Business Rates

Baroness Kramer Excerpts

Thursday 29th January 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, here we are again, discussing yet another U-turn when the Government conclude, after public outrage at an announcement that they have made and after some tardy reflection, that perhaps they did not get matters right first time. What is offered here is not merely tardy but inadequate. It fails to grapple with the pressures now bearing down on small businesses across the country, especially from business rates.

It is essential that we look beyond the Treasury’s abstractions and confront the real-world consequences of the changes announced in the Budget, which remain even after this U-turn. Tina McKenzie of the Federation of Small Businesses has warned, following this latest announcement, that it simply proves that

“the Government repeatedly fails to recognise the difficulty that these businesses are in”.

I could not echo that more strongly. Andrew Goodacre, the chief executive of the British Independent Retailers Association, went further, describing the change as a “half-baked U-turn” and warning that independent retail is being “flushed down the U-bend”. He added, tellingly, that he could not recall a worse policy decision, cautioning that this poor decision was based on poor reasoning that will inevitably lead to more shop closures—and so on.

The Minister has said that he wishes to work with businesses but, in the face of this negative and consistent feedback from businesses themselves, especially from SMEs, it seems he has been unsuccessful in that aim. It is abundantly clear that the Statement addresses only a small fraction of the economic damage inflicted on businesses since the Government took office.

The inadequacy is not merely one of scale. The relief announced is, by the Government’s own design, temporary, so it is a sticking plaster applied to a deep and structural wound. One of the most persistent economic misunderstandings that this Government have displayed since assuming office is a failure to grasp what businesses actually need: clarity, consistency and certainty. Businesses do not want U-turns, short-lived reliefs, or promises trailed in briefings only to be withdrawn or reannounced days later, as we all saw before the Budget. This announcement exemplifies that failure in its entirety.

Worse still, everyone in the sector is saying that it is inadequate. If the Minister will not listen to His Majesty’s Opposition, perhaps he might listen to Labour Back- Benchers. Jim McMahon and Stella Creasy made the point that I am making in the other place just this week. When Parliament, publicans, business leaders and his own Back-Benchers are urging a reconsideration, what more is the Minister waiting for?

This is ultimately a question of credibility. Businesses do not measure that by press releases or promises of future strategies; they measure it by whether they can plan, invest and survive. What has been announced does not provide that certainty. It is limited in scope and temporary by design, and arrived only after external pressure became unsustainable. That is not how stable tax policy is made or how confidence is restored.

The truth is that confidence in hospitality and retail is fragile. We heard only this morning from Charlie Nunn, CEO of Lloyds Bank, that the sectors in question were having a challenging time. What assessment has the Treasury made of the number of such businesses that have already cancelled investment, reduced staffing or decided to close since the Budget because the Government have failed to provide clarity about their intentions?

If the Government truly wish to work with businesses, they must move beyond reactive concessions and bring forward a coherent, durable approach that treats the whole high street fairly and gives enterprises the certainty they need in order to grow. Until that happens, I fear this week’s announcement will be seen not as a solution but as an admission of failure.

The modest action on pubs is, of course, welcome, and a promise has been made to look at hotels, but will the Minister agree to look at rates for the wider retail, hospitality and leisure sectors before the next Budget? Thousands of shops, cafés, hotels, nightclubs, cinemas and theatres are still facing huge increases. The combination of higher taxes and rates, extra regulation and energy prices for business—four times those in the United States—is crippling these very sectors, and I hope the Minister will be able to promise some relief.

[Baroness Kramer (LD)]

My Lords, I start with perhaps a modicum of welcome because the combined impact of the Budget and the business rates revaluation prior to this announcement, frankly, left the pub industry on the verge of a crisis, with up to 50% of pubs under the threat of closure. Some relief has now been offered for many pubs, and I am glad that this lifeline has been extended to live music venues, which are the birthing ground of our very important music industry.

Do the Government recognise that the relief that they have just announced amounts roughly to only £1,650 per pub, which will still leave many in a critical financial hole? Do they recognise that pubs with a rateable value of over £100,000 are, in effect, not eligible, and that restaurants, cafés and soft-play areas—so many of those hospitality and leisure operations that lie at the heart of our high streets and communities—will get no relief from these changes whatsoever?

The chaos that has surrounded the announcement of the review—the change and uncertainty that has gone with it and the impact on the sector—surely points to the fact that we need to stop trying to fix the business rates system at the fringes. We need to take a proper step back and review the whole way in which business rates are structured, which, I would say, should head in the direction of land value. There is so much to be done around this area. It is time that the Government see that, rather than get into continuous messes by attempting to ameliorate a system that, frankly, is broken.

Do the Government also accept that the chaotic process that we have seen deeply underscores the need to include hospitality in the industrial strategy? At the very least, one would hope that the effect of that would be to force the Treasury to align tax policy with the economic goal of strengthening our high streets and our hospitality and leisure sectors, and to determine that they are a source of growth, not of constant crisis and constraint. Does the Minister accept that, until the Treasury gets aligned with that agenda, we will have constant issues like that? Frankly, that is not the best way to go.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their comments and questions, and for their cautious welcome of what we have announced.

The noble Baroness, Lady Neville-Rolfe, ignored what we announced in the Budget: the £4.3 billion of support for those experiencing increases in business rates. As she knows, the previous valuation was based on property values during the Covid pandemic, which meant that rateable values were much lower. As a result of that valuation, some businesses, including the retail, hospitality and leisure venues that we are discussing, are now seeing an increase.

At the Budget, we announced three elements of support at a cost £4.3 billion, which neither noble Baroness mentioned in their comments. We are implementing transitional relief that will cap increases at 5% for the smallest properties and at up to 30% for the largest. For any business whose value increase has meant that they are no longer eligible for small business rates relief, we are capping their increase. We have expanded the supporting small business relief scheme, to provide specific support to those who are currently eligible for the 40% RHL relief.

The noble Baroness, Lady Kramer, said that the wider system needs reform; we absolutely agree on that and have begun that. We are reforming the business rates system by introducing permanently lower tax rates for over 750,000 retail, hospitality and leisure properties. The noble Baroness, Lady Neville-Rolfe, said that what we are doing is temporary, but those new lower rates are permanent—unlike what the previous Government did—and they will be funded by higher rates on the most valuable properties, including those of online giants.

I remind the noble Baroness, Lady Neville-Rolfe, that the previous Government’s plans were to scrap entirely the temporary Covid-era retail, hospitality and leisure relief in 2025—but she now says that more support should be offered. If they had won the last election, their plans clearly show that they would have removed it overnight in April last year. They now claim that they would extend it, so why did they not say so or include that in their forecasts or projections?

I am grateful to the noble Baroness, Lady Kramer, for what she described as her cautious welcome of what has been announced. We have of course been listening to the industry. We have announced that, from April, every pub in England will get 15% off its new business rates bill, on top of the support announced at the Budget. Their bills will then be frozen in real terms for a further two years. The noble Baroness noted that the support will be worth £1,650 for the average pub next year, but that means that three-quarters of pubs will see their bills either fall or stay flat next year. This decision will also mean that the amount of business rates paid by the pub sector as a whole will be 8% lower in 2028-29 than it is today.

The noble Baroness, Lady Kramer, said that pubs with ratable values of over £100,000 would not benefit, but we are clear that this will apply to all pubs. I am grateful for what she said about this applying to music venues too. Many live music venues are valued as pubs, and many pubs are grass-roots live music venues, so it would not be right to seek to draw the line so tightly as to include some but not others.

The noble Baroness, Lady Neville-Rolfe, also talked about the structural issues that many of these businesses are facing, and she will know that the sector has raised concerns about the way that they are valued. The Government agree that this needs to be looked at. We are therefore launching a review that will examine how pubs are valued for business rates, and we will set out more detail on that in due course.

The noble Baroness, Lady Neville-Rolfe, spent a lot of her statement telling us about what businesses need. What they need most is stability; they did not need the previous Government, with the Liz Truss mini-Budget, Brexit and austerity, and all the consequences that they had. The noble Baroness commented on what we are doing for business. She will know that, under the previous Government, business investment was the lowest in the entire G7, and that, since the election, business investment has increased faster in this country than in any other G7 country. I am more than happy to compare her record with ours.

The noble Baroness will know that we are pressing ahead with wider regulatory reforms to help businesses, as well as carrying out licensing reform, and that we are looking at loosening planning rules to benefit pubs more generally. She will also know that we are doubling the hospitality support fund with £10 million of funding over three years.

The noble Baroness, Lady Kramer, talked about the importance of the sector for growth, and the noble Baroness, Lady Neville-Rolfe, talked about the challenges faced by the wider sector. I understand the challenges that many other retail, hospitality and leisure companies are facing. We have already taken significant steps to support businesses, including, as I said, the £4.3 billion of business rates support.

As we all know, consumers have changed their habits over the past decade and are increasingly working from home and shopping online. Combined with the pandemic and the increase in energy costs since Russia’s invasion of Ukraine, these trends have continued to make it harder for high street businesses. Therefore, later this year the Government will bring forward a high street strategy, and we will work with businesses and representative bodies to look at what more the Government can do to support our high streets.

Business Rates: Retail, Hospitality and Leisure

Baroness Kramer Excerpts

Tuesday 20th January 2026 Lords Chamber

[Lord Livermore (Lab)]

I agree with a great deal of what the noble Baroness says. HMRC has announced substantial measures to crack down on some of the businesses she mentioned, and I think she will have seen several of them closing in recent months. She is quite right that more needs to be done. She is absolutely right to talk about the importance of the hospitality industry, and we completely recognise that. It plays an incredibly important role in the UK economy, employing more than 2 million people. It is vital to the life of high streets across the UK, and we will do what we can to support it.

[Baroness Kramer (LD)]

My Lords, I will repeat the adage I used formerly: measure twice, cut once. Does the Minister understand that there is real urgency to get response and relief now within the hospitality industry and for pubs, as they face uncertainty? Many, believing that the blows had ended, went ahead and hired or invested and are now unsure whether they are economically viable. Has the Minister looked at the impact of this uncertainty, particularly on the independents, which I understand are disproportionately affected?

Public Sector Productivity

Baroness Kramer Excerpts

Wednesday 7th January 2026 Lords Chamber

[Lord Leigh of Hurley (Con)]

My Lords—

[Baroness Kramer (LD)]

My Lords, this Question caused me to take a look at how the Government measure productivity. It strikes me as extraordinarily quantitative, taking into consideration almost no issue of quality. I am concerned that if AI is trained on these existing models, we are going to dig ourselves into a worse hole rather than make things better. Are the Government looking at how productivity is measured to give us something far more useful and valuable?

[Lord Livermore (Lab)]

I agree with a great deal of what the noble Baroness said. I noticed the noble Lord, Lord Leigh, who is very interested in this point as well, was on his feet. We have discussed it before in previous debates. We recognise the challenges in measuring public sector productivity, given the diversity of inputs and outputs in public services. The ONS recently published a review of its metrics. It has done a wide-ranging review into how productivity is measured and set out improvements that are now under way in many areas, such as healthcare, education and social security administration. It has included new quality adjustments, which better account for outcomes. I will take back to the Treasury the point the noble Baroness makes about the future adoption of AI.

Agricultural Property Relief and Business Property Relief

Baroness Kramer Excerpts

Tuesday 6th January 2026 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am grateful to the noble Baroness. May I first take this opportunity to wish her a belated happy birthday for the weekend just past?

I am grateful to the noble Baroness for her support for the measures that we announced shortly before Christmas. It is absolutely right that, following the reforms to the reliefs that we announced in the Budget in 2024, the Government consulted about the reforms with the farming community, as she says, and with family businesses. We have now carefully considered this feedback and have acted, and that was the right thing to do. We have acted to protect more family farms and family-owned businesses, while maintaining a core principle that more valuable agricultural and business assets should make a greater contribution.

[Baroness Kramer (LD)]

My Lords, I recommend a carpenter’s rule to the Government: “Measure twice, cut once”. Can the Government tell us their assessment of the serious harm that was done to our vital family farming sector by the devastating mistake of their original tax policy? I am glad that they have recognised that and have at least made some change. However, would it not benefit the economy more to abandon this tax policy altogether—it will now raise next to nothing—close the tax loopholes exploited by private equity, which were never actually touched by the policy in the first place, and focus on rebuilding trust and revitalising our critical agricultural sector?

[Lord Livermore (Lab)]

No, I do not agree with the points the noble Baroness makes. She says this will raise next to nothing; it will still raise about £300 million for our public services. I do not know whether she thinks that is next to nothing—I do not—and I do not know where she would get that money from if she wishes to cut this. There is also an important core principle that we have maintained: that more valuable agricultural and business assets should not receive unlimited relief. There is, I believe, a need to reform agricultural property relief and business property relief; I think she is saying that she does not agree with that. However, the status quo is not sustainable, because a very small number of claimants currently benefit from a very significant amount of agricultural property relief and business property relief. The top 7%, the largest 117 claims in 2021-22, accounted for 40% of the total Exchequer cost of agricultural property relief, and the top 4% of claims, the largest 158 claims, accounted for 53% of the Exchequer cost of business property relief. We are now getting the balance right between protecting those farms and those businesses, supporting the public finances and supporting our public services.

OBR: Resignation of Chair

Baroness Kramer Excerpts

Monday 8th December 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am grateful to the noble Baroness for her question and the points that she made. I should say very clearly that we take the Budget process extremely seriously and put the utmost weight on Budget secrecy. She will know that a leak inquiry is now under way, with the full support of the Chancellor and the whole Treasury team. She will also know that the Permanent Secretary to the Treasury will conduct a review of the Treasury’s security processes to inform future fiscal events. We will, of course, also work closely with the OBR to ensure that robust security arrangements are in place before the spring forecast and for all future forecasts. On the other points that the noble Baroness raises, she will be aware that the FCA has now written to the Treasury Select Committee confirming that it has not commenced an enforcement investigation.

[Baroness Kramer (LD)]

My Lords, the Minister will be aware from things I have said previously that it would be worth taking a look at the Swedish approach and that of some other countries to an open Budget process that gets away from the kind of shenanigans that we saw in the past weeks. He did not answer me when I raised that before. Will he now commit to taking it back for the Treasury to look at and think about?

Focusing on the OBR, the more I look at this episode, the more I ask myself whether any digital-based data can be truly secure. It is almost like a cat-and-mouse game at the moment, with fists being put into dykes to try to stem leaks, but nothing is reliably effective, and AI will surely be a game-changer that aggravates this. Will the Government consider an open dialogue with the public, the media and, in the case of sensitive financial reports, the financial markets, to consider how we handle data in this changed world, so that we no longer have this environment of leaks and secrecy but find a better way forward?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness. She raised her suggestion about the Swedish model before. I think I said then that I do not think that we had any intention of taking that forward, and I say the same thing again today.

It is important to say that we remain absolutely committed to the independence of the OBR. That is incredibly important to the fiscal framework and to our commitment to economic stability. Clearly, it is important that the information it has is treated with the utmost secrecy. That is why it is important that, as I have said, we will work closely with the OBR to ensure that it has robust security arrangements in place for how it treats information.

On the next steps that we intend to take, the OBR has rightly conducted its initial investigation as quickly as possible, and we should now take the time, as I think I have said to the noble Baroness before, to consider its findings and the report in greater detail. The report into the OBR also made the point that it

“could not, in the time available, carry out deeper forensic examination”

of other recent economic and fiscal outlook events and recommended that such an event takes place. We have committed to doing that with the National Cyber Security Centre, as I think the noble Baroness alluded to, although it is important that we note that the report found no evidence of hostile cyber activity.

Autumn Budget 2025

Baroness Kramer Excerpts

Thursday 4th December 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, as the first of the winding speakers, let me repeat the welcome to the right reverend Prelate the Bishop of Portsmouth and say how much we enjoyed his excellent maiden speech, which I will refer to later.

To the Government, let me say that I am not quite in the “Apocalypse Now” camp that I hear from the noble Lord, Lord Bridges, and some of his colleagues, but I really thought this was going to be—and needed to be—a Budget for growth. When we were in that period of endless announcements, U-turns, leaks, chaos, et cetera, I thought there would be a real surprise on Budget Day, that we would get that project, programme and vision that would drive forward growth. I was wrong.

As others have said, the OBR makes it clear that trend productivity growth is down, and we have no proper road map for dealing with it—the noble Lord, Lord Willetts, was eloquent on that point. The OECD has predicted that the UK will face headwinds from the Budget and will have the highest inflation rates in the G7. The noble Lord, Lord Rosenfield, spoke extensively on this issue. The Budget contained no compelling argument for investing in UK business. I wish the Government had listened to the noble Viscount, Lord Stansgate, who was calling for a real step change at this point, which is exactly what we need.

I agree that there were marginal but important measures in here that support upscaling—they were described by the noble Baronesses, Lady Moyo and Lady Penn, and, to some degree, by the noble Lord, Lord Ranger—focusing on AI.

These are not easy times for growth. Global headwinds are reducing global trade forecasts, which is not good news for the UK economy. That is exactly why my party is urging the Government to go immediately beyond their lackadaisical reset with the EU and push for a bespoke customs union. Those who do not think that Brexit is a blow that is battering our economy should go and talk extensively to business. It is not just the economists; it is the people on the ground daily who are dealing with the consequences. Of all times, this is not a time when we can indulge in the glow of insularity and exceptionalism.

My party, using work from Frontier Economics and the Commons Library, calculated that joining a customs union with the EU would deliver £25 billion in additional money to the Treasury. Frankly, that dwarfs every tax-raising measure in the Budget and off-sets far more than any spending cut that the Conservatives propose.

We heard concern about Brexit from the noble Lords, Lord Hollick, Lord Tyrie and Lord Brook of Alverthorpe. My noble friend Lord Razzall referred the Government to the Private Member’s Bill being brought forward by the honourable Member for Surrey Heath, which will give an opportunity to capture these issues.

I and my party strongly take the view—as my noble friends Lord Razzall and Lord Mohammed of Tinsley said—that the Government are absolutely right to lift the two-child benefit cap. I say to the noble Baroness, Lady Deech, and the noble Lords, Lord Bailey and Lord Massey, if a safety net is not for children, who is it for? We take the strong position that poverty undermines children, it does not raise them.

Similar views were expressed by the right reverend Prelates, the Bishop of Portsmouth and the Bishop of Manchester. I pick up the question introduced by the right reverend Prelate the Bishop of Portsmouth on where the funding will come from to guarantee SEND provision when it shifts from local authorities to central government. The noble Baroness, Lady Barran, raised that issue, and my noble friend Lord Mohammed of Tinsley stressed its importance. That means that we must have an important and strong answer on this from the Minister.

The decision to remove £150 from energy bills is welcome, but, as my noble friend Lord Razzall says, it is less adequate than the Lib Dem proposal. I say to the noble Baroness, Lady Griffin of Princethorpe, that we would not have been partly funding that by cutting programmes to tackle climate change, as the Government have chosen to do. We would have fully replaced that from central government resources.

When I first heard the Budget, like others—and the noble Lord, Lord Bilimoria, has just said this—I thought that huge relief would be given to the hospitality industry through the business rates system. We in our party have proposed a VAT cut, and some people implied that this was going to be the equivalent. But UKHospitality estimates that an average pub will pay £12,900 more in business rates over three years.

The noble Lord, Lord Freyberg, stressed similar pressures on grass-roots venues. This is a serious problem and I want to hear a proper answer from the Minister. In our case, we would have paid for the cuts in energy bills and VAT by pursuing the proposals of the IPPR for attacks on the windfall that major banks are making, not from their efforts but from the technicalities of QE and the reserves that they are keeping at the central bank. Why the Government have not seized that opportunity is beyond me. However, I give them credit for seizing the proposals pushed over and over by the noble Lord, Lord Foster, for a remote gambling tax, which has not just fundraising but moral outcomes.

Why have the Government not raised the digital tax from 2% to 10%? It applies to the mega seven digital companies. Frankly, I just do not understand. These are serial tax avoiders par excellence. Our own UK digital companies are disadvantaged by their gaming of the tax system. That absolutely matters if we push on digital and AI.

Let me address the main proposals in the Budget, which raised most of the additional £26 billion in taxation and take tax levels in this country to unprecedented highs. Taxes will have gone up by £67 billion since the first freezing of tax thresholds. Labour is responsible for £13 billion of those taxes and, oh my, the Conservatives are responsible for £54 billion of those taxes. When I hear them talking as though they are a low-tax party, I wish that they would go back and look at what they did. Freezing thresholds is one of the worst ways to increase taxes on ordinary people. The noble Baroness, Lady Thornton, raised the question of the impact on women, and I hope that the Government will answer that.

It is true that many people do not realise what is happening until it is too late, a point made by the noble Lord, Lord Burns. However, we now face the extraordinary prospect that a quarter of employees will be in the high-rate tax bracket by 2030-31, not because they have become more prosperous but simply because their wages are rising just to cover inflation. The OBR forecast relies on inflation staying higher for longer, as the noble Baroness, Lady Neville-Rolfe, said. The Government hope, because their additional spending is front-loaded and the tax increases are back-loaded, that people will have not caught on that, by 2030-31, they will be paying some £1,400 more in tax. We will have had nine years of threshold freezing.

The other major tax-raiser comes from changes to the salary sacrifice scheme of some £4.7 billion. I am concerned, and I heard the same concern from the noble Lord, Lord Hollick, that, combined with the changes to pensions in the last Budget, we are going to see a move away from pension saving and long-term investment by the wage-earning middle. The consequences of that are not good for growth. I ask the Government to get a grip on this issue. They are trying to get more auto-enrolled pensions—which is a very small part of the market covered by the Mansion House compact—into UK investing, but the big part of the market is now essentially being discouraged.

I refer to the comments made by my noble friend Lady Bowles on government procurement of innovation. That is a serious issue and I hope the Government take it on board. It is much wider than the narrow issue that it is sometimes treated as.

The so-called mansion tax will raise only £400 million and likely much less, but in London the revaluation of bands F, G and H will hit social housing. The mansion tax does not but the revaluation does. Can the Minister confirm that? The answer is that the whole of council tax needs a complete rethink—I agree with the noble Lord, Lord Campbell-Savours, on that.

The timing of the taxing per mile of EVs seems perverse, when we need to accelerate the switch from petrol to diesel. I assume, along with the noble Lord, Lord Young, that this is the beginning of an evolution into road pricing. Why on earth were we not given a tax road map on this issue? Without that map, we will begin to see people become inhibited about buying EVs, perhaps unnecessarily. A road map should have accompanied a significant change on this scale.

I have one small comment—perhaps it is not so small—on the loan charge. I thought that the Government’s seeming acceptance of the McCann review, even if it did not deal with pre-2010 and already settled cases, would largely provide a resolution to this appalling mire. Then I realised that the discount that the Government are now going to use is capped at £70,000, leaving some 20% of those with open cases still absolutely in the mire. These are people who might once have been high earners but now typically are retired on modest incomes. So little more was needed for this nightmare to be resolved. I do not understand why the Government did not take that next step.

Lastly, the Government, as necessary, increased the fiscal headroom to £21.7 billion. We called loudly for such a change. I am slightly taken aback that one-third of the increase in the headroom relies on public sector efficiency savings on, frankly, a heroic scale. The noble Lords, Lord Willetts, Lord Wood and Lord Eatwell, and the noble Baroness, Lady Shawcross-Wolfson, talked about how questionable future public sector savings are, particularly on the scale included in the forecast. The markets have calmed for now, but they will not stay calm if we do not see that efficiency come through and if we do not see growth.

Meanwhile, as I wind and finish, the public sector and local government are still on their knees. Ordinary people are still struggling every day with the cost of living. Businesses’ appetite to invest is still muted. There really is only one way to make a step change out of this mess, and I am going to go back to where I started: will the Government please now accelerate the process of resurrecting a bespoke EU customs union relationship so that we can look forward to a future with resource and choice, and without facing the kinds of constraints that are evident in this Budget?

OBR Forecasts

Baroness Kramer Excerpts

Monday 1st December 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by noting the resignation of Richard Hughes from his position as chair of the OBR and thank him for his service in that role, which he has occupied since 2020. We in the Opposition will carefully study the contents of the report that has been issued today into the highly regrettable early release of the economic and fiscal outlook. We welcome the seriousness with which the OBR has treated this matter.

We expect those in positions of power to act with transparency, openness and integrity. The only person who has shown any integrity in this process has demonstrated it by resigning. Perhaps the Chancellor might want to follow his example.

We must not let today’s report be a convenient distraction from the matter we are discussing, namely the accusations that the Chancellor misled the Cabinet, the markets and the public in the run-up to the Budget. On 4 November, three weeks before the Budget, the Chancellor held an extraordinary press conference to warn that a downgrade in the public finances meant that taxes would have to rise. She pointed to a supposed collapse in productivity and said this had consequences for working people and for the public finances too. No one compelled her to make that announcement. She chose to do so. She signalled openly that she was preparing to break the Labour manifesto by raising the basic rate of income tax, presenting this as unavoidable.

Yet we know that the picture she painted was not the full truth. There was a sin of omission. What she did not tell the public, Parliament or even her own Cabinet was that the public finances had actually improved. Higher than expected tax receipts had offset most of the productivity downgrade. By 31 October, four days before her press conference, the OBR had informed her that she in fact had a £4.2 billion surplus against the main fiscal rule and not a black hole. The omission of material fiscal information during the most sensitive period of the economic calendar is extraordinarily serious. The OBR was so concerned by the misconceptions circulating before Budget day that its chair took the highly unusual step of writing publicly to the Treasury Select Committee to correct the record. He confirmed that the Chancellor had been informed as early as 17 September that improved tax revenues largely wiped out the productivity downgrade. Yet on 4 November she chose to speak only of gloom, and working families, savers and businesses all made decisions as a result. People judged their financial futures based on those statements. The markets reacted; journalists reported. Those words and the briefings and selective leaks that followed came from the Chancellor, her officials and her Government, and they were incomplete, confusing and misleading. They came on top of weeks of U-turns, backtracking, redrafting and contradictory briefings. I think I have recalled this chaos in earlier debates.

What makes the whole saga even more inexplicable is this: if the Chancellor genuinely wanted more fiscal headroom, if she wanted to raise taxes in the name of prudence, then why on earth did she not simply say so? Instead, we had misreporting, mixed messages and false presentations of the facts, and for what? There is no obvious strategy, no coherent political rationale and no fiscal logic. It simply looks like serious, consequential incompetence at the very top of the Treasury. Let us be clear: this would be unacceptable at any time, but in the run-up to a Budget, when the markets are watching with greater intensity than at any other point, when households and businesses make real decisions based on what they believe the Government are telling them, when the entire country waits to hear how their taxes will be collected and their money will be spent, this is unforgivable.

In the light of the chaos the Government have created around this Budget, can the Minister answer three simple questions? Can he confirm that the Chancellor was aware of a £4.2 billion surplus against the main fiscal rule on 31 October? Can he tell the House, if the Chancellor wanted to increase tax to improve headroom and fund extra spending on welfare, as he suggested, why she did not simply say so in her scene-setting speech? Finally, will the Government finally subject themselves to an investigation by the Financial Conduct Authority and the Permanent Secretary to the Treasury into possible market abuse by all those in No. 10 and at the Treasury who would have had access to relevant confidential information? If the Government have nothing to hide, they will have nothing to fear from such an investigation.

[Baroness Kramer (LD)]

My Lords, this really has been a bit of an omnishambles with announcements, scene-setting musings, U-turns, misstatements and leaks—speculation that, for a time at least, spooked the markets, raising interest rates on government debt and causing such uncertainty that businesses and individuals delayed or abandoned decisions. We in this House have felt for the Minister, who has tried to hold the line by refusing to speculate despite being inveigled by pretty much all of us to try to make him do so. Frankly, all around him, others were simply flying kites.

On the issue of the OBR, Richard Hughes has taken the honourable step of resigning. Like others, I agree that he is very much the embodiment of a dedicated civil servant and has contributed much to the economic welfare of this country. Can the Government tell us, now that they recognise the seriousness of the breach, whether it is possible that attempts to access this information actually rise to the level of criminality? Are we looking at a possible issue around that? Also, is the security review being extended to other entities at arm’s length from the Government that might also have significant information but not the security that is necessary?

On the Chancellor, we need to understand much better why statements about tax receipts were omitted from the discussion on 4 November. This sits within the context of the omnishambles that I described. I am very concerned, for the future, that this form of extreme kite-flying—not just on this Budget; we have certainly seen it on earlier Budgets—has become so normalised that it has, in effect, killed off purdah. I am not sure that that is good for either the economy or how the markets behave.

In that case, will the Government recognise that they need to overhaul the whole Budget process? In the Swedish example, the Parliament gets to debate the Government’s Budget before it is set in stone, to propose alternatives and to make amendments; that is then followed by a period of scrutiny and accountability. Will the Government now bring forward a new approach to this process—one that enhances accuracy and transparency and properly restores both public trust and the role of Parliament?

[Lord Livermore (Lab)]

I am very grateful to both noble Baronesses for their contributions and questions.

The noble Baroness, Lady Neville-Rolfe, began by paying tribute to Richard Hughes, his actions today and his record of public service. I was very fortunate to work with him while I was a special adviser in the Treasury; he was my private secretary while I was a special adviser. I absolutely know what the noble Baroness said about his commitment to public service, so I join her in those words. The Chancellor said earlier today:

“I want to thank Richard Hughes for his public service and for leading the Office for Budget Responsibility over the past five years and for his many years of public service”.


This Government are committed to protecting the independence of the OBR and the integrity of our fiscal frameworks and institutions.

The noble Baroness, Lady Neville-Rolfe, spoke about misleading. I fundamentally reject that. The Chancellor has been completely honest and consistent with the public in everything she has said. On 4 November, the Chancellor said that her priorities were cutting the cost of living, NHS waiting lists, debt and borrowing. The Budget delivered precisely on those priorities. The Chancellor was clear that, if there were a productivity downgrade, that would mean lower tax receipts. The OBR confirmed that tax receipts are £16 billion lower than they otherwise would have been. The Chancellor said that she intended to build more headroom, and she did—to £21.7 billion. The Chancellor was clear that policy choices would need to be paid for; the Budget shows that those cost £6.9 billion. The Chancellor was clear that challenging decisions would need to be taken on taxation and spending, and she froze thresholds for a further three years. So, as I say, the Chancellor was completely honest and consistent with the public in everything she said.

I note that the noble Baroness, Lady Neville-Rolfe, spoke of a “supposed” productivity collapse, as if she were trying to make light of the fact that the OBR looked back at the past 14 years and revised its view of what the previous Government had done to the economy downwards. It looked at the chronic lack of investment, Brexit, the mini-Budget and all of the other things the previous Government had done, and it was forced to downgrade productivity—the performance of the economy—as a result. It put that forward and said that that did lasting damage to the economy. The noble Baroness described that as “supposed”, so I would like her to acknowledge that that was real and has real, lasting consequences.

The noble Baroness also said that public finances had “improved”. I do not understand how going from a headroom of £9.9 billion at the Spring Statement to a headroom of £4.2 billion before any measures were taken into account is an improvement in the public finances. It is important to point that out.

The noble Baroness said that there is no “fiscal logic” to this Budget. Is she saying, therefore, that she thinks that the headroom of £4.2 billion is sufficient? Is she saying that, if the Chancellor had come before Parliament and announced £4.2 billion of headroom, that would have been an acceptable level of headroom, given the global uncertainty that we face? So, no—there was very clear fiscal logic to this Budget.

The noble Baroness asked me three specific questions. Did the Chancellor know that there was a £4.2 billion surplus on 4 November? Yes, she did. On 4 November, the Chancellor had £4.2 billion of headroom before those policy choices were accounted for, meaning that, once those policy choices were accounted for, there would be a deficit of £2.7 billion before any additional headroom was built. The Chancellor was extremely clear that she intended to build more headroom. The noble Baroness also asked: if the Chancellor wanted more headroom, why did she not say so? I suggest that the noble Baroness goes back and reads her speech from 4 November, because she specifically said that she wanted to build more headroom to create a greater margin against events. The noble Baroness also asked me about the FCA but, frankly, that is a matter for the FCA to decide.

I am grateful to the noble Baroness, Lady Kramer, for her comments. She said that this Budget process had perhaps been dominated by more process questions than normal. I totally agree with her; it has been dominated by process before, during and after the Budget speech. I have some sympathy with her pleas for a return to purdah; it would certainly make my life more easy, and would have made life easier for me in the run-up to the Budget. She also praised Richard Hughes for his record of public service; I entirely agree with her.

The noble Baroness asked whether the contents of this review rise to the level of criminality. As the Statement that my right honourable friend the Chief Secretary gave in the other place says, we have only just received this report; we and the Treasury Committee should take time to consider it.

The noble Baroness gave some suggestions about how other countries run Budget processes. I am not sure that we will be reforming the process to quite that extent, but I have full sympathy with what she says. It is important that we take the Budget process and Budget secrecy extremely seriously—and we do.

Forthcoming Fiscal Changes

Baroness Kramer Excerpts

Tuesday 25th November 2025 Lords Chamber

[Lord Livermore (Lab)]

I am most grateful to the noble Baroness for her question. As she knows, I am not going to comment on the ongoing Budget process, which will conclude tomorrow when the Chancellor delivers her Budget. She asked about growth. Growing the economy, and supporting businesses to create jobs and innovate, will be absolutely central to tomorrow’s Budget alongside protecting our NHS and public services from a return to austerity, improving the cost of living, doing what is necessary to protect families from high inflation and interest rates, and keeping debt under control.

[Baroness Kramer (LD)]

My Lords, can the Minister tell us whether there are any significant measures in the Budget which have not been announced in advance or leaked? I would invite him to mention them to us, then he can have a clean slate.

[Lord Livermore (Lab)]

The noble Baroness need only wait 22 hours and then she will know for herself.

Budget: Press Briefings

Baroness Kramer Excerpts

Tuesday 18th November 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

I am grateful to the noble Baroness for her question. She claims that it is unprecedented for a Chancellor to comment on the economic situation ahead of a Budget. I do not think it is in any way unusual; there is always speculation ahead of it. As she knows, I am not going to speculate on the next Budget now or comment on any individual tax measure, nor will I comment on the ongoing Budget process. The Chancellor has asked the OBR to produce a new forecast. The OBR and the Treasury exchange information throughout the forecast process, which is usual practice, established over many years. The Chancellor will then take decisions based on that forecast and set out our fiscal plans in the Budget. She has been very clear that the Budget will protect the NHS, reduce the cost of living and reduce the national debt. We will continue to rebuild the economy after 14 years of failure from the party opposite.

[Baroness Kramer (LD)]

My Lords, the country was led up the hill and then marched right back down again. Does the Minister recognise that this sort of kite-flying is really undermining confidence in the comments that anybody now makes from the Treasury Benches? Does he accept that, although bond yields steadied a few days after flurrying, with that flip-flop and change in policy, we still find ourselves paying over the odds for issuing gilts, largely because markets are so uncertain about the direction of public finances? Steadying and calming surely ought to be the order of the day.

[Lord Livermore (Lab)]

The noble Baroness says that comments from the Treasury Benches create uncertainty and then invites me to comment, so I shall not do that. I shall not comment on bond yields as she asks me to do; as she knows, I never do. I will not comment on the ongoing Budget process or on speculation on individual tax measures.

Inheritance Tax: Pensions

Baroness Kramer Excerpts

Monday 17th November 2025 Lords Chamber

[Lord Livermore (Lab)]

I do agree with everything the noble Lord said. I enjoyed discussing these matters with him when he was a Treasury official and I was a special adviser. I probably learned a lot of this from him then, so I completely agree with what he said. To repeat, the purpose of pension savings is to fund retirement. If taxpayers are spending £78 billion a year on that, it is very important that it is used for its intended purposes rather than for estate planning, as the noble Lord says.

[Baroness Kramer (LD)]

My Lords, does the Minister agree that in real life, many people restricted their lifestyles, spending and gifting in order to build a sufficient defined contribution pension that could pay, if needed, for years in a care home—not knowing how long they would live or their health condition—and because they did not want to burden the state or their children? They now see that they were being gullible in believing the assurances that anything unused could go to their loved ones free of inheritance tax, and that the Government simply regard their sense of responsibility as rather stupid. What would the Minister say to those people?

[Lord Livermore (Lab)]

More importantly, what would I say to the noble Baroness? I would say that she is saying things that are completely misleading. As I have said already, estates will continue to benefit from all the normal nil-rate bands, reliefs and exemptions available, so an estate can pass on up to £1 million with no inheritance tax, and spouses are fully exempt from inheritance tax. It is also important to say that we have equal treatment here. There is equal treatment for inheritance tax purposes between pension and non-pension assets, and I think that is perfectly fair within the system.