Carers in England

Lord Haskel Excerpts

Monday 6th March 2023 Lords Chamber

Asked by

[Lord Haskel]

To ask His Majesty’s Government what steps they are taking to recognise the role of carers in England and their contribution to the economy.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

Carers play a vital role in our communities and we owe them all a debt of gratitude. The adult social care sector employs 1.5 million people, with Skills for Care estimating that paid carers contribute around £50 billion to the English economy. In 2016, the ONS also estimated that the gross value added of unpaid care in the UK was £59.5 billion. The Government recognise the value of unpaid carers and provide financial recognition, primarily through the carer’s allowance.

[Lord Haskel (Lab)]

Yes, the Government are at last starting to recognise the value of carers. In spite of the excellent work of front-line carers, the paid-for system remains inadequate, even with the adult social care Bill—a Private Member’s Bill. We know that it is inadequate because millions of men and women, and even children, have to step in as part-time carers, limiting their time in work, education or training, at great cost to the economy. When are the Government going to introduce the social and economic reforms to the social care system that would enable these voluntary part-time carers to fully participate in and contribute to the economy?

[Baroness Penn (Con)]

The Government have set out our long-term plan for the reform of adult social care. In the autumn, we announced that we were making additional funding of up to £2.8 billion available in 2023-24, and £4.7 billion in the following year. Those decisions also involved a delay to rolling out some of the reforms that we had set out, so we will be updating our plan to implement that vision this spring, setting out the path forward.

Finance (No. 2) Bill

Lord Haskel Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords
Wednesday 26th April 2017 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I cannot remember speaking in such a select debate. It may be that other noble Lords were deterred by the 762 pages of the original Finance Bill, which I think made it probably the largest Bill ever. Fortunately it was cut down yesterday and it is hard to know what is left, so I thank the noble Baroness for telling us.

We debated the Budget Statement on 14 March, and since then we have learned two important things. First, Brexit is going to be a lot more difficult than we thought, and secondly, we are going to have an election. The election means that the social aspects of the Finance Bill have to take priority. It is a Bill that, as well as trying to grow the economic pie, has to be accompanied by the politics that divide it up fairly. Does that happen with what is left here? I do not think so.

From what the Minister has said, the Bill avoids some awkward choices on things such as social care and national insurance for the self-employed. Indeed, since our debate last month, we have had more proof that the proliferation of low-paid and insecure work is strongly aided by the way the Government are still allowing companies to differentiate between people who work off a digital platform and those who work off a bricks-and-mortar platform. We now also know more about how this contributes to the lack of investment in raising productivity. In his Budget speech, the Chancellor called this our “number one priority”. Yes, the number of people in work is rising, but the disappointing growth in productivity continues. This indicates that much more attention should be paid in a Budget such as this one to the quality of jobs and whether they enable people to achieve an acceptable and rising standard of living. This is the social necessity that needs to be incorporated into the Bill, but it misses an opportunity to put that right.

We now know even better that the Bill’s indecision on adult social care is putting more of a burden on NHS finances. This Finance Bill is a lost opportunity to take the tough decisions on where public care ends and private care begins—an opportunity, perhaps, to introduce an insurance scheme whereby we all pay in and those who do not need care help to fund those who do. This is what would take pressure off NHS finances. This is a solution for those who are still at work, but for people who need care now, perhaps the Bill should have introduced some kind of loan scheme that would be repayable on death, but it is silent on that.

Since 14 March, when we last debated this, we have had further proof that the growth in the economy is not fuelled by investment, but by consumption—consumption with diminishing investment. That investment has been financed by borrowing. This private debt is approaching record levels. We all know that the housing market is being fuelled by the thin margins that brought Northern Rock down, yet the Bill still encourages this reckless lending. As long as this private debt remains there will be stagnation in growth and productivity. It is a pity that the Bill did not take up the opportunity to do something about this.

Since the Budget Statement, we now know that Brexit will cost us a lot more than we thought. The House of Commons Library tells us that up to 19,000 EU rules and regulations may have to be put on the statute book. EU statistics speak of 12,000. The CBI tells us that to avoid a race to the bottom we will have to create domestic versions of 34 regulatory organisations. The head of the Civil Service tells us that Brexit entails more than 1,000 new rules. Indeed, the Institute for Government speaks of 15 new Bills before we even exit. This is a tremendous undertaking.

Does this Finance Bill provide for the people and resources necessary? The National Audit Office tells us that over the last 10 years there has been a 26% reduction in the number of civil servants. It also tells us that Whitehall alone would need to recruit some 2,000 staff in digital roles. Perhaps the new Government will have to take note of the American system, whereby IT experts do a tour of duty with the Government as a kind of patriotic contribution. Yes, the Government speak of seconding people and hiring consultants, but we all know the limitations of this and how inefficient it is. The Minister will know this from her business experience. She will know that the real cost is the reduced efficiency and slower progress elsewhere in the departments from which these people are seconded. Maybe this is already happening. It was reported that because departments are short of staff, many—some say hundreds—of government contracts with the private sector which expire are being automatically extended instead of using the opportunity to find better ways of carrying out the services and reducing the costs. So much for raising productivity, our “number one priority”.

This Bill still speaks of apprenticeship schemes, funding them and how high standards will be maintained. That is great, yet a committee in the other place recently said that, to ensure these high standards, apprenticeships should not start until there is a clear way of measuring and ensuring these standards. In their response to that, the Government have said, “Yes, this could be a problem”. Is this because people were seconded from the Department for Education to the department for Brexit? If we are trying to reverse our dependency on immigration and rely more on the skills of our own people, we will have to do a lot better than that.

Since the election was announced, we all seem to agree on one thing: the mark of a civilised society is good public services and welfare funded by taxation. The Minister told us about taxation in the shortened Bill, but what a pity it was not reflected that, especially since our debate, we have learned that our economic prospects are less rosy and that spending cuts will make it even more difficult for many people. The Minister outlined the tax changes but not how we could civilise our society even more, perhaps by broadening the tax base with heavier taxes on activities that damage the environment, extending VAT to financial services, revaluing residential property, or fairly taxing inherited wealth. All this could go towards achieving the civilised society we seem to agree we want.

If the purpose of the Bill is to raise our standard of living and public services through economic and social growth working together, from what the Minister said it will need a lot more work by a new Government to achieve that. Perhaps another 762-page Bill is needed from the next Government.

Budget Statement

Lord Haskel Excerpts

Tuesday 14th March 2017 Lords Chamber

[Lord Haskel (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Lupton. We are alumni of the same school, but we obviously took away different ideas.

To me, this Budget continues with austerity, which tells us that the strains on the National Health Service, education and public services are increasing. With food and fuel inflation expected to reach 2.4%, we must be approaching the limits of austerity and the ability of JAMs to cope. The Minister told us that the Government’s ambition is to relieve these pressures through growth in productivity. The Budget seeks to achieve this largely through skills, training and education as part of the Government’s industrial strategy, which I welcome, but this has not worked in the past.

To illustrate this, I will quote from the Explanatory Memorandum of the Immigration Skills Charge Regulations, which are due to come into force on 6 April. Under section 7, entitled “What is being done and why?”, the memorandum says:

“The Government is seeking to increase investment in skills to increase UK productivity. The data show that, on average, employers in the UK under-invest in training compared to other countries. There are many examples of good practice but at an economy-wide level, employer investment in training has been declining for 20 years; the UK is now 22nd out of 28 in the EU for the proportion of employees taking part in continuing vocational training courses”.


These regulations impose a charge on firms for bringing in skilled workers from outside the EU and are designed to encourage British companies to train UK residents instead. But also on the horizon is the apprenticeship levy, which is designed to do exactly the same. In addition, several industries, such as the construction industry, still maintain their old industry training boards. It is conceivable that there will be firms paying all three of these charges. Is it not time to get all of this together? The Government’s own Explanatory Memorandum tells us that it has not worked in the past. What is it about these new schemes that the Government think will make them work now?

Yes, the Budget provides £500 million to expand spending on technical training, which I welcome. So to be constructive, I appeal to the Government to learn the lessons of the past, make a special effort and use this provision to invest not just in buildings and equipment but in people—mapping their progress, celebrating good initiatives, identifying best practice and providing work experience for the teachers, too. Perhaps they could appoint envoys to spread the word, acknowledge that apprentices can also be adults changing careers and put staff on management apprenticeships, as suggested by the noble Baroness, Lady Wheatcroft. The noble Lord, Lord Gadhia, made other suggestions.

There is another reason why I urge the Government to emphasize and demonstrate their commitment: it will help firms to stay here. Many firms are considering a move because here they will be outside the single market. Demonstrating a commitment to skills training also demonstrates one to the industrial strategy. A strong commitment to the industrial strategy will help them decide to stay here.

The Minister explained the tangle over national insurance payments for the self-employed. To me, this was just another example of the Government’s failure to adjust to the so-called digital economy. They have allowed companies to differentiate between people who work off a digital platform and people who work off a bricks-and-mortar platform. As other noble Lords have said, of course all these people should receive the same health and welfare services and pay the same contributions. This anomaly has been created by digitalisation, so if we are to have an industrial strategy and an economy which thrives, we have to understand what is going on in this digital economy.

We think that our future trading relationship with the EU 27 will be influenced by their having a surplus in manufactured goods traded with us and our having a surplus in trading services with them. But according to Eurostat, it is the EU 27 which have a surplus of €31 billion in trading services with us. Could this be explained by our trade in intangibles and the digital economy? The biggest discrepancy lies in our trade with Ireland and Luxembourg. The Minister and I have debated this before and I know that she is concerned about it. Her Government appointed Sir Charles Bean to look into it and have acted on his advice as far as identifying intangible investment is concerned, but there is a lot more to do as this part of our economy grows. This must have implications in our search for productivity, which concerns so many noble Lords. To raise productivity, together with skills training, I urge the Government to undertake work to understand exactly what is going on in the so-called digital economy.

Economy: Overseas Trade Deficit

Lord Haskel Excerpts

Wednesday 25th May 2016 Lords Chamber

Asked by

[Lord Haskel]

To ask Her Majesty’s Government what steps they are taking to reduce the United Kingdom’s deficit on the balance of payments in overseas trade.

[The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con)]

My Lords, changes in investment income are driving the UK’s current account deficit. This has greatly reflected Britain’s attractiveness as a destination for investors. In 2014-15, UKTI provided support for 1,610 of the 1,988 FDI projects in the UK. Government efforts are continuing to help reach the Government’s £1.5 trillion target by 2020. However, the Government’s commitment to eliminating the budget deficit should help to narrow the current account deficit, as forecast by the OBR.

[Lord Haskel (Lab)]

I thank the Minister for that reply, which of course is entirely consistent with government policy over the last five years—funding the deficit by inward investment—but the problem is that it is not working. The current account deficit has become larger in each of the last five years and now stands at a record level of 7% of GDP. Are the Government going to continue with this failed policy or are they going to change it before the deficit becomes unsustainable?

[Lord O'Neill of Gatley]

My Lords, I emphasise, as I tried to do in my opening comments, that the current account deterioration is not being driven by a deterioration in the trade deficit. In fact, our trade deficit has been relatively stable at around 2% of GDP for the last seven years.

The Economy

Lord Haskel Excerpts

Thursday 28th April 2016 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I add my tribute to Lord Peston, a friend and colleague for 25 years. He had a unique talent. When he addressed the House, he often delivered a lecture, much to our delight.

In opening, the Minister tried to reassure us on productivity, skills, infrastructure, the balance of payments and inward investment, but still, as my noble friends Lord Tunnicliffe and Lord Hain explained, the recovery from the financial crisis has been much slower than we would have liked or expected in spite of running budget deficits, cutting interest rates and expanding the money supply. I agree with what the Minister said about the referendum, but I wonder if the Government have been looking in the right places for the other solutions for our economy. Are we looking too narrowly? Is the cause of our disappointment not just economic but social?

Most of us here must have detected the rising social discontent with our economy and the way that business is being run. The recent Panama papers once more emphasised to the public how tax evasion and money laundering divert money away from schools, hospitals and public services. The Government’s reaction to the Panama papers is that this type of activity is damaging to the economy. I agree, but so must be the misbehaviour by some of our leading companies. Other noble Lords have spoken about the divisive, huge salaries paid out in spite of the concerns of shareholders and business representatives. Banks mislead consumers and pay huge fines, with little impact on those responsible for the policies—my noble friend Lord McFall told us all about that. Trusted car brands have falsified test results. A big chain of chemists has been shown to be ripping off the NHS while community pharmacies lose their government support. Microsoft and Google are in trouble with the EU Commission. Now there is BHS. I could go on.

There is another social concern: that our economy is unfair. We here are all for innovation and technological change, but obviously we have not convinced everyone else that these benefits will be evenly shared. They might be reflected in the high wages and better public services leading to a better standard of living for us all, but what they will do is add to the inequalities so graphically described by noble friend Lord Tunnicliffe. Yes, an increase in the living wage is designed to help address inequality, but now we know that very few will benefit. Instead of workers benefiting from increased productivity, working conditions will just become harsher.

So no wonder we hear that we are reaching the limits of the benefits of free trade, foreign investment and immigration. There are other voices, which the noble Lord, Lord Mawson, spoke about, often referred to as the “new millennials”, who are concerned about growth and the quality of life reflected on social media. We may or may not agree with those voices, but will the Minister agree with me that these social concerns must be having an impact on our economy, on growth and on development? If people are alienated from business, that must be damaging for the economy.

So what is to be done? Fortunately, there is an alternative. There is mounting evidence of what works. First, we must get away from the pressure to deliver short-term outcomes, which has led to a decline in long-term investment. Over the past few years, companies have been net savers in the economy. The result is that the returns to shareholders have been poor. The 20-year real return on UK equities is now the same as on government bonds, a situation that has not been seen since the 1920s and 1930s. This means that there has to be a purpose beyond shareholder returns.

The advantages of reducing the complexity of financial intermediation and simplifying the investment chain are well rehearsed. So are the benefits of longer-term horizons and of asset owners and fund managers being active stewards. To my knowledge, these ideas have been around for 20 years—they are not new—but over the years this kind of stewardship and corporate governance has gradually been shown to work. There are good examples, such as Bamfords, JLR, Admiral and the old employer of the noble Lord, Lord Price. Many tell us that. Indeed, the Parliamentary Commission on Banking Standards has called for that kind of management.

Here I must declare an interest as a supporter of Tomorrow’s Company, an organisation that has developed these ideas for many years. By happy coincidence, next month it will publish its paper about this clarity of purpose, about the values and about collaboration in business—the kind of thing that my noble friend Lord McFall spoke about with regard to banking. I hope the Minister will consider its work carefully because now more than ever, its time has come. It is time because studies show that only 37% of the population trust business, and our economy depends on it. It is time because that is one way of helping people in work deal with the uncertainties of the changing world of work. It is time because that is how we can deal with the concerns of the public at the direction in which business is going.

These values coincide with some of the Government’s own concerns. They certainly deliver value for money—the cost is minimal. Current low rates of interest must be the right time for long-term investment. The Prime Minister wants to reposition his Government as a force for social reform. Well, here is one way to do that. It is time for economic policy not only to deal with economics but also to bring investors, executives and boards together, with the Government, to make this social approach equally important to all the other things we are trying to do—the things that the Minister explained when he opened this debate. Economics alone will not do the job. We have to persuade companies to raise their social game, too.

By encouraging these values the Government will also help and encourage business to deal with other social pressures, such as: adapting to climate change; coping with the demands of sustainability; having to deal with antimicrobial resistance—the Minister knows about that; and reacting to the national populism which is becoming a feature of our politics. In addition, of course, there is the increasing need to be a good corporate citizen. Again, little of this is new; it is just that it is becoming a lot more relevant.

This debate is about the steps being taken to build a stronger economy. Many noble Lords have spoken about social steps. I think it is time for these principles and practices of corporate governance and business management to play their part in growing our economy.

Budget Statement

Lord Haskel Excerpts

Wednesday 23rd March 2016 Grand Committee

[Lord Haskel (Lab)]

My Lords, this Budget promises more austerity. I join my noble friend Lord Eatwell and many others in feeling that we are becoming victims of austerity as practised by this Government. Much of the Budget is designed to put right the low investment in infrastructure, training, the disappointing exports, disappointing tax receipts and poor productivity —caused by austerity. Alan Milburn pointed out in his recent report on child poverty and social mobility that much of this falls unfairly on generation Y. With welfare now added to the many areas of expenditure that are closed to the Chancellor for cuts, he may be forced to find the new approaches suggested by many noble Lords. The noble Lord, Lord Higgins, referred to a rather large black hole.

The Minister spoke of the need for resilience. Economic security is not just a matter of accountancy and government bookkeeping. The Government and other noble Lords continue to tell us that the economic crisis was caused by excessive public expenditure and public debt during the Labour Administration, but endless books, articles, learned papers and research tell us that the crash was all to do with global banks extending huge amounts of credit to inappropriate borrowers—banks with insufficient capital of their own to cover these and their own speculative losses. Internal bookkeeping will not protect us from these pressures. We have to raise our game in the financial industry and a robust and properly regulated financial system is required to protect us from outside financial pressures. My noble friend Lord McFall told us how weak the system is. What are the Government planning to do about it?

In his Budget speech, the Chancellor said that the most significant observation from the OBR was the slow-down in the growth of productivity. The Minister reminded us of this and so have many other noble Lords. The Minister has said that the Government are going to deal with this through investment in education and infrastructure. In support of this the Government speaks of the roads, railways and flood defences that are on the way. My noble friend Lord Darling told us that what the Government do not tell us is that much of this expenditure is on feasibility studies and design, on organisation and preparation—all essential, but not for now. It is for the next generation but one. For the next generation are the many small and local projects that are essential to cut bottlenecks and to help local businesses. But as the noble Baroness, Lady Kramer, pointed out, starved local authorities are struggling to support this. Instead we hear about the promised prestige projects that are a long way off in the future. What efforts will the Government make to help local authorities to carry out these small but urgent projects?

Government investment in science and engineering is key to raising productivity and, yes, there are several welcome signs of this investment all across the country. At last, there is even investment for studying the feasibility of building mini nuclear reactors. Also welcome is the decision to make loans available to many more adults training in further education, particularly for science and engineering. However, as the noble Lord, Lord Bilimoria, pointed out, compared with other areas, this is not nearly enough. Nor is it adequately managed. A few days before the Budget, the National Audit Office was strongly critical of the quality of the information used for the Government’s investments in science capital projects. I hope the Government will pay proper attention to that. These projects must be properly planned and funded from start to finish and not from Budget to Budget.

One of my major concerns is that the Government do not seem to understand the way that the world of work is changing and the impact that this has on productivity. We have long argued that the Government are giving insufficient attention to those less tangible investments. We now have an important ally in Sir Charles Bean. In his recent report he, too, points out that intangible investment is not properly reflected in our figures. He gives some interesting examples: go to a travel agent and book a ticket and that becomes part of our GDP because of the investment in the travel agent, but be more efficient and book it over the internet and it does not appear. If you travel by taxi, this is in our GDP because a taxicab is an investment, but if you travel by Uber it is not, because you are probably riding in somebody’s privately owned car. Many small businesses and self-employed people now use websites, platforms and apps to sell their services and products. Where do they appear? We have to get this right. The Bank of England’s chief economist, Andy Haldane, warns us that up to 12 million jobs in Britain are at risk because of these powerful tools to raise productivity.

I welcome the increased minimum wage. My noble friend Lord Eatwell pointed out that many firms have said that they will pay for the increased minimum wage with less hours, less overtime and fewer benefits. So we are not going to see much growth in earnings. This increase in pay should be financed by increased productivity. If the means of achieving this are not recognised, all we will get is a race to the bottom—as the noble Lord, Lord Skidelsky, indicated—which is an outcome that none of us wants. When will the Government bring us into the 21st century? I put it to the Minister that in failing to understand properly what is going on we are in danger of solving yesterday’s problems, not today’s. The Minister laughs, but I think it is a very serious matter.

Many noble Lords have spoken of our complicated tax system. What this means for business taxation is a lack of a sense of constant strategic direction, and it makes us nervous. The Minister welcomed the cuts in capital gains tax. Like many other noble Lords in this Committee, I spent much of my working life building a business—a business that I am pleased to say supplied John Lewis, so I welcome the noble Lord, Lord Price. During that time—some 30 years—the tax we would have to pay on selling out our businesses varied between 45% and 18%. Indexation was introduced and then withdrawn. From time to time, the definition of business assets was changed. Our strategic concern was to achieve success. The Minister may say that the Government’s intention was to encourage investment, but it has not happened. Others could interpret this as tempting us to enjoy the fruits of success rather than continuing to invest in the business. And yes, in this Budget the rules are changed again, so I put it to the Committee that this is a wrong strategic aim in a country such as ours which depends on people like us building long-term, successful businesses. I agree with others that this is where continuity and reform are needed.

We need Budgets that understand the economy, build a robust and secure economy and which invest in long-term business, industry, the environment and skills and services—not Budgets designed to deal with the self-inflicted damage of the Government’s version of austerity.

Autumn Statement

Lord Haskel Excerpts

Thursday 3rd December 2015 Lords Chamber

[Lord Haskel (Lab)]

My Lords, I say to the noble Lord, Lord Wakeham, that I have an American wife.

My noble friend Lord McFall spoke of a plethora of Chancellor’s Statements. He is absolutely right. In July, we were told to expect severe cuts in public spending; three months later, a small improvement in tax income is forecast, and this during an October which official figures show to be the worst for public finances in six years. The improvement is based not on healthy growth, as the noble Lord, Lord Shipley, pointed out, but, according to the OBR, on rising consumer credit—but never mind. Multiply this small expected rise over five years, and we are £27 billion better off. Wonderful.

The noble Lord, Lord Carrington, calls this luck. I call it creative accounting. It is the kind of accounting that I remember contributing to the collapse of industrial giants such as ICI and GEC. It is the kind of accounting which eventually led to the creation of the Investor Forum and the Financial Reporting Council to watch over it. It is wrong, it is dangerous and it is short termist. I suspect that the Chancellor and the Minister know this and have used it as an excuse to slow down austerity; to slow it down to Labour’s speed, if you like. However, universal credit will eventually do what the intended cuts in tax credits tried to do, but later. Even so, some low-income couples with three children will lose out now, so will single parents with one child working part time on the national minimum living wage, and women are again disproportionally adversely affected by the cuts. Is this balancing the books on the backs of the poor, as the noble Lord, Lord Shipley, suggested?

However, the noble Lord, Lord Carrington, and the right reverend Prelate told us to aim for a high skill, high pay, high tech, low welfare economy. How are we going to get there? In July, this journey was outlined by the Minister in the Government’s paper Fixing the Foundations: Creating a More Prosperous Nation. Well, I failed to find any mention of that in this Statement four months later. There is a passing mention of productivity on page 6 saying that it is growing, but we still lag behind most of our competitors. What the Chancellor did not say is that the OBR has revised down the growth in productivity next year and the year after that. So is that productivity paper history? Is it another victim of short termism? We must not let that happen. The Minister laughs. I think it is a serious matter because otherwise the rising national minimum wage will lead to serious job losses if it is not matched by rising productivity. If the route to increasing prosperity is productivity, surely the Statement should have said so.

The various changes should be put in the context of raising the nation’s productivity over the long term in the sense of the modern tangible and intangible world of work instead of in the context of short-term politics. For instance, the Autumn Statement commits to protecting the £4.7 billion science budget in real terms up to the end of the Parliament, but this needs to be within the culture of productivity to show that the culture is alive and well and that the state is engaging with industry in a positive way to rebalance the economy. This kind of government expenditure crowds in private investment; it does not crowd it out, as the noble Lord, Lord Carrington, suggested.

At the beginning of a five-year term, this Statement should have been forward looking. It should have been creative and pointed the way to a high wage, high skill, low welfare economy which unites us; it should have promoted productivity that in the long term is creative. Instead, the Government’s brand of austerity is short-term, divisive and destructive. What a lost opportunity.

[Lord Ashton of Hyde (Con)]

My Lords, I gently remind the House that this is a time-limited debate. Every speaker so far has gone over time, so we will cut into the Minister’s reply.

Spending Review and Autumn Statement

Lord Haskel Excerpts

Wednesday 25th November 2015 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, again, I am very tempted to rise to the bait of my noble friend’s question, but I have to be careful in this regard, given my own interest in China. All I would say is that as we creep through time, a number of the more sceptical voices about the performance of our own British economy in a sea of great turbulence and unpredictability around the world continue to improve, as does the most up-to-date, ongoing evidence of the economy’s performance.

[Lord Haskel (Lab)]

My Lords, the Statement promised a lot on infrastructure; so did the Budget two years ago, when a £40 billion fund was established to guarantee it. But since then only about 10% of this fund has been used—largely, I suspect, because employment in the construction industry has gone down by perhaps 120,000 people. So what confidence can we have that the infrastructure promise in this Statement will be more successful than what was promised two years ago?

[Lord O'Neill of Gatley]

My Lords, I am slightly surprised at the tone of this question with respect to infrastructure, along with a couple of earlier questions. Let me repeat that within the £12 billion additional commitment to capital spending, much of it, in its broadest sense, is indeed on infrastructure. I also point out that since the summer Budget, an independent commission has been looking at the nation’s infrastructure needs. It will give advice and report back ahead of the next Budget.

I will add that, based on the involvement that I personally have with many other countries around the world, the guarantee scheme that the noble Lord refers to in terms of its low take-up is generally regarded as one of the most sophisticated and credible in the world. It will continue to be used, as we have highlighted in today’s Statement, and we will welcome many more proposals for infrastructure spending from the private sector, which may be interested in using that guarantee.

Finance Bill

Lord Haskel Excerpts

Tuesday 10th November 2015 Lords Chamber

[Lord Haskel (Lab)]

My Lords, even though we cannot do much about it, I welcome this opportunity to debate the Finance Bill because it is a chance to expose a mismatch between what the Government promise and what is actually in the Bill. We are promised a fairer and more equal society, a more prosperous economy based on higher skills, higher-paid jobs and a greener and more pleasant land. The Finance Bill says otherwise.

The most glaring example of inequality is of course the mismatch between the rising minimum wage and reducing benefits, which leaves millions of poorer people worse off. The IFS distributional analysis says it all but there are other examples. I agree with my noble friend Lord Lennie that raising the inheritance tax threshold at a time of austerity must contribute towards inequality. Surely the time to raise inheritance tax thresholds is when our current account is in balance or even surplus. What the Chancellor is doing now is just giving the better-off a tax break, especially as the IFS tells us that the percentage of the population liable for inheritance tax is in single digits. As other noble Lords said, this comes at a time when 3 million working families are at risk of being worse off next year. We still do not know how the social care sector will manage. It really is a bit of a shambles.

The Minister spoke of anti-avoidance measures for corporations and individuals. Yes, those are welcome but how robust are these measures? According to the Institute of Chartered Accountants, corporation and income tax revenues are decreasing. Is this because they are not being collected by an efficient and motivated staff, as suggested by the noble Baroness, Lady Kramer? Is this yet another example of this Government alienating their public servants? Nurses and doctors, teachers and carers, police and firefighters: do we now add Revenue and Customs staff? The Public Accounts Committee in another place seems to think so. These measures will not be effective if the Government are not an effective employer.

We are also promised a more prosperous economy, hopefully through productivity and rising skills. However, skills are changing all the time in our digital economy and it is good practice for people in work to upskill through part-time study. In 2012 tuition fee loans were extended to part-time students, but they were hedged about with so many restrictions that few took them up. As a result, we have seen a sharp decline in the number of part-time students and the courses available to them. This is confirmed by this morning’s news about FE colleges. Despite much debate and frequent presentation of the facts, the Bill does not recognise this. Nor is there any mention of part-time education in the Green Paper published on 6 November. Consequently, we are losing a huge opportunity to raise the skills of our workforce, although that is industry’s most frequent complaint. This is despite the good intentions in the Minister’s recent productivity paper.

That paper also referred to the housing crisis. In spite of what the Minister said, the Bill does nothing to hold back ever higher rents, higher deposits, falling home ownership and the lowest rate of housebuilding that any of us can remember. All this is with a rising housing benefit bill and less secure tenancies. Despite what the Minister said, the Bill does nothing to encourage a culture of productivity; the kind of culture you immediately sense when you walk into a highly productive business or service. We have a financial strategy reflected in the Bill, but no industrial strategy. This is why our economy remains unbalanced, with growth still depending on low wages, rising house prices and rising consumer credit.

With the Paris meeting due soon, perhaps my greatest disappointment with the Bill is that it reduces our commitment to combating climate change. The Minister told us of the exemption of renewables from the climate change levy which is, incidentally, back-dated. The levy was designed both to promote energy efficiency and reduce CO₂ emissions. Since then, subsidies for onshore wind have been virtually removed with a single cut. At least these changes could have been tapered.

Another example of diminishing commitment to climate change in the Bill is the vehicle excise duty for passenger cars, which the Minister spoke about. Levels of excise duty used to deter high-polluting cars and encourage low-polluting ones. The new, rather complicated, rules seem to have abandoned this. Instead, under the new proposals, cars in band A, which paid no road tax, will pay much the same tax in years two and beyond as cars in band M, the highest-polluting band. Setting aside the public scepticism about car emission figures, what is the purpose of penalising polluting cars only in the first year? Is it just to maintain revenue from cars, irrespective of emissions; is it just to invest in roads? There were three items of news this morning about climate change. The Bill really ought to recognise it.

These are just a few examples of the way this Bill does not reflect the rhetoric of the Government. It certainly does not move us towards the greener, more prosperous and more equal society that we have been promised.

Economy

Lord Haskel Excerpts

Thursday 10th September 2015 Lords Chamber

Moved by

[Lord Haskel]

That this House takes note of the British economy beyond austerity.

[Lord Haskel (Lab)]

My Lords, I am delighted to move this Motion this morning. In fact, I rather feel like somebody waiting for the No. 59 bus and then two come along. Having two debates on productivity and the economy this week is most exceptional. Some of us were unable to get on the first bus, as it was slipped in during the summer, so I welcome noble Lords to this rather full second bus.

Now that the new Government may at last be thinking beyond austerity, I feel that it is very important to explore this, and I am grateful to all noble Lords and the Front Benchers for their participation. Perhaps debating this issue twice this week is an indication of its importance.

Let me start with the Government’s recent paper on productivity. Much was repeated in Tuesday’s debate. It certainly pressed most of the right buttons but, like many previous efforts, it is destined to achieve little. Why? It is because there is no strategy. It mentions everything; it prioritises nothing. It remembers everything; it learns nothing. If we want to move from an age of austerity into an age of productivity, it is management and leadership that should be prioritised, and then things will get done. That is because the first task is to encourage a culture of productivity, both in business and in government. Without this, much of the work that the Government do on infrastructure, housing, science and education will all be wasted. This is urgent because in the next 12 months, productivity has to make up for the gap between the recently announced withdrawal of in-work benefits and the rise in the minimum wage. Otherwise, it will lead to job losses. Quite rightly, one does not encourage productivity by driving down wages and making people poorer; that is what happens in an age of austerity.

This is especially true in local government, which has suffered twice the cuts that UK public spending has suffered as a whole. Over the past five years, the cuts in local government have not been so obvious because they are hidden: prisons or roads not being built, or reduced welfare for people whom we do not see outside of their homes. The public sector, which the Government are in charge of, is hardly mentioned in their paper. In an age of productivity, this kind of management is not good enough. If there has to be budget cuts, there must also be management and leadership to help cope with them.

After the age of austerity, the strength of our economy will rely on our ability to adapt to all the new changes coming from many directions. Our ability to manage things will be crucial. The old tools will not solve these new problems. I say this because technology is transforming everything. To start with, business markets and government services can be transformed in months as new apps and ideas reach millions of people in days. This means that it is the younger, digitally knowledgeable employees who will detect the coming change or indeed suggest one. This means that companies, particularly large companies, are going to have to change the way they manage their staff. Employees at all levels have to be free to come up with new ideas and exploit digital platforms. This kind of creativity is stifled by the more traditional forms of management.

Many jobs are now not jobs in the way they used to be defined. Many people are employed part-time or over the internet; it is called transactional employment. Many now work in an online market for casual labour, which is rapidly expanding. This is for not only on-demand or sharing services such as accommodation or taxis but, for example, computer programming. In Europe alone, there are some 20,000 freelancers registered with Upwork, which does this kind of business. The scale of this new world of work is only just emerging. Its impact on the age of productivity will be twofold. First, the Department for Work and Pensions will have to be creative and find a new form of employment arrangement that suits these changing circumstances, so that it does not just become old-style casual labour, with people losing out on training, pensions, holidays and sick pay. Secondly, as people become their own managers, so the economy becomes more productive, and the tax system will have to acknowledge and understand this.

Many noble Lords are concerned about skills shortages. By introducing a training levy, do we presume that the direction of travel is that business and industry will deal with the skills themselves? Is this why larger government contractors must now have apprenticeships?

The Government are obviously unsure about this policy because they have announced that they are going to create seven new national colleges for particular industries, such as nuclear and high-speed rail, with employers expected to contribute towards the capital costs. Meanwhile, resources are being put into university technology colleges, yet FE colleges, which offer the more expensive training and vocational qualifications, have had their funding cut. This kind of muddle confuses parents, and confuses students looking for a technical education and training for a career. To find out whether this is yet another example of the Government remembering everything but learning nothing, I have put down a Written Question asking who will pay the running costs of these seven new colleges. The crucial point is that the right technical education has to be available to those adapting to the technical change.

The age of productivity calls for a more progressive style of management, which ironically often means less management as people work with more autonomy. The Chancellor has asked Sir Charlie Mayfield to look into all this to see how corporate governance can look to the long term instead of the short term, and I am sure that his proposals will be very helpful. However, we cannot wait for yet one more report without getting the impression that Ministers are having reviews until they get the recommendations that they want, especially as there are signs that the change is already happening. The CEO of Unilever has stopped quarterly reporting. At its recent London conference, the Coalition for Inclusive Capitalism called for a more broadly based prosperity and is enlisting our major asset management groups in the City towards this end. Incidentally, Mrs Clinton is pursuing this in her nomination campaign in America.

Some companies have reviewed their governance in terms of stewardship—the kind of stewardship proposed by Tomorrow’s Company. The Bank of England is prodding banking in this direction. Some may say that these ideas have been around for a long time, but in an age of productivity, their time has come. This has to be the direction of travel. Ignoring this will once again be a sign that the Government are remembering everything but learning nothing.

The Government’s leadership on sustainability and the green environment is another important aspect of leadership in an age of productivity. The Government’s words indicate a green direction of travel, but recent actions indicate the opposite. For example, the Energy Bill will produce abrupt changes. Also, cancelling the requirement to build zero-carbon homes from 2016 adds to the feeling that we are not going to achieve the legally required targets for carbon emissions by 2020. This must be managed better. In an age of productivity, you have to carry people with you and have a purpose with which people can identify; otherwise, the very objective you are trying to achieve becomes discredited.

The Minister’s regional policy of more independence is absolutely right for an age of productivity. But in an age of productivity regionalisation must be seen not as devolving the cuts to local government, as happened in the age of austerity, but as revitalising areas of Britain away from London.

The age of productivity requires this kind of management and leadership because of the growing impact of computers and technology on work and business. In an age of productivity, products and services have to be lighter, smarter and greener. Services in particular will become yet more data-driven, using algorithms that self-improve.

[Lord Lea of Crondall (Lab)]

Would my noble friend mind if I asked him a question that has puzzled me for a long time on exactly the point that he has just made? How is it that we never see any sign of these vast increases on paper of productivity through technology —10 times, 100 times—in the aggregate productivity statistics?

[Lord Haskel]

The Minister has asked Sir Charles Bean—Charlie Bean—to look into this whole question, so I will leave it to him to answer. It is called delegation.

At present, we have a growing system where public administration, business and trading, shopping and entertainment, travel and leisure, and running our offices, our homes and our health depend more and more on computers dealing with each other. Sometimes, we are the only human in the loop. This is what the age of productivity will eventually look like.

The danger lies in our ability to control this complexity and interdependence. The complexity defeated us in the financial sector and helped cause the crash in 2008. This is why we need management and leadership that will remember everything and learn from it.

There is also a need for government to understand that much of this investment is intangible—difficult to see, so hard to finance. It is confusing to accountants, statisticians and apparently to the Government, too—so they set up a committee to look into it. But it is crucial to the stronger policies needed to support innovation. This is why the age of productivity needs arm’s-length organisations such as Innovate UK and the alternative forms of funding which are arising.

So what are the implications for the age of productivity? Since productivity has become disconnected from pay, pay rates have hardly gone up in the past five years. The proceeds of this have accrued mainly to investors and managers. In an age of productivity, the benefits must balance out and both must prosper equally. If they do not, the age of productivity, pursued to its logical conclusion, will create an unequal society the like of which we have not seen for generations. Are we just going to allow this economic process to continue unopposed? Surely not.

The Government claim that austerity is necessary so as not to impose on future generations. I say that we have to move to an age of productivity so as not to penalise future generations. In this way, we will learn something as well as remember everything. I beg to move.

[Lord Ashton of Hyde (Con)]

My Lords, that was perfect timing from the noble Lord, but I remind other noble Lords that we have a very tight timetable if we are going get through this debate in two-and-a-half hours. There is absolutely no spare time, so, when the clock turns to five minutes, it means that your time is up.

--- Later in debate ---

[Lord Haskel]

My Lords, in the three minutes left for this debate, I thank all noble Lords and members of the Front Benches for their words, their work, their wisdom and their contributions. I thank the Minister in particular for his response and for telling us about the work that he is doing; we should learn more about that.

There has been a diversity of opinion about the role of the state. The answer is not that the state is just an interested spectator but that it has a role to help with trade, science, technology, inward investment and skills. The state has to be part of the answer, not part of the problem.

Many noble Lords were concerned about inequality. Inequality goes with bad productivity, and many speakers drew attention to the fact that, where relations were good, so was productivity. This seems both socially sensible and desirable.

Most noble Lords agreed that we need to keep our finances under control. As for how to do it—well, there is a dispute about fiscal policy, but we will have to agree to disagree.

I was glad that the Minister referred to rebalancing the economy. Separating the economy into manufacturing and services is an old tool which will not solve new problems. So much of manufacturing includes providing services; indeed, some manufacturing companies employ more people to provide services than to make the products.

I hope that this debate will see talk turn into action. Before I finish, I would like to say that, in all the years I have served in your Lordships’ House, I have never known such a negative attitude towards us from the press and other media. Those of us who are engaged in outreach activities or who travel around as members of the Government or of the House of Lords will have noticed this. We must not let this drown out our contribution to the creation of policy, or our expert deliberations, our scrutiny of the Government and holding the Government and others to account. This debate will help counter that attitude.

Motion agreed.