Finance Bill

Lord Lilley Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is unfortunate that because, during the worst recession in two centuries, we have not had a full debate on the economy, we have to use this debate on the Finance Bill, but so be it.

Most recessions are the result of a shortfall of demand. This, uniquely, is caused by suppression of supply. There is considerable pent-up demand. I agree with my noble friend Lord Lamont, who said we must end the lockdown and encourage people to return to work, and Parliament itself and this House should set an example in that.

If we do so, and if the economy is enabled to, many businesses will spring back—more rapidly, I suspect, than some suppose—to full activity, but some sectors will have permanently shrunk. Many viable businesses have spent the last few months devising ways to produce previous levels of output with fewer employees, so we face a vast potential increase in unemployment, and unemployed buildings and other resources. We need to make it easier and quicker for new businesses to set up and expand, and for existing firms to expand, grow and diversify.

During the crisis, we have learned that public regulatory bodies can, in an emergency and under public pressure, take in days and weeks decisions that previously took months or years. We need to ensure that they do so henceforth to enable businesses to increase their activities rapidly. In most areas, we cannot scrap regulations, so we should accelerate decision-making in planning, building controls, environmental measures, health and safety and so on by, for example, setting time limits. If those time limits are not met, consent will be deemed to have been given. Every department should be required to publish at six-monthly intervals the times that it takes to give approvals or refusals or to make decisions when requested by business. Every Select Committee should hold those departments to account. Past experience has shown that the British labour market is more dynamic than any other in Europe; if we do this, we will be able rapidly to bring people back into work in viable and productive employment.

House of Lords and Machinery of Government: Consultation on Changes

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Wednesday 15th July 2020 Lords Chamber

[Lord True]

My Lords, I must repeat that, obviously, the commission will be looking at a wide range of matters and the broader aspects of the constitution. The issue that the noble Lord mentioned is of great constitutional importance and certainly deserves examination.

[Lord Lilley (Con)]

My Lords, the problems of moving this House away from the Commons and Whitehall may be insuperable. However, should we not, perhaps by moving the Moses Room and Westminster Hall to York, try to bring Parliament closer to people from whose views and values it was so clearly estranged during the last Parliament? It would surely strengthen this House, first, if more people saw your Lordships’ excellent work as a revising Chamber and, secondly, if closer contact with people outside the metropolitan bubble made us more respectful of their views.

[Lord True]

My Lords, my noble friend makes a number of important and relevant points. As I said yesterday, in some respects the House already takes part of its work outside London. I do not believe this is something to which your Lordships should close your ears.

David Frost

Lord Lilley Excerpts

Tuesday 30th June 2020 Lords Chamber

[Lord True]

My Lords, again, I do not agree with the characterisation of the presumed danger. The Prime Minister is responsible for the integrated review, as chair of the National Security Council. Mr Frost will be involved, but there will be a cross-Whitehall process. Even as a humble special adviser, I felt it part of my duty often to give unwelcome advice to a Prime Minister, and I am sure that any decent public servant, political or otherwise, would always feel the same.

[Lord Lilley (Con) [V]]

Does my noble friend agree that David Frost will be a valuable Member of this House and welcomed by all noble Lords, even those who may be embarrassed by his presence, given that they firmly declared he would never succeed in reopening the withdrawal agreement, dropping the original Irish protocol or completing negotiations by the end of November, and who now object to the robust way in which he is negotiating to achieve the mandate of the British people, democratically asserted in the referendum and the last general election? We should sympathise with their embarrassment but not allow it to mute our welcome for his presence.

[Lord True]

I strongly agree with what my noble friend has said. Mr Frost has shown remarkable skill in negotiations so far, and I am sure will continue to do so. He will be a vital and important Member of this House for many years to come.

Covid-19: Economy

Lord Lilley Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is not clear how much lockdown has helped to control the pandemic, but it is absolutely certain that it has created the worst recession in 300 years. Unlike most previous recessions, this is the result of the suppression of output and not a collapse of demand. Indeed, there is substantial pent-up demand, so the remedy is not primarily Keynesian pump-priming. It is, first, to release the lockdown as speedily as possible to enable viable businesses to recover and resume production. Most important is the reduction of the social distancing rule from two metres to one metre and scrapping the absurd plans to quarantine all tourists, without which the hospitality and travel industries cannot survive.

However, not all businesses will be viable once the lockdown ends if the pattern of demand has changed permanently, so the second priority is to encourage and facilitate the growth of new businesses and expansion of existing firms. The most effective ways to do that are tax cuts designed to bring forward activity—for example, by increasing capital allowances so that instead of taxing companies when they invest, we do not tax them until their investments generate profits. There should also be time-limited cuts, so that companies have an incentive to invest and produce sooner rather than later.

Equally important is speeding up regulatory decision-making, without lowering standards, to enable businesses to go ahead with new projects. The key lesson of the pandemic has been that state regulatory bodies, which normally take months or years to reach decisions, can, under intense public and political pressure, take decisions in days or weeks instead of months and years. Wherever possible, regulators should be given tight deadlines to reach decisions and if they do not do so in time would be deemed to have given consent. Then businesses can get out and invest to bring an end to this recession.

Economy: Personal Savings

Lord Lilley Excerpts

Thursday 12th July 2018 Lords Chamber

[Lord Lilley (Con) (Maiden Speech)]

My Lords, I am grateful to noble Lords and staff of this House for their warm welcome and unfailing helpfulness since I arrived here.

I perhaps owe noble Lords an explanation of the title I have adopted of Lord Lilley of Offa, since many have assumed that this refers to Offa’s Dyke along the Welsh Marches, with which I have no known connection. In fact, King Offa gave his name to the ward of Offa in my constituency of Hitchin and Harpenden, where he had his palace and I for the last 20 years have had my home. He also built the abbey in St Albans, which was my previous constituency, so I selected the name Offa as a tribute to both the constituencies I had the privilege to represent for more than 34 years.

Having done so, I thought I had better check out King Offa, in case he had done anything embarrassing. I discovered that he reigned from 757 to 796 AD. At that time, our European neighbours were united under Emperor Charlemagne in what historically minded Euro enthusiasts see as a precursor to the European Union. Charlemagne, hoping to bring Britain under his sway, proposed that his son marry King Offa’s daughter. Offa, wary of England becoming a vassal state and wanting a fair and equal partnership, as the Prime Minister might say, determined that he would accept only if Offa’s son married Charlemagne’s daughter simultaneously. Emperor Charlemagne was so enraged by this impertinence that he closed all European ports to English shipping—an early example of a “no deal” outcome. However, the trade war hurt Europeans at least as much as it hurt us and, thanks to the mediation of the Church—I hope right reverend Prelates will stand by in case they are needed in the future—trade was resumed after a year or two. I am happy to say that King Offa negotiated the first trade treaty between this country and our European neighbours. This certainly is not an occasion to reflect on the lessons to be drawn from this and subsequent attempts throughout history by continental rulers to bring this country to heel by restricting our trade, except to note that they all failed.

Before moving to the less contentious subject of this debate, I hope noble Lords will bear with me if I mention, as I have been advised by several noble Lords is normal procedure on maiden speeches, the experience I hope to bring on subjects which may come before this House in future. Certainly, trade is a subject I hope to return to in future debates, though not primarily in the context of Brexit. My first career was working in developing countries on aid and development programmes and, because of that, David Cameron asked me to chair his policy commission on globalisation and global poverty alongside Bob Geldof—an unlikely pairing, but one which would bear fruit, not least in my conviction that the best route out of poverty for developing countries is trade. As a result, I founded and co-chaired for 10 years the All-Party Parliamentary Group on Trade Out of Poverty, which remains a passion of mine.

My second career was as a partner of a major firm in the City where I specialised in investment in the energy sector. In the Commons, I served on the Energy and Climate Change Committee—I hope to return to those topics, too.

As Secretary of State for Trade and Industry, I was involved in negotiating the last successful international trade treaty, the Uruguay round, and also implemented the single market programme in this country, as well as negotiating the first passporting directive, all of which I hope may be of use in forthcoming debates on the Trade Bill and Brexit.

Finally, in my five years at the Department of Social Security, followed by 20 years as an ordinary constituency Member on the Back Benches, I came to the conclusion that most of the social problems in this country are either caused or aggravated by the acute housing crisis we have in Britain—that is one of the issues I want to focus on in future—and that most of our economic problems were related to the lack of vocational and technical skills of our indigenous population. Those are the two issues I care about most, and I hope to offer every support to my supporter and noble friend Lord Baker of Dorking—he does great work on that front.

I congratulate my noble friend Lord Leigh of Hurley on securing today’s debate on an important subject, when the level of savings in this country is so low. It is matter of importance to me because, as Social Security Secretary, I was responsible for the pension system and for coping with those who had been unable or unwilling to acquire sufficient savings to cope with emergencies or, above all, with their old age.

I shall make a few brief observations. First, discussion about savings in this country is dominated by an unhealthy obsession with tax reliefs and incentives. In fact, there is little evidence that tax reliefs affect the amount people save; they affect merely the form in which they save it. Moreover, the main beneficiaries of tax incentives are, by definition, those with large savings, who are also usually those with large incomes. Tax reliefs can have no impact on those who are too poor to save and have little, if any, effect on those whose time horizons are too short to recognise the need for saving. This obsession with tax reliefs has created a bewildering labyrinth of incentives which is costly to navigate and off-putting to those with limited financial expertise, so they have the reverse effect to that which is intended.

Secondly, that is not to say that there should be no recognition of savings in the tax system. On the contrary, the tax treatment of savings should be based on the simple principle that income should not be taxed twice. You should not be taxed when you earn the money you save and when you realise those savings as a pension or whatever. This is a matter of equitable principle rather than incentives.

Thirdly, as long as people pay the same marginal tax rate when they draw down their savings as when they earned them, it makes no difference whether tax relief is given on contributions, as we do for pension schemes, or on withdrawals, as we do for ISAs. Despite what many people believe, both methods have an identical arithmetical impact. We should give one relief or the other on any source of savings, but not both or neither.

Fourthly, there may be a case for using the tax system to channel some savings into specific kinds of investment—for example, more risky equity or early-stage investments—but we should not imagine that that will increase the total level of saving and investment in the economy, and we should be cautious about encouraging people to take undue risks with their money if they are not in a position to do so.

Fifthly, the main concern of the state is to ensure that people who have the means to save for a rainy day, for temporary hardship and, above all, for their old age do save when they have that opportunity rather than becoming a tax burden on more prudent citizens. People who cannot defer gratification or have very short time horizons are the least likely to be motivated by tax incentives, however generous or ingenious. Reluctant though I am to say it, ensuring that everyone builds up their savings when they have the means to do so requires an element of compulsory saving and/or restrictions on drawing down savings. Auto-enrolment in workplace pensions is a good step in that direction, particularly for those who perhaps cannot bring themselves to go to full-scale compulsion.

Sixthly, unlike with tax reliefs and incentives, requiring everyone to save a minimum amount of their disposable income may increase the total level of saving and investment in the economy and thereby increase the level of incomes in future.

Those were the principles that lay behind the scheme that I announced in 1997 for what was called basic pension plus. It was intended that, over a generation, it would ensure that everyone received a basic pension, not only guaranteed by the state as at present—and that guarantee would continue—but backed up by a savings pot. Moreover, it would have massively increased capital ownership because everyone would own their pension pot, they could pass it on to their family if they died before it was drawn down as a pension and they could put more money into that pot and benefit from superior investment performance while being protected by the guarantee of their basic pension against underperformance. If it increased the total level of investment in the economy and that boosted economic growth by just 0.1% a year, the scheme would have paid for itself.

That particular scheme died with the 1997 election defeat and I do not imagine that it will be resurrected, but I still believe that the principles that I have outlined today should guide the evolution of our savings and pensions system in future.

Oral Answers to Questions

Lord Lilley Excerpts

Wednesday 26th April 2017 Commons Chamber

[The Prime Minister]

We want to ensure that we have a system that properly assesses people who apply for benefits. As the hon. Gentleman has said, and as other Members will know, there have been issues relating to the way in which the system has operated. The Department for Work and Pensions has been looking very carefully at it to ensure that it makes proper assessments and delivers the right results for people.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Does my right hon. Friend realise that I am standing down after 34 years because of her? I am standing down because I am confident that the country will be safe after the election under her strong and stable leadership. Does she agree that seizing the opportunities presented by regaining control over our laws, our money, our borders and our trade will be more important than the terms of any exit deal and that, if we are to secure a reasonable deal, we must accept that no deal is indeed better than a bad deal? To deny this signals that no price is too high, no concession too grovelling to accept—a recipe for the worst possible deal.

I wish my right hon. Friend, all hon. Members and this House I love Godspeed.

[The Prime Minister]

I thank my right hon. Friend for the tremendous contribution that he has made throughout his years as a Member of the House, not only on behalf of his constituents but during his time as a valued Minister in a Conservative Government. He has rightly highlighted the importance of the decision that was made last year by the people of the United Kingdom, and I commend him for the role that he played in the referendum campaign.

It is right that we get on with the job of delivering Brexit and making a success of it, which means having a strong hand in negotiations. The only way to ensure that that is the case—for the people of Hitchin and Harpenden and for the whole UK—is to ensure that a Conservative Government is elected on 8 June.

European Council 2016

Lord Lilley Excerpts

Monday 19th December 2016 Commons Chamber

[The Prime Minister]

It is precisely because we need to look with great care and consideration at the wide range of our relationships with Europe that we have taken time before we trigger article 50. This is exactly the sort of work the Department for Exiting the European Union is doing: looking at the range of organisations, some of which are linked to membership of the European Union and some of which will not be so linked to membership of the European Union, and making a decision; and, crucially, talking to each sector about what is important for them, so we understand what really matters to business.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

While welcoming my right hon. Friend’s calm, considered and thorough preparations before triggering article 50, does she agree that a speedy conclusion of the subsequent negotiations will be in this country’s interests, both to put an end to damaging uncertainty and because, according to the Office for Budget Responsibility, every week’s additional delay in leaving the EU costs this country £250 million net per week?

[The Prime Minister]

As I said in an earlier response to the Leader of the Opposition, the treaty sets out a potential two-year process of negotiations. For how long, over those two years, it is necessary for the negotiations to take is a matter for the progress of those discussions and talks. My right hon. Friend makes a very valid point that the sooner certainty can come the better that will be for business, but we need to make sure we are getting the right deal for the United Kingdom.

Oral Answers to Questions

Lord Lilley Excerpts

Wednesday 23rd November 2016 Commons Chamber

[The Prime Minister]

Obviously, this is a very difficult time for the whole family. I am sure that we are all concerned about the reports of the impact that detention in Iran is having on Nazanin Ratcliffe’s health. This is an issue that has repeatedly been raised with the Iranian Government by the UK Government—by both the previous Foreign Secretary and the current Foreign Secretary. I personally raised it with President Rouhani on 20 September in New York, and I stressed the importance of finding a resolution as soon as possible. I have since written to President Rouhani requesting confirmation of the charges, the sentence and the appeals process, and I have asked for assurances that Mrs Zaghari-Ratcliffe will be allowed full legal representation and regular contact with her family. We will continue to do everything that we can for the family, and that includes the British Government remaining ready to help to bring back Mrs Zaghari-Ratcliffe’s daughter to Britain if that is the request.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Q9. Does my right hon. Friend agree that most of our social problems are either caused or aggravated by the acute shortage of housing, so even if we manage to reduce the net immigration to this country, as I hope we will, we will have to build far more new homes? Is not the recommendation by the European Banking Authority to increase by 50% the reserves that banks must hold against house building, which makes it even more costly for them to lend for housing than for unsecured credit cards, profoundly unhelpful and perverse?

[The Prime Minister]

I am sure my right hon. Friend will recognise that we are subject to our own Prudential Regulation Authority, but the overall point that he makes about the importance of house building is absolutely correct. We do need to build more homes. That is something that the Government have been doing. We have seen about 900,000 new homes being built since 2010, but there is more for us to do, and that is what this Government are working on.

European Council

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Monday 24th October 2016 Commons Chamber

[The Prime Minister]

The right hon. Lady makes an important point about the impact that Brexit will have on the economy generally as we go through this period of negotiations. Although people often talk about the impact on Scotland, Wales or Northern Ireland, there will of course be potential impacts on different parts of the United Kingdom. The Department for Exiting the European Union is talking to different industrial sectors and to agriculture throughout the UK precisely to understand what the priorities are and what the impact might be to ensure that when we negotiate the deal we negotiate the best possible deal—one that is right not just for the four nations but for the country and that works for everyone.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

I congratulate my right hon. Friend on the very positive message she delivered in Brussels about future co-operation and about free trade, and, in particular, her desire to continue tariff-free trade between us and Europe. Did any of her European colleagues advocate to her the return of tariffs on trade between us and Europe?

[The Prime Minister]

I thank my right hon. Friend for his question. I know that he has long been an advocate not only of our leaving the European Union but of the trade possibilities that would be available to us thereafter. We did not have a detailed discussion about the matters to which he refers, precisely because we have not yet started the formal negotiations.

Report of the Iraq Inquiry

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Wednesday 6th July 2016 Commons Chamber

[The Prime Minister]

I well remember that when I was on the Opposition Benches and the right hon. Lady was on the Government Benches, she made very powerful speeches about the appalling things that Saddam Hussein did to his own people and the practices in that country, which is a fair point. I also think that when the case was made, people were acting on the knowledge in front of them. It was not just about weapons of mass destruction; there was a sense that we were trying to uphold the position of the United Nations, and the massive danger that Saddam Hussein posed to the region and to his own people. However, those of us who voted for the war must be frank that the consequences of what followed have been truly very poor. That is what Sir John finds, in the section of his report in which he writes about the Government’s objectives not being met, and he states that far from dealing with the problem of regimes potentially linking up with terrorists, which Tony Blair talked about from this Dispatch Box, this action ended up creating a space for al-Qaeda. We must learn all those lessons, including the more painful ones.

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

Does my right hon. Friend agree that there are lessons for every Member of the House, and every member of the media, regarding how we assess evidence? We can no longer take refuge in the pretence that we did not know the evidence about the non-existence of weapons of mass destruction. The reports states:

“The assessed intelligence had not established beyond doubt that Saddam Hussein had continued to produce chemical and biological weapons”

or that efforts to develop nuclear weapons continued. That evidence was set out in the dossier, and as I showed in evidence to the Chilcot report, someone who read the dossier line by line could not fail to reach the same conclusion as Robin Cook, which was that there were no weapons of mass destruction. The fact that largely we did not reach that conclusion is because we have ceased to look at evidence and we rely on briefings from spin doctors and those on our Front Benches. If the House is to get a grip on issues in future, it must go back to looking at the evidence, and so should journalists.

[The Prime Minister]

A lot of things have changed since that evidence was produced in the way it was, and one of the most important things is the renewed independence and practices of the Joint Intelligence Committee. Ministers still see individual pieces of intelligence, and one wants to have a regular update, but the process of producing JIC reports and assessments is incredibly rigorous. I do not think that what happened could happen again in the same way, because the reports that we get from that Committee are now much clearer about what it knows, and what it thinks or conjectures, rather than anything else. I think we can avoid that situation. However, that does not solve the problem for the House of Commons, because it is impossible to share all that intelligence information widely with every Member of Parliament.