Income Tax

Lord Hughes of Woodside Excerpts

Wednesday 19th November 2014 Lords Chamber

[Lord Newby]

My Lords, as noble Lords will be aware, at the G20 last year the Prime Minister had this issue at the top of the agenda, since when the OECD has produced a whole raft of measures aimed at ensuring that companies pay their fair share of tax. Noble Lords will have seen the end of what was called the “double Irish” tax avoidance scheme in Ireland, and there are currently European Commission probes against tax avoidance in the Netherlands and Luxembourg. There has been a real tightening-up in this area, which was reinforced at the recent G20 summit.

[Lord Hughes of Woodside (Lab)]

My Lords, will the Minister reflect on what he has just said? If I heard him right, he said that most government departments were paying the minimum wage and that some are considering introducing it. Was that a slip of the tongue? Surely, no government department is paying less than the minimum wage. Did he mix up the minimum wage and the living wage?

[Lord Newby]

I am not sure, my Lords, but what I meant to say was that while all government departments obviously pay the minimum wage, a number are paying the living wage and we are encouraging more to do that.

Financial Services: Cold Calling

Lord Hughes of Woodside Excerpts

Monday 17th November 2014 Lords Chamber

[Lord Newby]

My Lords, all debt management companies themselves are required to advise on free debt management options at their first contact with a potential customer, so even when lead generators are being used there should be no cases in which people sign up for advice without having been told about the free alternatives. That is the key requirement. The circumstances that led to the banning of cold calling on mortgages a number of years ago, around the right to buy, were very different from the broader considerations that apply more generally.

[Lord Hughes of Woodside (Lab)]

My Lords, does the Minister recollect that when the announcement was made that pensioners could withdraw their pension funds, I asked him if he was aware of the spectre of cold calls every day seeking to advise people. He advised me then that there was no need to worry. Does he now accept that what is happening today, yesterday and the next day is that dozens of phone calls are being made advising people how they may access their pension pot? If the practice goes unfettered, is he aware that thousands, if not hundreds of thousands, of people will lose out very badly? Is it not now time to regulate that sort of thing?

[Lord Newby]

My Lords, the easiest way to ensure that people do not get that plethora of calls is for them to sign up to the Telephone Preference Service, which will mean that they do not get the bulk of calls coming in. As far as the potential mis-selling of pensions is concerned, the FCA has a very wide remit and toolkit to deal with any potential mis-selling, and I know that it is working very hard in this area.

Pensions Advice

Lord Hughes of Woodside Excerpts

Wednesday 23rd July 2014 Lords Chamber

[Lord Newby]

My Lords, I completely agree. For many years I have been trying to persuade the financial sector to do as the medical sector does and establish a professional body of writers to try to ensure that the material that people get is comprehensible. As far as this particular process is concerned, the FCA is looking to provide a template that pensions providers will complete, which might be on as little as a single sheet of paper, that will provide the basis for the guidance that is subsequently given.

[Lord Hughes of Woodside (Lab)]

Do the Government recollect that millions of people, even today, are bombarded on a daily basis by different companies, offering help to get payment protection policies returned and so on and so forth? How will they guarantee that this new policy will not mean that we will be bombarded daily by people telling us that we must try to draw down our pensions?

[Lord Newby]

My Lords, the key thing is that people get guidance from a trusted source. There will be a commonality of approach. The FCA is producing very detailed technical guidance, which everybody providing the personalised guidance will provide. I recommend that the noble Lord looks at the FCA consultation document that came out earlier in the week, which explains how it is going to do that. There is a danger that we are so concerned that things might not work that we never innovate.

Economy: GDP Forecast

Lord Hughes of Woodside Excerpts

Monday 29th July 2013 Lords Chamber

[Lord Newby]

My Lords, the noble Lord, Lord Peston, is an extremely eminent economist and he knows, as a good Keynesian, that the key at this point of the cycle is the change in animal spirits—the sense to which people have confidence to invest. Animal spirits have been very significantly subdued over recent years. There is a suggestion in every single figure that we now see that they are returning to the positive. That, more than any single thing that the Government now do, will be what drives growth forward.

[Lord Hughes of Woodside]

My Lords, the Minister has taken great comfort from the reduction in the amount of interest paid. Does he have any sympathy at all for those on fixed incomes and small and medium savers, for whom the policy of low interest rates has been quite ruinous?

[Lord Newby]

I do, my Lords, but with interest rates you cannot have it both ways. You cannot have low interest rates for people who want to borrow and high interest rates for those who want to save. On balance, the Government’s view is that having had interest rates low has kept families being able to spend, compared with having higher interest rates. For example, a 1% increase in mortgage rates would have added £12 billion per year to interest payments. It would have sucked that out of the economy. If you have that kind of reduction in expenditure and the kind of diminution of growth which it entails it harms everybody, even those who are savers.

Banking: Quantitative Easing

Lord Hughes of Woodside Excerpts

Wednesday 27th March 2013 Lords Chamber

[Lord Newby]

My Lords, there is obviously a tension in respect of interest rates in that some people benefit from low interest rates and some people lose from low interest rates. It is the Government’s view that low interest rates are in the interests of the economy in promoting growth in a very difficult economic environment.

[Lord Hughes of Woodside]

My Lords, given that the Minister was in purdah the last time I raised this issue, can he now say what the possibility is of banks being allowed to levy negative interest on savings accounts? Who will be in charge of this, as the new Governor of the Bank of England has said that he was within days of doing this in Canada? Who is going to protect savings?

[Lord Newby]

My Lords, I do not think that anybody in the Bank of England and the MPC at the moment is suggesting that we move to negative interest rates.

Bank of England: Monetary Policy

Lord Hughes of Woodside Excerpts

Tuesday 19th March 2013 Lords Chamber

[Lord Newby]

My Lords, when the previous Government established the independent Monetary Policy Committee, they decided not to follow the remit given to the Fed. No Chancellor since 1997 has decided to change that remit.

[Lord Hughes of Woodside]

My Lords, has the Minister noticed that the Deputy Governor of the Bank of England has floated the idea that banks should be entitled to charge negative interest on savings? Even the new Governor of the Bank of England, when he was in Canada, was apparently within days of allowing such a policy. This would be immensely damaging to savers. Will he put this to rest, immediately and unequivocally, and say that there is no possibility of the Government sanctioning any such idea?

[Lord Newby]

My Lords, an awful lot of ideas have been floated recently but the key remit for the Bank of England is set by the Chancellor. Within that, the Bank has operational independence on how it follows that remit. The remit has not changed but the Bank of England, with or without a new governor, always looks at questions in the general area of monetary activism.

FSA Investigation into LIBOR

Lord Hughes of Woodside Excerpts

Thursday 28th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, the noble Lord, Lord Radice, makes some good points, which I am sure the chief executive of Barclays will be pressed on when he comes before the successors to the noble Lord on the Treasury Select Committee.

[Lord Hughes of Woodside]

My Lords, in the Minister’s Statement he repeatedly says that there were failures of the regulatory system and it was matter of greed, and so on and so forth. What was going on was not a failure. It was deliberate criminal deceit. Under those circumstances, how can the Minister possibly say that criminal charges should be the last resort rather than the first resort? By all means, let us try to tidy up the system. In view of what appears to be absolute, outright criminality, we should recall that fraudsters rely on the fact that they will escape the law through such mealy-mouthed words.

[Lord Sassoon]

My Lords, I am certainly not going to jump to premature conclusions which are not for the Government—or, I suggest, other Members of this House—to jump to, about what is or is not criminal activity. I have made it quite clear in repeating my right honourable friend’s Statement that investigations continue by the FSA and the Serious Fraud Office. We will hear the views of the appropriate authorities in due course on these matters, but those investigations are ongoing.

Budget: Cost of Changes

Lord Hughes of Woodside Excerpts

Tuesday 12th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, the recent Budget introduced £9 billion of tax changes. There were a number of measures on which we said we would consult. We consulted and made the changes that were appropriate, which added up to a total in the range of £120 million to £150 million. I can give the House the breakdown if it wants it. Those were the numbers that resulted from the changes that we believed appropriate, having listened to what people had to say to us.

[Lord Hughes of Woodside]

My Lords, the Minister keeps saying that the Government consulted on these changes. As I recall, even 24 hours before they happened, Treasury Ministers were denying that there was any possibility of a U-turn, so please do not rewrite history.

[Lord Sassoon]

My Lords, I am not rewriting history.

Oil Prices

Lord Hughes of Woodside Excerpts

Wednesday 8th June 2011 Lords Chamber

[Lord Sassoon]

Well, I am always reluctant to disagree with the analysis of my noble friend who has considered these matters for many years, but I do disagree because I think that the medium-term target that the Bank of England has been given and the framework within which the MPC operates continue to be entirely appropriate. Of course, it is a medium-term target, and the latest Office for Budget Responsibility forecast from March shows inflation coming down to 2.5 per cent in 2012 and 2 per cent in 2013.The comparison of independent forecasters shows a very similar picture—2.3 per cent next year and 2.1 per cent in 2013. This shows that the Bank of England has the confidence of the commentators and the forecasters to continue to work to its mandate successfully.

[Lord Hughes of Woodside]

Is it not the case that inflation is never going to reach the benign figures that the Minister says? Yesterday we were warned of a gas price increase of 19 per cent, an electricity price increase of 10 per cent, and all the other companies will do the same. How can the noble Lord possibly think that inflation is under control? Is he simply going to let the spiral continue until we land in bankruptcy?

[Lord Sassoon]

My Lords, of course we would not wish to see inflation at the 4.5 per cent it is now. As has been explained, this is very largely driven by global factors with regard to commodity prices. We are not only keeping to our tight fiscal policy, which underpins the ability of the Bank of England to stick to its mandate, but giving help to the most vulnerable—whether that is the Budget announcement that gave a £630 increase in cash in personal allowances for the under-65s, whether it is in the arrangements that we made to cut fuel duty effectively by 6p per litre from what the plans of the previous Government had been, or whether it is increasing the state pension by 4.6 per cent. What the Government must do, and are doing, is to protect the most vulnerable in our society.

Banks: Cheques

Lord Hughes of Woodside Excerpts

Monday 6th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, it is correct that the Payments Council is an industry body. It is the banks and the other industry players who pay for and maintain the payments system, but it is a body with a chairman and four other independent members, and the Bank of England is an observer on the board. Back in December 2009, the Government welcomed the commitment made by the Payments Council, which was clear that if it took a decision in 2016 to end the present system of cheque clearing in October 2018—and it will take that decision only in 2016 if it does so at all—it will do so only if there is an available, acceptable and widely adopted alternative system. The Government have been clear that that must include a paper-based system. We believe that it is appropriate to continue to work closely, as we do, with the Payments Council to make sure that it is held to the commitments that it has given. The council is consulting users widely and has another round of consultation running now, and it will I am sure continue to take note of the important views of all users of cheques.

[Lord Hughes of Woodside]

Is the Minister saying that the alternative would have to be a paper-based system? If so, why on earth is the Payments Council bothering? Is this not an example of a body to which responsibility has been handed over without any control or thought? How much is it all going to cost? Why do they not just abandon it now and be done with it?

[Lord Sassoon]

My Lords, the facts of the situation are that the number of cheques being used has declined dramatically in recent years. There were approximately 4 billion cheques in use in 1990 and by 2009 that had reduced to approximately 1 billion—and it is expected to reduce very significantly again over the next few years. The fact is that the system has declined in use and it will require a very expensive rewrite of the clearing systems if it is to continue in its present form. The last thing that the Government or users of cheques would want to see is charges being passed on to users of cheques if that was a result of banks having to put in place an expensive new system. So one has to be pragmatic about this and give them the time, which they are taking, to come up with an alternative, including a paper-based alternative, that is acceptable to small businesses, charities and other individuals.