Medical Innovation Bill [HL]
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Lord Newby (LD)
My Lords, I remind noble Lords that this is Report and that, under the rules of the House, noble Lords are normally supposed to speak only once.
Lord Brown of Eaton-under-Heywood (CB)
My Lords, as I am speaking just the once, perhaps I may draw attention to Clause 2(2)(b), which contemplates innovation in the sense of,
“a departure from the existing range of accepted medical treatments for a condition”,
not—I repeat, not—within the scope of the Bill. Surely that innovation, too, should be included within the register, because it is important that its effects should be recorded. It should not be confined only to those who seek to invoke the provisions of this Bill.
Lord Newby
My Lords, I also remind noble Lords that, under the rules of the House, it is not permitted for noble Lords to speak after the Minister.
Baroness Butler-Sloss (CB)
But it is permitted for noble Lords to ask the Minister a question before she technically sits down. I should just like to reiterate what has already been said: it seems to me that making the register compulsory ought to be on the face of the Bill.
Childcare Payments Bill
Lord Newby Excerpts(9 years, 5 months ago)
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Lord Newby (LD)
My Lords, it is a great pleasure, even at this time of night, to introduce the Childcare Payments Bill, which introduces a new tax-free childcare scheme. The new scheme was announced by the Chancellor of the Exchequer at the 2013 Budget. Once it is in place, the Government will meet 20% of eligible working families’ childcare costs up to an annual maximum of £2,000 for each child. That is the equivalent of basic rate tax relief on childcare costs up to £10,000.
I am sure noble Lords will need no persuading that there is a compelling argument for the Government to support working parents with their childcare costs. Survey data from the Department for Education suggest that more than half of mothers currently not in paid work would prefer to be in paid employment if they could arrange reliable, convenient, affordable and good quality childcare. Likewise, around one-quarter of employed mothers say that they would increase their working hours if they could arrange appropriate childcare.
Sadly, it is the case that many parents find themselves in the difficult position of having to make a stark choice between work and family—between, on the one hand, staying at home to care for their children and, on the other, paying for the childcare to allow them to go to work. It is clear that many more parents than are currently able would like to work, provided they can find a successful way to combine work and family life. These are precisely the families that this Bill is designed to help.
To qualify for government support, a parent will simply need to register with HMRC to open an online childcare account. When they pay money into it, the Government will add a further top-up payment. So for every payment of £8 made by a parent, they will receive £2 from the Government, up to a maximum of £500 every quarter. The scheme will provide support for those with children up to the age of 12. This limit will be set out in regulations that the House will have the opportunity to debate after the Bill has received Royal Assent. However, the Government recognise that for parents of disabled children childcare costs can remain high well beyond their 12th birthday. Such parents face a range of additional challenges if they are to have a fulfilling working life alongside the need to care for their child. In recognition of this, the scheme will provide them with support until the September following their child’s 16th birthday.
Noble Lords will be aware that a scheme is already in place under which some parents can receive financial help from the Government with their childcare costs. This is delivered by means of an income tax exemption and a disregard of national insurance contributions provided by the employer-supported childcare scheme. The tax and NICs reliefs will gradually be withdrawn as the new scheme becomes available. The existing scheme has a number of serious shortcomings that mean it is far less effective than it needs to be. For one thing, as its name implies, employer-supported childcare is not available to those who are self-employed. Because it generally works through salary sacrifice arrangements, it is not available to those whose earnings are at or slightly above the level of the national minimum wage.
A further drawback is that whether a parent can receive support from employer-supported childcare is crucially dependent on whether their employer chooses to offer it. The fact is that less than 5% of employers currently offer the scheme. This means that over half of employees are simply unable to access it. Lastly, employer-supported childcare fails to pay any regard to the number of children that parents actually have. It can provide a higher level of support to a family with two adults and one child than it does to a lone parent with multiple children. That is obviously far from satisfactory.
The new scheme has none of the drawbacks of employer-supported childcare. As parents will engage directly with HMRC to open their accounts rather than via their employer, it will be available to anyone who works, provided they meet the relevant eligibility criteria. While around 500,000 parents are currently in receipt of employer-supported childcare, we estimate that up to 1.8 million families will be eligible for support under the new scheme. For the first time, self-employed parents will be able to receive support from the Government with their childcare costs. The Government estimate that around 200,000 self-employed people will directly benefit from the scheme. The level of support available to a parent under the scheme will be determined by the number of children that they have, rather than the number of parents whose employers operate the employer-supported childcare scheme. This will bring an end to the manifest unfairness of the current scheme, particularly to lone-parent families that have more than one child.
As well as being available to far more families than employer-supported childcare, the new scheme will give parents the flexibility that they need to allow them to return to work. They will be able to pay money into their childcare accounts when they want to and spend the top-up payments when they need to, such as over school summer holidays. In addition, other family members, friends and employers will also be able to pay money into the accounts if that is what they wish to do. Parents will also be able to withdraw money from their childcare accounts if they need to do so, with their contributions returned to them, and government top-ups returned to the Government. The scheme has been designed to be as simple and straightforward as possible for parents to operate and to minimise the need for them to engage with HMRC. That is fundamental to the scheme’s design.
A primary means of achieving this is the fact that parents will not be required to report changes in their personal circumstances in real time, as is the case for tax credits. Instead, the scheme will be based on quarterly entitlement periods, such that once a parent is eligible, they will continue to be entitled to support for that quarter, regardless of any changes in circumstances they might experience. This flexibility will be particularly valuable to those on lower incomes, who might meet the criteria for receiving government support for their childcare costs through either tax credits or universal credit. Parents will not, of course, be able to claim double support and will instead need to make a choice of which type of support best suits them. With that in view, alongside wider guidance and information, HMRC will provide an easy-to-use online tool for parents choosing between other means of government support and the new tax-free childcare scheme. Parents will be able to enter details about their personal circumstances quickly to see what support is right for them.
I should add that this scheme should not be considered in isolation but should instead be seen as one part of a far broader range of initiatives aimed at helping those with children that this Government have introduced since 2010. The main ones are: first, additional funding for 15 hours a week of free childcare for all three and four year-olds, saving families an additional £380 a year per child; secondly, additional funding for 15 hours a week of free childcare for all disadvantaged two year-olds, saving those families more than £2,400 a year per child; thirdly, an increase in the child tax credit to £3,295 a year, £450 more a year than at the election; fourthly, an increase, from 2016, in the childcare element of universal credit, from 70% to 85% of total childcare costs, to improve work incentives and ensure that it is worthwhile to work up to full-time hours for low and middle-income parents; and finally, the introduction of shared parental leave and statutory shared parental pay for those with children born after 5 April 2015.
I realise that there are concerns that the effect of these demand-side initiatives might simply be to drive up the costs of childcare. That is why the Government have also taken significant steps to increase the supply of high-quality childcare. The most notable of these are the introduction of childminder agencies to reduce bureaucracy for childcare providers and increase the choices for parents; consulting on proposals to relax planning rules to allow nurseries to expand more easily; and reforming the role of local authorities to improve access to government funding and encourage new entrants to the market.
Noble Lords will also be aware that in his 2014 Autumn Statement last week the Chancellor announced a further government initiative aimed at encouraging the supply of childcare. A further £2 million will be set aside to double the funding available for 2015-16 from the childcare business grant to support the creation of new childcare places. This grant has existed for some 20 months and provides funds to newly registered childcare businesses. To date, it has supported around 4,500 new childminders, who between them have the capacity to offer up to 32,000 new childcare places. I am sure that all noble Lords will welcome this expansion.
The Bill will deliver much needed support for working families. It marks a clear and significant improvement on the existing mechanism for providing such support and is a further tangible demonstration of this Government’s support for parents and their children. I commend it to the House. I beg to move.
Lord Newby
My Lords, I thank all noble Lords who have stayed to contribute to this debate, which was as thoughtful as one would expect in your Lordships’ House. I will attempt to answer some of the specific points that have been raised.
I absolutely agree with the noble Earl, Lord Listowel, about the importance of early years education. It is probably not as widely understood as it should be that very early high-quality educational intervention is an investment, in that it raises the starting point from which everything else flows through a child’s education and, indeed, life. I absolutely agree with him about the need to have good-quality provision at every stage. I take his point about low pay in early years. We hope, for example, that in dealing with those two issues we will see an increase in the qualifications of staff in the early years—in particular, that more staff will be qualified to graduate level. One objective of the new early years pupil premium, which will cost £50 million next year, is to provide funds to improve the quality of early education to disadvantaged children, including improving qualifications.
The noble Earl asked specifically about disabled children. We have recognised already that disabled children are in a separate category by running on the scheme from the age of 12 to 17. I accept the point that some disabled children require higher costs throughout their childhood, including their teenage years. As he mentioned, the Exchequer Secretary has made a commitment to look at increasing the maximum amount that the families of disabled children can pay into a childcare account and thus increase the amount of government top-up that they can receive. I know that that does not go as far as he would like because he would like the proportion of tax benefit to increase. The challenge here, as with many other potential changes to the scheme, is one of cost. My colleague in another place, the Exchequer Secretary, is looking at that and, hopefully, in respect of raising the potential amount of government support through matched payments as per the current scheme, we might see some progress.
As regards disabled children, the noble Earl asked whether we can learn from the local government scheme. In terms of what is already happening, he will be aware of recent reforms to special educational needs provision. I agree that it will be important to learn from the experience of those on the ground. Without looking at my diary, I am not sure what I will be doing on 9 January. Last Friday, I visited a nursery in Haggesdon but I am sure that the noble Lord will think that that does not really count. I am very happy to look at whether the suggestion would be possible.
The noble Earl and other noble Lords asked about the problem of this scheme working alongside tax credits and universal credit, and how parents will know whether they are eligible for working tax credit and whether they are best to opt for this scheme or for that scheme. That is why we are doing a number of things to help them. The online tool to which we referred, which will be a ready reckoner, is expected to be the main easy way for parents to access very good information.
Sometimes a bit of an assumption is made—far be it from me to suggest this to the noble Lord, Lord Davies—that parents from poorer backgrounds are incapable of managing relatively simple technology. I do not believe that that is the case. It is so common now for everybody of all income levels to use the internet, whether it is for shopping or whatever, that it is not unreasonable to think that a very clear online tool is an appropriate mechanism as the centrepiece of what we are trying to do. Certainly, my children are happier almost to deal with the consumption of words online than they are with the consumption of words on paper. They look to online sources of information in the first place.
The right reverend Prelate asked a number of detailed questions about the way in which the scheme works, how it will interact with universal credit and whether the Government will consider a number of changes to the way we are planning to administer it. In particular, he asked whether the Government might consider allowing help with childcare costs through universal credit to be paid via a childcare account. We have a number of issues with that suggestion. The new scheme is fundamentally different from schemes such as universal credit, with support paid for different purposes in different ways to meet different circumstances. Universal credit is paid as a monthly lump sum to cover a range of costs, including childcare costs. It is not ring-fenced and is intended to support households to focus on budgeting on a monthly income. The objective is to ease the transition into starting or going back to paid work, which is why it is paid in a similar way to a monthly salary. If the Government move to the suggestion made by the right reverend Prelate, we would end up with a much more complicated scheme than we have at the moment. I think universal credit and the benefits system is complicated enough without running any risk of making it more complicated.
The right reverend Prelate asked about the fact that support for childcare in universal credit would be on the basis of payment of childcare made rather than childcare costs incurred, and that this will mean that people will have to find money up front to meet these costs. I can see that this is considered potentially to be an issue, but for parents moving into work we have the flexible support fund that can be used to pay for childcare to enable a claimant to start work. Budgeting advances that will be available to families under universal credit are also designed to help claimants pay for intermittent household expenses, of which this will be one. The money will then be reclaimed over a period. The principle under universal credit that you pay for the childcare costs that you have actually incurred is a very sensible way of approaching matters but having this fund will ease that transition, which is very important.
My noble friend Lady Eaton raised a number of wide issues which we could spend all night debating. For example, she and other noble Lords raised some of the real conundrums in this area about how you spend a limited amount of money to the best effect. I am not sure that any Government are always 100% successful in that, but we are taking funding for a scheme that benefits relatively few people—certainly not the people we necessarily want to benefit, as it is largely by chance the way your employer decides to operate the scheme—and moving it to a scheme that treats everybody in work with children fairly. I think that is a very big gain from this scheme over what we had before. It obviously does not deal with many of the other wider issues she raised, including the extremely interesting debate about the importance of marriage in society and the extent to which that might be reflected in the tax system. I suspect that the political parties will be thinking what more they want to say on that issue as they draw up their manifestos over the next few weeks and months.
One of the key purposes of what the Government have been doing in respect of childcare policy and other policies is to encourage more people, particularly women who wish to do so, to get back into work. Department for Education survey data suggest that more than half of mothers not in paid work would prefer to be in paid employment if they could arrange reliable, convenient, affordable and high-quality childcare. That is one of the attractions of what we are doing with universal credit and, to a certain extent, what we are doing in this scheme.
The relevance of at least one family member—but very often mothers—being in work is the example that that sets to children in terms of how they see their lives developing. One of the statistics in terms of the labour market of which I am most proud is that there are now 390,000 fewer children living in workless households than in 2010. That is 390,000 children who see at least one of their parents going out to work and earning a wage. They see the benefit of that as opposed to many children in the past who saw their parents not going out to work and, sadly, often saw that as being the way that they might spend their own lives. Some of the broader issues that my noble friend Lady Eaton raised may be for another night, or, even better, another day, but I am sure that we will return to them.
The noble Lord, Lord Davies, raised a number of detailed questions, some of which I think I have covered in answers to other noble Lords. He suggested that the qualifying age for disabled children should be raised from 17 to 18. Having an age limit of 17 for disabled children is in line with the employer-supported childcare scheme and the childcare element of both tax credits and universal credits. It would not be right to increase the age limit in the new scheme while leaving it at 17 in other schemes. It would be inconsistent and confusing for parents. To increase the age up to which the child would be entitled to support across all these schemes would carry a material Exchequer cost, which is something that we have to be concerned about.
The noble Lord raised concern about Atos acting as a contractor to NS&I in respect of this scheme and whether that might be problematical. I believe that Atos acts as a contractor to NS&I in respect of premium bonds and I do not think that anyone is suggesting that there are any problems in the way that they are currently administered.
The noble Lord, Lord Davies, made a number of points on issues which would involve greater expenditure on childcare. Again, this Government feel that they have an extremely strong record in this area and the constituent parts of the Government will put forward proposals for childcare in the next Parliament, as will the noble Lord’s party. I am sure that the noble Earl, Lord Listowel, will be pleased that the parties are competing to see which can be the more generous in this area.
This is a sensible measure which will benefit many families and will use the resource much more fairly than is currently the case. I am extremely pleased that noble Lords who have spoken agree with the Government that this is a sensible and positive move forward to support families and their children.
Autumn Statement
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Lord Deighton
I, too, look forward to the debate tomorrow. The thing that resonated with me was the noble Lord’s reference to a clear record of failure, and he should know. Let us compare records. Fortunately, the previous Government wrote its own when it left a note for the Chief Secretary, with three words: “No money left”. Let us look at the record of this Government. We have the fastest-growing economy in the G7, demonstrating well balanced growth across all the industrial sectors and spread effectively regionally. We have record levels of employment, and record falls in long-term unemployment and youth unemployment. We have restored this country’s fiscal credibility from the record deficit we inherited. We have halved the deficit this year and are still on path to eliminating it by 2018-19.
If you look at the work of the OBR, you will see that the borrowing is slightly higher this year and next year, and slightly lower in the next two years, taking us to a surplus of £4 billion in 2018-19. I fully accept that we are not as effective in reducing it as our predecessors were in increasing it, but we are doing a pretty good job, given the global economic environment. We have also seen extremely low and falling levels of inflation; we are investing in business and productivity; and we have supported people through the recovery from the depths of a savage financial crisis by reducing personal allowances, making sure that we have frozen fuel duty, freezing council taxes, capping the rise in rail fares, et cetera.
I fully accept that this country has a long-term productivity problem. I am looking forward to the debate tomorrow, in which I am sure we will get some insights into how to cure that. My right honourable friend the Chancellor was not short in his analysis or the work he is doing on that. Quite simply, productivity has to come from: increasing the Government’s own efficiency; creating space for the private sector; and increasing the dynamism of the private sector through lower taxes and infrastructure investment, which we have discussed. By the way, as regards this Government’s record on infrastructure, through this Parliament £47 billion will have been spent on infrastructure, private and public. In the previous Parliament it was £41 billion. That is a 15% increase, which, in the context of the financial environment, particularly in the first few years, is extraordinary.
The noble Lord was right to say that there has been a shortfall in tax receipts, which is the principal reason why borrowing this year is a little higher. It is higher than was forecast in the Budget, although it is still coming down and will go down every year. Everyone was prepared to say that it was going up. No, the deficit continues to come down. I should explain the situation on tax receipts, which is important. Again, it is the productivity issue: the economy has grown faster than earnings. There is also an interpretation issue; in the second half of the year, we will see tax receipts do a little better than last year, when they were front-loaded—so there is an adjustment there. The biggest reconciliation of the difference between the OBR forecast this time and at the time of the Budget is the £16 billion improvement we get in reduced interest costs because interest rates are coming down, principally because inflation is under control. I have been trying for some time to find a good reason for having a high debt level. This is the only one I can think of: when interest rates are low, the interest burden comes down. That explains two-thirds of our ability to decrease spending in a couple of years’ time to make up the shortfall in tax receipts.
I want to dwell a little longer on the earnings situation. The noble Lord is right that earnings have not recovered as fast as we all would have wanted. People have been faced with difficult challenges. I have listed the kind of measures the Government have taken to mitigate the impact on our citizens. The reason is simply because the economy recovered more slowly than we expected. That was a result of the crisis being deeper than we had understood at the time, very high commodity prices in 2011-12 and a very weak eurozone. Essentially, that delayed the recovery; that explains why it is taking longer to get the deficit down. The Government have a clear plan to get us there. In listening to the series of observations the noble Lord made, I could not, with the best will in the world, detect an alternative plan.
The noble Lord raised two other points. I absolutely agree that our export performance is weak. It has been for some time. Addressing some of our productivity problems and improving the performance of our businesses will be at the heart of improving our export performance. The weakness of the eurozone—the customer for about 40% of our exports—is of course an important factor. We have been very focused, through our interventions with UKTI and UK Export Finance, on supporting the growth of exports to other markets, which in volume terms are, I think, up about 18% since 2010. We have to support that switch away from the slow-moving markets to the faster-growing markets. I absolutely accept that.
Before opening up to broader questions, I will mention housing. It is both a supply and a demand question. We are working very hard to increase supply, whether it is through the individual schemes that my right honourable friend the Chancellor went through at Bicester, Ebbsfleet, Barking, Brent Cross and the four London estates that are being regenerated, or at Northstowe, where we are freeing up land for building. We are also putting more money into affordable housing. If noble Lords were to add up all the schemes and initiatives in the Autumn Statement, they will come up with a very sizeable increase to supply. On the demand side, Help to Buy has been very successful. Continuing low interest rates are very successful and the radical reform to stamp duty rationalises that very inefficient tax in a way that will support home buyers, particularly at the lower end of the market.
Finally, the Government have increased spending during this Parliament by nearly £13 billion to support the National Health Service. I will not repeat the individual initiatives. As the noble Lord pointed out, we have made a down payment of an extra £2 billion, which is the pro rata amount that the chief executive of the National Health Service has asked for to get it to £8 billion by the end of the next Parliament. Again, a great plan has been established. We will finance it on the basis of its merits.
Lord Newby (LD)
My Lords, I remind the House that there are now 20 minutes for questions. The briefer the questions are, the more we will have time for.
Greater Manchester
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Lord Sherbourne of Didsbury
To ask Her Majesty’s Government what steps they are taking to develop the economy of Greater Manchester.
Lord Newby (LD)
My Lords, this Government are committed to rebalancing the economy and to supporting growth in Greater Manchester through a growth deal, city deal and enterprise zone. Earlier this month the Government and councils in Greater Manchester agreed to create a directly elected mayor for Greater Manchester with wide powers over economic development, housing, policing and planning.
Lord Sherbourne of Didsbury (Con)
My Lords, I welcome the decision to establish a Greater Manchester Combined Authority, but does my noble friend agree that there must be effective scrutiny of the decision-making of such a body, so that local people and businesses know who is deciding what and how? Will the Government, therefore, encourage these councils to make sure that that happens, so that there is transparency and clear accountability?
Lord Newby
My Lords, I absolutely agree that clear accountability is vital. That is why the Government and councils have agreed that there will be a democratically elected mayor to oversee the new powers and funding. Indeed, beyond 2016-17 these new powers will be conditional on the elected mayor being in place.
Lord Grocott (Lab)
Does the Minister not recall that—rather alarmingly, I thought—at the beginning of this Parliament there seemed to be complete agreement between the leadership of the Conservative Party, the Liberal Democrats and the Labour Party that the people of the big cities in England would relish the prospect of establishing a system of directly elected mayors? Rather unwisely, from their perspective, they put that proposal to 10 cities in Britain in the form of rather expensive referendums, and the people of these great cities—very wisely, in my view—decided that they did not want this expensive innovation, which had not worked nearly so well in London as some people were suggesting. At the very least, can the Minister assure us that the views of the people in these cities will in future be respected, and that should there be any change in the structure of local government in the direction of directly elected mayors it would be put to the people in a referendum?
Lord Newby
My Lords, some cities—notably Bristol—have decided to have an elected mayor, and the elected mayor in London, of whatever colour, has proved an effective spokesperson and advocate for London. There are no plans for a referendum for a directly elected mayor for Greater Manchester.
Lord Lee of Trafford (LD)
My Lords, the prime driver of the success story that is Manchester has been the growth of the airport. It now sustains 40,000 jobs and has flights to more than 200 destinations, which is actually rather more than Heathrow. With the onward development of Airport City and, in the longer term, the siting of the HS2 terminal adjacent to the airport, is my noble friend satisfied that the road network in that area will be able to cope with the increased traffic, particularly the A538 which at present, frankly, is in places rather quaint?
Lord Newby
My Lords, I absolutely agree with my noble friend that the airport has been a huge success. Transport links to the airport have been greatly enhanced and it now has one of the best intermodal hubs of any airport in the UK. Further funding is going in for roads—the A6 Manchester Airport relief road is being funded by the Department for Transport via the Greater Manchester Combined Authority. Any funding of the kind that my noble friend seeks for the A538 would most likely come from the growth deal process, which is now under way.
Lord Davies of Oldham (Lab)
My Lords, I declare an interest as I used to represent a part of Greater Manchester, namely Oldham, a town of which I am inordinately proud and eager to assist. However, how does the Minister think that the Chancellor can sustain the pretence of being a champion of the north when he has cut local government funding for northern cities such as Manchester, Leeds and Liverpool more than he has the wealthier areas of southern England?
Lord Newby
My Lords, we have to look at what has been happening to the Greater Manchester economy and the north-west more generally, where there has been a massive increase in the number of apprenticeships, for example, and a dramatic fall in unemployment. There is specific funding in terms of hundreds of millions of pounds of additional funding for rail developments and to innovative new world-leading developments in the Manchester area, such as the National Graphene Institute.
The Earl of Listowel (CB)
My Lords, in continuing this process of development in Greater Manchester, does the Minister not agree that it is the training and development of the people that are so important? In that regard, will he draw the attention of the leadership of Manchester to the report of my noble friend Lady Howarth on family learning, which was supported by the National Institute of Adult Continuing Education? It highlights the effectiveness of family learning for developing skills in the workforce.
Lord Newby
My Lords, one of the key things about the devolution of powers to Manchester is that it covers some of these areas. For example, services in terms of targeted employment support for vulnerable people have already been devolved to Manchester, and there are others. The “Working Well” pilot is also doing extremely well in that area and other plans on integrating health and social care have been devolved down to Manchester, so what the noble Earl is seeking is all part of that process.
Lord Adonis (Lab)
My Lords, a key part of the Greater Manchester deal is public bus franchising, which is a good Labour Party policy. Can the Minister confirm that this has been a huge success in London, where it has led to a doubling in bus passenger numbers over the last 10 years? We confidently expect that it will do the same in Manchester, so will he confirm that the same offer will be available to other cities that request it of the Government?
Lord Newby
My Lords, I can, certainly in terms of franchised bus services and for integrated smart ticketing across all modes of transport in Greater Manchester, which has been a success in London. The Government have made it clear that if other cities wish to follow the Manchester model, requests to do so will be sympathetically received.
Lord Smith of Leigh (Lab)
My Lords, first, I declare an interest in that I am chair of the Greater Manchester Combined Authority. While I welcome the deal that we have with the Government on devolution, can the Minister confirm that the mayoral offer in Manchester is not like the Mayor of London? It is a Manchester model built on working with the combined authority, which has been successful in the past.
Lord Newby
My Lords, I can, and the key difference between the Manchester and London models is the very tight integration between this proposed new post and the local council, so that they will all work together to deliver policy that will result from the new mayor being put in place.
Income and Wealth Inequality
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Lord Newby (LD)
My Lords, according to the latest ONS statistics, income inequality in the UK is lower than when this Government came into office. Recent ONS data have also found that wealth inequality has remained unchanged since this measure began in 2006.
Lord Dubs (Lab)
My Lords, there may be some dispute about those figures, but for the moment let us go along with them. Is the Minister aware that today, or yesterday, the Institute of Directors, hardly a hotbed of left-wing views, denounced a pay package for a senior executive as being “excessive and inflammatory”? The chief executives of our leading companies have seen their average pay go up from £4.1 million to £4.7 million. That is at a time when the largest network of food banks says that increased demand for food bank services has gone up by 38%. Is that not a gross condemnation of our society?
Lord Newby
My Lords, I completely agree with the noble Lord that many directors have had pay increases which bear no relation to either pay increases that other people have had or the performance of their company, and that is why this Government have introduced a raft of measures to make firms more accountable to their shareholders for the pay packages that directors get. However, I remind the noble Lord that those people who are in the top 1% of wage earners and whose pay has gone up now contribute some 28% of the total income tax collected.
Lord Marlesford (Con)
My Lords, does my noble friend recollect that the late Lord Bauer, a pathfinding economist in many areas, suggested that in this context a more objective word than “inequality” is “difference”?
Lord Newby
I am not sure that I do recollect altogether. It is important to look at inequalities as well as differences because there is an additional dimension in the word “inequality” to the neutral word “difference”.
Lord Stern of Brentford (CB)
My Lords, will the noble Lord, who is my former student and was a very good student, join me in recognising that after three or four decades of being roughly constant, income inequality in the UK shot up during the 1980s, and the Gini coefficient went from around 0.25 to about 0.35 in household disposable income and has stayed there through different Administrations over the last 20 years? We moved from being one of the more equal countries to one of the more unequal countries in the OECD. Does he recognise also that the share of gross income of the top 1% has more than doubled in the last 30 years, moving from around 6% to around 13%? Are he and the Government comfortable with those levels of inequality?
Lord Newby
My Lords, I cannot but agree with my former tutor. I fear that I did not hear the last part of his question altogether, but it is very important, first, that we shine a greater light on the amount that people have been earning at the top end so that they can be subject to appropriate scrutiny, and, secondly, that people at the top end are taxed more effectively than they have sometimes been in the past. In both those respects, the Government have made some progress.
Baroness Armstrong of Hill Top (Lab)
My Lords, has the Minister read the recent report of the Social Mobility and Child Poverty Commission? Its central conclusion is that, because of the rise in the number of working poor, unless very different policies are pursued, by 2020 the challenge will be that we will be a much more divided nation between north and south and between rich and poor. What are the Government going to do in order to have those different policies to ensure that we are not a singularly divided nation?
Lord Newby
My Lords, the commission has put great priority, in all its reports, on the importance of work in households. One of the telling statistics, for me, about what has happened in recent years is that there are now 390,000 fewer children in workless households than there were in 2010 and that the proportion of children in workless households is now at its lowest level since records began. We know that the family environment is extremely important to how children think about the workplace and to their chances of getting jobs.
Lord Razzall (LD)
My Lords, in the context of this important discussion on relative income and wealth inequality, do the Government have a view on the opinion of the Institute for Fiscal Studies, expressed yesterday, that since 2010 the position of pensioners has increased significantly relative to those in work, however palatable that might be to your Lordships’ House?
Lord Newby
My Lords, as for how resources are allocated, and where people feel more could be done or less, it is a bit like squeezing air round a balloon. It is interesting that I do not think that there has been a single question in your Lordships’ House on one aspect of the Government’s policy—the level of support the Government have given to pensioners.
Lord Davies of Oldham (Lab)
My Lords, if the Minister is right that inequality has not increased then the Government are clearly failing in their objectives, because they certainly set out to reduce income tax on the more highly paid. We all know the excesses of chief executives getting 21% increases in pay when very many other people are seeing reductions, let alone increases, and cannot keep up with inflation. Is he aware that there are 1.4 million people on zero-hours contracts and that the average family in this country is £30 a week worse off under this Government?
Lord Newby
My Lords, I just think that the noble Lord’s figures are wrong. On inequality, I would like to quote Chris Giles from last week’s Financial Times, since noble Lords opposite clearly find it difficult to accept what I am saying about it.
“Since 2008, the earnings distribution has been flat as a pancake. And because the coalition government has protected people dependent on social security more than the working population, inequality of net incomes has edged down”.
Lord Bilimoria (CB)
My Lords, does the Minister agree, following the noble Lord, Lord Stern, that the Gini coefficient has gone up significantly over the last three decades? There is no question about that, regardless of who has been in government. Does he agree that the living standards of people in this country are far higher than three decades ago, when Britain was the sick man of Europe?
Lord Newby
My Lords, I absolutely agree with the noble Lord. Noble Lords will be aware that real incomes are starting to rise again and are projected to do so over the next three or four years by all reputable forecasters.
National Insurance Contributions Bill
Lord Newby Excerpts(9 years, 5 months ago)
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Lord Newby (LD)
My Lords, the Bill before us today takes forward the Government’s commitment to simplify taxes and make avoiding tax harder. The Bill contains four measures: first, simplifying NICs paid by the self-employed; secondly, accelerating the payment to the Exchequer of NICs in dispute in avoidance cases, and providing for the issue of follower notices where the scheme or arrangement has been shown to fail in another party’s litigation; thirdly, applying new information powers and penalties to promoters of avoidance schemes; and, fourthly, introducing a targeted anti-avoidance rule—TAAR—to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. I will explain each of these four measures in more detail, starting with simplifying NICs paid by the self-employed.
In Budget 2014, the Chancellor announced that the Government intended to simplify the NICs collection process for the self-employed, who currently have to operate two different processes for two separate classes of NICs. This followed a 2012 recommendation by the Office of Tax Simplification and a consultation paper published in July 2013. As noble Lords may be aware, having two separate collection methods for class 2 and class 4 NICs causes confusion and extra work for both the self-employed and HMRC. Class 2 NICs are currently collected via a flat-rate charge paid through six- monthly billing or by direct debit, while class 4 NICs are a percentage charge on profits paid through self-assessment alongside income tax. This measure will move the collection of class 2 NICs into self-assessment, making the system simpler and more straightforward, while reducing administrative burdens on the self-employed by allowing them to deal with their tax and NICs in one go.
The aims of Clauses 1 and 2 and of Schedule 1 to the Bill are: to change the way in which class 2 NICs are structured; to change the means by which class 2 NICs are collected by moving their collection into self-assessment, so that they can be collected alongside class 4 NICs and income tax; to change the means by which class 2 NICs are enforced, with changes to associated appeal rights to broadly mirror those for class 4 NICs and income tax; and to make consequential changes to legislation relating to maternity allowance to allow women to continue to become eligible for it post-reform. It is proposed that these changes will take effect for the 2015-16 tax year onwards, so that the collection of class 2 NICs under self-assessment will be from 6 April 2016.
One of the key changes that will be made by this reform is that there will no longer be a need for customers with low profits who want to opt out of paying class 2 NICs to apply for a small earnings exception in advance. HMRC is aware that the self-employed find this confusing and burdensome. Under the reform, customers with profits below the new small profits threshold will not be liable to pay class 2 NICs but will be able to choose to pay on a voluntary basis. Those with low profits who want to opt out of paying class 2 NICs will not need to do anything except to confirm this when completing their self-assessment return, while those who still choose to pay—in order to protect their benefits entitlement—will be able to do so quickly and easily. Rather than requiring a separate process, this decision will be built into the self-assessment return. There is a small proportion of HMRC customers who pay class 2 NICs but are not in self-assessment. These individuals will continue to get a separate class 2 NICs payment request. They will receive this once a year instead of twice a year, as they currently do.
I will now mention some specific points on this measure that attracted interest in the other place. The Financial Secretary provided reassurance that the self-employed will continue to have the option to spread the cost of paying class 2 NICs. The facility already exists in self-assessment to make budget payments to spread the cost of tax and NICs through the year. The Bill makes provision to allow women to continue to become eligible for maternity allowance following the class 2 changes. There was a concern in the other place that the process being put in place to allow pregnant women to pay class 2 NICs if they have not yet filed their self-assessment return would be impractical and require a high level of forward planning. I would like to confirm the remarks of the Financial Secretary that this will not be the case. I emphasise that the process does not require any forward planning beyond that which a pregnant woman would routinely undertake under the current process of applying for MA. A self- employed woman who wishes to make a claim for MA and has not already submitted her self-assessment return will be able to pay for any shortfall in contributions at the time of her claim, through the exception process that HMRC and DWP are putting in place.
I turn now to the provisions in the Bill dealing with accelerating the payment to the Exchequer of amounts of NICs in dispute in avoidance cases. This also includes providing for the issue of follower notices where there is a relevant case in which the scheme or arrangement has been shown to fail in another party’s litigation. For NICs, the provisions in the Bill broadly follow new powers included in the Finance Act 2014 that allow HMRC to issue a notice to taxpayers who used avoidance schemes that failed before the courts in another party’s litigation—a so-called follower notice. It is estimated that the provisions in the Bill and the Finance Act 2014 will raise £5 billion in tax and NICs for the Exchequer.
A follower notice sets out HMRC’s view that a judicial decision in another case is directly relevant and that those who receive the notice should settle their disputes. If the taxpayer does not settle in response to this notice, they will face a penalty if they are unable to show that their case is materially different from the other party’s litigation, or if they do not have reasonable grounds to continue the dispute. An accelerated payment may be required from taxpayers in the following circumstances: where a follower notice has been issued and the taxpayer decides not to settle their dispute; where taxpayers are involved in schemes subject to disclosure under the disclosure of tax avoidance schemes, or DOTAS, rules; and where taxpayers have used arrangements that HMRC decides to counteract under the general anti-abuse rule, or GAAR. These measures are expected to lead to the issuing of payment notices to some 43,000 taxpayers involved in avoidance schemes currently under dispute with HMRC over the period to the end of March 2016.
In debates in another place, the issue of HMRC implementation and resourcing of this measure was raised, and assurances were sought that HMRC would be sufficiently resourced to implement the measures. I echo the reassurances provided by the Financial Secretary. Since 2010, this Government have made sure that HMRC has the resources it needs to effectively police the rules, making significant investment of nearly £1 billion to assist it in its work. HMRC’s success demonstrates that it is well resourced and doing a good job. For example, in 2013-14, HMRC brought in £23.9 billion in additional tax revenue—a record amount.
I will now explain the provisions in the Bill that apply new information powers and penalties to the highest-risk promoters of tax avoidance schemes. This measure was announced for tax in Budget 2013 and the Government’s intention has been to extend the measure to NICs at the earliest opportunity. A consultation on the tax aspects, Raising the Stakes on Tax Avoidance, ran from August until October 2013. The Finance Act 2014 included legislation that allows HMRC to issue conduct notices to promoters of tax avoidance schemes and to monitor promoters who breach a conduct notice. This Bill applies the tax legislation to NICs so that the legislation operates as one unified measure covering both tax and NICs.
Monitored promoters will be subject to new information powers and penalties, which will also apply to intermediaries that continue to represent them after the monitoring commences. The monitored promoter may be named by HMRC and required to inform its clients that it is being monitored by HMRC. Clients of monitored promoters will also be subject to certain obligations and extended time limits for assessments. This measure is part of the Government’s strategic response to avoidance and is to deter the use of avoidance schemes through influencing the behaviour of promoters, their intermediaries and clients. It is aimed at changing the behaviour of promoters of NICs and tax avoidance schemes. Naming a monitored promoter should deter intermediaries from acting for them, and clients and potential clients from using their products.
Finally, I will describe how the provisions in the Bill relating to the new targeted anti-avoidance rule will work to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. The National Insurance Contributions Act 2014 strengthened existing legislation in respect of offshore employment intermediaries. That measure was effectively intended to address the non-payment of employers’ national insurance in the oil and gas industry involving the placement of the employer of oil and gas workers—who are working on the UK continental shelf—outside the UK.
As noble Lords will be aware, the temporary labour market is quick to react to any legislative changes and to find new convoluted ways to reduce the amount of income tax and NICs they would otherwise be liable to pay. Stakeholders have indicated to HMRC that intermediaries involved in the facilitation of false self-employment may set up avoidance vehicles involving convoluted structures specifically designed to circumvent the legislation introduced in the National Insurance Contributions Act 2014. To dissuade such intermediaries, the Government propose that a TAAR, which would be similar to the tax TAAR included in Finance Act 2014 for the same purpose, is included in NICs legislation to deter such avoidance. It will focus on the motive for setting up the arrangements and what they achieve. Were they set up with the motive of avoiding NICs? Do they result in less national insurance contributions being paid? In order that the tax and NICs TAARs operate as one, both will take effect from 6 April 2014.
In conclusion, the Government have already taken action to reduce significantly the burden of NICs on earnings and employment through previous Bills. This Bill continues that approach and I commend it to the House. I beg to move.
Lord Newby
My Lords, I thank both noble Lords who have welcomed the Bill. The noble Lord, Lord Davies, said that it was a sign of the times that my noble friend Lord Razzall agreed with him, but surely it is a sign of the times that the noble Lord, Lord Davies, agreed with my noble friend. Whoever is agreeing with whom first, it is an extremely satisfactory position for a Minister at the Dispatch Box to find such a general welcome for a Bill.
Both noble Lords asked about the impact of the changes on the administration of the maternity allowance and whether it would be sensible to have a formal review two years after the Bill comes into force. That timetable does not make any sense, because the first payment of class 2 through self-assessment does not have to be made until the end of January 2017, so a two-year review date is pointless. However, both the DWP and HMRC are committed to ensuring that this group of women is not disadvantaged by the way the reforms work and will be keeping the operation of MA under review on a continuous basis. In response to the specific point that my noble friend Lord Razzall raised, it will be possible to see on an ongoing basis whether the number of claimants falls. I assure noble Lords that if there is any sign of that happening, the Government will act to deal with whatever the administrative problem is that has caused it because, obviously, that is not the intention of the legislation.
My noble friend Lord Razzall asked how there could possibly be no Exchequer impact, particularly when the measure is introduced, with people changing from paying monthly to paying up to eight months after the end of the tax year. National insurance contributions are accounted for on an accruals basis, so the important factor is the time period for which the money is due rather than the date on which it is actually paid. It will therefore continue to be counted in the tax year itself.
My noble friend Lord Razzall asked about the impact of the reforms on entitlements for benefits claimants and how that would work. The contribution conditions for benefits are changing. In addition to the maternity allowance, which we discussed, and in order to ensure that the self-employed are not disadvantaged as a result of the changes, the DWP will modify the relevant legislation to safeguard the position of claimants who pay their class 2 NICs by 31 January—the deadline for paying class 2 NICs through self-assessment. This will be done, first, by treating them as having satisfied the relevant contribution condition at the right time and, secondly, by disapplying the 42-day penalty that normally applies where contributions are not paid until after the start of the benefit year.
Questions were also asked about how the self-employed will learn about these changes and make sure that they comply with them satisfactorily.
HMRC and the DWP are working closely together in communicating the class 2 changes to the people who are going to be affected so that key messages are cascaded in a number of ways and a number of times. The department’s communication strategy includes: undertaking customer research and testing some of the products with customers; HMRC writing to all self-employed customers; an updating of existing customer outputs, such as the small earnings exception renewal letter; making HMRC staff and DWP staff aware of the changes and building the relevant information into call scripts and telephony, where appropriate; and using stakeholder partnerships with intermediary groups, agent organisations and forums to ensure that key messages are understood by everyone so that the self-employed hear the messages through a number of channels and in a consistent way.
Finally, the noble Lord, Lord Razzall, asked whether the effect of these changes on any possible future merger of NICs and income tax would be neutral, negative or positive. The whole question of merging income tax and NICs is fraught with difficulty and complexity. To the extent that these changes would have any impact at all, were any future Government to plan such a scheme, I suppose, if anything, it would be very marginally positive, but in the overall scheme of things and in the context of such a wide-ranging review it would be almost lost in the wash.
This is a short Bill, but as all noble Lords who have spoken have recognised, it is important to simplify the way in which we administer the system and to reduce the scope for avoidance. Therefore, I commend the Bill to the House.
Social Security (Contributions) (Amendment No. 5) Regulations 2014
Lord Newby Excerpts(9 years, 5 months ago)
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Lord Newby
That the draft Regulations laid before the House on 13 October be approved.
Relevant documents: 9th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 November
Income Tax
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Lord Wood of Anfield
To ask Her Majesty’s Government what is their assessment of the level of income tax receipts so far this financial year.
Lord Newby (LD)
My Lords, the Office for National Statistics’ latest estimate for income tax and capital gains tax for the period April to September 2014 is £71.5 billion.
Lord Wood of Anfield (Lab)
I thank the Minister for that precise answer. As today’s alarming ONS figures confirm, this Government are presiding over a recovery in which wages, far from recovering, have continued to deteriorate. As a result, the public finances are getting worse and social security spending targets are being missed by over £15 billion. The deficit continues to rise. Will the Minister tell us why this is the case, and say whether he agrees that in the light of this, the Prime Minister’s promise in October of further unfunded tax cuts lies somewhere between heroic and reckless?
Lord Newby
My Lords, I remind the noble Lord, and the House, that growth in the UK is the highest among the G7 countries; that unemployment has fallen by 324,000 in the past year; and that the other piece of news today, which he omitted to mention, is that the gender pay gap has fallen to an all-time low.
Lord Wrigglesworth (LD)
Does my noble friend not agree that the most important point is that 3 million people at the bottom of the earnings pile, including 1.8 million women, have been taken out of income tax completely? At the same time, the Revenue’s take has increased by some £5.1 billion over the past year. Is that not a classic example of a stronger economy and a fairer society?
Baroness Nye (Lab)
My Lords, will the Minister say whether the Government are planning to raise VAT again to fill the hole in the tax receipts?
Lord Lawson of Blaby (Con)
My Lords, is it not a bit cheeky for the noble Lord, who is the eminence grise of the party opposite, to talk about recklessness, when his party’s policy is to increase the deficit even more?
Lord Newby
My Lords, it is not always that I agree with my noble friend—but in this case I do.
Lord Davies of Oldham (Lab)
My Lords, how will the deficit be reduced if wages continue to fall, as they have done for 71 out of 74 months, and if, as has happened for virtually the whole of this Administration, wages fall in real terms, so that less tax is paid?
Lord Newby
My Lords, wages have fallen, but they have started rising in real terms. The OBR and every other forecaster that has made projections of real wages for the next few years in the British economy are firmly forecasting consistent real-wage growth.
Lord Forsyth of Drumlean (Con)
My Lords, will my noble friend tell us what the effect of cutting the top rate of tax from 50p to 45p was? Did revenues go up or did they go down? What was the effect of putting up the capital gains tax rate? Did revenues go up or did they go down?
Lord Newby
My Lords, the impact of the reduction in the 50p tax rate was about £100 million, when all the secondary effects were taken into account. In respect of capital gains tax, I will need to write to the noble Lord.
Lord Haskel (Lab)
Did the Minister see the research recently which said that paying a living wage encouraged people to be more productive and raised the level of income tax? Why do the Government not just do it?
Lord Newby
My Lords, paying the living wage is something that the Government support but, as we have discussed before in your Lordships’ House, there is a balance between rising wages and unemployment. That is the basis on which the minimum wage is set. I gave an example from the Dispatch Box the last time we discussed this: having spoken to people working in the textile industry in Leicester, they demonstrated to me that a big increase in the wage that they were paid would mean that fewer of them would be earning it, because they would be out of the job.
Lord Phillips of Sudbury (LD)
My Lords, is it not the case that income tax should be a good deal higher, particularly if those in the higher ranges of income paid their full amount of tax? What are we doing to tighten the receipt of income tax from all who should pay it?
Lord Newby
My Lords, the amount of income tax paid by the top 1% is now 28% of the total income tax revenues, which is the highest proportion it has ever been. That is because this Government have put substantially more money into fighting tax avoidance and evasion—far, far more—than the previous Administration.
Baroness Farrington of Ribbleton (Lab)
My Lords, we have heard various Ministers refer to government employees in terms of paying the living wage. It appears to be a sort of “This ministry does, this ministry doesn’t” situation. Why does not the whole of government do that, particularly given that some of the people who work in those government departments live in London, where the cost of living is very high?
Lord Newby
My Lords, the Government support the principle of paying the minimum wage. A number of government departments are already doing it and others are considering introducing it.
Lord Teverson (LD)
My Lords, what progress are the Government making on multinational corporate taxation to ensure that UK-domiciled companies are not discriminated against in terms of international and UK markets?
Lord Newby
My Lords, as noble Lords will be aware, at the G20 last year the Prime Minister had this issue at the top of the agenda, since when the OECD has produced a whole raft of measures aimed at ensuring that companies pay their fair share of tax. Noble Lords will have seen the end of what was called the “double Irish” tax avoidance scheme in Ireland, and there are currently European Commission probes against tax avoidance in the Netherlands and Luxembourg. There has been a real tightening-up in this area, which was reinforced at the recent G20 summit.
Lord Hughes of Woodside (Lab)
My Lords, will the Minister reflect on what he has just said? If I heard him right, he said that most government departments were paying the minimum wage and that some are considering introducing it. Was that a slip of the tongue? Surely, no government department is paying less than the minimum wage. Did he mix up the minimum wage and the living wage?
Lord Newby
I am not sure, my Lords, but what I meant to say was that while all government departments obviously pay the minimum wage, a number are paying the living wage and we are encouraging more to do that.
Social Security Contributions (Limited Liability Partnership) Regulations 2014
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Lord Newby
That the Grand Committee do consider the Social Security Contributions (Limited Liability Partnership) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Financial Services: Cold Calling
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Lord Newby (LD)
My Lords, the FCA’s financial promotion rules apply to regulated financial services and products, and cover all forms of financial promotion, including cold calling. On consumer credit, the FCA requires regulated firms that accept business from unregulated lead generators to take reasonable steps to ensure that the business operates in compliance with legal requirements. The Information Commissioner’s Office can also issue a penalty of up to £500,000 to any organisation that breaches the legal requirements around cold calling.
Lord Sharkey (LD)
My Lords, 31 million adults say that they have been offered fee-charging debt management via cold calls and texts. When these calls are from intermediaries, as they usually are, they are not in fact regulated by the FCA. As a result, the callers are not obliged to tell of the existence of free debt management services, which would be the case if the calls came directly from the debt management companies. The FCA already bans cold-call selling of mortgages. Will the Government consider doing the same for payday loans and fee-charging debt management services?
Lord Newby
My Lords, all debt management companies themselves are required to advise on free debt management options at their first contact with a potential customer, so even when lead generators are being used there should be no cases in which people sign up for advice without having been told about the free alternatives. That is the key requirement. The circumstances that led to the banning of cold calling on mortgages a number of years ago, around the right to buy, were very different from the broader considerations that apply more generally.
Lord Hughes of Woodside (Lab)
My Lords, does the Minister recollect that when the announcement was made that pensioners could withdraw their pension funds, I asked him if he was aware of the spectre of cold calls every day seeking to advise people. He advised me then that there was no need to worry. Does he now accept that what is happening today, yesterday and the next day is that dozens of phone calls are being made advising people how they may access their pension pot? If the practice goes unfettered, is he aware that thousands, if not hundreds of thousands, of people will lose out very badly? Is it not now time to regulate that sort of thing?
Lord Newby
My Lords, the easiest way to ensure that people do not get that plethora of calls is for them to sign up to the Telephone Preference Service, which will mean that they do not get the bulk of calls coming in. As far as the potential mis-selling of pensions is concerned, the FCA has a very wide remit and toolkit to deal with any potential mis-selling, and I know that it is working very hard in this area.
Lord Naseby (Con)
Is my noble friend aware that there is something wrong with the Telephone Preference Service, in that numerous calls are made to, I suspect, every Member of your Lordships’ House from overseas, and even from the UK, extensively for financial products, and is it not time that Ofcom and the FCA sat down together, with the help of government, to try to tighten up this whole area?
Lord Newby
My Lords, the regulation of cold calling is split between the FCA, the Information Commissioner’s Office and Ofcom. The Nuisance Calls Action Plan was issued by the Government earlier in the year, one of the key parts of which is to bring these components together and to work with equivalent bodies in other parts of the world from where people make cold calls. In addition, a consultation is currently under way, which recommends that it should be much easier in future for the Information Commissioner’s Office to take action and to enforce penalties against people who are breaking the rules.
Baroness Hayter of Kentish Town (Lab)
My Lords, next week we will have our amendment to the Consumer Rights Bill to deal with nuisance calls. It would make it compulsory for every marketing call to reveal its number, either for blocking purposes or to enable action to be taken. Will the Minister ask his friends in BIS to support that amendment when it comes to the House next week?
Lord Newby
I will definitely relay the noble Baroness’s request to my noble friends. As she will know from Committee on the Bill, a number of examples were given which made it less straightforward than she suggests, not least in terms of family members having access to calls being made from organisations such as helplines.
The Lord Bishop of St Albans
My Lords, I wonder if I could press the Minister again, particularly on payday loans. The recent report published by the Children’s Society, Playday not Payday, has highlighted the regulatory gap whereby payday loan companies can make unsolicited marketing calls, whereas, as we have heard, mortgage providers are not allowed to. That report showed that over 40% of people who have taken out payday loans are receiving on average more than one unsolicited phone call a day. Does the Minister not agree that the provisions that prevent the mortgage providers from making that sort of marketing approach really must now be brought in for the payday loan companies in order to protect those who are most vulnerable?
Lord Newby
The very specific arguments that apply in respect of mortgages do not apply to payday loans. The key thing about payday loans at the moment is that the payday loan companies are being regulated for the first time, which is leading to a collapse in the number of payday loan companies, so that it is expected that we may end up with as few as four payday loan companies in operation at the end of this process. However, the FCA is undertaking an in-depth thematic review of the debt management sector to assess the quality of advice and the area mentioned by the right reverend Prelate. If it finds substantial evidence of consumer detriment of the kind he suggests, it will be able to consider the scope of further regulations.