Economy: Inflation

Debate between Lord Newby and Lord Sugar

Tuesday 11th March 2014 Lords Chamber

[Lord Newby]

There is a tension as far as the Bank of England is concerned. If it does not say anything it is criticised for not giving any indication of what it thinks; and when it does say something, it is criticised for saying what it thinks. That is an inevitable problem. On balance, it is better to have the governor and other members of the senior management of the Bank of England explaining what they think is happening to the economy, what they are doing and why they are doing it.

[Lord Sugar (Lab)]

My Lords, the average family has paid £1,350 extra in VAT since it was increased by the Government. I am hearing noises from the Government that the economy is supposed to be looking up a little. If that is the case, would the Minister consider asking the Chancellor to revert back to a rate of 17.5% in his Budget next week?

[Lord Newby]

The noble Lord is not alone in hearing that the economy is improving: the economy is indeed improving. The British Chambers of Commerce increased their growth forecast to 2.8% only yesterday; the growth in permanent jobs, according to KPMG, was last month at its second highest since records began. As far as VAT is concerned, the noble Lord is asking the Government to spend somewhere in the region of £12 billion to £14 billion extra. We have not eliminated the budget deficit: the only reason we have what now looks like sustainable growth is that we have a credible path for the public finances and interest rates and we are not going to throw that away.

Financial Conduct Authority

Debate between Lord Newby and Lord Sugar

Tuesday 15th October 2013 Lords Chamber

[Lord Newby]

My Lords, last week the Financial Conduct Authority published its first attempt to deal with the problem that the noble Lord raises. It is proposing that it should be possible only to roll over a loan twice and that if a consumer has a CPA with a loan shark—sorry, if it is a loan shark, it probably does not have any CPA—or an entirely reputable company, the number of payments that will be able to be taken under such an authority will be reduced to two. This will therefore deal pretty comprehensively with the specific type of issue raised by the noble Lord.

[Lord Sugar (Lab)]

My Lords, I have seen the suggestions put forward by the FCA on payday loans in an attempt to protect consumers. May I respectfully say that whoever drafted them is a little naïve? Needless to say, those devious people alluded to here will work around them in a few moments. Does the Minister recognise that the only way to solve the issue is to cap the exorbitant interest rates charged and, more importantly, impose strict advertising guidelines where the advertisers are forced to devote as much prominence to warnings as they do to the sales pitch? By that, I do not mean some micro-printing in jargon that is not understood by the average consumer.

[Lord Newby]

My Lords, the FCA has made proposals on advertising, which the noble Lord may have seen. As for a cap on interest chargeable, the view at the moment is that the FCA does not believe that that is the most effective way of capping the total charge made. I am sure the noble Lord will have seen the Which? report in recent days, showing that borrowers from high street banks are sometimes paying as high, if not higher, effective rates of interest on their loans because of other charges. The key thing is to have a cap on the total cost of credit, rather than simply go for a cap on the rate, which payday loan operators certainly can get around by imposing a whole raft of other charges surrounding the conditions of the loans.

Taxation: Tax Collection

Debate between Lord Newby and Lord Sugar

Thursday 4th July 2013 Lords Chamber

[Lord Newby]

My Lords, the noble Lord raises an important point. Eighty-four per cent of Apple’s non-US operating income was booked by an Irish subsidiary that was not tax-resident anywhere and paid tax at a rate of 0.05%. That is clearly unacceptable and is why the G20 will look at the issue later this month. It will be presented with a report from the OECD that suggests not only what action is needed but sets deadlines for taking it and makes proposals on the resources that are going to be needed to implement the new rules.

[Lord Sugar]

My Lords, the issue here is one of transfer pricing policy by foreign companies such as Apple, where, to put it simply, the prices of their merchandise are inflated and the margins that they make parked outside the UK. The merchandise is then sold on for virtually cost price in our country. Will the Minister consider making an assessment of these companies’ sales and applying a profit margin criterion, based on industry standards? They can argue about it afterwards, including about the disclosure of their true costs.

[Lord Newby]

My Lords, this is exactly the issue which the OECD is looking at currently. Along with the French and the Germans, we have made a significant financial contribution in terms of getting experts working on this. There are a number of ways of dealing with it. The noble Lord suggests one way. The key thing is that we rapidly come up with new rules and get them implemented at an international level.