Finance (No. 2) Bill

Debate between Lord Soley and Lord Newby

Thursday 26th March 2015 Lords Chamber

[Lord Newby]

My Lords, I thank all noble Lords who have spoken in this debate. I shall come back to the matters raised by the noble Lord, Lord Davies, but perhaps I may correct one point. He claimed, completely falsely, that there was no enthusiastic endorsement from my Benches for the Bill. My noble friends have been restraining themselves, because their enthusiasm is very considerable indeed. I am sorry that he has not picked that up. I certainly have and it has given me great strength.

[Lord Soley]

As to my noble friend Lord Davies’s speech, the reason why so many people were on the government Benches, none of whom were speaking, is that they were trying to give subtle support to my noble friend Lord Haskel’s point that you can increase numbers without productivity. That is clearly the problem.

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[Lord Newby]

Given the policy of the noble Lord’s party on further education, and given that if you talk to anybody in a university about their absolute fears about what will happen if a Labour Government comes in, with their policies to cut grants, and their views on what that does to university funding, I would have thought that the best thing for the Labour Party to do for the future of universities is to pursue a policy of as much silence as it can manage. In this Parliament we have seen record numbers of young people going to university, including record numbers of girls and of young people from poorer backgrounds. That is exactly the sort of change and development that I thought the Labour Party supported. We have recognised that there is a need to improve skills below university level. As I was saying, we have supported the creation of university technology colleges and overseen the increase in the number of apprentices to 2 million, which is vastly more than obtained during the previous Government.

The noble Lord, Lord Soley, quite rightly talked about the absolute importance of science and technology and the transfer of basic research into business success. We have maintained resource funding and increased capital for science in real terms during the lifetime of this Parliament. Over the period ahead, we are planning some £5.9 billion of investment in the science infrastructure. On how we get that science applied, we have consistently put money into the catapults, the purpose of which is to act as a bridge between universities and firms. These have been extremely successful: the high-end engineering ones have been very successful. I saw the National Composites Centre in Bristol, which is doing tremendous work. It is possible to do that work only because it is a partnership between government, the universities and business. This concept began under the last Government, but we have strongly supported it. We need to do more, first, because it is successful and, secondly, because all our competitors are doing something like it.

Furthermore, in science we have initiated a grand challenge fund, which will deliver some £400 million of funding on a competitive basis for new, world-leading scientific infrastructure. Within the overall area of science and technology, we have put a £100 million investment, for example, into the research and development of intelligent mobility, which is one of the leading potential growth areas on which this country wishes to be, and remain, in the lead.

The noble Lord, Lord Desai, reminded us that the Labour Party legislated to halve the deficit over a four-year period, which is almost precisely what has happened under this Government. On his radical plans for changing the basis of corporate taxes and taxation more generally, this Government increased indirect taxation on consumption by increasing VAT and they have reduced taxation on income by putting up the personal allowance. Clearly that process, at least as far as indirect taxation is concerned, will not be pursued by any party in the next Government, as we heard yesterday.

On the noble Lord’s more radical ideas on taxing consumption, I am not a tax radical, I am afraid, partly because I started my working life as a tax man. I think that grand taxation schemes often have a whole raft of unanticipated consequences. Of course, those who suffer from any tax change make about 100 times as much noise as those who benefit, so politically I wish the noble Lord luck with the sort of grand scheme that he has in mind, but I hope that I am never called upon to try to do something equally ambitious.

The noble Lord, Lord Soley, made a number of interesting and useful points. I am pleased that he welcomed the changes to gift aid, and I wish him well in finishing the funding for the Mary Seacole statue. Having been in charge of fundraising for the Lloyd George statue in Parliament Square, I know just how stressful the process is, and I hope very much that it is quickly brought to a successful conclusion.

I will pass back to my colleagues in the Treasury and the Department for Transport the point that the noble Lord made about subsidising the establishment of charging points for electric vehicles. I have considerable sympathy with what he said about the power of attorney. I have power of attorney for my mother, and trying to work out how to exercise it is really quite difficult. Having gone through the whole process, I found that it was remarkably anachronistic. As we are moving into a period where power of attorney will be required by more and more families, there is an argument for looking a bit more fundamentally at the whole thing and not just at the way in which it can be used once it has been granted.

[Lord Soley]

I agree with the noble Lord’s general point, but I ask him to do one thing before the House prorogues. Will he ask his officials to put a reference to power of attorney on the tax website so that people can follow the link and find out what to do? That is not difficult to do, actually.

[Lord Newby]

I will do that very readily. Finally, the noble Lord, Lord Davies of Oldham, described this as a mean-spirited Bill, and he did not have a huge number of positive things to say about the Government’s track record during this Parliament. This is now the end of the Parliament and we have been in government for five years. We came into the coalition to turn the public finances around and to put the economy on a positive track, and that is what has happened. I think of the position that we were in, even when I first stood at this Dispatch Box three years ago, on growth, employment and our prospects in virtually every respect, and I look at the situation now. We have the quickest growth in the G7, the claimant count has come down a third in this Parliament, there are 400,000 fewer households with children with no one in work, and record numbers of women, both absolute and proportionately, at work.

Nobody can claim that the economy has yet reached a state of perfection—that will never happen—but looking at the progress that this Government have made in turning the economy around and making it fit for the challenges that we face, I am very happy to fight a general election on that basis. This Finance Bill completes the process by the Government in that respect and I commend it to the House.

Tax Avoidance and HSBC

Debate between Lord Soley and Lord Newby

Monday 23rd February 2015 Lords Chamber

[Lord Newby]

My Lords, I am sure that the noble Lord, Lord Green, like many other noble Lords, will read the noble Lord’s comments with great interest.

[Lord Soley (Lab)]

My Lords, does the noble Lord recall that about two weeks ago I raised with him on the Floor of this House the question of the governance of banks and reminded him of the Bank of England’s criticism of the failure of that governance? There can hardly be a better example of the failure of governance than what has happened at HSBC. It is one thing to say that these organisations are so big that they need to be broken but, frankly, they are not so big that they cannot be better managed. The managements of these banks need to provide reports on the quality of their management. They need to give those reports to the Chancellor of the Exchequer so that they can be placed before both Houses and we can keep an eye on these organisations. They are now becoming a disgrace to the public where once they used to be regarded as one of the great strengths of the United Kingdom.

[Lord Newby]

My Lords, the important thing to note is that the problems that we are now looking at—never mind who was in government—arose before the new regulatory regime was in place, before the banking industry itself set up its new standards body, and before there was the kind of scrutiny of what is happening in the banks that there is now. Everyone agrees that there needs to be a change of culture in the banks, including many who are in senior positions in those banks. I agree completely that Parliament has a role to play in calling the banks to account, and I hope that both Houses will continue in it.

Barnett Formula

Debate between Lord Soley and Lord Newby

Tuesday 10th February 2015 Lords Chamber

[Lord Newby]

My Lords, apart from the fact that the parties have supported the Barnett formula, the effect of the changes being made is that the relevance of the Barnett formula going forward is being cut by two-thirds and therefore any disparity that it might bring about will be reduced by an equivalent proportion.

[Lord Soley (Lab)]

My Lords, does the Minister agree that this exchange reinforces the view that we must have a constitutional convention and that a core part of that must be to address the relationship between the four parts of the United Kingdom? If we do not do that, we will lose the union, and I for one would deeply regret that.

[Lord Newby]

My Lords, it is absolutely clear that a consequence of the Scottish referendum is that a raft of issues around the way the union operates, not least the way in which power works in the Commons and in England, needs to be revisited. All the parties are setting out proposals at the moment about how they propose to do that.

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2015

Debate between Lord Soley and Lord Newby

Tuesday 10th February 2015 Grand Committee

[Lord Newby]

My Lords, I am grateful to both noble Lords who have participated in this debate, particularly to the noble Lord, Lord Soley, for breaking up our traditional duet. He asked about the relationship between this order and the developing EU plans to do roughly the same thing. Negotiations are going on at EU level in which the UK is actively participating. The aim is that the EU regulation, when it comes forward, will be compatible with these measures. When it comes in, it will replace this order automatically because it will have legal force. However, the aim—there is no reason to think that this will not be possible—is that the EU measure does not require us to make any substantial change to the way that we run this regime. It will come in and supersede what we are doing, but only, as it were, in a legal sense rather than in a practical sense. That is the plan. We do not envisage that we will need to make any significant changes in the way that the administration or the procedures work as a result of that measure coming in.

[Lord Soley]

How will this measure come off the statute book? Is it because it is identical to another? I understand that this measure will have to come off the statute book.

Banking System

Debate between Lord Soley and Lord Newby

Monday 9th February 2015 Lords Chamber

[Lord Soley]

To ask Her Majesty’s Government what steps they are taking to rebuild confidence in the banking system.

[Lord Newby (LD)]

My Lords, a successful and respected banking sector is of great importance to our economy. That is why the Government have taken wide-ranging action to ensure the integrity and stability of financial services in the UK. For example, the Government now require banks to ring-fence their riskier operations. They have also criminalised the manipulation of LIBOR and a further seven benchmarks and legislated to introduce a senior managers certification regime.

[Lord Soley (Lab)]

Does the Minister accept that the latest Bank of England financial stability report indicates that this is not just about financial resilience but also about governance? As reports today in the Guardian and elsewhere demonstrate, it is governance that is such a failure at the moment. Will he say, very specifically, whether he agrees with the British Chambers of Commerce that we need a British business bank which would enable growth to take place in the UK economy? It is a very important proposal and one that ought to get urgent support.

[Lord Newby]

My Lords, we do have a business bank. This Government have created one and it is growing very rapidly. As for standards, I completely agree that the standards that are adopted by bankers need to improve. Of course, the industry has itself recognised this by establishing the Banking Standards Review Council.

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[Lord Newby]

My Lords, the process by which people become Members of your Lordships’ House and are made Ministers involves them being vetted by the House of Lords Appointments Commission and the appropriate bodies within government. As far as I am aware, there is no evidence that the noble Lord, Lord Green, was involved in any of this sort of activity.

[Lord Soley]

The Minister cannot be allowed to get away with this. He is being incredibly complacent. The governance problem with banks has been there for years under all parties and it is fair to say that none of them has done enough about it. He is still not saying what he will do to ensure that the governance of banks, not just their financial resilience, is dramatically improved.

[Lord Newby]

My Lords, I have spent much of the past five years in this Chamber legislating to improve the governance of the banks. We have passed several major pieces of legislation to make long overdue improvements in the ways in which the financial services sector is managed. For example, we have introduced too-big-to-fail processes of various sorts, the ring fence and the bail-in, as well as new standards for senior managers in banks. All of these things will improve the way in which banks are managed and a number of them were actively opposed, when they were in government, by the previous Administration.

Airports: Heathrow Third Runway

Debate between Lord Soley and Lord Newby

Tuesday 17th June 2014 Lords Chamber

[Lord Newby]

I am tempted, of course, to say “shortly”, but it is the next Government who will respond to the report of the Davies commission. However, I think that it is worth pointing out that the Davies commission concluded that although one new runway will be needed, it will not be needed in the south-east until 2030.

[Lord Soley (Lab)]

Does the Minister recognise, with the Chinese Prime Minister and trade delegation in town, that this will not be the first time that the Chinese have raised with us the lack of runway space at our premier hub airport for their expanding economy? Why, then, does the Minister persist with this silly idea that Britain is closed for business because we do not expand our airports?

[Lord Newby]

My Lords, it is not for the Government to decide the priorities of individual airlines flying out of Heathrow or anywhere else. However, the noble Lord will be aware that, in September last year, British Airways launched a new service from Heathrow to Chengdu. He will undoubtedly also be aware that our current bilateral flight agreement with China, which sets a constraint on the number of flights that we can have to China, is up for review. Discussions on that will take place next month.

Banks: Payment Protection Insurance

Debate between Lord Soley and Lord Newby

Monday 13th January 2014 Lords Chamber

[Lord Newby]

My Lords, the Government are not letting the banks off the hook. The banks have paid out almost £13 billion in respect of PPI claims, which is about 70% of the total we think is payable, and a lot more claims are in the pipeline. The concern raised by the noble Lord in his Question relates primarily to the way in which the detailed amounts were calculated and the extent to which individuals can understand those calculations from the material that they receive from the banks.

[Lord Soley (Lab)]

My Lords, is not the problem around individual complaints that very often those people who do not claim are the most vulnerable?

[Lord Newby]

My Lords, a great deal of publicity has been generated on this issue, and consumer organisations are looking at how they can do more. As I have said, a very considerable number of claims have already been made.

Economy: GDP Forecast

Debate between Lord Soley and Lord Newby

Monday 29th July 2013 Lords Chamber

[Lord Soley]

To ask Her Majesty’s Government what is their forecast of the maximum public debt–gross domestic product ratio in 2016–17.

[Lord Newby]

My Lords, the Office for Budget Responsibility forecast public sector net debt to be 85.6% of GDP in 2016-17.

[Lord Soley]

In 2010, the Chancellor of the Exchequer promised to eliminate the structural deficit and to reduce the percentage of national debt to GDP. Both of those will now fail to materialise—I would argue, through low growth. When do the Government think that they will achieve them and why do they think that they have failed to achieve them?

[Lord Newby]

My Lords, the figure I gave was for the peak level of net debt. After that, the level will fall. Of course, if growth proves to be higher than forecast, as seems likely, for this calendar year, net debt will be less over the period ahead than has been forecast.

United States Budget: Economic Impact

Debate between Lord Soley and Lord Newby

Monday 10th December 2012 Lords Chamber

[Lord Newby]

I absolutely agree. The challenge now is for exporters to continue exporting in markets where they already do that. For example, our exports to the US this year have increased by 4% and are therefore still exploiting existing markets. However, in addition, the key is getting more companies exporting to the newer markets. That is why the increases in exports to China, Brazil and India over the past two years have been so significant.

[Lord Soley]

The Minister referred to the decisive action in 2010. Surely what the Government were doing at that time was talking us into a deeper recession than the one we were already going into. Secondly, does he not recognise that without growth we will not get out of the problems we are in? Historically, cutting deficits does not really work unless you have high growth as well. We do not have that and it does not look as though we will get it under the current policies.

[Lord Newby]

My Lords, if the Government had not adopted a credible fiscal policy in 2010, it is almost certain that interest rates in the UK would now be significantly higher than they are, as they are in much of the eurozone. Bear in mind that every 1% increase in interest rates means £12 billion extra in mortgage payments. This would have been have been a huge gamble that would almost certainly have failed had we not taken decisive action in 2010.

Banking: Offshore Accounts

Debate between Lord Soley and Lord Newby

Tuesday 20th November 2012 Lords Chamber

[Lord Newby]

My Lords, when it comes to tax avoidance, it is important that we begin to tilt the balance towards what is considered acceptable behaviour. That is one of the reasons why we will be introducing in next year’s Budget, or Finance Bill, a general anti-abuse rule. Those, including accountants, who undertake tax schemes, the principle purpose of which is to avoid tax, will find themselves subject to the rigour of that rule.

[Lord Soley]

The noble Lord mentioned talks with Germany. Is he able to tell us how many companies of European origin, or individuals of European origin, are also involved in the Channel Islands as, if you like, tax exiles? Bearing in mind the disgraceful evidence we saw in the House of Commons the other week from Google, Amazon and Starbucks, should this be addressed at a European level? If that is happening—one of the countries involved was Holland and I would guess that the Channel Islands are probably involved as well—we really should address this issue at a European level because what has been happening is absolutely unacceptable.

[Lord Newby]

I obviously agree with the noble Lord’s latter statement. Many recent examples clearly are unacceptable, which is why we have taken a great interest in, and are looking forward to hearing more about, the initiative that the EU Commission has taken this week in terms of reformulating what constitutes a tax haven. He is right that we can do a certain amount ourselves but we are going to deal with this international issue only through international co-operation.