Budget Statement

Lord Bishop of Chester Excerpts

Tuesday 14th March 2017 Lords Chamber

[The Lord Bishop of Chester]

My Lords, it is not only the last spring Budget, it is the last Budget in Lent. If we had any doubts, then the early speeches in this debate brought that Lenten theme home rather well.

I do not want to get into the details of the Budget, which are very political, but want to talk about two broader, longer-term issues to which the Chancellor referred in his speech. The first, which has already been alluded to, is our national debt. Its rate of growth is forecast to slow in this decade, but that is stabilisation at a very high level, representing nearly £62,000 for every household in the country. Even at the current very low interest rates, servicing that debt costs £50 billion a year—more than the combined costs of defence and police services in this country.

I do not know what level of national debt is sustainable, because I am not an economist, although the economists do not seem too sure either and take different views. I believe, however, that the current level, which grew greatly through the financial crisis that broke about 10 years ago, is much too high for our long-term good, not least if a further, serious long-term crisis were to hit us, for whatever reason. The blame lies in the years before the crisis, when, amid favourable economic conditions—not least the bonanza years of North Sea oil reserves—the national debt was allowed to rise so much. This reflected a national mood that is summed up in the iconic advertisement for an early credit card: that we should “take the waiting out of wanting”. Whether for individuals or for our nation as a whole, I question whether it is right and healthy to prioritise taking the waiting out of wanting. Getting our national finances genuinely into a better state will be a very difficult challenge amid all the political pressures which arise in a consumerist society so resistant to increased taxation.

That leads me to the second area upon which I would like to comment. The upward pressures on national expenditure are greatest, as has again been referred to, in the National Health Service and social care. It is difficult to keep track of all the reports and analyses on the delivery and financing of the NHS and social care. The absolute plethora of those in recent years simply illustrates why the underlying situation is so difficult. Indeed, the Chancellor has announced a new Green Paper this autumn on the future financing and delivery of social care. In the meantime, we await quite shortly the report from our own Select Committee special inquiry into the long-term sustainability of supporting and funding the NHS and social care.

Current plans from the NHS settlement at the 2015 spending review include a commitment to achieve 2% net efficiency gains through the remainder of this decade. Those are well ahead of the customary efficiency gains and will be demanding to achieve. Even if those challenging efficiency targets are met, the inexorable rise in demand will still prove immensely challenging. The underlying escalation in cost is estimated by the chief executive of NHS Providers at about 4% a year, driven by an ageing population and increasingly sophisticated medical treatment. The cost of social care rises in parallel. So what is to be done?

It seems unavoidable that we will need to devote a higher proportion of our GDP to health and social care. You can slice it and dice it but it seems to me that you would come to that conclusion. We are already significantly behind France and Germany in this respect, and well behind the United States, but will it be achieved while the whole area is such a political battlefield? We need to try to reduce the element of political controversy as far as possible in the basic decision-making processes, because once something becomes a political football, things tend simply not to happen because of the developing stalemate and the associated emotions.

I know that Governments are generally opposed to ring-fencing taxes but I have come to think that due to the inexorably increasing costs and unique political pressures involved, the future challenges to funding health and social care will best be represented by some form of hypothecation of tax revenues. There is something of a distinct anomaly here, which can be addressed separately. While individual Governments will have to take overall responsibility for what happens when they are in charge, the recommended Budgets and tax-raising plans would best be proposed by an independent and cross-party body—a bit like the OBR. That may not be politically palatable but, frankly, paying for what we need to pay for will be unpalatable in one form or another. We simply have to face up to that, and to a degree of austerity which seems simply unavoidable in the decades to come.

Greece

Lord Bishop of Chester Excerpts

Monday 6th July 2015 Lords Chamber

[Lord O’Neill of Gatley]

My Lords, my reaction, possibly based on my past experience, is as with a number of other questions that have been put to me. Ahead of such important discussions, I do not think it is particularly useful for me as the Minister, or for anybody in similar areas of government, to speculate idly about what is right or wrong. A lot of information is available about events that have led up to this crisis. It is the responsibility of the Greek authorities, having taken their stance to the Greek people over the weekend, together with eurozone Finance Ministers and their leaders, to try to bring this crisis to a better resolution in the next couple of days.

[The Lord Bishop of Chester]

My Lords, I was struck in the Statement by the sentence:

“Greece is a proud nation and a very long-standing ally of the United Kingdom”.

The danger in all of this is that, because we are not in the eurozone, we slightly sit on the fence, hedge our bets or stand on the sidelines. That can leave a certain vacuum. I have been very upset by the rhetoric between Germany and Greece in recent weeks—on both sides. The two nations are a little like chalk and cheese in so many ways. Politically, I wonder whether there is not a role, precisely because we are not in the eurozone politically, that we are not taking. What high-level contacts have there been between the Greek Government and the UK Government on these political issues?

[Lord O'Neill of Gatley]

My Lords, the right reverend Prelate asks, again, a slightly delicate question. I mentioned in my formal comments that the Prime Minister and the Chancellor in particular had a number of discussions with key participants from the eurozone and the head of the IMF earlier today and this afternoon. I suspect that there will be further discussions during this evening and tomorrow. We are obviously aware of our position as an EU member relative to those inside the eurogroup, and we will offer in private the views that we think may be of some use in helping them come to the right resolution.

Infrastructure Bill [HL]

Lord Bishop of Chester Excerpts

Monday 10th November 2014 Lords Chamber

[Lord Jenkin of Roding (Con)]

My Lords, I have some sympathy with the noble Baroness’s amendment. It has always seemed to me that if you are to have an effective carbon capture and storage policy, and if it is to be developed from the two projects which the Government are currently financing, it would make sense eventually to have what one might call a grid for the CO₂ that would be separated as a result of the technology. Each individual power station developing its own method of disposing of its CO₂ would not seem to me to be sensible.

However, we are at a very early stage in developing this technology. Yes, there have been other examples of a technology being worked in other countries. A number of noble Lords were in a party that I joined a year or two back when we went down to see the BP research establishment at Sunbury. We were given what I found a completely fascinating account of how carbon capture and storage has been operated in a large BP gas field in Algeria, with gas deposits spread over about 20 miles or more coming up to the collection point and the carbon capture and storage technology being applied and the CO₂ going straight back down to the deposits from which the gas had been extracted. The gas, now free of CO₂, was piped to the coast where it was delivered to markets.

I completely understand that that is a unique situation, but there are other examples in other parts of the world where the technology is working, and one hopes that this will be possible. If we are going to have to rely on fossil fuels—as I believe we will—for at least the next three decades or perhaps more, it seems desirable, if we can, to develop an economic method of carbon capture and storage so that it can be done without necessarily increasing the carbon that has to be discharged into the atmosphere.

I say this with some hesitation as the noble Lord, Lord Oxburgh, is sitting opposite and knows, I suspect, 10 times more about this than most of the rest of us. Nevertheless, the Government’s policy of having pilot projects and supporting them with the support of the industry is the right way ahead. It may well be that if this can be developed it will be necessary at the same time to develop a coherent system for disposing of the CO₂ that is discharged from the plant. I shall be interested to hear from my noble friend on the Front Bench about whether this needs a change in the law. It seems to me that something along these lines may eventually be necessary, and I hope that perhaps the Government will recognise that in due course.

[The Lord Bishop of Chester]

My Lords, can I ask the Minister when she responds to comment on two points? First, if we are now to be committed in this legally strengthened way to the maximum economic exploration of our oil and gas reserves, how do the Government see that to be compatible with the commitment under the Climate Change Act to reduce our emissions to only 20% of the 1990 level by 2050 without also having a strategy for carbon capture and storage, which I think lies behind the amendment?

Secondly, the amendment refers to the economic extraction of our hydrocarbons—I have never yet heard any reliable estimate of what the additional cost will be of having carbon capture and storage on a typical power station, be it a coal station or a gas station. What level of increase per kilowatt hour—in a unit that can be easily understood—is anticipated if carbon capture and storage is required on such stations? That impacts on what is economically recoverable.

[The Earl of Caithness (Con)]

My Lords, I have a question for my noble friend on the Front Bench arising from my work not long ago on carbon capture and storage. It concluded that every situation would be different and that it would depend not only on the oil wells but on the businesses trying to do this work. Some businesses might be able to pool their resources, and while it might be possible to set up a grid in a certain area, it might not be in another. Would not the amendments as proposed make that much more difficult? As my noble friend Lord Jenkin has reminded us, we are at a very early stage in CCS and the technology is not yet fully proven. An awful lot of work still has to be done, so to put something like this on to an industry which is in its infancy will surely cause more problems than it will solve.

Budget Statement

Lord Bishop of Chester Excerpts

Thursday 27th March 2014 Lords Chamber

[The Lord Bishop of Chester]

My Lords, the reason that the Bishops sit on the government side of the Chamber, I am told, is the recognition that the task of government is so difficult that the Government need all the help available to them. Managing the economy in recent years has been an enormously difficult task and we can only express relief and, indeed, gratitude that things seem to be moving on to a more normal plane despite all the challenges ahead, about which the Chancellor himself is fairly candid.

The present Budget reminded me a bit more than its immediate predecessors of the iconic Budgets of the 1980s, with their emphasis on deregulation and personal freedom. There was a similar tone, which the unexpected radical announcement in relation to defined contribution pension savings illustrated. I have always been a cautious and strictly apolitical supporter of many of the policies introduced in the 1980s. I could recall only too well the moribund character of much of the 1960s and 1970s in my formative years. The British economy did need opening up in many of the ways achieved in the 1980s, and it was significant how few of the changes made then were actually reversed by the long subsequent period of Labour government, apart from an increasing trajectory for public borrowing, as has been noted.

However, an underlying problem of the past 30 years has been the difficult interplay of freedom and responsibility in our society. Greater freedom demands a greater degree of responsibility in the exercise of that freedom and in how to deal with its fruits, if it is genuinely to serve the common good, otherwise greater freedom is likely just to generate a greater selfishness and individualism in all its guises. The sense of necessary responsibility is something which not only individual citizens have to recognise but the institutions of society and, especially, Government themselves.

Any society which increases the degree of freedom available to its citizens is liable and likely to generate an increasing disparity between winners and losers. Some will take advantage of the new freedoms, and much greater and more concentrated levels of personal wealth will emerge, while others will tend to sink to the bottom of the pile and form part of a growing underclass. That seems to me to be just what we have seen in the past 30 years. At the top of the pile, the rich get seemingly ever richer; and if the plans for inheritance tax are brought in, wealth will tend to be even more entrenched in particular families. We are told that 30% of our income tax in the UK is collected from 1% of taxpayers. However, that can be presented in two entirely different ways: as evidence that the rich are indeed paying their fair share of our taxes but also as evidence of the very imbalances which I indicated just now between the rich and the poor. Both may have a degree of truth.

I speak of a growing underclass. What is the evidence? The prison population has doubled in the past 30 years. The problems of ingrained poverty in a benefits-dependent culture, which noble Lords have referred to, are a new set of problems for our society and are well recognised. There are stubbornly high figures for child poverty. Beyond economic measurement, there is the strong perception that social mobility in our society has actually tended to decrease. That was the subject of a five-hour debate in your Lordships’ House just two weeks ago, in relation to our education system. I was able to sit through much of the debate and was struck by the fact that at the end of the day, for all the fine talk, people did not really seem to understand or know why there had been this decline in social mobility or, indeed, where the answers might be found.

A few months ago, I heard the former boss of Tesco, Terry Leahy, on “Desert Island Discs”. At the end, he was asked whether, today, someone like him from a working-class estate in Liverpool might rise to an equivalent position. He said that it was possible but much less likely. The reason he gave was the absence today of the social institutions which surrounded his upbringing and protected and encouraged him: the family, the local church—in his case a Roman Catholic church—and other local institutions.

All these supported the schooling that he received. That brings me back to the Budget. If, as surely we all hope is the case, we are now at the beginning of a new period of economic growth and prosperity, how will we avoid some of the problems that we have seen in the past 30 years? I will briefly doff my mitre—an imaginary cloth mitre—in three directions.

First, we must all do what we can to support strong social institutions in our society. Unavoidably, that must include the family. Independent estimates tell us that the cost of family breakdown to the Exchequer is something like £45 billion a year, a figure that the noble Lord, Lord Freud, accepted a few weeks ago in response to a Question. Of course, families can take a variety of shapes and all deserve support. Indeed, all who care for children, whatever their immediate circumstances, deserve and need our complete support. I just do not think that we will achieve a strong and renewed sense of family life in our society without having, in some sense, marriage as a core institution in the spectrum of actual family relationships. The Budget includes a modest introduction of transferable allowances within marriage and civil partnerships as both a symbolic and an actual gesture, and that is to be welcomed. It is very modest and I hope it can be built upon in the future.

Secondly, we must welcome unreservedly the Government’s commitment to maintain the real value of our overseas aid programme. In an ever more globalised world, the great disparities in wealth will be an ever greater source of instability. The notion of the common good is not just a national idea; it is a transnational and international idea. Wealth always brings power, and lasting peace is ultimately built upon some form of power-sharing.

Finally, as I said earlier, freedom has its in-built dangers. I can welcome the deregulation of defined contribution pension savings but only if robust protections are put in place to safeguard people against the misuse of those freedoms—here I agree entirely with the noble Lord, Lord Hollick. These protections include much better education about financial realities at all levels of our society, from school upwards. I am always struck by how the younger generation seem not to have been taught to think about these things, but pension saving is, if nothing else, a very long-term requirement. One has to look only at the way in which payday loans have been advertised in our society to see the equivalent dangers that are going to arise.

Let us be clear: in the future most people in our country are going to have some form of defined contribution pension pot. That is the whole trajectory of pensions changes in recent years. Robust advice and information must surely be made widely available if these new freedoms are to end up being used responsibly and wisely and in genuinely serving the common good in our society.

Autumn Statement

Lord Bishop of Chester Excerpts

Thursday 5th December 2013 Lords Chamber

[Lord Newby (LD)]

My Lords, these are time-limited questions, so the briefer individual Lords can be in making their contributions, the more Members of your Lordships’ House will be able to participate.

[The Lord Bishop of Chester]

My Lords, whenever a bishop speaks on economics I must emphasise that we preface it with St Paul’s statement: “I speak as a fool”. I fundamentally support the Government’s strategy of getting the deficit down. My question is about the cap and how that is going to operate. Somewhere in the Statement it says that 30% of tax is now collected from 1% of taxpayers. That is a signal of how disparities of wealth have grown in our society. It really behoves us to protect the weakest. My worry is that I see a sort of American scenario of a cap being introduced and benefits not being paid because the cap is there. How will this work, when social security benefits can rise and fall with events which nobody can control? It worries me that introducing another cap of an absolute sort without reference to other realities could end up almost undergirding the underclass, which I am afraid is a developing feature of our society. Can the Minister say a bit more on how this cap is going to work?

[Lord Deighton]

The cap is essentially a fiscal discipline to ensure that a very large part of our budget, which in the past has had no controls around it—and no opportunity to explain what is going on—is properly scrutinised. In the circumstances where there is justification for changing the cap, that will be done under the scrutiny of Parliament. The Chancellor has not introduced what the level of the cap should be but merely an operational measure to make sure that it is properly controlled, just as other parts of the budget are, and indeed so that all the questions and issues around the appropriate level of support for vulnerable members of society can be tackled independently. Those measures should be effectively targeted and that is also part of our welfare-reform programme.

Taxation: VAT on Retrofitting Buildings

Lord Bishop of Chester Excerpts

Thursday 25th July 2013 Lords Chamber

[Lord Newby]

I completely agree with the noble Lord. Of course, that is why we set up the Green Investment Bank, which is already proving its worth, not only in putting money into green projects on its own behalf but getting a significant multiple of private sector investment coming in to support that government pump-priming.

[The Lord Bishop of Chester]

My Lords, the Minister has twice referred to the Green Deal as the Government’s policy response to the issue. Can he tell the House how the take-up of the Green Deal is progressing in relation to the hopes that were expressed?

Children: Childcare Costs

Lord Bishop of Chester Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Newby]

Absolutely, my Lords. That is very much the thrust of the proposals that were announced at the beginning of this week. We have looked in particular across the EU, where childcare and nursery care is in some cases thought to be better than in the UK and two things have emerged: first, that we need to have better-qualified people involved and, secondly, that the ratios that the noble Earl spoke about are tighter in the UK than virtually anywhere else. However, the two go together, and that is why in our plans for early years teachers and educators we are putting a lot of emphasis on improving the qualifications of people working in childcare, while having more flexibility in the numbers.

[The Lord Bishop of Chester]

My Lords, would it not be unfair to introduce this tax relief for working parents with children while denying effective tax relief through transferable allowances to those parents who choose to stay at home with young children and who are currently penalised through the tax system for doing so?

Budget Responsibility and National Audit Bill [HL]

Lord Bishop of Chester Excerpts

Wednesday 1st December 2010 Grand Committee

[Lord Higgins]

My Lords, I agree with the point that has just been made. It is true, as the Minister has said, that we are breaking new ground here, but the other bodies to which he referred are very different from this one, which is unique. I would have thought that the case for having the whole board approved by the Treasury Select Committee gave greater weight to the committee’s authority and would certainly make the committee, which is going to be dealing with this whole issue a great deal, more acceptable to it in future proceedings. I am not clear why the Minister objects to adding this.

[The Lord Bishop of Chester]

My Lords, it would be a great mistake to regard being opposed to sin as the sole prerogative of the Church of England. I hope that the whole Committee is opposed to sin.

I have some sympathy with the Minister on this. My problem with this part of the schedule is that it feels too in-house to me—too much the same. The Chancellor of the Exchequer is involved in the appointments and perhaps the Select Committee will be involved. I should have thought that the office needs a certain amount of diversity; its independence requires a greater diversity. It strikes me that the schedule is too tightly constrained as it is and to constrain it further by saying that the Select Committee of the other place has to be involved each time feels odd. I would almost expect the Governor of the Bank of England to nominate a member. We need a greater sense of diversity and independence in what is supposed to be an arm’s-length body. This body is in danger of not being sufficiently arm’s length from government. On that ground alone, I support the Minister’s resistance. However, I have a problem in that the whole thing seems a bit too in-house as it is.

[Lord Turnbull]

The noble Lord, Lord Higgins, referred to making this more acceptable to the committee. I remember reading the report of the committee in another place: it did not actually ask for this. It asked for powers on appointment, and for powers of dismissal, which are built in here. Members of that committee did not think this was necessary and I am prepared to back that judgment.

--- Later in debate ---

[Lord Sassoon]

My Lords, that is indeed the position. It may be extraordinary but, as I have tried to explain, it is entirely consistent with the fact that, as far as I am aware, no other non-executive appointments to a wide range of public bodies are subject to a parliamentary committee veto. Of course, it will be up to the Treasury Select Committee to decide whether it wants to interview the non-executive members individually, collectively or as part of the total board of the BRC, and it will have an opportunity to see them in accordance with its normal processes.

[The Lord Bishop of Chester]

Can the noble Lord comment on the fundamental point I made in my earlier contribution that, as it is set up, it is all rather in-house and too tight and that it does not draw from a wide enough range of sources—for example, the Governor of the Bank of England? One could no doubt think of others, but can the Minister comment on that point?

[Lord Sassoon]

Certainly it is important that the non-executives are people of independent standing and stature who are able to challenge as well as support. That is why there is a critical distinction. It may bring with it some lack of clarity but the expert/non-expert distinction makes the critical point that the non-executives should come from people who are capable of a broader challenge and support role. That is why there is a distinction between experts—which implies a closed group of economists—and a wider group. The posts will be advertised and subject to competition. It will come down, as it should, to the description of the posts, which should allow for people from wider backgrounds to come in. I welcome the right reverend Prelate’s reminder that that would be healthy.

--- Later in debate ---

[The Lord Bishop of Chester]

My concern was that they are nominated by the office itself in an almost self-perpetuating sense. Whether or not they are approved by the Select Committee is a secondary issue. The more fundamental issue is how an arm’s-length body in such a sensitive and politically charged area should properly draw its membership. The danger is that this is too much like a self-perpetuating body, with the Chancellor involved in every appointment.

[Lord Sassoon]

My Lords, on the latter point, I say again that the fact that it is intended that, as part of the nomination process, there should be an openly advertised way in will make it clear that we looked widely for the non-executives.

Implicit in the remarks of the noble Lord, Lord Myners, about the non-executive members not going through the process of getting the imprimatur of the Treasury Select Committee is the suggestion that all the non-executive board members of a huge range of public sector boards who do not go through parliamentary scrutiny are subservient and subordinate. I do not know why it should be different here. As I have explained, we are applying the same rigorous, high standards to these appointments as are applied to all other bodies. I see no reason why they should be subservient or subordinate simply because they have not had Treasury Select Committee endorsement.

The critical thing is that these are non-executive non-experts carrying out an important role similar to that of non-executives in a huge number of bodies across the public sector. That is very distinct from the expert members who, because of their special role at the heart of economic forecasting—the Treasury Select Committee agrees with this distinction—should be subject to the special veto.

Ireland: Financial Assistance

Lord Bishop of Chester Excerpts

Monday 22nd November 2010 Lords Chamber

[Lord Sassoon]

Interest rates and the other terms of the package will be negotiated between the Government of Ireland, the IMF and those leading the European side of the negotiations, so they will not be the subject of discussion in your Lordships' House, except that any bilateral element in the package from the UK will be subject to primary legislation, so there will be an opportunity to consider the terms of any bilateral loan.

[The Lord Bishop of Chester]

Can the Minister help me resolve an ambivalence that I detect in his answers? He seems to be saying that it is vital to our national interest to support the eurozone and equally important to our national interest not to be part of it.

[Lord Sassoon]

That is precisely what I am saying. As was confirmed by my right honourable friend the Chancellor in another place, the Government are not going to take this country into the eurozone and, indeed, we are not going to make any preparations during the course of this Parliament to take us into the eurozone. I think that it is completely compatible with playing our part as an important part of the European economy to make sure that the eurozone is stable. I may be being thick, but I fail to see the contradiction in those two positions.