Lord Bird
Main Page: Lord Bird (Crossbench - Life peer)Economy: Spring Statement
Lord Bird Excerpts
Lord Bird (CB)
I welcome the opportunity to talk about the Spring Statement. I take a slightly different angle because I am rather cheesed off with the debates that I have been in and which I have seen in the period that I have been in the House, which is now six years, and indeed since long before that. To me, they are never about breaking the cycle; they never seem to ask why we are in this situation and what we are going to do about it.
I must declare an interest: as well as being a taxpayer, so I have a relationship with the Treasury, I have received a bounce-back loan for the Big Issue and I have received furlough. So my social business—it is not a charity—would not exist if it were not for the work that those at the Treasury carried out last year, and I thank them for that.
I want to thank them for something else too. We ran a campaign for 18 months to help people ride out the recession—to help them not to fall into homelessness because they had lost their jobs through Covid-19. It was a homelessness prevention programme for upwards of 250,000 people. I thank the Treasury for allocating £360 million pounds to it, which has hardly been spoken about; it went without even the Guardian or anybody else saying “Well done”. This was homelessness prevention, where you had people falling into homelessness who had no idea where it was coming from. They were not the socially prepared homeless people I come from—they were other people. Anyway, that is a little introduction to say thank you to the Treasury.
I think the problem is the Treasury. The Treasury, which was invented so long ago, is an office that has “No, no, no” over it. It does its job in a brilliant way because it picks and chooses what it says “Yes, yes, yes” to.
Lord Bird (CB)
With HS2 railways, you have a Treasury that can spend across the decades. That is brilliant, but does it ever use that same reasoning when it looks at social programmes or social innovation? When 70% of the time spent by both Houses of Parliament and the Government is spent considering the collateral damage created by poverty, no wonder we come to a situation where the world gets a bit funny.
People are not being educated and skilled to move away from poverty. I do not think there is anybody in this Room or in either House who suffers from fuel poverty. I do not think that people in the City of London will even know it is happening—and the reason for that is because they have been skilled; they have been educated. The investments were made by their families so that they did not ever get into a situation where £300 or £400 per month could be a sink-or-swim scenario.
That is one of the problems of the Treasury, which is there to prevent the kind of business that we need to do. We need to get rid of poverty in the same way as we did after the Second World War. I am glad the noble Lord, Lord Hain, mentioned the Second World War, because I am sick of being the only person who I know in this House who keeps referring to the wonders we did when we invested incredibly and got people out of the kind of poverty left by the fact that we were flat on our back after the Second World War. I thank him for that reference.
Could we not spend this 70% of our time more wisely? We have to reinvent the Treasury. We have to find a way for it to do things beyond the life of one Parliament. That is one of our biggest problems—how do we break the circle?
The other thing we should look at is the people suffering from fuel and food poverty. Let us look at them socially. I have found that the people I come from, the people I work with and the people I encounter who are in need all seem to have one thing in common. Do not shout me down when I say that that one thing in common is that they did not do very well at school. They did not get a lot out of it, so when they went to the job market their skills were limited to semiskilled or unskilled work.
When you talk to people in A&E departments or hospitals, many of them are suffering from nutritional problems due to poverty. A doctor at Addenbrooke’s Hospital told me that 50% of the people there were in hospital because of nutritional problems. They teach doctors about nutrition for only half a day in their seven years. Why are people falling into nutritional problems? Largely because we have not been able to morph them away from poverty, so they leave school with all sorts of problems and the only jobs they can get are ones that mean they are stuck.
We need to do very big things. In my opinion, we should double the education bill. If ever there was a universal panacea—I know we do not believe in them—it is likely to be found in and around education and skills. Let us move people away. In the middle of this emergency, let us consider how we prevent the next one.
Baroness Penn (Con)
My Lords, I make two points. One is that we have been increasing the value of the state pension, as I just said. Secondly, for those who rely solely on the state pension for their income, there is pension credit in addition. We are doing a lot of work to drive an increase in the take-up of pension credit so that people who are entitled to that extra support access it.
On food insecurity, the latest statistics from the DWP on households with below-average income, which came out today, show that the percentage of individuals in food-insecure households fell from 8% in 2019-20 to 6% in 2020-21. I completely acknowledge that that is still too many and that, of course, the nature of those statistics means that they lag behind by a year. I have already mentioned the household support fund that the Government have put in place but, beyond that, we have increased the value of Healthy Start food vouchers and are investing more than £200 million a year from 2022 to continue our holiday activities and food programme, which already provides enriching activities and healthy meals to children in all English local authorities.
The noble Baroness, Lady Boycott, asked about BOGOF promotions. We recognise that there will be costs to businesses associated with implementing this policy. However, the cost of obesity to individuals, society and the NHS is significant; the benefits of reducing calorie intake across the population are therefore substantial and outweigh the costs of that policy.
In the longer term, we can best support people to cope with the rising cost of living by helping them into work—not just into jobs but into better-paid jobs. The noble Lord, Lord Bird, talked about long-term investment in social programmes. In July 2020, the Government launched their plan for jobs, which is one of the most comprehensive and ambitious plans in the world, to protect, support and create jobs across our country. That plan is working, as demonstrated by unemployment falling for 12 consecutive months back to below pre-pandemic rates.
The Government have been building on the measures announced in the 2021 spending review to support people in finding work and increasing their earnings. We will spend more than £6 billion on labour market support over the next three years. That includes extending for a further 12 months the Department for Work and Pensions’ train and progress programme, whereby those on universal credit can spend up to 12 weeks in training, or up to 16 weeks in training in subjects with skills at boot camps, instead of eight weeks. That will allow those who have recently become unemployed or are at risk of unemployment to retrain into priority sectors.
Further, we have doubled the number of work coaches in the system to 27,000 and we have the KickStart scheme, which has supported 130,000 young people into KickStart jobs. We have also announced more than £1.1 billion of funding over the next three years for programmes that enable people with disabilities or long-term health conditions to find and sustain employment. This includes continuing the Access to Work scheme, which offers financial and practical assistance in making workplace adaptions, and the work and health programme, which provides tailored support for individuals to overcome their specific obstacles to employment.
Beyond this, in terms of support for wages, the Government have introduced the national living wage. As I said, this will increase in April by 6.6%. There is also a new in-work progression offer. This means that, for the first time, people who are on universal credit and are already in work can access individualised work coach support that focuses on helping them to increase their earnings and progress in their jobs. The other element to support that progression is investment in skills. We will invest £3.8 billion in skills in England by 2024-25.
The point about investment in skills allows me to touch on another point made by the noble Lord, Lord Bird, about the importance of education. It is absolutely essential. In the House, we dealt with the skills Bill as part of the Government’s plans to ensure that technical and further education get the support in this country that they rightly deserve. This week, we published the schools White Paper and the SEND Green Paper, which focus on improving educational outcomes for children. We have narrowed the attainment gap for children in the poorest households but there is so much more to do. The noble Lord, Lord Macpherson, talked about the need for long-term action in this area, building cross-party alliances. I do not pretend that there is agreement on all aspects of our plans but, on skills and education, the policies we have designed and the Government’s approach are definitely in that spirit.
This brings me to the question of public sector spending and the comments of the noble Lord, Lord Hain, who talked about cuts to public spending. I have to disagree with the noble Lord. The spending review in 2021 set departmental budgets up to 2024-25 and, based on these plans, total departmental spending is set to grow in real terms by 3.7% a year on average over this Parliament; that is £150 billion in cash terms and an increase of £88 billion in real terms.
I will address the point made by the noble Lord, Lord Davies, about the GDP deflator. Of course, the GDP deflator is a broader measure of inflation than CPI, which just measures the inflation felt by consumers. Government operates across the whole of the economy and therefore it is appropriate to use the wider measure of inflation. This is the measure that is always used to look at these questions.
The noble Lord, Lord Hain, also questioned whether, as we meet our fiscal rules, we should use the additional headroom to allow people to keep more of the money they earn, and suggested that we might have set our priorities in the wrong place. I disagree with the noble Lord; I think his own Front Bench may disagree with the noble Lord also. It is partly for this reason: the size of the state is expected to grow to 41.3% of the economy in 2024-25—up from 39.9% in 2007-08. So, when we are in a position to do so, we should look at cutting taxes for ordinary working people to put more money back into their pockets.
On the subject of spending, the noble Lord, Lord Macpherson, raised defence spending. He will know that defence spending has been prioritised by this Government. In the spending review 2020, the MoD was awarded the largest sustained spending increase since the end of the Cold War. Underpinning that spending review decision was The Integrated Review of Security, Defence, Development and Foreign Policy, which recognised that Russia remained
“the most acute threat to our security”
and that:
“NATO will remain the foundation of collective security in … the Euro-Atlantic”.
I was previously accused of being complacent on this subject, and I reassure noble Lords that I and the Government are not. All I would say to the noble Lord, Lord Macpherson, is that we are only five weeks into the conflict in Ukraine. I think it is something that will develop and unfold over a longer time period, so I caution against changing long-term plans and decisions based on the length of experience so far.
I turn to a subject where I agree with many noble Lords: the question of growth. The noble Lords, Lord Desai, Lord Horam, Lord Macpherson, Lord Hain, and others all pointed to the fundamental need to get more growth into our economy. That is why the second part of our tax plan is focused on exactly that.
On infrastructure, we have launched the UK Infra- structure Bank and confirmed a total of £100 billion of investment in economic infrastructure over the spending review period. On skills, I have already referred to the important investment we have made, including things such as the lifelong learning entitlement and the development of skills bootcamps. On innovation, we are increasing public investment in R&D to £20 billion by 2024-25 and we are focused on boosting small and medium enterprise productivity through the help to grow scheme. I could go on, but I am conscious of time.
Many noble Lords asked about the 1p cut to income tax in 2024. We have had a wider debate in this Committee about the merits of taxing earned versus unearned income. As the Government’s tax plan made clear, we want to spread the proceeds of growth. That is why the tax cut applies to a broad set of taxpayers. I am very aware of the concerns about how we are treating earned versus unearned growth. As I assured noble Lords yesterday, the tax cut does not apply to dividend income. Dividend tax rates will rise as planned this April and not reduce in 2024.
The Government have also taken significant steps to ensure that rental income is taxed fairly, including restricting the finance cost relief so that landlords can no longer get relief at the marginal rate if they are a higher or additional taxpayer. Purchases of additional properties are also subject to higher additional rates of stamp duty.
The noble Lord, Lord Sikka, raised the question of charging national insurance on capital gains. He will be well aware of the history of national insurance contributions as part of the UK’s social security system. That system is based on a long-standing contributory principle around paid employment and self-employment, with employers, employees and the self-employed paying towards the protection of those who have been in the labour market. That is why NICs focus on the tax base that they do.
The noble Lord, Lord Turnbull, talked about housing wealth funding social care, while the noble Lord, Lord Davies of Brixton, asked me yesterday whether there are any plans to change NICs treatment for the self-employed. I was clear to him then that the Government do not have any plans in this area. The proposal to use housing wealth to fund social care was included in the Conservative Party manifesto but was not welcomed by any party—perhaps including the Conservative Party—in that election. I do not make that point flippantly; it is important that policies put forward to be delivered, particularly as we discuss them in the unelected House, have the consent of the public. If we want to enact change, ultimately, we need people’s support for those changes. Some of the debates that we have today ultimately translate into broader debates across the country.
I heard the points that the noble Baroness, Lady Kramer, made. I hope she will forgive me for pointing to the fact that it was a Lib Dem policy to raise the income tax threshold to £10,000 while adding a penny to national insurance to pay for the NHS. I might be out of date on their approach now but that is worth bearing in mind.
Underlying a lot of this debate are the choices that the Government have made.
Lord Bird (CB)
Would it not be true to say that what we are experiencing here is that it is very expensive to keep people poor?
Baroness Penn (Con)
I absolutely agree with the noble Lord. That is why I tried in my speech to point to all the investment that the Government are making in helping people to move out of poverty and have a better life than they otherwise would.
In fact, the noble Lord’s point about the choices we have made in this Spring Statement and overall as a Government is a good one. I pointed to the distributional analysis published with the 2022 Spring Statement. Our modelling shows that the poorest 66% of houses receive more in public spending than they contribute in tax and, on average, households in the lowest income decile will receive more than £4 in public spending for every £1 that they pay in tax. The impact of government policy since the 2019 spending round on the bottom four deciles is expected to be worth more than £1,000 a year, while there has been a net benefit on average for the poorest 80% of households.