Finance (No. 2) Bill

Lord Soley Excerpts

Thursday 26th March 2015 Lords Chamber

[Lord Soley (Lab)]

My Lords, I shall make two or three small but important points and one large and general point. I shall start with the large and general point because it follows on very neatly from my noble friend Lord Haskell’s comments on productivity. It is clear, particularly after some of the statements made in Prime Minister’s Questions yesterday, that whoever forms the next Government, they will have difficulty in raising income in a significant way. I remind the Minister of what many of us have been saying over a number of years: that one of the best ways—indeed, the best way—of getting deficits down is through growth. I know the Government will say they are achieving growth, and there is some truth in that, but one of the problems that trouble me is that that growth comes from a low-income use of labour. My noble friend’s comments on immigration are exactly right. Immigration, particularly from eastern Europe, has depressed wages, particularly in the less-skilled areas. Even though these people are often highly skilled, their skills are not recognised here in a way that enables them to get a job. So there is a problem with boosting growth by means other than just increased employment and lower incomes.

The key to addressing the issue is science and technology, as I have mentioned before. In his opening remarks the Minister rightly drew attention to Clauses 27 and 28, which increase the aid provided to small and medium-sized enterprises for research and development. If this country is really to make a success of growth over a long period, science and technology will always have to be at the forefront. We have to do far more to invest in science and technology and, above all, to give small entrepreneurs greater help.

If you look round some of the university cities of this country you will find that many small and medium-sized enterprises have sprung up around those universities. I seem to remember that, many years ago, in the early stages of the Labour Government under Mr Blair, Cambridge did increasingly well with its link between the science departments, the banks and these entrepreneurial people. Somehow or other we have to boost that so that we do not have to rely for our growth on a lower income scale, important as that is. There was a very good article about this in the Guardian the other day. Boosting growth through low-income immigration from other countries might work economically for a while but you will not keep up with what is happening in more advanced technology areas. We have to be at the cutting edge. I would love to see every Budget start with a section on what will be done to give advantage to science and technology. It will also have to be linked to the universities, and the universities will need to be linked to the banks so that the banks will more generously fund and risk-take for the small and medium-sized enterprises.

The argument about immigration needs to be seen in two ways. There is clearly a problem in social terms with the pressure on schools, housing, hospitals or whatever. However, there is also the problem of how the issue feeds into our economy. Overall, immigration has been beneficial to this country—I think that almost everybody recognises that now. However, the question is how we can produce growth out of this immigration, which is why Members on all sides of this House and people outside it take a very dim view of including the many students who come to this country in the immigration figures. That has done much damage to Britain’s reputation, particularly in India. My message to the Government is that, overall, in a Budget which does not have much in it to criticise—although there are a few good things to say about it, which, to encourage the Minister, I will do in a moment—there is not the necessary emphasis on science and technology and small and medium-sized enterprises.

I will give one example. A company in Cardington, the old RAF base up in Bedfordshire, produces in essence a very large inflatable balloon that carries very heavy goods and has already done a tour of South America. I have talked to the company and seen the balloon. This sort of technology can be very helpful environmentally and also very good for our transport infrastructure in terms of transporting very heavy goods, the need for which is becoming increasingly common. For example, the assembly centre for the Airbus industry is largely in France but many of the parts are made in this country and have to be transported to France. These parts are transported in all sorts of bizarre ways as the aircraft themselves are often not big enough to carry them. We need to be imaginative and push such industries forward.

I am sure the Minister will not be surprised if I mention air passenger duty. There has been a small step in the right direction. He said in his opening comments that he thought that Britain must have the most competitive rate in the world. At the moment, however, our air passenger duty actually encourages people to fly more. People in this country will take a short hop across the Channel and then take a long-haul flight as it is cheaper there because they have no air passenger duty. I understand that it is very difficult in the current economic climate to change that overnight. However—and I say this to my own party as well—we need to get rid of the air passenger duty tax if we are to compete with other countries, particularly European countries which can offer far better deals to the travelling public, be it for holidays, work or whatever. That is very important.

I welcome the move to make gift aid easier for intermediaries, and also declare an interest as the chairman of a charity. Our charity will not benefit from this provision, however, because the famous statue of Mary Seacole will be unveiled across the river from here in September or October, we hope, as long as I can raise a little more money. If anyone would like to talk to me about that, please see me after the debate—because I am getting worried. However, that apart, it is so much easier if intermediaries can do the gift aid bit. I welcome the movement on that. It is very helpful.

I also have a small suggestion on car duty. I have been struck by the growth in the number of electric vehicles but, as the Minister will know, in some areas it is difficult to charge them. I do not know the tax position as regards establishing charging points. However, when there is clearly a long-term and important change in vehicle technology, there should be significant tax relief for establishing charging points. There might be some relief already—I do not know. I do not think that the relief should be ongoing but while this technological change is taking place it needs to be encouraged. I am sure that as electric vehicles become more and more common, the supply of charging points will increase to meet that demand. In the short-term, however, such investment could be very useful.

Those were my main points. I will end with a plea which is totally different from the other points—it is not about the Budget per se but about Her Majesty’s income and revenue department. I am one of a fast-growing number of people in this country who hold power of attorney for a relative or friend. Going on to the tax website and trying to find a way in which to deal with it is almost impossible. The only good thing that I can say for the department on this is that it is not alone, in that the banks are equally bad. I have been trying to close down a Barclaycard for two months now. There must be a way of typing into the website on tax matters “power of attorney” and being directed to it, because the situation that I have is that there are no paper records at all. I do not know what the tax position is or where to find the information, so I wrote some weeks ago to the tax department asking where I could find it and where to send my authenticated copy of the power of attorney. I still have not had an answer.

A big advantage for Peers and MPs and so on is that they can write to the Minister, but I do not want to do that. Every department nowadays must have some place where you can quickly access information on the current situation regarding power of attorney. The situation currently is almost impossible. When I asked other people about this, I found that I was not alone in having this problem. It is a very real problem and it can cause considerable difficulties. I am not saying that I am brilliant at using the internet and the web, but I am certainly not bad; if I can pat myself on the back, I would say that I was better than average. I may be being incredibly stupid on this, but I cannot find anything of assistance on the income tax website. I can find things on power of attorney, but the website does not direct you in the right way—nor is it developed enough—to give the information that I need. But that is a non-Budget point; it is a general point about the Minister's department, and I would be very grateful if he would pass it on and get it sorted out. An awful lot of people in this country now have to manage power of attorney—it is a growing number, as I say—and need this information to be on all major websites of private and public organisations.

--- Later in debate ---

[Lord Newby]

My Lords, I thank all noble Lords who have spoken in this debate. I shall come back to the matters raised by the noble Lord, Lord Davies, but perhaps I may correct one point. He claimed, completely falsely, that there was no enthusiastic endorsement from my Benches for the Bill. My noble friends have been restraining themselves, because their enthusiasm is very considerable indeed. I am sorry that he has not picked that up. I certainly have and it has given me great strength.

[Lord Soley]

As to my noble friend Lord Davies’s speech, the reason why so many people were on the government Benches, none of whom were speaking, is that they were trying to give subtle support to my noble friend Lord Haskel’s point that you can increase numbers without productivity. That is clearly the problem.

[Baroness Jolly (LD)]

A nice try.

--- Later in debate ---

[Lord Newby]

Given the policy of the noble Lord’s party on further education, and given that if you talk to anybody in a university about their absolute fears about what will happen if a Labour Government comes in, with their policies to cut grants, and their views on what that does to university funding, I would have thought that the best thing for the Labour Party to do for the future of universities is to pursue a policy of as much silence as it can manage. In this Parliament we have seen record numbers of young people going to university, including record numbers of girls and of young people from poorer backgrounds. That is exactly the sort of change and development that I thought the Labour Party supported. We have recognised that there is a need to improve skills below university level. As I was saying, we have supported the creation of university technology colleges and overseen the increase in the number of apprentices to 2 million, which is vastly more than obtained during the previous Government.

The noble Lord, Lord Soley, quite rightly talked about the absolute importance of science and technology and the transfer of basic research into business success. We have maintained resource funding and increased capital for science in real terms during the lifetime of this Parliament. Over the period ahead, we are planning some £5.9 billion of investment in the science infrastructure. On how we get that science applied, we have consistently put money into the catapults, the purpose of which is to act as a bridge between universities and firms. These have been extremely successful: the high-end engineering ones have been very successful. I saw the National Composites Centre in Bristol, which is doing tremendous work. It is possible to do that work only because it is a partnership between government, the universities and business. This concept began under the last Government, but we have strongly supported it. We need to do more, first, because it is successful and, secondly, because all our competitors are doing something like it.

Furthermore, in science we have initiated a grand challenge fund, which will deliver some £400 million of funding on a competitive basis for new, world-leading scientific infrastructure. Within the overall area of science and technology, we have put a £100 million investment, for example, into the research and development of intelligent mobility, which is one of the leading potential growth areas on which this country wishes to be, and remain, in the lead.

The noble Lord, Lord Desai, reminded us that the Labour Party legislated to halve the deficit over a four-year period, which is almost precisely what has happened under this Government. On his radical plans for changing the basis of corporate taxes and taxation more generally, this Government increased indirect taxation on consumption by increasing VAT and they have reduced taxation on income by putting up the personal allowance. Clearly that process, at least as far as indirect taxation is concerned, will not be pursued by any party in the next Government, as we heard yesterday.

On the noble Lord’s more radical ideas on taxing consumption, I am not a tax radical, I am afraid, partly because I started my working life as a tax man. I think that grand taxation schemes often have a whole raft of unanticipated consequences. Of course, those who suffer from any tax change make about 100 times as much noise as those who benefit, so politically I wish the noble Lord luck with the sort of grand scheme that he has in mind, but I hope that I am never called upon to try to do something equally ambitious.

The noble Lord, Lord Soley, made a number of interesting and useful points. I am pleased that he welcomed the changes to gift aid, and I wish him well in finishing the funding for the Mary Seacole statue. Having been in charge of fundraising for the Lloyd George statue in Parliament Square, I know just how stressful the process is, and I hope very much that it is quickly brought to a successful conclusion.

I will pass back to my colleagues in the Treasury and the Department for Transport the point that the noble Lord made about subsidising the establishment of charging points for electric vehicles. I have considerable sympathy with what he said about the power of attorney. I have power of attorney for my mother, and trying to work out how to exercise it is really quite difficult. Having gone through the whole process, I found that it was remarkably anachronistic. As we are moving into a period where power of attorney will be required by more and more families, there is an argument for looking a bit more fundamentally at the whole thing and not just at the way in which it can be used once it has been granted.

[Lord Soley]

I agree with the noble Lord’s general point, but I ask him to do one thing before the House prorogues. Will he ask his officials to put a reference to power of attorney on the tax website so that people can follow the link and find out what to do? That is not difficult to do, actually.

[Lord Newby]

I will do that very readily. Finally, the noble Lord, Lord Davies of Oldham, described this as a mean-spirited Bill, and he did not have a huge number of positive things to say about the Government’s track record during this Parliament. This is now the end of the Parliament and we have been in government for five years. We came into the coalition to turn the public finances around and to put the economy on a positive track, and that is what has happened. I think of the position that we were in, even when I first stood at this Dispatch Box three years ago, on growth, employment and our prospects in virtually every respect, and I look at the situation now. We have the quickest growth in the G7, the claimant count has come down a third in this Parliament, there are 400,000 fewer households with children with no one in work, and record numbers of women, both absolute and proportionately, at work.

Nobody can claim that the economy has yet reached a state of perfection—that will never happen—but looking at the progress that this Government have made in turning the economy around and making it fit for the challenges that we face, I am very happy to fight a general election on that basis. This Finance Bill completes the process by the Government in that respect and I commend it to the House.