Poverty: Metrics

Lord Lipsey Excerpts

Monday 21st January 2019 Lords Chamber

[Lord Lipsey (Non-Afl)]

My Lords, it would take more than three minutes to thank the noble Baroness, Lady Stroud, adequately, but I will use my introduction to give a commercial for the seminar that she and I, as chair of the All-Party Parliamentary Group on Statistics, will be holding in Room G on 12 February at 11 o’clock to go into these matters in more depth than is possible tonight.

Poverty statistics matter, not just as a proxy for misery almost inconceivable to Members of this House but because they underline other policy. When asked about the BBC licence fee in Oral Questions this afternoon, could the Minister have stood up and said that the Government want free licence fees for over-75s to go on, having read the report of the noble Baroness, Lady Stroud, and seen that only 12% of over-75s are in poverty? This policy is misdirected and does not survive contact with the facts.

Poverty is a Janus-faced statistic in the sense that, on the one hand, it is breakfast, lunch and tea for geeks like me and, on the other, it is controversial, even ideological. We have heard that there is a gap between the right, which tends to prefer what it considers objective measures of poverty based on absolute levels, and the left, which tends to prefer relative measures. Very wisely, the noble Baroness, Lady Stroud, has gone for a relative measure—55% of the median income—but her statistics are vastly more sophisticated than anything we have had in the past. They take account of families’ liquid assets and deal properly with the housing situation, which is important in poverty. This is a huge leap forward.

Personally, not being a great ideologist, I would be quite happy if we gave up disputing for evermore whether absolute or relative measures are right and settled for Stroud. As the noble Baroness would be the first to admit, there is more work to be done on her report. For example, I am concerned about the way it treats disability, important though that is. It would be much better to concentrate on those concerns than to allow this to be sucked once again into the endless maelstrom of political toings and froings and ideologically motivated views. Instead, let us settle for Stroud—or Stroud-plus, as it might be in today’s jargon—and use it from now on to see if we are really making progress against poverty.

Leveson Inquiry

Lord Lipsey Excerpts

Friday 11th January 2013 Lords Chamber

[Lord Lipsey]

My Lords, I am sorry to start on a slightly sour note but, in one regard anyway, the debate in your Lordships’ House will be less well informed than that at the other end. The House authorities have determined that we may not have printed copies of the full Leveson report, only of the summary. Of course, noble Lords could all access Leveson if they have 50 hours to sit in the Library reading it or were granted the skill, denied to some of us, to go through 2,000 pages on screen. The ground for the refusal was cost. I could go into that a great deal. I know it would be high if every Member of the Lords was given a copy. However, a compromise would have been to have given a copy to those who had put down their names to speak in this debate and who wanted it. This was turned down.

I asked the Clerk of the Parliaments whether he could provide any precedent for a report which was the subject of a specific debate in this House being denied to speakers. None has been cited. I know this is a subsidiary point but it is not unimportant since Leveson’s summary, although a good attempt, is not a proper reflection of the full weight of his report. I hope therefore that if noble Lords share my feelings on this matter, they will tell the Clerk of the Parliaments and the Chairman of Committees so, so that the House is not put in this invidious position ever again.

I speak as a former deputy to the editor at two national newspapers. I had responsibility at the Times for complaints, for the PCC and for libel. Whether that makes me a poacher turned gamekeeper or a gamekeeper turned poacher, I am not quite sure. I must say that I found some of the post-Leveson debate, although very interesting, a bit depressing because it seems that most of it has been making a mountain out of a molehill. There is really terribly little between 90% of the participants in the debate. All of us want an independent, self-regulatory system that works. None of us wants statutory control over content. Yet over this gnat of whether there should be statutory underpinning, we have strained and strained. I say to the noble Lord, Lord Wakeham, for whose views on these matters I have the greatest respect, that a Permanent Secretary instructed by his Minister to find eight reasons why something could not be done would not have managed to exceed the efforts he just made at the end of his speech. That is why the actual Bills that exist to do this are so brief, succinct and effective.

The Prime Minister did not help with his remark that legislation would cross a Rubicon. Is it a Rubicon? Honestly, it is more the River Piddle after a prolonged drought. I do not think there is any slippery slope here. There is certainly none so long as it is clear that any statutory underpinning is to underpin the process by which wrong can be righted and not to get at the specific content of newspapers, which is a matter for them and their editors.

Having said that, I would prefer a minimum of legislation. There are well worn reasons of principle why this should be so, but I am afraid that mine is a pure matter of practice. The problems we have seen are largely a matter of rogue cultures in newspapers. Changes in culture are usually more successfully achieved if organisations embrace them from within rather than them being imposed from without. One reason why the Advertising Standards Authority, on which I once had the privilege to sit, is an effective authority is that the entire industry accepts it. If statute makes it harder for the press to understand the change in culture that is required, we should try and keep it to a minimum.

However, there is one problem which has not yet been resolved by the system of contracts proposed by the noble Lord, Lord Hunt. It is no good setting up the finest system in the world if some newspapers choose not to join it or, more insidiously, if they join it but keep on saying, “Oh, if you don’t do what we want, we’ll withdraw and you’ll lose our money”. That is what prejudices the bureaucracies of those organisations to listen to their press members and not to their independent members. I do not think we have cracked that one yet. I am not wholly confident that the incentive of better treatment from the courts for newspapers which sign up will be sufficient. This needs to be looked at further.

I have one other proposal, which bears on the points made by the noble Lord, Lord Wakeham. No one much likes the idea that Ofcom should frank the self-regulatory system. There is, however, an existing alternative: the United Kingdom Accreditation Service, chaired by the noble Earl, Lord Lindsay. It would be worth everyone having a look at that. It has the enormous advantage of being extremely low-profile and therefore in many ways ideally equipped to take on this demanding task. I ask those who are responsible in these negotiations to look at that.

It is crucial that the all-party negotiations should succeed, because only then will we have a stable basis for a system. I should like to see a system that minimised the need for legislation. If it can be done without, no one would be more delighted than I would. If it requires something, I hope that those on the press side will retain a sense of proportion about the small amount of statute that is required. If it can be done by agreement without statute, that would be a wonderful outcome, but let there be no doubt: if no such agreement can be reached, statute there must be, and statute that will work.

Small Pension Funds

Lord Lipsey Excerpts

Tuesday 27th November 2012 Lords Chamber

[Lord Lipsey]

My Lords, first, I declare an interest as the unpaid president of SOLLA, the Society of Later Life Advisers. Because I am unpaid, I can say that this is an admirable organisation which takes on independent financial advisers wishing to specialise in the affairs of the elderly. SOLLA trains and accredits them so that people know they get what they need and not what the adviser wants them to hear.

I thank the noble Baroness, Lady Greengross, for raising this important but neglected subject this evening. Its importance has been highlighted by the excellent briefings that noble Lords have received from a number of outside organisations. It may seem a bit negative but I have to note that there was one briefing that I did not get. I did not get a briefing from the Financial Services Authority, and that seems extraordinarily neglectful because, as the noble Baroness, Lady Greengross, made clear, it is the Financial Services Authority’s retail distribution review that is blamed by many for the advice gap that exists in this area. I shall come back to that later. Surely this House had a right to hear the views of the FSA on this matter, its defence of the RDR and its approach to the problems that have been raised. I do not know whether this is FSA incompetence or FSA contempt for Parliament. Neither would surprise me and I hope that there is a more benign explanation, but it should know that this gap has been noticed.

As some noble Lords know to their cost, I am the House’s statistical geek, and I now want to make a statistical point. The size of the pots involved is often exaggerated due to a statistical quirk. The figure of £28,000 that one sees is the size of the average pot. This “average” is, as most of us learnt at school, the mean average but it is not the appropriate average in this case. There are a few very large pots—£1.5 million for judges and some people in the private sector—and a large number of other pots. However, the correct measure—I say “correct” because there is no doubt about this—is the median pot, where half the pots are bigger and half are smaller, and the median is below £20,000. Therefore, we must not allow the quoted size of the average to mislead us as to the scale of this problem.

Many of these pots are small but we should not conclude from that that they are unimportant. Let us take that median £20,000 pot. With a bit of luck, it might yield an annuity of £1,000 a year. I am afraid that to those of us in this House that may not seem a vast sum. However, let us compare it with the state pension, which is £107 a week, although I know that there is pensioner credit and so on on top of that. An annuity of £1,000 amounts to 20% of the single state pensioner’s income, and it makes the difference between mere penury and getting by.

Perhaps I may take this argument a step further. If somebody is well advised, that may make a difference of 40%—this is not an exaggerated example—so the income they get may go up by £20 or £24 a week or, if they are unlucky, it could be as low as £8 or £16 a week. That makes a huge difference to these people—more so than sums many times that amount would make to better-off people.

In order to get a better annuity, you have to be aware that if, for example, you have diabetes and heart disease you can get a bigger pension from your annuity pot. Indeed, if you smoke, you can get a bigger pension from the pot, but perhaps we will quickly pass over that—not many people will be able to afford to smoke much with this amount of money. However, for that, you need to know that you can do it, yet 75% of people do not know what an annuity is. They have not even reached stage 1, and that is why we need to do something about the advice.

I now turn to a slightly more controversial part of my argument on the advice gap. It is said that people are willing to pay only £35 for advice. The cost of advice from an independent financial adviser is £750, and therefore there is an absolutely unbridgeable gap here. I want to make one or two points. First, £750 is a substantial cost but it will be worth it for many people. I gave the example of a 40% gap in the annuity. If you got an annuity which was 40% better, you would pay for the advice within two years of receiving the pension and then there might be 20 or 30 years in which you would get a much higher pension as a result of the advice that you had taken. Therefore, the cost is not that disproportionate.

Secondly, in my experience, many independent financial advisers are prepared to provide advice even though it is unprofitable for them at the time. They do so partly because, believe it or not, many of them are very socially interested people—that is why they have chosen to specialise in older people—and partly because there may be other business down the line. For example, they may be asked to carry out inheritance tax planning so that the person can do something with their house, and they will therefore get future business from someone whom they helped with their pension and whose trust they won. So we should not think that every transaction has to be profitable. Good advisers can find other ways of benefiting from giving advice.

What worries me, however, is that because of the gap between the cost of advice and what people are willing to pay, we will finish in a wrong place by thinking that it is quite alright to give bad advice because bad advice is necessarily better than no advice. It is not. There are plenty of people who have been flogging payment protection insurance and plenty of advisers who have been getting rich off commission. They are kind of looking at ways in which to give inadequate advice to people on a money-making basis. Although I understand the criticism that is made of the RDR and the end of commission, equally I do not want us to jump off the other side and provide poor advice that is provided for the purposes of people making profits by preying on elderly people. Poor people should not get poor advice; they can afford it less well than anyone else, not more.

In the time available tonight one cannot go into the detail of how a system could be devised that avoids that trap but makes sure that advice is available to those who need it. That includes voluntary organisations of the kind to which the noble Baroness, Lady Hollis, referred. There are ways of doing it, perhaps through simplified technology, and so on. It is not beyond the wit of man, though we have yet to see if it is beyond the wit of the Financial Services Authority.

Education: Conservatoires

Lord Lipsey Excerpts

Wednesday 10th October 2012 Lords Chamber

Asked By

[Lord Lipsey]

To ask Her Majesty’s Government whether they will meet the funding needs of the United Kingdom’s conservatoires.

[Baroness Stowell of Beeston]

My Lords, before we start the next debate noble Lords will obviously know that it is time-limited. This is one of those tricky ones where we have great interest in the debate, which leads to a very limited speaking time for Back-Bench contributions: two minutes, except for the noble Lord, Lord Lipsey. I will endeavour to have us working together. If everybody were to have three minutes, it would take us over the hour but at two minutes I will try not to be too draconian. I am sure noble Lords would not want me to be that. If we can all come in together at an hour at the end of it, that would be marvellous. Thank you.

[Lord Lipsey]

My Lords, I start by declaring two non-pecuniary interests: as chair of the all-party classical music group and, as of 1 October, as chair also of the Trinity Laban Conservatoire of Music and Dance in London. I imagine that most of the many noble Lords participating in this debate have had the experience of walking into a music conservatoire. In my new position, I have the privilege of regularly walking in to the magnificent old naval college building in Greenwich, where the Trinity music school is situated, to find a jazz saxophonist practising up there, Bach cello music coming from down there and a bit of John Cage—I do not necessarily move towards that window—coming from over there. On the same visit, I may go to the Laban dance building, which won the Stirling architecture prize. There, because it does modern dance, you see bodies of all shapes and sizes—and yes, of course, of both sexes but also of every kind of racial background that you can imagine—working and working to perfect their art form. Every time that I go in there, it sends a tingle down my spine.

I am tempted just to say that and sit down, which might be very welcome as the House does not like people to go on for too long. The reason that I could sit down is the number of noble Lords who have put their names down to speak in this debate, even though they know that once they have cleared their throat they will have to sit down again. This really shows that this is one of those issues which may not seem huge on the great national tapestry but are of burning importance, not just to the people who work or study in the sector but to the whole of the culture. If anything in this world is of value, it is music, dance and drama and the conservatoires that make them possible.

I should also say at the beginning that this is not a “bash the Government” debate. I can do “too many cuts” speeches off the top of my head; I have been doing them for many years. When the Government introduced their new arrangements for higher education funding, I think that the special circumstances of the conservatoires did not enter their heads. That was certainly the impression that I got from ministerial correspondence at the time. However, to be fair, the Government have since woken up to the problem. My classical music group had an excellent meeting with David Willetts, the responsible Minister, over the summer. He was very concerned to listen to us. The Higher Education Funding Council for England is also sympathetic. This is not about “damn cuts” but it is, I suppose, special pleading and I will now make that special plea.

What, in a nutshell, is the problem? It is this: conservatoire education is by its very nature expensive to provide. You need one-to-one teaching; you need lots of space for people to practise; you need decent instruments, which are a lot more expensive than the whiteboard arrangements needed at a normal university. In recognition of this, successive Governments have provided funding for the sector—most notably through the exceptional funding that HEFCE provides. This is now coming under pressure. The higher education review that the Government published envisaged much higher fees and a consequent reduction in special funding. We are not going to argue with that; our fees will go up, as have those of other undergraduate institutions. However, we do not even have a guarantee that special funding will continue beyond the end of this year. HEFCE has kept it going for a further year in 2012-13 but is reviewing it now. An announcement is expected in December 2012. My colleagues and I operate every day with the sword of Damocles still poised over our heads.

The situation is very tough. HEFCE funding has been reduced by £9.7 million in cash terms and 16.1% in real terms since 2009-10. All conservatoires have been hit by the previous Government deciding that if you had done a first degree somewhere, you could not then go and do a first degree somewhere else and be funded for it. So someone who is a chemist but turns out to be a brilliant pianist cannot now get any funding if they go off to do a degree in piano. There has been a virtual removal of capital funding for teaching, which, as I said, needs to be much higher—you cannot buy a Steinway for the price of a blackboard. So the general situation that we face is very tough.

We ought to have a sense of proportion about this funding gap. The total funding for exceptional funding from HEFCE is £20 million. At the Conservative Party conference this week—this is not a party political point—the Government said that they were seeking, from social security benefits alone, cuts of £10 billion. That is 500 lots of our total funding. This money is not material in terms of its impact on the deficit, on the Exchequer or on anything like that, but it is oh so material regarding what happens at our conservatoires.

It is not easy for us to find other income. For example, we are looking the whole time for more foreign students but we face a great deal of competition, including from European institutions which are subsidised by their Governments, and now we have the problems created by immigration law, which were dramatically illustrated by the London Metropolitan affair. Trinity Laban suffers because the Americans have just cut off loans that were previously paid to fund students from the Americas because we do not have degree-awarding powers yet. The Government have made it more difficult for our students to get jobs after graduation, since you have to show that you can earn £20,000-plus a year and it is not easy for a music student to do that because they have a portfolio of earnings that come from different places.

We are also trying for philanthropic support, but that is not an instant solution either. The easiest thing to raise philanthropic support for is scholarships, but that just means that you get one student paid for by philanthropy who otherwise would be a student paid for through HEFCE in the normal way of business. It is not just money that goes through to the bottom line. We work on commercial money like mad but it is not easy to make yourself a billionaire from music.

Costs are being cut to the bone. I mentioned the beautiful buildings in Greenwich but I am afraid that the paint is peeling. It is hard to escape the conclusion that a proper contribution from government is essential if the conservatoires are to survive and prosper. This was recognised in the report by Darren Henley, the boss of Classic FM—no egghead he, but a good egg nevertheless—whose cultural education review in 2012, which the Government were very keen on, said:

“The government should recognise the need for exceptional funding for culturally based conservatoires, which train the artists, actors, dancers and musicians who will create and perform the culture of the future. The funding settlements for these conservatoires should be secured for the long-term”.

That last sentence is very important. It is not easy to plan the future and institutions such as this if you do not know where next year’s money is coming from.

With cuts here, there and everywhere—£10 billion of cuts—some might question whether institutions such as the conservatoires should be a priority for public spending, but no one should doubt the contribution that they make to the economy. Trinity Laban is in the top five higher education institutions in the country in terms of its graduates going into jobs. These are motivated people who are determined to work and find a way of making a living. Conservatoires contribute to jobs and to foreign exchange with students from abroad, and culture today is big business. However, I defend conservatoires not simply on those grounds but on these: our resilience as a nation in the crisis that we face in our economy depends not just on material matters—it depends on the values that sustain us as a society. A land without music, every kind of music, or dance of the highest quality is a land that has lost its soul, and once it has lost its soul it will lose the rest of its way too.