Taxation: Avoidance

Debate between Lord Sassoon and Lord Howarth of Newport

Wednesday 25th July 2012 Lords Chamber

[Lord Sassoon]

My Lords, what is important is that we have a tax system that is fair and which means that those with the broadest shoulders pay the most, which is exactly what the most recent Budget did, and that we have a tax system whereby in all parts of the earning scale people are incentivised to work. That is why raising the tax threshold on the way to our target of £10,000 is one component of making a real, radical change to the tax system in this country.

[Lord Howarth of Newport]

Can the Minister tell us how much revenue is forgone in consequence of higher-rate pension tax relief? Does he consider that either fair or useful?

[Lord Sassoon]

My Lords, this is another area where we need to strike a fair balance. We need to encourage savings in this country; we need to get the savings rate up; and we need to make sure that people are incentivised to save for all eventualities, including their pensions. The noble Lord would be right to say that we and the previous Government have taken measures to ensure that there is a fair balance.

Universities: VAT on Alterations to Listed Buildings

Debate between Lord Sassoon and Lord Howarth of Newport

Thursday 5th July 2012 Lords Chamber

[Lord Sassoon]

My Lords, it will be for the universities and colleges affected to decide what they do. We have made generous transitional arrangements which give the affected institutions time to plan. Of course, the total of higher education institutions’ funding will rise during the next two to three years, so there is time for those institutions to make the necessary decisions.

[Lord Howarth of Newport]

My Lords, if the Government are to continue with the Listed Places of Worship Grant Scheme, why do they not introduce a listed places of learning grant scheme? Better still, why do they not abandon their defeatist attitude towards the European Union and reopen vigorous negotiations with the European Commission to secure a unified zero rate of VAT for both alterations and repairs to heritage buildings?

[Lord Sassoon]

My Lords, on the noble Lord’s first question, he makes the point that I would make: that the Listed Places of Worship Grant Scheme is a continuation of an existing scheme and not a new scheme that has been introduced. As regards his question on Europe, we need to abide by the VAT rules that Europe sets. Those rules very seriously constrain us, and the noble Lord makes the important point that we have to work within those constraints.

Economy: Monetary and Fiscal Policy

Debate between Lord Sassoon and Lord Howarth of Newport

Tuesday 8th November 2011 Lords Chamber

[Lord Sassoon]

My Lords, I know that it is not for me to ask the questions this afternoon, but I wonder how much more expenditure and deficit the noble Lord, Lord Kinnock, would advocate before we risk getting into interest rates that are at the level of France, let alone of Italy. Last night the UK had 2.3 per cent 10-year interest rates, and Italy had 6.6 per cent heading for 6.7 per cent. Which would the noble Lords opposite like? We will stick to our deficit reduction plan, because that is what keeps interest rates low, and that is what our households and our businesses need.

[Lord Howarth of Newport]

My Lords, if the Minister insists that there is no case for altering the configuration of monetary and fiscal policy, may I draw to his attention another suggestion? Will the Government respond positively and energetically to the proposal put forward by the Society of Pension Consultants that a proportion of the vast resources held under management by pension funds could safely and sensibly be mobilised to lift investment in infrastructure and, through appropriate provision for early access to pension lump sums, to lift personal spending?

[Lord Sassoon]

I certainly agree with the noble Lord that infrastructure is one of the themes and priorities of the forthcoming growth review. The Government are looking at encouraging anything that encourages a further source of investment into our infrastructure from pension funds and others, so I certainly take his suggestions on board.

Euro

Debate between Lord Sassoon and Lord Howarth of Newport

Thursday 27th October 2011 Lords Chamber

[Lord Howarth of Newport]

To ask Her Majesty’s Government how they are seeking to safeguard the United Kingdom’s interests in discussions with European Union partners on the future of the euro.

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

My Lords, a stable euro area is in the UK’s interests and the Government are actively engaged in seeking to achieve this. While acknowledging the need for greater euro area fiscal integration, the Government are working to ensure that the UK is not part of that integration and that our influence on and interests in the single market, competition policy and financial services are safeguarded. We have ensured that the UK will not participate in the European stability mechanism.

[Lord Howarth of Newport]

My Lords, which would be more dangerous for Britain—financial and fiscal integration of the eurozone, with Britain marginalised in a minority bloc and outgunned in EU decision-taking; or disintegration of the eurozone, with its attendant chaos; or, most likely, a combination of the two? With eurozone countries objecting to Britain’s interference, and with both the coalition and the Conservative Party riven by internal disagreement, how can the Prime Minister hope to exercise useful influence or, indeed, to save his Government from being destroyed by Europe?

[Lord Sassoon]

I really do think that the noble Lord, Lord Howarth of Newport, puts up completely false choices and alternatives here. The fact is that significant progress has been made overnight to stabilise the eurozone. A lot more work needs to be done to fill in the detail but that is a first major step. I see that the noble Lord is nodding his head. That is point number one. Secondly, the idea that the UK is going to be marginalised in the “euro-outs” is simply not true. On Sunday, the Prime Minister established the key principle that we would be there, as we were yesterday, with a voice at the table on all matters involving all 27 EU member states. The idea behind the Question is that somehow it is just the UK versus the rest. We must be reminded that the other euro-outs include Poland, Sweden, Hungary, the Czech Republic and four others. We will play a critical part in driving forward the single market, and that is very important to the euro area.

Public Expenditure: Deficit Reduction

Debate between Lord Sassoon and Lord Howarth of Newport

Tuesday 6th September 2011 Lords Chamber

[Lord Sassoon]

My Lords, I remind noble Lords, lest they forget it, that we have introduced an independent Office for Budget Responsibility so that we can no longer keep fiddling the numbers and restating the cycle like the previous Government did. The Office for Budget Responsibility’s latest numbers, produced at the Budget, confirmed that we are on track to meet the Chancellor’s fiscal mandate on the rolling five-year period.

[Lord Howarth of Newport]

My Lords, does the Minister really believe that the automatic stabilisers will do the trick? Is it not a mark of leadership to be able to admit that you have got it wrong? Is it not now time for the Chancellor and the Prime Minister to acknowledge that their strategy of drastically reducing public expenditure cannot enable the UK economy to revive when there is no sign anywhere else on the skyline of demand for what the UK economy is able to offer?

[Lord Sassoon]

I am not quite sure who should admit what they got wrong, but the former Chancellor, Alistair Darling, made a complete mea culpa when he said, “We got it totally wrong, raising national insurance and putting a tax on jobs”. He said that there was no credible economic policy at the last election, which is why Labour lost.

We have introduced a policy that is on track to get the economy growing. It is the underpinning of the economy by a clear fiscal plan on which we can build. The Chancellor and the Prime Minister are working very hard on the growth of the economy, which is founded on the stabilisation of the deficit that we inherited.

Taxation: Deficit Reduction

Debate between Lord Sassoon and Lord Howarth of Newport

Thursday 28th October 2010 Lords Chamber

[Lord Sassoon]

I am very grateful to my noble friend. I completely agree with his sentiments. This is not a Government who believe in medium and long-term high marginal rates of taxation. We have to incentivise the private sector to go out and generate wealth in order to deal, among other things, with the rebalancing of the economy which is now so necessary.

[Lord Howarth of Newport]

My Lords, does the noble Lord really expect us to believe that engineering a wholesale reduction in demand in the economy is the way to prepare for growth? Will the noble Lord be candid and say whether he considers that the Government are more politically vulnerable on account of their failure to provide growth, or of their failure to provide fairness?

[Lord Sassoon]

My Lords, I will cite the latest figure this week for quarterly growth in the economy. The naysayers said that growth in the last quarter would be 0.4 per cent, but it was 0.8 per cent, coming on top of 1.2 per cent in the previous quarter. With more than 300,000 new private sector jobs created in the second quarter, that is the way in which we will deal with the economic situation.

Public Expenditure: Review of Commitments

Debate between Lord Sassoon and Lord Howarth of Newport

Thursday 17th June 2010 Lords Chamber

[Lord Howarth of Newport]

My Lords, we all agree that the UK’s fiscal deficit needs to be reduced, but is there not a crucial issue about timing? If you attack the deficit too fast, you abort recovery. If you deal with it too late, you risk inflation and possibly a downgrading of Britain’s credit rating. What is the reason for the Government’s hasty attack on public spending in an increasingly deflationary global environment? We see Governments withdrawing stimulus all across the world. China is seeking to slow its economy. Germany is deflating. Demand is imploding in the eurozone, which is such a crucial market for our exports. The noble Lord did not answer the question posed by my noble friend Lord Eatwell as to what the sources of growth will be to enable the private sector to drive the recovery of the UK economy. Is not the explanation for the Government’s zeal and impatience in cutting public spending that they are born not of a pragmatic judgment about how to secure sustainable economic recovery for this country but of a doctrinaire determination to cut back the role of the state without proper regard for the state’s own essential contribution to the promotion of innovation, for the quality and reliability of public services, for fairness to the poor and vulnerable in our society and for national self-respect? I strongly endorse the point made by my noble friend Lord Eatwell about Stonehenge. Stonehenge is an emblem of this country. It will be extraordinarily important for us in 2012. The Government’s decision announced today means that we shall present ourselves shoddily to the world.

[Lord Sassoon]

I thank the noble Lord, Lord Howarth, for his comments, but we really do need to get back to the central point today, which is that the previous Government left us with a series of projects that are unaffordable and in many cases present poor value for money. We need to do this. There are huge pressures on public expenditure, which are going to be looked at in the round through the spending review, but we have to take off the further pressures that have been put on by projects that simply cannot be justified. That will provide us with a much better baseline from which decisions made in the Budget next week and then in the spending round going forward can be taken to protect what really matters—projects that present good opportunities to invest in sustainable growth in the future. That is absolutely central and the announcement today helps to contribute to it.

In the short term, I cannot stress enough that to pay for these projects the previous Government were relying on an assumption that £7 billion of underspend would be made in the current year. That is approximately 1.8 per cent of DEL expenditure, but the evidence of recent years shows that the underspend has been reducing to what is estimated to be less than 1 per cent of DEL in 2009-10. The issue is not whether these projects stack up as value for money but that there is simply no money left to pay for them.

I would like to make a point about Stonehenge. I would hate anyone to be left with the thought that we are somehow abolishing Stonehenge or knocking it down—I see that the noble Lord agrees with that. Of course it would be nice to enhance the visitor centre, but unfortunately this is a project that does not stack up in the current circumstances.