Lord Davies of Brixton (Lab)

I start by paying tribute to the noble Lord, Lord St John of Bletso. I do not know whether he will mind me mentioning that we recently discovered that we share one thing in common—there may be others—which is that we are both stammerers. He is wonderful testimony to the fact that it is not a life-changing condition. In some ways it can be life-enhancing, because it forces you to do things you might not otherwise do. The first issue I want to raise is in relation to the Spring Statement. A number of speakers have mentioned that, obviously, the war in the Middle East is affecting the figures. Another thing that will affect the figures is the sweeping immigration reforms announced by my right honourable friend the Home Secretary earlier this month to extend the default settlement period from five to 10 years, introduce an asylum visa break and reduce refugee protection grants to 30 months. If they achieve the effects that we are told they will, it is clear that they will have significant implications for the OBR’s projections. The fiscal consequences of lower migration are, on balance, unfavourable to public finances. Oxford Economics, for example, has pointed out that falling migration “threatens growth, strains public finances, and leaves productivity carrying the burden”. More specifically, it estimates that, if net inward migration dips below 100,000—that is its expectation for the current year—the cumulative effect would leave the UK population 1.5 million lower than the ONS projection by 2030. So my question is: if the OBR is going to adjust its assumptions in respect of the proposed changes, what will be the effect on potential output for 2029-30? Oxford Economics estimates a reduction of 1 percentage point, implying that government borrowing will be £19 billion higher and hence wipe out most of the Chancellor’s so-called “headroom”. The aggregate picture is, of course, much more complicated than that, but I still ask my noble friend the Minister whether the Treasury is engaged in this debate and whether the proposals from the Home Office are set in stone. Is there a chance of the Treasury explaining the potential impact that the proposals will have on the economy? The second issue I wish to raise is that of inheritance tax on unused pension pots. A number of speakers have explained in detail some of the administrative and personal difficulties that will arise. I hope that my noble friend will be able to reply to those points, but let us not lose sight of the central fact, which is that personal estates not used for pension purposes should be subject to inheritance tax. They are part of the deceased individual’s estate and so should be subject to the inheritance tax that is due. We are in this situation because of what, in my view, was the ill-judged adoption of the so-called policy of “freedom of choice”, which effectively shifts the focus of provision from pensions to savings. If you are going to provide a tax-advantage method of providing pensions, that is what it should do. It should not be used for the separate purpose of sheltering payments that you want to make to other people. I was a bit puzzled by the comments of the noble Lord, Lord—