Spring Budget 2024
Lord Lee of Trafford Excerpts(2 months ago)
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Lord Lee of Trafford (LD)
My Lords, it gives me no pleasure to describe our country today as pothole Britain. For years, we have lived beyond our means, compounded, of course, by Covid and Brexit. Most public services are in dire need of greater resources. National morale is very low indeed.
I am supportive of some of the individual measures in the Budget—support for creative industries, changes to child benefit, and a focus on life sciences and artificial intelligence, and I understand the politics of the 2% reduction in national insurance. However, I believe that the money that has been saved there would be much better spent on defence, where the argument to spend more is compelling at the present time, as well as on our prisons, dentistry, youth services and the police, and on social housing, as referred to by the noble Lord, Lord Bird.
My focus today is on two things: the disposal of the NatWest shares and ISAs—the British ISA, referred to by the noble Lord, Lord Young. The noble Lord, Lord Macpherson, referred to the disposal of NatWest shares.
I think we all agree that financial education in our schools has been lamentable. The NatWest disposal of the Government’s around 30% holding gives the country a unique opportunity to improve financial education. If the Chancellor goes down the “Sid” route, which is what he is talking about, I believe that there is a real opportunity here, which myself and a number of senior Members of your Lordships’ House, including the noble Lords, Lord Lamont and Lord Howell, have put to government. Our idea is that government gives by way of gift something like £5,000 of NatWest shares free to all our state secondary schools, if they would like those shares. With just over 4,000 state secondary schools, that would probably cost around £22 million, assuming full take-up, which, frankly, is a pretty small amount of overall government spend.
These shares would have to be held for the long term. A £5,000 NatWest shareholding would give, at present, a dividend to the school of about £350 a year. Our idea is that the pupils would be empowered to decide how that £350, or the annual dividend, is actually spent. They might decide, for example, to spend it on something for the school, to subsidise a school trip, to support a local charity, or even to reinvest it in some form. But it would be their decision. Of course, because the school would own the shares, it would be able to participate in the national NatWest AGM. Indeed, NatWest may well send speakers into the schools to spread the word on financial education. This scheme would be transformative. It would, for the first time, begin to encourage and make youngsters aware of what banks are, what the stock market is and what dividends are.
In the Treasury Select Committee last Wednesday, John Baron asked the Chancellor about this scheme, which has been put to him, and his reply was that it was under consideration. Obviously, I very much welcome that. If such a scheme is actually implemented, we could build on it by encouraging regional public companies to give a small proportion of shares to state secondary schools in their locality, where their employees’ children go, and indeed where they recruit from.
Turning to ISAs and the concept of a British ISA, I have been a great supporter of this whole concept, starting to invest when PEPs, the precursor of ISAs, came in, in 1987. ISAs have developed into probably the best tax-free wrapper in the western world. Many of my overseas, foreign friends are envious of the ISA. It has been a very successful savings medium, and the newspapers over the weekend have been full of ISA content. I would be very supportive of anything that gives a boost to the UK stock market, but I have to say that the £5,000 British ISA suggested in the Budget is, frankly, something of a damp squib. It will be administratively very difficult and complex: we are probably talking about having to run two ISAs. It will obviously appeal only to the very wealthy, who will be able to put in something like £20,000 a year—£20,000 plus the £5,000. Frankly, it hardly produced a flicker in stock market interest: there were no movements at all. I am pleased to say that my own ISA is 100% invested in UK stocks—which perhaps explains its rather poor performance in recent years.
More seriously, there is a fundamental choice here. If individual savers and investors want to invest in overseas stocks, by all means let them—that is their decision—but I do not believe that we should give tax incentives, via ISAs, to those who invest overseas. Why should we? It does not make sense. Therefore, while I think it would be difficult retrospectively to argue that people should dispose of their overseas holdings, from now on those who take out new ISAs, whether they be for £20,000, £5,000 or whatever figure, should actually be restricted solely to UK stocks. If they want to invest in overseas stocks, that is their decision, but there should not be tax breaks supporting that.
Autumn Statement 2023
Lord Lee of Trafford Excerpts(5 months, 3 weeks ago)
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Lord Lee of Trafford (LD)
My Lords, I want to focus my remarks this evening on the 39% stake that the Government still have in the NatWest bank. In the Autumn Statement, the Chancellor indicated that the Government were considering disposing of their holding over a period, suggesting also that they might go down the “Tell Sid” route of early privatisations.
I want to suggest something very radical. I think it is accepted that, in this country, there is near zero financial education in our state schools. I suggest that the Government gift, say, £5,000 worth of the NatWest shares that they own to the 4,400 state secondary schools, to be held for the long term. That would cost the Government only something like £22 million. That £5,000 worth of shares would annually produce a dividend income of about £350. My suggestion is that the pupils themselves could decide, by voting, how that £350 is spent. Maybe it could be on an item for the school or to subsidise a school trip, something along those lines, or maybe even go to a local charity, but the pupils would decide. Similarly, they could participate digitally in the NatWest AGM.
In my judgment, this suggestion would raise awareness of how banks and the stock market operate. I am very pleased to say that, when I put this idea to the noble Lord, Lord Baker of Dorking, who drove the programme of introducing computers into secondary schools when he was IT Minister, he was very supportive. I was also very pleased to hear the noble Lord, Lord Howell, talk about wider share ownership a little earlier.
The Government also could and should provide a little money to enable approved speakers to go into schools to talk about financial education. Parallel to all this, I hope we can encourage PLCs, particularly those in the regions, to gift shares in their companies to the state secondary schools in their area, from which they draw recruitment or will in years to come. I put this idea yesterday to a public company chief executive and FD of a company that I am invested in; they immediately said that, yes, they would sign up and thought it was an excellent idea.
I realise that the Minister will not be able to give a reaction immediately, and I would not expect her to, but I hope that she will take this idea to the Treasury with her and that they will give it serious consideration. I hope that the Labour Front Bench will also perhaps consider this, because the opportunity may well come to them in a few months’ time.
Moving on, I was hoping that the Autumn Statement would reverse two early mistakes that I believe were made by this Government. First is the mistake that George Osborne made when he disallowed mortgage interest for landlords on their borrowings, which has had a massively negative effect on the private rented market. As we know, landlords are leaving the market and selling up, and I was hoping that would be reversed. Secondly, there is the decision that I believe the present Prime Minister made when he was Chancellor of the Exchequer to disallow overseas visitors from reclaiming VAT. There has been a massive campaign, as the Minister and the House will know, by our hoteliers and virtually all our leading retailers and restaurateurs to try and reverse the present situation and give us back a level playing field.
Finally, if the Government and the Treasury are looking to save money, I suggest that they look at the 60,000 civilians employed by the Ministry of Defence. It is an extraordinarily high figure—we have only about 70,000 in our Army—and has hardly changed over the last five years. In fact, if anything, it has slightly increased, despite the fact that our forces have been reduced. Almost every large employer in the country will have reduced their headcount over the last few years. We have had developments in automation, video conferencing and similar, yet the civilians employed by the MoD stay stubbornly at this figure of 60,000. I suggest that the Government and the Treasury look at this and see if they cannot reduce that headcount and move the money saved from the blunt end, as it were, to the sharper end of our Armed Forces and equipment for our Armed Forces.
Tourist Spending: VAT
Lord Lee of Trafford Excerpts(12 months ago)
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Baroness Penn (Con)
The noble Lord makes an important point. We have taken steps during the pandemic to provide support for those towns that rely on tourism; £37 billion of support went to tourism, leisure and hospitality in the form of grants, loans and tax breaks. We have the tourism recovery plan, which is focused on both international visitors and domestic tourism within the UK. We also have the towns fund, which is specifically focused on helping regenerate towns, including many of the seaside towns that do not tend to benefit from the bigger-city deals.
Lord Lee of Trafford (LD)
My Lords, last week, as president of the Association of Leading Visitor Attractions, I received an email from Dr Julia Knights, the deputy director of the Science Museum, who wrote:
“It is devastating to see so few schoolchildren now visiting the Science Museum from France and Germany especially.”
Could the Minister urge our trusty and well-beloved Home Secretary to again press the accelerator, but this time to urgently expedite the visa passport situation for visiting European schoolchildren and, similarly, to urge the Chancellor of the Exchequer to man up and admit that the VAT refund policy needs to be reversed, and do it now and not wait until the Autumn Statement.
Baroness Penn (Con)
I am not sure that the reversal of the VAT refund scheme would encourage more schoolchildren to visit the Science Museum. But I will certainly take back the noble Lord’s point about visas to the Home Office.
Budget Statement
Lord Lee of Trafford Excerpts(1 year, 2 months ago)
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Lord Lee of Trafford (LD)
My Lords, I have had the privilege of experiencing 30 years of Budgets in both Houses here at Westminster. As the noble Lord, Lord Skidelsky, alluded to earlier, in the old days if there was the slightest leak from a Budget, the security services would be called in. Today, we seem to have a Budget by instalments: a virtual daily leak.
When you are speaker number 13 in a Budget debate, as I am, there is really no point in repeating many of the things that have already been said. I am not even going to say what an excellent maiden speech the noble Baroness, Lady Moyo, made. I am going to focus on a few different areas, and maybe express a few personal ideas and thoughts.
On health and the lifting of the pension cap, I think the jury is out. On the one hand, it might well encourage senior consultants to stay on longer; on the other hand, it could encourage others—maybe not in the health service—to retire early. It is also vital that we increase the number of medical school places, which I am sorry there was no mention of in the Budget. We need to do something to stop the drain of nurses from our health service. We now have approximately 200 health trusts. A lot of consolidation is taking place, and many trusts are very big businesses. Their performances vary greatly, and we need more training for senior management. I suggest that we establish a standalone dedicated health business school, which would I hope bring about a significant increase in the quality of management of these large organisations.
I have asked a number of Questions recently on prescription charges, which are now rising to almost £10 an item. The total revenue the Government get is only about £600 million. Some 60% of the population do not pay, and there is some evidence now that people are forgoing their medicines because of the cost. There have been no prosecutions whatsoever for prescription charge fraud over the last 12 months. Prescription charges are free in Scotland, Wales and Northern Ireland, and I suggest they should be abolished here in England to ease the pressures on so many family budgets.
On housing, we clearly need more owner-occupancy, but we also need many more properties for rent. The rental situation, particularly for young people trying to find accommodation at a reasonable price, is a nightmare. Landlords are selling up and the stock of rental accommodation is drying up. In my view, the Government should act. They could easily reverse the disallowance of interest on landlords’ borrowings. They could abolish the extra stamp duty and perhaps even reduce capital gains tax on disposal of rental properties. If they wanted to, they could transform the rental market.
Tourism and hospitality—I declare an interest as the president of the Association of Leading Visitor Attractions; I was chairman for 30 years—is a major employer at all skill levels. It is probably the number one private sector industry in more parliamentary constituencies than any other single industry. Virtually every business in tourism and hospitality is experiencing recruitment problems. Vacancies are something like 9% nationally and 15% in London. The industry has been heavily hit by Brexit and I believe we have to and should allow more immigration in this area.
Tax-free shopping should also be reintroduced, where visitors can reclaim VAT. High-spending tourists are now deserting the United Kingdom and heading to France, Italy and Germany. Some 70% of tax-free forms validated at Eurostar Gare du Nord were from non-UK visitors—those shopping in Paris and claiming the tax back before visiting the United Kingdom. A survey of 10,000 Chinese travellers planning to visit Europe showed that only 42% were heading to the United Kingdom, whereas in 2019 over 70% headed here.
On defence, after years of neglect and denial obviously I welcome the increase in defence expenditure to 2.25% and maybe up to 2.5%, but we have to go further. In 1984, let us remember that defence expenditure was something like 5.5% of GDP. The head of the Army, General Sir Patrick Sanders, said very recently that we would struggle to mobilise a division of 10,000 troops if forced to fight a European war. Defence Secretary Wallace said very recently that we have hardly enough pilots to fly the F35s. It is commonly agreed the Army has reduced to far too low a number at 73,000. It is also questionable if we can recruit the 30,000 reservists intended to complement our regular forces.
On welfare, I think it is time we start to query the balance between the benefits we give to the old—I declare an interest as someone in his 81st year—and the young. I get free prescriptions, a free travel pass and of course a pension. Most pensioners have paid off their mortgages, whereas the young are more likely to be struggling to find a deposit for a house and have the costs of children’s clothing and childcare, as we know. Normally they are on fairly modest early salaries. I believe it is time we look again at the balance between young and old in terms of benefits.
Finally, I come to financial education—or indeed, the lack of it—in this country. There is hardly any teaching of budgeting, savings or investment in our schools, and it should be of serious concern to the Government. We have a situation where more young people speculate on cryptocurrency than invest through the stock market or in more traditional forms of investment. The Government should consider setting up—I think this is the first time it has been mentioned—what I would term a financial education fund, which would recruit and fund specialist qualified speakers to go into our schools, for the first time, to make a serious attempt to financially educate our young people.
Premium Bonds
Lord Lee of Trafford Excerpts(7 years, 1 month ago)
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Lord Lee of Trafford
To ask Her Majesty’s Government what is their policy on encouraging further premium bond sales.
Lord Lee of Trafford (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I declare an interest as a bond holder—one among 21 million.
The Commercial Secretary to the Treasury (Baroness Neville-Rolfe) (Con)
My Lords, premium bonds are a popular savings product. They date back to 1956 and were introduced by Harold Macmillan, the Chancellor of the Exchequer of the day. They provide a way for government to raise debt financing through the retail savings market. Depending on the Government’s financing requirement, NS&I promotes sales through its website, through direct correspondence with customers, through media coverage and through advertising.
Lord Lee of Trafford
My Lords, is it not time, after 60 years, to look again at the rules and aims of premiums bonds? Specifically, why cannot clubs, societies and charities own premium bonds? Could not those who win, say, £25 but do not wish to receive that prize have it designated and directed to a national charity by ticking a box? More radically, could we not think about reconstructing and converting premium bonds into something perhaps rather more popular, such as national care bonds? I think that would generate much greater public support, particularly if the unclaimed prizes were hypothecated to the care sector.
Baroness Neville-Rolfe
My Lords, that is for a debate, not a Question. I am not a fan of hypothecation. The Government raise premium bonds to fund government expenditure, as I have explained, and obviously there is nothing to stop anybody giving their tax-free winnings to charity as they see fit. We do not have any plans to introduce a direct transfer to charities, which would require stakeholder consultation and a systems change. The product is a good part of the portfolio of savings products that we have and, as I said, it is very popular.
Autumn Statement
Lord Lee of Trafford Excerpts(9 years, 5 months ago)
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Lord Deighton
The Government keep all taxes under review. With respect to taxes at the end of life, the focus of the Government has been much more on pension reform, which has been radical and generous in terms of how it will treat inheritance. In fact, my right honourable friend the Chancellor confirmed today that the tax on passing on a pension pot, which had been at 55%, will be removed. He has also introduced a similar arrangement for ISAs being passed on to spouses. While we have not yet made changes to inheritance tax, we have been thoughtful about taking care of some of the issues that complement it.
Lord Lee of Trafford (LD)
My Lords, I am sure that the Great Western Air Ambulance Charity and the Kent, Surrey and Sussex Air Ambulance Trust are worthy and deserving causes. Why are they the only two air ambulances that are being singled out for LIBOR money for new helicopters? What about the air ambulances throughout the rest of the country? I just do not know how the Government can operate on the basis of singling out two particular helicopters.
Lord Deighton
My noble friend has reached the point of exhausting my detailed knowledge. It is a good point. We are of course helping them with VAT in every case, but I am happy to write to my noble friend and explain how we have made those decisions.
Greater Manchester
Lord Lee of Trafford Excerpts(9 years, 5 months ago)
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Lord Lee of Trafford (LD)
My Lords, the prime driver of the success story that is Manchester has been the growth of the airport. It now sustains 40,000 jobs and has flights to more than 200 destinations, which is actually rather more than Heathrow. With the onward development of Airport City and, in the longer term, the siting of the HS2 terminal adjacent to the airport, is my noble friend satisfied that the road network in that area will be able to cope with the increased traffic, particularly the A538 which at present, frankly, is in places rather quaint?
Lord Newby
My Lords, I absolutely agree with my noble friend that the airport has been a huge success. Transport links to the airport have been greatly enhanced and it now has one of the best intermodal hubs of any airport in the UK. Further funding is going in for roads—the A6 Manchester Airport relief road is being funded by the Department for Transport via the Greater Manchester Combined Authority. Any funding of the kind that my noble friend seeks for the A538 would most likely come from the growth deal process, which is now under way.
Air Passenger Duty
Lord Lee of Trafford Excerpts(11 years, 3 months ago)
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Lord Lee of Trafford
My Lords, first, I congratulate the noble Lord, Lord Palmer, on securing this debate. I want to focus my brief remarks on the deleterious effect that APD has on UK tourism. I declare an interest as the chairman of the Association of Leading Visitor Attractions. Tourism is our fifth-largest industry and arguably the number one industry in more parliamentary constituencies than any other single industry. In an Oral Question on 12 November last year, I pointed out that,
“a potential visitor from China must fill in a 30-page visa application form … and find £650 for a family of four in visa fees and air passenger duty. Is it therefore surprising that mainland Europe gets four times as many visitors from China as we do?”.—[Official Report, 12/11/12; col. 1273.]
Thankfully, there has been some improvement on the visa application front, but no give on the APD front.
What is the point of the Government putting an additional £22 million into the GREAT campaign, announced by the Chancellor of the Exchequer in his Autumn Statement, if this is countered by a further rise in APD on long flights and in premium cabins? Since 2007, APD increases have vastly outpaced inflation over the same period, which was 17%. Non-economy visitors in band C from China or India—potentially wealthy spenders—have seen APD increase by no less than 305%. From Australia, it is even worse, with an increase of 360%. In overall terms, the UK levies the highest level of APD of any country in the world. Why is that? Britain’s aviation tax is now so high that the Treasury will collect more than twice as much in passenger taxes in 2012—£2.5 billion—than the total of all other European countries combined, which is £1.2 billion.
Other countries have realised the error of deterring passengers. Belgium, Denmark, the Netherlands and Ireland have all introduced APD charges lower than those now being applied in the UK and subsequently reduced or abandoned them, due to the adverse impact on their inbound tourism. In 2011, the Irish Government acknowledged the negative impact of APD on their economy and removed it to stimulate tourism revenue. Happily, our Government woke up the following year, removing APD from flights from Belfast when it was realised that it made those flights uncompetitive, compared with flights from Dublin.
Of course, we all appreciate that tax revenues must be generated, but why clobber tourism, a great world growth industry? Tourism and hospitality have the near-unique distinction of offering rising job opportunities across the range, from the skilled to the unskilled. It is surely madness to stunt their growth by excessive APD. The Manchester Airports Group tells us that in 2010 AirAsia X dropped plans for a Manchester-Kuala Lumpur service in favour of one from Paris Orly, purely because of the high APD. As the noble Lord, Lord Palmer, said in his opening speech, is it not high time that the Treasury instigated a full economic impact assessment of APD, which has not been done for 19 years?
Individual Savings Accounts: AIM Shares
Lord Lee of Trafford Excerpts(12 years, 3 months ago)
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Lord Sassoon
My Lords, I am very happy to confirm that ISAs have indeed been a very successful product. As I said, 45 per cent of the population over the age of 16 hold them. On the latest numbers that I have seen, the total value of ISAs is £350 billion. It was a successful initiative of the previous Government. It is the main savings product of a large part of the population and we should not do anything to undermine the value of that brand.
Lord Lee of Trafford
Can my noble friend name any organisation, any professional body or any serious investment commentator that supports the Government’s policy?
Lord Sassoon
My Lords, it depends what question they are asked and what the considerations are. I can see that lots of people have an interest in wanting AIM shares to be eligible for ISAs. However, I suspect that if they were also asked whether they wished to see AIM shares lose some of the tax benefits that they have in the way of eligibility for enterprise investment schemes and venture capital trusts and particularly the inheritance tax advantage that comes with their status as business property relief, they might not be so keen on this change.
Individual Savings Accounts
Lord Lee of Trafford Excerpts(13 years, 5 months ago)
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Lord Lee of Trafford
To ask Her Majesty’s Government why shares listed on the Alternative Investment Market are excluded from eligibility from individual savings accounts.
Lord Lee of Trafford
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as owning an ISA and a number of shares in AIM-quoted companies.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, individual savings accounts are the Government’s main non-pensions savings incentive and are held by 20 million adults. The Government believe that ISAs should be mainstream savings products and therefore do not intend to allow shares on the Alternative Investment Market, which can be riskier and less liquid, to be qualifying investments for ISAs. Companies listed on AIM may already benefit from other incentive schemes, such as the enterprise investment scheme and venture capital trusts.
Lord Lee of Trafford
My Lords, I thank my noble friend for his Answer but I find it very thin and disappointing. The arguments for allowing AIM shares to be eligible for ISAs are, frankly, overwhelming. They are supported by the Stock Exchange and the Quoted Companies Alliance. Eligibility would widen the shareholder base, improve liquidity and facilitate fundraising. It would also be tax neutral from the Treasury’s point of view. What is the logic in allowing AIM shares to be eligible for SIPPs but not for ISAs? I thought that the policy of this coalition Government was to encourage personal choice and indeed investment in our smaller growing companies.
Lord Sassoon
My Lords, I am sorry to disappoint my noble friend, who has been assiduous over the months in asking questions about AIM shares and ISAs. Within the range of products available, there are distinct differences between the aims of ISAs and those of other savings channels. When the ISA was introduced in 1999—and it has been an enormously successful investment channel—it was intended to be a mainstream product with easy access and liquidity. A line therefore has to be drawn between the sort of investments that are thought suitable to qualify and those that are not. AIM shares were kept out in 1999 and I believe that it is still appropriate, taking into account principally the nature of the product and the ease of access to liquidity investment, that they should be. SIPPs, which are a more sophisticated, tailored pension product with a different time horizon—for example, they do not require 30-day withdrawal—can rightly benefit from having a much wider range of investments held within them.