Working Tax Credits

Debate between Lord Touhig and Lord Sassoon

Monday 14th May 2012 Lords Chamber

[Lord Touhig]

To ask Her Majesty’s Government whether they will reconsider the changes to working tax credits.

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

My Lords, the changes to the working tax credit are necessary in order to tackle the record peacetime deficit which this Government inherited. Tax credit spending increased to around £27 billion in 2010-11 and extended to those high up in the income distribution. This was unsustainable. The package of changes to tax credits introduced in April will save £4 billion in 2016-17 while ensuring that the most vulnerable are protected. For that reason, they will not be reconsidered.

[Lord Touhig]

My Lords, this year, more than 200,000 low income families who work less than 24 hours a week will lose thousands of pounds as a result of the withdrawal of the working tax credit. In the present economic situation, a great many employers are not able to offer these people extra hours. Does the Minister agree that the phrase “making work pay” must seem pretty hollow to these impoverished families? I plead with the Government to take an interest in the poorest in our society and do something about this group who desperately need our help.

[Lord Sassoon]

My Lords, what underlines this change and the need for it, as well as the unsustainability of the huge cost of working tax credits, is some of the unfairness and behavioural incentives in the system. This Government firmly believe that working people on low earnings should gain through money that they earn rather than from government subsidies. The switch from reducing reliance on benefits to increasing personal allowances is part of a significant change to getting more families to gain more from working than has been the case to date and for incentivising second earners into work. There was also a basic unfairness in the system as it was in that a single parent had to work 16 hours but a couple had to work only 16 hours between them. Therefore, underlying what the Government have announced are a fairness and an incentivisation and behavioural change that are very important.

Welfare Reform Bill

Debate between Lord Touhig and Lord Sassoon

Monday 14th November 2011 Grand Committee

[Lord Sassoon]

It is certainly the case that if the law were not brought into line with what the Chancellor intended, at some point HMRC would have to make adjustments to the incorrect clawbacks that were calculated. We can discuss this for as long as we want. The fact is that there was a clear policy announcement. It should have gone through in the original statutory instrument—I think it was 2011/1035—and a claimant can at any stage ask for an appeal and ask to have their payments recalculated. However, clearly it would be pointless to do so if they expect that the amendment we are now debating will be agreed and will get the position back to where it ought to have been all along.

[Lord Touhig]

My Lords, I am not clear on this. Are the Government saying that people who had money taken from them that should not have been taken are not going to have it given back to them? The Government have acted outside the law. People have been disadvantaged. Is it the Government’s intention to give back to these people the money that they were entitled to, as the law specifies?

[Lord Sassoon]

The technical position is that what is paid during the year is only an interim award. Of course, HMRC seeks to pay all entitlements on a correct basis. However, the final calculation is done at the end of the tax year. Therefore, at the moment HMRC is quite properly paying what it believes will be the position once we get the legislation lined up with the original policy intention.

[Lord Sassoon]

My Lords, as I understand it that is not the position. The position for all taxpayers and claimants has to be finally calculated at the end of the year—and in many circumstances it can be done only then—because all sorts of circumstances may have changed. The issue is to get the legislation right in respect of this tax year. HMRC has calculated everything to date on the basis that there will be no further adjustments required at the end of the tax year once we get the legislation back into alignment with what was originally intended.

I appreciate the intention of noble Lords opposite to make hay out of this. It was a technical error in a statutory instrument that should not have happened. The amendment we are considering today is not to change anything midway through the year but to change the law with effect from 6 April 2011. There is going to be no unfairness and everything will be in line with exactly what my right honourable friend the Chancellor announced in the first place.

[Lord Touhig]

Make hay, my Lords? Some of the poorest people in this country have been denied the support they are entitled to. Is it true at 3.40 on a Monday afternoon we have a government Minister coming to Parliament and saying they are going to be denied the money that Parliament says they should have? Is that the case? Let us have a straight yes or no. Will these people get the money the law says they should have if we agree this amendment today?

[Lord Sassoon]

My Lords, nobody is being misled because the Chancellor of the Exchequer made the position extremely clear in his original Budget Statement. People have had their calculations made on the basis of the Statement by the Chancellor. What we are doing today is part of the process of getting the law into alignment with that to make absolutely sure that people are paid precisely what was announced in the June 2010 Budget.

Devolved Administrations: Financial Flexibility

Debate between Lord Touhig and Lord Sassoon

Tuesday 8th November 2011 Lords Chamber

[Lord Sassoon]

My Lords, as I have already explained, the Government inherited an extremely difficult deficit position. We took decisions that affected the whole of the United Kingdom and this one was consequential on decisions that needed to be taken to bring the deficit position under some sort of control so that departments were not completely without controls on their expenditure. After that, there were detailed discussions led by my right honourable friend the Chief Secretary, which led to the proposals which are the subject of this Question.

[Lord Touhig]

My Lords, the £400 million, to which the noble Lord, Lord Wigley, referred, could certainly help to sustain public services in Wales and boost the economy. Parliament has voted that money for the Welsh Assembly. Does the Minister not think that it is arrogance on the part of the Government to ignore the will of Parliament?

[Lord Sassoon]

My Lords, a lot of factors have to be taken into account in setting expenditure for the devolved Administrations, not least our favourite Barnett formula, but the fact remains that expenditure on a head-count basis in Wales will, in the present period, be some 12 per cent higher than the per head expenditure in the United Kingdom.

Banking: Government Shares

Debate between Lord Touhig and Lord Sassoon

Monday 13th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, I will wait with interest to see what the final report of the independent commission led by Sir John Vickers says on that point but, as indicated in its interim report, it is at the heart of its deliberations. The Government await with interest its final report.

[Lord Touhig]

Is the Government’s holding in the banks listed in the National Asset Register, and, if not, why not? If it is listed, can the Minister tell us where it is, because I cannot find it?

[Lord Sassoon]

My Lords, I shall have a look at the National Asset Register myself when I get back to the Treasury and, if it is not there, I shall write to the noble Lord to explain why.

Credit Unions

Debate between Lord Touhig and Lord Sassoon

Tuesday 8th March 2011 Lords Chamber

[Lord Sassoon]

My Lords, it is very much at the forefront of the Government’s thinking in this area to make sure that all appropriate steps and options are available so that those at the more deprived end of the economic and social spectrum are not ripped off by loan sharks or whoever. The credit unions that we are talking about have a central role to play in that.

[Lord Touhig]

My Lords, when the Government end the social fund maternity grant for the birth of the second child in April, many poorer families will be tempted to turn to loan sharks to borrow money. Will the Government help these families by promoting credit unions as a better way to save and borrow? In asking that question I declare an interest as a member and president of the Islwyn Community Credit Union.

[Lord Sassoon]

My Lords, that is exactly what we are doing by bringing forward the various reforms that I have described, which will help to modernise and drive forward the credit union movement—a movement that now numbers some 760,000 members in Great Britain. In Northern Ireland, where the movement has a different history, it has some 400,000 members. We wish to see the total in the United Kingdom growing, which is why the measures that we are bringing forward will promote this area of financial activity.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Touhig and Lord Sassoon

Monday 31st January 2011 Lords Chamber

[Lord Touhig]

My Lords, I do not intend to detain your Lordships for very long because this is exactly the same amendment that we debated in Grand Committee on 9 December. I did not press the amendment or the argument at that time because I was greatly encouraged by the debate, and in particular by the response of the Minister who certainly seemed to be in listening mode on that occasion.

I was a little disappointed to receive a letter from the Minister dated 21 December, listing the amendment that he has tabled this afternoon. I refer to the Government’s Amendment 15. This says that the Public Accounts Commission will have a role in specifying who should be consulted by former Comptrollers and Auditors-General on possible future appointments that they might wish to take up. My amendment says that this advice should be given by the Advisory Committee on Business Appointments.

As I said, I do not wish to detain your Lordships, but I point out that the amendment is based on the 15th report of the Public Accounts Commission. My noble friend Lord McFall was a member of that commission when it reported in March 2008. It referred to the subsequent employment of former Comptrollers and Auditors-General and said that a,

“C&AG should be required under the terms of his or her contract to consult the Advisory Committee on Public Appointments”—

it should have been “on Business Appointments”—

“(currently chaired by Lord Mayhew) before accepting any employment whatever after leaving the post of C&AG and to abide by the decisions of that Committee”.

The advisory committee is now chaired by the noble Lord, Lord Lang of Monkton, and its remit is simple:

“The Advisory Committee on Business Appointments is an independent body which provides advice to the Prime Minister, the Foreign Secretary, or other Ministers if requested, on applications from the most senior Crown servants who wish to take up outside appointments within 2 years of leaving Crown service”.

That body has the experience and background to provide the proper advice for any senior civil servant who wishes to take up an appointment after leaving public service. It would in my view be the appropriate body to give advice to former Comptrollers and Auditors-General. For the life of me, I cannot understand why the Government have not accepted this. Perhaps the Minister might say why it is that the Government now want to involve the Public Accounts Commission—another layer in between the time when a former Comptroller and Auditor-General would have to consult before he can consider taking up some other appointment. It may well be that the Public Accounts Commission will say to that former Comptroller and Auditor-General, “You must seek advice from the Advisory Committee on Business Appointments”. I do not know why we do not go straight to that point in the first place. I had hoped that the Minister would have put that in his amendment. He has not done so and I should be grateful to hear his response.

[Lord Sassoon]

My Lords, I see the Chamber filling up. This amendment is clearly attracting a lot of interest but, just in case noble Lords have come for some other business, let me deal briefly at this stage with Amendment 15, together with Amendment 14 tabled by the noble Lord, Lord Touhig. Having reflected on the points made on this issue in Grand Committee, I agree that clarification is indeed merited on this question of the C&AG taking up future offices or appointments. That is why the Government’s Amendment 15 makes it clear that the Public Accounts Commission would specify the person or body, such as the Advisory Committee on Business Appointments, that a former Comptroller and Auditor-General should consult before he or she takes up another office or position having left the office of C&AG. We have come forward with that important clarification.

Amendment 14, tabled by the noble Lord, Lord Touhig, seeks to name the Advisory Committee on Business Appointments as the body that former C&AGs must consult. However, there is a difficulty in naming a particular body in legislation because names and responsibilities may change over time. The fact that the body recommended in the original report from the Public Accounts Commission is different from that in the amendment makes that very point. While we need to have a degree of clarification which was not in the original Bill, writing in a particular body that exists now but may not exist in time—and was not that recommended only a short time ago by the Public Accounts Commission—means that we need to have the balance of flexibility but the certainty that the Public Accounts Commission will nominate a body up front.

The Treasury has carried out a search to see whether we could find any similar requirement elsewhere in legislation. The only mention at all of the Advisory Committee on Business Appointments is in relation to the obligation placed on it under the Freedom of Information Act, so there is no equivalent hard-wiring in legislation of its other responsibilities to deal, for example, with appointments for former Ministers. We absolutely share the noble Lord’s desire that former C&AGs should not just listen to but take to heart the advice of the nominated adviser, just as Ministers and civil servants do. Perhaps it is relevant to say that my understanding of the position of the serving C&AG is that he would be willing to consult any independent authority that the commission nominates about any employment that he proposed to take up after leaving office. This was written into the letter of appointment that he signed before taking up office. What was not written into the letter was a requirement for the C&AG to abide by the decision of the independent authority. It was expected that the decision of that authority would be made public and that that would be sufficient to ensure compliance.

In respect of future C&AGs, I think it is fair that they should know which person they needed to consult at the start, before they take on the office. It is expected that the person to be consulted should be specified in the appointment letters of all future C&AGs, which would parallel the arrangements for Ministers and senior civil servants. The terms of the C&AG’s appointment are agreed between the chair of the Public Accounts Committee and the Treasury, on behalf of the Prime Minister, and would have to be signed off by the prospective C&AG before he or she takes up office. I believe that with the government amendment we are bringing forward, along with how I have described that it will work in reality, we have sufficiently covered all the bases intended by the noble Lord’s amendment without getting into a position where we might nominate a body that could be inappropriate in a number of years’ time. On the basis of that explanation, I ask the noble Lord to consider withdrawing his amendment.

[Lord Touhig]

I am grateful to the Minister because he is a man of his word: he has sought to clarify the matters that we discussed in Committee. He made a fair point in saying that, if we specify a body in legislation, that body could disappear or change with future legislation. The Public Accounts Commission referred to the Advisory Committee on Public Appointments, but I do not think that it even existed. I think that the commission was mistaken and that it should have referred to the Advisory Committee on Business Appointments. I suspect that ultimately we will reach the point that I have been arguing for and that it will in fact be the Advisory Committee on Business Appointments, although the Minister is going to take us on a bit of a route, going through the Public Accounts Commission, to get there. It is a bit like me travelling to Wales via Scotland but I am sure that we will get there in the end. I beg leave to withdraw the amendment.

Budget Responsibility and National Audit Bill [HL]

Debate between Lord Touhig and Lord Sassoon

Thursday 9th December 2010 Grand Committee

[Lord Sassoon]

That is the intention behind the drafting but I shall see whether, on reflection, it achieves that. I think that we can accommodate the degree of certainty, albeit that, even in the period of appointment of a C&AG, the relevant advisory committee could change.

I turn to the question of abiding by the committee’s decisions. I hear what the noble Lord, Lord Touhig, says about this being different from ministerial appointments or other Senior Civil Service appointments, where similar conditions apply. However, as we have seen in recent years, there is, as there should be, a considerable focus on current and former Comptroller and Auditors-General. It is inconceivable that similar pressures to those that apply to Ministers and officials would not apply very directly in this case. Therefore, just as, so far as I am aware, it is not written into other Bills, I do not believe that there is a need to write into this Bill the necessity to abide by decisions. If it were thought appropriate to draw attention to this point, I believe it would be more applicable to the terms of appointment rather than the Bill.

On Amendment 42, I certainly agree with the noble Lord, Lord Eatwell, that we must make sure that we get the best field of candidates. If the matters that are the subject of Amendment 41A are addressed properly, which I believe in the total construct they are, then I believe that a period of two rather than five years strikes the right balance when considering the terms of the appointment. Again, it is difficult to say what the appropriate read-across should be, but two years is the period during which former Ministers go through clearance procedures, and this is a tighter requirement, as it should be.

In addition, there are potential difficulties concerning the legal enforcement of such a restriction. The issue here is whether, by specifying five years or some other relatively high number, we would risk infringing age discrimination legislation by making the appointment process exclude those who were getting closer to—I do not know what the term should be—perhaps our best years. Therefore, there are real concerns and there is clearly no easy answer to the question of what the right number might be, but the legal advice that the Government have received is that, as one pushed that number up—and five years would certainly lead to the legal advice being uncertain—there would be a significant risk that the restriction would be thought to be an infringement of age discrimination legislation. Therefore, subject to making it absolutely clear that Clause 15 works as intended—I think that it does, but I will look again—I believe that we have struck a proportionate balance which ensures that we get the best candidates for the job but does not in any way leave open a suggestion of impropriety afterwards.

[Lord Touhig]

I am grateful to my noble friend and to the Minister for their responses. I take the point that my noble friend Lord Eatwell made: if Amendment 41A were accepted, the necessity for Amendment 42 would perhaps not be as great. I also take his point—it was one reason that prompted me to draft this amendment—that the Bill simply says that,

“the person must consult such person as may be … specified”.

I hope the Minister will go back and look further at that, because there is some merit in specifying who will actually look at these matters; indeed, in 2008 the Public Accounts Commission recommended that it should be the Advisory Committee on Business Appointments. The advisory committee was formerly chaired by the noble and learned Lord, Lord Mayhew, and is presently chaired by the noble Lord, Lord Lang of Monkton, so it has a distinguished chairman and a distinguished membership. The committee’s website says:

“The Advisory Committee on Business Appointments is an independent body which provides advice to the Prime Minister, the Foreign Secretary, or other Ministers if requested, on applications from the most senior Crown servants who wish to take up outside appointments within 2 years of leaving Crown service”.

I rather think that it will not be abolished in a hurry, because we will always need such a body to give advice to Prime Ministers and to others on these matters.

I am certainly encouraged that the Minister says that he will perhaps go back and further reflect on this. He mentioned his concern that Amendment 42 might have an impact on age discrimination. As someone who celebrated his 63rd birthday on Sunday—I am still flattered, as a new Member of your Lordships’ House, when colleagues come up to me and ask, “Are you settling in, young man?”—I take the Minister’s point as a fair one. Having said that, I await the Minister’s further reflection and coming back to us, and I beg leave to withdraw the amendment.

Public Expenditure: Value for Money

Debate between Lord Touhig and Lord Sassoon

Tuesday 26th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, the assessment cannot be done exactly in that way—but when it comes to procuring large public projects and it costs more to cancel the project than it does to complete it, that is not the sort of behaviour that most people would indulge in when spending their own money. I absolutely take my noble friend’s point that there is far too much waste in procurement in government expenditure, inherited from the previous Government, and that is not the sort of thing that any of us would do when managing our own budgets.

[Lord Touhig]

The Government announced £1.1 billion-worth of savings in discretionary spending, including savings in consultancy contracts. Between May and 13 August, the Government signed 50 new contracts costing £10 billion with consultants. The National Audit Office has said that this is not value for money. Indeed, it said that the Government,

“lacks the information, skills and strategies to manage”,

these contracts. What is the Government’s response to the National Audit Office?

[Lord Sassoon]

My Lords, shortly after coming into office we cancelled £6 billion of in-year expenditure. That is the sort of rigorous approach that we will take, not only to inherited expenditure but to the management of all new contracts.

Comprehensive Spending Review

Debate between Lord Touhig and Lord Sassoon

Wednesday 20th October 2010 Lords Chamber

[Lord Sassoon]

My Lords, I think I would probably faint at this moment if I even mentioned the debt number. The critical thing is that the debt will peak and we will bring it down, as we said we would, within this spending review. I am grateful to my noble friend for stressing that it has indeed been a courageous and careful exercise that is enabling us to make sure that the debt tops out and starts to come down within the spending review period. He reminds us that a twin failure of the previous Government caused the mess that we are in: first, as my noble friend points out, the great increase in public expenditure that we could not afford; and, secondly, the complete failure to regulate our banking system properly, which caused the whole house of cards to come down. I can give my noble friend the numbers on the public sector net debt, which will go up from 53.5 per cent of GDP in 2009-10 to a staggering 70.3 per cent in 2013-14 before we bring it down to 69.4 and 67.4 per cent by 2015-16 thanks to the measures that this Government have announced today.

[Lord Touhig]

My Lords—

--- Later in debate ---

[Lord Sassoon]

I thank the noble Lord, Lord Stoddart, for a question that reminds us that we are working extremely hard as a nation to live within our means. It is equally important that within Europe the European Union also lives within its means. The Government will be doing everything they can to make sure that proper financial discipline is applied to the European budget this year and for the next spending period. I do not know, but I have a sense—I might like to ask on the subject—that the Labour Members of the European Parliament were today voting to allow the European Union to have its own tax-raising powers to fund a separate pot of money. The present Government want to see proper discipline applied to European Union expenditure.

[Lord Touhig]

My Lords, the noble Lord said that fairness is important to his Budget. He went on to say that a civilised society protected the most vulnerable. Yet in 21st-century Britain 30 per cent of disabled people live below the poverty line. What specific measures are proposed in this spending review to reverse that and to give some fairness and justice to the most vulnerable in our society?

[Lord Sassoon]

My Lords, as I have reiterated, at the absolute centre of this spending review is the universal credit, which, over the next two Parliaments as we bring it in, will go to the heart of the challenge the noble Lord poses. As to the provision for disabled people, people with long-term conditions account for around 70 per cent of the NHS budget, which is the area of spending being protected above all others.

People with disabilities and social care needs will also benefit from the additional resources given to social care within the health and local government budgets. People with care needs are also being protected from the extension of the single-room rate in the housing benefits. Finally, of the measures to which I should draw the attention of the House, families where someone claims a disability living allowance will be exempt from the new cap on total household welfare payments. Care for disabled people is absolutely at the heart of this review.