National Insurance Contributions (Secondary Class 1 Contributions) Bill

Viscount Chandos Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, I echo some of the comments made by the noble and learned Lord, Lord Hope of Craighead, who identified some key Scottish voluntary organisations that play a vital role in supporting particularly vulnerable people.

I draw attention to CrossReach, the social care arm of the Church of Scotland. CrossReach employs something like 16,000 people. Over recent years it has been able to support its services by drawing on reserves to the extent of not thousands but millions of pounds. That sort of thing is not sustainable. It has 32,000 beneficiaries across Scotland. In my year as moderator of the General Assembly of the Church of Scotland, I remember visiting many of these facilities and seeing the valuable work done by CrossReach in supporting young children, many of whom had disabilities. It also supports drug and alcohol rehabilitation schemes, elderly care and care homes, and young people with learning difficulties moving from the school environment into the adult environment. The work being done was quite remarkable. I fear that you cannot continue to run down your reserves for ever.

I received representations from the Coalition of Care and Support Providers in Scotland, which surveyed its members. More than 50 members participated, with a combined expenditure of £850 million, employing around 28,000 staff and supporting 230,000 people across Scotland. In the responses, 57% of respondents were seriously considering handing contracts back to commissioners next year; 55% were considering reducing the amount of support available to beneficiaries in services they do not plan to continue next year; 92% said that if employers’ national insurance contribution changes are not fully reimbursed, it will negatively impact on pay awards; 88% said it will negatively impact on staff pay differentials; 67% are budgeting for 2025-26 on the basis that they expect to reach financial balance only through the use of reserves, and 91% of these said they will no longer be a going concern within four years if they continue to reach financial balance through drawing down reserves in this way.

I hear what the noble Lord, Lord Eatwell, says, but when CrossReach is spending millions of its own reserves, that is not exactly taxpayers’ money. I will not make the excuse that these are unintended consequences; one must assume the Government know what they are doing, even if that is a bit of a far stretch. I would like to know what impact assessment the Government have made of the cost to the public purse if these services are withdrawn. If it is not a cost to the public purse, it is a cost to vulnerable people the length and breadth of this country. That is a completely unacceptable position for the Government to take up. I would like the Minister to tell us the impact assessment of the consequences if some of these services have to be withdrawn.

In my exchanges with the Coalition of Care and Support Providers in Scotland, it flagged up to me, only at the very end of last week, a possible problem with some of the definitions. You have English organisations with legislation passed by this Parliament, Welsh ones with legislation passed by the Welsh Senedd and Scottish ones with legislation passed by the Scottish Parliament. But, for example, “domiciliary support service” in Amendment 1 is not a definition that is known to Scottish legislation. It was too late to table a manuscript amendment to try to address that. The coalition also wanted some time to try to see what precisely needed to be done to extend it to Scotland. I am sure the House would agree that if this amendment is carried, we would also like to make sure it is fully adequate for the entire United Kingdom, not just for some parts of it. I therefore propose to table an amendment at Third Reading, if my noble friend’s amendment is carried, to try to address the specific Scottish issue.

[Viscount Chandos (Lab)]

I shall speak briefly to support the arguments and analysis of my noble friend Lord Eatwell and to remind your Lordships of the comments at Second Reading of the noble Lord, Lord Macpherson, who said that if we aggregate the reductions in employee national insurance that were introduced in the last year of the last Government with the effects of this Bill, the effect is about net unchanged. As my noble friend Lord Eatwell has said, all the various causes and organisations that will be proposed as excepted have benefited as employers, in effect, from the employee national insurance cut. Therefore, if they have to moderate their future wage rises, the net income over that period of 12 or 18 months will essentially be the same. That seems to me another argument for treating all the 38 amendments to which my noble friend referred as a heartfelt cry for help that has already been given.

[Baroness Stedman-Scott (Con)]

My Lords, I have not spoken on the Bill so far, but I want to speak now on behalf of charities. Charities are not for profit and they are not for loss. The impact of the Bill’s proposals provides a fiscal challenge, whichever way we look at it. I understand that the increase proposed will impose on charities about £1.4 billion in additional annual costs, and 87% of charities are worried about absorbing these and other costs that are forthcoming. Charities are emotionally driven and business-led organisations; they give their heart and soul to the people they get up in the morning to serve, and we must make sure that the people who need their services are not impacted detrimentally in any way.

While people in the finance departments of organisations, not least the Government, are focused clinically on money, and I understand that, I ask that they look at the impact that the Bill will have on individuals. My dad used to say to me, “Debbie, measure twice and cut once”, and I would like that saying to be applied to decisions in the Bill.

Economic Growth

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Thursday 23rd January 2025 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Horam, even though it is nearly 40 years since I could describe him in parliamentary terms as a friend. I am very pleased to be able to speak in the important debate which the noble Lord, Lord Farmer, secured and introduced, making many interesting points. Early in his introduction, he said that gloom must be dispelled. I agree, but not at the expense of honesty and transparency. This Government inherited 22—no, I will not steal my noble friend the Minister’s best lines—at least 22 acute challenges, from the fiscal position to the state of the NHS to crumbling infrastructure, which cannot be papered over with the boosterish rhetoric so beloved by Prime Minister Johnson.

There has been near unanimity in the debate so far on the importance of achieving economic growth, but before I address the “how”, it is worth asking: growth at what price and with what constraints? President Obama recently named Growth: A Reckoning by Dr Daniel Susskind as one of his best books of 2024. I strongly recommend it, although I am afraid that will have less effect on its sales than the advocacy of the former President. Dr Susskind, a research professor in economics at King’s College London, surveys the history of growth—only material in the last two centuries and only an explicit primary objective of Governments for less than half of that—and looks at the challenge for maintaining the path of the past 200 years. Drawing on Equality and Efficiency: The Big Tradeoff, written by Arthur Okun in 1975, Dr Susskind creates a framework for considering a wider range of trade-offs than equality alone, with the environment first among those. The costs of trade-offs can be managed and mitigated—the falling cost of renewable energy is a prime example—but, in some cases, decisions have to be made to accept a reduction in realistic growth targets, in recognition of these trade-offs.

I suggest that the willingness to acknowledge, manage and mitigate those trade-offs lies at the heart of the differences between some of today’s speakers and the views of these Benches—and even further, looking across the Atlantic, with the Trump Administration’s, “Drill, baby, drill” on the one hand, and the UK and most other European governments on the other.

I will pick up on two points. Economic growth crucially requires stability, both economic and social, as the noble Lord, Lord Farmer, argued. That social stability cannot be achieved without the investment in public services to which this Government are committed, and which the Governments of the previous 14 years wilfully neglected.

Despite all the efforts of the Opposition to allege financial crisis—interest rates are higher than in the recent past, but in line with global trends—international confidence in the UK is at an all-time high. PwC’s annual survey of global business leaders, published this week, shows the UK as second only to the US as a preferred destination for investment, up three places since this Government took office.

Finally, I turn to the financing of innovation and start-ups, where I find myself unusually in less than complete agreement with my noble friend Lord Eatwell. In 2023, venture capital investment in the UK represented an identical percentage of GDP to that of the US—nearly twice that of France and nearly three times that of Germany. In the words of David Clark, the chief investment officer of investment advisers VenCap,

“In the UK, there is no shortage of capital for world-class founders. There is a shortage of world-class founders”.


Much of that investment may come from overseas, although that would require knowledge of each US venture capital fund’s limited-partnership investor base, given that UK pension funds, insurance companies and endowments are significant investors in them. For me, the proposed pension fund reforms and restructuring, which I fully support, are about improving the return of those funds for the benefit of their pensioners, rather than filling a capital gap which does not really exist.

Independent Adviser on Ministers’ Interests

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Thursday 16th June 2022 Lords Chamber

[Lord True (Con)]

My Lords, I have already said that I am not going into speculative comments on what may or may not have been the subject of a commercially confidential matter under consideration.

[Viscount Chandos (Lab)]

Can the Minister name one other role, in public life or any other area, where the ultimate decision as to continuing in that role is left to the person in that position?

[Lord True (Con)]

My Lords, the decision on whether the Prime Minister continues in office will rest with the British people when the time comes.

Budget Statement

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Friday 12th March 2021 Lords Chamber

[Viscount Chandos (Lab) [V]]

My Lords, speaking as a non-Marxist member of the Labour Party, I think that this much leaked Budget is a case study for the long-established rule that the better the immediate reception, the worse it proves to be once more measured analysis has taken place. The noble Lord, Lord Macpherson, pointed out that all the pressures on future public spending are upwards and my noble friend Lord Eatwell returned powerfully to the need to increase resilience in every area of the economy and society.

The Government have responded reasonably well to the immediate economic shock from the pandemic, albeit with devastating exceptions, such as for many self-employed, and sometimes, we understand, in the teeth of opposition from the Chancellor. But the Budget starkly exposes—as that other non-Marxist, the noble Lord, Lord Forsyth, spelled out—the poverty of the Government’s longer-term plans, by unduly prioritising future fiscal consolidation over reversing the massive cuts of the past 11 years to so many unprotected areas of public services.

In this context, with a Government trying to justify deeply inadequate pay proposals for the NHS on grounds of affordability, the decision to delay the correct increase in corporation tax for two years is wrong, particularly when combined with the introduction of the super-deduction allowance for the same period. To the extent that the corporation tax rate affects investment decisions, multinationals and global investors will take the rate set for 2023-24 onwards as the relevant one in their considerations. The tax revenue forgone would be sufficient to cover desperately needed targeted increases in public spending. This is the worst of both worlds.

Economic Update

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Tuesday 12th January 2021 Lords Chamber

[Lord Agnew of Oulton (Con) [V]]

The first question, on the link between vaccination rate and economic confidence, is absolutely fundamental. I am not aware of specific research being done on that. If there is any, I will make the noble Lord aware of it. From my own interaction with businesses, there seems to be a strong sense that the two are intertwined, which is why we are putting so much emphasis on it.

I reassure my noble friend that the commitment to levelling up remains as strong as ever. We will be making a Statement in the next few days on our progress in moving civil servants out of London and into some of the areas that the noble Lord refers to. My right honourable friend the Chief Secretary has a large fund for levelling up, for which regions can bid, and that is moving forward as well.

[Viscount Chandos (Lab) [V]]

My Lords, the Economic Affairs Committee, of which I am a member, urged the Government in December to make the £20-a-week increase in basic universal credit permanent, as the noble Baroness, Lady Kramer, has done today. We may not be known for our footballing prowess, but the committee, chaired by the Minister’s noble friend Lord Forsyth, is hardly partisan. The Minister said that the Government were responsive to changing economic conditions, and these have only deteriorated since the committee’s report. Why does the Minister not commit now to this, thereby mitigating the deep anxiety of an inevitably increasing number of recipients, rather than prevaricate until only days before the scheduled expiry of the temporary increase?

[Lord Agnew of Oulton (Con) [V]]

As I said in my earlier comments to the noble Baroness, Lady Kramer, I am not able to give the commitment the noble Lord asks for. The Chancellor will give an economic update in his Budget on 3 March, and I am sure that this matter will be addressed then.

EU-UK Trade and Cooperation Agreement

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Friday 8th January 2021 Lords Chamber

[Viscount Chandos (Lab) [V]]

My Lords, even if my Christmas stocking did not contain a copy of the requested How to Overcome Confirmation Bias, my new year’s resolution was to approach consideration and implementation of this agreement in that spirit. In that context, I welcome the objective and forward-looking response of my right honourable friend the Leader of the Opposition on behalf of the Labour Party. I would commend this approach equally to the Minister; implying that the responsibility for the plight of touring musicians and other artists lies with the EU betrays a regrettable blame game. Just how hard did the negotiators fight for this economically and culturally important sector and its activities within the EU? I strongly support my noble friend Lord Lipsey and others in urging action to address this problem.

The principal other point I should like to raise relates to the Government’s intentions over the admittedly conditional freedoms in the state aid and subsidy regime arising from this agreement. It is now four years since the May Government published the Green Paper on industrial strategy. It is not clear to what extent this Government regard it as a framework for their actions. Did the demonstrably high-risk investment in the OneWeb satellite business, for instance, fit in with it, or reflect only the amateur enthusiasm of the Minister or the adviser? Can the Minister therefore say what the Government’s industrial strategy is, and how they propose to implement new regulatory regimes that balance the important objective of improving productivity and growth—which, as the noble Lord, Lord King of Lothbury, has just emphasised, is so important—with the vital protection of consumer interests?

Finance Bill

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2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Viscount Chandos (Lab) [V]]

My Lords, never can economic conditions have changed so much in the time between the publication of a Finance Bill and its consideration by your Lordships’ House. As the Minister has outlined, the Chancellor has, quite rightly, announced a wide range of emergency measures in response to the Covid crisis—even if, in many cases, they fall short of what these Benches would wish to see.

In macroeconomic terms, it was indeed a Budget and hence a Finance Bill from a different era, as my noble friend Lord Livermore described it in his forensic remarks from the Front Bench. But the Chancellor, basking in the current personal popularity that must cause such anxiety to his neighbour—no wonder the Prime Minister’s senior adviser is an advocate of Andy Grove’s dictum “only the paranoid survive”—has shown himself reluctant to move on fully. Yesterday, the Institute for Fiscal Studies published an analysis of the Chancellor’s recent £30 billion package, suggesting that a third of this supposed new spending is actually recycled or reallocated spending already announced in the Budget or otherwise. This

“makes scrutiny of plans more difficult and is corrosive to trust”,

commented the IFS dryly. More importantly, it means that support for the economy and employment is falling even further short of what is needed.

“The Finance Bill is a series of tweaks and corrections”,—[Official Report, Commons, 2/7/20; col. 625.]


said my honourable friend the shadow Chief Financial Secretary in another place, rather than implementing the vision necessary to address this devastating economic shock. Even these “tweaks and corrections” are under- whelming. Although the proposed delay to IR35 reform is welcome, the powerful report by the Economic Affairs Finance Bill Sub-Committee highlights the extent to which the Government are as much at sea in micro as in macro waters.

The Office of Tax Simplification reported on inheritance tax in two stages, between November 2018 and July 2019, with 11 recommendations. Could the Minister say how many of these have been adopted in the Bill? The Chancellor has just announced a further inquiry by the OTS, into capital gains tax. This prompted speculation that CGT changes would be used to fund some of the necessary public spending measures, which the Treasury quickly denied. O that in fact they might be! The Chancellor

“must change a tax system that was designed before returns to capital (and especially property) greatly outstripped returns to labour”,

wrote not a Marxist economist but the FT columnist Janan Ganesh. Although he was writing in 2015 about George Osborne, of whom he was the biographer, his analysis is even more valid today than it was then.

Covid-19: Economy

Viscount Chandos Excerpts

Thursday 4th June 2020 Lords Chamber

[Viscount Chandos (Lab)]

I draw the attention of your Lordships to my entries in the register of interests. I am from the Zhou Enlai school of analysis in thinking that it is too early to make a considered judgment of the economic lessons to be learned from the Covid-19 pandemic. However, it is not too early to suggest a few likely strands.

First, multilateralism is better than going it alone, and the Government have shown in their approach to vaccine and drug development that they are capable of acting multilaterally. That lesson should guide our economic strategy too. Secondly, “Keynes rules OK”, as a 1970s graffiti artist might have written—perhaps it was the noble Lord, Lord Russell. The Chancellor’s constructive response to the crisis demonstrates how misguided the previous coalition and Conservative Governments were in pursuing the policy of wholesale public expenditure cuts—another lesson that must not be ignored in the years to come, or the recovery will be elusive.

Thirdly, just-in-time supply chain and inventory management is totally unsuitable for the NHS, whether or not it is an acceptable risk for commercial manufacturing. The economy needs greater redundancy in the engineering sense in order to lessen redundancies in the employment sense.

Finally, the catastrophe in the social care system and the broader exacerbation of inequality resulting from the pandemic point to the urgent need to improve the position of those on lower incomes. Wages and salaries have fallen from 70% of GDP in the 1970s to under 60% now. In an era of unprecedentedly low, risk-free interest rates, the providers of capital can afford to see a rebalancing of the returns, to be divided between themselves and the providers of labour. Employers, trade unions and government, through regulation, all have a role to play in achieving this.

Budget: Economic and Fiscal Outlook

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Tuesday 5th May 2020 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, the Government’s assessment, the Minister and many other noble Lords who have spoken this afternoon acknowledge the certainty of a very high—possibly record—level of deficit this year, of over £200 billion. As the noble Baroness, Lady Northover, has argued, it is very uncertain that the recovery will be as swift as many people hope, and possibly not as swift as the OBR is assuming. Against this background, the Government must not fetishise the level of deficit, based on economic illiteracy, unlike the devastating period since 2010, as my noble friend Lord Hain has highlighted. There should be a gradual glide path of reducing deficits, but with a prioritisation of essential public expenditure.

We must of course look for increases in tax. Does the Minister agree that there is overwhelming evidence that those increases in taxation should come on capital and, in particular, that the natural time for that is when capital is transferred between generations, both in life and on death?

The single most important factor in economic recovery is the earliest possible introduction of a vaccine, as has been so cogently argued by Sir Jeremy Farrar, the director of the Wellcome Trust. I welcome the UK Government’s commitment, as part of the global effort, to the funding of accelerated research and the production and distribution of vaccines, as well as of therapeutics and diagnostics. The Wellcome Trust’s COVID-Zero initiative is encouraging global business and philanthropic contributions, and it is to be welcomed.

I have one question for the Minister in this respect. Although equality of access to vaccines is vital to our national interest, can he confirm that the funding that we are committing does not come from DfID’s ODA budget and will not be taken as part of our 0.7% commitment to international aid under the international development Act of 2015?

Small and Medium-sized Enterprises: Mistreatment

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Thursday 27th June 2019 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, we are indebted—the appropriate word in this case—to the noble Baroness, Lady Bowles, for securing time for this short debate and for her forensic speech introducing it. I begin by drawing your Lordships’ attention to my entry in the register of interests, in particular as a director of the Credit Services Association, the trade association for the debt collection and debt purchase industry—while noting that its members are overwhelmingly focused on consumer credit collection. I am also a long-standing personal customer of RBS, although I will be checking if my debit card is still working following this debate.

“UK’s most trusted financial platform … Effortless every day, brilliant when it matters”—


these were the claims in an investor presentation by RBS on its UK personal and business banking. Pre-financial-crisis hubris, perhaps? No, the presentation was made on 24 September 2018, nearly five years after the report by Lawrence Tomlinson which first laid bare the systemic failures of RBS’s global restructuring group, and even after the FCA’s subsequent report had been published by the House of Commons Treasury Select Committee earlier that year. In 47 PowerPoint slides, RBS made no reference of any sort to the problems in the GRG.

Ross McEwan, the RBS CEO, said to the Treasury Select Committee in evidence for its report SME Finance that,

“the culture, structure and way RBS operates has changed fundamentally”.

How well does this claim—worthy of a Conservative Party leadership candidate—stand up to scrutiny? The same Treasury Select Committee report says:

“The overwhelming majority of those responsible for cultivating GRG’s patently unprincipled culture remain employed in RBS’s new restructuring division”.


Some 136 out of 182 employees in the new restructuring division had previously been part of the GRG. Even more disturbingly, of the 32 senior managers in the new restructuring division, 30—I repeat, 30; all but two—had been members of the GRG.

Your Lordships will have had experience of changing culture in organisations—even if, I hope, not necessarily from such a toxic starting point. How credible is the claim that there has been fundamental change, when over 90% of the unit’s senior management is unchanged? It is in this context that we should read the FCA’s latest report and form a view as to its completeness.

I am, in general, a supporter of the FCA, and have seen the constructive approach and quality of people it has brought to the regulation of the consumer credit industry. I look back at the journey that financial markets regulation has taken since before the Financial Services Act 1986 to now, and believe that we have a regime more suitable for competitive markets and concern for consumer protection. I conclude, from experience, that the FCA compares favourably in general with regulators in many other countries. But it is difficult not to be profoundly disappointed by this report.

Yes, of course the fact that commercial lending is an unregulated activity, even if conducted by a regulated entity, presents problems, although this must seem like a very arcane distinction to the thousands of victims of RBS’s “unprincipled culture”. Yes, the approved persons regime did not offer the scope that the senior managers certification regime might do for a broader judgment, although it is disturbing that, as I understand it, Andrew Bailey is not certain that even the SMCR would have enabled the FCA to take more decisive action.

However, within all these constraints, and taking just one specific issue in the limited time available, is it not still extraordinary that the FCA discusses the challenges in balancing the GRG’s two objectives—“turning customers around” and “generating a return for RBS”, which the noble Baroness, Lady Bowles, referred to—without any mention of any sort of the incentive remuneration and career appraisal policy that applied to RBS employees in the GRG? How were those employees remunerated, and how were they appraised relative to those two objectives? The FCA is engaging actively in the question of alignment within other areas of financial services, but is totally silent in this report, where it would have been so relevant.

I have two questions for the Minister with a view to mitigating the risk of recurrence. First, like the noble Baroness, Lady Bowles, I ask whether the Government will take the necessary steps urgently to make commercial lending a regulated activity. Secondly, remembering that the Government are a 62% shareholder in RBS, will they report how UKFI, as the shareholder, is interacting with the RBS board—not as a government shareholder but as a normal, responsible investor—to improve the culture of the group?