Covid-19: International Response

Viscount Chandos Excerpts

Monday 18th May 2020 Lords Chamber

[Viscount Chandos (Lab)]

I join other noble Lords in welcoming the Government’s embrace of multilateralism in their response to the Covid-19 crisis, when they have too often appeared in other respects enthusiasts for British or even English exceptionalism.

The Government’s significant and early commitment to emergency funding, to be channelled through the Coalition for Epidemic Preparedness Innovations with its commitment to equality of access, was particularly welcome. However, it is wrong to attribute this, as the Secretary of State for the Department for International Development did in her Statement to the House of Commons 12 days ago, to the altruism of the British people. It is not altruism that lies behind investment in the accelerated development of Covid-19 vaccines, therapeutics and diagnostics but overwhelming economic and social self-interest. As the Minister said in her opening remarks, the virus does not respect national borders. This investment should not be at the expense of the other international aid programmes financed by DfID, when, as many noble Lords have highlighted this evening, the social and economic needs of low-income countries have already been increased so much and, I fear, will increase even more if Covid-19 explodes in those countries, as the hotspots in Nigeria threaten.

I therefore have three questions for the Minister. First, how much of the £388 million committed by the Government under the coronavirus global response has been, or will be, taken from the international aid budget and the 0.7% of GNI obligation under the International Development Act? Secondly, is the £84 million grant to Oxford and Imperial, announced last week, an addition to the CGR commitment and will it come from outside DfID’s budget? Lastly, in the current year, when the OBR is forecasting a 12.8% fall in GDP which will be reflected in a similar fall in GNI, will the Government not just protect the 0.7% international aid obligation, as my noble friend Lady Goudie has asked, but increase it in percentage terms, at least maintained in absolute terms, without counting any spending under the CGR commitment?

Spring Statement

Viscount Chandos Excerpts

Wednesday 20th March 2019 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I welcome the chance to debate the Chancellor’s Spring Statement and, as the noble Lord, Lord Shipley, noted, to do so—whatever the charms of the Moses Room—in this Chamber. I draw your Lordships’ attention to my entry in the register of interests.

As my noble friend Lord Tunnicliffe has already observed, the Chancellor of the Exchequer did not wish the Spring Statement to be a fiscal event. In that, at least, he has succeeded. It is indeed a small and imperfectly formed non-event, which I intend to mark with as brief a speech as possible.

What are the overriding responsibilities of the Government? The defence of the realm is indisputable and, although that is not the subject of this evening’s debate, it is worth noting that the Ministry of Defence’s budget has been cut by 10% in real terms between 2010-11 and 2019-20. The Secretary of State for Defence may have been noisy in his campaigning for an increase in his department’s budget but it is hard not to get the impression that he is more focused on leadership manoeuvres than naval ones, other than those that would have needlessly have jeopardised our economic and trade relations with China. These cuts, of course, are modest compared to the 40% reduction in the budget over the same period suffered devastatingly by Defra and the Ministry of Justice.

I suggest that next, after securing the security of our country, the maintenance of a stable and positive environment for business is a key responsibility of any Government. There may be varying views on different sides of the House on when and how the Government should intervene to address market failures, but the principle of maintaining confidence, domestically and internationally, in the UK as an attractive place to do business is shared right across the House. In this respect, the Government have abjectly and comprehensively failed. GDP is already 2.7% lower than was forecast three years ago, meaning that £50 billion in money, and perhaps £15 billion or more in tax revenues that could have been invested in public services, have been cut and cut over the nine years of Conservative-led Government—and we have not seen the half of it.

Even if the Prime Minister’s irresponsible brinkmanship—“reckless” in the words of her own deputy—gets her deal for Brexit approved by the House of Commons, allowing an Article 50 extension for its implementation, the chaos and uncertainty of the past month, for which the Government must take responsibility, will prove to have inflicted further damage on business confidence, with a corresponding reduction in economic activity and investment. GDP growth for the current year has already been downgraded from 1.7% to 1.2%, as I suggested was likely when your Lordships debated the Finance Bill last month. It would be no surprise if the outturn was worse still—barely no growth at all in GDP per capita—as a result of the Conservative-inflicted crisis that can only deter investment and damage confidence further.

This anaemic projected growth was posited on agreement being reached, I assume, on a timely basis with the EU. There remains, whatever the efforts of Parliament, an unnerving risk that we could in nine days’ time find ourselves tumbling into a disorderly Brexit, the adverse economic consequences of which the Chancellor reiterated in the Statement, and which the Treasury has quantified as an estimated 5% reduction in GDP. That is £100 billion in real money, of which £30 billion or more of tax revenues would be lost.

The Chancellor in his Statement described my right honourable friend the shadow Chancellor as living in a parallel world. In listening to the Minister’s introduction and re-reading the Chancellor’s Statement, I am trying to reconcile their tone with the figures I have set out, let alone the appalling hardship suffered by the least well-off in our society. I suggest it is the Minister and the Chancellor who are living in a parallel universe.

Compared to the effects of the Government’s incompetent planning and negotiation of Brexit, and the risks of a disorderly Brexit, the issues outlined in the Spring Statement are infinitesimally modest. The Chancellor has shown the zeal of the convert—which in principle I welcome—in his proposal for a review of the national living wage regime. I hope that the Dube review, and indeed the Furman review of competition in the digital market, enjoy a speedier timetable than the hugely important Augar review of further and higher education, which we still await.

The noble Lord, Lord Macpherson of Earl’s Court, who is not in his place, spoke with his undoubted authority on fiscal consolidation. I was pleased that he acknowledged that what the Conservative-led Governments have achieved has proved to be no more than that planned and started by the Labour Government and my noble friend Lord Darling, as Chancellor. He noted that Labour’s plans involved different means of achieving that fiscal consolidation, a critical difference, not just in the dispassionate Treasury analysis, but much more importantly, to those who have suffered most from the macho austerity policies pursued by this Government and their allies.

In our debate last month, I think the Minister may have misunderstood, and did not answer, my question about the implications of the decision by the ONS on accounting for student loans—which, for the avoidance of doubt, I welcome. The noble Lord, in his introduction, spoke proudly of the reductions in borrowing, and has been congratulated on them by the noble Lord, Lord Macpherson. The OBR has noted that these figures do not make any adjustments for the proposed changes to the accounting of student loans. I ask the Minister again: in conducting the spending review for the next three years, when those adjustments can be made, will the Government effectively ignore them in setting public expenditure, and not penalise the country for the imaginative accounting adopted previously?

I end by noting that the Minister highlighted the Government’s investment of £79 million in ARCHER 2, the supercomputer in Edinburgh. He did not repeat the Chancellor’s jolly quip:

“I am told that with the right algorithms it might even be able to come up with the solution to the backstop”.—[Official Report, Commons, 13/3/19; col. 350.]


I have already stressed the importance of a solution—with or without the algorithms available from ARCHER 2.

Finance (No. 3) Bill

Viscount Chandos Excerpts

2nd reading (Hansard): House of Lords & 3rd reading (Hansard): House of Lords & Committee: 1st sitting (Hansard): House of Lords & Report stage (Hansard): House of Lords
Thursday 7th February 2019 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I thank the Minister for his courteous introduction to the Second Reading of this Bill, which follows on from the debate on the Budget report in November—perhaps a rather more popular event in the calendar of your Lordships’ House than today’s proceedings. I also draw the attention of noble Lords to my entries in the register.

Even if the principal measures in the Bill and the economic issues surrounding them have therefore already been extensively debated, I welcome the chance for noble Lords to review them again while the Bill enjoys its rapid passage through this House. It is undoubtedly right, as the noble Lord, Lord Turnbull, has just said, that as a money Bill it should not be capable of amendment by your Lordships. I cannot help thinking that the Government Front Bench, based on its expressions of outrage that other legislation is subject to proper detailed scrutiny and amendment by your Lordships, may believe that the convention covering money Bills should also apply to the avalanche of Brexit-related legislation that threatens to bury Parliament in the weeks—or, more likely, months—to come.

This is a modest Bill from a Government with very much to be modest about—a holding measure designed to mark time while we pass through the maelstrom of Brexit. There is,

“no sign of a long-term strategy”,

concluded the IFS in the immediate aftermath of the Budget. This is nevertheless also an historic Bill in one respect, as my noble friend Lord Tunnicliffe has already said. It is the first Finance Bill for more than 40 years on which the Government have been defeated—through the amendment moved by my right honourable friend Yvette Cooper, which is now included in Clause 90(7). Like many other Members of your Lordships’ House, I welcome this important, if perhaps symbolic, expression of Parliament’s determination to ensure that our departure from the EU is not a disastrous crashing out. Even if that was not as strongly reinforced by the House of Commons’ votes last week as it could have been, I am confident that the wisdom and judgment of the majority of Members of that House will ensure that we will not leave the EU without a deal.

Even though the Prime Minister today returns to Brussels for, in all likelihood, another pummelling in her misconceived attempt to renegotiate the withdrawal agreement to satisfy the unsatisfiables in her party, today in your Lordships’ House we can have a day off from the relentless grind of Brexit—but only up to a point, Lord Copper, since even if Brexit is not in the foreground of this Bill, it is an inescapable gloomy background to our economic situation.

Advocates of a hard Brexit—members of the Donald Tusk mutual admiration society—persistently argue that the prospect of Brexit has had no adverse economic effect on the UK. This claim is as suspect as their nonchalant dismissal of the economic impact of crashing out. The UK slipping from being one of the fastest-growing G7 economies to the slowest has been widely highlighted, yet the Government have proudly boasted of a fractional increase in the projected growth in GDP in 2019 from 1.3% to 1.6% while lowering some long-term projections to a depressing and monotonous sequence of 1.4%, 1.4%, 1.5%, 1.6%, all based on a presumption of an orderly exit from the EU.

We should remember that these figures are for overall GDP. Since 2005, the UK population has been growing at a rate of 0.6% to 0.8% per annum, and this trend is expected to continue, whatever changes there may be to the immigration regime, so GDP per capita is forecast to come in at under 1% per annum year in, year out. That is hardly a scenario in which it is possible to be confident about any increase in disposable income for most people who have suffered 10 years of stagnant earnings or for any increase in spending on public services. The independent commentator IHS Markit has written that it is the,

“weakest growth spell for six years”,

and at the same time it estimated that growth in the fourth quarter of 2018 could have fallen to as low as 0.1%. How confident is the Minister that even these dismally low projected growth rates from 2019 to 2023, on which the Finance Bill is based, will be achieved?

In January, the purchasing managers’ index for manufacturing fell to 52.8%, the second-lowest level since July 2016, while even more ominously, in the light of the Government’s casual neglect of the services sector in its proposed future relationship with the EU, the equivalent for services was announced last Friday to have dropped to 50.1% against consensus expectations of 51%. That is a hair’s breadth away from implying negative growth in what is 80% of the UK’s economy.

Of course there are other factors that lie behind this economic malaise, of which a decade of stalled productivity growth from an indifferent starting point is foremost. Despite the Minister’s protestations, there is little or nothing in the Bill that begins to address the scale of this problem, particularly in relation to the even more depressing position on productivity growth in most regions and nations outside of London and the south-east. I feel a degree of ambivalence about pressing the Minister further on the actual or likely deterioration of economic indicators since the Budget Statement and your Lordships’ debate in October; I fear giving the Government any encouragement to reverse their declared “ending of austerity”—even if that is more in their fevered imagination than something being implemented where economic deprivation is at its most acute.

A clear understanding of where we are and accurate figures for the national accounts are an essential starting point for good policy decisions, whatever level of confidence may be felt in this Government’s ability to make good decisions even with accurate figures at their disposal. Will the Minister confirm that the implications of the ONS’s decision in December to change the accounting treatment for the student loan book will not lead to any tightening of fiscal policy, at least in the short term, since the underlying position has not changed? The cynical manipulation by the Government of both the carrying value of loans and the treatment of outrageously high interest charges was a case of creative accounting of which even the board of Patisserie Valerie would be embarrassed. The estimated impact of the accounting changes proposed by the ONS would be to increase the deficit in the current year from £40 billion to £52 billion and by 0.6% per annum of GDP thereafter. However regrettable the Government’s past treatment of student loans has been, the overdue correction of the accounting treatment must not cause harm either to the UK economy as a whole or, vitally, to the position of the higher education sector.

I end by drawing the attention of the Minister to the point made from his own Benches by the noble Lord, Lord Horam, during the November debate on the Budget report, to which he made no response. As the noble Lord pointed out, there are an estimated 1,200 different tax reliefs, costing the Exchequer up to £400 billion per annum. I have highlighted in previous debates in your Lordships’ House the indefensible reliefs in the area of inheritance tax, on which the Office of Tax Simplification is due to report in the next few months. Will the Government will take a much more concerted and focused approach to examining the effectiveness of these tax reliefs and the scope for a substantial increase in revenue for the Exchequer?

Economy: Spring Statement

Viscount Chandos Excerpts

Thursday 15th March 2018 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I too congratulate the right reverend Prelate on his excellent maiden speech. I also thank the Minister for moonlighting from his DfID duties to introduce the debate. I should draw the attention of your Lordships’ House to my entries in the register.

A year ago I spoke in the debate on the Budget—possibly the last Spring Budget—and there were 39 speakers. This afternoon there are 14 or 15. Although projections and forecasting are difficult, as illustrated by the OBR, my calculation is that there has been a saving of a maximum of £7,500 as a result of the reduced number of speakers.

We have been invited to take note of the economy in the light of the Chancellor’s Spring Statement. The question is, which portrayal of the economy—the Chancellor’s sunlit uplands or the Office for Budget Responsibility’s darker valleys? And how does the Chancellor’s upbeat assessment relate to the other evidence that all your Lordships are exposed to: crises in local government, the NHS and the provision of care for the elderly?

The United Kingdom has the greatest regional inequality of any country in the EU, yet, as I watched the Chancellor make the Spring Statement, he gave the impression that the only question was whether the outlook was better on St George’s Hill or in Virginia Water. Just as the American President calls any inconvenient facts “fake news”, anyone who does not embrace the optimistic view of the Government has been dubbed Eeyore-ish, and the Chancellor—himself regarded as an Eeyore by his Brexit-enthusiast colleagues—has now proclaimed himself to be a veritable Tigger.

Even if this gentle banter feels rather less threatening than the President’s terminology, it strikes me as fundamentally trivialising important and, for millions of people, harrowing issues—squabbling over which costume in the nursery dressing box is whose, while rough sleeping, the use of food banks, child poverty and the cancellation of hospital procedures inexorably rise.

Seventy-five per cent of the welfare cuts introduced by the previous Conservative Chancellor in 2015 and not reversed by the current one are still to take effect, and the projections for public expenditure and borrowing in the period to 2020-21 are based on the assumption that these cuts are fully implemented.

I will leave it to future economic historians with longer perspective and greater objectivity to pass judgment on the Conservative and Conservative-led Governments’ measures over the past eight years to reduce the deficit arising from the consequences of the global financial crisis, but I will be surprised if a consensus conclusion does not suggest that the national finances could have been better strengthened through a significantly more equitable sharing of the burden. We cannot, however, rewrite history or easily reverse past actions, so the priority has to be to ensure that future policy does not continue to place such an unfair and intolerable burden on the least well-off. Whether or not the IFS’s projection of the need for a £30 billion to £40 billion increase in annual tax revenues by the mid-2020s proves to be in the right range, there is little doubt that, with all the changes, among other things, to the workforce and employment structures, radical changes to how taxation is raised fairly and effectively are essential.

Although the Chancellor announced 30 different consultations in the Spring Statement, many of these are pretty technical and of limited potential in terms of revenue raising, and some, even if welcome, such as fair payment of commercial suppliers and prompt payment by government, have no direct relevance to the Government’s requirement for funding.

There appear to be no signs of any deeper thinking by the Government about key areas of taxation, however difficult they may be, as the noble Lord, Lord Macpherson, as a former Permanent Secretary to the Treasury, has previously argued in your Lordships’ House, such as the reform of residential property taxation. Even if our departure from the EU has as benign an outcome as possible, we will not have prosperity and fairness without grasping such nettles.

I would like to conclude, therefore, by reverting to an issue that I raised a year ago in the debate on last year’s Budget Statement: the need to reform inheritance tax. Inheritance tax is not currently a substantial contributor to public funding—around £5 billion per annum, compared to, say, 10 times that for corporation tax, even at its currently discounted level—and the most ambitious realistic reform is unlikely on its own to substantially close a £30 billion funding gap. But it could, I believe, make a useful contribution to such a target, and, as importantly, reform could create a system widely seen as much fairer. In the context of the case for inheritance tax reform, Janan Ganesh wrote in the Financial Times:

“A country’s tax code is not just a mesh of rules and rates—it is a secular bible of moral signals”.


Although not included in the list of consultations, the Government have recently commissioned the Office of Tax Simplification to produce a review of aspects of inheritance tax. The scoping document, dated 15 February 2018, refers to,

“a review of a range of aspects of IHT and how it functions today, including its economic incidence, to identify simplification opportunities … The overall aim of the review will be to identify opportunities and develop recommendations for simplifying IHT from both a tax technical and an administrative standpoint”.

These Benches have asked for a fundamental review of inheritance tax for many years. My noble friend Lord Eatwell argued powerfully six years ago for a review which considered the taxation base shifting to the recipient of gifts and legacies rather than the donor or the estate. Inheritance tax was introduced by the noble Lord, Lord Lawson, who is not in his place, in substitution for the capital transfer tax regime, which embraced lifetime gifts, introduced in the 1970s by the late Lord Healey.

I therefore find the limited remit of the review, perhaps admittedly reflecting the narrow focus of the Office of Tax Simplification, very disappointing. That disappointment turns to acute concern once I have looked at the position of the chair of the OTS, the former Conservative Minister, Angela Knight. For 10 years, and for 15 months while serving as chair of the OTS, Ms Knight was a non-executive director of Brewin Dolphin, the private wealth manager. Indeed, before she was chief executive of the British Bankers’ Association, she was chief executive of the Association of Private Client Investment Managers and Stockbrokers. As I did last year when I spoke on this subject, I spent a few minutes on the internet, this time to look at Brewin Dolphin’s site. Their guide, How to reduce an inheritance tax bill, includes topics such as how pensions can be used as an estate planning tool, and the benefits of using trusts. It states:

“Many people think it is deeply unfair that the estate they have worked so hard to build up can potentially be subject to a 40% tax charge. Fortunately, there are lots of exemptions that can help mitigate the tax paid”.


The House of Commons Treasury Select Committee, in scrutinising Ms Knight’s appointment in January 2016, expressed concern about her potential conflicts of interest and recommended that she recuse herself from the consideration of any matters in which she had a conflict of interest. I ask the Minister, first, whether Ms Knight has recused herself and will continue to recuse herself in relation to the review of aspects of inheritance tax. Secondly, can the Minister say whether, in parallel with this limited review, the Government will conduct a wider-ranging review, as these Benches have argued?

Whether your Lordships rely on the OBR’s projections, the more pessimistic OECD ones or the more optimistic Bank of England ones, it is clear that the challenge of re-establishing a sustainable economy is huge. This is no time for tinkering; radical thinking is needed.