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Comments were made about the reduction in VAT. I find this quite curious because, on the one hand, those who say that it will not be effective now also say that they do not want to see it revert to the original rate-particularly retailers; I had Sir Phillip Green on the telephone to me on this subject only a few days ago. The advantage of VAT was, as my noble friend Lord Sheldon said, that it is rapid, can be effectively implemented very swiftly, and is to the benefit of all
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The noble Lord, Lord Lang, said that we should spell out our plans for the future and the route that we are going to take. That is precisely what we have done. We have done so by painting a projection of public sector borrowing which, as a percentage of GDP, will decline quite rapidly once we are past the worst of the world recession. In the mean time, questions were asked not only by the noble Lord, Lord Lang, but by the noble Lords, Lord Forsyth and Lord Naseby, about the funding of the public sector debt. I remind noble Lords that the Government are currently borrowing at record low rates of interest, in both nominal and real terms, which seems to be inconsistent with the words of caution that we are hearing. The markets are expressing their confidence that the Government's commitment to returning to fiscal sustainability is something from which they can draw great encouragement.
The noble Lord, Lord Lang, also gave us a number of economic statistics on productivity, investment, imports, exports and employment. I think the noble Lord, Lord Forsyth, might accuse him of cherry picking, in only giving the most positive representations. In all cases, the trends that the noble Lord, Lord Lang, highlighted are evident in almost all developed economies. This is because we are in a global recession. Of course one would expect productivity to decline. Of course you would expect the rate of export activity to decline, although in that case it is interesting to note that our balance of trade is improving dramatically as our exporters gain an increasing share of what is clearly, at the moment, a constrained market for industrial export goods. The noble Lord, Lord Lang, referred-in connection with the funding of public sector borrowing-to the fact that we would be in competition with other Governments issuing significant amounts of debt. Of course, that is because other countries are following exactly the same policy that we are. That is, that the public sector can support economic demand, activity and output during a time when private sector demand is being affected by the global recession. That is why this policy is absolutely right for our country.
The noble Lord, Lord Lang, then raised several questions about pensions. Those were also raised by the noble Lords, Lord Forsyth and Lord Vallance, and a number of others in the House. I recognise that this is a sensitive subject and I am grateful for the interventions of the noble Lord, Lord Forsyth, on this point. I am also reminded by the noble Lord, Lord Higgins, that it is not wise to accept interventions in a speech from the Front Bench if you are intent on getting across a coherent story, which the noble Baroness, Lady Noakes, says is so important. The Government need to ensure that pension tax relief is targeted, sustainable and affordable. The changes affect only those pension savers
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It was suggested by a number of noble Lords from the opposition Benches that the announcement showed that the 2006 pension simplification had been a failure, and that we were changing rules which we had set down only three years ago. The underlying structure of pension rules remains the same. The advantages that the new pension rules have brought about continue for pension schemes, and the vast majority of pension savers are unaffected by the new rules. For the vast majority of pension savers, Schedule 35 and the main 2011 measures change nothing. Even at A-Day, the Government said that pension tax relief has to be sustainable and affordable. At the upper levels of income, this is no longer the case. In particular, it has become clear that the very wealthiest of savers have disproportionately benefited from the A-Day changes. This is not affordable in the current fiscal climate. The changes that are being made affect only high-income individuals. These are the very wealthiest people in society and those who require at least tax incentives to stay.
The anti-forestalling provisions on which noble Lords spoke extensively strike a reasonable balance between providing for fiscal neutrality, allowing the continuation of most forms of normal pension contributions and preventing undue administrative complexity. There is evidence that forestalling activity was already occurring by the morning of the Budget day, because of increasing expectations that the Government were to take action on pension tax relief. The Government do not encourage forestalling. Without such legislation, tax revenues of £2 billion were at risk. This is not the low risk suggested by the noble Lord, Lord MacGregor of Pulham Market, and, I suggest to the noble Lord, Lord Forsyth, justifies 13 pages of legislation and 52 pages of guidance. In the language of the Conservative Party, £2 billion is certainly not "chicken feed".
The noble Lord, Lord Forsyth, treated us to a speech which showed all his signature of warmth and goodwill towards those who sit on the government Benches. It is always a pleasure when I see the noble Lord rising to his feet. My journey, as described in the Sunday Times yesterday, is encouraged by the warmth that I have come to associate with the noble Lord. He also raised questions about the anti-forestalling regime. I emphasise that it does not stop people going ahead with planning. All that the rules do is to limit the amount of subsidy provided by the Government in the form of higher-rate tax relief.
The noble Lord, Lord Best-the friendly Lord Best-raised a number of very informed questions about
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I should refer to the noble Lord, Lord Barnett, as "my noble friend", but it is not always evident from the questions that he asks. The noble Lord, Lord Barnett, introduced a focus on economic matters that was welcome, given that most of the contributions to which I have referred focused on a narrow group of high earners and high-rate taxpayers. I salute the noble Lord, Lord Barnett, for introducing an economic perspective that drew upon his great experience and raised the standard of our debate on the economic outlook. I will not be drawn into responding to the noble Lord's speculation about what may occur in future announcements by my right honourable friend the Chancellor of the Exchequer. However, I will reiterate that we are committed to sustainable public finances, and that we will reduce public borrowing as a percentage of GDP.
On other issues, the noble Lord, Lord Barnett, must await the PBR. We are building on significant fiscal consolidation, announced in the last PBR, and the Budget sets out tax and spending measures that will reduce borrowing significantly by 2013-14. The noble Lord, Lord Barnett, referred also to the CBI speculation about a tax rate. The level of extra tax depends on the extent to which an individual makes additional contributions after the 2009 Budget. I cannot speak to the specific example that he gave, for which his source was the CBI.
The noble Lord, Lord MacGregor of Pulham Market, brought a wealth of experience on pension matters, on which he is very informed after working in this area for many years. I take note of what he says about the outlook for defined benefit pensions, although I note that that observation, as the Turner report on pensions showed, is global and not confined to the UK. I note also that pensions continue to enjoy very substantial tax incentives. However, we had to do something about a situation in which 25 per cent of the tax relief
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The noble Lord, Lord MacGregor, also raised the old canard about the £5 billion tax reduction in 1997. The first bite at this cherry was taken by the noble Lord, Lord Lamont of Lerwick. This is conveniently forgotten by the Opposition Benches, as is the fact that it was done to finance a reduction in corporation tax that was greatly welcomed at the time by the business community and investment markets.
I will move on. There were so many good contributions-for example, from the noble Lord, Lord Marlesford, on credit cards. His was a wonderfully anti-business, anti-liberal argument in favour of restricting the availability of credit cards. I assure the noble Lord, Lord Higgins, that if he studies Hansard from the other place, he will find a detailed discussion of the issues of retrospectivity in tax matters. We would only ever propose anything that was retrospective in response to the most heinous forms of tax avoidance, as was clearly the case with regard to certain measures that we announced in January.
Many other points were raised in what, as I said, was an excellent debate, but I know that Members of the House are keen to move on to the next item of business. As I said, if I have failed to answer questions of detail, I shall write to noble Lords, but I hope they will agree that this is a good Finance Bill and that it is an important step forward in our journey towards a stronger, fairer and more prosperous Britain. I commend it to the House.
The Chancellor of the Duchy of Lancaster (Baroness Royall of Blaisdon): My Lords, when we discussed this question earlier on Report, I said, on the basis of some amendments from the noble Lord, Lord Jenkin of Roding, that I was happy to go away and consider an amendment which would make it clear that IPSA should consult when deciding what conditions it would specify for the commissioner to be able to exercise his or her powers to settle an investigation without referring it to the Standards and Privileges Committee. This amendment fulfils that commitment. Unlike the noble Lord's amendment, which was to subsection (9), this amends subsection (10) so that it reads:
the bodies set out in the clause-that is, the Leader of the House of Commons, the House of Commons Committee on Standards and Privileges, the commissioner and any other person the IPSA considers appropriate.
As I explained on Report, the conditions may go beyond those which relate simply to the rectification of the error. That is another reason why we could not accept the noble Lord's amendment as it stood, but we accepted the principle that IPSA should consult on setting the conditions. I hope that the House will agree that this fulfils the commitment that I made. I beg to move.
Lord Jenkin of Roding: My Lords, I believe that the noble Baroness has been as good as her word and that we have improved this clause. I was very grateful when she indicated her acceptance of the amendments that I moved earlier today, and I consider her latest amendment to be an improvement. I think we have improved the Bill but whether we have improved it enough to make it a tolerable piece of legislation is something that I must leave to other people to judge. I do not think that it is.
Baroness Oppenheim-Barnes: My Lords, with Third Reading we now have a Bill, hatched and dispatched in a great deal of hurry, which I believe is far better than when it started out, thanks to the work of noble Lords on both sides of the House-in particular, those who involved themselves in the complexities of the legal aspects of the Bill, which had to be faced and were faced. The noble Baroness has been of great benefit to those of us who have an interest in the Bill. Her patience has been extraordinary and she has been very relaxed and amenable about the Bill.
We have to face the fact that the Bill has been hatched and dispatched in a great hurry as we were facing, and still are facing, a crisis of confidence in the other place. They had it coming to them. I am sorry that they are depressed; I am sorry that they are having nervous breakdowns; but when I look back some 40 years to when I first went to that House, I remember we had votes every night at 10 o'clock and
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What has happened subsequently has not happened overnight but over 20 or 30 years and outside interests are now frowned on. Members bring outside expertise to the House-they have more time to pursue those interests as the House does not sit anything like as long as previously-but in the Bill we still have the provision about outside interests. I am disappointed that we still have the silly provision in Clause 8(10)(b),
Some families are very large and it seems to me that we are expecting a great deal of them. The noble Baroness, Lady Royall, has helped me to digest the indigestible by dealing with the compliance section in regard to this far more favourably. I am very grateful to her, as I am sure are all noble Lords.
Lord Shutt of Greetland: My Lords, as we come to the end of this Bill it is perhaps appropriate to say one or two things. This has been an interesting Bill to be involved with. The circumstances are quite difficult and strange. As I said at Second Reading, it is one of those Bills that we shall somehow have to put up with. It has had a fair amount of chewing in this place and it was chewed even before it got to the other place in informal pre-legislative scrutiny.
The word "privilege" has been raised on many occasions. Privilege is something we have in this place: we have the privilege of being asked to come here and at the moment we do not have to seek the views of electors every four or five years. I am very conscious of those who have to seek the views of the electors every four or five years. However imperfect the Bill is, it may have assisted a little those who have to seek the views of electors. I am very aware of those who have gone home, weekend after weekend, to comments about this place being a place of abundance and being asked how much of that abundance they have been able to take on themselves. If the Bill assists those outsiders who are to look at the allowances, expenses and salaries in the future, I believe that will be to the advantage of democracy in this land.
Baroness Quin: My Lords, I support the Bill. I congratulate my noble friends on the Front Bench on the marathon in which they have been involved in getting this legislation to its present state. As a member of the Constitution Committee, I would have liked more time to consider the Bill, although I did not support the amendment in the name of the noble Lord, Lord Norton, which I believe would unfortunately have had the effect of kicking it into the long grass until October. Criticisms about parliamentary recesses and nothing being seen to happen for three months would have put us in a very difficult position.
My main purpose is to make a brief intervention, which follows from what the noble Baroness, Lady Oppenheim-Barnes, said. During this debate, a number of noble Lords, particularly the noble Lords, Lord
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It was said that the other place is finding it difficult to find people to fill the law offices. The figures that I have seen show that while the number of barristers has reduced over the past 15 years, the number of solicitors has increased. There are 70 or 80 Members of the other place with a legal background, which does not seem to be too small a pool from which to draw law officers in future. It is true that there are fewer manual workers and fewer miners in the other place than there were, but that simply reflects society, as does the increased number of women, and that makes for a better reflection of society than in the past.
Outside experience before coming into Parliament is important, and the figures show that there are more people who were politicians or political researchers in the other place than there used to be. However, the figures need to be looked at with some caution because they merely record the jobs that people had immediately prior to entering Parliament, not the jobs that they may have had prior to that. In those circumstances, people who have been MEPs are recorded in the figures as being politicians or political researchers, whereas most of us had other jobs prior to becoming Members of the European Parliament.
It frequently seems that when we talk about professional politicians, it is always done with a sneer. We would not say professional doctors, professional accountants or professional any other profession with a sneer, and we ought to be prepared to defend the idea of professional politics. Professionalism in politics is important. We all know that we keep on learning in the political forums in which we are active over many years. I support the provisions of the Bill, but I would like to think that the Government and the Opposition will be prepared to defend the profession of politics and the role of politicians, which are so important for the future of democracy in our country.
Lord Norton of Louth: My Lords, I shall speak briefly. There is a good article in the Times today that makes the case for public policy being evidence-based. It is clearly a very powerful case. My concern is that the Bill would not fall into that category. It has been justified by the argument that the public are outraged and demand action. I do not dissent from that view, but we have been presented with no evidence that the Bill constitutes the action that the public demand. My concern is that it has been rushed through in order to assuage public concern and may not be that well directed at achieving that. We were told that the offence that we were discussing on Report sends a clear signal to MPs. My concern is that it may be used simply to
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