(4 years, 3 months ago)
Lords ChamberMy Lords, this invisible universal virus can affect everyone in every part of the world. So much for the bellicose trumpeting of “Britain going it alone”, torn free from Europe, the world’s largest and most powerful economic bloc with a huge policy reach, as if the days of Empire can be reincarnated in today’s multipolar world of big powers led by self-styled big men like Xi, Modi, Trump and Putin.
In 2009 Gordon Brown saved the world economically by leading the G20 in a joint public-investment-driven recovery from the global financial crisis and prevented a huge global recession from becoming a catastrophic depression but, instead of a co-ordinated international response to the Covid-19 outbreak, countries have manoeuvred for national advantage, competing rather than co-operating over PPE, testing and tracing, Britain woefully failing on all three. Instead of learning with several weeks’ forewarning from Asia, most successfully South Korea with its concerted testing and tracing, lockdown and quarantine, western countries—notably the UK, Italy, Spain, France and the US—all have official death tolls far exceeding those in comparator Asian states, with the UK worst of all in Europe and the US the worst in the world.
As no-deal Brexit beckons, the UK even failed to take advantage of joint EU procurement of PPE, our nationalist zealots instead espousing British exceptionalism and national self-sufficiency. Why have we not joined Germany, Italy, France, Norway and the EU Council and Commission in their call the other week for treatments and vaccines to be shared equally? It is tragic that instead of co-operating to protect the most vulnerable worldwide, countries seem to be racing to get a vaccine for themselves to win commercial and geopolitical benefit.
(5 years, 5 months ago)
Lords ChamberMy Lords, compared with the noble Lord, Lord Macpherson of Earl’s Court, I am an innumerate amateur. But I am aware that economists work in a statistical minefield, in which they must take care to distinguish between provisional and revised figures, between raw and seasonally adjusted data, and between nominal and real values. The Chancellor’s Spring Statement really did take us from the real to the surreal.
In the real world, the UK economy grew at its slowest rate for six years in 2018, and growth is expected by the Bank of England, by the OECD and by the Office for Budget Responsibility to slow even further this year. Business investment has gone down and productivity improvements have dried up. The risk of recession has increased at the very time that the potency of monetary policy has diminished. Additionally, there are worries from a possible looming global debt crisis, global trade wars sparked in part by President Trump’s stand-off with China, and the Chinese slowdown.
But in the surreal world of the Chancellor’s fertile imagination the economy is “fundamentally strong” and “remarkably robust”. Twice in 2017, again in 2018, once more in February this year and again in the Spring Statement, the Chancellor peddled the same line: the economy is confounding his critics by continuing to grow. That remains his stance today. He wants to sound on top of his brief while saying nothing of substance and denying any need to give a sluggish economy a fiscal boost. As Bing Crosby sang:
“We’re busy doin’ nothin’,
Workin’ the whole day through,
Tryin’ to find lots of things not to do”.
Britain is vying with Italy and Japan at the foot of the G7 growth league. We are not alone in facing worsening prospects. Germany, France, Italy and China are all experiencing a growth slowdown. They are all responding by planning a fiscal stimulus but in Britain, the Chancellor has chosen to play a waiting game. Like a cricketing nightwatchman, he is intent only on staying at the crease by meeting every delivery with a dead bat. He is waiting for whatever dawn and the outcome of the Brexit votes might bring: perhaps a revival of business investment and consumer confidence as the fog of Brexit uncertainty lifts—if it ever lifts, given the Government’s latest Brexit shenanigans and the national crisis upon us. There is no sign of that fog lifting soon. The Spring Statement put off taking action until an Autumn Budget, assuming an orderly Brexit—some chance of that. The Chancellor’s fiscal stance simply echoed Scarlett O’Hara’s response to discouraging news: “Tomorrow is another day”.
This is an Alice Through the Looking-Glass world, in which we were led to expect a Spring Statement with no new tax or spending measures but in which, days before the Chancellor’s Statement, the Prime Minister could announce an insulting seven-year, £1.6 billion investment fund, ostensibly to boost growth in Britain’s “left behind” towns, which have been ravaged by tens of billions of pounds of public spending cuts and never-ending austerity. It is a world in which in-work benefits remain frozen and public spending plans face further brutal cuts unless the Treasury eases its grip. It is a world in which the Chancellor’s claims that austerity is coming to an end are contradicted by the Office for Budget Responsibility’s reports confirming that the 10-year Tory budget squeeze remains in place—a squeeze that, by 2020, will have taken more than £150 billion of spending out of the economy in tax rises and public spending cuts. It is little comfort to know that under his predecessor’s plans, the squeeze on national spending would have been closer to £200 billion.
The Chancellor and some commentators have pointed to lower government borrowing over the past year as a portent of a brighter future. Sky’s Ed Conway recently noted that annual public borrowing is now lower than it was before the financial crisis, which is true. As a proportion of GDP, it is now about half what it was in 2007—but in 2007, GDP grew by 3%, more than twice as fast as in 2018, and business investment was increasing, not falling like last year. Faster growth makes higher public spending and higher borrowing more affordable.
There was a time when the leader of the Conservative Party embraced the idea of sharing the proceeds of growth between the public and private sectors to build a civilised society. Today’s Tories remain intent on starving public services of funds, sacrificing economic growth in the process. In the real world, the UK economy is crying out for a fiscal boost from the Chancellor to promote faster expansion and put an end to austerity once and for all. That boost should focus on infrastructure investment, social housing, skills and training, care for the elderly and low-carbon, greener growth. Decades of underinvestment in UK infrastructure, in our people and in fighting global warming need to be corrected. There is no time to lose.
The right reverend Prelate the Bishop of Chester said, absolutely correctly, that there was no mention of social care in the Chancellor’s Statement. That should be a crying priority for any Government. The noble Lord, Lord Macpherson of Earl’s Court, spoke of a social care tax. He is right: I do not think that the incredible crisis in elderly care can be solved by dumping it on families in a lottery of burden. Virtually every family in the country now faces this problem, which needs to be dealt with through extra taxation, possibly compiled with some sort of insurance as well.
The Chancellor says that he is holding £26 billion of fiscal headroom in reserve. If he has such a trump card, as he implies, keeping it up his sleeve is doing no one any good. Britain has already endured the slowest recovery from recession in the post-war period, all under this Government since 2010. Now the Chancellor is prolonging the pain of lacklustre growth. He talks a good game about ending austerity but cannot bring himself to take the decisions needed to match his words. His Spring Statement has been another missed opportunity, another squandered chance, to give the green light to the faster growth this country desperately needs.
My Lords, I thank all noble Lords who have participated in this debate, which will probably go down in history. The purpose of the Spring Statement was to focus attention on the autumn as the single fiscal event and to be a light-touch, mid-year Statement simply to update the OBR forecast. This Spring Statement might go down in history for the reason alluded to by the noble Lord, Lord Bilimoria: there was some other business on the day of the Spring Statement. I think we have now spent twice as long scrutinising the Spring Statement as the other place managed. It all heads down to that.
I want to be associated with some of the thanks expressed by noble Lords. The noble Lord, Lord Shipley, thanked the business managers who intervened and drew us out of the Moses Room into what I refer to as “Centre Court” to debate in the main Chamber. That has added to the number of contributions.
Yes, we should thank the noble Lord, Lord Foulkes, in his absence, for making that plea, which the business managers were able to accommodate. I also wish to associate myself with my noble friend Lord Wakeham’s generous tribute to my good friend, colleague and mentor on the Front Bench, my noble friend Lord Young. I had not realised they were celebrating 45 years. I associate myself with my noble friend Lord Wakeham’s generous remarks to my noble friend about his service in both Houses.
I shall try to provide some taxonomy of the contributions, which ranged very widely but more or less settled down in the following areas. The first was, unsurprisingly, Brexit. I began repeating the Spring Statement by referring to what the Chancellor said about Brexit: it is dominating thinking not only in this place but in business. The noble Lords, Lord Tunnicliffe, Lord Davies of Stamford, Lord Davies of Oldham and Lord Bilimoria, the noble Viscount, Lord Chandos, my noble friends Lord Gadhia and Lord Northbrook, and the noble Baroness, Lady Kramer, made points about that headwind. The only area of difference between us is that we say that the opposition parties hold it within their gift to dispel that cloud of uncertainty by backing the deal before us, but matters are unfolding. If there is any news to report I hope that a Box note will make its way along to me.
There was—I shall not overegg it—support for and recognition of the progress which has been made, notwithstanding the uncertainty. We enjoyed the noble Lord, Lord Macpherson, describing Treasury civil servants having to deal with disappointment, and I am sure that was enjoyed within my earshot. The reality is that this Statement was able to unfold some positive news about levels of debt, employment and the general fiscal situation. The noble Lords, Lord Macpherson, Lord Wakeham and Lord Northbrook, referred to the positivity. Even the right reverend Prelate the Bishop of Chester—
(5 years, 5 months ago)
Lords ChamberWe attach great importance to the legitimacy of the open, merit-based process that is now in place for making that appointment.
My Lords, in assessing which candidate will succeed, will the Minister take account of the policies advocated by them? Along with the IMF, the World Bank has had a reputation in recent decades for pursuing a destructive, neoliberal policy, which has recently failed in Georgia, as it has elsewhere. Privatisation, marketisation, small government and cuts in public spending have become a religion, instead of a sensible policy to allow these countries to grow and succeed.
I do not accept that description of the World Bank’s work. It does an incredible amount for the world’s poor through investing in infrastructure and food—for example, for the Rohingya population. It is absolutely committed to eradicating extreme poverty around the world, which is why we support it.
(5 years, 6 months ago)
Lords ChamberMy Lords, my noble friend asks a relevant question, but we do not take a country-based decision in looking at asylum claims. We look at the individual claim, depending on what it might be for, and then take a view on whether it is safe to return that person.
My Lords, given the current climate in Zimbabwe, which is a human rights-free zone, and with President Mnangagwa and his military henchmen cracking down on individual freedom and particularly the opposition, nobody should be deported, especially when families are protesting about the desperate situation they will probably face. Surely the Minister accepts that.
I certainly accept the noble Lord’s point that Zimbabwe is violating human rights conventions, but civil unrest—in and of itself—is not a reason to grant somebody protection. There are certain issues within that civil unrest—for example if someone is opposing the current regime and might be at risk, that would be taken into consideration.
(5 years, 6 months ago)
Lords ChamberMy Lords, following the excellent speeches we have just listened to, beginning with my noble friend Lord Stevenson, I support this group of amendments and appeal to the Minister seriously to consider reversing the ERG amendments, not just for the detail and well-founded points and reasons that have already been made, but because the Government did not choose to accept them. They were foisted upon them, because of the arithmetic and politics of the situation, and wanting bigger fish to fry. As a result, we have a defective Bill, even by the Government’s own objectives. I ask the Minister seriously to consider on Report, rather than facing a possible vote and even defeat given the cross-party support that exists, getting the Bill back to where it was before the ERG plundered it.
My Lords, what connects this group of amendments is that they are European Research Group’s amendments in the Commons that were accepted by the Government. I do not think they should be treated by my noble friends on the Front Bench as if they all had the same merit or otherwise.
The single UK customs territory, which is now Section 55 in the Taxation (Cross-border Trade) Act, specifies that there should not be a separate customs territory between Northern Ireland and Great Britain. Frankly, I cannot see the circumstances in which this House or the other place would find this acceptable. That being the case, I cannot see any merit in this House seeking to ask the other place to think again about that issue. I do not think anybody in the other place is proposing to revisit it, so my suggestion is that we do not go down the path of thinking that Amendment 79 has merit.
I do not disagree about Amendment 80. I listened with care, but I would not like to try to explain it to somebody else and I am sure the noble Lord, Lord Hannay, is right about that.
I support Amendment 77 because I cannot see any good grounds for why legislation should require the Government to seek new primary legislation to have a customs union of any character with the European Union in the future. If, for example, we want to have a customs union with the United States of America, it could be done by an Order in Council. There is no basis for a distinction of that kind, other than the politics of the moment, and legislation should not be governed by the politics of the moment. If there is a proper process for the scrutiny and approval of a customs union, it should be set out in legislation and apply to any other country with which we establish a customs union and not discriminate and impose additional requirements specifically in relation to the European Union.
That just leaves Amendment 78. I confess I saw this being slightly of the moment, in that it was intended to entrench into statute the provisions in the Chequers White Paper relating to reciprocity in the collection of import duties on behalf of the European Union by the United Kingdom. But as I understood the White Paper, it did not necessarily mean that the European Union would collect import duties on our behalf. There was some suspicion on the part of our colleagues in another place that the negotiations might lead to such an eventuality, and that we would collect duties for the European Union but they would not collect duties for us, so they put this into the legislation. Frankly, that is not where the negotiations are now. We are either in a customs union or we are not; I do not think we are going to be in some sort of asymmetric customs arrangement of that kind. Nobody is debating that presently.
Amendments 77 and 80 have merit. I hope they are not going to be pressed at this point, but my noble friends should certainly think carefully about amending them when we come to Report to enable the other place to think again.
We discussed the customs union last Wednesday. That was the day before an interesting report was produced, principally by German economists at the Ifo Institute. I was encouraged by it, not least because I agree with it. It basically said that, to break the deadlock, both sides have to move from their red lines. In the United Kingdom’s case, that means no longer excluding the possibility of being in a customs union with the EU. In the European Union’s case, it means not treating such an arrangement necessarily to mean that the United Kingdom has to remain a member of the existing customs union or the Customs Union Code. They therefore propose the establishment of a European customs association, in which both the United Kingdom and the member states of the European Union would have voting rights. As a consequence, in the event that the European Commission operated as the representative of the European customs association, it would do so based on a mandate in which the United Kingdom continued to exercise the same kind of authority it presently exercises on the European Union’s customs arrangements.
This customs union would extend only as far as the present custom union applies inside the European Union. The document Hard Brexit Ahead: Breaking the Deadlock contains precisely the kind of discussion we have been having. It is not about whether we are in the customs union; it is what a customs union between the United Kingdom and the European Union might look like in the future.
It is doubly encouraging to see that not only put forward but put forward by prominent German economists. I hope that Ministers will continue to look at that in the time available before they have to come back and talk once more to the other place about what the next meaningful vote should be on.
My Lords, I am speaking on behalf of my noble friend Lady Altmann, who is unable to be here and asked me to extend her apologies. I think she would have shared the view of the noble Lord, Lord Hannay, that Amendment 98 would not prevent our exit without an agreement, which is the default situation under the statute law as it remains, but it would certainly enable one to put into the equation consideration of the damage and chaos that would result if one were to leave by default without an agreement and without the statute book and continuity agreements being in place. Both Houses would have to think hard about that. It is a contest between different visions of what kind of chaos might ensue. Unfortunately, that is essentially where we are.
My noble friends on the Front Bench have done a grand job, not least in keeping us on track, wherever possible, in understanding the importance of getting this legislation into the right structure rather than being distracted too often and too far into discussion of Brexit. I think we agreed at Second Reading that the Bill is occasioned by Brexit but is not really about it; nor, technically, is it about the future processes and structures of free trade agreements. Their approach has enabled us to have what I think will be some interesting, positive and constructive discussions on Report, arising out of this Committee, when we can really focus on one or two specifics. My noble friends will have been given an indication of what kinds of considerations will be important to the House in thinking about free trade agreements as they come along.
My Lords, I realise that the hour is late, but I rise to support Amendment 98, which would make it much more difficult for the Government to preside over a default no-deal Brexit, and to encourage the development of alternative strategies.
Due to the failure of the Government to develop a credible Brexit strategy, there is now a grave danger of the UK crashing out of the European Union on 29 March—in just over 50 days’ time—as the default option. This would have truly devastating consequences. However, because of the Brexit-related legislation already on the statute book defining exit day as 29 March 2019, it is possible that Parliament will not have the powers to stop it happening.
The amendment would therefore put a limitation on the commencement of the Trade Bill and provide that Clause 2(1), which gives the Government powers to implement international free trade agreements, can be implemented only on the condition that either: Parliament has approved a negotiated deal; the Government have requested an extension of Article 50; Parliament has approved a no-deal departure; or Parliament has voted for a second referendum. It would also offer your Lordships’ House a chance firmly to reject the possibility of the UK crashing out of the EU in a no-deal scenario.
The hard Brexiteers of the European Research Group, who assert that no deal would be an acceptable option, argue that Britain’s trade outside the EU is increasing at a much faster rate than trade with EU countries. However, this ignores the fact that measuring growth starting from a much lower base is always higher in percentage terms. They also fail to mention that trade with non-EU countries is not a binary choice and has been boosted by the EU’s own trade agreements with those countries, from which the UK benefits as an EU member—witness Germany’s spectacular trade increases with China, for instance. If noble Lords have any doubt about this, they should look at the website of the Department for International Trade. In the case of the recent trade agreement between the European Union and Canada, we read:
“UK trade with Canada up 14% since new free trade agreement introduced”.
This is a reference to CETA, the Comprehensive Economic and Trade Agreement between the EU and Canada, which was signed in 2017 after seven years of negotiations. EU free trade agreements with non-EU countries such as Canada, South Korea and Japan were negotiated with the leverage and weight of the 500 million-strong market of the whole EU, which the UK will lose after Brexit. Brexiteer fantasies about WTO rules ignore the complexity of the necessary reallocation of the UK’s share of EU tariffs and quota schedules, which will require difficult negotiations. They also disregard the application of rules of origin to UK goods trying to enter the EU market, which the Government have previously estimated could cost firms between 4% and 15%.
(5 years, 9 months ago)
Lords ChamberMy Lords, in September the International Monetary Fund concluded this year’s review of the UK economy by noting that Britain had moved,
“from the top to near the bottom of the G7 growth tables”.
We are now vying with Italy and Japan for the G7’s “Bringing Up the Rear of the Year” award. The UK growth trend is downwards. The British economy is still growing, but it is also slowing: it has grown slower every year for four years in a row. Growth this year is expected to be under half what it was in 2014. The British Chambers of Commerce has warned that growth will slow to “a snail’s pace” this year—barely 1.1%. Surely we should all know why. Years of austerity have stymied UK growth, leaving most people no better off now than they were a decade ago, when the global financial crisis pitched the real economy into the great recession.
Despite this dismal record, the Chancellor would have us believe that he is the bearer of good news about public finances, that the Budget deficit is shrinking fast and that things are looking up. But good news can indeed be relative. Back in December 2014, the Chancellor’s predecessor promised that this year, 2018-19, would be the breakthrough year—the year when the Budget would finally move out of the red and into the black, from deficit to an overall £4 billion surplus. Today the OBR expects this year’s Budget still to be in deficit to the tune of £25 billion. I repeat: not the predicted £4 billion surplus but a £25 billion deficit. The slippage has not stopped. The Government are still behind schedule with their deficit-reduction plans, and still overpromising and underdelivering, despite the misery, despair and economic vandalism of never-ending austerity.
Earlier this year the Chancellor’s Spring Statement envisaged a £37 billion deficit for the current year, 2018-19. That figure was the very target that George Osborne set for 2014-15 in his infamous June 2010 emergency Budget—by the way, exactly half the target set for that year by Alistair Darling in his final March 2010 Budget. It has taken the Tories eight years to hit their four-year target. All their 2010 talk about Britain being on the brink of bankruptcy and needing urgently to close the budget deficit before we sunk into the Greek abyss—all that nonsense has been exposed as the hogwash some of us always said it was.
Many Members of this House will have noticed a new study of the financial crisis that appeared during the Summer Recess—Crashed, by Professor Adam Tooze of Columbia University, New York. On page 350 he notes George Osborne’s claim that by 2015 he had slashed £98 billion in annual spending from the UK budget, and OECD evidence that only Greece, Ireland and Spain endured worse contractions than those inflicted on the British people—which is why it took GDP two years longer to recover to pre-crisis levels in the UK than in the United States, where President Obama did the very opposite: rather than cutting spending, he invested and expanded, and US growth picked up where ours went down.
For all the talk of a giveaway Budget and the Tory fiscal squeeze coming to an end, the reality is that Philip Hammond is pressing on with austerity. Office for Budget Responsibility figures show that between 2010 and March 2018, the Tories squeezed £130 billion of spending out of the economy in tax rises and public spending cuts. This latest Budget does not mark the end of austerity—it prolongs it. By 2020, 10 years of Tory austerity will have squeezed over £150 billion of spending out of the economy, 80% of which will have come from public spending cuts.
That £150 billion is 30% bigger than the whole of this year’s budget for NHS England. Figures from the House of Commons Library show that a quarter of that £150 billion in lost spending will be due to cuts in working age social security. Some of the greatest falls in living standards are being experienced by the worst off. So much for the Tory slogan, “We’re all in this together”. This is not a new chapter as the Chancellor claims: it is the same old story, and the Government plan to make it last into the mid-2020s.
Austerity is the reason why care homes are closing, why police numbers are down and why prisons are short of staff. Austerity is the reason why we hear cries of anguish over the lack of elderly care places and cries of desperation over the lack of housing for our young people. Instead of responding to Britain’s urgent social needs, the Chancellor committed nearly £10 billion to income tax cuts over the next five years, which will benefit the better off and the richest the most. Utterly wrong priorities, surely.
A disturbing new chapter in UK economic policy has now opened. The balance of fiscal and monetary policy is shifting towards monetary restraint, even before the austerity-induced slowdown has ended and before the full effects of Brexit uncertainty have become clear. Premature rises in interest rates can only hinder rather than help Britain’s recovery. Yet the fact that the Bank of England has begun to raise interest rates seems to have passed the Chancellor by. He is sticking to his tight fiscal grip when he should be offsetting the drag of higher interest rates by giving the economy a substantial Budget boost. Worse still, instead of encouraging growth he is preparing further cuts in the event of a no-deal exit from the European Union.
The economy really needs a Budget boost in infrastructure investment, skills and training, and low-carbon, greener growth. I welcome the recent call from the Institute for Public Policy Research commission on economic justice for a £15 billion increase in annual public investment spending over and above current plans, taking it to 3.5% of GDP, the average for the G7 countries. That would be double the current rate. It would help to correct decades of underinvestment in UK infrastructure and consequently generate greater growth which will in turn reduce borrowing and debt.
To those who say it cannot be done, I say this: we did it. It is exactly what the last Labour Government did at the height of the global financial crisis. We increased public investment by £14 billion in 2008 and by £15 billion in 2009, over and above previously planned levels, taking it to a 40-year high, and growth began picking up—until the Tories won in 2010 and it collapsed under the weight of savage austerity.
Maintaining infrastructure investment on a permanently higher plateau would encourage faster economic growth, deliver higher living standards and provide a better quality of life for all of our people. The Chancellor’s Budget falls short on all those criteria. He has dismally failed to provide the kind of fillip that is desperately needed for our economy—especially as the Government drives forward, lemming-like, towards an economically suicidal Brexit.
I think that we will have to debate this off-piste or I will talk for too long.
I am sorry to intervene. I was agreeing with everything that the noble Baroness was saying until she embarked upon a disastrous defence of her party’s complicity in Tory austerity for five years. If she looks at the record until the banking crisis blew everything out of the water, she will find that borrowing was lower than we inherited from the Tories, the deficit was lower than we inherited from the Tories and debt was lower than we inherited from the Tories. Those three indices were much lower than the average of comparable countries.
And Liam Byrne left us with the message that there was no money left. I shall try to move on quickly.
Much more could have been done for small businesses. It is time to deal with the underlying problem of business rates, which is a defunct way of taxing. I very much recommend that the Government look at our call for a land value tax—the commercial landowner levy—which would reward people for investing much more in both machinery and equipment.
Much of this debate has been about growth. I say to both the noble Lord, Lord Bates, and the noble Baroness, Lady Noakes, that I join others who are stunned that the Government are satisfied with the growth rate forecast that we face. Over the next five years, the best number is 1.6%, and it looks as though it will be 1.3% this year. That is awful and completely unacceptable. I am very worried that the Government are complacent about a number like that, and the noble Lord, Lord Livermore, highlighted that issue as well. Productivity is forecast to be at a trend rate of 1.2%, which will produce no future for any of our children. This year, I think that it is running at 0.8%.
On growth and investment, this year private investment has fallen from 3.3% growth, which is much closer to its norm, to 1%. The Bank of England has said that business investment growth has been 3% to 4% lower over the past two years as a result of the referendum. Those investment numbers are absolutely devastating. When people point to full employment, I ask them to look at the demographics. We have a demographic shortage of working-age people. It is not hard, in those circumstances, to have full employment. I ask the Minister to check the dependency ratio, because—although my calculation may not be right—I believe it is currently 1.7:1. So one person supports themselves plus 0.7 of another person, rising rapidly to 1.9:1, which is completely unsustainable.
We have to face up to the issues of productivity, our rising pensioner tail and our falling working-age population. With our migration policies, we are about to make that situation significantly worse. We are certainly not going to achieve economic recovery in a Budget like this.
I have not even touched on Brexit; many people raised it and it is absolutely pertinent, as it sets the framework. We know now that there is a technical agreement between the EU and the UK. It will be fascinating to see whether tomorrow, by the time the Conservative Party has worked through it, there is anything more substantial than that.
No matter what we do, by the Government’s own figures there is no scenario for Brexit that does not harm prosperity—a point made by the noble Lord, Lord Livermore, in great detail, and by the noble Lord, Lord Kerslake. From talking to City players today, I understand that the financial services industry has either paid, or is committed to pay, something in the range of £15 billion to cover the cost of adapting to Brexit—this assumes not that there will be a no-deal Brexit but a Brexit more in the Chequers mould. I have no idea what is falling on manufacturing, but those numbers are quite damaging to any kind of economic future.
This was a sticking-plaster Budget. In this atmosphere of uncertainty, without knowing where Brexit goes, the Chancellor has chosen—perhaps rationally—to do only the few things that impact on this year. Let us not overstate what he has done. We still face huge cuts to public services on every front. We have not dealt with the challenge of putting our taxes on a long-term and sustainable basis and we have not dealt with the underlying challenges of growth and productivity.
(5 years, 11 months ago)
Lords ChamberMy Lords, it will come as no surprise to the noble Viscount, Lord Trenchard, that I disagree with virtually everything he said. As the Bill confirms, the Brexit charabanc is lurching giddily along, dragging our country towards a completely unknown destination. Even at this not-quite 11th hour, no Brexiteer, and certainly not the Prime Minister, has the faintest clue how we will be trading with our biggest partner—Europe—or any other country for that matter. No wonder the pound has plummeted and businesses engaged in any way with the outside world are at their wits’ end. It is therefore hardly a surprise that, although the Bill allows for the creation of a stand-alone customs regime for the UK, there is as yet no idea what shape it will take.
Everybody knows the mantra is “Brexit, dammit”, but nobody knows yet what it means, and maybe we never will until after we crash out into the nirvana of Trumpian free trade. That does not matter a jot because we will be free of Brussels—free, free at last—but God knows what new chains will now restrict our jobs, our prosperity, our businesses and our workers. I am no historian but I cannot think of any equivalent situation our country has ever faced as a result of a conscious act of government policy which says, “We’ve no idea where we’re going but we’re going there anyway”. Has the British political class ever done anything more utterly, profoundly irresponsible? Yet this Parliament, to our utter shame, has so far simply indulged in rubber-stamping it.
It should therefore be no surprise to anyone that the Bill illustrates how neither No. 10 Downing Street nor the arch-Brexiteers in the Conservative Party are now in control of their Brexit fantasies. Neither has a plan as the clock ticks down. What unites them is that it must click down regardless of the consequences. The people have spoken—full stop. We are going we know not where, but we are going anyway. This is rapidly becoming an act of collective national madness.
With the Chequers deal based on her flawed White Paper, the Prime Minister was supposed to be keeping the UK close to the single market after Brexit, with some magical thinking about customs arrangements. Never mind that the services sector, forming a mere 80% of our economy, was abandoned. The importance of the Bill and the parallel Trade Bill should not be underestimated. Borders matter. Those who fantasise that the UK can enjoy frictionless trade under WTO rules need to understand that those rules mean hard borders, including within the island of Ireland. Even under the WTO’s most-favoured-nation rules, if we did not enforce the border in Ireland, we would be in breach of our agreements with other parts of the world, as would be, in parallel, the Republic and the EU. That would be a disaster for the economies of Northern Ireland and the Republic and would gravely threaten the peace and prosperity which have flourished since the Good Friday agreement of 1998, which is a binding treaty recognised under international law to which this Government pay lip service, but which is being steadily undermined by their whole approach to Brexit. No developed country trades purely on WTO rules, and it is fantasy to suggest that Britain should be the first to give it a go. Moreover, less than two weeks ago the director-general of the WTO pooh-poohed the idea that the UK could fall out of the EU straight into compliance with WTO arrangements, pointing out that it would take quite a time to negotiate the transition.
The debates on the Bill in the Commons demonstrated that the Government are a hostage to a minority of their own Back-Benchers, who chose to table four changes as wrecking amendments. The Chequers compromise can be seen as the Prime Minister’s attempt to steer her dysfunctional Cabinet towards a softer Brexit strategy that would mitigate, to some extent, the most damaging economic consequences of a hard or, worse still, a no-deal Brexit, but it started to fall apart at the first hurdle. Rather than risk defeat and a possible government collapse, these European Research Group amendments to the Bill were accepted by No. 10 and now potentially constitute new red lines, which may hinder the conclusion of a successful Article 50 withdrawal agreement.
The amendments in question were, first, to introduce the need for primary legislation if the Government want to keep Britain in a customs union. As my noble friend Lord Tunnicliffe and the noble Lord, Lord Kerr, have convincingly argued, and as Labour has compellingly argued, the case for a customs union with the EU is overwhelming—in order, among many other things, to avoid rules of origin requirements and check whether goods qualify for preferential tariff arrangements. According to the Government’s own analysis, these rules can burden businesses with additional administrative costs amounting to between 4% and 15%.
Furthermore, once the UK ceases to be regarded as EU territory, UK component parts and products will no longer benefit from zero tariffs as EU products under EU free trade agreements. That means that if the Government’s facilitated customs arrangement does not work, the fallback position will be no customs deal at all, which would be deeply damaging for our manufacturers. This could have a huge impact on UK trade and is the reason why a customs union is absolutely necessary for the sake of British manufacturing, international trade and Northern Ireland’s peace.
A second ERG amendment accepted by the Government ruled out a customs border in the Irish Sea between Northern Ireland and the rest of the UK. This was accepted as in line with the Prime Minister’s previous position, despite her commitment in the UK-EU joint report of 8 December 2017:
“In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the”,
Belfast/Good Friday agreement.
The purpose of the second ERG amendment seems to be to destroy the negotiating room within which discussions on such backstop arrangements could take place. However, the most substantial and visible impact of the Bill will be at the UK’s borders—seaports and airports—and on our land border with the Republic of Ireland. It allows for the Irish border to return to being a customs border between the UK and Ireland. That means that goods leaving Northern Ireland will have to be cleared for exit from the UK and for entry to the EU.
First, goods crossing the border must be covered by a pre-departure declaration, partly to offer evidence of their status for VAT-free export. Secondly, goods will be able to enter the customs territory only through a designated place of clearance—which, for a land border crossing such as on the island, usually contains facilities for customs examination and clearance, including access to the relevant customs software systems to ensure that detailed information on the goods is submitted for recording and risk analysis purposes, and that correct duties are paid.
Thirdly, goods will be subject to customs duties from both sides. Fourthly, traders are more likely to be subject to requirements for import and export licensing. As the UK leaves the EU, all businesses in Ireland and Northern Ireland that trade across the Irish border will have to be properly registered to do so. Proper rollout of any trusted trader scheme requires time and agreement with trading partners.
Fifthly, the Bill will change common experience for VAT and excise. Import VAT will be charged on all imports from outside the UK. Sixthly, if goods have to be inspected, there has to be the facility and capacity to do so. For the movement of agri-food produce, for example, including livestock, a rigorous veterinary and plant health inspections clearance regime must be in place. All of this illustrates the importance of getting a deal with the EU that avoids the need for customs controls between the EU and the UK.
How ironic it is, then, that this Bill also now contains a provision that risks making such a deal far less likely. The addition of this proposed new clause as a result of ERG dogma has ramifications not just for the Irish border; it also has implications for the current Brexit negotiations at a macro level. This was the Government’s intention in accepting it.
The so-called backstop in the draft withdrawal agreement is intended to prevent the scenario I have outlined previously coming into effect around the Irish border. However, what the ERG amendments, and therefore the subsequent new clause, do—in a fairly crude way—is to prevent that backstop being workable. It forces a scenario in which the Irish border is a customs border in the Bill. More to the point, by making it more difficult for the UK and EU to finalise the withdrawal agreement, it makes such a scenario all the more likely. This is no imaginary problem; there are no harmless consequences.
In July, the Prime Minister made her first substantial visit to Northern Ireland. When there, she visited the village of Belleek, on the Fermanagh-Donegal border. Belleek is in many ways a typical Irish border village. It has a population of Catholics and Protestants, British and Irish citizens, cross-border families and cross-border workers. A good number of such workers are employed by one business that straddles the border, with its front door in the Republic and its back door in the UK. As Theresa May’s entourage descended on the village, that business owner described the impact of the uncertainty around Brexit in a powerful way. “Out here”, he said, “We’re cannon fodder”.
The third ERG amendment Theresa May accepted makes it illegal for Britain to collect EU tariffs at its ports unless Brussels agrees to act on a reciprocal basis. The Government insisted that the amendment was consistent with the customs policy as outlined in the White Paper because they envisaged using a formula to govern the flows of money based on trade patterns between the EU 27 and the UK. However, the White Paper does not explain exactly how this would work, and it seems highly unlikely that the EU will accept such a plan. There are further technical problems with the proposed facilitated customs arrangement, as it would appear to breach elements of the General Agreement on Tariffs and Trade—GATT—which is part of the World Trade Organization rules.
It is, in any case, a complete and utter delusion that the UK, with a market of 60 million, can improve on the negotiating strength we already have as a member of the EU with a market of 500 million, as far as free trade agreements with third countries are concerned. The point is that trade will become more costly and burdensome outside the EU single market and the customs union, and our businesses and manufacturers will be at a disadvantage compared with their European neighbours and competitors.
The ERG’s fourth amendment concerned VAT. Because the authorities need to know whether goods have crossed the border to properly apply the tax, the EU VAT area is absolutely crucial to avoiding a hard border. We currently have around 25 million customs declarations requiring payment of VAT at the border. That will potentially rise to 255 million after Brexit. Either goods are checked as they cross, requiring hard infrastructure and border friction, as happens in Switzerland and Norway, or we seek to stay in the EU’s system, which operates on the basis of a paper trail to track the movement of goods and requires European Court of Justice rules to apply. If the Government adopt neither option, it opens the UK up to massive fraud where goods enter the country VAT-free and people evade tax, depriving the Treasury—and therefore our already cut, battered and overstretched public services—of crucial revenue.
In conclusion, the debates on the Bill have illustrated that, as the reality of Brexit becomes clearer, the case for it disintegrates. Instead, the case for delaying Brexit and for giving not only Parliament but the people a meaningful vote, or a people’s vote, on any draft withdrawal agreement becomes ever more compelling. I am delighted that my own trade union, the GMB, has today supported the principle of a people’s vote.
(6 years, 3 months ago)
Lords ChamberMy Lords, I support the Bill in its unamended form and echo what the noble Baroness, Lady Tyler, just said. BrightHouse had to repay £14.8 million to 384,000 clients last year because the Financial Conduct Authority judged its behaviour to have been unreasonable. The Bill makes available more reasonable credit, although not necessarily the cheapest, to all those who rent.
If you do not have a credit record, life is very dangerous. I went on to the web this morning to see quite what finance was available. Fast Loan UK claims to offer:
“Responsible Loans For Everyday Lives”.
The APR it charges on one of its loans is 907%. That does not sound terribly responsible to me.
One source of reasonable credit for people on very low incomes and who need it most is credit unions. We have often spoken in this House about the need for more credit unions. They do a good job, but there are nowhere near enough—there are 384 members of the credit unions association. However, if you search for “credit union loans” on the internet to find out where you might access them, you come across “Credit Union Loans” with an APR of 277.5%. The irresponsible lenders have twigged that the way to get customers is to pretend to be what they are not. They are not responsible lenders. While I support the Bill in its unamended form, I hope that we might encourage the FCA to police this sort of thing rather more carefully.
My Lords, the noble Baroness’s point about credit unions is vital. On my way to London early on a Monday morning, I often see people near Neath station queuing outside their credit union. For them, it is a lifeline.
My Lords, from the Cross Benches, I support the noble Lord, Lord Bird, and oppose the amendment. I know that the motivations of the noble Lord concern mostly poorer people who need credit to buy white goods and the rest—we have known for many years that the slogan, “The poor pay more”, has been more than true—but I want to refer to those members of Generation Rent who have a chance, albeit a sometimes slim one, of being homeowners and need every help in getting their creditworthiness to the highest-possible status to move from being a tenant to a homeowner, and who are held back by the way in which credit agencies operate. It may be said that the people in Generation Rent do not wish to be homeowners —that they live an “Uber lifestyle” in which you do not own a car; you call Uber. That can apply to many aspects of life. However, surveys continue to show that people wish to be homeowners and for very good reason: home ownership brings with it security, which you do not get in the private rented sector. Even if your tenancy is for a full year, a lot of people find that it is hardly enough to enable you to settle down and, certainly, to bring up a family—we are now seeing ever more families in the rented market.
Home ownership remains an aspiration. Although you might be paying more for a mortgage on day one—if the mortgage company can provide a loan for you—rents will rise roughly at the level of earnings, which is RPI or CPI plus 1% or so, year after year and, in 25 or 30 years, those rents will be enormous. When you come to retire as a tenant, a lifetime of tenancy means having to move home on retirement because your income will drop but your rent will keep rising. Home ownership gives you not just the security of tenure but the financial security of knowing that, although it may take 25 or 35 years, eventually you will be free of debt. Anything that inhibits people from breaking into home ownership, which is what people aspire to, is extremely important.
People say, “Nowadays in London and the south-east, what is the point of talking about home ownership? Prices are so far beyond the reach of those on ordinary incomes this will never happen”. We now have planning consents across London for an enormous number of new apartment blocks. We are seeing come out of the ground 520 apartment blocks of more than 20 storeys for residential use. A massive housebuilding programme is coming down the line. Those who have built those apartment blocks, some of them overseas investors, believe that the starting price will be about £500,000 for the majority of the flats. Someone who is on £50,000 a year—there are not that many people on such a salary—will be able to get a mortgage of £250,000 and not £500,000. The trouble is that we are running out of Russians; we are running out of overseas buyers who are prepared to pay £500,000. I predict that home ownership, which has been in sharp decline, will come back into fashion. The opportunities will recur; prices will have to come down to meet the incomes of those who aspire to own. We should ensure that the credit lines for them are as clear as possible, which is what the noble Lord, Lord Bird, would do.
(6 years, 8 months ago)
Lords ChamberMy Lords, it is a pleasure to follow such an expert and impressive speech from the noble Baroness, Lady Bowles, in moving Amendment 69B. The amendment is supported by my noble friend Lord Collins, and I have put my name to it. It introduces a failure to prevent offence.
In June 2011, the then Financial Services Authority found shocking inadequacies in UK banks’ anti-money laundering controls, with one-third of banks accepting,
“very high levels of money-laundering risk”,
and three-quarters of banks failing to take adequate measures to establish the legitimacy of the wealth they were handling. The then acting head of financial crime at the FSA, Tracey McDermott, said publicly:
“The banks are just not taking the rules seriously enough”.
Yet, after all these strong words, what happened? Instead of the FSA—now the FCA—getting tough with the banks, since 2010 there have been only 10 convictions under the money laundering regulations, not one of them of a bank. It is therefore hardly surprising that there have been repeated money laundering scandals involving UK banks. There is simply no adequate deterrent or serious regulatory risk to make UK banks turn away profitable business that they are offered, and there will not be until the FCA starts prosecuting people and banks for failing to apply the regulations.
By chance, I met a business analyst this morning. Although I did not know it beforehand, he happened to be an expert in this area, and he described London as the money laundering capital of the world. If he is right, that is shameful. The UK is woefully behind where it should be on holding banks and financial institutions to account for money laundering. HSBC was fined $1.2 billion in the US in a criminal settlement for money laundering, and just a few weeks ago it was fined $352 million in France to settle criminal charges for money laundering. Despite being a UK-headquartered bank, and despite being under investigation since last December by the FCA, HSBC has not yet faced regulatory sanction in this country, even though it has been named repeatedly in corruption cases, for example in Nigeria in 2012 and during the 2000s. No UK action was taken against HSBC in any of those cases. Earlier this year, HSBC was again implicated, with other British banks, in laundering ill-gotten money out of Russia.
A failure to prevent offence for money laundering, as provided for in Amendment 69B, would make it significantly easier to hold large global banks such as HSBC to account for poor procedures and for turning a blind eye to handling corrupt wealth. Without this reform, as Jonathan Fisher QC, a money laundering expert, has explained, it would be difficult and clumsy for the FCA or any other agency to prosecute a bank such as HSBC because it would have to show that a director or some other controlling mind in the parent company in London knew about the alleged misconduct. Indeed, it would have to show that that director intended the misconduct to happen. This is an exceptionally high bar which makes it virtually impossible to hold large global financial actors such as HSBC to account in the UK.
In my speech at Second Reading on 1 November 2017, I described a vivid context for this Bill: the massive money laundering organised from the very top of government in South Africa—the presidency itself—and the systematic transnational financial crime network facilitated by an Indian/South African family, the Guptas, and the presidential family, the Zumas. British-based financial institutions such as HSBC, Standard Chartered, the Bank of Baroda and other international institutions have been conduits for laundering hundreds of millions of pounds or billions of rands, mostly through Dubai and Hong Kong.
The South African Parliament itself is in the process of holding a public inquiry into large-scale state capture involving even larger-scale corruption and looting of state-owned enterprises. On 21 November 2017, Mr Zola Andile Tsotsi, erstwhile chair of the state-owned electricity generator, Eskom, gave evidence under oath. What resulted is the first smoking gun implicating the President of South Africa, Jacob Zuma, who exerted shadow control over state-owned enterprises which have been exploited through large-scale looting and money laundering, from which his family and friends have benefited. He did this by deploying one of his nominees, Ms Dudu Myeni, a person near and dear to him—he fathered a child by her. Educated as a primary school teacher, in 2012 she was appointed chair of Africa’s largest state-owned airline, South African Airways. In early December 2015, the then Minister of Finance, Nhlanhla Nene, rejected her request to renegotiate a fleet renewal deal for SAA, because it smacked of corruption. Within days, the President sacked Minister Nene.
Evidence before the South African parliamentary public inquiry showed that, as chair of the state-owned airline, Ms Myeni not only facilitated looting by the Zuma and Gupta families, but also sought to control, instruct and manipulate the running of another state-owned power utility, Eskom, from which the Gupta family, through an intricate network of companies, have siphoned off billions of rands, via various banks, including London-based banks which I am asking the British authorities to investigate. I am grateful to the FCA for the contact it has had with me to pursue this.
First, Eskom chair Mr Tsotsi was ordered by the government Minister for Public Enterprises in February 2015 to refrain from “interfering” with the management of Eskom. He only chaired the Eskom board, after all—why on earth should he bother himself with holding to account the executives underneath him? This ministerial instruction, to put it simply, was aimed at stopping him scrutinising the decisions and behaviour of Eskom and instead ensuring he turned a blind eye to the corrupt award of multibillion-rand contracts to the benefit of the Gupta and Zuma families.
According to the evidence at the parliamentary inquiry that same day in February 2015, Mr Tony Gupta phoned Mr Tsotsi, accusing him of not “helping us with anything”, adding: “We are the ones that put you in the position you are in. We are the ones who can take you out!”. A few days later, on the eve of the newly appointed Eskom board’s first meeting, President Zuma called Mr Tsotsi, instructing him that the board meeting be postponed, without even giving reasons. Less than a week later, Mr Tsotsi was instructed by South African Airways chair Ms Dudu Myeni to attend the presidential residence on 7 March 2015, where she unlawfully ordered the suspension of three of Eskom’s key executive members. President Zuma arrived late to the meeting and ordered that Mr Tsotsi go along with the plan, resulting in one of the most notorious examples of looting in South Africa’s recent history. This Zuma-Gupta conspiracy then left the door wide open for the appointment of Gupta stooges, who in less than 18 months had bled the power utility dry. It now faces bankruptcy and has been downgraded by international financial institutions due to governance failures. I am explaining the background before coming to the point about money laundering and the responsibility of UK authorities.
Eskom has more than 471 billion rands in outstanding debt, the majority of which is guaranteed by the South African Government and owed mainly to funders outside the country. In October 2017, Eskom revealed to its largest shareholder, the South African Government, that the power utility only had 1.2 billion rands left in its cash reserves until the end of November 2017, when it should have had 20 billion rands. It is estimated that by the end of January 2018, Eskom will be running a deficit of 5 billion rands. Eskom’s virtually giving billions to the Gupta-Zuma syndicate through nonsensical consulting contracts, tenders for fictitious goods and services, and advances to allow them to buy the coal mines from which they then sold back overpriced, poor-quality coal is the underlying cause of what went wrong.
Similarly, in September 2017, South African Airways was given emergency Treasury funds to help it repay loans of 3 billion rand to Citibank, again diverting precious money from taxpayers into the pockets of the Zumas and Guptas. The bill is being picked up by taxpayers when there is a shortage of the decent schools, hospitals, housing and job opportunities those billions should be spent on.
Each South African state-owned enterprise has been looted using the same modus operandi by the same elite individuals at the very top of the chain—namely President Zuma and his family, and the now infamous Gupta family. They have placed cronies such as Ms Myeni in key decision-making positions in these public enterprises to ensure that all valuable tenders are siphoned off to the Guptas, and in return a cut is then given to the Zuma family. Hundreds of millions of pounds have been siphoned off these important public companies in a process that has been described by the South African media as “state capture”. What is more, well-placed South African whistleblowers inform me that UK financial and banking institutions have been used for the systemic transnational financial crime network run by Gupta and Zuma families.
Then there is the shadowy figure of Mr Nick Linnell, a “Mr Fixit” who, in the late 1970s, operated in the illegal racist white minority regime of Ian Smith in then Rhodesia. He was unlawfully hired by Eskom, on Ms Myeni’s instructions, to assist in unlawfully getting rid of certain executives, thereby clearing the way for the corrupt capture of Eskom. It has now emerged that South African Airways, through dubious unauthorised payments to Mr Linnell, and working hand-in-glove with the remnants of South Africa’s notorious apartheid police, has deliberately targeted well-known anti-corruption activists. This has resulted in unlawful arrests, detention and torture, as part of a desperate attempt to silence these courageous men and women, to stop them exposing systemic state-sponsored corruption. By the way, last weekend it was announced that Dudu Myeni had been appointed as the special adviser to the Transport Minister and that she came “highly recommended”.
I therefore hope not only that this amendment will be supported by the Government but that there will be an immediate investigation by the City of London Police, the Metropolitan Police and the financial regulatory authorities into all bank accounts held in London by any South African state-owned company. Can the Minister, in replying to the amendment, please give me an assurance that this investigation will proceed? Because of the South African Airways chair’s patently unlawful involvement with the Zuma and Gupta families, the authorities should start their investigations with the airline, which is known to bank here in London, to ensure that its UK accounts have not been used for the illegal laundering of moneys from the proceeds of financial crime in South Africa, and that payments from it into UK banks have not been used to pay off stooges who have unlawfully targeted corruption whistleblowers.
The British Government must not permit any UK-based financial institution to be complicit in the plundering of state-owned companies in foreign lands, especially when that plunder affects the poorest of the poor. South Africa suffered enough repression over the apartheid years, and we cannot stand idly by while economic repression replaces racial oppression, serving the greed of corrupt leaders, when we have the ability to help stop it.
The exposure of HSBC, Standard Chartered and the Bank of Baroda to the parasitic Gupta financial crime network is currently the subject of international law enforcement investigations from the FBI to our own FCA. Inevitably, when dirty money from a global criminal network infects one financial institution, it will sequentially infect a number of others. This is the result of what is known as “correspondent banking”—a term that I have just been educated in—which by its complex nature is often misunderstood. Correspondent banks are international banks that clear smaller, generally domestic banks’ foreign currency transactions through large financial centres. In practice, this means that one transaction can move through a chain of financial institutions from the point of payment before it reaches its intended beneficiary. This creates significant money laundering and terrorist financing risks because each bank in the chain has to rely on the other to correctly identify the customer, determine the real owner and monitor the transaction. In essence, the correspondent bank is only as strong as the weakest link in the chain.
Perhaps I may press the Minister to respond to my request on red flag warnings to the British domestic banks. I am happy for him to write to me about it, but some government response on this matter is important to try to deal with this infection of our own banking system by a disease that is spreading throughout the South African economy.
The noble Lord, as an experienced Member, will know that when there is an ongoing investigation, to which he referred, it is often dangerous for Ministers, who are supposed to be detached from the process, to comment. However, I recognise the seriousness of the allegations—as does the Chancellor—and they have been passed to the appropriate authorities. I am pleased that they are being investigated.
I apologise to the Committee for probing this point. I am grateful for the Minister’s response but I have named other banks as well as those to which I previously referred—namely, HSBC, Standard Chartered and the Bank of Baroda. I hope that he or the Chancellor will send me a letter in the manner in which the Chancellor responded to my earlier request—even if the Minister cannot respond this evening, for reasons that I totally understand.
My Lords, I thank the Minister for his responses to the amendments in my name and that of my noble friend. I am conscious that there are issues of due process around consultation, but forgive me if I also think that there was a bit of fancy footwork going on with the alacrity with which a call for evidence went out during the progress of the Criminal Finances Bill, when some distinguished Members of the other place started to take a great deal of interest in including an offence of failure to prevent. It is the best part of nine months since then and probably three months since I was contacted and asked whether it was okay to publish my submission to the call for evidence. I said yes, but still nothing has been published. I do not know why we cannot see some of the responses separately from the response of the Ministry of Justice.
However, one thing that has been established is that we have a pretty rubbish criminal regime on corporate liability. Something has to be done. In that context, it would be good to know how long the Minister thinks it might take for the Government to analyse whether any good has been done by having a second failure-to-prevent offence on tax evasion. I gave an exposition of how good it is to have one, and it will not be shown to be any weaker vis-à-vis tax evasion than it is vis-à-vis bribery. Therefore, to require specific evidence within the economic crime sphere is probably overegging it.
The Minister referenced fines, and there will potentially be more fines under the money laundering regulations 2017. I accept that, as well as what he said about the senior managers regime—but ultimately you have to be able to bet to board level. It is, importantly, board members who ultimately control how much resource goes to internal audit. That is behind the director disqualification point. It is always somebody further down, not the people at the top—the people who are able to pass the buck to some junior person who may not necessarily have been given the resources. They are the ones who carry the can, mainly in the senior managers regime.
I therefore hope that the Minister will listen to and think about these points, and consider how much use the Secretary of State is making of the potential for director disqualification when it is discovered that procedures have not been in place in the regulatory environment. The Secretary of State could still say, “Right, I want investigations of whether the directors are fit and proper because they have allowed these things to go on within the companies for which they are ultimately responsible”.
I would be grateful if the noble Baroness and my noble friend Lord Collins would consider putting this amendment to a vote on Report. I worry that the consultation will go on for so long that the Bill will have passed through this House—and possibly the Commons as well—before we have a chance to vote on this important failure to prevent offence.
I thank the noble Lord, Lord Hain, for his support. It is certainly a matter to which we will return—not least because the other place has shown interest in this subject. There are problems with the timing; it may be on the never-never, as he suggests. But for now, I beg leave to withdraw the amendment.
(6 years, 8 months ago)
Lords ChamberMy Lords, I enjoyed the spirited exposé of octogenarian privilege from the noble Lord, Lord Tugendhat. I noted that before the Budget George Osborne’s former chief of staff, Rupert Harrison, called for a “safety first” Budget. He thought the Chancellor could not afford another slip-up like the mess he made in March over self-employed national insurance contributions. The last thing the Tories needed was another bananadrama.
Mr Harrison got what he wanted. Nevertheless, it was a Budget that brought more bad news—very bad news—about Britain’s economic prospects. Just eight months ago, the Chancellor began his March Budget by claiming that the British economy had confounded critics with “robust growth”. He contended in November that it “continues to grow”. He should have said it “continues to slow”, because March’s “robust growth” proved to be a flight of ministerial fancy that melted away with the winter snow.
The stark reality is that Britain’s growth rate has fallen every year for three consecutive years and is set to plumb fresh depths next year, in 2019, and again in 2020. It is in their failure to get the economy growing at anything like the rate it did under Labour before the global financial crisis, let alone the growth rates achieved in the 30 years following the Second World War, that the Tories have done most damage. By the way, the debt bequeathed after the Second World War fighting Hitler was double as a proportion of GDP what my noble friend Lord Darling had to cope with after the global financial crisis.
The Tories have spent the past seven years sacrificing living standards, public services and our social safety net on the altar of their austerity policy. The Institute for Fiscal Studies says we face two decades without a rise in average pay, with average earnings in real terms £750 a year lower in 2022 than in 2007. What a total, shameful failure of Conservative economic policy.
The pedestrian pace of economic expansion since 2010 is the root cause of the hardship Britain has endured for years now. What has held growth back is the Tories’ savage tax and spending squeeze. George Osborne used to boast about having squeezed the UK economy tighter than any in the advanced world, all in the name of ending the budget deficit, but squeezing growth out of the economy has left the Tories well short of a balanced budget while doubling national debt. Having failed to end the deficit completely by 2015—their original target—they now say they will only halve it by 2022. By then your Lordships can be sure the goalposts will have moved yet again to maintain the illusion that their plan is still on track and to justify still more austerity. Clearly the modern Tory Chancellor is like the frog in a pond whose successive jumps only ever take him half way to the edge. He and the frog share an aim that they cannot realise unless they try a new approach. In the Chancellor’s case that means abandoning austerity and promoting faster growth, as Labour, in particular its shadow Chancellor, is indeed urging.
Some people think, mistakenly, that the Chancellor has already done so. The BBC economics editor Kamal Ahmed said that, compared to the March Budget, the Government are,
“doing more to stimulate the economy”.
I am afraid that is wrong. By making a smaller cut in the structural deficit than he had planned in March, the Chancellor is doing less to hold the economy back, not pushing it forward. There has been no U-turn. He still plans to take a big slice out of overall spending in the economy. More cuts are coming to departmental budgets, with real-terms cuts outside the NHS of more than 6% according to the Institute for Fiscal Studies. More cuts to working-age benefits are already in the pipeline—£12 billion on top of the £29 billion already made. Local government is being hammered. Head teachers are in despair. Further education colleges, surely key to any recovery, face even more cuts.
Their obsession with ending the deficit has blinded today’s Conservatives to the fact that bringing down Britain’s debt burden does not require a balanced budget. No Tory leader delivered more budget deficits than Margaret Thatcher—11 in her 13 years in power. Only one of the last six Tory Chancellors ever ran a budget surplus, the noble Lord, Lord Lawson, and he managed it in only two of his six Budgets.
At the Conservative Party conference Theresa May pledged to revive what she called the British dream. Perhaps her inspiration came from “The Island of Dreams”, the Springfields’ last hit before they broke up in the 1960s. That left Dusty Springfield to launch her solo career with two other features in the Prime Minister’s repertoire: “I Just Don’t Know What to Do with Myself” and “Wishin’ and Hopin’”. Ministers keep saying that they want to send a signal to the world that Britain is open for business, but all our friends abroad can hear is a garbled transmission on channel 16, the international distress frequency: “Mayday, mayday, mayday”. The British economy is in deep trouble. Frankly, that is because of primitive Conservative economic policies.
The Chancellor pledged to meet the challenge posed by Brexit and new technology, and to make whatever change is needed to fix Britain for the future. But by only easing his fiscal squeeze, instead of ending austerity altogether, he is cheating the challenge and faking the change. What the economy needs more than ever is a strong stimulus, not a weaker squeeze. Instead, all we are getting is austerity for ever, and that means failure for ever. Meanwhile, as my noble friend Lord Livermore pointed out so eloquently, Brexit grimly awaits to make the situation even worse.