Cyclone Idai

Lord Bates Excerpts

Thursday 28th March 2019 Lords Chamber

[Baroness Hayman]

To ask Her Majesty’s Government what assessment they have made of the current humanitarian situation in the countries affected by Cyclone Idai.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, Cyclone Idai is one of the most severe cyclones ever to hit southern Africa. Approximately 129,000 people have been displaced in Mozambique, 87,000 in Malawi and 4,000 in Zimbabwe. Some 2.6 million people have been affected across the three countries.

[Baroness Hayman (CB)]

I am grateful for that response and for all that the department has already done, including UK Aid Match, which has helped the Disasters Emergency Committee appeal reach over £21 million in less than a week. I remind the House of my interest as a trustee, and that the appeal is still very much open for those who have yet to donate. Does the Minister agree that the scale and effect of this disaster is devastating and still unfolding with, as he said, more than 2.5 million people in need of urgent humanitarian assistance and the threat of a secondary emergency from diseases such as cholera and malaria? Could he tell the House of the department’s longer-term plans to help these countries recover and what the Government are doing to encourage other countries to match this country’s generosity, both private and public?

[Lord Bates]

I pay tribute to the noble Baroness’s work with the Disasters Emergency Committee. The amount of money raised—£21 million—is phenomenal, thanks to the generosity of the British people. The UK Government contribution is some £22 million so far. The appeal launched by the UN is for some $289 million. The UK contribution, from overseas development assistance alone, is way ahead of that of any other country. The next nearest is the United States at $10.8 million and then Germany at $3.5 million. Rightly, the Secretary of State for International Development and the Minister for Africa have been putting great emphasis on getting other countries to step up to the mark and realise the severity of the situation faced by these people.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, I was struck even at the time of the last significant flooding that there were no preparations in place to try to avoid a similar catastrophe affecting so many communities in the future. Will the Government, as part of these international discussions and through our own ODA, look to build better disaster resilience facilities and mechanisms for the future in Malawi and Mozambique in particular, including early warning systems and the construction of homes and facilities that can withstand some of these extreme weather events?

[Lord Bates]

Absolutely—I am happy to give that commitment. The UK Met Office has a significant relationship in Mozambique as far as that is concerned. We have commitments already on the ground there from previous instances of providing resilience support. We have a £150 million DfID package of programmes which is supporting building resilience, and we will build that up further as we move to the UN climate summit in September.

[Lord Howell of Guildford (Con)]

As we are chair-in-office of the Commonwealth, will my noble friend the Minister encourage the Government to encourage the richer Commonwealth countries to work closely together now and rally round to help a stricken member of the Commonwealth family?

[Lord Bates]

I am happy to do that in relation to Mozambique and Malawi. Canada has contributed some $2 million, but the scale and response internationally is just not meeting the level of crisis that we are seeing on the ground.

[Lord Alton of Liverpool (CB)]

My Lords, can I return the Minister to the Question that the noble Baroness, Lady Hayman, asked him in connection with the spread of cholera? Did he see that the first reported cases of cholera were confirmed overnight in Mozambique? Did he see the comment of Ussene Isse from the Mozambique Health Ministry, who said:

“When you have one case”,


of cholera,

“you have to expect more cases in the community”—

and that health workers are already battling 2,700 cases of acute diarrhoea, which could be a symptom of cholera? Given that the World Health Organization has said that it will deliver some 900,000 oral cholera vaccines, can the Minister tell us when they are likely to arrive?

[Lord Bates]

Yes, I can give the noble Lord an update from the situation report that I received just an hour before coming to the House today. Five cases were confirmed at a laboratory in Beira. There is a high risk of an outbreak. Vaccinations are already under way but this is a very worrying situation, which is another reason why the scale of the response and facilities from the international community needs to be stepped up.

[Baroness Sheehan (LD)]

My Lords, in response to my Oral Question yesterday, we heard the extent to which the Government in the UK support the export of fossil-fuel infrastructure. Shockingly, 40% of those exports go to developing countries. Does the Minister recognise the policy incoherence between, on the one hand, support for fossil fuels and, on the other, the millions that DfID is deploying to alleviate the awful suffering caused by extreme weather events such as Cyclone Idai?

--- Later in debate ---

[Lord Bates]

On the co-ordination that we are responsible for, we have committed some £5.8 billion to international climate finance. We are taking a leading role in resilience, ensuring that the ambitions set out in Paris are actually met and putting resources behind that. So we are doing all that, but this is a complex situation and international co-operation is needed to address it.

[Baroness Tonge (Non-Afl)]

My Lords, the Minister may recall that some 20 years ago there were images in our newspapers of a woman giving birth to a baby in a tree in Mozambique. The disaster then was made worse by a shortage of helicopters and large Antonov aeroplanes that could get helicopters to the area. Has this been corrected? Are there enough helicopters to help people in south-east Africa at the moment?

[Lord Bates]

We could not say that there were enough, but what the international organisations are doing is quite remarkable. The Office for the Co-ordination of Humanitarian Affairs at the UN, led by Sir Mark Lowcock, formerly of DfID, has been doing an incredible amount of work in this area. The UNFPA is dealing with that particular point but so is the WFP, the IOM and UNICEF. They are all working to ensure that people get the help that they need.

National Insurance Contributions Holiday

Lord Bates Excerpts

Wednesday 27th March 2019 Lords Chamber

[Baroness Burt of Solihull]

To ask Her Majesty’s Government whether they intend to implement their commitment in the 2017 Conservative Manifesto to give a one-year National Insurance contributions holiday to firms that employ those from disadvantaged groups; and if so, when.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, we remain committed to delivering on manifesto commitments.

[Noble Lords]

Oh!

[Lord Bates]

We will set out any changes as part of the annual fiscal event process in the context of broader government work on employment support and the wider public finances.

[Baroness Burt of Solihull (LD)]

I am grateful for that Answer and delighted to hear that the noble Lord is “committed” to this. Small businesses very often bear the brunt of changes in our economy, so they know how to be flexible. The Federation of Small Businesses found that 95% have taken on an individual from a disadvantaged background in the past three years. With this small incentive, which is in the Minister’s own party’s manifesto, they would be encouraged to identify and utilise the talent that is sitting on their doorsteps. It makes good business, financial and moral sense. Will he and his party please consider carrying out that commitment and implementing their own policy?

[Lord Bates]

The noble Baroness has looked at the Conservative Party manifesto, and I encourage her to read it all. On page 54, where this pledge is mentioned, it is under the heading, “More people in work”. Since the general election, 713,000 more people are in work— I call that quite a delivery.

[Lord Davies of Oldham (Lab)]

My Lords, the noble Lord will have appreciated the rather derisive laughter that greeted his first comment that he was out to fulfil manifesto commitments. Since the general election the Chancellor, who the noble Lord speaks for in this House, has discussed two Budgets and two Spring Statements—the last of which was only a couple of weeks ago—with ne’er a mention of this fundamental commitment in the manifesto. The noble Lord is hoping to escape today without making any precise commitment for the future.

[Lord Bates]

I thought I said in my Answer that we are committed to delivering the manifesto commitments. The noble Lord talks about manifestos, but I do not want to remind him of his party’s commitments on student debt, which did not seem to survive the election campaign. The reality is that we are significantly increasing employment: employment is at record levels and unemployment is at a historic low; more young people are in work; and the rate of youth unemployment has been halved. These are all steps in the right direction.

[Lord Cormack (Con)]

Does my noble friend agree that our manifestos—this applies to all parties—are far too long? Would it not be a very good thing if, in future, they were limited to far fewer than 54 pages? Would not four suffice?

[Lord Bates]

I am sorry to disappoint my noble friend, but page 54 was not the end of the manifesto—you had to keep reading for a little longer. However, I totally agree with his sentiments.

[Baroness Kramer (LD)]

My Lords, setting aside the irony that this is a unfulfilled manifesto commitment, does the Minister recognise that small businesses, which are often the best place for someone from a disadvantaged community to start work because of the support available, often find it costly to take on someone who needs that kind of additional support? For those firms, this critical amount of a one-year holiday from national insurance contributions, which might not matter to a big company, is absolutely pivotal in making it possible for them to take on this extra load. Therefore, will he push for this element of the manifesto to be carried through?

[Lord Bates]

The noble Baroness will recall that, when we were in coalition Government, we introduced the employment allowance, which effectively said that the first £3,000 of national insurance contributions for small businesses did not apply. We have also abolished national insurance for those on apprenticeships under the age of 25 and abolished national insurance for those under the age of 21. We are doing a significant amount in this area, but I accept that we need to do more.

[Lord Anderson of Swansea (Lab)]

Americans have a saying that a platform is something to run on and not to stand on. Is that not relevant to this manifesto commitment?

[Lord Bates]

We are running very hard on this agenda. I mentioned the 713,000 more people in work, and I would have thought that that would be welcomed on all sides of this House.

[Lord Bird (CB)]

Is it possible to include people who are banged up at the moment? If we can actually get them into work when they get out of prison, as a disadvantaged group, the knock-on effects are enormous. People who have a job when they leave tend not to reoffend.

[Lord Bates]

That is absolutely right, and the noble Lord has done more than probably anyone else to improve the chances of people in those circumstances. That is one reason why we announced the rough sleepers initiative and why we have this new education network, which is being trialled with governors. But we cannot get away from the stark statistic that although care leavers represent only 1% of 19 to 21 year-olds, they represent 24% of the prison population. That has to be an area that we all focus on, on a cross-party basis.

[Lord Dobbs (Con)]

Does my noble friend accept that there are perils in store for parties that do not honour their manifesto obligations? He himself is probably far too young to remember “solemn and binding”; we all remember the terrible fate that awaited that particular pledge. But would he accept that, if both the Labour and Conservative parties failed to honour their commitments given in the last manifesto to respect and implement the will of the people—noble Lords knew I was going to get around to that—they would then run the severe danger of ending up in total parliamentary irrelevance, just like the Liberal Democrats?

[Lord Bates]

I was going to finish on a harmonious cross-party basis with the noble Lord, Lord Bird. However, manifesto commitments need to be honoured. The Prime Minister has been very clear about our manifesto commitment in relation to leaving the European Union. She was also incredibly clear that she wanted to create a country where everyone had the opportunity of work—that worked for everyone. That is a pledge that we all have to work towards.

Customs Safety and Security Procedures (EU Exit) Regulations 2019

Lord Bates Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 27 February be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, in moving these regulations, I will speak to the three statutory instruments that are part of the Government’s package to prepare for the possibility of the UK leaving the EU without a deal. The instruments are related to safety and security, cash controls and the Economic Operators Registration and Identification scheme—EORI.

EU law provides the legal framework for implementing these policies across the EU. By virtue of the European Union (Withdrawal) Act, this law will form part of our domestic law on exit day and will continue to apply as retained EU law.

The relevant EU legislation was drafted to apply to EU member states. Therefore, it will not work as effective legislation for the UK without amendments. These instruments ensure that the UK has a functioning legislative rulebook by replacing references and terminology that will no longer be valid in the event of no deal. This ensures that the UK will have effective safety and security, cash controls and EORI regimes after the UK leaves the EU.

First, allow me to set out the context of the provision we wish to introduce for managing the safety and security risk of goods entering and leaving the UK. The Union Customs Code sets out that the movement of goods into and out of the EU requires entry and exit summary declarations, also known as safety and security declarations. So, for example, shipments from the US or China require a safety and security declaration before entering the EU. If the UK leaves the EU without a deal, UK importers and exporters will be required to complete safety and security declarations for goods moving to and from the EU, as well as the rest of the world.

As well as making required changes to retained EU law, this instrument introduces a provision to phase-in the legal requirement for entry summary declarations on goods imported from the EU. The legal requirement to submit entry summary declarations for goods imported from the EU will apply from 1 October 2019.

HMRC has listened to industry concerns about ongoing uncertainty and the readiness of businesses to comply with safety and security requirements on UK-EU trade from day one. Therefore, we are taking this approach to give businesses more time to prepare to submit declarations to HMRC. This does not remove the requirement for declarations for goods imported from the rest of the world. Goods entering the UK from the rest of the world will still have to make entry summary declarations as they do now.

When the UK leaves the EU, a separate customs union will be created between the UK and the Crown dependencies—the Channel Islands and the Isle of Man. This instrument includes a provision to support the operation of the UK and the Crown dependencies, namely that the movement of goods between the UK and the Crown dependencies will not require safety and security declarations. This instrument does not apply to the movement of goods between Northern Ireland and Ireland.

The second statutory instrument we are talking about today relates to cash controls. The EU monitors the international movement of cash by requiring individuals who are entering or leaving the EU, and who are carrying €10,000 or more in cash, to make a cash control declaration. This declaration must be made to the customs authority of the member state into which they are arriving or leaving.

The UK is committed to continuing this practice. The declarations provide information about the international movement of cash and are one measure that assists in the fight against money laundering, the proceeds of crime and the funding of terrorism. If the UK leaves the EU without a deal, this instrument will require cash control declarations at the UK border, including the border between the UK and the EU. It does not apply to the border between Northern Ireland and Ireland.

The current practice, which requires these declarations between the UK and non-EU countries, will continue. This instrument extends those requirements to movements between the UK and EU. It makes the small change that we will require declarations on amounts of £10,000 or more, rather than €10,000.

The final change as a result of this instrument that I should draw to your Lordships’ attention relates to information sharing. Currently, details of the movement of cash are automatically shared between member states. This instrument removes the requirement to share information but permits sharing of information where it is in the UK’s interests so to do.

The third and final instrument we are discussing today is for the Economic Operators Registration and Identification scheme, EORI. An EORI is a unique registration number given to businesses that interact with customs authorities so that HMRC can identify them effectively. EORIs are necessary when applying for customs simplifications or facilitations, when making declarations or in other interactions with the customs authority.

All EORIs issued by the UK, known as UK EORIs, will remain valid for use in UK customs processes in the event of a no-deal EU exit. Following the UK’s departure from the EU, UK individuals and businesses that want to trade with the EU or other territories outside the EU and do not already have a UK EORI will need to obtain one. Persons who are not established in the UK but who wish to lodge a UK declaration will also require a UK EORI. This instrument ensures that the UK has a functioning EORI scheme by replacing references and terminology in retained EU law that will no longer be valid in the event of no deal. Traders whose only international trade is between Northern Ireland and Ireland will not be required to register for a UK EORI.

These instruments will ensure that the UK has independent customs processes that work after we have left the EU and will maintain the security of our borders while ensuring that traders are faced with as little change as possible and are given time to prepare for the new customs requirements after EU exit. I commend—

[Lord Purvis of Tweed (LD)]

My Lords, before the Minister sits down, can he tell the House how many businesses currently have an EORI? The last published information from the Government suggested that only one-sixth of businesses which trade exclusively with the EU and would require an EORI have one. What is the current position?

[Lord Bates]

The current position is that the largest number of businesses affected would be UK businesses. There are an estimated 245,000 traders who will need to register for an EORI. That figure comprises 145,000 VAT-registered businesses and 100,000 businesses below the VAT threshold. Overseas businesses will also require a UK EORI to make customs declarations for goods being imported into the UK after we leave the EU.

[Lord Purvis of Tweed]

I am grateful to the Minister for indicating how many businesses would be required to have one. How many businesses are registered for and have secured an EORI?

[Lord Bates]

The answer is 52,000. I beg to move.

[Lord Palmer of Childs Hill (LD)]

I thank the Minister for the explanation of these three statutory instruments and for the detail he provided. I trust that when he winds up he will stress that this is continuity rather than anything new. To the extent that this is continuity, I do not wish to dwell at this hour on things that are replacing what already exists, but I shall deal with some of the things that might be slightly different.

The customs safety and security procedures SI refers to exempting risks during a six-months transition period. Will the Minister tell the House whether this exemption will cause any risk? There must be a risk in giving a six-month exemption. If this were an insurance company, there would be a risk assessment for giving that six-month exemption. I am sure the Minister and his team have worked that out.

This SI also places requirements on small firms in the transitional period. I agree that there have to be requirements for small firms, but I question why businesses are included as small firms if they employ up to the rather arbitrary figure of 50 people and therefore have this exemption. Has the Minister considered how many companies employing 100 people would divide their company in two and thus be exempted? One could use any multiple of 50, but it seems to be an easy way to avoid the requirement and I wonder whether the Minister and his team have thought about that. Should this be done according to the number of people employed or the size of the enterprise? A massive enterprise with millions and millions of pounds does not have to bother because it can be classified as a small company, but if the opposite applies, you are not exempted.

--- Later in debate ---

[Lord Bates]

I am afraid that I will probably disappoint the noble Lord, Lord Tunnicliffe. In this context, I should say that this is certainly not an objective or outcome that we are hoping will occur; we want to leave with a deal, ideally the withdrawal agreement that has been set out. I will deal with the contributions from the noble Lords, Lord Purvis, Lord Palmer and Lord Tunnicliffe, as best I can. There will be some gaps, so I give notice that I will have to write on a couple of points.

The noble Lord, Lord Palmer, began by asking me to stress the continuity element. I am very happy to say that that is what we are seeking to do. We are simply following the same process as with the onshoring exercise to ensure that we replicate what is there at present. Continuity is the objective. I suspect that the answer to the noble Lord’s subset of questions on number, amount or size of firm is that we are providing continuity of the existing arrangements. I will not be able to answer this evening the point about the innovative idea of firms with 100 employees dividing into two to somehow get around the requirements; I will write on that point if I may.

Let me deal with the noble Lord’s other point. If the UK leaves the EU without a deal, this instrument will remove the requirement for safety and security declarations for six months. He rightly questioned what assessment we had made of this. Taking this approach, the risk to safety and security will not increase after EU exit, given that goods from the EU are not currently subject to safety and security declarations. The transitional period does not apply to non-EU traders that already comply with the current safety and security regulations. After the six-month transition, businesses will be obliged to submit safety and security declarations.

The noble Lord, Lord Purvis, asked what information the Government will provide to businesses on EORI and how to register. I take his point about the level of registrations; of course, we wish it were higher. We have tried to make it as easy as possible to register. He has had the experience of doing it. Our belief is that doing it online takes five to 10 minutes. I do not know whether that corresponds with the noble Lord’s practical experience. I have not done it, but our feeling is that it can be done relatively easily. Businesses need to be aware that it will be important for them to do that in the event of a no-deal Brexit.

[Lord Tunnicliffe]

Will the Minister flesh out the word “important”? Can businesses trade if they do not have—I cannot pronounce the damn thing—this unique identification number?

[Lord Bates]

That is the whole point. We are saying that, in the event of no deal, they would require that to trade. It is a very serious commitment. If they are above the relevant threshold, that will be a requirement.

[Lord Palmer of Childs Hill]

If there are a lot of businesses which have not registered, through negligence or misinformation, how much of a risk is that?

[Lord Bates]

Clearly, that is a risk. We have put out technical notices and engaged quite significantly with industry bodies on this. We have listened to the industry, which is one of the reasons why we have taken this approach on safety and security, with the six-month transitional period. We have tried to get the information out there as much as possible. However, we are concerned about that as an eventuality and encourage businesses to register, even at this late hour.

[Lord Tunnicliffe]

I hope the Minister will forgive me for pressing this point, but there is a world of difference between being concerned, with perhaps some irritation, minor penalty or whatever, and whatever proportion you want to take—say four-fifths—of the firms that would want to trade across this border not being able to in a fortnight’s time.

[Lord Bates]

Once they became aware of that situation, if that eventuality occurred, the remedy—to get the registration—is a fairly simple and straightforward process. We would like them to do it before then. That is why we have been encouraging them to do that—but we cannot force them to at this stage.

[Lord Purvis of Tweed]

Businesses cannot do it afterwards if they want to trade on day one of exit if there is no deal. A post-fact situation is irrelevant if they wish to trade without any obstruction on day one of a no-deal exit. Will the Minister confirm this or get information from the Box before he sits down? The information I have received is that HMRC can only process a maximum of 11,000 a day. I hear what the Minister is saying about the Government encouraging businesses to register and that it may take only a short period of time, but that depends on the complexity of the business they do. That is for them to have an EORI. Even if all the businesses wish to register, there is only a certain capacity at HMRC, as I understand. I would be delighted if the Minister can say that that is incorrect and that before exit day—on 12 April if there is no deal—all the businesses that can trade can conceivably be in a position where they can trade. If he is not able to give that reassurance, we are in a very difficult position.

[Lord Bates]

Let me clarify that, because I think we can be more helpful on that point. There is a lighter-touch element to this: businesses can trade but they need to give a name and address. That is the requirement. They need an EORI number when interacting with customers and HMRC. So when they are doing that part of the exercise, rather than the trading element—completing their VAT return et cetera—they will need that number when they interact, but to trade they would need simply to give their name and address. I hope that offers some reassurance.

[Lord Purvis of Tweed]

I am not sure that it offered the clarity we need. Is it the Government’s position that, in the absence of having an economic operator number to trade with others in the EU 27, businesses have only to state that they have a British-registered trading address? That is absolutely not the advice that HMRC has been providing British businesses that trade with those in the European Union.

[Lord Bates]

The reality is that we would prefer them to have an EORI registration number. It is a fairly straightforward process that takes five to 10 minutes. But we are talking about extraordinary circumstances. The advice I am given and that I am presenting is that they need to give just their name and address to be able to continue to do that.

The noble Lord asked about the limit on processing of 11,000 per day and whether HMRC had the capacity. The customs declaration service has the capacity to process significantly higher numbers than that.

The noble Lord, Lord Tunnicliffe, asked whether we would end up with a border down the Irish Sea. These non-fiscal statutory instruments will not create an east-west border between Northern Ireland and Great Britain. This will be a temporary measure until a permanent solution is in place. We will seek to discuss this at the first opportunity with the Irish Government and the European Union. However, until this point, this policy is necessary to avoid a hard border on the island of Ireland and to uphold the Belfast Good Friday agreement.

[Lord Purvis of Tweed]

I am grateful for the Minister’s patience on this. It is important. He said at the Dispatch Box that HMRC has a capacity much greater than for providing 11,000 registrations a day. On GOV.UK on 28 February 2019, HMRC announced:

“HMRC has the capacity to sign up 11,000 businesses per day for EORI numbers”.


What have the Government done since then to provide that extra capacity? Am I wrong in believing the Government on 28 February? What extra capacity is provided to offer this, other than what the Government themselves have said in their own statement?

[Lord Bates]

I am advised that the customs declarations service does have the capacity to process significantly more. I do not have a number. When I write on the other issues, I will include an update.

[Lord Palmer of Childs Hill]

Just to clarify once more, there has been legal advice over the years that, when something is in Hansard, it proves to be something people can rely upon. The Minister is saying that a name and address being given will suffice. As that has, presumably, now been recorded in Hansard, has the law now been clarified?

[Lord Bates]

The noble Lord may not have been present for a rather fascinating debate on Pepper v Hart, which took place on another Bill recently—the Trade Bill, I think—and my noble friend Lady Fairhead is here. I and the noble Lord, Lord Stevenson of Balmacara, are not going to rehearse that argument again, but a degree of clarity came through that. I do not wish to make light of a very serious point which the noble Lord is raising, that this is impacting on real businesses, real lives and real trading opportunities. What I am trying to do is give as much information as I can from the Dispatch Box in a fast-moving situation, and provide more information in writing. I hope that the noble Lord will accept that in good spirit.

The noble Lord raised the point about £10,000. I share his surprise. Like him, I am not used to carrying anywhere near that sum across borders. The Financial Action Task Force, an international government body, has identified this as a key risk. This requirement of declaration is set by each of the members; the EU sets the limit at €10,000; the USA sets it at $10,000. The Government chose their own limit, using a memorable round number. They did not want to use another state’s currency or alter the figure to reflect changes in the exchange rate.

The noble Lord also asked about existing risk profiles. In a no-deal scenario, we will continue to use the current risk profiles, updating them as needed.

The noble Lord, Lord Tunnicliffe, asked if we had asked the EU for a transitional period. After the UK’s exit from the UK, we will seek to negotiate a safety and security agreement with the EU, so that safety and security declarations are not required on imports between EU countries and the UK.

The noble Lord, Lord Purvis, asked for the Government’s estimate of when all businesses would have an EORI number. We are committed to making it easier for businesses to be ready. Information is clearly laid out on GOV.UK. I have said all that.

[Lord Purvis of Tweed]

I am grateful again to the Minister because this is a very important point. My question is a simple one. On 28 February, the Government released the information that 40,973 businesses have registered. On the same day, they said that up to 11,000 businesses a day could be registered because of the capacity. The Minister has said at the Dispatch Box that that capacity is now considerably higher, without explaining what has been done in the meantime to provide that extra capacity. Can he provide something simple? Is there sufficient capacity for all British businesses which trade with the European Union to be in a position, if they so choose, to be registered before 12 April?

[Lord Bates]

I am afraid that I cannot go further than what I have in front of me, but I will happily put an assessment of that question in writing. Of course the situation as it stands today is that, without the statutory instrument which may receive the agreement of your Lordships’ House tomorrow, we would leave on 29 March. This is one element where there is a real sense of urgency and a need for businesses to prepare for that.

I can save writing a bit of a letter here. The answer is yes; we can do that. Let me take the time over the next few days, before April 12, to go into a little more detail and set that out. I will write to all noble Lords who have participated in the debate and, as usual, place a copy in the Library. I hope that will be helpful to noble Lords.

I again thank your Lordships for their contributions and scrutiny. I think we have benefited from that process.

Motion agreed.

Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019

Lord Bates Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 27 February be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

Motion agreed.

Cash Controls (Amendment) (EU Exit) Regulations 2019

Lord Bates Excerpts

Tuesday 26th March 2019 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 27 February be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

Motion agreed.

Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019

Lord Bates Excerpts

Thursday 21st March 2019 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 25 February be approved.

Relevant document: 19th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A).

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, as this instrument is grouped, with the leave of the House, I shall speak also to the draft Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019.

These two instruments are part of the same legislative programme that we have discussed previously in the House to ensure that, if the UK were to leave the EU without a deal or an implementation period, there continued to be a functioning legislative and regulatory regime for financial services in the UK. Both SIs have already been debated in the House of Commons.

The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 revoke a number of pieces of UK domestic law and retained EU law which it would not be appropriate to keep on the statute book after exit. The instrument also makes amendments to a number of financial services EU exit SIs to reflect other instruments that have been laid as part of the wider legislative programme, corrects minor errors identified in legislation, and makes amendments to ensure consistency between EU exit instruments.

The SI has five main components. First, it amends UK domestic law to ensure continuity with other legislation amended under the European Union (Withdrawal) Act. Specifically, it makes amendments to primary and secondary legislation that do not fall within the remit of changes made by other instruments. Specifically, the SI will remove references to EU institutions and regimes in four Acts of Parliament; namely, the Insolvency Act 1986, the Financial Services and Markets Act 2000, the Income Tax Act 2007 and the Corporation Tax Act 2009. These amendments will ensure that provisions that are irrelevant in a UK-only context are not retained on the UK statute book.

Secondly, the SI makes minor technical amendments to 19 statutory instruments, including 12 other financial services EU exit instruments that have previously been debated in this House. A number of those amendments are made in this instrument because they are consequential on other instruments that have been made only recently, such as the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019. A minority of the amendments correct drafting errors and improve the clarity of drafting. For example, a duplicate provision is omitted from the Bank of England (Amendment) (EU Exit) Regulations 2018, as the same amendment is made by the Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018.

Thirdly, this SI revokes three UK statutory instruments that relate to EU regimes that will not be applicable to the UK in the event of a no-deal exit given that they implement EU law being revoked at exit day under separate instruments. Fourthly, the SI makes amendments to, or revokes, retained EU law to ensure consistency with other EU exit instruments that have been made and to remove references to EU institutions that will no longer be relevant post-exit. Fifthly, the SI makes transitional and saving provisions to address deficiencies that arise from the UK’s withdrawal from the EU and to limit disruption to the financial services industry if the UK leaves the EU without a deal.

On the substance of the second instrument, at present there exists a regime within the EEA to facilitate greater cross-border e-commerce activity, implemented by the e-commerce directive 2000—or ECD for short. E-commerce refers to commercial activity that takes place online only. This regime allows an EEA firm to undertake online-only activity in an EEA state other than its home state without being subject to regulation in that EEA country. This is on the basis that such firms will be subject to relevant regulation in their home state. In the field of financial services, this means that an EEA firm, excluding Solvency 2 insurers, can undertake online-only activity in the UK without needing authorisation from the Financial Conduct Authority.

In a no-deal scenario, the UK would be outside the EEA and not subject to the e-commerce directive. As a result, the reciprocal arrangement that permitted EEA e-commerce financial services providers to operate in the UK without being regulated in the UK will no longer be valid. The exclusion in the regulated activities order will therefore be revoked to prevent EEA e-commerce financial services providers being able to undertake online-only financial services activity in the UK without the appropriate authorisation from the FCA. With regard to the e-commerce directive, these draft regulations therefore revoke Article 72A of the regulated activities order, where the exclusion from UK regulation for EEA e-commerce financial services providers currently lies.

In addition, this SI revokes the bulk of the regulations in the Electronic Commerce Directive (Financial Services and Markets) Regulations 2002, which gave the FCA rule-making powers pertaining to incoming EEA e-commerce financial services providers. These will no longer be relevant post exit. To help protect the interests of UK customers of EEA financial services firms, and those firms themselves, it is necessary to implement a regime that allows contracts taken out under the current exclusion to continue to be legally serviceable. This instrument will therefore implement a run-off regime to allow EEA e-commerce firms to legally service financial services contracts that were taken out before commencement of the instrument, and which utilised the exclusion in the regulated activities order, for a limited time. Pre-existing financial services contracts taken out under the e-commerce exclusion will continue to be excluded from the scope of regulated financial services activities under the Financial Services and Markets Act 2000. This will enable EEA providers of e-commerce activity of a financial services nature to wind down their UK operations in an orderly manner. This will provide certainty and fairness to both providers and users of financial services, and demonstrate that the UK remains open for business and takes seriously legal certainty and business continuity.

These draft regulations also make minor changes to a Commission delegated regulation related to the EU Solvency 2 directive and EU securitisation regulation. This delegated regulation sets out the requirements for investments in securitisations that no longer comply with the risk-retention and qualitative requirements. Specifically, these regulations amend the delegated regulation to correct a cross-reference and add references to the UK regulators. These changes are necessary to reflect the UK’s position outside the EU.

In summary, the Government believe that these instruments are necessary to ensure that the UK has a coherent and functioning financial services regulatory regime once the UK leaves the EU, and that the legislation will continue to function appropriately if the UK leaves the EU without a deal or an implementation period. I hope noble Lords will join me in supporting these regulations. I beg to move.

--- Later in debate ---

[Lord Tunnicliffe (Lab)]

My Lords, I will speak mostly about the first SI, if only to moan a bit. Paragraph 3.6 of the Explanatory Memorandum says that the Secondary Legislation Scrutiny Committee,

“noted that the legislation proposed to be amended by the instrument includes: four Acts of Parliament; seven ‘pre-EU Exit’ statutory instruments; 12 ‘EU Exit’ statutory instruments that have been considered by the House during the last six months; and several items of retained EU legislation”.

As far as I can tell, there are 36 amendments in this SI which have no themes or interrelationship. To get a feel for how difficult it is to work on the SI, paragraph 2.6 of the Explanatory Memorandum gives up almost altogether and says:

“Part 3 also makes minor technical amendments to correct the following financial services EU exit instruments. Further information on these instruments can be found in the EMs accompanying the instruments on legislation.gov.uk”.


If I threw all that in, it would take hours. Indeed, if one devoted just 10 minutes’ attention to each amendment, it would take six hours to read the thing.

The Minister said, rather grandly, that this had been considered by the House of Commons. I too noted that fact and leapt at the Official Report to give me some help. It told me that the Commons committee sat at 6 pm —that is quite keen—but adjourned at 6.11 pm, having completed its work. Members devoted 11 minutes to this SI. I am sure that, due to their natural brilliance, they scrutinised it fully, but I am rather slower than that.

There is a real problem of how we get proper scrutiny. I sought help from the Civil Service, as one is invited to by the Explanatory Memorandum. As I understand it, the amendments fall into three groups. One group corrects errors; I would value knowing how many of the 36 are error corrections. Another group makes previous SIs compatible with those created subsequently by other departments. So we have one bit of government making SIs that create complications in another; it is a bit brave to consider creating complications in Treasury SIs.

The third group comes from a review of the previous legislation. One worries about that until turning again to the Explanatory Memorandum. The Treasury has been consistent and kept paragraphs 7.1 to 7.8 identical in all its 50 SIs. Paragraph 7.4 says that these SIs,

“are not intended to make policy changes, other than to reflect the UK’s new position outside the EU, and to smooth the transition to the situation”.

Therefore, I want a categorical assurance that in these 36 amendments there is no new policy. If there is new policy hidden among them, will the Minister tell me what that new policy is?

Turning to the second instrument, I found almost the opposite to the noble Baroness, Lady Kramer. Not that I am suggesting that what she said was not valid, but I thought this was a commendable Explanatory Memorandum. It is a stand-alone document that one could understand and it seemed that it was doing what the SI should do. In other words, it was dealing with inevitable consequences, so I am content with it. I think the essence of what the noble Baroness was saying is that here is yet another bad consequence of leaving the European Union, and to that extent I totally agree with her.

[Lord Bates]

I thank the noble Baroness and the noble Lord for their scrutiny and questions on these points. I shall do this in reverse order because I am waiting for a little further inspiration about fintech—it is arriving. The noble Lord, Lord Tunnicliffe, is always assiduous in these matters and drifts easily between bus operations in Northern Ireland and financial services across the European Union in his scrutiny of SIs. He raises a very serious point: the first of these documents runs to some 26 pages, and 26 pages of Explanatory Memorandum, while the second has 11 pages and 14 pages of Explanatory Memorandum, so there is an awful lot of detail.

During this process—we are now nearing the end of it—we have worked on some 52 statutory instruments and have been grateful for the way the noble Baroness and the noble Lord have engaged with us very constructively over the past four to five months. During that process, of course, there will be consequential amendments that were not foreseen, because some of the 48 affirmative statutory instruments that have gone through this House were laid after the previous ones were made, and therefore changes need to be made. We envisaged, when we began this, what we call an onshoring process to ensure seamless activity, so that there is no disruption for UK financial services. We always envisaged the need for some instrument such as this at the end that corrected any errors and dealt with consequential changes. All the amendments are being made to ensure a functioning financial services regulatory regime in the UK, in any scenario, when the UK leaves. These amendments ensure continuity and clarity.

The noble Lord asked me to make the very specific commitment that no policy changes are involved in these: that is certainly the case. To make policy changes would be in contravention of the letter and spirit of the withdrawal Act and we certainly would not do it. The approach has been consistent. He asked about the number of errors. Around eight drafting errors in previous EU exit financial services SIs are being corrected in this measure.

The noble Baroness raised some issues around fintech and I appreciate her expertise in this area. Fintech is very much a jewel in the crown of the UK. We have some of the most amazing financial services firms in fintech, including start-ups in places, such as Shoreditch, around the City of London: it is a quite incredible and burgeoning industry and certainly one that we want to see continuing to expand. UK providers of online services to the EEA countries will need to continue to comply with a range of EEA countries’ individual legal requirements relating to online activities. The exclusion we are referring to here is limited to online-only activities. We expect that firms will use passporting rights rather than this exclusion; therefore, we estimate the number of fintech firms will be very small.

[Baroness Kramer]

Will the Minister, if he has the opportunity, look into this? I know that crowdfunders and many others—I have tried to tell the Treasury a million times—use the e-commerce directive, not passporting rights. It has played a key role. Whether they can transfer from using the e-commerce directive to passporting rights, I am not clear, but it seems at least an issue somebody should look at.

[Lord Bates]

I was just coming to that precise point, because the noble Baroness raises a serious point which is worthy and very important for us to look into further. I undertake to do that and to write to her, to copy in the noble Lord, Lord Tunnicliffe, and to place a copy in the Library. It is very important that we ensure that there is no unintended, deleterious impact on such an important sector of the UK financial services industry. With that, I commend the regulations to the House.

Motion agreed.

Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019

Lord Bates Excerpts

Thursday 21st March 2019 Lords Chamber

Moved by

[Lord Bates]

That the draft Regulations laid before the House on 25 February be approved.

Motion agreed.

Sibling Couples

Lord Bates Excerpts

Thursday 21st March 2019 Lords Chamber

[Lord Lexden]

To ask Her Majesty’s Government what plans they have to extend fiscal and legal protection to close family members, particularly siblings, who live together long-term in jointly owned property.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, as the nature of relationships between married couples and those in civil partnerships is different from that of cohabiting siblings, the same legal and fiscal protections do not extend to the latter. The Government do not therefore intend to make changes at this time.

[Lord Lexden (Con)]

Why do the Government refuse to accept that those who live together permanently in platonic relationships, such as sibling couples, are no less deserving and in need of fiscal and legal safeguards than those who marry or become civil partners? Is it just or right that, among other hardships, many platonic family couples should have to endure the terrible anxiety created by the potential loss of the much loved and jointly owned family home because inheritance tax has to be paid when the first member of the couple dies and cannot be deferred until the death of the second? Did the Conservative manifesto not promise to take the family home out of tax?

[Lord Bates]

My noble friend makes a persuasive case. I appreciate the meeting we had in December, to which he also brought Catherine Utley. It persuaded me that this needed to be looked at again, and I therefore went to the Financial Secretary to the Treasury and asked him to do so. He looked at it again, and pointed out in his letter to my noble friend on 6 February, along with the Answer I gave to my noble friend’s Question, that if siblings order their affairs such that they jointly hold the asset, the charge would effectively become liable only on properties exceeding £650,000 in value. If they had difficulty in making that payment, inheritance tax could be made payable over 10 years. That was set against the fact that the average property price in the UK is £225,000. Those were the arguments put forward for retaining the position.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, the noble Lord, Lord Lexden, has a strong point and he has long campaigned on it with great energy and skill. He highlights much unfairness to siblings and other blood relatives who share households. It is not only inheritance tax; there are fiscal disadvantages in a number of areas, and disadvantages in landlord and tenant intestacy. Do the Government agree that while there is not a case—and we agree with this—for equating siblings and other blood relatives with civil partners, there is nevertheless a strong case for a number of reforms? Will the Government agree to establish a cross-departmental working party to look at these issues and consider what specific measures are necessary to address these disadvantages?

[Lord Bates]

I am happy to do that. The standard response of all Treasury Ministers is to say that government policy in this area of tax is constantly under review. That has a particular meaning at the moment, because the Office of Tax Simplification is undertaking a review of inheritance tax. The issue of siblings will be within the scope of that. It is due to report in the spring, and we will take its findings seriously, but our position is clear—that this reflects an impact on a very small number of estates for which, with careful tax planning, much of the liability can be mitigated.

[Baroness Deech (CB)]

Does the Minister accept that there would be no loss to the Treasury because it would be only a question of rolling over the inheritance tax? Can he also explain exactly what it is about a short marriage or partnership of two years that would give its participants tax advantages not given to siblings living together for 50 or 60 years?

--- Later in debate ---

[Lord Bates]

There would be a tax consequence, because the spousal transfer in inheritance tax costs the Treasury some £2.5 billion per year. To extend the scope of that would involve a charge, and our judgment is that this case does not merit that.

[Lord Forsyth of Drumlean (Con)]

My Lords, given that the Financial Secretary to the Treasury has refused on four occasions to come to the Economic Affairs Committee and its sub-committee on the loan charge and shown himself unwilling to look at the evidence of hardship being caused, might my noble friend try lobbying the Chancellor on this matter instead? Could my noble friend acknowledge that this is not about avoiding inheritance tax? This is about people being able to continue to live in the family home. It is unjust. Is the Liberal Democrat policy not absurd—that the ability to live in the family home should depend on having a sexual relationship rather than a caring one?

[Lord Bates]

My noble friend makes his point. His point on the loan charge was debated here last night, when he and his representations were mentioned in dispatches by my noble friend Lord Wakeham. However, the point remains that we feel that there is a small number of cases. If a property is worth £1 million, and you divide it and take into account the personal thresholds of £325,000 times two, the liability on the death of one sibling will amount to some £70,000 in tax, which can be spread over 10 years.

[Lord Davies of Oldham (Lab)]

My Lords, I agree with a great deal of what the Minister has said. It is right that the Treasury should be concerned about the protection of inheritance tax. After all, avoidance of inheritance tax is basically a middle-class pastime in this country; any lawyer is likely to recommend that people should think about setting up a trust fund to avoid the consequences of certain aspects of the tax. We all have sympathy for the original Question and problem, but it is now, properly, with the Treasury, and I am glad that the Minister is taking the position that he is.

[Lord Bates]

I am grateful for the noble Lord’s support on this.

[The Lord Bishop of Chester]

My Lords, over the years, speakers from these Benches have completely supported the thrust behind the Question from the noble Lord, Lord Lexden. It is not only a matter for the Treasury and tax, but a matter of justice. If another party gets into power, perhaps the inheritance tax thresholds might even come down in due course—who knows? This does not seem a strong argument for denying an obvious need for justice in these cases.

[Lord Bates]

On the point of justice, that was tested, rightly, in the courts. The Burden sisters took their case to the European Court of Human Rights in 2008, and it did not find that there was discrimination against them in contrast to married couples when it came to inheritance tax. That was a clear decision. It is open to anybody else to challenge it through the courts, but our position is clear.

Spring Statement

Lord Bates Excerpts

Wednesday 20th March 2019 Lords Chamber

Moved by

[Lord Bates]

That this House takes note of the economy in the light of the Spring Statement.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Chancellor gave his Spring Statement last week which showed that the economy remains robust, despite lingering uncertainty around Brexit. It has grown for nine consecutive years, creating 3.5 million new jobs since 2010, and is now delivering the fastest wage growth in over a decade.

The Office for Budget Responsibility expects growth to continue at a rate of 1.2% this year, 1.4% in 2020 and 1.6% for each of the following three years. It also expects to see 600,000 more new jobs and wage growth of 3% or higher—that is, above inflation—in every year of the forecast.

There was positive news on public finances as well. Borrowing this year will be just 1.1% of GDP, £3 billion lower than forecast at the Autumn Budget. This fall will continue, from £29.3 billion in 2019-20 to £13.5 billion in 2023-24, the lowest level in 22 years.

This means that we remain on track to meet our fiscal targets early, with the cyclically adjusted deficit at 1.3% next year, falling to just 0.5% by 2023-24, and with debt lower in every year than forecast at the Budget, falling to 82.2% of GDP next year, then 79%, 74.9%, 74% and, finally, 73% in 2023-24.

It increases headroom against our fiscal mandate in 2020-21 from £15.4 billion at the Autumn Budget to £26.6 billion today.

We have rebuilt the public finances since the shock of the financial crash and are now in a strong enough position to bring austerity to an end. Last year, the Prime Minister announced an additional £34 billion of funding per year for the NHS—the single largest cash commitment ever made by a peacetime British Government. In the most recent Budget, the Chancellor set out an indicative five-year path of 1.2% per annum real terms increases in day-to-day spending on our public services.

Later this year, the Chancellor will launch a three-year spending review before the Summer Recess to be concluded alongside the autumn Budget. It will set departmental budgets to reflect the public’s biggest priorities, such as schools, police and the environment, while maximising value for taxpayers’ money with discipline and a focus on high-quality outcomes. If we leave the EU with a deal, and secure an orderly transition to a future economic partnership, the Government will be able to reduce the level of fiscal headroom needed for no-deal planning, giving us real choices in the spending review.

Before then, however, some pressing challenges needed addressing. First, in response to head teachers’ rising concern that some girls are missing school due to an inability to afford sanitary products, the Chancellor announced the provision of free sanitary products in secondary schools and colleges in England to be rolled out during the next school year. Secondly, he announced a £100 million fund to tackle the recent surge in knife crime. It is a tragedy that, for too many, this money will arrive too late, but it will go some way towards meeting the challenges ahead.

Ahead of the spending review, the Home Secretary will work with the police to consider how best to prioritise resources, including newly funded manpower to ensure a lasting solution. Alongside support for public services, the Government have made sure to invest in infrastructure, skills and technology—the fundamentals that boost productivity and living standards. To supplement the largest ever investment in England’s strategic roads, the biggest rail investment programme since Victorian times, and a strategy for delivering a nationwide full-fibre network by 2023, the Chancellor made a series of further pledges. These included an announcement of up to £260 million for the borderlands growth deal.

But raising our productivity is not just about investing in physical capital; it is about investing in people too. To help small businesses take on more apprentices, the Government are accelerating the reforms announced in the Budget of 2018, bringing forward a £700 million package this April. We want to drive productivity across the income distribution, with the ultimate objective of ending low pay in the UK. So we have asked Professor Arin Dube, a world-leading expert in the field, to undertake a review of the latest international evidence on minimum wages to inform future national living wage policy after 2020. This study will support our extensive discussions with employer organisations and trade unions over the coming months.

As we move forward, we are keeping the interests of businesses as a high priority, and that means giving them access to the best talent, including from overseas. From June, we will begin to abolish the need for paper landing cards at UK points of entry for citizens from the United States, Australia, New Zealand, Canada, Japan, Singapore and South Korea. They will be able to use e-gates at our airports and Eurostar terminals, alongside the EEA nationals who can already do so. From this autumn, we will completely exempt PhD-level roles from visa caps—a signal to the best and brightest across the world that we want them and welcome their expertise in the United Kingdom. Having the best people in Britain will help us remain at the forefront of the technology revolution that is transforming the global economy. To maintain our edge, the Chancellor announced a £79 million investment in a new super-computer to be hosted at Edinburgh University. We are also allocating £45 million of NPIF funding to the European Bioinformatics Institute and investing £81 million in a new extreme photonics centre in Oxfordshire.

Innovation requires careful handling by Governments, and a fair and forgiving regulatory environment. Nowhere is this more important than in the digital world, where we need to ensure a level playing field that fosters innovation, and where the giants pay their fair share. To this end, the Chancellor asked Professor Jason Furman, Barack Obama’s former chief economist, to review competition in the digital market. His report was published last week, and the Chancellor has already taken the first step in response, asking the Competition and Markets Authority to undertake a market study of the digital advertising market as soon as possible.

We must adapt to the challenges of a changing world, and that extends to the environment as much as the economy. Despite what some say, it is not the case that these are competing concerns. The UK’s 1,500 pollinator species, for example, deliver an estimated £680 million of annual value to the economy, making an obvious case for protecting the diversity of the natural world. Therefore, following consultation, the Government will use the forthcoming environment Bill to mandate biodiversity net gain for development in England, ensuring that the delivery of much-needed infrastructure is not at the expense of the birds and the bees, which help fill the air with song, and our plates with food.

Of course, climate change is our biggest environmental concern. The UK is already leading the world in this regard, reducing the carbon intensity of our economy faster than any other G20 country. Last week, the Chancellor set out plans that demonstrate a commitment to maintain this progress. First, we will publish a call for evidence on whether all passenger carriers should be required to offer genuinely additional carbon offsets, so that customers who want zero-carbon travel have that option. Secondly, we will help small businesses cut their carbon emissions and their energy bills, with a call for evidence on the business energy efficiency scheme. Thirdly, we will publish proposals to require an increased proportion of green gas in the grid, to advance decarbonisation of our mains gas supply. Finally, we will introduce a future homes standard, mandating the end of fossil-fuel heating systems in all new houses from 2025.

There will be many new houses. One of the Chancellor’s biggest motivations is to restore the dream of home ownership to millions of younger people. He has set out a five-year, £44 billion housing programme to raise annual housing supply to 300,000 by the mid-2020s. This Government have also abolished stamp duty for thousands of first-time buyers and introduced planning reform to release land in areas where the pressure is greatest. The Chancellor built on this further last week, announcing a new £3 billion affordable homes guarantee scheme to support delivery of around 30,000 affordable homes. In addition, he announced £717 million from the Housing Infrastructure Fund to unlock up to 37,000 new homes on sites in west London, Cheshire, Didcot and Cambridge, near some of the best jobs in the country.

It all means that we are stiffening the sinews of this economy. We are transforming our infrastructure, investing in innovation, and sharpening our skills. These are fundamentals of economic and personal growth, and it means that our grasp of the opportunities that lie ahead of us can be better met and reached. I commend this Statement to the House.

--- Later in debate ---

[Lord Bates]

My Lords, I thank all noble Lords who have participated in this debate, which will probably go down in history. The purpose of the Spring Statement was to focus attention on the autumn as the single fiscal event and to be a light-touch, mid-year Statement simply to update the OBR forecast. This Spring Statement might go down in history for the reason alluded to by the noble Lord, Lord Bilimoria: there was some other business on the day of the Spring Statement. I think we have now spent twice as long scrutinising the Spring Statement as the other place managed. It all heads down to that.

I want to be associated with some of the thanks expressed by noble Lords. The noble Lord, Lord Shipley, thanked the business managers who intervened and drew us out of the Moses Room into what I refer to as “Centre Court” to debate in the main Chamber. That has added to the number of contributions.

[Lord Hain]

We should thank my noble friend Lord Foulkes.

[Lord Bates]

Yes, we should thank the noble Lord, Lord Foulkes, in his absence, for making that plea, which the business managers were able to accommodate. I also wish to associate myself with my noble friend Lord Wakeham’s generous tribute to my good friend, colleague and mentor on the Front Bench, my noble friend Lord Young. I had not realised they were celebrating 45 years. I associate myself with my noble friend Lord Wakeham’s generous remarks to my noble friend about his service in both Houses.

I shall try to provide some taxonomy of the contributions, which ranged very widely but more or less settled down in the following areas. The first was, unsurprisingly, Brexit. I began repeating the Spring Statement by referring to what the Chancellor said about Brexit: it is dominating thinking not only in this place but in business. The noble Lords, Lord Tunnicliffe, Lord Davies of Stamford, Lord Davies of Oldham and Lord Bilimoria, the noble Viscount, Lord Chandos, my noble friends Lord Gadhia and Lord Northbrook, and the noble Baroness, Lady Kramer, made points about that headwind. The only area of difference between us is that we say that the opposition parties hold it within their gift to dispel that cloud of uncertainty by backing the deal before us, but matters are unfolding. If there is any news to report I hope that a Box note will make its way along to me.

There was—I shall not overegg it—support for and recognition of the progress which has been made, notwithstanding the uncertainty. We enjoyed the noble Lord, Lord Macpherson, describing Treasury civil servants having to deal with disappointment, and I am sure that was enjoyed within my earshot. The reality is that this Statement was able to unfold some positive news about levels of debt, employment and the general fiscal situation. The noble Lords, Lord Macpherson, Lord Wakeham and Lord Northbrook, referred to the positivity. Even the right reverend Prelate the Bishop of Chester—

[The Lord Bishop of Chester]

Even?

[Lord Bates]

I am sorry—delete “even” from the record. The right reverend Prelate the Bishop of Chester, whose point about housing I will come back to in a minute, referred to it. The noble Lords, Lord Leigh, Lord Gadhia, Lord Bilimoria and Lord Suri, recognised that progress had been made despite the headwinds. It is absolutely right that we recognise that that progress has been made because British business and enterprise up and down the country—and around the world—is making a Herculean effort, creating jobs, wealth and buoyant tax revenues. These revenues are coming into the Exchequer, giving us the opportunity to look at them.

Across most of the contributions, there was a focus on public services and public spending. As I mentioned, the spending review will be in the summer and conclude in time for the Budget for the autumn, which will rely on it. Contributions effectively broke down into four areas. The noble Lords, Lord Macpherson and Lord Hain, and the noble Earl, Lord Listowel, referred to social care. The noble Lords, Lord Tunnicliffe and Lord Bilimoria, referred to policing, and the noble Lord, Lord Scriven, alluded to the tragic knife crime situation in Sheffield. The right reverend Prelate the Bishop of Chester, the noble Lord, Lord Wakeham, and the noble Baroness, Lady Thornhill, referred to housing. The noble Lord, Lord Shipley, and the noble Earl, Lord Lytton, addressed local government finance.

Two other areas, which were grouped together, were the challenges of the changing nature of tax revenue and collection. The attraction of statutory land tax, which the noble Lord, Lord Wakeham, referred to, is that it is very easy to collect. The changing nature of tax is making collecting tax more challenging. The noble Lord, Lord Wakeham, the noble Earl, Lord Lytton, my noble friend Lord Leigh and the noble Viscount, Lord Chandos, referred to that challenge and ways to address it. Coupled with that is business confidence, which the noble Lords, Lord Gadhia, Lord Suri, Lord Northbrook and Lord Davies, referred to.

I will use the bulk of my time to address the questions raised as a result of those contributions. Several noble Lords asked how the Brexit dividend might be funded. The OBR’s Spring Statement forecast that business investment is weak. The noble Baroness, Lady Kramer, referred to that, and we acknowledge that in the near term. However, as uncertainty wanes, it picks up to 2.3% in 2020 and grows stronger at this pace from 2021 onwards. GDP growth is forecast to be 1.2% in 2019 before picking up to 1.4% in 2020 and 1.6% from 2021 onwards.

The noble Lords, Lord Tunnicliffe and Lord Hain, as well as several others, referred to infrastructure. We have increased the National Productivity Investment Fund to £37 billion to support key infrastructure up and down the country. Public investment is at its highest sustained level in 40 years.

The noble Lord, Lord Bilimoria, and the noble Earl, Lord Lytton, referred to Making Tax Digital—indeed, the noble Lord, Lord Wakeham, focused on that and the noble Lord, Lord Hain, touched on it. Research now shows the high level of awareness among business and tax professionals: eight out of 10 businesses were aware at the end of last year and over 80% of those had already started preparing. Of VAT returns, 98% are already done online.

The disguised remuneration loan charge was raised quite extensively, by my noble friend Lord Northbrook; by the noble Lord, Lord Wakeham, on behalf of the noble Lord, Lord Forsyth; and by the noble Baroness, Lady Kramer, with her work on the all-party parliamentary group. Disguised remuneration schemes are and always were contrived tax avoidance. It is not normal or reasonable to be paid loans that are not repaid in practice; my noble friend Lord Wakeham was right in his sage advice on that, as in so much other advice he has given over the years. It is the individual’s responsibility to ensure the accuracy of his or her tax return. HMRC is pursuing the promoters of disguised remuneration schemes and has been investigating over 100 promoters. In the last year, HMRC has taken litigation action against 10 scheme promoters.

I turn to universal credit and welfare, which the right reverend Prelate the Bishop of Chester referred to and the noble Lord, Lord Shipley—

[Baroness Kramer]

This really is an important point on the loan charge. Regarding the action that the Minister said HMRC had taken against scheme promoters, I do not believe that any of those schemes was a loan charge scheme. Those are schemes generally, but one of the complaints is that no action has been taken against the promoters of loan charge arrangements.

[Lord Bates]

I am afraid that I do not have the answer to that. Your Lordships may recall that, after the Autumn Statement, I ended up having to write extensively on loan charges. We know that officials at the Treasury are used to dealing with disappointments and I am afraid we may have to write again on the issue to deal with that point.

On welfare, as the noble Earl, Lord Listowel mentioned, work is the best route out of poverty. I thank him for the recognition that he gave to the incredible growth in the number of people—three and a half million more—in work, and a million fewer people in workless households. These are substantial social changes happening around the country and we believe that that is the best route out of poverty. Changes to the welfare system have ensured that work pays. There is a strong safety net for people who need it, while making the system fair for taxpayers.

The noble Lords, Lord Tunnicliffe, Lord Scriven and Lord Bilimoria, all raised the issue of serious violence. Police forces are already due to receive an additional £970 million from April. Police and crime commissioners have committed to using this funding to recruit and train an extra 2,800 police officers. In addition, the Chancellor announced a package of £100 million additional funding. Of this, £80 million is new funding, which takes the total additional funding for policing this year to in excess of £1 billion.

The noble Lords, Lord Hain and Lord Bilimoria, the noble Baroness, Lady Thornhill, and the noble Earl, Lord Lytton, referred to business rates. We are providing up-front support worth over £1 billion for high streets through the new retail discount, reducing bills by one-third for up to 90% of retail property for two years, starting from 1 April 2019.

On housing, further progress has been made in implementing the Budget to achieve our ambition of 300,000 homes. I hope that the right reverend Prelate the Bishop of Chester will not called upon from his retirement home in Scotland to eat his cassock—that prospect will add extra zest to our ambition to meet the target—but £717 million from the £5.5 billion Housing Infrastructure Fund to unlock 37,000 homes is a good step in that direction; there will be £250 million for 13,000 homes at Old Oak Common in London, and there are other schemes in Cambridge.

The noble Lord, Lord Wakeham made a serious point about the tax gap. While we recognise that there is a long way to go, we have one of the lowest tax gaps on record. It has fallen from 7.3% in 2005-06 to 5.7% in 2016-17.

We heard a considerable number of contributions on the very important issue of health and social care, which featured significantly in the Autumn Budget as well as in the Spring Statement last year.

Over the last three years, we have given councils access to around £10 billion of dedicated additional funding for adult social care. This includes £240 million this year and next for adult social care so that people can leave hospital when they are ready, and £410 million next year for councils to use to improve social care for older people, people with disabilities and children. This was announced in the Autumn Budget of 2018. The offer of the noble Earl, Lord Listowel, for us to see the incredible work done by many involved in social care and health visitors is one that many will want to take up.

I was immensely grateful to my noble friend Lord Leigh, for summarising a lot of the very positive, good news around, as did my noble friends Lord Suri and Lord Northbrook. My noble friend Lord Leigh spoke particularly about the measurement of productivity, and I think he is on to a point here. We had a discussion about this after the last Autumn Budget, and that was one of the conversations that led to the commissioning of Professor Sir Charles Bean to undertake an independent review of UK economic statistics to find out, among many things, whether that point about how financial services are treated and whether their full value is considered is right. To help address challenges, the Treasury has today provided the ONS with £16 million of funding so that we can continue to have world-leading statistics that capture what is happening in the modern economy.

The noble Baroness, Lady Thornhill, talked about the funding of local government. I recognise the experience that she draws on when she does that. The Budget of 2018 and the 2019-20 local government finance settlement delivered a real-terms increase in core spending power for local authorities in 2019-20. We expect authorities to receive final funding allocations in the normal timetable. Councils in England can access more than £200 billion for local services from 2015 to 2020. The 2019 spending review will be launched in the summer and conclude in the autumn and will no doubt receive many representations.

I am sorry about not addressing the point made by the noble Viscount, Lord Chandos, about student loans. I remember answering an Urgent Question at the time of the last debate and I thank him for that. This will be taken up in the Augar review. In the Spring Statement, the Chancellor of the Exchequer announced that the post-18 education and funding review will conclude at the spending review, so that will be in the summer. This is a delay from the original timetable, in part due to the decision by the ONS to change how student loans are accounted for in public expenditure. That will be covered in the review.

The noble Lord, Lord Shipley, mentioned the importance of the northern powerhouse. That is crucially important: we have seen spending of more than £13 billion—the largest in history—in the northern powerhouse. We hail from the same area of Tyne and Wear and we have all rejoiced at the increase in infrastructure there, including the Tyne and Wear metro upgrade, which will make a very big difference.

The noble Lord, Lord Bilimoria, asked whether we would have the necessary money in the event of no deal. The Chancellor has been clear that leaving without a deal would mean significant disruption in the short and medium term, and a smaller economy in the long term. However, he also laid out ways in which it is possible for the Government to prepare us, including holding a £26.6 billion headroom against our borrowing target.

I again thank noble Lords for their contributions. Several noble Lords referred to investment into the UK. I want to put some points on the record, which noble Lords might have touched on. We need to remember that Forbes magazine, which knows a thing or two about business, surveyed 153 economies to find out which was the best country in the world for business investment. It arrived at the UK in 2018—and again in 2019; it is the number one place for investment. That is backed up not just in a survey but with the significant increase in overseas investment between 2016 and 2017—the last numbers available were announced just last year.

[Baroness Kramer]

My Lords—

--- Later in debate ---

[Lord Bates]

I am on a roll. Can I go a little further with the good news before we get reminded that every silver lining has a cloud wrapped around it? There was a £149 billion, or 12.6%, increase in the stock of overseas investment in the UK. It is now the third-largest in the world and the largest in Europe. London is the top city for property investment, not way past when, but in 2018. It was £16.2 billion compared with £12 billion in Paris and £8.4 billion in Hong Kong. Exports are at near-record levels and have risen more than 50% since 2010. They rose by £17 billion last year.

We have many challenges in this country and face many headwinds, but one of the things we can all have confidence in is that the world has confidence in this country. We should have more confidence in ourselves. I commend the Statement to the House.

[Baroness Kramer]

I do not want to entirely ruin what the Minister is saying. I know that the noble Lord, Lord Leigh, knows exactly what I will say in this particular instance. The Minister is quite right that a lot of the investment in the UK is property development. It is overseas moguls buying very expensive properties in London and elsewhere. If that is removed from the numbers, I am afraid that the picture is exceedingly different.

Supply and Appropriation (Anticipation and Adjustments) (No. 2) Bill

Lord Bates Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords
Thursday 14th March 2019 Lords Chamber

Moved by

[Lord Bates]

That the Bill do now pass.

[Lord Davies of Oldham (Lab)]

My Lords, it is not customary for the Opposition to make any comments on the appropriations Bill and, in normal circumstances, we would not. There is no question of us seeking to delay the Bill as this is, appropriately, a House of Commons issue. But I ought to congratulate the Government in this week when their whole strategy has been an utter and total failure; I ought to congratulate the Minister on finding a Bill on which there is unanimous support.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

I am grateful for the noble Lord’s support. We would love to have his support on the withdrawal agreement, and then we could all have a happy future.

Bill passed.