Government Debt

Debate between Baroness Altmann and Lord Pitt-Watson

Wednesday 16th September 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

There are numbers that can project out for 50 years and which would leave future generations with a potentially very large debt. They are, of course, extremely sensitive figures. The first thing that the Government have to do is to have the fiscal discipline that brings the debt down. As I said, last year we had the lowest borrowing for six years, and for the first time since 2004 we are projected to borrow less than the OECD average. I hope that is at least a start, and we can go on to think about where we go to 2070 as we move forward.

[Baroness Altmann (Non-Afl)]

My Lords—

Financial Services and Markets Bill [HL]

Debate between Baroness Altmann and Lord Pitt-Watson

Report stage
Wednesday 9th September 2026 Lords Chamber

[Baroness Altmann (Non-Afl)]

My Lords, I support Amendment 87 in the name of the noble Baroness, Lady Bowles. I will speak to my Amendment 92, and I am grateful to her for adding her name to it. Amendment 92 would insert a provision in the Bill to allow life insurers to set up defined benefit pension superfunds outside of their solvency UK ring-fences, enabling them to participate in the superfund market and potentially even help the UK build its own version of Canada’s much-vaunted Maple Eight. UK insurers—with suitable ring-fencing, as set out in the amendment, to ensure separation from their insurance business—are ideally placed to run large pools of pension investments, with existing in-house expertise in areas such as investment, actuarial and legal. At present, insurance buyout is seen as the gold standard for defined benefit pension scheme endgame strategies.

Superfunds could provide a means to add billions of pounds-worth of productive capital into the UK economy and allow pension members to enjoy better benefits, rather than superfunds remaining niche players, if the current system is not changed. Insurers could bring large amounts of capital pooled into the pension scheme area and collect pension assets so that scheme members would have better upside opportunities and robust alternatives to the finality of annuity buyouts, which are generally considered 100% safe but could well not be. Buyout pushes assets into low-return, unproductive opportunities and denies members greater returns and better pensions, which could come from superfunds.

In particular, there are concerns about systemic risk with annuity buyouts. I wondered whether the Minister might agree to meet me and other interested parties to discuss the risks involved in the Government’s current perception that annuity buyout is the gold standard, 100% safe endgame strategy. I hope that he will recognise that the Financial Services Compensation Scheme may not be as secure as expected.

[Lord Pitt-Watson (Lab)]

My Lords, I thank the noble Baronesses, Lady Bowles and Lady Altmann, for their amendments. I will take each in turn, starting with Amendment 87.

As was noted by my predecessor, the Government recognise the role which the bespoke tax regime for transformer vehicles plays in ensuring that the UK is competitive. We also recognise, as does this amendment, the importance of robust anti-avoidance measures and clear guidance in ensuring that the regime functions effectively, provides certainty to business and safeguards the integrity of the tax system.

It is right that we preserve HMRC’s ability to effectively pursue instances where vehicles are established for the purposes of avoiding tax, and it is important that we preserve that ability and avoid creating risks for the Exchequer. However, I recognise the strength of feeling in industry over this issue. I therefore offer the Baroness a meeting with HMRC and Treasury officials to discuss it in more depth. I remain of the view that this legislation is not the appropriate place to make provision for the tax regime governing transformer vehicles—the Risk Transformation (Tax) Regulations 2017 being the specific legislation designed to govern this.

On Amendment 92, the Government recognise the important role that defined benefit pension scheme consolidation can play in improving outcomes for pension scheme members and providing additional options for schemes. The amendment seeks to place in legislation an explicit permission for PRA-authorised insurers to establish, own or operate DB superfunds and would introduce statutory requirements governing the separation of superfund and insurance activities. However, insurers are already able to establish and operate superfunds under the existing regulatory framework. The amendment therefore does not create a new route into the market. Rather, its primary effect is to place requirements relating to ring-fencing, capital treatment and the separation of activities into primary legislation. The Government’s view is that matters relating to prudential regulation, capital treatment and the supervision of regulated firms are more appropriately addressed by the relevant regulators rather than through detailed provisions in primary legislation. For those reasons, while I appreciate the intention behind the amendment, the Government do not consider it necessary.

I therefore ask the noble Baronesses to withdraw or not move their respective amendments.

[Baroness Altmann (Non-Afl)]

Would the noble Lord be willing to meet to go through some of these issues?

[Lord Pitt-Watson (Lab)]

If I would be the relevant person to talk to on this matter, I would be happy to meet. If not, perhaps I can direct the noble Baroness to appropriate officials.

Pension Schemes Bill

Debate between Baroness Altmann and Lord Pitt-Watson

Committee stage
Thursday 5th February 2026 Grand Committee

[Lord Pitt-Watson (Lab)]

My Lords, I rise nervously since it has been only one week since I made my maiden speech. I should declare an interest, as I have worked in the field of responsible investment for the past 25 years; I am not paid for any action there but, on occasion, my old employer allows me to use an office in the City when I have a meeting there.

I want to make two observations. One is about this Committee, which I have been sitting in on over the past few days, and one is more about this debate.

My observation on the Committee is that I am so impressed by the standard of the questioning. I am also extraordinarily impressed by the magisterial answers that can be given in pulling together what is a really complicated pensions Bill, much of which I admit not to understand. I have noted that, in our discussions and debates, there is often a great unity of purpose in terms of where we want to get to, but also some questions around how we might want to get there.

With that in mind, I want to address the issues that we are discussing today. I think that where I want to get to is very similar to the places the proposers of these amendments want to get to, but I might caution them a little to think about the ecosystem for which we are writing rules. If you look at a big UK pension fund, its equity portfolio is probably index-tracked, so it is buying entire markets rather than individual companies. It probably holds stakes in 5,000 different companies, or something like that, so we need to think practically about how we are influencing it.

We also have a situation—I find this extraordinary; I know that both the Government and the Committee are concerned about this—where an average British pension fund might have more equity investments in Nvidia and Apple than in the entire UK stock market because of the way in which assets are allocated. The UK pensions system is, therefore, a very small holder in a very large number of companies. I profoundly agree that we need to uphold international law on human rights, but, if we are to do that, do we not need to think about how we can get everyone to work together on that, rather than just a small proportion that might ultimately divest?

I note that Principles for Responsible Investment, which has $130 trillion of assets under management, has promised to be active owners and to incorporate social and environmental issues into its investment and ownership practices. Might there be some way in which we can hold those promises to account? Also, when thinking about how we can address human rights issues such as modern slavery—we have talked to companies about this—the campaigners often tell us, “Don’t have the companies ticking boxes saying that they know nothing about modern slavery. It is everywhere, and we need to be fighting it everywhere. Let us be open about how we do this”.

One initiative that I support, both in an advisory role and financially, is the Business and Human Rights Resource Centre, a network that investigates 1,500 human rights abuses by companies all around the world. It goes back to the companies and says, “You’ve got to fix this”. I have been particularly keen that, if the company does not fix it, the network can then see their shareholders and make sure, at the next shareholder meeting, that those questions are being raised with the companies. I wonder whether that is something we could leverage.

Recognising how difficult this is, I led the finance initiative to persuade British companies to divest from Myanmar 15 years ago, just before Aung San Suu Kyi took over. Of course, things have gone backwards since then. I was at a party before Christmas where someone remonstrated with me about what a terrible decision it was for British companies to withdraw from Myanmar. This is quite complicated stuff. How do we build on what is already there?

I love the passionate support for new asset classes, because it is so important that we move them forward. What we want to do is to get money flowing to social causes. I am not quite sure that there is always one solution. I was very involved in the development of the green bond market, which reached a $1 trillion issuance last year—that is pretty good. We also have to think about the traditional ways we can get this. Housing associations borrow on normal markets, so how do we get more of that? We have Bridges and the LGPS, which the noble Baroness talked about. I wonder whether we should always want things to be pension specific—although I do know that this is a pensions Bill, so perhaps that is part of it.

Then there is the question of knowing the social impact. We need to be careful about what social impact is. I am struck that, if you were to set up a pension system, a lending system or even a saving system in the developing world, you would be praised for the massive social impact you would make. Similarly, Henry Duncan’s trustee savings bank—he was Scottish, like me, as were Wallace and Webster, who set up the first pension fund—had a huge social impact. As we think about the social impact of the pensions and finance industry, I note that both in terms of its liability—what it is giving the public for their savings—and the assets it is holding on their behalf, the industry is thinking about both sides of that social impact.

Going back what I said earlier, I hear quite a lot of consensus about where we want to get to. Whatever happens to these particular clauses, I wonder whether we could work together on this issue—it is a very big one—in the future in some way. Britain is an absolute leader in responsible investment. If we can listen to beneficiaries, talk to sponsors and gather the industry—and if the Government can help set the framework—we can do something that would be really worth while.

[Baroness Altmann (Non-Afl)]

I will speak very briefly to support the amendment tabled by the noble Baroness, Lady Stedman-Scott, and the noble Viscount, Lord Younger. I know how passionate the noble Baroness is about the issue of social impact bonds, so it seems to me that this is a very modest and well-constructed amendment that could have significantly positive impacts on growth and local amenities. It would also specifically say, after Clause 117:

“Nothing in this section … requires trustees to invest in social bonds or any other asset class”.


So it does not in any way require this to happen, but it seeks to facilitate a system set up for pension funds to invest in this way in assets that, potentially, would have a significant social benefit, of which the noble Baroness spoke so passionately, having seen the positive results.