King’s Speech (4th Day)

Lord Sikka Excerpts

Monday 22nd July 2024 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I welcome new Ministers and Peers to this House and I look forward to working with them. There is much to admire in the King’s Speech, but I have a few questions.

I support bringing passenger rail services into public ownership. Can the Minister explain what will happen to those franchise agreements which do not expire within the next five years? These include contracts with East Midlands Railway, CrossCountry and the west coast operator. Will the Minister say something about the cost to the public purse of leaving freight and rolling stock companies, commonly known as roscos, in private hands? Just three companies, Angel Trains, Eversholt Rail and Porterbrook, own 87% of the rolling stock, which is leased out to train companies. All three have complex corporate structures, controlled from an entity in Luxembourg, which obviously means tax dodges, and 100% of their income is derived from the public purse. In the last decade, roscos have paid £2.7 billion in dividends; they have a profit margin of 41.6%; and no UK tax is paid on any of their dividends. I am sure the Minister will find this abuse unacceptable and will act very swiftly. The profiteering by roscos can be ended by purchasing rolling stock directly from manufacturers, or by setting up a new publicly owned entity to replace the existing roscos. I hope the Minister will give us a timetable for ending this abuse.

The £7.3 billion national wealth fund to boost investment is welcome, but it is not really enough to fuel the economic revival that the Government seek. The Government hope to secure £3 of private sector investment for every £1 of public money. Can the Minister please explain what returns the Government are guaranteeing to the private sector for that investment? The Government are effectively resuscitating the private finance initiative, which ran from 1992 to 2018 and secured investment of £60 billion in return for repayments of £306 billion from the public purse. Successive Governments effectively acted as guarantors of corporate profits. Inevitably, each £1 of private investment through the national wealth fund will result in repayment of £5 to £6 from the public purse but, happily, there are alternatives. These include creating new money, as modern monetary theorists suggest; engaging in quantitative easing; borrowing, especially as the cost of borrowing by government is always lower than the cost incurred by the private sector; and the Government can also eliminate tax anomalies and tax the ultra-rich. Will the Minister publish data showing how the Government evaluated these alternatives? That would be very helpful.

It is also very disappointing, at least from my perspective, that the Tory Government’s two-child benefit cap, which affects 1.6 million children, has not been abolished. There is no shortage of money. Just last week, the Government promised to increase military spending and promised £3 billion a year in military support to Ukraine. They are also ready to hand new money to Tata Steel as well. The formation of the child poverty task force should not preclude removal of this cap. There is no point in prolonging the misery for millions of children. If the Government are looking for new resources, I can help. They can raise about £14 billion by taxing capital gains at the same rates as wages and levying national insurance on the same. This one change alone would enable them to finance the national wealth fund, without private money, in one go, in one year; abolish the two-child benefit cap; and provide free school meals for all children. What objection could the Minister have to this suggestion?