(5 years, 6 months ago)
Lords ChamberFirst, I pay tribute to the noble Lord for taking through that legislation, which I was delighted to support myself from the Back Benches; it was crucially important. We need to keep at the forefront of our minds that there is a huge need out there. We need to build on the commitments we have already given and the pledges we have made, but as he rightly points out, we also need to encourage others to step up to the plate. Increasingly, however, we see that Governments cannot do this alone. We need to leverage in trade and private investment to bridge that gap if we are to lift people out of poverty.
My Lords, may I ask the Minister what proportion of the 0.7% goes via EU projects or other EU conduits?
(5 years, 7 months ago)
Lords ChamberFor the points I will come to in a minute, which the noble Lord has slightly pre-empted. Obviously he has read the wind-up speech I gave at Second Reading—the arguments about volume of legislation and timeliness remain consistent—but I will come back to that.
Would I be correct in describing the reason for that legislation as enabling us to meet equivalence requirements going forward if we have not otherwise dealt with things?
Equivalence is one of a range of considerations that could be taken into account at that point.
My Lords, this amendment is a simple, overarching provision that says that no adjustment may be made,
“that jeopardises potential equivalence with the EU”.
This goes to the heart of what is allowable under a statutory instrument and what is not. It seems to me that it is one thing to seek short-cut arrangements—if I might call them that—to land in-flight legislation without needing primary legislation but quite a different matter to then land that legislation at a destination that is very different from the one that was expected. This is especially the case for legislation under subsection (2), which is no longer under negotiation but which has in fact landed, even if it is not yet operational.
It is worth pointing out that everything the Government have said about Brexit, under whatever type of Brexit, is to try to obtain or retain equivalence—that is the expectation. It may be that equivalence does not work out; it might be due to things that the EU does which become problems for UK markets—and, as I said, I know pretty well how that might happen—or it might just be that the EU Commission delays or decides not to make an equivalence finding because it does not see it as in its interest. After all, it is EU Commission policy to make equivalence decisions only when the EU needs them—although it tends to find out in the end that it does need them. I know full well what an infuriating process equivalence can be, as I have played my part both in making sure that it gets into the legislation in the first place and then pressing EU officials to get on with it.
However, despite all those difficulties around equivalence and whether we will have it or not, that will not be decided overnight—even, if I may say so, in the event of a no-deal Brexit. Thus to abandon notions of equivalence, even at any time within two years of Brexit, would be a big step and a decision that should come before Parliament in primary legislation. I do not say that it should not happen, but it is a big departure. I do not remember that anybody’s manifesto said that they would abandon equivalence willy-nilly. Everything that has been said on every occasion, on everything to do with the Brexit negotiations, has been to try to get something better than equivalence, so it would be a big departure to set it aside. This is where the dividing line comes, and this would be the gatekeeper of those things that you do: “It’s okay—you’re keeping equivalence. No; you can’t do it this way if you want to break away from equivalence”.
The truth is that we have already given regulators sufficient leeway that they could make rules that led to an abandonment of equivalence by them not matching EU delegated Acts legislation. The way we have set it up, that has been given to the regulators. However, I do not think that our regulators would tend to go down that track—and if they did, I suspect that it would feature prominently in their consultations. I regret that the noble Lord, Lord Adonis, is not in his place, because I commend his amendment that we will come to later on, in which he suggests that some reporting from the Bank of England should be included. Possibly, if we are to have these reports that tell us what is going on across the piece, it would be a good idea to include in that what the FCA is doing, whether that is done through the FCA having a section of the report or through the Treasury dealing on its behalf with that aspect of the report that it told us about.
As I have already indicated, we know that there are concerns about certain bits or pieces of legislation, but we have to bear in mind that abandonment or significant alteration of any policy element of what is essentially EU primary legislation may well remove the hope of equivalence for part of the market, or indeed for other parts or entities that are not necessarily the direct beneficiaries of those adjustments. I could construct an argument around the changing of the buy-in regime. If that was dropped, it could have ramifications for equivalences in many other places, and that matter is already weighing on the consciences of those who are having to think about which way they would want to push that debate.
As I said, the business about what we do with equivalence needs a great deal more thought. As my noble friend Lady Kramer said, we cannot let it go by default of not doing something or by rushing something through in a statutory instrument that we cannot amend, knowing that it might lead to a loss of equivalence. I beg to move.
My Lords, the hope is that if everything were sensible, the amendment would be appropriate and powerful. As the noble Baroness, Lady Bowles, pointed out, it is possible that the EU may go down paths of regulation that are not very sensible. In that situation, given that the market for the UK’s financial services industry is not just Europe, it may not be practical for the UK to use and follow equivalence. Indeed, there may need to be changes to the benefit of the industry other than vis-à-vis a Europe that has gone off the rails with its regulations.
My Lords, I added my name to the amendment because I consider it one of the most important in the range we are addressing today. Two fundamental issues seem to underlie our concerns about the legislation. One issue comes from a constitutional perspective, concerning Henry VIII powers. It matters; we discussed it in other contexts but it is important in this context too. It has an impact on the relationship between Parliament and the Executive, including applying the ability to exercise policy power and Parliament’s role in scrutinising policy.
One aspect of that is particularly substantial in the Bill. In the two-year period when the regime discussed in the Bill holds sway, we will be in a critical time, determining our future relationship with the European Union and whether our financial services industry continues to have access to European markets for financial services. That is a huge discussion and decision; it should not be handed over to the Treasury to enact simply through statutory instruments. I am exceedingly concerned that using this legislation, we will find ourselves in a position where because of Treasury decisions, our negotiators will find that no matter what they wish at the end of their negotiating period, we will have diverged significantly in financial services, making it almost impossible to reconnect parts of the market. If the industry sees that we will go through a period in which that may happen, it will make decisions about where it puts operations, activities and jobs that would not be in the long-term interest of the UK. That two-year period—exactly the period when this legislation applies—is critical. We will basically delegate decisions on whether equivalence continues to be UK policy that come into effect in this House only through the weak medium of statutory instruments.
I see this measure as a safeguard. I recognise what was said by the noble Lord, Lord Flight: that some things about future European regulation in the financial services industry may be unsatisfactory and that we may decide to diverge from them. But it really should not be the Treasury’s decision to do that and it should not be the Treasury’s decision to shut off the possibility of creating a long-term equivalence regime. That is why I support this amendment. If we accept that within this Bill and the Government decide that there are indeed instances where they want to diverge, they can bring forward primary legislation. It is simply that they could not do that through secondary legislation in the way that this Bill would currently allow them to do so. That is too major and fundamental a decision.
I remind the Committee that the financial services industry is probably the most important sector in our economy. It delivers something like £76 billion a year in taxes which support our public services. To make a decision that will fundamentally impact on key aspects of the industry and with all the consequences that that entails must surely need to be done only through primary legislation and with the full and total engagement of this House. That is why I am particularly concerned about this clause.
I did not hear the noble Lord across the Chamber, but it does not affect the point. He wants to vary the level of the bar—that is the issue. I do not object in principle: he has a right as a parliamentarian to put forward proposals for changing the level of the bar. However, I object strongly that the Government should be allowed to make those changes by decree, the power that is given to them by this Bill, but we will return to that on Report.
At the moment, the intentions of the European withdrawal Act are elaborately debated in this House, precisely to meet the objective rightly set out by my noble friend Lord Tunnicliffe: that there should be a transposing of European legislation to British law and any further changes to the law should be sufficient only to prevent, remedy or mitigate deficiencies in retained EU law. That is a limited objective which justifies the power of the Government to do this by Orders in Council. As soon as we get to much wider political objectives—the kind that the noble Lord has just set out and as set out by this amendment—it completely undercuts the justification for this Bill. The justification for this Bill should surely not be for major departures of this kind in the law and the regulatory regime to be made by Orders in Council rather than by the full, open and proper debate which is necessitated by introducing primary legislation.
My Lords, first, I declare my interest in the register. I want to make a small point, to which no one has referred so far. There is quite an importance in the various trade and regulatory bodies to discuss with the Treasury, and potentially with the regulator in the EU, what makes sense and what does not. That is a check on the Government having too much power where they will potentially have to do things in a way that is not approved by the noble Lord, Lord Adonis.
(5 years, 8 months ago)
Lords ChamberFair banking principles are upheld currently by the Financial Conduct Authority. I come back to the point that the access to banking standard is now in place, and has been in place since last year. It requires much greater consideration and consultation before branches are closed. Alongside that, the Government have been investing in the Post Office network to the extent of some £2 billion since 2010. Those two factors will, I believe, help address the majority of concerns.
My Lords, I declare an interest as a director of Metro Bank. Are the Government aware of the extent of the services and branches that the new banks are bringing to this country? Metro Bank has just opened its 62nd branch and will continue to add branches. It has gained 1.5 million customers in less than 10 years. My point is that modernisation is happening, and it is often the new banks that are providing what people want.
Modernisation is indeed happening and challenger banks are making a big contribution to the way that banking services are delivered. The reality is that digital online banking is now conducted by 71% of the population. Next year, mobile apps will overtake digital banking in service delivery. That is leading to changes in our high streets, communities and villages. They need to be taken into account, but so too does the changing way in which we pay for services.
(5 years, 9 months ago)
Lords ChamberMy Lords, I welcome this pragmatic Budget, which addresses a lot of the issues that voters have seen as needing to be fixed for some time. There is within the Budget an exhaustive list of such issues, both large and small. The Chancellor is fortunate that the public finances have improved substantially at a particularly convenient time. Economic growth for next year has been revised upwards to 1.6%, while employment has been revised up by 800,000 more jobs, and wages are forecast to rise above inflation for the next five years, considerably increasing living standards. We have met our borrowing target three years early and the annual deficit is down to 1.9% of GDP. Borrowing is £11.6 billion lower than forecast. We have also met our debt target three years early and delayed recovery from the 2009 recession implies that tax revenues are likely to continue to be better than forecast for some time, as was the case in the recovery from the 1990 to 1992 recession, for over 10 years.
Some improvement in productivity growth is forecast, but not enough; growth is forecast at 1.65% per annum rather than 2.6%. The main cause remains that it is cheaper and lower risk to produce more by taking on more staff than by committing to major capital investment. The 800,000 increase in employment by 2022 reflects this very point. The increase in the minimum wage addresses this issue in part, but employees will still benefit substantially from wage subsidies channelled via universal credit. History has shown us that where pay is subsidised by the state, productivity suffers.
Most of the budget stimulus comes from increased government spending as opposed to tax reductions, in particular the huge increases in NHS spending, amounting to some £20 billion per annum over five years. Interestingly, this is mostly NHS England catch-up. The other main increases in government spending are on universal credit at more than £1.7 billion, £1 billion on defence and £1.6 billion on local authorities, along with a total, looking seven years ahead, of £28 billion of investment in roads.
The main items of lower taxation are the increases in personal allowances and the higher rate of income tax band, together costing £2.8 billion, and reducing business rates by a third for values below £51,000. PFI has been abolished, but leaving some £200 billion to be paid off. The extent to which this and some £50 billion of student loans that are unlikely to be repaid have been provided for is not clear. There is also an undefined spending provision of £58 billion in the Red Book for “other, including EU transactions”. I wonder what that is about.
There are three main measures to help more people into home ownership, which others have addressed in more detail. I am disappointed and surprised that the Chancellor has not addressed the crackpot stamp duty regime introduced by George Osborne that is killing the housing market in London and the south-east and preventing people of my age trading down, thus vacating larger houses for people with young families. Among the welter of statistics in the Budget is one showing that the 2004 stamp duty take was a disaster. The confiscatory tax on more expensive property failed to raise the expected revenues. The Government got it wrong and forgot about the Laffer curve. Stamp duty revenue is forecast to fall by £1 billion this year and to decline in each of the next five years. At an affordable level of stamp duty, revenues should be at least double. The uncommercial hike in stamp duty flies in the face of the long-standing economic truth that if marginal rates are too high, revenues will fall. The Government should forget about being scared of cutting for fear of being attacked by Labour as the party of the rich. Osborne’s stamp duty was a mistake that has damaged the housing market and needs correcting urgently.
(6 years, 5 months ago)
Lords ChamberWe have said that we are open to that. It is one option being looked at by the Green Finance Taskforce, and it feeds into the work of the Green Finance Initiative in the City of London, which is doing great work in this area. However, we should not overstate the extent to which we are being left behind. We are in a position where some 63 green bonds in seven currencies listed on the London Stock Exchange, amounting to £20 billion—that figure represents an increase of 93% between 2016 and 2017. However, we will keep all options open and listen to the advice that we are given.
My Lords, will the Government consider allowing local authorities to raise funds by bond issues, particularly in areas of environment expenditure?
Many of those areas are for the local authorities concerned to look at. One thing that we have introduced is the clean air fund, which was announced by the Chancellor, and some £220 million will be available specifically to help local authorities in that area, but of course local authorities are able to come forward with their own proposals, should they choose to do so.
(7 years, 1 month ago)
Lords ChamberThe EU agreed that deal with great support from the United Kingdom. We have made it very clear that we want to replicate such deals and potentially get even better terms for our markets. We have seen a tremendous increase in the value of exports over the past year—up by 5.8%, and up by 34.8% since 2010. We believe that we can do better than that outside the European Union.
My Lords, will the Government look at arrangements for the financing of exports in comparison to both the US and France? This country is much less helpful and, post-ECGD being privatised, quite a few businesses still find it difficult to get exports financed.
My noble friend will be aware, of course, that the export finance levels were doubled by the Chancellor in the Autumn Statement last year. That will be a significant increase. Some 279 companies had access to export finance and more than 70% of those were small and medium-sized enterprises—precisely the sorts of organisations that we need to encourage to do more.
(7 years, 6 months ago)
Lords ChamberMy Lords, I congratulate the noble Lord, Lord Bates, on his excellent introduction to the Bill. I declare my interests as set out in the register. I greatly welcome the Bill and wish to speak out in support of it and the CDC. What it has done over the last five years or so is no mean achievement, making successful investments in parts of the world that are difficult to operate in. It has been a civilised and professional body; references to merchant banks are not entirely fair, because it has focused on need just as much as on commercial attractions.
The CDC has also become very capable of investing and managing third-party funds in Africa and India. I hope that that may develop as a new part of its business. As I understand it, it operates in three separate parts. There has been private equity investment, largely in east Asia and Africa, amounting to some $3 billion. A professional fee of, I think, 0.25% is paid for the management of those assets. The Bill will significantly increase the scope here. The second area has been direct equity investment, again in south Asia and Africa, of the order of $1.2 billion, and thirdly debt investment of some $400 million. As has been pointed out, the increase in the size of those investments over the last five years has arisen from their success rather than from additional funding.
The Bill is about significant increases in funding for the CDC—an initial increase from £1.5 billion to £6 billion, and then a route is provided with delegated powers for the Secretary of State to go up to £12 billion. That is a substantial increase, but it is not widely realised that the CDC and its associates are wholly government-owned. This is not the Government funding third-party entities; they are funding another limb of government to operate effectively on a commercial basis. It is still a government entity.
I am a member of the Delegated Powers and Regulatory Reform Committee, which, as noble Lords will be aware, has opined that the Bill inappropriately delegates power without demonstrating the need for it. Personally, I have mixed views. I understand the point but I repeat my own: that this is government advancing funds to another part of itself. I tend to think that is justifiable, and that the case for increasing the funding has also proven itself, so I do not see the need for primary legislation to authorise the additional funding.
The key point is that the CDC’s record, particularly over the last five years, stands for itself. I remember times when there was criticism of it, and it is extremely heartening to see how successful it has been, in very difficult territory.
(10 years, 1 month ago)
Lords ChamberThe Girl Summit is extremely important. The right reverend Prelate is right about the gender gap in India, but I also notice that in the budget of last week money was put into trying to ensure that girls attend and are safe in school. I have myself seen a major programme which puts money into the hands of families of girls to try to ensure that they stay in school and have the incentives to be there.
My Lords, does the Minister agree that the most important way to reduce poverty in India is to increase its growth rate? It has lagged behind that of China significantly over the past decade for a variety of reasons, whereas China has indeed alleviated poverty dramatically.
I agree with my noble friend that growth is essential for reducing poverty. As he will know, Mr Modi has a record in this regard. What he is doing at the moment by investing in that growth, stabilising prices and investing in infrastructure is encouraging because that is how he is most likely to relieve poverty.