EU: Budget

Lord Campbell of Alloway Excerpts

Monday 4th March 2013 Lords Chamber

[Lord Stoddart of Swindon]

My Lords—

[Lord Campbell of Alloway]

My Lords—

Scotland Bill

Lord Campbell of Alloway Excerpts

Thursday 15th March 2012 Lords Chamber

[Lord Maxton]

Oddly enough, I am in the unfortunate position at one level but fortunate in another that about five years ago, if not longer, I got my last letter from the Inland Revenue. It said, “Please do not send us any more tax returns because we know what your income is. It has been the same for the last 10 years so don’t bother any more”. If I moved house, I am not sure that anyone would know where I had gone. I assume that you have to tell the Inland Revenue but the fact is that there is this problem. As far as I am aware, PAYE is paid on the basis of where you are employed, who employs you and the income that you are paid. That can come from a variety of sources and is taxed at source. I am never quite clear whether one’s residence is an important part of that issue.

[Lord Campbell of Alloway]

My Lords, I support what has been said by and large for this amendment in the name of my noble friend the Duke of Montrose. This is a highly complex problem and very difficult to understand. The question is whether it falls within devolution or not. It is understood that an arrangement has been made for members of the Privy Council to consider, if a question such as this arises, whether it is within or without the concept of devolution. This matter is so complicated that I am only grateful for having been able to listen to what was said about it. I hope that it may be satisfactorily resolved.

[Lord Kilclooney]

My Lords, the people of Northern Ireland are increasingly concerned that Scotland is heading towards a higher taxation system—be it devolution or potentially independence. There needs to be clarification to the people of Northern Ireland since the Larne and Belfast ferries to Cairnryan and Stranraer are some of the busiest within the United Kingdom. The people in Northern Ireland on those ferries will remain United Kingdom taxpayers until they land in Scotland.

Aviation: Passenger Duty

Lord Campbell of Alloway Excerpts

Monday 23rd January 2012 Lords Chamber

[Lord Sassoon]

My Lords, although I do not underestimate for one moment the effect on the Caribbean, there will be very many businesses located there, here and in other places for which air passenger duty is a burden. The present system of four bands was introduced by the previous Government. We had a one-year freeze in order to recognise the difficult situation in which people were placed by this and we looked at it. However, the fact is that the APD raised approximately £2.5 billion in 2011-12 and is an important revenue-raising duty.

[Lord Campbell of Alloway]

My Lords—

[Baroness Gardner of Parkes]

My Lords, what would be the effect of the suggestion that was made about Bermuda? Would it be possible for the Caribbean countries to reclassify themselves with Bermuda? What would that involve and would it make quite a difference to them, as has been claimed with regard to the United States?

Impact of Government Policies on Family Budgets

Lord Campbell of Alloway Excerpts

Thursday 27th October 2011 Lords Chamber

[Lord Knight of Weymouth]

My Lords, I am pleased to introduce this debate on the impact of government policy on family budgets. Before I come to the substance of my contribution, I want to say something about the choice of the word “family” in this debate. Yesterday I asked, through Twitter and Facebook, for examples of how people have been affected by government policy in the past 18 months. I quickly had a response from someone called Ma on Twitter. She—I think she may be a she—said:

“Every single politician who talks about families is talking about those with kids. That has never changed. For my entire life in this country, I’ve been an irrelevance. Why? Talk about being ‘excluded’”.

I apologise to her if she felt excluded by the use of the word “family”. Over a series of tweets she had important things to say for us in this debate. I quote:

“I’m visibly older. What happens when I need to find a new job and can’t? This government will have me out in the street. I’m way past old enough to be a grannie now. Am I supposed to live in a student flat or crummy bedsit now? One wage coming into my home to pay for fuel. How does that work, exactly? One wage to pay for housing? All very well to care about kids. I didn’t have them in part because I couldn’t afford them. So I’ll freeze now? Nae good”.

She may have been Scottish. Clearly single people are suffering under this Government as well as more traditional definitions of family and I am happy to speak for them too as best I can. The other most striking response was on Facebook from Caroline O’Brien. She wrote:

“One thing that I haven’t seen mentioned is the effect of cuts in local services on family budgets. Particularly on families with special needs children. Very often as services are withdrawn families are forced to try to make up the shortfall or see their children suffer. Whether that is getting independent assessments of educational need, private speech therapy, funding activities previously coming from youth services or providing transport. The withdrawal of EMA is going to hit us too, as my daughter starts A levels next year and as for thoughts of university, the debt levels are terrifying. I am also noticing that charities are being hit hard, so far less help is now available from them. Many of these things are just starting to have an effect but from where I am standing the future seems bleak for so many families. I know I am lucky. We can afford to buy the food we need, heat our house and pay the mortgage but is equality of opportunity for my kids really something that should be cut? After all it is the tax payer who will have to pay if my kids are unable to participate in society in the future”.

[Lord Campbell of Alloway]

Would the noble Lord forgive me for asking whether his interesting speech is within the remit of the problems of this particular Statement?

[Lord Knight of Weymouth]

I am speaking to the Motion in my name around the impact of government policies on family budgets and I believe I am speaking directly to that, but I welcome the interest from the noble Lord.

Those two responses are the authentic voice of people in this country—not the poorest perhaps but certainly what has been described as the “squeezed middle”—and it is appropriate that we heard from them first in this debate.

In the remainder of my time I want to make three broad points. First, the lack of growth in the economy is hitting family budgets hard and the country desperately needs a credible and urgent plan to return to growth. Secondly, tackling two of the big inflationary items in budgets, food and energy prices, means taking on vested interests and pushing them to act in the long-term interest rather than for short-term gain. Finally, this Tory Government are failing because they are out of touch with the problems of ordinary families in this country.

I start with the last of those first. It was, I think, in George Osborne’s 2009 party conference speech that we first heard his soundbite: “We are all in this together”. The Government want us to believe that the pain is shared fairly. Does the Minister still believe that to be true? The evidence that he is hitting the poorest hardest is stark. I quote from Peter Wilby’s excellent piece in the 17 October edition of the New Statesman, where he said:

“One of Labour's most outstanding achievements in office was to reduce child poverty during an economic boom. This sounds nonsensical, but isn't. Poverty is defined relatively; children living in families that receive below 60 per cent of median income count as poor. As the median nearly always rises during a boom, more children automatically become poor unless employers increase their parents' wages or ministers increase their benefits. The Tories are about to pull off the opposite trick. In recessions, the median falls and so, unless poor families' wages and benefits are hit harder than average, child poverty automatically falls. In 2009-2010, that was exactly what happened, with 300,000 children coming out of poverty. But that was before the Tories got to work. Now, the Institute for Fiscal Studies reports, we can expect the same number (though not necessarily the same children) to go back into poverty over the next two years, despite the likelihood that median incomes will remain, at best, stagnant. You couldn't have a clearer illustration of the difference between Tory and Labour governments”.

On the income side of family budgets, we know that wage increases are not keeping up with inflation and that families are therefore suffering real-terms cuts. The Government are adding to that by their own attacks on pay in the agricultural sector by abolishing the Agricultural Wages Board, on the pay and conditions of school support staff by abolishing their negotiating body, and on public sector workers generally by imposing an effective extra tax on them through increased pension contributions beyond those being recommended by the noble Lord, Lord Hutton.

At the same time, the Government are of course cutting the benefits bill. Their cuts to housing benefits, to tax credits, to child benefit, to childcare, to educational maintenance allowance, to baby tax credits, to the maternity and health in pregnancy grants, to concessionary transport and to disability living allowance amount to a list that is long and painful. These cuts are hitting the poorest hardest, because it is the poorest who claim the most benefits, both in and out of work. Worst of all, for some families, unemployment is rising once more, with too many families now going through the trauma of a sudden collapse in their income. It is clear that “We are all in this together” rings hollow. If Ministers want to continue to claim that their choices on spending have been spread fairly, they are even more out of touch than I thought.

I turn to spending. The biggest hit on family spending overall was the Government’s decision prematurely to raise VAT to 20 per cent. As former Monetary Policy Committee member Professor Blanchflower wrote recently:

“It certainly appears that increasing VAT from 17.5 per cent to 20 per cent was a big mistake—it increased … Consumer Prices Index inflation by 1.5 percentage points and hit ordinary working people's living standards”.

His call to reverse that increase was repeated by last year’s winner of the Nobel Prize in economics, Christopher Pissarides, who said this month:

“Cutting VAT back to 17.5 per cent … will revive job creation and reduce unemployment. Deficit reduction is best done with spending cuts when the economy is recovering, not with higher taxes in a downturn”.

Last week’s inflation figures made grim reading. CPI, the Government's preferred measure, has never been higher at 5.2 per cent, and RPI, at 5.6 per cent, is the highest since June 1991. It is little wonder that the Markit Household Finance Index published this week showed 37 per cent of UK households expecting their financial situation to worsen this month, against only 7 per cent expecting an improvement, or that the Family Lives survey of December last year found that 53.3 per cent of families said that their finances were in a worse state now than last year.

If we look at the detail of the inflation figures, we see the reality for families. Bills for gas and electricity have risen by 9.9 per cent in the past month and are up 18.3 per cent since last year. Transport has risen 12.8 per cent in the past year and food is 6 per cent higher than 12 months ago. I expect that my noble friend Lady Smith of Basildon will talk about energy prices in her speech, but we know that the poorer you are, the higher the proportion of income is used in food and heating. I fear that this winter many more will have to choose between the two as the decision to cut winter fuel payments to £200 for over-60s and £300 for over-80s adds to the misery.

With regard to fuels costs, I have to press the Government on why they are not giving teeth to the groceries code adjudicator. This new body will be funded by the supermarkets. The responsible Minister, Ed Davey, has said it will “safeguard the consumer interest”, and it will lead, in the words of the National Farmers Union to,

“fewer instances of flagrant bully-boy tactics … by the supermarkets”.

Yet the Government have rejected two Select Committee reports calling on them to implement the regulatory body quickly. It was ready to go last summer. The Government rejected proposals to allow it to fine without a resolution in both Houses of Parliament and to allow it to act on anonymous complaints. On the three big tests, the Government have shown that they are unable to resist the power of the vested interests of the supermarkets and unwilling to set up an effective regulator—the effective regulator that consumers and producers of food want and need.

Since the Minister is so well briefed on Europe now, and given the warm relationship that the Prime Minister has developed in Europe with the likes of President Sarkozy, perhaps the Minister can tell us how we will get heard on more radical reform of the common agricultural policy, which his friends in the TaxPayers’ Alliance claim costs every household in this country £398 per year in higher food prices. If the Government are serious about helping family budgets, they must be willing to take on the short-termism and vested interests that are raising food and energy prices. That is the new bargain with business that Ed Miliband talked about last month in Liverpool and it is sorely needed.

Finally, what families in this country need more than anything is growth in the economy. Growth brings jobs, job security and consumer confidence. We are in a vicious circle that needs reversing. Today’s British Retail Consortium figures show 23,000 fewer workers in high-street stores than a year ago because of the collapse in consumer demand. How are the Government going to reverse it? To get the economy moving, we need spending to increase. As we have seen, that certainly will not come from consumers. Despite the welcome deal overnight in the eurozone, the best prospect of an export-led recovery is if China starts to import more, and we cannot see any signs of that. The lack of delivery by Project Merlin means that the prospects of businesses accessing the finance that they need are poor, so they are unlikely to start spending either.

That leaves the Government. In this downward spiral, we need a kick-start from the Government. That is the consistent lesson from history. We need a plan for growth. Call it plan A plus, call it plan B, call it whatever you like, but give us a plan for growth that will work. The Shadow Chancellor, Ed Balls, has offered his plan: reverse the VAT increase until growth is sustained; cut VAT to 5 per cent for home improvements; bring forward investment in schools and hospitals; repeat the bankers’ bonus tax to invest in building new homes and thereby create work for 100,000 more young people; and offer small business a national insurance incentive to take on new staff.

The Minister may say we cannot afford to do it; we say we cannot afford not to. Where else is growth going to come from? Families in this country are up against it. The conversations around the kitchen table are very bleak. Too many cannot tighten their belts much more, and the real impact of many of the cuts is still to come. The poorest are hit the hardest. It is not fair. Without a change of heart from this Government and without serious progressive measures, I fear massive social problems, a sustained recession and a blight on families’ chances for a generation. The families of this country need action now.

EUC Report: Economic Governance

Lord Campbell of Alloway Excerpts

Thursday 16th June 2011 Lords Chamber

[Lord Liddle]

My Lords, first, on behalf of the opposition Front Bench I congratulate my noble friend Lord Harrison and his committee on an excellent report. It shows that this House can bring an intelligence and clarity to complex issues that are unusual in the political world, and I sincerely congratulate them on that. Secondly, when my noble friends Lord Woolmer and Lord Haskins make the point that the recommendations of the Van Rompuy taskforce do not address the fundamental crisis that the euro faces, they are of course right. In my view, it is a crisis of solvency not liquidity that at some stage has to be addressed.

This economic governance package is not about the immediate resolution of the present crisis but about trying to make sure that we prevent future crises happening. From our perspective, the proposals here are an advance on the stability and growth pact. The stressing of the need to monitor the debt to GDP ratio, not the deficit, is good. The new emphasis on economic imbalances is good, as it is on credit conditions, the risk of asset bubbles and the new streamlined processes for monitoring member state budgets. Where we have ended up on the sanctions regime, which was mentioned by the noble Baroness, Lady Maddock, is right as well.

However, we have some reservations about this and some questions to ask the Government. First, on debt, Mr Hoban’s letter says that the Government were concerned that on debt to GDP, the proposals might involve too much of a target-based, semi-automatic approach. However, they say that the proposals have been modified to make sure that that is not so. Could we have more of an explanation of how they have been modified? On this side of the House, we believe strongly that one should not take short-term actions on deficits which make the long-term position on debt worse, not better. It may be that that is what the present Government are doing in terms of their “too far, too fast” economic adjustment in this country but we would like to know more about avoiding that target-based semi-automatic approach.

Secondly, on the long-term challenges of debt to GDP, is there not a need for an emphasis on positive policies, social investment policies, to overcome issues such as the rising costs of ageing, so that we activate more people in the workforce and invest more in research, education and infrastructure to raise productivity? Is that not a positive absence from these proposals? Thirdly, are there not other measures that the EU could be taking to promote growth in the sovereign debtor countries—for example, bringing forward unused structural fund money or trying to develop, through the European Investment Bank, a cross-border infrastructure investment—which might help to revive the economies in countries such as Greece and Spain? What view do the Government have of that?

Finally, although I must sit down in a moment, the noble Lord, Lord Hamilton, made a very thoughtful speech on the role of the UK. I have disagreed with him on the EU Bill but his speech today was extremely thoughtful, as was that of the noble Baroness, Lady Hooper, about the impact on the UK. The Government have looked rather Janus-faced to me on these issues. They say at the start of their letter that economic shocks do not respect geographic borders and that it is very much in our economic and political interests to engage, but then they express reservations about engaging. What were the reasons for the Government deciding, for instance, not to join the euro-plus pact, where they might have been able to exert a positive influence on eurozone policies? What would be their attitude to future treaty changes that might lead to further steps towards fiscal union?

[Lord Campbell of Alloway]

My Lords, may I ask a very short question? Being very much impressed by the speech that has been made, what is the position of the Opposition? I am not quite sure what the policy of the Government is, but with vast extraterritorial commitments now, should there be a moratorium until we can retrieve our debt without borrowing more money to pay the interest? I do not say that they should be excluded for ever. I am not expert on these things but I would like to know what the noble Lord has to say.

[Lord Liddle]

Given that that is not a short question, while I have the greatest respect for the noble Lord, Lord Campbell of Alloway, I cannot conceivably deal with a question of such complexity without breaking the rules of the House.

EU: Budget

Lord Campbell of Alloway Excerpts

Monday 16th May 2011 Lords Chamber

[Lord Newby]

My Lords—

[Lord Campbell of Alloway]

My Lords—

[Lord Newby]

My Lords, does the Minister agree that in promoting growth across the EU, even more important than the EU budget is the completion of the single market? What are the Government doing to promote the completion of the single market, particularly in services?

EU: Budget

Lord Campbell of Alloway Excerpts

Thursday 28th April 2011 Lords Chamber

Asked By

[Lord Campbell of Alloway]

To ask Her Majesty’s Government what proportion of the United Kingdom contribution to the European Union Budget has been signed off by the Court of Auditors over the last 16 years.

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

My Lords, the UK contributes to the EU budget as a whole, not to individual spending programmes. Therefore, data on UK contributions to the EU budget not signed off by the Court of Auditors are unavailable. However, the recurrent failure to achieve a positive audit opinion from the court on the EU’s accounts is unacceptable. The Government set out recommendations to improve EU financial management and transparency at ECOFIN in February this year.

[Lord Campbell of Alloway]

I thank the noble Lord for his explanatory exposition of this aspect of the unacceptable, on which we have not spoken previously. I merely seek to establish a transparent, independent regime and to deal with the problem of inclusion in the budget of expenditure which has been signed off in the accounts by the Court of Auditors. Perhaps I may ask a short question. Is it not a relevant consideration in the ongoing negotiations to seek to establish an acceptable regime?

[Lord Sassoon]

I am grateful to my noble friend for once again drawing attention to the unacceptable situation that we face with regard to the European audit. I think that he puts his finger on one of the key issues, which is that we need to work towards a much simpler and more transparent regime. If the rules around the various European expenditure programmes were made less complex, it would be much easier for member states to comply with those rules. It is very much on that practical aspect of the regime that my honourable friend the Economic Secretary is working with the Audit Commissioner, others in Brussels and member states to make sure that we move to a simpler, clearer and more auditable regime.

EU: Financial Management

Lord Campbell of Alloway Excerpts

Wednesday 6th April 2011 Lords Chamber

Asked By

[Lord Campbell of Alloway]

To ask Her Majesty’s Government what representations they will make to the Council of Ministers to give consideration to the joint declaration by the Netherlands, Sweden and the United Kingdom regarding the financial management of European Union funds, made at the Economic and Financial Council on 15 February, before the European Union Budget for 2010 is discharged.

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

My Lords, the failure to achieve a positive opinion from the European Court of Auditors on the EU accounts is unacceptable. The Government are working to resolve this and have been clear that they want to see simpler rules surrounding EU programmes to facilitate proper scrutiny of EU spending. The Government continue to build on the February joint declaration. This includes negotiations on the financial regulation and the principles governing EU budget implementation.

[Lord Campbell of Alloway]

I thank the noble Lord for that constructive response not only about representations that will be made to the Council of Ministers for approval of the joint declaration, but also about the initiative to set up negotiations, without which no new effective regime could be established. I add shortly that, having read the reports of yesterday—if you can understand them at all—it is apparent that a referendum is in no way related to this matter because, whether you call it a power, a competence or whatever, nothing is being taken away from us; it is in fact just given to us and to others.

I have two short questions. What practical steps will be taken to address the management of EU funds which relate to the EU budget and to make them transparent? Could the Government—of course we cannot deal with this issue at Question Time—arrange for a debate in which these matters may be considered by your Lordships?

[Lord Sassoon]

My Lords, I am very grateful to my noble friend for recognising the practical steps that the Government are taking to get round this issue. I very much respect his many years of involvement in European issues. We are working very practically. Only next week, my honourable friend the Economic Secretary is meeting the three Commissioners who have responsibilities for the budget and the audit of the budget. She plans to meet the Court of Auditors and she has met the one and only state Minister who is solely responsible for the management of EU funds. We are very much on the case in making sure that EU funds are handled in a much simpler and transparent way in the future so that control can be improved.

On the question about a debate, I shall take that suggestion on board. In another place, I believe they have a debate in committee which normally takes place in January or February before ECOFIN considers the annual discharge. We shall consider that suggestion.

EU: Budget

Lord Campbell of Alloway Excerpts

Monday 10th January 2011 Lords Chamber

Asked By

[Lord Campbell of Alloway]

To ask Her Majesty’s Government what steps they will take to ensure that the expenditure on accounts for the budget signed off by the European Court of Auditors shall be excluded from the contribution imposed on member states.

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

My Lords, the UK cannot withhold its contributions to the annual European Union budget as it is required to make those contributions under obligations imposed by the treaties. The European Communities Act 1972, particularly Section 2, gives effect within the UK to Community law.

[Lord Campbell of Alloway]

I ask the noble Lord in response: since the findings of the Council are subservient to the approval of the Parliament, will the Government now seek change to the Lisbon treaty to enable the European Court of Auditors to oppose expenditure on a reasoned assumption that has the support of the Council of Europe, and so then to sign off the accounts? In other words, will the Government take some step, if not that step?

[Lord Sassoon]

My Lords, I am grateful to my noble friend for drawing attention to a clearly unsatisfactory situation. Year after year, the European accounts cannot get a clean audit opinion. However, it is the Government’s view that the way forward is not to press for treaty changes but to try to make sure that the whole system of accounting is made simpler and clarified. It should concentrate on what is important, and the capabilities of both the European Commission and other agencies—whether at the European level or, particularly, within member states—to manage the money should be enhanced so that we get out of an appalling situation that we do not want to see continue. However, treaty change is not the appropriate vehicle.

EU: Budgets

Lord Campbell of Alloway Excerpts

Thursday 2nd December 2010 Lords Chamber

Asked By

[Lord Campbell of Alloway]

To ask Her Majesty’s Government what assessment they have made of the grounds on which the European Union Court of Auditors has withheld approval of European Union budgets.

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

My Lords, the Government are concerned that the European Court of Auditors has been unable to provide a positive statement of assurance for the 16th year in succession. The Government support the ECA’s work but are concerned at the slow pace of reforms to EU financial management. The European Commission and member states are responsible for disbursing EU funds, and share responsibility for sound financial management. The Government take financial management seriously and will shortly publish a consolidated statement on the use of EU funds in the UK.

[Lord Campbell of Alloway]

I thank my noble friend for his surprisingly encouraging exposition. There is no need on that basis to delve into the grounds of the assessment, because that has been covered. May I by leave ask a question that perhaps the Government may accept? At their behest, by dint of diplomacy, will they seek an arrangement, be it by treaty or by some other means, to ensure that the ECA’s decisions are always reflected, and that they are the only decisions reflected, in the contributions of all member states to the budget?

[Lord Sassoon]

My Lords, I reiterate that we take the situation enormously seriously. It is deeply unsatisfactory, but progress has been made. In their latest report, the auditors have been able to certify a greater percentage of EU expenditure as satisfactory than before. There are significant complications with anything that goes to changes in the treaty arrangements in this area, but the UK is leading by example by, for instance, producing this consolidated statement, which a number of other member states are now producing and which is welcomed by the Commission. We are adopting every route to try to get improvement. We are by no means complacent, nor should the European authorities be.