Finance (No. 2) Bill

Lord Haskel Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords
Wednesday 26th April 2017 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I cannot remember speaking in such a select debate. It may be that other noble Lords were deterred by the 762 pages of the original Finance Bill, which I think made it probably the largest Bill ever. Fortunately it was cut down yesterday and it is hard to know what is left, so I thank the noble Baroness for telling us.

We debated the Budget Statement on 14 March, and since then we have learned two important things. First, Brexit is going to be a lot more difficult than we thought, and secondly, we are going to have an election. The election means that the social aspects of the Finance Bill have to take priority. It is a Bill that, as well as trying to grow the economic pie, has to be accompanied by the politics that divide it up fairly. Does that happen with what is left here? I do not think so.

From what the Minister has said, the Bill avoids some awkward choices on things such as social care and national insurance for the self-employed. Indeed, since our debate last month, we have had more proof that the proliferation of low-paid and insecure work is strongly aided by the way the Government are still allowing companies to differentiate between people who work off a digital platform and those who work off a bricks-and-mortar platform. We now also know more about how this contributes to the lack of investment in raising productivity. In his Budget speech, the Chancellor called this our “number one priority”. Yes, the number of people in work is rising, but the disappointing growth in productivity continues. This indicates that much more attention should be paid in a Budget such as this one to the quality of jobs and whether they enable people to achieve an acceptable and rising standard of living. This is the social necessity that needs to be incorporated into the Bill, but it misses an opportunity to put that right.

We now know even better that the Bill’s indecision on adult social care is putting more of a burden on NHS finances. This Finance Bill is a lost opportunity to take the tough decisions on where public care ends and private care begins—an opportunity, perhaps, to introduce an insurance scheme whereby we all pay in and those who do not need care help to fund those who do. This is what would take pressure off NHS finances. This is a solution for those who are still at work, but for people who need care now, perhaps the Bill should have introduced some kind of loan scheme that would be repayable on death, but it is silent on that.

Since 14 March, when we last debated this, we have had further proof that the growth in the economy is not fuelled by investment, but by consumption—consumption with diminishing investment. That investment has been financed by borrowing. This private debt is approaching record levels. We all know that the housing market is being fuelled by the thin margins that brought Northern Rock down, yet the Bill still encourages this reckless lending. As long as this private debt remains there will be stagnation in growth and productivity. It is a pity that the Bill did not take up the opportunity to do something about this.

Since the Budget Statement, we now know that Brexit will cost us a lot more than we thought. The House of Commons Library tells us that up to 19,000 EU rules and regulations may have to be put on the statute book. EU statistics speak of 12,000. The CBI tells us that to avoid a race to the bottom we will have to create domestic versions of 34 regulatory organisations. The head of the Civil Service tells us that Brexit entails more than 1,000 new rules. Indeed, the Institute for Government speaks of 15 new Bills before we even exit. This is a tremendous undertaking.

Does this Finance Bill provide for the people and resources necessary? The National Audit Office tells us that over the last 10 years there has been a 26% reduction in the number of civil servants. It also tells us that Whitehall alone would need to recruit some 2,000 staff in digital roles. Perhaps the new Government will have to take note of the American system, whereby IT experts do a tour of duty with the Government as a kind of patriotic contribution. Yes, the Government speak of seconding people and hiring consultants, but we all know the limitations of this and how inefficient it is. The Minister will know this from her business experience. She will know that the real cost is the reduced efficiency and slower progress elsewhere in the departments from which these people are seconded. Maybe this is already happening. It was reported that because departments are short of staff, many—some say hundreds—of government contracts with the private sector which expire are being automatically extended instead of using the opportunity to find better ways of carrying out the services and reducing the costs. So much for raising productivity, our “number one priority”.

This Bill still speaks of apprenticeship schemes, funding them and how high standards will be maintained. That is great, yet a committee in the other place recently said that, to ensure these high standards, apprenticeships should not start until there is a clear way of measuring and ensuring these standards. In their response to that, the Government have said, “Yes, this could be a problem”. Is this because people were seconded from the Department for Education to the department for Brexit? If we are trying to reverse our dependency on immigration and rely more on the skills of our own people, we will have to do a lot better than that.

Since the election was announced, we all seem to agree on one thing: the mark of a civilised society is good public services and welfare funded by taxation. The Minister told us about taxation in the shortened Bill, but what a pity it was not reflected that, especially since our debate, we have learned that our economic prospects are less rosy and that spending cuts will make it even more difficult for many people. The Minister outlined the tax changes but not how we could civilise our society even more, perhaps by broadening the tax base with heavier taxes on activities that damage the environment, extending VAT to financial services, revaluing residential property, or fairly taxing inherited wealth. All this could go towards achieving the civilised society we seem to agree we want.

If the purpose of the Bill is to raise our standard of living and public services through economic and social growth working together, from what the Minister said it will need a lot more work by a new Government to achieve that. Perhaps another 762-page Bill is needed from the next Government.