Autumn Budget Forecast

Baroness Lister of Burtersett Excerpts

Tuesday 29th November 2011 Lords Chamber

[Lord Sassoon]

My Lords, there is no one more grateful than me for not having to read out 45 minutes of Statement, however excellent it is, so I am glad of the change in the rules of the House.

The situation with the pension funds is that two groups of funds approached us to ask if we as the Government could facilitate their creation of a collective vehicle through which they might invest. We have signed a memorandum of understanding with the groups of pension funds, and we will work quickly to help them set up a vehicle that will then be in place for them. We will be reporting on progress certainly by the Budget next year. Of course, there is nothing to stop those pension funds from investing now, and indeed some of them do so through private sector vehicles.

Further, the UK pension funds are not the only bodies putting up their hands and recognising the attraction of this asset class. Noble Lords may have seen only yesterday an interesting article by the chairman of the Chinese sovereign wealth fund, the CIC, in the Financial Times, saying that it was looking to invest in this sector. The appetite for investment in UK infrastructure is very strong. The UK pension fund vehicle will be additive, and we welcome that.

The housing strategy was published on 21 November. The Government have a clear plan for supporting the housing market in order to achieve a more stable and sustainable position. Without going in detail through every element of what that strategy consists of, we are introducing the new build indemnity scheme to support builders and lenders in increasing the supply of new homes by increasing the supply of affordable mortgage finance. We are launching the new £400 million “Get Britain Building” investment fund. We are bringing more empty homes and buildings back into use. We are invigorating the right to buy, and for the first time within that, the receipts from additional right-to-buy sales will be used to support the funding of new affordable homes for rent on a one-for-one basis. We are supporting locally planned large-scale developments and we are consulting on various planning obligations. What was set out on 21 November is a substantial and important package for housing.

[Baroness Lister of Burtersett]

My Lords, can the Minister explain to the House the justification for reneging on the pledge to increase in real terms child tax credit, given that that increase was supposed to stop child poverty rising? Can he tell the House what the impact of that will be on the number of children living in poverty?

[Lord Sassoon]

My Lords, the original £110 rise over inflation was announced at a time when the expectation as regards inflation was significantly lower than has turned out to be the case. The inflation increase that will be made is much higher than intended. Inflation in all the independent forecasts is expected to come down significantly next year, so by April 2012 when the uprating comes in, the inflation expectations are going to be different. That is the basis for the change now. On the distributional effects, those have been set out in considerable detail in a document that was put up on the Treasury’s website this afternoon.