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British Bakeries has developed a detailed dialogue with its unions to ensure workers are adequately trained and, importantly, retrained to adjust to organisational change and restructuring. I visited the Rolls-Royce aero engines plant at Derby where learning reps have made such a contribution to that company continuing to make the best aero engines in the world. The union learning reps at Rolls-Royce’s plant at Inchinnan in Scotland recently mapped out the learning needs of the workplace and put in place a learning programme in partnership with local providers such as the University of Paisley, Stow College and the Open University. Rolls-Royce’s good work in this area was recognised when its lead learning rep, Pat McIlvogue, won the TUC learning rep of the year award for 2007.
Those are just a couple of examples—there are so many more. Reskilling and upskilling the UK workforce is vital to our global competitiveness. It is the agenda for the 21st century for trades unions, whether in the private or, importantly, public sector. The benefits to employees and employers alike are enormous.
The Regulatory Enforcement and Sanctions Bill, introduced to this House last week, will reduce regulatory burden on business. It will establish the Local Better Regulation Office, bringing consistency to local authority enforcement. The Bill will also put in place a range of administrative sanctions for regulatory non-compliance that will complement existing criminal sanctions, and also requires that regulators do not maintain or impose unnecessary
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There is a cross-government commitment to reduce administrative burdens on private and third sectors by 25 per cent by 2010. We have secured agreement from 27 member states and the European Commission in Brussels for a 25 per cent target for the reduction of EU law administrative burdens by 2012, and we are delivering better regulation in the public sector, identifying and removing unnecessary burdens that add to the cost for the taxpayer and impact on the delivery of services to the detriment of the consumer.
My right honourable friend the Prime Minister also announced proposals to extend the right to request flexible working arrangements to parents of older children. The right to request flexible working not only helps millions of parents juggle work and family life, but can benefit business by improving staff retention and productivity. Used appropriately and as part of a wider employment strategy in line with 21st-century lifestyles, employers can acquire a reputation in a local community as the place to work in that community. Happy employees are productive employees.
An independent review consulting with employers will be led by Sainsbury’s human resources director, Imelda Walsh, to determine what further progress can be made. A formal consultation will be held after the results of the review are published, to gauge the views of business, employers, and other stakeholders.
Moving on to issues covered by the Department for Work and Pensions, I hope that noble Lords will support the Pensions Bill. It will build on the consensus created around the Pensions Commission reform package. The Government intend to make it easier for people to save through automatic enrolment into a qualifying workplace scheme or personal account. Coupled with major changes to the state pension system in the Pensions Act 2007, people will be helped to meet their retirement aspirations. Since 1997, average pensioner incomes, net of tax, have increased by 29 per cent in real terms, with more than 2 million pensioners lifted out of absolute poverty and more than 1 million lifted out of relative poverty. That is good progress, but it must continue.
The Child Maintenance and Other Payments Bill will establish a new system of child maintenance to tackle child poverty more effectively. It will also support sufferers diagnosed with the asbestos-related disease, mesothelioma, by extending the categories of people eligible to receive the lump sum compensation payment and by paying it as quickly as possible once the disease has been diagnosed, so bringing help when it is needed and not only when it is too late.
It will establish a non-departmental public body—the Child Maintenance and Enforcement Commission—to replace the Child Support Agency. It will introduce more streamlined and transparent child maintenance arrangements, which will empower and enable parents to make their own maintenance arrangements and more effective processes for assessing, collecting and
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Moving on to Bills covered by the Treasury, the Dormant Bank and Building Society Accounts Bill will enable money lying dormant in the banking system to be made available for distribution in the community. The Government intend that money available for distribution will be reinvested in the community, with the focus in England on funding youth services, financial capability, financial inclusion and, resources permitting, social investment. This money can help to meet the Government’s commitment to use the money to fund the provision of facilities for young people in England. There will be protection for those consumers affected as they will be able to reclaim their money at any point in the future and have equivalent protection to that currently held.
The Government will bring forward legislation to improve the framework for depositor protection. To maintain trust in the financial system, consumers want to be sure that they will be able to get their money back in a timely fashion if a bank runs into problems. They also want to know that they will continue to have access to day-to-day banking services with strong safeguards in place until at least they can transfer their services in an orderly way.
The Government released a discussion document on 11 November and will follow it up with full consultation in the new year. It would be wrong to prejudge the outcome of that consultation process. However, the broad aim of the legislation will be to give greater protection for depositors in the event of a bank failure, to preserve all-important financial stability and reputation, and to safeguard the taxpayers’ interest.
The National Insurance Contributions Bill will ensure that the Government begin to implement their commitment to provide a solid and simpler state pension foundation as an incentive to private saving while delivering the Budget’s personal tax reforms. It will also include changes to the state second pension following the announcement by the Chancellor in the Pre-Budget Report that the Government would bring forward the introduction of the upper accruals point in 2009. Both those reforms will offer more support for working families and pensioners.
Lastly, the European Communities (Finance) Bill ratifies the system by which member states finance the annual budget of the European Communities. It will provide entry into law of the revised decision on the communities’ system of our own resources that implements changes agreed under the UK presidency at the December 2005 European Council.
That is a brief summary of the Bills we are about to receive. Business is the key to social inclusion, the key to a better skilled and safer population and the key to paying, out of the profits earned, for the schools, hospitals, prisons, roads and armed services that the nation must have. These Bills will ensure that UK business continues to succeed while providing fairness for employees and consumers alike. I so hope that noble Lords will support them.
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5 pm
Baroness Noakes: My Lords, I thank the Minister for opening the last day of debate on the gracious Speech. The Minister spoke about the importance of the creation of business wealth in our country, but he did not tell us whether he thought the Chancellor’s recent CGT changes would help or hinder that. We know what the business community thinks, but what does the Minister, who used to be a champion of business, think? If he would like to tell the House, I will happily give way to him. Well, perhaps he could whisper the answer to his noble friend Lord McKenzie of Luton, who could let us know later on.
The scope of today’s debate includes economic affairs. I was therefore somewhat surprised and disappointed to find that the noble Lord, Lord Davies of Oldham, who speaks in your Lordships’ House on Treasury matters, was not taking part in our proceedings today. I am delighted, of course, that the noble Lord, Lord Jones of Birmingham, has opened the debate and I certainly look forward to the speech of the noble Lord, Lord McKenzie of Luton, when he winds up, but I have to say to noble Lords that it is odd that the Government’s own spokesman on economic matters in your Lordships’ House will not be defending the Government’s economic record.
This is all of a piece with the Government’s unwillingness to debate the economy in your Lordships’ House. On 9 October, the Pre-Budget Report and Comprehensive Spending Review were announced in another place. That was the Statement which was hastily rescheduled to provide a platform to launch the general election that never was because the Prime Minister bottled out. We on these Benches believe that the PBR/CSR Statement was a very important one which ought to have been debated by your Lordships on a timely basis. It not only set out the Government’s assessment of the economy and some of the fiscal measures that will appear in next year’s Budget, but included the long-awaited spending plans for the next three years. It represents a crucial part of the policies of the Government. Noble Lords will doubtless recall how in those few weeks after our return in October, the business of your Lordships’ House was extremely light and we often rose early. Members on these Benches continually pressed the Government for a debate on the PBR/CSR in that period, but we were stonewalled.
In that light, I make no apology for dealing with some of the substance of the PBR and CSR today. Indeed, I crave the indulgence of the House to dwell rather longer than I would otherwise have done on the statement in the gracious Speech that the Government would,
- “pursue policies to secure a stable and strong economy, with low inflation, sound public finances and high levels of employment”.
But before I turn to that, I should say that I shall be covering matters from a Treasury perspective and will also speak to some matters that fall within the Department for Work and Pensions, as the noble Lord, Lord McKenzie of Luton, is with us. My noble friend Lady Wilcox will be winding up for these
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The Government have built our economy on debt. Just as we can confidently predict that night follows day, so can we predict that the Budgets and Pre-Budget Reports of this Government will revise their forecasts of debt upwards. This PBR was no exception, adding another £16 billion of debt over the next five years. The Government meet their 40 per cent of GDP debt rule only because some key items are left out of account, items such as Network Rail and PFI liabilities.
Our economy has experienced an unbroken growth record since 1992, which is something that we can be proud of. But since 1997, that growth has to a considerable degree been on the back of consumer expenditure. There would be nothing wrong with that if disposable incomes had been growing commensurately, but the disposable income ratio has been falling as rising taxes have taken their toll. The Institute for Fiscal Studies has calculated that the latest PBR will increase taxes by a further £2,600 per annum for the average family over the next five years. In addition, wage earners are now suffering real income declines as RPI inflation remains above earnings growth, and well above the CPI inflation that the Government target. The Queen’s Speech referred to low inflation, but the inflation experienced by those on low incomes, especially pensioners, is well above their income growth. The latest news on food and fuel prices will keep RPI inflation uncomfortably high in the near term. The net result of all this is that the majority are experiencing a real income squeeze. The savings ratio this year hit a 40-year low, which will in turn exacerbate our pensions crisis in years to come, a point I shall return to later.
Personal debt is also at record levels, nearing £1.4 trillion and higher than the UK’s GDP. Much of this is secured on property and the level is driven in part by the rise in house prices. Are the Government still complacent about house prices? Now that house prices have started to slide, do they still have no worry about their impact on the economy?
While debt default levels and mortgage repossessions are increasing, they have not reached crisis levels taken in the context of the whole economy—although they undoubtedly represent tragedies for the individual families involved. Of more concern to the economy is the impact that stressed household finances will have on consumer spending. Do the Government have any concerns on this front? If consumers stop spending, what will underpin economic growth? We all know that business investment as a percentage of GDP is at its lowest level since records began, and the cack-handed capital gains tax changes announced in the PBR will depress that still further. Businesses are reeling from the rise in the corporate tax burden and from high interest rates, and the state cannot fuel growth without more tax and spend.
The Government cannot take the blame for the sub-prime debt problems which emanated in the US and are now rippling around the world. My noble friend Lord Marlesford will address this issue. But the
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The gracious Speech also stated that the Government would,
- “continue to work to build a prosperous and secure European Union, better able to respond to the challenges of globalisation”.
We think it would be so much better if the Government concentrated on equipping our own business community to respond to the challenges of globalisation. Only last week, the World Economic Forum’s competitiveness league table showed how the Government’s policies have resulted in the UK slipping to ninth place. Our tax code is the longest in the world and one of the most complex. Our headline corporation tax rate is due to reduce next year but that is not enough to restore our competitiveness, especially against the faster growing economies with which we compete for corporate investment. Regulatory burdens, which my noble friend Lady Wilcox will cover, have reached frightening levels.
Where in the Queen’s Speech, the PBR or the CSR do we find the Government setting out policies which will equip the UK for the competitiveness challenges of globalisation? The noble Lord, Lord Jones, tried to say that all these measures will do that and that the Government have policies, but we are far from convinced that they will achieve the outcomes that we urgently need.
The gracious Speech referred to high levels of employment but said nothing about unemployment; it failed to acknowledge that there are now nearly 5 million people on out-of-work benefits, including 2.7 million on incapacity benefit. As Joseph Rowntree studies have shown, the incentives to move from benefits to work have got markedly worse for many groups under this Government. In the 16 to 24 age group there are 1.2 million NEETs—those not in employment, education or training. This group has increased in the past 10 years, underlining the abject failure of the Government’s youth employment policies.
The Government have got themselves into a dreadful mess on immigration: they cannot count the numbers which have swelled our workforce or the proportion of new jobs taken by immigrants, and they have no idea about the economic benefit or disbenefit of their ineffective immigration policies. The Government have hidden behind platitudes rather than facts, and my right honourable friend Mr David Cameron has now put down clear markers for the scope of the debate that we urgently need on issues such as the impact of immigration on our overstretched public services. Recently the Prime Minister has borrowed a slogan from the British National Party in his call for “British jobs for British workers”. Will the Minister explain how that will work and how it will impact on the Government’s policies towards immigrant workers?
I shall run through some of the Bills within my subject area. The gracious Speech promised a Bill to,
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but there is silence as to how the Government will repair the damage they have inflicted on the reputation of our financial services system through their mishandling of the Northern Rock affair. The first run on a UK bank in 140 years occurred on this Government’s watch, and it is in large measure a result of the failure of the tripartite arrangements that were the brainchild of the Prime Minister. We will work constructively towards appropriate depositor protection, but that is not anything like the end of the story of Northern Rock and we shall expect the Government to do much more than that Bill.
I shall say nothing today about the Dormant Bank and Building Society Accounts Bill, as we already have Second Reading scheduled for that next week. The only other relevant Bill mentioned in the gracious Speech is one that Her Majesty described as one to,
which is a classic bit of new Labour spin. The Pensions Bill is actually about getting employees to save for their retirement before any question of employer contribution arises.
We have supported efforts to achieve higher pension savings, but that support is not unconditional and we remain concerned about a number of issues, all of which were debated in the context of the previous Session’s Pensions Act. This Session’s Bill is not assured of a trouble-free passage in your Lordships’ House. It will do nothing to deal with the Government’s failure to honour the ombudsman’s recommendations for proper compensation for those who lost their pensions, and will assuredly do nothing to eliminate the disparity between the majority of the workforce and public sector workers, whose pension arrangements are gold-plated at taxpayers’ expense.
Not mentioned in the gracious Speech, though mentioned by the noble Lord, Lord Jones, was a National Insurance Contributions Bill, which we will greet with little enthusiasm. By aligning the income tax and national insurance thresholds, the Bill will achieve a welcome simplification of the structure of personal tax. However, it is being introduced not in a cost-neutral way but in the tax-grabbing style of this Government, and will cost middle-income families around £1.5 billion a year. The Bill will also legitimise the Chancellor’s latest pension raid via the state second pension. Put simply, the Bill is just one big money-raising exercise to shore up shaky government finances.
Another Bill not mentioned was the one allowing the privatisation of the student loan book. That policy came directly from our 2005 manifesto and we look forward to working on it.
Lastly, there will be a European Communities (Finance) Bill, which has a price tag of over £7 billion. It will legitimise the damage done by the former Prime Minister last year when he gave up a large part of our EU rebate in return for precisely no EU reform. We simply cannot afford EU membership at whatever price our profligate neighbours demand.
Her Majesty’s most gracious Speech said that the Government would,
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It would be nearer the truth for the Speech to have said that the policies were designed to satisfy the aspirations of this Government, who have run out of steam, are desperate to cling to power and lack the courage to ask the people whether they can stay in office. We on these Benches will work tirelessly to demonstrate the poverty of vision of this failing regime.
5.15 pm
Lord Oakeshott of Seagrove Bay: My Lords, I too thank the noble Lord, Lord Jones, for introducing this debate. I do not propose to follow him particularly on the trade, industry and energy aspects of his speech, which my noble friends Lord Cotter and Lord Razzall in particular will respond to.
On the initial challenge which the noble Baroness, Lady Noakes, laid down on capital gains tax, I make it clear that we on these Benches support the thrust of the changes that the Government have proposed. They did it in a panic and in a blue funk, and consultation is certainly necessary but, in general, simplification is important. We are not sure that the Conservatives genuinely are in favour of them, and one finds a sequence of different special interest groups coming forward and saying on all these reforms that they strongly support the principle but, in each case, that they do not like the change that is proposed for them. I am afraid that, when we have a situation that is as messy, expensive and complicated as the present ragbag of reliefs, one has to accept that there will be quite a few losers through simplification.
I spoke in the debate on the gracious Speech one year ago and focused on the dangers of debt—personal, corporate and public. I gave some pretty stark warnings. They were not perhaps in the flesh-creeping premier league of those of my honourable friend our shadow Chancellor, Vincent Cable, but they were serious. I was especially worried about the overpriced housing market forcing families into debt, and about the spectre of tax privilege and secret private equity funds gobbling up well run British businesses and loading them with vast debts. However, never in my darkest nightmares did I foresee what I think is the first ever nationwide run on a bank in British history—Overend and Gurney was a side show compared to Northern Rock—with more than £20 billion of taxpayers’ money poured so far into what I fear will turn out to be the Northern Rock black hole. There is no end in sight and no government grip to protect these vast sums, which are more than we spend on primary education and more than our entire aid budget.
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