Budget Statement

Lord Beecham Excerpts

Tuesday 14th March 2017 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I refer to my local government interests.

Seventy years ago this November, the Labour Chancellor of the Exchequer, Hugh Dalton, was sacked by Clem Attlee for disclosing in general terms to a journalist the details of his Budget while he was on his way to the Chamber to deliver it. This year’s prize winner in the parliamentary leak show is Philip Hammond, whose Budget last week, appropriately close to the ides of March, contained little of note which had not already been trailed in the media. Not that this amounted to much, in any event. The Treasury’s summary of the Budget boasts of “robust economic growth”—without, of course, mentioning that much of this is due to household spending fuelled by debt. It also purports to tackle two areas of growing public concern: the crisis in social care and the state of our schools.

In relation to social care, the King’s Fund forecasts a £2.8 billion annual shortfall by 2020. The Budget allocates £2 billion in total by 2020, manifestly leaving a substantial gap—of the order of £2 billion annually—at a time when needs will continue to grow. As the noble Lord, Lord Porter, chair of the Local Government Association, pointed out in the association’s response to the Budget, local authorities are facing an overall funding gap of £5.8 billion by 2020, such that, as helpful as the announcement of extra funding is,

“short-term pressures remain and the challenge of finding a long-term solution to the social care crisis is far from over”.

Since 2010, Newcastle alone has had to reduce social care spending by £40 million a year. Even after the extra funding, it now faces further cumulative cuts in funding for social care of £19.2 million by 2020, or £38.7 million in total over the next three years—and this in the context of an overall cut in funding for the council of £290 million a year by 2020.

On schools, in which investment is critical for the future of our economy, £216 million will be invested nationally in maintaining existing schools, whereas the National Audit Office reports that no less than £6.7 billion is needed to rebuild dilapidated school buildings across the country, such that the allocation represents 3% of what is required. Yet £360 million—50% more than will be invested in this maintenance programme—will be allocated to new free schools. I remind the House that councils cannot invest in new schools due to the Government’s obsession with the free school concept. Here again, the Conservative-led Local Government Association calls for councils to,

“have a role in determining where new free schools are created”,

and to have a say over,

“whether or not selective schools are introduced in”,

currently,

“non-selective areas”.

On the fiscal front, two areas are currently generating concerns. The first—about which a number of your Lordships have spoken—is the change in national insurance contributions for the self-employed, in flagrant contravention, as we have heard, of the Conservative manifesto commitment in 2015. At the very least, any such change should surely reflect the different circumstances of the self-employed in relation, for example, to sick pay, holiday pay and employer contributions to pensions. The Government need to review the tax and benefit systems and the employment aspects of the so-called gig economy, which threatens to be, if I may be excused the pun, “uber alles”. Personally, I am beginning to wonder whether NI itself is in need of a fundamental review. People tend to forget that the impact of national insurance contributions is felt even before income tax becomes payable. At the very least, we should examine aligning the two systems at both ends of the income scale.

The second area is business rates. Here, the problems have been exacerbated by the deliberate decision of the coalition and the Conservative Government to postpone the revaluation, and they have been compounded by the failure to have regard to the changes in the market, with online retailers taking a growing share of that market from the low-rated sheds outside urban areas. Given the Government’s policy of substituting business rates for revenue support grant to councils, it is surely necessary urgently to review the system, including the approach to valuations. I suspect that in addition there will be an avalanche of appeals, which themselves are costly for councils. Will the Government reimburse councils for such costs?

Will the Government clarify how they propose to ensure that councils with relatively low business rate income can be compensated for the effect of replacing grant with the proceeds of business rates? When can we expect an announcement about the distribution of such rates?

Mention of rates brings me to the issue of council tax. It is 25 years since this replaced the poll tax and, over time, it has become increasingly unfair. I remind the House that there are eight bands for council tax, with the top band paying only three times as much as the lowest. I can illustrate the outcome from my experience in Newcastle. Zoopla, an organisation that values properties and publishes those assessments, valued properties in two streets in the ward that I have represented for just under 50 years at £49,000 and £76,000 respectively. They are in band A, the bottom tier, and the council tax is £1,008 per year. In a street near where I live, a house in band H, the top band, was sold recently for more than £2 million. The council tax payable for that property is £3,024—only three times more than for a property a fortieth of its value. For the record, my own four-bedroomed house is in band F, the sixth band. The council tax that I pay is £2,084 and the house is worth perhaps £750,000—substantially more than those of my constituents, but their council tax bears no real relation to the difference in value.

This is a grotesquely unfair system that the Government adamantly refuse to change. They could do so by having a revaluation and then adding more bands at the top and bottom of the scale without, if they so choose, necessarily increasing the total yield. Why do they not take action? Why are they equally complacent about the stagnation of earnings, which according to the Institute for Fiscal Studies will be no higher in 2022 than in 2007—15 years without any real rise in earnings? It is time for the rhetoric of the just about managing to be translated into action and extended to those who, through no fault of their own, are just not managing.

Pension Schemes Bill

Lord Beecham Excerpts

Tuesday 16th December 2014 Lords Chamber

[Lord Bourne of Aberystwyth]

I am sure that we all wish him a very happy and well earned retirement, and look forward to hearing his speech today.

I turn to the Bills before us today. Together, these Bills introduce the latest radical reform of pensions. These ground-breaking pension changes were the centrepiece of the Queen’s Speech, and are about encouraging new forms of pension saving, such as shared-risk schemes and the provision of collective benefits to give greater security in retirement, and giving people freedom and choice in how and when they access their pension savings. The time is right to make these changes to private pensions legislation. The new state pension will provide a simplified foundation for those in retirement, making it easier for people to know what pension they will receive from the state. It will provide a platform on which individuals can build their own private pension savings according to their wants and needs in retirement.

The excellent early results of automatic enrolment mean that millions more savers have joined workplace pension schemes. This Government have also taken forward other changes so that the future private pension landscape delivers high-quality, value-for-money pensions for members. For example, regulations are being brought forward so that, subject to parliamentary approval, from April 2015 there will be a charge cap in the default funds of qualifying schemes—schemes used for automatic enrolment—and new requirements for independent governance committees and trustees to report on costs and charges.

The market is therefore growing, and employers and the pension industry are already thinking about future pension provision. These Bills further encourage a flourishing private pensions market that provides greater choice for business on the pensions offered and for individuals on how they access their pension savings. Taking no further action is simply not an option. Despite government action, the Department for Work and Pensions estimates that there are 11.9 million people below state pension age who are not saving enough to provide adequately for their retirement.

I turn to the Taxation of Pensions Bill. My noble friend Lord Newby is the pilot of this legislative craft, but let me say a few words by way of introduction. The Taxation of Pensions Bill contains measures to make the tax system fairer by ensuring people have more choice about how they access their savings, to prevent this new flexibility being exploited by individuals to gain unintended tax advantages and to ensure the taxation of pension savings on death remains fair and appropriate under the new system. The Bill will mean that, from April 2015, individuals from the age of 55 will be able to access their money purchase pension savings flexibly if they wish, subject to their marginal rate of income tax, rather than the current 55% tax charge. In addition to the Government’s consultation after the Budget, we also published draft legislation for technical consultation in August.

I will talk about these changes in a little more detail, starting with measures to ensure people have more choice about how to access their savings. This Bill is about ensuring that people have greater choice at the point of retirement. The current system restricts choice at the point of retirement. Those with the smallest and largest amounts of pension savings have flexibility, but those with a moderate amount of savings have very limited options. The measures in this Bill will change that by extending this flexibility, such that it applies regardless of the size of the pension pot, thereby ending the effective compulsion to annuitise.

The Bill also introduces a new method to allow people to access their pension flexibly. The “uncrystallised funds pension lump sum”, or UFPLS—the clumsiest acronym I have ever seen in my life—is a new option. This will give individuals the flexibility to take one or more lump sums from their pension fund, with 25% of each payment tax free and 75% taxed at their marginal rate, without having to enter into draw-down or take all of their tax-free lump sum in one go. The Bill also increases choice by introducing changes to encourage innovation in the retirement income market, allowing providers scope to make annuities much more flexible products in line with consumer needs.

[Lord Beecham (Lab)]

I am grateful to the noble Lord for giving way. Could he tell us how much and for how long the Treasury will gain from the changes in the Taxation of Pensions Bill as people draw down or take their pensions early?

[Lord Bourne of Aberystwyth]

The noble Lord is right if he is inferring that there is a tax saving. Estimates have been made, but of course we cannot be certain of them. I have the estimates and I will ensure that I send them to the noble Lord—I do not have them to hand —but suffice it to say that this is not the thrust of the legislation. I think we will see that it is perfect in terms of providing what pensioners want, it gives a boost to the pensions industry and it probably saves the Exchequer money, although these are only estimates. However, that is not the main intention. As I say, it is to give consumers and members, after consultation, a very fair deal.

The Bill also contains measures to ensure that the new system cannot be exploited by individuals to achieve unintended tax advantages. If the Government were to put in place no protections, an individual over the age of 55 could divert their salary each year into their pension, take it out immediately and receive 25% of it tax free, thus avoiding income tax and national insurance contributions on their employment income. This is not the intention of the reforms. However, in the context of automatic enrolment, it is also important that any solution preserves the incentive for those aged over 55 to save after accessing their pension flexibly.

As a result of extensive consultation, the Government decided that introducing a £10,000 money purchase annual allowance for those who have accessed their pension flexibly strikes the right balance. On the one hand it allows people the flexibility to withdraw or contribute to their pension as they choose from the age of 55, while on the other it ensures that individuals do not use the new flexibilities, which are intended to provide people with greater access to their retirement savings, to avoid paying tax on their current earnings. It will also avoid unnecessary complexity for both consumers and pension providers when the new system comes into places in April 2015. As stated in the Government’s response to the consultation, we will be closely monitoring behaviour under the new system and will work closely with industry to ensure that it remains fair and proportionate.

I turn now to the changes made by this Bill to the taxation of pensions at death. As set out in the original consultation document which the Government published alongside the Budget, it is likely that the 55% tax charge which currently applies to pensions on death would apply to more people under the new system. If it were retained, it could provide an incentive for individuals to remove their savings from their pension in order to avoid the 55% tax charge. Consequently, the Government have amended the Bill to ensure that taxation of pensions at death remains fair and appropriate under the new system. The changes to the Bill will allow individuals who die with pension funds remaining to pass them on to anyone they choose. These funds can be paid tax free if the individual dies before the age of 75. If the individual dies having reached the age of 75 and the funds are paid out as a pension, they will be taxed at the beneficiary’s marginal rate, or at 45% if they are paid out as a lump sum. The aim of these changes is to ensure that individuals who have made sacrifices to save over the course of their lives can pass on their pension savings without worrying about those funds bearing excessive tax charges when they die. They will also preserve the incentive for individuals to keep money in their pension without fear of their beneficiaries being hit by a 55% tax charge.

Additionally, the Chancellor announced in the Autumn Statement that these changes will extend to annuities. Death benefit payments from joint life and guaranteed-term annuities will also be tax free when the policyholder dies under the age of 75, and such death benefits will be able to be paid to any beneficiary. This will also apply when an individual uses uncrystallised or draw-down funds to buy a dependant’s annuity. These changes will be legislated for in due course, although not through this Bill. The Taxation of Pensions Bill will therefore increase choice for the 320,000 people retiring each year.

The Taxation of Pensions Bill deals with the tax changes and the Pension Schemes Bill, which I will turn to shortly, deals with changes to enable the flexibilities to work as the Government intend. There are differences in the definitions of money purchase benefit in tax legislation and in pensions legislation which we have had to address. Tax legislation provides a definition of money purchase which in essence covers all forms of accrual that result in a cash amount. The pensions legislation definition is narrower, as it focuses only on those forms of benefit in which a deficit cannot arise. This is to ensure that the correct funding and member protection regime applies. In order to ensure that the provisions of both Bills work correctly together, the Pension Schemes Bill contains a new definition of “flexible benefit” which fits within the pensions legislation context and captures the forms of benefit to which the tax flexibilities apply. We also define the term “safeguarded benefits”, which are, in the main, forms of benefit to which the flexibilities do not apply but to which other provisions do. I will explain the context in which the term is used shortly.

I turn now to the Pension Schemes Bill. This Bill will make the changes required to pension legislation as a result of the freedom and choice created by the Taxation of Pensions Bill. This will include a legislative framework for a guidance service providing individuals who benefit from the new pension flexibilities with access to free, impartial guidance so that they are clear on the range of options available to them at retirement. The Bill places a duty on the FCA to ensure that the providers it regulates make people aware of their right to guidance and signpost them to this service, and the Department for Work and Pensions will ensure that the equivalent duty is placed on pension schemes regulated by the Pensions Regulator.

It is important to note that there is a fundamental distinction between advice and guidance. Providing advice on investments, including pensions, is an activity regulated by the FCA. A financial adviser will usually make a full assessment of a consumer’s circumstances and make a specific recommendation, and may sometimes sell a product, based on what is most suitable for that person. The guidance service will not aim to replicate this. Instead, it will provide tailored information to consumers regarding the options available to them but, unlike financial advice, it will not recommend specific products or providers. The guidance is designed as a first step for consumers, to support their decision-making and to empower them to make their own choices. Having had the guidance, it is expected that many people may wish to go on to seek financial advice to help them with their decision, and the guidance will help them to access the service they need.

The Government will continue to allow members of private sector schemes offering safeguarded benefits—that is, benefits other than money purchase or cash balance benefits—the freedom to transfer to other types of scheme. However, in the vast majority of cases where a member has safeguarded benefits, it will continue to be in the best interests of the individual to remain in their scheme. Therefore, two additional safeguards will be introduced to protect individuals and schemes. First, there will be a new requirement for individuals transferring safeguarded benefits out of a scheme to take advice from a financial adviser before a transfer can be accepted. Secondly, there will be new guidance for trustees of schemes on using their existing powers to delay transfer payments and taking account of scheme funding levels when deciding transfer values.

We will also ensure that the taxpayer and Exchequer are protected. First, transfers will not, other than in very limited circumstances, be allowed from unfunded public service defined benefit schemes into schemes from which flexible benefits can be obtained. Secondly, for funded public service schemes, Ministers will have a power to reduce cash equivalent transfer values in circumstances where there is a risk to the taxpayer.

The Pension Schemes Bill also makes other changes to the transfer requirements allowing individuals to access pension savings. We will do this by extending the current transfer rights for those with flexible benefits up to and beyond their schemes’ normal retirement age, and applying statutory transfer rights at benefit category—rather than scheme—level.

We will also make three technical changes to existing pensions legislation. The first will allow pension schemes to offer the new flexibilities to their members and will ensure that these flexibilities operate as intended in relation to those with cash balance benefits. The second will allow members to take one or more lump sums from their money purchase funds after the minimum age is reached. The third will prevent the conversion or replacement of non-money purchase benefits with money purchase benefits when a scheme winds up or during a Pension Protection Fund assessment period.

As the flexibilities will come into force on 6 April next year, we are making the relevant regulatory changes that are necessary to deliver these significant reforms by that date. The Department for Work and Pensions and the Treasury are co-ordinating a structured engagement with the industry on the drafting of regulations to ensure that final decisions are informed by stakeholder views.

With these changes, the Taxation of Pensions Bill and the Pension Schemes Bill together give the individual greater choice and flexibility in how they access their pension savings. The Pension Schemes Bill also introduces legislation to enable greater risk sharing between the employer and the saver—and, indeed, third parties—and risk pooling between savers, thus encouraging greater innovation in the private pensions market.

I now turn to the measures that grant pension providers greater flexibility in the sort of pension schemes they offer. The Queen’s Speech announced a radical reshaping of pensions legislation to ensure that it remains relevant for future generations. The Pension Schemes Bill reflects, recognises and encourages innovation in response to demand. It does this by creating a clear space for shared risk or defined ambition—as they are sometimes called—pensions and enables the provision of collective benefits in the United Kingdom. Those are two quite separate concepts.

With increased participation in saving, the Government are keen to support greater innovation in the products offered to savers, based on employer and member demand. Consumer trust in the pensions industry is relatively low, and although we can protect beneficiaries against risks of high charges or poor governance, our research shows us time and again that many individuals want more stability and more certainty. They want to know something about what their savings will give them and some protection from the worst of the vagaries of the market.

Many employers have found the increasing costs of longevity—welcome though it is—and investment risk too heavy to bear in traditional final salary defined benefits schemes, but if defined contribution schemes are the only alternative, outcomes for members and savers will be less certain and more volatile than for earlier generations, making it much harder for future generations of savers to plan for later life.

Although some forms of risk sharing can already happen, the current legislation is based on a binary structure, leading to a tendency for schemes to polarise into schemes in which either the member or the employer is bearing all the risks. While both of those types of pension can be the right product for many, we do not think it is right that the only future for pensions that our legislation explicitly recognises or encourages is either where the individual member or the employer takes on the full financial risk of such long-term savings.

Therefore, the Pension Schemes Bill introduces three categories of pension scheme and enables a new type of collective benefit along with requirements to ensure that there is appropriate regulation in relation to such benefits. The scheme categories are based on the type of promise that the scheme provides to savers during the saving phase about the benefits that will be available to them at retirement. The Bill includes new definitions of defined benefits, where the member receives a full benefit and the employer takes the risk, defined contributions, where the member takes the risk, and shared risk, or defined ambition, the third category of pension scheme.

The shared risk, or defined ambition, definition describes a middle ground between the defined benefits and defined contributions definitions. It creates a distinctive space to encourage innovation in pension design that provides for more certainty for individuals than defined contributions schemes, in which there is no promise during the savings phase, by sharing risks between employers, employees and third parties.

The new scheme categories will apply to existing occupational and personal pension schemes. They do not make any additional requirements about benefit design and do not change any current legislative requirements, such as occupational scheme funding or member protections.

The definitions work at scheme level, rather than the benefit level, so the wider legislative requirements that apply to certain benefit types still apply, regardless of the scheme category. That includes, for example the new Budget flexibilities, and the collective benefit requirements, to which I shall come shortly. The definitions are formulated very specifically and, along with the regulation-making powers, they ensure that current and new scheme designs will fall into the correct categories to reflect the member experience of certainty during the savings period.

The Bill also provides for a new definition of collective benefits. These are different from shared risk schemes, although shared risk schemes may include collective benefits. The collective benefit definition enables a new form of risk pooling among scheme members that can provide greater stability in outcome for members—partly by virtue of scale. Collective pension schemes are a key part of some other countries’ pension systems—for example, the Netherlands and some of the provinces of Canada—and they are recognised internationally as being of high quality. As we aspire to develop a pension system that is rated among the world’s best—we hope the best—it is only right that the United Kingdom should also have pension schemes offering these types of benefits. We also have the advantage of providing protections at the outset which address issues that have arisen in relation to these types of schemes overseas. The regulation-making powers are key to the success of collectives, ensuring appropriate safeguards can be applied and developed in discussion with industry, employers, and members’ representatives. The Bill enables collective benefits to be part of a defined contributions scheme or a shared risk scheme. The intent is that members of schemes offering collective benefits would be able to access their collective benefits flexibly, either directly or by transferring to a money purchase scheme.

The Bill makes changes to existing legislation in order to reflect the new scheme categories and collective benefits. It also provides for additional governance protections for these new types of pensions, reflecting the new types of decisions that are being made on behalf of members. We also intend to use regulation-making powers in other legislation in respect of governance and disclosure as appropriate. We have engaged extensively with stakeholders across the pensions industry and found there is appetite for legislation that allows for greater risk sharing and risk pooling. There are employers that would welcome the greater flexibility to create pension schemes that suit the needs of their workforce. Pension providers want the flexibility to design and offer pensions that provide greater certainty and more options for sharing risk, and individuals value greater certainty than that provided by defined contributions pension schemes and the greater stability that collective benefits may provide. All these are considerable advantages.

I turn to the other changes to private pensions legislation made by the Pension Schemes Bill. These are relatively minor in terms of the main thrust of the legislation. The Bill contains two clauses from the Ministry of Justice concerning judicial pensions. One corrects the Judicial Pensions and Retirement Act 1993, regarding the funding of pensions shared on divorce, to ensure that the Act works for cases where pension sharing is activated after a person has left judicial office. The second allows a pension scheme to be established for fee-paid judges, as required by relatively recent case law. It is aimed at old and transitional cases. Pensions for fee-paid judges will in the future be governed by a new scheme under the recent public service pensions legislation.

In addition, the Bill contains a minor and technical measure on the Remploy pension scheme. The legislation will allow the Department for Work and Pensions to fund the Remploy pension scheme directly rather than via the company, should this be required in the future.

Furthermore, the Bill contains an amendment to extend a regulation-making power in the Pension Schemes Act, relating to survivors’ benefits in the case of certain gender-change cases, to Scotland. Finally, the Pension Schemes Bill contains a provision the effect of which will be to permit schemes to increase the maximum age at which a pension credit, following a pension share on divorce, must be put into payment if the highest normal pension age for benefits payable under the scheme is higher than 65.

These are very radical reforms that build on this Government’s previous changes to improve pensions in the United Kingdom. Giving people greater choice is at the heart of these reforms—greater choice for business on the pensions they offer and greater choice for individuals on how they can access their pension savings. These are important changes to allow the private pensions market to flourish too. I commend these Bills to the House. I beg to move.

Assisted Dying Bill [HL]

Lord Beecham Excerpts

Friday 7th November 2014 Lords Chamber

[Lord Carlile of Berriew]

I agree with the noble Lord. Indeed, there is a very slippery slope from saying, “I feel an obligation to my family or the NHS” to it being said, “Well, we have to deal with people who are an obligation to their family or the NHS”. The safety that this provision would introduce into the system is, in my view, very important.

[Lord Beecham]

Before the noble Lord sits down, for the third time he has referred to a person ending the life of another person. Will he concede that that is not a description of what the Bill sets out to permit?

[Lord Carlile of Berriew]

I do not concede that for one moment. The purpose of the Bill is for a person to be put in the position of facilitating the death of another person in circumstances in which that death would not otherwise occur. It seems to me to be a distinction completely without a difference. Indeed, if one were to analyse it as a matter of criminal law, there is no difference. I beg to move.

Pre-emption of Parliament: Constitution Committee Report

Lord Beecham Excerpts

Thursday 6th February 2014 Grand Committee

[Lord Beecham (Lab)]

My Lords, this Government have a record of pressing on with legislation paying scant attention to the views, for example, of the Joint Committee on Human Rights on draft Bills, Select Committees in the Commons designed to provide a measure of pre-legislative scrutiny or, indeed, the outcomes of what are often short periods of consultation. I coined the phrase “pre-legislative implementation”, now supplanted by the term “pre-emption”, in relation to what happened under the then Public Bodies Bill, where, in what was trumpeted as a bonfire of the quangos, the abolition of regional development agencies was proposed. Despite receiving repeated assurances from the noble Lord, Lord Taylor, whom I acquit of any personal culpability, that there would be consultation and that each case would be considered on its merits, the Government pressed ahead as if the Bill had been enacted, and stripped the RDAs of their staff, budgets and assets without any consultation long before Royal Assent.

The Constitution Committee noted, as we have heard, analogous approaches in relation to the Youth Justice Board and the then Health and Social Care Bill, in respect of which the noble Lord, Lord Owen, observed,

“we should not feed the idea that legislation can reach us but we cannot do anything about it because it has already been pre-empted”.—[Official Report, 8/2/12; col. 261.]

Similar considerations arose over the proposed abolition of the Chief Coroner’s Office, which, like the Youth Justice Board, was ultimately saved.

The most worrying and immediate example of pre-emption is currently in process. It concerns the future of a service with a critical impact on public safety and the lives of those for whom it is responsible—namely, the probation service. The Government are bent on privatising 70% of the work of this service without properly piloting how the new system would work. There is huge concern about the risk to the public of outfits like G4S, Serco and other organisations that purport to be able to deliver almost any public service without prior experience. This is particularly acute as offenders move between risk categories. A binary system for probation is clearly unsatisfactory. The noble Lord, Lord Ramsbotham, and I collaborated in moving amendments to the Offender Rehabilitation Bill, which began its life in this House, without which the matter would never even have been discussed. The amendment requiring any major reorganisation to be approved by Parliament was passed by this House but overturned in the House of Commons. It will no doubt return to us shortly.

The Government, it emerged from the documents, deliberately avoided including their proposals in the Bill precisely because of the opposition that they knew would be engendered. They simply ignored the concerns and pressed on with this massive reorganisation—or should I say fragmentation?—of a service with a demonstrable record of achievement, recognised by a national award. They continue to do so now, even though their timetable has slipped beyond the recklessly adopted target date of, appropriately enough, 1 April, and they do so under the cover of a misrepresentation of which the Lord Chancellor should be ashamed. He makes much of the reoffending rate of prisoners released after serving short sentences as if this were something for which the probation service were responsible whereas, as he must know, the service has no responsibility for those offenders. This is the latest and most egregious example of a Government overreaching themselves and treating Parliament with contempt. If the Government get their way with this issue, they will be signing a blank cheque in their own favour, enabling them to act first and legislate afterwards, if at all.

The Government’s response to the report from the Constitution Committee is surely unsatisfactory. While they accept the committee’s advice in principle, they merely note its conclusion that it should be recognised that Parliament’s interests are primarily guarded by Parliament itself, rather than being assumed by the Treasury. Why did the Government not accept, rather than merely “note”, the committee’s recommendation? Will the Minister now say that they accept the recommendation?

For that matter, why has the noble Lord, Lord Deighton, who is much respected across this House, been given—or perhaps drawn—the short straw of having to reply to this debate as if it were a Treasury matter? It is not. As noble Lords have said, it is a constitutional matter going well beyond the remit of one individual department. Will the Government seek Parliament’s endorsement for the guidance that they propose to issue? That would be one test of the seriousness with which they take this very valuable report.

The Government adheres stubbornly to the advice of the Ram opinion, which emerged shortly after I was born in early 1945—not quite as ancient as those referred to by the noble Lord, Lord Lexden, but, I feel, getting on for that. However, the Government take the view that,

“the Crown does have common law powers which may be exercised subject to overarching legal constraints”,

as my noble friend has just pointed out. However, surely the question is not whether the Government can legally fall back on an ancient principle but whether it is right and reasonable to do so.

The Government merely note the committee’s central conclusion—that,

“the principle of restraint in the name of good constitutional practice should apply to all pre-emptive actions, not just those involving expenditure”.

The Government adopt the same stance in relation to the committee’s ringing assertion that:

“Where the pre-emption involved is such that it threatens effective parliamentary scrutiny, it should not be undertaken. It is for Parliament, not the Government, to decide whether to change the law”.

It was a leading Conservative, Viscount Hailsham, who warned of the dangers of an elective dictatorship. It would appear that a Conservative-led Government are ready to ignore that warning whenever it suits them to do so.

National Infrastructure Plan

Lord Beecham Excerpts

Wednesday 4th December 2013 Lords Chamber

[Lord Deighton]

I thank the noble Baroness for broadening the perspective of the debate. While I accept that the banking crisis was an important contributor, it is clear to me, from my time in the Treasury, that the spending planned through those last few years created significant problems for this country.

[Lord Beecham (Lab)]

My Lords, what proportion of the sums involved in the schemes announced today, many of which are recycled, do the Government expect to be spent in the north-east, the region with the highest levels of unemployment—in particular youth unemployment—in the country?

[Lord Deighton]

I am afraid I do not have the regional breakdown at my fingertips. However, if the noble Lord would care to go into the national infrastructure plan website, there is a map where you can drill down and see the details of every planned project, region by region.

Care Sector: Minimum Wage

Lord Beecham Excerpts

Wednesday 27th November 2013 Lords Chamber

Asked by

[Lord Beecham]

To ask Her Majesty’s Government what steps they will take to enforce minimum wage legislation in the care sector, in the light of publication by Her Majesty’s Revenue and Customs of figures disclosing non-compliance with the legislation.

[Lord Newby (LD)]

My Lords, employers found not to pay minimum wage must pay arrears plus a penalty, and may be prosecuted. From 1 October 2013, all those who break minimum wage law will be named, as an additional deterrent alongside existing financial penalties. Non-compliant employers identified during this evaluation in the care sector will meet the new criteria for naming if investigated from 1 October this year. HMRC continues to investigate every worker complaint from the care sector.

[Lord Beecham (Lab)]

My Lords, the announcement of naming and shaming and perhaps heavier financial penalties is welcome. However, given that the HMRC investigation showed that 48% of care sector employers surveyed were paying staff below the minimum wage and that only a tiny number of prosecutions had been brought, what further steps will the Government take to enforce the law. and what additional resources will they make available for this purpose?

[Lord Newby]

My Lords, in addition to the naming and shaming, the noble Lord will have heard the Prime Minister announce today that the maximum fine payable under the law will be increased fourfold. However, the work that is done with key stakeholders is a very important element of ensuring that the law is enforced and indeed understood. The Government work very closely in this sector with the UK Home Care Association and the trade union enforcement group, of which UNISON is the principal member.

Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013

Lord Beecham Excerpts

Wednesday 12th June 2013 Grand Committee

The ban on referral fees will apply to those conducting insurance and insurance mediation and those in the same group as such persons. It will mean that insurers and insurance brokers are likely to incur compliance costs related to ensuring that they are not in breach of the ban. Firms can also expect to be subject to monitoring by the Financial Conduct Authority and enforcement action where breaches are identified. The FCA has published a one-minute guide for firms affected by these regulations on how it will supervise the ban on referral fees in relation to financial services firms. Supervision of the financial sector’s compliance with the ban will form part of the existing supervisory regime of the FCA. For those reasons, I commend the regulations to the Committee.

[Lord Beecham]

My Lords, today is perhaps the first bite of the regulatory apple in as much as the noble Lord, Lord Hodgson, has a Question on Monday, to which the Minister will be replying, on the impact of this measure on the introduction of alternative business structures. We will no doubt be returning to that aspect later.

I am always impressed by how the Government rely on Lord Justice Jackson’s report, except when it comes to his very strong assertion that legal aid should have remained intact. It is a very selective approach—we are moving from apples to cherries in terms of our botanical analogies. Having said that, we have no objection to a ban on referral fees in general, although I am bound to say that I was a little surprised that my noble friend Lady Hayter reported to me that in her experience in the consumer world, in which she is heavily engaged, consumers apparently very much like the referral fee system and going through a referring body to solicitors. It was rather a surprise and, perhaps, a disappointment to me. I declare an interest as a solicitor, although now an unpaid consultant in my old firm.

Be that as it may, there were certainly abuses, particularly in claims management companies but also by the very insurance companies that have constantly pressed the Government, now successfully, on their need to reduce the likelihood of litigation by making it more difficult and more expensive for litigants to obtain justice. The limits, particularly on claims of less than £25,000 for personal injuries, will be subject to a very strict regime in terms of costs that may well make it uneconomic for solicitors to pursue them—but that, I guess, is a different matter.

The ceaseless advertising and constant cold calling from which many of us still suffer have been a nuisance. I do not know how many times I have been told that I have a claim under PPI—mind you, if I had, it does not look as though Lloyds Bank would be paying up. Insurance companies in particular and claims management companies abused their position, so we have no objection in principle to the ban.

Having said that, there are areas in which the extension was not justified, which I mentioned in debate on the LASPO Bill, as it then was—in particular, the ban on referral fees to non-profit organisations and trade unions, because they are regarded in the same light as those commercial organisations. I thought then and I think now that that equivalence does not exist, but we are where we are.

I note from the Explanatory Notes that the FCA has issued guidance notes to firms affected by the regulations. I am bound to say that I could not trace those when I looked online, but they may exist. It would have been helpful had I had them but I assume that they have been issued, as the Explanatory Notes state that they have. The noble Lord might want to check that before Monday.

It is interesting that the Legal Services Board has also issued guidance on referral fees. My noble friend Lady Hayter has copied to me a letter dated 21 August 2012 that seems to have been addressed to all approved regulators, so I suppose that that includes the Solicitors Regulation Authority, the FSA and possibly other bodies as well—the Institute of Chartered Accountants in England and Wales, or whatever. I am not sure, and the Minister may not be able to tell me today, whether the FCA guidance reflects the guidance previously offered by the Legal Services Board. I note from the Explanatory Notes that there was no consultation on this statutory instrument, which puzzles me because if the Legal Services Board pronounced some months ago, unless the FCA simply adopted its guidance, one would have thought that it would have at least consulted the Legal Services Board and possibly other bodies. I am curious about that apparent turn of events.

The Legal Services Board stated in its letter—this may reflect the substance of the question of the noble Lord, Lord Hodgson last Monday—that on the rules against referral fees in personal injury matters,

“it will be important to ensure that such rules do not go beyond the obligations in LASPO. That legislation bans referral fees, but does not prohibit, for example, new alternative business structures that effectively do away with the need for a referral”.

That is the Question that the Minister will be asked on Monday. It looks as though the Legal Services Board was saying at that point—admittedly, that was before the regulations were issued—that the ABS would effectively, as it states,

“do away with the need for referral”,

and therefore, presumably, for referral fees. It states:

“A liberal approach that supports the regulatory objectives of the Legal Services Act 2007, while properly delivering the legislative intent of LASPO, will therefore be crucial in making sure that both pieces of legislation are implemented effectively”.

It is not clear what its view was or now would be on the regulations, but it appears to be taking a somewhat different position from that which I suspect that the FCA and the noble Lord would anticipate.

The board went on to state that its guidance on referral fees applied across all segments of the legal market, whereas at the moment we have a ban in respect only of personal injury. That is because the ban on personal injury suits the insurance industry, and we know how influential the insurance industry is with at least one of the coalition government parties. The board states:

“In particular, regulators will need to justify any ban on the payment or receipt of referral fees that remains in place with clear supporting evidence”—

and that, in respect of personal injury, regulators will rely on the provisions of the Act—

“and to take proper account of the rest of the guidance”,

including transparency and the like. So we question, with regard to other areas of law beyond those that are the subject of these regulations, when, if at all, the referral fee ban would be extended to other areas of law. Perhaps the noble Lord could enlighten us about that—again, if not today, then subsequently.

Lest it be thought that this is a straightforward matter, there has been an interesting duel about the effect of this ban in the pages of the Law Gazette between two authors, whose names I do not have, and two QCs. The later of the two articles is from the two QCs who find that the Solicitors Regulation Authority—which is of course the primary regulatory body for the profession and will have to oversee the conduct in the situation as opposed to the operation of the ban—has been clear about how the position will work. Meanwhile, in the previous article, considerable doubt was cast on the effect of the proposed ban. I am fairly persuaded by the position that the two QCs adopt; they seem to argue their case effectively. However, this illustrates that, even here, there may be some grey areas that will provoke not further litigation, hopefully, but at least correspondence and some difficulty—particularly on the part of those involved in understanding exactly what it is that they are required to do or, more particularly, what they are required not to do on referral fees. I suspect that that matter will be included in part of the questioning that will occur on Monday.

Having said that, the Opposition do not object to the regulations. They will be reviewed over the next few years and we will see how they go. I reiterate, however, that it is most unfortunate that they extend to non-profit-making bodies, but that argument was fought and lost during the passage of the Act.

Banking: Bonuses

Lord Beecham Excerpts

Tuesday 11th January 2011 Lords Chamber

[Lord Sassoon]

I am grateful to the noble Lord, Lord McFall of Alcluith, for reminding us that there are other challenges as well as bankers’ bonuses to be resolved. The too-big-to-fail one is absolutely at the heart of strands of ongoing work. I did not have the opportunity to listen to the whole of what Mr Diamond said to the Treasury Select Committee but I certainly believe that whether it is in the work of the Independent Commission on Banking or in the discussions that are going on in international fora, the question of how to resolve bank failures is one to which we need to continue to give considerable priority. We are reminded that the question of the structure of banking is multifaceted and we should not focus exclusively on one aspect of it.

[Lord Beecham]

Will the Minister tell the House by how much the banks will benefit from the pending reduction in corporation tax?

[Lord Sassoon]

My Lords, clearly it depends on the level of profits they make as to how much they will benefit from the reduction in the rate of corporation tax. We look at the total package of taxation on banks, as we do for the rest of industry. We believe that by introducing in particular the levy on banks, they will be paying a fair share to the Exchequer. We need to take account of the remuneration taxes, continue to consider the costs and benefits and talk to our partners about a financial activity tax, but we must take the whole of the taxation burden on the banks in the round.

Taxation: Avoidance

Lord Beecham Excerpts

Wednesday 20th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, I am grateful to my noble friend, who has made the position absolutely clear. Minimising tax payments is perfectly reasonable. Where it gets into the avoidance on which HMRC needs to focus is where people have minimised their tax payments in a way that HMRC believes to be contrary to the way in which Parliament intended the tax laws to operate.

[Lord Beecham]

My Lords, will the Minister ask Sir Philip Green to complement his report on efficiency savings with a report on tax avoidance?

[Lord Sassoon]

My Lords, I think that Philip Green has done the nation a single service in exposing the extraordinary amount of waste in government that was left unattended to by the Labour Government for 13 years. We will come on to the consequences of that later this afternoon.