Brexit: Outstanding Commitments

Debate between Lord West of Spithead and Lord Bates

Wednesday 6th February 2019 Lords Chamber

[Lord Bates]

I agree with all of that. We certainly agree with my noble friend Lord Hamilton, who made the good point that part of the £35 billion to £39 billion covers the implementation period, which is the two years of ongoing contributions to the European Union. He is also therefore correct to point out that if we left without a deal, there would not be an implementation period, so that money would not be paid. However, there would need to be some mechanism to reach a negotiated settlement, or it would be as a result of a legal challenge in some court.

[Lord West of Spithead (Lab)]

My Lords, how will we deal with things such as the £1 billion we have invested in Galileo, which we will now not be able to use? How will that be resolved—as part of the £39 billion, or separately?

[Lord Bates]

All these figures went into the financial settlement; that is how we arrived at those numbers. As regards our future relationship, that is a matter for the future economic framework, which, once we get the withdrawal agreement through your Lordships’ House and on to the statute book, we can look forward to negotiating with our European friends.

Economy: Budget Statement

Debate between Lord West of Spithead and Lord Bates

Tuesday 13th November 2018 Lords Chamber

[Lord Bates]

My Lords, I begin by mentioning a moment of cross-party consensus. The noble Lord, Lord Davies, began his speech by saying that this had been an excellent debate, and I want to endorse that wholeheartedly from the Government Benches. It has indeed been an excellent debate.

It was particularly helpful, as we sat through the long hours of the debate, to hear such thoughtful contributions on the long-term issues faced by this country. I think here of the contribution on adult social care from my noble friend Lady Eaton, on which the noble Lord, Lord Kerslake, came in; the noble Baroness, Lady Jolly, referring to the funding of mental health care and how assets could be used in that context; the noble Lord, Lord Gadhia, discussing the unwinding of quantitative easing and the role of potential funding mechanisms for that, a suggestion shared by the noble Lord, Lord Macpherson; my noble friend Lady Neville-Rolfe talking about how to reintroduce dynamism into the retail sector; the noble Lord, Lord Shipley, contributing on the issue of housing, born of his great experience in that area; and my noble friend Lady Stroud, speaking also from experience, commenting on pathways out of poverty. I pay tribute to all that she has done over many years in raising this issue and seeking those pathways and ladders out of poverty for the poorest in our society. The noble Lord, Lord Leigh, made an interesting contribution on productivity measures in the information age—he shared that element of the debate with the noble Lord, Lord Skidelsky—and how we effectively measure productivity in the new economy. The noble Baroness, Lady Byford, talked about the future of the rural economy and gave a picture of the potential effect of AI, even in farming. The noble Baroness, Lady McGregor-Smith, continued on the theme of technology and spoke about how we create an economy that is fertile ground for tech start- ups in this country. It has been an excellent debate.

In the debate I was struck by a number of revelations. The outstanding opening speech of the noble Lord, Lord Fox, will be great news to Mrs Fox because my noble friend Lord Wakeham will report back on it. To add to Mrs Fox’s joy, I echo the fact that it was a very good speech. If my noble friend Lord Wakeham happens to know Mrs Bates, perhaps he might offer a similar view about my contribution. One of the most intriguing contributions was the revelation from the noble Lord, Lord Macpherson, who played a distinguished role in the Treasury, serving as Permanent Secretary to three Chancellors at least—perhaps more—of his insight into that fateful Budget for those of us on this side of the House when VAT was applied on fuel. John Major was opposed to that measure and it is reassuring to know that the reason it could not be changed was not because of opposition from the Chancellor but because the Red Book had already gone to the printers. Having suffered severely at the general election that followed on from that issue, I would have offered my services to make manuscript amendments to every copy that had been produced at that time.

This is the third time I have participated in these debates—my noble friend Lady Neville-Rolfe has done more—and I was momentarily heartened when the noble Lord, Lord West, began his speech by saying, “I am not going to be asking for more ships”. We all breathed a sigh of relief at that point, but then he went on to ask how the money would be spent. I shall come back to that in a minute. Another thing I have learned from doing these debates is that when the noble Lord, Lord Skidelsky, whose reputation in the field of economics I have great admiration for, says that he gives the general thrust of the Budget a broad welcome, I know that is when I start quaking in my boots and hope that a flow of paper will come from the far end of the Chamber to help me out.

There has been a great number of contributions to the debate, and I will try to get through as many of the specific questions raised as possible in the time that I have. The noble Baroness, Lady Jolly, began by asking whether £2 billion is enough for mental health. Funding for mental health will grow as a share of the overall NHS budget over the next five years. The NHS will invest up to £250 million a year by 2023-24 in new crisis services for that purpose.

My noble friends Lord Wakeham and Lord Flight and the noble Lords, Lord Macpherson and Lord Shipley, touched on stamp duty land tax. My noble friend Lord Flight was particularly critical of the impact it was having. We reformed stamp duty in 2014 to improve the fairness and efficiency of the tax. The Government continue to support first-time buyers, including by increasing the price at which property becomes liable to stamp duty to £300,000 at the Autumn Budget 2017. This relief means that 80% of first-time buyers will no longer pay stamp duty.

The noble Baroness, Lady Byford, and the right reverend Prelate the Bishop of Chelmsford called for further action on plastics and food waste. The right reverend Prelate declared his passion for the flat white, which henceforth will be in a reusable cup. Defra will be publishing resources on its waste strategy in 2019, which will set out the further actions we intend to take. He also asked about what more we are doing for the environment, as did several noble Lords, including the noble Lord, Lord Hain. The Budget announced a £350 million industrial strategy transformation fund to support businesses in transitioning to a low-carbon future and action on single-use plastics as part of the Government’s wider strategy to address plastics waste, with further detail to be set out in the resources and waste strategy later this year. Subject to consultation, a tax on plastic packaging will be introduced from April 2022. It is not right to say, however, that coffee cups are so rarely recycled. However, there is no practical way to apply the tax to just hot drinks. It would have to be levied on all types of disposable plastic cups, which at this time would not be effective in encouraging reuse.

I pay tribute, as did the noble Lord, Lord Davies, to my noble friend Lord Higgins. The making of his 60th speech on the Budget is worthy of celebration. It is a diamond jubilee. I was going to say it was a diamond speech to go with that anniversary, but we all appreciate the assiduousness and the service he has given to scrutinising the public finances and fiscal measures over the years, in this House, of course, and in the other place as chair of the Treasury Select Committee.

My noble friend Lord Higgins also asked me a specific question about the change to probate fees, as did my noble friends Lord Northbrook and Lady Altmann. I will attempt to respond to it. Charging fees is an essential element of funding an effective, modern Courts & Tribunals Service, thereby ensuring and protecting access to justice. We are introducing a more progressive fee for obtaining a grant of probate, lifting 25,000 estates annually out of the need to pay a fee. The proposed fees range from £250 to £6,000, in line with the value of the estate. No estate will pay a greater fee than 0.5% of its value.

In leading off the debate, the noble Baroness, Lady Smith of Basildon, was concerned that 84% of the benefit of tax cuts goes to the top half of earners. The income tax system is highly progressive. The top 1% of income tax payers are forecasted to pay nearly 28% of all income tax in 2018-19—a higher proportion than in any year under the previous Labour Government.

The noble Lord, Lord Livermore, and my noble friends Lady Altmann and Lord Suri were concerned about the impact of Brexit. They raised a number of concerns; I will not attempt to turn this into a debate on Brexit because there will be many more opportunities for that. I assure them that the Chancellor has established a £15 billion fiscal headroom to be kept aside for Brexit contingencies. With a good deal, which we all hope for, that money can be invested in public services.

The right reverend Prelate the Bishop of Chelmsford and my noble friend Lady Stroud talked about the moves on universal credit and gave some insights. I join my noble friend Lady Stroud in paying tribute to Baroness Hollis. For a brief and painful time, I was the Lords spokesman for the DWP until I put in a plea to the Chief Whip and anyone else who would listen to move off to the Department for International Development—or anywhere else—to get me out of her line of fire. The power of her delivery was incredibly effective; she always narrowed things down from the big picture and the big numbers to individual families and cases, which made what she did so powerful. I take the point made by the noble Lord, Lord McKenzie, that if she were privy to this debate, she would be urging for more and pointing out where more needed to be done.

Some noble Lords referred to comments made on this side in relation to universal credit. A couple of responses from the Resolution Foundation were cited. Its director, Torsten Bell, said that the Budget will benefit some families because it includes giveaways on both the benefits side and the tax side. He went on to say that the Chancellor has delivered a,

“very welcome … £630 boost to low-income families”,

on universal credit. This will mean that the Government’s flagship welfare reform,

“is now more generous than the benefit system it is replacing”.

The noble Lord, Lord West, asked about the increase in defence spending. In the Budget, we invested an additional £1 billion in defence. Page 76 of the Red Book highlights how that will be spent. Of course, that comes in addition to the £1.8 billion announced in the Spring Statement, which will be for defence but will also include maintaining the pace of the Dreadnought programme to ensure our continuous at-sea deterrent.

[Lord West of Spithead]

I also asked whether this presaged the Treasury’s acceptance that it will use central fund money to fund the capital cost of the Dreadnought programme, which had been agreed until 2010 when it was cancelled by Chancellor Osborne.

[Lord Bates]

Can I write to the noble Lord on that, just to make sure that I get it absolutely right? I will certainly undertake to write to him and place a copy in the Library.

The noble Lord, Lord Shipley, asked about Help to Buy and questioned its effect on house prices. He also questioned why the scheme had been extended. Housing developers need notice of any changes, and ending the scheme abruptly in 2021 could disrupt housing supply. Instead, we will have a two-year transition period.

My noble friend Lady Altmann asked about pensions. Some people who earn between £10,000 and the personal allowance are missing out on tax relief on their pension. To date it has not been possible to identify any straightforward or proportionate means to align the effects of the net pay and relief at source mechanisms more closely for the population. The Government are already committed to ensuring that we can deliver a modern digital tax system to make it more effective, more efficient and easier for customers to comply and to reduce the amount of tax lost through avoidable error. This may present opportunities to look afresh at the two systems, and I welcome my noble friend’s continued engagement in this important area.

My noble friend Lady Byford asked about digital infrastructure top lines. The Government are committed to 15 million premises being connected to full-fibre broadband by 2025, with nationwide coverage by 2023.

My noble friend Lord Northbrook struck a chord with a number of noble Lords, including the right reverend Prelate the Bishop of Chelmsford, when he talked about the delay in the introduction of the measure on fixed-odds betting terminals. I know that it is a contentious measure. Fixed-odds betting terminals have been in operation since 2001. We undertook the review. It has now been decided that the maximum stake will be cut from £100 to £2, which is extremely welcome. There has been a well-argued debate in the other place on the timing of that. The Chancellor has set out his proposal for it to be in the autumn of next year. To counter that, there has been a proposal that it should be earlier. However, whether it is in the spring or in the autumn, the reality is that, after many years, that welcome change will be brought in to help alleviate the deleterious effects of that side of the gambling industry.

My noble friend Lord Horam talked about the importance of growth in raising all boats and solving all problems. We agree with that and we need to do more to address that issue.

I was with my noble friend Lord Northbrook almost all the way through his excellent speech until he trespassed on the holy ground of the international aid budget, at which point I broke away a little, because that 0.7% is a badge of hope to the world—I see it day in, day out around the world. We live in a world where 29,000 children under the age of five die every day from completely preventable diseases, which makes us realise that, whatever the demands we face in this country, there are some immense needs around the world, and we have rightly been recognised for introducing that and standing by it.

My noble friend Lady Altmann asked what we are doing for skills. We have funded a £20 million skills pilot to help workers develop digital skills. The noble Lord, Lord Kerslake, asked about measures for local authorities in the short term. The spending review will set budgets from 2020-21 onwards, but the Chancellor used the Budget to announce additional funding to support services. This includes an additional £240 million in the current year.

The noble Baroness, Lady Smith, and the noble Lords, Lord Fox and Lord Macpherson, asked about the effect of ongoing spending on unprotected areas. The Government have been clear that the NHS is their number one spending priority, with an £84 billion increase over the next five years. The noble Baroness also mentioned policing. Police funding was protected in real terms in the 2015 spending review. The 2018-19 settlement gave an additional £450 million to police forces.

The noble Lord, Lord McKenzie of Luton, asked which taxes had helped to recover the more than £185 billion in tax. Since 2010, the Government have secured and protected more than £185 billion of tax that otherwise would have gone unpaid. The noble Lord, Lord Gadhia, asked about PFI and an infrastructure bank. We already have a range of financing support options to deliver infrastructure, including the UK Guarantees Scheme and the British Business Bank.

My noble friend Lady McGregor-Smith talked about the importance of corporate tax revenues and rates for encouraging start-ups, as did my noble friend Lord Wakeham. It is great that we have seen the corporation tax rate fall from 28% to 19% today, and have legislated for it to fall further to 17%.

My noble friend Lady Neville-Rolfe asked what we are doing to increase productivity. The national productivity investment fund has been increased from £31 billion to £37 billion, driving key investments to boost productivity and innovation. I have been given a highly technical note on the points made by the noble Lords, Lord Gadhia and Lord Macpherson, on quantitative easing. In the interest of time, I may write to them on that and place a copy of the letter in the Library.

I have to mention my noble friend Lady Noakes, simply because I noticed from social media that she asked whether I would be listening to her, so I have to show that I did—it is easier for me than replying on social media. My noble friend and the noble Baroness, Lady Kramer, talked about the disguised remuneration loan scheme. There are a number of points here—I think that my noble friend, for whom I have great respect, covered most of them—but HMRC actively encourages anybody who is worried about being able to pay what they owe to get in touch as soon as possible. I will undertake to take her concerns back to the Treasury and respond to them.

I want to end on a note of optimism. I share with the noble Baroness, Lady Smith, that desire for optimism: my blood group is B positive and I like to think that I do not disappoint, so I just say to the noble Baroness that employment is at record levels and wages are growing at their fastest rate for 10 years. Income inequality is at its lowest level since the 1980s. The number of people living in workless households is at a record low. Unemployment is at its lowest level since 1975. Some 1.74 million people have been taken out of tax. We have the highest sustained level of public investment of all time. We have doubled the amount of free childcare. Debt is falling as a percentage of GDP. The deficit is down by four-fifths. The income of the lowest-paid 20% is growing faster than that of the highest-paid 20%. We have seen the largest peacetime increase in spending on the NHS in its 70 years and in the public record. Forbes has declared that the UK is the number one place to do business in the current year, despite all. Exports are at record levels— £620 billion and rising. Some 2,265 overseas investments have been made in the UK. Britain’s hard work is paying off and our economy is fit for the future. I commend the Statement to the House.

Syria-Jordan Border: Rukban Camp

Debate between Lord West of Spithead and Lord Bates

Tuesday 16th October 2018 Lords Chamber

[Lord Bates]

The plan has been put forward and we are familiar with it. It contains some challenges and we are still working through the detail. The UN has expressed some concerns about it. The briefing and support for the leadership of Staffan de Mistura and his reporting back to the UN Secretary-General and the Security Council within the next day or two will be crucial in determining what shape the response to that proposal takes.

[Lord West of Spithead (Lab)]

My Lords, I am sure the Minister believes that Assad will, within the next 12 months, effectively gain control of Syria, with the help of the Russians. He might be a loathsome man—indeed, he is a loathsome man when one looks at what has happened—but the only way to help the poor, benighted people in that country is, surely, for us to have proper links with him and work to the future to look after them? Certainly the end of the civil war is one of the best things possible for the people of Syria because while it continues there will be more deaths and more refugees, and so it goes on.

[Lord Bates]

We are certainly supportive of the fact that the only real solution is for there to be a lasting political discussion. That is why we are putting so much energy into the Syria support group process in Geneva and at the UN. I accept that. There is a particular challenge faced by the effects of Daesh and it was right that the UK played its role as part of the international coalition seeking to drive it out of its bases in Syria.

Paradise Papers

Debate between Lord West of Spithead and Lord Bates

Thursday 14th December 2017 Lords Chamber

[Lord Bates]

The question was about a public register. The UK is the first major economy to issue a public register of foreign-owned companies. We are leading in this; it was a landmark commitment given at the global Anti-Corruption Summit, which David Cameron initiated. So far, it is not required to make sure there is a public register in other jurisdictions. It has to be available to tax authorities and to security authorities in the case of counterterrorist finances. That is what is happening in those jurisdictions at present, but there is still more to do and we are far from complacent.

[Lord West of Spithead (Lab)]

My Lords, does the Minister think the problem might go away because we have responsibility for defence and security of our overseas territories but so few ships that we cannot do it? If we are unable to defend them, maybe they should no longer be British Overseas Territories.

[Lord Bates]

The overseas territories and the Crown dependencies are a very important part of the British family and will be a very important part of global Britain going forward. It is important that, as part of that family, everybody works together to ensure that people who have assets held overseas make sure that they report them in an accurate and timely way to the tax authorities of their countries.

Overseas Aid and Defence Expenditure

Debate between Lord West of Spithead and Lord Bates

Monday 13th November 2017 Lords Chamber

[Lord Bates]

I agree to this extent with my noble friend: we do not want to waste money. That is one of the things we have been driving very hard on in the Department for International Development. I am very happy to meet with my noble friend to discuss how the aid budget is being used and the lives which have been saved as a result of it. I happen to think that one of the things we can be proud of in this country, particularly when we think of the act of Remembrance which took place yesterday, is that we are the only country in the world which actually meets its 2% obligation under the NATO agreement along with our 0.7% aid commitment. That is the type of global Britain which we can all be proud of.

[Lord West of Spithead]

My Lords, in the last two debates on defence, it has been made clear by speakers on all sides of the House, apart from the Government Front Bench, that defence is in crisis and that not enough money is being spent on it. Everyone has said that, and indeed the noble Earl took that message back to the department, so to say that all in defence is fine and rosy is incorrect. One wonders if the Government need to have a reality check on this. I am very proud of 0.7% being spent on aid, but can the Minister assure me that the defence budget is going to get the same protection and be looked after in the same way as the aid budget? I ask this because in the final analysis, strong defence forces help stability, make us all safer, and enable aid to actually be used in these places abroad.

[Lord Bates]

As I just mentioned, the defence budget differs from the aid budget in the sense that it will increase each year in real terms by 0.5%, which is greater than is going into overseas aid. We have announced a national security capability review which is being conducted at the present time. The noble Lord will also be aware of the national shipbuilding strategy which has put in an order for five Type 31e general purpose frigates in addition to the Type 26 frigates ordered in July. We can do both, and we are.

Overseas Development

Debate between Lord West of Spithead and Lord Bates

Wednesday 1st November 2017 Lords Chamber

[Lord Bates]

You could construe it in that way, but another, perhaps a little more generous interpretation, would be to look at the case of the BVI. Its population is about 28,000. We follow GNI limits, which are $12,754 for graduating. One billionaire can make a profound distortion to the noted wealth of that country. In the BVI there are some very poor and needy people who lack the resources to rebuild their communities. We are committed to them not only because they are overseas territories but because of our humanitarian commitment.

[Lord West of Spithead (Lab)]

My Lords, our Armed Forces have a great tradition of helping around the world when there are catastrophes. We used to be able to do this easily because we had decent-sized Armed Forces. Now they are very small, does the Minister not believe that the defence budget should get recompensed when we give this aid in all parts of the world?

[Lord Bates]

That was very much one of the points that we made—we said that we wanted to see that coefficient increase. The military response in the Caribbean was absolutely essential and critical. HMS “Ocean” was there and 2,000 troops helped with the rebuilding process and the reconnection of power lines. They were a great tribute to, and played a great part in, the Government’s humanitarian effort.

Business: Exports

Debate between Lord West of Spithead and Lord Bates

Thursday 6th July 2017 Lords Chamber

[Lord Bates]

There is a factual answer to that—I am not sure whether it will play right into the noble Lord’s hands—which is that the Export Institute is an accredited training provider to the Department for International Trade. It is actually doing that already. The reality is that the future is going to be about exports, and exports outside the European Union: the fastest growing economies in the world are all outside the European Union. We need to broaden our horizons and take advantage of the opportunities. That is going to be the future of business, for which we need to train, and be encouraged and inspired about.

[Lord West of Spithead (Lab)]

My Lords, as regards advice to exporters, what advice are the Government giving to exporters and indeed UK citizens who are dealing with South Korea—a very big market for us—bearing in mind that there is, I am afraid, an inexorable march towards a war within that peninsula? What advice are we giving to our people and our companies there?

[Lord Bates]

These are very complex matters, which are being dealt with at the Security Council. They are on the agenda for the G20 and the Foreign Secretary has made statements about them today. We are taking these matters very seriously indeed. We recognise that the Republic of Korea is a major trading partner for the UK and we want to maintain those relationships and maintain peace and stability on the Korean peninsula.