European Union (Future Relationship) Bill
Baroness Falkner of Margravine ExcerptsWednesday 30th December 2020
(5 years, 6 months ago)
Lords ChamberRead Full debate European Union (Future Relationship) Act 2020 View all European Union (Future Relationship) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 30 December 2020 - (30 Dec 2020)
Baroness Falkner of Margravine (CB)
My Lords, I, too, felt an enormous sense of relief on Christmas Eve when this agreement came through, delivered, as it was, four and a half years after this country decided its interests were better understood in Burnley and Bournemouth than Brussels. But I, too, share a sense of regret, being married to a German who was forced to become a Brexit Brit. His experience of nationality here was very different to mine some 40 years ago, when I became a British citizen. Mine was exuberant, enthusiastic, optimistic; his was merely to protect his rights. But for me, this deal will do. Importantly, it leaves us on good terms with our neighbours and allows us to build on those terms as we go forward towards a better future.
The noble Lord, Lord Newby, asked what this Bill will do to unite the country. I have thought of that quite frequently. The House will know of my movement from the Liberal Democrat Benches to the Cross Benches on the case of democratic accountability. I would ask him the question, in light of his contortions of the last five years, of why the Liberal Democrats believe that they can help unite the country by disagreeing with this agreement. To vote against this agreement is effectively to say that no deal is better. That may not be what they want to do, but it is fortunate for us that this is just a gesture. That is what it is—a gesture that will have no consequence for the passage of this Bill today.
Let me turn to the most significant missing element of the Bill, which is the lack of a comprehensive agreement on financial services. I had the privilege of chairing the EU Financial Affairs Sub-Committee from 2015 to 2019. Five reports on Brexit and financial services later, it cannot be said that the costs of losing passporting were not calculated. But the fact is the sector had to take decisions on regulating approval in good time, and most firms made the necessary moves to onshore in the EU before the current deal even started to be negotiated. Our financial services sector will do fine. It is well regulated and well regarded. It is known for its high professional standards and will continue to thrive, most importantly in the greatest growth area—east and south-east Asia and other emerging markets.
I follow the noble Lord, Lord Butler, in my sense of optimism—that, as we go forward in a different trajectory, we will do more than survive and we will have new opportunities and horizons. We must prepare with optimism for the new challenges. For the next generation, we must strive to demonstrate that we can be a force for good in a global world.
Restriction of Public Sector Exit Payments Regulations 2020
Baroness Falkner of Margravine Excerpts(5 years, 10 months ago)
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Baroness Falkner of Margravine (CB)
My Lords, I begin by assuring the Minister that I too have no objections at all in principle to the imposition of a payment cap on public sector employees. I only wish that the private sector would voluntarily incorporate some form of limit on what employers pay as golden goodbyes, but I fear that that is not imminent. However, I am troubled by the immediacy of these regulations, by their seemingly sweeping application—particularly as it impacts older workers on modest levels of pay—and by the burden imposed on individuals.
The rush to implement these regulations within 21 days seems inappropriate. Surely a longer period is required for the plethora of public sector bodies to examine the implications and communicate with employees who might be affected in the next several months, when finances and workloads will be particularly stretched. Why not pause the implementation for a reasonable period while HMT deals with the significant concerns that employers have and issues appropriate guidance after listening to those concerns?
I turn to the human rights implications. The briefing from West Midlands Employers concerns the impact on employees who might be caught by these regulations, who are mainly long-serving but on relatively modest incomes and disproportionately female. When the original legislation was passed in 2015, we expected it to deal with high-earning executives, but it now appears that it will also catch those I have mentioned due to pension strain costs. This is an issue on which almost every speaker has commented. The briefing gives an example of an employee who
“on a salary of £40,000, with 37 years of service, on early retirement, would require the county council to pay approximately £97,000 into the fund, without adding redundancy pay, notice, or holiday pay.”
The Minister has mentioned that a waiver might be available for a limited number of cases. Could he indicate whether guidance will be issued to explain what those circumstances might be?
The BMA highlights different issues and I hope the Minister will reclarify its main charge—that the regulations are unlawful because they capture individuals who have claims against their employer which arise during their employment. These might relate to claims for damages for race or sex discrimination, or any form of discrimination under the Equality Act 2010. They point out that this is a significant change from the 2015 statutory wording. My interpretation of Regulation 6(f) is that such payments would come under its terms. Could the Minister clarify what would happen if an employer settled a claim without resorting to a tribunal—that is, where Regulation 6(f) is too narrow in its scope and does not take into account this kind of settlement?
Why are such onerous terms of a requirement to inform placed on the individual by Regulation 9, rather than on the employer, as required by the 2015 Act? Here I have sympathy with the example of junior doctors frequently moving between NHS employers, particularly as the sums concerned are nowhere near the £95,000 cap. I look forward to the Minister’s reply.
Finance Bill
Baroness Falkner of Margravine ExcerptsFriday 17th July 2020
(6 years ago)
Lords ChamberRead Full debate Finance Act 2020 View all Finance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 2 July 2020 - (2 Jul 2020)
Baroness Falkner of Margravine (Non-Afl) [V]
My Lords, I broadly welcome most of the measures the Government have taken since the onset of this fiscal emergency. I think Her Majesty’s Treasury needs to be congratulated on the dexterity and speed with which it has risen to these unprecedented challenges. In a sense, our heroes are the operators of Whitehall: the Civil Service has stepped up to the mark and done an extraordinary job in the last several months.
I want to start with the reference that has been made to the health emergency being equivalent to fighting a war. If that analogy holds, surely a solidarity tax, already mentioned by the noble Lord, Lord Macpherson, would be the appropriate response, because that is what is normally used in a war. I accept that one of the unique features of this fiscal emergency is that there is both a demand and supply-side shock, and that the measures taken need to be very carefully calibrated, but I wonder whether the Minister is completely au fait with the German example after reunification in 1991, when a solidarity tax surcharge was introduced across the board: on individuals, SMEs and larger corporations. It was set at a flat rate of 7.5% for one year—it was reintroduced several years later, for a different reason—but it gave an injection to the East German economy for the vast amounts of money that had to be spent in bringing that up to the level of the West German economy.
Given where we find ourselves on the need to ultimately deal with the debt burden, will the Government consider a progressive version of that kind of programme, perhaps to last for two years at 1% for basic rate taxpayers, 2% for higher rate taxpayers and 3% for additional rate taxpayers? It would not breach the Government’s manifesto commitment not to bring in higher taxes in the sense that the public now want—I think 66% is the figure in recent polls—to pay higher taxes to support vital public services such as the NHS and social care.
My second point, very briefly, is about the stamp duty land tax. I wish it had been longer-term relief for first-time buyers and not a rather blunt tax which will benefit second homeowners, buy-to-let landlords and all those who are the last people to need assistance at this point.
Fixed-term Parliaments Act 2011
Baroness Falkner of Margravine Excerpts(6 years, 1 month ago)
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Lord True [V]
My Lords, my noble friend is an outstanding authority on these matters, and I am sure that all contributions from him will be heard on all sides of the House. He is quite right to say that the Government made a commitment in their manifesto to repeal the Act. However, I can only repeat that detailed announcements about how we will proceed will come in due course.
Baroness Falkner of Margravine (Non-Afl) [V]
My Lords, I served on the Constitution Committee during the passage of the then Bill. We heard extensively about the many concerns regarding it, which eventually came to pass during 2017-19. If ever a demonstration was needed that the Act is unsuited to our constitution, the last few years provided it. Can the Minister therefore please press for the review to be announced as soon as possible so that we have the legislative time to pass the necessary legislation to do away with it?
Lord True [V]
My Lords, the Government remain absolutely committed to replacing the Act, and I totally agree with the noble Baroness about its impact. We all lived those days, months and years, and we do not wish to see a recurrence.
Beyond Brexit (European Union Committee Report)
Baroness Falkner of Margravine Excerpts(6 years, 2 months ago)
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Baroness Falkner of Margravine (Non-Afl)
My Lords, I too was a member of the committee under the chairmanship of the noble Lord, Lord Boswell. It is no understatement to say that his outstanding tenure was undoubtedly during the most eventful period in the committee’s history, and he led us through it most ably.
Given that this report has been overtaken by events, I want to concentrate on the Government’s negotiations and aims, as set out in their February 2020 Command Paper. It sets out five areas where the Joint Committee and dispute resolution systems will not apply. These are mainly areas where the EU is, as we know, particularly concerned about a “level playing field”. I can see the need for the United Kingdom to have regulatory autonomy, particularly as the Covid-related economic shock will lead to EU states adapting differentially to technological change and automation, which will impact directly on some of those areas where the EU wants a level playing field. The Government is therefore right in principle, but I urge them to retain a form of joint dialogue in a structured format, as we will need to have some common approaches to these problems, particularly our competition policy and our policy on those countries that have been blatantly shown to play by a different rule book.
Finally, I turn to financial services, where, the report tells us, the equivalence assessments are separate from the FTA and expected to be completed in June 2020. Will the Minister confirm that that timetable still holds, and, if not, when they are likely to be concluded? As he will appreciate, they are terribly important for our financial services sector as we approach the end of transition.
House of Lords: Membership
Baroness Falkner of Margravine Excerpts(6 years, 2 months ago)
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Lord True
My Lords, I think this is going wide of the Question, though the noble Lord might wish to reflect on the large number of Peers on his own Benches who were brought in under the previous two Administrations. I shall not enter into conspiracy theories; the House should concentrate on fact and work. I have stated on the record that this is not, and has not been, government policy.
Baroness Falkner of Margravine (Non-Afl)
My Lords, while I completely support reform of the House of Lords—indeed, I was enthusiastic about the last reform—I hope that when Ministers get round to considering this matter they will look at the need for a more balanced Chamber representing not only the protected characteristics but expertise beyond the current framework. The House does need refreshing from time to time; I support the Minister in that view.
Budget: Economic and Fiscal Outlook
Baroness Falkner of Margravine Excerpts(6 years, 2 months ago)
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Baroness Falkner of Margravine (Non-Afl)
My Lords, I agree with other speakers that it is, indeed, a surreal experience to be speaking on government compliance with the SGP on a convergence programme, given that we are diverging from the EU, notwithstanding our obligations under the transition period. I also note that within the EU the SGP escape clause has been triggered, but that the EU insists that this should not suspend programme reporting. That seems slightly odd, given that no member state will be able to say with any certainty where it might be even by year end, never mind in the next three-year period. However, since the UK is complying, I shall make two general points.
The obvious point is that although we have left, the economic strength of our largest trading partner—its growth and prosperity—continues to be of huge significance to the UK economy and business. The EU, just like all economies, is throwing everything at dealing with Covid-19, but we simply do not know how that will play out in the peripheral economies of the eurozone. All we can do is hope that this emergency continues to be a health and economic emergency and does not turn into a financial crash as well; 2008 still hangs over us. Looking at the stock of non-performing loans on banks’ books, a Financial Times report yesterday shows that four of the top five banks making provisions for bad loans are UK institutions, so we need to be vigilant as the situation unfolds.
My second point has to do with the UK record in terms of deficit and debt criteria. When I took over as the chair of the EU Financial Affairs Sub-Committee, the UK was in excessive deficit procedure, for the perfectly understandable reason that our deficit and debt had rocketed during the financial crash of 2008. Although we were not subject to sanctions, due to Protocol 15, we were nevertheless subject to surveillance and had to demonstrate an endeavour to avoid an excessive government deficit. This was achieved and the UK returned to the preventive arm of the SGP, but the discipline of a deficit and debt target or range is an important one, as long as it is flexible and can adjust to emergencies to take account of automatic stabilisers.
My question to the Minister, in finishing, touches on the Government’s fiscal rules. While these are desirable in normal times, I have always disagreed with the straitjacket of PSNI not exceeding 3% of GDP, so will the Government rethink these rules in light of the current situation?
Tax Avoidance
Baroness Falkner of Margravine Excerpts(6 years, 3 months ago)
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Lord Agnew of Oulton
I assure the noble Lord that all these things are continuously under review. As I mentioned briefly in the previous Question, we have introduced in days things that could often take years, so by definition we are keeping a very careful eye on them. To give the noble Lord some reassurance, with most of these loan schemes, businesses have to show that they are viable, and if they are going to continue to pay dividends the banks will take a view on that and decide whether it is appropriate. These are not automatic entitlements; they have to be justified.
Baroness Falkner of Margravine (Non-Afl)
My Lords, I declare my interest related to the Bank of England, as set out in the register. The Minister referred to the plethora of regulation and law that came in in the period after 2008-09, but he will recall that the bankers who were bailed out paid themselves excessive bonuses and therefore suffered in the court of public opinion. Will the Government go a little further and at least publish the list of companies that are benefiting from all kinds of taxpayer support on offer this time, so that we can see who is benefiting from it in a transparent manner? Where the Government give support to those companies, will they at least require an equity holding as collateral and preferably give only loans, not grants?
Lord Agnew of Oulton
The noble Baroness makes very good points, and I will certainly take her ideas back to the Treasury. We also ought to acknowledge that a number of senior managers have announced pay cuts during this difficult time. Our overall macro concern at the moment is to protect businesses and employment and to make sure that we can bounce back as quickly as possible from this crisis, but I take on board her helpful comments.
Economy: Update
Baroness Falkner of Margravine Excerpts(6 years, 3 months ago)
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Lord Agnew of Oulton
The noble Lord is a little harsh on the banks. I accept that there was some bad practice in the lead-up to the crash 12 years ago, but there have been dramatic changes in governance and lending practices since then. There is also a levy on banking profits, which goes some way to deal with the issue that he just raised. I genuinely believe that any slowness in getting these loans processed at the moment is not through any intent on their part but that they have had to completely overhaul their lending systems to react at the speed at which we expect them to. However, I am always open to hear any examples of bad practice, and if my noble friend would like to write to me, I give my assurance that I will follow it up.
Baroness Falkner of Margravine (Non-Afl)
My question concerns universities and support for the higher education sector, and I refer to my interests as set out in the register. I accept that, as the noble Lord has said, not every business can be saved, but universities are not traditional businesses. However, they are absolutely fundamental to our long-term recovery as we try to climb out of this deep recession. Universities are going through a short-term demand-side shock due to the collapse in international student numbers. We have been hearing in the media that the Treasury is unconvinced about providing support for them, but I would say to the Minister that it needs to hold urgent talks because they are also fundamental to their location—to their places and to their areas. The impact of universities going bankrupt will be profound across the community. Will he undertake to ensure that the Treasury takes a look at the proposal put forward by Universities UK, that conditional though it might be, that support is essential?
Lord Agnew of Oulton
The noble Baroness is right to say that universities play an extremely important part both in our society and in our economy, but it is worth reassuring her that they are eligible in aggregate, as business in their own right, for some £700 million-worth of coronavirus support. That support is available to them now. Very active discussions are going on, particularly about the loss of foreign students, because of course they pay a higher tariff and thus have in the past provided good cash flow for universities. It is worth making the point that universities have always been jealous of their independence, and if they need government support now, I hope that there will be a bit of humility on the part of those vice-chancellors who take very large salaries from their organisations. I would expect there to be some conversation about that if there is to be any support.
Budget Statement
Baroness Falkner of Margravine Excerpts(6 years, 4 months ago)
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Baroness Falkner of Margravine (Non-Afl)
My Lords, it is a real pleasure to follow the noble Lord, Lord Hunt of Wirral, whose long experience and pragmatism is something that we in this House should all take account of.
Like other noble Lords, I want to concentrate on the broad economic outlook in these extraordinary times. It is said that in 1942, in the middle of the Second World War, William Beveridge said on publishing his report on the welfare state:
“A revolutionary moment in the world’s history is a time for revolutions, not for patching.”
I think we are all coming to the realisation that this extraordinary period may end up being revolutionary, not least in its impact on globalisation—or deglobalisation —and on our faith in the capitalist model underpinning these free societies.
Several analogies have been drawn between the financial crash and this coronavirus pandemic, but the profound difference is of time, scale and scope. With the financial crash, it took five months between the run on Northern Rock and its eventual nationalisation. In the case of Covid-19, it has taken 13 days from the first death on 5 March to around 71 now. While the crash was a relatively slow burn with a very long tail, as we know from austerity policies, it is expected that the UK will see 95% of cases over a nine to 10-week period only.
Another difference is scale. Banks and large businesses going under undoubtedly impacted on a significant number of people very directly, but the indirect effect of lower public spending was a slow, long burn over many years, as other noble Lords pointed out. For me, the underlying risks to the economy are more grave this time and the level of uncertainty, as opposed to risk, is rising; hence the slump in global markets. We do not know whether a global recession, or indeed even a depression, caused by the pandemic will go beyond the current stock market slump to a full-blown financial meltdown, which will be of a different order of magnitude from that which we are planning for in loosening the purse strings.
We know that global regulation and financial buffers have made banks much more resilient and that the stress tests to evaluate bank safety have been made much tougher, taking into account multiple scenarios for shocks to the economy. However, the modelling has not anticipated the speed and depth of this pandemic, and its impact on regional and national lockdowns on supply and demand constraints. The equity market falls contemplated in worst-case scenarios of around 25% have already been exceeded, since some markets have fallen south of 30% in the last couple weeks. While central banks have countercyclical capital buffers, the question is whether they are deep enough to increase the capacity to lend to avert a credit crisis.
In this context, I note that calls for helicopter money, which has been mentioned by the noble Lord, Lord Lamont, are being considered in the US, where Steven Mnuchin, the Treasury Secretary, is contemplating a cheque of $1,000 for every American citizen. Here in the UK too, there are increasing calls for universal basic income. I note that the Prime Minister did not rule it out in Prime Minister’s Questions this morning. It is not surprising, since conventional economics holds that when interest rates are low—ultra low—debt can grow exponentially. I think that was the basis of the Labour Party’s spending splurge promised in its manifesto.
The current Government’s borrowing assumptions in the Budget were also predicated on that view, hence the £30 billion stimulus, which would have looked like good economics had normality continued in the market and the wider economy. While some speakers on the Labour Benches have used this crisis to suggest that there should have been no attempt from 2010 onwards to bring down the public debt, I am curious whether they think that the economy would have been able to withstand this particular crisis, or that this level of spending would have been possible, if we were still carrying a level of government debt of around 57% of GDP, as was the case in 2009. Of course, that excessive and extremely high public debt is a burden carried by future generations.
However, it has all changed now, and hard times call for new thinking. As far as helicopter money or universal basic income are concerned, if used to alleviate shocks to earnings and employment they must be for a very time-limited crisis response, since its overall effect on incentives and issues of equity will create free-riding. I think the noble Lord, Lord Skidelsky, said that we will all have to start paying for what we are giving. Some will pay more than others.
The Government should use every lever that they can at the moment, but in doing so they must surely be mindful that things can get worse, even from where we are today. At unpredictable times, we might be mistaken in thinking that we have hit the bottom, only to discover that our sight was blurred and that the bottom is still some way down. Foresight, not panic, should be the order of the day for both the Government and the public. Good judgment should drive the response, not the need to do something, even at this time of national crisis.