UK Convergence Programme

Debate between Lord Haskel and Lord Bates

Tuesday 9th April 2019 Lords Chamber

[Lord Bates]

I thought it was a J curve; I think the J curve is non-inflationary employment growth, and the Laffer curve might be the other one. However, I will take a break there in case I am completely shot down on that—I am not saying it is one or the other.

It is a point that increasing growth feeds through into inflation, just as the historical view was that if you fell below 5% unemployment, the tightening of the labour market would feed through into wage inflation. That we have not seen. Although it is now below 4%, CPI inflation is still at about 1.9%. We are within that constraint. If I can get the exact model from our wizards in the Treasury, I will write in answer to that and other points, and reassure the noble Lord. Perhaps he is about to give me the answer to his own question.

[Lord Haskel]

Why does the Minister not write to me? It is very difficult. Statements such as the one he just made compartmentalise the economy. Inflation takes it all into account. That is why I raised the point, because the Minister did not mention it in his first statement.

[Lord Bates]

I am very happy to put it in writing. Also, should the noble Lord be familiar with anyone serving on the Monetary Policy Committee of the Bank of England, I am quite sure they would have the answer completely to hand.

I thank noble Lords for the debate. I am sorry I was not able to answer some of their detailed points; I will put them in a letter, copy it to noble Lords who took part in the debate and place a copy in the Library.

Debt Advice Services

Debate between Lord Haskel and Lord Bates

Thursday 6th September 2018 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what assessment they have made of demand for debt advice services; and what steps they are taking to reduce the level of household debt.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government recognise that demand for debt advice is currently higher than supply. That is why we are increasing the funding for publicly funded debt advice. Although the level of household debt in relation to income is significantly down since the financial crisis, we realise that some people struggle with debt, which is why we are creating a breathing-space scheme to help people to get out of problem debt.

--- Later in debate ---

[Lord Haskel (Lab)]

Recently, there have been many reports of the rise in the number of people seeking debt advice and seeking loans to pay basic household bills. Many of these people are in work. National Debtline, the IPPR, McKinsey, and now the National Audit Office tell us that the cause is exploitative and precarious terms of employment, which enables low-value jobs, instead of encouraging productivity and investment in skills and trades. There was a time when we spoke of work being a way out of poverty, but under this Government it seems that the opposite is true. How will the Government make employment the answer and not the cause of this rise in household debt?

[Lord Bates]

I am sorry but I do not accept that; the evidence does not point to it. Over 3 million more people are in work in this country. We have seen one of the largest increases for the lowest-paid in this country through the introduction of the national living wage. As a result of basic tax thresholds being raised, the typical taxpayer in full-time work is £1,000 better off. That is not to diminish in any sense the fact that there is a serious problem with personal debt in this country. It is about 16.5% less than its pre-crisis levels when inflation is taken into account. That is why we are taking the steps that we are.

Economy: Productivity

Debate between Lord Haskel and Lord Bates

Thursday 28th June 2018 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what assessment they have made of the conclusion reached by the Economic Statistics Centre of Excellence in their paper Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle, published in May, that some of the UK’s largest and most internationally competitive companies account for the biggest reduction in UK productivity growth.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Economic Statistics Centre of Excellence paper is an important addition to the evidence base, highlighting sectors where recent productivity slow-down has occurred. However, it remains unclear why this slow-down has occurred, why other sectors did not make stronger contributions to productivity growth before the crisis or to what extent this explains our long-standing productivity weakness.

[Lord Haskel (Lab)]

Does the Minister agree that this report, plus the further research from the Bank of England, indicates that our slow productivity growth is less due to the long tail of zombie companies but reflects the weaknesses of the business model applied by some of our biggest and best known companies—a model that incorporates share buybacks, high short-term bonus culture, and lower corporation tax and tax allowances that do not encourage investment. Will the Minister dust off the industrial strategy and review it so that these lessons can be learned?

[Lord Bates]

I assure the noble Lord that there is no dust on the Government’s industrial strategy. In fact, we have invested some £31 billion in a productivity investment fund for exactly that type of challenge. Moreover, we are conducting a further business productivity review, which is open to submissions along the lines that the noble Lord has referenced until 6 July. He will be aware, as a keen student of this area and indeed very experienced in it, that there has long been a UK productivity puzzle—that is why the centre titled the paper in that way—and it has existed since the 1950s and the 1960s. It has been suggested that, at a sectoral level, productivity gains are easier to make in the manufacturing sector than in the service sector and we have traditionally been a service area. We are far from complacent on this and are making progress on a whole range of issues to ensure that we improve our performance in the future.

Scrutiny of Secondary Legislation

Debate between Lord Haskel and Lord Bates

Monday 6th November 2017 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I am a member of the Secondary Legislation Scrutiny Committee, and the Minister will be pleased to hear that I will concentrate my remarks on its work. Our task is to keep the Government up to scratch so that Parliament can properly scrutinise secondary legislation. I thank my noble friend for moving this Motion, which draws attention to this work and helps us in carrying it out.

What was wrong with these regulations? I do not want to repeat everything that has been said but, as my noble friend explained, we were unhappy with both the drafting and the process. We were unhappy with the definition of a “person with significant control”, and explained why that was unclear. We were unhappy with the fact that, although it was promised, there was no analysis of the consultation—this, of course, is standard practice. As my noble friend said, the impact assessment came two weeks after the regulations were laid. When it did come, there was no assessment of the value to be gained from the cost to business.

These regulations were laid in a rush. As the noble Baroness and my noble friend explained, instead of the normal 21 days between a regulation being laid and it coming into force, there were only two or three days. When we drew the Government’s attention to this, we were told that it was “because of the election”. However, as others have pointed out, the consultation ended in November 2016, so why the delay? If the Government want Parliament to scrutinise regulations properly, everything should be done in good time and with proper care; otherwise, Ministers will be called into account—that is what we have to do.

The committee wrote to Stephen Barclay MP, the Economic Secretary to the Treasury, about its concerns. Perhaps it was because of those concerns that, in his reply, he helpfully said that HM Treasury was instituting new proceedings and that he would become the “secondary legislation champion”. That was good news, but that was in July. Will the Minister confirm that this has actually happened, because it would greatly assist Parliament in its scrutiny and the public in their understanding of the law?

[The Minister of State, Department for International Development (Lord Bates) (Con)]

I thank noble Lords for their contributions and the noble Lord, Lord Tunnicliffe, for moving the Motion. I was in the middle of reading my notes seeking to answer the point of the noble Lord, Lord Haskel, and then realised that it was my time to speak. Perhaps he might bear with me as I quickly try to offer a response.

We can confirm that Stephen Barclay is now acting as the secondary legislation champion, as set out in his letter of 17 July to my noble friend Lord Trefgarne, chair of that committee. The new prioritisation and planning process is now operational. I will come back to some of those points, because they overlap with points made by other noble Lords, including the noble Lord, Lord Tunnicliffe, who talked about focusing more on procedure rather than on questioning the argument for the need for these money laundering regulations to be put in place.

I thank the noble Lord for bringing about this debate. I am sure noble Lords will agree that protecting the public and our economy from financial crime is vitally important and something that cannot be taken lightly. Indeed, the size of the UK’s economy, our open economy and the attractiveness of the London property market to overseas investors exposes the UK to money laundering—a point made by the noble Baroness, Lady Bowles, about the importance of London. The Home Office estimates that serious and organised crime costs the UK at least £24 billion every year, which is a significant sum. I am sure that we all agree on that.

In June 2017, the Government updated their anti-money laundering and counterterrorist financing regime. In doing so, the EU’s fourth money laundering directive was transposed into UK law. This was mainly through the 2017 money laundering regulations, but also through two linked statutory instruments produced by the Department for Business, Energy and Industrial Strategy. This brought the UK’s anti-money laundering regime in line with the latest global standards.

The Government’s overarching objective in this area is to ensure that the UK’s anti-money laundering and counterterrorist financing regime is current, effective and proportionate. The money laundering regulations have made it clear to both firms and supervisors that they must take a risk-based approach, as the noble Lord, Lord Tunnicliffe, said, taking steps to avoid putting disproportionate burdens on businesses.

In terms of processes of implementation, before the directive was transposed, the Government sought views and evidence through public consultations. The noble Baroness referred to the consultation exercise and the 186 responses that were received. The responses to the autumn 2016 consultation, which was also referenced by the noble Lord, Lord Tunnicliffe, were used to inform the Government’s decisions. Therefore, the draft regulations were published in March 2017.

The UK was legally obliged to transpose the directive by 26 June 2017 and meeting that deadline was imperative to minimise uncertainty for businesses that had prepared for implementation on this date. While I am not trying to suggest to the noble Baroness, Lady Bowles, that this is in any way an excuse, the Dissolution of Parliament came at a difficult time for the implementation of those directives because it was not possible to lay the money laundering regulations and the two separate but linked BEIS statutory instruments within the appropriate timeframe. That is something that we have acknowledged in our communications with the Secondary Legislation Scrutiny Committee. As the noble Lord, Lord Tunnicliffe, noted, we were unable to lay one of the impact assessments along with the regulations. A draft was however published in September 2016, alongside the first consultation, and eight months prior to the regulations coming in to force.

I shall now address some of the key policy questions raised by noble Lords in the debate. The noble Lord, Lord Tunnicliffe, rightly pointed out that the gambling sector, except for casinos, has been exempted from the scope of the money laundering regulations. While the Government recognise that money laundering risks exist in the gambling industry, in comparison with other regulated sectors, they are lower-risk. That was confirmed by the national risk assessments in 2015 and 2017. The Government will keep that decision to exempt gambling service providers, except casinos, under review as we move forward.

On the national risk assessment that the Treasury and Home Office must produce, I can confirm that that was published on 26 October 2017. It had the benefit of input from across government and the private sector. The noble Lord, Lord Tunnicliffe, also raised the question of the different levels of consumer due diligence that firms should apply and the need to be consistent across sectors. Businesses are required to carry out risk assessments and base their level of customer due diligence checks in line with those risks. To ensure consistency across sectors, all guidance is reviewed by the Money Laundering Advisory Committee, which includes representatives from law enforcement, the Government, industry and regulators, so there is a voice to be heard there. The Treasury is also in the process of reviewing the guidance and ensuring that messaging across sectors is consistent, which I know was a concern of the noble Baroness, Lady Bowles.

On the point made by the noble Lord, Lord Tunnicliffe, about regulators and the strain on their resources, I can confirm that anti-money laundering responsibilities in the FCA, HMRC and the Gambling Commission are paid for by relevant businesses, which they supervise. The noble Lord also notes the steps that businesses have taken to comply with the regulations include appointing a compliance officer. Around 100,000 businesses are subject to the money laundering regulations and, where appropriate, based on the size and nature of the businesses, they may be required to take steps, including appointing a compliance officer. I can also confirm, as I was asked, that the money laundering regulations specifically state what mechanisms are in place if businesses fail to comply.