Lords Chamber

Thursday 10th September 2026

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None Portrait Introduction(s): Lord Jabbar and Lord Davey of Chalk Farm
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>> >> Charles >> Charles III, >> Charles III, by >> Charles III, by the >> Charles III, by the grace >> Charles III, by the grace of >> Charles III, by the grace of God

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Charles III, by the grace of God of the United Kingdom of Great Britain and Northern Ireland, and of her other realms and territories. of her other realms and territories. King, head of the Commonwealth. Defender of the faith to all Lords, Defender of the faith to all Lords, spiritual and temporal, and all other. Our subjects, whatsoever to whom these presents shall come. whom these presents shall come. Greeting. Know ye that we have our especial grace, certain knowledge and mere motion, in pursuance of the Life Peerages Act, 1958, and of all other powers in that behalf us enabling do by these presents advance, create and prefer our trusty and well-beloved Pervaiz Jabbar, member of our most excellent order of the British Empire, to the state degree, style, dignity, title and honour of Baron Jabbar of Little Venice, in our City of Westminster, and for us our heirs and successors do appoint, give, and grant unto him the said name, state, degree, style, dignity, title, and honour of Baron Jabbar, to have and to hold unto him for his life winning.

And by these presents granting for us our heirs and successors, that he may have hold and possess a seat, place and voice in the Parliaments and public Assemblies and councils of us, our heirs and successors within our United Kingdom, amongst the Barons, and also that he may enjoy and use all the rights, privileges, Preeminences, immunities, and advantages to the degree of a Baron duly and of right belonging, which Barons of our United Kingdom have heretofore used and enjoyed, or as they do at present, use and enjoy in witness whereof we have caused these our letters to be made patent.

Witness ourself at Westminster in the forenoon of the 18th day of August, in the fourth year of our reign, by warrant under the King's sign-manual.

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I, Pervez Lord Gilbert, do solemnly, sincerely, and truly solemnly, sincerely, and truly declare and affirm that I will be faithful and bear true allegiance to his Majesty. King Charles, his heirs and successors according to

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Charles Charles III. Charles III. By Charles III. By the Charles III. By the grace Charles III. By the grace of Charles III. By the grace of God of the United Kingdom of Great of the United Kingdom of Great Britain and Northern Ireland, and of her other realms and territories. of her other realms and territories. King, head of the Commonwealth. Defender of the faith to all Lords, spiritual and temporal, and all spiritual and temporal, and all other.

Our subjects. Whatsoever to whom these presents shall come. whom these presents shall come. Greeting. Know ye that we. Of our especial grace, certain knowledge and mere motion, in pursuance of the Life Peerages Act, 1958, and of all other powers in that behalf us enabling do by these presents advance, create and prefer our trusty and well beloved Marcus John Davy, commander of our most excellent order of the British Empire to the state degree, style, dignity, title and honour of Baron Davy, of Chalk Farm of Chalk Farm in our London borough of Camden, and for us our heirs and successors do appoint, give, and grant unto him the said name, state, degree, style, dignity, title, and honour of Baron Davy, of Chalk farm to have and to hold unto him for his life willing.

And by these presents granting for us our heirs and successors, that he may have hold and possess a seat, place, and voice in the Parliaments and public Assemblies and councils of us, our heirs and successors within our United Kingdom, amongst the Barons, and also that he may enjoy and use all the rights, privileges, preeminences, immunities, and advantages to the degree of a Baron duly and of right belonging, which Barons of our United Kingdom have heretofore used and enjoyed, or as they do at present, use and enjoy in witness whereof we have caused these our letters to be made patent.

Witness ourself at Westminster in the forenoon of the 26th day of August, in the fourth year of our reign, by warrant under the King's sign-manual. I, Marcus, Lord Davy of Chalk Farm, do solemnly, sincerely, and truly declare and affirm that I will be faithful and bear true allegiance to his Majesty. King Charles, his heirs and

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First First Oral First Oral Question First Oral Question Baroness Stedman-Scott Lord Dear.

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Stedman-Scott Lord Dear. I beg leave to ask the question standing in my name on the Order Paper.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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The. Within the overall Mod >> The. Within the overall Mod budget, there is funding for the defence diplomacy strategy. For defence diplomacy strategy. For example, the Integrated Integrated Global Defence Network, which the noble Baroness will know. The Defence Diplomacy strategy seeks to professionalise by. I know which will be something of keen interest to her better language training, better professional training all the way around, and that will be

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funded in the in the normal way through the Mod budgets. But it is an important part of what we do. There's understandable

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There's understandable frustration that the government set out a target, but not but the delay how they're going to implement it. how they're going to implement it. So can he address two specific urgent questions? With the phasing out of our destroyers and their current lack of readiness, what current lack of readiness, what action is the government taking now to develop advanced, layered ballistic missile defence for our ballistic missile defence for our country? And what action are they taking now to replace depleted stockpiles of munitions and scale

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up and always on munition supply chain? If we take the last point first about what the government is doing now, he will know that in the in the dip that was announced, there the dip that was announced, there was £11,000,000,011 billion worth of investment to invest in six munition sites to give us the stockpiles that that we need. What you can't do is magic those out of nowhere. But what we are doing is nowhere. But what we are doing is to invest, to deliver the very thing that the.

The noble Lord quite rightly says. He will also see in the dip. There are a whole range of ways in which we are building ships. And to be fair, as I say, everyone wants to defend our country started. Some of it started under the last government to rebuild and replace some of the ship capacity that we need. And you see examples of that on the Clyde. But we're also looking at different ways of doing the same thing through the increased use of drones and having those on with the mothership concept.

My Lords. My Lords, does my noble friend agree with me that in this debate around level of defence spending, we should actually look at how we got to where we are today? The fact that under the Tory led coalition government from 2010 to 2017, the government then cut the defence budget by 16%, made people compulsory redundancies leading to the smallest Watanabe since Napoleonic times and because of the Liberal Democrat veto, delayed the replacement of the Trident nuclear deterrent, leading to extra costs deterrent, leading to extra costs today.

So does he agree with me that in this debate, the opposition should have a little bit more humble in their approach in terms of taking some responsibility, why we've got to where we are today.
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None Portrait Oral questions: Proposed legislation in Australia to permit individuals to disable algorithms on social media Baroness Berger (Labour)
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Fourth Oral Question Baroness Berger. question, standing in my name on the Order Paper.

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My Lords, Australia's draft legislation was only published on Monday. The government has therefore not made a full
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None Portrait Business of the House
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My Lords, that concludes our questions for today. questions for today. >> My Lords, on my appointment as Government Chief Whip and Captain, the Gentlemen at Arms in July 2024, I wanted to ensure that noble Lords and the staff of the House would give as much notice as possible of give as much notice as possible of recess dates, so I thought today was a good time to update the house on the planned dates of the Whitsun and Summer recess in 2027. There's no need to write these down, as my office has arranged for notices to be placed in the Royal Gallery and the printed paper office, and you will shortly all receive an email from me, director of Parliamentary email accounts.

So, subject to the usual caveat of the progress of business of the House, the current plan for the House to adjourn is as follows. For the Whitsun recess, the House arrives at the conclusion of business on Thursday the 27th of May, return on Monday, the 7th of June for the summer recess. The House arrives. Occlusion of business on Wednesday the 28th of July, and House will return on Monday the 6th of September. I've included several additional Fridays in the early part of next year, and they're also set out in the notice.

Hope that noble Lords will find this helpful when planning summer holidays, in particular with family and friends. Finally, I would like to place on record my thanks to the staff across the house for their continued professionalism, dedication and support all the different roles they undertake for us. I know this view is shared by all members across the House.

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My Lords, this might be a convenient moment for those who wish to leave the House and don't wish to leave the House and don't wish to remain for the following debate. To do so quietly and

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Motion Motion for Motion for debate. Motion for debate. The Motion for debate. The UK's

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Motion for debate. The UK's fiscal outlook Lord Bridges of Headley.

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My Lords, one word hovers like a spectre over this debate on the
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None Portrait Debate: United Kingdom fiscal outlook Lord Bridges of Headley (Conservative)
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spectre over this debate on the fiscal outlook. Debt two years ago. To this very day, your Lordships Economic Affairs Committee, which I Economic Affairs Committee, which I then chaired, published a report on our national debt titled It's Time for Tough Decisions. It concluded that the UK's national debt risks becoming unsustainable unless tough decisions are taken in this Parliament. To address the major challenges the UK faces and put debt on a gradual downward path. We found that sustainability depended not just on the level of debt, but on having sufficient fiscal buffers to absorb future shocks and avoiding a trajectory of rising debt service costs.

Two years on, our debt stands at nearly £3 trillion, over 94% of GDP, almost £96 billion higher than a year ago. And relative to the size of our economy at levels last seen in the early 1960s. My argument today is our debt remains on an unsustainable path. Our fiscal buffer is dangerously small. The risks facing our public finances have grown and are growing still. And all this is thanks in very large part to the actions this government has taken.

Some may point, they may point to the fact that the debt accumulated during the last administration. And that is, of course, correct. And I have argued that the last government made mistakes. But however critical one is of that government, one has to accept that it faced both Covid and the energy shock. Others may argue that Britain has carried far higher debts before, notably after the Second World War. And again, that's correct. But after 1945, the baby boom, the peace dividend and the opening of world trade, they all boosted growth which helped lower our debts.

Today, governments here and worldwide face what I call the challenges of the D's higher defence spending. The demographic challenge, ageing populations, dependency, large welfare states. Decarbonisation, the green transition. All of these D's increased demands for higher government spending at a time when governments are already drowning in debt across the advanced economies, government debt rose from around 70% of GDP on the eve of the financial crisis to around 110% today. That debt explosion took place during an era of low inflation, ultra low interest rates, unprecedented quantitative easing, and in a world largely at peace.

That world has gone. But government debt remains. It remains at record levels, and it's growing. The OECD expects governments to borrow around $18 trillion this year. Almost 4/5 of that is simply to refinance. Debt coming due. Advanced economies spent more than $2 trillion on debt servicing alone last year. Dozens of nations, including the USA, now spend more on debt servicing than defence. So, my Lords, in this rising tide of red ink, the price each government pays on its debt is ultimately determined by investors, by their judgement on the health of a nation's economy.

To coin the Prime Minister's phrase, it's that thing of being in hock to the bond market. And that brings us to the question. Bond traders and all of us here today are asking just how resilient are the UK's finances. Now, on Monday, the Chancellor told us that Britain is turning a corner. If so, my Lords, surely debt should be on a steady downward path. But no, it is not. Debt will be higher, higher at the end of this Parliament than at the start, before falling only slightly to around 95% of GDP by 2030 31.

And even that fall is questionable, as the OBR notes, plans to reduce borrowing and stabilise debt have been a common feature of forecasts since the pandemic, but have not yet materialised in outturn. Or, as Saint Augustine might have put it, Lord, make me fiscally responsible. Just not yet. Indeed, the OBR concluded in July that Britain's public finances are in a, and I quote, challenging position relative to history and to other similar countries. With debt having risen by one of the largest shares of GDP of any advanced economy over the past two decades.

And, my Lords, it's the structure of our debt that makes us unusually vulnerable. QE shortened its effective maturity, while Britain has a particularly large stock of index linked debt. So when borrowing costs rise, we feel the effects very quickly, even before before the economic impact of the Gulf War, the OBR was forecasting debt servicing would cost us £110 billion in 2024, 2025, 26. That's 3.5% of our national income, more than we spend on education and a processing twice.

Twice what we spend on defence. And by 20, 30, 31, that figure is expected to hit 137 billion. And my Lords, the bond market is beginning to reflect investors anxiety about all this. Britain may not be an outlier in the amount it owes, but it is becoming an outlier in what it costs us to borrow. Our ten year borrowing costs are now the highest in the G7 and the fourth highest in the advanced world. On Tuesday, Britain paid the highest borrowing cost on a sale of 30 year debt in almost three decades.

And that rising interest bill is eating into the government's fiscal buffer at the spring forecast. That buffer was around £24 billion. Now, my Lords, against a £3 trillion of national debt and 1 trillion of annual spending, that's not a buffer, that's a wafer. And some estimates suggest it has already shrunk to just 5 billion. So, my Lords, the Chancellor's optimism cannot camouflage the facts. Debt is high and still rising. Its structure leaves us unusually exposed to shocks. Our fiscal buffer is wafer thin and shrinking, and investors are demanding increasingly high price to lend to us.

So in that sense, though the Chancellor may be correct, we are turning a corner. Ken Rogoff, the former chief economist of the IMF, now puts the chances of a major UK debt crisis by 2030 at more than 5050. Which brings us to a central question. What would convince investors that that Britain has a credible plan to stabilise its debt? And the answer, my Lords, I would argue, lies. Not so much in economic theory as in political choices. A central conclusion of the Economic Affairs Committee two years ago was, and I quote, if we wish to maintain the level and quality of public services and benefits that we have come to expect, we face a choice.

Taxes will need to rise or the state will need to do less. Addressing this will demand clarity as to the responsibilities and role of the individual versus that of the state. Muddling through is not an option. If this choice is ducked in this Parliament, the UK risks being on a path to unsustainable debt. My Lords, two years on, my argument is not that the government has failed to take tough decisions. It has taken tough decisions, but it has taken the wrong tough decisions.

Lord Barber decisions have weakened growth, dug us deeper into the debt hole and increased our fiscal vulnerability. What's needed is a plan to control spending and strengthen the underlying budget. So we live within our means. So we bear down on inflation and the cost of our debt. And above all, we get the economy growing faster. But the government's actions have produced the reverse of all that. Let's look at spending. I was intrigued to hear on Monday the Chancellor say, and I quote, staying true to our values means being honest about the need to control public spending.

My Lords, for a moment I thought I was listening to fake news, but by the end of this Parliament, the government will be spending around £260 billion more a year than at the start. Public spending will absorb more than 44% of national income. That's a level we haven't seen on a sustained basis. Outside shocks in their aftermath since the 1970s. And let's look where that increase is going. Welfare spending set to rise by some 75 billion a year over this parliament, rising to £390 billion.

And within that, spending on health and disability benefits forecast to hit £104 billion, an increase of more than a third. So, my Lords, instead of taking the tough decisions needed to control spending, the government has chosen higher spending financed by higher taxes. Work hard, invest, set up a business, employ more people the very activities that drive growth, that generate the revenue needed to stabilise our debt. They're being taxed more heavily. One example the rise in employers National insurance alone means an employer now pays around £900 more a year for every worker, on median earnings £900.

And the tax burden? The tax burden is set to rise still further to the highest level on record. And then there's inflation. Now, I fully concede that the government and I fully concede that the war in the Gulf has made the fight against inflation more difficult. But, my Lords, all the more reason for the government to double down on measures to cut costs on business. So I welcome the government's promise to take an axe to the bureaucracy holding back private investment.

But, my Lords, why are they stopping there? If regulation is holding back investment and growth, the government should take an axe to the burdens it has itself imposed on business and employers, such as its energy policies and the Employment Rights Act, an act which will impose direct costs on business of around £1 billion a year. My Lords, these policies have undermined growth. Growth, which is the all important ingredient to bring down our debt. The government will rightly point out that stronger there was stronger growth in the first half of this year.

But two good quarters do not stole the structural problem. The OBR still puts our potential growth rate at only 1.5% and forecast GDP per head to grow by just 1.1% a year over the rest of the decade. That's roughly half its pre-financial crisis rate for debt sustainability. It is that underlying rate of growth growth year on year, not a couple of strong quarters that matters. So let's put this together. What lies around the corner? A higher spending government extracting ever more tax from a weak debt laden economy.

Now there is clearly a debate to be had about the role the fiscal rules play in all this. My view is that today's fiscal rules, like their predecessors, can be too easily gained and we can address how to. We can debate how to address that. But let's not lose sight of the main point. What matters is whether the underlying fiscal trajectory is credible, and that trajectory is shaped by political choices and political belief. Do you believe the state should be the driving force of growth? Or you do you trust people and the markets? Should the state encourage people to take greater control of and more responsibility for their lives, or should it, should the state assume ever more responsibility for itself? The answers to these questions, those are the ones that will shape our fiscal trajectory.

And, my Lords, they will shape the decisions in next month's budget. So the noble Lord, the Minister, obviously cannot prejudge that budget. But that said, there are some simple questions he should be able to answer first. Does he think British business can afford to pay still higher taxes without damaging growth? Yes or no? Second, the Prime Minister has said he will use flexibility flexibility within the existing fiscal rules. Can the Minister define what flexibility means? Third, what did the Prime Minister exactly mean when he said, we've got to get beyond this thing of being in hock to the bond market? And finally, what does the Minister think about the current trajectory of our national debt? Is it sustainable? Yes or no? My Lords, my answer to that question is a firm no.

We may not face a debt crisis today, but the horizon is darkening. Weak growth, a record tax burden, sticky inflation, rising welfare dependency, and more of our national income consumed by servicing the debts of the past. My Lords, I do not see this as turning a corner. I see it as proof that after two years of labour with its massive majority, we are on the wrong path and going in a very, very dangerous direction. We need to change course now. Before that thing called the bond market forces us to change and change in a way that will be more painful and more costly.

My Lords, let me end by taking us back. Back 50 years back to September 1976. Britain had just turned to the IMF for a loan. A few days later, standing at that despatch box, the noble Lord Lord Carrington said something which echoes down the generations. He said, and I quote, you cannot go on spending vast sums of money which you have not got. You cannot go on improving your own standard of life on other people's money, because sooner or later they will not lend you any more.

Whether we like it or not, and we do not, and the sooner the better. We are going to have to cut our public expenditure. Of course, it's not going to be nice. Of course we're all going to be hurt by it. And of course, we shall all have to cut the things we should much rather not cut. Of course we will dislike it very much. But, my Lords, what are the alternatives? Are there?
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Viscount Chandos Portrait Viscount Chandos (Labour)
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My Lord, it's a privilege to follow the noble Lord that this follow the noble Lord that this motion be agreed to. By Lords. It's a privilege to follow the noble a privilege to follow the noble Lord Lord Bridges of Headley, and I congratulate him on securing the debate. The challenges facing this country and many others globally by the current fiscal outlook has been a consistent focus for him, both during his distinguished stint as chair of the Economics Economic Affairs Committee and since.

I should like to welcome my noble friend Lord Pitt-Watson to the front bench as it's the first time I've spoken in a debate where he will be responding and I should declare the interests as in the register, as a trustee of Lambda and advisor to the Family Office, WFO and the director of Digbeth Loc Studios. Lord Bridges survey of the fiscal outlook could be described, perhaps by Sir Humphrey Appleby as very grounded, verging on the bleak. There is no denying that globally the challenges are formidable, with the economies in a more vulnerable position to future new shocks than by some measures.

Before the global financial crisis of 2008 and the UK, as the noble Lord described, is unfortunately not a positive outlier relative to the global picture and in too many respects, at the wrong end of the spectrum. But before I make my observations on these challenges and some of the responses to them, I should like to begin in a positive note by welcoming the encouraging trend in productivity growth that has emerged in recent weeks. Output per job increased by 1.4% in the 12 months to 30.

June has been consistently above average since late 2024. It's premature to call victory or attribute the improvement to the effects of AI, but productivity is so central to the turnaround of the economy and the balancing of the fiscal books, that there do seem to be grounds for cautious, tentative optimism. It does perhaps also support the argument that my noble friend Lord Eatwell made after the government's first budget, that the increase in employers National insurance would drive productivity growth more than hit employment.

But for all of that, there are powerful headwinds to contend with. The Financial Times this week described the issue of national debt service globally as the $2 trillion monster. The US, France and the UK are all having to pay more debt interest than they spend on defence. This not only poses real challenges in setting steady state spending plans, but also, as I've already noted, gives less leeway to respond to future financial crises. The OBR, in their long term forecasting, assumes a financial crisis every nine years, and in this week's announcement by the Dutch central bank that they were moving the physical custody of 14% of their gold from New York and Ottawa to London.

An eloquent demonstration, perhaps, of the damage the Trump administration is doing to international confidence. They made the strikingly blunt assertion. This ensures that D and B is prepared for severe crises. As my right hon. Friend the Chancellor prepares his budget, he is undoubtedly constrained by the commitment in the Labour manifesto not to increase the three most significant personal tax rates. Taxation policy has always been part of the political debate, but perhaps most acutely since the Conservatives Party's campaign, fake news.

Labour's tax bombshell, which can be credibly seen as having swung the 1992 general election result scare. Scarred by that. It is understandable why the party has sought to avoid a repeat, but to be frank, it is not conducive to the best management of the economy in inevitably changing circumstances. And those changing circumstances include, most importantly, the effects of the war in Iran. The Nicer has estimated that every 10% increase in the oil in.

In. Increase in the oil price reduces GDP by 0.12%. So the rise of 40% or more since the US's misconceived attack on Iran is likely to have reduced GDP by half a percent, with the IMF having concluded that prior to this, the UK economy was on a positive, improving trend. I will end on 1 or 2 more positive notes. The fiscal devolution started by the last Chancellor and turbocharged by the new Prime Minister, has the potential to have disproportionately effects on growth, employment and housing.

As I'm already seeing in the work I'm doing in the West Midlands. My right hon. Friend Gordon Brown's compelling analysis in the Financial Times of the role of innovation in driving growth, and the UK's world leading strength in science and and technology. I hope my noble friend the Minister, can reassure the House of the government's understanding of the need to address the fragile state of the higher education sector, the scale and severity of the challenges that we face are formidable.

These are global challenges faced, as I've said, by multiple countries and exacerbated overwhelmingly by the policies of the US administration. Lord Bridges is wrong to attribute the causes of this challenge to this government. In fact, in contrast, I'm totally confident that the Labour government governing, unlike its predecessors in the national interest, is best placed to find a successful path through these challenging times.
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Lord Burns Portrait Lord Burns (Crossbench)
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My Lords. >> Outlined the challenges facing fiscal policy very well. I was a member of the Economic Affairs Committee that Lord Bridges chaired so ably, and he has summarised the conclusions of the report of that committee two years ago. Since then, the OBR has also set out the significant risk that UK debt could become unsustainable unless offsetting action is taken. While the previous Chancellor was successful in stabilising the debt ratio, we now need to make significant progress in reducing it, not just in the forecast but in practice as well.

The need for early action is not removed because the debt ratio of other countries is similar, or even worse than that of the UK. Having a shared problem might make it feel less urgent, but the UK debt ratio can only be brought onto a sustainable downward path by our own actions. Lord Bridges also set out the source of the. The initial source of the problem very clearly. Since 2007, we have engaged in three rounds of exceptional expenditure in response to events.

There were good reasons in each case why that was undertaken, even if in some cases it was overdone. But, you know, in one case, the financial crisis. Of course, we were trying to protect savings and maintain a functioning financial system. The Covid crisis required support for people who were suffering in lockdown. And of course, there was a very sharp rise in energy prices after the invasion of Ukraine. So some of this was right in principle, but I cannot recall any government giving much warning that these rounds of fiscal support would eventually have to be paid for, even if not immediately.

Nor did governments warn that the longer the delay, the greater the cost in terms of higher debt interest taxes were cut when the opportunities arose, and expenditure controlled control proved to be too difficult politically. While there was general support for changing the fiscal rules to accommodate public sector investment, less has been said about the debt service costs involved in that as well. At a time of rising and very high global interest rates, taking out a mortgage means starting your monthly payments immediately.

The same applies to government borrowing. And of course, we are experiencing that. Both Economic Affairs Committee and the OBR set out the significant headwinds we are facing, and they are very tough. They include ancient society, increased defence spending and rebuilding our energy grid to make the best use of renewable energy. And dealing with these is not going to be easy. In my own view, this means a combination of increased taxes, restraint on increases to benefits, and improved public sector productivity as far as possible.

This should involve reducing the array of exemptions and tax credits that are characteristic of our tax and benefit system, and we need closer scrutiny of claims for benefits. The goal should be a wider tax base and a narrow welfare base, and we should be doing our best to avoid high marginal tax rates or damaging cliff edge withdrawal rates that are also very evident. Now. Faster growth could improve the situation, but we need to be cautious. The OBR has pointed out that if faster growth is simply translated into proportionate growth in the provision of public services, then growth on its own will not be sufficient to solve the problem.

And here lies a fundamental challenge. Demand for the major public services tend to increase more than proportionately in a growing economy. We see this with health, social care, education, and some aspects of welfare. So it's not surprising that costs rise more rapidly than the growth rate itself. Indeed, in the case of the triple lock, the arrangements mean that pensions will grow faster than earnings. It has been designed to reduce this effect. This explains why growth alone will not solve this problem.

In an earlier phase of my career, I had close experience of three difficult periods for fiscal policy in 1976, 1981 and 1993, I was an academic and a commentator during the first, and I was a Treasury official during the second and third, and in each case, decisive action was taken, even though it involved difficult and often unpopular decisions. As the noble Lord, Lord Lamont will remember in the case of the 1993 event. But eventually we saw an improvement in the balance of the economy and improved market confidence.

If coping with excessive debt becomes the priority for government, this tends to crowd out discussion of longer term structural policy and issues like tax reform, which are so necessary. Once debt is clearly on a downward trajectory, life becomes much calmer, leaving more time for dealing with the longer term issues that really do deserve scrutiny. Above all, if we could get onto a path of falling debt, if a falling debt ratio, we might spend less time discussing the fiscal rules and whether there is sufficient buffer for the next budget.

And I

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suspect we would all welcome that. My Lords. It's a great pleasure. To speak after.

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To speak after. Lord Burns, who. Bring so much experience. And authority to his comments,

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And authority to his comments, which I think were extremely balanced and will be well received by all sides of the House. My Lords, by all sides of the House. My Lords, my noble friend Lord bridges set out his case with his customary clarity, and the figures he gave us,
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Lord Hill of Oareford Portrait Lord Hill of Oareford (Conservative)
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clarity, and the figures he gave us, I think, speak for themselves. The rest of the world is now catching up with the warnings of our own Economic Affairs Committee two years ago, and not a day goes past at the moment, without more evidence of the stresses and strains, not just in the bond markets, but in the wider world of geopolitics that are adding to the pressures and bringing closer, I think, some kind of reckoning. Although I agree with my noble friend that the decisions that the government has chosen to take over the last two years have, I fear, made the problem worse.

Ducking cuts to the welfare budget, increasing taxes on business and employment. We on this side also have to acknowledge that this is a problem that has been a long time in the making. Whereas in 1997, the Conservatives left office with a surplus, a surplus. My Lords, in 2024, the fiscal signs were already flashing red. And that brings me to the main point that I would like to make today, which may seem slightly to one side, but I wanted to bring it to the discussion because I believe that our fiscal problems are a consequence of some structural political problems, and that we will not be able to address our fiscal and economic problems unless we also address the whole way in which our political system operates, and the way in which I think our political classes have come to behave.

What do I mean by this? When I started working in government back in the 1980s, the basic operating model for politicians was something like this. The leadership worked out their overall vision and values and then developed policies that were coherent with that vision. The job of politicians was to make an argument in favour of that vision, and seek to persuade as many people as possible of the wisdom of a particular course of action. Now, I'm not arguing this was universally applied, nor that there weren't sometimes contradictions.

But I do argue that government and Parliament were fundamentally transmission mechanisms, and that their core job was to make an argument that was as coherent as possible. We did not obsess over opinion polls. We did not carry out endless focus groups and taxpayer funded market research. We did not, at bottom, think our job was to split the difference between competing interest groups.

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Right? So contrast that, my Lords, with what we see today, incoherent and contradictory policy positions to please different lobby groups, for please different lobby groups, for example, a drive on deregulation where I believe the government is to be congratulated, but it sits alongside higher taxes on business and employment, taxes on non-doms and employment, taxes on non-doms and laws to make it less attractive to hire workers. One set of measures that is pro-investment, but another that is anti investment.

And the result, I think is incoherence. In essence, I believe we've moved from government and Parliament as a transmission mechanism into one that is always on receive one that sits on top of a giant lobbying system where the plaudits go to the politician who can negotiate the next 24 hours most skilfully, or hold some ludicrous line to take most plausibly, ideally while wearing a hi vis jacket or a hard hat. So, my Lords, is it a surprise? Our fiscal problems have compounded as our political system has become ever more performative.

I remember my noble friend Lord Lamont once saying, to govern is to choose. More recently we've had a Prime Minister who said, I'm pro cake and pro eating it. Fortunately, my Lords, we face a test that will show whether we have a political system that is indeed capable of being serious once again. What are we going to do about the pension triple lock? It is already clear that in the circumstances we face, it is indefensible economically. But if as a society, we believe in some kind of intergenerational unfairness, it is clearly also indefensible, morally, a policy that locks in the transmission of money from a declining number of young people into a growing number of relatively well-off older people, or, if you like, from our children to us, is not the path to a strong, balanced society.

Now, I hope we can rise to this challenge, my Lords, which applies to my benches as much as it does to the benches opposite. As my noble friend Lord bridges said, we can either take steps ourselves to start sorting out the mess, or we can wait to have change forced on us. I know which I prefer and which I believe is better for our democracy, but honesty about our fiscal situation requires honesty in our policies to restore seriousness to our fiscal position, we first need to restore seriousness to our politics.

seriousness to our politics.

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Very good, very good. Very good. Thank you, my Lords. I also welcome this debate. Can I thank a Lord Bridges for bringing it, and also welcome Lord Pitt-Watson to also welcome Lord Pitt-Watson to his place. It's inevitable that the tone of the debate in the conference season and immediately conference season and immediately before the budget is a time when all parties lay out their stall.
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Baroness Alexander of Cleveden Portrait Baroness Alexander of Cleveden (Labour)
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all parties lay out their stall. Although I've been particularly encouraged by the contributions of Lord Burns and the contribution that we've just heard from Lord Hill about some of the thoughtful, longer term structural issues with which we are contending as a nation. The nation's fiscal challenges are self-evident, and my party in government, therefore, does face understandable public anxiety. As Lord Hill has just noted, the party opposite is also contending with some public scepticism about their record in the government.

And then to come to what that does to our politics, what it does is bring the politics to the forefront. It brings to the forefront the populists, those who peddle easy solutions to these structural challenges, those determined to convince the country that the answer to our fiscal challenges is to blow up the system. And it's not made any easier by the markets being spooked by a US president who, on social media last week was telling the Federal Reserve in capital letters, lower the rate and today promised a cash bung to those who voted the right way.

That therefore creates a challenge for all of us. But as Lord Bridges recognised, the real rocket fuel for populism and difficult politics is low growth. Low growth is the root of our fiscal pressures, and it is as a result of the difficulties of the financial crisis, as we have heard, there have been exacerbated in Britain by Brexit, but then a series of global shocks the pandemic, the war in our continent, the rising energy prices, the Iran conflict. And here I think there is common ground that on top of those pressures comes spending pressures of an ageing population and the need to raise defence spending.

All of that requires a government willing to face up to those headwinds. And that, I believe, is what we are seeing. Our times demand serious responses. We have heard from Lord Sandhurst about Gordon Brown. I'm going to come to that, but I took inspiration this week from William Hague, who wrote the old conservative philosophy is no longer a convincing government programme. That is because circumstances have changed. We now face ageing populations, housing scarcity, energy insecurity, technological competition with the US and China, Russian aggression, weak productivity, strained public services and increasingly expensive welfare states.

Wise words indeed. And the echo what we have heard in this chamber today. But there is also an honest acknowledgement of the new fiscal challenges and an invocation to us all not to be tempted by easy populist solutions. His remedy was growth, particularly innovation and entrepreneurship. And Gordon Brown, who did right 24 hours later in the Financial Times, also urged a focus on growth and innovation, both men arguing for a budget as an economic event as much as a fiscal one.

And encouragingly, the new Chancellor's inaugural speech on Monday did focus on growth and innovation and scaling start ups in the North. So let me put the case for the government. Despite the headwinds, this government, the Starmer government, delivered economic stability that we promised. Growth is the best in the G7. We are cutting the deficit faster than others in any other G7 economy, although I accept that a sustainable long term path is something we have to find. But let me just repeat we are cutting the deficit faster than any other G7 economy.

Productivity is up, wages are up, business investment is rising. Planning delays, judicial reviews, the Green Book all being tackled and young people put back to work. Meanwhile, the Chancellor has reaffirmed the government's commitment to fiscal discipline, respect for manifesto commitments and wisely has made no false promises on tax. I say to the party opposite, we do await what the new Chancellors. Shadow Chancellors prospectus is. The last shadow Chancellor told us that his strategy was not one of focusing on innovation.

Indeed, he was proposing cuts to the British Business Bank, but a rather implausible £23 billion to come from welfare. I simply say that welfare spending outside of pensions has hovered around 5% of our national wealth for the past 40 years, so there is scant evidence on where the axe would actually fall. We have been told that half a million children would be pushed back into poverty by restoring the child benefit cap, and by raising VAT on disabled drivers and cutting housing benefits.

I simply say that is not the totality of the solution, nor is cutting overseas aid. That ship has sailed, we are told, will cut asylum hotels. Another ship that sailed legal and illegal immigration, both decisively down, cutting back on some of the extra 150,000 civil servants employed in the past decade and a half, perhaps wise. But my point is that the luxury of opposition should not involve aping the populists, because that is not a governing strategy. We have heard from Lord Burns that actually the way forward may indeed be to look at tax.

We have heard from others, including Lord Howell. We should perhaps look at the triple lock. Now, there are legitimate differences around where and how spending might be addressed and where the axe should fall. But can I simply say in conclusion, we know from the Chancellor that this budget will be one that sticks to the fiscal rules, restores the fiscal headroom as it must, and reinforces this government's commitment to growth, with a ten year plan to follow that signals where change is coming on devolution, on social care and defence.

My Lords, I believe these are the priorities that resonate

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with the country. Yes. My Lord.

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My Lord. I really do congratulate my.

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I really do congratulate my. Noble friend Lord bridges for both bringing forward this debate. And I think we have had to do a bit of think we have had to do a bit of pushing and shoving to do that. And indeed, for his crystal clear indeed, for his crystal clear demonstration. But I don't really see who can be challenged that we
12:46
Lord Howell of Guildford Portrait Lord Howell of Guildford (Conservative)
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are with our national debt interest. We are on a path to unsustainability, and no one has really a very clear idea of what to do about it, including the present do about it, including the present Chancellor. This isn't fair enough. This isn't new, as Lord Hill and Lord Burns, and no one has Lord Burns, and no one has experience of of said, this is an old problem or had its seeds in the past, I can go back one further past, I can go back one further than the late 70s to 1970, when we talked about a new style of government and said he slightly unexpectedly became Prime Minister.

And we urged that we should start unravelling the really an almost entirely socialised public sector, which was inherited from from the war years and begin to regain some balance between private enterprise and and the market economy on the one hand, and the necessary government framework of laws and guidance and support on the other. So it's not new. And anyone who says it's all the fault, either of the present government or the past government. Interesting comment, but actually completely irrelevant to what on earth we do now.

Do now about it, my Lords, I also wanted to declare my interest, given that energy is often at the root of all these problems, because I am chairman of the Windsor Energy Group and I advise the crystal energy both, I may say, without pay, and I also advise the Kuwait Investment Office, who are an enormous sovereign wealth fund, who long to invest as it. To others in the British economy, but find great difficulty in doing so, and have vastly reduced their commitment in the British economy, rather as a pension fund rather reduced.

When I was young, the pension fund put 60 pension funds for their surpluses, put 60% of their money in the British economy and mostly in British equities. Now the figure is 3.8%. What on earth has gone wrong? No wonder there's a shortage of resources for investment. If our main investors, home and overseas, are just quietly packing their bags and going elsewhere. Well, let me put four points on the question. Lord Hill is right there is what what to do about it? The roots are deep and the problems are going to require a change of attitude in the digital age of an enormous kind, which is going to very difficult for a lot of people to face, including a lot of politicians.

Four points. One, there are a lot of fat around the world, a lot of methods of merging or matching private finance and enterprise with public and state frameworks. Re basic needs, in particular public infrastructure projects, longer term ones which simply cannot be delivered without government pump priming and underpinning, but for which there is no state catch left. There is no money, there's no more room to borrow, or if there is the borrowing cost plus interest cancels out what one's trying to borrow.

And there is no room for tax, because tax beyond a certain point. We know from Mr. Arthur Laffer and many others, although there are exceptions to this, that you end up with less revenue and not more revenue. So the ceiling is being bumped against, and there's no way out of that. Second, these new methods which I mentioned, which we we really invented here under the name of for 30, 25, 30 years ago and are now called P p P are being developed and used in several countries.

This isn't just experiments or hopes of the future. This is what is actually going on at the moment. We dropped the idea back in 2018, but a whole range of countries which are found to have a hard time are adopting varieties of this method of combining private enterprise with harnessing it to public needs, having achieved from compatibility between state and private investment. This can be reached through risk analysis and insurance developments and careful phasing of particular projects, so that.

But the whole resources of private enterprise can be brought in and the tension and ease and easement take place in regard to to bond markets and their worries and their consequent increase in interest rates for lending us their money. So there is a there are money. So there is a there are opportunities opening just for certainly not for any more, for. Carrying forward some of the projects that we need from, from potholes to fire stations without burdening the the bond markets or the government accounts.

And these are being followed in a number of countries. And finally, these are immensely powerful and new insights, which I do hope we can pursue and share. Aside from the politics of who's, in fact, on this side, we take, we think the wrong governance in office in advance always bias the state. That is a statement of fact and raises all sorts of other issues. No point in bemoaning it at this time. We have our own in opposition to try and state some constructive ideas, and if the government borrows and takes them, that's fine.

At least we're making progress. I hope that we can unlock a great deal of progress, and a lot of this lies in the area of the great energy transition and providing 247 reliable, affordable, clean energy in the quantities that are going to be needed if we can ever get growth going. The among the experts in our planning agent energy future, a persistently underestimated the amount of clean, green energy we're going to need and the amount of investment we're going to need to achieve that clean, green energy.

Certainly for our modern growing economy, and even more certainly to cover the enormous requirements of our data centres, we need to keep up in the world which are very thirsty indeed. And we present our plans are totally inadequate for meeting their needs as well. So the nations that are moving this way are the Netherlands, Ireland, France, Germany, Norway, Sweden, Finland, Canada, Australia, South Africa and some separate provinces and states in Canada and in Australia. The province of Ontario is launching a huge new nuclear program, much quicker than ours, much more efficient, much more with the help of the Japanese and without going to their own government.

There are many other examples, some of which might well bring down the cost of borrowing, which for this country is too much and too expensive, and we must call a halt. So there is a third way of assault. It doesn't let it. The government also hope it doesn't. Politicians off the hook. But we should realise that the private enterprise or public expenditure of this kind is vital, vital projects of the future is attainable if we think very clearly and wisely about it.

Yes.

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My Lords, I too would like to salute the noble Lord, Lord Bridges of Headley, for securing this of Headley, for securing this critical, timely debate and for his compelling opening remarks. And it was a pleasure to sit on the was a pleasure to sit on the Economic Affairs Committee under the noble Lords astute chairmanship, the noble Lords astute chairmanship, especially during our inquiry into the sustainability of our national
12:55
Lord Londesborough Portrait Lord Londesborough (Crossbench)
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the sustainability of our national debt. National debt. It's time for tough decisions. Some of you will remember that we debated that title for some time, as many of us, myself included, had little confidence that governments of any colour would make those tough decisions. And so it proved with Keir Starmer and Rachel Reeves, and, I fear, with Prime Minister Burnham and Chancellor Healey and more on that in a moment. The committee's two subsequent inquiries raised further concerns about our fiscal outlook, preparing for an ageing society which, in short, we're not doing.

And earlier this year we looked at our fiscal architecture and asked the key question is the fiscal framework fit for purpose? To which, in short, the answer is no, it's not. Our track record. As Lord Bridges has pointed out, is disturbing, to say the least. Debt at 3 trillion, it's tripled in size over the last 20 years, and yet we have so little to show for it. Witness our anaemic growth rates annual interest bill now standing £110 billion, almost double our defence budget and our budget deficits continue to run well north of 100 billion a year, financed by yet more borrowing.

Despite our overall tax burden rising above 36% of GDP and heading, I fear for 40%. My Lords, the OBR copped a lot of flak for its projection. That debt would climb to 270% of GDP in 50 years time. But given our economy's vulnerability to global shocks, let alone our baseline trends, that forecast strikes me as conservative. But that's enough fiscal hand-wringing from me, as I want to focus on the outlook and the need for turnaround.

And here I draw on lessons learned from my own private sector experience in rebooting companies that have lost their growth momentum and become overly dependent on outside financing. Turnaround always involves taking tough decisions on costs, unpopular decisions. But in the interest of financial sustainability, the triple lock is a classic example. But my Lords, far more important than cost controls turn around depends on sustained revenue growth, what areas you need to protect and nurture in order to accelerate growth.

That is the only way out of our fiscal trap. And yet government after government has failed to address this. Rachel Reeves first budget was a classic example, trumpeting economic growth as the number one mission yet hitting the supply side. Our businesses and employers with an extra £25 billion on Nick's doing huge damage to jobs, growth and investment. And I've seen the impact firsthand across SMEs that I chair, invest in and advise, and I should declare my interests as set out in the register.

So it is deeply disappointing to hear Andy Burnham repeat Keir Starmer's pledge not to touch income tax employees, National Insurance or VAT, because that points to raising taxes on businesses and wealth creators. Now this government appears to be hanging its growth strategy on the peg of devolution. Good growth in every postcode, a mission that may come back to haunt them because such ambitions will generate pain before gain. If indeed you get the gain, increase spending on reallocating resources and power recruitment, training, management and execution.

And that's before we even address infrastructure. It's a long term strategy, which in parts of this country does have some merit, but it requires financing upfront and it will disrupt output and productivity, adding even more fiscal pressure that will not go unnoticed by the bond markets. Yes, economic growth is the only way out of our fiscal hole, but we need to address this head on and with realism. So let me conclude by suggesting a pathway. We need a plan, a coherent strategy that delivers a minimum of 2.5% real GDP growth from 2027 to 2032, compared to our current rates of 1 to 1.5%.

This would be achieved not by shifting resources around the country or by building high speed railway networks, but by addressing the core productivity issues within our 34 million person workforce, both public and private sectors. Now, I'm talking about performance management and leadership, the way we pay and incentivise our workers recruitment and retention, training, of course, and adoption of technology, especially AI above all, by specifically targeting productivity gains and rewarding performance. An enterprise culture, in other words, and I contend there are very few organisations or companies out there that cannot achieve a 2% annual improvement in productivity if that's their prime

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focus. So what would this do fiscally? By Adding.

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Adding. Just one percentage point of real GDP growth. And each the next real GDP growth. And each the next five years we would see 60 to £70 billion a year of additional tax revenues by the end of that period, without increasing tax of even without increasing tax of even greater benefit would be the impact on interest rates, because debt sustainability turns on the gap between the interest rate the government pays and the growth rate of the economy.

R minus G. Right now that gap is unfavourable. Gilt yields are sitting at 5.2 to 5.9% against nominal growth. Real growth plus inflation currently running closer to 3.5%. We have to close this credibility gap. Otherwise our economy will remain chronically dependent on borrowing at unfavourable and unsustainable interest rates. While our miserable GDP growth rates continue.
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Lord Redwood Portrait Lord Redwood (Conservative)
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My Lords, the conservative government was swept from power, government was swept from power, firstly because it did not deliver on immigration control in the way that it promised, but secondly that it promised, but secondly because it presided over a very major surge in inflation in the early 2020s, which had been brought about by excessive spending, excessive borrowing, by the deliberate repression of interest rates and the artificial creation. A very large sums of money by the Bank of England.

Like many, I supported the first very substantial injections into the economy. When the lockdown was first announced, the lockdown took a lot of activity and income out of the economy, and there was need to have a very major offset. But I became increasingly increasingly critical and impatient in the recovery period because the government and the Bank of England didn't seem to understand that we were into recovery, and they carried on with excessive borrowing, excessive spending, excessive money creation. And I told them and others told them that it was bound to be inflationary.

But much of the great British economic establishment was slow to see that, and the result was a nasty cost of living crunch, which damaged to the electorate and which drove the Conservatives from power in a perfectly understandable way. By 2024, it so happens the conservative government had got much better control of the economy. And for the first six months of 2024, under conservative direction, the inflation rate came back down to the 2% target. The economy for that six months was the fastest growing economy of the G7, and the government set out in its spring budget of 2024 a five year plan, as always with that five year plan, had entirely credible figures to show the deficit and therefore the borrowings coming down year by year to reassure bond markets.

And under the Conservatives, of course, it was considerably cheaper than it is today for the government to borrow because there was a bit more credibility in the medium term prospects for controlling borrowing than there is today. So I think the fairest thing to do to try and analyse where we are, because I want the government to succeed, and I think it needs to consider very carefully where it is when framing its next budget is to compare the the outgoing plans in budget 24 of the conservative government with the plans of this government for 278 and I think let's concentrate on.

27. Eight because that is the year when the new Prime Minister and his new Chancellor can make any changes they like. They've inherited the current year. They've chosen not to make many changes in the current year, just a few incidental, very small increases in spending. So they basically lived with the Starmer Reeves construction of this year. But let's hope they think carefully about what they want to do for 278. So what have they inherited from re Starmer? Well re Starmer in two budgets increased taxes by 66 billion by policy changes.

Also of course a much bigger increase in taxes from fiscal drag and inflation. And what they suggested for 278 was they wanted to borrow £97 billion in that year, more than the outgoing conservative government. The conservative government was planning to borrow £50 billion in 278, and the current government inherits 147 billion. And there is then the level of spending and the re. Starmer government added 145 billion extra spending for 278, compared with the 97 billion of increased spending which the Conservatives were planning for that year.

So the total package is to borrow a lot more and to tax a lot more, and to spend a great deal more. And I think we see looking at the economic performance of the last two years, that this has not been a benign policy mixture for the economy. We have seen that unemployment has gone up. We've seen that inflation has gone up not entirely because of world events in the Middle East, but also be driven by public sector costs, where there's been a very big increase in public sector wages.

I have no problem with paying people in the public sector more, but there should be productivity gains to help pay for it, and those have been sadly lacking. And we've seen the government stumbling to maintain the tax revenues at the more elevated levels, because, of course, they they have triggered what in the 1970s was called a brain drain. We have seen a lot of talented people and a lot of people with with wealth deciding they want to make their lives or to make their investments elsewhere.

And this is a considerable concern. I have no problem with wanting to tax the rich more than everybody else because they have the money to tax. But if you overdo it, they don't stay to pay the money you wish to raise from them, and then everybody else has to pay rather more because you've lost those easier amounts that you can get. If you tax the rich in a sensible and internationally competitive way. So the government, I think, as has been made very clear by my noble friend Lord bridges, does have to take action on spending.

I don't think higher taxation is going to help get the government out of this, given that they have ruled out the the main taxes on most people, they would have to target the wealthy, the energetic, the people who worked harder rather more than anybody else. And I think more of that would do damage to growth and would mean less revenue rather than more revenue. So they do have to find public expenditure reductions, which can start to bring the budget into a proper shape.

I do not share the view of those that think we should pick on the pensioners or the disabled to make particular sacrifices at this juncture, I think those who are genuinely disabled need our proper financial support, and I think both parties were right to promise the triple lock in the election and to keep to their word. There are many easier targets, which I've often mentioned, but which time does not permit to handle today. But my party has set out a very good set of cuts for the

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benefits bill to start us off. My Lords, I congratulate my noble friend Lord Bridges of noble friend Lord Bridges of Headley on securing this debate. The fiscal outlook, as my noble friend set out in his excellent friend set out in his excellent speech, is pretty awful. The upcoming budget will be particularly difficult. The small headroom left by the previous Chancellor has probably already
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Baroness Noakes Portrait Baroness Noakes (Conservative)
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Chancellor has probably already disappeared. Public expenditure at 44% of GDP is too high. Debt at approaching 100% is too high. Taxes at 38% are too high. Growth at around 1% is way too low, and the Bank of England seems incapable of getting inflation down to its 2% target. The backdrop to the budget could hardly be worse. The government have been in power for over two years now. They might want to carry on blaming their economic inheritance as the noble Lord, Lord Livermore did ad nauseam.

But that simply won't wash. We are where we are because of choices made by this government. They've been true to form Labour. Governments always spend too much, borrow too much and tax too much. The solution is definitely not more of the same. But there is no sign that the new leadership in number ten and number 11 will change course. I will focus my remarks today on two areas debt which my noble friend Lord Bridges of Headley spoke about, and taxation.

We used to think that 40% of GDP was a de facto ceiling for debt. But in the wake of the global financial crisis and then the pandemic, we seem to have normalised debt levels, staying at historically high levels. The fiscal rules require only that debt falls, and that could be by any amount at the end of the current forecast period. And there is no commitment to putting debt on a serious downward trend in the noble Lord Burns rightly emphasised the need for this debt has to be serviced and the cost is rising.

As we've heard, the UK's long term borrowing rates are the highest for 30 years. Ten year rates are the highest in the G7, and bond yields reflect the market's view of our economic prospects. We are being judged as weaker than the rest of the G7. The persistent inflation, weak growth and worries about a government which shows no sign of controlling expenditure or moderating debt levels, will keep our borrowing expensive. The the ultra low interest rates that we experienced post the financial crisis lulled governments around the world, not just our own, into seeing borrowing as a cost free option.

But since rates have normalised again, the real cost is now visible. And as my noble friend Lord bridges said, we'll be spending over £100 billion a year on interest way, way more than on defence. Now there are three ways to get debt down. The government seemed to be betting on growth solving the problem, but many of the government's policies are positively anti-growth employment laws and the jobs tax in particular. The two other ways are to spend less or to tax more.

I do not believe that this government will cut expenditure. Does anyone believe that the government will be able to keep a lid on the out of control NHS expenditure? Does anybody believe that the government will have the courage to face down their backbenches to cut the benefits Bill, and if they cannot make headway on these two big ticket items, expenditure will remain too high. And that, my Lords, leaves taxation. The Chancellor has refused to rule out raising taxes in next month's budget, but raising taxes is about the worst thing that he could do.

He ought to learn from the last Chancellor's dreadful decisions that hiking taxes has consequences. Loading more National Insurance onto employers will simply destroy jobs, especially entry level jobs. Increasing taxes on banks, as the TUC have called for this morning, simply means that banks will have less to lend to the real economy, and taxing oil and gas companies might satisfy the green zealots, but it will threaten our energy security. Now the Chancellor may be tempted to satisfy calls from his left wing to tax the rich more, but that will backfire.

Wealth taxes have not worked anywhere. Higher rates of capital gains tax are counterproductive because people simply do not sell assets, and creating higher rates of income tax will drive even more wealthy people to head for the departure lounge. Now, some of us were privileged yesterday to hear doctor Art Laffer speak. He was clear that the decline in the UK economy over the last 70 years is highly correlated with periods of high rates of taxation. He was also clear that there is no example of an economy which has been taxed into prosperity.

The government would do well to take note of this, my Lords, a serious response from the government to our woes has to be rooted in unburdening the private sector so that it can grow without interference. The economy needs less regulation, lower tax rates and increased incentives, and this applies to individual taxpayers as much to our business sector. The state must take it must play its part by doing less and spending less. I do not think that the Prime Minister or his Chancellor are remotely capable of achieving those things, and that is a tragedy for

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us all. It's a privilege to take part in

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It's a privilege to take part in this debate. I very much welcome enjoyed this typically powerful enjoyed this typically powerful speech from noble Lord, Lord Bridges of Headley. But what I Bridges of Headley. But what I think he got right is where he said this debate is really about political choices. It's about political beliefs. And it will come as no surprise to him that on this side of the House, we have different beliefs leading to different choices. And that's as it should be.

Now I'm just going to talk about the triple lock, which on the OBR's figures is a key element in determining the UK's future fiscal outlook. Now, I want to be clear. I support my party's commitment to the triple lock up to the next election. The inevitable question is what follows. Now a
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Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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number of other noble Lords who have spoken have mentioned the triple lock. And of course it was triple lock. And of course it was mentioned a number of times in the sort of parallel debate that we had last week. I won't mention them all, last week. I won't mention them all, but it's clearly a big issue. And a number of people had simply say, we need to abolish the triple lock. I'm sorry that it is facile to just simply say abolish the triple lock.

That's only part of the equation. You also have to say what should replace it, and crucially, what you think should be the right level for the state pension. Because the debate about the triple lock is as much about the level of the state pension than the technical details of the revaluation basis. Now, these are jobs for the Pensions Commission, in my view, and I hope that they will address them in their report coming early next year. I favour the triple lock because it is highly effective in protecting pensioners, particularly those on low incomes.

I think people understand the triple lock, but what is often missed is that it does not apply to the whole of the state. Pension only applies to the new state pension and the basic pension. The rest of the state pension is tied to CPI and of course it doesn't. All to all the other sources of income received by pensioners. And the result? The net result for most pensioners is their incomes during receipt. As they get older, don't increase faster than the working population.

There seems to be an implication that because of the triple lock, pensions are going up faster. It's only part of the equation and most pensioners experience a decline in their incomes during the during their retirement, the only people for whom it actually leads to a protection or even in some cases, an increase of the poorest pensioners because by definition, their only income is the new state pension or the basic state pension. Now pension. Any system of pension uprating serves three distinct objectives, hence the triple lock.

Firstly, it allows pensioners to share in rising living standards, which I hope we would all support. It protects pensioners against inflation and last and not least, it protects the government about against difficult political circumstances. Now the first two objectives could be achieved through linking pensions solely to earnings or prices. The triple lock, of course, goes further by guaranteeing the most favourable outcome each year, which leads it. That reduces political risk but increases long term costs through the ratchet effect.

The core argument in favour of the triple lock is that disproportionately benefits poorer pensioners. As I have explained, it is targeted and is then for better off pensioners recouped through them paying taxation like everyone else. For many low income retirees, the state pension and related benefits make up the majority of their household income and a significant minority have no income beyond their state support. It is these people that the triple lock benefits. Now it's the 2.5% minimum increase that has raised most questions.

Now this floor was introduced partly in response to the politically controversial £0.75 weekly rise in the in the basic state pension in the year 2000 that complied with the rules at the time, but was widely regarded as inadequate. But it still ensures pensioners receive a meaningful increase even during periods of low inflation and weak wage growth. Now, the policy has helped bring the state pension close to what was anticipated. Its level by the 2005 Pensions Commission, which visited something like 30% of median earnings, which is the sort of level it is at the moment.

Now, clearly the most significant drawback, and bringing it back to the focus of this debate, it comes with a fiscal cost. It has increased pension spending more rapidly than was envisaged when it was introduced, particularly because the 2.5% floor has increased has been higher than earnings growth in the number of years now. Critics argue that pensioners, a group, are now relatively better off, but that's not true of all pensioners. As I explained, as large numbers of pensioners on low incomes.

So what we need now, and I agree with my noble friend Baroness Alexander of Cleveden, is a reassessment of the triple lock. What are we going to do after the next election? But as part of that, we have to recognise the value that it brings to the poorest pensioners.
13:23
Baroness Lane-Fox of Soho Portrait Baroness Lane-Fox of Soho (Crossbench)
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My Lords, I to thank Lord Bridges for his securing this debate and for his masterful opening. I'll be more modest in my remarks than him, and direct my comments to just one number. That pesky 1%. The number, as we've heard, is roughly the rate of productivity growth that the OBR productivity growth that the OBR assumes will reach by the end of its forecast. And as we know, it's one of the numbers on which the fiscal outlook turns higher. Productivity means higher wages, stronger tax receipts, more capacity to fund public services.

Weak productivity means that every aspiration, better services, better jobs, lower taxes, or lower borrowing collides with the same hard constraint. We spend a great deal of time debating in this House how we divide up the economic pie, but we must help the pie grow faster. Every Chancellor will face increasingly miserable choices. Otherwise, technology is not the only explanation for Britain's productivity weaknesses, but investment in technology and the ability to spread it rapidly through businesses in the public sector is a vital part of the answer.

I recently chaired the Mayor of London's Task Force on AI and the Future of Work. Our starting point was that the future is not predetermined. AI is not a weather system rolling towards us, which we merely observe. We still have choices. We can wait for disruption and deal with the consequences afterwards, or we can act early, shape the change and create opportunity from it. That distinction goes directly to our fiscal future. Successive PMS have assured us that Britain can produce the next great trillion dollar AI company, and I for one, very much hope that we can.

But there is another race that matters just as much as that one. Can we get these technologies into the rest of the economy quickly enough to make Britain's jobs more productive and more fulfilling? AI is sitting in a data centre is not productive. AI used well in millions of workplaces might be the latest ONS evidence gives us a glimpse of both the opportunity and the problem. Among businesses with more than ten employees reported, AI use rose from around 12% in late 23 to 35% in June this year, yet only 1 in 10 businesses using AI say that it is using it extensively or helpfully.

That suggests in many cases, AI remains an add on to existing work, rather than a chance to rethink what work is and how it is done. Having spent three years as president of the British Chambers of Commerce SMEs that are always at the forefront of my mind, the productivity revolution will not happen simply because another brilliant AI company opens up in King's Cross. It will happen when a manufacturer in the Midlands, a hotel in Cornwall or an accountancy practice in Newcastle can use these tools to do things better, faster, increase profits, increase employment.

My first ask of the government is simple don't treat the diffusion of AI through the economy, including the public sector, as anything less than a national productivity mission, and every bit as important as the next invention at the frontier. We must help smaller firms, and we must help them have the skills to use this new technology, redesign processes and help build businesses around it. My second ask is to act. Earlier, one of our task force recommendations was an early action system to spot changes in London's labour market as they emerge, combining data with what employers and workers are seeing on the ground, as well as where opportunities are available.

Its wider approach was to act early, shape change and create opportunity. We need the same discipline nationally. If we wait until somebody has lost their job before we think about retraining them, we have failed. Helping people move into new work is cheaper, it's more productive and far better than leaving them with the consequences of redundancy. Workers must not simply be the recipients of technological change. The people who do jobs understand best how technology could improve them, bring workers into the redesign of work, were much more likely to use AI to augment people rather than simply removing them.

I welcome the decision to put AI much closer to the centre of government, most particularly with the recent appointment of my noble friend Lord Ballance. But AI will not rescue government systems and processes that do not work. Success must be measured by whether white. Sorry. Success must not be measured by whether Whitehall has an AI strategy. It will be measured by whether it becomes easier for a parent to obtain support, whether businesses spend less time navigating bureaucracy, whether frontline public servants spend less time moving information between outdated systems, AI can make the government more productive, but not by bolting new technology onto old bad ways of working.

We must start with the greatest points of friction and then we must give team, give good teams the freedom, the tools and the support to fix them. I was lucky enough to see Demis Hassabis, as was Baroness Batters is in her place on Tuesday. He was the founder of DeepMind, as you're well aware, and this week he received the Albert Medal from the RSA for his work. Now, undoubtedly, he is one of our greatest assets and inevitably one of the most productive people on the planet.

For Dennis, in his acceptance speech, he painted an optimistic and exciting vision of an AI future. He seems no reason to proceed with fear, but his caution was this very few of us have an idea what is coming, and we are not acting with enough creativity, imagination and urgency to make sure the UK is in an advantageous position for the next decade. Let's heed Dennis. Let's be bolder. After all, the test over the next few years is in some ways remarkably simple.

Did

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that 1% go up? Lords. I congratulate.

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I congratulate. My noble friend Lloyd Bridges on securing this important debate and on his excellent opening speech. The Prime Minister wants to bring back hope, but he blames back hope, but he blames Thatcherism and Blairite economics. Economics, which he once supported
13:29
Baroness Meyer Portrait Baroness Meyer (Conservative)
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Economics, which he once supported for Britain's problem. And what is his solution? More state control and more regulation. He calls it business friendly socialism. But how can an economy be business friendly, with more union power and less economic freedom? My Lords, we have been here before. In the 1970s, the state controlled large parts of the economy, while trade unions wielded enormous power. I remember those days rampant inflation, power cuts, rubbish piling up during strikes, disrupted transport and economic decline.

The Soviet Union offers an even starker lesson. The state controlled production, prices and investment. Private enterprise was not allowed. The result? Shortages, inefficiency and stagnation. The Soviet Union collapsed because central planning destroyed incentives, innovation and production. My Lords, governments cannot create prosperity by controlling the economy. Yet the Prime Minister appears determined to take us back to an era in which government owned and trade unions ran the economy. And here lies the first contradiction.

The Prime Minister says that growth cannot be ordered from the top down. Yet he advocates public ownership of essential services and to decide which sectors of the economy should be prioritised. History shows us that governments are notoriously bad at picking winners. The second contradiction is fiscal. The Prime Minister embarks on his ten year plan when the fiscal headroom has fallen to just 8 billion. Welfare accounts for almost a quarter of government spending, and national debt is approaching 3 trillion.

Yet he has already run up a potential bill of more than $50 billion pounds, while proposing further uncosted public ownership. Nationalising water alone could cost some 140 billion. So where will the money come from? Will the Prime Minister break his pledge and Labour's manifesto commitment not to raise taxes? The tax burden, as we've heard before, is already at a record high. Any further increases will discourage hiring, investment and entrepreneurship and accelerate capital flight. Some 27,300 high net worth individuals and 6000 business owners have already left Britain in the last two years, taking with them investment ideas, jobs and tax revenues.

My Lords, there comes a point when higher taxes produces less growth and less revenue by weakening incentives to work, save and invest and policies that suppress growth do not protect. Protect the poor and vulnerable. Ultimately, they make the poor poorer. Or will the Prime Minister borrow more? We already spend 110 billion a year servicing our debt money, which could be spent on education and defence. As my noble Lord, my noble friend Lord Hannan said, markets are not interested in moral hazard or injustice.

All they care about is getting their money back and the bond markets are taking note. As we heard before, ten year yields are at a record high, higher than under Liz Truss. Some economists warn that Britain could again find itself going cap in hand to the IMF for a bailout, as we did in 1907. In the 1970s, rather than reverse Thatcherism, the government should remember that her reforms reversed Labour's economic decline and reduced our debt.

With welfare spending continuing to rise as our population ages, we're passing an ever larger bill to our children. This is the fundamental contradiction at the heart of the Prime Minister's programme. He wants a bigger state when we can no longer afford the state we already have. But, my Lords, the Prime Minister has an opportunity to build the pro-business, innovation led economy he wants. The Chancellor recently recent call for more private investment, more profitable businesses and more wealthy founders is encouraging.

But that requires less government, not more lower taxes, not higher ones, and an economy that rewards enterprise rather than penalises it. So will the government rein in spending, reform welfare and reverse the most damaging elements of his predecessor, Employment Rights Act, so that Britain once again can be once again a country where businesses want to start, grow and stay.

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Lord, sir. I'm obviously. Not alone in enjoying the period

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Not alone in enjoying the period I spent on the Economic Affairs Committee under the chairmanship of Committee under the chairmanship of of the noble Lord. I really enjoyed it. I enjoyed most of his speech as well. It was one of the most well. It was one of the most interesting committees I've served on, but I have to say, neither government of any kind paid much government of any kind paid much attention to our reports. I'm very pleased with the appointment to the Chancellor of the Exchequer, and
13:35
Lord Rooker Portrait Lord Rooker (Labour)
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I've every confidence in him he'll obtain growth, but there are some need to have some reforms of taxation, and I want to make three little points before two bigger little points before two bigger ones. One council tax should be revalued and extended up the scale and absorbed with an abolished and absorbed with an abolished stamp duty into a land value tax. Two why should small businesses Two why should small businesses want to remain small the VAT threshold deal with it? Because we want growth.

And three why on earth should over 65 working not pay National insurance? I have a declaration to make in the. Between 1999 and 2001, I was the Pensions Minister. I was responsible for the 75 pension increase. It wasn't all bad as the poorest pensioners on. Supplementary benefits are an increase of over £3. They don't queue up to the TV cameras to say I'm poor and I had £3. I explained this to the Labour Party conference that year and when I sat down I was on the platform.

Gordon Brown said I should acknowledge the standing ovation. It's how you tell the tale. It wasn't just £0.75 there was more to it than that. Of course. This resulted in the double lock leading to the triple lock, and it's now unsustainable. And I've said so publicly. So what's the answer? My answer is a triple average. It's fairer and easier to explain. I've done some calculation, but I've got the library to calculate for me that I've used in the past three years.

The increases would not have been 10.1%, 8.5% and 4.1%, but they would have been 6%, 5.9, and 2.8. The triple average could work after the next election. It's easy to explain. It's fair. We have to reset the pension. I'm not arguing with my noble friend, but the mechanism for changing it could be simply the average would remove the major obstacles we've got in terms of public expenditure. My second main point is the need to avoid, and this is the message to this government to need to avoid attacking the poorest low income pensioners.

This will happen unless the Chancellor changes the personal allowances, i.e. the tax threshold. It is no longer a stealth tax. Following the work of the late Audrey Wise and Nigel Lawson and myself in 1977, the law requires a vote in the Commons to raise the allowances less than inflation, and on the 2nd of December last year, Labour MPs voted to freeze the allowances until 2030 31. They voted for a tax increase. The manifesto is completely out of the way.

It's a tax increase. Everybody knows that. That's what they voted for. This government perpetuated the freezing of the allowances started by Jeremy Hunt and Rishi Sunak, and this policy is now dragging millions of low earners, low earners and low paid pensioners into taxation in the first place and millions more into the higher rates. For anybody interested in the technicalities, by the way, the 1977 law these days is set out in section 35, one of the Income Tax Act of 2007, to tax the very basic state pension, which is what are we going to do? This government's going to do it unless he changes the allowances.

Freezing them will cause that to happen will be very bad news. It will be a lot worse than the abolition of the heating allowance. And it's got to be dealt with because it can be avoided. But the fact is, are they going to avoid it? I understand the pressures and it's no good saying, oh well everybody's got to carry the burden. I just don't believe the poorest pensioners have the broadest backs. Why should they have the basic state pension I'm talking about? It's never happened before.

Never. And it will happen unless the government does something about the threshold, and it can do it in a way that doesn't affect everybody else. I don't agree with the the issue of freezing the threshold in the first place, but the fact is it can't be done as it used to be done by stealth. You've got to knowingly vote for it. But I actually read the debate down the other end. Nobody ever told Labour MPs by the way, this is a tax increase and we have to do this because of those three people back in 1997 forced us to do it because it was being done without that.

That's what it was all about, to index the allowances and therefore they used the law, but they used the law, but they didn't tell people what they were doing. And the fact is, I want to tell Labour MPs, you voted for a tax increase, and unless you do something else in the next budget, you're going to be responsible for taxing the basic state pension. That's not a good idea.
13:41
Lord Elliott of Mickle Fell Portrait Lord Elliott of Mickle Fell (Conservative)
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By Lords. Over the course of this three hour debate, the national debt will have grown by £45 million. 45 million might not seem like a lot of money compared to some of the figures we discussed in this chamber, but that's £0.65 in this chamber, but that's £0.65 of additional debt for everyone in the nation. Interestingly, when we sat for questions this morning with the 21 hours of sitting time over the week, £315 million had been added to the national debt.

Sadly for us, Britain's third largest taxpayer, Chris Rokos, who gave us £330 million in tax last year, is no longer around to pick up the bill. The growing national debt isn't a new problem. In my early 20s, I founded the Taxpayers Alliance, and in the spring of 2010 we launched a debt clock tour in Parliament Square, a 14 metre long Scania truck carrying a one metre by seven metre debt clock, counted up the public borrowing in real time.

The truck visited all four countries of the UK on a 1300 mile tour, with the message wake up to the national debt. In April 2010, the national debt was hovering at just below £1 trillion. Between 2010 and 2020, it grew by another trillion pounds. We're currently at 3 trillion and is set to hit 3.5 trillion by 2030. Crucially, according to the latest analysis from the Taxpayers Alliance, this year's real national debt the figure, which takes into account the 1.5 trillion of public sector pension liabilities and almost 7 trillion in state pension liabilities, will be 11.7 trillion, or almost four times the size of the UK economy.

I agree with other noble Lords that our fiscal position is perilous, so we clearly need to address our ballooning spending. I won't attempt to provide a comprehensive spending plan in the few minutes I have, but I would like to briefly touch on two important budget lines welfare spending and public sector pay. As the Prime Minister told the BBC in July, and I quote, we have to get really serious as a country about getting the welfare bill down, not slowing its increase, not freezing it, but getting the welfare bill down.

And he's absolutely right. According to table 4.6 of the OBR's report in the Spring Statement, we currently spend £333 billion on welfare, a sum which is almost as big as the combined GDP of Scotland, Wales and Northern Ireland. It's also a sum which exceeds the £331 billion of income tax, which the Treasury hopes to collect in the current financial year. The key to solving this is obvious we need to help more people transition from welfare into work, because there's no better form of welfare than a good, well-paying job, Sir Charlie Mayfield pointed out in his Keep Britain Working report that a young person out of work costs the state around £1 million, with the same amount of money lost for the young person in lifetime earnings.

Alan Milburn also spoke about this powerfully before the summer. He said what is shameful is that for every £25 you spend on keeping young people on benefits, we only spend a pound helping them get into work through employment support. I commend the government's government for commissioning these reviews, and I hope that we act on them in the forthcoming budget. On the question of public sector pay, one statistic which came out during the summer recess caught my eye. Last month's ONS figure showed that private sector pay has risen by 2.8% over the past year, compared to a much greater 6.1% rise in public sector pay.

And since January, there are now 110,000 fewer private sector jobs, but 42,000 more public sector jobs, increasing taxes on a shrinking private sector to pay for an expanding public sector is the economics of the madhouse. And we should not fool ourselves that the way to solve the national debt is more tax rises. Since this government came into office, we've seen 24 tax rises. There is increasing employer national insurance, increasing both of the capital gains tax rates, restricting business and agricultural property reliefs, freezing income tax thresholds, increasing the energy profits levy, increasing taxes on flights and plastic packaging, and raising the climate change levy.

My Lords, if raising taxes were the answer to our economic challenges, would be experiencing the highest growth rate in living memory, a different attitude to business is required to get more people into work, enabling us to reduce our spending, increase our revenue and create a society with more comfortable fiscal outlook. I'm reminded of Sir Winston Churchill's comments on business. I quote some regard private enterprise as if it were a predatory tiger to be shot. Others look on it as a cow.

They can milk. Only a handful see it for what it really is. The strong horse that

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pulls the whole cart. My Lords. That there are two pillars. To the government's financial

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To the government's financial framework monetary policy and fiscal policy. Monetary targets were introduced in the late 1970s were introduced in the late 1970s and were replaced by inflation targets in 1992, and since 1998, the MPC is being given responsibility to adjust interest rates when inflation rate target is
13:47
Lord Turnbull Portrait Lord Turnbull (Crossbench)
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rates when inflation rate target is not being met. With the egregious exception of 2021, where they misjudged the economy after Covid, the bank has kept inflation reasonably close to target. Not perfect, but a creditable record. Fiscal policy targets, deficits and debt were introduced in 1997. The governance here is different, and the record is much poorer. If the fiscal metrics go off target, it is for the government itself to respond. Too often they have not done so.

Instead, the metrics have been changed new definitions, new baselines, new time horizons. Announcements have been made, which have been quickly reversed. Meanwhile, the debt to GDP ratio has continued to rise. Now the OBR produces two reports a year. The economic and fiscal outlook comes out with a budget providing a five year outlook. As a result, it receives quite a lot of attention. The other is the Fiscal Risks and Sustainability Report, which provides projections for another 40 years, starting where the F leaves off.

It comes out mid-year and receives much less focus, although it is arguably the more important of the two. The two reports appear to be written by two different organisations in the first period. The fiscal position improves with a dramatic turnaround in the primary balance by 2030, enough to stop the debt ratio from rising in the second period covered by the fiscal report. It progressively gets worse all the way through to 2017. It could be two, 270 or 300.

Neither of these projections on its own is plausible. The improvement in the FR in the f r the five year programme is because the OBR is required to embody the path being assumed by the government, even though few people believe it, and the path tracked by the f SFR SR would blow up long before we got to 2070. If we look through this bizarre down first and then up trajectory, some features are clear. The EC report, which we're discussing today of 2024, said the path we were on was not sustainable.

Two years later, it still isn't. Not enough is being done on either tax or spending. Difficult decisions are being dodged. Too many commitments are not being followed through. Now, the fact that many other large economies may face similar problems is no comfort. We're not in the world of Tom Lehrer's. We'll all go together when we go. Markets may well pick on what is perceived to be the weakest economy, probably not outside the US. Of those, it is the UK that now has the highest cost of borrowing.

Much better is to be an early adopter of a more credible policy. The term headroom can be ambiguous headroom, which is seen as a margin providing resilience. Allowing time to respond to shocks is fine, but it has to be replenished in better times. Otherwise it slips into being a cosy back pocket to get you around the next corner, leaving, you know, better off to face the next shock. As society ages, an increase in spending on collectively provided services will, in my view, be unavoidable, as was spending on defence.

So ruling out increases in the major taxes is unwise. The government will not be able to rely on funding from domestic pension funds to the extent that it has been in the past. It is vital to improve the structure of the tax system, as well as increasing the level. There are many choices to be made and I haven't any time to mention a few. As highlighted in last week's debate on an ageing economy, it will be essential to increase the participation rate of those between 50 and 70, and it will be essential to help more people into jobs, rather than leaving them stranded on benefits.

We need to be building more affordable homes to reduce the cost of rents and the housing benefit bill. We need to look at reforming the taxation of the wealth locked up in owner occupation, and we need a more measured approach to climate change to reduce the cost of electricity closer to that of our competitors. And we should be prepared to exploit our own fossil fuels rather than importing them. But there are many other difficult choices beyond that.
13:52
Baroness Morrissey Portrait Baroness Morrissey (Conservative)
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My Lords, it is an honour to follow so many interesting and thoughtful contributions to this thoughtful contributions to this timely debate. Thank you Lord Bridges of Headley. Now, I bring a distinct perspective today. As a former bond fund manager for 15 years, I managed both UK gilt and global government bond funds totalling several billion pounds. And now, as set out in my register of interest, I continue to have several active investment roles. I chair Eton College's endowment fund. I serve on the board of a US investment company.

I chair a US listed insurance company whose balance sheet is invested mainly in government debt. All these roles require me to keep my finger firmly on the pulse of markets or bond markets and make me, I'm afraid, all too aware of our perilous position today. Of course, many governments have seen a sharp jump in their debt levels over the past two decades, thanks to the triple whammy of the global financial crisis, Covid policies, and the inflationary pressures of the Russia-Ukraine and Middle East wars, and also nearly $500 billion of debt has been issued year to date by tech companies in the US, and that's recently also pressured US Treasury yields higher, and they act as the reference point for all developed government bond markets.

But there is no safety in numbers as far as bond investors are concerned. And what's more, as Lord Bridges mentioned at the start, the UK gilt market has specific structural features that make us more vulnerable to a borrowing crisis in a high inflation, low growth world. Excuse me, today, just as an example, ten year gilts yield a full percentage point above Italian ten year bonds. So that's a risk premium demanded by investors for the extra risk they see in investing in our government debt, compared with Italian government bonds.

And to give some historical perspective on that, in January 2012, Italy was the one that had to pay its bond investors five percentage points more interest every year than the UK. So why is the UK seen as a particularly deteriorating credit risk? Well, that's because the bond investors see us as running out of options to escape a fiscal doom loop, because both the policy mistakes we've made here over several governments and the idiosyncratic features of the gilt market. I want to give a couple of specifics on that to show the order of magnitude.

So first, a quarter of our debt mountain is index linked. That's a far greater proportion than other countries. And France, for example, it's just 10%. So in a persistently high inflation environment like today, the UK suffers much more than other nations in terms of the incremental burden of financing our national debt. And second, the average maturity of British debt is much longer than other G7 countries. It's around 13.5 years compared, say, with eight years for France and less than six for the US.

Now, this is a big problem because of the changing nature of UK pension funds, which is resulting in dwindling domestic demand for long dated gilts. Defined benefit schemes required pension funds to match their liabilities with assets, so they had to buy long dated gilts and particularly long dated linkers, or index linked, which offer the best match for inflation linked final salary pensions. But in today's increasingly defined contributions, pensions world, that just no longer applies. Now, of course, the debt management office is aware of that, and it's going to experiment later this month with what they're calling a switch auction.

It's just an operational test, mind. There'll be no actual gilts being switched, but they're trying to see if they could reprofile the maturity of outstanding debt. The problem, of course, is that holders of long gilts would be crystallising their losses if they swap them for shorter bonds, so that may not fly. And one of the most active sellers of long gilts today, of course, is the Bank of England, as it tries to reverse the long period of quantitative easing after the global financial crisis, and the bank will announce its plans for the so-called quantitative tightening in a week's time.

So that's another worrying date next Thursday for gilt market participants. Now, bond investors are acutely aware that there are very limited ways for a country to escape spiralling interest payments on its national debt. And Baroness Noakes mentioned three ways I'm going to add a fourth. A country in many cases may be able to try inflating its way out of the problem by devaluing the face value of that debt. But as I've mentioned, that's not an option here because we have this huge preponderance of index linked bonds.

So there's the other three are growing our way out. Raising taxes has not been discussed about that. And cutting public spending or of course, some combination of the above. So I just want to add my two pennyworth to the options. We would all love to see robust economic growth. And as we all know, over the past two years, the Labour government has often described this as their priority. But the fact is that their policy actions have undermined not supported business and growth.

And others have mentioned many examples. The increased national insurance burden on employers is the most obvious. I think, as we've heard, economic growth depends on wealth creation, which goes hand in hand with internationally competitive levels of taxation. My noble friend Lord Elliott of Mickle Fell just mentioned the departure of Chris Rock from these shores, as well as contributing £330 million to the Treasury coffers last year. He's also been an incredibly generous benefactor to Cambridge University and to Eton College. All of us are left poorer by his departure, and I will remind those who have the ear of the Treasury 100% of nothing is obviously nothing.

So we are well past the optimal point of taxation rates, which yield the most revenue. So there's just one option to kerb government spending. And I just mention Lord Davies of Brixton talked about choices and political choices, but I'd like to say that sometimes I don't think we have the choice. Sometimes we don't have that luxury. And today the warning lights are flashing. There is a headline in today's City AM Could Britain collapse under the weight of labour spending? We are as a nation in hock to the bond markets.

It's just as if I am personally insignificant. Debt to a bank. It's the bank that sets the terms. Who can call in the loan, who can raise the interest rate, and who can refuse to lend me more unhappy gilt market participants are like banks and like taxpayers, and they will vote with their feet. They will not accept vague reassurances about fostering growth or taking responsibilities of fiscal nature seriously. They need and demand specific concrete actions. So to avert a fiscal crisis, Chancellor Healey must not raise spending in taxes in next month's budget.

Instead, he must set out quantified and credible plans to cut spending. That will just be the first, but very critical step towards restoring government finances so we can start regaining control of the national debt, escape the fiscal doom loop and start to really focus

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on our economic future. My Lords. This has just been an outstanding debate, and I want to outstanding debate, and I want to join others in congratulating Lord Bridges that in obtaining it and Bridges that in obtaining it and opening with a powerful speech, not all of which I agreed with, but it was definitely very powerful. I also want to start by slightly changing the tone of this debate. I suppose that's strange when it's a suppose that's strange when it's a winding speech, but it seemed to me we had very little attention to the extraordinary strengths that we have as a country.

A significant part of our workforce is very highly skilled. Our legal framework is the basis for much of global
14:00
Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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commerce. We have leading world sectors in financial services, life sciences, technology and the sciences, technology and the creative arts. I think Lord Chandos did focus on technology that and that's just to name but four. And we have exceptional universities we have exceptional universities which breed new opportunities. We have a track record of entrepreneurship, often at the entrepreneurship, often at the leading edge. We are the place to start a new business. That, and I very much wanted to then pick up on the speech of Baroness Baroness Lane-fox because she focussed on AI and indeed digital, as an extraordinary opportunity to completely reset where we take our economy.

To me, some people look at this only as risk, but I see this as the most extraordinary advantage. If we go from being on the back foot and talking just about strategy, step by step, minor adjustment, but really seize the chance of change. And thanks to Lord Pitt-Watson, I had meeting yesterday with others with Chris Woollard, who is now the champion for the wholesale, wholesale digital markets. And for once, I was actually hearing somebody within the orbit talking about serious action at speed.

And that, I think, is the the lesson that the government has got to take on board. But my Lords, here today, we've heard about the appalling headwinds that that we face as as as as a country economy and a government. And I started trying to write down the names and suddenly realised, of course, it was everybody who was naming the the the headwinds that we face, whether it's the public debt to GDP at 94%, taxes at the highest level since World War two, that the the gilt issues at the highest interest rate since 1988, and I have to say Baroness Morrissey and I know it was somebody else I forgot.

I think perhaps Hill, who focussed on index linked. I have screamed at the Bank of England so often that on that issue and unfortunately it is coming home to roost that. But I also wanted to pick up the issue that was stressed by Lord Bridges on demographics and dependent on the dependency ratio, because this is, again, something else that I and my colleagues have attempted to stress that a constantly. Dependency ratio now at 57.8%, my Lords alarm bells go off when the dependency ratio gets to 50% and we are well over that point.

It is getting worse with our ageing population. That. And we have we have got to address the issue that we have a working age population that is very small to sustain our growing elderly population, and I think we dodge that issue, that it ties into the immigration debate as well. That's and is so often ignored. My Lords, that I think we have to thank Lord Howell that Lord Turnbull for bringing in the issue of climate change. That which seemed to be generally overlooked, and other than a quick mention by Baroness Alexander, may I say nobody talked about Brexit.

How extraordinary. 6 to 8% scarring of the economy. The other blows that we've had have been blows that have been temporary and we can have a chance to recover from this is permanent scarring to the economy and ignoring it is extraordinary to me. I know that's sort of Tory party policy at the moment, because you can't be blamed for the damage if everybody forgets about it. On these benches, we don't forget. So, my Lords, let's see how we can turn all of this around.

And I do think we need to focus on growth, which was part of the discussion here, but really only a small part of the discussion that. This House will not be surprised that my first proposal is to negotiate a bespoke arrangement for a customs union and single market with the EU that are the supposed freedoms the public were promised by. Brexiteers turn out to be few and economic terms. Any benefits were utterly insignificant. While the damage has been huge, businesses, especially small businesses, have struggled to grow without participating in EU supply chains and getting the benefits of an EU domestic market.

Of an additional 450 million people, that's a scarring of 6 to 8% of the cell is not something anybody can ignore. It's huge and ordinary people pay the price daily. As Brexit harms push up the cost of living. My Lords, devolution, Baroness Alexander and others talked about it and if it's done properly, I agree that it can drive growth. Importantly, that for it to do so, it has to go be across the

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country and Include disadvantaged areas. So the House can imagine my utter the House can imagine my utter frustration when this government rejected my amendment in the Financial Services and Markets Bill, Financial Services and Markets Bill, which would have led to a rapid expansion of the available credit to small business to be provided by to small business to be provided by a growing network of community and credit unions, qualifying as credit unions, qualifying as community development financial institutions. Now, my amendment, which was inspired by the Fair Banking for All coalition and campaign but would require the mainstream banks where they have abandoned local lending and they have to fund community development, financial institutions.

Little businesses are the backbone of our community, and many want to grow a little bit faster than organically, but can't get that loan for the next shop, the next van, the workshop extension, or the next worker. And we always talk about unicorns, but we forget that the backbone of our economy is with those small businesses growing just more than organically. And it also has that spread into every area and into every community. And I am afraid that the government will, sadly, not deliver its agenda of good growth in every postcode without my amendment or something very similar.

Because at present, even though the government makes money available, that's for credit to small businesses, the mechanism simply aren't there to deliver the appropriate lending to small firms. That's a mainstream banks, as I've said on many times, no longer not just don't have the branches, they don't even train their staff in the skill base. That is necessary. But I also agree that businesses that intend to scale up and be the next unicorn need different financing from that. That is currently available in the form of long term patient capital that can carry high risk.

And we all want those companies to stay in Britain. So that's a but I still have troubles with the mansion House Accords and the recent pension legislation. I just think they're so narrow. They're based on taking the tiny pensions of the lowest paid and least financially aware and putting them into high risk, illiquid investments. And most of those investments will fail. I think that's really just a very unattractive strategy. We need a structure that will produce the products that Britons will be willing to invest in.

And Britons have something like £61 billion in investment savings that could be channelled in large part into these activities. And what we have seen with the end, basically, of the defined benefit schemes, is that new products that are attractive to people that meet their risk appetite, that are, and their return appetite are not being provided by the markets as they are at present. That's even though I think there are plenty of willing investors. I made a suggestion that the that there could be a structure in which the government encourages risk investment, but for the most for the poorest provide some sort of backstop.

And I thought, well, this is an idea no one's going to take seriously. The industry is starting to take it seriously. And I'm now involved in quite a number of conversations around this issue that. But it needs much more imagination. And I think the government should focus on driving that the private sector to produce the kind of investments that would attract people. But because the money essentially is there, my Lords, I think we could go on and all of us could produce a significant number of proposals which could stimulate and drive growth.

But it's the government is going to have to pull the levers on it. As my very last comment, what I want to see. I do agree with all of those that are saying to the government, Will it please be consistent that having a policy of growth and then a policy, and the last person to discuss it was Baroness Morrissey of them raising employers NICs is a complete insanity that there needs to be consistency, there needs to be direction, and the Minister will be well aware that many of the voices that have spoken today have said that set the strategy, set the goal, but then keep to it in every policy decision that's made.

My Lords.
14:11
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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I am grateful for the opportunity to contribute to what I opportunity to contribute to what I agree has been an outstanding debate, and I want to thank my noble friend Lord Bridges of Headley for setting out the scale Headley for setting out the scale of the challenge facing the country in his usually persuasive style, he rightly drew attention to the conclusions of the Economic Affairs Committee two years ago that the UK's national debt risks becoming unsustainable, echoed by my noble friend Lord of Guildford.

Our public finances are in a worse state now than two years ago when Labour took office. The party opposite likes to talk about Liz Truss. But this morning ten year gilt rates were at 5.24% more than in the financial crash of 2008. This is significantly higher than under Liz Truss. My noble friend Lady Morrissey warned us that there is no safety in numbers amongst bond investors. In some sense we are in hock to the bond markets. We've heard that debt is approaching 3 trillion.

Borrowing was approximately 130 billion last year. Debt interest costs around 109 billion and is expected to continue rising. My Lords, we cannot allow this to happen. At the same time, the tax burden is forecast to rise to 38.5% of GDP by 2030 31, its highest level since records began in 1948. The truth is that our fiscal position is much worse than the public realises, and it will not take anything major to trigger a surge in the bond markets leading to a crisis.

The Chancellor would be wise to study what happened in 1976, when another Healey had to be bailed out by the IMF, and indeed the experience of 1981 and 1993, referred to by the noble Lord Lord Burns. My Lords, the international pressures we are experiencing come at a time when the UK is combining historically high levels of taxation and public spending with weak productivity pressure, with weak productivity pressure on our public services and very little margin for error.

the go not have a credible plan to restore fiscal resilience, stronger economic growth and put the public finances on a sustainable long term footing. My Lords, I want to make three further points. The first is that the government's fiscal rules cannot be a substitute for an economic strategy capable of delivering genuine growth. The government's so-called headroom is already extremely limited, but is not nearly as important as the wider economic context. Growth is forecast at just 1.1% this year.

While the deficit remains some 4% of GDP. This is unsustainable. Over the past two decades, as we've heard, we've experienced a global financial crisis, a pandemic war in Europe, energy shocks and repeated geopolitical disruption in the Middle East. It would be a reckless government who constructed fiscal policy on the assumption that there will not be another crisis. We need over £300 million every day simply to service the national debt. And we can all imagine what a difference that would make to our armed forces, to our services, or indeed in TACT tax cuts geared to generating growth.

Now, Doctor Arthur Laffer, we have heard was in London this week saying that we are taxing ourselves to death and explaining how. In contrast, over the years, tax cuts have increased revenues and fired growth in the United States. My second point is that we cannot tax our way out of a productivity problem. The denominator in almost every fiscal ratio is the size of the economy. Without stronger growth, fiscal consolidation ultimately becomes an impossible choice between higher taxes, poorer public services, and still more borrowing.

Productivity must therefore sit at the heart of any credible fiscal strategy. And it was good to hear from Lord Chandos that it might be edging up. That means creating more of an enterprise culture, as the noble Lord, Lord Londesborough said, and using AI effectively, as we heard from the noble Lady, Lady Lane-fox. And it's right to think of our strengths as the miner, as the noble Lady, Lady Cramer said. And that includes actually our very strong network of SMEs in this country.

Productivity also requires conditions in which businesses are prepared to invest and innovate. Energy is internationally competitive skills are better matched to the needs of employers. Regulation becomes simpler and most important, people who are able to work, work. The employment rate was estimated at 75.1% in the second quarter. In a soft labour market. At the same time, welfare spending is forecast to increase from about 3334 billion to 409 billion by 2030 31. Now, Alan Milburn has rightly condemned the insane Sicknote culture as Neet figures reach an all time high, with £25 spent on benefits and only £1 on employment support.

As we heard from my noble friend Lord Elliot of Macclesfield, and a Csj report has laid bare a worrying post-pandemic trend of graduates going straight from university onto sickness benefits. That's the opposite of how welfare should function, and on this side we are agreed on the damaging effect of the Employment Rights Act on new employment. My third point is that we must become much more willing to confront our spending pressures. I agree with my noble friend Lord Redwood on this. The demands on defence, on social care, on infrastructure and public services will be substantial, especially if the PM seeks to move utilities into public ownership.

As my noble friend Lady Mayo suggested he might. Every major new commitment should therefore be accompanied by a credible timetable a long term costing, an identified source of funding and a clear assessment of the consequences for wider public finances. That will be our conservative way. Under Kemi Badenoch, we spend a great deal of our time in politics discussing inputs. The government announces another billion pounds here or another programme there, and presents the scale of the expenditure as though it were in itself evidence of success.

It's not. We need to know what expenditure actually achieves. The taxpayers are entitled to expect not simply higher spending and input, not an output measure, but better value and better outcomes. My Lords, like others, I was particularly struck by the thoughtful contribution from my noble friend Lord Hill of Oareford. We need honesty over the challenge of things like pensions and a change to the 24 hour political system. Buffeted by the demands of different lobby groups. Incidentally, I agree with the noble Lord, Lord Rooker, that the poorest pensioners should not be taxed by stealth.

I was also very concerned to hear from Lord Eliot that public sector pay had been rising by 6.9%, compared with 2.8% in the private sector, with public sector public sector numbers going up by 42000 and the highly taxed private sector numbers declining by 110,000. This is not right. In a typically trenchant analysis, my noble friend Lady Noakes set out the dilemma facing the Chancellor in his budget on the 28th of October. We must have some sympathy for him and the need to learn from the last Chancellor's record, which has hit business and entry level jobs so very hard.

As she said, there is no living example of taxing in to prosperity. My Lords, I also look forward to the reply to the rather challenging questions from Lord Bridges and Lord Howell. My Lords, in conclusion, the fiscal outlook is grim. I agree with those who have argued that we should tackle that by reducing spending and not by tax rises. They would only reduce growth and risk a downward spiral. And yet today's leading story is of a visitor's levy, which will hit growth, and a TUC request for a bank tax.

Is it a surprise that so many high rate taxpayers are leaving the country?
14:20
Lord Pitt-Watson Portrait Lord Pitt-Watson, The Parliamentary Secretary, HM Treasury (Labour)
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My Lords. >> My Lords. >> I thank the noble Lord Lord Bridges for securing this debate and congratulate him on his opening speech. I also thank all the noble Lords for their contribution today, and it's a pleasure to respond to this debate. I say that I absolutely know I cannot do justice to the number of comments that have been made and the expertise that has been brought to our debate. But let me try and frame them around some logic.

One would just be the economic context that we're looking at today. The second would be to look at the fiscal rules and the OBR, then to look at the fiscal outlook and the long term challenges. And I have to warn, with a budget coming up, there are some things, of course, that I can't talk about because they could be in the budget, nor can I do anything that could lead to market speculation, but I hope within those this framework I can I can at least respond well and.

Look, I guess I'd start by saying I'd like to frame my remarks around the lead given to us by Baroness Alexander that actually, I believe there is considerable consensus in this House. Now, look, this is an opposition day debate, and I've had a number of speeches that were a bit polemical. That's understandable. Maybe a few. Aunt Sally's about Britain being like the Soviet Union. I think if you've ever visited the Soviet Union, you wouldn't be saying that. And the odd speech that sounded a wee bit funereal about our wonderful, resilient country.

But lots and lots of speeches that I think were ones where there was a shared overall goal, which is to drive growth, to drive good growth in every postcode, to back investment, to back innovation and to back jobs across our economy. That was what, earlier this week, the Chancellor set out in his speech. And I believe the choices that have already been taken since coming to office actually make Britain stronger, position Britain in a stronger position today to deliver those plans and to capitalise on the growth opportunities ahead.

Now, look, I absolutely know that one swallow does not make a summer, but in the first half of this year we had the highest growth in the G7. Government borrowing fell to its lowest level in six years. Viscount Chandos mentioned productivity last year in 2005. I think we need to be very careful about productivity figures, by the way, but it was a greater than 2% increase in productivity. That's the best in ten years. When you adjust for the effect of of Covid.

And look, I think this government is trying to build on our world class strengths. Viscount Chandos mentioned our world class universities, our world leading sectors in life sciences, defence, technology, creative industry, Baroness Kramer in financial services, and the need for growth from Lord Londesborough. Absolutely a clear trade deals, planning reform, a whole set of things that we're trying to do. But nevertheless, and as has been clear from the debate, global instability, conflict, trade frictions are continuing and they drive up inflation and they drive up interest rates around the world.

And while these shocks are international in nature, their impact is particularly being felt here in the UK. From the cost of the weekly family shop to the cost of government borrowing. But Britain's shown a resilience in the face of these pressures and I think the country is on the up. But in the context of a more uncertain world, we must continue to make responsible choices, and fiscal discipline will underwrite every promise this government makes. Look, I don't want to dwell on how we got to 100% a, a, a borrowing.

I don't want to dwell on the moment when Britain ended up having the highest borrowing costs amongst the G seven, because what we're looking for is what Lord Orford was pushing us to look for, which was a coherent policy going forward. And look, in the past, we've had so many different fiscal rules. Every time a government was going to break the fiscal rules, they just changed what the fiscal rule was going to be. That's the point that was made by Lord Turnbull.

And my Lord, I think both the Prime Minister and the Chancellor have been unequivocal in their committing, in committing to meet the fiscal rules and to meet them in the budget next month with a with a buffer for uncertainty, you'll remember what they are the first fiscal rule. The stability rule moves the current budget into balance. So that day to day spending is met by revenues and ensures the government will only borrow for investment. Previous fiscal rules discouraged investment.

The second fiscal rule. The investment rule, ensures that net debt falls as a proportion of GDP. What Lord Burns was advocating. This keeps debt on a sustainable path, while supporting over 120 billion of additional departmental capital spending. And that's in housing, in energy, in transport and other growth driving infrastructure. Also, in some pump priming, which Lord Howell was encouraging us to think about. My Lords, look, taking this approach is responsible. It means the government will balance the books with a buffer to protect against uncertainty, will control borrowing, and we will reduce long term pressures on our public finances because, as the Chancellor said, there is nothing progressive about spending £1 in every ten on debt interest.

By the way, I also thought the speech by Baroness Morrissey. What a classic speech from the House of Lords of such insight and expertise about how it is that the bond market work. I will not try and respond to it a. In this talk, but look beyond the fiscal rules. The government's also taken a number of steps to strengthen the wider fiscal framework, including holding regular multi-year spending reviews so that departments have certainty on what their funding will be and most particularly, protecting and respecting the independence of the OBR.

My Lords, the office for Budget Responsibility will produce an updated view of the economic and fiscal outlook alongside the budget on the 28th of October. As I said at the outset, our economy is beginning to turn a corner. I hope is beginning to turn a corner. It's an uncertain world and Britain has shown such resilience in the face of global pressures. We see this in the uptick of confidence and indeed in the many business people, including a Baroness, a, a Lane Fox's a a successor at the British Chamber of Commerce.

But but clearly there remains challenges to the fiscal outlook. The war in Iran has pushed up energy costs and inflation, which in turn raised the cost of borrowing in all major economies, including a in the EU, in the UK. And that's why the Chancellor has committed to reduce borrowing, get debt down because that's the route to lower inflation, lower interest rates and higher economic growth. That's the central point to get debt under control, as Lord Hadley reminded us.

And as a result of the action of the government has already taken. Borrowing fell last year from 5.2% to 4.2% of GDP. OK, still borrowing, but the lowest in six years. And according to the IMF, for the first time since 2004, we are forecast to be borrowing less this year than the G7 on average. But look, this problem, which arose over half a generation, will take time to solve. It will take careful thought and it will take clear discipline.

Longer term, the OBR's recent Fiscal Risks and Sustainability reform report confirms the need to boost growth and to maintain sustainable public finances, and that is what the government is intending to do. You know, people have raised questions about tax and particularly about business tax. I've spoken a in the House about this only last week. It is true that businesses have been paying more tax. But it's also true that it's businesses that have been responsible for that productivity increase.

And it's businesses that have been responsible a for that growth. I think Baroness Neville-Rolfe point about government stop going on about inputs and start thinking about outputs. Again, I would agree that that is absolutely fundamental. Lots of questions about pensions and where pensions are invested. Of course, the government is taking action on this. Let me acknowledge it. Picking up a baton from the previous government about the asset allocation of pension funds not being as good as it could be.

We had questions about employment and on training, a Lord Londesborough 1% increase in productivity for every business would solve so many problems. But look, I one statistic that absolutely struck me as we talk about people not in work, did you know that there are only two peacetime years of the past 150, where the average annual employment rate has been higher than it was in 2025? A this is not a a, there are great things that are there for us to do.

And the effective tax rate on the corporation tax rate in business is, of course, the lowest, the lowest in the G7. The effective tax rate for a single individual with no children. On average, earnings is the lowest, the lowest in the G7, the tax paid by our worker and a lower average income is at historically low level. There is lots of good stuff going on and that was why I was so inspired. For me, the standout speech of this debate was by Baroness Lane-Fox.

It was about productivity, it was about creativity. It was about imagination. They are not things that are the exclusive preserve in any way of parliament, of government. They belong to the British people and to British businesses. But fiscal credibility is the bedrock for economic stability and national security, because without sound public finances, we cannot give businesses and families the breathing space and the stability that they need for the future. Because the ultimate goal, as Baroness Kramer was reminding us, I think we both congratulated Baroness a Lane-fox.

The ultimate goal is growth. It's good growth. It's growth in every postcode and it won't be delivered by the government alone, but by the people and the businesses of Britain. The strong horse that pulls the whole cart. But the foundation for that is a sensible, well financed government with real fiscal discipline. And that is what I think this government is offering

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to the country. My Lords, forgive me. This has been an absolutely excellent debate. been an absolutely excellent debate. Let me start by apologising to the noble Lord Lord Pitt-Watson. At the start, I didn't welcome him to his start, I didn't welcome him to his place, and this is the first time that I've debated against him. And let me also say, I very much applaud his emollient and reasonable style. And I think those of us on this side of the House think it's a welcome change from think it's a welcome change from what we've had before, and we can have a proper debate about the issues before us.

Let me also thank all those noble Lords who have spoken from all sides of the House, who have given such incredibly thoughtful contributions. In particular, forgive me for singling them out. Those members of the Economic Affairs Committee who served under me. It's rather like the reunion of a pop group. We're playing our golden oldies. I'm going to speak very briefly. There was so much to cover. I hope you'll forgive me. I'm not going to go into depth and detail on all the points that were raised, but at the start of the debate, I listed the debts that we face on other nations face defence, demographics and the ageing population which the noble Lords Lord Rooker Davies, Baroness Alexander and my noble friend Lord Hill picked up.

Welfare dependency which others have picked up. Lord Elliott decarbonisation the green transition Lord Howell I miss two D's. The first D is depressing. This debate can be incredibly depressing. But that said, and Baroness Kramer does make a good point as there's the noble Lord, the Minister. We do have strengths. We absolutely do have strengths as a nation, and it is very important we do not play them down. And I don't for a moment want to suggest that this country does not have massive, massive potential.

But my Lords, if we're going to unleash that potential, we have to be honest about the challenges we face and the noble Lord, the Minister said. And I wrote it down. He thinks this country is on the up. I would love to think so. I do hear him, and he obviously makes a very valid point about statistics that have come out, suggesting that productivity might be turning the corner. He hopes they will. I noticed that's a little tweak on what the Chancellor was saying.

Where it is turning a corner, he hopes it's turning a corner. Well, my Lords, when I think of a country on the up, very sadly, the things I see going up are our taxes, our debt and our debt interest. Those are the things that are on the up. And my Lords, unless we are honest about this, we're not going to be able to bring the public with us in taking the tough decisions that need to be taken. The second D I missed my Lords and I quite agree with the noble Lord.

The Minister Baroness Lane-Fox, is absolutely right to talk about digitalisation and AI. AI is the revolution that is sweeping the world, transforming business models and entire economies. It offers immense potential, massive opportunities. But within it we also have to confront. It also poses challenges and risks. One of the risks that we face right here now as regards the fiscal outlook and Baroness Morrissey will know all about this, is the immense amount of debt that tech companies are issuing around the world, enormous amounts of debt reliant on productivity, reliant on profits, reliant on this revolution, continuing to gather momentum.

So that in itself poses a risk. But but the noble Baroness absolutely right to highlight that. I think, my Lords, this debate, though, does confront a very, very simple point. The point that my noble friend Lord Hill made and others have made. We have to have honesty about the challenges we face. We are in this position, my Lords, because over the best part of a generation, we have not had as a political class, we have not had the courage to confront the public with the consequences of the decisions we were taking, were going to have, not just in the next year, but the year after that and the decade after that.

And the noble Lord Lord Burns alluded to this during Covid, during the energy shock, we run up enormous bills, enormous debts. We were not honest about that. We need that honesty now, and we need to be
14:37
Lord Bridges of Headley Portrait Lord Bridges of Headley (Conservative)
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honest about our solutions based on clear conviction and clear belief. And above all, we have to be honest And above all, we have to be honest about the trade offs that need to be made in response to the challenges we face. We cannot try challenges we face. We cannot try and tell everyone, as my noble friend Lord Hill said, that we can have our cake and eat it. I'm very have our cake and eat it. I'm very sorry to say these decisions are going to be painful, but my Lords, I think the British public are not I think the British public are not stupid.

They know that we as a nation are now living beyond our means. They will reward the politicians from whatever side, from whatever side of the house. They will reward the politicians who speak to them of this honesty and have a credible, coherent plan to get us out of the mess we're in and the choices will have to be made. We all know a country. Yes, it can spend beyond its means for a time. It can borrow, it can tax more, and it can hope that growth will come to its rescue.

But we know from our history that if governments wait too long, they risk losing the freedom to make those choices themselves. And I want to just end by thinking about the budget, which a number of noble Lords have referred to. I think that the battle in the budget will actually be a battle between the two two cities, the City of London and the City of Westminster. The noble Baroness made a point very clearly Baroness Morrissey there in the City of London, down the road they're looking at nearly £3 trillion of our national debt are rising, debt interest are shrinking fiscal buffer and asking whether we as a nation have a credible plan to live within our means here, down the other corridor and the other place in the city of Westminster, 403 Labour MPs, many demanding the government spends more taxes, more, borrows more or at the very least does not spend less.

Now, my Lords, many of those MPs understandably argue that that's what brought them into politics. Plaudits to them. They are standing up for their convictions and their beliefs. But they believe, quite possibly like the Prime Minister, who again holds passionate beliefs, that we took the wrong turn in the 1980s, the wrong turn in the 1980s. I end with this thought, my Lords, we landed up making very tough decisions in the 1980s because during the 1970s we ducked those decisions.

We consistently pushed the pushed things down the road. The circumstances today are no doubt very different. But the lesson is not we still have the freedom to choose and we should use it because if we do not take the tough decisions now ourselves, eventually

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others will make them for us. The question is that this motion

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The question is that this motion be agreed to. As many as that opinion will say content. The contrary, not content. The contents contrary, not content. The contents have it, my Lords, there'll be a slight pause now, while the Frontbenches are refreshed before A A question A question for short debate. The use of patient data for research Lord Patel. My

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Lords, after listening to the last debate, I'm tempted to speak. Only about how health research

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Only about how health research data might help economic growth to alleviate all the debts that we are alleviate all the debts that we are talking about. But I won't. But I thank the noble Baroness Baroness Merron for kindly taking this Merron for kindly taking this debate. I also thank all the noble Lords who signed up to take part in
14:42
None Portrait Short debate: Use of patient data for research Lord Patel (Crossbench)
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Lords who signed up to take part in the debate, despite the brief moments that they're allowed to speak about. I also thank the library and Post for their excellent brief and the publication of the report from the post. On the subject of health research data, health data research. My Lords, I fully support the government initiative to strengthen the collection and use of health data for research. I only hope, though, that that commitment from the government would be longer term and would be prepared to do whatever is necessary to make UK a world leader in health data research.

My Lord, the use of health data to improve health care is not new. If you remember, in the 14th century, plague killed a third of the population because they did not have the ability to use data and track the the the epidemic that had occurred. But by 1854, John Snow followed the then tracked the cholera outbreak in Soho and control the spread of the disease. There are many examples of use of data and epidemiological studies that led to improvement in health care, such as in the 1954.

The association between smoking and lung cancer and chronic lung disease, the HPV and the association with cervical cancer, and more recently, quite importantly, the registry of Cystic fibrosis kept by the charity Cystic Fibrosis that identified genetic mutations that occur in some of these children and adults who suffer from cystic fibrosis, and an effective drug that improves their ventilatory ventilatory function. With the advent of AI and machine learning, genomics and pharmacogenomics, and linking the data of these through machine learning and imaging, technology will transform the research using health data for better health care and innovations.

Better data means fewer deaths a strong, efficient health data platforms that can be accessed for research is crucial for our success of a life science strategy and economic growth. Currently, life science sector has a turnover of £146.9 billion, employing over 360 000 people. Health Data research is a fuel that will accelerate that to more than another 10 billion in value added growth annually. Apart from delivering better health care, UK strand for health data, accuration is the ability to track longitudinal data on 63 million diverse population.

But the current system is fragmented, scattered across thousands of GP practices, hospital trusts, community health clinics and others who deliver health care. But the UK health data environment is changing from siloed system to a national framework. The active phasing out of data sharing, which often led to data breaches, will now stop when hopes because of the secure data environment, the so-called SDS, the data stay put model, where the data is not shared but is acted upon.

Stakes stays in one platform, and the researchers are only allowed to access that is not exported. The five Safes model for data access and outputs makes the data secure. The launch of the DRS, the health data research system, backed by 600 million investment by the government, keeps the promise going. All very good. But the verdict the great blueprint. But delivery is the test. So we have good plans, but let's hope the delivery will follow. So what are the challenges? Regional secure data environments operate in silos.

Currently in over 180 trusts. Often there are written and not coded, which means to use them is difficult. They diverse. They they handwritten. They're not coded. And they occur in 180 trusts and thousands of GP practices, and therefore they're not connected. Data is currently currently written and collected in different hospitals and general practices, but not unified in any data models. The governance to access data for research is multi-layered, causing bottlenecks, having to having to answer to so many different regulators just to allow it to be used.

The data. The UK, if UK is to become a clinical leader in clinical trials, health data needs to be coded and easily available in every hospital. To maintain public trust, there needs to be clear, transparent, legally binding arrangements as to how data can be accessed and used for pharma and tech industry, and how the NHS will benefit from the benefits that accrue, both in terms of healthcare improvement and in money. By the way, I personally approve of the opt out model rather than opt in model, because opt in model will not work for health data research.

What are the consequences for not addressing these challenges? If we don't address them, it'll affect NHS. It will affect patients because they will not get the modern care and it will affect the UK economy. So, Minister, I have four key questions. What specific legal mandate will be needed to have longitudinal data streams linking GP and hospital data? Secondly, what plans will be put in place to end fragmented secure data environment which will be effective? Thirdly, on the public trust, will the government legislate that any benefits from use and access to NHS data by commercial companies will flow back to NHS? And lastly, what plans are there for trusts to have workforce, such as data engineers, that can clean up the data and and produce the appropriate codes that will be used by AI and machine learning to national standards and how it will be funded.

I look forward to the minister's answers.
14:49
Baroness Nargund Portrait Baroness Nargund (Labour)
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My Lords, it's a great pleasure >> My Lords, it's a great pleasure to follow the noble Lord Lord Patel. I congratulate him for securing this very important debate and for this very important debate and for a very insightful and excellent introductory speech. The National Health Service is one of Britain's greatest institutions. After 30 years as a frontline NHS consultant in women's health, I believe it can be more than a health care provider. My Lord Saatchi NHS holds the richest longitudinal health data assets in the world.

It can help to improve outcomes, accelerate innovation, create intellectual property patents, high value jobs and attract global investment. The new Health Data Research Service presents a significant opportunity. Our ambition should go further to create high quality, representative data sets needed to develop and validate AI safely. AI can analyse data at a large scale that the humans can't. Predicting risk early detection, accelerating drug discovery and clinical trials, and enabling the much needed shift from treatment to prevention.

But my Lords, AI is only as good and as equitable as the data it is trained on. We need richer data points, not simply age and sex, but ethnicity, disability, socioeconomic deprivation, postcode and wider determinants of health to identify who is missing out, why they're missing out, why outcomes differ and how to address them. My Lord Sewell diseases do not care about borders, nor should any medical research. The UK should ensure regulatory interoperability with international standards and lead global research with our data.

This is essential, particularly for rare diseases and cancers, and for ethnic minority communities who are underrepresented in research. My Lords, public trust must be the foundation patient consent, privacy, security, transparency, transparency and appropriate safeguards must be embedded. From the outset. The NHS patient database. If the challenges. My noble friend, a noble Lord Lord Patel said are addressed, can become a powerhouse for health research and AI driven innovation and economic growth. So can I ask my noble friend the Minister, will the government ensure that the Health Data Research Service develops representative data sets for AI research and also pursue international data interoperability so that Britain can lead in equitable and also rare diseases innovation while driving economic growth.

My Lords, good patient data can drive good medical research and help deliver good health and good growth together.
14:52
Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (Green Party)
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My Lords, I thank the noble. >> My Lords, I thank the noble. >> Lord Patel for securing this debate and I declare something of an interest in that. I'm just back from the ninth Global One Health Congress in Lisbon, supported by partially supported by I go to the UK by starting. In fact, that the social determinants of health determine up to 80% of health, health, income, health outcomes, with clinical care only accounting for 20%. We must not lose sight of this reality, particularly given that healthy life expectancy is down two years.

In the past decade poverty, inequality, austerity. We don't need data to know that these have enormous health costs, and data collection does not really add to our understanding of that reality. The impacts of financial insecurity, poor housing, filthy air discrimination. Now, the noble Lord Lord Patel spoke about economic growth having an impact on health. I would argue we need a major redistribution of the resources our society to tackle those things. And waving the magic wand of AI and saying, we'll fix it with that just doesn't actually satisfy.

But when we come to health data and there's no doubt it is extremely important and useful, we have a huge problem of trust. Patients are trusting the system, trusting the government to govern if their data is handed over and if their hand. If there's not clear, transparent controls, then patients are going to say, no, we're not going to allow that. And I note that the government itself, in a letter to the chair of the Commons health Committee, has acknowledged that tens of thousands of patients in recent times have withdrawn their data from use in research projects, very many of them expressing concern about the involvement of the US defence and health tech company Palantir.

And there's really no wonder about that. We need to think about this. Peter Thiel and Alex Karp have said some very disturbing things, but I also go to the UK head of operations Lewis Mosley, last year's Alliance for Responsible Citizenship, said Western civilisation is in an existential battle against the armies of fact checkers and experts, lawyers, academics and journalists. They are supposed to be supplying unbiased, fact based data analysis for the NHS, and this is the company that we're talking about.

We know that they had very little track record in health data before they enlisted the aid of the company of the former member of this House, Lord Mandelson Global Council, and they secured this contract. The government has a really important decision to make on health data, on whether they continue with this contract, and we must not allow ourselves to be trapped into using these companies. And also, as the noble Lord Lord Bridges of Headley referred to in the last debate, we have to ask questions about their financial stability.

And if we rely on them and they're not financially stable, that's another issue as well.
14:56
Lord Tarassenko Portrait Lord Tarassenko (Crossbench)
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I'm very. debate, during which I only have time to speak about the UK Biobank. I declare an interest, as I've been not only a participant since 2007, but also a co-investigator in a research study analysing UK Biobank data to develop AI algorithms for the early detection of atrial fibrillation. Ahead of this debate, there have been some very biased negative briefings about UK Biobank, a not for profit charity with multiple claims from those in those briefings, backed with no evidence whatsoever.

UK Biobank is a visionary project in modern science, admired the world over, which has assembled a unique data set from 500,000 UK volunteers, over 22,000 scientists have been approved to analyse the data, contributing to 18,000 peer reviewed papers. Now we all know that access to UK Biobank data was offered for a very short period in April on a Chinese e-commerce website. There was swift action to deal with the data breach, and the advice from China was that there had been no sales of data.

It is also the case that since mid 2024, Biobank has been making the transition to its data, only being available within a trusted research environment. A tree with an airlock. The data from UK Biobank does not contain any personally identifying information. It is de-identified. No participant has ever been re-identified without their active cooperation, my Lord. All participants were informed of the data break in China and given the opportunity to ask for their data to be removed. The number of those who did so is staggering.

344 out of 500,000 participants, less than 0.1 percent of the total number of participants. Now, this vote of confidence, I believe, stems not only from the altruism of the participants, but also from the awareness that UK Biobank has already enabled new diagnostics and treatments that are saving thousands of lives, for example, through polygenic risk scores being added to heart disease risk measurement through non-invasive diagnosis of fatty liver disease and through near real time automated cardiac MRI analysis. My Lords, the current UK Biobank model for patient data research could be scaled up as a result of the introduction of the single patient record, and I hope that noble Baroness Carr Minister will be able to confirm that the NHS modernisation Bill will make this possible.
14:59
Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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I must thank the noble Lord, Lord Patel, for introducing the debate, and I very much agree with the points he made, and I hope the answers will be forthcoming now. Clearly, I support the use of patient data for research. The benefits for medical innovation and prevention and treatment are substantial, but I want to focus on a narrower issue. The gap between what we know about public opinion and how policy responds to it. The evidence consistently shows strong public support for the use of health data in research.

Yet the same evidence also shows continued concern about how data is handled, and in particular about the role of private companies and in accessing and using that data. These concerns are acknowledged in many reports, but are too often treated as secondary. This is especially important when mental health data are concerned. Research indicates that willingness to share mental health information remains high, and it is only marginally from willingness to share physical health data. However, trust is critical.

People's confidence depends not simply on whether data is used, but on who is using them and for what purpose. For those with stigmatised conditions, the consequences of any misuse or breach can be profound. Recent events have demonstrated that public confidence cannot be taken for granted. I wasn't going to mention Biobank, but since it's been mentioned, I have to say I have a defence. Clearly, I'm a fan of Biobank. I'm a participant biobank, but I think it does illustrate the problems that we face, that particular case, because once trust is lost, participation may decline, undermining the very research that depends on public cooperation.

I therefore ask the Minister for two, two questions. First, will the government consider establishing a standing oversight body with substantial patient representation to review access to particularly sensitive categories of data, not least on mental health, and to publish the reasons for its decisions? And secondly, where commercial organisations benefit from access to NHS data. What steps will the government take to ensure that the knowledge gained is that the knowledge gained is returned to the NHS and to patients?
15:02
Lord Mair Portrait Lord Mair (Crossbench)
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This House is Science and Technology Committee, which I chair has been investigating innovation in the NHS, including the use of patient data for research. We expect to be producing our report in the next few months. There is no question that the UK has unique and exceptionally rich health data. Better use of it would save lives, benefit the NHS and grow the economy. However, enabling access to this data for research has been a long term policy problem. Professor Cathy Sudlow's review warned that access is in danger of going backwards.

Since the pandemic, the £600 million Health Data Research service, the Hdrs, is intended to help address this. It has the potential to be transformative, but there are two key areas of concern funding and public trust. First, the question of funding. After its initial five year budget period, the government has set a target for the Hdrs to be self-funding through commercial partnerships. But since there is not yet clarity around which services it will offer, what its expenditures will be and what prices it will charge, we cannot assess whether this is realistic.

High access fees on existing health data. Research projects already lock out life sciences SMEs and could push researchers overseas where they could access health data more easily, and the self-funding model risks the hdrs, ending up dependent on large pharmaceutical companies just to maintain its operations. So could the noble Baroness, the Minister, explain to us how and why the department decided that the Hdrs should be self-funding? And will she publish the analysis behind that? Second, the question of public trust.

The importance of public trust has already been referred to by my noble friend Lord Patel in his excellent opening speech, and also by other noble Lords. There is a long list of well-meaning policy initiatives. Care.data GDPR to enable access to patient data, which were undermined by a loss of public trust. Public support for using health data for research is real but conditional. It is undoubtedly weaker when it comes to commercial uses. Trust cannot be assumed. It has to be earned through transparency.

Clarity about how data is used and visible. Tangible benefits to patients. So can the noble Baroness, the Minister, tell us how the Hdrs will become a trusted data custodian? What safeguards will it use for patient data, and how is it going to engage with the public? I hope the Minister will tell us how the Hdrs will address these important issues about funding and public trust. It is vital to ensure that we can realise the immense opportunity offered by full use of patient health data.
15:05
Lord Weir of Ballyholme Portrait Lord Weir of Ballyholme (Democratic Unionist Party)
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I join with others in thanking >> I join with others in thanking Lord Patel for having secured this debate, and I think across a range of medical conditions, we are hopefully on the brink of medical advances, underpinned by robust research which have the opportunity to both save and transform lives for the better. And with the structure of the National Health Service, I think we have a unique asset which puts us in a much better position than most other countries across the globe.

Data whenever used, when collated correctly by government. When the quality of it is uniform in nature and used effectively, can be of major benefit. To give an example, outside the health service. During the pandemic in Northern Ireland, the. We have a single education authority which held all data for every pupil in Northern Ireland as regards Free School Meals in Uniform grant, which meant that when support needed to be given to families that were in need, we could identify that straight away, and around about 98% of families were able to be helped from the very start, which contrasted with what was there in most areas of of Great Britain.

With that data was quite often of a different nature and fragmented between different local authorities. I think that the government's response to the review in terms of the Hdrs is the right way forward, but I think there are four conditions which I think are critical to implementation. First of all, it's not simply about the quantity of data, it's about the quality of data, particularly as it tends to be most data on the health side of it will be qualitative in nature.

As has been highlighted, it is critical that data is codified, but also actually that it is coded in the same way, in a consistent way, and also that we have linkages between data sets. Secondly, it is critical for medical companies and researchers that we provide clarity and certainty for them as to what can be available. So we need to ensure that data is research ready and that companies know what data they're getting, is what cost will be there to them, and how long they can have that data that will enable them to plan research for the future.

Thirdly, I think, as has been highlighted, public trust is critical. I think one of the main barriers that whenever the government looked at some form of national identity was public concern over how their data would be used and how secure that that would be used. And particularly now with both malevolent foreign states and criminal gangs, we know that there is there is a risk of data breaches and data capture. So we need to ensure that what is put in place there is secure from the start.

And finally, I would say it is important that we are comprehensive in our approach both to geography and to subject matter. We need to ensure that, for example, if we're going to integrate social care, that is also factored in within data provision, and also that we have systems which take account not simply of NHS England, but across the UK, involving all the devolved institutions working together to be able to provide that data.
15:08
Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (Crossbench)
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My noble friend Lord Patel, in introducing this important debate, spoke about health data, secure systems, and I want to speak about the secure Anonymised Information Linkage System, the sale database Linkage System, the sale database based in Swansea, funded by Welsh Government, which runs on the mantra of public data for public good. It's been going for almost 20 years. Has data reaching back a quarter of a century? And in the Health data Research service, Digital Ecosystems Analysis report, it has been highlighted because Sale Data Bank is has expertise in data pipelines, advanced data linkage, and secure research infrastructure powered by the secure E-research platform or Cirp.

These capabilities are essential for the future of health data research. The sale database is really very widely trusted and widely trusted because it was so carefully set up and is so carefully managed. The report identifies it as one of the UK's established examples, and has documented transformative transformation, logic and quality assurance built in. The database has an extensive number of research projects internationally, and it reinforces the importance of trusted research environments or trees, and secure data environments, or SDS, where approved researchers analyse sensitive data within secure settings rather than downloading or transferring information.

That model has maintained public trust while enabling high impact research. Professor Simon Thompson is the director of the Sail data Bank and Cirp, and has pointed out that we've been recognised as a benchmark for the for the UK that the Welsh population. Data links across health, education, housing, justice and beyond and shows where it's possible when secure personal level linkage is done properly and at scale. So this is one of the leading environments. Sharon Hayes, who is the head of legislation due diligence there, has raised and discussed the difficulties about defining the lines of anonymisation and actually whether data is likely to be identifiable or not.

And I'm grateful to my noble friend Lord Tarassenko for talking about the Biobank and Biobank data. I had the privilege of being on the first Ethics Committee as Biobank was being set up, and I think the durability of Biobank and the durability of sale represent the importance of considering all aspects. Before you even get started.
15:12
Baroness Freeman of Steventon Portrait Baroness Freeman of Steventon (Crossbench)
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Decision aids to help patients >> Decision aids to help patients and healthcare professionals, and I'm also an unpaid adviser on the board of Opensafely, a system for allowing research to be carried out securely on data. Every healthcare decision we make is based on knowing what's happened to people like us in the past, knowing the outcomes for thousands of people and how much those outcomes vary, is the only way we can do better than just blind hope. It allows us to say, out of every hundred people like you that have taken this option, X had this outcome that makes all the difference for those faced with a hard decision, and for those developing potential new treatments, analysing data helps them to see those outcome differences in detail.

Shared information is the whole basis of medicine. We in the UK have unique health data, and we must do all we can to continue to learn from it and to communicate it to patients. On the other hand, I also know how people feel when their trust is undermined. Society works by spreading the costs and the benefits across many people, but industries like insurance and marketing benefit financially. If they can target their products to individuals, they would love to get their hands on our medical data.

And as other noble Lords have said, when you talk to people, they say they share their data for the benefits of society, but they don't want it to be used for things that stratify society, like differential insurance, pricing, differential access to healthcare or welfare or profiteering. Quite understandably, but some people's experience has been of that of trust abused, healthcare records accessed or used inappropriately. Every abuse of power we learn of undermines trust a little more. And the thing about data is that you need it to be representative.

So if trust is lost from some groups of people, then we'll end up losing the data of those groups of people. And that erodes the value for everyone, especially those groups themselves. If you want to be trusted, you need to be trustworthy. Demonstrating trustworthiness takes dialogue, listening, honesty, owning up to mistakes, good faith, trying to do better. Where there's a breach, like at UK Biobank, it needs to be fully and transparently investigated and lessons learned. Everyone needs to know that their voices are heard and respected and acted on.

Everyone should be able to say what they want to happen to their data if they don't want it shared. That has to be respected too. I don't expect that my doctor's consultation will be recorded and uploaded to AI for note taking. For me, that's sharing my data and I don't know with whom. As the National Commission in the regulation of AI in healthcare today reported from their consultation, the majority of participants believe that patients should be informed when AI has been used in their care.

So I would like to ask the noble Lady, the Minister, what are their plans for data sharing opt outs, and how will they ensure that they're always respected? Is consent always going to be explicitly sought for AI during consultations? And are patients being meaningfully involved in dialogues about all the uses of their data? As the government makes plans for more? We have to be able to answer yes to all of these before we can reap the benefits. Our data should give us.

My Lords.
15:15
Baroness Gill Portrait Baroness Gill (Labour)
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I rise today to address a challenge that sits at the intersection of public service and my own professional background, and I thank the noble Lord Patel for I thank the noble Lord Patel for this timely debate. Over a decade ago, I was working in data analytics sector. It was an era when my colleagues and I routinely repeated a phrase that has now become a bit of a cliche. Data is the new oil. We were at the beginning of a digital bonanza, watching a frontier expand, while governments maintained largely a laissez faire approach long before modern privacy regulations were covered by Data Protection Act and GDPR that we rely on today.

I raise this because the data landscape has evolved exponentially since my time in the industry. Today, the pressures to find solutions to chronic diseases are immense. While I deeply share the health professional's enthusiasm for laudable, life saving research, those of us with background in data know a quiet truth. In the rush to find health solutions, individual privacy can inadvertently be compromised if our security frameworks do not evolve as fast as the technology. We've had wake up calls earlier this April, and some of the noble Lords before me have highlighted the case of rogue researchers at a partner institution in China, violated their contracts and attempted to list the data of 500,000 UK Biobank volunteers on Alibaba.

It was a near miss for our research ecosystem. Thankfully, swift action prevented actual sales and the data itself lacked direct personal identifiers. But as your Lordships' House knows, there are methods of data manipulation have grown sophisticated far beyond what we imagined a few years ago. The rise of advanced artificial intelligence has fundamentally changed the game. Today, De-identifying data is no longer a permanent shield. With modern AI algorithms, bad actors can cross-reference anonymized health files with external commercial datasets to re-identify individuals with terrifying ease and accuracy.

If the public begins to fear that AI will be used to turn their altruism into an exposed personal medical records, public trust will evaporate, and we cannot let that happen. So I would urge the noble Baroness, the Minister, to secure this system so tightly that the public trust remains unbreakable. A shift away from data extraction entirely moving instead towards trusted research environments requiring external commercial players to run their AI analytics inside a secure, government hosted cloud where they can query the data but can never

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download or export raw files. Hair, hair.

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I want to take this opportunity to use this opportunity to provide, to use this opportunity to provide, just by Lord Patel to talk about the data for research, for the greatest healthcare is our greatest healthcare is our challenge challenge of our time and that is dementia. Improving the
15:19
Baroness Murphy Portrait Baroness Murphy (Crossbench)
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that is dementia. Improving the quality, accessibility, and use of dementia data to support researchers in extremely poor state. We identify people too late, if at all. There is poor follow up and data linkage and difficulty matching people to the right trials. One problem is that people get referred to memory clinics over here, often remote from hospital services. They're good for access, but where there are no links to research organisations, diagnosis is rarely followed up. And if you have a mild problem, you're never seen again.

There's a wholesale lack of understanding that if you wish to research dementia, you need to understand that social care services, both statutory and independent providers, are where the subjects are. Coding is inconsistent. Data is often unusable. Those eligible for clinical trials are invisible to research, so recruitment to trials is very low indeed. Over the four years 2021 to 2025, dementia trials recruited only 551 participants, compared to 24,000 in cancer. The UK has strong basic sciences, major data resources, early phase trial capability and a trusted regulatory environment.

But the science is moving rapidly, and while the UK now has a major opportunity to build on these strengths and become a global leader in dementia research, we are very constrained by the lack of national leadership to align the science, diagnostics and trial delivery. We're even further away from the NHS adopting results and realising the full value of government investment. Now the governments governments, since in the early 20s since then have done some very positive things. The Dame Barbara Windsor Dementia Goals programme in 2022, the Medical Research Council's £20 million investment into Dementia Trials Accelerator.

Excellent initiatives, but we need to go further and faster and I should like to ask the Minister whether she agrees with me that we should use the modern service framework to improve the quality and usability of dementia data, ensure that people are not lost to research after diagnosis, and surely the government should make. Barbara. Marvellous. Name the brain ageing registry for biomarkers. Access to trials, research and adoption. I'd love to know who thought up that as a government priority by 2030.

I

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would ask for that to happen. My Lord Oates Baroness Brinton is taking part remotely. I now

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invite Baroness Brinton to speak. My Lords, it's a pleasure to

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My Lords, it's a pleasure to follow Lady Murphy and I congratulate Lord Patel for securing this debate. As an securing this debate. As an obstetrician, clinical teacher and academic, his exceptional work for well over 50 years has reduced the well over 50 years has reduced the risks to women in pregnancy and childbirth, and I'm sure patient data will have been key at every stage and contributed to the life saving and life changing therapies and treatments. So from these benches, we are clear that patient data must be available for medical research.

And I want to thank the Alzheimer's trusts and others for their briefings on the real progress in treating diseases, as well as the hopes for future research. I especially want to thank the Cystic Fibrosis Trust. My dear childhood friends, Julie and Vivienne Gaster. Both had cf all their lives. They both took dozens of tablets every day to mitigate their symptoms. In the early 60s, there was no hope of tackling the underlying disease and as they and we knew would happen, they died as teenagers in the early 70s.

These days, using patient data, eligible people with cystic fibrosis can receive new drugs that treat the underlying causes by targeting the faulty Cftr protein. A partnership involving the CF registry collects evidence on the effectiveness in routine care before nice appraises the therapies, and this has meant that people with CF are able to access the new drugs. Whilst effectiveness data is still being gathered. What a life giving transformation. But my Lords, we have also heard in the debate today of concerns about the wider use of patient data, especially AI.

So it is prescient of Lord Patel to have called this debate before your Lordship House starts to consider the government's health bill. The BMA has told us about threats to the common law, duty of confidentiality of patient data. The patient data can be used beyond the narrow protections available for use in academic research studies. That data functions would move from NHS England to the Secretary of State. My Lords, this is not the first that a government has tried to change the data protection for patients, a challenge the government to keep the research black box protections which my noble friend Lord Clement-Jones and I negotiated with labour support in the passage of the Health and Care Act 2022.

Because, my Lords, and this gets to the heart of the debate we've had today, the vast majority of patients, doctors and academics all believe that it's vital that patient medical data must be made available for medical research. But and this is key with the data securely, appropriately and strongly anonymized and pseudonymized.
15:25
Lord Kamall Portrait Lord Kamall (Conservative)
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My Lords, can I start by thanking the noble Lord Patel for securing this debate on using patient data for patient centred research. Health and social care. Can I also thank all noble Lords who spoke and also for Lord Wood Lord Dear my register of interests. I won't name them all because that will be my three minutes. My Lords, we can have the most innovative health care systems in the world, but that will be meaningless if patients do not trust the NHS, do not trust other health and social care providers with their data, and there is some consensus on the need to collect and share patient data for to improve patient care and research, but not only for today, but also for the research that will drive the innovation of tomorrow.

But currently, not all patient data is digitised or shareable. Records are not always follow. The patient information is often duplicated, delayed, or not available when most needed. And while we hope that the single patient Record and Health Data Research Service will respond to that challenge, the key will be patient trust. Recent events that have been mentioned, such as the UK Biobank incident, have shown how fragile public confidence can be when governments and outside that cyber security are not watertight. So how does the.

Can I ask the Lord Brady Minister, how does the Department intend to address the problem of researchers downloading patient data to work in less secure environments or sharing it on sites such as GitHub, or even perhaps selling it as we saw, or offering to sell it? They did not actually sell it. Secondly, can the Minister tell the House whether organisations and individuals access patient data for research will be required to meet minimum cybersecurity standards? And thirdly, how will they address the concerns of civil liberty organisations such as Med Confidential, who have found Biobanks response less than reassuring? At this point, I should also thank the noble Lord Tarassenko for his reassuring point on that particular incident.

My Lords. Nowhere is the need to get this right clearer than in dementia. A noble Lady, Baroness Murphy said it's the leading cause of death in the UK, affecting individuals, families and the economy, and a recent Alzheimer's Research UK report tells us that the UK has world class medical science, major data resources, early phase trial capability and a trusted regulatory environment. But that progress is constrained by weaknesses in data coordination and implementation. Without high quality data and interoperable systems, researchers and clinicians cannot identify patients early, cannot recruit them into trials, evaluate new diagnostics or scale treatments across health and social care.

My Lords, this is not a technical detail. It is a foundation on which meaningful progress to diagnose and treat dementia will stand or fail. So can the noble Lady, the Minister, tell the House if her department has considered how to connect existing initiatives so that dementia data is linked, accessible and usable for research for real progress will depend on confidence. Confidence from clinicians that systems help, rather than hinder, confidence from patients, that their data is secure, and confidence from the wider public that data governance is transparent, proportionate and accountable.
15:28
Baroness Merron Portrait Baroness Merron, The Parliamentary Under-Secretary for Health and Social Care (Labour)
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My Lords, I want to congratulate >> My Lords, I want to congratulate the noble Lord, Lord Patel, for securing this debate, but also for his acknowledgement of the importance of data, patient data in terms of research and and what the government has done to date. And I also want to thank noble Lords for their very thoughtful and informed contributions. And I do understand the point very much about trust, which has been made several times, and we will come back to that.

But I do want to assure noble, all noble Lords of the understanding. It's not always whether people have distrust because of something factual, but if they feel distrustful, that in itself is a challenge for us. But, my Lords, we do have some of the richest health data in the world, thanks to our diverse population. And because we've got an NHS that has supported us and cared for us for some 78 years. We are fortunate indeed. And it is the case that patient data drives life saving discoveries.

And the noble Lady Baroness Brinton spoke very personally to this point, as I know, many noble Lords could also draw on their personal experience to do so. It does help us to understand disease and to develop new treatments, many of which we could never have dreamt of. But it's also essential to improving the nation's health and prosperity. It's key to our life sciences sector. It's key to creating jobs, to driving investment and to power innovation, and ensuring that benefits flow back to patients and the public.

As the noble Lord Lord Patel asked for is, I agree, essential. And that's why we've published a value sharing framework for NHS data and also why we will charge organisations for access and. To my noble friend Lord Davis, who asked about considering an oversight body, I can assure him that the Confidentiality Advisory Group is. The independent adviser is the independent oversight body, which I feel is probably what he is seeking, which decides whether confidential patient data can be used for research without individual consent or not.

So, my Lords, we all know that and many noble Lords have acknowledged this, that people do want their patient data to be used for research. But I completely agree that this trust is conditional upon us keeping the data secure and making that known. We are committed to moving from a system of data sharing, where copies of people's data are sent to researchers, to a system of data access by default using secure data environments. And the noble Lord Lord Patel spoke to this very point.

So perhaps if I can give some further outline and some further reassurances and pick up a number of the questions, any key questions I'm not able to answer because of time, I will be very glad to write. And the noble Lord Lord Patel raised this following point that NHS England now uses the secure uses secure data environments SDE as the default route for accessing data for research, and its network brings together around 300 local and regional data sets that were not available previously, and the Health Data Research Service will build on that foundation by developing a much clearer route into the system and more consistent processes.

And I do think that is important more broadly, because whilst investment in secure data environments had begun previously and yes, services were being established, we are now taking the system from where it was, which is somewhat fragmented, as has been referred to, to a coherent approach. And I can say to your Lordships House that a simpler, safer and more accessible and more accountable, sorry, a more accountable set up is where we will get to by the end of this Parliament.

So last year, and again, this is to the point raised by the noble Lord Lord Patel and the noble Lord Lord Weir. Last year we did commence powers to allow us to mandate information standards and also create binding rules across both GPS and trusts. And yes, there is more work to do, but I think that that sets us absolutely in the right place. I would also say there are some examples of very good practice. We looked at Greater Manchester where they have linked GP and hospital data.

But I would say this isn't commonplace because it is GPS who currently decide how their patient data is used on a practice by practice basis. Where are my Lords currently running a programme of national engagement with GPS on the use of patient data, and we will use that work to work with GPS and also other other primary care professionals to improve the use of GP data in the future. And our new guidance on enabling safe access to UK human genomic data does demonstrate that we expect human genomic data to be accessed through secure data environments, and I would emphasise only to approved researchers.

And I do agree with my noble friend Baroness Gill, that we have to act swiftly and robustly. Where things go wrong, of course, we minimise the possibility, but we have to be realistic and I'm grateful to the noble Lord Lord Tarassenko for setting out the facts on Biobank, which the. Which the noble. My noble friend Lord Davis also referred to. So I won't repeat them, because I do share his analysis. But perhaps I could say to the noble Lady Baroness, in respect of the Federated Data platform.

It is not used for research. It supports NHS operations and direct care, and this does mean that opting out of sharing your health data for research and planning will not stop your data being used by the FDP to support your care, and I think that's an important reassurance to those who wish to opt out of sharing the health data. And of course, as I mentioned before, the FDP contract will be reviewed ahead of the February 2027 break clause.

And to the noble Lady, Baroness Freeman. The issue of gaining trust and maintaining it is key. But I think that also means giving people meaningful choices over their data. So following public engagement, we are reforming how people can opt out of having their data used for planning and research, and to make it clearer and simpler so they don't feel bound should they not wish to. And it is true, as noble Lords have said, that generally people do support the use of patient data when they understand who's using it, why it's being used, and for what purpose.

And yes, I accept. Awareness remains low, so we have to be transparent about its purpose as well as maintain strong safeguards and involve the public safeguards and involve the public in decision making. With regard to the safeguards that about which I've spoken, we do want to make it easier for legitimate researchers to access data, and the Sudlow review did describe just how long it can take for approved researchers to access health data, and that that's an issue. And so the NIHR is through that our through our body, we are investing around 1.7 million a year in research and research infrastructure.

And alongside this, the NHS Data and Analytics Academy is developing the data engineers, analysts and other specialists as per the point of the noble Lord Lord Patel on workforce who need to turn this into better treatments and care and our NIH. Our reforms means that clinical trials are being set up some 47 days faster than last year. But we do want to go further and faster, and that is why we've established the Hdrs. And to the noble Lady, Baroness Murphy, the question of dementia research will indeed be one of them.

It will be indeed, for the h d, r c, or maybe even the HDRS. The noble Lord, Lord mayor raised about the HDRS, and indeed processes will be streamlined and on the matter of funding, I did want to say to him that the future funding model will is is to be developed and we certainly will take into account the patients and the public, and I'm sure that's something we will want to develop further. My Lords, this has been a helpful debate.

We are moving towards a coherent strategy. A number of questions, including the noble Lord Lord Kamall, have been raised and others, and I will be glad to follow up. And for now, I hope this will take us forward and that we can all move to use patient data to manage better in terms of how we provide our health services.

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Now be a short pause. Once we

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Thank Thank you.

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Thank you. Motion for debate and the levels

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Motion for debate and the levels of home ownership. Baroness Eaton.

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of home ownership. Baroness Eaton. My Lords, I rise to open this debate that this House take note of debate that this House take note of home owners and levels of home ownership. We have both a sense of history and a sense of urgency. For generations, across parties and
15:40
None Portrait Debate: Home owners and levels of home ownership Baroness Eaton (Conservative)
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across social classes, the desire to own one's own home has been one to own one's own home has been one of the most powerful and consistent aspirations in our national life. It has shaped communities, underpinned family stability and helped create the social and helped create the social and economic resilience on which a civilised society depends. It is civilised society depends. It is not a narrow economic goal, but a means for profound social good. Yet too many. Yet today, for too many people, especially the young and those on modest incomes, home ownership feels less like a realistic ambition and more like a distant dream.

I want this afternoon to remind the House why this aspiration matters so deeply, and to highlight how recent government policies, sometimes by design and sometimes by neglect, are undermining it. I hope to suggest that we might adopt a more hopeful and practical approach. Home ownership is not simply about bricks and mortar, it is about roots, belonging, agency and responsibility. Families who own their own homes are more likely to invest in their neighbourhoods. Voluntary groups and civic life.

Children enjoy greater stability with deeper ties to schools and friendship networks and community support. People are better protected against economic shocks and the insecurity of short term tenancies and sudden rent increases. We know from decades of experience that home ownership can be a ladder of opportunity, enabling families of modest means to build an asset over time, support retirement, help the next generation, and weather life's storms. But the wider context is deeply troubling. Home ownership in England now stands at 65%, broadly unchanged over a decade, but well below the peak of 71% in 2003.

Affordability has deteriorated dramatically. The average home now costs 7.6 times average earnings, compared with around four times earning earnings at the turn of the millennium. In London, the ratio is over 10 to 1. For young people, the picture is even starker. The average deposit for a first time buyer is now £78,000, with the median still an eye watering £36,500. Deposits have grown to the point where they are worth more than a year's salary. For many, the average age of a first time buyer has risen from 31 to 34, and the proportion of under 25 entering the market has collapsed from one quarter in the 1990s to just 6% today.

More than half of the first time buyers now need two incomes to purchase a home. Surveys show that while three quarters of renters aspire to own, around 60% believe they will never be able to afford to do so. That is not aspiration, that is despair. These pressures are compounded by the government's economic decisions. Youth unemployment has reached 16% higher than during the pandemic, and rental reforms have reduced supply, driving rents upwards. High rents make saving for a deposit harder, trapping families who could afford a mortgage but cannot reach the starting line.

My Lords, under the previous conservative government, 800 000 people bought their first home through Help to Buy and stamp duty relief. Yet since Help to Buy ended, major developers reported nearly 50% fall in first time buyers. This is simply not sustainable or fair model for a country that believes in social mobility. The supply side tells a similar story. The government pledged 1.5 million homes. This parliament. Yet in its first year delivered just 208,600 net additional weddings, a fall from the previous year and far short of what is required.

On current trends, it will miss its target by 400,000 homes. Worse still, the new mandatory housing targets shift responsibility away from cities and onto our rural communities, cutting housing numbers in London, Birmingham and Coventry while imposing huge increases on rural authorities. This is not a serious plan for meeting demand. It is a political redistribution of targets. My Lords, taxation policy is also central to this debate. Stamp duty has become a significant barrier to home ownership.

Conservative governments recognised its distorting effect and acted to limit the damage, including during the pandemic. But the current current government has cut first time buyers stamp duty relief and now presides over a system that slows the market, penalises mobility and reduces affordability. The Housing Select Committee concluded earlier this year that stamp duty puts barriers in front of people seeking to buy a new home and damages the economy. This simply is simply an unfair tax and yet another hurdle for individuals trying to get on the housing ladder.

Meanwhile, Labour's social housing bill downgrades right to buy one of the most successful conservative policies of the last half century, which brought over 2 million people into ownership and delivered measurable social benefits. Labour's reforms raise the minimum tenancy period to ten years, exclude new homes for 35 years and slash discounts. These changes do not expand opportunity. They restrict it. And for those who have managed to buy, the leasehold system remains fraught with unfair charges. Progress on reform has been slow and partial, leaving families trapped in unsaleable homes and undermining confidence in you built flats.

My Lords, taken together, these trends paint a deeply discouraging picture. Home ownership is simply becoming a distant prospect for too many. If we are to honour the aspiration of home ownership, we need a coherent, long term strategy. Stable planning, fair taxation, well designed support schemes and robust leasehold reform. After all, we need a clear statement of principle that home ownership is a public good. We actively wish to promote. My Lords, when we debate home ownership, we debate the kind of country we wish to be.

A country where young couple with a steady job can reasonably expect to buy a home or a country where they find themselves permanently locked out, paying ever higher rents with little prospect of ownership. Government policies either support that aspiration or undermine it. Too often in recent years, they have done the latter. We must renew a balanced housing system in which the aspiration to own is respected, supported and attainable. If we fail, we erode not just economic opportunity, but a key element of our national story the belief that through work saving and contribution, a secure home can be achieved.



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Yeah. The question is that this motion be agreed to.

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be agreed to. My Lords, my congratulations to Baroness Eaton on. Securing this Baroness Eaton on. Securing this debate because for generations or a generation across Britain, the dream of owning a home has felt entirely out of reach. But it is not because they lack ambition, it
15:50
Baroness Gill Portrait Baroness Gill (Labour)
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not because they lack ambition, it is because they have been trapped in an adversarial stop start system designed to benefit speculators rather than communities. Having led housing organisations providing both social housing and homes for sale right here in London, I know first hand the delicate balance needed to make the city liveable. I know that a healthy city needs mixed tenure. Communities where social rent, private sale and affordable home ownership coexist seamlessly. So our mission must be to structurally rewrite the rules of British housing to enable those families and others who want to transition out of renting permanently.

To understand how this government is addressing this, look at how the buyers were locked out. First, there was the deposit war. Lenders routinely pulled high loan to value options during economic dips, meaning a young couple could work hard and save diligently only to find the goalposts moved overnight. Under the previous government's, I welcome that this government solved this by launching the Freedom to Buy Scheme, transforming a temporary setup into a permanent government backed guarantee by removing the risk for high street banks.

We changed the lending behaviour. Lenders now confidently offer 95% mortgages through all market cycles, meaning that if you can afford the monthly payments, a 5% deposit is permanently enough to secure your foundation. But fixing finance does nothing if buyers are left competing for non-existent supply for a decade. The why behind the lack of houses was local political paralysis. Councils routinely bowed to pressure and scrap housing, build housebuilding targets, choking the market. We broke that long term by immediately reinstating mandatory housing targets and aggressively streamlining the planning rulebook through the updated National Planning Policy Framework by introducing brownfield passports and opening underused greenbelt land.

We have removed the bureaucratic vetoes to clear the path for 1.5 million new homes. This government is addressing the supply issue, too. We've changed who gets the new housing by establishing local priority windows. We have blocked overseas investors from buying up entire developments off plan, ensuring that those new keys go to local families first. This is especially critical for our key workers the nurses, the teachers and the first responders who keep our country running but are routinely priced out of communities that they serve.

For many of them, shared ownership was supposed to be the safety net. But let's be honest about what has happened to it. High interest rates and volatile service charges have left many shared owners struggling. And in response to this, the government has injected new protections through social and Affordable Homes Programme. We've tightened regulations around optional fees, enforcing greater transparency on costs and backing the new shared ownership code to protect buyers from financial hardship.

We're also reforming the model so it serves as a sustainable staircase to 100% ownership, not a dead end. Yet solving this crisis is not just about pouring new concrete or tweaking up intermediate tenures. It is about better utilising all the homes that we already have. And right now there are thousands of older citizens who are living alone in large multi-bedroom family houses, and they want to move closer to their children or their grandchildren or wider families, and they want a home that is easier to manage.

But the heavy financial friction of moving stops them. So I would urge the noble Baroness, the Minister, to look at what targeted initiatives that the government is preparing to help home older homeowners right size, because there is a landmark data report from Lord Big Tent Housing Commission rightsizing report that indicates that nearly half of over 65 find current rates of moving

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Effectively locking. Up an estimated 870 00000 underused homes estimated 870 00000 underused homes across the UK because of the barriers to moving. So if we want to bring the family sized to bring the family sized properties back into active supply chain for the next generation chain for the next generation without laying a brick, I ask the Minister to consider a tailored scheme that will help them and unlock a massive hidden housing

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supply. I'm delighted to speak in this debate, and I congratulate my noble friend for securing this debate and friend for securing this debate and for setting a very good tone of, I think, she said, hopeful and practical, and where we can talk practical, and where we can talk about the type of country that we want to be. There are three quick want to be. There are three quick things that I do wish to raise. The first is a more general point. I'm always struck by how many people already in this country care
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Lord Gascoigne Portrait Lord Gascoigne (Conservative)
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already in this country care passionately about all aspects of housing and growth in in this country, and I think we should surely acknowledge that as a healthy sign. For those of us who do want growth, we should look at doing. We should look at doing things differently and articulate a clearer vision that faces the facts and comes up with solutions. And sometimes in these debates, you may hear it today. I do get exasperated when you hear the Nimby or Yimby phrase being thrown around, because for me, too often it belittles the debate and oversimplifies the views.

Because broadly, people do want development. Last year, polling from public first showed that 55% of the population are in favour of development in their area, and for many who do have concerns, that does not translate automatically into a total rejection of new housing. And for us greenies, we should not instantly object to growth and development because you can do both. Last year I visited a development in Aylesbury where they have. They are delivering about 2500 homes. Yet biodiversity has flourished simply by planning to put nature and development together at the outset.

I'm delighted to see my Chief Whip and my. My leader on the front bench as I never. I'm delighted to see them always, but today in particular, as I, as I never, I never, I never tire of thanking them for for giving me the privilege of, of of chairing the Built Environment Select Committee here in your Lordships' House. And most recently, as the Minister knows all too well, we've been talking about new towns, and this great endeavour has bedevilled many a government, and the Minister knows better than many that if it is done properly, it can create a lasting, positive legacy.

Our second report on New Towns focussed on making sure we can create strong communities. Now, I know some will say we just need to build homes, but it does matter what those homes look like, that it becomes places and communities people want to live and want to take care of. And to be fair, I'd say developers want to build homes that people love and that will stand the test of time. We also did a recent report about how to get the views of younger people embedded in the whole process, from education through to employment and in consultations.

And if we begin to combine that with doing other things differently, such as better ways of engaging, ensuring people see the actual uplift locally by making sure section 106 and CIL payments are being delivered, and looking at why on earth major infrastructure projects like HS2 take so long and cost so much, then I do think we can begin to make a difference and change the tone of the debate. Now optimism or cakeism alone isn't enough and you cannot satisfy everyone. And of course there does need to be some trade offs and there are challenges.

But it is our job as politicians to take them on to fix the issues we face and own this agenda. Second, I was in Downing Street under Prime Minister Johnson, and there were some great things that we did on the supply side reforms, and we should have carried on, in my view. And I confess that whilst I still have reservations about the Planning Act and how it will work, I do think the new MP is Baroness Gill was just saying. I do think that it's right to be welcomed.

It still would be good to hear more details though, particularly around where exactly these well connected stations are to give confidence and clarity. But if we look at the market right now, we have about 1.4 million homes sitting with approval yet waiting for work to commence. That is not to say we should reverse the policy to unlock land, but I think the debate should move on to the demand side. Whilst I know the government and indeed the Minister will perhaps say later that the government must set out the detail now, but I do hope that in the upcoming Autumn statement, there is a lot more about helping first time buyers to get onto the housing ladder.

Then hopefully it kicks off the wider housing market beyond first time buyers. And if we look at what previous governments have done, it is a rare opportunity of where government can step in and actually have a positive impact. And if you look at what we did when we were in government with Help to Buy, for example, you saw a net benefit to the Treasury. It fired up the sector and it helped get over 300,001st time buyers over the line. And finally, I wish to comment briefly on the capital, and I've worked briefly in City Hall.

And sometimes when I speak in these debates, it's a bit like a reunion. And particularly when I see my good friend Baroness O'Neill on the frontbench and Lord John on the opposite side. I was there. I worked in City Hall after the crash for a few years, and I came to make London my home. And I can say, as a Northerner who did make it home, that Samuel Johnson remains right, that if you're tired of London, you are tired of life. It does have everything.

However, there are challenges and they are stark. There is the tragedy of families and children in temporary accommodation. There are issues relating to cost of rent, lack of social housing supply, not meeting demand, driving those less able to afford out of the city. A fascinating yet sobering recent centre for London report sets out the scale of the problem, as well as the measures to tackle the plethora of issues at play, which they say is touching the lives of almost every Londoner. So could I ask, in that vein, given that this is not a single issue, but one requiring a much broader response, does the government recognise this complexity? And furthermore, is work taking place to develop a different, more comprehensive package of solutions? My Lords, this is a vital debate beyond simply building homes.

It isn't something that's gone awry overnight, but there is a huge opportunity here not just to increase home ownership, but to create jobs and growth, do things differently and get people more involved in society. Yeah, yeah.

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My Lords, I'm in this short contribution. I want to stress just contribution. I want to stress just one point. But first, may I congratulate my noble friend Baroness Eaton on procuring this debate and take the opportunity to thank her for her copious thank her for her copious contributions to the House. And in addition, for the many years of

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addition, for the many years of service she has given to local government. Yes. I grew up with my mother and
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Baroness Seccombe Portrait Baroness Seccombe (Conservative)
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brother in my grandmother's house. Ours was not possible to live in Ours was not possible to live in due to bomb activity during the war. So when I married, you can imagine the thrill of my husband and me the thrill of my husband and me owning our own home early in our marriage. Many years ago, we had a painter and decorator named Mr. Brown and always called Mr. Brown a rather testy figure, particularly where his younger sister was concerned.

One day he told me that no one in his family had ever owned their home, and he was nervous about doing so. So I suggested he talked to my husband, the solicitor, after which he took the plunge. Ever after that, he repeatedly told me that my husband had given him the best advice he had ever had. He was a proud owner and certainly made his home his castle. And it mattered to him as he felt he had a stake in society.

Home ownership is always popular with the public, and I remember the excitement when the right to buy was introduced, giving those who rented from local authorities the right to buy their council houses. It was remarkable how soon those houses looked different, as the owners cared for them and brightened them up. 65% of people now own their homes. But I hope that we can find ways to increase that level of ownership. I hope that the government will realise the damage that has been done by their attitude to stamp duty.

The value of properties today has meant deposits needed have increased dramatically, making the chance of owning your own home seem almost impossible. But my Lords, I believe it is a noble ambition to try and give future generations an opportunity to buy their own home. And we have a responsibility to make it happen.

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My Lords, before I start, I should remind the House of my interests in this area as a partner interests in this area as a partner in Coin Partners and as the Chair of Homes for life. Firstly, I want to thank Baroness Eaton for to thank Baroness Eaton for bringing this debate because it has prompted me to really think about prompted me to really think about that philosophical question of why we truly value home ownership. And I want to commend her and all of I want to commend her and all of those who've made contributions so far.

As a child of the Thatcher era,
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Lord John of Southwark Portrait Lord John of Southwark (Labour)
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I suppose I grew up thinking that the gold standard for one's housing was home ownership. And over the was home ownership. And over the past 40 years, we've also seen housing become an increasingly prudent investment vehicle. The prudent investment vehicle. The equity in your house is your wealth. Now, I've been a beneficiary of Now, I've been a beneficiary of this thinking, seeing my 7200 £0 first home, a one bedroom flat in Bermondsey, as the financial Bermondsey, as the financial foundation for my current, fortunately, mortgage free home.

So home ownership has historically provided both housing security and financial security for those fortunate enough to have been part of that generation buying their homes since the 1980s. But of those two, it must be right that we focus our attention on housing security. For now, it seems that the era of ever upwards house price inflation seems to be on pause. So we have to look at pensions, savings and investments to act as the financial growth vehicles, which we've tended to look to our homes to provide recently.

So if the most vital importance of home ownership is housing security, how can we as a society best replicate that security outside of ownership? How can we ensure that people who do not own their own homes still feel invested in and part of their communities? I should add that one of the drivers of Mrs. Thatcher's policy of right to buy, and it's been discussed today, was the belief that people would take greater pride in and care of their homes if they owned them.

And I suppose initially we. That seemed to be true. But what we have seen in some instances as a consequence of Right to Buy, is, in my experience in Southwark, the fracturing of some of those communities, as some of those first generation right to buyers moved on and their properties became buy to let housing. So the point I'm making there is that homeownership has not always demonstrated itself as the only way to achieve housing security in settled and safe communities.

And I do think that this Labour government's Renters Rights Act makes a very positive contribution towards the housing security I've been talking about. With the overdue end of no fault evictions. I well remember a conversation with a facilities management worker at Southwark about ten years ago, when he told me that the following week his daughter would be five, and he said that for each of her five years she had lived in a different home. They'd had the misfortune that every year their landlord would serve an eviction notice and reset the property at a much higher rent, which he simply couldn't afford.

He asked me what I could do to help. Well, sadly, my Lords, it took the Renters Rights Act to provide that help. A decade later. Now I'm not arguing and wouldn't arguing that home ownership isn't a valuable source of housing security. And with that in mind, I do think that it is perverse that we live in a world where someone renting and renting for many years, paying significantly more in rent than they would be on a mortgage for the same property, and having demonstrated that ability and reliability to pay over a long period, remain shut out of the home ownership market because their income, even if multiplied by five, doesn't equate to the purchase price of the home they're living in.

Why is that the case? Well, in trying to cure the failures of the subprime market from 2000 and 809, we allowed to be created a banking and lending system, which too often seems to work against the interests of the public, and which I still think bears a great deal of responsibility for public disaffection with the system or the establishment. My Lords, the banks were seen to get away with their failures, and the people who were punished were the great British public, who found it harder to get a loan and impossible to get a mortgage.

So I would ask my noble friend the Minister, what more can be done to really radically rethink the approach with which the banks and lenders take to those who could meet a mortgage, rather than a rental liability? But, my Lords, essentially, whether we see an increase or decrease in home ownership in coming years, and I accept that the factors which influence that are many and varied, we do need to ensure that housing security is the gold standard for

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everyone, and not just those fortunate enough to be able to buy. My Lords.

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My Lords. I too would like to thank my noble friend Baroness Eaton for noble friend Baroness Eaton for having introduced this debate so ably today. I declare my interest as a director of a company that has carried out a very small development and as a homeowner. Home, as we've heard, is more than Home, as we've heard, is more than an investment or a place. It's one sanctuary, and a home is more than
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Baroness Hodgson of Abinger Portrait Baroness Hodgson of Abinger (Conservative)
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bricks and mortar. It encompasses general surroundings, community and neighbourhood. Where we live has an neighbourhood. Where we live has an effect on our mental wellbeing and health. And as the old adage goes, an Englishman's home is his castle. As we've heard, home ownership has been a long held aspiration in this been a long held aspiration in this country, more so than our colleagues on the continent who have a tendency towards a rental have a tendency towards a rental culture. Much of the recent home ownership debate has centred on the issue of numbers of houses, but it is much more than this.

Most of us value also a home by what it looks like, where it is, and other factors. You so often hear how house building has fallen behind in recent years, so I was really interested to read in the briefing notes that we were given by the House. That house building has actually kept up with the population until 2021. Whilst current ownership data suggests home ownership here is at a fairly constant level, it has never been easy for first time buyers to get on the ladder and this has got progressively more difficult.

House prices are rising and the average ratio of prices to earnings at 7.63 is higher than the five times average affordability benchmark used by the ONS. I think we all agree that we need to do more to help younger people get onto the housing ladder, and that that means that we do need to build more houses. However, it is just applying a sticking plaster of mass building is not the answer. We should also address the causes. Some is due to the huge influx of people into this country, and also that for many years we have allowed people from all over the world to buy properties in central London, pushing prices beyond affordability for most British people, thus donating our capital city of its settled population.

And I would like to ask the noble Lord, the Minister, whether they have figures on this and how the government is going to enable more British people to buy in their own capital city. And the effect of this is rippling out around the surrounding counties. My Lords, we are the custodians of this country, with its beautiful old towns and villages and outstandingly lovely countryside. Yes, we do need more housing, but it is important that we do not spoil what we have got and that new housing is sensitively done in the small rural towns and villages where small numbers of extra houses are needed.

We need beautiful housing built in a way that harmonises with the existing community. We need to encourage and facilitate local builders who will build a few houses and are invested in their neighbourhoods, and we should make it easier for people to build just one house or two houses. The report, Building Homes Better Buy the Housing Forum, recently highlighted that government policy has prioritised growth in housing delivery over quality, but undocumented poor quality workmanship with falling customer satisfaction levels. Building houses should be a long.

Housing should be a long term asset and we should be building beautiful. Not adding to what Roger Scruton called the uglification of the UK, driven by utilitarian modern architecture, corporate greed and a culture rejection of traditional beauty. We are seeing this too often in the developments going up around the country, often big, unsightly developments inappropriately tacked onto spoiling small villages. Can I ask the noble Lord, the Minister, have we yet implemented the statutory requirements in the Levelling Up and Regeneration Act 2023 for Lpas to prepare design codes? And if not, why not? In discussions about the Planning and Infrastructure Bill last year, it was identified that there were 1.2 million brownfield sites, around half a million planning permissions given and over 300 000 empty neglected houses that could be refurbished.

We need to end the practice of development companies land banking planning permissions until prices rise. It is perfectly possible to meet the 1.5 million House government target without encroaching on greenfield sites. The planning Bill also introduced grey, built on disused petrol stations and abandoned car parks as sites that could be released in the green belt for development. However, new research from the Campaign to Protect Rural England reveals that the government's greenbelt policy is paving the way for large scale development on England's unspoilt rural landscape.

Please can I ask the noble Lord, the Minister, what the government is going to do to stop the misuse of this policy and erosion of genuine greenbelt? Before I close, I would like to raise an issue that I have spoken about before under human Rights law. We are entitled to live in our in our. Without our property being interfered with. The Party Wall Act cuts across this. This can result in damage to adjoining houses and. In some rare cases, houses have collapsed.

I declare that I have been a recipient of three party wall notices in the last four years. Lord Dubs tried to put forward a private member's bill in 2016 to address aspects of this. I have put down some written parliamentary questions about this, and the government said it would be engaging with stakeholders in the public to gather insights and explore ways to improve its implementation. During last year's planning bill, I tabled some amendments and I had understood that the Minister said she would meet further to discuss this, so I hope she will not mind me asking if we can meet before it.

Not for too long. To conclude, my Lords, of course, we need to help young people to be able to buy their own homes, but in doing so, we must ensure that this isn't at the detriment of present homeowners, existing communities, and that we continue to preserve our countryside.
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Lord Frost Portrait Lord Frost (Non-affiliated)
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My Lords, I congratulate the noble Baroness Baroness Eaton on securing this debate, and she set securing this debate, and she set out very eloquently the benefits of home ownership. And I don't need to home ownership. And I don't need to dwell on them again. We know what they are, and I'm sure most of us agree with them. The stability it agree with them. The stability it gives the stake in society and in your local area that it provides. And we all saw the socially transformative effects of the council house sales programme in the 1980s.

Now we can all agree on that. The problem is how do you deliver home ownership in modern conditions and we need to achieve it. We need an effectively functioning housing market that is capable of providing housing where people want to live at affordable prices. And at the moment, we simply do not have this in this country, and we haven't had it for quite a long time. And indeed, much of government policy over the last I mean, it depends where you start.

The last 20, 40, even 70 years has been going in the opposite direction. We've had the obviously, this all began with the Town and Country Planning Act. The greenbelt policy that first came in in the 50s and has expanded since then. But I think a lot of the real damage was done in the 90s and afterwards, with the huge rise in stamp duty that's persisted, the constant green and environmental restrictions on what can be built and how it can be built, and where you can build and the style in which you can build, and so on and so forth.

To mitigate all of this, successive governments have engaged in price manipulation, the affordable housing, so-called affordable housing scheme, subsidised housing, really. And of course, we've had the latest wave of restrictions on tall buildings, particularly in London, that has brought house building almost to to zero. We've had the war on renters across successive governments. There's also destroyed rental stock, and this has taken us to a position, I think, where we we have a planning process where there are simply too many blockers in the process to get the job done.

We have the absurd situation. I say it's absurd anyway, that the the greenbelt now is actually bigger than the developed area of the country. It's quite an unusual belt that's bigger than the area that it's trying to constrain, and it's certainly constraining the growth of our cities and towns pretty effectively. And prices are, of course, super high as a result of of all of this. Now, I think it's worth pausing a moment just to contrast the situation in this country with other European countries, which are, of course, our nearest comparators.

Now, it's true that the UK is a fairly small and dense country, and England is even more so. However, there are European comparators, and the story isn't particularly flattering. Belgium, as a country I know well, still has a lot of natural beauty of all kinds, is slightly less dense in population than England is only slightly. And of course Netherlands is quite a lot more dense, very significantly more dense. Now here in England we have 430 dwellings for every 1000 population in.

In the Netherlands there are 490. In Belgium there are 500. Our dwellings are also the smallest in Europe, by the way. Now, if we wanted to give English people the same housing opportunities as those in Belgium and the Netherlands, and I think that's a reasonable kind of thing to aim at. We would have to build 2.8 million houses just to catch up with the Dutch, 3.6 million to catch up with the Belgians, and 4.5 million if we set our goal as the European average, that is simply to catch up, not to deal with any of the social changes or trends that are currently driving the problem harder.

So, my Lords, we have to face this reality. And I do think there's a lot of the current debate. I don't mean today, but generally on this question is about trying to avoid this reality. It's about belief that we can have more houses without changing any of these rules. Somehow the magical sort of Tardis like powers of the brownfield in cities that are supposedly can accommodate everything we need. The the. We have a policy that appears to be designed to maintain the economic geography of the 50s and 60s, and never allow villages to merge, never allow towns to to grow.

We have the belief that people can be made to live where the houses are rather than the other way around. And we have the endless circular debate about social housing, where we've got the biggest, one of the biggest sectors in Europe, of course, social housing, the council housing, the affordable housing. All of this is avoiding the problem. Now. I think the government deserve a bit of credit, actually, for the Planning Act and for the latest. Plan, but I don't think the solution is driving the current system to work harder and still less.

Is it to allocate housing to favoured categories of workers, as some have suggested. And it's not about telling people they need to right size and they're somehow occupying the wrong kind of house. It's about freeing up the system. It's about trying to generate a real housing market with incentives to build and to invest and to grow. And we're simply not achieving this. And my Lords, I do fear we're heading for a social and economic crisis if we don't look this hard in the face, realise we've got to do some things that many of us don't particularly like, but we have to give opportunities to our young people.

We have to give them a chance to settle. We have to give them a chance to have houses as we did. And my Lords, we need to get serious about this, I think.

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My Lords, I thank my noble. Friend Baroness Eaton for giving

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Friend Baroness Eaton for giving us the opportunity for debating the issue of home ownership and the government's record on housing government's record on housing delivery, and I wish to focus on a few areas. One is about family housing, the others about the housing, the others about the current housing crisis and supply and demand, and a few practical and demand, and a few practical solutions to the current malaise. I won't rehearse the comments I made
16:23
Lord Jackson of Peterborough Portrait Lord Jackson of Peterborough (Conservative)
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in the Second Reading of the Social Housing Bill on the 1st of June. Suffice to say that there's little evidence that the government understands the need to support more home ownership for families, more home ownership for families, and have failed to address the economic and social impact of falling birth rates via regulatory falling birth rates via regulatory policy or legislative changes. What we did see in that bill is a spiteful ideological assault on right to buy, which will be all but scrapped by raising the required tenancy length eligibility and reducing the discount to 5%, and that will lock out 600 000 potential tenant householders out of the scheme.

I believe a future government will and should reverse this pernicious and incoherent policy. There's no doubt that the government's housing record is lamentable. Nationally, house building starts are at a 12 year low. There were 261,000 housing starts in the last 18 months, compared to the implied target in the Labour Party manifesto of 525 000. Bloomberg predicts a shortfall of between 90 and 100,000 starts each year between 2026 and 2029. The situation under Mayor Khan in London is even worse.

Indeed, it's it's dire. In quarter one, 2026, just 6325 homes were started. Just 7% of the mayor's target. 22,000 homes are unsold or under construction. My Lords, there's no way the government's annual target, which is broadly supported on both sides, will be achieved to meet their 1.5 million homes. Aspiration. Are we surprised, given the government's mishandling of the economy? Highest energy costs in Europe, Labour shortages, increased inflationary pressures on materials, higher national insurance contributions, higher minimum wage, rising taxes, increased borrowing and mortgage rates have all contributed and exacerbated what Savills have described as, quote, a particularly gloomy output outlook for the housing sector.

On the supply side, my Lords, the government's planning reforms are, to be fair, a small step forward in the right direction. But no more than that, I welcome some aspects of the revised MP faster infrastructure consents brought into force in August. The. The MP changes and the redesignation of low quality green belt and a focus on brownfield and transit land sites. But it simply enough to overcome the inherent viability. Squeeze on new building sites, planning hold ups, long decision times, biodiversity rules, nutrient and water neutrality conditions, infrastructure levies, tighter building standards and the forthcoming building safety levy due later this year means that land which is viable and buildable on paper, cannot and will not be developed profitably, and the government should address that.

My Lords. In addition, we have one of the highest levels in terms of affordable housing targets in the Western world, much higher than most of the developed world. And that means sites are land banked and lay idle and undeveloped. We've got to look at this 40 and 50% figure again, because it is not delivering housing that we need. This government has also failed to look at demand. Only 27% of tenants in social rented accommodation are in work, and so the government intends to borrow £39 billion for its social and Affordable homes programme to build more properties to warehouse welfare, a direct capital transfer from business, working people and pension funds to the Workless who will continue to receive benefits.

This is economically insane and unsustainable. Immigration and welfare is integral to better housing policy. We must look again at prioritising working families and young people, and it is a badge of shame that in 2021, over 100 000 people in social lettings in London were held by foreign born tenants. It's indefensible and offends against fairness, efficient resource allocation, social equity and is a breach of the social contract, and the figure is 12% across the whole of the UK.

My Lords, in conclusion, a future conservative government indeed, perhaps even a reformed government, if there is one, should cut taxes for SME builders, which suffered so grievously in the downturn in 2008 2009. We must reduce regulations, establish a sovereign wealth fund to build new houses, give priority to families and married couples and for instance, veterans. Young working people restore right to buy eligibility, post anti and relaunch the coalition government's very successful new homes bonus policy.

The present government's anaemic policy response will do nothing to tackle this grievous housing crisis and build enough homes. Much more

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radical change is needed. Yeah. Yeah. My Lords, I'll start by

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My Lords, I'll start by reminding you Lordships, of my declaration of interest as a Vice President of London Councils and a President of London Councils and a part owner of a rental property in Bexley, I want to congratulate my Bexley, I want to congratulate my noble friend Lady Eaton in securing this debate. It's a really this debate. It's a really important subject, and I know she feels as passionately about it as I
16:29
Baroness O'Neill of Bexley Portrait Baroness O'Neill of Bexley (Conservative)
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do. My Lords, we recently had some conversations about home ownership as part of the Social housing Bill as part of the Social housing Bill debate, but hopefully this debate allows expansion of that discussion, especially around the value of especially around the value of right to buy and the potential of the shared ownership model. the shared ownership model. Contrary to some of the comments from government, we should recognise that the right to buy recognise that the right to buy council properties gave opportunity to many who would not otherwise have had that chance.

Many were on low incomes and it afforded them the aspiration to be a home owner. Ownership didn't go without benefits to their communities, and contrary to what's often suggested, the majority of the tenants who bought continued to live in those properties and raise their families. If they hadn't bought under the scheme, they were likely to have remained as council tenants. It was noticeable that one of the first things many of them did was to install a new front door.

I'm sure most of us saw that when we were out canvassing. I don't know why that was so important, but it seemed to be the first action that most former tenants did when they transferred to be a home owner. And as Baroness, my noble friend Baroness Seccombe has already said, that sense of pride didn't. From those who bought through the right to buy didn't stop there. They got more involved in their surroundings and their community, and that benefited others as well as what was happening within their property.

There were other benefits as well. Research says that the children of people who bought under Right to Buy did better in schools. And I'm sure my noble friend Lord Jameson, will remind the House that receipts could be used to build additional social housing. So ownership through Right to Buy benefited many people. And it's such a shame that the government are looking to water it down now to shared ownership. As we discussed during the Social Housing Bill, shared ownership can also allow some to get a foot on the property ladder who would not do so otherwise.

My Lords, this can often include key workers and the key workers who we all depend on to run our vital services on a daily basis. However, as we heard during the social housing debate, there can be issues with the current offer around service charges, legal costs and sales. I thank the government for agreeing to review, and I hope that any change brought forward through that review will make the offer more attractive to potential purchasers, both right to buy and shared ownership can help people who want to buy their own home.

But for the vast majority of those looking to buy, there are many other barriers, some of which have already been identified. The first one, of course, is affordability. The average cost of buying a property now is out of the reach of many, and the multiple salary, size of deposit or indeed length of mortgage can be eye watering. Many can't access the bank of mum and dad, and the cost of private rental often means they're unable to save the required deposit.

Often, the cost of private rental is higher than what a mortgage payment might be. The previous governments, the Conservative government's Help to Buy scheme and also savings schemes, helped many first time buyers, and there's now a gap in that support. The noble Lady. The Minister did say conversations were being held with banks and building societies to come up with some more attractive products, and maybe she can share some of that information with us this afternoon. Stamp duty is another barrier.

One reason why our party is promising to look at that and take action. It's not only expensive, but in addition, it can stop people from accessing the housing market. They might not buy that starter flat with a view to moving into a bigger home. Or indeed, it might discourage those who might be considering downsizing and therefore freeing up valuable family accommodation. Of course, another barrier to home ownership is availability of the right type of properties, whether that be starter homes, flats, apartments for those commuting, student accommodation, family accommodation, supported living or properties for those who wish to downsize.

Whilst it's important to build, it's also vital to consider the type of homes being built to ensure need is met, and it's also worth considering the knock on impact to other public sector services. If that doesn't happen, my Lords, nobody is suggesting that home ownership is right for everyone, or indeed that the only type of accommodation available. But we should definitely recognise the benefits it can bring.
16:35
Baroness Paul of Shepherd's Bush Portrait Baroness Paul of Shepherd's Bush (Labour)
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My Lords, I am grateful for the debate. >> Thank Baroness Eaton to have chosen to have brought it before the House, home ownership matters and the decline in the number of and the decline in the number of people who are able to buy a home should be concerned to all of us. And on that point, I suspect that there's more agreement than disagreement. I want to begin on a personal matter and a personal perspective. I grew up in a high rise council flat.

My grandparents lived in a council house. My uncles and aunts lived in council houses and in the community where I grew up, that was entirely normal. Owning your own home felt like an unattainable dream. Then, in the early 1990s, after a lifetime of hard work, and I really do mean hard work and multiple jobs and lots of saving, my mum was able to buy our family home through the Right to Buy scheme, and whatever view the noble Lords take of this policy, and I'm sure there are differing views across this House.

It was transformative for working people. The shame, of course, was that the some of the receipts were not able to be reinvested into other homes, and I just want to put on record that it did not turn all of us into Tory voters, as was an ambition of the programme, but it was transformative and it gave us our own front door, our security and the feeling that we were finally set up for life. And it also, and I don't think we understood this at the time, turned out to be a defining moment for the generations that followed, because home ownership, it turns out, has already been discussed, is not simply about having a property, it's about a way of passing security and opportunity from one generation to the next.

But it also showed that it's possible to work hard. And because of your own efforts and a helping hand from the state, change the trajectory of your life. And that is why some recent research from Cambridge University is so sobering and spoke so loudly to me because it found that and this is hardening and lengthening and has taken place over the last decades, that housing, wealth and home ownership are increasingly linked to parental home ownership and parental education, even after taking account of an individual's own work and achievements.

So however hard you work or save or educate yourself, the thing that is most likely to determine if you will go on to your own home is if your mum or dad did. And this cannot be right. And this isn't about the bank of mum and dad. It's an evidence that the housing ladder is increasingly becoming an inherited ladder. And we know the importance of firsts in working class families. The first to travel abroad, to go to university, to own your own home.

These milestones change horizons and expectations for those that follow. And the danger is that if fewer people become first generation homeowners, then these advantages are increasingly concentrated within the same families over time, and that should trouble us. Home ownership should not be hereditary, as noble Lords know, on this side of this House, we are not general enthusiasts for hereditary principles. So I am delighted that Labour, after many, many years of policy neglect, has decided that it needs to tackle the issue of supply and build more homes.

And that's why Labour's ambitious housing housing programme matters so much. Delivering 1.5 million homes is significant, but it's a difficult target which can only be achieved through pragmatic, partnership based approach to removing barriers. The government has already shown a willingness to confront some of the difficult decisions and interests, vested interests that previous administrations have too often avoided. The greenbelt reforms, revised planning guidance and measures to bring forward a land around transport hubs for new developments that will help accelerate delivery.

We know that progress will be hard and incremental and will probably involve setbacks, but I'm proud of our ambition and our purpose and our desire to do so the most. And to do this because it's the most difficult thing. Alongside supply, however, there are other practical routes into ownership that matter to housing. Associations at their best are not simply landlords through shared ownership, which has already been mentioned in other affordable ownership projects. They help thousands of families take their first steps onto the housing ladder.

Organisations such as Clarion demonstrate the important role housing associations can play in supporting aspiration and widening access to ownership. They can be transformative, but they need a review to make sure that they are opening that access in the way that was intended, that these are schemes that can that to be proud of are not a burden to those who take them up. Housing associations have highlighted many challenges with the schemes, including thresholds to participation, which have not kept pace with the challenges to rents and wages, keeping out the people who they were designed to help.

In addition, there needs to be pressure applied and incentives developed to encourage innovation amongst more mortgage lenders, helping them develop new products and new ways of assessing risks. That reflects the realities of how we live. And I want to call out some of the great new products that and some of the companies that are doing just that nationwide, Nationwide's Helping Hand Mortgage and Skipton Building Society Track Record mortgage, which says if you have a track record of paying your rent on time, then you are likely to pay your mortgage as well.

And so on the basis of that, they will lend you money. This is great and is rooted in common sense. These are practical solutions which help creditworthy households overcome barriers to ownership and should be applauded. The opposition have bought this debate because they believe home ownership matters, and I agree with them. I think we should also agree that hard work should be the gateway to improvement, and that's not always the case right now. These things need to change, but that won't happen simply because we talk about it.

It means planning reform. It means supporting development in places where too often it has been resisted. It means saying yes as well as no. It means welcoming developments and the people who live in them. So while I welcome this debate, I ask the noble Lords opposite if they will be gone, go beyond diagnosis and commentary and help support the remedies as well. The test is not whether whether we can agree that home ownership matters. The test is whether we will make the difficult decisions to make it happen.

And that's the

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challenge that this House faces, and I hope that we will find common cause in it. Yes.

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Yes. My Lords, it's common ground that we need more homes, but this that we need more homes, but this government is going entirely the wrong way about it. We are on track wrong way about it. We are on track to complete fewer new homes in this Parliament than the last, a period Parliament than the last, a period which was disrupted by Covid and the strategic supply shocks unleashed by European war. It's not
16:42
Lord Fuller Portrait Lord Fuller (Conservative)
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hard to understand why we're failing. The failure to the mark it masks the failure to grow in our masks the failure to grow in our cities and impossible, unachievable new targets have been set. Therefore, in the countryside, Therefore, in the countryside, they've undermined the equity and collateral in the largest sites with the greatest entry costs. So with the greatest entry costs. So any old orchard for handful of homes has economic preference over the strategic allocations which the strategic allocations which have been left to moulder.

Yes, the five year land supply is part of the problem, not the solution. New levies, fees and charges amount to between 30 and £40,000 for a new dwelling house, and I now learn that the regulatory costs that a high rise flat amount to about 7000, a real fiscal disincentive borne disproportionately by the young and the first time buyer. Making a start. There are three elements to sustainability, but Natural England has been granted a veto on the creation of new homes in the largest parts of the country, with the greatest housing potential.

As if not building new homes is going to clean up our rivers. All those ecology and archaeological reports, which could only be done at certain times of the year. A delay cost and increased risk and failure to dot an I or cross a T means growth is postponed for a year by quangos acting as judge and jury in their own court, using the consent process as a make work scheme for university chums and colleagues, whilst bricklayers Tilers roofers, ground workers are put out of work.

The Labour Party, which was established to represent the journeymen, has nothing to say to these people and only last week the Home Builders Federation told me the case of a small piece of ground suitable for nine homes that cost about £40,000 and would had was burdened with proposed biodiversity charges of over 200. And that was before 200,000. And that was before the madness of the nutrient neutrality levies. No wonder the development developer walked away. No homes built there and no more mayoral taxes.

Building safety levies in London, £90 a square metre in Fulham are chilling our capital's housing growth. The fiscal incontinence of this government, unable to get spending under control, has led to the highest interest rates for two decades, which has killed off nearly all the small builders and even the largest operators. Public companies are now struggling with the number of active sites, down 20% in London, in in London since this government started. And only this morning the times reported that worse is to come, 140 out of 166 developers operating in London are working out projects due to complete next year, and without a pipeline of work from 2028 onwards.

They, the times says, will effectively exit London. Of course, the government tries to blame councils for this sorry situation, but to find the culprit they just need to look in the mirror. This is their calamity. But let's look at the the situation for families that have actually aspired to and own a stake in their own home, a Prime Minister that tells them that land and property isn't taxed enough. Really, the politics of envy and the mansion tax, which falls on the old widow who, eking out a pension whilst living in a home bought generations ago.

Second home surcharges that are crushing the tourist economy of coastal communities, and a resistance to addressing the injustice, imbalance of power and sharp practice between shared ownership owners and the rsls, where the residents cop all the costs and the landlord gets off scot free. Crazy duty stamp duty rates that damage labour market liquidity, trap people in their homes and discourage inward investment in our economy. The government is, of course, trying, but their medicine is making the patient worse and vibes alone will not build these homes.

The new town programme is dead on arrival, not even going so far as to long list schemes with fast rail connections. Grade separated junctions, all the land assembled in the adopted plan and with the unanimous support of the local planning authority, it's just incompetent. And the emergency relaxations on high rises in London will expire before they can do any good. So that's another three years wasted. And on the 1st of January, the government plans to implement even more taxes on steel and cement.

How many more burdens can the construction industry take? We have to call time on these delusions because build costs have leapt whilst house prices have fallen. Can't you see the jeopardy here? Why would anybody want to catch a falling knife like this? My Lords, the property market is being taxed to death. Whether building, buying, selling, owning, renting or landlording, this government is crushing aspiration while missing its own numeric housing manifesto target by miles. And it matters because workers can't move about growing families can't get on the old, can't downsize and the young can't upsize.

And worst of all, the journeymen are being put out of work. The economist Arthur Laffer, with whom I had dinner last night, says you can't tax yourself to success, but Britain is taxing itself to death, and no more so than in building, construction and housebuilding with a dogmatic whole economy experiment on housing that

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is killing ownership and aspiration. It's just not working. My Lord.

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My Lord. Sir, I am delighted to speak in this debate, for which I am most this debate, for which I am most thankful to my noble friend, Lady Eaton. It is on these benches who have been and remain the party of home ownership. Proudly so. And like Baroness Paul, I declare that like Baroness Paul, I declare that I was born in a South Manchester council estate, which my parents had the good sense to buy. In 1972, under the conservative government
16:48
Lord Evans of Rainow Portrait Lord Evans of Rainow (Conservative)
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of Ted Heath. And unlike Baroness Paul, obviously I became a conservative. There are. We are. We conservative. There are. We are. We are committed to supporting first home buyers specifically to help homeownership become a reality, especially for younger generations. Under the previous government, Under the previous government, 800,000 people bought their first home through schemes such as Help to Buy and Stamp Duty Relief. The to Buy and Stamp Duty Relief. The lifetime Isa was also introduced to help young people save towards their first home.

We understand the government is seeking to introduce a new Isa scheme and any assurances the noble Baroness the Minister can give to existing lifetime Isa schemes users and clarify how they will be affected, if at all, will be greatly appreciated. Savers should not be punished for doing the right thing. That's for stamp duty relief. Labour let the threshold expire. My party has pledged to scrap stamp duty altogether on all primary residences. If implemented, the average buyer could save over £4,500.

The policy is there for the government's taking. But alas, millions of prospective buyers face exorbitant stamp duty bills showing the housing market disincentivising those who want to downsize and keeping those larger family homes and home ownership out of reach. If you don't believe me, listen to the Housing Select Committee reported in June this year. Stamp Duty Land Tax reduces the affordability of home ownership, so slows the property market and ultimately damages the economy. While it is a vulnerable, valuable source of revenue for public finances, Stamp Duty Land Tax must not be maintained in its current form and needs to be reformed.

Indeed, the tax did generate 15.2 billion in the most recent financial year. But this is a question of priorities. Does the government care more about increasing levels of home ownership, or would it rather increase welfare budgets? We have done the work for them. This is not an unfunded announcement. We have identified 47 billion of savings, around half of which could come from the ballooning welfare budget. Would the government rather see the increase, or would they rather see more people get their keys to their first home? 76% of renters.



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Lord, I beg, the House is the chamber. Apologies for interrupting, but the noble Lord has two minutes

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for the gap. OK, I apologise, and so I ask the noble Baroness, the Minister, very simply, whether the government will consider scrapping the Stamp Duty Land Tax for primary residences. I thank my noble friend residences. I thank my noble friend Lady Eaton, for giving the opportunity to voice this cause and look forward to the response from

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look forward to the response from the noble Baroness, the Minister. My Lords, I would like to begin by thanking Lord Evans for speaking in the gap because it actually saved me from pouncing immediately on Lord Fuller, whose comments were so provocative and I should know by now, shouldn't I? But actually I would like to begin by thanking the noble Baroness, Lady Eaton, for securing this very timely debate and actually introduced it with her customary experience and insight.

I did agree with much of what you said, although not obviously not
16:51
Baroness Thornhill Portrait Baroness Thornhill (Liberal Democrat)
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all. Now, my Lords, we've heard a thoughtful and wide ranging discussion from across the House discussion from across the House and indeed, coming at this point in the debate, I knew that noble Lords would well have covered all the key would well have covered all the key aspects, cover them well, and asked all the main questions. So I'm going to take a slightly different tack. And I'd like to say I particularly enjoyed the thoughtful particularly enjoyed the thoughtful contributions from Lord John of Southwark, Lord Gascoigne, Lord Gascoigne and interestingly, Lord Frost, I felt I had something slightly different to say, and perhaps what I'm going to say might chime a little bit with them.

We may have completely different perspectives, and that was all too evident. But there is a striking degree of agreement about the scale of the challenges facing aspiring homeowners today. We have heard contributions on housing supply, on planning, good or bad, on infrastructure, a real issue when we're trying to get people to agree to housing, mortgage access, rental costs and the wider functioning of the housing market, all noble Lords have posed their detailed questions to the Minister and I do not intend to repeat them.

Instead, I want to focus on two issues that have only slightly been touched upon, and that is actual affordability and intergenerational fairness. As a former mayor of Watford, I met many people whose experiences illustrated why this issue matters. They were not looking for special treatment. They simply wanted the opportunity that previous generations often took for granted. The chance to buy a home, to put down roots and build a future. Now, several noble Lords have spoken about the need to build more homes, and it's difficult to avoid the conclusion that, as a country, we have not built enough homes for many years and certainly not enough social homes.

And I'd certainly like to publicly disagree with Lord Jackson from his use of the phrase warehouse warehousing welfare. My question would be where should the most vulnerable people in society live? But yet, as today's debate has demonstrated, supply alone doesn't explain very much or everything. Of course, more homes need to be built. I doubt whether anyone in this House would seriously disagree with that proposition, though some housing experts do. But perhaps we should be honest about the limitations of what building can actually do.

Do we really believe that we can build our way to affordability alone? If so, over what timescale? Five years, ten years, 20 years? And even if ambitious housing targets are reached and I really get fed up of the sort of our targets are higher than yours kind of willy waving that goes on where where targets are concerned, targets don't build houses, builders do. So even if they're achieved. Are we confident, as somebody did say, that homes will be built in the places where the demand is greatest, where the jobs are concentrated, and actually where people want to live and work? These are not arguments against building more homes.

They are arguments against believing that a complex problem has a simple answer. Just keep building. Now, if affordability is the objective and we on these benches believe it absolutely should be, should we not be honest enough to say that building more homes is a means to an end, and not an end in itself? Affordability lies at the heart of almost every aspect of housing policy. It determines whether young people can save for a deposit, whether families can afford mortgage repayments and whether can people move as their circumstances change, and ultimately whether home ownership remains a realistic aspiration.

Now, one of the difficulties in housing policies is that political debate, as I evidence today, often searches for a single cause and a single solution, we are told that housing housing would become more affordable if the planning rules were changed, if there weren't all these extra taxes that we had to pay, or if only interest rates were lower, or if one element of the market behaved differently, the reality is far more complicated than this. And I think it's important to say that where we are now has been decades in the making, and not just in the recent past few years.

Housing affordability is shaped by supply. Yes. Planning rules definitely. Land values, an interesting one, but also wages and interest rates, demographics, construction costs and wider economic condition. It's also affected by how effectively people can move through the housing system in different stages of life, and by the availability of supported and specialist housing. Now, no one mentioned that today, so I immediately want to look over and say, Lord Best, where are you? As that is something he always reminds us of.

During my years in local government, I would actually encounter two very different conversations about housing. One resident would proudly tell me how much the value of their home had increased since they bought it. But another, a renter, would tell me they had all but given up hope of ever buying a home themselves. And sometimes those conversations were on the very same street. I think this captures the dilemma at the heart of housing policy. Now, those seeking to enter the market understandably want greater affordability.

And as we've heard a lot today, those who already own their own homes often see rising house prices as a source of security, and for many, an important component of their long term financial planning. In truth, we celebrate affordability when we are trying to get on the ladder and rising house prices once we are on it. And that's why housing remains one of the most politically difficult areas of housing policy. Almost everyone agrees there is a problem. The disagreement begins when we discuss who should bear the cost of solving it, because every serious solution creates winners and losers.

And I'm sure the noble Lady, the Minister, is very aware of that. More development can place pressure on existing communities and infrastructure. Lower house price inflation may be welcomed by aspiring homeowners, but not necessarily by those whose wealth is already tied up in their homes. Reforms to planning, taxation, land use and incentive all involve trade offs. The challenge is not that the choices are unknown. The challenge is whether governments are prepared to make them an equally important theme arising from debate.

Today's debate is intergenerational fairness, mentioned very ably by Baroness Paul and I agreed with her challenges. The reality for many young people is that they are attempting to enter a housing market that is actually fundamentally different from the one that that we entered, entered by their parents and grandparents. Deposits do take longer to save for high rents, consume the very income that might otherwise have been used to build a deposit. And mortgage affordability remains challenging. Increasingly, access to home ownership appears not to depend simply on work and saving, but upon whether someone has access to support from parents, grandparents or inheritance.

And that is a stark reality that I believe we on these benches and the government are actually trying to address. This isn't a question of whether one generation has worked harder than another. It's a question of whether opportunities available to successive generations are broadly comparable. Increasingly, many people doubt that they are, and this should concern us all. So I hope the Minister will address those two issues in particular. First, as the noble Lady, accept that affordability pressures are increasingly creating a housing market in which access to home ownership depends more heavily on parental wealth and inheritance.

And if so, what does the government see as the answer to that challenge? And secondly, if affordability is the objective, how should success be measured? Is it by the number of homes built, or whether a young person on an average income in ten years time finds it easier to buy a home than they do today, because it will take that long? My Lords, we all know home ownership should remain an aspiration achievable through work, savings and endeavour, and not increasingly a consequence of inheritance.

We know many of the drivers behind the affordability challenge, and we know many of the

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potential solutions. The difficulty is not that the problem is misunderstood. The difficulty is that the solutions involve trade offs, winners and involve trade offs, winners and losers, competing interests, some very powerful and difficult political choices with electoral consequences at the ballot. So I guess I'll leave the Minister with guess I'll leave the Minister with this final thought question. Does she believe the government accept that the real obstacle is no longer understanding the problem of housing affordability, but having the potential courage to confront the trade offs required to solve it and confront the consequences of actually what we already know?
17:02
Lord Jamieson Portrait Lord Jamieson (Conservative)
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My Lords, can I first declare my interest as I am still a councillor in Central Bedfordshire? Also, can in Central Bedfordshire? Also, can I thank my noble friend Baroness Eaton for bringing forward what I think is an essential debate on housing and home ownership, and I think it has been quite an enlightening debate across the House, where I think there's been House, where I think there's been quite a lot of agreement and I wouldn't say disagreement, but puzzlement, because I think, as the noble Baroness Thornton has just said, this is a I am I am so sorry.

I keep making that mistake. My apologies, but you did rightly say this is a very complex issue and it will require trade offs. And there isn't a simple solution. And actually, I don't think anyone knows what the actual outcome is that we're all desiring because there are so many different outcomes, whether it's housing affordability, being able to have security of tenure and so forth. However, I think we can identify the biggest problems. Housing is the single biggest cost facing most families.

It puts enormous pressure on household budgets. Too many people are living in overcrowded accommodation, paying too much rent or mortgage, and increasingly unable to live anywhere near where they work. Now, my noble friend Baroness Eaton gave some statistics about how people would like to own their own home. I won't repeat them, but there are some other good statistics from that survey. 65% of people believe it's harder to buy today or rent than it was for their parents, and 62% believe that housing is on the wrong track.

Now many noble Lords, including my noble friend Baroness Seccombe Baroness Paul of Shepherd's Bush Lord John of Southwark, raised the benefits of being able to own their own home and how it helped them in their lives or people related to them. Now we are unashamedly the party of home ownership, and we recognise that not everyone will want to buy and that's perfectly legitimate, but everybody should have the opportunity to do so. And those who rent should have access to affordable, secure alternatives.

Now, sadly, this situation has deteriorated since labour came into power. One year mortgage costs have risen from around 5% to 5.7%. Average rents are up 10% to £1,450 a month. And this isn't simply a housing crisis, it is a growth crisis. Building homes creates jobs, investment and economic activity, but the wider economic benefit is even greater if people can afford to live close to where they work. Businesses can recruit more easily, productivity improves, and our towns and cities become more vibrant.

And look at London as raised by Lord Jackson of Peterborough. Rents for a two bedroom flat in central London are above £2,000 a month. Someone needs to earn close to £100,000 a year if they are able to afford to live in the centre of our capital city. That's not realistic. Or they face a punishing daily commute or overcrowding. Is it any wonder that London is losing its appeal as a destination for graduates and skilled workers? Now we've repeated repeatedly debated housing in this House, and every time I speak on this subject since Labour's election, the opinion sorry, the position appears to worsen.

The government talks about building 1.5 million homes, but this. This is an ambition. It's not delivery. Delivery fell again last year by 3% to around 200,000 homes. By contrast, the last conservative government delivered its target of 1 million homes in four and a half years. And the pipeline is getting weaker, as has been mentioned by others. Only 1220 sites for private housing received planning permission in England in the first quarter of this year, down from the 2000 sites approved in 2022.

Now, when I first became a councillor in 2009, my priorities were about improving services, rebuilding the local leisure centre, reducing costs and fixing potholes. Now all of those things matter. But I quickly learned that in the long term, nothing is more important than planning, building great communities, good housing, infrastructure, local jobs, schools, leisure, public services and beautiful homes. As was mentioned by Baroness Hodgson of Abinger and also my noble friend Lord Gascoigne. Now we've all seen the transformative effects of successful regeneration, whether it's King's Cross, Brindleyplace in Birmingham or the Kidbrooke village in Greenwich.

Now the noble Baroness, the Minister, has on occasion suggested I'm a little too focussed on London and brownfield development. I make no apology. Yes, there will be need for development on greenfield land, but our greatest missed opportunity is the failure to build enough homes in our towns and cities where there is the greatest demand. MH LG's own figures show that two thirds of local authorities failing to meet the housing delivery test of 75% are essentially urban areas, and 21 of London's 33 boroughs are also failing this test.

The housing crisis is particularly acute in London, which since 2016, households in temporary accommodation have increased by 50% to 76,000. There are more statistics, but we don't have the time. At the same time, the cost of building has soared and it's not one regulation or one levy, it's the cumulative effect of layer upon layer of additional costs. Building levies, landfill tax, building safety requirements, section 106, Future Home standards and others. Now, that's not to say that any one of them is not valid in its own right, but the cumulative effect is clear.

The Home Builders Federation estimates that cost of building a low rise home has increased by £76,000 since 2020. Now, government's argues that that will be reflected in lower land prices and so forth, but that ignores the reality. And the problem is particularly acute on brownfield land, where remediation costs build costs are often higher and the land value has higher alternative use. If we genuinely want to regenerate our cities, gentle densification of urban areas is essential. We must make brownfield land viable.

We cannot load so many costs onto a development that the finished product costs more than people can afford. Now, Manchester is an example. The council and the mayor recognise the need for compromise, including on affordable housing targets and homes were built. My Lords, the principle is simple if you want more affordable homes, the cost of building them must be below the price people can afford to pay, whether it's to buy or to rent. The government needs to change direction. You can't tax your way to growth.

As my noble friend Lord Fuller said, the social housing Bill will undermine the right to buy one of the greatest engines of social mobility that we have seen, and where the the proceeds are reinvested will also drive more housing and more availability of social housing. The Rent is Right act risks yet more landlords leaving the sector, reducing supply and putting upward pressure on rents while undermining the build to rent centre sector. Now, by contrast, the Conservatives have proposed positive measures such as removing stamp duty on housing mentioned by my noble friends Baroness O'Neill of Bexley and Lord Evans of Rainow.

That will free up the market. It will reduce the cost of buying your home. It's not just a deposit. When you have to find another 20 grand for stamp duty, it gets even more difficult and it allows people to do what we used to do. You buy a very cheap, maybe one bedroom studio in somewhere, maybe not the most salubrious location, and move up the housing ladder. That is no longer possible with stamp duty. And finally, the government should stop distracting councils with top down local government reorganisation.

We warned that this would consume local authorities time and resources and that their proposals would not work. And I'm sad to say we have been proved right not once, but twice. Please don't prove us right a third time. Can I ask the Minister, will this government commit to reviewing the burdens placed on urban brownfield development? Will it look at what support it can give buyers, such as Help to Buy, and when will it publish the report it commissioned on Help to Buy? On Green Belt? Will it ensure that those commitments in the Nppf are held to by developers, and that they don't walk back from them on the basis of viability? And the Minister did commit to a shared ownership review, which is another great way to get on the housing ladder if it is done properly.

And we discussed in the social housing bill. When will the government move forward with that review and publish that review? Is there a timetable? My Lords, Britain does not need more targets. It needs delivery. It needs homes people can afford in places where they want to live and work. It needs a planning system that enables rather than obstructs development, and a government prepared to remove the burdens that make new homes unaffordable. If we get housing right, we do more than solving housing crisis.

We unlock growth, improve productivity, strengthen communities, and give the next generation something that too many are being denied. Today. The chance to call a home their own.
17:12
Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage, Parliamentary Under-Secretary (Housing, Communities and Local Government) (Labour)
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My Lords, I very much thank the noble Baroness lady for securing noble Baroness lady for securing this important debate. And can I also express my thanks for her enormous contribution to local government over the. Over many years, and I very much remember her tenure in the Local Government Association. So thank you for that. Can I also extend my gratitude to all noble Lords and speakers for very valuable contributions to this important discussion today? As ever, the House has brought a wealth of experience and perspective to an issue that matters deeply to people across this country.

The motion before us is broad and that is appropriate. Home ownership cannot be separated from wider questions around housing supply, affordability, economic opportunity or community is bound up with all of them. For generations, owning a home has represented something important. It has meant stability. It has meant independence. It has given families a stake in their community and confidence in their future. For many people, it remains one of the clearest expressions of aspiration and security. Baroness Eaton spoke powerfully about roots, belonging, aspiration and security, and that aspiration is still very much alive.

The challenge is that for too many people, the pathway to achieving it has become increasingly difficult. It would be wrong to pretend otherwise, and I'm sorry, but I'm not prepared to absolve the party opposite from the legacy of the worst housing crisis for generations. That was our legacy when we came into office. Many of the themes raised during this debate reflect pressures that have been building over decades. As Baroness Thornhill said, house prices have outpaced earnings. Saving for a deposit has become more difficult.

Housing supply has failed to keep pace with the need, and for many across the country, people who work hard and do the right thing nevertheless find themselves unable to take the next step towards home ownership and the consequences that too many people feel. Opportunities available to previous generations are becoming harder to reach. That matters not only for individual households, but, of course, for society as a whole. A strong housing market should allow people to move through different stages of life. It should allow young people to leave home and establish themselves.

It should allow renters to buy if they wish to do so. It should allow growing families to find homes that meet their needs. It should allow older people to move when that's the right choice for them. And that's why this government sees housing as both a social and an economic priority, because housing is about more than bricks and mortar. It affects productivity, labour, mobility, health, community cohesion and opportunity. It shapes people's confidence in the future. And nowhere is that more apparent than in the debate about home ownership.

And I think my my noble friend Baroness Paul really clearly articulated some of those issues. This government wants a country in which more people have a genuine choice about where and how they live. We want a housing market that works better than it has in recent years, and we want a fairer system in which opportunities are not determined solely by geography, by wealth or by family circumstances. That requires a long term approach, as Baroness Thornhill rightly diagnosed. There are no quick fixes to challenges that have developed over many years, nor is there a single policy lever capable of solving them.

Instead, progress depends on addressing the fundamentals. It does mean increasing the supply of homes, because we cannot tackle housing shortage without building more homes. Which is why we've taken urgent action through bold planning reforms, I think recognised by my noble friend Baroness Gill and the noble Lord Jackson, and a record £39 billion investment to kick off, kick start social and affordable house building at scale across the country. Of course, Lord Jackson is not the case that all social and affordable housing is occupied by those on benefits.

That's just not the case. Many occupiers of social and affordable housing are working people, and they do continue to to contribute to communities in the same way that my town where the majority of homes when I was growing up, there was, was council housing and they developed an entire community from that council housing. We've also launched sorry, we do need to increase that supply of homes. So we've also launched the £16 billion National Housing Bank to unlock private capital support delivery on large and complex sites and accelerate the construction of new homes across the country.

And together, these measures are designed to address the root cause of many of the challenges discussed today. The simple fact that for too long we haven't built enough homes. And that also means ensuring that aspiring homeowners have realistic routes into ownership, which is why we are supporting first time buyers through a range of measures, including shared ownership and reforms to mortgage lending that will help more people access suitable mortgage products. We have also consulted on a new first time buyer savings product to replace the lifetime Isa, and that means making the experience of buying and owning a home simpler and fairer.

And that's why on the 19th of June, we published a roadmap setting out actions this government is taking over the course of this Parliament to reform the home buying and selling process. And I'm very grateful to the cross-sector partners who have worked with me to deliver this at a time when families are feeling the squeeze. These changes will cut home buying times by around four weeks, save first time buyers an average of £650 and stop the nasty surprises in the house buying process that cost time, money and heartbreak.

Overall, first time buyers are set to save a total of more than £200 million a year from these reforms. And finally, it means recognising that housing policy must work for existing home owners as well as future ones, which is why we're taking action to improve the experience of home ownership itself. The King's Speech confirmed that the Common Cold and Leasehold Reform Bill will be introduced this session, delivering long overdue reforms for millions of leaseholders and helping to make Commonhold the default tenure for new flats.

At the same time, we remain committed to ensuring people are safe in their homes, accelerating the remediation of unsafe buildings and removing barriers that prevent vital works from being completed. So our aim is to create a system that offers more choice, more opportunity and greater security for people at every stage of life. Because whether you're taking your first step towards ownership, moving to meet the needs of a growing family, or considering a move later in life, everyone should have the confidence that the housing system is working for them.

Throughout today's debate, there's a common thread running through many contributions, regardless of political perspective. And that thread is a recognition that home ownership remains important. There may be different views on precisely how to expand access to it. There may be disagreements about individual policies or interventions, but I suspect there is broad agreement across this House that we should be striving for a society in which people have a realistic opportunity of buying a home is that if that's what they choose to do? In fact, I agree with much of what Lord Frost said in this respect.

But we cannot just keep doing what we did when it has not worked, and that is certainly this government's ambition. We want aspiring home owners to fill this ladder is once again within reach. We want existing home owners to have confidence that the system works fairly, and we want future generations to look ahead with optimism rather than resignation. And achieving that ambition will take time. The barriers facing many households today were not, as I said, created overnight. So we have to take sustained action with our partners across the sector.

I'm going to address some of the issues that were raised individually by noble Lords, but I'm sure I won't get to all of them. And I will respond in writing where I don't reach any particular issue. And I have very much appreciated that while we discuss these different issues, they were different approaches. So I'm going to set out our government view on these issues. I want to, first of all, talk about first time buyers. This was an issue mentioned by many noble Lords, including Baroness Eaton, Baroness Gill, Baroness Seccombe and Baroness Hodgson and other peers.

In addition to increasing the supply of homes for all tenures, the government supporting people into home ownership, as I said, including through the shared ownership scheme and the lifetime Isa. First time buyers do want to tackle the stamp duty myth. The noble Lord Evans, Baroness O'Neill, Baroness Eaton all, I all spoke about stamp duty, as did Baroness Thornhill from slightly different perspectives. Now, first time buyers benefit from paying no stamp duty. Land tax up to 300 000 are able to claim relief on purchases up to 500 000.

I've heard from noble Lords on the conservative benches. I keep hearing about all this money. They're going to spend, what they're taking out of the welfare bill on stamp duty, being yet another one of those. And following on from defence and tax cuts and so on and so forth, I wait to hear where that where which part of the welfare bill that's coming from. And I look forward to those discussions later on. The government's also introduced a new permanent mortgage guarantee scheme available to support and sustain the availability of low deposit mortgage products for prospective buyers.

The Bank of England's eased the loan to income limit. My noble friend Lord John mentioned the need for flexibility on finance, and he's quite right. The Financial Conduct Authority has ongoing review of the mortgage market, which means many borrowers can now borrow 10% more towards a property purchase. And can I commend both Lloyds and Santander both reintroduced their 5% mortgage deposits, and in June, the FCA published proposed new mortgage rules to support first time buyers and underserved customers, including wider access to interest only mortgages and greater flexibility for borrowers on variable and non-traditional incomes.

Baroness Paul mentioned some of the great examples that building societies are taking up and can I really commend the Building Societies Association for their Think Again campaign? Baroness Seccombe mentioned an example of someone who didn't think they would be able to buy and could. And that's what the Think Again campaign is looking at. And there are. There is a much more flexible consideration now around, for example, fluctuating income levels and taking payment of rent into consideration as a guarantee of mortgage payments in relation to supply.

And the 1.5 million homes which a number of noble peers raised, including Baroness Eaton, Baroness Hodgson, Lord Dixon, Baroness Paul, Lord Fuller, Baroness Thornhill and Lord Jamieson. We've inherited this acute housing crisis after decades of not building enough homes, and that's why the government's committed to delivering 1.5 million safe and decent homes this Parliament now, I don't apologise for the ambition in that target. We're pulling every lever at our disposal. We've taken urgent action through bold planning reforms and a record £39 billion investment to kick start social and affordable housing at scale across the country.

We've launched the National Housing Bank, unlocking over £53 billion of private investment and as well as our programme of new towns. And I'm grateful to the noble Lord Gascoigne for all the work he's done on that programme. Our interventions are showing positive signs of change with new build starts in March 2026, up 15% on the previous year, and residents in outline applications up 54%. That mission signals our commitment to the country and to the market, that we are serious about solving the housing crisis and ending this ingrained brake on aspiration.

But it was always the case that we were going to have to take some time to put these steps in place before we started to see the outcome that we're looking for a lot. A number of noble Lords have raised the issue of planning reforms. Baroness Gill, Lord Gascoigne, Baroness Hodgson, Lord Frost, Baroness Paul and Lord Jamieson. And again, thank Lord Frost for his support on the planning reforms as I do. Lord Jackson, it's good to hear that, and I. I do think this has been a very important step.

A set of pro supply, pro-growth planning reforms to support our commitment to build those 1.5 million homes, and those changes to the national planning policy framework that we've introduced involve a wider set of growth focussed interventions that will help us build, not only build the homes in places that people want to live, but supported by the right infrastructure that need to go. Alongside that. And the new Nppf confirms those reforms to make planning policy easier to use. And I want to specifically answer the question about well connected stations that Lord Gascoigne asked me.

There is a definition of that in the National Planning Policy Framework, and I think I'm meeting the noble Lord Banner next week to discuss that further. This. So we're building on our landmark Planning and Infrastructure Act to. Made a step in the reform programme to unlock new scale of housing delivery and especially focusing on the right type of housing that Baroness O'Neill mentioned. Noble Lords have raised the issues around right to buy reforms, and we are reforming Right to buy to deliver a fairer, better value and more sustainable scheme.

We want a scheme that helps long standing tenants to buy their own homes, whilst protecting much needed social housing stock and ensuring more homes are built to last. As my noble friend Baroness Paul said in a thoughtful and analytical speech echoed by Baroness Thornhill, for too long social homes have been sold off without being replaced and that's why we've already acted to reduce maximum right to buy cash discounts to their pre 2012 levels, and the bill will implement more comprehensive reforms to right to buy, including minimum tenancy requirements and allowing councils to keep 100% of the receipts generated by right to buy sales.

So I think this is a really important move. It's something in terms of building council homes that councils have called for for a long time, and it will enable the building of the council much needed council homes. In terms of the issues raised about London, and a number of noble Lords have raised issues of London. Lord Gascoigne spoke about the complexity of building in London. Baroness Hodgson mentioned it Lord Frost Lord Jackson, Lord Fuller and Lord Jamieson. So in March the government and the Greater London Authority confirmed a package of temporary emergency measures providing targeted time limited support for house builders to improve the viability of schemes and get quicker approvals on new housing schemes across every borough.

That includes the Gla's fast track planning process for sites with at least 20% affordable housing, removal of guidance that constrains density and expansion of the mayor's planning powers, temporary partial receipt, relief from development levies and £324 million for the GLA to establish the City Hall Developer Investment Fund to unlock stalled sites and increase supply. And we are back in London with a major long term investment, with up to £11.7 billion from the social and affordable housing programme confirmed for London over the lifetime of the programme, and an allocation of £1.5 billion of the new low interest loan scheme for social and affordable housing.

I'm very aware that we do need to give some assistance to London to deliver the housing that London needs. On the Renters Rights Act, mentioned by Baroness Eaton Lord John what Lord Frost mysteriously called a war on renters. I think it was actually a big support for renters that that Bill Baroness Thornhill and Lord Jamieson, that Renters Rights Act is transforming the experience of private renting for the 11 million private renters and 2.3 million landlords in England. Delivering our manifesto commitment to end section 21 no fault evictions, which were an enormous cause of homelessness in this country and tenants have stronger protections against unfair practices.

The act also prevents landlords from demanding excessive amounts of rent in advance, and helps remove barriers that can prevent renters from accessing accommodation. So I'm very proud of the Renters Rights Act. I do think it's going to deliver a much greater security of tenure for renters. And in terms of the supply of rented homes, we do not expect those reforms to have a destabilising effect on the rental market. And so far, that has proved to be the case. I do want to just briefly comment on the support we're giving to SME builders.

I Baroness Hodgson mentioned this. She also mentioned rural homes. And we we do have a specific policies around making sure we have rural exception sites so that we can make sure that local people think about what homes they need in their local areas. Lord Fuller mentioned this issue as well on SMEs. The. There is a package of financial support for SMEs. We will unlock the 53 billion of private investment mentioned in the National Housing Bank and support the building of over 500,000 new homes, including supporting SME house builders to build and.

We've also doubled the enabled build guarantee scheme to 2 billion to increase SMEs access to finance. We recognise the challenge SMEs have in accessing suitable land and to support them. Homes England have committed to sell more of its sites through SME only sales, with less bureaucratic sales process to help level the playing field. And lastly, I will respond to other issues that I haven't got to in writing, but on shared ownership, which a number of noble peers raised.

Baroness Gill, Baroness O'Neill, Baroness Paul and Lord Jamieson. I think shared ownership continues to have a very important role to play in supporting households. However, government is aware that some people have entered the shared ownership process, have faced challenges and as many noble Lords will know, this was discussed in the recent Report stage debate of the Social Housing Bill. As I set out in that debate, we have a programme of improvements in place to make shared ownership work better for customers, but there is more to come in the improvement programme.

We are continuing to consider what more can be done to improve our customer experience for shared owners and my right hon. Friend the Housing Minister is in discussion with the noble Lord young on many of those issues. My Lords, in terms of this housing issue, there are no quick fixes. The barriers to home ownership were not built in a single parliament and they will not fall in a single Parliament. But the direction is settled. Building the homes the country needs, opening the route to a deposit and a mortgage.

Rebalancing the market towards people who want somewhere to live and making ownership secure for those who already had have it. I am proud that Labour has picked up the challenge of tackling the housing crisis we inherited from the previous government. And to pick up Lord Fuller analogy, we grabbed that knife that was falling and turned it into steel for building. I'm grateful to the noble Baroness, Lady Eaton, for giving this House the opportunity to debate this

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issue in. Apologies, but just before the Minister sits down, I may just clarify a couple of things. There clarify a couple of things. There was a lot of discussion on planning, and I think there is some recognition that some of the things recognition that some of the things in the Nppf are positive, not necessarily all, but I think the biggest issue now is not necessarily just getting planning necessarily just getting planning permission, it is the viability of the site. And the noble Baroness the site.

And the noble Baroness Minister didn't really address that issue, other than a temporary measure in London. If it's not viable to build in London, it's not viable, not just on a temporary basis. Will the government be considering extending that and what else will it be doing? As I mentioned in my contribution to make sites viable, by possibly reducing some of these levies and regulations on sites? My second point, if I may, if the noble Baroness Minister wishes me to share with you the full calculations of how we will fund the stamp duty cut, I'm happy to do

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so. On viability. We continue to have active discussions with the have active discussions with the sector on that. There are elements in the national planning policy in the national planning policy framework that that look at that and we continue to debate it. It's a very important issue. The a very important issue. The immediate crisis was for London on that, and we've worked with the mayor and his team to introduce some measures, which we hope will help with that. Homes England are looking at it as well, so we continue to explore that.

I do think we do have to be careful about broad statements about how we're going to cut away the welfare bill. It's it's a very it's very easy to say we're going to chop the welfare bill and do this, that or the other with the money. It's when it comes to actually saying which bit of the welfare bill you're going to cut, that the difficulties

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start to arise. My Lords, I wish to thank all members who have taken part in this members who have taken part in this debate today. I think the many contributions have showed and contributions have showed and highlighted that across the parties of the House. We all actually do of the House. We all actually do see clearly the value to society of home ownership. As the noble home ownership. As the noble Baroness, Baroness, the Minister, said, this was a broad title for the debate and that was deliberate.

And I've seen, as we all have, the
17:34
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