(5 years, 5 months ago)
Lords ChamberMy Lords, I pay tribute to my noble friend Lord Forsyth, who has been a doughty campaigner on this critical issue.
It is a universally acknowledged fact that inflation is not a glamorous topic; nevertheless, it runs through and buttresses almost all our spending activities. From Treasury bonds to train tickets, inflation is a vital measure by which pricing is calibrated. For all regulated prices, index inflation is the benchmark by which standards are set.
Sadly, in 2010 we made a foolish error, the difficulties of which we are still grappling with. A mistake crept into the retail price index as the standard measure of inflation. RPI is itself flawed for a multiplicity of reasons, many of which are elegantly pointed out in this report. The fundamental point, however, is that RPI, as currently calculated, tends on the whole to penalise those who earn their money and advantages passive investors. Since RPI is in almost all cases higher than the consumer price index, the winners are those who hold bonds or have invested in benchmark-linked indices. The losers are those who suffer high water bills or see the cost of their train tickets go up year after year. Chris Giles of the Financial Times, who has done excellent work on this, has estimated that bondholders have benefited by £1 billion a year since 2010.
I welcome the Treasury’s efforts to diversify away from RPI, but this work needs to be accelerated to cut off the fleecing of the British public. The Treasury’s response to concerns raised some time ago was questionable. When asked to justify its continued use of RPI in the Budget, the response was that it was “complex and potentially costly” to the Exchequer to move away from RPI. But what of the consumers who were negatively affected?
The Government’s priority should be the welfare of citizens, and it is hard to shake off the sense that this might have been overlooked. It is certainly concerning that the Government should take money from people on an RPI basis and give it out on a CPI basis. Index shopping as a method of regulating spending undermines public confidence in public spending and gives rise to a justified sense of grievance. If every public body which made an error to its advantage refused to fix it, public confidence in the administrative state would collapse altogether. Does the Minister consider this a justifiable trend?
I accept that there are legitimate concerns over such a move. Some in finance have come to rely on high returns. However, the concerns over RPI have been clear for so long that reform must be priced into the models of those who work with bonds daily.
Some make the case that it could cause hardship to those exposed to index-linked gilts, but it is a clear term of all gilts, and written into the purchase contract, that the index need not be of a particular type but one that is recognised by the Treasury and the Office for National Statistics. Ultimately, this is down to the ONS and Treasury to fix, but the ONS has a duty to promote and safeguard the quality of official statistics. Until this is fixed, we might be forgiven for thinking that it is failing to carry out one of its core mandates. Will the Minister commit to a rapid phase-out of RPI in the next economic Statement?
(6 years, 3 months ago)
Lords ChamberMy Lords, it is a pleasure to speak on this subject. I thank the noble and right reverend Lord, Lord Harries, for securing the required time.
Many of us in this place will remember the big society initiative. Indeed, some of us had the chance to work on the plans and be consulted beforehand. The initiative failed but it hammered home the point that civil society and the charity sector have an enormous role to play in our society, both with a support function and as an outlet for voluntary activity. However, charities should be extremely wary of a number of things. Political campaigning is one of them. I have been disappointed recently to see a number of charities go beyond their remits to engage in political campaigns, using donations from members of the public and government grants to do so.
Recently, there has been a collapse in trust in charities in this country. The recent survey on trust in charities and the overseas development sector revealed a fall in the proportion of adults who said that they trusted charities “a great deal” or “quite a lot” to 54%, compared with 60% a year earlier. I find this a saddening state of affairs. British people still trust charitable sectors, but not to the extent that they will turn a blind eye to abuse and injustice. Recent scandals involving Oxfam and Médecins Sans Frontières have brought shame on the sector; trust must be rebuilt. Charities ought to focus on their charitable activities, rather than attempting to become similar to think tanks in producing policy reports, lobbying and running campaigns during elections and referenda.
The advantage of the Act is that it gives the public confidence that charitable institutions are being regulated on a similar basis to private enterprises and think tanks that might have an interest in voting behaviour and the influencing thereof. Indeed, it encourages charities to focus on their original mission and, when they do attempt to make political interventions, to be careful about how they go about it. This is particularly important in the case of elections.
There has been much talk recently here and in the other place about the overspending by both sides in the European Union referendum. That strikes a cautionary warning about the influence of money in our elections. Greenpeace and Friends of the Earth, which were quoted by my noble friends, were fined for running undeclared campaigns during the 2017 election, and the Electoral Commission noted that the manifesto scorecard published on Greenpeace’s website was a political judgment and liable to influence voting behaviour.
My sympathy is with charities when it comes to the actual legislation. It is true that the wording used can be unclear and confusing and, reading as a lay man, I would struggle to advise a third party on what they could do. This is a particular problem for the smaller charities, which may wish to bring up entirely legitimate and apolitical points but cannot for fear they might fall foul of the legislation. If clearer legislation cannot be produced in amended form, it would be a magnanimous gesture for the Government to lay out in clear English the precise rights and obligations of third-party organisations.
(6 years, 5 months ago)
Lords ChamberMy Lords, I thank my noble friend Lord Leigh for introducing this most important debate. I welcome my noble friend Lord Lilley, whom we used to see guest speaking when my noble friend Lord Young of Cookham was our MP.
Saving is a necessity. Without savings, or a bank account to put savings into, it is practically impossible to meaningfully participate in the modern economy. Even travel is increasingly difficult without a bank account and some healthy savings to draw upon. I consider that my success is partly based on a strong habit of saving, and the savings of others made available to me through loans and guarantees. The fact that some do not have savings or a bank account is the scourge of financial exclusion, and ought to be considered a contributor to economic malaise. It is a surprising fact that nearly 2 million people in this country do not have a bank account. That ought to give us pause for thought. This country has one of the most advanced financial systems in the world. A few minutes away in the City of London, we have some of the finest minds and technology in existence figuring out new and innovative methods of banking, but we overlooked an issue piling up on our own front door.
In my view, the issue starts from an early age. If one is born into a family without a regular habit of saving or with an inability to save, one does not learn the habits required at an early age, such as setting aside a portion of the pay cheque, shopping around for the best perks and rates, and understanding how to use a bank account and receive or send funds. This is regrettable, if understandable, but we can make changes through the national curriculum. I am pleased that financial literacy has been a statutory requirement as part of the curriculum since 2014, but more needs to be done.
Given all that we teach children, it seems to me that a greater focus is needed on important tasks that all of us here probably take for granted. If children and teenagers are given some practical advice on saving and banking, I strongly believe that they will be more disposed towards participating. Young people are far more likely to be at risk of financial exclusion: some 8% of them do not have a bank account, compared with 0.7% of the national population. Since there is to be education targeted at younger people, it ought to be accompanied by a range of accounts targeted at them too.
The public sector should not seek to get involved with this, bar the notable exception of the National Savings and Investments Bank. Instead, there ought to be a partnership with banks to create these new products and market them sensibly so that young people can make an informed choice. If they get into the habit of putting money into the bank early, they will not lose it. There is a quiet joy in putting in the pennies and seeing the pounds take care of themselves.
The other area this feeds into is universal credit. At present, claimants face enormous difficulties accessing their social security payments if they do not have a bank account. Furthermore, the monthly payment risks those without good spending habits running out of money. I support monthly payments as they mimic normal wages, but further emphasis should be put on financial education as this system is brought online and more people are switched over.
(6 years, 10 months ago)
Lords ChamberMy Lords, I was a remainer and now I am in favour of Brexit. This is not due to a fundamental shift in my economic thinking. I still hold many of my original opinions, and I think our economy will take a hit with Brexit, although the predictions made before the vote to leave were quite ridiculous and damaged the integrity of many institutions. The reason I have changed my mind is simple. I am a democrat, the people voted and we must, in this and the other place, execute that vote.
Although there was no direct outline that people voted for, we can reasonably say that two things are true. The first is that voters want us to have the power to make our own trade deals. The second is that voters want control of our borders. The second point is far more important, as it has been a running sore of our body politic for at least a decade. To end freedom of movement and regain control, we must leave the single market. This is not a choice that the electorate will accept a fudge on. Nothing less than full control of our borders will do.
The EU will not make a special deal on migration for us, as the shadow Chancellor and some Labour Front-Benchers insist. Michel Barnier, Jean-Claude Juncker, Merkel, Macron and Tusk all agree that the four freedoms are inseparable. This is their prerogative. They wish to preserve the trade-offs that exist in the single market, and it will be their legacy. But to suggest they will change now, when they had the chance to during the former Prime Minister’s renegotiation, is clearly false.
The question of what happens on the island of Ireland is a vexed one. I believe two tests must hold. There must not be a border between the north and the mainland, but there must also be a smooth and frictionless border on the whole island. It may well be the case that the UK opts in to some EU rules to meet this goal. It may well be the case that the whole of the UK ends up following them to avoid internal borders. I see no issue with this. People voted to take back control, and politicians making decisions to keep the union together of their own choice is firmly consistent with that principle. Peace in Ireland is not ours to endanger, and we must make sure to keep it.
It is rare that we in this House should seek to amend such an important piece of legislation. This has been voted on by the people. It has been voted for by the other place, which is elected. It has passed with a majority and it now comes to us. I am of the opinion that if changes ought to be made, the legislators who are in actual contact with public opinion should make them. Brexit remains the biggest issue of my political life, bar perhaps our initial joining and the Falklands War. I would not have been expecting to be involved in those issues were I in this place then. I will not now. If we begin to meddle in affairs decided by the voters, then we cannot hope much for our future as a Chamber. Many will speak today about the need to change the Bill, but I beg noble Lords to ask themselves this question: what mandate do I have?
(7 years, 1 month ago)
Lords ChamberMy Lords, I thank the noble Baroness, Lady Hollis, who has made sure that this Motion is debated here, for it appears to be one of the most contentious government programmes being rolled out at the moment and a real opposition attack line. I must admit that I am surprised that it is actually being proposed. When my friend the current Member for Chingford presented the initial White Paper in the other place, I thought it would be too difficult for any Government, purely on an administrative level. It is testament to the indefatigability and competence of the current Secretary of State and his predecessors that we are finally moving to a full rollout.
I state at the outset that I am in favour of the principles of universal credit. To simplify benefits into a consolidated payment makes sense on every level. Lower processing costs and greater ease of use create gains for the recipient and the administrator, as well as making it easier for new entrants to avoid paperwork. Some take the general view that monthly payment is wrong because it means that funds can be spent more quickly. Let me be clear: I am a Conservative. I believe in personal responsibility and sound fiscal management. In the workplace, one is expected to manage spending such that it tallies with the inflow of wages. If we have a benefits system that does not prepare people for the workplace, what is the point? It is precisely because the way people are paid requires management skills that we must structure our benefits system to mirror it. We teach our young people what they need to manoeuvre in the modern economy in school, and it makes sense that the various other arms of the British state ought to as well.
I will keep my criticism of the scheme brief, mainly because one of my key concerns has already been addressed. Forcing claimants to pay to call up, especially with the complexities of a new system, was mean-spirited and unfair. I am glad this has been reversed. My other criticism—and I worry—is that the relatively simple cases that the scheme currently deals with can create complacency. Single people with few complications are the easiest cases, so some of the evident success of the scheme could fall away as more people are brought on. Let no illusions be entertained: there will be more bumps in the road ahead.
There is one area I would like the Government to rethink. I was concerned to read about the data collected from Croydon, Hounslow and Southwark in the Work and Pensions Select Committee report last month. The data indicates that 2,500 tenants in London claiming UC stand at risk of eviction from their homes as a result. I do not think that this is entirely government failure. As the National Federation of ALMOs report made clear, three-quarters of claimants were already struggling. However, we ought to make every exertion to not exacerbate that issue, especially as the taper rate is already being lowered and people are receiving smaller cheques.
I was pleased to read that the Secretary of State was open minded to increasing the share of advance payments to more than 50% of the estimated first UC payment. I would like more flexibility to let that rate be raised or banded for different kinds of claimants. Will my noble friend consider this policy in light of the data that we received last month?