United States Budget: Economic Impact

Lord Roberts of Conwy Excerpts

Monday 10th December 2012 Lords Chamber

Asked By

[Lord Roberts of Conwy]

To ask Her Majesty’s Government what assessment they have made of the effect on the United Kingdom economy of the outcomes of the “fiscal cliff” discussions in the United States of America.

[Lord Newby]

My Lords, the Office for Budget Responsibility, which is responsible for producing independent economic and fiscal forecasts for the UK economy, based its forecasts last week on the assumption that fiscal policy will be tightened in the US by between 1% and 2% of US GDP. This, in turn, assumes that the US Congress will reach a budget settlement by the end of the year and that the fiscal cliff will be avoided.

[Lord Roberts of Conwy]

Is my noble friend aware, as I am sure he is, that many believe that unless the end-year fiscal crisis in the US is averted, involving as it does some hundreds of billions of dollars’ worth of tax rises and spending, there is a risk that the US could return to recession, and the prospects for our exporters to the United States could be very gloomy indeed? Such prospects are already gloomy in the eurozone and other countries where lower growth is anticipated. Is there a specific remedy for that situation, should it develop?

[Lord Newby]

My Lords, I agree with the noble Lord that the US economy is extremely important to our exporters. Last year, we exported £80 billion of goods and services to the US, which amounted to 16% of our total exports. However, perhaps I have watched too many episodes of “The West Wing” but I suspect that a deal on the US budget will be done in time, albeit at the last minute.

Northern Ireland: Corporation Tax

Lord Roberts of Conwy Excerpts

Monday 15th October 2012 Lords Chamber

[Lord Newby]

My Lords, I can confirm that, as the current UK corporation tax system has different rates for smaller and larger businesses, it would be possible in principle if corporation tax were devolved to the Northern Ireland Assembly for two rates to obtain in Northern Ireland. I agree that the argument in favour of the devolution of corporation tax to Northern Ireland is of a different nature to the devolution of corporation tax to Scotland because of the proximity of the Republic of Ireland, which of course has a significantly lower corporation tax rate.

[Lord Roberts of Conwy]

Will my noble friend take on board the fact that Wales, too, would like to have the power to give variable rates of corporation tax?

[Lord Newby]

My Lords, of course, considerations of consequentials to Wales are always uppermost in the Government’s mind.

Wales: Barnett Formula

Lord Roberts of Conwy Excerpts

Wednesday 20th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, we are straying a bit from Wales, but I am very happy to talk about Scotland. Of course, we recently passed through this House the new Scotland Bill, now an Act, which made some very significant changes resulting from the Calman commission recommendations. In respect of the eponymous formula of the noble Lord, Lord Barnett, the difficulty that we have among others is that there is no consensus across the UK on what could replace it. Since 1978, it has stood the test of time, and it is very difficult to find a better basis.

[Lord Roberts of Conwy]

Would my noble friend agree that ideally what is required is a formula that is adaptable to the special needs of Wales, Scotland and other national regions?

[Lord Sassoon]

Yes, indeed, I would agree with my noble friend that that should be the objective of any replacement for the formula.

Queen’s Speech

Lord Roberts of Conwy Excerpts

Wednesday 16th May 2012 Lords Chamber

[Baroness Royall of Blaisdon]

My Lords, I move the Opposition’s amendment to the Motion on the gracious Speech. We on these Benches do not do so lightly, and we acknowledge that it is a serious step. To do so is not unprecedented, although we recognise that it is unusual. In fact, the last time it was done was back in 1999, in an amendment against the overall thrust of the policy of the then-Labour Government. The mover of that amendment was none other than the noble Lord, Lord Strathclyde, so we are completely confident that the government Benches will strongly support our right to argue for this amendment today.

Our reason for tabling the amendment is straightforward. We believe that the Government are putting the wrong priorities first because the Government are putting the wrong people first: tax cuts for the rich, but hard-working families being asked to pay more; nurses being laid off, but an expensive and wasteful NHS reorganisation; and police numbers being cut back—indeed, as the police themselves say, 20% cuts are criminal—but nothing being done to tackle crime. There is no legislation, as was promised, on ASBOs. Rather than concentrating on Lords reform, the Government should be concentrating on jobs, on growth, on living standards and on youth unemployment.

Let us consider the economic state of the nation. The economy is in a double-dip recession with no end in sight. Indeed, the latest dismal figures for the building industry suggest that the estimate of national GDP growth of minus 0.2% in the first quarter was overly optimistic, an underestimate of the true scale of economic decline. The UK, as a direct result of this Government’s policies, is set to endure a longer depression than the country suffered in the 1930s. Just today, the Bank of England has cut its growth forecast for this year from 1.2 per cent to 0.8 per cent, and warned that the UK would not be unscathed by the storm which is still convulsing the eurozone. That is precisely why we should be part of, and influencing, the debate rather than standing in isolation. But it is still this Government, not events beyond our shores, who are responsible for the double-dip recession in which we are mired.

What is there in the Queen’s Speech that will do anything to kick-start the economy back into growth? Of course there will be Bills on competition policy and on banking, and on a green investment bank, as the noble Baroness, Lady Wilcox, said, but I would be grateful if in her reply, the Minister would confirm that the banking Bill is not going to be a carryover Bill, as we had understood.

These may be worthwhile measures. We certainly hope that they will be, but any effect that they have on economic performance will be in the medium to long term. They will make no discernible impact over the next few, crucial, years. The noble Baroness mentioned a Bill to reduce burdens on business by repealing unnecessary legislation. Well, we are all against “unnecessary legislation”, though it seems to me that we have encountered a lot of seriously unnecessary legislation recently—for example, on the National Health Service, something that produced a plethora of quangos. But I leave the verdict on these proposals to none other than the leader writer of that organ of radical thought, the Daily Mail:

“The promised bonfire of the quangos and red tape has been pathetic, with last week’s Queen’s Speech paying only lip service to deregulation”.

I do not think that the Government really understand. They do not seem to understand that it is their policies that have mired the economy in recession and that, without a change of course, without active intervention now, the prospects for a return even to the levels of output seen in 2008 are bleak. The coalition appears to be in recession denial. There is no hope and the people of our country are desperate for vision, hope and opportunity. But the Government lack any vision of how Britain might return to prosperity.

[Lord Roberts of Conwy]

Would the noble Baroness give way? I am very surprised that she does not give a hearty welcome to the increase of 105,000 in employment and the decline of 45,000 in the unemployed that were announced today, facts that were welcomed by the Leader of the Opposition at Prime Minister’s Questions.

Deficit Reduction

Lord Roberts of Conwy Excerpts

Tuesday 18th January 2011 Lords Chamber

[Lord Sassoon]

Well, my Lords, it has come to a pretty pass when the noble Lord characterises the investment in the banks as some sort of voluntary investment to make a return. It was necessary to bail out and save the British economy because the previous model of financial regulation had completely failed. Under the stewardship of the new Government, we will do our best to get back the investment, and hopefully more, that was necessarily put in by the previous Government. That is what we are doing.

[Lord Roberts of Conwy]

My Lords, would my noble Friend confirm that Royal Bank of Scotland and Lloyds banking groups have considerable liabilities, which will be added to the country’s net debt in due course?

[Lord Sassoon]

My Lords, as my noble friend says, there are liabilities as well as assets on the Government’s balance sheet as a result of the bailout of the banks. It will be a long process, in which the management of those banks is taking the leadership, to restore them to health, both for the benefit of the shareholders, including the nation, but also to ensure that they can continue to lend money to the businesses of this country.