National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Eatwell Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Baroness Lawlor (Con)]

My Lords, I support my noble friend Lady Neville-Rolfe and will say a few words about my Amendment 42 on reviewing the impact of the Act one year on in respect of the different categories of employers in the business sector—small, medium and large.

This is needed given the worsening outlook for the UK economy and employment, which has been going from bad to worse month by month since, and in response to, the Budget. Unemployment figures are up. In the quarter ending December 2024, 1.56 million people of working age were unemployed and the UK unemployment rate was 4.4%. Unemployment levels have increased by 210,000 over the last year. Economic inactivity is also up. At the end of the last quarter of 2024, 9.29 million people aged 16 to 64 were economically inactive; the inactivity rate was 21.5%.

Jobs are being cut, as this month’s figures from S&P Global indicate. Data reveals that the decline in staffing numbers in February was the sharpest since November 2020. The chief business economist at S&P Global Market Intelligence explained that the data revealed that

“business activity remained largely stalled for a fourth successive month, with job losses mounting amid falling sales and rising costs … One in three companies reporting lower staffing levels directly linked the reduction to policies announced in last October’s Budget”.

The number of vacancies fell in the last quarter too, although they remain slightly above pandemic levels.

We want the Government to take responsibility for their actions and face up to the costs they have imposed on growth, productivity and employment and the impact on businesses, be they small, medium or large. I echo the comments of my noble friends throughout Committee that what we had on 14 November and the figures presented at the time of the Budget were inadequate in detailing the sort of impact this country is already facing. Employees’ lives and livelihoods are at stake.

[Lord Eatwell (Lab)]

My Lords, Amendment 38, as written, is econometrically impossible. This cannot be done unless we have further specification of what is to be done. For example, are we to look at the effect of these changes assuming that the Budget had not changed or to look at their effect taking into account the consequential effects of the Budget which were also dependent on the national insurance changes?

Then, there were other tax changes that took place at the time which were also dependent on the national insurance changes. Are they to be taken into account or not? At the moment, the amendment does not tell us. Any serious economist faced with this would say, “Sorry, I can’t do this unless you tell me what I have to take as the underlying conditions”.

Amendment 38 is seriously defective and cannot really be taken seriously as it stands because it simply does not specify the underlying circumstances within which the particular consequences of the changes in this Bill are to be assessed. Without that framework, it is simply not possible to do in any way—or, if you like, anybody could produce any result they like by assuming different background circumstances. So, I am afraid that Amendment 38 is underspecified and, as a piece of serious econometrics, impossible, because the framework is not specified for the amount of information required to perform the studies.

On Amendment 42, I was very struck by the request of the noble Baroness, Lady Lawlor, that the Government face up to their responsibilities. It would be really helpful if the Conservative Party faced up to the damage it has done to the British economy over the past 14 years and to the disaster it has inflicted on the British people, which the Labour Party is now desperately trying to repair in very difficult circumstances indeed.

Once again, the issue of the impact of employment and productivity depends on a whole series of other factors. Are they to be taken into account or not? How is the particular effect of the national insurance change to be examined? If they were independent, then you could do that by saying that the national insurance change has no relationship to other changes taking place in the economy and therefore we can isolate it. But that is not true; the national insurance change has direct effects on the other components of the Budget and has effects which are interdependent. Without specifying the framework in which this amendment is to be considered, it is a false exercise. You could sit down, make any assumptions you like and get any result you like, to be frank.

Although it would be very interesting to perform this exercise, I am afraid that these amendments are so defective that they cannot actually give the guidance as to the exercise to be performed. Therefore, it is entirely inappropriate for amendments such as these to be in the Bill.

[Lord Davies of Brixton (Lab)]

I have to confess a smidgen of support for the amendments in this group—but not nearly enough to make me vote for them. I am going to complain about a different lack of information that has been presented to this House in relation to the Bill.

The point is that it is a contribution Bill—a contribution to the National Insurance Fund. I pursue a somewhat quixotic and lonely quest to persuade people of the importance of the National Insurance Fund, the whole point of which is that it receives contributions, has reserves and pays benefits. Somewhat oddly, simultaneous to discussions of the money coming in, in the earlier stages of Report, there was a discussion in Grand Committee of the money going out. My complaint is that there has been no discussion of the state of the National Insurance Fund. I am very much in favour of such a discussion because it is a crucial element of our welfare state.

The problem is that the information is available. I have it in my hand: the Report by the Government Actuary on: The Draft Social Security Benefits Up-rating Order 2025; and The Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2025. Noble Lords might ask, “What’s that got to do with the Bill?” It says on page 7:

“This report also includes the expected effect on the Fund of the National Insurance Contributions (Secondary Class 1 Contributions) Bill”.


This is information germane to our current discussions, but at no stage—I am sorry to complain to my noble friend the Minister—has this been adequately, or in any sense, discussed as part of an overall consideration about the state of the National Insurance Fund. That is my complaint, and I have got it off my chest.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Eatwell Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Lord Howard of Lympne (Con)]

My Lords, I am afraid that I too was unable to be present at the earlier stages of the Bill, but I rise to support this amendment—in particular, the provisions relating to hospices. These would have the same effect as later amendments in the name of my noble friend Lady Neville-Rolfe, to which I have also put my name. I draw attention to my entry in the register as vice-president and past chairman of Hospice UK.

The added burden that the increased contributions will place on the hospice sector are considerable. The extra cost has been estimated at no less than £34 million a year. St Christopher’s Hospice in south London has said that it will face increased costs of around £450,000 a year—equivalent to the cost of nine specialist nurses. Dorothy House hospice in Wiltshire estimates additional costs of £422,000 a year. The Kirkwood Hospice has had to put 33 roles at risk of redundancy, citing the increased national insurance costs as one of the drivers. Nottinghamshire Hospice is also proposing redundancies, again citing these extra costs as one of the factors.

These are just some of the examples of the devastating effect that these measures will have on hospice care. This is all so short-sighted. We all know that one of the major challenges facing the NHS is bed-blocking. As I have told your Lordships before, hospices can make a huge contribution to overcoming this challenge by looking after patients in the community, either in hospices or looked after by hospices at home. To make that contribution, hospices need more resources, not fewer, so this change will add to the challenges facing the NHS, not only directly in respect of its own employees but indirectly by diminishing the capacity of hospices to help.

The Minister will no doubt refer to the Government’s recent announcement that £100 million would be made available to hospices, and that is indeed welcome. But that money is for capital projects. Not a penny of it is available to defray the extra costs of the increase in national insurance contributions, which we are debating today, so it will have little or no effect on the crisis in hospice care that I have described.

I urge the Government to think long and hard about this amendment and to come up with a constructive solution.

[Lord Eatwell (Lab)]

My Lords, I find some difficulty in addressing this group of amendments, specifically because these amendments are but a part of 38—out of the total of 44—amendments in the Marshalled List that are essentially all the same. The 38 amendments all propose exemptions to the changes proposed in the Bill, or variations in the various thresholds at which employers’ national insurance is charged. All the amendments have the same internal logic: they are designed to reduce revenue. All 38 are the same; they vary only in the individuals, firms or groups that are to be exempted. The House will, of course, deem many of the individuals and groups not just worthy but really deserving of support.

I wish to address the 38 amendments collectively because they are the same. The Liberal Democrat Benches, notably with amendments associated with the noble Baroness, Lady Kramer, seek to exempt providers of care homes or domiciliary care, primary care providers, dentists, pharmacists, charitable providers of healthcare, hospice care, carers and part-time workers. She adds providers of education or childcare to children under five years of age, universities, providers of further or higher education, registered charities, housing associations, small or micro businesses, town councils, parish councils and businesses in the hospitality sector.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have not spoken on the Bill before but I add, very briefly, my support to the proposals from the noble Lord, Lord Londesborough. I have spent a lifetime in the city helping businesses grow—funding them, looking after them and developing them. They are vulnerable throughout, but they are particularly vulnerable in their early stages, which is the point of the noble Lord’s amendment.

With 25 people or fewer, it is easy to forget just how difficult it is, and how persistent an effort is needed, to get a business going, keep it going and to eventually grow it, hopefully, to a great size where it will employ people and increase the prosperity of the country. It is our feedstock—this is where I take issue with the noble Lord, Lord Eatwell, who served with me on a City regulatory body many years ago—and if you cut down the trees in any one year, those trees will never reappear. We shall have a smaller number of growing companies from the years when this proposal has its impact.

It is also surprising, when I hear debates in your Lordships’ House, how many Members cannot conceive of circumstances when the pay cheque will not turn up at the end of the month. A lifetime in public service insures you against that. But, if you run a business, you have to think every day about will happen at the end of the month. Will there be a call from the bank manager saying, “I’m very sorry, I’m not going to be able to meet your payroll”? When you have responsibility for other people, that ghastly pressure is increased by the sorts of measures the Government propose to take here.

I say to the Minister, very gently, that the phrase is: revenue is vanity, profit is stability, but cash is reality. In this Bill the Government are proposing to undermine the reality of the cash that is desperately needed by the very smallest among our companies.

[Lord Eatwell (Lab)]

My Lords, the amendments proposed by the noble Baroness, Lady Barker, are a classic example of how to distort a market. She wishes not only to exempt part-time employees from the measures in the Bill but to reduce the national insurance charge on part-time employees. She does not appear to have reflected on what would be the impact on full-time employees. How many full-time employees will, as a result of this measure, lose their jobs and be replaced by two or three part-time employees? How many companies will reach a cliff edge with respect to their employment policies that will ensure they develop only part-time employees, who often have fewer opportunities, and certainly fewer opportunities for promotion, than full-time employees? What has the noble Baroness got against full-time employment? We need an answer to that. Why is she so content to distort the labour market in this way?

With respect to the amendments proposed by the noble Lord, Lord Londesborough, I have greater sympathy with what he says, but he too is creating a cliff edge. The cliff edge is at 25 employees and it will considerably distort the operations of the market at that stage. It will discourage companies from growing above 25 employees. It will encourage the break-up of structures, so that units employ only 25 employees.

Most interestingly, the noble Lord asked for an impact assessment of the overall impact on employment of the measures in the Bill. There have been at least three—one by the National Institute of Economic and Social Research, another by the OBR and another by the Treasury. They all demonstrate that, taking the measures in the Budget as a whole, employment in the next year will increase, not diminish. The error which, I am afraid, the noble Lord made in his argument is that, yes indeed, because of higher employment costs, there may be a reduction in employment per unit output, but, because of the stimulation of aggregate demand in the Budget, there will be more units of output. So, not only will these measures encourage the growth of labour productivity by reducing the input of labour per unit output but the expenditure of these measures, through a technical device called a balanced budget multiplier, will increase the level of employment in the coming year. The impact assessment is there for all to see.

[Lord Blackwell (Con)]

My Lords, the noble Lord, Lord Eatwell, is a distinguished economist and I defer to his expertise, but I have to challenge him on the assertion that the measures in this Bill which raise national insurance are job creating. The Budget as a whole does not spend only the money raised through this tax; it spends another £40 billion a year, I believe—a total of £70 billion extra over each year of the course of the Parliament. Now, you have to assume that any measure that increases public spending by £70 billion a year will increase employment. It would be a strange measure that increased public expenditure without increasing employment. The difficulty is that all that employment increase will be in the public sector. The fact that this Government have to understand is that you have to earn wealth before you spend it and that compressing the wealth-creating part of the economy in order to spend on the public sector leads to financial disaster in the long run. So I do think his argument on that point needs to be challenged.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Eatwell Excerpts

Committee stage
Wednesday 29th January 2025 Grand Committee

We need a lot of questions answered about what is happening in those segments of the business community. If the Government have that sort of analysis, they really ought to share it with Parliament. Indeed, if they have the analysis, and if they get their skates on and publish it fairly promptly, my amendment would not even delay the implementation of the national insurance changes. If they cannot provide the analysis, however, the Government need to ask themselves whether they are right to pursue this policy choice without understanding the detailed impacts—and Parliament needs to consider whether the Bill should come into effect in an information void.

[Lord Eatwell (Lab)]

My Lords, with respect to all the amendments in this group, with the exception of that of the noble Baroness, Lady Noakes, I repeat what I said last time: these amendments are designed to increase the complexity of the system and that is a very bad idea. I can assure noble Lords that, right now, tax-avoidance accountants are sharpening their pencils with glee at the possibility of more complexity being introduced into this structure. It is a very bad idea and we should not be doing it.

If we want to support small business, we should do it directly by deciding what subsidies or benefits should be given. Playing around with the tax system or, in this case, the national insurance system, is a bad idea. I will not say this again, because we have a series of other attempts to increase complexity coming in later amendments—so, please, let us not do this. It is bad for the tax system, bad for the national insurance system and a bad way to achieve the goals set out.

I now turn to the important amendment from the noble Baroness, Lady Noakes. The problem with it is that it is seriously underspecified. She does not say whether the examination of the effects of the national insurance changes should take place in the context of the pre-government Budget situation, or should take account of some measures in the Budget or of the Budget as a whole. If we take the Budget as a whole, the examination by the OBR shows that employment will increase over the relevant period. What the noble Baroness is doing is taking just one part of the actual economic package represented by the Budget and saying, “Let us look at this in isolation, even though this part funds the other part”—the expenditure decisions of the £26 billion injection of demand into the economy in the next fiscal year.

In that context, this amendment is seriously under- specified and impractical. We need to understand whether she wishes to look at just one side of the equation, how revenue is raised, or the other, how revenue is spent. Surely the correct thing to do is to put both together to see the overall impact of the policy represented by the Budget. I am afraid that the amendment is unsatisfactory, in that it is seriously underspecified.

[Baroness Noakes (Con)]

I will briefly respond to that. I am asking for an impact assessment of the Bill. The Bill does not incorporate the whole Budget; it incorporates one policy decision, which is the focus of my amendment. It is clear that I am open to drafting suggestions. I have already spent some time with the noble Lord today in another committee on drafting improvements and I am sure that, between us, we could come up with some better words.

Economic Growth

Lord Eatwell Excerpts

Thursday 23rd January 2025 Lords Chamber

[Lord Eatwell (Lab)]

My Lords, in principle, the growth problem is straightforward: invest in the quality of labour via education and training, and in the quality of capital via research and development and innovation. On the one hand, the state is the main investor in education and skills and plays a crucial role in providing efficient infrastructure and much of the budget for fundamental research. The funding of research is particularly important because the state is able to invest in areas that only yield an uncertain return in the long term. Consider, for example, the fact that all relevant innovations embodied in the iPhone were developed in public sector institutions. It was the genius, then, of Steve Jobs to put them all together.

On the other hand, business investment requires incentives and means. The incentive is clear: the expectation that the investment will be profitable. That depends on the prospective demand for the goods and services that the investment is designed to produce. It does not matter if interest rates and taxes are low or even zero; if you cannot sell the product due to a lack of demand then investment is a waste of money, so the maintenance of a high level of effective demand is the vital precondition for the stimulation of competitive investment. Even if demand is there, though, the means are required—namely, the finance. Much investment is financed by retained profits, but truly innovative investment—the investment that changes the world—requires the medium-term to long-term support of financial institutions.

That is where Britain fails. Our major financial institutions define the concept of investment peculiarly: they claim they are investing billions in Britain, but what they mean is that they spend billions in the purchase of financial assets in secondary markets. They do not finance the creation of new, real, productive investment—investment in national accounting terms. It used to be argued that liquid secondary markets were a necessary complement to primary investment, but the relationship is declining, with an increasing proportion of investment being funded through private vehicles.

There are exceptions to the non-real investment and non-growth stance of UK finance. Some of the larger institutions have small real investment divisions. However, investment is usually confined to fintech. There are some specialist small and medium-sized banks that spread their investment outside fintech into other growth areas, often with a real estate content. Some private equity firms promote organic growth in their target companies, and venture capital trusts are a valuable source of SME funding. Unfortunately, however, it is clear from the overall lack of second-stage SME funding in the UK that these exceptions do not add up to the scale required to transform the growth prospects of the economy.

For example, the entire assets of the venture capital trust sector amount to around £6.2 billion. This compares to the £1.5 trillion size of Barclays’ balance sheet alone; that is 250 times greater than the entire venture capital sector. This suggests that we cannot simply look to the financial services industry as it is currently structured to do more. More of the same will simply not be good enough.

The structure of financial services must be changed. The new National Wealth Fund will contribute to that change, but for scale we need the private sector, so carrots and sticks are required. On the carrot side, there are already significant tax advantages associated with innovative investment, but these do not achieve what is necessary. The reform of pension funds will be very important. The US pension reform in 1978, which enabled investment in alternatives, gave rise to the professional venture capital industry in that country. It is striking how many successful UK SMEs raise their secondary funding in the United States—another indicator of the failure of UK financial services.

How about the stick? Well, how about requiring appropriate financial institutions of over a certain balance sheet size to devote a given proportion of their assets to real investment, either directly or indirectly via funding organisations such as venture capital funds? We must also find a way of weaning the banks off algorithm-driven lending and get back to old-fashioned relationship banking. For how that is done, see Handelsbanken: the point being that real investors need a close advisory relationship with their funders, where advice flows in both directions.

It is a remarkable paradox that our wonderfully successful financial services industry is one of the main reasons for our growth failure. But until fundamental reform, by carrot and stick, induces greater flows of finance into real investment, that sad paradox will remain.

Economy: The Growth Plan 2022

Lord Eatwell Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Eatwell (Lab)]

My Lords, it was encouraging to hear the Prime Minister echo Keir Starmer’s conference speech, putting growth at the heart of the political agenda, but terribly discouraging that her policy for growth embodies the libertarian philosophy that she has soaked up at America’s libertarian think tanks.

Her libertarian economics has already been tried. Donald Trump’s Tax Cuts and Jobs Act 2017 cut taxes—notably for the better off—and funded the cuts by borrowing in excess of $2 trillion, arguing that these measures would increase investment, growth and incomes, so that tax cuts could pay for themselves. Well, it did not work. Investment increased temporarily but then declined. Lower taxes produced a barely perceptible increase in growth of 0.1 of 1%, and there was no increase in incomes to pay for tax cuts. The American experience confirms that libertarian economics is bad for business. Consider the most commercially successful innovation of modern times: the iPhone. Every significant technical innovation with the iPhone was made in the public sector, from the touch screen to internal electronics.

Growth demands innovation. Because returns are an unknowable future, innovative investment in new, untried technologies, or new products, accessing new markets, is always risky. That is why the state has such an important role to play, funding the risk-taking that markets cannot handle. When public bodies created the iPhone technologies, they were taking risks that the market would not.

There remains Britain’s perennial problem of transforming invention into innovation into commercially viable products. Imitating best commercial practice in Europe and the US will help, but more is needed. We need to leapfrog our competitors by building a new financial and industrial system that faces up to competition today and beats the competition tomorrow. That is why Keir Starmer’s commitment to turn the UK into a green-growth superpower is so important. Britain has the science to produce green energy and to create the new technologies that will allow us to adapt to climate change. This is a challenge that cannot be met by shrinking the state. It requires a new entrepreneurial state underpinning the risks involved in providing the new goods and services that an overheating world will need.

The Prime Minister’s diagnosis of the need for growth is correct but, instead of tackling the problem with modern economic medicine, she plans to bleed the patient. I understand that the Prime Minister read politics, philosophy and economics—PPE—at Oxford. It is evident that she read too many Ps and not enough E.

Elections Bill

Lord Eatwell Excerpts

Lords Hansard - Part 2 & Report stage
Wednesday 6th April 2022 Lords Chamber

[Viscount Stansgate (Lab)]

My Lords, I rise to say three things. First, I am pleased to see the Minister back in his place and I hope he has recovered. Secondly, I am pleased that the noble Lord, Lord Woolley, has made another journey from Cambridge to be with us tonight. Thirdly, I agree with him that we should make history and I urge the House to vote for this amendment.

[Lord Eatwell (Lab)]

My Lords, I was struck by the argument from the noble Lord, Lord Rennard, that one does not have to opt in for taxation. I think he is arguing for “no taxation without representation”, a slogan which if recognised in the past might have eased some pain which a British Government suffered.

At the end of the debate in Committee, I put it to the Minister that someone should turn up at a voting booth with a British passport and a driving licence and would then be denied the right to vote. She replied, “Of course, that person’s not on the register.” That seemed to illustrate the total folly of the current restrictive register, and the wisdom of the amendment tabled by the noble Lord, Lord Woolley, which I urge everyone in the House to support and so maximise the number of people who are engaged in the civic process of voting in this country.

[Lord Stunell (LD)]

I want to support what the noble Lord, Lord Woolley, has said, and perhaps try to pre-empt the Minister in her reply. In Committee, two reasons were given. One was a mitigation that HMRC in fact informs those who receive new national insurance numbers of their right to vote, which started in September last year. That is excellent and if HMRC can inform them, I am sure they could send the form to go with it. The noble Baroness also said:

“Automatic registration would threaten the accuracy of the register and … enable voting and political donations by those who are ineligible”.—[Official Report, 23/3/22; col. 1058.]


There is a measure of disconnect between the Government’s approach to this issue and their approach to overseas voters. Will the Minister consider whether it would not be sensible to go one more step with HMRC and to link their policies for overseas voters with the domestic voting system?

Elections Bill

Lord Eatwell Excerpts

Lords Hansard - Part 2 & Committee stage
Wednesday 23rd March 2022 Lords Chamber

[Lord Stunell (LD)]

First, it is important to establish that there is a problem. I quote from the briefing supplied by the Electoral Commission to your Lordships on these amendments:

“There is more that could and should be done to modernise electoral registration processes in Great Britain, to ensure that as many people as possible are correctly registered.”


I believe I heard the Minister make the same point—that he believes it good public policy to get people registered. The Electoral Commission’s most recent estimate is that

“between 8.3 and 9.4 million people in Great Britain who were eligible to be on the local government registers were not correctly registered”.

As the noble Baroness, Lady Bennett, said, those figures were collected in December 2018. It says there are another 360,000 or more people in Northern Ireland not correctly registered. It also made the same point as the noble Baroness, Lady Bennett:

“Our research found that young people, students and those who have recently moved are the groups that are least likely to be correctly registered.”


Courtesy of the noble Baroness, Lady Whitaker, I would say that Travellers are very much in that group of under-registered people.

The Electoral Commission has published feasibility studies which identified that there is potential to evolve the current system. Those studies are reflected in the amendments before your Lordships today. Amendment 141 is one route to it—the two are not exclusive but it is one route—and Amendment 144B is another, to which we have added our names as well. It provides simply that, when a person is issued with a national insurance number, they receive their application for the electoral register.

The Electoral Commission makes two more points in its briefing:

“the education sector … could help EROs identify attainers and other young people. Also, data from the Department for Work and Pensions could potentially be used by EROs to register young people to vote automatically when they are allocated their national insurance number ahead of their 16^th birthday.”

I do not want to frighten the Minister; the Electoral Commission is not suggesting that they would vote from their 16th birthday but simply that, as attainers, that would be an appropriate time for them to apply to be put on as an attaining voter.

At least in theory, I think we are all in favour of all qualified UK citizens being on the electoral roll and we would all say that we would like them to exercise their vote. This legislation increases the number of people eligible to go on that register by virtue of what the Bill proposes to do in relation to overseas electors. We will debate that shortly.

Clearly, the Government do not have a problem with having a larger voting roll. They share the Committee’s view that it is desirable, in principle, that all eligible people should be on the roll, and yet, so far, they have been extremely resistant to doing that, as far as attainers in particular are concerned. In the light of the evidence that the Electoral Commission has produced, that it is a significant number and that there are solutions, and in a situation where the Minister has in front of him two amendments proposing practical ways to solve that problem, I hope that in winding up he will be able to say that he will take this back, give it further consideration and perhaps produce an appropriate government amendment on Report.

[Lord Eatwell (Lab)]

My Lords, the noble Lord, Lord True, has made two sets of powerful arguments about the right to vote. First, he made a series of powerful arguments in favour of photo identification as a right to vote and, just now, he talked about the rights and responsibilities of citizens with respect to prisoners’ right to vote. Would an acceptance of this amendment not represent some consistency, and a rejection of this amendment represent some very clear inconsistency in the following sense? What would the Minister do about a situation where someone turns up at a polling station with a British passport and a British driving licence on which their address is registered, and they are then refused the right to vote? They will have complied with everything the Minister argued for in the discussion of identification, but they will be denied the right to vote because of a variety of complexities that still bedevil our registration system.

Surely it is appropriate that there are democracies—Norway, Australia—in which a presence on the register and the right to vote are automatic and ensured by modern data systems that can easily do the job. Surely, if he has a degree of consistency in his arguments about this Bill, the Minister will support these amendments.

[Lord Scriven (LD)]

My Lords, throughout Committee I have kept coming back to the impact assessment. Right there on the front page of the impact assessment it says:

“What are the policy objectives of the action or intervention and the intended effects?”


It is:

“To ensure that those who are entitled to vote should always”—


always—

“be able to exercise that right freely, effectively and in an informed way”.

That is the intended consequence, the stated intention of the Bill before us: that those who are entitled to vote

“should always be able to exercise that right”.

People cannot exercise that right if they are not on the electoral roll. It is an absolute condition of always being able to exercise that right.

The amendments before us are absolutely bang on the money, in terms of what the intended policy of the Bill is in the impact assessment. As citizens of this country, we are all given automatic rights and responsibilities. Through that, we get certain certificates or automated numbers. We get our national insurance number automatically. We do not have to apply; it is automatically granted to us at 16. As the noble Baroness, Lady Chakrabarti, said, we are registered for taxation automatically. We get our NHS number automatically. If noble Lords asked the vast majority of the public if they would object to being automatically registered, I have seen no evidence that says people would reject that proposition. Whether people then go to vote is down to the politicians to encourage them, enthuse them and get them to the polling station.

The very fact that the Government’s policy is to “always” ensure that people are able to exercise their vote in an automatic, easy and effective way means that these amendments should be accepted by the Government. If they are not, I would ask the Minister to explain why not having automatic registration, and keeping what is on the face of the Bill, would actually meet their objective to

“ensure that all those who are entitled to vote should always be able”

to do so.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

No, I think we will deal with that later—but if we do not deal with that today, I shall make sure that the noble Lord gets a note on it, because I do not have a list of them to hand.

We have no plans to introduce automatic registration, and I request that the amendment is withdrawn.

[Lord Eatwell (Lab)]

Could the Minister address the inconsistency to which I referred—that someone with a British passport and a British driving licence, obeying the requirements in this Bill for identification for voting, could be denied the right to vote because they are not registered?

[Baroness Scott of Bybrook (Con)]

No, because they are not registered. You cannot just have anybody walking into a polling station with some pieces of paper or a passport and saying that they have the right to vote. They have to register to vote.

[Lord Eatwell (Lab)]

So the Minister is saying that a British passport and a driving licence are random pieces of paper. Is that how she is referring to them?

Elections Bill

Lord Eatwell Excerpts

Lords Hansard - Part 2 & Committee stage
Thursday 17th March 2022 Lords Chamber

[Lord Scriven (LD)]

My Lords, I have listened to this debate with a sense of bewilderment and admiration, but I am still not clear what the imposition of compulsory voter ID is going to solve. As the noble Lords, Lord Grocott and Lord Woolley, made very clear, there has been one conviction.

While everyone has been getting passionate, I have been a bit of geek over the past couple of weeks and have read the impact assessment, so I want to go through why these amendments in the names of the noble Baronesses, Lady Hayman and Lady Meacher, and the noble Lord, Lord Woolley, are so important. If the Government decide to go down this path, even though they have not been able to determine that there is a need for it, the costings they are using must be absolutely watertight, otherwise people will find it hard, or sometimes impossible, to get this compulsory photographic ID.

The noble Baroness, Lady Noakes, said that we should not worry because it is £3 per person. She has clearly not read the impact assessment. That is not for every voter. Under the Government’s own impact assessment, it is for those who do not have the ID that is required who will need voter ID. According to the Government’s impact assessment that is 0.1% to 0.4% of voters. That works about at £150 per card, at the Government’s best estimate, to determine a problem that no one can quite work out what it is about.

The Government also say in the impact assessment that the degree of certainty on the final scope of all the costs—the £180, the £230 and the £1 million that have been determined—is so unknown that the costs are preliminary and further work will be needed. Too true that further work will be needed. If you get down to the details, the costs just do not stack up. On basic things, the Government are saying that the poll card that we all get will have to go from A5 to A4, yet they say that the postal cost is 80p. A4 is a large letter—so the costs have not been worked out. If these costs were presented by any person doing a basic business studies degree, perhaps at Cambridge with the noble Lord, Lord Woolley, they would get F or F-minus.

The Government have assumed this from one study in Woking. I have no problem with Woking—I am sure it is a very nice place—but it is not demographically made up of the rest of the country, and you cannot work out that what happened in Woking is going to happen in every community across this country. The Government have taken the average cost in Woking, taken it across every constituency in the country and averaged it out.

So let us look at some of the costs and resources. The Government have worked out that every constituency will need 1.64 machines to print these things. What nonsense is 0.64 of a machine? They have worked out the cost of 1.64 machines for each local authority. A number of people have said, quite rightly, that extra polling station clerks will be needed. The Government’s impact assessment says that: one for every two polling stations. I worry about the poor polling clerks in my city of Sheffield and in my ward who are going to have run three miles between polling stations. This is absolute nonsense.

PACAC has been really clear on this. A survey has been done by the Government. It is referred to in the impact assessment, but it does not give the results. The Government say that only 4% of people will need these, but, when asked, 31% of the public said that they would need them, want them or ask for them. PACAC is right to say that, for every 1% extra of the population who asks for one, it is a £10.2 million cost. As PACAC says, 31% takes it up from £150 million to £450 million.

I know that the Minister will say that it will all be guaranteed under the new burdens process. Under that process, there is meant to be a new burdens assessment with the impact assessment. I ask the Minister where that is, because I have not been able to find it. It does not seem to appear. I speak as a former leader of a council and declare my interests as a vice-president of the Local Government Association. If this kind of nonsense accounting is going to be the basis of the new burdens, I can tell you that you will have polling clerks running between polling stations and 0.64 of a machine. It does not stack up.

That is why these amendments are vital. We need proper accounting, proper costs and proper assessments, and then, and only then, will these cards be introduced—if they are to be introduced—speedily and in a timely way, with councils having the resources to deliver the very things which the Government say are required.

[Lord Eatwell (Lab)]

My Lords, there is a great temptation to stray into clause stand part issues, which we shall debate later, and it is unavoidable in the context of these amendments and of our first discussion of this issue. I was struck, as I think all of us were, by the speeches by the noble Lord, Lord Woolley, and the noble Baroness, Lady Verma. Both spoke in favour of greater participation and greater involvement. I say “hear, hear” to that.

What we are discussing is an additional requirement to vote. At Second Reading, a number of noble Lords—for example, the noble Lord, Lord Hannan—reflected on voting in jurisdictions which have identity cards and said that this was no big deal: you go along with your identity card, you vote, and it is all quite normal. Of course that is so, because that is not an additional requirement to vote; it exists in the society in general for other purposes. What we have here is an additional requirement—an additional impediment to the participation which the noble Lord, Lord Woolley, and the noble Baroness, Lady Verma, seek.

That additional impediment will inevitably reduce participation—by how much we can debate. There have been a number of studies, including the evidence which the noble Lord, Lord Woolley, cited and the study by the Rowntree trust, as to the degree to which participation may be reduced. We can disagree as to which study is the more accurate and the more satisfactory, but it is impossible to argue that this will not reduce participation. That is the true cost of these measures—not the financial cost so much, but the true cost.

In what I call his precautionary mode, the noble Lord, Lord True, at Second Reading—

[Lord Hayward (Con)]

The noble Lord spoke about reducing turnout. Can he identify the evidence that shows that the introduction of ID in Northern Ireland has now reduced turnout?

[Lord Eatwell (Lab)]

I refer the noble Lord to the evidence mentioned by the noble Lord, Lord Woolley, and the study by the Rowntree Foundation. I am quite willing to believe—

[Lord Woolley of Woodford (CB)]

To answer the noble Lord’s question, I was citing the review of voter ID from the local elections in 2019. It is difficult to judge what happened in Northern Ireland, but it is easier to judge what happened with these pilot projects in England. That is what the Government set out to look at—to see what happened when people showed up. The Government now want photo ID but, in the pilot projects, it was both photo and non-photographic ID, and that caused significant problems. Imagine if it was just one type—photographic ID, for example—that could double the problem. Bear in mind that people have to be more driven to vote in local elections, where the rates are a lot lower than in general elections—they have to be motivated to go to the polling booth. Then they are told they do not have the right type of ID, whether it is photographic or non-photographic, and so they have to go home and get the right one, and they do not return—they could not be bothered. The danger is, as has been argued, that potentially hundreds of thousands of people will have that encounter and not return.

[Lord Eatwell (Lab)]

As I was saying to the noble Lord, an accurate study to achieve a careful assessment of the impact of any measure would have to take into account all the circumstances of the time. Over time, there will be a change in circumstances, and therefore the gross figures may appear as if there has been no impediment. However, if you disaggregate the components of the motivations to vote, it is difficult to believe that the introduction of a new requirement or impediment has a zero effect.

[Baroness Noakes (Con)]

Does the noble Lord believe that this will be a permanent or a temporary effect? As my noble friend Lord Hayward said, voter ID has existed in Northern Ireland for a very long time, introduced by the Labour Government. There has been no evidence of a reduction in voter turnout and, importantly, there is a higher degree of satisfaction with the integrity of elections in Northern Ireland than in England and Wales. I think we ought to ground ourselves in facts—not pilots or the studies by the Rowntree Foundation, but facts.

[Lord Eatwell (Lab)]

I think the noble Baroness would agree that the electoral issues in Northern Ireland are rather different from those in the rest of the United Kingdom.

As I have just said, studying a phenomenon over time requires a careful disaggregation of the effects. Looking at the gross numbers does not tell you anything. Specific studies which carefully disaggregate the impact of particular measures are necessary. I find it difficult to see how one can sustain the argument that introducing a particular impediment to vote will have a zero effect.

As I was about to say, at Second Reading the noble Lord, Lord True, in what I call precautionary mode, referred to locking your door to prevent burglaries even though your house has not been burgled. However, it is striking that if you go to the Isle of Sark, where there are no burglaries, no one locks the door. It is the presence of burglars that encourages people to lock their door. If the incidence of fraud is one, as the noble Lord, Lord Woolley, told us, and the cost now is £180 million, or whatever the number is, to prevent one occurrence, is that value for money?

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

My Lords, that is if anybody goes back because they have not been intimidated into not going in the first place, I have to say. I respectfully say that this is something that we simply cannot ignore—

[Lord Eatwell (Lab)]

Will the noble Baroness explain the relationship between intimidation and the intimidating need to get photo ID?

Elections Bill

Lord Eatwell Excerpts

Lords Hansard - Part 2 & Committee stage
Thursday 10th March 2022 Lords Chamber

[Baroness Noakes (Con)]

At the end of the day, there is a requirement for Parliament to agree. That is an important part of the framework. It is not something the Executive can do alone. It would need to become a parliamentary approved statement and, as we discussed earlier, it must be approved by both Houses of Parliament.

My second point is that we should be absolutely clear that strategy and policy statements are not directions. No power of direction exists for the Electoral Commission, and Clause 14 does not create one. Noble Lords would be rightly concerned if Clause 14 created a power of direction in relation to the Electoral Commission. I think that the Electoral Commission was just plain wrong, in its written briefing, to claim that it would be subject to government direction as a result of Clause 14.

I regret to say that the noble Lord, Lord Butler of Brockwell, for whom I have the highest regard, was also wrong, when he spoke on the first group of amendments, to assert that this statement amounts to a direction. It does not. Directions are very clear in what they can force public bodies to do. This does not force anything. The only requirement, as we have heard, is in new Section 4B for the Government to “have regard to” the statement. We discussed that in the first group of amendments, and the noble and learned Lord, Lord Judge, has made some comments on the ineffectiveness of that, because it does not refer to other things which it could “have regard to”. It does not trump the commission’s statutory objectives; it does not compel the commission to do anything at all, or to take account of anything else.

We must keep all this in proportion. It is an additional thing for the Electoral Commission to take into account; it does not replace all the existing law relating to the commission. This is the formulation used for all existing regulators, and I believe it is the right approach to protect regulatory independence. As I said, no concerns have been expressed to date about the independence of any of the regulators subject to statements.

The important thing is that the commission has to report on what it has done in consequence of the statement. In practice, as we will see from the way in which the statements tend to align with what the independent regulators are doing, statements generally reinforce what those bodies are doing, and relatively new information beyond what would be included in the annual report comes as a result of those statements.

However, it is important that the independent regulator explain any divergence from the Government’s priorities as approved by Parliament. For example, if the Government said that their priority was to improve democratic participation, not just generally but for particular groups, we would want to know what the commission had done about that and whether it had had any impact. That really does not threaten independence.

I believe that transparency and accountability are what the strategic and policy statements are really all about, and why they are useful. One element is for the Government to be transparent about their policies and priorities, because they have to set them down, get them consulted on and then have them approved by both Houses of Parliament. The regulators then have to be transparent in reporting on what they have done in respect of those priorities—or whether they have done nothing at all. That allows them to be held to account by Parliament—in the case of the Electoral Commission, through the Speaker’s Committee. I hope noble Lords will see that this legislation is not the monster they have created in their own minds. In fact, it can be seen as a very positive development for improving transparency and accountability. I hope we will allow these clauses to stand part of the Bill.

[Lord Eatwell (Lab)]

My Lords, I regret that, like the noble Baroness, Lady Noakes, I was unable to attend the Second Reading debate. At the time I was on an aeroplane returning from work in the United States. However, I have read the full proceedings in Hansard with great care and I feel appropriately informed.

Moreover, some time spent in the United States has also given an added perspective on some of the measures in the Bill, for there is about it a definite odour of the Donald J Trump playbook. There is the whiff of voter suppression in the extra requirements being added for access to the franchise. There is a distinct stench of the politically partisan in the measures that undermine the independence of the Electoral Commission. But perhaps the strongest stink arises from changes in the franchise being imposed by the current majority party, without pre-legislative scrutiny or a Speaker’s Conference. This strikes at the foundations of our constitution, written and unwritten.

I predict that in due course, much as the late Enoch Powell predicted, Mr Johnson will be defeated in an election—and then there will be a, perhaps minor but none the less significant, online campaign claiming that the election was stolen or rigged. While it would be unfair to claim that the noble Lord, Lord True, had planted the seeds of such a threat to our democracy, he will have added a little natural fertiliser. In his speech introducing the Bill at Second Reading, he made much of the precautionary principle, and of taking steps to protect the integrity of elections from potential, if as yet hypothetical, threats. He did not, however, extend his precautionary principle to the measures in Clauses 14 and 15 that, as the Public Administration and Constitutional Affairs Committee stated, risk undermining public confidence in electoral outcomes by diminishing the independence of the Electoral Commission, both in perception and in reality.

As the late Lord Hailsham famously observed, this country is governed by an elected dictatorship. A Government with a substantial majority in the other place can do virtually what they please. That is why this House, with its, let us say, peculiar composition, has a particular responsibility to protect the constitution, written and unwritten, against partisan proposals by the governing party. Here, the discussion by the noble Baroness, Lady Noakes, of statements for regulators gives us a valuable insight, because, in this case, the statement is made by the regulated entity. It is as if one of the broadcasters could have a statement telling Ofcom to what it should have regard. The Secretary of State is a political figure. In the electoral arena, he is a regulated entity. He should not be in a position to provide advice of any sort to the regulator.

As the noble and learned Lord, Lord Judge, said at Second Reading,

“there is a constitutional necessity, in a system of democracy based on universal suffrage, that any electoral commission should be wholly and totally independent”.—[Official Report, 23/2/22; col. 239.]

By rejecting these clauses and affirming the independence of the Electoral Commission, this House will make a vital commitment to free and fair elections.

[Lord Rennard (LD)]

My Lords, in considering the Government’s plans to take more direct control of the Electoral Commission, we should go back to considering the consensus that existed when it was established. In 1998, the Committee on Standards in Public Life, then chaired by the late Lord Neill of Bladen, proposed the creation of an

“independent … Election Commission with widespread executive and investigative powers”.

Introducing the resulting legislation, the then Home Secretary, Jack Straw, explained how the commission would

“undertake its key role at the heart of our electoral arrangements”.

He emphasised that

“the commission must be as independent of the Government of the day as our constitutional arrangements allow, and it must be answerable directly to Parliament and not to Ministers”.

On behalf of the Conservative Opposition in the other place, Mr Robert Walter, then said:

“The Opposition have always made it clear that we support the recommendations of the Neill committee and that we shall support the legislation that implements the report”.—[Official Report, Commons, 10/1/2000; cols. 42-109.]


In this House, the noble Lord, Lord Bassam, introduced the legislation. He said that

“the commission will need to be seen to be scrupulously independent both of the government of the day and of the political parties”.

The consensus about the essential independence of the Electoral Commission was backed on that occasion by the late Lord Mackay of Ardbrecknish, a greatly respected Member on the Conservative Benches at the time. He said that

“there should be an electoral commission”,

but:

“There must be no possibility of the commissioners being \ As currently drafted the provisions in Part 3 of the Bill are not consistent with the Electoral Commission; cols. 1088-95.]


This principle of the Electoral Commission’s independence from the Government of the day survived five general elections. No previous Government before this one sought to change that principle. So I ask why, if we could not have “Tony’s cronies” overseeing the work of the Electoral Commission, we should then have Michael Gove overseeing it? To have any government Minister of any political party setting the overall strategy and policy for the Electoral Commission effectively ends its independence.

Since the last general election, the Conservative Party has been subjecting the Electoral Commission to undue pressure. In August 2000, the then Conservative Party co-chair Amanda Milling wrote in the Daily Telegraph that, if the Electoral Commission failed to make changes,

“then the only option would be to abolish it.”

That sounds pretty much like a threat to me. An independent election watchdog should not operate under such threats—not in a democracy.

--- Later in debate ---

[Lord True (Con)]

Yes, my Lords, new Section 4A(3)(b) allows the statement to contain—I am repeating what the noble Lord has just read out for the Committee; I am trying to help the Committee by doing so—any information considered appropriate, such as information

“about the roles and responsibilities of other persons.”

This could include other bodies with which the EC has relations, for example. The commission cannot be held responsible for the functions of other bodies which might be mentioned. New Section 4B(2) is disallowed from the commission’s duty to

“have regard to the statement when carrying out their function.”

New Section 4B(3) says:

“Subsection (2) does not apply to information contained in the statement by virtue of section 4A(3)(b).”


It is therefore intended specifically, for the reasons that the noble Lord puts forward, for that provision in the Bill.

The Government are clear in their submission that a statement will not undermine the commission’s other statutory duties. It could be used to provide guidance in areas where the commission is exercising the significant amount of discretion it is afforded, and will continue to be afforded, in terms of activity, priorities and approach.

More generally, statutory consultation in applicable circumstances, and the required approval of the UK Parliament when a statement is created or revised, will ensure that the Government consider the UK Parliament’s views and will give Parliament, including your Lordships’ House, the final say over whether the statement takes effect. This measure will improve the commission’s accountability to this Parliament and ensure that Parliament remains firmly in control of approving any statement.

I turn to the amendment relating to Clause 15. The purpose of Clause 15 is to expand the remit of the Speaker’s Committee on the Electoral Commission, a statutory committee which is chaired impartially by the Speaker of the other place. Its existing remit is limited to overseeing the commission’s finances, its five-year plan and the appointment of Electoral Commissioners. In expanding the committee’s remit, so that it may examine the commission’s performance of its duties to have regard to the statement, the Government are seeking to extend Parliamentary accountability of the commission to the Speaker’s Committee. This will enable the committee to perform a scrutiny function similar to that of Parliamentary Select Committees, allowing it to retrospectively scrutinise the commission’s activities in light of its duty to have regard to the statement. This power will sit alongside the committee’s existing statutory duties, which we are not amending in any way.

For clarity, Clause 15 will not enable the committee, any more than the Government, to direct the commission’s decision-making. The commission will remain operationally independent and continue to be governed by the commissioners. For completeness, this clause also gives the Speaker’s Committee powers to request relevant information from the commission

“in such form as the Committee may reasonably require”,

while ensuring that the commission is not required to disclose information that

“might adversely affect any current investigation”

or that

“would contravene the data protection legislation.”

This is important in protecting the commission’s ability to investigate, and also the interests of those who may be under investigation. For the reasons that I have set out, we contend that this clause will actually improve the commission’s accountability to Parliament, while respecting the regulator’s operational independence.

Those are the reasons why the Government think that these clauses are proportionate and reasonable, and I urge that your Lordships do not seek to remove these clauses from the Bill.

[Lord Eatwell (Lab)]

My Lords, the Minister suggested that he did not use the precautionary principle in his speeches at Second Reading. At col. 314, he drew a direct analogy between the need for photographic evidence to vote and locking a door to prevent burglars. Is not that the precautionary principle?

[Lord True (Con)]

No, it was a humorous remark for the Committee. The precautionary principle is one that the European Union applies in considering legislative activity; it is not a principle that I espouse and not one that I endorsed in the speech.

Budget Statement

Lord Eatwell Excerpts

Wednesday 3rd November 2021 Grand Committee

[Lord Eatwell (Lab)]

My Lords, a Budget provides insight into the Government’s overall economic strategy and into how the Government think the economy works. Many commentators have suggested that this Budget represented a fundamental change in economic policy by the Conservative Party: the age of austerity was banished, replaced by the era of big-state, tax-and-spend Conservatism. The Chancellor himself has seemed to many to be confused, on the one hand declaring triumphantly that

“The Conservatives are the real party of public services”,


while at the same time as he raised the tax burden to a record level he argued both that “government should have limits” and

“My goal is to reduce taxes”.


Then there are the repeated references to the need to reduce the public debt, even as government borrowing rises to record peacetime levels.

It is not hard to identify the source of the Chancellor’s dilemma. It is the pandemic. On his own Budget he confessed:

“I do not like it, but I cannot apologise for it: it is the result of the unprecedented crisis we faced and the extraordinary action we took in response.”—[Official Report, Commons, 27/10/21; col. 286.]


The Chancellor was forced into measures that he did not want to take because the pandemic laid bare the economic and social consequences of the Conservative austerity years. The decade-long destruction of the nation’s social capital in care, education, local authority services and the National Health Service has been cruelly exposed. Something had to be done.

Yet Mr Sunak’s big spending will not restore the real per capita spending on social care to the level of 2010. His big spending on “family hubs” will not make good the Conservative destruction of Sure Start. His big spending will barely restore resources per student in state schools, as we have just heard, to the level of 2010. His big spending on the NHS will not approach anywhere near the rate of growth of spending on the health service under Tony Blair and Gordon Brown.

To add to the destruction of social capital, there is, as the OBR details, the loss of output as a consequence of the Chancellor’s beloved Brexit—4% scarring of GDP year after year. That means an annual loss of around £30 billion in tax receipts year after year.

Forced to do what he adamantly insists he did not want to do, it is no good looking there for the clues to his longer-term economic thinking. Unfortunately, the Chancellor did not make his economic case any clearer by his terminology, with his characterisation of government borrowing as “immoral” and his pursuit of an economy fit for a “new age of optimism”. This is not the language of economics and economic policy. It is the language of the hedge fund lunchroom after a good lunch.

None the less, I believe that there is a clear economic perspective to be detected in the Budget speech and the Charter for Budget Responsibility. The charter includes falling public sector net debt, a target to balance the current budget, a cap on public sector net investment and a cap on welfare spending. The persistent reference to net debt is a distinguishing feature of the speech. The Chancellor quoted approvingly the Prime Minister’s argument that

“higher borrowing today is just higher interest rates and even higher taxes tomorrow”—

a statement that even a passing acquaintance with our economic history would demonstrate to be palpably false. For the Chancellor, government borrowing is not part of the overall design of macroeconomic management; it is a burden, a limit on the passage to the smaller state that is his ultimate goal.

Yet the experience of the pandemic suggests something quite different: borrowing has not been a burden. Government spending, necessarily increased to deal with the economic shock of the pandemic, was paid for by higher borrowing, ultimately financed by the Bank of England. The Bank of England’s share of government debt has risen sharply, from 23% at the end of 2019 to 34% today. When he sums up, will the Minister explain in what way this increased holding of gilts by the Bank is a burden? Will he explain how it will lead to

“higher interest rates and even higher taxes”?

The pandemic is but one example. Another is the approach to net zero. The Treasury’s new document Net Zero Review, published in October, argues that, if the Government borrowed to fund some of the transition to net zero, the burden of expenditure would fall on future generations. What would be the greater burden on future generations—that the Government borrowed to fund net zero or that the Government did nothing and net zero was not achieved? I believe that the answer is obvious.

The problem is not government borrowing, as Mr Sunak thinks. It is the use to which money is put in the context of overarching economic goals. The composition of the funding of government expenditure, whether by taxation or borrowing, should be part of overall economic management of current levels of demand, as in the pandemic; the attainment of medium-term growth objectives, as in the transition to net zero; the investment in social capital, as in health and education; and policy on the distribution of income. Mr Sunak has a plan: it is to cut taxes and cut borrowing. The result, as the OBR makes clear, is that, once output has returned to pre-pandemic levels, the rate of growth falls to around 1.5% a year, which is totally inadequate to meet the needs of demography and climate change.

In the Financial Times, Martin Wolf argued that

“low growth … makes all policy options painful: with slow growth in revenues and strong pressure for higher spending on health, social care and pensions, either taxes must rise as a share of national income or the rest of public spending is mercilessly squeezed.”

The Chancellor, Wolf goes on, failed

“to show how the growth strategy, taxation and the ambitious climate goals fit together.”

The Chancellor provided a forceful rejection of Wolf s argument, asking,

“do we want to live in a country where the response to every question is ‘What are the Government going to do about it?’, where every time prices rise, every time a company gets in trouble, every time some new challenge emerges, the answer is always that the taxpayer must pay? Or do we choose to recognise that Government has limits? Government should have limits.”—[Official Report, Commons, 27/10/21; col. 286.]

That is a moral clarion call for the new austerity.

The Chancellor concluded by laying out his economic vision with this statement:

“Borrowing down, debt down: proving once again it is the Conservatives, and only the Conservatives, who can be trusted with taxpayers’ money.”—[Official Report, Commons, 27/10/21; col. 276.]


The problem is that this Government cannot be trusted with the economy.