Business of the House

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 4th September 2019 Lords Chamber

[Lord Forsyth of Drumlean]

Well, the Liberals say: “We would never do that”. The Chancellor has announced major increases in expenditure on education, on health—

[Lord Newby (LD)]

My Lords—

[Lord Forsyth of Drumlean]

I know noble Lords do not want to hear this—on health, education and social care. This very day I had a letter from the Secretary of State for Health in my capacity as Chairman of the Economic Affairs Committee responding very positively to the future of social care and the commitments being made. We have no opportunity to discuss that this afternoon. We have no opportunity to have the Statement because this game-playing by the Opposition continues.

[Lord Newby]

I am interested to know whether the noble Lord could give an example of when this House had taken the spending Statement by the Chancellor on the day on which it was made.

[Lord Forsyth of Drumlean]

The noble Lord knows perfectly well that this is a self-regulating House. If the Government and Opposition wished to do so, that would be possible. Can he give me an example of when, in the entire history of this House, anyone has put forward a guillotine Motion on the Order Paper? I will give way to him if he can, but he cannot, because it is utterly and absolutely unprecedented.

[Lord Newby]

I am sorry for interrupting the noble Lord, but I think it might be to the benefit of the House if I answer all his points sequentially when I make my speech.

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[Lord Forsyth of Drumlean]

That reminds me of the points that Screaming Lord Sutch used to make about the Monopolies Commission in various election campaigns. If there is a Division on this matter, I hope that the noble Baroness will join us in the Lobbies because she is making a very important point. In order to prevent the guillotine procedure being used in this House, it is necessary for us to table amendments—the only thing we can do—that will enable this House to keep talking until one minute past 10 am on Friday. I agree with the noble Baroness that it is outrageous that we should have to do that, but it is her doing. That is what we have to do in order to prevent this dangerous constitutional innovation in this House.

When I say “dangerous”, in agreeing with the former Lord Chancellor, I think it is dangerous for this reason—I am determined to make this point. If this House is going to be subject to a guillotine procedure, we will be in exactly the same boat as the House of Commons. If we are in the same boat as the Commons, we will not be able to do our job of scrutinising legislation, and if we are not able to do the job, what is the point of us continuing to exist? This Motion leads the way to unicameralism. My noble friend Lord Hailsham, who is not in his place, was burbling on yesterday about the elective dictatorship. What this does is to transfer huge power to the Executive.

I know your Lordships do not want me to go on for too long, but we are discussing serious issues which point to us having to be in Committee. I shall make a point which may appeal to our friends on the Liberal Benches and in the Labour Party. If we get to a position where these guillotine Motions can be used in this House, we cannot have a situation where the Government do not have a majority of Peers, so with each change of Government we will end up with a House of about 1,500 to 2,000 Peers as the Government try to maintain that position. What the noble Baroness is doing in order to avert something she supposes may happen—that somehow this House will not operate in its normal way in considering legislation—is putting a bomb under this Chamber and this institution. I hope that I might persuade your Lordships that we should sit in Committee and consider the implications.

Noble Lords will note that I have not sought to talk at length and I have not mentioned Brexit or any of the proceedings in the other place; I am entirely focused on the rights and opportunities of this House. I hope that every Member of this House, if they are not prepared to take this in Committee, will urge the noble Baroness to withdraw this wretched Motion. She said she will withdraw it if the Government give an undertaking to give safe passage to a Bill which has not even been passed in the other place. She might like to reflect on this. What is the Prime Minister meant to do when the Opposition are now so gutless that they are not even prepared to have a general election and let the people decide on these matters; when they are going around the country saying they want people to have more opportunity to discuss the issues arising, but they are bringing in guillotine Motions in this House to prevent us discussing those issues? It sounds like—are we allowed to say “hypocrisy” in this House? Is it parliamentary? Whatever the equivalent of hypocrisy is, that is what we are seeing from the Front Bench today. I beg to move.

[Lord Newby]

My Lords, I support the Motion of the noble Baroness wholeheartedly. I do so, according to the noble Lord, Lord Forsyth, as a member of a bunch of malcontents who, apparently, are being dictated to by Jeremy Corbyn. Well, you could have fooled me. The Motion is proposed by the Leader of the Opposition as a matter of convention, but it is supported absolutely by me and my colleagues on these Benches, by many on the Cross Benches—including many of the most distinguished parliamentarians, civil servants and former judges in this country—and by a significant number on the Conservative Benches. To try to characterise, to trivialise, the motivation behind the Motion as something to do with a plot by Jeremy Corbyn does the noble Lord and this House no service.

In supporting the Motion, I am not acting lightly. I have sat through many thousands of hours in your Lordships’ House, at literally every hour of day and night, when there has been no time limit. I have accepted, through stiff bones and weary eyes that, on balance, our normal system was preferable to that in the Commons where, as the noble Lord says, so many debates, however important, are severely truncated. I sat through 150 hours of debate on the withdrawal Bill, when debates on individual amendments often took several hours. I did so cheerfully, despite the odd moments of tedium, because I knew that we were debating issues of first importance for the country and that they deserved exhaustive deliberation. I would have been more than willing for the debates on the Bill that we expect from the Commons tomorrow, and which we have to make provision for today, to follow our normal procedures. But if I had done that, I would have had to acknowledge that there would be a real—

[Lord Forsyth of Drumlean]

I must point out to the noble Lord that we do not have a Bill. When he uses the phrase, “we have to make provision for it today”, the provision he is making is to prevent this House discussing it properly. How does he justify that?

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[Lord Newby]

The provision we are making today is specifically to allow this House to debate it properly and in a proportionate manner. If, however, we had simply waited for the Bill to arrive and started debating it tomorrow under our normal procedures, I would have had to acknowledge the real possibility that it would not pass. The reason for that is straightforward: we are faced with Prorogation on Monday next, and if the Bill is to pass, it must receive Royal Assent by then. In the absence of some sort of time limits on our proceedings, even with good will—and even if we sit over the weekend—things would be, at best, tight. However, it became clear at an early stage that such good will, at least from the Government’s side, would not be forthcoming.

Last Thursday, I was contacted by a senior political journalist. She had just been in discussion with a Downing Street spokesperson. The Downing Street line was that if the Bill, which is being debated in the other place today, passes the Commons—as it is likely to do—it would not get through the Lords because there would be a government-inspired filibuster. I have no reason to believe that Downing Street was not accurately representing the position of the Government, although I am willing to be told that it was not. Indeed, the spate of amendments before us today, clearly co-ordinated, gives some support to that thesis. Given that I believe that this is an issue of the first importance for the future of the country and that we will face a filibuster on the Bill itself, what options lay before us, other than to shrug our shoulders and capitulate?

The first was that we could have repeated the performance that we had with the procedural amendments on the substance of the Cooper/Letwin Bill. As noble Lords know, we were able to get that through only because we repeatedly moved that the Motion be now put. We would have been faced with that prospect on the substantive issues of the Bill and some issues might well not have been debated at all. That did not seem to be a sensible way forward.

The only other alternative before us was a timetable Motion such as we have today. It has of course been objected to on the grounds that it goes against our normal practice, that it will set a baleful precedent and that it is intended to curtail debate. However, as has already been said, we are not seeking to stifle debate. I am happy to debate hours into the night with the noble Lord, Lord Forsyth—it is a peculiarity of mine that I quite enjoy it. However, the brutal, unprincipled Prorogation with which we are faced on Monday is specifically there to curtail debate, and it is in the context of that Prorogation that we have to decide what we do today. It goes against our normal practice. According to the noble Lord, Lord Forsyth, it is an abomination. That is a pretty strong word but frankly—

[Lord Forsyth of Drumlean]

It was the former Lord Chancellor’s word, aired in the press, to describe the threat of a possible guillotine Motion. “Abomination” is not my word; it was his.

[Lord Newby]

It was a word that the noble Lord happily appropriated. However, how does he describe the unprecedented Prorogation, the sole purpose of which is to curtail debate? How does he describe a senior Cabinet Minister going on the television, as happened at the weekend, and saying that the Government would decide, after the event, whether to follow a piece of legislation duly passed by Parliament? I think that that is an abomination and that what we are proposing is eminently reasonable.

If we pass this Motion, your Lordships’ House will have some 14 hours to discuss the Bill. That is over four times the amount of time being given to it in the Commons. It would give seven hours for the principle of the Bill to be debated. Is that unreasonable? Clearly not. By our normal standards, we are undoubtedly talking about a tight timetable, but in the circumstances it is an eminently reasonable timetable.

Of course, it has been suggested that this is the beginning of a slippery slope, but it is not unusual for your Lordships’ House to take an entire Bill through all its stages in one sitting day. That is the norm for Northern Ireland legislation. However, as the noble Lord, Lord Forsyth, helpfully points out, that is normally done by agreement between the parties. This Bill is undoubtedly urgent and, in the absence of agreement between the parties and as a self-regulating House, it is for your Lordships to decide whether the proposals before the House today are proportionate and necessary in their own right. I hope that we never find ourselves in such a position in the future, but the only future that we should have in our minds today is the future prosperity, security and influence of our country, and in order to protect those we need this Bill and we need this Motion.

Northern Ireland (Executive Formation etc.) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Ping Pong (Hansard): House of Lords
Monday 22nd July 2019 Lords Chamber

[Lord Newby (LD)]

My Lords, early on in the Brexit process the right honourable Kenneth Clarke MP said that we were entering an Alice in Wonderland world. This amendment takes us further down the rabbit hole because it invokes an obscure bit of legislation from 1797 that had a completely different purpose in mind. But we need to remind ourselves why the Commons passed this and why we should support the Commons. It did so because it did not trust the incoming Prime Minister to behave in a constitutionally proper manner. It was not just remainiacs such as my colleagues in the Commons who behaved in this way; it was the 17 Conservative Members who voted for this amendment and the slew of Cabinet Ministers who abstained on it. These are the people who know Boris Johnson much better than I do—much better than most of us do—and they had formed a judgment that he was not to be trusted. That is why they voted the way they did and it is why we should support them.

[Lord Forsyth of Drumlean (Con)]

My Lords, I rise briefly to respond to at least one of the things that my noble friend Lord Hailsham said. He has talked about constitutional outrage but it seems to me that the purpose of this House is to preserve our constitution and our conventions, and that the purpose of the Cross Benches is not to behave in a political or partisan manner. For a fast-tracked Bill such as this, which has not followed the normal timetable of our procedures, to be used as a Christmas tree in this way to fight the ongoing battle between—to use the term of the noble Lord, Lord Newby—the remainiacs and the British people, who voted overwhelmingly to leave—

Northern Ireland (Executive Formation) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Committee: 1st sitting (Hansard): House of Lords
Monday 15th July 2019 Lords Chamber

[Lord Newby]

My Lords, I am extremely grateful to the noble Lord, Lord True, for taking up my invitation to speak before I did. Apart from enlivening proceedings, it has given me the chance to respond to some of the things he said. I congratulate him on having a very acute and astute understanding of the policies of the Liberal Democrats when it comes to Brexit. These are not exactly secret, but he got them to a T.

One thing, however, that I think the noble Lord was wrong about was the suggestion that because we want the people to decide on Brexit, and we would prefer it if they decided they did not want Brexit, we are saying—far from it—that there should be no vote in September in the Commons about a no-deal Brexit. I would welcome such a vote. This amendment, this procedural gambit, is necessary only because we believe it is reasonable to take precautions against the new Prime Minister preventing the Commons having a vote. The only reason for it is that everybody in your Lordships’ House knows that, if the Commons votes on a no-deal Brexit, it will vote it down. The only way you get that outcome is by some kind of chicanery: the chicanery of proroguing Parliament purely for that political purpose. We believe, as does the noble Lord, Lord Anderson, and the other signatories to the amendment, that that would be an improper use of Prorogation.

The noble Lord, Lord True, said that this Session has gone on far too long. Perhaps it has. I should be delighted to have Prorogation on 1 November, but Prorogation requires a Prime Minister with a plan and a Queen’s Speech with some substance. If the incoming Prime Minister has such a plan and such a speech by 1 November, the entire country will be delighted. We fear that there is nothing but vacuity where there should be a programme and that Prorogation will continue far beyond 31 October or 1 November because the Government do not know what to put in a Queen’s Speech.

It is extraordinary that your Lordships’ House is having to resort to a procedural gambit in order to try to prevent a Prime Minister subverting the constitution. That sort of thing happens in tinpot dictatorships. We go around the world saying, “Of course, it does not happen here because we are so much more grounded in constitutional principle. No, it could not happen here”. The truth is that the incoming Prime Minister has not ruled out such a thing. It would have been very easy for him to have said, “Of course, I would never contemplate such a step because I know that it would be a constitutional impropriety and shameful for our democracy”, but he has refused to say that. What are we expected to do? Just sit on our hands and trust in the good sense of the incoming Prime Minister? There may be some people in the Conservative Party prepared to do that, but it does not extend much beyond that.

That is why we have an amendment which is a procedural gambit in a Bill about Northern Ireland: because it is all we have. We have seen no other way to put something on the statute book to prevent the constitutional principles of this country being ripped up. It is of course unsatisfactory to do that, but it is because we are in an extremely unsatisfactory position. That is why we strongly support the amendment.

[Lord Forsyth of Drumlean]

My Lords, I support my noble friend Lord True in his amendment and congratulate those noble Lords who have spoken against it and in support of Amendment 7—I note that quite a few of them are lawyers—on their honesty in admitting that this is some kind of trick or gambit to frustrate the will of the British people, who voted overwhelmingly for us to leave the European Union, and to frustrate the law and the decision taken by both Houses of Parliament. I know that there is a difficulty in the House of Commons in so far as three times as many Members of Parliament voted to remain as voted to leave, but the fact is that Parliament passed the legislation to require people to take that decision and the Government of the day gave an undertaking that that decision would be respected. I am happy to give way to the noble Lord.

[Lord Newby]

My Lords, the Government had a date to do that: 29 March. That date has been put back. To claim that the possible missing of the date of 31 October is a huge impropriety to people who voted to leave in the referendum rather overlooks what has been happening in recent months.

[Lord Forsyth of Drumlean]

We have just heard speeches from the other side of the House against the amendment of my noble friend Lord Cormack, which sought to extend the deadline in respect of the Bill, that it would be foolish to do so because it would take off the pressure and would mean that we were kicking the can down the road. At the same time, it is perfectly clear that the mover of the amendment is passionately determined to prevent us leaving the European Union. That is what this amendment is about.

I wish to make a more general point about the Bill as a whole. The noble Lord, Lord Pannick, welcomed the fact that my noble friend is to join the Constitution Committee, whose report on the Bill is extremely damning. I have never seen a bigger Christmas tree than this Bill—all sorts of things have been added. The Bill has been fast-tracked, which means that there is no opportunity to consider many of the important matters in detail. I do not blame the Government for that. The House of Commons has chosen to add a range of issues and the whole thing is going to be fast-tracked through this House. To my mind, when added to a device to try to frustrate the elected Government implementing what the people voted for in the referendum, that is deeply worrying.

Business of the House

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 26th March 2019 Lords Chamber

[Lord Forsyth of Drumlean]

That comes from the author of Article 50; he has a brass neck. It may sound like a pedantic point, but at the other end of this building, the House of Commons has now become the Executive—or, at least, it will be tomorrow. If the House of Commons is now the Executive, how does Parliament hold the Executive to account? The responsibility lies in this unelected House if the House of Commons has now become the Executive.

Although we have no written constitution and I have never been in favour of our having one, I am beginning to change my view. Our constitution consists of all these little rules and conventions. If we no longer have collective responsibility in Cabinet or people respecting the Standing Orders of this place and the other place, and we have a Speaker who behaves in a way that is unconventional by the traditions of the other place, our constitution itself is being undermined. My noble friend Lord True makes a really important point: we have to respect our Standing Orders because that is what lies between us and tyranny. It is absolutely essential that we take account of that.

I cannot resist making one point. I put down a Written Question, which was answered by my right honourable and noble friend Lord Young of Cookham, asking how many times the Prime Minister had told the House of Commons that we would be leaving the European Union on 29 March. Like every other Question, it is best to know the answer before you ask it, but I was not sure of the answer. I knew it was more than 100 times. The reply I got back was that this information is not collected centrally. I do not blame my right honourable and noble friend for that Answer—I suspect it was written elsewhere—but it is very important that the Executive remain accountable to Parliament. My noble friend Lord True makes a very convincing case. While we have such disorder at the other end of the building, it would be very good if we could maintain our traditions, respect our Standing Orders and operate in a civilised manner that sets an example to the other place.

[Lord Newby (LD)]

My Lords, over recent months a number of quite extraordinary claims have been made about the consequences of actions relating to Brexit. The claim of the noble Lord, Lord Forsyth, that all that separates us from tyranny is whether we take this statutory instrument before or after a committee has expressed a view on it seems up there with the most extraordinary.

This House has been considering statutory instruments that are some 650 pages long. In this case, we are looking at a statutory instrument that is of minuscule length, the meaning of which is absolutely clear and the purpose of which is not disputed by anybody. Therefore, it seems that if ever there were a case where we could do without the normal rules with no jeopardy to the future of the state, this is it. Who in this House thinks we will not pass this statutory instrument? Who thinks that there is any ambiguity in its wording? The sooner we have certainty on a whole raft of Brexit issues, the better. This is one straightforward, easy bit. I suggest we deal with the easy bit tomorrow and then start worrying a bit more about the harder bits.

Brexit: Preparations and Negotiations

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 23rd July 2018 Lords Chamber

[Lord Newby]

My Lords, it is very interesting that the noble Lord should ask that question. We are talking about the most important issue that the country has faced in my lifetime, and I can give him an absolute assurance, as I have said many times—including to him in response to identical questions—that, if there were such a referendum, it would lance the boil of this question. We would accept the outcome and go ahead on the basis of the referendum result.

[Lord Forsyth of Drumlean]

Given that the noble Lord and his party stood on this policy at the general election and received such a derisory result, and that both the major parties got more than 80% of the votes on this matter, how does he square that?

[Lord Newby]

I think that things have moved on since the last general election. At the time of the election, a lot of people believed the slogan on the bus; a lot of people believed a whole raft of things about EU membership, or leaving the EU, which have proved to be false. All I am doing is explaining how public opinion currently stands. The noble Lord might not like it, but that is where we stand. If we go back two years, it was different; if we go back five years, it was different again. When we first had a referendum, it was two to one in favour. Public opinion changes, and it has changed against the noble Lord’s view. That is why he does not like it and that is why he does not want to have a referendum.

European Union (Withdrawal) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 19th March 2018 Lords Chamber

[Lord Forsyth of Drumlean]

The intention is clear. I am shocked, actually, at the noble Lord. He says that he is a unionist but in the debates on the Bill he has propounded the view that the Scottish Parliament should have a veto on legislation passed by this Parliament, and now he is arguing that it is important that people have the opportunity to reconsider their decision after a referendum in which a commitment was made to implement the result. How is that going to play in Scotland, where we have a Scottish Government and a Parliament where a majority voted for independence in a referendum? The words that the noble Lord keeps trotting out—that there should be an opportunity to rethink—will be played back by the nationalists and people who want to break up the United Kingdom. This is irresponsible.

We all know that at the moment both Houses of this Parliament are held with a degree of contempt by the electorate. How are they going to react if, having voted in the biggest vote in our history, this Parliament were to decide to reverse it? There is no danger of that because both this House and the House of Commons voted overwhelmingly to reject the idea of having another referendum.

[Lord Newby]

I am following the noble Lord with great interest. He says that the people will be outraged if they were to be asked again. Why then, when they are asked in opinion polls do they say time after time that they want a vote on the outcome? Why do over two-thirds of all Conservative voters who were recently polled say that they want a vote on the outcome?

[Lord Forsyth of Drumlean]

I have not seen the particular poll that the noble Lord refers to but I saw the poll in the general election, when his party campaigned on the basis that we should have a second referendum and it was utterly destroyed—so much so that it now has to use this House as a platform to put forward its policies, because it is so beleaguered in the House of Commons.

European Union (Withdrawal) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

2nd reading (Hansard - continued): House of Lords
Wednesday 31st January 2018 Lords Chamber

[Lord Forsyth of Drumlean]

But I grew out of it.

We are keen on Edmund Burke quotes. The one I would suggest the House might look at is this one:

“The people never gave up their liberties but under some delusion”.


I was under a delusion that the Common Market would be a free trade area. Instead, it has turned into a European Union which has been a tyranny for many of the countries of Europe. The noble Lord looks quizzical. Go to Greece and see what the European Union has done to the people in Greece.

[Lord Newby (LD)]

Could the noble Lord inform the House what proportion of the Greek population wishes to remain in the European Union?

[Lord Forsyth of Drumlean]

I have no idea what the proportion is, but if the noble Lord is suggesting that they have a referendum then I think he has enough on his plate with trying to persuade the British people that they should have another referendum. This Bill is a major first start in a process which is about taking back control, making our own laws, and being able to police our own borders and spend our own money.

On the devolution issue, as far as Scotland is concerned, because I have nothing to say about Wales, I have to say that it is absolutely hilarious to watch members of the SNP say that there is a major constitutional crisis because they might not have the powers over agriculture, fisheries and other matters which are exercised in Brussels while at the same time arguing vehemently that Brussels should continue to exercise those powers. It is this Government who are going to create the opportunity for those powers to be exercised in the Scottish Parliament. Many noble Lords have made speeches saying that the Bill is defective because there is no amendment to achieve that purpose. It does not require an amendment; it requires people to sit down in a constructive manner to talk about the arrangements that need to be in place in order to ensure that the various nations of the United Kingdom work together. What the SNP is doing is once again turning everything into a constitutional crisis in its efforts to break up the United Kingdom. We should not give it any quarter on that matter, a point which was made very effectively by my noble friend Lord Dunlop.

This Bill is not a vote to leave or remain, it is not a vote on future policy, it is not a vote on whether we have a free trade agreement and it is not a vote on the devolution of EU policy. Let us just think of the volume of legislation that would be required if we did not have some Henry VIII clauses. I looked at the Open Europe 2005 estimate of EU law passed since 1957 and it amounted to 666,879 pages. I have worked out that if Parliament sat for 24 hours a day, seven days a week, and we did that for a year, we would be able to look at each page for 47 seconds. The practical reality is that we need a Bill of this kind to deliver what the people voted for in the referendum. There are people in the Scottish Parliament who say that they will refuse legislative consent. I wish them well if they are going to try to go through all that legislation and legislate for themselves.

I appreciate that I am running out of time, but leaving aside Thomas Cromwell, perhaps I may give a quote from Oliver Cromwell to those in the House who are so firm in their opposition to responding to what the people voted for:

“I beseech you … Think it possible you may be mistaken”.

European Union (Notification of Withdrawal) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Committee: 1st sitting (Hansard): House of Lords
Monday 27th February 2017 Lords Chamber

[Lord Newby]

My Lords, the Minister is entitled not to wish to answer the question—and I can understand why. I will make just three points. First, I am sorry to the noble Lord, Lord Grocott, that I was so hard on him earlier on. I should have welcomed—and indeed do now welcome—his intervention because he has given me some very helpful drafting advice for the amendment that I will be bringing before your Lordships on Report.

Secondly, I have never heard the noble Lord, Lord Rooker, sound so defeatist. If this House took the view that the House of Commons might not accept an amendment that we passed, we would hardly ever pass any amendments. We would certainly not have passed the amendment on tax credits. Therefore, I urge him to take that as a precedent and think that, so impressed by the quality of our arguments, those 20 Conservative Back-Benchers might change their minds in an instant on reading Hansard and that we would get our victory when it went to the other place.

Thirdly, in response to the noble Lord, Lord Empey—a number of noble Lords spoke about the parallels with or differences from Scotland—this is a completely different situation from that which obtains in Scotland. The SNP wants a second bite at the same cherry. We want a vote of the people on a firm proposition, rather than the vote which did take place on 57 varieties of proposition that were assiduously and separately propounded by different people on the leave side. So it is a completely inapt parallel and I cannot accept it.

[Lord Forsyth of Drumlean]

The noble Lord says that the Scottish situation is completely different. The Scottish nationalists argue that people did not know what they were voting for because of project fear. Surely that is precisely the same argument that is being used by the noble Lord.

[Lord Newby]

I have the greatest respect for the noble Lord but I am afraid that that argument simply does not hold water. The principle that we are putting forward in this amendment is straightforward: who decides at the end of a process initiated by the people? Our view is that the people should decide and nothing that any noble Lord has said this afternoon has made me question that principle in any regard. For today, I will withdraw the amendment.

Corporation Tax (Northern Ireland) Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 17th March 2015 Lords Chamber

[Lord Newby]

That is accepted. My noble friend makes a very strong point.

[Lord Forsyth of Drumlean]

No, it is not accepted. My noble friend said that by giving more powers to Northern Ireland, and with it more responsibility, the case for breaking away from the United Kingdom will be blunted. That is precisely the argument which has been used by the Government in Scotland, where we gave more powers after we had won a referendum on independence, and the result is that the nationalists have surged. My noble friend says that no one in Scotland is crying out for corporation tax powers, but the Scottish nationalists are crying out for devo-max. In the past six months, they have gone up to 55% in the opinion polls, and the Labour Party, which has advocated more powers on the same argument as my noble friend has put, is facing annihilation. Can we not learn the lesson that by giving more powers to constituent parts of the United Kingdom, we break the unitary state which is the United Kingdom and give succour to those who wish to smash it up? When my noble friend says that Scotland is not like Ireland because there is no other country it can be, yes there is. It can be Scotland as an independent country outside the United Kingdom. That is the threat.

[Lord Newby]

I am not sure that is a threat in respect of Northern Ireland. I disagree with the noble Lord about both the principle of devolution and its effect. The SNP is at 55% in the polls today but, if I were a betting man, I would say that it will not be at 55% in the polls in 10 years’ time when we have seen how it manages taking responsibility for Scotland’s own income. It seems to me that one of the great weaknesses about the current settlement in Scotland is that the Scots Nats or the Government in Scotland wait to get a cheque from England but, however big it is, it is not big enough, and they do not have the responsibility for raising the money themselves. Now, they will have significantly greater responsibly for raising the money, and that will mean that they have to take more responsibility. I think that is wholly beneficial. I just disagree with the noble Lord, I am afraid.

The noble Baroness, Lady Blood, asked about building societies and credit unions. The effect and the design of the scheme is that in order to attract genuine economic activity, some mobile trades and activities are excluded, including lending and investing. The rules in respect of lending and investing do not distinguish between types of entity, so banks and building societies are treated on the same basis for that purpose. In respect of credit unions, the Northern Ireland corporation tax regime applies only to trading activity in order to encourage genuine employment. The income from the loans that credit unions make to their members is not currently taxed as trading income, so credit unions do not pay corporation tax on that income. Given those special rules already in place, this income from loans will remain outside the Northern Ireland corporation tax rules. Perversely, to bring the profits within the trading income rules, and so within the Northern Ireland regime, would likely result in them paying more tax. I do not think that credit unions are being disadvantaged by this.

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[Lord Newby]

Yes, it is the difference between the 20% and the 12.5%.

[Lord Forsyth of Drumlean]

Will the Minister just elaborate on that? Let us just say for the sake of argument that it is decided to drop the corporation tax rate to 12.5% on day one. The Government have made an estimate that that would cost £325 million. Would the block grant then have £325 million deducted on day one? Is it based on the estimate? Given that we know how volatile corporation tax is from year to year, how would that work? I do not want to be rude, but it does rather feel as though the Government are introducing a Bill without knowing how it will work in practice, or how much it will cost. It does matter, for reasons that the noble Baroness, Lady Blood, pointed out in her speech.

[Lord Newby]

First, Northern Ireland would not lose the £325 million on day one. As I said, there is a transitional period; it takes three years before the full effects work through, because of the time that it takes to get corporation tax returns sorted out. On the second point, on how it works out, the model that is being followed closely follows the model that has been agreed with the Scottish Executive in respect of income tax for Scotland. So a lot of work has been done on that, and the principles and the practice will follow from Scotland to Northern Ireland. I am happy to write to the noble Lord about it—it is extremely technical. But I can assure him that a lot of work has been done on the issue already.

I am well over time. I just say to the noble Lord, Lord Bew, that the double Irish arrangement is coming to an end, so he is right to the extent that the rate would go up there.

As I said at the start, this is a measure that is broadly supported in Northern Ireland by the political and business community. It has raised varying expectations. The view of the Government is that it has the potential to encourage genuine investment and help Northern Ireland to become competitive, boosting the entire UK economy and the standard of living of people across Northern Ireland. But it will be for those in Northern Ireland—business and politicians alike—to ensure that, if and when the Bill comes into effect, it has the desired effect.

Barnett Formula

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 10th February 2015 Lords Chamber

[Lord Newby]

My Lords, there are many different views about where equity lies in this respect. The effect of the transfer of fiscal responsibility means that, going forward, the extent to which Scotland has money to spend will depend increasingly on the success of the Scottish economy and therefore very much upon the effectiveness of the Scottish Administration.

[Lord Forsyth of Drumlean (Con)]

My Lords, will my noble friend reflect on the fact that if it is the Government’s policy that the Scottish Parliament should be more responsible for the money it spends and should raise that money, the corollary is that the grant should be done on a needs basis and not on the basis of a formula that dates back to the 1970s, which clearly disadvantages the north of England, Wales and the rest of the United Kingdom? Why have the Government set their face against the report of the Select Committee of this House on the Barnett formula which spelled this out very clearly?

[Lord Newby]

My Lords, apart from the fact that the parties have supported the Barnett formula, the effect of the changes being made is that the relevance of the Barnett formula going forward is being cut by two-thirds and therefore any disparity that it might bring about will be reduced by an equivalent proportion.

Income Tax

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 19th November 2014 Lords Chamber

[Lord Newby]

My Lords, wages have fallen, but they have started rising in real terms. The OBR and every other forecaster that has made projections of real wages for the next few years in the British economy are firmly forecasting consistent real-wage growth.

[Lord Forsyth of Drumlean (Con)]

My Lords, will my noble friend tell us what the effect of cutting the top rate of tax from 50p to 45p was? Did revenues go up or did they go down? What was the effect of putting up the capital gains tax rate? Did revenues go up or did they go down?

[Lord Newby]

My Lords, the impact of the reduction in the 50p tax rate was about £100 million, when all the secondary effects were taken into account. In respect of capital gains tax, I will need to write to the noble Lord.

Barnett Formula

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 3rd November 2014 Lords Chamber

[Lord Newby]

My Lords, I absolutely agree with the noble Lord that Lord Barnett was a formidable parliamentarian across a range of subjects.

[Lord Forsyth of Drumlean (Con)]

My Lords, I associate myself with the remarks about Lord Barnett, who was a good friend and a great person in this House.

Can my noble friend explain to me how the vow made by all three party leaders in the concluding days of the Scottish referendum, which states that they are committed to,

“sharing our resources equitably across all four nations”,

is consistent with keeping the Barnett formula?

Bank of England

Debate between Lord Forsyth of Drumlean and Lord Newby

Thursday 30th October 2014 Lords Chamber

[Lord Newby]

A notable feature of the referendum campaign was that Alex Salmond was desperately keen to keep the comfort blanket of the Bank of England. As far as I am aware, he never suggested that its name should change.

[Lord Forsyth of Drumlean (Con)]

My Lords, given that the Bank of England has responsibility for ensuring that other banks and financial institutions have proper systems and back-up systems in place, what action has been taken following the failure of the CHAPS system—for which the Bank of England is responsible—that resulted in many people being unable to buy their houses on the day concerned; quis custodiet ipsos custodes?

[Lord Newby]

Quite, my Lords. The Financial Services Act gave the Bank of England new powers in this area. It is conducting an investigation to see what happened in that unfortunate case and what lessons can be learned for the future.

Income Tax: Top Rate

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 15th July 2014 Lords Chamber

[Lord Forsyth of Drumlean]

To ask Her Majesty’s Government what effect the reduction in the top rate of income tax has had on revenue received by HM Treasury.

[Lord Newby (LD)]

My Lords, the forecast Exchequer revenue effect of reducing the additional rate of income tax to 45% is estimated at around £110 million per year. This is set out in table 2.2 of Budget 2013.

[Lord Forsyth of Drumlean (Con)]

My Lords, I am astonished that my noble friend is not prepared to take more credit for the success of the Government’s policy. Is it not the case that the reduction in the top rate of tax from 50% to 45% has resulted in a record level of 28% of all tax revenue being paid by the top 1% of taxpayers? Is that not more than twice the level that was paid by the top 1% of taxpayers when the Labour Government under James Callaghan had a marginal tax rate of 98%? Is not the lesson that lower taxes and fairer taxes are needed in order to cut the deficit and preserve public services?

[Lord Newby]

My Lords, the noble Lord has a better memory than I have. I am very happy to take credit for the Government’s achievements. The proportion of income tax collected from the top 1% has gone up from about 26% to 28% during the lifetime of this Government. Certainly, income tax take from high earners is extremely resilient because they are prepared to pay it at the levels we now have.

Payday Loans: Advertisements

Debate between Lord Forsyth of Drumlean and Lord Newby

Thursday 3rd April 2014 Lords Chamber

[Lord Newby]

My Lords, I do not have that figure. I will write to the noble Baroness.

[Lord Forsyth of Drumlean (Con)]

My Lords, is there not a case for looking at daytime advertising? On the one hand, you have ads that are encouraging people to take out loans at very high interest rates and on the other you have people being encouraged to go on gaming sites. With hindsight, was it not a great mistake for the previous Government to abandon the principle with respect to gambling and advertising that we should not take any measures that stimulate demand?

[Lord Newby]

My Lords, it is a highly contentious issue and there are simply different views on it. As I said, personally I find those adverts distasteful, but that is not to say that I necessarily want to ban them all. One problem with a lot of adverts is that they encourage behaviour that might be thought to be irresponsible. There are a lot of ads on children’s TV for expensive toys and games that encourage children to say to their parents, “Can I have that toy and that game?”, which the parent cannot necessarily afford.

Scottish Independence: Currency Union

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 12th March 2014 Lords Chamber

[Lord Newby]

My Lords, I completely agree with my noble friend. It is highly irresponsible of the Scottish Government to have no plan B, when it has been made absolutely clear that the kind of currency union that they want is simply not on the cards. They have other interesting questions to answer in this respect. As the Governor of the Bank of England pointed out yesterday, Scotland, as a new EU applicant, would have to agree at some point to join the euro. I think at one point Mr Salmond was in favour of that; I am not so sure what his policy is on it now.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think it extraordinary that Alex Salmond has had 40 years to think about how to answer this question and is unable to do so? Furthermore, does my noble friend not think that this is the height of irresponsibility, given that we are not discussing some abstract economic concept here, we are talking about the amount that people will have to pay on their mortgages and the future of Scotland’s families? What advice would he give to the leader of the Scottish separatists at this point?

[Lord Newby]

My Lords, I have many burdens in your Lordships’ House but, fortunately, advising the leader of the Scottish National Party is not one of them. I will point out, however, that on all the available analysis, the likelihood is that were Scotland to adopt the pound, the interest rates that would be payable in Scotland would be significantly higher than they are here—possibly up to 1.65% higher. For an average Scottish mortgage holder, that works out as an extra £1,700 to pay.

Economy

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 28th January 2014 Lords Chamber

[Lord Newby]

My Lords, the important thing about output is that it is rapidly approaching the previous peak. With every passing set of statistics, we find that output is growing more quickly than we thought. It is interesting to note that the figure today of 1.9% growth in output for the past year is significantly higher than the figure that the ONS thought even in December, when it suggested 1.4%. The message from today's figures is that growth is accelerating quicker than most forecasters thought, and all forward indicators suggest that that trend will continue.

[Lord Forsyth of Drumlean (Con)]

Does my noble friend agree that the reason we have successful growth is because of the enterprise policies of this Government? Did he note the remarks made over the weekend by the noble Lord, Lord Myners, who was a Treasury Minister at the time that the 50p tax was introduced, that the reintroduction of a 50p tax would be a return to the bad old days of old Labour and the politics of envy? Does he acknowledge that there is no greater joy in heaven than over a sinner who repenteth?

Taxation: Personal Thresholds

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 20th January 2014 Lords Chamber

[Lord Newby]

My Lords, the most important thing the Government can do as the economy grows is to ensure that the macroeconomic framework is conducive to greater growth. There has been a 300,000 fall in the claimant count within the past year, so that is the single biggest thing that the Government can do to promote the continued reduction in unemployment and long-term unemployment. Youth unemployment has been falling now for five quarters. It is not falling fast enough but a raft of measures, including improved vocational education and an expansion of the apprenticeship scheme, have been designed specifically to tackle that long-standing issue.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend agree that one of the best ways of helping people on the minimum wage to improve their income would be to raise the threshold for national insurance and consider merging national insurance and income tax? That would help employers and those on the lowest pay.

[Lord Newby]

My Lords, the Government have looked at merging national insurance and income tax. It is one of those ideas that is perennially discussed but every time the Government look at it they back off because it is extremely difficult to achieve. The problem with what the noble Lord’s suggests is principally the cost. However, I would remind him that the Government are introducing in the National Insurance Contributions Bill a tax-free national insurance allowance of £2,000 which will benefit every firm but particularly small firms. The Federation of Small Businesses has said that the single biggest consequence of that change will be increased employment.

National Savings and Investments

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 14th January 2014 Lords Chamber

[Lord Newby]

My Lords, NS&I needs to be able to compete effectively with best practice across the financial services sector. The truth is that NS&I has been behind the curve. It is undertaking a major programme to get all its customers online. Bear in mind that NS&I has 25 million customers in this country. That is a massive operation. When it is finished, it will be able to give information to the standard that people expect from the best of the other high street brands.

[Lord Forsyth of Drumlean (Con)]

Did my noble friend really say that it was the role of National Savings to get the best return for the Government? Surely its role is to provide a safe haven—as it advertises— for savers. Are not the savers getting a poor return because the Government are indulging in quantitative easing, which is a transfer of money from those who have done the right thing to those who have borrowed?

[Lord Newby]

My Lords, the Government are not doing quantitative easing, the Bank of England is. On the rate payable on National Savings, as the noble Lord will know, the role of National Savings is to contribute to the Government’s funding requirements. In doing that it has to operate in line with market rates because otherwise the Government are paying more for their money via National Savings than through the gilts market.

Pensions

Debate between Lord Forsyth of Drumlean and Lord Newby

Thursday 12th December 2013 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, will my noble friend, in making his statement that it is important that those who have saved throughout their life get the best return on their savings, bear in mind that the Government’s quantitative easing programme is one of the major reasons that annuities are so poor? Can we have some indication of when the Government might abandon QE?

[Lord Newby]

My Lords, we have discussed many times the fact that low interest rates are a key determinant in supporting growth, and that growth is in the long-term interest of the entire community. The Bank of England has given forward guidance in respect of when interest rates might rise. Monetary policy is firmly in its purview rather than the Government’s.

Banking: Lending

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 12th November 2013 Lords Chamber

[Lord Newby]

My Lords, the decision on setting up the bad bank was, primarily, for the management of RBS. The Treasury and UKFI are obviously in regular contact with RBS.

[Lord Forsyth of Drumlean (Con)]

Does my noble friend not agree that one of the reasons that the banks have had difficulty in providing loans for small business is the disastrous state of their balance sheets, which was the responsibility of the ridiculous monetary policy followed by the previous Government?

[Lord Newby]

My Lords, that was clearly a major contributory factor. However, I refer noble Lords to the review undertaken by Sir Andrew Large for RBS, which found that the bank had failed to meet its own lending standards, had risk-averse staff and took longer to process applications than other banks, and that its treatment of customers in financial distress had led to major negative perceptions of the bank. The bank is now, at long last, moving to tackle many of those issues, but the failures in the way that RBS ran its business were a major contributory factor to its failure in recent years to lend to SMEs the amounts it set itself in its target.

Taxation: Tax Law Enforcement

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 30th October 2013 Lords Chamber

[Lord Newby]

I think the decision taken by Ministers to give an additional £1 billion for compliance activities was pretty clear. Many of the problems that we see with multinationals paying less tax than would appear appropriate are international by nature. That is why we have put a lot of resources into the OECD. We put another £400,000 into the work that it is doing following the G20 summit earlier this year. There is a determination across the international community, to a degree that has not been apparent before, that companies cannot get away with avoiding taxes. This must be dealt with internationally, and that is what we are promoting effectively.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend agree that what the Treasury should be about is maximising the revenue that is taken in tax, and that the best way to achieve that is by having a lower, flatter, fairer tax system?

[Lord Newby]

My Lords, one of the things I learnt as a junior Customs and Excise official—

Future Investment

Debate between Lord Forsyth of Drumlean and Lord Newby

Thursday 27th June 2013 Lords Chamber

[Lord Newby]

I absolutely agree that the north-east has had a high level of unemployment for many decades and compared to the rest of the country. I accept also that it has suffered particularly in recent years because there has been a high level of public sector employment there, which has fallen significantly. The attempts by the Government to shift priorities towards manufacturing and the private sector have already, in some respects, begun to bear fruit in the north-east. Nissan goes from strength to strength and the number of apprenticeships that we are funding helps people in the north-east, as elsewhere, to get skills that enable them to get jobs in the long term. That is how we will get sustainable growth in the north-east.

[Lord Forsyth of Drumlean]

My Lords, I seem to recall that we were discussing dualling the A1 when I was Secretary of State for Scotland nearly 20 years ago. What is needed now are projects that are actually happening on the ground. So what on earth are the Government doing, for example, in persisting with this HS2 project, which we were told yesterday has increased in cost by a third even before a single activity has happened on the ground? It is now set to cost more than £40 billion. It is perfectly possible to have privately funded projects, such as the third runway extension at Heathrow, going ahead, creating jobs and dealing with the very substantial disbenefit created by the chaos at Heathrow. Why is it jam tomorrow when we could have jam today?

[Lord Newby]

My Lords, the noble Lord is usually very good at reminding us about the financial constraints under which the Government are operating. It is not a case of jam tomorrow and no jam today. As I said earlier, in the housebuilding sector, we are putting more money into building affordable housing and all the big housebuilders have said in the past three months that they are increasing their plans for building private sector housing. The great thing about housing is that it starts quickly. As the noble Lord knows, we just do not agree with him on High Speed 2. We find it surprising, when the rest of Europe and much of the rest of the world are investing very significantly in high-speed rail, that some people in this country feel that it is not a sensible technology and a potential source of economic development.

Sterling: Exchange Rate

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 25th June 2013 Lords Chamber

[Lord Newby]

My Lords, the Government have been clear from the start that we want a shift away from financial services towards manufacturing. To a certain extent, that is happening. For example, we had an export surplus in cars last year for the first time in nearly 40 years.

[Lord Forsyth of Drumlean]

My Lords, does my noble friend not agree that the last thing we want is a further devaluation of sterling? Who is thinking about the interests of people who do the right thing and save, but who find that as a result of the programme of quantitative easing the returns on their savings are minimal? Pensioners who go for annuities are robbed blind because they get very little return on their savings. Surely the last thing we need is a weaker pound and the prospect of more inflation, which would hit people on fixed incomes.

[Lord Newby]

My Lords, the Government have no policy in terms of the exchange rate. Equally, the MPC does not target the exchange rate. However, the Governor of the Bank of England, before he retired in recent months, said on a number of occasions that he thought that the level of sterling is, in his view, now about right.

Taxation: Income Tax

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 24th June 2013 Lords Chamber

[Lord Newby]

The absolutely bald point that lay behind the question of the noble Lord, Lord Eatwell, is that when you do this kind of thing at the top end of tax rates, very well-off people take evasive action. That is why it is an ineffective way of raising additional amounts of money. People do not just sit there and pay the tax: they forestall it, postpone it and avoid it. This is why it was a very ineffective way of trying to raise additional funding.

[Lord Forsyth of Drumlean]

My Lords, can my noble friend tell us what the effect was on revenue of increasing the rate of capital gains tax?

[Lord Newby]

My Lords, I do not have that figure immediately to hand, but it was very significant. It was more than the potential loss of revenue from reducing the top rate of tax.

Economy: Fiscal Framework

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 4th June 2013 Lords Chamber

[Lord Newby]

Clearly some do view it as that. It is worth bearing in mind that while we are reducing our deficit to the 3% EU Maastricht target over the period to 2017-18, even the relaxation that the EU has agreed in recent weeks with France, Slovenia, the Netherlands and Spain will get them back to a target of borrowing of less than 3% by 2015 or 2016. It is therefore taking us a lot longer. The Government have agreed to phase down borrowing over a much longer period than is allowed even under the reduced timetable elsewhere in the EU.

[Lord Forsyth of Drumlean]

My Lords, is my noble friend not concerned at the way in which asset prices, particularly housing and shares, are now being inflated as a result of quantitative easing? Will he confirm that this Government will never use inflation as a means to get rid of the debt, because that will result in substantial unemployment, a loss of competitiveness and the road to Carey Street?

[Lord Newby]

My Lords, this Government will make that commitment, which is why the target that we set for the Monetary Policy Committee of the Bank of England has not been relaxed, and will not be relaxed during this Government’s tenure of office.

Banking: Quantitative Easing

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 27th March 2013 Lords Chamber

[Lord Newby]

My Lords, the Bank can do a number of things. However, on the change in the remit, the idea of having intermediate thresholds, which the Fed and other banks around the world have adopted, is to give longer-term certainty about the path of interest rates, which, we hope, will stimulate business confidence.

[Lord Forsyth of Drumlean]

Did my noble friend see the report in the Financial Times on Monday that the Japanese company, Fujitsu, was going to invest £800 million in Britain, but that all that money will go to reducing the deficit on its pension fund? How much longer will we see artificial deficits being created because gilt yields are used to calculate the liabilities of pension funds, and these liabilities are being exaggerated by the effects of quantitative easing? When are the Government going to do something about this?

[Lord Newby]

My Lords, there is obviously a tension in respect of interest rates in that some people benefit from low interest rates and some people lose from low interest rates. It is the Government’s view that low interest rates are in the interests of the economy in promoting growth in a very difficult economic environment.

Taxation: Income Tax

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 6th March 2013 Lords Chamber

[Lord Newby]

My Lords, the living wage is one component in supporting the poor, and the Government have made it clear that they encourage people to use it. However, for many people who are poor the key thing is to get into work and, having got into work, to work the number of hours that are compatible with the family circumstances in which they find themselves. Particularly via the universal credit, we are taking steps to make sure that work always pays and that people are indeed encouraged to take up the maximum number of hours that are appropriate for them.

[Lord Forsyth of Drumlean]

My Lords, while congratulating the Government on raising the threshold at which people pay income tax—an ideal which was first put forward by my noble friend Lord Saatchi—perhaps I may just ask whether they have any plans to raise the threshold at which people pay national insurance. Many of the people to whom the noble Lord, Lord Greaves, referred are still paying national insurance at very high rates, and national insurance is a tax. Would we not be wise to merge national insurance and income tax so that people realise just how much is being taken out of their pay packets?

[Lord Newby]

My Lords, the Government do not have any plans to raise the threshold for national insurance simply because—as noble Lords will be aware—to do so would be extremely expensive. The Government looked at merging national insurance and income tax but have decided that they will not take that consideration any further forward for the course of this Parliament.

EU: Eurozone Financial Transaction Tax

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 5th March 2013 Lords Chamber

[Lord Newby]

My Lords, as I said in my original Answer, we are fully engaged in discussions going forward. If the FTT is introduced, it will have a number of impacts on the UK. The Government are in the process of assessing what those impacts might be.

[Lord Forsyth of Drumlean]

My Lords, can my noble friend tell us how much the European Commission expects the tax to raise? Will it not be pensioners and consumers who have to pay it?

[Lord Newby]

My Lords, the estimate that the Commission has produced is that the tax would raise €35 billion. It would not be raised from all financial institutions across the EU; it would be raised only from those established in countries which levy the tax. A tax such as this, which covers things like shares, trickles down through multifarious channels but, obviously, at the end of the day, a very large number of people end up paying a small amount towards it.

Welfare Benefits Up-rating Bill

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 25th February 2013 Lords Chamber

[Lord Newby]

My Lords, we and the noble Lord will simply have to agree to differ on that. The noble Lord, Lord McKenzie, repeated some of the arguments made about millionaires and the huge tax boost that they allegedly got. He did not mention that the Budget changes announced last year affecting millionaires and those on very substantial means would generate five times as much income as the 45p tax rate. It is simply untrue to claim that the Budget measures last year mean that millionaires as a group are paying, and will be paying, less tax this year and next than they have in the past. Equally, it is simplistic and false to argue that there is a sort of mechanical problem with HMRC, or an inability of HMRC to collect money from millionaires. Millionaires are extremely clever at avoiding tax. All the evidence from the Office for Budget Responsibility and the work that it did demonstrates why the 50p tax rate simply would not generate anything like the amount of money that was originally envisaged. Indeed, it said that it was quite possible that the 50p tax rate would mean less money being collected than would otherwise be the case.

[Lord Forsyth of Drumlean]

I am most grateful to my noble friend. Have we not had a spectacular example this very day of how cutting taxes can result in huge increases in revenue? The Chancellor’s decision to reverse his plan to increase the tax on the oil industry has resulted in the £25 billion of investment reported today, with huge implications for future revenue and employment.

[Lord Newby]

My Lords, that is an extremely good point. It demonstrates that there is no simplistic relationship between tax rates and the amount of tax collected. In some cases there is and in some there is not. The trick of government is to understand the difference between the two. Frankly, I do not believe that the Opposition have reached that point.

The noble Lord also talked about tax avoidance and conflated wealthy people avoiding tax and the situation relating to Starbucks. On the question of Starbucks and profit shifting, the Government, along with the French and Germans, have started a process with the OECD—something that the previous Government never did—to change the basic global accounting rules so that we can get to the bottom of corporations that are shifting their profits to low-tax jurisdictions. This holds the prospect of being successful in the medium term, but whatever it does it will have no impact on the effectiveness of the Government’s treatment of individuals. As we have debated many times in recent months at Question Time, the new focus that HMRC is putting on going after people who are avoiding and evading tax is generating many billions of pounds more in income. While the previous Government cut the number of HMRC people working on compliance by 10,000, this Government have already increased it by 2,500 and will increase it further.

I was very taken by the comments of the noble Baroness, Lady Afshar, on extended families. In the past year, employment has increased by more than 500,000 and I am unaware of any differential effect on the minority ethnic communities such that small firms in those communities have been shedding jobs disproportionately. Perhaps they have, but I have not seen any evidence. One of the more welcome developments of the past year, which has surprised a lot of commentators, is that hundreds of thousands more people are in work, and this increase in employment has taken place disproportionately in regions other than London and the south-east. There has been a slight rebalancing of employment prospects, and regions such as Yorkshire and the Humber, which I know, have done remarkably well in difficult economic times. I completely support the noble Baroness’s view about the moral economy of kin, but I question whether what has happened in recent months has undermined it to the extent that she suggested.

Finally, the noble Lord, Lord Bach, implied—very gently; I know that he did not really mean it—that the Government might have influenced what amendments were considered to be in scope of the Bill. He knows, as we all know, that the Government have no power to determine what is in scope of the Bill.

Bank of England

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 22nd January 2013 Lords Chamber

[Lord Newby]

My Lords, the Government do not put the needs of the credit rating agencies first. The Government are seeking to promote growth within a stable framework while reducing the deficit. We do not know what the credit rating agencies are going to do, but I can assure the noble Lord that people in the Treasury are not spending every night awake worrying about them. They are expending their efforts on promoting growth on the basis of a reducing budget deficit and a credible long-term macroeconomic policy.

[Lord Forsyth of Drumlean]

My Lords, is it not obvious to everyone that inflation targeting has failed? The Bank of England has consistently failed to meet its inflation targets and we have zero growth in the economy. Would it not be sensible for the Government to listen to Mr Carney’s suggestions?

[Lord Newby]

My Lords, the Government will listen to Mr Carney’s suggestions. Mr Carney has said that he will not comment on the position in the UK until he arrives. His key speech on this issue was made in February last year before he was appointed. In that speech, he said among other things that,

“if nominal GDP targeting is not fully understood or credible, it can, in fact, be destabilizing”.

There is no quick and easy answer—

Taxation: Tax Havens

Debate between Lord Forsyth of Drumlean and Lord Newby

Wednesday 9th January 2013 Lords Chamber

[Lord Newby]

My Lords, the accounting rules are internationally based and it makes sense to change them on an international basis. That is why we, France and Germany, between us, have given €450,000 over recent months to the OECD to come forward with proposals to deal with this issue. Those proposals will come forward and there will be a progress report in February. There is a strong head of steam in this country and in France, Germany and the US to tackle this issue.

[Lord Forsyth of Drumlean]

My Lords, could my noble friend just remind us what action was taken by the last Labour Government between 1997 and 2010—over those 13 years—on tax havens? Is it not extraordinary that we now have such enthusiasm from the Benches opposite to do something, when they had that opportunity and, I believe, did nothing?

[Lord Newby]

My Lords, the Government greatly welcome the enthusiasm from the Benches opposite for the initiatives which we are now taking.

Taxation: Avoidance

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 11th December 2012 Lords Chamber

[Lord Newby]

I do not remember the noble Lord quite espousing those lines when he was in my position. The Government are working very hard with low-tax jurisdictions to make sure that we get the tax that is due. This is why the Liechtenstein disclosure facility has been so productive and why the agreement with Switzerland will yield many billions of pounds that we never got before. We also have the newly expanded exchange of information, announced with the Isle of Man, which sets an example that we hope to expand to other tax havens. We are trying to bear down slowly on them so that one after another they become less desirable as places for people to put money to evade taxes.

[Lord Forsyth of Drumlean]

My Lords, on the problem of leakage of tax revenue to tax havens with lower rates, is not the answer to lower the rates of corporate taxation in this country? In answer to a previous question of a similar nature, my noble friend told me that it was an accounting problem. It is not an accounting problem that leads people to base their company headquarters in countries such as Luxembourg—it is because they pay less tax there. If we wish to maximise revenue, should we not cut corporation tax still further in the way that my right honourable friend did in the Autumn Statement?

[Lord Newby]

We are reducing the rate of corporation tax but there is a danger of a race to the bottom. Corporation tax brings in a substantial amount of money and is an important contributor to the Exchequer.

United States Budget: Economic Impact

Debate between Lord Forsyth of Drumlean and Lord Newby

Monday 10th December 2012 Lords Chamber

[Lord Newby]

My Lords, if the Government had not adopted a credible fiscal policy in 2010, it is almost certain that interest rates in the UK would now be significantly higher than they are, as they are in much of the eurozone. Bear in mind that every 1% increase in interest rates means £12 billion extra in mortgage payments. This would have been have been a huge gamble that would almost certainly have failed had we not taken decisive action in 2010.

[Lord Forsyth of Drumlean]

My Lords, is the lesson that we need to learn from both sides of the Atlantic not that if Governments live beyond their means and raise the tax burden too high, growth disappears—a lesson that my noble friend Lord Lawson taught us in the 1980s and which we need to relearn?

[Lord Newby]

My Lords, the key challenge for Governments, either in this country or on the other side of the pond, is to ensure that there is a credible fiscal framework and a competitive economy so that businesses can invest. That is what the Government have been seeking to achieve.

Banking: Offshore Accounts

Debate between Lord Forsyth of Drumlean and Lord Newby

Tuesday 20th November 2012 Lords Chamber

[Lord Newby]

I obviously agree with the noble Lord’s latter statement. Many recent examples clearly are unacceptable, which is why we have taken a great interest in, and are looking forward to hearing more about, the initiative that the EU Commission has taken this week in terms of reformulating what constitutes a tax haven. He is right that we can do a certain amount ourselves but we are going to deal with this international issue only through international co-operation.

[Lord Forsyth of Drumlean]

My Lords, will my noble friend clarify the position, as I genuinely do not know the answer to the question? Are we able to deal with companies such as Google and Starbucks and others which are not paying the tax that they should pay in this country or are we constrained by European law from being prevented from doing so?

[Lord Newby]

I can reassure the noble Lord that we are being constrained not by European Law but by international accounting standards. There is no suggestion that Starbucks and the other companies are breaking the law but the accounting standards allow them to manipulate the point at which they take a tax charge on revenues that they raise.