Fiscal Rules

Lord Davies of Brixton Excerpts

Tuesday 29th October 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I thank my noble friend for this Statement; the real meat will come tomorrow. I also thank noble Lords opposite for reminding us of their gross irresponsibility and refusal to accept any responsibility for this situation. When you have fiscal rules that distinguish general expenditure and investment in one way or another, you need a clear definition of investment. The problem is that pinning down such a definition is difficult in practice. When we on the Economic Affairs Committee took evidence from Joseph Stiglitz, he drew attention to this, instancing the possibility that spending more money on nurses would count as investment towards the sort of growth we need in the economy.

[Lord Livermore (Lab)]

My noble friend makes an extremely interesting point. I am grateful for his support for what I have set out and will take away his point to give it further consideration.

Budget Responsibility Bill

Lord Davies of Brixton Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 9th September 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I support the Bill—after all, it is in the manifesto—but it has faced some criticism. The comments of Ben Zaranko have already been mentioned. It ill becomes a Member of the Opposition to criticise legislation as performative, since that is practically all they did over the last five years.

The legislation is not performative but declaratory—it is setting out a declaration of intent, and it is to be welcomed for that. But—and there is always a but—I see in the Bill potential weaknesses, which arise from the exceptions in new subsection (4), and this issue of what counts as “temporary”. After all, the freeze in fuel duty each year is temporary, but it is now apparently part of our constitution. But I am more concerned about the term “emergency”. Is it a term of art? Who is going to determine what counts as an emergency? It is not defined in the Bill, and it has not been used in the charter. Ultimately, there is no track record of how it is interpreted in this context or who is going to decide.

We have an interesting case study here. Of course, we had a fiscal event on 29 July. I shall steer away from talking about winter fuel payments again. My assumption is that it was not large enough to trigger the size test, but did it trigger the emergency or the temporary test? I shall be interested in hearing my noble friend’s comments on how that undoubtedly fiscal event fitted in with the requirements of this legislation.

I was going to speak at more length on that but, inevitably, I was diverted by the comments made by the noble Baroness, Lady Wheatcroft, who came up with the perennial saw that there was some sense in including liabilities for future unfunded public service pensions in the national accounts. The whole point about unfunded pensions is that they are unfunded, and it makes no sense at all to treat them as though they were funded. However, if you are going to do the sums—or I could do them for you—and say what the current value of the future liabilities of these schemes will be, logically you should also have a figure for the future revenues that are going to meet those liabilities. It is not funded, so the future payments are exactly matched by the future taxation revenue that will pay those liabilities. You have to include both figures if you are going to account for them, and they are equal and opposite by definition. Including them in the national accounts makes no sense.

European Investment Bank

Lord Davies of Brixton Excerpts

Wednesday 24th July 2024 Lords Chamber

[Lord Livermore (Lab)]

The national wealth fund will work on the same basis as the UK Infrastructure Bank in terms of allocating investment. I think that is the answer to the noble Lord’s question.

[Lord Davies of Brixton (Lab)]

In a similar vein to the question from the noble Lord, Lord Fox, I had a question in the debate on Monday about the first phase of the pensions review, looking at the investment of pension scheme monies in productive economy. I am sure my noble friend will agree that in such discussions the voice of the trade unions that represent scheme members and pensioners through their organisation should be an important part of the debate.

[Lord Livermore (Lab)]

I thank my noble friend for his question. I did not address his question in the debate, because I hoped he knew that I would agree with him, which I do. As part of the pensions review, we will consult all interested bodies.