Horizon Europe: UK Participation

Lord Forsyth of Drumlean Excerpts

Tuesday 31st January 2023 Lords Chamber

[Lord Callanan (Con)]

I always stand ready to receive advice from the noble Lord about how we can meaningfully enter into negotiations with someone who does not want to meaningfully enter into negotiations with us. Obviously, the Labour Opposition know better than we do on this.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think that the Government might be more successful in delivering what everyone wants if the Opposition do not keep taking the side of the EU, which is responsible for this?

[Lord Callanan (Con)]

My noble friend gets the Opposition riled more than I do sometimes. Criticism of the EU is almost blasphemy in some parts of this House, but the reality is this is the fault of the EU. We stand ready to continue the negotiations and to associate as soon as the EU is prepared to talk to us about it.

Electric Vehicle Battery Production

Lord Forsyth of Drumlean Excerpts

Monday 23rd January 2023 Lords Chamber

[Lord Callanan (Con)]

I think we acted appropriately. We agreed a grants award with this company, and we very much hoped that that project could be taken forward. It was a substantial amount of grant aid, but appropriate due diligence was done. The company produced a business plan and we set out an agreed series of milestones that it needed to meet, including securing the necessary private investment, before the public funds could be released. Unfortunately, it did not manage to achieve that. As I said in response to the noble Lord, Lord Lennie, noble Lords would have criticised me if we had released the funds and the company had then gone into administration.

[Lord Forsyth of Drumlean (Con)]

Jaguar Land Rover and Mini are iconic examples of British culture and manufacturing. How can the Minister be satisfied with new Jaguar Land Rovers only being supplied with one key because the company does not have chips, and with electric Minis being made in China? Surely this cannot be right, and the Government need to get a grip on this.

[Lord Callanan (Con)]

I know that my noble friend has personal experience of problems with his keys, and I hope they are resolved. That is not intended as an obscure comment—his is a genuine complaint, and I know it will be resolved. Of course, it is always regrettable if manufacturing is outsourced overseas, but the UK car industry has been successful in the past, and we have one of the biggest car industries in Europe. A massive programme of transformation is required in the industry as we move towards more electric vehicles, but I am sure that the industry will rise to the challenge.

Renewable Energy: Generation Licences

Lord Forsyth of Drumlean Excerpts

Tuesday 13th December 2022 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Baroness for that, which is totally unrelated to the Question she tabled. There have been almost 1,000 generation licences issued. It is a demand-driven process. All generators below 50 megawatts are exempt from having a licence in the first place.

[Lord Forsyth of Drumlean (Con)]

My Lords, could my noble friend the Minister indicate what has happened in recent days, as temperatures have fallen so low and there being no wind, to the cost of electricity as a result?

[Lord Callanan (Con)]

My noble friend makes an important point. I suspect that he knows the answer to his own question: because it has been relatively still, there have been relatively small amounts of wind in the power sector, so the other sources of power—nuclear, imports, gas, et cetera—have moved in to fill the gap. That is how a diverse system should work.

Employment Policies

Lord Forsyth of Drumlean Excerpts

Tuesday 6th December 2022 Lords Chamber

[Lord Callanan (Con)]

I thank the noble Lord for his question. It is slightly unrelated to the point under discussion, but I would be happy to get back to him in writing.

[Lord Forsyth of Drumlean (Con)]

My Lords, could my noble friend tell me whether it is consistent with the International Labour Organization’s declaration on fundamental principles and rights of work to have Ministers in this House one-third of whom are unpaid?

[Lord Callanan (Con)]

The ingenuity of my noble friend in seeking to ask his questions knows no bounds. As far as I am aware, Ministers do not have employment contracts. We serve at the behest of the Prime Minister and sovereign, and I am sure that most Ministers are happy to continue doing so.

Newport Wafer Fab

Lord Forsyth of Drumlean Excerpts

Tuesday 22nd November 2022 Lords Chamber

[Lord Callanan (Con)]

As was printed in it, the final order was based on the technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site. The noble Lord has read the final order. As I said in a previous answer, this has no implication for any other policies. Every one of these transactions is looked at on national security grounds in the context of the legislation that was passed giving quasi-judicial power to the Secretary of State. It has no implication for any other sectors of the economy. Every transaction is looked at on an individual basis.

[Lord Forsyth of Drumlean (Con)]

My Lords, I bought a new Land Rover in July, and I am still waiting for a second key because of the shortage of chips. Given the Chinese aggression towards Taiwan, and given its dependency, surely this decision is to be welcomed. We should aim for a degree of self-sufficiency, as far as is possible, in the production of chips, given our determination to be a country which is secure against totalitarian states and their aggression.

[Lord Callanan (Con)]

I am sorry to hear about my noble friend’s Land Rover key; I hope it is restored to him as quickly as possible. We have a very active semi- conductor manufacturing and research and development facility in this country. We have over 100 companies actively working with compound semiconductor devices. Around 5,000 UK companies, 90% of which are SMEs, are designing and making electronics components devices, systems and products. The Chancellor announced an increase in funding in this area. The south Wales cluster is particularly important. We are spending hundreds of millions of pounds promoting it. We are very proud of it. This has no implications beyond that specific transaction, which was considered on national security grounds under the legislation, as the Secretary of State is required to do.

Prepayment Meters: Pricing

Lord Forsyth of Drumlean Excerpts

Tuesday 11th October 2022 Lords Chamber

[Lord Callanan (Con)]

I refer the noble Baroness to the Answer I gave earlier: using a prepayment meter is not the most expensive way, and many customers choose to do it for their convenience. The licensing conditions for Ofgem reflect the cost of serving different groups of customers. Of course, we keep these matters under review, but if we equalised it, then those paying by direct debit—often those who are fuel poor as well; there is a higher percentage of customers on that level —would end up paying more. There are no easy answers to this.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not accept that it is all very well talking about those people paying on direct debit, but we are talking about people who, if they have a bank account, are probably overdrawn and are certainly not in a position to do so? I pay by direct debit, but I do not understand why my standing charges, which are a major part of the costs, are going up as well as the energy costs. At a time when the Government are giving huge support to consumers and therefore to the utilities themselves, which would otherwise be facing severe financial difficulty, do we not have a bit of leverage and can we not speak up for those people struggling to pay those bills?

[Lord Callanan (Con)]

We are helping those struggling to pay bills; I refer the noble Lord to the massive programme of support that we have put in place. These charges are set by Ofgem. I am aware that the standing charge is a controversial subject, but that reflects the network costs and other costs that every customer has to bear in addition to the unit costs of gas and electricity.

Economy: The Growth Plan 2022

Lord Forsyth of Drumlean Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Callanan (Con)]

I will certainly look at doing that but, as I said, we are preparing for the legislation. There is furious drafting going on at the moment. It will be in the House shortly. I think noble Lords will find that it addresses some of the points they are raising, but I would be happy to look at holding a seminar as well if they would find that helpful.

Once again I can only agree, as I normally do, with my noble friend Lord Forsyth’s words; what a great Budget Statement it was. He rightly noted, for instance, that investment comes from retained profits after tax. The noble Lord, Lord Bilimoria, for his part, agreed that it is absolutely right to target growth. My noble friend Lord Lamont said that going for growth is a laudable objective. My noble friend Lord Lilley said simply that growth is crucial. All were correct. I cannot agree with everything that the noble Baroness, Lady Wheatcroft, said—I do not normally agree with her very much—but she was right to say that, on growth, the problem has been about delivering.

My noble friend Lord Frost observed that the Government’s opponents think that the right way forward is more of the same, while our belief is that we have to do things differently. The measures in the growth plan represent an ambitious first step towards getting to the 2.5% target through removing barriers to the flow of private capital, supporting skilled employment, accelerating infrastructure construction, getting the housing market moving and cutting red tape for businesses. Historical experience suggests that 2.5% GDP growth is ambitious but achievable given the growth that the UK has observed in the past.

Independent economic forecasters have estimated that the energy package could reduce the headline rate of inflation by around 5% by freezing energy bills. As always, the Chancellor is of course working closely with the Governor of the Bank of England to tackle inflation and closely co-ordinate support for the economy. While more government borrowing is required in the short term to tackle high energy prices, the Chancellor is committed to seeing government debt fall over the medium term. The independence of the Bank of England is sacrosanct and the Government have reconfirmed their commitment to the monetary policy remit. The Government have full confidence in the Bank of England to take action to get inflation back to target.

The right reverend Prelate the Bishop of Durham and the noble Baroness, Lady Brinton, used the phrase “trickle-down economics” as if it is somehow official government policy. I am afraid that, as my noble friend Lord Hannan said, this phrase is a fantasy of extremely fertile left-wing imagination. We have no such policy, as my noble friend Lord Bethell said. No Minister has ever used that phrase. I cannot be clearer: it is fantasy.

The noble Baronesses, Lady Smith of Basildon, Lady Bowles of Berkhamsted and Lady Fox of Buckley, discussed the perceived market reaction to the Government’s decisions. Of course I cannot get into commenting on specific financial market movements. They are determined by a wide range of international and domestic factors. We recognise that there has been some market volatility, which is to be expected as financial markets adjust to policy decisions. The Government do not have a preferred price or yield for assets in financial markets; the price is set by that market. I note, however, my noble friend Lord Lilley’s astute observation that sterling has recovered against the US dollar.

On corporation tax—again, this was mentioned by the noble Baroness, Lady Smith of Basildon—the Government have prioritised cancelling the corporation tax rise and announcing the permanent level of the annual investment allowance to support businesses and increase the productive capacity of the economy. Importantly, the decision on corporation tax is not a cut: it is not proceeding with a previously announced increase.

Meanwhile, the income tax rate cut is being brought forward to April 2023 instead of 2024. This is the first cut to the basic rate in 15 years, supporting over 30 million taxpayers to keep more of their own income. Taxpayers in England, Wales and Northern Ireland will all gain around £170 on average.

The noble Baroness, Lady Walmsley, made the point that freezing the personal allowance is bad for low-income households.

[Lord Forsyth of Drumlean (Con)]

I apologise for interrupting my noble friend the Minister at this late hour. Can he explain why, as a result of the cut in the basic rate of income tax, it is necessary to send money to Scotland to compensate them for English taxpayers paying less?

[Lord Callanan (Con)]

My noble friend is tempting me down a difficult road with the Barnett formula. I am sure that he will allow his point to stand, but I will not get into an argument about it at this late stage.

The Government equalised the primary threshold and the lower profits limit, the point at which employees and the self-employed respectively start paying class 1 and class 4 NICs, with the personal allowance at £12,570 from July 2022. This was the largest ever increase to a personal tax starting threshold, with an almost 30% increase. About 2.2 million working people have been taken out of paying NICs altogether, on top of the 6.1 million who already do not pay NICs.

The right reverend Prelates the Bishop of Durham and the Bishop of Derby both spoke on the importance of benefits, and I know that the House had a discussion on this earlier today. The next annual review of government-provided benefits is due to commence this autumn, and the Government will announce their outcome following this review.

Achieving economic growth is about a good deal more than just cutting tax, crucial though that is. The Government have announced a series of complementary steps to support that growth. As my noble friend Lord Wolfson of Aspley Guise rightly noted, supply-side reforms are key, and the Chancellor made a series of announcements to achieve those reforms.

The noble Lord, Lord Davies of Brixton, asked about IR35. The Government recognise that administering the reforms places a high burden on businesses that engage contractors. The Government’s overarching priority is growth, so now is the right time to simplify the tax system and reduce those burdens, so that businesses can focus once again on core profit-making activities.

The noble Lord, Lord Hendy, questioned the Government’s plans on strike legislation, which were also mentioned by my noble friend Lord Northbrook. On this, I agree with my noble friend Lord Dobbs that the Government should be on the side of the workers trying to get to work. I confirm that the Government will indeed legislate to implement our manifesto commitment on minimum service levels. Our plans will also ensure that staff in organisations that are in active industrial disputes always have the opportunity to resolve disputes when fair and meaningful pay offers are made from employers. The measure will make it simpler to end industrial disputes over pay and ensure that trade union leaders do not have undue influence in causing disruptive strike action through rejecting fair pay offers without the consent of their members.

The noble Lord, Lord Patel, noted the importance of capital investment, particularly in research, science and innovation. The Government are committed to their target to increase R&D investment to 2.4% of GDP across the economy, which I know that the noble Lord will welcome. At the 2021 spending review, the Government committed to £20 billion by the end of the SR period, £5 billion more than in 2021-22 and the largest ever sustained uplift in public research and development spending.

The noble Lord, Lord Inglewood, asked about the business rates offer in investment zones. Investment zones could benefit from a range of time-limited tax incentives over the next 10 years, such as reliefs on business rates, stamp duty, land tax and employer national insurance contributions. Businesses in designated areas and investment zones will benefit from 100% business rates relief on newly occupied and expanded premises.

Crucially, the Government understand that growth and sustainable finances go hand in hand and that maintaining fiscal discipline will provide the confidence and stability to underpin long-term growth. As the Chancellor said last week, there is no path to higher sustainable growth without fiscal responsibility.

The noble Lord, Lord Liddle, said that he did not believe that the numbers could be made to add up. The point of the medium-term fiscal plan, three weeks from now, is to do exactly that. My noble friend Lord Lamont rightly said that fiscal responsibility is not the enemy of growth and furthermore noted that the Chancellor has the resolve and determination to face these challenges.

Given the exceptional circumstances, we moved quickly to provide significant support for households and businesses in the first days and we are acting swiftly to set out a growth plan. The Chancellor has brought forward the medium-term fiscal plan and OBR forecast date to 31 October, alongside the publication of the medium-term fiscal plan. This reflects the Chancellor’s desire to provide clarity and certainty, by setting out a plan to get debt falling and by publishing a full economic and fiscal forecast.

The core economic mission of this Government is growth. We have a plan to achieve it. The Prime Minister promised that this would be a tax-cutting Government and we are keeping that promise. Most importantly, we promised to release the enormous potential of our great country, and that is what the growth plan does and what this Government are determined to deliver.

Low-Income Families: Energy Cost Support

Lord Forsyth of Drumlean Excerpts

Tuesday 6th September 2022 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is commenting on proposals that he has not yet seen. The House will not have long to wait, and a lot of options have been worked on over the summer. As well as putting preparations in place for the Energy Bills Support Scheme, which I remind the House will be rolled out from 1 October in a series of monthly payments, other options have been prepared. The energy price rise is unprecedented, and we all know the reasons for that. The noble Lord will have to be patient and wait and see what we announce.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not agree that the reason why 46% do not pay income tax is that this Government have raised their thresholds? If it was right to pay an extra £20 in universal credit during lockdown, when circumstances were bad—they are considerably worse now—should we not look to increase universal credit payments on a temporary basis?

[Lord Callanan (Con)]

My noble friend makes powerful points on both the issues that he raises. Of course, we should be proud of our record in taking the lowest paid out of income tax altogether, but I am sure that the new PM will want to bear my noble friend’s words in mind.

Winter Heating Initiatives

Lord Forsyth of Drumlean Excerpts

Thursday 7th July 2022 Lords Chamber

[Lord Callanan (Con)]

I am slightly confused by the noble Baroness’s question. Yes, of course, we are rolling out the energy bills support scheme, which is a £400 payment that will be delivered through energy bills directly to all consumers. There is a considerable package of support. I could list all the other measures if the noble Baroness had time but there is a £37 billion package of cost of living support across the economy.

[Lord Forsyth of Drumlean (Con)]

My Lords, could my noble friend help me? Surely the easiest way to help people faced with large energy bills is to remove the tax from them and cut the 5% rate of VAT?

[Lord Callanan (Con)]

Of course, the rate of VAT has already been reduced on some energy-efficiency measures, but my noble friend makes a good point and I will be sure to convey it to the Treasury.

Post Office: Horizon Compensation

Lord Forsyth of Drumlean Excerpts

Thursday 30th June 2022 Lords Chamber

[Lord Callanan (Con)]

Officials and, I am sure, Ministers are keen to learn the lessons, but the inquiry is the best place to fully go into all these matters, which took place over decades, as I said. It will get to the bottom of this and the appropriate individuals will be held responsible.

[Lord Forsyth of Drumlean (Con)]

My Lords, I congratulate my noble friend on the brilliant job he has done on this, but can he help me on the question of Fujitsu? We do not need a public inquiry to tell us that the software was deficient; we have reports of whistleblowers saying that they knew it was. So why is the taxpayer having to pick up the bill for this, and why is Fujitsu not being forced to pay up? If it is not prepared to do so, why on earth are we allowing it to do any work for any Government or anyone else with whom we have influence?

[Lord Callanan (Con)]

As my noble friend knows, I have considerable sympathy with his points, which, on the face of it, seem obvious. But we need to wait for the inquiry to positively establish the facts and lay them out in stark detail before considering what further steps to take.