Fiscal Outlook

Lord Burns Excerpts

Thursday 10th September 2026 Lords Chamber

[Lord Burns (CB)]

My Lords, the noble Lord, Lord Bridges, has outlined the challenges facing fiscal policy very well. I was a member of the Economic Affairs Committee that he chaired so ably, and he has summarised the conclusions of the report of that committee two years ago. Since then, the OBR too has set out the significant risk that UK debt could become unsustainable unless offsetting action is taken. While the previous Chancellor was successful in stabilising the debt ratio, we now need to make significant progress in reducing it, not just in the forecast but in practice. The need for early action is not removed because the debt ratio of other countries is similar or even worse than that of the UK. Having a shared problem might make it feel less urgent, but the UK debt ratio can be brought on to a sustainable downward path only by our own actions.

The noble Lord also set out the initial source of the problem very clearly. Since 2007 we have engaged in three rounds of exceptional expenditure in response to events. There were good reasons in each case why that was undertaken, even if in some cases it was overdone. In one case, the financial crisis, we were trying to protect savings and maintain a functioning financial system; the Covid crisis required support for people who were suffering in lockdown; and there was a sharp rise in energy prices after the invasion of Ukraine. So some of that was right in principle, but I cannot recall any Government giving much warning that these rounds of fiscal support would eventually have to be paid for, even if not immediately. Nor did Governments warn that the longer the delay, the greater the cost in terms of higher debt interest. Taxes were cut when the opportunities arose, and expenditure control proved to be too difficult politically.

While there is general support for changing the fiscal rules to accommodate public sector investment, less has been said about the debt service costs involved in that, at a time of rising and very high global interest rates. Taking out a mortgage means starting your monthly payments immediately. The same applies to government borrowing and we are, of course, experiencing that.

Both the Economic Affairs Committee and the OBR have set out the significant headwinds we are facing, and they are very tough. They include an ageing society, increased defence spending and rebuilding our energy grid to make the best use of renewable energy.

Dealing with these matters will not be easy. In my view, it means a combination of increased taxes, restraint on increases to benefits and improved public sector productivity. As far as possible, this should involve reducing the array of exemptions and tax credits that are characteristic of our tax and benefits systems, and we need closer scrutiny of claims for benefits. The goal should be a wider tax base and a narrower welfare base, and we should be doing our best to avoid the high marginal tax rates or damaging cliff-edge withdrawal rates that are also very evident now.

Faster growth could improve the situation, but we need to be cautious. The OBR has pointed out that if faster growth is simply translated into proportionate growth in the provision of public services, growth on its own will not be sufficient to solve the problem.

Here lies a fundamental challenge. Demand for the major public services tends to increase more than proportionately in a growing economy. We see this with health, social care, education and some aspects of welfare. So, it is not surprising that costs rise more rapidly than the growth rate itself. Indeed, in the case of the triple lock the arrangements mean that pensions will grow faster than earnings. It was designed to produce that effect. This explains why growth alone will not solve this problem.

In an earlier phase of my career, I had close experience of three difficult periods for fiscal policy: 1976, 1981 and 1993. I was an academic and commentator during the first, and a Treasury official during the second and third. In each case, decisive action was taken, even though it involved difficult and often unpopular decisions, as the noble Lord, Lord Lamont, will remember in the case of the 1993 event. But eventually, we saw an improvement in the balance of the economy and improved market confidence.

If coping with excessive debt becomes the priority for a Government, it tends to crowd out discussion of longer-term structural policy and issues such as tax reform, which are so necessary. Once debt is clearly on a downward trajectory, life becomes much calmer, leaving more time for dealing with the longer-term issues that really deserve scrutiny. Above all, if we could get on to a path of a falling debt ratio, we might spend less time discussing the fiscal rules and whether they are a sufficient buffer for the next Budget—and I suspect we would all welcome that.

Preparing for an Ageing Society (Economic Affairs Committee Report)

Lord Burns Excerpts

Friday 4th September 2026 Lords Chamber

[Lord Burns (CB)]

My Lords, I would also like to thank the noble Lord, Lord Liddle, for outlining the conclusions of the committee’s report so well, and thank the noble Lord, Lord Wood of Anfield, for chairing the committee during this investigation. He has now gone on to greater things and I hope he will have the opportunity to continue to deploy his considerable economic skills in that role as well.

There is nothing new or recent about the phenomenon of an ageing population. This been going on throughout my working life, but it is now a major factor in the conduct of economic policy. In the mid-1960s, when I started work, there were fewer than 7 million people aged 65 or over. Today, that number is approaching 14 million and by 2050 it is forecast to reach almost 19 million. The increase in those over 85 is even more impressive. Over the same period, their number has gone from fewer than 500,000 in the mid-1960s to almost 2 million today. It is now forecast to reach 4 million by 2050. This is something to celebrate; it was one of the things we had to keep reminding ourselves of in the committee. It has been a remarkable measure of the progress that has been going on. But it does have consequences for fiscal policy.

Our concern is that, despite this success, the proportion of people aged between 50 and 65—this was mentioned by the noble Lord, Liddle—either working or looking for work drops off considerably compared with the cohort just before them: the 35 to 50 age group. There has been some noticeable increase in the participation rate of those over 65, but it remains quite modest. It was these figures and the starkness of this that formed the basis for our report. It is clear that, unless working lives are extended, our successors will have to fund many more years of retirement than in the past. The report also emphasises the need to rethink our approach to lifelong financial planning for individuals; this is not just a matter for government but for individuals as well.

As has been noted, the committee concluded that, from a fiscal point of view, the best response would be to encourage and incentivise those in their mid-50s to mid-60s to remain active in the workforce, but this would also require greater recognition of the valuable contribution that experienced people can make to the workplace.

The issue of the growing number of people requiring health support and social care has been mentioned. As others have noted, the unsatisfactory arrangements for adult social care have been recognised for years, but no policy proposal has received the necessary support. Fundamental questions remain about service provision, our lifetime contributions, how we share costs between the state and the individual, and the potential role for insurance. Let us hope that the noble Baroness, Lady Casey, can unlock this puzzle.

Finally, there is the testing question of pensioner incomes. The old system of indexing pensions solely to prices meant that pensioners did not automatically benefit from economic growth. However, the triple lock guarantees that the level of pensions will increase faster than earnings over time, but in an arbitrary and random way. This is a problem that must be fixed.

King’s Speech

Lord Burns Excerpts

Thursday 14th May 2026 Lords Chamber

[Lord Burns (CB)]

My Lords, most of us agree that economic growth is critical. I am very pleased to see that it is on the board, as it is one of the best topics that we are discussing in this response to the gracious Speech. Growth widens the choices that are available for Governments. It increases the scope for making those choices and the trade-offs that Governments are forced to make. As we know, higher output and greater productivity lead to high disposable incomes, generate the taxes that we need to fund public services, and, when you have a decent rate of growth, provide much more room for spending, adjustments and allocations between different areas.

The tough challenge for any Government is that underlying growth rates change only slowly and are difficult to predict. Since 2007, the growth rates of the major countries have been significantly slower than they were in the years before. In this respect, the UK’s performance is similar to that of other major European countries. The reality is that it is difficult to increase the underlying growth rate in the UK if we have slow growth around the world. That has been the pattern and, for the moment, it looks as though that pattern will continue.

We must be much more careful about putting too much emphasis on month-to-month changes, which tend to be erratic. There has been a pattern in recent years of stronger figures in the early months of the year and weaker figures later—possibly a seasonal adjustment problem. This morning’s GDP might show a quarterly increase of 0.6% but the reality is that this is still only 1.1% higher than the first quarter of last year. This compares with the years when we became accustomed to growth rates of 2.5%.

One criticism of the Government’s approach has been the failure to acknowledge at an earlier point that much of the previous Government’s woes were due to this global slowdown and that simply changing Governments has not changed this. Ahead of the election, the Economic Affairs Committee highlighted major spending challenges ahead—the cost of net zero, increased defence spending and an aging population—all of which will put pressure upon financial stabilisation. Given these challenges, my view was that taxes would have to increase across the board or significant public spending savings would be necessary, and probably both. Instead, we have seen increased public spending and attempts to raise taxes either on employers or on a very narrow part of the tax system. This has sparked anger and has not succeeded in raising sufficient revenue. Further, the other measures to protect jobs have done little to improve the economy’s supply side.

However, my biggest concern now is that some groups involved in the current leadership debate are convinced that faster growth can be achieved through increased public expenditure and larger fiscal deficits. My experience is that this is a confusion of cause and effect, and a very serious one. Over time, the scope for higher public spending is a result of faster growth; it is not the cause of faster growth. We start with a debt ratio close to 100% of GDP. Debt interest costs consume 10% of our tax revenue. We have not been able to pay for the huge borrowing at the time of Covid or the cost of supporting energy bills. Proposals to increase this further, either openly or through disguised off-balance-sheet borrowing, which we have heard some chatter about, are high-risk policies.

We all desire a world where spending eventually pays for itself. With some aspects of spending this is the case, although the benefits take time to emerge. However, more often, they do not pay for themselves. The Chancellor deserves credit for recognising and emphasising this. For faster growth, we need an environment with effective incentives for work and investment. We urgently need an overhaul of the tax system to iron out inconsistent and bizarre marginal rates of tax for some people. We need to eliminate the wide range of unnecessary exemptions and allowances and ensure the right incentives for business taxation. However, these are all issues for future Budgets, rather than for the gracious Speech.

There are reforms in the gracious Speech that I welcome and which could make a difference, and we have heard about some of them this morning. I welcome the emphasis given to growth when judging the approach to financial services regulation. It has been a view of mine since the crisis that there has been a significant regulatory overreaction to the 2008 crisis. There is a natural desire to prevent it happening again and it is very important that prudential risks should be managed. However, in the process, increased regulation damaged bank lending to the private sector and the productivity of the banking industry. The focus was on changes that were the easiest to make, rather than on addressing the weaknesses that posed the greatest risk. This was also the action taken by the other major countries. My view is that the growth reduction which we have seen all those countries suffer is, in part, a result of that response to the crisis.

I support efforts to minimise friction in trade and flows of investment within Europe, although reaching agreement will be difficult and contentious, and, as many have pointed out in the course of the debate already, the growth performance of the major European countries has been one of the slowest in the world over this period. It is not exactly a vibrant market at this point.

Also welcome to me are the proposals for Northern Powerhouse Rail. In a predominantly service-based economy, cities have become increasingly important centres of wealth creation. However, they can realise their potential only if they have a functioning public transport system that allows as many people as possible to access them. With the growth of the economic potential of cities, commuting by car into those cities becomes increasingly difficult. This is not just a London issue; we can see the pressure around many cities. I was involved in transport services in Wales, where road systems are struggling to cope with these pressures. I remain hopeful that the proposals for a commuter service in south Wales, which I was involved in putting forward, will be in place soon, despite some of the devolution issues.

House of Lords (Peerage Nominations) Bill [HL]

Lord Burns Excerpts

2nd reading
Friday 18th November 2022 Lords Chamber

[Lord Burns (CB)]

My Lords, I am also delighted to support the Bill introduced by the noble Lord, Lord Norton. It proposes some very important changes to how appointments are made. It would strengthen procedures and give confidence to the public, as the noble Lord, Lord Blunkett, has mentioned.

I will comment on a few of the aspects which touch on the work of the Lord Speaker’s Committee on the Size of the House, which I chair. I take this opportunity to suggest how we could build on the useful reforms proposed in this Bill to achieve further changes in due course. The Bill proposes a limit on the size of the House, that it be no greater than the membership of the Commons. This is a crucial first step and has been a key part of the proposals of the Lord Speaker’s committee. The House of Lords is exceptional among legislative chambers in having no limit on its size and no constraint on the numbers appointed. A limit on its size would have many benefits, some of which I will mention.

Of course, it also raises other issues. First, this Bill says nothing about the transition to a level consistent with the House of Commons, and, as we know, this first step seems to be very troublesome despite the widespread support from Members of this House. Secondly, once the membership of the House has been reduced to the size of the Commons, the number of appointments cannot exceed the number of leavers. As it happens, over the past 10 years or so the numbers have stabilised—albeit at a much higher level than the Commons—with both leavers and appointments averaging around 25 a year. In no small way, this has been due to the introduction of retirements in 2014.

As the noble Lord, Lord Blunkett, also mentioned, a limit on the size of the House could rightly focus more attention on the political balance of appointments. Over the past 40 years, appointments have been made disproportionately to the party in government, while the Official Opposition have suffered in terms of refreshment. This is not addressed in the Bill, which simply says that

“no one party may have an absolute majority”.

This is not a particularly strong test. I understand the reason for driving the political imbalance of appointments, but, over time, this leads to successive leap-frogging when there is a change of government. Can anybody be in any doubt about the consequences for the size of this House if there is a change of government at the next election, unless a significant number of current Members retire?

To avoid this leap-frogging, the Lord Speaker’s committee proposed that the flow of new appointments should reflect the results of the most recent general election, taking account of both the share of votes and the share of seats. However, it also follows that, if we were to share appointments in this way, it would probably be necessary to increase the turnover of Members. The turnover of 25 a year does not give the scope that would be needed to refresh the House and provide the vacancies necessary to create room for some change in the political balance over time to reflect election results. The committee took the view that, with a limit on the size of the House, a turnover could be achieved most effectively if we were to have appointments with fixed-term lengths. An age limit, which is often proposed, would not deliver a steady flow of retirements and would affect the party groups rather differently. With a House of 600 Members, our calculations suggested, as noble Lords know, that terms of between 15 and 20 years would be required if we want to see the 30 to 40 retirements each year to provide scope for that change. This challenging arithmetic follows, if we wish to see a continuing adjustment of party strength to reflect the results of general elections.

Finally, I strongly support the suggestion that at least 20% of the House should be formed by people who are independent of any registered political party. Additionally, 20% of any appointments over the course of a Parliament should also be required to be independent. Since 2010, the proportion of appointments to the Cross Benches has been significantly below this figure. The Cross-Bench and non-aligned numbers have been inflated by people escaping from the party to which they were first appointed, and who are unlikely to pass the test of independence as set out in this Bill.

In summary, I support the Bill; however, in time, I hope it will be possible to go further, along the lines I have outlined.

Economy: The Growth Plan 2022

Lord Burns Excerpts

Monday 10th October 2022 Lords Chamber

[Lord Burns (CB)]

My Lords, the financial statement has not gone down well. I will leave it to others to address many of the details of why it went wrong, and my noble friend Lord Macpherson has done that with great clarity. I will say a few words about some of the issues facing the new Government in designing the proposed medium-term fiscal plan.

The first and most important task is to make sure that we get through the period of abnormally high energy prices without serious adverse consequences. I agree with others that the energy price cap scheme has substantial support. Capping prices has the advantage of containing some of the increase in RPI inflation we would have seen and it can be done quickly. It has an in-built mechanism to adjust the amount of subsidy to the future pattern of energy prices.

Of course, the scheme is not without problems: it dampens the incentive for households to economise on their use of energy and it is not well targeted. But the reality is that it is difficult to target vulnerable households at short notice, as the tax and benefits system is based around individuals rather than households. However, because the scheme is poorly targeted, it could be expensive—indeed, very expensive. Along with others, I must say that I find it very difficult to understand why the Government have resisted a windfall profits tax. Energy companies are experiencing a windfall and we should try to recover some of that.

At this difficult time, it is essential that fiscal policy supports the Bank of England in bringing down the rate of inflation. The Government have made it clear that they regard bringing down inflation as a job for the Bank of England. I share the view that the Bank of England is not without blame around some aspects of the present circumstances, and it has been slow to recognise the emerging inflationary pressures and to increase interest rates. But my worry is that its task of bringing down inflation will be made considerably more difficult if the Government’s fiscal policy is pulling in the opposite direction.

The proposed tax reductions next April remain a high-risk strategy until we know the size of the bill for the energy price cap scheme, so it is vital that the Government’s forthcoming medium-term fiscal plan gives dual weight to the OBR’s report on public finances and the need to support monetary policy in the job of bringing down inflation. This lesson was learned the hard way in the 1970s and it was an important driver of the MTFS introduced by the Thatcher Government in 1980.

I fully support the principle that supply-side measures play a critical role in any policy to improve growth rates, but in the circumstances I hope that they will be concentrated on those measures that do not make the task of dealing with inflation more difficult. In my view, the harm from unfunded tax cuts at this point is very likely to exceed any supply-side benefit. I do not know of any convincing argument that unfunded tax cuts ultimately pay for themselves, other than in very special circumstances of high marginal tax rates.

In these circumstances, public expenditure cuts will be difficult to find. My noble friend Lord Macpherson talked about this, and I shared his experience for many years. They could also be potentially damaging if they target those who are suffering most from the rise in energy costs and inflation in general.

This is not to question the longer-term ambition of simplifying the tax system. However, we should recognise that supply-side measures will take time; they require careful analysis and implementation. I witnessed many attempts to introduce supply-side measures. Many of them fell into considerable problems as they moved on because they were exploited by people for whom they were never intended.

Growth has been affected in all advanced countries by the combination of the financial crisis of 2008, the pandemic and the Russian invasion of Ukraine, so this is a general problem and is not unique to the UK. Higher public indebtedness and higher tax ratios are largely a consequence of dealing with these adverse shocks. I am afraid that the consequences for growth will take some time to work through.

House of Lords Appointments Commission

Lord Burns Excerpts

Thursday 21st July 2022 Lords Chamber

[Lord True (Con)]

My Lords, any Prime Minister would normally pay heed to the advice, as this Prime Minister has made clear. There is a particular case to which your Lordships continually return, where the Prime Minister made an appointment on his own judgment. I defend that particular person; he plays a valuable role in our House.

[Lord Burns (CB)]

Since the establishment of the Lord Speaker’s committee, some three-quarters of political appointments have been made to the Conservative Benches. There are now 89 more Conservative Members than Labour Members and there are more Conservative Members than Labour and Liberal Democrat Members combined. If there were to be a change of Government at the next election and similar partisan behaviour were to continue, would the Minister be comfortable with a House of 900 or more Members?

[Lord True (Con)]

My Lords, the reality of this House is who comes here and who works. Sometimes, those who do not come here very often make enormous contributions; I can think of a very distinguished scientist who comes on occasion. The Prime Minister has appointed—I should say recommended; Prime Ministers do not appoint—91 Peers since he became Prime Minister. That is not out of order with numbers in the past.

House of Lords: Membership

Lord Burns Excerpts

Tuesday 21st April 2020 Lords Chamber

[Lord True]

My Lords, my noble friend makes some concrete suggestions, some of which would require legislation. The Government’s view is that any reform of your Lordships’ House would need careful consideration and should not be brought forward in a piecemeal fashion. On a minimum participation threshold, I think many noble Lords feel that it is not the quantity of participation that matters in this House but its quality.

[Lord Burns (CB)]

My Lords, I am of course strongly in favour of the proposal for two out, one in, as it is an important part of the transition to a smaller House. However, I would not like to lose sight of some of the other issues which the Lord Speaker’s Committee felt were important in the longer term. We concluded that the hard work of getting the numbers down would be in vain unless a cap on the size of the House is maintained and the allocation of new Members reflects each party’s electoral performance and progress in achieving departure. Does the Minister agree that without some combination of proposals such as these it is difficult to see how we will bring an end to the almost continual growth in numbers that we have seen since the 1999 Act?

[Lord True]

My Lords, as a matter of fact, the recent history is not of numbers increasing. I pay tribute to the noble Lord, Lord Burns, and his committee for the inventive and constructive suggestions they have made and commend the spirit with which many in the House are following them. However, the longer-term proposals of the committee to maintain a steady-state size require further careful thought and wider engagement, particularly with the House of Commons. That was a point made by the previous Prime Minister.

Inflation

Lord Burns Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Burns (CB)]

My Lords, I too thank the noble Lord, Lord Forsyth, for securing this debate and chairing the committee so effectively. I found the inquiry rather a strange experience to begin. I had spent almost 20 years in the Treasury worrying about how to control inflation, yet in this inquiry we were deep in the detail of measuring inflation down to a few decimal points. In the process, as has been mentioned, we became aware of a series of quite surprising events that cast doubt on the Government’s various measures of inflation. I should like to develop some of those concerns.

I well recall that the main governance for the RPI until the mid-1990s was the existence of the RPI advisory committee, which consisted of some officials and a number of stakeholders, including the trade unions. The noble Lord, Lord Lea, mentioned that he was for many years a representative on that committee; there were also business representatives. My recollection is that the advisory committee found it difficult to accept any change that made a significant impact on the inflation rate, one way or the other. Indeed, there was a strong and continuing concern to uphold confidence in the RPI measure of inflation, for the reasons he mentioned.

It turns out that the RPI advisory committee did not meet between 1995 and 2007. I was somewhat surprised to learn this. It was charmingly referred to by the ONS in its evidence to us as a period of “no governance”. Then in 2007, we had the Statistics and Registration Service Act and the introduction of the RPI protocol. This required the ONS to produce a monthly figure for the RPI and introduced the formality we have heard about: that the Chancellor had to give his consent to any fundamental changes judged by the Bank of England to be materially detrimental to the holders of relevant gilts.

Paradoxically, this legislation, designed for the worthy purposes of increasing the independence of the statistics authority and improving the governance of the RPI, turns out to be a contributory factor in the loss of confidence in the RPI as a measure of inflation. In my mind, this stems from the asymmetric treatment of changes that are detrimental to the holders of gilts, as opposed to changes that are to their advantage and to the detriment of others. This is set out in the statute.

As we have heard, where a fundamental change is seen as materially detrimental to the holders of gilts, the Chancellor, with advice from the Bank of England, has to decide whether the changes should go ahead. By contrast, if changes are beneficial to the holders of indexed gilts, the Bank of England is not required to take any action. This asymmetry became evident in 2011 and 2012, when there was a change in measurement of clothing prices, as we have heard. I argue that the statistics authority then made some quite serious mistakes.

The effect of the change was, as we have heard, an unexpectedly large increase in the clothing component of the index and an increase in difference in the growth of the RPI and CPI to around 0.8% a year, instead of 0.5%. I stress that, in the evidence we received, there was a lot of criticism of the change, along with claims that it had not been tested before implementation. This was the first mistake.

What I conclude to be a second mistake followed, which was not to undo the change and to go back to the previous arrangements reasonably quickly, when the emerging problems became evident. It became clear that the statisticians were influenced too much by worries that it would be judged a fundamental change that was materially detrimental to gilt holders. The one-sided nature of the protocol meant there was no requirement to be concerned about the original change, which had materially advantaged gilt holders. Instead, the options were studied and the focus switched to the weighting system and horrendous technical debates about the merits of different methods of compiling the two indices. This response is a classic case of the best being the enemy of the good. Reversing the clothing changes would not have removed the whole difference between the two measures but would have dealt with it in part. Reversing it quickly might also have been seen as a correction and not a fundamental change.

There followed what I think we all agree was a third mistake: the decision to maintain the RPI in its current form, but to declassify it as a national statistic and consider it a legacy measure, with no further improvements to be made. This was astonishing, because it was evident that the RPI would be in place in contracts for many years, both for gilts and pensions. The committee raised the question of whether admitting that this statistic is flawed, but refusing to fix or maintain it, leaves the authority failing in its statutory duties.

Another related governance aspect of this story worries me, which was emphasised by the noble Lord, Lord Darling. The authority admitted that it had been reluctant to propose a change to the Bank of England when there was a significant risk that it would be told that it was a fundamental change likely to go to the Chancellor. This fails to follow what is set out in the legislation. I have some experience of public bodies, where the framework for their independence is set out in statute but there is a requirement to obtain the agreement of Ministers on a limited number of occasions. My interpretation is that it is for the public body to take a view about changes that should be made on professional grounds and not to shrink from referring them to Ministers for their approval, when required. In this case, it is not for the statistics authority to seek to guess the Bank’s response before deciding whether to propose changes; the decision should be taken on professional statistical grounds. It is then for the Bank of England to decide the materiality and potential detriment and for the Chancellor, in turn, to take a view on whether the proposed change should go ahead.

The committee has come forward with a sensible and workable set of proposals to try to get us out of this stand-off. At the same time, we should reflect on aspects of the governance of national statistics. As I said, the drafting of the legislation is unhelpful because of the asymmetric treatment of gilt holders and other stakeholders, not least those saving through government saving schemes. Even taking the legislation at face value, surely it is possible to make changes necessary in the light of changes in markets and product innovation without them being classed as fundamental and so that, when a mistake is made, repairing it is seen not as a fundamental change but as a tiny correction.

House of Lords: Membership

Lord Burns Excerpts

Monday 21st May 2018 Lords Chamber

[Lord Young of Cookham]

With respect, my right honourable friend the Prime Minister has exercised restraint. I note that in the 2010 Dissolution Honours List, Nick Clegg insisted on 11 former Lib Dems becoming Peers, so there was not much restraint then. So far as going forward is concerned, the Prime Minister has made it absolutely clear that there will be no more automatic peerages. As I have said, if your Lordships look at the number of Peers appointed since she became Prime Minister, the House is now smaller than it was then so she is on track to deliver that commitment. What we are still waiting for is some retirements from the Liberal Democrats.

[Lord Burns (CB)]

My Lords, over the weekend the noble Lord, Lord Adonis, tweeted that the Lord Speaker had welcomed the composition of the new list. He clearly did not read what the Lord Speaker actually said; the only thing he welcomed was the Prime Minister’s ongoing commitment to restraint in appointing new Peers, which provides such a contrast with her recent predecessors. As the Minister has pointed out, the 21 life Peers appointed since the last election is the smallest number of appointees in the first year of a Parliament for perhaps 40 years. Does he agree that what is important now is to arrive at an understanding for departures and appointments for the remainder of this Parliament and, furthermore, that this should be closely in line with the framework set out in the report of the Lord Speaker’s committee, which was overwhelmingly welcomed by the Members of this House?

[Lord Young of Cookham]

I am grateful to the noble Lord not just for his helpful intervention but for the work which he and his committee have put in. I understand that he is continuing that work. Yes, I did read the comments made by the Lord Speaker, as reported in the press, and my right honourable friend the Prime Minister has shown restraint. Tony Blair appointed 374 new Peers—including the noble Lord, Lord Adonis—David Cameron appointed 245 and Gordon Brown appointed 34, so two years in the Prime Minister has indeed shown some restraint and I think that we are on track. The noble Lord set out targets for the individual parties to reach by 2022, and those are challenging targets. As I indicated a week ago, some groups and parties within the House are making progress but not all of them.

Trade Union Bill

Lord Burns Excerpts

Tuesday 3rd May 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, we have debated at length the principle of how union members exercise their choice to opt either in or out of a political fund. I am particularly grateful to the noble Lord, Lord Burns, and the wider Select Committee for their deliberations on this complex issue. They were both careful and wise, and extraordinarily rapid because of what looked like an impossible five-week deadline.

I extend thanks in particular to my noble friends Lord Sherbourne, Lord De Mauley, Lord Robathan and Lord Callanan, who gave up their time to help the committee find a way forward on these very important matters and ensure that the principle of union members having a transparent and active choice to opt in was supported.

The Government have given careful consideration to the recommendations of the Select Committee and to the amendment tabled by the noble Lord, Lord Burns, which followed the majority view that opt-in should apply only to new members. We tabled an amendment in the other place, but concerns were expressed by a number of colleagues from both Benches in both Houses.

It was important to progress matters and get this Bill through the House and on to the statute book, and the Government subsequently tabled a new amendment, now before your Lordships following its acceptance by the other place, which like the original amendment of the noble Lord, Lord Burns, reflects the recommendations of the Select Committee on opting in.

The amendment corrects some legally defective drafting and, instead of the Certification Officer being required to issue a code of practice, places a statutory obligation directly on unions to provide an annual reminder to those new members who have opted in to the political fund. It is not usual for the Certification Officer to be involved with communications between unions and their members, and it provides more certainty to have this requirement in the Bill.

In the interests of finalising this important Bill for Royal Assent, I hope that noble Lords will support the amendment. I beg to move.

[Lord Burns (CB)]

My Lords, I am delighted to be able to thank the Minister for her statement and the amendments, and I hope that this will be the end of what has been the controversial issue of trade union political funds. As the Minister said, today’s proposals leave intact the substance of the amendment which was passed so comprehensively by your Lordships’ House. Noble Lords will recall that the amendment was designed to put into legislation the majority recommendations of the Select Committee on Trade Union Political Funds and Political Party Funding, which I had the honour to chair. I remind noble Lords that most of the recommendations reflected the unanimous view of the committee, although there was a difference of opinion about the treatment of existing members of unions with political funds.

In essence, after a transitional period of at least 12 months, all new members will be required to pay into political funds only if they have actively opted in. They will be reminded annually of their right to opt out. Opting in or out will be allowed electronically, there will be no renewal requirement every five years, and the requirement to opt in will not apply to existing members.

--- Later in debate ---

[Lord Forsyth of Drumlean]

In the noble Lord’s discussions with the Government about his amendment, at what stage was he told that the Government had changed their position? Was there a stage before that?

[Lord Burns]

Mr Nick Boles explained to the other place one day last week that he and I met last Monday evening and had a discussion. He put a proposal to me that I thought was rather unsatisfactory and fell somewhat short not only of the majority recommendation of the Select Committee but of the minority view. I explained that from my perspective it did not go far enough and that there would have to be further stages between the two Houses. Then I was subsequently told on Tuesday evening, the following day, that the revised proposal was being set down.

[Lord Robathan (Con)]

My Lords, I rise with some disappointment to speak on these amendments, but I start by paying tribute to my noble friend Lady Neville-Rolfe because throughout she has been exemplary in her courtesy and assistance. I know from past experience that sometimes as a Minister you hold to a line and then suddenly a hole appears in front of you into which you drop. I fear that she may be feeling slightly like that, and our honourable friend Mr Boles may feel the same.

I am disappointed not because this is a grand old Duke of York moment, although in the committee we were indeed marched up to the top of the hill, but because this is the wrong decision. The Bill that came to the House of Lords was frankly not a good Bill. There were three issues that I particularly seized on. One was electronic balloting and the unnecessary bureaucracy involved in the Bill—the need to write to people and people only being able to communicate by writing, which was nonsensical. The second was that there was just not enough time to do it in a matter of months. Any large organisation needs time to contact all its members. I am glad to see that, as a result of our deliberations, there will now be a 12-month window for transition. The third reason was that having to review the decision every five years was punitive, as the noble Lord, Lord Burns, who ably chaired the committee, has described it. Others in this Chamber will know better than me, but I wonder whether the Bill was stitched together by some special adviser who was being paid too much; some teenage scribbler who should, perhaps, have been given greater and wiser direction.

There were two reasons for my disappointment. First, this was a commitment in our manifesto, which specifically said that we would,

“ensure trade unions use a transparent opt-in process for union subscriptions”,

and not just for new members. The second reason is the very important issue of principle. If the principle is that people should opt in, rather than out, then that principle is right—would any noble Lord like to disagree with that? As we heard in our committee, presumed consent is no longer acceptable in financial services. In our earlier discussions on the Bank of England and Financial Services Bill, the Opposition were speaking ably and rightly about consumer protection. Why should trade unionists not have the same consumer protection as anybody else and not have to opt in rather than out?

These two reasons leave me gravely disappointed. I am sure it is not the case, but there is a hint that a deal may have been cut behind closed doors, which does not reflect well on this Government. They should have stuck by their principles and by the principle which I have mentioned. Politicians are much criticised for not keeping their promises and for inconsistency. By allowing these amendments to go forward, the Government have not kept their manifesto promise and have been inconsistent, and it pains me to say that.