Universal Credit
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(11 months, 2 weeks ago)
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Lord Forsyth of Drumlean (Con)
My Lords, has my noble friend had the opportunity to read the report of the Economic Affairs Committee on universal credit, which pointed out the injustice of people who moved on to universal credit and who received overpayments under the previous system, through no fault of their own, having their universal credit reduced? Surely at a time of such pressures, the Treasury should write off the sum and acknowledge it was a mistake made by government, for which people who are under very stressed circumstances should not be paying?
Viscount Younger of Leckie (Con)
I take note of the point raised by my noble friend. I am not able to comment directly on that, but I will take his points back to the Treasury.
Universal Credit
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(1 year, 7 months ago)
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Viscount Younger of Leckie (Con)
The noble Baroness will be well aware that we have raised many benefits—particularly the benefit cap, by 10.1%, which we think is pretty generous. But we also acknowledge that it continues to be tough for households and businesses across the UK at the moment, which is why we continue to provide support with the cost of living, as I alluded to earlier. This totals £94 billion over the next two years, which is equivalent to an average of £3,300 per household this year and next year.
Lord Forsyth of Drumlean (Con)
My Lords, should we take that as a pledge that the Labour Party will uprate benefits by inflation, or is this just another example of the Opposition attacking the Government and having nothing to say?
Viscount Younger of Leckie (Con)
My noble friend makes a good point. I will add to what I said: we are still on track to deliver the Government’s pledge, with the OBR—it has to be the OBR—forecasting that inflation will reduce to 2.9% by the end of the year. In my newspaper today, I noticed that there are signs that food prices, which have been extraordinarily high, are beginning to slip, so I very much hope that this is going in the right direction.
Tax-free Shopping
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(1 year, 11 months ago)
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Viscount Younger of Leckie (Con)
I take note of what my noble friend says but, as I say, we have no plans to change this policy.
Lord Forsyth of Drumlean (Con)
My Lords, is my noble friend not immensely encouraged by the enthusiasm for tax cuts on the Opposition Benches?
Viscount Younger of Leckie (Con)
My noble friend makes an excellent point.
Direct Tax and National Insurance Contributions
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie (Con)
The Prime Minister mentioned the levelling-up agenda today, and it is very much on course—as you probably heard, he cited the fact that we wish to revert back, which is quite right, to the 2019 manifesto. In terms of the noble Lord’s figures, I will need to look at Hansard to see what precisely he said, because it was a very specific issue that he raised.
Lord Forsyth of Drumlean (Con)
My Lords, could my noble friend take these questions from the Labour Benches as a strong recommendation for the Government for simplifying the tax system and indeed, in time, for reducing the burden of tax by cutting the basic rate of income tax, as the Prime Minister has indicated he will do in the long term?
Viscount Younger of Leckie (Con)
My noble friend is right: the Prime Minister has said, over a long period of time, that he is a tax-cutting individual—now a tax-cutting PM—but when the economic conditions allow. It is the right way forward, but there is a lot to do before we get to that point.
Public Spending: Borrowing Increase
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie (Con)
I do not take the view that the noble Lord has. The Government are focused on increasing economic growth to boost living standards through supply-side reform. This will create new, better-paid jobs, allowing people to keep more of what they earn, and ensure that people from across all spectrums of society, including the most vulnerable, will benefit. On the noble Lord’s question, the detail of the growth plan will be rolled out on 31 October. It is intended that we should show that we are fiscally responsible.
Lord Forsyth of Drumlean (Con)
Does my noble friend think that the noble Lord, Lord Hain, did not notice that this week the Labour Party voted for the reversal of the national insurance increase? He asks what the Government are doing; what they have done is save people from energy costs that would have been £6,500 a year and save businesses from bankruptcy. Is that not the case? That is something which the Labour Party is unable to match, because its guarantee was for only six months while ours is for two years. Most people in the country will cheer that, will they not?
Viscount Younger of Leckie (Con)
My noble friend is right. The Government are reducing the tax burden by delivering tax cuts worth around £45 billion by 2026-27. We know that is for both individuals, through the EPG, and businesses, through reversing the increase in corporation tax from 19% to 25%. It is an ambitious first step towards this mission of cutting taxes. However, as I said earlier, this includes looking at the public sector and liberating, in particular, the private sector.
Prime Minister: Meetings with First Ministers of the Devolved Governments
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie (Con)
As the noble and learned Lord will know, there are constant meetings regarding the pandemic with the Chief Medical Officers, but the Prime Minister himself is Minister for the Union and he met the First Ministers three times last year—there were meetings in June and October and bilateral calls in December. But it is more than this: last year there were more than 350 meetings at ministerial level. Co-operation is getting better and will certainly improve in 2022 after all the discussions on the IGR.
Lord Forsyth of Drumlean (Con)
My Lords, is not the fact of the matter that the Prime Minister made the right judgment and the right call, and in England people were able to celebrate new year? In Scotland, for the first time ever, hogmanay celebrations were prevented, resulting in people having to go south of the border. It is a bit rich to blame the United Kingdom Government for the mistakes of the Scottish Parliament.
Viscount Younger of Leckie (Con)
I take my noble friend’s point, but of course, as the House will know, it is up to the devolved Governments to make decisions themselves, based on the back of discussions that continue to take place between the four Governments.
Higher Education Institutions: Spending
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
That is certainly being discussed by the Government and various stakeholders, particularly the OfS. It is worth pointing out that teaching and research represents 49.2% of total higher education institute spending, which totals £31.3 billion. The teaching grant to which the noble Lord referred represents £1.4 billion in funding in 2018-19.
Lord Forsyth of Drumlean (Con)
My Lords, can my noble friend confirm that the independence of the Augar review was compromised by the Treasury insisting that none of its recommendations should result in increased public expenditure?
Viscount Younger of Leckie
I certainly cannot confirm that; it is the first I have heard of it. After this Question I will follow the issue up with my noble friend and find out where he got that information.
Education: Flexible Lifelong Learning
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
The noble Baroness is correct. I reassure the House that the post-18 review, which aims to ensure that there is a joined-up system, is due to report shortly. It will consider the issues around part-time and distance learning. I will take the opportunity raised by the noble Baroness, Lady Garden, to congratulate the OU on 50 years since its official charter date. Indeed, this is a very participative House today: a number of noble Lords either studied or taught there.
Lord Forsyth of Drumlean (Con)
My Lords, now that the Treasury has been required to change the fiscal illusion funding that encourages all higher and further education to be funded through student loans, should the Government not look at restoring direct grants to institutions so that they are able to run these courses? The Augar review was promised for November last year, and then January—and we are still waiting. What is the delay? The Economic Affairs Committee of this House set out very clearly what needed to be done to sort out this problem. Why can the Government not get on with it?
Viscount Younger of Leckie
I reassure my noble friend that there is no delay, as far as I am aware—“shortly” is the word that I am using. The Government will respond to the proposals that Philip Augar produces by the end of the year. But the Government plan to invest nearly £7 million this academic year for 16 to 19 year-olds in education or training, including apprenticeships.
Student Loan Books
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
It relates back to the first sale of student loans: the Government take a view as to whether it is right to hold on to the loans or to effect a sale and exchange an uncertain stream of future cash flows for a certain amount today. The Government assess whether we are better off retaining the loans rather than selling them by considering the opportunity cost of not having the money now for other issues. Those decisions are very carefully thought out, and that is the case for this second stage.
Lord Forsyth of Drumlean (Con)
My Lords, is it not obvious that this is a piece of fiscal chicanery? My noble friend refers to the decision to sell the phase 1 loan book and to the loans having a face value of £3.5 billion—I think that was the tranche of loans sold at the end of December 2017. They were sold for £1.7 billion, with £1.8 billion written off. Does my noble friend agree with the OBR’s view that the plan to sell £12 billion of plan 1 loans up to 2021 will result in an undiscounted loss to the taxpayer of £28.1 billion?
More importantly, on my noble friend’s point on interest, the Government have been taking credit for the interest which has not been paid and which will be written off 30 years down the line. Given that these loans are going to be sold off to the private sector, with the interest paid to the private sector, why are the Government not adjusting the national accounts to take account of the loans they have taken credit for but which will never be repaid?
Viscount Younger of Leckie
I do not agree with the assessment of my noble friend. The figure I have from the OBR is not £28.1 billion but £23 billion. Whatever the figure, a lot of money has been put down. The forecast from the OBR is based on a nominal undiscounted cash projection, and this implies that the £28.1 billion received 30 years from now—or the £23 billion; whichever we agree upon—has the same value as £28.1 billion today, which is not the case. We have to account for inflation. Similarly, the lack of discounting means that none of the risk or uncertainty associated with those cash flows has been captured in the £28.1 billion. We have to discount for the riskiness of the asset. It is a complex issue, which my noble friend will know.
Viscount Younger of Leckie
Part of the rationale for looking at a sale now is because market conditions are considered to be right. The money is certain money which comes to the Treasury and can then be used to better effect in other areas, which, as I said earlier, is up to the Treasury to decide.
Lord Forsyth of Drumlean
My Lords, we still have time, and my noble friend did not answer my question. Given that the Government have taken credit for interest payments which have not yet been received in the national accounts, will the national accounts be adjusted to reflect that? Also, does he agree with the OBR assessment that it is not obvious why selling these loans at such a loss is of net benefit to the taxpayer?
Viscount Younger of Leckie
There are some further points I can make on my noble friend’s first question. The figure he gave does not take into account the opportunity cost to Government of having the money tied up in loans. My noble friend will know that there are two types of interest rate: the lower rate and the higher rate. I will write to my noble friend with an answer giving him the detail of that.
Apprenticeship Levy: Creative Industries
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
The apprenticeship at the higher level can be defined at quite a senior level. I say again that it is up to employers to engage with the Institute for Apprenticeships to define and describe the standards that they think are right. Some of them are quite senior and would include management levels.
Lord Forsyth of Drumlean (Con)
My Lords, with hindsight, does my noble friend think that setting a target of 3 million new apprenticeships might have been a mistake that encourages quantity over quality? Would it be better to have a target for those who have completed apprenticeships rather than started them, given that 40% do not complete them?
Viscount Younger of Leckie
We have always said that quality comes before quantity. It is good to have a target of 3 million quality apprenticeships that will change the lives of apprentices and the prospects for businesses.
Universities: Contract Cheating
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
I concur that in the passage of that Bill we did not discount the idea of legislating, but we are firmly of the opinion that we should look at the non-legislative approach. I know that the noble Lord is a key member of the academic integrity advisory group, which is doing some good work in conjunction with the QAA to look at the whole area of cheating. It is of course a fast-moving process because much cheating can be done over the internet.
Lord Forsyth of Drumlean (Con)
My Lords, has my noble friend had an opportunity to look at the table in the Economic Affairs Committee’s report on higher education, which shows the huge increase in the number of students being awarded first-class degrees at some universities since the fees were increased to over £9,000? Does he suspect that the market in universities is now geared up to attracting students, and perhaps marketing their universities, on the basis of the number who can get first-class degrees? I exempt the University of Cambridge, which has seen no increase, yet at the University of Oxford those awards seem to have almost doubled, and at some universities it is by a factor of four and more.
Viscount Younger of Leckie
The OfS of course takes responsibility for this and undertakes an annual analysis of degree classification trends at sector and provider level. It will publish its findings and directly challenge the sector where there is evidence. We welcome the UK Standing Committee for Quality Assessment’s work to define the standards for all classifications of degrees.
Part-time and Continuing Education and the Open University
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie (Con)
My Lords, it is a great pleasure to respond to this debate on part-time and continuing education, and I note the specific reference to the future of the Open University. I thank the noble Baroness, Lady Bakewell, very much for raising this subject again. Studying part-time and supporting the education of individuals throughout their lives can bring considerable benefits for individuals, employers and the wider economy.
Let me start by setting the scene. Noble Lords have spoken at length today about the importance of the Open University, and they are right to do so. It has been particularly interesting to hear remarks from those who have been its previous leaders and from its current leaders and alumni, and particularly from those who have taught at it—including, if I picked it up correctly, the noble Baroness, Lady Taylor, and the noble Lord, Lord Shipley. Since 1969, the Open University has brought the opportunity to engage in higher education to people across the country who would not otherwise have had the chance to do so. There has been a theme of social mobility in what has been said today.
I also say at the outset how much I appreciated the maiden speech of the noble Baroness, Lady Bryan of Partick. She gave a particularly warm and thoughtful speech and I am certain that her experience as a graduate of the OU has added greatly to the debate today—and that she will continue to do so in the future. We also look forward to no doubt hearing the views of Keir Hardie transmitted from above via the noble Baroness in the future. Given that football is in vogue, in addition to the importance of study, I hope that she is a keen supporter of Partick Thistle.
The Minister for Universities, Science, Research and Innovation last month described the Open University as,
“essential to our future higher education landscape”.
I agree with Sam Gyimah on this point. I can also report that the Minister took part in an online meeting with Open University students on Monday, making use of the same videoconferencing technology that they use for their studies, to join in a conversation with students from all parts of the country. I am myself looking forward to joining the noble Baroness, Lady Lane-Fox, chancellor of the Open University, and others at a round-table meeting to discuss the work of the OU on 16 July. I note its important work for education in prisons, which we are reminded of today.
It stands to reason that part-time education offers opportunities to many people who are not catered for by the traditional undergraduate model of university. We know that the part-time student population in higher education is different from that for full-time—the noble Lord, Lord Parekh, cited some demographics. Over half of part-time students are older than 30, while this is the case for only 7% of full-time students. As an observation, part-time students also happen to be nearly 10 percentage points more likely to be female than their full-time equivalents. There are numerous testimonials provided by Open University graduates over the years that speak to this. These include people whose caring responsibilities or disabilities made part-time study the appropriate choice for them. Part-time education, however, also carries benefit that will follow an individual throughout their career. Many of those who choose to study through such routes do so because it can complement their existing job roles. Research has found that there are significant employment advantages for those who complete part-time courses, when they start with only a level 3 qualification or below.
Education is of course considered to be a pleasure and a challenge in itself, stimulating and maintaining what Monsieur Poirot referred to as those “little grey cells”. I hope that this will be the experience of the lady wife of my noble friend Lord Northbrook when she graduates. Part-time and continuing education allows this pleasure to be extended to a broader span of the population. Put simply, it is good for people’s well-being and mental health, where appropriate. Contrary to what the noble Viscount, Lord Hanworth, said, we do understand this and I hope that he realises that.
The Open University stands out as by far and away the largest provider of part-time higher education in England. In 2016-17, over a quarter of all entrants to part-time undergraduate study started at the OU. I will though also pay tribute to other universities and institutions, such as Birkbeck—where the noble Baroness, Lady Bakewell, is president, and where the noble Baroness, Lady Blackstone, was previously and the noble Baroness, Lady Garden, is now a fellow. I also mention Teesside University. All make important contributions to part-time study in this country. I also point out that—as the noble Baroness, Lady Bakewell, will know—over 93% of part-time undergraduate qualifiers at Birkbeck were in further study or employment six months after graduating. As noble Lords know, outcomes are a very important part of our government policy.
The noble Baroness’s Motion refers to continuing education as well as part-time education. Continuing education of course extends beyond what we may commonly refer to as higher education and I will return to this theme later on.
Let me now address directly the challenge posed by the changes observed in participation in part-time higher education in recent years. There are now record numbers of 18 year-olds going to university to study full-time, including those from disadvantaged backgrounds. However, we know that there has been a marked decline in the number of people studying part-time in higher education in England. This downward trend goes back to 2008. The noble Baroness, Lady Bakewell, eloquently highlighted the statistics, and a number of reasons for this have been given during the debate, which I will not rehearse again. The Government have taken a number of steps to address the decline in part-time study in higher education. First, noble Lords will recall that, during the passage of the Higher Education and Research Act, the Government brought forward an amendment that gave prominence to part-time study, distance learning and accelerated degrees. This amendment set out that such types of study are included in the need to promote choice for students, which the Office for Students must have regard for in pursuit of its wider functions. The Government also offer part-time tuition fee loans. I am pleased to note that in 2016-17, 47,000 OU students were able to benefit from a tuition fee loan for undergraduate courses. OU students made up around 64% of all the part-time students supported by English tuition fee loans in that year.
I pause for a moment to note that, just this week, the Government have announced that the maximum tuition fees that a university will be able to charge in the 2019-20 academic year will be frozen for the second year running. My noble friend Lord Forsyth spoke passionately on this particular matter. The Government have removed, as he has said, the “equivalent or lower qualification” restrictions—the so-called ELQ restrictions —for all science, technology, engineering and mathematics part-time degree courses. This means that students who already held a degree on these courses were then able to access support through student loans.
Lord Forsyth of Drumlean
My Lords, I am most grateful to my noble friend for giving way, and for the initiative that has been taken in respect of that particular group of students. However, if the Government have conceded the principle, why not extend it more broadly? Am I right in saying that the number of students who have benefited from that are a few hundred? After all, in the whole of England this year, the number of students who did A-level engineering was 10.
Viscount Younger of Leckie
My noble friend will know that I do not have those statistics to hand but I take note of what he has said. It ties into the report that he has produced, and I hope that at a later point we will have time to debate the details of that report.
I turn to HEFCE—now replaced by the Office for Students—which targeted an element of the teaching grant in recognition of the additional costs of part-time study. Twenty-nine and a half million pounds of the £72 million made available through this allocation was granted to the Open University. Importantly, in addition, this Government have in recent months tabled regulations that will allow part-time students on higher education courses to access maintenance loans similar to those received by their equivalents on full-time courses. These loans will be available to students starting honours and ordinary degrees, and equivalent qualifications, on or after 1 August this year.
NHS: US Companies
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
I can reassure the noble Lord again—I know that some Written Answers have been given to him. Protecting the NHS is of the utmost importance to the UK as we leave the EU. The Government will continue to ensure that decisions about public services are made by UK Governments, not by our trade partners. As we leave the EU, the UK will also continue to ensure that rigorous protections for the NHS are included in all trade agreements that it is party to.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend not accept that the anxiety that the noble Lord, Lord Brooke, has would arise if the EU proposals in respect of TTIP were implemented? Is not the glory of leaving the European Union the fact that we will be able to decide this for ourselves?
Viscount Younger of Leckie
My noble friend is right. The main point to make is that the same strong safeguards as we have now will be in place once we leave the EU. These include: that all providers of NHS healthcare in the UK must meet our standards of safety and quality; that staff must be registered with UK regulatory bodies; that decisions on which services to provide are locally led by clinicians; and that NHS hospitals will remain state owned.
Apprenticeships: Levy
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
I have mentioned to the House before that we have a National Careers Service up and running. It is essential in giving proper careers advice that employers in particular can go into schools and address, and hopefully garner, the interest of pupils. We are trying to address the skills shortages. STEM skills and occupational sectors, including the digital side, are well represented in our move from frameworks to greater standards and to increasing the skills level in our country.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend know that the Economic Affairs Committee has been looking at this issue for almost the last year? We have had employers openly admit that they are using the levy to fund training that they would have done anyway. Is it appropriate that the apprenticeship levy should be used to fund people doing MBAs at business schools and so on? Surely the resources should be concentrated on level 3, and in particular on young people, to give them the skills that they need in the workforce.
Public Bodies: Appointments
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
There is no evidence that the Minister broke the ministerial code. In terms of the governance code, there are some failings and the noble Lord will be aware of those. This Government set up the governance code following the independent review by Sir Gerry Grimstone and I am pleased that that is the case. The commissioner himself pointed out that in his experience, this episode is unrepresentative of the hundreds of public appointments that take place each year.
Lord Forsyth of Drumlean (Con)
Can my noble friend reflect on the appointments made by the previous Labour Government and perhaps advise the Opposition that people who live in glass-houses should not throw stones?
Student Loans: Interest Rates
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(7 years, 2 months ago)
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Viscount Younger of Leckie
My Lords, the details of the scheme continue to be kept under review, but the student loan system is working well. The Government’s reforms to the undergraduate student finance system have ensured that it is financially sustainable for the taxpayer in the long term, while enabling those with the talent to benefit from a higher education to do so. Young people from the poorest areas are 43% more likely to go to university than they were in 2009-10. This is a very good step in the right direction.
Lord Forsyth of Drumlean (Con)
My Lords, can my noble friend explain why the Government cut the discount rate—their own measure of the liability for the public—arguing that they were able to borrow money more cheaply, and at the same time hugely increased the interest rate that students have to pay? Given that three-quarters of students do not pay their student loan back in full, those who do will be paying back several times what they actually borrowed.
Scotland Bill
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(8 years, 8 months ago)
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Lord Elton (Con)
Perhaps I could clarify the situation. As I understood it, when those remarks were made, we were discussing Parts 2 and 3 of the Bill. That is when any new regulations might apply; they do not apply this evening.
Lord Forsyth of Drumlean
Further to that point, perhaps the noble Viscount could confirm that that is the position. To be fair to my noble friend, he said that it was a matter for the usual channels, but we were led to believe that the usual channels would accede to this. It would be completely unacceptable if we did not have that flexibility for Parts 2 and 3, particularly as all the Statement today said was, “Haven’t we done a great job?”. It did not tell us what this was about: we are not getting that until tomorrow, which is Thursday. Although the House is sitting on Friday, there is not a great deal of time for people to absorb it.
Viscount Younger of Leckie
My noble friend Lord Dunlop did indeed refer to discussions that might be taking places among the usual channels, but my clear understanding is that no decision was made for Report today.
Lord Forsyth of Drumlean
I did actually ask my noble friend to give us an assurance that, as far as Monday is concerned, that will be the case.
Viscount Younger of Leckie
I cannot as yet give an assurance on that. The rules on Report remain in place for today.
Volkswagen: Emissions
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
I do not know about that, but as I said, that the Government have been pressing Volkswagen very hard and we need to establish what the actual losses are. There is no question but that if UK owners have legitimate claims for compensation for losses, they should be compensated.
Lord Forsyth of Drumlean (Con)
Can my noble friend explain why Volkswagen has indicated that it will pay compensation to owners of Volkswagens in the United States but not in Britain?
Viscount Younger of Leckie
I am very aware of that point. We are trying to establish why the US has done this, but it does have a different emissions regime, and there are fewer Volkswagen cars in the US. We are trying to get to the bottom of that.
Living Wage
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(10 years, 5 months ago)
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Viscount Younger of Leckie
I certainly agree with the noble Lord that we are encouraging more employers to be productive. Much work has been done to that effect but I point out to him that the minimum wage is now increasing faster than earnings. The rise of 3% in the adult rate will mean that low-paid workers will enjoy the biggest cash increase in their pay packets since 2008. A rigid formula does not allow for changing economic circumstances, for example imposing a target set by politicians. That would result in job losses if it is set too high and lower earnings if it is set too low.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend not agree that the most important thing is take-home pay and that therefore the Government’s efforts to reduce the burden of tax on the low aid are what matter? Does he not think that an Opposition who refuse to deny that they would increase national insurance if they were in government have a cheek talking about the effect on living standards of taxation?
Viscount Younger of Leckie
My noble friend makes some good points. The only real way of achieving sustainable increases in living standards is through focusing on economic growth, employment and reducing taxes for the low paid, as he said. Christine Lagarde, the managing director of the IMF, said recently that the IMF had,
“underestimated the growth of the UK economy”.
In a significant turnaround, the fund’s latest assessment found that the UK economy had rebounded strongly.
National Minimum Wage
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
My Lords, the naming and shaming scheme, as the House will know, came into effect on 1 October 2013. The new rules are part of the Government’s efforts to toughen enforcement of the national minimum wage and to increase compliance. By naming and shaming employers, it is hoped that bad publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the national minimum wage. The Government have accepted the Low Pay Commission’s recommendation of the first real increase since 2007. We welcome its assessment, and 2014 could mark the start of a new phase of bigger real increases in the minimum wage.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend agree that what matters is not the minimum wage but how much of your wage you take home in pay? Is not the Chancellor to be congratulated on implementing the policy of raising the tax threshold so that more of that money is kept—a policy, incidentally, first put forward by my noble friend Lord Saatchi some years ago but which, rather like pedestrian crossings in a constituency, has been hijacked by the Liberal party?
Economy: Business Investment
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
Business investment is a very narrow measure, which excludes investment by firms in skills, innovation and organisational change. When estimates of these types of investment are included, the UK’s performance is much improved, as we tend to invest heavily in these types of knowledge asset. It is also important to recognise that quality of investment is as important as quantity.
Lord Forsyth of Drumlean (Con)
Has my noble friend noticed the disinvestment that is taking place in the energy sector, thanks to the irresponsible policies announced by the Opposition to bring in price controls?
Viscount Younger of Leckie
Yes, I have noticed that. Having said that, we are doing much in terms of the Green Investment Bank, which has invested directly and indirectly in 22 projects from five dedicated funds. It has directly committed £791 million, which will mobilise a total of £3.3 billion when fully deployed.
Businesses: Employee-shareholder Scheme
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(10 years, 10 months ago)
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Viscount Younger of Leckie
First, my noble friend is probably referring to the Royal Mail rather than the Post Office. I can say that around 150,000 eligible Royal Mail employees have been given shares under the free shares offer. Only 372 employees opted out of the scheme, which means that approximately 99.75% of eligible employees received the free shares that they were offered. This is the largest employee-share scheme of any major privatisation for 30 years.
On my noble friend’s second point, the national minimum wage is a vital safety net in protecting the low paid. We have already said that we need to do more to make sure that the benefits of growth are shared fairly. My right honourable friend in the other place, Vince Cable, has asked the Low Pay Commission to extend its expertise to look at what economic conditions would be needed to allow the national minimum wage to rise. The convention is that if there is a rise, it will commence in October, and that the report will be in the spring of 2014.
Lord Forsyth of Drumlean (Con)
My Lords, will my noble friend indicate whether the Government are happy that the private equity industry is using the employee-shareholder scheme to create incentives for highly paid executives that will enable them to be awarded shares and avoid capital gains tax?
Viscount Younger of Leckie
My noble friend would expect—and will not be surprised—to hear me say that it is not my department’s responsibility to formulate tax policy, and that the figures that were given during the course of discussions on the Bill were very much estimates.
Consumer Protection
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
My Lords, the powers strike a balance between protecting civil liberties and reducing burdens on business and enabling enforcers to tackle rogue traders. Requiring enforcers to give 48 hours’ notice before carrying out routine inspections will benefit businesses by making it more convenient for them to accommodate these inspections. However, notice need not be given, for example, where it would defeat the purpose of the visit, as when a breach is suspected, such as with counterfeit DVDs.
Lord Forsyth of Drumlean (Con)
My Lords, will the Minister, in responding to the request of the noble Lord, Lord Kennedy, for protection of consumers from unfair practices, look at helping those people who find that, without their knowledge, they are signed up for membership of trade unions or the Labour Party?
Viscount Younger of Leckie
My noble friend may be aware that there is a Bill going through Parliament at the moment and I am at the Dispatch Box later.
Growth and Infrastructure Bill
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
Viscount Younger of Leckie
The noble Lord makes a good point. The matter of what types of shares and what shares are offered is very much left to the employee and the employer. That is a negotiation between the employer and the employee. The Government will not prescribe how that will come about because there are different types of shares, as the noble Lord will know only too well from his experience. It will very much depend on the type of company, the wishes of the individual who may be looking at an employee shareholder role, and the employer.
Lord Forsyth of Drumlean
I am most grateful to my noble friend. When he says that the valuation and the convertibility of the shares will be a matter of negotiation between the employer and the employee, it is hard to see what the employee’s negotiating position would be. At the very least, should not the employee be given independent legal advice as to the valuation and the nature of the transaction he is entering into, which, after all, applies under existing employment law for compromise agreements and things of that kind? If it is to be a negotiation, surely the employee has to be informed, and not all employees will be particularly financially literate or employment experts.
Viscount Younger of Leckie
The matter of advice is very much applicable to settlement or compromise agreements, as my noble friend has pointed out. This concerns entering into an employment agreement, and therefore we do not see this as being appropriate. On the issue my noble friend has raised concerning share valuation, as he well knows, there are established means through actuaries whereby shares are valued. That is done all the time and it is a straightforward process. Again, that is very much a matter between the employer and the employee.
Viscount Younger of Leckie
I can only reiterate that it entirely depends on the role on offer, the type of company and the type of employer as to how the discussions will go. An individual taking on a normal role, if I may put it that way—an employee role or a worker role—may find that sort of contract complicated, in which case they may have obtained their own advice and are still free to do so. This is a wholly different—
Lord Forsyth of Drumlean
I am most grateful to my noble friend for giving way and I shall try not to interrupt him again. However, can he explain to me why employment law as it stands requires employers entering into a compromise agreement to provide legal advice in order to make that agreement stand? They usually provide a reasonable amount of the cost of independent legal advice. If that is appropriate for a compromise agreement where people are surrendering certain of their rights, why should it not be appropriate where people are giving up their employment rights and entering into what may be a complicated and major financial decision, given the proposed levels of tax relief with capital gains relief of up to £50,000? What is the Government’s logic in saying that advice should be paid for by the employer in one case but not in this case?
Viscount Younger of Leckie
I know of many employee contracts—not those for an employee shareholder—where serious advice is required. However, the status of being an employee shareholder is wholly new. The individual concerned may well require advice but noble Lords are talking about the circumstances of entering the employment phase and the proposal we are discussing would set a new precedent. As we know, often very difficult discussions take place towards the end of the employment contract. That is where it has become the custom and practice for companies to pay fees. That is the difference. I hope that I may be allowed to move on.
The recruitment of skilled personnel is normally taken very seriously. It takes time and commitment and involves searching for suitable candidates, sifting applications and interviewing. This will be no different with the new employment status. In fact, companies will need to take time to consider whether this type of contract is right for them. The owner of a company offering the status should think about the impact of giving up equity in the company. This is a decision that is not easily reversed, as once you have given away your shares it may not be easy to get them back. We must remember that the owner is giving away a stake in the company. Companies will need to be sure that the person to whom they offer the contract is right for the company. An employee shareholder may be able to influence the decision-making of the company and take a share of the profits. This is not something a company would do without being sure that it was the right move for them.
The new status will not be applicable or suitable for all companies or all individuals but it might be right for some. This new employment status represents more choice for individuals and companies. I have been clear throughout our debates that the status is voluntary. Indeed, it may well be used only by a minority of companies, but what is important is that we allow them to choose what is right for their own personal and commercial circumstances.
Lord Forsyth of Drumlean
On this point of the valuation of shares, could my noble friend deal with the point that was made by the noble Lord, Lord Bilimoria, about liquidity? It is all very well to reach a theoretical value of shares, but the value is actually in what people are prepared to pay for them. In small private companies where there is no liquidity, how will you deal with that?
Viscount Younger of Leckie
It remains the case that these are discussions that must take place between the employer and the employee. Again, it is not for the Government to prescribe or give advice in this respect. That is a consistent theme that I have taken.
On the same theme of shares, as raised by my noble friend Lord Forsyth, we recognise that there may not be a market for private company shares and therefore it is important that, where appropriate, a buyback clause will be useful to both the employee and the employer. This is an issue that the noble Lord, Lord Myners, raised as well. We introduced in the other place a power to bring forward the regulations that would govern these buyback clauses in the event that employers were behaving unscrupulously. This would prevent employee shareholders being forced to sell back their shares at an unnaturally low price.
The noble Baroness, Lady Turner of Camden, made an assertion, or perhaps it was an accusation, that the Government want to remove employment status. I reiterate what I mentioned both in Committee and on Report, that this is not about removing rights, it is about creating a new employment status that offers a different set of rights and a mandatory share ownership. The status, I say again, is not compulsory for companies to use, and it will only be suitable for those companies that want to share ownership with their workforce. We must remember that employee shareholders will retain the majority of employment rights, including, for example, automatic unfair dismissal rights and the right to be paid the national minimum wage. We have consistently said that the new status will not suit all people or all companies. This is very much a common theme. However, for those who choose to use it, the employee shareholder status offers more flexibility and allows greater risk- and reward-sharing between people and companies.
My noble friend Lady Wheatcroft and others raised the issue of whether the employee shareholder scheme is open to tax avoidance, an issue that I touched on slightly earlier. It is a key aspect of the policy to allow employee shareholders to share in the success of their employers without paying capital gains tax on at least some of their gains. However, to guard against abuse of the tax exemption, there are several rules that limit the number of shares that can be exempt. For example, the rules will prevent repeated consecutive use or multiple simultaneous use of employee shareholder status to get around the limit. In addition, anybody who controls, alone or with other connected persons, 25% or more of the voting power in the company, will not be able to receive exempt shares. We will not allow people such as spouses or children who are connected to individuals who control 25% or more of the company to benefit from the exemption.
We have listened to the concerns and, as was mentioned earlier, we have acted to ensure that jobseeker’s allowance claimants will not be penalised if they decide not to apply for or accept an employee shareholder job. Together with protections for employees, our announcement about jobseeker’s allowance policy means that no claimant or employee can be forced to accept this status. I thank many noble Lords for their support in this particular respect.
The new employment status gives ambitious, talented individuals with entrepreneurial spirit an opportunity to share in the risks and rewards of being part of their employing company. I want to say something important in these closing stages. I have clearly listened this afternoon and I have heard the strength of feeling in the House towards this particular clause. I ask the House to support the Motion to agree with the Commons’ position that Clause 27 be retained. If the House does not support that Motion, I will ensure that the strength of feeling in the House today is conveyed to my ministerial colleagues.
Growth and Infrastructure Bill
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
My Lords, I thank my noble friend Lord Flight for raising this matter, and for his general support for the principle of the clause.
I would now like to speak to Amendment 49C. As noble Lords have said, we will have a chance to debate the fuller aspects of the clause under the next amendment. In effect, this amendment calls for up to £25,000 of share value received by employee shareholders to be free of income tax and national insurance contributions. I note my noble friend’s considerable knowledge of this area from his time shadowing Treasury Ministers and from his chairmanship of the Enterprise Investment Scheme Association, but on this occasion his proposals are not in tune with the underlying aims of the policy. The employee shareholder status is not a new tax-advantaged employee share scheme or an investment incentive, although it may be used alongside existing reliefs in these areas.
In practical terms, the cost to the Exchequer of pursuing this amendment would be prohibitive. A tax relief of that sort of magnitude would make it necessary to attach a great many prescriptive rules to ensure that benefits were targeted and to prevent abuse: for example, by businesses using it as a means of transferring taxable income into employee shareholder shares. I acknowledge that my noble friend Lord Forsyth of Drumlean made these points rather eloquently. This would have the effect of introducing considerable complexity to the new status, working against our stated aim of offering a new option that is flexible and accessible to a wide range of companies.
Of course, tax policy has a part to play in this new employment status. We have listened carefully to concerns that the income tax position could be a significant disincentive for some individuals. We recognise that this could be an issue for a very few and have addressed it. It is a long-established fact, and certainly not unique to employee shareholders, that when a person receives shares as part of their employment, they may be liable for income tax and national insurance contributions on those shares. This is a consequence of the normal tax rules and the way in which income gained from employment is taxed. We must also remember that when an employee shareholder sells their shares, gains from the first £50,000 of shares given to an employee shareholder will be free from capital gains tax, which is part of the wider aspects of the scheme.
I informed the House that the Government were considering an option which would allow the first £2,000 of shares to be given to employee shareholders without incurring income tax or national insurance liabilities. The Chancellor announced in his Budget earlier today the decision to proceed with that option. This means that, typically, if an employee shareholder were to receive shares worth £2,000, no income tax or national insurance contributions would be chargeable when they received them. If they received £2,500 worth of shares, any tax would be due on the £500 excess.
The Finance Act contains several measures that will prevent misuse of the employee shareholder employment status.
Lord Forsyth of Drumlean
Will my noble friend give way? I apologise for interrupting.
Viscount Younger of Leckie
If I may, I am about to address some points that my noble friend made concerning the tax status.
For example, we do not want directors to manipulate the new status by making fake jobs for family members, which may have been in the mind of my noble friend Lord Forsyth when he made his earlier comments. We want this employment status to be attractive to a whole range of people. If we allow that no income tax or national insurance contributions are payable on the first £25,000 of shares, we think this will create only a disproportionate tax benefit for higher earners. This is about a new employment status that is open and attractive to a range of prospective users.
My noble friend Lord Forsyth asked a number of questions relating to how different types of shares would be treated and what this meant in tax terms for individuals in employment. When a person agrees to become an employee shareholder, the employer should be able to tell them what type of shares they will receive. The types of shares an employee shareholder receives may vary, as I think my noble friend indicated. First, they could be non-restricted shares. These are shares awarded without any ongoing conditions, limitations or requirements that affect their market value. If an employee shareholder holds non-restricted shares, they are usually in the same position as an external investor in the company.
Secondly, restricted shares are shares awarded with conditions, limitations or requirements attached that reduce their value. For example, an employee shareholder may not be able to sell their shares for a certain period or, if they leave the company, they may not be able to retain their shares. The employer may agree to buy the shares back from the employee shareholder.
Thirdly, forfeitable shares are restricted shares awarded on the basis that within a certain period of time, or on the occurrence of certain events, the employee shareholder may have to forfeit them and in return will receive less than their market value. When the tax is payable on these shares will depend on the type of shares that are offered. As my noble friend Lord Stewartby said, this is a voluntary arrangement, under which the individual will go into an agreement with the employer, and the type and status of the shares will be decided with their agreement. That will then lead, by agreement, to the point when the tax will be payable.
Viscount Younger of Leckie
My noble friend is taking rather a negative view. We need to look at the opportunities that the whole scheme offers. The employee shareholder could decide not to accept any shares or such a role if the situation that my noble friend mentioned applied. It may not suit them; they need to get advice and go into this scheme with their eyes open.
Lord Forsyth of Drumlean
Is my noble friend saying that the scheme will work for restricted stock that is subject to conditions? He seems to be saying that restricted stock will be treated in the same way as tradable shares, to the extent that they can be tradable. Perhaps I should declare an interest in that I have been given shares in the form of restricted stock on the condition that if I left the company or was dismissed the shares would be forfeited. Could conditions that effectively took away people’s employment rights be applied to restricted shares? How would that be defined? If it is just something to be negotiated between the employer and the employee, could an employee not find that he gives away his employment rights for some shares that he would lose if he was sacked?
Viscount Younger of Leckie
The discussions will take place before the employee shareholder goes into an agreement. If they are at all unsure, they have the right not to do so. Different types of shares and share schemes beyond those that I have highlighted today may be applicable. That, as my noble friend said, will remain a matter for discussion between the employer and the employee shareholder.
Lord Forsyth of Drumlean
That is precisely what I am doing. I am seeking clarification on an important point. If someone comes to work for a company that has a scheme involving restricted shares that you would lose if, for example, you were dismissed, how can that person negotiate when they are told, “This is the job and these are the terms”? What is their negotiating position if 100 people have already signed up? If the Minister is correct, does that not drive a coach and horses through the benefit, limited as it is, that applies to the employee?
Viscount Younger of Leckie
That takes me back to the question raised by my noble friend Lady Brinton. If there are too many employee shareholders to make this work, there may indeed be no room for another employee shareholder. I say again: the opportunity is voluntary and the terms are to be agreed between the employer and the employee. That is all that needs to be said. It is exactly why we are not being too prescriptive with this system. We are providing an opportunity for employers to take up this scheme and for employees to share in its risks and rewards.
Scotland Bill
Debate between Viscount Younger of Leckie and Lord Forsyth of Drumlean(12 years, 8 months ago)
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Lord Forsyth of Drumlean
I guess it does, and that is another absurdity but this is what happens when, for political reasons, politicians start mucking around with the powers that relate to Parliaments. The end result is confusion where there should be clarity, and clarity is very important in this area. If there is a case for reducing the speed limit—I think that there is a case for doing so in built-up areas and for increasing it on motorways—it should be done in the United Kingdom as a whole. In all the time that I served as a Scottish Member of Parliament in the other place, nobody ever came to me and argued the case for having a different speed limit in Scotland. People would argue about the regulations that related to where 30 mph speed limits would be but there was no suggestion that there should be differences.
Because I am very constructive when it comes to the Scotland Bill, as my noble and learned friend knows, I am very happy to accept that a decision has been taken on this. However, if you are going to make changes to the law and to the ability to change the law in respect of speeding, drink-driving and so on, the penalties should match the crime, and we are not providing for the Scottish Parliament to be able to produce the whole package. In short, this is a bit of a muddle. I look forward to my noble and learned friend’s answer and to hearing a commitment that he will sort out the muddle in the way that this House is very good at doing.
Viscount Younger of Leckie
My Lords, my name is added to Amendments 47 and 50. However, I should like to focus my thoughts in general on all the amendments in this group, which specifically, following my noble friend the Duke of Montrose, covers the devolvement of drink-driving test thresholds to Scottish Ministers and the decision on speed limits north of the border.
Within the Bill I am broadly supportive of passing decision-making to Scottish Ministers on major issues such as raising taxes. However—and this is where I agree with my noble friend Lord Forsyth of Drumlean —my initial reaction to the proposals for potentially different speed limits and alternative breath-test thresholds on either side of the Scottish border was that they were petty, insignificant and unnecessary. Above all, I felt that any such change north of the border must surely be change for change’s sake, with the Scots just wishing to be different and having an implicit mistrust of the English authorities to set correct limits for both.
I regard us as being one nation for these purposes. In case we had not noticed, there is a seamless border between Scotland and England, so any change would necessarily mean increased bureaucracy, together with, as has already been mentioned, changes in the Highway Code, and, in particular, signpost changes everywhere along the border from Gretna to Coldstream and beyond, leading to increased costs. Above all, it would be confusing for the motorist. It has already been pointed out that if, for example, someone driving north is stopped south of Carlisle and breathalysed, and is then let off because of the limit in England, and he then unfortunately gets caught again when he is stopped at Beattock Summit, he could be over the limit there—assuming there is a lower breath test limit north of the border. The moral of the story, of course, is that one should not drink and drive; but the fact of the matter is that we should keep it simple for motorists and it is a very confusing issue.
However, that was my initial reaction and I have come round to thinking more positively about the potential differences north and south of the border. In so doing, I decided to look at the Irish experience—that is, the differences in road laws north and south of the border. Again, it is a seamless border. There are, first of all, broadly similar speed limits, the major difference being that there are kilometres in the south and miles in the north. The implications for that are that drivers have actually got used to the changes and highway codes have been changed without too much bother. The main thing is that rental companies have had to be aware of the changes and have had to, over time, issue new guidelines. Some of their cars have dual kilometres/miles per hour on their speedometers.
When it comes to the breathalyser tests, there are differences between the Republic and Northern Ireland. At present, Northern Ireland is the same as the rest of the UK, which has a limit of 80 milligrams per 100 millilitres of blood: beyond that, you get caught. In October 2011, the Republic’s threshold was lowered to 50 milligrams per 100 millilitres of blood. In Northern Ireland, there is now talk of changing to the Republic’s levels. It is no bad thing, therefore, if Scotland also goes down this route, given devolved powers.
Why is this? It is because in Scotland, the road casualty rates, some of which inevitably result from drink-driving, are 34 per cent higher per head of population—both for fatalities and for serious injuries. We should bear this in mind. The Royal Society for the Prevention of Accidents fully supports a reduction in breath test limits. It says this is a chance for greater financial benefits for the nation as well as benefits in health and well-being.
Lord Forsyth of Drumlean
I am most grateful to my noble friend, but is he not making an argument for the whole of the United Kingdom? Is not the difference in statistics between Scotland and England, which he has highlighted, an argument about enforcement rather than the level of the limit?
Viscount Younger of Leckie
I take my noble friend’s point, which is a good one that should be discussed. It brings up the point about discussions going on north and south of the border concerning that issue. One point to make is that a recent survey highlighted the fact that 79 per cent of Scots were in favour of lowering the limit.
Finally, as has been mentioned, if Scottish Ministers did decide to change either speed limits or breath test levels north of the border, there need to be certain safeguards in place. For example, if an English driver commits a serious offence in Scotland, it is imperative that a disqualification remains in place when he returns home. There is form on this. In 1998, for example, there was an agreement of co-operation between the Republic of Ireland and 13 member states of the European Union over disqualification. I understand that there is also an agreement between Northern Ireland and Great Britain over such recognition. I think, on balance, that devolution of powers to Scottish Ministers on road safety matters is positive only if—as seems possible—there are safer roads.