Economic Update

Lord Fox Excerpts

Tuesday 12th January 2021 Lords Chamber

[Lord Agnew of Oulton (Con) [V]]

As I said in my earlier comments to the noble Baroness, Lady Kramer, I am not able to give the commitment the noble Lord asks for. The Chancellor will give an economic update in his Budget on 3 March, and I am sure that this matter will be addressed then.

[Lord Fox (LD) [V]]

My Lords, in the self-congratulatory response of the noble Lord, Lord Agnew, he favourably mentioned the household savings ratio. As my noble friend said, this pandemic will hit poorest families hardest; they are already having their incomes squeezed, and they have no savings at all to see them through this. It is clear also that the most deprived in the UK are the least likely to self-isolate; given the current level of support, they simply cannot afford to. The poorest people in this country cannot afford to wait for a March Budget and, despite the Minister’s smug response, this Statement offers them nothing. So can the Minister explain why the Government are blind to the fact that adequately helping the poorest people in this country is not only right but vital in the national fight against Covid?

[Lord Agnew of Oulton (Con) [V]]

I would remind the noble Lord of the large number of interventions we have made which will substantially support the most vulnerable in society: support to renters to reduce the ability to force evictions; the mortgage holiday, which has been granted to 2.7 million people since last March; the support in the many individual programmes we have announced. All these are applicable to some of the poorest in our society. We are very aware of their vulnerability. I would gently remonstrate with the noble Lord that it was not a statement of self-congratulation when I was answering the noble Lord, Lord Tunnicliffe; it was merely a statement of what we have done over the last 10 months.

European Union (Future Relationship) Bill

Lord Fox Excerpts

3rd reading & 2nd reading & Committee negatived & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 30th December 2020 Lords Chamber

[Lord Fox (LD)]

It is a pleasure to follow the noble Baroness, Lady Donaghy. I will focus on three business consequences of this treaty. First, the deal creates an ocean of new paperwork. The Financial Times reports that each year British companies trading with Europe will have to fill in an extra 215 million customs declarations, at a cost of about £7 billion per year. At best, each delivery to and from the EU will take an average one day longer. Can the Minister explain how the Government will ameliorate this fettering of British trade?

Secondly, there will be double regulation. Any UK company wishing to export to the EU will now have to comply with both the new UK regulations and standards and the EU ones—an extra set of design, testing, certification and administration costs. For example, UK chemicals regulation requires British-based companies to reregister every chemical that is currently legal in the EU. Double regulation means double cost. In the case of chemicals, that is about £1 billion of extra cost. What are the Government doing to alleviate the millstone that is hanging around British industry?

Thirdly, on rules of origin, traders can self-certify the origin of goods sold and then enjoy what is called cumulation. That is good, but the deal does not allow for parts imported from regions outside the UK and EU to be counted towards local content—what is called diagonal cumulation. This will make it hard, or impossible, for our more complex manufacturers to avoid being hit by heavy tariffs from the EU. What are the Government doing about that?

These are undeniable issues. The Minister and the Government should face up to them. This Conservative treaty makes things worse for investors, workers and consumers.

Finally, it is clear that, despite its size—no skinny treaty here—this deal is actually a master framework. As the House has heard, from the noble Earl, Lord Kinnoull, and other noble Lords, there are many further deals to be made. As the noble Earl set out, there is a welter of committees to hammer out these details— 32 committees and working parties by his count. Noble Lords should remember that, if either party is not happy, the entire deal could be terminated with just one year’s notice. The UK and the EU will be arguing about our relationship for years. So much for this deal giving certainty to business. Business will soon realise that things are not fixed; they are still moving. Without certainty, capital takes flight.

Taxation (Post-transition Period) Bill

Lord Fox Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Wednesday 16th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, over the course of this parliamentary term, we have seen the introduction of many things. Although the Government have not invented content-free legislation, they have certainly furthered that process through the liberal use of secondary legislation following primary legislation which is unable or unwilling to set things out in exact detail, and we are faced with that again today.

On a slightly more frivolous note, this Bill introduces, or highlights, the way in which a word like “notwithstanding” can suddenly be vested with some sense of terror, like a shark arriving on a beach. We are glad that the “notwithstanding” clauses were not, in the Government’s view, necessary in this Bill, so there is a little piece of brightness there.

The sunny optimism of the noble Lord, Lord Sharpe of Epsom, was very welcome. We welcome him to this House and look forward to his wisdom, and perhaps his anecdotage—I am sure that there is plenty lurking there somewhere. I would call into question his maxim that every problem is an opportunity in disguise. As a former chief executive of the Liberal Democrats, I am quite able to give evidence of why that is not true.

I thank the Minister for his very clear explanation of the nature of the Bill. When I looked at it, I set out with the notion that it is the plumbing, which it is. It is easy to dismiss the plumbing, but then you think about what the world was like before we had plumbing and what it is like when we do not have plumbing and you realise that it is important. That is why the Bill is important and why we welcome it. Given the nature of our role in this House, I will seek clarification on some of the issues rather than make what could be called a traditional Second Reading speech.

The Bill sets out a new framework for customs, VAT and excise duty for goods moving in and out of Northern Ireland. The Minister was very clear, and said twice in two different ways, that Northern Ireland is, and remains, part of the UK customs territory, but on the second occasion he followed it with a big “however”. That “however” is that EU rules for goods but not services will apply in Northern Ireland. Therefore, it remains part of the UK customs territory but it also remains part of the EU customs territory, and there is a dichotomy in that process. That adds complication such that a £200 million scheme is required to help people with it. Like others, I ask the Government to update us on whether that scheme is ready to run.

The complexity lends itself to the six-month adjustment period that my noble friend Lady Kramer introduced. For the benefit of the noble Baroness, Lady Bennett, and others, I should explain that my noble friend is a member of the Economic Affairs Select Committee, and there is a protocol that allows those who have important Select Committee meetings not to sit through the extent of the debate.

The big question set out by the noble Baroness, Lady Altmann, my noble friend Lady Suttie and others concerned non-qualifying goods. We understand that there will be such goods but we do not know what they are and what the criteria are for creating them. We are not sure of the process for communicating what they are and we have no idea about the timing. This is not an abstract debate; it is about real people, with products, trying to understand what they need to do. Like them, I see adverts on my television every night telling me to get ready. Can the Minister tell us what they are getting ready for? What goods will be non-qualifying, and when will people know? That is really important and, again, it begs the question about delaying implementation so that people really can get ready, because that is what they want to do.

The Minister mentioned the role of duty suspension. It is an interesting role and one that I had not talked to the Minister about before. It would be interesting to know whether any of the rules around duty suspension are changing and whether the Government considered changing some of them, perhaps to add or remove friction from the system.

The Minister also talked about the removal of VAT relief on low-value items, and that is a welcome area. I would be interested to know whether the Minister can tell us what the expected increase in tax take is for that, and indeed what extra enforcement will be required to get that tax through the door. It strikes me that there could be an awful lot of different transactions that, in the end, add up to not much take. But I accept the Minister’s point that levelling up the playing field for our high streets across the country is really important. This is a very small measure but I would not overestimate its effect. A lot of things are happening to our city-centre and town-centre shops, and this is just one small element of them. My noble friend Lady Suttie and the noble Baroness, Lady Ritchie, talked about measures to manages shortages and potential price rises, and perhaps the Minister could set out what those would be.

My noble friend Lady Kramer and the noble Baroness, Lady Altmann, raised the issue of the trusted trader scheme. A lot of hope has been vested in this scheme but, without shooting too cheap a shot, our evidence of tracing schemes thus far has been relatively disappointing, to say the least. How can we be sure that this system will stand up to expectations? The accepted wisdom of many is that it is a small scheme that will not facilitate the sort of trade we are looking for.

Finally, a number of your Lordships raised the issue of removing tax-free shopping for foreign visitors. Here, without debating the issue, one needs to know what the facts are. Can the Government publish the cost-benefit analysis that I am sure they must have carried out before publishing such an important change in the rules? Can they explain how the difference in tax raised, which would have had to extend to EU visitors, is weighed against the economic effects on tourism and trade from foreign visitors? That number is very important and when we see it, I am sure we will be better able to understand why the Government have made this decision. Without those numbers, one might imagine that they just put a damp finger in the air and tried to work out which way the wind was blowing.

This is important plumbing, but it is inexplicable why we have had to wait this long so that businesses can get ready. I understand that we had to get through the internal market Bill, but that ran very late. Businesses need to be ready and for that, they need to know what they have to do. The Bill is essentially content free. The real detail comes with the regulation and the secondary legislation. When will we see that? When will businesses know what they have to do so that they can continue to trade? It is up to us and the Government to make sure that they know what they have to do.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for clearly setting out his objections to the last set of amendments. In his closing words he said that the Government view the common frameworks process as complementary to the market access principles. Listening to the noble and learned Lord, Lord Hope, it was very clear that there is a discontinuity—a lack of complementariness—between the two positions. As the noble and learned Lord set out, a central feature of the framework agreement is to come to an agreed process for divergence between the four nations, within which the UK has a major role. That divergence is killed off by the automatic nature of the market access principles. That is the central point that the noble and learned Lord’s amendments address. In doing so, the new versions of the amendments have taken on board the comments that have come back from the other place, having recognised the level of uncertainty that could have been injected by a previous proposed new clause, which has now been removed. The amendments adopt the regulations within the Bill to facilitate that decision, so that it is consistent with the way that the Bill seeks to operate, but also consistent with the principles of devolution that have served this country so well to date.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, perhaps we need to remember why we are here. It is really quite simple. When the case for Brexit was all about “taking back control”, we failed to understand that the Government meant taking control to themselves, even over issues that were fully devolved. However, when the Bill was published—without any involvement from the devolved authorities, remember—we soon discovered that it ran roughshod over devolved competences, as the noble Lord, Lord Fox, said, trumping the common frameworks programme.

I have often wondered whether this was deliberate or an oversight, though the lack of prior consultation suggests the former. However, that makes the statement on the publication of the Bill, on 9 September, signed by the Scottish Secretary but not the Welsh Secretary, and by Mr Sharma and Mr Gove, a bit strange in the light of this Bill. It says that the devolved Administrations will enjoy a “power surge” when the transition period ends.

Let us take that at face value. Perhaps the particular construction of the Bill was clumsy—as an oversight rather than deliberate—and perhaps it is right that the Government did not intend to bring back to themselves all the powers long devolved to the other three authorities, but in that case the amendments tabled by the noble and learned Lord, Lord Hope, would rectify the problem. They would simply restrict the market access powers in the Bill, which of course are only about devolved competences, to those where the four-party process failed to reach agreement.

As the Government are one of those four parties, they will be in a very strong position to revert to the Bill, and to Parliament, for the powers they feel are vital for an internal market on areas where disagreement cannot be overcome. That seems, to this side of the House, a simple, clean solution. It would hard-wire in a common frameworks process which the Government themselves described last week in the latest of their three-monthly reports on the frameworks—reports which, I think, we added to Schedule 3 to the EU withdrawal Bill as a requirement for the Government to publish—as

“an agreed approach to ensuring regulatory coherence”

in devolved areas. That is absolutely spot on—coherence, not uniformity—and that is probably where we are trying to get to. The problem is that, as written, the Bill adopts “uniformity”.

The same document, which has just been published, despite having talked about coherence, then asserts:

“Common Frameworks cannot guarantee the integrity of the entire UK Internal Market.”


However, the document does not provide any evidence of why the frameworks will not work. It gives no examples of where, within devolved competences, any agreements might not work. Indeed, the Minister, in introducing the debate, again asserted that it would have to be for Parliament alone to decide when the market access rules would not be used, but he did not explain why the four-party process would not be able to deal with that and why they would come to Parliament only when there was a failure to agree. The same document notes the “freezing power” contained in the withdrawal Act, and it also notes that it has never needed to be used, but it fails to suggest where it might be needed.

Therefore, in the Bill the Government are saying that on the one hand the frameworks are very good and have been able to produce coherence but, on the other hand, the Bill allows the market access principles to trump that process, even if it produces agreement.

We have it said before and I say it again: we on this side of the House want an internal market which thrives and serves the needs of business, the professions, consumers and the environment, but it has to be one that respects rather than dismantles devolution. These amendments seem to us to offer the path to achieve that, so we will support the noble and learned Lord when, as I am sure he will do, he asks the House to vote. I hope that in the light of that vote we can, as the Minister suggested, continue the dialogue so that we can reach an agreed position that would safeguard all that has been going on with the devolution settlements and the common frameworks process but, in the last analysis, would of course come back here.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, I welcome the noble Baroness, Lady Bennett, back to her seat—just in time for tier 3 to arrive. We have again had a short debate. As we have seen the evolution of this argument—in the amendment’s approach to common frameworks it is, in a sense, the yin to the yang of the noble and learned Lord, Lord Hope—we are now looking at a different way of trying to ensure that diversity can survive under the automation of the market access measures.

In the past, the Minister has brought to bear the Government’s disapproval of the breadth of the exclusions that previous versions of this amendment made. As the noble Baroness, Lady Bennett, pointed out, many of those have now dropped off. So, in a sense, the Government have already pushed this to a narrower set of exclusions. The Minister highlighted his uncertainty around the word “proportionate”. Of course, none of us would want to do something disproportionate, but I cannot help thinking that the Government, in all their wisdom and with all their clever legal people, could come up with a frame of words that will prevent hideous problems developing in the courts—so I cannot help thinking that that is something of a red herring.

As the noble Lord, Lord Stevenson, said, this is getting more modest than was previously attempted, but it still has the overriding aim of dealing with the problem which keeps coming up throughout this debate. The Minister has magnanimously said that the devolved authorities are perfectly at liberty to develop new and innovative ways of doing things—so far, so good—and then, of course, the market access principles mean that those innovations will get undercut if someone else in the British Isles is doing it differently. I do not understand how the Minister can keep linking those two sentences without seeing that the one excludes the other. If it does not do it in governmental terms, it will do it in the courts. This will be a creature of the courts, because there will be businesses that will be going at a legal opportunity to get their products into devolved authorities that have sought to raise standards, as they see it.

The issue of minimum-unit alcohol pricing often comes up, and it is quite clear that this legislation will not affect that at all. We are all in agreement there. But if we were seeking to bring that in once this legislation was in place, what chance would it have of surviving the courts? That is why we will support this amendment.

[Lord Callanan (Con)]

I thank everybody who has contributed to what has been a very good, albeit brief, debate. I have listened very carefully to the points that have been raised, and I will respond directly to the points of the noble Lords, Lord Stevenson and Lord Fox. Innovative policy-making relating to public health and the environment will be fully possible under the Bill, within the clearly defined market access principles. Schedule 1 sets out a clear exclusion process for:

“Threats to human, animal or plant health”.


There are also several other exclusions relating to the environment and public health: chemicals and pesticides, for example. All of these are drafted tightly to strike the right balance between these objectives and the integrity of the market.

It is also essential to remember that neither of the market access principles affects the devolved Administrations’ abilities to uphold and enforce rules governing how consumers use goods. Neither would they prevent reasonable “manner of sale” restrictions, as long as they are not discriminatory. If an Administration wanted to introduce minimum alcohol pricing or the plastic bag charges, they are fully able to do so and can use them to fulfil environmental or public health aims in future; the principles would not be an obstacle to that, as long as those rules do not discriminate. I say to the noble Baroness, Lady Bennett, that she is wrong: if a future devolved Administration wanted to introduce the plastic bag charges, they would be able to do so under these market access principles, as long as they were non-discriminatory.

--- Later in debate ---

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

Does anyone else in the Chamber wish to speak?

[Lord Fox (LD)]

There is almost no one left in the Chamber who has not spoken. This has been an interesting debate and, no doubt, the Minister is carrying away lots of advice from some of the Benches. I thank the noble Lords, Lord Adonis and Lord Liddle, for their passion. If that passion is matched by votes in the event that the noble and learned Lord, Lord Thomas, decides to ignore the advice of the noble Baroness, Lady Noakes, and press this to a vote, I will have more excitement because otherwise, it is merely a rhetorical gesture.

The noble and learned Lord set out his view on devolution. It is quite clear, as was set out a number of occasions, that in the structural fund process, which this will herald the replacement for, the devolved authorities were in the driving seat of deciding where and on what the money was spent. It is not clear from anything the Minister said today, or in answer to questions last time, that the Government will not seek to impose things on the devolved authorities. The Minister said there would be governance structures; it would be interesting to hear how those governance structures will be introduced and what the Government envisage. In other words, do central Government have the veto in deciding what goes where? In the end, that is the difference between this being genuinely consultative and, as we have heard described around the House, a Westminster-knows-best process. Consultation is fine but only if it is adhered to.

My final point on the quantum of money and its distribution comes back to a question I asked earlier. I think the Minister said that the amount of money envisaged to go into the shared prosperity fund is equivalent to that which came through the structural fund. The Minister also indicated a much broader remit for spreading that money around than was the practical reality of the structural fund. How will the Government manage the process of certain areas that have been particularly well funded through the structural fund, such as Cornwall and Wales, getting less money if there is no increase in funds and they are spread more widely? Furthermore, the European Union distributed that money using classifications of need, so how will the UK Government develop those? Do the Government envisage that they will be different, and can they undertake that they are transparent?

In conclusion, if the noble and learned Lord, Lord Thomas, decides to call a vote, we on these Benches would support it, but there are a lot of questions we would be grateful if the Minister could answer.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords—[Inaudible]—on earlier discussions around this issue and the issue that will come up in the next group of amendments on state aid and spending as a result of moneys which may be available to support that. We should pause and take note of the fact that the noble and learned Lord, Lord Thomas, has engaged with this issue again despite the view taken in the other place that it is a financial privilege. The noble Baroness, Lady Noakes, is right in saying we are in a difficult area. I am not sure how the comments from the noble and learned Lord, Lord Thomas, will take him forward. He certainly has a point, but I do not think this is the right amendment or place to explore it. It needs a wider perspective. Many of these issues date from time immemorial; it is important to respect them and understand where they come from, but they should not block debate and discussion on key issues.

The issue the noble and learned Lord is raising, which has also been picked up the Minister, is how, in the future, possibly using statecraft—whatever that is—we will manage spending in the devolved areas, which are not reserved, when the funding mechanisms are different and have to be adapted to meet current arrangements. There are issues that will need to be addressed in the future, but we covered a lot of ground in earlier debates, and I thought the points made by the Minister on the shared prosperity fund were sufficient to ensure that we do not need to go back over this again. It is not our view, as Her Majesty’s loyal Opposition, that we need to divide the House on this issue again.

If the issue is common between us, we need to understand where we can get to in respect of comments made from the Dispatch Box. The noble and learned Lord, Lord Thomas, made a number of good points and asked a number of questions, and I am sure the Minister will respond to them. I do not think the points added by my noble friends Lord Adonis and Lord Liddle vitiate that approach; they made a good case that we will need more in this area in the future, but this is not the right amendment to take us down that route.

--- Later in debate ---

Therefore, big, centrally important constitutional principles are at stake here, and I will strongly support both the noble Baronesses, Lady Finlay and Lady Bowles, if they press their amendments to a vote. It is very important that noble Lords are on the record as to their position when it comes to defending and taking forward the devolution settlement in our United Kingdom.

[Lord Fox (LD)]

My Lords, I can assure the noble Lord, Lord Adonis, that we on these Benches are not keen to hustle this through; we are keen to see one or other of these amendments put back so that we can continue to have the discussions in this area that we need.

I shall speak briefly to both amendments, starting with Amendment 50F, as put forward by my noble friend Lady Bowles. The Minister said that the amendment limited Parliament’s scope. Au contraire, it would make sure that Parliament was in the driving seat of any significant changes. State aid is clearly important—so important that the Government are prepared to crash the entire economy to maintain control of it. If state aid is so important, Parliament and not Ministers or the Secretary of State should be in the driving seat. That, briefly, is what my noble friend Lady Bowles’s amendment seeks.

On Amendment 50E, in the name of the noble Baroness, Lady Finlay, even through the attenuation of the virtual system, her passion for and understanding of devolution, her understanding of the union and the threat she sees posed to it by the overall communication atmosphere created by this Bill and other things—a view which many of us share—rang through her speech. It is clear that, without co-creation, as she called it, that threat to the union remains strong. The Minister should heed the noble Baroness and, whether or not she presses her amendment, look at ways of genuinely bringing on board the devolved authorities so that there is shared ownership of this important process. If either proposer presses their amendment, we will support them.

Covid-19: Economy Update

Lord Fox Excerpts

Tuesday 27th October 2020 Lords Chamber

[Lord Agnew of Oulton (Con)]

I agree with the noble Baroness that tier 3 has a devastating impact on businesses and on people’s lives, but it is how we are trying to control the spread of the virus. We see what is happening in Spain at the moment. That is the nightmare that we are seeking to avoid. As I understand it, the overriding way of monitoring whether an area can come of out of tier 3 is when the percentage of those being tested for the virus falls below a certain threshold. This information gives some indication to businesses that they may be coming out of this nightmare.

[Lord Fox (LD)]

My Lords, in answer to an earlier question, the Minister reeled off a whole range of government measures. I do not think he mentioned the Bounce Back Loan Scheme. In September, the BEIS annual report stated that losses from non-repayment bounce-back loans would be in the range of 35% to 60%. I note that this would buy a lot of school meals. Meanwhile, we know that banks are hiring debt recovery specialists to reclaim those loans. With his Treasury hat on, can the Minister tell the House which route the Government favour? Do they favour greater use of debt recovery services to reduce the overall level of loan defaults or do they accept that there will be widespread default? In either case, what level of default is the Treasury modelling?

[Lord Agnew of Oulton (Con)]

It is important to differentiate between default and fraud. As the noble Lord will know, there are no repayment requirements on bounce-back loans for a year. The idea that banks are now hiring debt recovery firms to go out collecting is probably inaccurate. They are increasing their resources to deal with fraud because this has been a problem. I am concerned about this both as fraud Minister and as a Treasury Minister. No repayments are due on BBLs for 12 months from drawdown and we have recently extended the repayment period to 10 years.

Economy

Lord Fox Excerpts

Monday 28th September 2020 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, I can only reply honestly and say that I do not know whether the support announced last week will be adequate. It depends on simply too many moving parts. We all know that if a vaccine is discovered in the next couple of months it would completely change the game. At the other end of the spectrum, if we had a very bad surge which led to huge levels of hospitalisation, that would push us in the other direction. The Chancellor has been consistent in saying that he will respond to the circumstances.

[Lord Fox (LD)]

My Lords, even with the job support scheme, economists and others are predicting at least 1 million being made unemployed by the end of the year. For many of them and their families, the only recourse will be universal credit. The Minister claimed to be proactive, so here is a proactive idea. The Economic Affairs Committee has just issued a report which lays bare the shortcomings of universal credit, so will the Minister undertake that he and his Government will take a look now at that report and respond much more quickly than they normally do because this is an oven-ready way of making sure that universal credit is adequate for all the millions of newly unemployed people?

[Lord Agnew of Oulton (Con)]

My Lords, universal credit has turned out to be a total game-changer for those thrown out of work by this crisis. It has been extraordinarily flexible. If we look at the past three or four years, we have always responded to criticism and have improved universal credit when it has been clear that it needed improving, and I can assure the noble Lord that I will make sure that the report to which he referred is made available to my right honourable friend.

Covid-19: Economy

Lord Fox Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I declare my interests as set out in the register. Today’s debate is timely and the noble Lord, Lord Eatwell, should be congratulated on securing it. Your Lordships’ contributions make it a difficult job to wind up this debate. The backdrop against which it is conducted is one of darkening economic storms. The Institute for Public Policy Research today issued a report predicting that greater than 1 million people will be “plunged into poverty” by the end of the year; included in that are some 200,000 children. This debate is a chance to tease out the Treasury’s thinking on the next steps, and those beyond, for our economy. I hope the Minister will be forthcoming.

First, looking back, noble Lords have mentioned Germany, which is held by many to have tackled the virus very well. What factors contributed to its relative success? We all know that Germany has a strong industrial base as a result of decades of public policy. Yet I believe I heard comments from the government podium implying that the Germans were somehow fortunate to have the private companies they needed to lead their testing programme. Countries make this kind of luck. Germany also has a well-organised regional administrative capacity through which to deliver its virus defence and recovery programme. This stands in contrast to the UK approach, not least on testing and our nascent plans for tracing.

The evidence shows that we are a country where public policy has for decades undermined our industrial capacity, and one with an uncontrollable urge to overcentralise. This is a country where local government has been drained of finance, belittled and undermined, and where the regions and nations are often ignored by Westminster. These chickens came home to roost during this crisis. Unless and until the Government undertake to sustain a meaningful industrial strategy, and do it in a devolved way, any economic recovery efforts will be severely hamstrung. Sadly, it is often the Treasury which is portrayed as an overwhelming influence against these two things. Can the Minister undertake to call off the centralising urges of the Treasury?

We have heard that there will be millions of jobs on the line. Today, Make UK, which represents 20,000 businesses, has told a Select Committee in the Commons that one in four manufacturing firms plan to cut jobs. For example in aerospace, Rolls-Royce announced 3,000 UK redundancies this week, with, of course, a knock-on effect to the supply chain. Elsewhere, today’s IHS Markit survey says that some 64% of building firms reported a drop in construction activity during May. Car showrooms have recently reopened but, not surprisingly, UK car production is down by about 99%.

However, some of the sectors that are suffering worst are made up of myriad SMEs. These include the hospitality, tourism, arts and creative sectors, as set out by my noble friend Lady Doocey and many others in their speeches. SMEs across the country—across the whole economy—are also the drivers of growth, while being key entry places for new people coming into work. For many of these businesses, further loans will not be the answer. The noble Lord, Lord Eatwell, is right to highlight the liquidity trap facing such businesses. Loading them up with debt will cause them to fail. The EU seems to be moving towards a grants system, so, in addition to the question of the noble Lord, Lord Eatwell, on possible equity injections, can the Minister tell your Lordships what the Government’s position is on grants—not just to public organisations, as noble Lords set out, but to private sector organisations?

The noble Lord, Lord Kerslake, and the noble Baroness, Lady Warwick of Undercliffe, spoke about stimulus programmes and focused on housing. Others not in this debate may be pinning their hopes on a consumer-led recovery. The German Government have agreed to a €130 billion fiscal stimulus, centred on a big cut in VAT. They also plan a €300 one-off children’s bonus payment. The aim of their package is to stimulate consumer demand, but given that we make so much less than the Germans a consumer-led recovery here is more likely to benefit Amazon than the UK economy. I would like to tease out from the Minister what the plans are for investing in a recovery. My noble friend Lord Razzall made a raft of suggestions, which I will not repeat, but can the Minister set out how the Treasury is approaching this issue?

The noble and right reverend Lord, Lord Harries, talked about social solidarity and was right to do so. It is extremely unfortunate that even some of those people retaining their jobs are doing so at the expense of having worse contracts than they had before the virus. Within that, we will almost certainly see an upsurge in the number of gig workers. During the crisis, many of us have been sustained by the services of today’s gig workers. The noble Lord, Lord Hendy, rightly pointed out that many of them are employed on very disadvantageous terms. To discourage this race to the bottom, Her Majesty’s Government need to send a message now. One way to start doing that is by implementing the Taylor review of modern working practices. Protection of gig workers and the implementation of decent conditions should now be a priority. The Taylor report contains a range of improvements that the Government have said they accept, yet it is gathering dust. Can the Minister undertake to talk to colleagues about implementing the Taylor review, and to come back to your Lordships’ House and report on his discussion?

Finally, there is our trading position in the world. The EU negotiations seem mired; indeed, the Bank of England is preparing for no deal. The US free trade agreement will lead to nothing before elections there. The Japanese negotiations may yield something sooner, and perhaps a fraction better than the deal we currently have under the EU’s umbrella. At the very best assumption, an EU-Canadian type of free trade agreement, which looks unlikely, would mean at least 5% of GDP being cut. Even if the noble Lord, Lord Lang, gets his dream deals with the US and Japan, those will struggle to recover as much as 1% of the GDP that we have lost. This is all on top of a double-digit hit on GDP from Covid-19.

I am not calling to cancel Brexit—we have left the EU—but for any Government to allow the full effects of a no-deal Brexit on top of the economic shock of Covid is careless with people’s lives and prospects. As the noble Lord, Lord Low, and my noble friend Lord Shipley highlighted, there needs to be an extension to the transition period of two years to allow the Covid-19 pandemic to be managed strategically and carefully. Does the Minister agree that it is far more sensible to give ourselves time to get the best possible trading arrangements with the EU and other third countries before we shut the door on our favourable deal with the rest of Europe?

Briefly returning to industrial strategy, I fully endorse the comments of my noble friends Lord Oates and Lady Sheehan and others such as the noble Baroness, Lady Boycott. We must set out for a green, jobs-led recovery which also seeks the strategic self-sufficiency that my noble friend Lady Bowles mentioned. For a green, jobs-led economic strategy to work, it has to be consistent over many Parliaments. I know that the noble Lord, Lord Stevenson, who will speak after me, is enthusiastic in this regard and that he is a reasonable person, as we are on these Benches. There needs to be a cross-party agreement on the way forward to lock this into the future. Will the Minister go back to his colleagues and propose a cross-party approach to planning for this vital element of our future?

Using most conventional measures, the economy is at least overstretched if not bust. We will have many millions more unemployed people and still more underemployed people, and few jobs for young people. The most vulnerable will be hit hardest. Meanwhile, the climate emergency is accelerating, China and the US are completely polarising the global economy and we are about to put up the barriers to the EU. I look forward to hearing the Minister’s response.

Economy: Update

Lord Fox Excerpts

Tuesday 28th April 2020 Lords Chamber

[Lord Agnew of Oulton]

I assure the noble Lord that we are looking at all options. He makes a good point about the shortage of doctors. As the Chancellor has repeatedly said, we will give the NHS all the support it needs. Noble Lords might recall that in the Budget a few weeks ago—it seems like another era—substantial additional funding was announced for the public sector, and we will of course have our spending round, albeit delayed, in the next few months.

[Lord Fox (LD)]

I draw attention to my interests as listed in the register. Implicit in the question from the noble Baroness, Lady Neville-Rolfe, is the point that the managers of the 4 million-plus people being furloughed will start to think about whether they have a future in the business as soon as next month. A huge wall of cash will be required when these workers come out of furloughing and go back into work. That cash will endanger jobs. The flexibility that they do not have at the moment in the furloughing scheme will be very important. The furloughing scheme needs to unwrap in stages, rather than hit a brick wall. Will the Minister acknowledge that this cash drain will be potentially catastrophic for jobs? Will the Government take on this issue and do something about it?

[Lord Agnew of Oulton]

The noble Lord broke up a little. I think I got the—

--- Later in debate ---

[The Deputy Speaker]

If that would establish a better connection, it would be very much appreciated, Lord Agnew. We will pause until you are able to do that.

[Lord Fox]

May I re-ask my question, given the circumstances?

[The Deputy Speaker]

Yes. As the Minister was not able to hear, the noble Lord should indeed ask his question again.

--- Later in debate ---

[The Deputy Speaker]

I will ask the noble Lord, Lord Fox, to repeat his question so that we can start again.

[Lord Fox]

I reiterate that I declare my interests as set out in the register. The point at which furloughing ends is of great danger for jobs because it will cause a huge drain on cash in businesses. Those businesses have to decide whether or not they will continue to employ people as soon as next month. They need to know that the Government understand this issue and will set up a more flexible way of unfurloughing workers so that they can do it gradually. Can the Minister acknowledge that this is understood and undertake to tell businesses what will happen very soon? They need to know.

[Lord Agnew of Oulton]

I will try to offer some reassurance to the noble Lord. The most important thing to say is that the Chancellor has demonstrated enormous flexibility and dexterity over the weeks of the crisis. As the saying goes, if the facts change, he will change his mind to deal with the emerging situation. I am perhaps a little more optimistic than the noble Lord on the current position; even in the last 10 days we have seen increasing numbers of people going back to work as businesses have responded to social distancing and worked out simple things, such as how to rearrange offices. We are seeing this in the traffic stats of the volumes of people commuting. While I accept that there could be something of a big bang, I am hopeful that it will be more of a gradual return to work. If the noble Lord is right and we see that as an approaching problem, I am confident that the Government will react accordingly.

Covid-19: Self-employed

Lord Fox Excerpts

Thursday 23rd April 2020 Lords Chamber

[Lord Agnew of Oulton]

My Lords, I will not repeat the arguments I made in an earlier response. We will of course keep it under review. Some 11 measures have been made available for a variety of self-employed people and businesses. I will not list them all now, but there is a pretty strong safety net. If there is evidence that some are falling through that net, we will of course keep an open mind.

[Lord Fox (LD)]

Nothing the Minister has said will make insecure workers any more secure today, so can we try another line? There is, to coin a phrase, an oven-ready way of improving the rights and entitlements of many self-employed people. Can the Minister pledge that the Government will at last implement the Taylor review of modern working practices? It is time to give insecure workers at least some sense of security.

[Lord Agnew of Oulton]

My Lords, we will certainly keep it under review. I am not able to give a cast iron commitment on that now. It is worth restating that the package of support we have announced over the last month is very substantial. Our policy has been to make it available in a number of different ways—unlike in some countries, such as Germany, where it has been a very targeted form of support. With these 11 different measures, we are confident that the vast majority of small business proprietors will have their situations protected.

Economy: Productivity Measurement

Lord Fox Excerpts

Thursday 28th March 2019 Lords Chamber

[Lord Young of Cookham]

It is certainly the case that cost per Member is much lower in your Lordships’ House than in another place, although of course there are reasons for this. So far as productivity in your Lordships’ House is concerned, one possible measure would be the number of questions we get through in 30 minutes adjusted for quality.

[Lord Fox (LD)]

My Lords, without bringing the analysis down, it is a fraction; it comes down to that in the end. The denominator is something that the Government like to talk about a lot. Employment levels are high and that is a good thing. However, the numerator is GDP. Last year, we saw GDP grow at only 1.4%—the worst performance since 2009—and the ONS predicts that the figure this year will be 1.2%. Clearly, the chaos we are seeing is driving down GDP growth. How can we ever have the productivity levels that the Government aspire to when the chaos around us prevents investment and confidence in business?

[Lord Young of Cookham]

The noble Lord goes back to an issue raised by the noble Lord, Lord Haskel, which is the industrial strategy. Its main thrusts were driving up productivity, backing businesses with high-quality and well-paid jobs, and investing in skills, growth industries and infrastructure. Investment in infrastructure is up 3%. Private sector investment totalled over £358 billion in 2018, combined with public sector investment. We also have long-term partnerships in 10 key sectors, so we are making progress. One reason that productivity has not been as good as it might have been is that, after the downturn, industry tended to keep people on, but at the same time, investment fell. Of course, that had an impact on productivity.