Banks: Money-laundering

Lord Oakeshott of Seagrove Bay Excerpts

Tuesday 18th December 2012 Lords Chamber

[Lord Sassoon]

My Lords, I certainly accept that there is unfinished business to be done around the whole “know your customer” and opening bank accounts regime. Many of us know what difficulty that causes, whether on our own account or on that of our children. This is something that we discussed during the passage of the Financial Services Bill. It is interesting that some banks require less detail and paperwork than others. I wish they would all make this process as easy as possible for their customers, consistent with the regulations that apply.

[Lord Oakeshott of Seagrove Bay]

My Lords, on that topic, I wonder whether the noble Lord and other noble Lords bank with HSBC. I have done so for the past 30 years. Last week I was rather surprised to be asked by bank staff to show them my passport and a utility bill. I am not sure whether noble Lords realise but we are all politically exposed persons in regulator-speak; some of us may be more so than others. But, honestly, is this not mindless box-ticking? Do they really need to check our passports to know the difference between a British baron and a Mexican drugs baron? Is not the reality that these monster banks such as HSBC and RBS are, as the Minister touched on, frankly, not just too big to fail but too big to regulate and too big for any single board to control?

[Lord Sassoon]

My Lords, on the first of my noble friend’s points, I certainly agree that the banks need to get much more intelligent about this matter. I have met in the Treasury senior bankers on the retail or wealth management side of these banks to make precisely my noble friend’s point: namely, that they need to be intelligent about this matter. This must not be a box-ticking exercise. I have made the same point to the chairman of the FSA. My noble friend raises a very important point.

Financial Services Bill

Lord Oakeshott of Seagrove Bay Excerpts

Monday 15th October 2012 Lords Chamber

[Lord Lawson of Blaby]

My Lords, I would like to support very strongly the amendment moved by my noble friend Lady Wheatcroft. I shall speak briefly but my brevity does not indicate that this is not an important issue. It is a very important issue indeed. We are debating in the shadow of the worst banking crisis of our lifetimes and possibly the worst banking crisis there has ever been. As my noble friend pointed out, the Economic Affairs Committee of this House produced a report called Auditors: Market Concentration and Their Role which was published in March 2011. It was extremely critical and rightly critical of auditors in the context of the banking collapse that we have seen. This was, as is common with reports of Select Committees of this House, a unanimous report, but unanimity can be got in various different ways. This was unanimity where everybody of all parties who sat on that committee and heard the evidence was totally committed to what the report said. My noble friend Lady Wheatcroft mentioned one thing from the report. Let me quote one other thing from paragraph 204. It states:

“There was no single cause of the banking meltdown of 2008-09. First and foremost, the banks have themselves to blame. … But we conclude that the complacency of bank auditors was a significant contributory factor”.

This has to be addressed. How will we prevent—as far as we can—this sort of thing happening again?

In discussion of an earlier amendment, the noble Lord, Lord McFall, referred to the banking commission of which I, too, am a member. It is quite possible, such is the importance of this, that the banking commission will decide to look into the question of bank audits and auditors, and indeed auditing standards and IFRS, which leave a lot to be desired and are probably a step in the wrong direction. However, we must do what we can in the Bill to rectify the position.

I say en passant that what concerned me a great deal when the big four auditors gave evidence to us was the extent to which they seemed to think that they had simply to satisfy the management of the banks at the time, when under law their duty was to the shareholders. Furthermore, the putting in place of a proper system of audit for business and industry as a whole, but particularly for the banks, is a public duty; auditors had a duty to the wider public to do a good job, quite apart from their duty to shareholders of the banks—and they failed lamentably.

What can we do about this? I do not think that my noble friend Lady Wheatcroft would say that her amendment is the complete answer. Of course it is not: a lot more has to be done. However, it is very important that the Bill addresses this question, and I believe very firmly that the amendment before the House tonight is an important part of the answer, even though it is not the whole answer. I strongly support my noble friend’s amendment.

[Lord Oakeshott of Seagrove Bay]

My Lords, I, too, am delighted to support the amendment moved by my noble friend Lady Wheatcroft. With her characteristic delicacy and discretion, she did not mention the name of the auditors in question—but I will. I believe that Deloitte has very serious questions still to answer about its audit of RBS, particularly towards the end. There were some unhealthily close relationships between Deloitte’s auditors and the senior management of RBS. I also believe that PWC has very serious questions to answer about its final audit of Northern Rock before it went bust. I am sure that the Minister will remember that in this House, I moved an amendment calling for a special audit of Northern Rock, organised by the Bank of England. The amendment was agreed, but not approved in the other place. My noble friend has put her finger on a very important question and I very much hope that the Government will take it seriously.

[Lord Flight]

My Lords, I, too, strongly support the amendment moved by my noble friend Lady Wheatcroft. The first point I will stress concerns IFRS, which hugely exaggerated bank profits and hence capital in good times, and has done the reverse in bad times. IFRS has contributed substantially to the destruction of our pension schemes by discounting liabilities at inappropriate interest rates. There have been complaints about IFRS from many quarters. Accounts have been rendered almost impenetrable. Fund managers frequently have to rewrite the accounts of companies they examine in order to make an assessment of the trading state of the business.

I have consistently complained about this subject, but nothing has happened. Who is responsible? When I was shadow Chief Secretary, the point was made to me that it was the job not of Parliament but of the profession to dictate standards. That is entirely wrong. In the USA the political representative bodies have rightly taken up such issues, and it is the duty of both Houses of Parliament to do the same.

--- Later in debate ---

[Lord Sassoon]

For the reasons that I have given, I am not absolutely convinced that it would have been helpful against the background of complacency of the bank auditors at the time of the crisis. Having said that, I agree with the Committee that there is something here that we need to look at further, so I want to see whether the Bill can and should go further to require the regulator to make the most of the expertise that auditors can undoubtedly offer. I am happy to take this issue away and consider whether there is an amendment that I can bring back at Report that recognises the important role of auditors without cutting across the role of the regulator in the way that I believe this particular amendment may do. I will look at it and come back to the House with something that addresses this area. On that basis I hope—

[Lord Oakeshott of Seagrove Bay]

It sounds as though the Minister is encouraging the regulator to ask the auditors more questions. If we have complacent auditors, surely it is even more important that they sign something, that their complacency is questioned and that they take more responsibility for their work.

[Lord Sassoon]

I certainly agree that if we can get more value out of the auditors we should do so. It should be on the basis of something that helps people—I am not sure whether that is the regulator or directly the public—towards a better understanding of the risks embedded in bank accounts. On that basis, as I say, I will take the issue away. I ask my noble friend to withdraw her amendment, which would, of course—I should say for the benefit of my noble friend Lord Marlesford, who asked me to mention credit card debt—wrap up credit card debt and many other things if we can get this right.

Global Economy

Lord Oakeshott of Seagrove Bay Excerpts

Thursday 11th August 2011 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

My Lords, I thank my noble friend Lord McNally for that and for this invitation back to the Front Bench for one day only.

I declare my interest as a pension fund manager for the past 35 years and an active investor in British shares and property. The noble Lord, Lord Eatwell, mentioned rating agencies. I have never taken a blind bit of notice of them in my life, which is probably why I still have a job. I well remember how wrong they were when I was warning about the dangers of Iceland.

We on these Benches believe that the Chancellor is right to stress the need for Britain to stick to a determined deficit-reduction plan and keep interest rates low while we have to keep borrowing so much because of—let us be frank about this—Labour’s legacy. However, I agree with the noble Lord, Lord Eatwell, that low government bond yields are not a guarantee of a strong economy. They can be a sign of weakness, as they were in Japan. I would be interested if the noble Lord, Lord Sassoon, could comment on that. Are we not now in danger of keeping the confidence of foreign investors but losing the confidence of British consumers? Some noble Lords will, like me, be old enough to remember Harold Wilson complaining that his economic recovery plan had been blown off course. That has clearly been happening in this country since the Budget. Even looking through—I am bound to say—the Minister’s rather rose-tinted spectacles at the GDP forecast, does he agree with the Governor of the Bank of England, who said:

“Headwinds to world and domestic growth … are becoming stronger by the day”?

I thought that was a striking comment from him yesterday. I agree with it; does the noble Lord?

Does the Minister also agree with the Business Secretary, the Chief Secretary to the Treasury and all Liberal Democrats that the priority, if and when there is room for tax cuts, is not to help the 1 per cent of taxpayers who pay the 50p top rate, but the millions of ordinary people who will spend any tax cut they get—and desperately need—to boost demand and jobs? Does he also agree with our calls, from Vince Cable and others, for more quantitative easing from the Bank of England to boost growth, so that we do not risk slipping into the Japanese morass, and much more bank lending to small businesses? Royal Bank of Scotland, the bank that we own, has just missed even its own soft Project Merlin target for gross lending to small and medium-sized enterprises by £1.5 million over the first six months. Is it not now time that we seriously considered imposing a net lending target on the nationalised banks, as was flagged up in the coalition agreement, so that they take their foot off the throat of small business?

[Lord Foulkes of Cumnock]

My Lords, the Minister and the Chancellor have prayed in aid of their argument the credit rating agencies. Is it not strange that these credit rating agencies, which downgraded the economy of the United States of America, are private companies—private sector institutions such as Standard and Poor, Fitch, Moody and all the other credit rating agencies. Does the Minister not agree that they have, by their actions, exacerbated the economic crisis and that, as a result, some of their friends and interests have benefited? Would it not be better if our Government and those of other countries, particularly members of the European Union, were to get together and look at ways in which credit rating can be done on a public sector basis in the public interest, and not on a private sector basis in the private interest?

Economy: Government Policies

Lord Oakeshott of Seagrove Bay Excerpts

Thursday 24th March 2011 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

My Lords, I welcome my noble friend Lord Hussain, who is sadly not in his seat at this moment. I found his speech fascinating and moving. I also congratulate the noble Baroness, Lady Stedman-Scott. I think that she is the big society in person.

I thank the noble Lord, Lord Lawson for introducing this debate. He has lost nothing of his focus or timing. Some of us on these Benches might possibly have drawn our breath in slightly to hear ourselves described as his allies and friends. He is certainly a friend, ever since we used to discuss politics over the dinner table together at Nuffield College, Oxford, in the early 1970s—I am much fatter than I was then, sadly, but at least he is much thinner—but allies? Up to a point, Lord Lawson.

I declare my interest as a pension fund manager for the past 35 years and as an entrepreneur for the past 25. I started my own business in one room with a partner and a secretary and I am still running it today. Our size has increased to eight employees so I welcome Vince Cable’s pledge of no new regulations for the next three years.

I support the broad thrust of the Budget and the overriding need not to run risks with the markets while they have Britain over a barrel. On the day when Portugal’s Government have just fallen, when Greece is staring down the barrel of default on its debt and with Greek bonds yielding 13 per cent, Irish bonds nudging double-figure yields and Spain, as my noble friend Lord Newby pointed out, looking shakier by the day, we must err on the side of caution. When you have been dumped with a mountain of debt from the disastrous Brown/Balls double act at the Treasury and you have to borrow tens of billions every year just to buy time, I am afraid that you have to tough it out while you trade your way out.

I remember that Roy Jenkins, when I worked for him, always told me how much he regretted the biggest mistake of his chancellorship when he took over from Jim Callaghan after devaluation in 1967. He did not cut as much as he should have initially and had the agony of having to go back for a second bite a year later.

I also support, as do all Liberal Democrats, the further substantial move towards taking the low-paid out of income tax. The pledge that we made at the election to take everyone earning less than £10,000 a year out of income tax was very powerful and an important reason why people voted for us. It is at the centre of the coalition agreement, which says:

“We will increase the personal allowance for income tax to help lower and middle income earners. We will announce in the first Budget a substantial increase in … 2011”.

We have now done that twice. We must press on to achieve the full goal over the period of this Parliament. If we do, it will be our proudest Liberal Democrat achievement in government, and will give millions of people a real reason to vote for us. Do not forget—you can vote Tory, Labour, Liberal Democrat, UKIP or Green, but what you cannot do at the next election is vote for the coalition.

The other key point in how we will fund this is to give priority to increasing the personal allowance over other tax cuts, including cuts to inheritance tax. That is just as well. Do noble Lords remember the great triumph of the present Chancellor, George Osborne, at the Tory conference two or three years ago, when he announced that he would make big cuts in inheritance tax, funded by a new levy on non-doms? When the Minister replies, he might remind us of how much George Osborne claimed that levy would raise. In practice, last year 5,600 non-doms paid the £30,000 charge, raising the magnificent sum of £168 million. You do not get much of an inheritance tax cut from that.

In the coalition agreement we also promised to focus on tax avoidance, including detailed development of Liberal Democrat proposals. The Treasury has developed our proposals, but why has it ignored them? On non-doms, I am afraid the Chancellor has bottled out, just like Gordon Brown. What is particularly distasteful is the announcement that there will be no further change in non-dom taxation over the course of this Parliament, which is exactly what the previous Government did. The Guardian today rightly points out that there has been a “big sigh of relief” from people advising non-doms. Sean Drury, the international mobility partner at PWC said:

“I am checking the temperature with my senior non-dom clients but I think that ultimately there will be a big sigh of relief … It could have been worse”.

That says it all. For rich non-doms, £30,000 a year is a flea bite and £50,000 a year is a minor irritant. They will be laughing all the way to the Caymans.

On stamp duty, the Chancellor’s speech highlighted correctly the problem of abuse. Everyone who knows the property market in this country knows that precious few properties worth more than £5 million ever show up in the Land Registry with proper stamp duty having been paid when they change hands. However, the Budget speech highlighted the problem but offered no solution. We Liberal Democrats can; it was in our manifesto and was quite clear. The abuse is simple. Rich people hide their houses behind a company cloak, so stamp duty is payable at 0.5 per cent when they change hands, rather than at 4 per cent or—from 1 April—5 per cent on properties worth more than £1 million. That is what honest taxpayers have to find when they move. Therefore, we say: just strip away the sham companies and charge the full stamp duty on the underlying property value. What is the Treasury waiting for?

The Chancellor must stick to the course he has set, but it will be far easier if the country believes we are all in it together. That must include the non-doms and the super-rich, who are still paying nowhere near their fair share.

Egypt: Mubarak Family Assets

Lord Oakeshott of Seagrove Bay Excerpts

Wednesday 16th February 2011 Lords Chamber

[Baroness Williams of Crosby]

To ask Her Majesty’s Government what steps they have taken to freeze the financial assets of the Mubarak family held in the United Kingdom.

[Lord Oakeshott of Seagrove Bay]

My Lords, with the permission of the House and at the request of my noble friend Lady Williams, who is attending a funeral, I beg leave to ask the Question standing in her name on the Order Paper.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, for well established operational reasons, the Government cannot comment on individual asset-freezing cases. The Government have received a request from the Egyptian Government to freeze the assets of several former Egyptian officials. We will of course co-operate with this request, working with EU and international partners as we have done in the case of Tunisia. If there is any evidence of illegality or misuse of state assets, we will take firm and prompt action.

[Lord Oakeshott of Seagrove Bay]

My Lords, I accept the point about individual cases, but will the Minister say how long he would expect SOCA normally to take to assess and approve a request of this kind? In particular, will the firm and prompt action that the Foreign Secretary has promised in this case be firmer and prompter than in the disgraceful case of President Daniel arap Moi of Kenya, who looted hundreds of millions from his people, and indeed of British taxpayers’ aid, left a lot of it in London banks, and eight years on has still not had to pay back a penny?

[Lord Sassoon]

My Lords, there are a number of potential courses of action, but the principal one now is working with our EU partners, following a similar route to the one that was adopted in relation to Tunisia. My right honourable friend the Chancellor discussed the issue with his colleagues in the context of the ECOFIN meetings earlier this week. EU diplomats are discussing the issue this week and it will be on the agenda of the Foreign Affairs Council meeting on Monday 21 February. It could decide to request the Commission to draw up a regulation similar to the one that was drawn up on Tunisia, which would be enforceable in all EU member states.

Banking: Royal Bank of Scotland

Lord Oakeshott of Seagrove Bay Excerpts

Tuesday 1st February 2011 Lords Chamber

[Lord Sassoon]

My Lords, indeed those numbers for the marginal rates of tax are correct. And that is not the only tax we extract from the banks—far from it. This Government have put in place a bank levy which will, when it comes into full force, raise an additional £2.5 billion out of the banking sector; a larger amount of money than was taken from the banks in the previous Government’s bonus tax.

[Lord Oakeshott of Seagrove Bay]

My Lords, can I encourage the Minister to use the full resources of the Treasury to try to find a way of untying his hands? I cannot believe that there is not a way around this. Is the Minister aware that Sir Philip Hampton, the chairman of RBS, a year ago told us that over 100 Royal Bank of Scotland bankers collected £1 million? What does the Minister expect the figure to be this year? Is he aware that I and the overwhelming majority of taxpayers, who are having to pay £828,000 of every £1 million paid out to RBS bankers, believe that we are entitled to see the names on the cheques?

[Lord Sassoon]

My Lords, the Royal Bank of Scotland is due to announce its results on 24 February. It normally makes its remuneration disclosures on or around that date, so we will have to wait. I have no knowledge of the number of bankers who might or might not be getting particular levels of bonus. Our relationship with the Royal Bank of Scotland is managed on a commercial, arm’s-length basis through UK Financial Investments.

Banking: Bonuses

Lord Oakeshott of Seagrove Bay Excerpts

Tuesday 11th January 2011 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

My Lords, I thank the Minister for the Statement. I do not know whether he has read it lately, but I have here an excellent document, The Coalition: Our Programme for Government, in which Nick Clegg and David Cameron promised,

“radical plans to reform our broken banking system”.

Item 1 said on banking:

“We will bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial sector … We want the banking system to serve business, not the other way round”.

There is not much sign in the briefing that has been coming from No. 10 and the Treasury that they are very aware of those commitments. Can the Minister assure us that he will draw those commitments to the attention of the people in the Treasury who are working on these schemes, because frankly the messages that are coming out are not right when we are trying to do a serious negotiation with the banks to improve their behaviour?

Specifically on the Royal Bank of Scotland, what possible justification is there for Mr Hester, who is one of the highest-paid public sector workers in the country, to get any bonus at all when his bank has missed its legally binding mortgage and business lending targets by a mile?

[Lord Sassoon]

My Lords, I am always grateful to my noble friend Lord Oakeshott for reminding us of what is in the coalition agreement, which is always at the heart of what we do. I am sure that my colleagues in the Treasury will need absolutely no reminder of what the coalition agreement says in this area, because it is precisely because we are guided by the coalition agreement that we now have a package that, as I have explained, means that 2,500 banks as opposed to 25 are caught by the code. For all their talk, the previous Government had not actually brought in any new remuneration code. We now have one in place. We are continuing, as I said, to urge our European partners to work with us on a common set of banding disclosures. The current discussions are precisely to make sure that bonuses are lower than they would otherwise have been and that lending is higher.

In respect of the Royal Bank of Scotland, as I said in the Statement, we found ourselves having inherited a most extraordinary agreement negotiated by the previous Government that put absolutely no restrictions on RBS’s payments and bonuses this year. We want to see RBS now not as a front-runner, which seemed to be where it was encouraged to be under the previous Government’s agreement, but as a back-marker when it comes to its bonus payments for this year.

Budget Responsibility and National Audit Bill [HL]

Lord Oakeshott of Seagrove Bay Excerpts

Monday 29th November 2010 Grand Committee

[Lord Oakeshott of Seagrove Bay]

My Lords, like the noble Lord, Lord Eatwell, I was rather struck by the word “intergenerational” in the draft charter for budget responsibility. The Treasury’s objectives for fiscal policy are to,

“ensure sustainable public finances that support confidence in the economy”,

which is fine, and,

“promote intergenerational fairness, and ensure the effectiveness of wider Government policy”.

Can the Minister tell me why we need the word “intergenerational”? It seems that one of the basic objectives of fiscal policy is to promote fairness and, of course, our coalition agreement holds fairness very high. Why do we need the word “intergenerational” here? As it is a draft charter, perhaps I may ask that the word be taken out from the final version.

[Lord Myners]

My Lords, I support my noble friend Lord Eatwell. I think that I need do no more than cite our debate a few minutes ago in the Chamber when the Minister repeated the Statement on the OBR made earlier today in the other place by the right honourable Chancellor of the Exchequer. The central emphasis of that Statement was the economy. It would seem therefore that the Government intend to use the OBR and the charter in support of it to give confidence to their economic projections. I therefore suggest to the Minister that no harm would be done, and considerably greater precision would be achieved, if the words proposed by my noble friend were inserted in Clause 1.

--- Later in debate ---

[Lord Barnett]

My Lords—

[Lord Oakeshott of Seagrove Bay]

My Lords, I listened at considerable length to the Minister reading out his brief in response to the amendments but I wondered whether, by any chance, he could do me the courtesy of answering my question, which I thought was fairly simple and clear. Why are we having just the word “intergenerational” with fairness? He has said that he does not want a Bible. I am suggesting that he might make it shorter, but why “intergenerational”? Why not any other sort of fairness? The document says that these are:

“The Treasury’s objectives for fiscal policy”.

This is a government document, so could the Minister please address the question that I raised?

[Lord Sassoon]

I was not meaning to be at all discourteous to my noble friend. I thought that I had explained that a lot of things could be set out in a full description of the policy frameworks but that the objective is to have a short encapsulation of fiscal policy objectives as a background to the specific mandate for fiscal policy. As I also said, this is of course a draft charter. I am listening to that and other comments that are being made on the charter. I absolutely confirm that. I fully understand that there are other aspects of fairness; indeed, I read out another formulation of the coalition policy approach to broader economic policy-making, so I am absolutely listening to my noble friend’s point. Fairness, without any specific reference to “intergenerational” or any other kind, is indeed central to the economic policy objectives of the coalition Government.

[Lord Oakeshott of Seagrove Bay]

I am glad that we are starting to get the matter addressed, but this is Committee stage and it is no good, if I may say so, taking a Civil Service attitude of, “We’ll think about anything that comes in”. This is Committee stage. I have made a proposal and suggested the document should be shorter, not longer. I know that it is a draft. I have said that, if the Minister cannot explain why intergenerational is the one bit of fairness that is picked out, why not leave out “intergenerational” and just say “fairness”? Could we actually engage here, please? What is the answer?

[Lord Higgins]

Before my noble friend replies to that, perhaps I may delay the Committee for a moment or two more. First, I apologise to the noble Lord, Lord Eatwell. His reference in the amendment to the lines in the Bill is correct. I was working on the original version of the Bill, which the Treasury has subsequently corrected. I just hope that the Public Bill Office has sorted out all my numbering; otherwise, I will have a lot of work ahead of me.

We should be extremely grateful to the Minister for providing the draft charter; otherwise, we would be relying purely on what is in the Bill, which leaves a large number of questions unanswered. Perhaps I may pursue the point raised by the Minister with regard to the fiscal mandate. There is no initial capital letter in “mandate” in the draft charter, which perhaps there should be. It states that the mandate is,

“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period”.

That is an extremely important statement. My problem is that there are shades of Gordon Brown, rather like Banquo’s ghost, in the reference to “cyclically-adjusted”, because Gordon Brown was a master at changing the dates of when the cycle began. If the mandate is to mean anything at all, we need to know when the Government think that the cycle began. If my noble friend cannot answer now, perhaps he might come back to it later.

--- Later in debate ---

[Lord Oakeshott of Seagrove Bay]

I rise briefly strongly to support the amendment. The noble Lord, Lord Sassoon, might be pleased to know that I had the pleasure of serving under the noble Lord, Lord Peston, for several years on the Economic Affairs Committee and sub-committee and he was as peppery then as he is now, so it is nothing personal. It was a worthwhile committee. You need only look round this Room to see the range of expertise and economic distinction available in this House. I remember that there was a former Chancellor of the Exchequer and very distinguished economists of all sorts. I endorse the remarks of the noble Lord, Lord Myners, and thank him for engaging more seriously with this House as a Treasury Minister than we have had in the past. That committee was excellent, and it could do nothing but add to the quality of debate and economic governance in this country to pass this amendment.

[Lord Eatwell]

I have a couple of comments to make on the amendments. With respect to the engagement of my noble friend Lord Myners in the House, that was increased by the noble Baroness, Lady Noakes, from the other side, who kept him working hard.

On the remarks with respect to the charter, there is a good point. The Economic Affairs Committee of your Lordships’ House takes a long-run view on fiscal affairs, which is what you want to get into this charter. It is about the whole philosophy that the Government have talked about. In the examination of the Finance Bill by the sub-committee of the Economic Affairs Committee, there is tremendous expertise considering technical aspects of fiscal policy. To quote another example of involvement by your Lordships’ House, I had the privilege of serving on the pre-legislative committee on the Financial Services and Markets Bill, which was a committee of both Houses. It enormously improved the Bill before it got to the legislative stage and saved a lot of time in the House.

With respect to the charter, my noble friends and the noble Lord, Lord Higgins, have hit on an absolutely central and valid point. On the amendment referring to appointments, it might be a little cumbersome unless we put the two committees together. What if the two committees disagreed? It would all become rather messy, so I am rather agnostic on that. The key amendment is Amendment 35. My noble friends have spotted an obvious oversight in the drafting of Schedule 1. Of course, the OBR should provide evidence to the relevant committees of both Houses. I am referring to evidence that is within the terms of its remit as defined in the Bill. If it is independent, it should be shown to be such by providing evidence in that way. We ought to have the word “reasonable” here so that reasonable requests for attendance can be made. After all, the OBR is rather small, and it cannot be attending things all the time. Whether the drafting is appropriate, I am not sure, but it is an entirely sensible point that when necessary the OBR should appear before committees in your Lordships’ House.

--- Later in debate ---

[Lord Myners]

I shall bear that in mind. If the Minister is struggling to keep up with his work, I will obviously make an effort to lighten the burden on him. However, I hope that he makes a serious effort to answer Written Questions. There are some examples in Hansard today which are so far from the mark in terms of attempting to answer the Question that they treat the House with a disregard which is inappropriate.

[Lord Oakeshott of Seagrove Bay]

It is not just under this Government that that has been happening; it is a problem with the Treasury generally, although it has been happening particularly under this Government. If the Treasury made a bit more effort to answer Questions honestly and fully the first time, we would not need to ask them two or three times. It is a bad problem.

[Lord Sassoon]

I had not intended to go down this interesting byway, but there has been a singlehanded contribution by the noble Lord, Lord Myners, to a considerable increase in the number of Written Questions. I am very happy to give him the figures, although I do not have them to hand. The number of Questions for Written Answer that the Treasury has had to deal with in the past six months has been significantly above the figure that previous Ministers in the Treasury—principally the noble Lord himself—have had to face. Nevertheless, our record on answering Questions on time has improved dramatically, and I am very happy to supply the noble Lord with the data. I am conscious that we are scheduled to go on for only another 35 minutes, so perhaps we should go back to the Bill. However, with regard to answering Treasury Questions, I am happy to discuss the relative performance of this Parliament compared with the previous one if it would interest the noble Lord, although I shall do so on another occasion.

We want plenty of scrutiny in this House. Clauses 1(4), 1(6), 2(3) and 8(2)(b) all confirm that the OBR’s reports will be presented to the whole of Parliament, not just to another place. I will return specifically to the question of committee scrutiny, but it is important that the Economic Affairs Committee of your Lordships’ House should have, and will have, responsibility for whatever it thinks appropriate in considering economic and fiscal issues, including those that relate to the OBR. However, I do not believe that any of the amendments in this group are necessary to achieve that.

When it comes to the relatively narrow but important point on formal approval of the charter, perhaps this will not surprise noble Lords, but I very much lean towards the argument of my noble friend Lady Noakes, because, critically, the charter contains the fiscal mandate, which I believe should be properly considered in another place, rather than here.

Housing: Mortgages

Lord Oakeshott of Seagrove Bay Excerpts

Wednesday 10th November 2010 Lords Chamber

[Lord Sassoon]

My Lords, I certainly agree with the noble Lord that questions of affordability should be addressed, which is why the FSA is carrying out the consultation. The consultation is due to close shortly and forms an important part of the FSA’s ongoing work to ensure a sustainable mortgage market for the medium term.

[Lord Oakeshott of Seagrove Bay]

My Lords, I am sure that I misheard the Minister, but he seemed to imply that it was inevitable that mortgage lending is so low at this stage of the cycle. There is nothing inevitable about it. The fact is that the banks are not lending as they should and they are demanding 30 per cent and 40 per cent deposits from people with good prospects. What does the Minister think is a fair deposit for a bank to ask a creditworthy borrower to put down to get a fair and affordable interest rate? The banks are not doing it at the moment.

[Lord Sassoon]

My Lords, it is certainly not for government to make judgments about the right terms on which mortgages should be advanced by individual banks. There is a rebalancing going on from an excessive household leverage which built up in the past decade. There is also a necessity for the banks to price all their products, including mortgage products, at an appropriate margin, because it was quite clear that they were extending a whole range of credit products, including mortgages, at submarket rates before the crisis. The Government’s interest is to make sure that we have a sustainable balance, which means that people, including first-time buyers, can get mortgages on appropriate terms, but also that it is sustainable and does not lead to another bubble. We are following very keenly the work of the FSA in this regard.

Comprehensive Spending Review

Lord Oakeshott of Seagrove Bay Excerpts

Monday 1st November 2010 Lords Chamber

[Lord Oakeshott of Seagrove Bay]

Well, my Lords, that was the noble Lord, Lord Peston, at his peppery professorial best. I welcome what he said about Trident. I hope he will be paying tribute to the Liberal Democrats in Government. We are not meant to brag about this too much but I am still going to mention it. By a feat of negotiation we have managed to get the renewal of Trident put off until after the next election, which, we hope, will at least give time for Labour to change its policy as well. So there is a really serious chance that we will not be committed to a replacement of Trident which the other two main parties were putting forward at the general election.

It is always interesting to hear from the noble Lord, Lord Lamont, with his experience. He certainly does know all about markets losing confidence in governments. I was particularly impressed by the wise words of the right reverend Prelate the Bishop of Leicester about the importance of maintaining stable communities in social housing. I am afraid the real problem about the housing benefit situation is the way the social housing stock was run down disgracefully under Thatcher, Blair and Brown. That is the real reason we are in this mess on housing today.

The Chancellor announced £81 billion of cuts in the CSR and the official estimate of the tax gap—the total of tax avoidance, evasion and fraud—is £42 billion. We must close the deficit, but to do that in a fair and sustainable way, we must repair Britain’s broken tax collection machine. Volunteering is all very well, but not when it comes to paying tax. Just like any business in the real world, we must get our revenues up as well as our costs down. I declare my interest as a pension fund investment manager for the past 34 years. It is one of life’s rather strange twists that I went from advising a Labour Minister, Roy Jenkins, to working for Warburgs in the City, and the noble Lord, Lord Sassoon, went from working for Warburgs to advising a Labour Minister, Gordon Brown, at the Treasury. Today he is a Conservative Minister and I am a Liberal Democrat Treasury spokesman. With all his top-level experience at the Treasury in the Brown years, the Minister will know where all the bodies are buried and be ideally placed to answer our questions and respond to our concerns in this House.

My right honourable friend Danny Alexander told Parliament last week and the Minister repeated today that there is no place for tax cheats in our society. How we deal with tax cheats will be a crucial test of fairness for us. We will never persuade the great majority of hard-working British taxpayers who pay their dues and cannot afford expensive accountants and solicitors that we are all in this together unless we make fair tax our watchwords. This is not just some airy-fairy academic issue. At the Arsenal on Saturday we were having a moan at half-time about our failure to score against West Ham, when the man behind me suddenly said:

“I liked your piece in the paper, you know. These non-doms get away with murder”.

We know a fair bit about dealing with non-doms in this House. I pay tribute again to the fantastic support I have had from noble Lords sitting on all sides of this House for our long and successful battle against delaying tactics and outright opposition from the Front Benches to make all of us here pay full British tax. The House showed itself at its independent and robust best last June when we passed our amendment to the Political Parties and Elections Bill to ban non-dom and non-resident donations. That is now law and just needs a touch on the statutory instrument button. What are we waiting for?

Did your Lordships know that you inherit non-dom status from your father? Just like an hereditary peerage, it passes down the male line, and like an hereditary peerage, you are born a non-dom and you stay one unless you disclaim it. Leading accountants advise me that between three and four million people living in this country, most of whom have lived here all their lives, are non-doms and could claim non-dom tax status for tax purposes if they wanted. Does the Minister agree with that figure, or what is the Government’s best estimate if he does not? Can he give us the latest figures for the numbers paying the £30,000 flat charge? What is the Treasury’s best estimate, in its detailed review of Liberal Democrat proposals on tax avoidance, of the amount of extra tax which will be raised by limiting non-dom tax status to seven years—the Treasury always initially works these things out— in the absence of behavioural change? The really big benefit of paying no British tax at all—on your income, capital gains or inheritance tax—on all the assets and earnings that you have offshore goes, of course, to the really rich. That is because a £30,000 a year poll tax payment—a non-dom poll tax, if you can call it that—is really just a fleabite for the fat cats.

Our coalition agreement says:

“We will make every effort to tackle tax avoidance, including detailed development of Liberal Democrat proposals”.

The Chief Secretary has made a good start in announcing a beef-up of the tax avoidance operation in HMRC. Yet if we can really close the tax gap, as it is suggested, by £7 billion a year in four years by investing £225 million a year in HMRC over the spending review period, why are we not investing far more? Anything like those rates—a 3,000 per cent annual return—would make Bernie Madoff blush, and if it is anything near that, we should be doing far more. If it is that easy to boost the tax take, what a condemnation that is, I am afraid to say, of Gordon Brown’s long years at the Treasury, when he tried to run every department but his own.

Very rich people are also past masters at cheating the rest of us on stamp duty. Anyone who knows their way around the property market will tell you that precious few luxury houses or flats worth more than, say, £5 million today ever feature on Land Registry records with stamp duty having been paid. There is an especially abusive scheme using a loophole in the law on Islamic finance to dodge stamp duty, which is sold to Jews, Christians and atheists with no questions asked. Rich tax cheats and their advisers know no shame. More resources for HMRC will help, but the way really to boost the tax take is to simplify the system and close the loopholes. Non-dom status is an open invitation to tax avoidance on a massive scale. That is why our policy on these Benches is to make non-doms come fully onshore after seven years. That gives plenty of time for visitors and people on short-term contracts, but then we say, “If you’re in our club, you pay the sub—full British tax, like all the rest of us”.

The Treasury is reviewing non-dom status as our coalition promised. I asked the Minister a question 10 days ago on the non-dom review which he did not answer, so he has kindly written to me as follows:

“This is a complicated policy area involving considerations of fairness as well as competitiveness. The Government is aware of the need for interested parties to be engaged on this issue and will make a more detailed announcement about the form and timing of the review, including any formal public consultation, at the appropriate time. I am sorry that I am not able to provide you with a more specific answer at this time”.

So am I. Who are the interested parties? Not just the non-dom bankers, we hope, who choose to be British when it suits them and foreigners when it does not. Those words are Vince Cable’s, by the way, not mine; he has not changed his mind. Let us act now to limit non-doms to a seven-year free ride and make Britain a country where the rich pay their fair share of tax.