Economy
Lord Low of Dalston Excerpts(9 years, 2 months ago)
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Lord Low of Dalston (CB)
My Lords, I thank the noble Lord, Lord Haskel, for introducing this important debate on a subject that must be on all our minds: what kind of state the economy will be in once we get beyond this damaging austerity—not that the prospect seems all that imminent.
I say “damaging austerity”, but not everybody seems to see it that way. Some people—let us not be mealy-mouthed about this: the Chancellor and his acolytes—far from seeing austerity as a bad thing, or at best a regrettable necessity, seem to see it as a good thing. As the noble Lord, Lord Turnbull, said the other day, they seem to relish the opportunity to shrink the state back to levels not seen since the 1950s, except perhaps for a time at the end of the last period of Conservative government in the 1990s, with public expenditure set to fall to just over 36% of GDP by the end of this Parliament.
In contrast with the noble Lord, Lord Howell, I wish to take issue with this perspective and maintain that public expenditure, properly managed and controlled, is a good thing. It has been responsible for the vast improvement in the welfare of our citizens over the last 100 to 150 years. It has made major inroads into Beveridge’s giant evils of squalor, ignorance, want, idleness and disease. To take just a few examples at random, it has given us old age pensions, compensation for industrial injury, great improvements in access and provision for disabled people, a flourishing of the arts and much more besides.
One good thing to have come out of the Labour leadership election is that it has brought discussion of an economic policy aimed at combating austerity, rather than imposing it, into the mainstream. More than 40 economists wrote to the Observer in support of Corbynomics and 55 to the Financial Times against, which I suppose just goes to confirm that, however many economists you put end to end, they would never reach a conclusion. But the important point is that there is a discussion. In passing, one thing economists do seem to agree about is the wrong-headedness of the Chancellor’s plans for permanent Budget surpluses. To me, as a non-economist, it seems that the Corbynistas are getting the best of the argument.
The charge against Corbyn was summed up in a New Statesman editorial in the issue of 20 August to 27 August, as,
“the policy of a ‘people’s quantitative easing’ would risk rampant inflation and is not a sustainable means of financing infrastructure programmes”.
Let us take that in bite-sized chunks. “People’s QE” is rather disparagingly referred to as “printing money”. It is, but that is no different from what the Bank of England has been doing for the last few years. As regards rampant inflation, this policy might contribute to inflation in the longer term but that is not a risk at the moment with interest rates still at record lows in a very lukewarm recovery.
As regards this policy not being,
“a sustainable means of financing infrastructure programmes”,
the operative word here is “sustainable”. QE is probably not a sustainable means of financing infrastructure programmes in the longer term for the reason just stated, as well as Bank of England independence, but it might kick-start the process. However, this would probably not be necessary as Corbyn has other proposals for funding infrastructure investment—namely, a national investment bank.
There is discussion among Corbyn supporters on whether conventional borrowing would not be a more appropriate way of capitalising a national investment bank. These are matters of emphasis which can probably be resolved. The important point is that even the 55 economists critical of Corbynomics agree that, at this time of very low interest rates, much-needed public investment can be financed by conventional borrowing.
The time limits have not left much time to talk about the key question posed by this debate—namely, what awaits us post austerity. I fear that the answer is not very encouraging. This is one of the most fragile recoveries in history. Fuelled by ballooning household debt, it contains the seeds of its own destruction. What happens when interest rates rise? Another crash, but that is likely to be only a staging post in a self-reinforcing downward spiral, and the Chinese slow-down is not going to help either.
The demise of capitalism has oft been predicted, but it has shown itself to be remarkably resilient. The future of capitalism is a subject for another debate, but there must be a question about how long we can continue to rely on this resilience.
Queen’s Speech
Lord Low of Dalston Excerpts(9 years, 5 months ago)
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Lord Low of Dalston (CB)
My Lords, I add my word of welcome to the new Minister to his position. I have heard him on the radio frequently; he is a big hitter, and will add much authority—I nearly said “much-needed authority”—to the Government and to our proceedings in this House. To judge from his speech this morning, he will add much dynamism as well. I also congratulate the noble Lord, Lord King of Lothbury, on a maiden speech every bit as distinguished as we would expect.
The Prime Minister and the Conservative Party are to be congratulated on their surprise victory—a surprise, I believe, as much to themselves as to anybody else, although people are now coming out of the woodwork to claim that they saw it coming. I myself believed that it was the one outcome that could not possibly come to pass. Mr Clegg has described it as the triumph of “grievance and fear” over liberal values. I have great respect for our Lib Dem colleagues, but I have to say to them that if that is the case it is something that they have connived at for the last five years.
In truth, the election was won on a fraudulent prospectus of over-promising and under-delivering. The record for competence, especially economic competence, was rubbish, with the loss of our AAA credit rating and flagship deficit reduction and immigration targets missed by miles. Instead of the much-denied top-down reorganisation of the health service, we got a top-down reorganisation of the health service, only a costly one of byzantine confusion—and the jury is still out on universal credit, with major question marks still hanging over its deliverability.
The Prime Minister is now impaled on a number of promises that he probably did not expect to have to keep. On public expenditure, the figures simply do not add up. How are £7 billion worth of tax cuts, raising the threshold for inheritance tax to £1 million, subsidising the sell-off of housing association property and £8 billion more a year on the NHS to be squared with the removal of £30 billion from the budget is anyone’s guess, especially given the absurd lock on raising VAT, income tax and national insurance. Perhaps the Chancellor will tell us on 8 July, but I am not holding my breath. Against this background, seven-day working, along with extra doctors and nurses for the health service, is surely for the birds. If anyone else had exhibited such a cavalier approach to the nation’s finances, they would have been torn to shreds.
It is widely agreed by economists that the Government’s austerity measures at the beginning of the previous Parliament delayed the recovery by two years, entailing a permanent loss of resources to the economy conservatively estimated at 5%. When the recovery failed to materialise, the Chancellor abandoned his austerity policy, and the pace of the recovery quickened up to the present time. The Chancellor and his followers never tire of describing this as his long-term economic plan and claiming credit for holding to it. Indeed, the Chancellor achieved the singular feat of persuading people to accept a policy of austerity on the grounds that, although unpalatable, it is good for us, even when he has abandoned it himself. This is only a long-term economic plan if by “long-term plan”, you mean shrinking the state in the first two years of a Parliament with a view to expanding the economy again in the run-up to a general election.
The noble Lord, Lord Desai, and I had a slight difference of opinion over this when we last debated it shortly after the Budget when the noble Lord gave the Chancellor credit for sticking to his guns. It is true that the slowdown in the pace of deficit reduction in 2012 owed as much to disappointing tax receipts as to the Government reducing their expenditure. However, the Chancellor could have stuck to his original deficit reduction plan by raising taxes to compensate for this, or cutting spending still further, but the important point is that he chose not to do so.
Labour is said to be facing an existential crisis stemming from the unravelling of traditional class identities, its failure to come to terms with Scottish nationalism and its failure to speak to those left behind by the damaging effects of market individualism and global market forces. It certainly faces a herculean challenge which will not be overcome by vague appeals to back aspiration. It is said that Labour’s dilemma is that it needs to appeal to different audiences simultaneously, but I am not so sure. I think the problem was that it simultaneously colluded with the narrative on austerity and Labour’s part in the crisis while cautiously hinting at something a bit more radical, with the result that the trumpet gave forth a very uncertain sound. Whenever the Labour Party was taxed with the deficit, all it could do was go on about the good things it had done with it. It had just about screwed itself up to say that the deficit did not cause the crash but did not seem to be able to take the crucial step of explaining that it was the crash that caused the deficit. If Labour’s analysis is so poverty stricken, how can it expect anyone to get the message? Yet whenever I heard a strong lead being given in opposition to austerity, people resonated strongly with it. This is what happened in Scotland, and people voted for it. Labour needs to learn the lesson from this and stop giving so many mixed messages.
I fear that the Government are about to make the same mistake that they made at the beginning of the previous Parliament and inflict another bout of austerity. A number of speakers have anticipated this concern. This would not only be wrong in itself but risks choking off the recovery, which is not so strong that it can easily withstand another austerity shock. Attention focuses principally on stagnant productivity these days, but this should be viewed against the background of a host of other deep-seated problems with the British economy. It was reassuring to note the Minister’s awareness of them in his speech.
Investment is too low, the economy is unbalanced, our manufacturing base is too small and we rely too heavily on the service sector, particularly financial services. We have chronic balance of payment problems, debt levels remain too high, but growth, rather than further consolidation, is a much better way of addressing this. The recovery is too dependent on consumption artificially boosted to unsustainable levels by rising asset values and asset sales. There is even ominous talk of another crisis, worse than the previous one, looming. I was not sure how far this ominous talk was loose talk. The noble Lords, Lord Desai and Lord Skidelsky, referring to it this afternoon should lead us to take it very seriously.
The IMF has just said that deficit reduction is no longer the priority that it was, so there are many good reasons to be concerned at the prospect of a further round of austerity on economic grounds. It would seem to be counterproductive, even in the Government’s terms of delivering a programme of one-nation compassionate Conservativism. What price seven-day working in the NHS then?
Small Business, Enterprise and Employment Bill
Lord Low of Dalston Excerpts(9 years, 8 months ago)
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Baroness Neville-Rolfe
My Lords, I thank the noble Baroness, Lady Thornton, for her amendment and all her supporters, including Grazia magazine. I pay tribute to her tireless campaigning on gender equality. This is a very timely debate, following International Women’s Day on Sunday. I am pleased to confirm that it is the Government’s intention to accept the noble Baroness’s amendment, subject to changes that I am proposing by way of government Amendments 58ZZA and 58ZZB.
Before turning to the amendments, I remind the House of some key facts about the pay gap and the work that the Government have already been doing to close the gap and improve transparency. First, it is important not to lose sight of the fact that, according to ONS figures, the gender pay gap has fallen to its lowest level ever. It has been virtually eliminated among full-time workers under the age of 40, which is a more positive way of looking at the statistics. We are broadening the career aspirations of girls and young women by encouraging them to get into STEM-related careers through the Your Life campaign. Opening up these highly skilled areas ensures that women are less concentrated in sectors that offer narrower scope for reward and career progression.
We have also championed the voluntary, business-led drive by the noble Lord, Lord Davies, to get more women on boards. Women now account for around 23% of FTSE 100 directors, up from 12.5% in February 2011, and there are now no all-male boards in the FTSE 100. It is a huge step forward. Last night I attended the fantastic dinner for women on boards, hosted by the Secretary of State for Business, Innovation and Skills and sponsored by Lloyds Banking Group, encouraging this key group of women to drive forward further progress, which I believe is very important.
We are modernising the workplace to give women a fair chance to get to the top. Last June, the right to request flexible working was extended to all employees, and from April we will introduce a new system of shared parental leave. Further, almost 2 million families could benefit from our new tax childcare scheme from autumn 2015, which is worth up to £2,000 per child.
In January we published new guidance for employees on the gender pay gap. Research has shown that organisations perform better when they have a good balance of women across teams and in senior roles. Our guidance helps women to check if they are being paid fairly and encourages good practice of the kind the noble Baroness mentioned. Furthermore, new EU software to help UK employers analyse their pay data can now be downloaded for free. We are already encouraging greater transparency about pay. We have banned pay secrecy clauses, changed company reporting on boardroom diversity and introduced mandatory equal pay audits for companies that lose equal pay claims. We have also been working in partnership with business to tackle the root causes of the gender pay gap and promote culture change and greater transparency through the Think, Act, Report initiative, which the noble Baroness mentioned.
Because of Think, Act, Report we now we have a powerful business community of best practice with more than 275 leading companies—the figure is right—employing more than 2.5 million people, leading the way on gender equality. Of course, Think, Act, Report was never intended as a substitute for Section 78; it is so much broader and has achieved a lot. We said that we would keep Section 78 under review and that is exactly what we have done. We now want to build on the progress we have made. We need to take into account that one size will not fit all and that is why the Government feel strongly that we must consult on how Section 78 is taken forward. I welcome the amendment from the noble Baroness, Lady Thornton. I am proposing two amendments to it—Amendment 58ZZA to ensure it fits properly with the Equality Act provision, and Amendment 58ZZB to require consultation before implementation—which the noble Baroness has graciously indicated that she will accept.
We know that business is particularly concerned about being required to report more information, so we also want to ensure that the Government actively engage business during a proper consultation. This will ensure that we find the best way of implementing Section 78 in a business-friendly way, making use of information employers already have available and without being bureaucratic. In order to bring forward tailored, workable regulations, it will be essential for the Government to consult business properly, as well as others with interests and expertise in the area. We want to ensure that the requirements on business can be fulfilled and that the data published are of real use. I am therefore grateful to the noble Baroness for agreeing to these important adjustments to her amendment.
Lord Low of Dalston (CB)
My Lords, I was glad to put my name to the amendment in the name of the noble Baroness, Lady Thornton, and I am equally delighted to support the government amendment that essentially accepts the noble Baroness’s amendment but makes some minor modifications to the text. In view of the welcome degree of consensus that is breaking out, I will endeavour to speak quite briefly.
The Equal Pay Act was passed in 1970—all those years ago—but 45 years on there is still a significant gender pay gap. In 2014, women in full-time employment earned 9.4% less than men in full-time employment. The gap was wider for part-time work. Female part-time employees earned 37.9% less than male full-time employees. For all employees, the gender pay gap was 19.1%.
Lord Low of Dalston
My Lords, I have put my name to all these amendments, which have been spoken to so ably by the noble Lord, Lord Wills. I will speak very briefly to them in the order in which they were grouped.
I very much welcome the Government’s speedy response to the recommendations of the report by Sir Robert Francis on speaking up, or whistleblowing, in the NHS. However, like the noble Lord, Lord Wills, I am concerned that too narrow an approach has been taken to the issue of protecting whistleblowers in the job application process. Surely it is not right to adopt such a piecemeal approach to the development of legal protection for whistleblowers. This is why I support Amendment 58ZA, tabled by the noble Lord, Lord Wills, which calls for the protection of anyone who, in applying for a new job, is discriminated against for making protected disclosures or for blowing the whistle in a previous job. I emphasise anyone, not just workers in the NHS. The Government’s movement on this issue and their recognition of the principle is very welcome but, like the noble Lord, Lord Wills, I cannot for the life of me see why they should confine their approach to the NHS. Surely what is good for workers in the NHS must be just as good for workers in any other sector. This is an issue that many whistleblowers have said results in real hardship, as is evidenced in the Francis report. I believe that anyone who is not employed because the potential employer knows about their whistleblowing activity in a previous job should be able to remedy such discrimination in law.
I also support Amendment 59, as I believe that it will assist the Government in taking a cross-sector, strategic view of the UK whistleblowing framework. As the noble Lord has indicated, now is the time to put in place a structure that will collect and analyse not just the reforms in this Bill but recommendations from other inquiries that will impact on the whistleblowing framework, whether these come from the banking sector, the NHS, social services or the police. There is real value for employers, regulators, the Government and society as a whole in reviewing these issues on a regular basis. I hope very much that the Minister will see this amendment, which provides for a regular review of the whistleblowing framework, as a useful mechanism not just for identifying what is missing from the framework but also for helping to spread and encourage good practice among employers.
Turning finally to Amendments 59A to 59F, which give power to the Secretary of State to establish a number of national whistleblowing review officers, I agree with the noble Lord, Lord Wills, that a role such as this will help to plug the regulatory gap that exists in the whistleblowing framework. This would make it possible for such a national whistleblowing review officer role to be created, by order of the Secretary of State for Business, Innovation and Skills, in any industry, not just in the NHS, as the noble Lord, Lord Wills, said. This role complements the regulatory reporting provisions contained in the Bill that the Government intend should drive change in relation to whistleblowing across all industries. It will enable a review officer to be created in any sector or industry, whether that is financial services, the health and care sectors, or services in relation to vulnerable adults and children.
Given the very many scandals brought to light by whistleblowers in recent years—in our care homes, our schools and our local authorities—I consider that such a role could only do good in driving forward the development of good practice in whistleblowing across all sectors. What is more, a role that has the features described in this amendment will provide a quick and simple warning system for regulators and organisations where there is a failure to deal properly with a whistleblowing issue. I therefore look forward to hearing the Minister’s response on these amendments, which I am pleased to support.
Lord Phillips of Sudbury (LD)
My Lords, my name is also to this group of amendments. I thank the noble Lords, Lord Wills and Lord Low of Dalston, for making most of the points that need making, and making them forcefully.
It seems extraordinary that the Government should have introduced Amendment 58A in the wake of the 200-page report by Robert Francis QC, entitled Freedom to Speak Up and published only last month. It is bizarre that they confine the provisions in the amendment to the National Health Service, for reasons which have been touched on by the two Peers who have already spoken. The need for the protection of Amendment 58A is universal.
I should perhaps say that in my long legal career I have dealt with a number of whistleblowing cases, and was charged back in the 1980s with trying to register a charity which had as its principal purpose the support of whistleblowers. That was successful—not, I may say, without vast and prolonged effort, because at first the Charity Commission viewed the very idea as bizarre. In 1993, the charity Public Concern at Work was formed and is still operating with huge effect. All of us here tonight are grateful for the work that it has done and the information which it has provided to us under the leadership of Cathy James. Its work leads it even now—or perhaps more than ever now—to advise about 800 people a year who have personal, direct, often plangent problems in relation to their employment and their attempt to try to get those who employ them to take seriously malfeasance—sometimes corruption, sometimes wilful and terrible illegality.
Public Concern at Work is, as I said, better informed than any other agency in this country as to just what whistleblowers have to go through. Our point is that whistleblowers are not some little sideshow. If we are serious about attacking the widespread and growing corruption and criminality that, I fear, infects so much of what we value in this country, we have to support whistleblowers. Frankly, they are the only people who can uncover criminality at source, often at a time when, if it can be dealt with, doing so will save vast loss and suffering. One has to look only at the collapse of the financial markets of the world, led by the City of London in 2008, to realise just what terrible losses we have all suffered—trillions rather than billions—by reason of the fact that there were virtually no whistleblowers from within the City of London, or indeed the other financial centres, who were able to get the facts relating to what was going on in their entities to the authorities in time for them to take action.
Again, I have a certain amount of personal experience of this. One thinks, for example, of Paul Moore of HBOS. He blew the whistle, except that he blew the whistle to his own board, saying openly and clearly that the measures taken in that bank to balance risk and opportunity were unsustainable and were leading the bank, and had led the bank, into the most dangerous of situations. He not only got no succour when he took this matter up the scale in the bank but has not had a job in the City of London since then—we are talking about 2007 or 2008—despite his huge experience as a former partner at KPMG and senior financial officer at HBOS.
Baroness Neville-Rolfe
We have very good evidence from the Francis review. We do not have evidence for all other sectors and, of course, the amendment would apply to the private sector and the coverage would be very wide-ranging. Several noble Lords asked why it is a two-tier system and the noble Lord, Lord Hunt, asked why we are not doing it universally. Sir Robert’s findings were health-specific. He reported that he had seen evidence of individuals suffering serious detriment in seeking re-employment in the NHS after making a protected disclosure. That is what we are talking about. The health sector has one of the highest instances of whistleblowing reporting, perhaps for the reasons that the noble Lord, Lord Hunt, suggested, and, consequently, has the greatest potential for discrimination against whistleblowers, who therefore cannot get another job. The NHS is one of the largest employers in the world, I am glad to say, and should operate to the very highest standards of integrity in its recruitment practice.
Lord Low of Dalston
I thank the Minister for giving way. She makes the case that we have particular evidence in relation to the health service and so she wants to act on the health service. With regard to all the other sectors that we have asked the Government to take into consideration as well, would it not be better to put a system in place to stop the scandal before it happens rather than wait and close the stable door after the horse has bolted?
Baroness Neville-Rolfe
I thank the noble Lord, Lord Low, for his intervention. We have to legislate in an informed and evidence-based way. We have brought forward the provisions on the NHS and it is very good that noble Lords opposite support that at this late stage. We are not in the same situation in relation to other sectors. There are various arrangements and we are making general improvements on whistleblowing.
Small Business, Enterprise and Employment Bill
Lord Low of Dalston Excerpts(9 years, 10 months ago)
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Lord Wills (Lab)
My Lords, the amendments in this group—I shall speak to them all together—seek to improve protections for whistleblowers. Twenty years ago, the Nolan committee highlighted the importance of,
“encouraging a culture of openness”,
in organisations to tackle and prevent malpractice. Since then, successive Governments have recognised the importance of this. The previous Labour Government brought in the Public Interest Disclosure Act and this Government have said repeatedly that they want to protect and encourage whistleblowing. The Prime Minister, for example, said:
“We will always back whistleblowers when they challenge poor standards, particularly in large organisations”.—[Official Report, Commons, 26/2/14; col. 257.]
However, there are still significant gaps in the current protections for those making disclosures in the public interest. These gaps in protection not only discourage individual cases of whistleblowing and damage individual whistleblowers quite unfairly; they also inhibit the creation of an effective culture in organisations that encourages transparency.
Large organisations that serve the public in both public and private sectors are powerful institutions. They are often driven by a potent internal culture and every case of whistleblowing challenges the powerful vested interests that run such organisations. As I have said in these debates, too often after a scandal is revealed, after the abuses have been tackled and the guilty punished, and after all the fine words about whistleblowers have been spoken, it is all too easy for those dominant interests in these organisations to revert to carrying on much as they did before. The powerful never like being challenged.
Repeated failures within the NHS, for example, have highlighted not only how important whistleblowers can be in protecting the public, but how difficult they can find trying to expose incompetence and wrongdoing. These problems are not confined to the NHS. For all the police wrongdoing after the Hillsborough disaster that has now been exposed, for 20 years no one blew the whistle. No one blew the whistle on the scandal of MPs’ expenses, even though the Fees Office in the House of Commons was well aware of the scams that went on. Whistleblowers need effective protection if the public interest is to be secured and there is clearly a need to do more. I hope that the Government will take advantage of a rare legislative opportunity to plug the gaps in protection for whistleblowers, which these amendments aim to do.
I am grateful for the support that I have received from my Cross-Bench colleagues, the noble Lord, Lord Low, and the noble Earl, Lord Lytton, and my noble friends on the Labour Front Bench. I am also grateful to the Minister and her officials for sparing the time to discuss these amendments with me in advance of today’s Committee. I hope that the Government will now respond to these amendments, to which I shall speak relatively briefly.
Amendment 66 simplifies the concepts of allegation and disclosure of information, and tackles the confusion that has arisen from the Employment Appeal Tribunal decision in Cavendish v Geduld, where an artificial distinction was made between a worker making a disclosure of information, which was protected, and the making of an allegation, which is not protected. It is unfair to expect non-legally trained workers to choose the precise wording to ensure that their disclosure is one of information rather than merely an allegation. The Cavendish v Geduld decision provides a convenient way for bad employers to ignore the concerns raised by claiming that the disclosure represents an allegation, as opposed to information. Moreover, the decision undermines one of the Public Interest Disclosure Act’s key policy aims, which is that protection should be most easily obtained for disclosures to the employer.
Amendments 63 and 67 seek to tackle the continuing problems of so-called gagging clauses. Even though the current law renders gagging clauses in any agreement void, there is evidence that further clarity is required. It is difficult to know exactly how extensive this problem is because of the confidential nature of severance agreements, but the experience of Public Concern at Work, the whistleblowing charity, suggests that many still feel gagged, even though these clauses may not be applicable in law. The National Audit Office also recently looked at this issue and concluded that many individuals believed they were gagged as a result of the events leading up to the signing of the agreement, including: the culture of the workplace; the attitude towards whistleblowing; the wording of the agreement itself; and because it was often not made clear to individuals that confidentiality clauses would not prevent them making disclosures on concerns of public interest. The National Audit Office looked at 50 agreements from the public sector, 49 of which were found to include a confidentiality clause which, in the end, prevented the individual discussing the terms of the agreement. It judged that none of the agreements would have legally prevented the whistleblower raising a concern, but its report gives several examples of how individuals nevertheless felt gagged.
Amendment 64 seeks to extend the protection for whistleblowers to student healthcare professionals. Students in these professions, with the fresh insights they bring to their work, are often well placed to make disclosures in the public interest. The case for extending whistleblowing protection to them has been extensively rehearsed. I do not intend to repeat it today, as I under- stand that the Government have already made a commitment to extending these protections. However, I would be grateful if the Minister could tell the Committee what progress they are making in doing this.
Amendment 65 seeks to tackle the problem of job applicants who find themselves denied employment opportunities because they have made a disclosure in the public interest. If an individual is labelled as a whistleblower, it can be difficult for them to get work because they can find themselves, in effect, blacklisted, not through a formal, central database but informally. This is a particular problem in small industries and within small communities. Unlike in other areas of discrimination law, job applicants are not considered workers under the Public Interest Disclosure Act, which provides protection where a worker secures a position and is then victimised, forced out or dismissed if the employer becomes aware of an instance of whistleblowing in a previous job. The amendment seeks to plug the loophole, which was identified in BP plc v Elstone, where the Court of Appeal stated that this situation was created because the drafting of the Act had not considered the situation of a job applicant being victimised for raising concerns in a previous job. The amendment addresses this anomaly. It might be helpful to the Committee to remember that an employer who is unaware that an applicant blew the whistle in a previous job would not be in breach of the Public Interest Disclosure Act. This is because, to succeed, the worker would need to prove not only that they had made a protected disclosure in a previous job and the prospective employer knew this—perhaps through a reference check or because the applicant informed the prospective employer of their whistleblowing past at interview—but also that this led to the decision not to recruit them. Without this causal link being demonstrated to the Employment Appeal Tribunal, there would be no case to answer. The amendment seeks to put this beyond argument.
Amendment 62 seeks to extend protection to those victimised for being falsely accused of whistleblowing. The Public Interest Disclosure Act does not protect a worker dismissed or victimised because the employer wrongly believes that they are a whistleblower. The worker cannot, therefore, link a disclosure to the dismissal or victimisation. This is an obvious anomaly and, in addressing it, the amendment follows the precedent of the Equality Act, under which legal protection for sexual orientation can still apply, even though an employer wrongly believes that someone is homosexual or heterosexual and discriminates on that assumption. Although the Equality Act is prohibitive legislation and the Public Interest Disclosure Act is not, other changes, such as the recent ones on vicarious liability, have borrowed from discrimination law. The amendment suggests a similar approach in relation to those who are wrongly identified as whistleblowers, without suggesting that being a whistleblower should be seen as a protected characteristic.
Amendment 68 seeks to embed a code of practice into statute, so that it will be taken into account by courts and tribunals. This was a key recommendation of the whistleblowing commission, chaired by the former Appeal Court judge Sir Anthony Hooper, which did invaluable work in this area in 2013. It drafted a 15-point code of practice, which provided practical guidance to employers, workers and their representatives and sets out guidance for raising, handling, training and reviewing whistleblowing in the workplace. A statutory code of conduct would send out to all organisations, in the public and private sectors, a powerful signal about the importance that Parliament attaches to providing adequate support for whistleblowers. This should help to drive the necessary cultural change within organisations to encourage whistleblowing.
Finally, I turn to Amendments 68ZA to 68ZF, which work together to set up a new office of a whistleblowing ombudsman. I am even more grateful than I usually am to the clerks for their invaluable help in drafting these amendments. Despite their length, they are essentially probing amendments, aimed at eliciting the Government’s attitude towards setting up such a whistleblowing ombudsman or some similar organisation. Establishing this was another important suggestion made by the whistleblowing commission. Its work, and the range and scope of the amendments that I have put forward today, suggest that providing adequate protection for those making disclosures in the public interest is a continuously evolving challenge.
Establishing an ombudsman, which need not involve expensive and elaborate bureaucracy, could provide an effective way of responding to this challenge. It could receive concerns and investigate retaliation against whistleblowers. It could also offer a form of alternative dispute resolution in whistleblowing cases. This would mean that whistleblowers would not always have to wait for such rare opportunities for legislation as this Bill to receive the protections that they deserve and the public need them to receive. It may also help to avoid the delays and costs of court and tribunal cases. I do not expect the Minister to make a pledge this afternoon, but I hope that she will at least feel able to commit to exploring positively and constructively the creation of such an organisation. I beg to move.
Lord Low of Dalston (CB)
My Lords, I have my name to most of these amendments. I was not able to get my name to those starting with Amendment 68ZA, which relate to the whistleblowing ombudsman, but I support those as well.
I support everything that the noble Lord, Lord Wills, has said about this group of amendments. Amendment 62, as we have heard, aims to give extra protection to individuals who are falsely accused of blowing the whistle because the employer erroneously assumes that they were the source of the disclosure, based on a previous incident or a reputation for challenging poor behaviour or malpractice in the past. It is wrong that employers should be able to penalise people when they have simply jumped to unsubstantiated conclusions, perhaps or perhaps not based on something that happened in the past. It would be the purpose of this amendment to avoid that possibility, or at least to give those who have been damaged by employers making such unsubstantiated assumptions a remedy.
Amendments 63 and 67, as we have heard, will help to alleviate some of the misconceptions around the protection afforded to whistleblowers under Section 43J—the anti-gagging provision—which was inserted in the Employment Rights Act by the Public Interest Disclosure Act. As has been said, the legal principles on which Section 43J is based are not the problem; it is that the section could be drafted more clearly. Instead of providing an oblique defence, the new provision in the amendment would act as a shield, preventing information that may point to malpractice, wrongdoing or a health and safety risk being buried in secret settlements. Clearer wording that could be understood by an individual who is not legally trained may well break down this potential barrier for the worker and be of benefit to the employer, as their duties and obligations in this area will be rendered all the clearer.
Baroness Neville-Rolfe
My Lords, I am glad that the noble Lord intervened to register his concerns, which to some extent I share. That is why the Government have committed to reviewing the introduction of fees. We are considering the scope and timing of the review, and will bring forward our plans in due course. We need to understand what is going on here, of course, but I was trying to make a general point about trying to improve things. The provisions in the Bill are another example of our efforts to do just that—to ensure that there are fair results and that people who are given awards receive them in due time.
I turn to each of the amendments, acknowledging the spirit of them, but obviously, as is usually my wont, looking to make sure that we do not have any perverse effects. I will start with Amendment 68ZG, which is designed to include costs in the calculation of the money that is considered to be owed for the purposes of the penalty. It is worth noting that “costs” or, sometimes, “preparation time” awards—where people are not paying for attorneys—are made in only a tiny proportion of cases. Costs awards are not related to the compensation for the breach of employment rights—for example, in a case of discrimination—but to the way in which one of the parties has behaved during the tribunal process. A good example would be the deliberate, repeated late disclosure of documents. Indeed, last year only 242 costs orders were made to claimants—in the context of more than 42,000 claims. The Government do not believe that adding costs to the calculation will add a significant additional incentive to pay. But I am sympathetic to the noble Lord’s intention and will consider further whether we need to make a change ahead of Report.
Turning to Amendment 68ZH, we are clear that a penalty regime must incentivise prompt payment in full and not inadvertently reduce the likelihood of individuals gaining their full award. Allowing the penalty to be used to offset the award, as proposed in the amendment, would not, we fear, incentivise prompt payment of the award in full, which is our objective. The point of the penalty is to act as a deterrent and a sanction for non-payment. Conflating money owed to the claimant with a civil penalty would cause confusion and might raise questions about which liability had been met when money was paid. We believe it would be better to keep the civil penalty separate from the money owed to the individual. The clause already encourages an employer to make full and prompt payment to avoid a penalty altogether. As I have explained, the only way in which an employer can avoid a penalty is to pay up in full once they receive a warning notice. This seems to be the most effective approach.
Amendment 68ZJ seeks to introduce a naming scheme. As the noble Lord will be aware, there is already a scheme for the national minimum wage. We are considering naming as part of the Government’s overall approach to increasing the full and prompt payment of tribunal awards. We need to carefully consider the options to ensure that we find the most effective response. I would be happy to update noble Lords on our thinking ahead of Report.
Turning to Amendments 68ZK to 68ZM, I reassure the noble Lord that unpaid awards are already recoverable through the county court, or the sheriff court in Scotland, as they are treated as judgment debts. There is also a fast-track scheme in England and Wales where a court enforcement officer can pursue the money on the claimant’s behalf. Furthermore, interest accrues on those unpaid tribunal awards at 8% per annum. So there is an incentive to pay promptly and in full.
Finally, in response to Amendment 68ZMA, I hope I can provide further reassurance. As I have outlined, there are already a range of mechanisms by which an individual is able to enforce their tribunal award. In addition, under Clause 145, a government-appointed agent will impose penalties for non-payment. The penalty scheme we are introducing through this clause offers an alternative, cost-free way to ensure that the claimant gets the money they are owed. Therefore, the Government do not consider that there is a need to set up a further mechanism at this stage, but we shall continue to monitor the situation following implementation of the new penalty provision.
I hope that my explanations, including about our wider plans, have provided reassurance to the noble Lord and that he will be content to withdraw the amendment.
Lord Low of Dalston
Before the noble Lord, Lord Young, replies, I wonder if I might be permitted to say a word or two about Amendment 62ZMA. I am afraid I was not quick enough on the draw before the Minister rose to reply. I thought that more noble Lords would intervene on some of the earlier amendments so I missed my cue.
Since I am speaking slightly out of turn, I will not make all the points that I might have made in support of the amendment. I am very grateful to have heard what the Minister had to say but there is a considerable amount of concern about the effectiveness of regimes for enforcing the payment of awards. A number of suggestions have been made for addressing this problem. I wonder if the Minister might be prepared to meet me before Report to talk through some of the options and to see if we cannot slightly firm up the provisions that are already there and find a formula or mechanism which might be slightly more likely to deliver results than what is in place at the moment and, indeed, what is proposed by the Minister.
Queen’s Speech
Lord Low of Dalston Excerpts(10 years, 5 months ago)
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Lord Low of Dalston (CB)
My Lords, it will be immediately evident to your Lordships that I am not the noble Earl, Lord Sandwich. I am grateful to the noble Earl and the Whips’ Office for accommodating my need to be elsewhere when I would have come up for my original turn on the speakers list.
I am pleased to follow so many powerful speeches urging a stand against barbarism in other parts of the world, and that I am able for once to make a speech that welcomes the course of government policy and action. Two months ago, on 10 April, the International Development Select Committee published its 11th report on disability and development. For too long disability has been overlooked in the UK’s and other countries’ international aid and humanitarian efforts, so I very much welcome the report. Its recommendations are comprehensive and far-reaching and I very much hope that the Government will respond positively to them. This is an opportunity for the UK Government once again to show leadership in the field of international development by supporting people who are frequently the most deprived and marginalised.
I have been heartened to see the lead being given by the Parliamentary Under-Secretary of State for International Development, Lynne Featherstone, to ensure that disabled people are included in all development programmes being led and funded by DfID. Her announcements on funding the construction of accessible schools only and on taking the lead on addressing the need for more data on disability globally are a most welcome start.
As your Lordships will know, we are at a crucial moment for development as Governments debate a post-2015 development framework to replace the current millennium development goals. I very much welcome the ways in which the Prime Minister and the Secretary of State for International Development are continuing to champion the call for a transformative shift in post-2015 development whereby no one is left behind by insisting that targets are considered achieved only if they are met for all relevant income and social groups. The prioritisation of disabled people in development programmes is crucial to ending poverty. As the Select Committee says, development goals will remain out of reach unless we urgently step up our work on disability.
I believe that it is essential for the UK as a world leader in development to lead by example in inclusive development, responding positively to the Select Committee’s recommendations and making immediate plans to implement more ambitious disability inclusion. I encourage the Government to continue advocating for this transformative shift as discussions on post-2015 development continue in the UN Open Working Group on Sustainable Development and at the General Assembly in September.
With the general election on the horizon, I agree with the committee that DfID should move quickly to put in place a cross-cutting disability strategy to ensure that the increased focus on inclusion is embedded for the long term, even as key individuals move on. The strategy should be developed in consultation with disabled people and their representative organisations in lower-income and middle-income countries, and should embrace the principles and commitments contained in the UN Convention on the Rights of Persons with Disabilities. The strategy should be published with clear objectives and timescales, supported by a larger team of specialists and by strong reporting processes at DfID. We have seen clearly with DfID’s important focus on women and girls that a sustained strategic focus by the UK on the most marginalised can have a transformative impact and influence other donors and developing-country Governments.
The Select Committee has recommended that a larger team be put in place with a director-level sponsor, a wider network to champion disability in country offices, basic training for all DfID staff and strong reporting processes to ensure accountability and that the commitment can be sustained even as Governments change and key individuals move on.
As the report recommends, DfID should choose one or two substantial sectors and a small number of countries to focus on initially. Given my work as president of the International Council for Education of People with Visual Impairment and my role as vice-chair of the All-Party Parliamentary Group on Global Education for All—and I declare an interest in that regard—your Lordships will not be surprised to hear me say that I urge DfID to prioritise education, given how fundamental education is to poverty reduction and given the leadership position that the UK already has on aid to education. However, this needs to be set out within a long-term timetable, showing how DfID will expand from this focused approach to more sectors and countries in due course to achieve progressively the full inclusion of disabled people in all UK aid programmes.
The report notes that education for disabled children is a complex area and that one size does not necessarily fit all. It recommends that forthcoming guidance on inclusive education should take a nuanced approach. I support this, but also urge the department and Ministers not to let complexity or imperfect data stand in the way of urgently needed action. Great progress can be made for disabled people, even as evidence and approaches are being refined. I therefore urge the Government to accept the International Development Select Committee’s recommendation that DfID should not let imperfect data stand in the way and should set challenging milestones for implementing large-scale programmes and reporting results disaggregated by disability in annual reviews, project completion reviews and logframes.
In conclusion, I congratulate the Government on the progress that they have made so far to include disabled people within their programmes. I now call on them to take the report of the International Development Select Committee seriously and announce a plan for a disability strategy and a larger team to make provision for inclusive development a reality.
Budget Statement
Lord Low of Dalston Excerpts(10 years, 8 months ago)
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Lord Low of Dalston (CB)
My Lords, the Budget seems to have played pretty well on the day. However, if I was the Chancellor I might be a bit worried by that as it is part of the lore of politics that what goes down well in the spring frequently bombs by July. In the case of this Budget, the shine has begun to come off already. Indeed, in the area where the Budget was probably at its strongest—pensions and savings—fears have been expressed about the potential impact of people drawing down from their pension pots prematurely and the threat to providers of annuities, such as insurance companies. Be that as it may, the Chancellor’s far-reaching reforms in this area are to be welcomed, even though they will principally benefit the better off.
I note that the IFS has expressed concern about the risk that permanent tax concessions, such as the increase in the personal allowance, which are funded only by temporary tax increases and unspecified cuts in public expenditure—as the noble Lord, Lord Hollick, pointed out—will weaken the long-term outlook. Moreover, bringing forward revenue that the Treasury would have expected to receive anyway, as with national insurance changes, may be a cost to the Treasury later on.
This was indeed a Budget for pulling rabbits out of hats. As other noble Lords have said, it was full of conjuring tricks and sleights of hand. Take the announcement that the number of £1 million Premium Bond prizes is to be doubled. That sounds impressive until you learn that it is to be doubled from one to two. Much of the rest of the Budget displays a similar level of disingenuousness.
Reducing the deficit by a third is presented as good progress, but it was originally supposed to be eliminated altogether by the end of this Parliament and had already been reduced by a third last year. This is no better than Gordon Brown’s serial announcements of the same new money.
The Budget contains a fundamental misrepresentation of the Chancellor’s fiscal stance and its effectiveness. However, before I come to that, I want to say a word about the Government’s characterisation of the situation we face and the problem with which they are trying to deal. The policy of the Government over the past three years has largely focused on public debt; it has not talked much about private debt. The Minister reflected this emphasis in his introduction today. But let us be clear: private debt got us into this mess. Before 2008 our public finances were in reasonable order. You can argue that there was some letting go of the controls of public expenditure in the last few years but on the whole that was not the case. We had a low level of debt and did not have high levels of deficit. We had a very rapid expansion of private debt and that produced a bubble and a crash, which then produced a recession and public debt went up as a result.
We do not have a high level of public debt because of profligate Governments; we have high levels of public debt because we had a financial system which was out of control, creating too much private debt. It is important that we understand this sequence of events. That is not me talking: it is the noble Lord, Lord Turner, on the “World at One” on 30 December last year. I am sorry if it appears to labour the point but I do so only because it is so often misrepresented.
When I hear noble Lords to my left—I mean spatially, not ideologically, you understand—engaging in the same kind of misrepresentation, I often wonder whether they really believe it or whether they are indulging in political knockabout. They are not stupid, so I have to conclude that it is the latter, but I would hope that we can avoid such disreputable distortions of analysis in this House. At all events, amid all the focus on bringing down public debt and government debt, we have yet to come up with a solution to the problem of running a reasonably growing economy without returning to the increases in private debt which got us into so much trouble in the first place. That is the problem confronting the Chancellor, as he congratulates himself on a recovery based on a housing bubble and rising consumer spending, which this Budget does nothing to tackle.
I turn now to the central misrepresentation of the Budget; namely, that the Government’s strategy of cutting the deficit is working, reiterated as the central plank of the Minister’s introduction to the debate. On the face of it, this would seem to be self-evidently the case. The economy is recovering—is it not?—and recovering faster than anywhere else. But there are several things wrong with that. Is it because of or in spite of the Government’s policies? This recovery has been likened to a man who has been hitting himself over the head with a baseball bat saying that he feels better when he stops and attributing his improvement to the fact that he had been hitting himself over the head with a baseball bat. Then again, as I have said, according to the Government’s strategy on taking office, the deficit was supposed to be eliminated by next year, not four years later in 2018-19 as is now being forecast. The economy is forecast to recover to pre-crisis levels, but only this year, after six years, and 14% smaller than it would have been had the recession not struck. Moreover, what has gone has gone for good. The damage is irreparable.
As the economist Simon Wren-Lewis has conclusively demonstrated, the economy started growing once the Government abandoned their strategy of fiscal contraction, not in response to the strategy of fiscal contraction. From a peak deficit in 2009-10 there was substantial fiscal tightening until 2012-13. This essentially stopped in 2012-13 and 2013-14, whereas the original plan was for fiscal contraction to continue in 2012-13 and 2013-14. The figures show clearly how the strategy was abandoned as the recovery failed to materialise. I am not complaining about that, of course; rather, I am just pointing out that you cannot abandon a strategy and carry on pretending that it is still working. I was disappointed to hear the noble Lord, Lord Desai, say that this is the only Chancellor to have adopted this strategy and stuck to it because, as Simon Wren-Lewis has shown, it is just not true.
The final thing the Chancellor shamelessly glosses over is the full extent of planned austerity despite the economic recovery. He said:
“While the underlying structural deficit falls, it falls no faster than was previously forecast, despite higher growth”.
This goes to the heart of the Government’s argument: faster growth alone will not balance the books. Securing Britain’s economic future means that there will have to be more hard decisions and more cuts but, apart from talking about the welfare cap, the Chancellor has been completely unspecific about what these cuts might be. Presumably this is deliberate until after the next election for, if he were to come clean about just what he has in store for us, the public’s verdict on the Budget might be very much less favourable than it appears to have been to date.
Welfare Benefits Up-rating Bill
Lord Low of Dalston Excerpts(11 years, 8 months ago)
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Lord Low of Dalston
My Lords, I have put my name to this amendment and will briefly signify my support. There is not a lot that I can add to the comprehensive account given by the noble Lord, Lord McKenzie. The only point I would stress was made by somebody on television last night—that we now live in an environment where inflation is considerably higher than we were used to in the first decade of this century. We understand that the new Governor of the Bank of England advocates that the inflation target should be allowed to float free. We are in an environment where inflation is set to hover around 3.5% or higher with no prospect of it reducing. In these circumstances, to cap the increase in benefits at 1% is simply unjustifiable. I support the amendment moved so comprehensively by the noble Lord.
Lord Forsyth of Drumlean
My Lords, there is no one in this Chamber who would not like to see support for those on low incomes and families to be increased. What was striking when the noble Lord proposed this amendment was that, apart from a vague suggestion that it might be possible to find the money by pursuing tax evaders, there was no indication of where the £3 billion needed to provide uprating in line with inflation—assuming the Government’s forecasts are correct—could be found. That is deeply irresponsible and it is particularly irresponsible of an Opposition who will not say what they would do in government. In other words, while it is not their responsibility, their line is “You should spend the money”, but when it might be their responsibility, they are not prepared to say what they would do. That is completely dishonest politics.
We have a dangerous position in our country, partly caused by the present Government constantly harping on about how they have reduced the deficit by a quarter. According to a poll carried out by ITN and a separate poll by the Centre for Policy Studies, which may not be quite so objective, when asked the question, “Do you think by the end of this Parliament the national debt will have gone up by £600 billion, be just the same, or will have gone down by £600 billion?” only 6% got the answer correct: that it will have gone up by £600 billion. So here we are, living in a country where we have to make difficult decisions—this Bill is an example of having to make difficult decisions—and where the vast majority of people believe that the Government are cutting debt, when in fact all the Government are doing is reducing the amount by which the debt is increasing. I will wager that when we have a debate at the end of this Parliament and come the next election, the Opposition will pursue the same kind of irresponsible tactics which we see in this amendment. They will say, “The Government were elected to reduce the debt, but the debt has gone up by 50%. If we had been in government, it would have been different”. That is the politics of it.
Let us look at it from the point of view of people on low incomes—working or non-working—faced with inflation. If we follow the prescriptions contained in this amendment, the consequence will be that the pound will sink still further. The consequence of the pound sinking still further is that the energy and fuel costs that the noble Lord, Lord McKenzie, spoke of will go up. So how does it help people who are struggling to say “Your benefits will go up by inflation” if at the same time you pursue policies which will result in higher inflation and higher debt and leave an even bigger problem to solve at the end of the day, which will be solved on the backs of the poor?
The noble Lord said that the Government are handing out a tax-free benefit to the very rich. I remind him that when his party were in government, people on very high incomes were paying less in marginal rates of tax than they are now. I also remind him that the effect of cutting the top rate of tax from 50% to 45% will be, as has been proved over and over again in countries around the globe, that the revenue to the Treasury will go up. Although the noble Lord and his party quite rightly point to the excesses in the City arising from bonuses, and so on, they seem to forget that 52% of those obscene bonuses come back in tax and national insurance. Actually, it is more, because there is an employers’ contribution of 12%, so 64% of those bonuses come back to the Treasury in revenues.
The name of the game here is to increase revenues to the Treasury. Then we will be in a position to do something about welfare. We are now in this difficult position and my noble friend is having to take this painful legislation through the House. The Opposition should recognise that that is a consequence of their period in government. The noble Baroness shakes her head. While they were in government, welfare benefits went up by 60% in real terms.
Lord Low of Dalston
“(1A) Any mandatory 1% up-rating stipulated in subsection (1) shall not apply—
(a) to any components of the employment and support allowance (including personal allowances);(b) to sums specified in regulations under section 10(3) of the Welfare Reform Act 2012 in respect of an amount to be included under section 10(2) of that Act.”
Lord Low of Dalston
My Lords, Amendment 3 would remove from the 1% uprating cap all aspects of the employment and support allowance, including the personal allowance component, the support group component for those in the support group and the work-related activity group component for those placed in the work-related activity group, which I may shorten to the WRAG as “the work-related activity group” is a bit of a mouthful and I do not wish to take up too much of your Lordships’ time—no more time, at any rate, than I need to. Paragraph (b) of the amendment would also remove the child disability addition under universal credit from the cap.
The Government have given the impression that disabled people are protected from the restriction of benefit increases to 1%, but this is not the case. Some disability benefits are protected—notably disability living allowance—but that does not mean that disabled people are protected from the restrictions introduced by the Bill as a whole. The only disabled people who are protected are those who receive no benefits other than the disability living allowance. The impact assessment makes clear that households where someone describes themselves as disabled are more likely to be affected than those where there is not a person who describes themselves as disabled: 34% of households as against 27%.
Even some benefits specifically targeted at disabled people are not protected. This applies particularly to employment and support allowance. ESA is paid at two different levels according to whether claimants are placed in the support group, meaning that their impairment or condition is such that they are not expected to look for work, or the WRAG. Both groups receive a personal allowance of £71 a week but those in the support group receive a support group component which is paid at a higher rate than the comparable component paid to those in the WRAG.
The Government have given the impression that those in the support group are protected from the 1% uprating cap but, in truth, only their support group component of £34 a week is protected: rather less than one-third of their benefit. This means overall that disabled people in the support group will see their ESA payments rise by only 1.4% rather than by inflation, not a lot better than if increases in the whole of their benefit were capped at 1%. As a result, a disabled person in the support group will be £62.76 a year worse off. Capping increases in their benefit at 1% will mean that households receiving ESA in the work-related activity group will be £87.65 a year worse off.
However, it is worse than this. Although some disability benefits and some disability elements and components may be protected, disabled people may lose out overall because of the complex interaction of different benefits and components. Disabled people do not only receive disability benefits; they have children and rent houses, and so they are not immune from restrictions in the uprating of children’s benefits, housing benefit and so on.
If a claimant in the support group does not have any other income, they are also likely to be entitled to housing benefit and council tax benefit. If they have children, they will also be entitled to child benefit and child tax credit. It can be seen that protecting the support group component protects only a small proportion of their overall benefit. For example, a lone parent who is in the support group and has two children will have lost £18 a week or almost £1,000 per year by 2015 compared with their position in 2011, simply due to uprating changes.
The amendment is essential if the Government are to fulfil their pledge to protect disabled people from the 1% uprating cap. A third of disabled people in the UK were found to be living in poverty before the global economic crisis. Disabled people routinely experience higher living costs associated with their disability, on things such as equipment, personal assistance and special diets, for example. In Committee, the Minister said that ESA for those in the WRAG group is intended to be a short-term benefit:
“Those who are placed in the work-related activity group are there because they have been found able to prepare for work”.—[Official Report, 25/2/13; col. 881.]
However, that does not make sense in terms of work incentives. People’s impairments often make it very difficult for them to work. Where this is not the case or the difficulties can be overcome, discriminatory attitudes in the workplace can present insurmountable barriers. In the current state of the economy, there just are not the jobs.
Finally, as we know, the work programme, by which the Government set such store, is just not working. In Committee, the Minister questioned the rationale for including the personal allowance in the amendment and for not subjecting it to the 1% cap. She said that treating the personal allowance differently from that in other parts of the benefit system would add an element of complexity and undermine the coherence of the system as a whole. That strikes me as a comparatively technical objection. If that is her principal concern, I ask her to look at the position again with me before Third Reading to see if we cannot find a way of achieving the purpose of the amendment without giving rise to the technical difficulties to which the Minister pointed.
The second limb of the amendment would remove the 1% uprating cap from the lower child disability addition under universal credit. The right reverend Prelate also spoke about that. This part of the amendment is particularly necessary given that rates of support for children in this group are already intended to be halved under universal credit. At present, families with a disabled child for whom they are in receipt of some level of disability living allowance may be entitled to receive support through the disability element of child tax credit, currently worth £57 a week. Under universal credit, that support is to be provided through disability additions within household benefit entitlements. But it is proposed to cut this support in half to just £28 a week. This change will affect all families with a disabled child unless the child is receiving the high-rate care component of the DLA or is registered blind.
In Committee, I spoke about the evidence in the Holes in the Safety Net review from the noble Baroness, Lady Grey-Thompson, of the impact of universal credit on disabled people and their families. I will not repeat the detail now but, in a word, it was that the effects would be disastrous. The Institute for Fiscal Studies estimates a growth in the number of children living in poverty of 400,000 between 2011 and 2015 and 800,000 by 2020. The Minister said in Committee that we cannot set too much store by such predictions because we do not know what direction government policy will take. But government policy seems to follow only a one-way direction of travel in this regard. We do know that the Government intend to take a further £10 billion out of welfare. The upshot of that can be only one thing: more child poverty. This measure can only serve to increase that; indeed, the Government have acknowledged that it will add 200,000 to the numbers of children in poverty—100,000 of them in working households.
The Children’s Society estimates that the cost of removing child disability addition from the cap would be just £2.4 million in 2014-15 and £4.2 million in 2015-16. In the scale of public expenditure, that is a trifling sum and I really hope that the Government see their way to thinking again on this aspect of my amendment at least.
The case for the amendment is compelling. It seeks to do no more than the Government already claim to have done by exempting from the cap a particularly vulnerable group among those who receive benefits—disabled people—and I hope that the House will support it. I beg to move.
Lord Low of Dalston
I am grateful to all those who have spoken and to the Minister for her full reply. A fair amount of the discussion has been taken up with where we are going to get the money. It is certainly not my job to answer for the Opposition as to where they would get the money from, but I would say here that without wanting to open up a general discussion again on the management of the economy, especially at this stage of the debate, I do take the view that you can borrow your way out of a recession. This is a paradox, of course, and it is not clear how it is the case at first blush. However, running a national economy, where one person’s expenditure cut is a cut in someone else’s income, is different from running a domestic economy.
There is a clear difference of view here with those on the Benches to my left. I am not an economist but I would ask people to accept that there is a very respectable and quite populous strand of opinion that supports the proposition that I have just enunciated. It is not so self-evidently barmy, as was suggested earlier in the debate, to say that the Government would be able to meet the cost of these amendments by borrowing more. There is respectable opinion to support that. To those who say that the Government are already more in debt and borrowing more than they would like to be, I simply say that there is no reason why they should not borrow a bit more. If the amount of extra borrowing that they are engaging in is still not achieving lift-off for the economy, they just have to borrow a bit more until they do. I know that that will not commend itself to this side of the House, but it is a respectable point of view and it is the position that I take.
We have been asked about the cost of the amendment. As the noble Lord, Lord McKenzie, has said quite clearly, that obviously depends on a range of factors. One of those factors is certainly the rate of inflation. Therefore, it cannot be precisely quantified. In any case, the question about what we would do to get the extra money is answered by what I have already said in response to the Minister. A more pertinent question than how one would find the money is when one would find the money. The answer of the noble Lord, Lord McKenzie—a year at a time—is perfectly reasonable. Labour is prepared to say that it would uprate at the rate of inflation in the first year that we are talking about.
The only other thing I want to say in response to the Minister is that the Government have essentially been peddling a myth when they say that they are protecting disabled people in this Welfare Benefits Up-rating Bill. They are only partially doing so. The Government ought to be straight with the British people. I repeat: they are only partially protecting disabled people. It is because I believe that the Government should deliver on their pledge to fully protect disabled people with this benefits uprating measure that I have brought this amendment to the House. It is also why I ask the House to support it, and why I would like to test the opinion of the House.
Welfare Benefits Up-rating Bill
Lord Low of Dalston Excerpts(11 years, 9 months ago)
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Lord Low of Dalston
My Lords, somewhat to my surprise, I find my name on this amendment, so perhaps I should say a few words. I do not want to repeat all the arguments that were advanced at Second Reading and I do not have a lot to add to the very eloquent speech that we have just heard from the noble Baroness, Lady Meacher, but there are a couple of points I would like to make.
The first is the economic argument. I said at Second Reading that it did not really make any sense, at a time when the economy was flat-lining, to withdraw additional purchasing power from a section of the community that was most likely to spend it: those on welfare benefits. With every day that goes by and the economic news piles up about the dire condition of the British economy, the stronger this argument gets. The Minister did not respond adequately to that argument at Second Reading. I would be grateful if the Government gave further serious consideration to the force of that argument, which is genuine and considerable.
The Bill will cause real hardship for disabled people, carers and children. Disabled people are said to be protected but, as we showed at Second Reading, the protection accorded disabled people is partial. There is some protection for those in the support group receiving employment and support allowance, and disability living allowance is exempted from the 1% cap, but those receiving employment and support allowance in the work-related activity group and other disabled people receiving other benefits do not receive protection from the 1% cap. It cannot therefore be said that disabled people are fully protected, nor are carers.
Above all, children are not protected. Disabled children in this country are already disproportionately likely to live in poverty. Approximately 40% of all disabled children—about 320,000—live in poverty, compared with a poverty rate of 30% across all children. Nearly a third live in severe poverty—where a family’s income is less than 40% of the national average. Under universal credit, which will begin to come into effect later this year, parents of disabled children can receive a benefit called the disabled child addition. This will replace the current disabled child tax credit, but, under universal credit, the support available for disabled children who do not receive the high rate of DLA care component will be cut by half, from £57 a week under the disabled child tax credit to £28.52. The Bill will mean that the value of this benefit will increase at a significantly slower rate, by just 1% as opposed to in line with the CPI, which is currently running at 2.7%. As a result of the Bill, parents of disabled children receiving the lower disabled child addition of universal credit will lose £25.21 a year, or £75.63 over the three years during which the 1% cap is intended to operate. I would be grateful if the Minister could reflect further on the hardship that will be caused to all these groups and have second thoughts about the universal application of the 1% cap.
Lord McKenzie of Luton
My Lords, I shall speak to Amendment 1 in this group and to the other amendments that we have in it: Amendments 6A, 9 and 10A. I am grateful to my noble friend Lady Hayter for moving the amendment in my absence and apologise to the noble Baroness, Lady Meacher, for missing the very start of what was a powerful presentation.
Amendments 1 and 9 would remove the reference to 1% in Clauses 1 and 2 and hence remove the 1% cap on the uprating of relevant sums and amounts. Amendments 6A and 10A would delete the prohibition on uprating such sums and amounts under the annual uprating of benefits and tax credits. We fully intend these amendments to undermine and negate the purpose of the Bill, which we consider to be unnecessary, misdirected and contributing to the continuing economic failure of this Government, a failure all too evident from last week’s downgrading of our AAA credit rating by Moody’s.
Let me be clear from the outset on Labour’s position: we will make no commitment now on spending or tax for the next Parliament and will set out our spending plans at the time of the next election. However, right now we would uprate in line with inflation—I shall come on in a moment to how the Government can plug the hole in their increasingly fragile finances.
This Bill is unnecessary because if this Government misguidedly wish to plough on with this capping on uprating, they could simply use the annual uprating process. The Bill provides no certainty for taxpayers because there is no certainty on claimant numbers, except perhaps the prospect of them increasing, given the Government’s economic failure. As for the markets, it is frankly untenable to suggest that by locking those amounts, which account for less than 0.1% of government spending, into legislation they will be assured and comforted. It does not seem to have cut any ice with the rating agencies. The certainty of a real terms cut in support cannot be welcomed by claimants, especially when they have no certainty about the level of the real cut.
We all know why the Bill was brought forward. We made our position clear at Second Reading and I do not propose to revisit the issue in Committee. The Bill is misdirected on several counts. It does nothing for jobs. Indeed, by withdrawing real resources from low-income families, which of necessity have the highest marginal consumption rates, it is damaging demand. It ignores the IMF warning that the fiscal stabilisers should be allowed to operate. Its justification is supposed to be that there needs to be some correction for the fact that benefits have been uprated at a faster rate than earnings over the past five years—essentially, that those out of work have done better than those in work. It is perverse, therefore, that two-thirds of those hurt by the Bill are in work, taxing the very strivers whom the Government claim to be supporting. Indeed, specifically included in the cuts is in-work support, such as working tax credit, SSP, SMP and paternity pay, as well as in and out of work benefits such as housing benefit, the very support that enables individuals to sustain employment and manage work and family responsibilities.
It is not only those in work who are having their living standards cut. The Government are failing to honour their pledge to protect the most severely disabled. If they still hold to their obligations under the Child Poverty Act, they are drifting further away by pushing a further 200,000 children into poverty. Worst of all, at a time when the Bill will reduce the living standards of the very poorest, they are rewarding those with the highest incomes, including 8,000 millionaires, with a generous tax cut. The contrast could not be greater: a £2,000 a week tax cut for some, 71p a week if you claim JSA.
By leaving the inflation risk with claimants, the Bill creates greater risk for the poor and uncertainty about their real incomes. The 2012 Autumn Statement cites energy and fuel prices as remaining a potential source of risk over the coming years. It estimates that inflation will be higher in 2013 and 2014 than originally announced due to rises in domestic energy prices and food commodity prices—the very costs that hit the poorest hardest. We see today the reaction of the currency markets to our credit rating downgrade: a weakened sterling, which will put further pressure on prices.
Uncertainty is compounded by there still being no cumulative impact assessment for the raft of benefit and tax credit changes that have been introduced so far by the Government. The IFS, in its 2013 green budget, analysed the effect of the 2013-14 tax and benefit changes. It concludes:
“This broad pattern of tax giveaways and welfare takeaways”—
its own terminology—
“means that the changes, on average, reduce net incomes towards the bottom of the income distribution and increase net incomes in the middle and upper parts of the distribution”.
It states that the below-inflation uprating is the predominant cause of losses in the bottom half of the income distribution and that the reduction of the top rate of tax from 50% to 45% produces the gain for the richest.
That juxtaposition speaks volumes about the priorities of this Government: the rich need more to motivate them; the poor need to feel the lash of cuts to inspire them. This pattern is not new. Looking at the overall position since 2010, apart from the richest decile it is a fact that the poorest have lost the greatest percentage share of their income in the cause of fiscal consolidation. This analysis is consistent with the detailed briefings that we have all received from a range of authoritative sources. They tell us that 68% of those affected by the Bill are actually in work, 30% of all households that will be hit will lose on average £156 a year, two-thirds of those households are families with children, 71% of households affected are at or below average income, and two-thirds of those affected are women.
Lord Newby
My Lords, I have read The Spirit Level as well, but one of the best ways of dealing with inequality in society is to increase the proportion of people in work and to increase opportunities for people to get into work. I will come on to that later.
The noble Lord, Lord Forsyth, in a way answered the point of the noble Lord, Lord Low, about spending more money now. That is the argument. We get back to a macroeconomic point that if one spends a lot of borrowed money now, it will generate the kind of growth that will get us out of our difficulties. The Government reject the argument that we are in a position where we can spend our way out of recession, and it is as simple as that.
Lord Low of Dalston
My Lords, I just want to clarify that I am not arguing for a splurge in spending. I am not advocating that the Government should spend more. My point is rather that the Government—I am sure that the noble Lord, Lord Forsyth, for whom I also have great respect, would not agree with me—should not pursue an economically counterproductive policy of withdrawing purchasing power from the economy.
Lord Newby
My Lords, we and the noble Lord will simply have to agree to differ on that. The noble Lord, Lord McKenzie, repeated some of the arguments made about millionaires and the huge tax boost that they allegedly got. He did not mention that the Budget changes announced last year affecting millionaires and those on very substantial means would generate five times as much income as the 45p tax rate. It is simply untrue to claim that the Budget measures last year mean that millionaires as a group are paying, and will be paying, less tax this year and next than they have in the past. Equally, it is simplistic and false to argue that there is a sort of mechanical problem with HMRC, or an inability of HMRC to collect money from millionaires. Millionaires are extremely clever at avoiding tax. All the evidence from the Office for Budget Responsibility and the work that it did demonstrates why the 50p tax rate simply would not generate anything like the amount of money that was originally envisaged. Indeed, it said that it was quite possible that the 50p tax rate would mean less money being collected than would otherwise be the case.
Economy: Quantitative Easing
Lord Low of Dalston Excerpts(12 years ago)
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Lord Sassoon
My Lords, first, since the noble Lord talks about the state of the economy, we should recognise that employment is at a record high; inflation, for which the MPC has responsibility, has come down very significantly; the trade deficit is down; and the economy is growing again. We really do not need too much unreasonable doom and gloom. I could cite many other recent quotes from the Bank of England, which has made its position completely clear. In October 2012, the governor said that the MPC stands,
“ready to inject more money into the economy”.
As, when and if it thinks the assessment is right, it is free and able to do it.
Lord Low of Dalston
My Lords, what is the Government’s latest estimate of the reduction they have achieved in the deficit since taking office? Is it still a quarter? Will the noble Lord assure the House that that is more than would have been achieved at this point by the previous Government’s deficit reduction strategy, as evidenced by the Office for Budget Responsibility’s pre-Budget forecast in June 2010?
Lord Sassoon
My Lords, we are straying a bit from the effect of quantitative easing and on to the Government’s fiscal policy, for which the Bank of England is not responsible. However, the fiscal deficit that we inherited has been cut by over a quarter. We are on track. As to what would have happened under a Labour Government at this point, the independent research shows that the country would have been left with an additional £200 billion of debt on top of the present Government’s plans.
Economic Policies
Lord Low of Dalston Excerpts(12 years, 4 months ago)
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Lord Low of Dalston
To ask Her Majesty’s Government what is their latest assessment of the success of their economic policies.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, returning the UK to sustainable, balanced economic growth is the Government’s overriding priority. Although considerable external risks remain, the Government’s actions to reduce the deficit and rebuild the economy have secured stability and positioned the UK as a relatively safe haven, with interest rates near record lows benefiting families, businesses and the taxpayer.
Lord Low of Dalston
I am glad that we are no longer expected to thank Ministers for their replies. I am becoming increasingly concerned about the gap between what Ministers say about the economy and what is actually the case. In the debate on the Queen’s Speech, the Minister told the noble Lord, Lord Skidelsky, that sustainable recovery was underway. When I asked him on 29 May how he squared that with the fact that we were in double-dip recession, he palmed me off with references to the success of the private sector in generating jobs and exports. No sooner were the words out of his mouth than manufacturing output plummeted. It is up a bit in June, but yesterday we learnt that activity in the construction sector had fallen at the fastest rate for two and a half years. We are probably heading towards a third-quarter recession.
Lord Low of Dalston
What has the Minister to say about all of that; and can we believe a word of what he says when he has said it?
Lord Sassoon
My Lords, I will try to make the answer shorter than the question.