Covid-19: Economy

Lord Darling of Roulanish Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Darling of Roulanish (Lab)]

My Lords, I start by referring the House to my interests as recorded in the register.

It is a pleasure to speak in this debate secured by the noble Lord, Lord Eatwell. I agree with everything that he said, particularly on the need to build resilience in this country and to point out that, at a time like this, the Government can do things that individuals and companies cannot do themselves—in particular, supporting the economy to get people back to work. That is what we did 10 years ago; that is why the economy started growing again in 2010.

I understand people’s concern about debt, but we have to look at it in the same way as we did in the aftermath of the Second World War. We will have to spend a lot of money to get our economy going and to preserve the fabric of our economy. We are now, in many ways, reaching the most difficult part of the economic policies that we need to look at. As the furlough schemes run out, I fear that unemployment will start to rise. The Government must do everything they can to stimulate the economy with things like cutting VAT, perhaps a scrappage scheme for cars and so on. All these measures and more will need to be addressed, as well as continuing support for companies, through grants and possibly taking equity or loans.

Critical to all this is to get the testing regime working. At the moment, the promises are not being met by reality. In far too many cases, delivery matters and the Government need to pay attention to that.

We must address the fact that people will lose their jobs as a result of this. We cannot allow ourselves to go back to the 1980s, when millions of people went on the dole queues and, frankly, many of them never came off. That scarred the whole country. That is why the Government now need to look at the measures they will take to retrain people, get people back into work and stimulate the economy, perhaps introducing measures that will help us to adjust to a lower-carbon economy.

The Government cannot just leave these things to chance; they need to act. It is very important that we concentrate on the delivery of these policies, because that will make the difference to whether we succeed in coming out of this in better shape than will otherwise be the case.

Inflation

Lord Darling of Roulanish Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Darling of Roulanish (Lab)]

My Lords, we live in strange political times. I find myself in complete agreement with everything that the noble Lord, Lord Forsyth, said. I think that I speak for the rest of the Economic Affairs Committee in acknowledging his skill as a conciliator—the House will be very familiar with that—which has enabled us to produce not just this report but a number of others, which I hope will be of value in decision-making as and when the next Government are formed. Before I proceed, I draw the House’s attention to my entry in the Register of Lords’ Interests: since the report was produced, I have become a trustee of the International Valuation Standards Council, which some might consider relevant.

The debate is essentially about the role of the UK Statistics Authority and, bluntly, what it is for. It is also about the integrity of statistics and the trust in institutions. For a long time—indeed, a number of decades—there has been a move away from Governments deciding things that can be controversial towards putting them in the hands of independent agencies or organisations, such as the UK Statistics Authority. This will work only if they show that they are truly independent and are acting in the public’s best interests so that we can maintain confidence.

Inflation matters, as the noble Lord, Lord Forsyth, pointed out. The rate of RPI and how taxes are indexed affects how much millions of people pay, whether on their fares, whether they are students, and so on. It is not only a technical issue; it matters a great deal to the well-being of millions of people in this country. That is why it is so important that we have confidence in the Statistics Authority. As the noble Lord said, nowhere in the 2007 Act—which set up the United Kingdom Statistics Authority, made it independent and gave it responsibility for the maintenance, integrity and accuracy of the statistics—does it say that it should consider other matters, as he said that its chairman told the committee. We find that difficult to understand because, for this authority to work, it has to be independent.

The 2007 Act not only requires high standards of stewardship but specifically gives the authority responsibility to compile and maintain the retail prices index, which the authority and everyone else agrees is defective at the moment. It is flawed—and has been so for almost 10 years—yet apparently nothing is going to be done about it. It is worth labouring the point that, at a time when it has become fashionable to denigrate experts and trash institutions, to find an institution such as this inflicting harm on itself is deeply depressing. The only way this authority will command respect is if it recognises that a mistake has been made or that there is a flaw in the statistics, and does something to put it right.

The authority knows that RPI is flawed. It refers to the RPI as a legacy matter—some legacy; it is being used, day in, day out, to calculate people’s entitlement—and that it is not a good measure of inflation. There have been arguments about this for the past 100 years or so but in this case since 2010, because of the methodological point raised by the noble Lord, we know that the inflation measure is higher than it would otherwise be. As I have said, this is not just an academic issue because it matters to people.

The authority has also said it wishes to discourage the use of the RPI. If that is its ambition in life, I am afraid that has failed as well. Members of the public think the RPI statistic is the main measure of inflation. It is better known than the CPI, let alone the CPIH, which is hardly known at all outside a narrow field of public opinion.

It is vital for the Statistics Authority to reconsider its position. When the chairman said to us that there is no point in going to the Chancellor because he will say no, that is to completely misunderstand the authority’s position. It is there to act in the public interest and to say to those who are elected—the Chancellor of the day—that they need to do something about it. They should not just assume—I suspect it is an informed assumption, in the usual way—that such a recommendation would not be welcome. None the less, it needs to be dealt with. As a former Chancellor, I am aware that if I were the Chancellor of the Exchequer I would probably find it unwelcome. However, having received other things that I felt unwelcome in my time in office, I do not see why I should treat this one any differently. You have to get on with it. Frankly, it does not do the Government’s reputation for policy-making and making decisions any good to carry on with a procedure that we all know is fundamentally flawed.

The noble Lord, Lord Forsyth, eloquently made the point that many gain from this—if they hold government gilts they are gaining handsomely—but many other people are losing. Sooner or later they will wake up to the fact that they are losing and will continue to lose unless something is done about it. I appreciate, too, that there will be a cost to the Exchequer if this is to be done too quickly—although I have read the utterances of the two candidates now vying to be the next Prime Minister, and fiscal rectitude does not appear to be the order of the day. They may have a more open mind than I might have had as to how much money they are willing to spend, as there does not seem to be any constraint on that at the moment.

The committee has raised an issue of great importance, in outlining not only the practical results of a flawed RPI but the more fundamental question that, if Parliament decides to put these matters into the hands of an independent authority, unless that authority exercises its judgment, does what is right and what it is required to do in the Act of Parliament, one is bound to ask what on earth is it for.

European Council

Lord Darling of Roulanish Excerpts

Monday 17th December 2012 Commons Chamber

[The Prime Minister]

I should again make the point I made to my hon. Friend on Wednesday. Change in Europe cannot go ahead unless it has the support of national Parliaments. Clearly, the European Parliament has a role set out in the treaties—whatever one thinks about that, one cannot ignore it. When it comes to changes in the eurozone, Angela Merkel going back to her Parliament matters; when it comes to the European budget, my coming back to this Parliament matters. That was my point. In Europe, the Parliaments that matter are the national ones—this is the Parliament that matters to me.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

I agree with what the Prime Minister said about the banking union. Like so many other things coming out of the eurozone, it looks a bit half-baked at the moment. Did he get any sense of how much money the banking union will have, and where it will get it from? Did he also detect any urgency being applied to sorting out the Spanish banking problem? It looks as though all the problems that have bedevilled us in 2012 are still going to be there in 2013.

[The Prime Minister]

The right hon. Gentleman makes an extremely good point. This is not a fully fledged banking union; it is simply the first step in terms of a single supervisor. A banking union as we in the United Kingdom would know it would cover the resolution of problems in banks and deposit guarantees. If a bank in England, Scotland, Wales or Northern Ireland has problems, it does not make any difference because we have a proper banking union. They are a long way from that in the European Union. The point I was making is that these discussions are going to go on for quite some time, because they involve big issues of national sovereignty, so it will take time before they get a banking union.

EU Council

Lord Darling of Roulanish Excerpts

Monday 2nd July 2012 Commons Chamber

[The Prime Minister]

My right hon. and learned Friend has set out the situation very well. It is worth saying, as I said in my statement, that everyone has to recognise that the short-term firefighting is the EU’s urgent and immediate priority, but my point is that we are safeguarded through the referendum lock in respect of further powers being transferred. However, we must think about how Europe is developing, make sure we make the most of the opportunities, and then think about how to seek the consent of the British people.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Does the Prime Minister agree that the customary celebrations after last week’s euro summit were, yet again, premature? There is not nearly enough money in the European stability mechanism, as its £500 billion is not enough to deal with Spain, let alone other countries. Equally, the German Chancellor’s opposition to eurobonds means there must be a question mark hanging over the eurozone. On banking, if we are to have a truth and reconciliation committee—which is fine—we must just remember that some of the most strident calls for deregulation over the last 30 years came from the Government side of the House.

[The Prime Minister]

I have great respect for the right hon. Gentleman, and what he says about the eurozone agreements at the weekend is absolutely worth listening to and having regard to. The point I would make is that for the first time in a long time there was a series of steps that countries such as Britain had been calling for about using the facilities to buy bonds and about direct recapitalisation of banks. They are hedged around with all sorts of ifs and buts, but that was progress. On the truth and reconciliation commission issue, I note that the right hon. Gentleman said that a full independent public inquiry is not the right way ahead. I think the way ahead we have suggested will be swift enough, but also strong enough to get to the answers—and to get to them quickly.

G8 and NATO Summits

Lord Darling of Roulanish Excerpts

Wednesday 23rd May 2012 Commons Chamber

[The Prime Minister]

My right hon. Friend makes an incredibly important point, which is that a single currency requires an active, interventionist central bank behind it. That is something that we have been saying for a very long time, and it is one of the reasons I have always been sceptical about the single currency. There is a growing realisation that, alongside plans to deal with deficits to provide fiscal credibility, there is a need for a more active monetary policy. That is what we have in the UK, with our single currency across our nations, and if Europe is to have a working single currency, it needs that sort of monetary policy too.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

While I welcome the change of rhetoric over the weekend, particularly from the Prime Minister, in recognising that austerity alone will not work—at least, from his point of view, in Europe; he might apply that here, too—will he tell us whether the German position has changed at all? It does not seem to have done so, but until it does, I shall find it hard to believe that the eurozone can come up with anything convincing or credible before the Greek elections on 17 June.

[The Prime Minister]

I have great respect for the right hon. Gentleman, and he raises absolutely the right point. I would say that the German approach is changing, to an extent, because the Germans know that alongside deficit reduction plans, in a single currency, there needs to be greater co-ordination of that single currency. Their concern is that they do not want to take their foot off the deficit reduction until they have more of a political system around the single currency. I understand their concern. This is one of the reasons that I never wanted to join a single currency; I have always believed that a single currency involved a sort of single economic government. The struggle is to try to convince countries in Europe that, alongside deficit reduction, they need a more active monetary policy, a European Central Bank that stands behind the currency, and the structural reforms, such as completing the single market, that we have always argued for.

G20

Lord Darling of Roulanish Excerpts

Monday 7th November 2011 Commons Chamber

[The Prime Minister]

My right hon. Friend speaks hugely powerfully about this issue. He is right that we must not allow the IMF to substitute for what the ECB and the other institutions of the European Union need to do; that is vital. It was one of the reasons why, in the end, all the countries of the world that were prepared to see an increase in IMF resources wanted to see more done by the eurozone and by the ECB. I have discussed this with Chancellor Merkel on many occasions. My right hon. Friend will know as well as I do of the huge hold-back that there is in Germany about what a central bank is, and what it should do. But I do believe that, as it says in the communiqué, you have got to have the institutions of the eurozone fully behind the currency in order to save it.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Understandably, the Prime Minister is putting a brave face on what happened last week. On any viewing, the G20 failed to reach its aims on growth, on the imbalances or on the eurozone crisis, which is as bad now as it was a few days ago. I see that there were reports that the G20 is planning to meet again, perhaps as early as in the remaining part of this year or at the beginning of next year. Is that right? If so, would the Prime Minister bear it in mind that in some ways, no summit is better than another failure? The G20 may not be perfect, but it cannot afford another meeting where it singularly fails to come up with the goods.

[The Prime Minister]

The right hon. Gentleman is entirely right: meetings that do not have a proper conclusion can often add to the problem rather than solve it. What is required is the political will for eurozone countries to act. I was very clear after the G20 meeting that it had not achieved a breakthrough on the euro—that is absolutely clear. Some progress has been made in terms of establishing the three elements that need to be put in place—the firewall, the recapitalisation and the Greek write-down—but much more has to be done. There may well be a meeting of G20 Finance Ministers, but I agree with the point that the right hon. Gentleman makes: it is progress and resolution of these issues that is required, rather than another meeting.

Oral Answers to Questions

Lord Darling of Roulanish Excerpts

Wednesday 2nd November 2011 Commons Chamber

[The Prime Minister]

I will certainly do that. My hon. Friend makes an important point. The cost of supporting public sector pensions has gone up by one third in the last decade, and we are now spending something like £32 billion. They are a major item of public spending, and obviously we are taking taxes off people, including those in the private sector who have less good pensions, to pay for that pension provision.

I believe that our scheme is fair. For example, a teacher retiring on a salary of £37,000 after a full career would retire on a pension of £25,000 in future. That is more than the £19,000 that they would currently get. This is a fair set of changes. The less well-off are really protected, and the low paid in the public sector will not have to pay the increased contributions. Frankly, I think the whole House of Commons should get behind them instead of playing with strike action like the Labour party.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

When the Prime Minister goes to the G20 meeting over the next couple of days, will he try to persuade his colleagues of the urgency of coming up with some detail on the eurozone settlement reached last week? It is not at all clear how on earth Greece will get out of its difficulties, even if the referendum passes. European banks will need shoring up well before next summer, and as for the new rescue fund, which may be needed sooner than we think, it does not actually exist. Will he accept that the G20 now needs to show the same urgency and sense of purpose that it showed two years ago when it met in London? Otherwise, far from getting ahead of events, Governments will be condemned to being dragged along in their wake.

[The Prime Minister]

The right hon. Gentleman is absolutely right in what he says about the urgency of the G20 meeting, and the necessity of its agenda. I think some progress was made at the European Council meeting a week ago when, for the first time, it accepted a proper write-down of Greek debt, which must be part of the solution, and a proper recapitalisation of Europe’s banks done to a credible test, rather than the incredible test we have had in months gone by.

The final element that the right hon. Gentleman rightly refers to—and which needs to have more detail and substance added—is to make sure there is a proper firewall to stop contagion in the eurozone. The need has become even greater. Frankly, of course we cannot involve ourselves in Greek domestic politics, but it has become even more urgent to put meat on the bones of these plans to show that we are removing one of the key obstacles to global growth, which is the failure to agree a proper plan to deal with problems in the eurozone.

Afghanistan

Lord Darling of Roulanish Excerpts

Wednesday 6th July 2011 Commons Chamber

[The Prime Minister]

Yes, it will. Let us look at the numbers—we are talking about roughly 120 British personnel for the training academy, supplemented by other countries’ personnel. Indeed, the US has agreed to put, I think, $38 million into the training academy. Clearly we want to do more over and above that, and the National Security Council will discuss precisely how much we should commit and how much we will spend. Yes, of course we will be going over and above that as part of an important relationship to help Afghanistan build and maintain its capacity.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

May I join the Prime Minister in expressing my condolences to the family of Scott McLaren, who was killed in such tragic circumstances earlier this week? He came from Edinburgh. His loss of life is a reminder to us of the sacrifice being made in Afghanistan by so many young people from this country.

When the Prime Minister spoke of drawing down troop levels next year, I think I am right in saying that he meant reducing our troops to the numbers that we had at about the beginning of 2009. However, I was unclear about what will happen after 2014. Are we talking about maintaining such a significant presence after that time? I appreciate that the troops will be in a different role and doing different things, but the House will want to have some idea whether we are talking about maintaining such a significant presence, and also of where other countries stand on that.

[The Prime Minister]

The right hon. Gentleman asks a totally appropriate and legitimate question. What I have said is that the numbers are going down to 9,000 by the end of 2012. We must then work out the right number for 2013 and into 2014. I have said that after that, we will not be in Afghanistan in anything like the same number, nor in a combat role. I am not in a position now to give a figure for, as it were, the enduring commitment, through 2015 and beyond and the training role, which involves the officer training academy and other training work. We are not in a position yet to put a figure on that, but it will obviously be way down from the figures that we talk about today.

Libya/European Council

Lord Darling of Roulanish Excerpts

Monday 28th March 2011 Commons Chamber

[The Prime Minister]

I am not an expert in the politics of Baden Württemberg, but I suspect that this is partly about the euro and the effects of the euro. I think that there are also strong feelings about nuclear power in Germany. The point I would make is that whatever our views about the euro—I think that my hon. Friend and I agree that we should stay out of it—it is in Britain’s interests that the eurozone sorts itself out, because that is the destination for a lot of our exports. So we should support these countries in what they want to do to deal with their problems and challenges.

[Mr Alistair Darling (Edinburgh South West) (Lab)]

Does the Prime Minister accept that when he referred to the discussions that took place last May on the eurozone fund he gave a somewhat incomplete account of my conversation with the now Chancellor? We did indeed agree that we should do everything we could to keep Britain out of the main part of the rescue fund, but in relation to the smaller element to which the Prime Minister refers, what we discussed was not voting against, but abstention, recognising that Britain could have been outvoted—that is exactly the same thing that the Chancellor of the Exchequer referred to when dealing with Ireland. So when the Prime Minister next refers to this issue, perhaps he would give the whole account, not a partial account, of what happened.

[The Prime Minister]

Fortunately, I have had a full discussion with the Chancellor about that issue and he was absolutely clear that it was something to which Britain should not agree; nor should we. The problem is that we are stuck with this mechanism, which I have managed to get rid of once the new mechanism is introduced. That is the sort of action, frankly, that we have needed in Europe these past few years.