Banking: Northern Rock

Lord Borrie Excerpts

Thursday 30th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, first of all, it is right that Northern Rock is now a highly liquid and well capitalised strong bank, which is why UKFI has been able to recommend the start of a sales process to the Treasury. Incidentally, for all the very significant reductions in the number of employees that there have been, the bank still has a footprint of some 75 branches—little changed since before the collapse of the bank. As for its commitment to the foundation, the bank has a signed agreement with the foundation, signed in March 2011, under which Northern Rock plc agrees to donate 1 per cent of pre-tax profits to the foundation under a covenant with an initial expiry date of December 2012. It will be very much in the interest of prospective purchasers to make clear, if they want the support of people in the north-east, what their plans are for the headquarters, for their support for the foundation and for other matters.

[Lord Borrie]

I wonder whether the noble Lord could show a little more enthusiasm for mutualisation as a most desirable method of organising and purveying financial services. That would give the Government a chance to distance themselves from the sad period of the 1980s, when far too many building societies moved away from mutualisation, with a lot of risky business being pursued thereafter.

[Lord Sassoon]

I have made clear on this and previous occasions that the Government regard mutualisation as a desirable model. It would be wrong to say that it is the best model, as the noble Lord has suggested, but, indeed, we want to see variety of provision of financial services in this country by organisations with different models, of which mutualisation should be one.

Air Passenger Duty

Lord Borrie Excerpts

Tuesday 11th January 2011 Lords Chamber

Asked by

[Lord Borrie]

To ask Her Majesty’s Government what is their assessment of the potential effects on United Kingdom competitiveness of the announcement by the Chancellor of the Exchequer in June 2010 forecasting that air passenger duty revenue would increase from the current rate of £1.9 billion to £3.8 billion per annum by 2015–16.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Office for Budget Responsibility’s November forecast estimates air passenger duty revenue at £3.6 billion in 2015-16. The estimate reflects forecast growth in passenger numbers and the November 2010 rate increases as announced by the previous Government. It also assumes that duty rates are uprated by inflation each year—a standard forecasting convention. However, at the Budget, the Government committed to exploring changes to aviation tax and to consult on any major changes. We are considering evidence from stakeholders, including on the impact on UK competitiveness.

[Lord Borrie]

I thank the noble Lord for his answer. However, it does not deal with the great problem that so many countries on the continent of Europe either do not have any duty at all or have a much lower duty than in Britain. Therefore, the competitiveness of our airlines, airports and tourist industry is at a disadvantage. Apropos the last Question and Answer, this is surely one matter on which the Government have a measure of control. It is their duty that has been imposed and is suggested to be higher. I am sure that the Minister will agree with me that the UK tourist industry must be very disappointed with the Answer that has been given, especially when tourists from countries such as India and China—growth economies—are wanted yet are being turned away by this unduly high duty.

[Lord Sassoon]

My Lords, I do not believe that the tourist industry will be either surprised or disappointed because I have merely restated that we are consulting a wide range of stakeholders and listening to views of the tourist organisations, among others. On UK competitiveness, it is important to see the APD in the wider context. For example, we do not levy the APD on transit or transfer passengers. As the noble Lord, Lord Borrie, points out, other countries are introducing similar taxes—Germany introduced a similar tax on 1 January. In the wider context of competitiveness, the Government are reducing corporation tax very significantly from 28 to 24 per cent over four years from April 2011. If we talk about competitiveness, we should look at it in a much wider context.