Councils: Funding

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Thursday 4th July 2019 Lords Chamber

[Lord Young of Cookham]

The Government have not imposed mayors on parts of the country; they have elected to have mayors. There has been no imposition. In all the cases involving combined authorities and local mayors, local government has come to the Government and asked that these powers be given to them. I think the noble Lord will find that he is misinformed that we have imposed this structure on local government.

[Lord Forsyth of Drumlean (Con)]

My Lords, has my noble friend had an opportunity to read the report today on social care from the Economic Affairs Committee? Will he note that social care and local authorities have seen a real-terms cut in resources and that 1.4 million elderly people are not receiving the care they need? Does he not recognise that shifting the burden on to local government and relying on business rates results in postcode inequality, as different local authorities have different demands and different abilities to raise resources? Should this not be funded centrally, and done urgently?

[Lord Young of Cookham]

I took the precaution of getting a copy of my noble friend’s report, which was published this morning. For the last 30 or 40 years, Governments have been trying to bring together health and social care. If you are an elderly person in need, you are not interested in a bureaucratic argument as to whether yours is a health or a social care problem; you want the support that you need. The dilemma my noble friend’s report addresses is that health is provided by national government and is free at the point of use, while social care is provided by local government and is means-tested. He addresses that problem by suggesting that local government should provide social care but it should be free and be funded by central government—that is the nub of the report. It is a hard-hitting report that expresses noble Lords’ frustration at the delay to the publication of the social care Green Paper. I very much hope that his report will accelerate a solution to this long-standing problem.

Inflation

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 1st July 2019 Lords Chamber

[Lord Young of Cookham]

I said, “to name but a few”, but I will gladly add the issue raised by the noble Lord to the list. Some, but not all, wage increases are linked to RPI.

Some uses of the measures are interlinked; for example, for pension schemes whose members, many of whom are in private sector defined benefit schemes, have pension payments that increase by RPI. This means that, in turn, those schemes seek RPI-linked assets to hedge those liabilities. As a result, a large share of the Government’s outstanding RPI-linked debt is held by those pension schemes. The Pension Protection Fund estimates that almost 90% of outstanding index-linked gilts are held by UK defined benefit pension schemes and UK insurance companies.

The breadth, complexity, and importance of these issues mean that the committee’s report requires further careful consideration. Given the complexities of the issue, it is sensible that the Government and the UKSA produce a well-considered response—while respecting the UKSA’s independence, of course.

[Lord Forsyth of Drumlean]

A very kind and polite person from the Chancellor’s office rang me to say that there would not be a response. I said that I was not sure that the House would like that very much, but he said, “Don’t worry, Lord Young will be able to deal with the debate”. The Minister gave a reason for the complexities of the system: that so many things rely on the RPI. If that is so, is that not a reason to make sure that the RPI is accurate? I cannot get my head around it.

[Lord Young of Cookham]

That goes to one recommendation directed at the UKSA. That issue will be addressed directly in the government response to the recommendations. I cannot give my noble friend an answer today; I hope that he understands why.

In introducing the debate, my noble friend wondered whether the Government discussing this issue with the UKSA somehow compromised the UKSA’s independence. It is perfectly legitimate for the Government to discuss matters with the UKSA without interfering with its independence in decision-making. We discuss a wide range of issues with it—as we should, given that the ONS is the producer of economic statistics. One can have that dialogue without encroaching in any way on the UKSA’s independence. The Government continue to discuss the relevant issues raised by the report; the Chancellor wrote to my noble friend last week, outlining that point. I stress to my noble friend, the noble Lord, Lord Sharkey, and other noble Lords that we are working hard to respond to the committee’s report as quickly as possible. We will communicate a date for this response in due course and will provide sufficient notice for the markets.

Let me move on to the central focus of the inquiry, namely the RPI. As the Government have stated before, we recognise that there are flaws in the way that RPI is measured and that, as a result, its rate of inflation is higher than that of other measures, such as the CPI and CPIH, which is the CPI including owner-occupiers’ housing costs.

The report from the committee is the latest in a series of reports on this intractable issue. I highlight this to stress how complex it is. In 2012, the then National Statistician launched a consultation on potential changes to the RPI following concerns about the increased wedge between RPI and CPI, which had been driven primarily by the 2010 change in the collection of clothing prices. There was then a considerable response, both on matters statistical and non-statistical, and in 2013 the then National Statistician responded, arguing that the RPI did not meet the highest standards expected for a national statistic. That answers the question of the noble Lord, Lord Lea, as to why it was regarded as discredited: the UKSA stripped the RPI of its national statistic status.

However, given its widespread use in the economy, the National Statistician argued that the RPI should remain unchanged. In 2015 a review into consumer price statistics, which had been led by Paul Johnson of the Institute for Fiscal Studies, was published. This also criticised the RPI and recommended that it should be classed as a legacy measure and that its use should be actively discouraged.

Let me explain the Government’s use of inflation statistics and highlight how they have not ignored the criticisms of RPI. Since 2010 the Government have reduced their use of RPI. They have moved the indexation of direct taxes, benefits, public sector pensions and the state pension from RPI to CPI. More recently—this addresses the accusation of index shopping made by a number of noble Lords—in April 2018 the Government brought forward switching the indexation of business rates from RPI to CPI.

Statistics: Accuracy

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 1st July 2019 Lords Chamber

[Lord Young of Cookham]

Under the Ministerial Code, if a Minister misleads the House, he or she is obliged to put it right. So far as Ministers doing the right thing, a year ago the Home Secretary resigned after inadvertently misleading the House. I say in passing that when it comes to the creative use of figures, none of us can lay a glove on the Liberal Democrats, with their use of bar charts—“Only the Lib Dems can win here”. These multicoloured instruments of fantasy now have a website all of their own on Buzzfeed.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think it wrong that the official statistics body has openly admitted that there is an error in the retail prices index which results in commuters, students and other groups being short-changed? Should not a body responsible for the integrity of our statistics resile from its current position, where it refuses to adjust the error?

[Lord Young of Cookham]

My noble friend tempts me to reach for my folder which has a 20-minute speech in response to his debate, which is shortly to begin, on the use of the retail prices index and the role of the UK Statistics Authority. If he can contain himself until then, he will get a very full reply.

National Health Service: Pensions

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 10th June 2019 Lords Chamber

[Lord Young of Cookham]

My Lords, the Armed Forces Pension Scheme continues to be one of the best available defined-benefit occupational schemes. Service personnel on the AFPS are not required to contribute towards their pension throughout their career. However, we continue to monitor the differences between the various schemes to ensure that they are fair and provide appropriate support to the workforce.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend the Minister not recognise that this is not a problem confined to the NHS or indeed the armed services? It arises because the former Chancellor of the Exchequer, George Osborne, reduced the size of the pension pot from £1.8 million to £1 million over a short period of time. As a result, if people with final salary pension schemes reach the age of 55 and do not retire but continue, they are taxed at an outrageous 55%. The remedy lies in the Treasury undoing the mess that it created in the first place.

[Lord Young of Cookham]

There are a number of contenders for the leadership of our great party at the moment. If my noble friend feels this is a cause which will gain currency in my party, no doubt he will pursue it with one of those candidates. However, I return to what I said a few moments ago. The changes we made were progressive, to ensure there was not an inequity in the tax relief benefit.

Electoral Commission: Referendums and Elections Spending

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Thursday 23rd May 2019 Lords Chamber

[Lord Young of Cookham]

Following our exchange yesterday, I have been in touch with the Minister for the Constitution and he has agreed to the meeting that was discussed. It took me 24 hours to agree to that proposition; the noble Lord may think he is on a roll when it comes to the second one. So far as that is concerned, the Government have regular contact with the Electoral Commission on a range of issues, including its powers, and we keep those matters under review.

[Lord Forsyth of Drumlean (Con)]

My Lords, in his contacts with the Electoral Commission, could my noble friend encourage it to consider the issue of collusion between trade unions and the Labour Party in campaigning in general elections? Expenditure made by trade unions in campaigning should be accounted for as part of the Labour Party’s contribution.

[Lord Young of Cookham]

The Electoral Commission will have heard the suggestion from my noble friend, which aroused some excitement on the Benches opposite. I am sure that all political parties want to abide by the law, and declare donations as appropriate.

Political Parties: Donation Rules

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Wednesday 22nd May 2019 Lords Chamber

[Lord Young of Cookham]

As I said on Monday, there appears to be some headroom in the Government’s legislative programme at the moment. Sitting beside me are two members of the relevant Cabinet sub-committee that processes bids for legislation and they will have heard my noble friend’s suggestion. Were there to be such a Bill, I hope that it would be taken through by law officers and not by me.

[Lord Forsyth of Drumlean (Con)]

My Lords, given that the largest ever political donation to the Liberal Democrats was given by a convicted fraudster, Mr Michael Brown, and that they refuse to return that money to the people who have been defrauded, will my noble friend look at the law to see whether we should require political parties who have been given money by convicted criminals to return it on behalf of those who have lost out?

[Lord Young of Cookham]

That was a slightly less consensual approach from my noble friend than that from the noble Lord, Lord Kennedy. If we did go down that road, I doubt whether any legislation would be retrospective. I suspect my noble friend would agree. It would be for the Electoral Commission in the first place to put proposals forward for such legislation.

Making Tax Digital for VAT (Economic Affairs Committee Report)

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 29th April 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I thank my noble friend Lord Forsyth for introducing this debate, and for agreeing to reschedule it from its previous slot, which would have been at a less civilised hour. I also thank the Economic Affairs Committee, for its two detailed reports, and all noble Lords who have taken part in this exceptionally well-informed debate.

I have read both the reports and the Government’s response with particular interest, as a former Financial Secretary to the Treasury with responsibility for HMRC 25 years ago—some 15 years after the noble Lord, Lord Lawson, who was referred to in our debate. Although we have debated these two reports together, they are very different. The one on powers is wide ranging, hard hitting and contains some radical proposals—particularly those which we have just heard from the noble and learned Lord, Lord Judge. The one on making tax digital is more narrowly focused, more consensual and concerned with the pace of travel—as mentioned by my noble friend, Lord Tugendhat—rather than its direction. The current Financial Secretary carefully considered both documents and gave a detailed written response. Although he did not agree with all the recommendations, he was happy to accept the majority of them, in whole or in part. We are still reflecting on the report.

I take very seriously the comments made by my right honourable friend, and the comments made by my noble friends Lady Noakes and Lord Forsyth, the noble Lord, Lord Kerr, and others, about his reluctance—his refusal—to give evidence before the committee. My understanding is that the sub-committee’s inquiry was focused on the Finance Bill, which is properly the preserve of the other place, and as such, no Treasury Minister has given evidence to the sub-committee in the nearly 20 years of its existence. However, I take on board the comments and undertake to convey them to my right honourable friend, to see whether, were a further invitation to be extended to him by the committee, he might reflect again on his decision not to appear.

Before addressing the issues raised in the debate, I join others, particularly the noble Lord, Lord Davies, in paying tribute to my colleague and noble friend Lord Bates, who earlier this month stood down from his position as a DfID Minister and Treasury spokesman. No one regrets his resignation more than I do, as part of his ministerial burden falls on my shoulders. He was an exceptional, dedicated and popular Minister, covering government business on a wide range of topics, from overseas aid to the Trade Bill, from financial services onshoring to the performance of our economy —to name but a few. For each, he brought intellectual clarity and a strong defence of the Government’s record, but also a listening ear. We all wish him well as he walks from Belfast to Brussels raising funds for a cause he is passionate about.

I apologise—58 years too late—for running into the noble Lord, Lord Kerr, on my bicycle in Oxford. Had I known that in 2019 he would make a trenchant attack on a government policy I was obliged to defend, I would have navigated with much more diligence. I thought I was in enough trouble when he sat down—but then the noble and learned Lord, Lord Judge, got up.

I turn to the question of HMRC’s powers, which dominated our debate. I am conscious that I will not answer all the questions raised but I will write to rectify that omission. The British people expect HMRC to take decisive action to tackle tax avoidance and evasion, and Parliament has voted to grant the department a variety of powers which allow it to carry out this essential function. It is of course also essential that there are safeguards in place for taxpayers, but the purpose of the powers is to allow HMRC to collect the tax that we need to fund vital public services, a point made by the noble and learned Lord, Lord Judge.

I note what the report says in paragraph 58 about scrutiny of the loan charge but, as someone who has taken a Finance Bill through the other place and sat in Committee on the Finance Bill in opposition, it is my experience that Members in the other place are extremely wary about giving HMRC new powers over their constituents. This legislation was taken through the parliamentary process, with scrutiny in the House of Commons, following a public consultation on the policy and on the draft legislation. As my noble friend knows, we have also set out in a report published last month the rationale for, and impact of, the charge on disguised remuneration loans.

[Lord Forsyth of Drumlean]

On the subject of the scrutiny in Committee on the Finance Bill in the other place, I think I am right in saying that there was a speech from a Minister, a speech from the Opposition and two other speeches. None of the issues about retrospection et cetera was raised. I think there has also been an Early Day Motion signed by many Members and several debates, including one in Westminster Hall, none of which has altered the Government’s response in any way.

[Lord Young of Cookham]

I am sure that if my noble friend and I had been on the Finance Bill at the time, we might have raised some of the issues that he has now raised. I make the point again that the legislation went through all its stages in the other place after its publication in draft.

I was grateful for what my noble friend Lord Tugendhat said about HMRC in some generous words, which I know will be well received by the hard-working public servants in that department. I believe all Governments, and both Houses, are committed to striking the right balance between helping the compliant majority to fulfil their obligations, and providing appropriate support to customers who need extra assistance to get things right, while taking robust action against those who seek to avoid paying their fair share of taxes. For this reason, the Government welcomed the committee’s detailed contribution to this important debate.

I say to my noble friend and to others who have taken part in this debate that my comments will reflect the Government’s response to the reports, including the updated response which we published in March. I will share with the Chancellor and other Ministers in the Treasury the tone of the debate and the deep concern expressed by Members on all sides about some of the actions that have been taken. Again, without any commitment, I will see whether within the confines, which I hope the House understands, there is any flexibility available to reflect the anxieties that so many Lords referred to.

Several noble Lords spoke more specifically about the charge on disguised remuneration loans. My noble friend Lady Noakes made this the focal point of her speech. As acknowledged by the report:

“Disguised remuneration schemes are an example of unacceptable tax avoidance that HMRC is right to pursue. All individuals using these schemes must accept some degree of culpability for placing an unfair burden on other taxpayers”.


It is the Government’s view, supported by a unanimous Supreme Court ruling, that these schemes are not and have never been effective, and that tax was always due. It is unfair to the vast majority of ordinary taxpayers who pay all their taxes to let anyone benefit from contrived tax avoidance of this sort. I am sorry to disappoint the noble Lord, Lord Kerr—

[Lord Young of Cookham]

With respect to the noble Baroness, the unanimous decision of the Supreme Court was that the tax was due and is payable by the employee and not the employer. I will come on to the employer in a moment. I was about to disappoint the noble Lord, Lord Kerr, on one of the questions he put to me. But if it was always the case that the tax was due, as I have just said, the loan charge is not retrospective, as he implied. I am not sure that he meant to imply this, but it does not have to be paid in the current tax year. It becomes liable, but I hope that people will engage with HMRC and agree terms that may cover a longer period.

[Lord Forsyth of Drumlean]

I apologise for interrupting my noble friend again, but there are two points here. The court proceeding he referred to was the Rangers case, which said that liability was with the employer. The point that my noble friend Lord Kerr was making was that this is treated as an emolument in one year, which means that the incidence of tax is higher because goes over the top rate. That is the point.

[Lord Young of Cookham]

My understanding is that the tax now due accrued over a period of time, and was payable in the year in which it was accrued. That has been consolidated and crystallised into the loan charge. If I am wrong, I will write to my noble friend.

The Government are committed to tackling the promotion of tax avoidance and that is why HMRC has been investigating more than 100 promoters and others involved in marketing tax avoidance, including many who sold disguised remuneration arrangements. HMRC recently won a legal case, mentioned by the noble Baroness, Lady Kramer, over a contractor loan avoidance scheme promoter, Hyrax Resourcing Ltd. This will help collect over £40 million in unpaid taxes.

The charge on disguised remuneration loans has been criticised by those who say that it ought to be the employer who has to pay the tax that is outstanding. I agree, so let me be clear that HMRC will seek to collect the loan charge from employers in the first instance, and will pursue individuals for the tax due only where it cannot reasonably do so from the employer; for example, if the employer is no longer in existence or is offshore. In those cases, HMRC seeks to collect the tax liability from the individual who benefited from the tax avoidance.

HS2

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Thursday 13th December 2018 Lords Chamber

[Lord Young of Cookham]

The noble Lord makes a powerful case for more resources for transport in addition to the money that we have already committed to HS2, in both phase 1 and phase 2. He wants additional resources to improve connectivity with Liverpool. A spending review is just starting in which I am sure the Department for Transport and those departments that have an interest in the northern powerhouse will make bids. I note his strong representations that improved connectivity for Liverpool should be a high priority.

[Lord Forsyth of Drumlean (Con)]

Has the Minister had the opportunity to read the reports from the Economic Affairs Committee of this House on HS2, and can he confirm how many billions could be saved by a marginal reduction in the speed of this train?

House of Lords: Membership

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 21st May 2018 Lords Chamber

[Lord Young of Cookham]

I am grateful to the noble Lord not just for his helpful intervention but for the work which he and his committee have put in. I understand that he is continuing that work. Yes, I did read the comments made by the Lord Speaker, as reported in the press, and my right honourable friend the Prime Minister has shown restraint. Tony Blair appointed 374 new Peers—including the noble Lord, Lord Adonis—David Cameron appointed 245 and Gordon Brown appointed 34, so two years in the Prime Minister has indeed shown some restraint and I think that we are on track. The noble Lord set out targets for the individual parties to reach by 2022, and those are challenging targets. As I indicated a week ago, some groups and parties within the House are making progress but not all of them.

[Lord Forsyth of Drumlean (Con)]

On the subject of fairness, raised by the Liberal Front Bench, if the political parties were represented according to the results at the last general election, will my noble friend indicate how many of the Liberals would have to leave this House?

[Lord Young of Cookham]

I do not have the mental capacity or the bandwidth to work that out. Fifty? Sixty? Any advance on sixty? [Laughter.] I notice some jostling for position on the Liberal Benches. I am sure that by the time the House rises someone will have worked out the exact proportion and how many Liberal Democrats ought to go.

Meetings with Ministers

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Wednesday 14th March 2018 Lords Chamber

[Lord Young of Cookham]

The Government are genuinely open to discussions about how we improve accountability and transparency in our political process. I am very happy to look at those proposals. In the past it has not been possible to achieve the sort of consensus one would like on these sensitive matters of political issue.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think that where money is obtained by political parties from proven criminal sources perhaps the funds should be returned, as in the case of the very substantial donations made by Mr Michael Brown to the Liberal party, which held on to the money?

[Lord Young of Cookham]

My Lords, behind this, there is a serious issue. Democracy in this country depends on political parties. If there is to be a choice at a general election, we need a range of financially viable, credible political parties which train and nurture the people who lead this country and which provide an opportunity for engagement and debate at a national and local level. Given the limited taxpayer appetite to fund those activities and that political parties need to be resourced, we should be cautious about denigrating those who support political parties. We should encourage more people to join and financially support the political party that most closely reflects their values.

Electoral Spending Limits: Wales

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Wednesday 6th September 2017 Lords Chamber

[Lord Young of Cookham]

My Lords, I am grateful to the noble Lord for his question, not least because it was in English rather than in Welsh. The proposals would exempt the costs of translation from a candidate’s limits and I see no reason at all why the approach taken by the Welsh Assembly, if it goes down that road, and the approach taken by the UK Parliament, if it does so as well, should not be aligned so that there is no confusion among the candidates over what the rules are.

[Lord Forsyth of Drumlean (Con)]

My Lords, given the enormous costs of the Electoral Commission, would my noble friend encourage it to review its own spending limits and levels? The last time I looked, the cost of the Electoral Commission was as much as half that of the entire cost of the Royal Family.

Boundary Reviews 2018

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Monday 26th June 2017 Lords Chamber

[Lord Young of Cookham]

The legislation, which was approved by both Houses of Parliament, reduced the numbers of Members of Parliament from 650 to 600. The review that I referred to in my earlier response postulates boundaries for 600 constituencies.

[Lord Forsyth of Drumlean (Con)]

My Lords, I speak as someone who, when Secretary of State, had to sign a Boundary Commission report which made my own constituency unwinnable. Would my noble friend confirm that it is the duty of this House and the other place to approve the independent Boundary Commissions’ proposals? If it becomes a party-political matter, that way lies great danger to our democracy.

[Lord Young of Cookham]

I heartily agree with my noble friend. His constituency was made unwinnable by the Boundary Commission; mine was actually abolished; I am not quite sure which of us came out of it best. So far as his question is concerned, it would be an affront to democracy if the proposals of the independent Boundary Commissions were obstructed.

Tax Havens

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Thursday 6th April 2017 Lords Chamber

[Lord Young of Cookham]

We already have country-by-country reporting in this country, and multinationals based in this country have to report to HMRC how much profit they make and how much tax they pay in each country. We are encouraging other countries to do this, so we have a multilateral approach, and the Chancellor raises this issue at the G20. In response to the first part of the noble Lord’s question, we have taken the lead on this as a result of our presidency of the G8, and more than 90 countries have agreed automatically to exchange taxpayer information under the common reporting standard. We are also taking initiatives on beneficial ownership and some of the other issues that we have already discussed.

[Lord Forsyth of Drumlean (Con)]

My Lords, given the widespread use of Luxembourg by large companies and multinationals to reduce their tax, will our exit from the European Union provide an opportunity to broaden our tax base?

[Lord Young of Cookham]

The initiatives we are taking on tax evasion are independent of our membership of the EU, although we are pursuing some EU directives. As I said, this country is in the lead. I do not know whether my noble friend has seen page 9 of today’s Times, which says that:

“Oligarchs must disclose identity as home owners”,


with a register. That is a world first: the people behind anonymous companies that own billions of pounds-worth of property must reveal their identities under new anti-corruption rules. This shows that the country takes the matter very seriously.

Pensions: Tax Relief

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Tuesday 6th December 2016 Lords Chamber

[Lord Young of Cookham]

The Government have consistently reduced the cost of tax relief on pensions by introducing the lifetime allowance, which has now been reduced to £1 million, and the annual allowance, which has been reduced to £40,000. This year we made further savings of up to £4 billion over the lifetime of this Parliament by saying that for those who earn over £150,000 the £40,000 relief is tapered. So we have made substantial savings in the cost of pensions tax relief.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not agree that the whole point of pensions investment is that it should be stable and not subject to sudden changes? Have the Government not interfered enough with the pensions regime? Do we not need a period of stability?

Infrastructure Improvements: Funding

Debate between Lord Forsyth of Drumlean and Lord Young of Cookham

Wednesday 23rd November 2016 Lords Chamber

[Lord Forsyth of Drumlean]

My Lords, while congratulating the Chancellor on his excellent Statement committing to building more housing, can I ask my noble friend what is to be done about the decision by the European Banking Authority to increase the capital weighting required for loans to small housebuilders from 100% to 150%, which is greater than is required for unsecured credit card debt and will result in less availability of money for builders to build and also require banks to make provision for their existing loans? I declare my interest which is on the register.

[Lord Young of Cookham]

There is only one answer for my noble friend: I will write to him.