Small Businesses: Finance

Debate between Lord Harrison and Lord Newby

Wednesday 25th February 2015 Lords Chamber

[Lord Harrison]

To ask Her Majesty’s Government what steps they have taken in the past year to increase access to finance for small businesses.

[Lord Newby (LD)]

My Lords, it was announced in the Autumn Statement that the Government are providing further funding to two British Business Bank schemes, the enterprise capital funds and enterprise finance guarantee schemes. Additionally, the Funding for Lending scheme will be extended and focused on lending to SMEs, and furthermore, the Small Business, Enterprise and Employment Bill ensures that SMEs which are rejected for finance by banks are referred to alternative finance providers and that those providers have access to the credit data they need.

[Lord Harrison (Lab)]

My Lords, according to the Federation of Small Businesses, credit availability and affordability has declined in the past quarter and indeed the Government’s own Funding for Lending scheme has sputtered and spluttered into reverse over the past two years. Will the Government take heed of Keith Morgan, the leader of the British Business Bank, who has said that there are market failures which need to be addressed if our small businesses are to grow and to provide jobs for the future?

[Lord Newby]

That is why we have created the British Business Bank specifically to deal with these market failures. The bank aims to unlock £10 billion of new finance by 2017-18. On lending to small businesses, the noble Lord should be aware that gross lending has grown by 25% in the past year and by 41% over the past two years.

Bank of England

Debate between Lord Harrison and Lord Newby

Thursday 30th October 2014 Lords Chamber

[Lord Harrison]

To ask Her Majesty’s Government whether they will rename the central bank of the United Kingdom, “The Bank of England and of the United Kingdom”.

[Lord Newby (LD)]

My Lords, having begun life in 1694 as a commercial bank, the Bank of England predates the formation of the United Kingdom itself. Of course, the Bank’s role is not limited to England and it acts as the central bank for the whole of the UK. However, to change its name would represent a break from over 300 years’ worth of history and the prestige which it carries as a global brand.

[Lord Harrison (Lab)]

My Lords, given the particular saliency of the currency issue in the recent Scottish referendum, would it not be a wise, inexpensive and inclusive act to extend the title of Britain’s central bank to the “Bank of England and of the United Kingdom”, thereby properly recognising the reach and relevance to all four nations of the United Kingdom of our own central bank?

[Lord Newby]

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

Employment: Private Sector Jobs

Debate between Lord Harrison and Lord Newby

Thursday 30th January 2014 Lords Chamber

[Lord Harrison]

To ask Her Majesty’s Government, in the light of the report by the Centre for Cities in respect of the proportion of private sector jobs created in London, what steps they are taking to rebalance the economy across the United Kingdom.

[Lord Newby (LD)]

My Lords, the Government are taking a number of steps to ensure that the recovery is balanced across the UK through local enterprise partnerships, enterprise zones, city deals and growth deals. The latest figures show an increase in private sector employment of 928,000 outside London over the past three years, compared to 307,000 in London over the same period, so nearly 80% of all private sector employment growth has come from outside London.

[Lord Harrison (Lab)]

My Lords, according to the recent report, most of the new jobs have come from London and the south-east. Does the Minister share my concern about that? Does he understand that concern against a background of declining exports, a parlous balance of payments situation and the matter of small businesses having access to finance in order to grow jobs still not having been resolved? How will we rebalance the economy and how and when will we know that the economy has indeed been rebalanced?

[Lord Newby]

My Lords, there are a number of measures but one of the key things is what is happening to employment and unemployment regionally. In the past quarter, unemployment fell more quickly in Scotland, Wales and four English regions than it did in London. There is big growth in a number of regions outside London, which is extremely welcome.

Economy

Debate between Lord Harrison and Lord Newby

Tuesday 28th January 2014 Lords Chamber

[Lord Newby]

My Lords, at the moment, when we are seeing the largest increase in business confidence for a number of decades, any statement by anybody from any party which has the effect of undermining that confidence is very much to be deprecated.

[Lord Harrison (Lab)]

Does the Minister share the concern of the British Chambers of Commerce that our lack of ability in linguistic skills has severely held us back from exporting as rigorously and productively as we might have done and thereby caused the severe balance of payments problem that this country has suffered from under the coalition Government?

EU: Financial Transaction Tax (EUC Report)

Debate between Lord Harrison and Lord Newby

Tuesday 17th December 2013 Grand Committee

[Lord Newby]

My Lords, we will probably have to agree to disagree on this. As the previous Financial Secretary pointed out in the correspondence that the noble Lord, Lord Kerr, quoted, it was clear from discussions that took place in the lead-up to the ECOFIN meeting that a qualifying majority of member states was prepared to support the authorising decision. Moreover, abstention had no bearing on the prospects for our subsequent legal challenge. The noble Lord, Lord Kerr, talks about building alliances, an issue that arose when we last discussed this matter, but we have to accept, as the noble Lord, Lord Liddle, pointed out, the strength of the political will across much of the EU to introduce this tax. The UK standing up to say, “We are going to vote against it” would not have affected that. It is inconceivable that this would not have gone ahead at that meeting, whatever we had done.

[Lord Harrison]

Perhaps the Minister can be helpful. The committee has made that point time and again. Would it be useful if the Minister demonstrated the activity of the Government in Brussels in talking to other member states: what canvassing they did and with whom they spoke? We would like to see the ocular proof of the Government’s enthusiasm to block this tax.

[Lord Newby]

My Lords, I will not go through a blow-by-blow account of which member state we spoke to at which point. The view was taken, which I believe was the correct one, that at that stage this proposal was unblockable, because of the political will to which the noble Lord, Lord Liddle, referred. We may think that other member states are misguided. History may prove they are misguided. But there is a slight tendency in the UK to believe that we always know best. We may well know best in this case, but the French and the Germans think they know best, and it is a bold UK Government—or committee of your Lordships’ House—who are unambiguously sure that they know better than a large number of major EU member states.

--- Later in debate ---

[Lord Newby]

My Lords, I have 12 minutes, of which I have used 11, and I have not answered a single substantive question posed by noble Lords. It is just possible that I might do so if I am allowed to respond to some of the points that have been raised.

I was asked where matters stand in terms of discussions in the Council. A Lithuanian document was produced last week which I think has been rather mischaracterised as to its significance. It is a short document and I have it with me. It was discussed briefly at last Thursday’s working group, but many participants were reluctant to discuss it, taking the view that the technical discussions should not run ahead of and potentially prejudice the more substantive discussions, so consideration of it was limited. There has been no substantive breakthrough in the negotiations recently, largely because of the situation in Germany. As noble Lords will be aware, the German coalition deal has now been ratified and we expect more progress in the new year.

The noble Earl, Lord Caithness, asked about the timing of the resolution of the difference between the Council and the Commission legal opinions. The conflicting opinions of the Commission and Council legal services were discussed by the 12 December working group and it is now for the Council members and the 11 participating member states to weigh these as they begin to consider a compromise proposal. We are not aware of any challenge from Luxembourg.

On the timing of the legal challenge, we have exchanged written arguments with the Council. Several member states and other eligible parties have intervened. Written proceedings will come to a close in January, and it is then down to the court. But, as noble Lords will be aware, oral proceedings would ordinarily take place after written proceedings close.

On the argument that has repeatedly been made about our engaging positively with other member states, the UK has been closely engaged with these negotiations from the start. We have held numerous meetings with other member states about the FTT. UK officials are closely engaged in the Council working groups, of which there have been five, including submitting detailed written technical questions to the committee. It simply is not the case that we have not been and will not continue to be fully engaged.

I have gone over my time, for which I apologise. I thank the noble Lord, Lord Harrison, and members of the committee again for the report, and for generating what has been, as usual, an extremely stimulating debate.

[Lord Harrison]

I apologise; the noble Lord’s comments have provoked a number of interventions. Can he promise the Committee that he will write to us on those many questions which he was eager to answer, and give us full and ample replies to those which he was not able to reach?

[Lord Newby]

I would be delighted to do so.

Banking: Regulation

Debate between Lord Harrison and Lord Newby

Thursday 11th July 2013 Lords Chamber

[Lord Newby]

My Lords, none of the measures in the Government’s response to the Parliamentary Commission on Banking Standards are prevented by proposed European Union legislation on bank regulations. As the detail of these measures is developed, HM Treasury will ensure that they are appropriately aligned with any relevant European Union legislation.

[Lord Harrison]

My Lords, given the slender reference to the European dimension both in the Tyrie report and the Government’s response, could the Minister illustrate what obligation there is at present, under CRD IV and Basel III, for us to report the British banks that have a high-risk assessment to the European Banking Authority? Given the flat-footed nature of the Government in responding to the financial transaction tax and the European banking union, may we have an assurance that preparatory work is being done in anticipation of the Liikanen proposals coming to fruition this autumn, and indeed the recovery and resolution directive that will cover all 28 member states?

[Lord Newby]

My Lords, I think that I can give that assurance as far as the Liikanen proposals are concerned. As the noble Lord probably knows, the Government believe that there is no incompatibility between what he is proposing and what the Government are doing in respect of banking and the banking reform Bill. I am confident that the Government are acting with all due speed on these measures, and indeed in some areas we have moved more quickly than the EU as a whole has been able to do.

EU: Budget Report

Debate between Lord Harrison and Lord Newby

Thursday 25th April 2013 Lords Chamber

[Lord Harrison]

I must say that we spotted these inherent flaws in our 2011 report and repeated them. The problem was that the Government were supine in their approach. It was only by our goading, and at the very last moment, that they began to act. The point that I make in so many of these areas is that the UK has to intervene early.

[Lord Newby]

My Lords, I am all in favour of increased early intervention in all matters European, but it is fanciful to believe that anything that the UK could have done or said at a significantly earlier stage would have stopped a very significant move in many European countries that was led by the trade union movement, which is desperately keen to get an FTT going. We have been extremely critical of it, but it is for other countries to decide. We will see how discussions go in the coming months.

The noble Lord asked about a debate to approve the basis of the national reform programme. We do not think that there is a legal obligation to debate the basis for the national reform programme, and we are not aware of any occasion on which it has been submitted for parliamentary clearance, including under the previous Government. Of course, the national reform programme does not include any material that has not previously been published and debated.

I now move to the other end of the spectrum of considerations from high economics to the question from the noble Baroness, Lady Noakes, about why there was no speakers list. I absolutely share her view, and I raised the question myself, because I would have welcomed having some sense of how many people were going to speak. I was told that, because these are Motions, it is not the normal practice of the House to do it. However, I would be very happy to take to the Procedure Committee a suggestion that we have a speakers list for this kind of debate, because I think that it would be helpful to the House.

The noble Baroness also asked why we bothered to have this debate at all, and said that we should repeal Section 5. As any Minister would say, I am sure, I can see some advantage in doing that, but it is highly unlikely that we will. The main thrust of her comments was that it was all a waste of time and why bother, not just with this debate but with getting involved in all this EU stuff. We support the European semester as a means of ensuring that what we consider to be necessary structural reforms take place across Europe, because, simply, we believe that it is in our national interests to see strong economic recovery in Europe.

The noble Baroness and a number of other noble Lords said that we placed too much emphasis on trade with Europe and not enough on trade with the rest of the world. In my view, it is not an either/or. We have about 40% of our trade going to the EU, and we cannot afford to see trade with the EU suffer. What we need to do is to see trade with the rest of the world growing strongly, as we have been doing, while, one hopes, seeing trade with Europe growing strongly as well.

The noble Lord, Lord Layard, queried whether this Government have as their overriding objective a better life for the people. I assure him that this Government do have that as their overriding objective, which is hardly surprising. I cannot agree either with his view that we should be borrowing a lot more or, indeed, with the comment of the noble Lord, Lord McFall, that the markets have turned against the Government. Last Friday, borrowing costs for the UK were 1.69%; for the US, they were 1.71%; for Italy, they were 4.22%; and for Spain they were 4.62%. For Italy and Spain, the proportion of borrowing to national income is very significantly less than it is in the UK. So I do not think that the markets have turned against the UK at all. It is only because we have a very clear deficit reduction policy that that remains the case.

The noble Lord, Lord Hollick, prayed in aid the last Chancellor, and he and other noble Lords referred to the IMF. For me there is a slight irony in this, because for most of my political career Labour politicians have been explaining why the IMF was the worst possible organisation in the world. They said that it had all the wrong priorities and had never once got it right. So it is interesting that they have changed their view. I would say only that their description of the view of the IMF is somewhat less nuanced than the view of the IMF itself. As Christine Lagarde reiterated last week, the IMF supports the UK’s policy of deficit reduction and said that the pace of consolidation was in line with the IMF’s recommendations for advanced economies.

The noble Lord, Lord Marlesford, urged us to put up the tax on petrol. We think that the arguments for freezing petrol tax in terms of its impact on small businesses, rural areas and elsewhere, are very strong, and that is why we have done it. He was also very keen that we switch our efforts to other economies than the eurozone. Of course, the significantly increased funding for UKTI will allow us to put a lot more effort into developing our exports to those new markets.

The noble Lord, Lord McFall, suggested that we should investigate the possibility of a UK digital university. That sounds an extremely sensible idea. The way in which universities are making material available free is a huge potential benefit, and the quicker that that happens the better.

The noble Lord, Lord Davies of Oldham, basically said about job creation, “Well, there may be jobs, but they are not proper jobs”. In my view, the debate about what constitutes a proper job, or a job, is a false one, because for the person who is doing it, it is a job, and they would rather have it than not. Incidentally, it is not true to say that in recent months the bulk of jobs that have been created are part time. Certainly, the latest figures that I saw suggested that there had been a reduction in part-time jobs and a significant increase in full-time jobs. I completely agree with him about skills, and the need to upskill the labour force. I point out that under this Government there has been a massive increase in the number of apprenticeships, which by common consent is the area where for many decades this country has lagged behind the rest of the developing world.

Ultimately, the return to sustainable growth is the only way for EU member states to pay down their debts and improve the way in which the single market works. The UK Government are leading the EU growth agenda and making the case for ambitious EU reform. On that basis, I am pleased to commend the Motions to the House.

Taxation: Tax Collection

Debate between Lord Harrison and Lord Newby

Tuesday 5th February 2013 Lords Chamber

[Lord Harrison]

To ask Her Majesty’s Government whether they have sufficient resources and staff in place for the full collection of tax.

[Lord Newby]

My Lords, this Government are investing in HMRC so that it will collect £9 billion a year more from its compliance activities by 2014-15 than at the start of this Parliament. The number of HMRC staff in compliance roles fell under the previous Government. Under this Government there will be around 2,500 more staff tackling tax avoidance and evasion.

[Lord Harrison]

My Lords, given that the Public Accounts Committee found that £1.1 billion was lost to the Treasury by foolishly cutting 3,300 staff from the compliance and enforcement unit of HMRC, can the Minister give us a greater assurance that that folly will not be repeated, especially with the new comprehensive policy that has been announced on offshore tax evasion? Will the Minister say when that will be published, what its focus will be, and whether that, too, will be properly resourced to do the job that is required of it?

[Lord Newby]

My Lords, it is important to recognise that the big cut in staff in HMRC took place before 2010. The number of staff fell by 25,000, and 10,000 staff working in compliance roles—that is, the very staff about whom the noble Lord is concerned—were cut during that period. We have added 2,500 staff in that area since we came in and they are generating a very significant amount of additional funding. On international tax evasion and avoidance work, a whole raft of initiatives is under way. There is a new unit within HMRC and we are working very closely with the OECD. I am sure that a number of further announcements in this area will be made during this calendar year.

Financial Services Bill

Debate between Lord Harrison and Lord Newby

Monday 15th October 2012 Lords Chamber

[Lord Harrison]

My Lords, I came to listen to the Statement. However, it may be of interest to some of my colleagues that we on Sub-Committee A of your Lordships’ European Union economic and finance committee are studying the banking union proposals and the recovery and resolution directive. The deposit guarantee scheme is an integral part of Herman Van Rompuy’s proposals, and of the response that we have got from the four presidents. That is the reason I am here today. I was slightly taken aback when my noble friend Lord Peston mentioned charities. As I understand it, the deposit guarantee scheme is a separate matter. The proposal has yet to mature. This will be done in Brussels over the coming weeks and months. I do not know whether that helps.

[Lord Newby]

My Lords, it is extremely helpful—and it will be done over the coming months. First, it is a single-market measure, not a eurozone measure. The aim is to establish a level playing field for consumers across the EU that is funded not by the state but by the financial services sector wherever the scheme is in operation. This means that as people move around the EU, as they increasingly do, they will know that they will get broadly the same degree of consumer protection wherever they are. That is a good idea, not a bad one. However, whether it is a good or a bad idea, this is the framework within which the deposit protection level operates in the EU, and therefore in the UK. Within the discussions about the directive that are going on at the moment, the level of compensation and the bodies that are eligible for it are being considered.

I say to the noble Baroness that we have listened very carefully to her concerns, and that the Government will consider whether it is appropriate to review the eligible limit to charities in the context of our overall negotiating priorities on this proposal. This is just one of a number of issues that we are considering in the round and as part of the negotiating posture we will take up. I assure her that we will give careful consideration to whether this is the way of achieving what she wants to achieve.

I move on to Amendment 187CA in the name of the noble Lord, Lord Hodgson of Astley Abbotts. This amendment would amend FiSMA to require the regulators to ensure that levies imposed on a particular class of firm reflect the claims made, or likely to be made, on that class. Before I address this amendment directly I would like to use this opportunity to draw noble Lords’ attention to the fact that a draft of the statutory instrument allocating rule-making responsibility for the FSCS between the two regulators will be published on the Treasury’s website this week as part of a broader consultation on draft secondary legislation required by the Bill. I will place copies of this paper in the Library of the House.

I am not entirely convinced by the case for Amendment 187CA. FiSMA already requires the regulators, as the noble Lord, Lord Hodgson, said, to take account of the desirability of ensuring that the amount of levies imposed on a particular class reflects, so far as practicable, the amount of claims made, or likely to be made, in respect of that class. Ensuring that classes are levied in a way that fully reflects claims, or likely claims, as proposed in the amendment is likely to be an impractical and disproportionate approach to evaluating how the fund should be funded. The current drafting in FiSMA reflects my noble friend’s concern but also leaves sufficient flexibility for the expert regulators to use their judgment.

The FSA’s recent consultation document on its funding model in the new regulatory system gives a good indication of the complexity involved in determining the funding model of the FSCS. I have it here, and its 100-odd pages demonstrate that this issue is somewhat more complex than might immediately be apparent. It demonstrates, among other things, how difficult it would be to ensure, in any strict sense, that levies fully reflect claims, or likely claims, on a particular class while delivering a fair and equitable scheme.

I suggest to the noble Baroness that the correct way to address her concerns is to contribute to the consultation on this document, which is open until 25 October. On that basis I would ask her to withdraw her amendment.