Economic Forecasts

Lord Tomlinson Excerpts

Tuesday 17th January 2017 Lords Chamber

[Baroness Neville-Rolfe]

As a new Treasury Minister, I am very aware that I should not comment on currency movements, but we are very lucky in this country to have the independent Bank of England. It has an inflation target; we do not target the exchange rate. The performance of the economy has been stronger since Brexit than any of us feared with, for example, good household consumption figures recently.

[Lord Tomlinson (Lab)]

My Lords, does the noble Baroness agree with the Governor of the Bank of England, whom she has just praised, in his analysis but two days ago, when he said that the high levels of consumption in this country are kept up by unsustainable levels of household debt—that we are living now and will have to pay for it in the future?

[Baroness Neville-Rolfe]

I always listen with great care to what the governor says. Of course, unsecured debt as a share of household income is in fact lower than it was before the financial crisis. It is true that the savings ratio has come down more recently to 5.6%. That often happens in a recovery. I go back to the point that I made at the start: UK GDP growth has been strong relative to other leading OECD nations, and the unemployment rate is extremely low in this country, which is very good for working people across the UK.

EU Budget Surcharge

Lord Tomlinson Excerpts

Monday 10th November 2014 Lords Chamber

[Lord Deighton]

I thank my noble friend for putting, with force and eloquence, precisely the points I have been trying to make in response to the last three questions.

[Lord Tomlinson (Lab)]

My Lords, can the noble Lord explain exactly what the Treasury had been up to—it had been involved in all the calculations—and how it was that, after three months of negotiations, the Chancellor did not understand what it had been doing? The Chancellor also did not advise the Prime Minister before he went to Brussels, which is why the Prime Minister was caught on the hop. If we have not got just what we were going to get back in any case, can the Minister assure us that we are still going to get the rebate in 2015 and 2016, and that we have not merely already received it back as an advance?

[Lord Deighton]

I can assure the noble Lord that the rebate that we are discussing with respect to halving this payment is applied specifically to this payment. It is independent of other arrangements for the rebate.

EU: UK Contribution

Lord Tomlinson Excerpts

Wednesday 30th October 2013 Lords Chamber

[Lord Newby]

My Lords, by looking at the net contribution to the EU, the noble Lord is concentrating on only one dimension of our relationship with the Union. He is ignoring the very substantial economic benefits that we enjoy through increased internal trade via the single market, increased external trade via, for example, the recently concluded EU-Canada trade agreement, and increased investment in the UK by companies such as Nissan. He is also ignoring the non-economic benefits of membership in the fields of the environment, justice and external affairs.

[Lord Tomlinson (Lab)]

Will the Minister take urgent steps to gain control of expenditure in the European budget? That can best be done by introducing a system of zero-based budgeting, such as my noble friend Lord Kinnock sought to introduce when he was a Commissioner. The Government have always said yes to this in principle but done nothing in practice.

[Lord Newby]

My Lords, the first thing that we sought to do on the European budget was to ensure that it was not increasing in real terms. As the noble Lord knows, the agreement made by the Prime Minister at the European Council in February will result in €80 billion less expenditure over the next budgetary period than the Commission proposed. The first step in getting the budget dealt with appropriately was to cap it.

Banking: Co-operative Bank

Lord Tomlinson Excerpts

Wednesday 30th October 2013 Lords Chamber

[Lord Newby]

My Lords, one of the key purposes of the Financial Services (Banking Reform) Bill is to provide, in ring-fenced retail banks, relatively risk-free places for ordinary customers to put their money. Beyond that, the key thing is that the Bill’s resolution provisions will require banks to put in place mechanisms to be activated if they got into financial difficulties, such that they would not need to come to government in those circumstances.

[Lord Tomlinson (Lab)]

Is the Minister aware that when giving evidence to the House of Commons Select Committee yesterday, the former chief executive of the Co-op Bank said that he was assured by the financial regulator about the safe state of the Britannia Building Society? The Co-op Bank takeover of the Britannia Building Society has given rise to the liquidity problems in the bank. Will he acknowledge that and inquire what the financial regulator was doing in giving that assurance?

[Lord Newby]

My Lords, I think the merger with the Britannia Building Society was one of the material causes of this problem. I cannot comment on what the regulator may have said. Generally, where banks of all sorts have sought to make large acquisitions and they have then gone wrong, the principal responsibility for due diligence rests with the management of the bank involved in the takeover. The role played by the regulator, whatever its scale, does not detract from the fact that responsibility for major corporate decisions of that kind lies primarily with management.

EU: Budget

Lord Tomlinson Excerpts

Monday 4th March 2013 Lords Chamber

[Lord Deighton]

I thank my noble friend for congratulating the Prime Minister on the excellent deal he brought back. We accomplished our three main objectives, which were to restrain the size of the budget, to make sure that we kept hold of our abatement and to resist any new EU-wide taxes. We shrank the budget and shifted it away from the more traditional areas, such as the common agricultural policy, into growth-oriented funds. I agree with my noble friend that we are shifting towards a pattern of expenditure that is more consistent with the reformers among us.

[Lord Tomlinson]

My Lords, will the noble Lord accept that what we have here is a seven-year financial framework, but what really matters now is the annual budget year by year over the next seven years? Can he give an undertaking that this Government will pursue a system of zero-based budgeting in each of those seven years so that we can cut out budget lines that are wasteful and increase those budget lines which need to be increased rather than take this rather conservative approach of across-the-board cuts which cut the good as well as the bad?

Children: Childcare Costs

Lord Tomlinson Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Newby]

Yes, my Lords. Vouchers are one of the possible ways of dealing with this, and they are one of the options being considered.

[Lord Tomlinson]

Will the Minister explain to the House how improving the demands for training of care assistants of young children by requiring them to have a C-grade GCSE in maths and English helps them to make better provision for the children in their care?

[Lord Newby]

My Lords, I think it is recognised by common consent that having better qualified teachers and assistants in this area is beneficial to the pupils and the young children being cared for. If we want, as we do, to improve the quality of the care given, part of it will involve soft skills but another part will involve basic competence.

Government: Economic Policies

Lord Tomlinson Excerpts

Wednesday 30th January 2013 Lords Chamber

[Lord Deighton]

I thank my noble friend for that excellent contribution. I will not comment on the timing of selling the gold. Hitting a market high is tough to do. I will refer to what I would call the “scissors of doom”, which is the graph I was first shown when I entered the Treasury, which shows that between 2008 and 2010 spending was heading north at a rapid rate while receipts were heading south at an equally rapid rate, a situation that we are now trying to recover through this period of fiscal consolidation.

[Lord Tomlinson]

Does the Minister agree that confidence in the United Kingdom is being illustrated by the way sterling is devaluing against the euro—the much derided euro on which we blame so many of our economic ills? If the medicine is so good, why is the patient looking so ill?

[Lord Deighton]

There are many positive signs. I do not think that the patient does look so ill. I refer to the extraordinary employment levels—the biggest increase in employment for the past 20 years. On the question of the exchange rate, the noble Lord is absolutely correct that sterling has recently weakened against the euro. The exchange rate has two sides: the strength of the eurozone versus the UK economy. What that exchange rate reflects is that many of the risks that have been confronted by the eurozone over the past two or three years are perceived by the market to be diminishing.

United States Budget: Economic Impact

Lord Tomlinson Excerpts

Monday 10th December 2012 Lords Chamber

[Lord Newby]

My Lords, the key challenge for Governments, either in this country or on the other side of the pond, is to ensure that there is a credible fiscal framework and a competitive economy so that businesses can invest. That is what the Government have been seeking to achieve.

[Lord Tomlinson]

My Lords, if the economy is doing as well as the noble Lord suggests, does he regard the threats from the rating agencies as being a vote of confidence?

[Lord Newby]

My Lords, the rating agencies, as we all know, have an unblemished record in dealing with businesses and countries. For those countries that have seen their credit rating reduced, including the US, there has been virtually no impact on their ability to borrow.

Governor of the Bank of England

Lord Tomlinson Excerpts

Tuesday 10th July 2012 Lords Chamber

[Lord Sassoon]

Yes, my Lords, I am sure they will.

[Lord Tomlinson]

My Lords, does the Minister agree that the next Governor of the Bank of England, besides having the proven competence that has clearly grabbed the Minister’s attention, should also be a person of honour and integrity—the sort of person who, should he or she wrongly impugn anyone’s integrity, would at least have the grace and courage to stand up, admit it and apologise?

[Lord Sassoon]

My Lords, if that is an oblique reference to my right honourable friend the Chancellor, I do not believe that an apology is needed. I agree with the noble Lord, Lord Tomlinson, that honour and integrity will be among the qualities needed by a future governor.

Eurozone

Lord Tomlinson Excerpts

Thursday 17th May 2012 Lords Chamber

[Lord Sassoon]

Because it is a complicated Question, which deserved a somewhat fuller Answer.

[Lord Tomlinson]

My Lords, as the decisions affecting the eurozone clearly have a major impact on this country and its economy, can the noble Lord at long last tell us precisely what advantages are achieved for the United Kingdom by excluding ourselves from some of the very important European decisions?

[Lord Sassoon]

My Lords, we are not excluding ourselves from very important decisions; we are saying that it is for members of the eurozone to take the lead in sorting out the problems with the euro. We are very much at all the discussions. As well as questions of potential and past bailouts, we are discussing growth strategies and the completion of the single market, which will put Europe back on a sustainable growth path.