government have a specific responsibility, which Parliament has endorsed, not to release information that would undermine our negotiating position. We are in the midst of one of the most complex and important negotiations that this country has ever undertaken in peacetime. It cannot be right that we should have to give a running commentary that will be observed and undermine our negotiating position. We do not want that to happen. At the same time, we are very mindful that we have a duty to keep Parliament informed as far as possible. The position is that we are negotiating the best possible outcome that we can achieve. We have a particular target in relation to the Council meeting taking place in mid-December. We are making every effort and working in a good spirit towards a successful completion of that negotiation.

Budget: Reduction of Waste

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 28th November 2017 Lords Chamber

[Lord Bates]

In terms of landfill, of course it was the landfill tax introduced by the Conservative Government in 1996 that has reduced the amount going into landfill by some 70%. On local authorities, it is not just about money; it is actually about ambition and determination. We have neighbouring local authorities with varying recycling rates. Lewisham has a recycling rate of 18% but Southwark has a recycling rate of 35%, while Trafford has a recycling rate of 60%. We think that it is not just about money; it is about learning and the political leadership that will ensure that we deliver this.

[Lord Davies of Oldham (Lab)]

My Lords, does the Minister accept that normally this House would take some encouragement from the fact that the Treasury is taking the lead on an environmental issue? But what is it proposing to do? It is proposing to carry out an inquiry into how taxation impacts on plastics. Surely it can be a bit more proactive than that.

[Lord Bates]

One of the most recent ideas we had on that was about plastic carrier bags; we put 5p on them two years ago. As a result, we have seen usage reduce by 83% in two years, saving 9 billion plastic bags and leading to a 40% reduction in the number of plastic bags washed up on British beaches. That is exactly the type of innovative initiative that the Treasury should be working on, in partnership with other government departments.

VAT: Evasion

Debate between Lord Bates and Lord Davies of Oldham

Monday 20th November 2017 Lords Chamber

[Lord Bates]

The noble Lord is absolutely right to say that there is a big change from traditional sorts of trading to online trading. It is therefore essential that HMRC tracks that in moving towards making tax digital. That is what we are trying to do. We are also saying that fulfilment houses, which are a device used to store goods for onward selling in the UK, will need to register from April next year. Perhaps most relevant to the point that he raises, we are also looking at the idea of having split taxation so that, rather than going through the declaration element, the minute that a transaction is triggered online, the tax immediately goes to the Exchequer. That seems a more sensible way forward. We consulted on that and will come forward with our proposals on it very shortly.

[Lord Davies of Oldham (Lab)]

My Lords, as the noble Lord, Lord Lucas, has clearly exposed, the Government have been somewhat tardy in dealing with this issue—as they have been on so many issues which involve the multinationals. Will the Minister recognise that legislative time is no excuse as the Government introduce a Finance Bill every year in which they could, and should, address these significant issues? Does he appreciate that the Government ought to have a comprehensive plan to restore transparency to our tax system—which is what a future Labour Government will deliver?

[Lord Bates]

Before we wait for the future one, we might reflect on what the last one did or did not do in this area. The truth is that these are fast-moving instruments; people are arbitraging the system and looking at how to exploit advantages from a trading point of view. HMRC has been vigilant and has come forward with ideas—and when it does, we implement them. That is why we put them forward in the Finance Bill and are bringing forward the measures we are talking about. That is also why the 75 measures on tax evasion and avoidance that we have introduced since 2010 have raised £160 billion for public services.

Overseas Aid and Defence Expenditure

Debate between Lord Bates and Lord Davies of Oldham

Monday 13th November 2017 Lords Chamber

[Lord Bates]

It is true to say that around 26% of the overseas aid budget is dispensed by other departments, and a lot of it is spent by Department for Business, Energy and Industrial Strategy. It is investing in education and research, particularly in medicine, along with development matters that will help developing countries. However, we are clear that everything has to be categorised as overseas development assistance; it must meet the primary purpose test, which is that it is for the economic development of the least well-off countries in the world. We are absolutely confident that that target is being met. If it is not met, the money is not categorised as overseas development assistance and therefore we do not meet the 0.7% target. That is why we take it very seriously.

[Lord Davies of Oldham (Lab)]

My Lords, I congratulate the Minister on his answers to this Question. Is it not essential that we continue to commit ourselves to 0.7% for the aid budget? It would be quite wrong to raid it in order to solve the problems of defence.

Brexit: Financial Settlement

Debate between Lord Bates and Lord Davies of Oldham

Monday 13th November 2017 Lords Chamber

[Lord Bates]

There is no doubt that the entire Cabinet signed off on the position of the Florence speech, and that remains the position David Davis is pursuing with vigour and ability in Brussels at present.

[Lord Davies of Oldham (Lab)]

My Lords, the temptation to follow the noble Lord, Lord Cormack, is almost overwhelming, but on this occasion I will resist, to return to the main issue of the Question. We in the Labour Party accept the referendum result, but we will seek to remove the concept of “no deal”, which wrecks confidence as far as British business is concerned. The Minister refers to the fact that other noble Lords have had experience at the Dispatch Box on Treasury matters, but they do not last very long, do they?

[Lord Bates]

I had the benefit of seeing the faces of the noble Lord’s colleagues behind him when he was asking that question, which reminds us that the negotiation is not necessarily easy for any of us, in any party. Where do the Opposition stand on free movement and the single market? The only thing they seem to agree on is that we ought to sign up to whatever is put in front of us. We are saying no—this is a negotiation and we have the right to say no.

Paradise Papers

Debate between Lord Bates and Lord Davies of Oldham

Monday 6th November 2017 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, that is a totally inadequate response given the sense of outrage in the country over what has been revealed in the paradise papers. The Government are trying to say that, after seven years of Conservative Chancellors of the Exchequer and Conservative government, condign action is now being taken against aspects of tax avoidance, which has clearly not happened over the preceding period. Therefore, I do not think that we should take these suggestions seriously. After all, only in the last few weeks the Government have rejected any mention of non-dom status in the Finance Bill and have rejected Labour’s demand that this issue be identified and dealt with in legislation.

The Conservative Party has a great deal to conceal. What is the tax status of the former non-domicile Lord Ashcroft? We noticed that for a short while he figured prominently in the newspapers during the election period but, of course, by then he had already paid half a million pounds into the Conservative election fund. Therefore, we cannot take this Statement at face value. The Government purport to say that they are interested in fair taxation. We have seen their record on that over the last seven years and know that many people in this country are being impoverished by them while they still treat the very rich advantageously.

There is nothing in the Statement about the great global companies and their taxation advantages; we do not get a single mention of any of them. What we do get, because the Paradise papers reveal this, is that there has been maladministration by the Government of the Duchy of Lancaster estates. The Chancellor of the Duchy of Lancaster is the elected Member responsible for those estates yet, following the revelations of the Paradise papers, the Queen herself has had her name dragged down by these assertions. The Government do not even think that they owe Her Majesty an apology, because there is no suggestion in the Statement that they recognise that the fault lies with poor government administration.

We seek a full public inquiry into tax avoidance. Nothing less will restore our nation’s confidence that the Government’s approach to this whole wretched issue is adequate.

[Lord Bates]

The noble Lord asked what we had done about tax over the past seven years. The Statement mentioned that we have collected £160 billion in compliance revenue since 2010, that the tax paid by the richest 1% is now 28% of the total, which is more than it was under the previous Labour Government, and that we have introduced initiatives such as a diverted profits tax to tackle just the sorts of corporate manoeuvring of tax, revenues and incomes that he talked about. We have introduced the Criminal Finances Act to make it a criminal offence for employees of organisations, be they professional services firms or others, to give advice on avoiding tax. We are at the forefront of the OECD tax initiatives. This Government included in the Finance Bill, which will come before this House on 15 November, a measure to make it no longer possible to have non-dom status in perpetuity—we are ending that position. Therefore, we have done a great deal but we are not complacent. We recognise that there is an issue to be addressed and fairness will be at the heart of all our actions.

European Investment Bank

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 31st October 2017 Lords Chamber

[Lord Bates]

The Chancellor of the Exchequer would echo those words. He has made it clear that a continued relationship with the EIB may be possible and indeed desirable, but that is a matter to be negotiated because at present the EIB’s constitution and formation does not allow for it to happen. Changes will need to be made, but in the meantime it is important that we make clear that we believe that the full rights and obligations which come to the UK as a member of the EIB and its partner organisation, the European Investment Fund, should remain fully intact and that UK borrowers should have equal access with other members while we are exiting the European Union.

[Lord Davies of Oldham (Lab)]

My Lords, things are already happening. Is the Minister aware that a current project to provide support for businesses in the north-east is now on hold because the European Investment Bank is meant to provide half the resources towards it? Action is already being taken to the disadvantage of a section of the British people, even while the Government are involved in this situation.

[Lord Bates]

That is a fair point. The North East Finance application by seven local authorities was put forward. Following the triggering of Article 50, the EIB took the view that it wanted to undertake an additional level of due diligence to make sure that the UK would stand by its obligations after exiting the European Union. We believe we have confirmed that position by producing our position paper on privileges and immunities. We were delighted to see that the EIB, at its September meeting, had started to approve loans again for after that period. We wish North East Finance well in that.

Consumer and Personal Debt

Debate between Lord Bates and Lord Davies of Oldham

Monday 23rd October 2017 Lords Chamber

[Lord Bates]

There is no need for people to engage in any of those kinds of activities. Help is there, including in the shape of the advance, which over 50% of people now take advantage of, and which can be based on that element. We need to remember that universal credit was brought in with cross-party support, with the very purpose that it would stop the perverse incentives which meant that, under the previous benefit system, people could work more hours and be worse off, and move them to a system where people would always be better off if they worked. We now need to address the details, which my right honourable friend the Secretary of State is doing.

[Lord Davies of Oldham (Lab)]

My Lords, the crisis is upon us, and it is evident that it is. Will the Minister recognise that the Government have an opportunity tomorrow to accept an amendment tabled by the Opposition for a breathing space for debtors? During the general election, of course, the Conservative Party was in favour of this proposal. Can he not see that the urgency of the situation demands that the Government act positively tomorrow?

[Lord Bates]

The Bill is about improving the quality of debt advice to those in need of it and has been broadly welcomed. My noble friend Lady Buscombe has tabled a number of amendments which will be discussed on Report. As I have already said, we remain committed to the concept of a breathing space and will bring forward details on that very shortly indeed.

South Africa: Money Laundering

Debate between Lord Bates and Lord Davies of Oldham

Thursday 19th October 2017 Lords Chamber

[Lord Bates]

I do not accept that we are behind the curve on this. In many ways, the UK is leading the world: at the G20, in the Financial Action Task Force, and with the regulations that we have put in place and the reform of the Financial Conduct Authority. That is why this year the Financial Conduct Authority handed out one of the toughest fines ever levied—£163 million—to Deutsche Bank for failing to comply with up-to-date money laundering regulations. We are very tough on this, but we realise that you have to be vigilant all the time. Therefore, when issues are drawn to our attention, we respond to them quickly and appropriately.

[Lord Davies of Oldham (Lab)]

My Lords, this is a very big issue in South Africa, and it will not do for the Government to suggest that they have their eye firmly on the ball. At last we are getting some response, but it is quite clear that a number of British banks have got very significant interests in South Africa. It is important that action is taken now to make sure that these banks are clear of this corruption and, if they are not, that action is taken against them. I urge the Minister to reinforce what he has said today elsewhere. It will not do Britain’s reputation any good at all for us to be tardy on this very significant issue.

[Lord Bates]

I totally agree with the latter part of the noble Lord’s point. That is exactly why we have taken action in referring this matter to the Financial Conduct Authority. That is why we passed the Criminal Finances Act in April this year and introduced the tough new anti-money laundering regulations in July this year. That is why we introduced, just yesterday in your Lordships’ House, the Sanctions and Anti-Money Laundering Bill, which my noble friend Lord Ahmad will take through the House. We are taking this very seriously because we realise the consequences of not doing so for the reputation of the City of London and the UK.

Sterling: Euro Exchange Rate

Debate between Lord Bates and Lord Davies of Oldham

Monday 9th October 2017 Lords Chamber

[Lord Bates]

We can certainly say that a number of those elements are, rightly, matters that are independent of government. The Bank of England has been given the UK macroeconomic mechanisms to make those judgments on interest rates. Interest rates are at an historically low level. Exchange rates can have a negative effect on imports but a positive effect on exports. It is important that we emphasise that the fundamentals of the British economy remain strong. Employment is at record levels and we continue to grow and expand, and we want to see that continue. That is very much the positive outcome we want from this complex negotiation.

[Lord Davies of Oldham (Lab)]

My Lords, if the economy is so strong, why was our credit rating reduced recently? Sometimes Governments preside over the depreciation of their currency in order to improve their balance of payments and trading position. Why is that clearly not working under this Government?

[Lord Bates]

Since 2010, the economy has grown by 15.3%. That is 1.5 times the level of France. I do not necessarily want to remind the noble Lord, who was standing on this side of the Dispatch Box during 2008-09, that the economy contracted by 6.3% during that period. The fact that we have record levels of employment and are seeing sustained growth should be welcomed and built upon.

Mental and Physical Health: Insurance

Debate between Lord Bates and Lord Davies of Oldham

Tuesday 12th September 2017 Lords Chamber

[Lord Bates]

While we recognise the great service and the demands placed on GPs and their practices in this regard, most people who seek support, particularly for mental health issues, are not necessarily going through private healthcare providers but seeking it through the NHS and through GPs themselves. That is why it is important to put on record that the funding going into mental health services within the NHS is at record levels—it is now at £11.6 billion—and we have the Five Year Forward View for Mental Health, under which that figure will grow year on year. That is not to be at all complacent; we are very mindful and cognisant of those important strains and how they are responded to.

[Lord Davies of Oldham (Lab)]

My Lords, I am just back from Bhutan, a constitutional monarchy that has been in existence for only nine years and needs some help with the development of democracy. However, the noble Lord, Lord Layard, went there a few years ago after his book Happiness and the king welcomed him on the basis that this was part of the constitution of Bhutan—one of their key issues is increasing support in the area of mental health. I hope that the Minister will convince us all that the Government give similar priority to mental health in this advanced country.

[Lord Bates]

First, welcome back. It is good to see the noble Lord in his place. I do not know how long he was away in Bhutan, but there has been quite a bit of movement in this area in recent years. The Health and Social Care Act, led through this House by the noble Earl, Lord Howe, played an important role. It introduced parity and this was a significant advance. The serious discussion in the media now about mental health issues—particularly among young people—and how we respond to them, and the resources which are moving into this, bode well. As to whether we will match the constitution of Bhutan, I can say that parity of esteem is now in the constitution of the NHS.