Queen’s Speech

Lord Holmes of Richmond Excerpts

Wednesday 25th May 2016 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, I add my welcome to the right reverend Prelate the Bishop of Newcastle. As the Magpies’ trashing of Tottenham on the last day of the football season demonstrated, nobody from the Toon Army should be taken lightly. In that the right reverend Prelate also has my noble friend Lord Ridley in her flock, she will always have a fair amount of work on her hands as a rational optimist.

The gracious Speech had two golden threads running right through it: economic competence and life chances. The latter is significantly stifled if you do not have the former. It is largely a digital economy that we need to consider today. So I was pleased to see the digital economy Bill in the gracious Speech. We can no longer consider digital as a separate world from the real economy. Digital runs through everything that we are considering. The first Industrial Revolution took over a century. We are already into the first blows of the fourth industrial revolution and its pace is absolutely extraordinary.

I welcome the Bill’s provisions on superfast broadband. With the commitment to fibre optic, it is pleasing to see that the business department has very much moved on from cable. FinTech will be key to this. It already contributes £6.6 billion to the UK economy. What more can be done to enable FinTech to unleash economic power for the unbanked and underbanked and to provide credit lines? This can be such a boon for SMEs, business and the British economy. So what more can the Treasury do to encourage FinTech, not least in further pushing mandatory referrals?

On transport, the Minister referred in his opening speech to the success of the railways in increasing passenger numbers since privatisation. We need to see that same increase for buses. Having grown up in the West Midlands, like the right reverend Prelate the Bishop of Portsmouth, I was surprised to note that in the relevant Bill the word “bus” is spelled with an “s” rather than a “z”. Technology runs through that Bill as well in the potential use of data and the ability for people to have electronic access to timetables and the opportunity to understand and connect with public transport in a way that was previously unheard of. That is an example of how data can drive innovation and change. Buses are an excellent example of this. The Bus Services Bill provides a real opportunity to look at the whole question of access, not least for disabled people in the area of audiovisual announcements. That is certainly something on which I will speak more when we come to Second Reading in a couple of weeks.

As regards energy, if we are truly to get the best out of the economy, not least the digital economy and automated vehicles, we need power. I contend that we do not need Hinkley Point. Its economics do not add up, the technology does not add up, the numbers do not work and neither does the EP reactor. Will the Government take the opportunity to end Hinkley Point as currently constructed, or will we wait for the French to promenade away from the project? Perhaps we will have a third option: Hinkley Point will become the world’s largest renewable power plant as all that will be left to fuel it will be thin air.

I was phenomenally fortunate to attend with my noble friend Lord Kirkham a Duke of Edinburgh awards ceremony for gold award winners at Buckingham Palace last Monday. We heard stunning stories of the life chances of individuals across the country having been enhanced. We need economic competence, life chances, a high-skill, high-knowledge economy if we are to innovate and tech our way into the 2020s and beyond.

Budget Statement

Lord Holmes of Richmond Excerpts

Wednesday 25th March 2015 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, we have heard a great deal of numbers, figures and statistics this evening. Coming in at this stage of the debate, I am happy to say that 95.6% of the numbers I was going to use have already been deployed.

It is also a pleasure to speak alongside the noble Lord, Lord Bilimoria. The difficulty is that, at this stage of the evening, it makes one very desperate for a Cobra beer, which would be very pleasant. I had the pleasure of growing up in Kidderminster and the noble Lord, Lord Rooker, was a regular in my living room on “Midlands Today”. I agree entirely with the noble Lord’s point about the beginning of the crash being the American Dream Downpayment Assistance Act. Nobody can dispute that. That is where it began. It was a well intended, naive piece of legislation which was always going to end in tears.

Where I depart from the noble Lord, Lord Rooker, is on the impact of the crash on our economy. Rightly, the Iraq war was mentioned. Billions of pounds that could have been spent on public services were deployed on a misadventure which ruined a country and was a massive drain on our economy. Similarly, public spending on the NHS unquestionably increased by 20%, but for only a 2% increase in productivity. Productivity matters—we heard that earlier in the debate. However, if one is going to increase spending by 20% on the NHS but have only a 2% increase in output, that does not make any sense. Although well intended, it cannot be seen as a good use of public money.

To re-rehearse some of the figures: growth is 2.6%—the highest of any advanced leading economy. Inflation is 0.2%. I agree that it is somewhat Saudi assisted but such a low rate of inflation is still a massive opportunity. Unemployment is 5.3%, a fantastic figure—low unemployment with the highest-ever level of employment. Regarding some of the measures in the Budget, as we have heard, the overall increase in personal allowances by £4,500 is a benefit to many people of £900 in their pockets. Four million people have been taken out of paying basic rate tax completely. The measures on beer duty can be laughed at, but this is the third year running in which it has been reduced. That has a positive impact. The increase in fuel duty planned for this autumn has been cancelled. On savings, and the allowance of £1,000 for those on the basic rate and £500 for those on the higher rate, I should like to ask the Minister: how can these measures and many more not have a positive impact for millions of people from every region and every background across the entire United Kingdom?

I move to the two “I”s—infrastructure and innovation. It is always best to have two “I”s rather than one. Infrastructure spending in the planned powerhouse of the north-west, with HS3, has to be applauded. This is the way in which to drive our cities, not just London but powerhouses up and down the nation. Similarly, the roads programme will have a massively positive impact. Spades at the ready will come up trumps.

There is one piece of infrastructure on which we and every Government could do more. It is the whole question of broadband. If we are going to be a competitive nation, we do not have to just acknowledge the digital opportunity but embrace and lead it. We can be at the cutting edge of this. I ask the Minister to consider the report of the Select Committee on Digital Skills, of which I was lucky enough to be a member. We published our report on 17 February; it addressed a number of these issues—not least the pressing need for high-speed, universal broadband access. We could have this today, but years ago we abandoned technology neutrality and said, “Fibre is the only way”. Fibre is a fantastic way of delivering high-speed broadband, not least in urban areas, but it is not the solution for all areas. In rural areas, there are already satellite solutions that could solve the problem right now, right here today. We need strongly to consider this, not least for farmers but for all rural businesses to let them play their part, not just in the national economy; with modern digital communications, one can have a global business wherever one happens to be if one has that broadband on which to base one’s business.

We need to consider broadband as a utility; it is as significant as water, heat and power. Does my noble friend believe that Her Majesty’s Government are doing enough to embrace, understand and commit to the opportunities that digital offers? We entitled our report, Make or Break: The UK’s Digital Future. It is that significant. There will be no “an economy or a digital economy” question; there will be just a digital economy. It is the everythingness of digital that we all need to understand and embrace if we are to go on the front foot and not just compete but be at the forefront globally in a digital future. There is a potential £43 billion at stake here; 35% of jobs are potentially in danger from automation but, by the same token, almost 1 million will be required in the digital sector before the end of this decade.

In conclusion, I ask my noble friend to consider this: we have had five Budgets from Chancellor Osborne. We have low inflation, the highest levels of employment ever, low unemployment and low interest rates. As a graduate in economics at Trinity College Cambridge, can my noble friend speculate on what the situation would be if we had had five Budgets from Mr Balls?

Pension Schemes Bill

Lord Holmes of Richmond Excerpts

Tuesday 16th December 2014 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it must surely be Christmas soon, with not one but two pension Bills in the same afternoon. What treats to pop under the tree.

I give my respect and honour to my noble friend Lord Jenkin for his 50 years in Parliament. My sadness is that I got to know him only about a year ago, but I appreciated the wisdom that he shared with me when I joined your Lordships’ House and his witty comments, sometimes sotto voce when he was sitting next to me, at which I found it very difficult to suppress at least a snigger.

Where are we with pensions? It has been a tumultuous 20 years. We have heard the words “security”, “freedom”, “flexibility” and even “simplification”, until we all finally concluded that pension simplification is probably one of our greatest oxymorons. Defined benefit schemes, once the gold standard, with the ability to deliver two-thirds of someone’s income in retirement, were a solid proposition but have been undermined and eroded over the years by a whole series of factors, not least the tax raise by the previous Government, which put the final nail in their coffin. However, these current changes offer a lot; there is flexibility, but that must be balanced with the ability to have assured choices. I will not dwell too much on the Taxation of Pensions Bill, which is a money Bill and not our responsibility, but I ask the Minister what assessments HM Treasury has made as to the likely impact on tax take—not least as regards NICs—of these changes proposed in the Bill.

Much has, rightly, been said about the guidance guarantee. I will not add to those comments, but it is at the core of so much of this. If guidance is to be given, it must be guidance that can be relied upon. For many individuals, pensions are not only dull, boring and uninteresting, but that person will potentially hit a point where a decision could dramatically and irreversibly give them a retirement which they did not deserve, expect or need to have if they do not get that decision right.

The idea that a pensions board clearly sets out all of somebody’s benefits in one place—they have a dashboard picture—makes such sense. As regards wake-up notices, because of the profound nature of these changes I ask the Minister to consider whether such notices need to occur at five or maybe even 10 years before retirement, to get people thinking about what potential exists and how they may choose to act. We will almost certainly have guidance on it, but that is no bad thing. Much has been said on the guidance guarantee from a member’s perspective, but for a moment let us consider this from a trustee’s point of view, when somebody may want to transfer defined benefits into a defined contribution provision. Currently it is required that trustees consider the “appropriateness of the advice” that that member would have taken. I ask the Minister to consider sharpening this as we go through the legislative process. As it stands, it could be interpreted that there is a responsibility on trustees to look into that advice to consider its appropriateness. What is meant by that and what should be clear is that trustees need to convince themselves of the appropriateness of the independent financial advice and that it has come from an FCA-authorised provider rather than a responsibility on trustees which would be almost impossible for them to exercise to go into the details of that advice, and which would also go far too deep into the private matters of that particular member.

To turn to what is best seen as the £30,000 rule—the trivial commutation—again, potentially £30,000 of benefits can be moved without the need for advice. However, as the Bill stands, how can that happen if a member does not have nor should need the knowledge to understand how to assess the value of their benefits? It will not be measured on the cash equivalent transfer value measure but on the lifetime allowance measure. Not only does a member not need to know this, but even if they do know it, it will be impossible for them to gain all that information if they had existing crystallised provisions in a whole series of schemes. I ask the Minister to consider whether in these circumstances a way around this would be to enable that measure to be made on the CETV measure, which would cut through a whole heap of headaches and certainly allow everybody who currently understands that measure to go forward.

As regards the new types of schemes, again, I commend putting risk in there—the new defined ambition. However, there is a new issue here with regard to cost, complication and potential confusion. There is potentially a cost for trustees who seek to have to go through a process to come to the conclusion that their defined contribution scheme is a defined contribution scheme, as they always suspected. There is potential confusion for members to have their scheme potentially fall into a different name, despite the fact that the benefits structure is exactly the same.

There are a number of smaller provisions on which I will go into more detail when we get into Committee. However, what I would like to draw out is that, despite people’s lacklustre and disinterested approach to pensions, they impact our lives way before we come to draw the pension. For example, recent pensions case law demon-strates that, potentially, a part of a pensions trust can fall within a bankruptcy order. How will these new changes affect that? Similarly, how will the legislation impact on pension-sharing on divorce ear-marking orders, already issued and those yet to come? Pensions matter from the moment when a person begins with an employer, when they change employer and when, perhaps, they become bankrupt or get divorced. So many life elements impact on pensions provision.

I support the intent but, as always with pensions, the devil is very much in the detail. It is complex and it makes your head hurt, but it matters—and time is incredibly short.

Budget Statement

Lord Holmes of Richmond Excerpts

Thursday 27th March 2014 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, I thank the Minister for launching this debate. Indeed, it is difficult to think of a more significant debate. If we want a world-class health service, world-class education and world-class transport, we can get them only if they are founded on a world-class economy.

Last week’s Budget was about jobs, business and Britain, so let us consider the employment figures that were issued that day. They showed that more people in this country are in work than ever before—more people employed in the private sector than ever before, and, best of all, more women in employment than ever before. These are not just figures that we can bandy around or statistics for economists to consider; these are real people’s lives. We have higher employment, lower unemployment and more people on the right path in this country as a result of the measures that have been taken since 2010. But let us not take the words of politicians or pundits, or even the words of economists. Let us trust business.

The day after the Budget, as has been mentioned, Hitachi announced that it was going to base its global—yes, its global—rail business in the country. A few days later, Siemens announced investment that will create more than 1,000 jobs in renewables. Business believes in Britain. We should similarly believe in and back business to invest in this country. To secure jobs is one thing but we should also focus relentlessly on building up skills and talents, particularly in our young people—training them to be able to take up these jobs, not least in engineering and manufacturing. In that, we should all pay tribute to my noble friend Lord Baker of Dorking for his work with university technical colleges. I should mention also the JCB Academy and the work of my noble friend Lord Bamford. These initiatives are making a difference.

If Hitachi and Siemens demonstrate that businesses are coming to Britain and want to base their operations here, we also need to act to ensure that British business gets the best bang abroad. What we saw in the Budget was a real commitment in doubling the funding for exporters to £3 billion and cutting the interest that they will pay by one-third. This is urgent and necessary, and it will make a difference. For too long, we have relied on the European market. Europe takes 40% of our exports but when I studied economics Europe took around two-thirds of our exports. We can see the way that that market is going. However, it is still a significant market and we are focusing on getting our businesses into every corner of it.

We are still so far away from grasping the prize that the BRICS economies and the so-called new MINT economies offer to us. The “Great” campaign from the Foreign and Commonwealth Office and BIS is significant in this area but we are starting from such a low base. When I was in Rio in 2011 with the “Great” campaign, I discovered that we export four times less to Brazil than Italy does. Italy is a fine country but it is one with no language, cultural or historical links to Brazil. Yet through effort and connection it has made that happen. It exports four times more to Brazil than the United Kingdom. The BRICS economies and the MINT economies are there for us. The whole of Africa is there for us to ensure that we put everything in place to enable our businesses to go out there and do the business.

The Budget threw a helpful and necessary light on pensions. In reality, it was seeking to address people’s trust in pensions. Over the past week, reports of the death of the annuity have been greatly exaggerated. The annuity is a fine financial vehicle for delivering certainty, security and a de-risked retirement. I do not believe that the changes introduced in last week’s Budget will mark the death knell of the annuity. It will still be a product into which millions will decide to put their funds but the crucial point is that it gives individuals the choice of when to take a particular financial vehicle, how much to put into it and what to do with their savings, which they have been building up for decades. This is about freedom and choice. Crucially, it is about trusting us all, as individuals and across the country—everyone with a DC pension pot—to do the right thing.

The Budget was about belief in the individual. If the right environment is put in place, people up and down the country—all of us—and businesses will do the right thing. Businesses will invest and back their workforces. They will get out there and build, make, manufacture and export. It was a Budget that believed in Britain, rooted in the reality that we are at our most brilliant and best when we work together and come together. We saw this in 2012 with the Olympic and Paralympic Games, so excellently steered by my noble friend the Minister. We see it across the country, in the smallest economic and social acts and in communities and businesses, from Inverness to St Ives. We are at our best and we are better together. Together, we all need to continue on this journey to try to secure and sustain Britain’s economy. We are on the right road but we have barely begun the journey. It is in everyone’s best interests, whichever corner of the country or perspective you come from, to have a high-employment, low-inflation, high-productivity and low-interest rate United Kingdom economy that is focused on and fit for a national, European and global future.