Spending Review 2020
Lord Haskel Excerpts(4 years ago)
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Lord Haskel (Lab) [V]
My Lords, I would like to speak up for the one group largely excluded from government support in this Statement: the 3 million to 4 million self-employed and the many directors of small, limited companies who failed to qualify because of their accounting structure. Let me declare an interest: this was me many years ago, when I started in business. Then, it was prudent to become a limited company because this was the way to manage the risk and the inevitably unpredictable cash flow of a new business. It is not a tax dodge. By not paying income tax and national insurance, you hardly save after paying corporation tax, VAT, dividend tax and other taxes—and you are supporting other jobs.
The lack of assistance to these small companies means that they are massively overborrowed, which puts at risk the many millions of jobs that they are creating and supporting. Such businesses create the competition that keeps prices low. On Monday, the Competition and Markets Authority reported that the most profitable tenth of our companies enjoyed the least competitive pressure over the last 20 years. This, of course, is yet another contributor to the growing inequality that this Government say they are trying to tackle.
Fortunately, I am not alone in speaking up for these businesses. Others have done so in this debate, and the Mayors of Manchester, Liverpool and London have also spoken out, criticising the Government for sending a message that they are not with you if you start up on your own.
So I ask the Minister: is this a message the Statement is intended to give? Do the Government really want to limit competition and encourage inequality? Or is this yet another example of the Government’s incompetence and poor management, which has put us among the worst-off for economic damage caused by the pandemic?
Northern Ireland Protocol: Implementation Proposals
Lord Haskel Excerpts(4 years, 1 month ago)
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Lord True (Con)
My Lords, to say that the Government are wholly committed to the future security and prosperity of business in Northern Ireland is not “warm waffle”; it is the truth of the matter. We are providing extensive support through the trader support service. I have referred to other measures, including the £150 million that has been put into IT systems, and we are working at pace to deliver all that is necessary. I hope that agreement can be reached in the joint committee and that any uncertainties there can be resolved.
Finance Bill
Lord Haskel ExcerptsFriday 17th July 2020
(4 years, 5 months ago)
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Lord Haskel (Lab) [V]
The Minister has talked about the digital services tax. That is a small step on the long road to properly taxing the digital economy, as called for by the noble Lord, Lord Blencathra. The noble Lord, Lord Bruce, told us that in this financial year, the digital services tax will raise £279 million. That is a small but welcome step in the right direction. In directing this tax at large companies, the Government are rightly aiming it at those which have long practised so-called “tax optimisation”, which, translated, means choosing where you pay tax. The IMF is constantly pointing out the revenues lost through these activities, so the Government are right to separate out these multinationals from domestic companies which have much less opportunity to optimise their tax.
The 2% tax will be paid by businesses that provide online marketplaces, search facilities or social media services in the UK to residents and other users. The definitions are fairly detailed, but some companies operate both online and offline. Are the Government satisfied that these can be properly identified? Part of tax optimisation can mean that digital and non-digital activities are separated, and the digital element located outside the UK. A study by Oxford University in 2019 showed that more than 50% of the subsidiaries of foreign multinational companies active here reported no taxable profits in the UK. Yet a third of the companies that received coronavirus loans under England’s largest scheme are substantially owned in a tax haven. Some of these companies have also been in receipt of job retention funds, grants and emergency loans. This is perceived by the public as unfair and is yet another example of the unfairness brought to our attention by the pandemic. Surely the quid pro quo must be a commitment to better behaviour in matters regarding tax.
I do see a glimmer of hope. There has been quite a shift—companies are acknowledging that public opinion requires them to recognise that they also have a social purpose. Indeed, only last week, HSBC reported some evidence to show that companies which focus on these strategies are weathering the consequences of the pandemic better. I welcome the digital services tax, but it is only an early step. Do the Government have further steps in mind?
Covid-19: Public Wealth Investment Fund
Lord Haskel Excerpts(4 years, 6 months ago)
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Lord Haskel
To ask Her Majesty’s Government what plans they have to establish a public wealth investment fund to support those businesses affected by the COVID-19 pandemic.
The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con) [V]
My Lords, the Government have announced unprecedented support for public services, workers and businesses to protect them against the current economic emergency. Our interventions have been targeted to protect UK jobs while also protecting the taxpayer. Our aim is to protect the productive capacity of our economy and to enable a strong and sustainable recovery from this crisis. As we move through this crisis, the Government will continue to keep our economic response under review.
Lord Haskel (Lab) [V]
To rebuild our economy, the Government should listen to the many calling for our recovery through investment instead of paying down debt, which is where they seem to be concentrating. These are debts which some may never repay. Since I tabled my Question, investment ideas such as Project Birch have been floated, but will the Government make it clear that, in return for equity, firms should work towards our social objectives of responsible company behaviour, local levelling up and ensuring that all benefit?
Lord Agnew of Oulton [V]
I agree with the noble Lord that social benefit is an extremely important part of the recovery. To that end, we are consulting on our rules for public procurement at the moment to include social values as part of the scoring system.
Covid-19: Economy
Lord Haskel Excerpts(4 years, 6 months ago)
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Lord Haskel (Lab)
Noble Lords are right: the pandemic has clearly shown how the economy does not work for everyone and lacks resilience. Take the resilience of care homes. The largest group has a complex offshore ownership that receives excessive related-party payments, resulting in a debt level of £56,000 per resident. With the declining occupancy due to excess deaths, they are looking for rescue. Empty beds do not pay interest.
Similarly, as a result of non-payments and their excessive debt, some cut-price electricity suppliers have raised the possibility of groups of customers being cut off unless the regulator steps in with money. Their lack of resilience is a danger to us all.
I do not know what the Government are going to do, but as a condition will they introduce and accelerate a new industrial strategy to help deal with this—one based on purpose? I put it to the Minister that the Government would be pushing at an open door. Before the pandemic this idea was well developed, with institutions as diverse as BlackRock and the Local Authority Pension Fund Forum calling for it. We need a purpose that calls on companies to behave responsibly in employment, investment, risk, environment, taxation, training and research.
Will the Government use this opportunity to remove the risks I spoke of and stimulate a more purposeful economy that would create the fairer and more equal economy that many noble Lords have called for?
Public Procurement and the Civil Society Strategy
Lord Haskel Excerpts(5 years, 6 months ago)
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Lord Haskel (Lab)
My Lords, few of us would argue with the objectives of the Government’s civil society strategy. We all want to strengthen and unify the institutions and organisations which make up our civil society. The noble Baroness is quite right; public procurement has an important role to play in this and I congratulate her on moving this debate.
As the noble Baroness told us, the UK public sector spends over £250 billion, about one-third of public expenditure, on the procurement of goods and services from the private sector. This large amount of money means that directing public procurement can make a real difference. Deliberately choosing providers from the local area can make a difference to local communities. This keeps money in the local economy. Managed well, it can lead to more investment in poorer parts of the country and help revitalise local economies.
By deliberately favouring smaller firms, the Government can promote competition and discourage dependency on large monopolistic providers. Public procurement can favour firms which meet certain ethical standards, as the noble Baroness said—for example, living wage employers or sourcing fair trade products. Public procurement can also favour providers with strong community links. For example, a local authority may prefer to fund a homeless shelter provided by a church which has strong local links and is grounded in the community, rather than a large national organisation. As I said, few of us would argue with these social objectives. Indeed, most of us would welcome them.
So what stands in the way? In short: the law, value for money, public sector bureaucracy and standards. By the law I mean our EU membership and free trade agreements. The EU is relatively relaxed about restrictions on public procurement. On the other hand, far less relaxed are the existing free trade agreements and the proposed free trade in services. The agreement aims to provide equal treatment to foreign service providers as well as promoting competition. Indeed, Liam Fox has repeatedly stated that this will be a priority for UK trade policy after Brexit.
These trade deals include heavy restrictions on local and ethical procurement. Put simply, the Government’s prioritisation of these agreements is at odds with their civil society strategy to use public procurement to strengthen civil society. The free trade ambitions of one government department are at odds with the domestic policy objectives of another. It may be above the Minister’s pay grade to sort this out, but somebody will have to do it.
I can be a lot more helpful to the Minister on value for money, bureaucracy and standards. For some time there has been growing concern about failures in procurement. The care homes fiasco is but one recent example; the noble Baroness mentioned Carillion. These failures have undermined the public’s trust in outsourcing. It is estimated that the recent failure of the privatisation of the probation service will cost the taxpayer some £450 million. Yet the Government aim to achieve value for money. Most believe that, with the exception of IT, this is simply a matter of price, as the noble Baroness said. This seems to have led to the evolution of large monopolies delivering public services, and it is difficult to find an alternative when they fail. Measures of market concentration in this and other sectors have risen sharply in recent years. As a result, there is broad concern about the ethics, quality, transparency and value for money in the procurement process.
It was with these concerns in mind that, many months ago, Tomorrow’s Company—here I declare an interest—approached the British Standards Institution to see whether a well-defined set of criteria could be established to define what “good” looks like and what works in the field of public procurement. To some of us, the British Standards Institution means a kitemark—a mark which tells us that a piece of steel is strong enough to do the job. But the world of standards has moved on a long way. Standards are now a tool that enables firms to set and meet best practice. For example, the British Standards Institution now has the task of laying down the standards strategy for connected and autonomous vehicles. A British standard for public procurement would level the playing field so that UK businesses of all sizes can be included in the public sector supply chain. By meeting the standard, an organisation can demonstrate that it meets the generic requirements for an organisation providing products and services to the public. All of this is this in keeping with the Government’s civil society strategy and the requirements listed by the noble Baroness.
Meeting the standard allows small and start-up organisations to prove themselves suitable and capable. This takes the burden off public sector administrators to perform due diligence, as there will be third-party conformity assessment. It reduces bureaucracy because it simplifies the complex process of tendering for government contracts—a process which deters many small firms from tendering. Indeed, standards can be a form of self or lighter-touch regulation, so that the Government are not obliged to enact legislation establishing best-practice benchmarks.
For this purpose, British Standard 95009 will come into effect on 31 May. The Minister may already know about this, because his department has been consulted. This standard was written with input from a broad range of stakeholders, including government departments, large and small firms, industry organisations—reflecting infrastructure and technology—and charities and welfare organisations; everybody was consulted. This standard also sets out good practice in the supply chain. This is the second time I have raised this issue in your Lordships’ House, and I make no apology. We seem to have lost our way on public procurement and services, and this British standard will point us back in the right direction.
My question to the Minister is: will the Government insist that all public procurement bodies and suppliers to the public sector will have to satisfy British Standard 95009? After all, the British Standards Institution is appointed by the Government as the National Standards Body. This will not only help to restore public trust and confidence in public suppliers and contractors and in the Government’s handling of the supply of these goods and services; by adopting this standard, public procurement will be much more aligned with the Government’s civil society strategy—the purpose of this debate—and it will incorporate many of the points made by the noble Baroness.
Conduct of Debate in Public Life
Lord Haskel Excerpts(5 years, 7 months ago)
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Lord Haskel (Lab)
My Lords, when I was a student I used to play in curtain-raiser rugby league matches for the local team. We got a bit of money to cover our expenses, but this was docked for bad behaviour. Bad behaviour was “playing the man, not the ball”. I do not wish to trivialise this subject, but I was reminded of this when my noble friend introduced the debate—on which I congratulate him—because it is playing the man, not the ball, that introduces toxicity into public life.
You do not have to be a visitor to the United States to be appalled at the way the President has made personal insults a firm substitute for political argument—the noble Baroness, Lady Hussein-Ece, mentioned this. Of course, because it comes from the President, this practice is legitimised and copied. As the Guardian pointed out, we had a good example of this here recently, when Greta Thunberg came from Sweden. Instead of dealing with her arguments and evidence, many commentators just called her weird, privileged, inexperienced or irrelevant. It is this disparaging of a person, rather than dealing with the argument or the evidence, that is one of the causes of toxicity in our public life.
As my noble friend Lord Harris and others have explained, social media thrives on this. Social media platforms are set up to reward people’s engagement: people are encouraged to feed off each other in a continuous cycle that enables the amassing of data. This data then enables people to target microgroups with messages that nobody else sees—angry messages of an extreme nature that would otherwise never be published—all adding to toxicity. The internet is a wonderful medium for knowledge and information, but as the noble Baroness, Lady Bottomley, and other noble Lords have said, paradoxically, it has degraded debate.
What can we do about this anger and frustration? This tendency towards extremism has been apparent for some years. Like my noble friend Lord Parekh, I think it is due to rising inequality: in wealth, income and the standard of living, as well as regional inequality. My noble friend told us in his introduction of a poll that found that 82% of the public now feels that the country is more divided than ever. A cause of this inequality is the hollowing out of the economic middle. At the same time, we have a polarisation of the generations, as shown by the FCA study, and the unfairness of the generation divide, as shown by your Lordships’ own Select Committee. This hollowing out and polarisation is not the inevitable result of automation and new technology but the result of bad government and bad management—economic and social. Much of this automation is taking place without increases in productivity, resulting in unequal distribution of the benefits. If we do not do anything about it, new artificial intelligence and robotics will continue the process and widen the gap even more. This hollowing out of the economy is a direct cause of the hollowing out of our politics, somehow legitimising extreme views and language. As somebody famous said, bad economics always result in bad politics.
Yes, there are efforts in reskilling, apprenticeships and lifelong learning, and there is a minimum wage, but it is not working. The “just about managing”, who so concerned the Prime Minister when she came to office, are still there. Reports from various welfare charities, food banks and the children’s organisations that support the “just about managing” tell us that their number is increasing rapidly.
The problem that my noble friend has set us is about turning round society, and part of that turnaround is economic—economic reform that stops the hollowing out and produces a more equal distribution of wealth and of income so that all of us feel included. Public services are part of this turnaround. Hardly a day goes by without reports of the impact that austerity is having on our public services, particularly those provided by local authorities, which have had cuts to their grants of 30% to 40%. The cumulative effect of all of this—a political choice, not an economic one—has been to increase inequality. In this turnaround, citizenship and identity matter. After all, we are a community of citizens. As part of this turnaround, let us clearly define what is owed to and expected from each citizen. Add this to less inequality and we will have a more sustainable and successful democracy.
Economy: Productivity Measurement
Lord Haskel Excerpts(5 years, 8 months ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to modernise the way productivity is measured in the economy.
Lord Young of Cookham (Con)
My Lords, the independent Office for National Statistics measures productivity and has increased the volume and timeliness of productivity data, which can now be accessed by region, with detailed breakdowns of region by industry. We are the only country in the world to produce quarterly, rather than annual, multifactor productivity reports, which take account of capital. We now also have the UK’s first official estimates of aggregate infrastructure and intangible assets, such as research and development.
Lord Haskel (Lab)
I thank the Minister for that reply. However, it is not the quantum of data that we need but up-to-date data. The Government’s industrial strategy—if noble Lords remember that—is directed towards raising our productivity by developing the so-called intangible economy and the digital economy. Yet the way we measure productivity is still biased towards traditional industry. It is the same with GDP. As they say, what gets measured gets done. Will the Government show some urgency and speed up, encourage, publicise and conclude the work of modernising these measurements so that we may get a better understanding of exactly what is going on in our economy today?
Lord Young of Cookham
The noble Lord has a long-standing interest in productivity data, perhaps inspired by the book Capitalism Without Capital by Professor Jonathan Haskel, with whom he has a relationship that is statistically significant. The noble Lord is quite right that intangible assets such as software, research and development and intellectual capital are now just as important as tangible assets. In fact, the annual investment in each is about the same. The ONS regularly engages with leading academics and government departments to ensure that its work meets their needs; there is an annual productivity user forum. Over the next two years, the ONS is investing in improving information, particularly on public service productivity, and I will ensure that it takes the noble Lord’s injunctions on board tomorrow morning.
Interserve: Provision of Public Services
Lord Haskel Excerpts(6 years ago)
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Lord Haskel
To ask Her Majesty’s Government what assessment they have made of Interserve’s financial situation and the impact this may have on the provision of public services.
Lord Young of Cookham (Con)
My Lords, the funding arrangements of Interserve are the responsibility of the company and its directors. The Cabinet Office has regular discussions with the company’s management and monitors the financial health of all government strategic suppliers. The company successfully raised new debt facilities earlier this year and plans further restructuring to strengthen its balance sheet and financial robustness.
Lord Haskel (Lab)
I thank the Minister for his reply, but the monitoring does not seem to work, because this is happening too many times. As well as infrastructure, Interserve does welfare to work, probation, home care and hospital work—all important services—yet because of its financial structure, like many other public service companies, it has become a speculative vehicle for hedge funds and private equity. How will the Government rectify that? Will they give it more work to keep it afloat or sink it by taking the work away? How will they ensure that these essential services continue?
Lord Young of Cookham
As I said, the Government are in regular contact with Interserve to monitor its performance. Not only does the Cabinet Office have overall responsibility for monitoring the health of the company, but individual government departments that have contracts with Interserve have a dialogue with it about those specific contracts. The noble Lord may have seen the statement which the Cabinet Office issued a few days ago:
“The Cabinet Office has expressed full support for the work the company is doing to implement”,
its “long-term recovery plan”. It is worth making the point that Interserve is very different from Carillion. Interserve is now taking the action that Carillion ought to have taken—to restructure its balance sheet and improve its robustness—and, unlike Carillion, it does not need new money. It needs to turn debt into equity. It is not accurate to make a direct comparison between the two companies.
Cyberattacks
Lord Haskel Excerpts(6 years, 1 month ago)
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Lord Haskel
To ask Her Majesty’s Government what steps they are taking to protect the United Kingdom’s critical infrastructure from cyberattacks.
Lord Young of Cookham (Con)
My Lords, ensuring that our critical national infrastructure—CNI—is secure and resilient against cyberattack is at the heart of our 2016 national cybersecurity strategy. The National Cyber Security Centre we established has improved our understanding of the threat and provided a unified source of advice and support. We have also strengthened regulatory frameworks across much of the CNI to ensure that cyber risk is managed in the national interest.
Lord Haskel (Lab)
I hear what the Minister says, but I do not think he will satisfy the committee. It defined the Government’s current position as,
“long on aspiration and short on delivery”.
It says that the Government have failed to match the increasing threat with improved cyber resilience in both the public and private sectors and that it finds a lack of expertise to provide credible insurance. It would like to see a Minister appointed to ensure that there is capacity. Putting this right will require a lot more than money and good intentions. Will the Government take steps to carry out the report’s proposals?
Lord Young of Cookham
The noble Lord will be aware that this is a substantial report published two days ago by the Joint Committee on the National Security Strategy, with 22 senior Members of both Houses. It has 10 major recommendations and the Government will want to respond to those in due course. The noble Lord quoted a little from the report and, just to add some balance, may I also quote from it? It said:
“Many of those who submitted written evidence … welcomed the step change in Government approach in the 2016 NCSS, with some describing the strategy—and the activity it underpins—as world-leading. This appears to be borne out by the notable level of international interest in the UK’s approach to cyber security”.
That gives a somewhat more balanced response than what the noble Lord quoted. There are many recommendations. One is that there should be one Minister; the committee wants what it calls a collective mind—a somewhat Orwellian concept. If we look at the building blocks of national security, we have GCHQ, which is under the Foreign Office; the Home Office, with overall responsibility for protecting the citizen if there is a cyberattack; the Ministry of Defence, which is in charge of offensive cybersecurity; and the Cabinet Office, which is in charge of CNI. It is very difficult to have a collective mind. What is important is having a collective strategy that all the Government agree to, underpinned by substantial resources and supervised by the National Security Council, chaired by the Prime Minister. That is more important than having what the committee calls a collective mind.