Inheritance Tax, National Insurance and VAT

Lord Davies of Brixton Excerpts

Monday 27th January 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

We need to thank the noble Lord, Lord Morrow, for introducing this debate. I admire the passion and clarity of the arguments he presented; unfortunately, I just do not agree. I think the Labour Government’s adjustment—the Motion says removal, but of course it is not being removed; it is being cut back—of APR for inheritance tax, the increase in national insurance contributions and the extension of VAT to private school fees are all steps towards greater economic fairness in funding for public services.

We had a debate on the school fees issue, in which I spoke and I do not wish to repeat what I said there. We are having an apparently endless debate in the Committee on the national insurance contributions Bill, and I will save my remarks on that for that arena. But I will add that the point that the money will be spent on improved public services—providing jobs and buying in services from suppliers—is always ignored by the opponents of the increase in national insurance contributions. Perhaps my noble friend could say something about the positive impact that will have on the economy, as reflected in the figures from the OBR.

I am running out of time, but I will say something about inheritance tax. I do not give advice on inheritance tax, but I do read the financial pages. Clearly, until this whole debate took place, the general view was that inheritance tax was essentially voluntary; you paid it only if you did not arrange your affairs appropriately. Now is not the time to provide advice but, given succession planning and insurance, the problems can be overcome.

Economic Growth

Lord Davies of Brixton Excerpts

Thursday 23rd January 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My thanks to the noble Lord, Lord Farmer, for initiating this debate, which has been interesting although not always enlightening. I was tempted to talk about pensions, as raised by the noble Baroness, Lady Swinburne, but we will have other opportunities to debate that. I will simply say that it is a lot more complicated than that.

I speak as an unreconstructed Keynesian with a side order of Joan Robinson—I will come back to that in a minute—but, first, it is preposterous for those on the other side to lecture us on the UK’s poor economic performance. They were in power for the last 14 years. As explained by the noble Lord, Lord Desai, who is not in his place, they cannot shift the blame to anyone else. Perhaps the Liberal Democrats could take a little share of the blame, but they may be reformed sinners. They also try to claim that the ups and downs of short-term statistics over the last few weeks is in some form the fault of this Government. Well, to use the tired analogy, it is like the supertanker heading for the rocks. They steered it towards the rocks, we are steering it away and the move is starting.

I mentioned Joan Robinson because I want to quote from a book by the Chancellor, Rachel Reeves, about the women who made modern economics. She states:

“Keynesian economics as developed by Robinson is still relevant for policymakers today, and I would argue that the poor performance of the UK economy since 2010 owes a lot to the failure to heed the lessons of Keynesian economics. When David Cameron and George Osborne became prime minister and chancellor respectively in 2010, they embarked on a programme of austerity that went against everything that Keynes (and Robinson) would have advised”.


Subsequently, she says:

“Welfare spending was cut, public sector wages frozen, departmental budgets for everything except the NHS cut”.


She concludes by pointing out:

“The economic recovery which was picking up steam at the end of 2009 and into 2010 was stopped in its tracks. Economic growth stalled and productivity tumbled”.


That is the record of 14 years of Conservative Government. They come here today and lecture us on the failure of the present Government. Let us see. I hope my noble friend will be able to assure us that we will not be adopting the policies of 2010 from the coalition and that the policies we introduce will achieve the economic growth that we require.

I conclude with a final comment on the contribution from the noble Lord, Lord Agnew—not the substance; I look forward to his joining us on the Economic Affairs Committee and some interesting debates. He said, in effect, that 10,000 millionaires were leaving the UK each year. Well, I have to admit that I am a millionaire. I live in central London. I have a house that is worth more than £1 million. Using the tired old trope of millionaires is meaningless. A vast number of millionaires have been created. I suspect that we are going back to the time of our childhood, when £1 million was a lot of money. It is not any more.

Civil Servants: Compulsory Office Attendance

Lord Davies of Brixton Excerpts

Thursday 9th January 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

This has been an interesting debate, and we are all grateful to the noble Lord, Lord Farmer, for introducing the subject and giving us an opportunity to discuss these issues. In fact, it is interesting to follow the remarks of the noble Lord, Lord Frost, because, in preparation for this debate, I was re-reading the debates that took place in this House on the Factories Act 1847, which introduced a 10-hour day. There were plenty of speakers in this Chamber who opposed the revolutionary concept that people—in that particular Act, it was only women and children—should not have to work for more than 10 hours in a day. Clearly, ideas on what is the right way of working move on.

As well as hybrid working, there is the issue of the four-day week. It is interesting that PCS is seeking agreements in other areas of employment for a four-day week. These standards and expectations move on. The key—in some ways, what the noble Lord, Lord Farmer, said is correct—is to deliver the job in hand. There is no shibboleth that we should have about actual attendance; that in itself is not important. The issue is the delivery of the job in hand. It is quite clear, and it has not really been spelled out in the debate, that the Land Registry has failed to deliver the job in hand: there is a massive backlog.

I will not pretend that I totally understand why there has been such difficulty, but, clearly, getting into an argument with the staff does not seem to be a great way of solving the problem. Forcing your staff to undertake a ballot for industrial action, where 84% of the staff believe they should take action short of a strike in order to defend their working conditions, seems to me an indictment of the management rather than of the union.

I would just correct the noble Lord, Lord Farmer, on one point. There is no strike planned from 21 January; there is action short of a strike, where the staff concerned will refuse to do work outside of their allotted grade and to fill in time for absent colleagues. There is no strike at this stage, although 69%—again, a relatively high figure—voted for the potential of strike action. However, the decision has not yet been made on whether that will take place.

We can see here the need to understand the position of the union. Why are we here with the union? It is not an arbitrary decision on its part. In fact, it should be emphasised that the industrial action relates not just to hybrid working but to the issue of how work is assessed and who does the work. The workforce there are extremely concerned that people are, in effect, being asked to act up, presumably because of the delays and shortfalls, without the necessary training that they need to undertake that work.

Overall, we can see here a pattern of management—other speakers emphasised the importance of good management—failing to deliver the job. Whether that is an issue of lack of resources is difficult to tell from outside. The key issue is leaving it to the people involved—the management and the unions—to undertake the proper collective bargaining to arrive at a satisfactory solution.

Climate Agenda

Lord Davies of Brixton Excerpts

Thursday 24th October 2024 Lords Chamber

[Lord Davies of Brixton (Lab)]

I welcome this debate and look forward to the other speakers and the debate that will take place between them. In particular, I look forward to the maiden speech of the noble Baroness, Lady May of Maidenhead.

I will not pursue the specific points that were made in the introductory speech. I will use the limited time available to me to highlight some excellent and important work that has been undertaken on climate change by the actuarial profession. I declare my interest as a member of the Institute and Faculty of Actuaries as entered in the register. Climate change is an issue to which actuaries are devoting increasing attention. What happens in the future is intrinsic to the work of actuaries, hence the risks inherent in climate change are an essential element in the work that we do. It is already built into our professional standards. We are, in an important sense, risk scientists, able to uncover uncomfortable possibilities involving the risks we face, to which mainstream debates struggle to give sufficient weight.

I do not have enough time to go through all the arguments, but I trust my noble friend the Minister will follow up the information and perhaps even organise a meeting at which they can be explored at greater length. In summary, work undertaken by the profession in the report it produced last year, The Emperor’s New Climate Scenarios, identified that many of the models used to predict economic damage from the hothouse world we face have been too optimistic. Actuaries are saying that the models are not sufficiently accurate for us to place sufficient weight on them. They underestimate the rate at which the Earth is warming, hence carbon budgets based on those estimates are no longer applicable.

More recent work by the profession has identified how close we are to the risk of real problems and how they should be taken into account when making our decisions on policy. The key document here is the institute’s report from March this year, written in conjunction with Exeter University, Climate Scorpion—The Sting is in the Tail. The point made in the title is that the models currently used fail adequately to take into account what are called “tail risks”: the problems that appear towards the end of the period that is being assessed. The risky outcomes of climate change are those in the tail end of the models that are being used.

In short, the message is that we need to give greater weight in our assessment to worst-case scenarios. They need to be taken into account when making policy on climate change. This is essential, given our growing yet precarious lack of knowledge about extreme climate risk and, crucially, the range of tipping points that we face. For example, we have to treat the 1.5 degrees centigrade limit as a physical limit, not a political target. Too often the long-term impacts of climate change are described in terms of central estimates, when rule number one of risk assessment is to focus on the worst case. This subsequent note by actuaries makes it clear, first, that current energy policies are not sufficient to meet the Paris Agreement goals, that an overshoot of the 1.5 degrees centigrade threshold is now more likely than in the past, and that the rate of global warming was accelerating in 2023. In fact, the rate of acceleration was accelerating. We are going faster towards these tipping point risks.

Secondly, there are material risks associated with a failure to meet those goals, with the risk of triggering multiple climate tipping points and a potential tipping cascade. We must understand that a failure to meet the target does not mean that things will be a bit worse; we must take more seriously the fact that passing one of the tipping points will result in catastrophe.

I am therefore concerned about the Answer that my noble friend the Minister gave yesterday to the Written Question from the noble Baroness, Lady Jones of Moulsecoomb, referring to AMOC, the Atlantic meridional overturning circulation; at school we may have referred to it as the Gulf Stream drift, but it is now AMOC. The collapse of AMOC undoubtedly presents existential—an overused word, but in this case it is meaningful—risks to food production and water availability. Saying “It’s okay so far, and there are a range of views” is not an adequate response to the risks that we face.

The actuarial profession is taking these risks seriously. There are reports by practitioners who understand the nature of risks and how to adapt policy to those risks. I hope the Government will accept the information they are being provided with and adapt their policies to reflect these new dangers.