Inflation

Lord Tugendhat Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, my noble friend Lord Forsyth has achieved a notable success in making statistics both interesting and controversial. Normally there is nothing so dry as statistics, but he has demonstrated by his speech, the committee by its report and the noble Lord, Lord Darling, by his speech that statistics are not only dry but have a profound impact on people’s standard of living, sense of well-being and, therefore, political attitudes. The choice between the RPI and the CPI, with its problems, means that people are either better off than they thought they were or they have resentment because they are worse off than they should be. In practical terms, that means that decisions that ought to be taken in a democratic fashion, and debated and made judgments on in Parliament, are left at the whim of statistical inconsistencies. This is very wrong.

Having listened carefully to my noble friend and the noble Lord, Lord Darling, it is difficult to think of anything to add to what they have said. I had prepared a speech, but everything that I had intended to say has already been said. Rather than make that speech, I should like to emphasise, in no particular order, what is at stake: first, the position of the statistical authority; secondly, the way in which the Government make judgments between different sections of the community—bond holders, students, commuters and the rest; and, thirdly, as a result, the way in which decisions are taken in Parliament that have an immediate impact on the lives of ordinary people.

My noble friend Lord Forsyth has carefully explained our recommendations, and it remains for me to say only that this important debate demonstrates the unanimity of the members of the committee, who are people drawn from each of the political parties, of different backgrounds and approaches, in supporting this important report. We look forward to what my noble friend Lord Young will say. Earlier, he said that he had been a Treasury Minister, and we look forward not only to his response but that of the Chancellor of the Exchequer, whoever he may be in a short time.

Making Tax Digital for VAT (Economic Affairs Committee Report)

Lord Tugendhat Excerpts

Monday 29th April 2019 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, it is a matter of great regret to me that, because Brexit is such a dominant issue in our politics, I often find myself in opposition to my noble friend Lord Forsyth. It is therefore a great pleasure to be able to say how much I admire the way he has chaired the Economic Affairs Committee and its sub-committee. The fruit of his chairmanship has been shown in the considerable media attention that our reports receive. They receive it not only because a certain amount of effort is put into obtaining that coverage but because they deal authoritatively with matters of topical and widespread concern, and in a detailed fashion that demands answers. The Government—HMRC, on this occasion—have largely responded in the same spirit. I do not by any means accept all the points made by HMRC and shall come to those in a few moments, but the quality of the response has been rather good.

That leads me to make a general remark. In inquiries and debates of this kind, we inevitably focus on issues of concern and matters that have gone wrong; that is what we are for. But, having been paying taxes of one sort or another for the last 60 years now, on the whole I have found the Inland Revenue—latterly HMRC—quite reasonable to deal with. My affairs have certainly been simple compared with those of many businesses, including many small businesses, but in my relationship with it over many years I have not found HMRC difficult to deal with. I have found it reasonably sensible and understanding of problems that have arisen. It is invidious to compare one public-facing government department with another, because their functions are very different, but if one compares HMRC’s record with that of the various departments which at different times have had responsibility for social security, HMRC emerges rather well from any such comparison—perhaps particularly so at the moment.

My noble friend Lord Forsyth went through the recommendations and details of the two reports and there is no point in members of the committee following each of the points that he made, so I shall confine myself to very few. I agree with his strictures about the pace at which Making Tax Digital is being introduced and I feel that this is an example of the problems that arise when those who work for very large organisations, with a wealth of specialist expertise, have difficulty in understanding the way in which those who have small businesses and do not have very much expertise at their disposal actually live.

Many years ago now, I was chairman of the Civil Aviation Authority, which is a very fine body. We dealt a great deal with small airlines, as well as with large ones. I remember being struck by how difficult some of the officials at the CAA found it to put themselves in the position of people running small businesses and understanding the pressures on them. In the case of Making Tax Digital, we have another example of that. Having said that, however, the Government have a responsibility to encourage the digitalisation of the economy. The process of introducing taxes is one way they may do that, so I recognise that fact.

So far as the other proposals are concerned, on treating taxpayers fairly I applaud the Government’s acceptance of our view that HMRC should do more to publicise action against promoters of tax avoidance schemes. These schemes are of course promoted to boost the profits of the advisers, sometimes to the very great disadvantage of the clients of those firms, who get into trouble later. The important thing here is to change the risk-to-reward ratio to make it clear to the promoters that they are running great reputational risks by plugging schemes at the outer limits of what is permissible, or go beyond what is permissible.

By contrast, I greatly regret the Government’s rejection of our proposal that naming and shaming should be restricted to those who have actually broken the law, as distinct from those engaged in legal activities of which HMRC disapproves. I realise that that naming and shaming is not done casually, and that various steps must be gone through before HMRC goes public in these matters. But the practice of naming and shaming people who have not done something that is, or has been demonstrated to be, illegal seems contrary to the basic principle of natural justice. It is also in line with the deeply objectionable current practice of using innuendo and denigration to generate accusations and change behaviour. This is not something a government department should participate in. It is dangerously close to the way the police and others have behaved in the case of sexual allegations, the most extreme example of which is that of Wiltshire Police and Ted Heath.

I also regret the out-of-hand rejection of the proposal to give the First-tier Tribunal the power to conduct judicial review. I accept that, as HMRC says in its response, the Ministry of Justice and the judiciary would need to be involved in reviewing the need and mechanism for such a change, but the terms in which the rejection are couched show no recognition of the reasons for the recommendation. They are to try to even out the balance between the small taxpayer on one hand and the large government department on the other. It would have been helpful if rather more detail or meat could have been given in explaining why this is such a bad idea.

In general, we must recognise that we are dealing with a government department that has a good record. We are putting forward proposals to improve it and to try to ensure that those who work for large government departments, with all the expertise at their disposal, show a greater understanding of the position of small businesses and individuals who lack those advantages.

Civil Service Impartiality

Lord Tugendhat Excerpts

Monday 5th February 2018 Lords Chamber

[Lord Young of Cookham]

Well, whether the accusations made in the House of Commons last week constitute bullying, I am not quite so sure. I think they were ill-advised, given that the evidence did not stack up for the accusations that were made. But I agree with what the noble Lord said in his final remarks that the people who come out of it worse are those who make the accusations, rather than those they are levied against.

[Lord Tugendhat (Con)]

Does my noble friend believe that those MPs and Ministers who impugn the impartiality and good faith of our civil servants are behaving very much as President Trump does in the United States with regard to the FBI?

[Lord Young of Cookham]

I am not sure I want to open up a fresh front from the Dispatch Box, but I hope President Trump will read what my noble friend has just said.

European Union (Withdrawal) Bill

Lord Tugendhat Excerpts

Tuesday 30th January 2018 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, I agree with those who say that this Bill is not about whether we should leave the EU or stay in it—it is about how to ensure against a legal void when we leave. On that basis, it is a Bill that must, of course, pass. The question is in what form it should leave this House and return to the Commons. As has been widely pointed out, it represents an unprecedented arrogation of power to the Executive. Our duty, therefore, is to do as much as we can to ensure that the arrangements in place will be those that ensure that the powers are exercised in a responsible and democratic fashion, in accordance with parliamentary sovereignty and the rights of the devolved Administrations. It will be for the House of Commons to take the final decisions, but we must do what we can to lay before it a Bill that meets those criteria.

This means that the Bill requires substantial revision. I hope very much that the Government will take into account the serious concerns raised by the Constitution Committee and others with parliamentary and constitutional experience. I was encouraged by what my noble friend the Leader of the House had to say on that subject. I hope very much that noble Lords on the other Front Bench will pay very serious attention to what is said and not resort to any accusations of sabotage or anything of that nature. For my part, I hope that I will in general support Ministers. However, I will feel able to do so only if I am convinced by the merits of the case they put forward and that they have taken into account the arguments others have made, even if they have not accepted them.

I hope that the Government will understand another concern that I have. Our debates take place against a background of not only negotiations in Brussels but a struggle between different factions in the Cabinet and within the Conservative Party. Indeed, it is very hard to know at times what official policy is, let alone in what direction it is heading. This uncertainty is bound to influence the way in which—I was going to say “one” but I should say “I”—I respond to ministerial arguments on the Bill and to the way in which Ministers deal with amendments that are put forward. That is true of not just those clauses and amendments relating to our domestic law; it is even more true of those relating to our future relationship with the European Union. On that question I would like to make two points in the limited time available.

First, we must aim to strike a balance between the least possible economic and trading disruption in the short term and scope for regulatory divergence in the long term. That sentence is easy to say but the objective is extremely difficult to reach. As time progresses, the EU will develop differently from how it would have done if we were still members. We need to ensure that while remaining closely aligned to it, we are able to adopt policies that reflect our own views and priorities.

My second point is directed at those to whom the role and scope of the European Court of Justice and European law has become neuralgic. I ask them to consider the extent to which the United States listing requirements and sanctions regulations impinge on the freedom of action and practices of British companies and citizens. We live in a world in which a middle-sized economic power is inevitably constrained by the extraterritorial reach of the larger powers. If we are to prosper and have a successful trading and commercial relationship with the rest of the world, we are going to have to accept that reality. We will certainly have to accept it in any deal we might do with the United States. We need to accept it in relation to the European Union and in due course we will find that we have to accept it in relation to China.

I end on a point which others have made: if we are to secure a good deal—or, indeed, any deal—in Brussels, the Cabinet must end its internecine warfare and Cabinet Ministers must curb their personal ambitions. They must rally behind the Prime Minister and get stuck into the job in hand.

Intergenerational Fairness in Government Policy

Lord Tugendhat Excerpts

Thursday 26th October 2017 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, my noble friend Lord Willetts declared an interest as a member of the baby boomer generation. I am older than he is, and I gather that mine is the silent generation—perhaps because it is thought that we are no longer capable of speech.

I congratulate the noble Baroness, Lady Smith of Newnham, on bringing this matter to the attention of the House. It is one of the great issues of the present time. It has been given added topicality by the report of the FCA on young people’s finances, published in the last week or ten days. I am also conscious that not only my noble friend Lord Willetts but my noble friend Lady Altmann and the noble Baroness, Lady Greengross, have great expertise in this area, which I certainly do not.

The issue can be quite simply stated. We of the older generation have, in recent years, acquired a disproportionate share of the nation’s wealth. Not only that but, because of the triple lock and various other devices, we enjoy greater protection against the vagaries of economic life than any other generation. This is the result of decisions taken in the past which were themselves designed to bring about intergenerational fairness. Previous generations of pensioners endured the hardships of the 1930s and the Second World War. When the rest of the country was getting richer, for a long time they lagged behind. Decisions were taken that enabled them to catch up and safeguard their position. At the time, those were correct decisions.

We ought now to be thinking in terms of the same generosity of spirit for the generations that come behind us. We are now in a situation where, except for the very oldest members of the silent generation, those who are drawing a pension have grown up during the years of prosperity and peace. As everybody in this House knows, we have reached a point where the typical pensioner household is now better off than the typical family of working age. That cannot be right, given the responsibilities that families of working age have and the position of people whose responsibilities have very largely been discharged. Of course, I agree very strongly with my noble friend Lord Willetts that we are not talking about intergenerational warfare but intergenerational mutual support. The older generation supports the younger generation in a variety of ways, depending on the prosperity of the families concerned, but they also look to the younger generation for other kinds of support. To achieve that support in the circumstances that now exist, some redistribution is necessary.

There has been talk recently of tax breaks for people in their 20s and 30s. I am not a fan of that device because, were there to be tax breaks for people in one decade or another, inevitably unfairness would arise. If you give tax breaks to those in their 20s and 30s, you could have people earning a great deal of money in their 20s paying less tax than people earning less money in their 50s, so I do not think that is the right way to go. However, there is scope for more inducements for hypothecated savings—for example, to save for pensions and in ways that the saver is unable to get at in the short term. There is obviously scope for reducing stamp duty but I do not think there is any point doing that unless we combine it with a considerable increase in housebuilding: otherwise, it would merely have the effect of pushing up house prices. We need to reduce stamp duty for younger people, perhaps for first-time buyers, but do it in conjunction with a much more ambitious housebuilding programme.

The findings in the recent report of the Social Mobility Commission have a considerable role to play in resolving the issues that we face today, particularly what it said about apprenticeship policy and persuading universities to link courses more directly to employment opportunities and to provide better advice to students during their university careers and when they graduate on where their education can be put to best advantage. We also need to give a good deal more thought than we have done to the other possibilities offered by tertiary education, and to the balance between different forms of tertiary education in this country.

Anything that we do to resolve this issue will cost money. There is no escape from grasping the nettle and starting to cut back some of the privileges that we of the silent generation and the baby boomers enjoy. In particular, a start must be made on phasing out the triple lock, which next year will yield a particular bonanza because of the September inflation figure.

Finally, I urge the young to vote. The reason the older generation has so many privileges that are so difficult to tackle is because old people vote and young people do not. We saw the result of that in the referendum and in a different and, from my point of view, rather less fortunate, fashion at the last general election. However, if younger people would vote in the same numbers as older people, it would be a great deal less difficult for Governments to tackle the issues that need to be tackled if we are to secure a greater degree of intergenerational fairness.