Finance (No. 2) Bill

Lord Davies of Oldham Excerpts

Thursday 26th March 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, we live in a strangely surreal world with regard to this Finance Bill. My noble friends and noble Lords on the government side will recall when they were in the other place long days and nights spent on Finance Bills, watching dawn break across the river as we struggled with the issues presented by their depth and significance. This Finance Bill went through the Commons in one day. The Budget was debated. There was a very good debate in the other place over several days. Of course, yesterday in this House we had four hours of excellent contributions to the general issue of the economy and what the Budget represented in relation to that economy. But I can scarcely for the life of me engender the same degree of intense scrutiny of this one little Bill. Even the Minister was able to dispatch it in 20 minutes or so.

In any case, this Finance Bill is a pretty mean-spirited effort. The Chancellor tried to boast and establish the fact that living standards were not lower than they had been in 2010. It is a strange thing to boast about—that there has been no growth in living standards since that time. In the area where he suggested that there had been some progress, others, such as the Resolution Foundation think tank, challenged his figures and indicated that far from there being income growth for people, incomes had fallen.

We know who has been hardest hit over these past five years—young people, in particular, and middle-aged people with low-paid jobs. There are plenty of those about. We know that there are 1.8 million zero-hours contract jobs at present. I do not know how the Government can be proud of a low-wage economy that has slumped to that level but that is what faces us. When the Minister blithely says that the Government are increasing the personal allowance, he ignores the fact that for 5 million people that is utterly and totally irrelevant as they do not earn enough to pay tax. The changes in the allowance are of absolutely no relevance to them at all. However, the more you earn, of course, the more relevant the changes become. It is typical of the Government to look after the better-off while doing very little to help the less well-off.

What does this mean-spirited little Bill mean? We had the Chancellor trying to talk about success in a land where food banks proliferate. In my old stomping ground of Oldham, rickets has emerged in recent months. Is that the society over which this Government wish to preside? Are the Government content that the pay of chief executives of FTSE companies and of some people in the public sector has increased to the extent that it has while those at the other end of the spectrum experience the difficulties that I have mentioned? We know of chief executives in local authorities who earn considerably more than the Prime Minister. We are also well aware that high salaries are paid to some officeholders whose posts were never distinguished by high earnings in the past. For example, a university vice-chancellor can earn £640,000 a year. I have great respect for British universities. They have done tremendously good work. However, one has to ask questions about the relationship between vice-chancellors and the rest of the scholastic community when their incomes almost equal those of FTSE chief executives. One also has to ask questions about the differential between vice-chancellors’ pay and the average pay of university staff. We hoped that the Government would address some of these issues. When they did address them, on the whole they rewarded the very rich with further tax cuts.

I am grateful for the fact that three of my noble friends have spoken in this debate. I note that no one from the government Back-Benches thinks that it is worth speaking in support of this Bill, although their presence may be an enthusiastic endorsement of what the Government are doing. However, it is a pretty limited endorsement. At least, three of my noble friends have sought to address the Bill. In all honesty, their talents would have been better deployed yesterday because my noble friend Lord Haskel, who spoke so eloquently about the fundamental issue of productivity, a phrase which I do not think passed the Chancellor’s lips at all—

[Lord Forsyth of Drumlean (Con)]

I am most grateful to the noble Lord. If this is such a bad Bill, which parts of it would he reverse if his party were to win the next election?

[Lord Davies of Oldham]

Not a great deal. I am not arguing that it is such a bad Bill but that it is such an irrelevant Bill. It contains absolutely nothing of any significance. As I said, my noble friend Lord Haskel alighted on productivity, but that was not mentioned at all in the Chancellor’s speech. However, as my noble friend clearly identified, we have to see improvement in that area if Britain is to earn its way in the world. We cannot be ignorant of our current balance of trade problems.

I listened carefully to what my noble friend Lord Desai argued. He put his case with considerable force and I hope it will get a sympathetic response from those who will lead the next Labour Government after the general election and that they will acknowledge some of the cogent points he made.

My noble friend Lord Soley is absolutely right to say that we need to concentrate on growth. However, as we established yesterday, the Government spent the first three years in office dissipating any potential for growth, and we even dropped back from the growth levels obtained by the Labour Government in their last year in office. There is, of course, growth this year, just before the general election. It is just like the Government’s public expenditure plans: there will be three years of vicious cuts—greater cuts in three years than the country has suffered in five—but there will be a certain easing back by 2018-19 in preparation for the next general election.

The Chancellor has a reputation for being political. He has certainly earned it in this tawdry little Bill.

--- Later in debate ---

[Lord Newby]

As my noble friend said, a nice try. The big theme of several speakers related to productivity, and I will deal with that as best I can. I should like again to correct the noble Lord, Lord Haskel, about GDP per capita. This year, 2015, it will in fact be 5% higher than it was in 2010, so it is simply not the case that while GDP overall has risen, GDP per capita has fallen.

There is, I think, widespread acceptance that we need to increase productivity. As the noble Lord, Lord Haskel, is aware, there has been a productivity gap between this country and some of our competitors in Europe and the States for a long time. It fell and has risen slightly again. There is an interesting argument to be had about whether, particularly in times of austerity, it is better to have rapid employment growth, even if productivity does not increase as quickly, than to have higher unemployment and higher productivity. Personally, I think that over the last five years the fact that there has been rapid employment growth has been of crucial importance. We are now beginning to see some increase in productivity, and I obviously share his view that we wish this to accelerate.

I should like, though, to tackle head-on the assertion of the noble Lord, Lord Haskel, that the Government have no view or strategy on improving productivity. How do we do it? One of the key points is that we have to improve the qualification and skill levels of the workforce. Everybody agrees on that. We accept that there are far too many people who have far too few skills. That is why, for example, we have accelerated the academies programme to improve teaching in schools.

[Lord Davies of Oldham]

Does the noble Lord recall the figures of the projected cuts in the further education budget for the trainers of a great number of these people without skills?

[Lord Newby]

Given the policy of the noble Lord’s party on further education, and given that if you talk to anybody in a university about their absolute fears about what will happen if a Labour Government comes in, with their policies to cut grants, and their views on what that does to university funding, I would have thought that the best thing for the Labour Party to do for the future of universities is to pursue a policy of as much silence as it can manage. In this Parliament we have seen record numbers of young people going to university, including record numbers of girls and of young people from poorer backgrounds. That is exactly the sort of change and development that I thought the Labour Party supported. We have recognised that there is a need to improve skills below university level. As I was saying, we have supported the creation of university technology colleges and overseen the increase in the number of apprentices to 2 million, which is vastly more than obtained during the previous Government.

The noble Lord, Lord Soley, quite rightly talked about the absolute importance of science and technology and the transfer of basic research into business success. We have maintained resource funding and increased capital for science in real terms during the lifetime of this Parliament. Over the period ahead, we are planning some £5.9 billion of investment in the science infrastructure. On how we get that science applied, we have consistently put money into the catapults, the purpose of which is to act as a bridge between universities and firms. These have been extremely successful: the high-end engineering ones have been very successful. I saw the National Composites Centre in Bristol, which is doing tremendous work. It is possible to do that work only because it is a partnership between government, the universities and business. This concept began under the last Government, but we have strongly supported it. We need to do more, first, because it is successful and, secondly, because all our competitors are doing something like it.

Furthermore, in science we have initiated a grand challenge fund, which will deliver some £400 million of funding on a competitive basis for new, world-leading scientific infrastructure. Within the overall area of science and technology, we have put a £100 million investment, for example, into the research and development of intelligent mobility, which is one of the leading potential growth areas on which this country wishes to be, and remain, in the lead.

The noble Lord, Lord Desai, reminded us that the Labour Party legislated to halve the deficit over a four-year period, which is almost precisely what has happened under this Government. On his radical plans for changing the basis of corporate taxes and taxation more generally, this Government increased indirect taxation on consumption by increasing VAT and they have reduced taxation on income by putting up the personal allowance. Clearly that process, at least as far as indirect taxation is concerned, will not be pursued by any party in the next Government, as we heard yesterday.

On the noble Lord’s more radical ideas on taxing consumption, I am not a tax radical, I am afraid, partly because I started my working life as a tax man. I think that grand taxation schemes often have a whole raft of unanticipated consequences. Of course, those who suffer from any tax change make about 100 times as much noise as those who benefit, so politically I wish the noble Lord luck with the sort of grand scheme that he has in mind, but I hope that I am never called upon to try to do something equally ambitious.

The noble Lord, Lord Soley, made a number of interesting and useful points. I am pleased that he welcomed the changes to gift aid, and I wish him well in finishing the funding for the Mary Seacole statue. Having been in charge of fundraising for the Lloyd George statue in Parliament Square, I know just how stressful the process is, and I hope very much that it is quickly brought to a successful conclusion.

I will pass back to my colleagues in the Treasury and the Department for Transport the point that the noble Lord made about subsidising the establishment of charging points for electric vehicles. I have considerable sympathy with what he said about the power of attorney. I have power of attorney for my mother, and trying to work out how to exercise it is really quite difficult. Having gone through the whole process, I found that it was remarkably anachronistic. As we are moving into a period where power of attorney will be required by more and more families, there is an argument for looking a bit more fundamentally at the whole thing and not just at the way in which it can be used once it has been granted.

Budget Statement

Lord Davies of Oldham Excerpts

Wednesday 25th March 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I begin by craving the indulgence of the House. My noble friend Lord Stevenson caught my ear; I was present at the memorial service, and the defence of the arts by Lord Attenborough was a brilliant speech, reprinted in the programme. On either side of it were sayings from Mahatma Gandhi and a Shakespeare sonnet. As far as I was concerned, the service was a work of art in itself on paper before we actually heard the words being read. It was a great occasion.

I would also like to comment on my noble friend Lord Graham. He and I won adjoining seats in Enfield in 1974 and served together there for a number of years. I was delighted that he spoke this evening. I know that it was a limited area on which he spoke and probably pretty marginal to the Budget, but I think it gave cheer to us all that he puts a very high priority on service in this House in difficult times.

This has been an excellent Budget debate—but so was the debate in the House of Commons, which of course went over several days, in which many of the contributions were extremely thoughtful and well worked-through. That suggests that the debate we will have in the country in the general election may reach rather greater heights than some people suggest our political culture is now capable of. It did not start off too well because, as my noble friend Lord Lea indicated, there was pretty well nothing in the Chancellor’s speech about the macroeconomy. It is not long before the election so he indulged in a political speech, but he said little about the macroeconomy.

We had nothing on the question of our balance of payments problem. We had nothing on productivity. In fact, those issues seem to be suffused in the general aura of success, which the noble Lord, Lord Deighton, succeeded in imitating, to a degree, in his opening contribution this evening. What success? The success of the economic plan—but that economic plan became long term when it failed because the Chancellor could not deliver an end to the budget deficit in 2015. So, we have an extended plan, and that plan has some very dire implications indeed.

It is quite clear—it is all in the Red Book—that, as my noble friend Lord Stevenson and many other speakers in the debate said, we have not seen anything yet. The cuts of the past five years are going to be exceeded in three years, which will have a dramatic effect upon our economy and our society. And for why? As the noble Lord, Lord Skidelsky, identified, the Government’s original position way back in 2010 was a false analysis of the crisis leading to some pretty awful solutions to it. My noble friend Lord Layard identified very clearly the basis of the false analysis: that it was all down to excessive spending by the past Labour Government. No, it was not. This country was the second lowest in debt of the advanced countries when we left office and it was not the case that our expenditure had run out of control. What happened was that the global financial crisis, which started in the United States, as described most excellently by my noble friend Lord Rooker, reduced the receipts of government to a calamitous extent.

Of course it needed a significant response, but the idea that it called for a Government imbued with a philosophy of reducing the size of the state and doing everything that they can to get public expenditure down, irrespective of the impact upon our economy and society, it did not need and has not needed but has unfortunately received thus far under this Administration. The task of noble Lords on my side of the House is to make sure that this Government get no opportunity to extend their ill thought-through plans based upon a completely false premise.

We have to recognise that the expenditure cuts that are coming are coming against a base where cuts have been so sharp already that we are getting right to the bone. How can the police meet their obligations with the kinds of cuts that are likely to face them? What about defence? After all, that has, on the whole, been an issue that has concerned the Conservative Party in particular over the years. What does it think about this debate about the 2% figure if defence is to bear its share of the cuts? As defence is an unprotected sector, it is going to, if this Government were returned to power.

What about other areas of expenditure? Local government spends a very great deal of its expenditure on social support and welfare for children and the aged. It is going to get a massive cut in those resources if this Government continue in office.

The challenge is clear. We need to establish that this Government have presided over failure and the slowest recovery for over a century, with a desperate price being exacted from ordinary people.

What about the bedroom tax? The Government recoil at Labour’s proposal on the mansion tax directed towards the wealthy in our society and those who take advantage of the London housing position, to which the noble Baroness, Lady Valentine, referred. Housing in London is critical. We cannot keep the economy of London running if there is a flight of large numbers of people from the city because housing is too expensive because of foreign investment. That is so obvious, but what did the Government say about housing in the Chancellor’s Budget speech? Nothing of any significance.

We have a major task to tackle after what has been a desperate decline in growth, lost revenues, as the noble Lord, Lord Skidelsky, identified so very clearly, and then a little bit of a spurt before the general election, which is about to be put at enormous risk if the Government carry on with their existing policies. It is quite clear that we have a low-wage, low-productivity economy in which people get poor returns for their work and, as the right reverend Prelate the Bishop of Portsmouth, identified, many of them are still subject to a marginal rate of taxation—if you take taxation plus national insurance—which renders it difficult for them to sustain their living standards.

We know that the success of an economy cannot be based on low wages and low productivity, not least because the only way in which it has been continued thus far is because migration figures are so high and large numbers of our labour force are earning low wages and doing jobs in circumstances where wider society is more reluctant to respond.

We have 1.8 million zero-hours contracts in this country at present. The tax and national insurance combination has extended to considerable levels. We have a £300 billion deficit on our balance of payments. I will just mention the success story of 2011-12: we lost our triple A credit status. This Chancellor dares to come before the country to say, “Give me a renewal of the mandate because I am doing so well”. In fact, what is reflected is a colossal failure.

That means that we need to take different measures. Labour is quite clear what we are going to do. We intend to raise living standards by increasing the minimum wage, because we do not think that a low-wage economy makes any sense. We intend to safeguard the National Health Service, because we are terrified that such is the level of cuts promised in this Budget, they are bound to impact on the health service. They do in any case, because cuts in social welfare thrust people into the health service through the accident and emergency service. The leakage is already there, but it is due to get a great deal worse if this Government are able to follow through on their plans.

We intend to cut business rates for 1.5 million small business properties by not reducing corporation tax—with a slight increase to corporation tax. We also intend to deal with housing in the only way that one can, which is to build houses. It is not a problem of illegitimate demand—it is a problem of supply. I should have thought that the party of Macmillan in the 1950s would recognise that Governments can put their back into creating supply of houses if they are prepared to do it and it is defined as a priority. By heavens, it ought to be a priority in our country at present.

We are also going to balance the budget and the books in a fair way. That means we shall take a slightly different view on the bedroom tax, which we intend to scrap, and on tax cuts for the very wealthy in our society—the millionaires.

[Lord Bilimoria]

I thank the noble Lord for giving way. Did he just say that there would be a slight increase in corporation tax?

[Lord Davies of Oldham]

My Lords, the Government are promising a reduction. We are not going to carry out that reduction. That is putting it as fairly as I possibly can in comparison between the parties. We will keep it where it is. The Government intend, for reasons best known to themselves, to cut it.

That means that a change of government is absolutely essential. The greatest need is the one that was expressed by my noble friends Lord McFall and Lord Layard, by the right reverend Prelate the Bishop of Portsmouth and by my noble friend Lady Thornton, who talked about the position of women in society. It is that we need an improved public morality. We need to recognise that there is more to life than just the economy of getting and spending. Life for people, when it is enriched, is about relationships, fairness and degrees of co-operation to help those who have greater needs—to have some degree of common endeavour. Those are the values of my party, and we intend to carry them out in government.

Economy: Public Finances

Lord Davies of Oldham Excerpts

Tuesday 24th March 2015 Lords Chamber

[Lord Newby]

My Lords, I thank the noble Lord for his optimism about my future career prospects. I agree with what he says about savings in particular. That is why the Chancellor announced at the Budget a new personal savings allowance of up to £1,000 for basic rate taxpayers, more flexibility in the operation of ISAs and a new Help to Buy ISA for first-time homebuyers.

[Lord Davies of Oldham (Lab)]

My Lords, is the Minister aware that Labour has today made a clear pledge to the British people that in government we will not raise the rate of VAT nor extend its coverage? Will the Minister, close as he is to the Chancellor, give a similar pledge to my party; or will the coalition parties follow the pattern of 2010, with the Liberals warning of a VAT tax bombshell and the Tories staying silent—and, in the weeks after, in coalition, increasing VAT from 17.5% to 20%?

Corporation Tax (Northern Ireland) Bill

Lord Davies of Oldham Excerpts

Tuesday 17th March 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, this has been a fascinating debate, in which two obvious problems with the Bill have been identified that might not have been entirely anticipated. They broadened the debate to such an extent that I sympathise with the Minister responding to it. The breadth that has developed is obvious enough. First, questions have been directed to points of such substantial detail that we want answers this evening because this is a money Bill and we have no chance to press the issues any further. Therefore, I hope that the noble Lord—I know how scrupulous he is in observing time limits when he is winding up—will indulge himself sufficiently to respond to those very detailed points, one of which I will refer to in a moment, so that we can make as much progress as we can before we pass the Bill, defined as it is as a money Bill, by taking all its stages after Second Reading.

The second aspect that has broadened things was raised by the noble Lord, Lord Forsyth. He was not alone in this respect, although he probably presented the most challenging dimension on it. The noble Lord, Lord Shipley, accurately reflected this as well. They said that the Bill raises issues relating to devolution powers and the position of the United Kingdom.

I am absolutely delighted to welcome the contribution of the noble Lord, Lord Forsyth, on the prospects of a convention immediately after the election. He has only to vote Labour and he will help with that. Unfortunately, he is not allowed to but perhaps he can persuade the other members of his family to vote Labour to ensure that we have a convention after the election.

The noble Lord, Lord Shipley, also identified in his very useful contribution that there are real issues at stake here. I do not doubt that the noble Lord, Lord Newby, will be somewhat reluctant to indulge in that part of the debate to a very large extent. However, it is clear that this is a further step towards devolution, which is welcomed on all sides. We heard in all speeches—and know from the deliberations in Northern Ireland, particularly in the business community—that people are in favour of this measure. Of course, as the noble Lord, Lord Bew, indicated, that might be on the basis of a fairly limited perspective on what the implications are for devolution and the position of the United Kingdom as a whole—the interaction of the parts. We heard some very challenging contributions today. It is a great pity that we are able to raise them only in the context of a Second Reading debate that concludes very shortly.

Of course, we support the Bill and will give every assistance to its progressing satisfactorily. However, we have anxieties about it. Noble Lords raised the question of the trade-off between this and the block grant. Extending wider than that, there is the whole question of devolution arrangements as well. The Barnett formula came into the debate, too. We have anxieties on those issues and the Minister must recognise that when the Bill goes through, the hoped-for increase in revenue in due course will be balanced against the block grant. I hope he will appreciate that this has considerable ramifications for the Northern Ireland public.

My noble friend Lady Blood emphasised the fact that loss of resources for government might crucially affect the amount that the Government are able to invest in, for example, training and education. These are clearly issues of great importance to making a strategy for increasing the private sector’s capacity to compete successfully. Reference was made to the days of the Republic of Ireland tiger, but it was not just the business rate taxation that was crucial to Ireland. A great deal was made of that, of course. As the noble Lord, Lord Forsyth, reflected, certain companies hived themselves off to the Republic to take advantage of that, but other factors at play also made the Republic attractive at that time. Northern Ireland has a clearly important task to fulfil in matching up in certain respects.

That is why we are concerned about the effect of this. The Government have made it clear that there is a delaying timetable for the implementation of this measure. It is dependent on the Northern Ireland community, particularly the Assembly at Stormont, reaching an agreement that gives the Government confidence that there is fiscal security in the economy, and gives strength to that economy. Two years is a pretty short timetable to make that demand—it is a pretty substantial demand as well. The Minister must flesh out what his tests are for this demand being met before corporation tax reduction powers are vested in Northern Ireland.

None of us regards corporation tax as a panacea. It can play its part, and we are aware of the strength of opinion in the business community that it will help, but it is not a panacea for the economy; much more substantial improvements need to be made as far as the Northern Ireland economy is concerned. Therefore, the only thing I can say to the Government is that I understand their need for delay—they want to get the Bill through before this Parliament concludes and so they built in the delay before implementation—but delay is no friend in circumstances where things are not improving as rapidly as one would hope.

I hope the Minister will address these issues and at least have a shot at the broader constitutional problems.

[Lord Forsyth of Drumlean]

I wonder whether the noble Lord, Lord Davies, can help me by answering the question that I put to his noble friend Lord McAvoy. I am just a bit puzzled. Of course the business community welcomes the Bill, because profitable businesses will pay less tax at the expense of the resources that are available for public services. Why is the Labour Party supporting such a measure?

[Lord Davies of Oldham]

My Lords, we see that there is support in Northern Ireland for the Bill, which will give some chance of rebalancing the economy to a certain extent. We are in favour of that, but recognise that the development of the Northern Ireland economy, as with all the other parts of the United Kingdom, will depend on much more fundamental issues than the rate of corporation tax. That is why we regard this as a marginal Bill in these terms. However, it would be fruitless of us to object to it, although I accept his point about why we did not address ourselves to other issues, rather than the reduction of corporation tax. He will know, because he is so well informed on Labour Party policy, that we propose to increase the corporation tax rate for the rest of the United Kingdom, with the specific objective of reducing business rates for small and medium-sized businesses. We think that is a quicker and more effective way of giving stimulus to the business community. There we are: on two areas of policy, the noble Lord, Lord Forsyth, and I are in full agreement. I did not expect to say that this evening.

[Lord Forsyth of Drumlean]

If it is the policy of the noble Lord, Lord Davies, that it is better to reduce business rates and that that should be applied to the rest of the United Kingdom, why is it not his policy to do that in Northern Ireland? If he believes that that is the right approach, why is he proposing something that he rejects as being the right approach in the rest of the United Kingdom?

[Lord Davies of Oldham]

My Lords, has the noble Lord not noticed that I am speaking from the opposition Benches? We are not in a position where we can implement our policies at present. It is only a matter of a short delay, as the noble Lord, Lord Forsyth, will readily appreciate. But at this stage, the Government put Bills before us and this is the Bill we have. I have only two alternatives: to reject the Bill whatever its benefits, or to accept it but state that we can do better. That is exactly what I have argued.

[Lord Empey]

My Lords, I am sorry to have to interrupt this job interview for the best anti-capitalist speaker in the House, but will the noble Lord, Lord Davies, clarify one thing? I am assuming that the Opposition support the Stormont House agreement. That agreement has subsequently been ratted on by one of the parties to the it. It appears to some of us that the reason they are doing that is the hope that, after the election, were there to be a change of Government, the noble Lord’s party would be more readily prepared to put more money into the Stormont House process. Therefore, they are holding out in the hope that that might happen. Will the noble Lord clarify that that is not the Opposition’s position and that the Labour Party stands over the Stormont House agreement as it was dealt with at the end of December?

[Lord Davies of Oldham]

Is the noble Lord seriously asking me to clarify conjecture about why people have acted as they have done in Northern Ireland thus far? The Government have said that this will need to be resolved because the reason for delaying implementation of this measure is to give us time for that to be done. We will obviously take considerable advantage of such time when we come to power.

Income Tax: Top Rate

Lord Davies of Oldham Excerpts

Monday 16th March 2015 Lords Chamber

[Lord Newby]

No, my Lords, it does not. HRMC estimates that if you reduce the top tax rate from 45% to 40%, the likely cost to the Exchequer will be about £1 billion.

[Lord Davies of Oldham (Lab)]

My Lords, does the Minister not acknowledge that in fact the very wealthy have various stratagems for reducing the impact of taxation? That is why, whatever the Government do, it does not produce the resources that the nation needs. Why does the Conservative Party not drop the idea that supporting the wealthy will somehow lead to a trickle-down advantage for the rest of the community, when the disparity between the wealthy and the poorest in our society is growing wider, and why do they not address themselves to the real issue, which is that the vast majority of people in this country are poorer under this coalition?

[Lord Newby]

My Lords, I do not know which bits of that question to deal with first. However, given the time, I just point out to the noble Lord that the group of the population whose income, by percentage and absolute amount, has suffered most and which has lost the most is the top 20%. They have seen a 3% cut in their income, which is a greater cut than has been experienced by any other tranche. The noble Lord does not like it because it is an inconvenient truth, but it does not stop it being a truth.

Money Advice Service

Lord Davies of Oldham Excerpts

Thursday 12th March 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, the Minister replying to this debate and I share a common problem: the report has not been published. The difference between us is that it is his Government’s fault that we are debating a report that we anticipated would have been published long since. As my noble friend Lord Stevenson said in introducing the debate, the report looks as though it will join the long list of challenges that will await the May election and will be passed on to the next Administration—a role we will, of course, fulfil with enthusiasm.

The other difficulty in dealing with the report is that comments made on it vary considerably. It is clear that some consider that the Money Advice Service has an important role to play in the significant area of dealing with personal debt and that its performance passes muster. However, there are indications of failure elsewhere which have led to the calamitous situation of the collapse of morale in the organisation. There are even suggestions that the staff may be cut by as much as one half and the budget reduced by nearly 40%.

This is a grim situation to confront an organisation that clearly has a role to play. The Treasury Select Committee, which also was dealing with partial information before the report was published, said in a forthright manner that it did not consider the Money Advice Service fit for purpose. It is not surprising, therefore, that there is consternation all round on the role that the organisation should play in the future, if at all.

I am very grateful to my noble friend Lord Stevenson for having identified and highlighted this issue against a background where, as the right reverend Prelate, joined by the noble Baroness, Lady Coussins, emphasised, personal debt is a major issue for our society. We are approaching the record levels of personal debt that preceded the great crash. One would have thought that the Government might address themselves to a report that has significant things to say about an agency that is meant to help people in these circumstances, yet they have merely rendered its future uncertain.

Therefore, I hope that the Minister will today be able to give some reassurances. One matter on which we would certainly want some reassurance from the Administration is the clear criticism in the report of the service’s potential role in relation to pensions advice. That issue will imminently be upon us in substantial numbers. People who are at the age at which they can take decisions about cashing in elements of their pension for a cash pot will need dispassionate, objective advice. The MAS would almost certainly be a body to which some would look, yet there are references to its lack of capacity for handling advice in this area.

We need these issues cleared up. I agree with the noble Baroness, Lady Coussins, that this debate would have had a very long list of speakers today if we had had the report before us and were able to consider in full how we expect people to be advised and how institutions will respond in giving dispassionate, accurate advice to so many of our people in need. As the right reverend Prelate mentioned, the church, among other organisations, is acutely aware of the pressure of debt. That pressure is shown in the recourse that people have to food banks. The right reverend Prelate came very close to home when he mentioned Christ Church in Ware, as I live only four miles away from the church and know the excellent work that it does in this area.

However, we all recognise that such levels of support do not necessarily provide 100% coverage—far from it. All those organisations have limited resources, so we want the fullest contribution from those who have the requisite level of expertise and we want the Government to insist on priority for this area. As my noble friend Lord Stevenson made abundantly clear—I do not need to repeat many of the points he made—the Government’s delay and hesitation over the publication of the report, far from tackling the issue, merely creates uncertainty where we need certainty for a rather desperate public.

Entrepreneurs’ Relief

Lord Davies of Oldham Excerpts

Thursday 26th February 2015 Lords Chamber

[Lord Newby]

My Lords, it is far beyond my powers to cool the fevered brows opposite, but I repeat: we have been extremely successful in terms of private sector employment. Over 2 million additional private sector jobs have been created in this Parliament, which means that we now have more people employed in the UK than ever before, and the joint-highest rate of employment.

[Lord Davies of Oldham (Lab)]

My Lords, does the long-term economic plan, developed against a background where the Government have postponed the ability to eliminate the deficit, have as a constituent part no decision on the fundamental issue of aviation in terms of Heathrow or the third runway in the south-east? Does it also contain a commitment to continually run a low-wage economy and zero-hour contracts for an awful lot of the people who get new jobs?

[Lord Newby]

My Lords, growth in the UK this year is the highest in the G7. It will be, at worst, the second highest in the next year. Frankly, this is an economic position of which this Government are extremely proud.

Small Businesses: Finance

Lord Davies of Oldham Excerpts

Wednesday 25th February 2015 Lords Chamber

[Lord Newby]

My Lords, the Government have been supportive of the peer-to-peer and crowdfunding lending sectors and have removed barriers to ordinary people making investments while limiting their exposure to risk. So far this support has included allowing peer-to-peer lending to be included in ISAs and to be eligible for bad debt relief, channelling investment from the British Business Bank towards peer-to-peer, and helping investment crowdfunding take off through the enterprise investment scheme.

[Lord Davies of Oldham (Lab)]

The Minister’s initial Answer suggests that he is utterly oblivious to the fact that we have a productivity crisis in this country, a massive balance of payments issue, and that small businesses are constantly emphasising that their access to finance is very limited and difficult for them. Does the Minister not agree that Labour’s commitment to a British investment bank is the next Government’s solution to this Government’s failure?

[Lord Newby]

The noble Lord will be amazed to discover that I do not agree with him at all. He has failed to point out that since this Government came into office private sector employment is up by well over 2 million and the majority of that is likely to be in small and medium-sized businesses.

Tax Avoidance and HSBC

Lord Davies of Oldham Excerpts

Monday 23rd February 2015 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, a highly political Statement from the other place a month or so before the general election I suppose is to be anticipated. But the Chancellor did not answer the questions, and it is for this Minister to answer the questions before this House. Once the information was available of the 1,100 names involved in tax evasion or avoidance, the Chancellor confirmed that the “selective prosecution policy” was a decision of Ministers. There has been one prosecution—I repeat, one prosecution—since then, despite the fact that the Government also gave the assurance to the Public Accounts Committee that at least another dozen would follow. None has. The country will be staggered to discover that the Government are moving at this pace to deal with these issues, particularly when it is known that the French Government have prosecuted a multiple of cases with success. What is our problem?

Secondly, why was the noble Lord, Lord Green, appointed a Member of this House and a member of the Government when the Government already knew the position of these files? It is not, as the Government said, because no Chancellor seeks to get indications of the personal taxation of a Member of this House—we all understand how improper that would be. But it is the role of the noble Lord, Lord Green, as chairman of HSBC during this period that led to the bank being subject to £1.9 billion in fines; that is why we need an explanation of why the Government carried on with this appointment.

Finally, on the question of the deal with the Swiss authorities in 2012 which prevents the UK actively obtaining similar information in the future, why was this declaration signed by the Government? What advice was given about how it would impede the ability of HMRC and the Government to act in the future? The Minister thus far has given no adequate explanation of that.

Banking System

Lord Davies of Oldham Excerpts

Monday 9th February 2015 Lords Chamber

[Lord Newby]

No, I do not. As for the first part of the noble Lord’s question, the agreement with Switzerland, which he seems to deride, has generated £1.2 billion for the Exchequer. That is £1.2 billion more than was being generated under the previous Administration.

[Lord Davies of Oldham (Lab)]

My Lords, this information was available to the Government when they took office. How is it, then, that the former chairman and chief executive of HSBC during this period was made a government Minister?

[Lord Newby]

My Lords, the process by which people become Members of your Lordships’ House and are made Ministers involves them being vetted by the House of Lords Appointments Commission and the appropriate bodies within government. As far as I am aware, there is no evidence that the noble Lord, Lord Green, was involved in any of this sort of activity.