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Queen’s Speech

My Lords, I am happy to follow the noble Lord’s plea for honesty in government statistics. I believe that these two Benches have secured considerable improvements in that regard. I congratulate the noble Lord on his measured and balanced speech. I wish I could say the same about the speech of the noble Lord, Lord Hunt. I was going to attack the Conservatives’ economic illiteracy, as I saw it, but the noble Lord, Lord Skidelsky, with his unique knowledge of the 1930s, has done that demolition job far better than I ever could. I am sorry to say that I think the noble Lord, Lord Sugar, is no longer in his place—he left rather suddenly. I listened with particular interest to his punchy speech, having received correspondence from him and his lawyers over the summer. I have apologised to him for any personal distress that my comments may have caused and I would be happy if he chose to make my whole letter public, but that, of course, is entirely up to him. I declare my interest as a commercial property investment manager for pension funds, charities and investment trusts. Indeed, I sold Lloyds Bank in Romford to the noble Lord a few years ago. Noble Lords may not realise that he is one of our most successful property tycoons, with net assets estimated at £730 million in this year’s Estates Gazette rich list. The Amsprop Estates website displays a fabulous selection of prime West End properties from Bond Street to Park Lane, so if the noble Lord ever gets bored with starring in "The Apprentice" I am sure that he would be equally brilliant in "Location, Location, Location". We welcome the noble Lord as the most propertied Labour Peer in history. Is it not wonderful how well the super-rich—the bankers and the property magnates—have done out of 12 years of Blair and Brown? We have finally been told today how near to catastrophe our cowboy bankers drove us last year, and how they needed an extra £62 billion secret bail-out. The noble Lord, Lord Hunt, talked of choking on his cornflakes this morning. I nearly choked on a slice of melon when I heard the noble Lord, Lord Myners, say that the owners of the banks must begin to step up to the challenges of ownership. Of course, he meant pension funds and insurance companies, the traditional institutional shareholders, as both he and I were for many years in the City. Of course he is right in principle. But do not he and the noble Lord, Lord Mandelson, who is sitting beside him, realise that they and the Government are now the owners on behalf of us all? The buck stops with them on enforcing government lending targets, changing the banks’ casino culture and stamping out short-term bonuses. That has certainly not happened at RBS. I wrote to the Chancellor on 9 November, nearly three weeks ago, asking him to clear up the confusion left by his Statement to the House of Commons on 3 November on RBS bonuses. It was clear from Stephen Hester’s letter to his employees that most of RBS’s investment bankers could cash in half their bonuses in seven months’ time—in June 2010. They can order their Ferraris now. If my letter has not reached the Chancellor’s desk, perhaps the noble Lord can check and obtain a proper reply for me soon. The Government are acting as the banks’ biggest absentee shareholder. They cannot wash their hands while the banks continue to fail the country. The noble Lord, Lord Myners, yesterday also encouraged shareholders to take a long-term view and reject hostile takeover bids. I agree with him. Why is he letting the Royal Bank of Scotland bankroll Kraft’s hostile bid for Cadbury? I thought that British taxpayers had poured billions of pounds into banks to support British businesses, not attack them. The other main topic I wish to cover is the most serious threat to government finances over the next few years—public sector pension costs. I give a particularly stark example. In the past three years, we have had to pay twice for police pensions—first through council tax and now through income tax, through a Home Office top-up grant to police authorities. I received parliamentary Answers last week which showed that this top-up tax shot up from £201 million in 2006-07 to £340 million in 2007-08, and to £482 million last year. That is a 140 per cent increase in just three years. A police constable is retiring with an index-linked pension pot which typically would cost £1,050,000 to buy from Legal & General. For a superintendent, the figure would be nearly £2 million and for an assistant chief constable nearly £3 million. The main reason is that life expectancy figures have been shooting up. A policeman retiring today could typically expect to draw his pension for five years for every four years that he has worked, and a woman police officer could draw her pension for three years for every two years that she has worked. Even after the reform of police pensions in 2006, most will retire in their early to mid-50s, when they are still able to work and earn, unlike most private sector workers who do not draw a full pension until they are in their 60s, if they are lucky enough to have a pension at all. Meanwhile, the basic state pension age is increasing to 68, because rising life expectancy makes pension provision unaffordable at the ages of 60 for women and 65 for men. We urgently need an independent pensions commission—a Turner mark 2—to review all public sector pension costs to make them affordable, sustainable and fair for public employees and the income tax and council tax payers who have to foot the bill. Pension rights earned already must be protected, but future accrual and contribution rates and pension ages will have to be based on a thorough assessment of what is fair and affordable for the 80 per cent of taxpayers who do not enjoy public sector pension rights. No economy can pay pensions for on average longer than people work, never mind an economy such as ours with a serious structural deficit. Getting a grip on ballooning public sector pension costs will be the acid test of any Government’s credibility, and Britain’s shaky credit rating, over the next five years. The Conservatives are wrong to want to slash and burn when Britain is in deep recession, but any Government must face the hard medium-term choice that we have all ducked for far too long. We must start to close our unfair public/private pensions divide and stop turning a blind eye to the spiralling pension cost of delivering our essential public services.