Inflation

Debate between Lord Young of Cookham and Lord Lea of Crondall

Monday 1st July 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I thank my noble friend Lord Forsyth for introducing this and all noble Lords who have taken part in an exceptionally well-informed debate on a rather specialised, but none the less important, topic which impacts directly on all of us—as the noble Lord, Lord Darling, and my noble friends Lord Tugendhat and Lady Browning, explained. I also thank noble Lords for their detailed report, for which the Government are grateful; I thank, too, the departing members of the committee for their work.

Normally, I look forward to debates on my noble friend’s reports, but on this occasion it cast a small cloud over my weekend, as I realised that what I have to say may leave my noble friend and his committee less than satisfied. However, I hope to persuade him that there are good reasons for that. In fact, much of the debate focused not exclusively on the Government but on the role of the UKSA—particularly the speeches from the noble Lords, Lord Burns and Lord Turnbull. I am sure that they will read with interest what we have said today.

As a former Treasury Minister, albeit some 25 years ago, I took a deep personal interest in the Government’s response, possibly straying from my advertised role as a spokesman for the Treasury. I have read the report, which raises a number of complex and wide-ranging issues on the RPI, the Government’s use of inflation statistics, and the future of measuring inflation.

Before I continue, may I first pay tribute to John Pullinger, who recently retired as National Statistician? He had a distinguished term in that post. To mention but a few of his achievements in the role, he led the ONS strategy entitled Better Statistics, Better Decisions, headed the newly created analysis function, and worked alongside the UKSA to, in his own words, make it,

“unacceptable for people to either not use evidence, or to misuse it”,

a sentiment with which I am sure this House concurs—and relevant in view of the exchange earlier today in the Oral Question from the noble Lord, Lord Foulkes.

I should like to address the concerns of my noble friend Lord Forsyth, and the other noble Lords who sit on the Economic Affairs Committee, on the lack of a government response to their report, which was published in January—an issue raised by many noble Lords, including the noble Lord, Lord Sharkey.

The Government appreciate the amount of work and the level of scrutiny that go into all the committee’s inquiries; we understand its frustration. I regret that there is yet to be a government response and understand the difficulties in debating a Select Committee report without one being available. This delay is not driven by inaction. The issues that the report raises are complex and wide-ranging. Measures of inflation are embedded across the economy and affect the lives of almost everyone in the country. They include rental agreements, mobile phone contracts, financial instruments, government debt, pensions and rail fares, to name but a few.

[Lord Lea of Crondall]

Will the Minister take this opportunity to include wage and salary increases in that list? It seems quite extraordinary that the main quantitative use of the RPI does not get a mention, even now.

[Lord Young of Cookham]

I said, “to name but a few”, but I will gladly add the issue raised by the noble Lord to the list. Some, but not all, wage increases are linked to RPI.

Some uses of the measures are interlinked; for example, for pension schemes whose members, many of whom are in private sector defined benefit schemes, have pension payments that increase by RPI. This means that, in turn, those schemes seek RPI-linked assets to hedge those liabilities. As a result, a large share of the Government’s outstanding RPI-linked debt is held by those pension schemes. The Pension Protection Fund estimates that almost 90% of outstanding index-linked gilts are held by UK defined benefit pension schemes and UK insurance companies.

The breadth, complexity, and importance of these issues mean that the committee’s report requires further careful consideration. Given the complexities of the issue, it is sensible that the Government and the UKSA produce a well-considered response—while respecting the UKSA’s independence, of course.

Devolved Administrations

Debate between Lord Young of Cookham and Lord Lea of Crondall

Monday 25th March 2019 Lords Chamber

[Lord Young of Cookham]

Devolution is England is not stuck. I spend many hours in the Moses Room dealing with statutory instruments, either setting up combined authorities, where local authorities wish to combine, or local mayors, who will shortly be elected, so we are making good progress in devolving power from Westminster to the local authorities.

[Lord Lea of Crondall (Lab)]

My Lords, is the notion that Northern Ireland is a special case somehow inevitable as there is no devolved Administration in operation? Is that the rationale that the Minister is pointing to?

[Lord Young of Cookham]

A priority for the UK Government is to restore the devolved institutions in Stormont. In the absence of Executive Ministers, there is a limit to the decisions which the civil servants in Northern Ireland can take. That is why last November the Secretary of State issued guidance on decision-making for Northern Ireland during the period for Northern Ireland Executive formation. In the meantime, we are taking such steps as we can to develop a common framework, but there does come a point where you cannot make much more progress without prejudicing the freedom of Northern Ireland to do what it wants.

Carillion

Debate between Lord Young of Cookham and Lord Lea of Crondall

Monday 15th January 2018 Lords Chamber

[Lord Young of Cookham]

My Lords, I am grateful to the noble Baroness. It is worth making the point that of the seven contracts that were let post July, six were joint ventures; in other words, there was joint and several liability to undertake the work if one of them collapsed. In the case of HS2, which was the largest at £1.4 billion in total, Kier has already announced this morning that it has put in place contingency plans to ensure continuity of service. The two MoD contracts were joint ventures, as were the two HS2 ones, and so was the Network Rail contract to Carillion Powerlines. Only one relevant contract was not a joint venture where Network Rail is now transferring the work to another framework contractor.

However, the noble Baroness has made a good point. When one assesses who has won a tender, one has to do it against a number of set and published criteria. If you do not, you are up for judicial review. One of those criteria is financial stability. Clearly, whatever the test was back in July, it was passed. It relates to a point made by my noble friend Lord Lawson, which is whether one should take this opportunity just to stand back and look at whether the criteria used for assessing financial stability are correct and robust enough or whether they need firming up.

[Lord Lea of Crondall (Lab)]

My Lords, is not a picture emerging of some prima facie creative accounting going on? The noble Lord, Lord Lawson, makes a fair point when he suggests that not every contract should come directly from the Government. The picture now is that in almost everything done by Wimpey, Costain and so on, they are called subcontractors, and that applies to the workforce as well. Does the inquiry not need to cast a beady eye over how far the culture of subcontracting everything—much more so than was true previously in the construction industry—is part of the background to this problem because no one can take an overall view of what is happening on the balance sheet?

[Lord Young of Cookham]

That is quite a complicated question. One can make a good argument for having subcontractors—namely, people who specialise in a particular discipline and compete against each other for contracts, rather than one company trying to cover the whole spectrum of services. Many very successful industries are built on a structure of contracts and subcontracts. Noble Lords need look only to the airline industry to see a whole range of contracts: companies lease the aeroplanes and subcontract baggage handling and catering and so on, and, on the whole, it is a satisfactorily run industry. I would not want to get drawn into conclusions about what structure is the right one for a particular industry. On the question of accounting, I should have said that the FCA and the FRC are both conducting their respective inquiries—one, I think, into audit, and the other into statements that were made or not made about the company’s prospects. These particular aspects are being looked at by the relevant authorities.

High-Cost Credit and Debt Management

Debate between Lord Young of Cookham and Lord Lea of Crondall

Monday 10th October 2016 Lords Chamber

[Lord Young of Cookham]

I take this opportunity to thank my noble friend for her services at the Department for Work and Pensions up to last July—services which are missed by nobody more than myself as I now have to do some of her work. So far as cold calling for pensions is concerned, I note that my noble friend has taken this up since people have been able to switch their pot out of their providers and into something else. I cannot say whether this will be swept up in the review of high-cost credit and debt management but I will certainly see that the point is taken on board elsewhere.

[Lord Lea of Crondall (Lab)]

My Lords, many of the calls that people receive are clearly mendacious. They say, “We are representing a British bank” and then something about compensation, which is just not the case. Will the credibility of any code not depend on the industry itself having a financial responsibility for recompense?

[Lord Young of Cookham]

I am sure that the noble Lord is correct in what he said but I did not quite catch his question. Perhaps he could repeat it.

[Lord Lea of Crondall]

Will the credibility of any code, to which reference has been made, not depend on the industry accepting financial responsibility for compensating the people who have been in some sense the losers from the mendacity of the original caller?

[Lord Young of Cookham]

That is exactly why the FCA has been instituting these fines. As I said, last month it ordered a payday loan firm to repay £34 million to 97,000 customers for unfair practices. Another firm which acquired customer bank details in an underhand way has agreed to a £20 million redress scheme. There is built into this scheme the necessity of those who break the rules compensating those who have been hard done by.