Pension Schemes Bill
Lord Lipsey Excerpts(9 years, 6 months ago)
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Lord Lipsey (Lab)
My Lords, I should first declare that I am the unremunerated president of the Society of Later Life Advisers, which provides independent advice to older people. I am sorry that I have not taken part in the proceedings on this Bill so far, knowing, as I have, that it is so safe in the eloquent hands of my noble friend Lady Hollis, but I want to intervene in this case to draw to the House’s attention one particular, very dramatic effect of what is happening.
Let us imagine two people, A and B. They both have £40,000 in their pension pot, and they both retire on the same day. One buys an annuity, the other takes the money as a lump sum. A few weeks later, by coincidence, they both have to go into a care home. As they go into the care home, they both say, “I don’t want to sell my home which I am leaving to go into this care home. I might get out one day. Please don’t make me sell”. To person A, the following applies: the council, under the Government’s deferred payment scheme, has to give them a loan to cover the cost of their care, which is repaid when they die, so they do not have to sell their home. However, person B, because they have £40,000 in their pocket, exceeds the £23,250 limit—the arbitrary limit which I have drawn attention to on a number of occasions—on non-housing assets that they are allowed to have to take advantage of the deferred payment scheme, so they instantly have to go off to sell their home.
The Government promised that nobody would have to sell their home to pay for care. That transposed gradually into a universal guarantee and was then narrowed down still further so that nearly half the people eligible for it were disqualified—but now we find arbitrariness added to arbitrariness because so much will depend on whether you chose to take a lump sum or an annuity. This is beyond rectifying now, alas, as the secondary legislation has gone through, but one thing we can do is to make sure that before somebody decides to take a lump sum, they know that they will in future not be eligible for the deferred payment scheme. That requires authoritative advice. Is that really too much to ask?
Baroness O'Cathain (Con)
My Lords, surely there must have been discussions since the Bill had its First Reading between those in the pension business and those who act as financial advisers to people. Frankly, most people do not understand anything about pensions, and I think we have to accept that. Maybe people here do, but most people do not. You go to a financial adviser, who explains. I say, “Oh, take away all that small print. I can’t be bothered to read it”. That is the first thing, and that is a sin that I have committed several times.
The second is that you do not understand the way it is written. The noble Baroness, Lady Hollis, made a point about plain English. I think that should be made on every single Bill that we pass in this House, because it is so convoluted and it is just hopeless. People deliberately make things complicated so that they can hide behind them, but that is not the Government’s fault; it is ours for not insisting that we have much easier ways of looking at these things and for not making people like me, instead of throwing it into the waste-paper basket, take some responsibility for my decision, which I have not made on the basis of proper information.
Infrastructure Bill [HL]
Lord Lipsey Excerpts(9 years, 9 months ago)
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Baroness Jones of Moulsecoomb (GP)
I support Labour’s amendments. They attempt to improve the regulatory framework but they do not go far enough. I hope that other amendments will be pushed through. We need a complete rejection of fracking. The things that have been said so far are not borne out by the facts and it would be very interesting to see future examples of just where fracking has gone very badly wrong.
We need to see a reprioritisation of renewables and energy efficiency. That would reduce our overall energy demand and make us much more able to fulfil our agreement under the Climate Change Act. Energy efficiency and renewables are already delivering jobs. They are very good at supplying employment and will do much more for energy security, lower bills and reduced emissions than an unacceptably risky shale gas industry can ever do.
The Bill contains some very worrying new measures that will, if given the green light by Parliament, threaten the UK’s wildlife. No one seems to take that into account. It will also promote the unfettered extraction of unconventional fossil fuels, which will undermine the Climate Change Act and our ability to avoid, as one nation among many nations, dangerous climate change.
The coalition talks endlessly about its supposed concern for future generations when it comes to reducing the budget but the same level of commitment is, surprisingly, absent when it comes to the environment and handing on a planet fit to live on. The next generation will be given a very degraded natural world if we do not understand the sort of damage that fracking can do.
If we want any more evidence that this is not the “greenest Government ever”, we need look no further than Clauses 32 to 37 and the deeply worrying and hugely unpopular new provisions to give companies the freedom to frack under our homes without letting us know. The Government have pushed ahead with this change despite recent polling showing that 75% of people are against it and the fact that 99% of respondents to the consultation rejected the proposals. I remind noble Lords that those people are voters.
If we look at just how much we have to do if we are not to allow the world to heat by more than 2 degrees—although it is probably already too late to avoid that—it is clear that fracking cannot be part of it. It is not even as though shale gas will bridge the gap that we keep hearing about between now and a future based on renewables. Shale gas will not be online until about 2020, or even well into the 2020s, so if the Government stick to our commitments under the Climate Change Act and coal is offline by the early 2020s, shale gas will not be replacing coal. We will see exactly what we have seen happening in the United States, which is that it is simply able to export more coal when shale gas fills its own energy needs. Shale gas merely displaces fossil fuels; it does not replace them. Professor Dieter Helm of Oxford University has told us that there is enough gas and coal to fry the planet several times. But of course we cannot use it. It must stay locked up. That is the most efficient form of carbon capture: leave it as coal.
These clauses will also allow fracking companies to undertake activities that have not yet been assessed for their environmental safety, including the keeping of substances within infrastructure on the land with no limits on what can be kept or for how long. Injection wells could be extremely damaging. They have caused problems in the United States, particularly in Ohio, where there have been earthquakes.
We know that the existing regulatory framework is full of gaps. Rather than continue the obsession with deregulating fracking and allowing the industry—an industry that the Chancellor proudly stated has the most generous tax regime in the world—to regulate itself, the Government should see this as an opportunity to introduce regulation that is fit for purpose in order to safeguard the climate. Balcombe, which has been the scene of a lot of interest in the context of fracking, has now decided to go carbon-neutral. If Balcombe can do it, the rest of us can do it.
That brings me to these innocent-looking amendments. If it is the mover’s intention merely to probe the Government’s intention, then I would go further and say that they are welcome amendments. In particular, the new clause proposed by Amendment 113G insists that the integrity of wells used should be independently assessed rather than it being possible for firms to use their own preferred consultants. I hope that the Minister heard the consensus around this House that that was a sensible recommendation and the disappointment that the Government have rejected it.
We need to set our arguments in a broader context. In the committee, we heard from the leading environmental groups, and I am afraid that the speech just given by the noble Baroness, Lady Jones, confirms that they were not really interested in whether the wells were integral, how much methane should lapse out or whether there were any risks of earthquakes. Instead, they sought to raise every empty canard about fracking and treat it as if it were a genuine concern. Their aim was transparent—to surround fracking with regulations and planning constraints to ensure that in practice it never happened without having, in theory, to oppose it. For example, I asked a question of Mr Molho, the spokesman for the environmentalists. I said that,
“if there was no threat of global warming in this gas, would you still be against it, or would you say … that if the regulatory framework is right, it could be a goer?”.
He said:
“We would revise the position accordingly, yes”.
In other words, what the environmentalists want is to stop fracking, and the Trojan horse they use to hide their armies is more and more regulation, which is in danger of killing the whole thing.
That was the environmentalists and, unfortunately, they are not heavily represented in this House, so it is always a delight to hear from the noble Baroness, Lady Jones. Unfortunately, their philosophy has popped up within these amendments. Amendment 113G specifies a 12-month period for groundwater baseline monitoring. It pops up in Amendment 115A, which demands a monitoring programme, including on fugitive methane, to report within six months of the passing of the Act—not, as the committee did, a report only when extraction begins. The amendment sets up a whole new system designed to ensure that fracking is compatible with climate change aims.
Those features make me worry about the position of our Front Bench. It says that it is not opposed to fracking. Indeed, I hope that the noble Baroness will say when she responds to this debate that she is in favour of fracking with the right regulation. However, in practice, it wants to make it more difficult than even your Lordships’ Economic Affairs Committee wanted. We are somehow left trying to ride two horses at once—no doubt, cheers from some environmentalists, although, in my experience, they are never satisfied by whatever concessions you make to them; not the extreme environmentalists. We are saying that we are in favour of fracking in principle but want to make it harder in practice. The noble Lord, Lord Maxton, is not in the Chamber but his predecessor, Jimmy Maxton, said that if you could not ride two horses at once you should not be in the circus. In this particular case, the trick becomes a little demanding when the horses are galloping in opposite directions. Are we for fracking or against it, subject to the right regulation? At the end of reading these amendments, I was in great doubt.
Tackling Corporate Tax Avoidance: EAC Report
Lord Lipsey Excerpts(10 years, 10 months ago)
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Lord Lipsey (Lab)
My Lords, as a member of the committee, it would not be seemly for me to blow its trumpet—although I do not mind giving a toot or two for our chairman, who did such an admirable job. The report was generally welcomed as a very balanced one. We did not accept the proposition put to us by many of our witnesses that all was for the best in this best of all corporate tax worlds—a suggestion that many of us ascribed to the fact that many of them made their money advising on precisely that system. But nor did we side with Richard Murphy and the Tax Justice Network, with their ambitious plans to milk the corporates.
It was a balanced report, and it went down well—except with Her Majesty’s Government. I have rarely read a more dismissive—and, I am afraid, at points arrogant—response to a Select Committee report. “No, we won’t review corporate taxation. What a silly idea”, “No, we won’t look at tax relief on interest”, “No, we won’t register tax advisers”, “No, we won’t penalise those caught under GAAR”.
I once wrote a book on the Treasury—little read today, I am afraid—and I am generally a supporter of it in all the difficult jobs it does, warts and all. But this response is a very big wart. What explains the tone of the response? The answer is simple. The clue is on page 2, where the Government say that they are taking action,
“first, to make the UK tax system more competitive … second, to clamp down on tax avoidance … and third, to drive forward reform of the international tax framework”.
I can paraphrase that as follows: “We would quite like less tax avoidance. However, if we do anything to get it, we shall put firms off locating in Britain, where we want them. So the best thing is to minimise national measures. We’ll have to do a few things to pacify the pop newspapers and Margaret Hodge, but meanwhile we’ll concentrate on international measures”. The result of that is that the Starbucks, the Amazons, the Googles and the food companies exposed by the Independent can laugh at us.
With this excessive tolerance we are encouraging an international race to the bottom. Corporation tax rates worldwide are falling. If others think like us they will act like us, and corporate tax will soon be a thing of the past. The noble Lord, Lord Lawson, would welcome that, as he said—and so might I, so long as it was replaced by something equally lucrative to the Exchequer, and preferably more, rather than less, progressive.
The “do nothing nationally” approach enshrined in the response is extended by the Government to measures that would not in any way affect the international competitiveness of our tax system. For example, the report canvasses a proposal for a register of tax advisers, which might facilitate action being taken against those who give egregious advice to their clients, and an accompanying code of conduct. The Treasury does not explain why it rejects this; that would be too much bother, I think. It just says that the Government,
“does not regulate the tax profession”,
as if their failure to do what the committee recommended was a decisive argument against doing so. Honestly, whether or not noble Lords share my view of the committee’s report, it deserves better than this. This is not the response of a Government who are seriously concerned to do anything about corporate tax avoidance and evasion. I hope that this complacency will not be repeated by the Minister in his reply this evening.
Education: English Baccalaureate Certificate
Lord Lipsey Excerpts(11 years, 7 months ago)
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Lord Lipsey
My Lords, I, too, congratulate the noble Earl, Lord Clancarty, on obtaining this debate. With the support of the House I will also congratulate Darren Henley, whose excellent reports on cultural education were recognised in the New Year’s Honours List with a very well deserved OBE.
I chair the Trinity Laban Conservatoire of Music and Dance. We train outstanding musicians and dancers and are fifth out of all higher education institutions in the country for employment of our graduates, 97% of whom are in work or further study six months after graduating. We can achieve that quality of output only because of the quality of our input. We have all heard of child prodigies in music, but you do not very often hear of adult prodigies—that is, performers who started late in life. Music and dance in schools are what enable us to do what we do.
The EBacc as it is presently conformed is very bad news for Trinity Laban: no music, no dance, no arts; instead, the Daily Telegraph suite of subjects. Ministers claim—and I am sure the noble Baroness, Lady Garden of Frognal, will do the same—that they still value the arts and I expect some of them do, but we live in a harsh world. If they do not figure in the EBacc, then schools, which will be judged by their EBacc success, will downgrade them and, indeed, they are already doing so. This is despite a YouGov poll which shows that 88% of the public expressing an opinion think that music and other creative subjects are important or very important to a child’s education. With some children whose level of performance needs to be increased, it is very often through the arts, music or dance that they make the breakthrough to seeing the value of education and then apply that to other, less congenial, subjects.
If the Government do not change tack, the composition of those who come to Trinity Laban will change as well as the quality. Those whose parents can afford to will provide school-age education in music and dance privately. Those who cannot will see their children’s talents wasted. The answer is a sixth pillar to the EBacc for such studies. If Michael Gove wants to retoxify the Tory party as the philistine party, he will continue to resist it.
Private Finance Projects (EAC Report)
Lord Lipsey Excerpts(13 years, 9 months ago)
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Lord Lipsey
My Lords, I was not on the Economic Affairs Committee for the whole of the period of this inquiry, but I was there long enough to appreciate greatly the qualities which the then chairman, the noble Lord, Lord Vallance, brought to its proceedings and which he again demonstrated in his admirably concise speech this afternoon. Our report is clear and I do not want to attempt another summary. Rather, I want to draw the attention of the House briefly to two things that it does not conclude—the two dogs, as it were, that did not bark in the night.
The first concerns the view put to us by a minority of witnesses that PFI and PFPs are taxpayer-unfriendly rip-offs. This was put to us—not, of course, quite in those terms—by, for example, the trade union UNISON and by Professor Allyson Pollock of Edinburgh University who writes a column to this effect in the Guardian every month or two which I always look forward to. As the chairman of the committee said, it is too early to be sure on a lot of these matters, but the gap between those who advance these arguments and the majority of our witnesses is a Grand Canyon. It would be to go too far to say that we refuted the arguments of the opponents and it is fair to note that many of the witnesses who gave evidence as to what a wonderful thing PFP was were at the same time lining their pockets from the proceeds of it. However, the evidence we received from the NAO, which I think can be taken as objective in this matter, seems to get it about right. The NAO said:
“Having examined many PPPs, we have concluded that private finance can deliver benefits, but is not suitable at any price or in every circumstance. It is one of many routes of delivery, which, when used for the right reasons and managed effectively, can work well. When it is used for the wrong reasons or is managed badly, it does not deliver projects well”.
That seems good judgment and it contains the view as to why the critics, in my view, are getting it wrong. What they tend to do is take the odd project that has gone wrong and present that as if it were typical. As every speaker has mentioned so far, the project that most obviously went wrong was the ludicrous London Underground project, which was far too complex to be done through this kind of contractual obligation. I do not expect to say this very often in my life, but Ken Livingstone was right and Gordon Brown was wrong. We need to balance those failures against the many successes and the general feeling that our public infrastructure is a great deal better at less expense and to greater benefit to the public as a result of these schemes.
The second dog that did not bark—the noble Lord, Lord MacGregor, just referred to it—is the case for a national infrastructure bank, often referred to as a national investment bank. Fortunately, they have the same initials so it does not matter—NIB. I noted that the noble Lord, Lord Myners, called for such an institution when he spoke in the debate on the comprehensive spending review on Monday. On this matter, the committee sat firmly on the fence. We resoundingly concluded that the pros and cons should be kept under review and, the nature of that recommendation being what it was, the Government cheerfully agreed with us. I do not think, however, that the recommendation quite captured the general tone of the group’s discussion. Some of us, at any rate, find it hard to see what it is, precisely, that such a bank would do. Is it going to lend at rates keener than private sector banks? If so, that distorts the market. If the rates are the same, why bother? Despite the failings of the banking sector over the past three years, not all of us are convinced that more publicly owned banking is the long-term answer to Britain’s economic problems. After all, the crash itself, to a great extent, owed its origins to the misdoings of two American public institutions—Fannie Mae and Freddie Mac.
The committee believes that this report represents a reasonable and balanced contribution to the ongoing debate about an evolution of a public finance initiative and so we commend it to the House.