Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025

Baroness Neville-Rolfe Excerpts

Tuesday 21st October 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for introducing this statutory instrument, which, as he said, implements the UK’s commitment to the agreement between the UK and the Swiss Confederation on mutual recognition in financial services.

I note that the explanation of the SI says that it will, as the Minister said, allow the Financial Conduct Authority and the Prudential Regulation Authority to essentially oversee and ensure that nothing is going wrong and have oversight of Swiss operations here. That is perhaps not as reassuring as one might hope. I note a report in the Times yesterday that the Financial Conduct Authority had privately shared concerns about the 79th Group with the City of London Police eight months before the group collapsed, owing thousands of people more than £200 million. It is, to quote the Times,

“suspected of being one of the largest Ponzi schemes in British history”.

I note for the record that the company denies any wrongdoing. None the less, the Financial Conduct Authority appears to have had concerns but did not share those with consumers, who are clearly now very much paying the price.

It is worth reflecting that it is a little bit surprising that, as the Minister said, this reflects an agreement that was struck in December 2023 by the previous Government. They said that this was a

“ground-breaking pact on financial services cooperation”

and that it would enable

“frictionless, cross-border provision of financial services between the UK and Switzerland”.

It is interesting that a Government who have been elected on a promise of change now appear to be delivering exactly the agenda with the same kind of terminology as that of the previous Government who they replaced.

It is important to put on the record and focus on the reality of Swiss banking, which is deeply corrupt and non-transparent. If we take, for example, the Tax Justice Network’s financial secrecy index, Switzerland ranks second, and that is not a good result—it is second worst. The UK ranks at number 20, which is relatively good comparatively. Yet we now appear to be seamlessly linking up these two systems, linking our system into a more secret system, with considerable risks. Switzerland also ranks fifth on the Tax Justice Network’s corporate tax haven index, so it is complicit in multinational companies’ tax abuse in particular. The Tax Justice Network estimates the cost to other countries of the Swiss operations to be $21 billion a year.

Perhaps this is a specific question to the Minister. As regards the worldwide rise of automatic exchange of information notes in the past decade or so, in which Governments are supposed to exchange relevant financial information with their peers to help them enforce criminal and tax laws, Switzerland has carved out exceptions to these so-called AEOI notes. So, Article 47 of the Federal Act on Banks and Article 127 of the direct federal tax Act, which still provide for secrecy, have not changed. That is going to be accessing our system and under Swiss law we will not be able to see what is happening. There has been talk of using trusts to replace some of the secrecy instead, but of course trusts are one of the issues that are a major problem.

I note in particular the work of Maria-Gabriella Sarmiento—I do not know whether the Minister has seen this, but I certainly encourage him to look at it—who completed a PhD at the University of Zaragoza about the estimated losses of between $20 and $40 billion for corruption practices, of which Switzerland is a significant destination for that money. Over 20 years,

“assets from at least 33 jurisdictions have been traced to Swiss banks … primarily proceeds of grand corruption, money laundering and other crimes”,

with their estimated values ranging between $112 billion and $514 billion.

The reality is, of course, that the UK and Switzerland are quite similar: they have expansive banking sectors, sophisticated wealth management services and market high-value assets. They are prime destinations for the corrupt to stash their money. To take one practical example from Transparency International, Carlos de São Vicente, a former CEO of a partially state-owned insurance company in Angola, embezzled more than $1.2 billion through Bermuda-registered companies; he then transferred substantial sums to Switzerland. That is one case where someone has been found out, but it is a sample of what a great many people we know are doing without being found out and without me being able to name the details.

I note also that, in 2023, Swiss regulators inspected their institutions and found that 50% had largely unsatisfactory anti-money laundering systems. I do not know whether the Minister can tell me whether there have been significant improvements in that area of money laundering since then.

It is very sad that this important statutory instrument is getting so little attention and focus and that it is happening in this Room, because it is crucial. We have to situate this in the context of the grave concerns—it is not just me who is expressing them—about the state of financial stability in our current system, for all kinds of reasons that I will not go into here. This is about linking up two systems that have great problems with corruption and a lack of transparency—two of the biggest systems in the world—and I cite a former Conservative Minister saying that 40% of the world’s dirty money goes through the City of London and the British Crown dependencies. I do not have a comparable figure for Switzerland, but I have no doubt that it is significant. We are linking up these two sets of money flows, which has to be a concern.

[Baroness Neville-Rolfe (Con)]

My Lords, this statutory instrument gives legal effect to the mutual recognition agreement between the UK and Switzerland known as the Bern financial services agreement. As the Minister has so clearly outlined, the agreement enables the UK and Swiss financial firms to provide services to each other’s markets, particularly in wholesale sectors, such as investment services, insurance and banking, without needing to establish a local presence or duplicate regulatory approvals.

The UK’s position as a global financial centre depends on maintaining strong transparent relationships with trusted international partners. We therefore welcome this agreement with Switzerland, developed on our watch. Mutual recognition, when accompanied by effective supervision and regulatory co-operation, can deliver meaningful benefits to both markets. Under this agreement, Swiss firms will be able to operate in the UK under the supervision of Swiss regulators, with the FCA and PRA granted powers to step in if issues arise—as the Minister explained. The same applies to UK firms offering services in Switzerland.

With that in mind, I would be grateful if the Minister could address the following points. First, I would like to probe the Swiss end. Has Switzerland yet put in place what is needed there to allow UK firms to benefit from mutual recognition? If not, when will this be done? What are the nature and scale of benefits to the UK financial institutions? That seems an important point.

Secondly, turning to our end, how confident are the Government that UK regulators have the necessary tools to monitor Swiss firms’ activities and act swiftly if concerns emerge? What protections are in place for UK clients—not only high net-worth individuals but small firms—should something go wrong?

Thirdly, on timing, why has it taken nearly two years from signing the agreement in December 2023 to putting this framework in place? Has there been a problem with the regulators not being ready or is the Treasury not working at pace?

I was grateful for the reply of the noble Lord, Lord Livermore, to my Question on 16 September, reporting that, by July this year, 51% of assimilated EU law—most of it in financial services—had been repealed, amended or replaced. This was a much lower figure than I had hoped for, given the importance of financial services to growth. I am not sure whether the Swiss regulations—the one set that we are debating and the negative set that is not being debated—will be included in the count in that definition, but the point about pace generally is important. The Official Opposition have been supportive of the transformation process, and there is no excuse for delay.

No doubt the Minister will respond on some of the reservations of the noble Baroness, Lady Bennett, and perhaps explain how things have improved in Switzerland over time. But I note that there will be information sharing as part of the deal, which is important. However, how will Parliament be kept informed of the operation of this agreement, particularly in the event of regulatory diversion or dispute, or a bad case of the kind that was asked about?

In conclusion, we support efforts to deepen co-operation with trusted international partners in financial services, but it is vital that it is done without compromising consumer protection or financial stability, and that it delivers the trading benefits that we all hope to see. I look forward to the Minister’s response, ideally today but otherwise in writing.

[Lord Wilson of Sedgefield (Lab)]

I thank both noble Baronesses for their comments on this SI, which were gratefully received. This is an important SI because it is all about growth and building a relationship with a trusted trader in Switzerland that we can build on into the future.

On security and trust, the UK and Switzerland have a strong and established relationship in financial services, and last year we increased the number of transactions et cetera by 27%, and the amount by £4.9 billion. I cannot give a figure for how that is going to extrapolate into the future, but we are doing this to make it easier to have growth. Those figures will hopefully improve—they will improve, in my view—over the coming years.

In response to the noble Baroness, Lady Bennett, the agreement includes, for us, robust safeguards. Swiss firms must be authorised and supervised by FINMA, and the UK regulators retain powers to intervene if risks arise, including restricting activities and managing wind-downs, which both noble Baronesses raised. The FCA and the PRA act swiftly in urgent cases and collaborate closely with Swiss authorities. These measures ensure that, for UK consumers, market integrity and financial stability remain protected, while enabling the benefits of cross-border market access.

How they will be held to account was another issue raised by both noble Baronesses. Regulators will be held to account through clear statutory duties set out in regulations requiring transparency in their actions and co-operation with His Majesty’s Treasury. Their decisions, such as interventions against Swiss firms, are subject to oversight and include the right of affected firms to refer matters to an independent tribunal. The FCA public register will provide visibility of Swiss firms’ activity, supporting scrutiny by clients and stakeholders. Regular engagement with industry and reporting to the joint committee further ensures regulators’ accountability in implementing and managing the agreement. On the anti-money laundering aspect that was raised, Swiss firms will still need to comply with the UK anti-money laundering regime that we have in place.

On timing, it has taken two years—longer than that, actually, because the negotiations have been going on for a few years. Ultimately, we want to get this right. It is not just us but Switzerland that wants to get this right. There are two different kinds of regimes that have to agree this. After it was agreed by the Swiss Parliament, they had to allow 100 days for a potential referendum to be held. It was not held—it was not called for, so it did not take place—but that is 100 days of that two year period that the noble Baroness mentioned. International agreements often take time. We have to get it right.

--- Later in debate ---

[Lord Wilson of Sedgefield (Lab)]

Obviously, I will write with further detail but, as I said, the regulators will be held to account for what they do. This requires transparency—that is one of our stipulations—but I can write to the noble Baroness with further detail about that.

[Baroness Neville-Rolfe (Con)]

I am grateful to the Minister for explaining the scale of the opportunity to date and, therefore, our ambition for more; this is very good news. I am not sure that it has been quite quick enough for me—from May 2024 to today seems like quite a long time—but, of course, the Government are new and have been very busy with many things, so it is understandable.

Perhaps I could just come back to the point about parliamentary scrutiny. The Minister mentioned a Joint Committee; I am not sure which Joint Committee that was. Clearly, it is important that parliamentarians should be able to see the progress of important financial agreements such as this. I am not quite sure what the mechanism is. Is there an annual report from the FCA that covers this? That would be the FCA and the PRA. I am interested in how parliamentarians will be able to scrutinise this. What will be the best approach?

Amazon Web Services

Baroness Neville-Rolfe Excerpts

Tuesday 21st October 2025 Lords Chamber

[Lord Leong (Lab)]

I thank my noble friend for that point. The Government are obviously aware that we need to give guidance to businesses as well as to people working within government. The NCSC has published a lot of guidance and toolkits, and I encourage my noble friend to look at its website and at all the various guidance and toolkits available to individuals, schools, businesses and other stakeholders.

[Baroness Neville-Rolfe (Con)]

I think the Minister can hear that everybody is rather concerned about this development and the related developments on things such as mobile. I wonder whether it is time for a debate in this House on this and on cyber in advance of the Bill, which is most welcome.

[Lord Leong (Lab)]

I thank the noble Baroness for that. As for a debate, I leave it to Members of the House to table it accordingly. I would welcome a debate to look at this in further detail. As far as the Bill is concerned, we have been working on it for some time, as most noble Lords know. The Bill itself will ensure that the UK economy and information systems relied on by most important digital services and suppliers are better protected. As a result, businesses and public services that rely on them will also benefit. The Bill will include powers for the Secretary of State to update the security requirements that companies in scope of the regime must have in place to protect their systems from any further disruption, whether because of a cyberattack or for other reasons, even simple things such as human error, system outage or physical damage.

Financial Services and Markets Act 2023 (Capital Buffers and Macro-prudential Measures) (Consequential Amendments) Regulations 2025

Baroness Neville-Rolfe Excerpts

Wednesday 3rd September 2025 Grand Committee

[Baroness Kramer (LD)]

My Lords, I recognise that these two statutory instruments deal with technical measures and in and of themselves have limited impact. They are essentially a tidy-up of the text to reflect broader changes made since Brexit to the financial regulatory system. The FSMA 2023 SI transfers to the PRA responsibility for setting the capital buffers that banks are required to hold in addition to minimum capital requirements. The PRA is a strong regulator, but it has taken a series of measures to move in the direction of lighter touch, motivated by its competitiveness and growth objective. I have spoken before about my concern that the PRA, for example, is increasingly willing to turn a blind eye to the illiquidity of assets. When powers are transferred to the PRA, as they are by this SI, a significant measure of transparency, accountability and parliamentary oversight disappears. Capital buffers are critical to the stability of the banking system, and I remain concerned when parliamentary oversight in this key area is significantly weakened, as it is by the measures that both surround and are then captured by this SI.

The second statutory instrument deals with the markets in financial instruments and again affects a transfer of power and responsibility, this time to both the FCA and the PRA. Once again, it is a move to a less transparent and less accountable system. The rules can now be changed, presumably in line with the smarter regulatory framework that the Government have put forward, and they both allow divergence from the EU and a lighter-touch approach. Divergence has its own risk, as it has implications for cross-border business, and Parliament will not have a voice any more than as a significant consultee. Frankly, experience suggests that the regulators look at Parliament’s views in these consultations and treat them as relatively irrelevant compared to the views of industry.

I note that the Minister described the regulators as expert, independent regulators. He would have used exactly that same phrasing before the 2007 crash, and we still live with the repercussions of that crash. Blind trust in the regulator is exceedingly inadvisable. I have tried in previous speeches to list some of the erosions of protections that were introduced after the crash. They include: the competitiveness and growth objective for regulators; the changing to matching adjustment; insolvency UK; significantly increasing the illiquidity of the insurance sector; the removal of the cap on bankers’ bonuses; the permanent permission for pension funds to transact derivatives without using central counterparties, thereby avoiding putting in place margin collateral, which puts them seriously at risk in any kind of financial volatility in unstable times; the watering down of the senior managers’ regime, which is key to accountability; the weakening of the financial ombudsman; the pressure on pension funds to invest in high-risk, illiquid assets; and the uncertainty that now exists around bank ring-fencing.

That is a partial list of the erosions that I have been able to pick up, and I am sure that, if the Government sat down and thought about it, they could come up with a far longer list and perhaps even suggest that this was a huge positive. But it is notable that Parliament will have no further say, now that these SIs have gone through, any more than just an ordinary consultee, in a further erosion of these various protections. Frankly, while Parliament will get reports that will allow it to look at the impact, that will be very much in retrospect, which I suggest is very late in the day.

I repeat a request that I have made before for the Government to publish a compendium of the changes that have been made that increase risk in the financial sector and a look at those risk implications. My view is that, without that degree of transparency, Parliament cannot do its proper job.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the Minister for his clear explanation of these statutory instruments and the noble Baroness, Lady Kramer, for her gloss on that.

Today we are considering the instrument on capital buffers as well as the Markets in Financial Instruments (Miscellaneous Amendments) Regulations. While each is described as largely technical, both help to shape the future of our financial regulatory framework. Obviously we on these Benches are happy to consider them together and to raise some questions about how they link to the Government’s wider ambitions for stability, innovation and growth.

We recognise that both instruments form part of the wider process of revoking retained EU law and restating and embedding that in the smarter regulatory framework under the Financial Services and Markets Act 2023. It is important that our regime is clear and coherent and reflects the institutional responsibilities of the regulators, whether the Prudential Regulation Authority, the Bank of England’s Financial Policy Committee or the Financial Conduct Authority.

For me, the most important current issue for the financial regulators is whether they are really adjusting their rules, their outlook and their culture to pursue growth and competitiveness, as they were recently required to do. Is the Minister in a position to assure us that the PRA and FCA have taken vigorous action to meet the Government’s requests and instructions on this vital point? I recall that the Chancellor wrote to them last autumn. What were the key demands, and what did they do in reply? What are the opportunities for growth, bearing in mind the current challenges outlined by the noble Baronesses, Lady Bennett and Lady Kramer? Although I do not agree with all that they said, I think it is important to debate that.

I have a few other questions. On capital buffers, while the instrument is described as technical, it involves substantive changes in transferring responsibility for buffers, such as the capital conservation buffer and the global systemically important institutions buffer, to the PRA. Can the Minister clarify how the Government will ensure sufficient parliamentary oversight of these crucial prudential tools, now that they will be set directly by the regulator? As the noble Baroness, Lady Kramer, said, it is now a less transparent system, so Parliament needs a strong voice in the post-EU world.

Of course, capital buffers are at the heart of keeping our financial system stable. We learned in painful ways during the financial crisis what happens when banks lack the resilience that they need in times of stress. The framework we have now is well established, but risks are evolving all the time. Can the Minister share the Government’s view on whether today’s capital requirements are still fit for purpose, particularly in the light of the growing challenges from shadow banking, digital assets and climate-related exposures?

We note that the second instrument retains certain key definitions from the MiFID organisational regulation, while paving the way, as the Minister said, for the revocation of firm-facing provisions. The intention is to allow the FCA and the PRA to take forward responsibility for detailed rules, tailoring them more closely to the needs of the UK market. The Minister has explained the rationale for that, but I ask him to expand on how these changes will not only safeguard market integrity and, I think he said, prevent the gaps that might arise—but encourage innovation and investment and growth, which I think we all agree that we need if the economy is to move forward positively.

What steps will the Treasury take to ensure that regulators’ rule-making in this area is aligned with the broader ambition of using financial services as a driver of economic prosperity, the point I addressed earlier?

--- Later in debate ---

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Baronesses for their questions and remarks on what are really technical issues. There is no real policy change, but the issues are none the less important. As the noble Baronesses said, one of the key issues is that we want to ensure that the economy grows. As far as our financial regulation infrastructure is concerned, it is always welcome to have heard from the IMF that the architecture that we have now is some of the best of its kind in the world. The IMF also endorsed the Government’s fiscal plans as striking

“a good balance between supporting growth and safeguarding fiscal sustainability”.

In answer to the noble Baroness, Lady Bennett, the Government are committed to upholding financial stability, which is a prerequisite of our position as a leading global financial centre. This is about rebalancing our approach to risk and pushing back on some of the mission creep that we have seen over the past decade. There is scope to do this while continuing to protect financial stability, and obviously we will always keep this under review, which was one of the noble Baroness’s questions.

The noble Baroness, Lady Kramer, asked about parliamentary scrutiny and how Parliament will continue to scrutinise what the FCA and the PRA are going to do. They are independent non-governmental organisations and their independence is vital to their role. However, they are fully accountable to the Government and Parliament for how they exercise their functions, and this accountability is critical to ensure that they are advancing the objectives given to them by Parliament and performing at the optimum.

There were other questions about whether we are giving regulators too much power. We do not believe we are. We have a flexible system. Some of it is still going to be in legislation; some of it is going to be in regulation. The flexibility is there to ensure that the one thing that we create is growth in the economy. To the noble Baroness, Lady Neville-Rolfe, I say it helps to deliver growth because growth is our ultimate ambition. To achieve this, the Government have announced the most extensive package of financial service reforms in over a decade. Reform will unlock growth by increasing the global competitiveness of the sector, reducing unnecessary regulatory burden, spurring the sector’s confidence and boosting innovation and opportunities, which is one of the issues that the noble Baroness raised. Obviously, it is about flexibility, and we need to ensure that we remain flexible in our approach to these regulations and continue to keep them under review.

We believe that these technical statutory instruments do that. It will be for the FCA and the PRA to decide how to streamline and improve their rulebooks. The FCA has already published a discussion paper seeking views on organisational and conduct rules that could be removed or simplified. It has also announced work to review who can be treated as a professional investor, another key plank of the current framework.

I hope this answers many of the questions that were asked. If there are any that I have left out, I am sure that we can write to noble Lords.

[Baroness Neville-Rolfe (Con)]

That was extremely helpful, especially the direction of travel in terms of reform. I would be very interested to know what the growth questions to the PRA and the FCA were. The letters were written last autumn. The Minister has repeated the vision, as it were, and has talked about flexibility, which can be very useful. If the Minister could reflect a bit further on that and on transparency—emphasised by the noble Baroness, Lady Kramer—that would be great. Are the regulators being transparent in the way that they move forward? That is another way that we are able to feed in and criticise if we are not happy.

My other point perhaps goes wider than this debate, but I asked how the Government were getting on with the process of making these post-EU regulations. I do not know whether the Minister can answer that now, but if not, it would be helpful to hear separately on that.

[Lord Wilson of Sedgefield (Lab)]

I do not know exactly where we are with working our way through the EU regulations et cetera and decoupling where we think it is necessary to decouple. I am sure that we can write in some respects. I am sure that we will be doing it diligently in the best interests of the UK and our international standing. On the other issues, I should have mentioned the Leeds reforms which were mentioned on 15 July. The changes will help UK banks to compete internationally and provide the vital investment required to drive growth in the economy. We are implementing the Basel III.1 arrangements on international banking by delaying investment banking requirements until 2028 and implementing other requirements in 2027 and communicating that the Treasury will avoid ring-fencing and that the PRA will undertake a review and report by early 2026. There is a lot going on in this area. The Leeds reforms are critical to that. What drives all this is the fact that we are pursuing growth. That is the one thing that we want to achieve.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I support the objective of growth. I used to be a Treasury Minister and I know that the Treasury will move forward, but it would be good to get this process done.

[Lord Wilson of Sedgefield (Lab)]

I welcome the Opposition’s support.

NHS 10-Year Plan

Baroness Neville-Rolfe Excerpts

Wednesday 9th July 2025 Lords Chamber

[Lord Lansley (Con)]

My Lords—

[Baroness Neville-Rolfe (Con)]

My Lords, if so many people want to speak, we should have a full debate on this plan, which is generally welcome. On digital, the plan summarises various digital improvements. There is also a red book for a child’s health, and feedback from Fitbits and data, which is all very good. However, there is no timescale for any of this and no plan to make patient records from GPs or hospitals available and viewable on the NHS app by the patient, as is the case in other countries. When will the Government give patients open access, as opposed to control by NHS professionals?

[Baroness Blake of Leeds (Lab)]

I hoped I had made it clear that this is the broad outline. Of course, more specific details will come forward and we will have the opportunity to debate them as they do so. The noble Baroness raises important points about challenges as well as great opportunities. I look forward to those debates; I think we are on a very positive way forward. However, I hope everyone understands that this is a 10-year plan for very good reason. We realise the scale of the challenges that face us, and we look forward to getting on with implementation.

Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025

Baroness Neville-Rolfe Excerpts

Thursday 5th June 2025 Grand Committee

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords, financial services fulfil a vital role for people and businesses across the UK and the Government are committed to ensuring high standards of customer protection. These regulations form part of this commitment by strengthening protections for customers, including consumers, businesses and charities, when their bank accounts or other payment services are terminated by their provider.

While decisions to terminate services are generally commercial decisions, customers must be treated fairly. Noble Lords will be aware that concerns have been raised in this area over recent years. This has included concerns about services being terminated on the basis of customers’ lawful beliefs and political opinions. The Government are clear that customers should not see services terminated due to lawful freedom of expression. There are already laws that prohibit providers discriminating against UK consumers on these grounds. However, in other areas existing legislation does not always provide appropriate protection and is not sufficiently clear.

Currently, payments legislation contains no obligation on providers to explain why they are terminating payment services, making it difficult for customers to understand the reasons for terminations, rectify issues or know whether to bring a complaint against their provider’s decision. Furthermore, the current requirement that providers must give customers at least two months’ notice does not always provide customers sufficient time to manage the impacts of a termination and, where needed, find an alternative provider. These regulations make changes to address these issues.

Specifically, the regulations will amend the Payment Services Regulations 2017 to require providers to give customers a longer notice period of at least 90 days before terminating a payment services contract and a sufficiently detailed and specific explanation so the customer understands why it is being terminated. Providers must also advise the customer of how to complain to their provider and of any right they have to complain to the Financial Ombudsman Service. The regulations also clarify ambiguities in legislation to ensure that these new protections are applied consistently. There are some exceptions to the new requirements, mainly so that providers can continue to meet other legal requirements.

Lastly, the regulations make equivalent changes to the Payment Accounts Regulations 2015 so that people who apply for and use basic bank accounts will benefit from the new rules. These changes will increase transparency for customers, ensuring that they understand providers’ decisions and have more time and information to make a complaint or find an alternative provider. The changes will take effect from 28 April 2026 and apply to the termination of payment services contracts that are concluded for an indefinite period and entered into on or after that date.

I know that the Secondary Legislation Scrutiny Committee raised this measure as an instrument of interest in its 25th report, published on 15 May. I am grateful for the consideration the Committee has given this legislation, and I shall respond to the points it raised.

First, the Government acknowledge that there have been concerns about customers being debanked on the basis of their lawful beliefs and political opinions, and that this formed part of what initially led to a review of legislation in this area. Since coming into office, this Government have taken a fresh look at the issue from a broader perspective. As I said earlier, providers are already prohibited from discriminating against UK consumers based on their lawful beliefs and political opinions, but there are shortcomings in wider legislation that governs how providers terminate payment services contracts. The Government are therefore taking a wider approach to strengthen legislation and to enhance fairness and transparency for all customers more generally.

Secondly, regarding the length of the 90-day notice period and the implementation period for the instrument, the Government’s approach is based on extensive engagement. We have sought to balance strengthening the protections for customers with minimising the burdens on firms.

In conclusion, these regulations would make important changes to ensure that customers are treated fairly, while respecting providers’ rights to make commercial decisions. I hope that the Grand Committee will endorse these reforms. I look forward to the debate and beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I welcome the opportunity to speak on this statutory instrument in this brief debate. We note that these regulations build on previous legislation and arise from a consultation that began under the previous Conservative Government in July 2023.

I agree with the Minister that the extension of the minimum notice period for contract termination from two months to 90 days is a prudent and welcome measure. Even more significant is the requirement for payment service providers to provide detailed and specific reasons for termination, thereby enhancing transparency and fairness and discouraging needless debanking; we all saw the unfortunate effect of Coutts’ closure of Nigel Farage’s account. Additionally, informing customers of their right to complain to the Financial Ombudsman Service is a useful safeguard.

I have two problems with these regulations. First, I am concerned by the wide-ranging exemptions to the new rules—“exceptions” is probably the right word. These include the anti-money laundering requirements and the suspicion of serious crime, as well as the possible commission of a public order or harassment offence. These are substantial exceptions that could be the subject of unfair debanking, with the accused unable to know what it is claimed he or she has done wrong. I therefore welcome the change in the threshold from “reasonable belief” to “reasonable grounds to suspect” for serious crime exceptions following consultation, but I wonder whether this is enough.

I should add that small and medium-sized businesses are not exempted from the new requirements. What targeted support or guidance will be provided to help these providers manage the increased compliance burden? These measures could cause problems for businesses already under pressure from NICs and the prospect of new regulation. We all want fairness but the net cost to businesses is £6.4 million a year, by the normally prudent Treasury estimates. This means a net present value of minus £55.4 million.

In the light of this, how do the Government plan to monitor and evaluate these regulations over time to ensure that the extended notice periods and disclosure obligations generally lead to better outcomes for consumers, rather than creating additional administrative burdens for the suppliers of financial services? Can the Government also clarify how conflicts between these termination requirements and other legal obligations on payment service providers will be managed, especially where other laws might take precedence? What mechanisms will be in place to resolve such conflicts fairly and transparently?

Secondly, the main problem for consumers of payment services is not being able to secure a bank account at all. I know this from my own family’s experience of being denied banking, reducing the scope for moving to a different, more competitive bank. This is on grounds such as being a publicly exposed person, which is our experience; selling arms, which it seems wrong to exclude given our growing defence needs; or ungrounded fear by the provider of money laundering. What is the Government’s position on this difficult area of securing a bank account?

I look forward to the Minister’s response and to continued engagement with the Government and regulators to ensure that these important reforms deliver tangible and lasting benefits for payment service users.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Baroness for her speech and those questions. These are important regulations which clarify the situation we have lived under over the last few years, as far as this issue is concerned.

On the several points and questions she has raised, I will answer the last one first, which was about access to banking services. The Government recognise the vital role that financial services provide; that is why we have introduced these new rules. The Government are focused on account closures as a priority. We continue to monitor wider access to bank account provision but recognise this is largely a commercial matter. Some 120 banking hubs have opened; another 200-plus will be opened in the next few years. That is not the limit or the target; it could go beyond that, but it depends on what LINK, which provide them, wants to do. It is, obviously, an ongoing issue. We want to ensure everybody has access to them.

On the new requirements that the noble Baroness suggested, there are important public policy reasons for the exemptions, which are necessary to enable payment service providers to continue to discharge other legal obligations or manage complex scenarios—for example, in relation to financial crime.

On the question of whether we will publish guidance, the Financial Conduct Authority, as the relevant regulator, will update the guidance to reflect the legislative changes. The Government have worked closely with industry, law enforcement and regulatory partners to ensure that expectations of payment service providers are clear.

With that, I think I have covered all the questions. I conclude by saying that the Government are committed to ensuring high standards of customer protection and financial inclusion across the financial services sector. These regulations make important changes but address long-standing concerns about protection given to customers when their bank accounts or other payment services are terminated by their providers. This increased amount of notice and transparency will make it easier for customers to understand and manage the impact of their provider’s decisions, and to make a complaint or find an alternative provider where necessary. The changes will help deliver fairer outcomes and support the Government’s ambitions to deliver for working people. I hope the Committee will join me in supporting the regulations.

[Baroness Neville-Rolfe (Con)]

My Lords, I was a little disappointed about the response on two points. One is on this business of small and medium-sized businesses. The Minister rightly referred to the FCA as the body that is responsible for guidance. It is supposed to care about small businesses and growth, following the letter that the Chancellor wrote to them. The Minister mentioned that there are more small and new businesses in the pipeline; that is good news. Small business spectacles are important, both for financial service providers and, indeed, for unfortunate customers who are trying to get bank accounts.

That was the second point: perhaps it was not possible as I did not give notice of the question, which is not the subject of these regulations, but he did not inform us as to what the latest is on helping people to open a bank account. His objective is the same as mine: to make sure that everybody can do that. He may know from discussion with other parliamentarians that the publicly exposed person issue has been a big one, and there are other issues. I would be interested to be referred to an update on how we are getting on on getting people to open bank accounts. It is important, in societies, for people to have bank accounts and not to be excluded. It is a great pity that it is so difficult, if you are a publicly exposed person, to move banks. That seems unfortunate.

[Lord Wilson of Sedgefield (Lab)]

I think these regulations help clarify all that. As far as small and medium-sized businesses are concerned, the Treasury Select Committee published figures in 2024 on the termination of business accounts in 2023. They were sourced from eight UK banks. The Treasury estimates that, on average, around 64% of business accounts were terminated due to suspicious activity or financial crime, due diligence or fraud, 10% were terminated because of dormancy and less than 1% for political exposure or other issues. We can all amplify the politically exposed people, and we know it is important, but the vast majority of closures and issues that we have are with financial crime and due diligence.

On the other question, we all want everyone who wants to have a bank account to have one. The decision to provide banking services is generally a commercial one by providers. I have already mentioned that 120 to 150, I think, banking hubs have been opened already, and a lot more will be opened. It is not a target. Once we get there, we can probably open more, but that has to be in consultation with the industry. The Government want to ensure that customers are treated fairly when providers decide to withdraw those services. We are focused on account terminations as a priority, given the material impact that a loss of banking services could have on a business already in operation. More widely, the Government continue to monitor evidence in relation to accessing banking services and welcome the FCA’s work in this area.

[Baroness Neville-Rolfe (Con)]

My Lords, I am reassured. It is good to have the figure for politically exposed debanking of 1%, although the significance depends on the total figure for the number of cases. It is more about when people are trying to get bank accounts. I think that the Farage event has led to a degree of understanding that it is important not to debank people who are already customers. What I think is less well understood is how when people who are, for example, politically exposed try to get a bank account, they have difficulties. I hope the regulators such as the FCA think about this because we want to try to make sure that people can have proper bank accounts. If there is any more material on that side of things, I give notice that I would be very interested in it, though I appreciate that I sprung this question on the Minister today although it is not the subject of the regulations.

[Lord Wilson of Sedgefield (Lab)]

I think increasing the time period from 60 days to 90 days and banks now having to write to the customer to say, “These are the reasons why we have this issue with your bank account” and, where it is appropriate and where they can, having to say that they can refer it to the ombudsman all helps. Obviously, this will be kept under review, but I think it is an important improvement on where we were in previous regulations.

Pension Fund Clearing Obligation Exemption (Amendment) Regulations 2025

Baroness Neville-Rolfe Excerpts

Thursday 5th June 2025 Grand Committee

[Lord Davies of Brixton (Lab)]

I thank my noble friend the Minister for his clear and helpful introduction of these regulations.

I just have two issues to raise; it would overegg them to describe them as issues of concern, but we need to recognise them. First, these clearing obligations are there to protect investors. The level of risk is materially increased by removing those obligations; we need to understand that. On balance, it may still be a reasonable thing to do, but we need to recognise that there is risk involved.

The second, bigger issue is that the Pension Schemes Bill, which was published an hour ago—I am holding it in my hand—makes significant on pension schemes in terms of the investments that they hold and the way in which they undertake their investment policy. It needs to be recognised that this very minor measure is part of that more general review, which will take place because of the Bill. I was very glad to hear my noble friend the Minister report that the policy will be kept under review. The fact that we have this pensions Bill means that it will inevitably be part of that process. The whole thing needs to fit together both to provide the investments that secure members’ benefits and to provide members with the reassurance that their money is being kept well.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the Minister for bringing this important debate before the Grand Committee today. While technical in nature, the debate strikes at the very heart of our pensions system. It concerns the management of risk, the generation of returns for pension schemes and the financial security of our country. Derivatives play a crucial role in the operation of pension funds. They allow for efficient exposure to asset classes without necessitating the purchase of the underlying assets. They enable tactical asset allocation decisions to be executed more swiftly and cost-effectively than physical rebalancing and, through leverage, they offer the ability to increase market exposure without tying up significant amounts of capital. I know all of this from my experience as a trustee of the Tesco pension fund some years ago. Above all, derivatives are essential because pension funds face long-term liabilities that are highly sensitive to changes in interest rates, to inflation and to currency fluctuations.

These instruments are vital in managing such risks, especially in an uncertain and volatile world. Interest rate swaps hedge against fluctuations in interest rates that affect the valuation of liabilities. Inflation swaps protect against unexpected shifts in inflation, which is especially relevant where pensions are index-linked. Currency forwards and options manage foreign exchange risk where assets or liabilities are denominated in non-sterling currencies. It is the management of risk more than anything else that justifies their inclusion in the portfolio strategies of pension funds and, as the noble Lord, Lord Davies of Brixton, said, the level of risk is materially increased by this regulation. He also rightly referred to the Pension Schemes Bill, which has only just been published. I am afraid that due to other commitments, I have not yet had time to study it.

Since the European Market Infrastructure Regulation was introduced in 2012, pension funds have been granted an exemption from the central clearing obligation, recognising their unique challenge in meeting margin requirements as central counterparties. Pension funds operate on a long-term, illiquid investment model, and this fundamentally mismatches the short-term, high-frequency liquidity demands of CCPs, particularly under stressed market conditions.

Will the Minister outline the contingency plans in place should the absence of mandatory clearing suddenly appear to increase the risk of counterparty defaults?

I have to say that the exemption from these insurance-type arrangements of a CCP carries its own risks. The Government bear a heavy responsibility to maintain confidence in a financial system upon which livelihoods depend. The government review mentioned by the Minister concluded that removing the exemption could impair the ability of pension funds to invest in productive assets. That must be weighed carefully against the imperative of effective risk management. Can the Minister clarify how bilateral arrangements will be monitored for resilience, given that derivatives are no longer subject to central clearing? He talked about keeping this under review, which I think was helpful.

Our financial markets are deeply embedded in the global system. Can the Minister explain how this move aligns with international financial regulatory frameworks and, indeed, with the EU and US, which have slightly different rules from the UK? Furthermore, has the Minister assessed the potential reputational impact on the UK’s standing in international markets, particularly in the context of post-G20 commitments to mandatory central clearing, which the Minister referred to? Finally, will the Minister publish the underlying risk analysis or cost benefit assessment that supports the decisions to go for an indefinite extension period? Without such transparency, it is difficult to understand how the Government have reached their conclusion and indeed why they have chosen this policy path.

The current impact assessment states that the measure

“mitigates the risk of disruption to the market”

that might occur if pension funds were required to restructure their investment strategies “at short notice”. This would be ahead of the exemptions expiring, which happens to be 18 June—the week after next. However, this is a narrow, short-term cost analysis. I am interested in the wider picture of longer-term cost versus the benefits of alternative systems, so I very much look forward to the Minister’s response on whether he is willing to publish his cost-benefit assessment or, perhaps, to say bit more about the detail.

I urge the Minister to engage deeply with the concerns raised and to provide reassurance that the Government’s decision rests on a sound and transparent evidential foundation. We are dealing with an important subject and a risk that, as I am sure we all agree, needs to be properly managed in the interests of UK plc.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Baroness, Lady Neville-Rolfe, and my noble friend Lord Davies of Brixton for their contributions and questions. First, to answer them both, one thing that the Government are after is growth, obviously, but the other thing is financial stability; both of their contributions referred to that. This is a key priority for the Government. However, the evidence on whether removing the exemption would generate direct financial stability benefits was mixed. For example, some responses to the call for evidence noted that removing the exemption could make stress events worse by increasing liquidity pressures on pension funds. In contrast, the Government found strong evidence that pension funds would need to hold more cash and reduce investment in productive assets if the exemption were removed.

On the other issues, such as how the underlying risk will change and how we will keep that under review, the statutory instrument provides long-term clarity for market participants, which is very important in terms of the policy position. This will help with long-term planning of investment strategies by pension funds to meet their future liabilities. As I have noted, the Government will keep this policy under review in co-ordination with the UK regulatory authorities. If there are changes to market dynamics or wider government reforms that have a material impact on the value of mandatory central clearing for pension funds, the Government may reassess this issue.

On the increased burden on pension funds, this policy maintains the status quo. Removing the exemption would have placed more strain on pension funds. This gives assurance to the pension markets around the long-term consistency in our policy approach.

Finally, on the international market, our market is different from those of the EU and the United States as far as pensions are concerned. The response to the call for evidence indicated that the UK defined benefit market is structurally different from that of other jurisdictions, such as the US and the European Union, so it is appropriate that we take a different decision on this issue. The Government are committed to maintaining our high standards of regulation and financial services, including adhering to relevant international standards, where appropriate. In the US, pension schemes tend to be of shorter duration. There is also a larger and more diverse corporate bond market, which can be used for hedging; this means that the derivatives are used less there than they are in the UK.

I hope that these answers are what noble Lords are looking for.

[Baroness Neville-Rolfe (Con)]

That is very helpful—particularly on the international side. One does need to look at this in an international context; nowadays, we are so aware of the ups and downs of global markets. However, the Minister did not answer the question about the impact assessment. It may be that he does not have an answer today, but this is something that I am often concerned about because I think that good cost-benefit analysis is vital to good government. I made the point that the cost-benefit analysis that we got was a rather short-term thing; it would be very helpful to have a response on that.

[Lord Wilson of Sedgefield (Lab)]

Basically, what we are doing is maintaining the status quo. Things have been like this for several years now; we are just ensuring that the status quo continues into the future. We will review it if we need to, such as if the dynamics in the market change, but what we are offering is consistency for the industry. That is an important aspect of this statutory instrument.

Devolved Authorities: Use of Resources

Baroness Neville-Rolfe Excerpts

Wednesday 23rd April 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, achieving value for money ought to be a priority for any Government, whether national, regional or local, especially a Government committed to growth. So I come back to the point mentioned by the noble Lord, Lord Foulkes of Cumnock: do the Government consider that the SNP Scottish Government’s actions on trans rights represented a good use of taxpayers’ money?

[Lord Wilson of Sedgefield (Lab)]

I appreciate the question that the noble Baroness has asked, but I think that the one thing that should focus our minds, besides the outcome of what the Supreme Court said, is what the Scottish Government should do, and we all should be doing, in the best interests of all the Scottish people. That must be to secure growth to make sure that the support that we have for our cities, our people and the NHS is for all the people in Scotland. It would be great to see the Scottish Government and the UK Government work closely together to ensure that that happens.

Child Trust Fund Accounts

Baroness Neville-Rolfe Excerpts

Wednesday 19th March 2025 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

We are working across departments and with all the providers to try to ensure that access is gained for people who have child trust funds. I am not quite sure what kind of relationship and communication we have with friendly societies, but I will make sure that someone writes to the noble Lord to let him know.

[Baroness Neville-Rolfe (Con)]

My Lords, I too very much welcome the noble Lord, Lord Wilson of Sedgefield, to his place. There is a problem, as he said, so can he say whether he has formally consulted, or intends to, the financial institutions or the child trust fund providers on the feasibility of simplifying the process for young people accessing their funds? What steps might he take to ensure that they are more aware of the child trust fund accounts—perhaps using social media and so on—so that we communicate this opportunity for people to pick up these funds, which are not being claimed, as the noble Lord, Lord Blunkett, explained?

[Lord Wilson of Sedgefield (Lab)]

As of 5 April 2024, some 2.5 million child trust funds accounts and 670,000 mature child trust fund accounts had not been claimed. The Government recognise the importance of ensuring that we marry up young people with those accounts. HMRC is working very closely with opinion-formers and stakeholders to try to ensure that this group is reached. This includes, for example, working closely with UCAS, joining with younger influencers who discuss personal finances online, and using traditional media and HMRC’s own social media channels to target young people to ensure that they know the trust funds exist.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Neville-Rolfe Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I shall be very brief as the leader of the winding speeches. I just join the noble Lord, Lord Leigh, in saying to the noble Lords, Lord Hogan-Howe and Lord Macpherson, that Parliament has given us the responsibility under the national insurance contributions legislation, to come forward with amendments and press them. I am not going to walk away from that responsibility simply because it looks rather difficult.

I say to the noble Lord, Lord Eatwell, who talks about simplification, that it is very easy to have a high-level issue such as that, but I am not going to put simplification ahead of what will basically be the cancellation of something like 2 million GP appointments because of the additional costs on GPs. I am not going to sit by and watch dental practices cut back their services, so that we have much more of this DIY dental care that people are carrying out. I am shocked by the rise in dental sepsis alone. I am not going to sit here while pharmacies basically cut their hours and services. I am not going to sit here while adult social care—we have heard about so many cases—basically has to work out how it sets aside the most vulnerable in our society, because that is the implication.

We have heard also from hospices. People are being told now that their jobs are at risk. This is not a hypothetical or some exaggerated claim; this is a process that is under way across the community healthcare and social care sectors to absolutely cut back in response to this increase in employers’ national insurance contributions. We are trying to stop a disaster. When they came forward with their proposals, the Government did not absorb the fact the National Health Service does not work in isolation. It is part of a much more holistic, complex landscape, and if you undermine the private elements of both social care and community healthcare, you undermine the NHS, and that surely is not what the Government want to be doing under these circumstances.

I could go on because there is so much to be said, but it has been brilliantly said by so many across this House. If the Government were to stand up and say that they accepted this amendment, I think there would be a hallelujah, quite frankly. Will they please understand the problems we are trying to deal with? This is not hypothetical or playing party-political games; this is dealing with a really difficult and serious problem that our society is facing. I do not know quite what I can do in a winding speech, but if I can move anything, I will.

[Baroness Neville-Rolfe (Con)]

My Lords, I echo much of what has been said by the noble Baronesses, Lady Barker and Lady Kramer, what my noble friend Lord Ahmad said about it being a pity that the Minister had not engaged more with all those affected, and the plea for fairness from the noble Lord, Lord Leigh. This Bill is the most important economic measure the Government have put forward since they took office and, as has become apparent from our debates, especially the detailed examination in Committee, it is a misguided measure with numerous defects. It will hit hardest those sectors that employ more labour, such as care homes and hospices, but there will also be flow-through to SMEs and bigger businesses as they seek to cut costs and staff. We have seen this in action with big names such as Sainsbury’s shedding staff and the Federation of Small Businesses and the Chartered Institute of Personnel and Development recording collapsing confidence and planned headcount cuts in the surveys.

During our debate today, the Opposition are proposing amendments to reduce some of the Bill’s most egregious effects. That is the answer to the noble Lord, Lord Eatwell. We have to find a way to limit the impact of this ill-thought-out jobs tax. The tax system is not simple and we are where we are because of the choices the Government have made. The changes are having real impacts on real people in their everyday lives: on charities, small businesses, nursery schools, special needs drivers, pubs, young people and—the specific subject of this amendment—care homes, pharmacies, dentists, GP surgeries and hospices. That is why we are supporting the amendment from the noble Baroness, Lady Barker, and will be voting in favour.

At every stage throughout the progress of this Bill, we have raised the plight of these sectors because of the decisions the Government made in the Budget. They are facing these changes in a very short timescale, as the noble Baroness, Lady Barker, has rightly said. At every stage, the Government have remained unmoved. The Minister has been stony-faced and utterly unreceptive to the genuine and deeply felt concerns of millions of businesses and charity trustees across the country.

We have heard from the noble Lord, Lord Hope, about the Cyrenians, from my noble friend Lady Stedman- Scott about the sheer scale of the impact on charities, and from my noble friend Lady Fraser about the loss of jobs and skills and the difficulties of deciding what to do. These organisations and others are facing a financial cliff edge in April and that is thanks to the Government, who have chosen to put them in this position while at the same time choosing to give a £9.5 billion pay rise to their friends in the public sector, to pledge £8.3 billion to the amorphous GB Energy project and to increase day-to-day spending by £23 billion this year.

These were all choices, and it is hospices, charities, healthcare providers, early years settings and small businesses that will pay the price. That is what my noble friend Lord Clarke of Nottingham was saying: he felt that it was the wrong choice.

In November last year, the Nuffield Trust predicted that the Government’s jobs tax would cost the independent sector’s social care employers in the region of £940 million in 2025-26, and that is on top of around £1.85 billion more that they need to meet the new minimum wage rates from April. These are all relevant to this amendment.

I am particularly concerned about the hospice sector, and that is why I have tabled my own amendment with the support of my noble friends Lord Leigh of Hurley and Lord Howard of Lympne. Both my noble friends spoke with great eloquence, as did the noble Baroness, Lady Kramer, so I will not repeat any of that, but I will say that Hospice UK has confirmed to us that the sector is headed for a £60 million deficit this year. The Health Secretary announced £100 million to make sure we are protecting our hospices, but last week the Prime Minister was forced to admit that that is capital funding and will not have a direct impact on the day-to-day costs. Further to that, I understand from boring into the detail that the £26 million that the Minister mentioned in Committee on day 3 represents almost no new money at all; so, we have a big problem.

Finally, it was reported that the National Pharmacy Association has taken the unprecedented step of voting for collective action in protest at a £250 million hike in business costs that pharmacists face under the Government. If the Minister will not listen to the Official Opposition, perhaps he will listen to the experts, the GPs, the hospices and the charities, which are all telling us that the Government must think again. We agree with the noble Baroness, Lady Barker: the Government must act urgently to protect our health and care providers, our GPs and our hospices before it is too late. Should the noble Baroness choose to test the opinion of the House, we will be with her in the Lobby.

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

My Lords, I am very grateful to all noble Lords who have spoken in this debate. I will address the amendments tabled by the noble Baronesses, Lady Barker and Lady Kramer, seeking to maintain the rates and thresholds at their current level for NHS commissioned services including GPs, dentists, social care providers and pharmacists. As noble Lords will know, as a result of the measures in this Bill and wider Budget measures, the NHS will receive an extra £22.6 billion over two years, helping to deliver an additional 40,000 elective appointments every week.

Primary care providers, general practice, dentistry, pharmacy and eyecare are important independent contractors who provide nearly £20 billion-worth of NHS services. Every year, the Government consult with these primary care sectors about what services they provide and what money they are entitled to in return under their contract; this continues to be the case this year.

The Government have announced an extra £899 million for general practice in 2025-26 and have set out the proposed areas of reform which will help to deliver on our manifesto commitments. This is the largest uplift in GP funding since the beginning of the five-year framework and reverses the recent declining trend in funding. As a result, a rising share of total NHS resources will now go to general practice. The Department of Health and Social Care is consulting with the General Practitioners Committee in England of the British Medical Association on the 2025-26 GP contract and will consider a range of proposed policy changes. These will be announced in the usual way following the close of the consultation later this year.

The Department of Health and Social Care has also entered into consultation with Community Pharmacy England regarding the 2024-25 and 2025-26 community pharmacy contractual framework, and the final funding settlement will be announced in the usual way following this consultation. The NHS in England invests around £3 billion in dentistry every year. NHS pharmaceutical, ophthalmic and dental allocations for integrated care systems 2025-26 were published alongside NHS planned guidance.

The noble Lords, Lord Howard and Lord Leigh, spoke about hospices. The Government recognise the vital role that hospices play in supporting people at the end of life and their families, and we recognise the range of cost pressures that the hospices sector has been facing over a number of years. As the noble Lords mentioned, we are supporting the hospice sector with a £100 million increase for adult and children’s hospices to ensure they have the best physical environment for care. We have also allocated an additional £26 million in revenue to support children and young people’s hospices. The £100 million investment will go towards helping hospices improve their buildings, equipment and accommodation, to ensure that patients continue to receive the best care possible.

Regarding social care, the Government have provided a real-terms increase in core local government spending power of 3.5% in 2025-26, including £880 million of new grant funding provided to social care. This funding can be used to address the range of pressures facing the adult social care sector.

To answer the noble and learned Lord, Lord Hope, all charities can benefit from the employment allowance. As a result of this Bill, from April 2025 the threshold of £100,000 or less will be removed.

--- Later in debate ---

[Lord Elliott of Mickle Fell (Con)]

My Lords, I strongly support the amendments tabled by the noble Lord, Lord Londesborough, to protect small businesses with fewer than 25 employees from the increase in national insurance. Before I begin, I should declare my chairmanship of a small fintech company, as declared in the register.

I am particularly concerned about the impact of the national insurance rise on SMEs because they are the main vehicle for job creation. A 2022 report by the Ewing Marion Kauffman Foundation looked at the United States and found that, in 2019, companies in their first year created, on average, five jobs each, while companies older than that created, on average, just one new job every two years. A similar pattern can be found in the UK. Analysis by Santander of ONS data in 2018 showed that employment growth in SMEs was three times faster than in larger businesses in percentage terms.

The Government’s ambition in their Get Britain Working White Paper to increase the employment rate to 80% is laudable, and I very much support this objective as the president of the Jobs Foundation, again as declared in the register, but achieving this objective requires moving 2 million people from welfare into work. There are currently around 800,000 job vacancies in the economy, according to the ONS, so we need to create an additional 1.2 million jobs to achieve this target, and that will be very difficult with the employer NI rises. SMEs employ 16.6 million people in the economy, and small businesses, those which have between zero and 49 employees, provide 13 million jobs in the economy.

We should seize the national mission to get the employment rate back to pre-Covid levels. This target cannot be achieved if SMEs are not thriving. Therefore, I very much support the amendments to exempt smaller businesses from the increase in NI to enable them to fulfil their role as the biggest engine of job creation and, even more importantly, the biggest mechanism for poverty alleviation here in the UK.

[Baroness Neville-Rolfe (Con)]

My Lords, this has been a good debate and I rise to speak briefly. I listened carefully to the arguments put forward by the noble Baroness, Lady Kramer, for Amendment 2, and I commend the noble Baroness for championing part-time workers, as she has done during the passage of this Bill, much as my noble friend Lord Altrincham has been championing youth employment, which is also so important. She is right to raise the impact that the policy will have on jobs. We know that part-time workers are likely to be more at risk of losing their jobs or missing out on future opportunities as a result of this Bill, particularly as a result of the drop in the threshold, which is one of the proposals.

I also support the noble Baroness’s call for more information on the Government’s assessment of the impact of the Bill. I have tabled a review clause, which is in a later group, that goes wider than Amendment 36 and seeks to correct the Government’s failure to produce a proper impact assessment.

I should add that I have tabled Amendment 34—it has been put into this group—to increase the employment allowance available to farmers. Our farmers are hurting. “Starmer Farmer Harmer” signs are now a common sight on the country lanes of England, although I doubt many Ministers have seen them, but we will not press that amendment to a Division. We tabled that amendment to call on the Government, once again, to support our farmers and reverse the family farm tax, which is undermining, unfortunately, the long-term viability of British farming.

--- Later in debate ---

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I rise to thank my colleagues. As the chief executive of a charity, I know that the sector is watching and listening to what we are doing here and urging us on to do everything we can to mitigate this disastrous policy.

The noble Lord, Lord Bruce of Bennachie, mentioned Scotland. In an earlier debate, it became apparent that the drafting of some of the amendments perhaps did not cover Scotland. Any charity in Scotland of any size has to be registered by the Office of the Scottish Charity Regulator and I would want to be reassured that exemptions covered the entire sector. It amounts to 5% of Scotland’s workforce, and with an increasing number of redundancies and the struggle to recruit volunteers, the workforce is already under strain and potentially limited in its capacity to deliver services.

The Minister spoke earlier about the Government’s increased funding to various sectors, some of which are covered by the charity sector. However, he did not outline how that might help those not in receipt of public sector funding but who are delivering services which support public sector delivery.

Finally, as chief executive of Cerebral Palsy Scotland, SEND transport is an issue firmly in my bag. We already know that the SEND system is under immense strain. We already know of children who cannot go to the school it has been assessed they should attend because of transport issues. This is very complex: transport is provided mostly by private providers. There is already a limited choice of schools. Many children need specialist vehicles to get from A to B. As the noble Baroness, Lady Bennett, said, many firms will be forced to hand back contracts.

I look forward with interest to the Minister’s response to these challenges.

[Baroness Neville-Rolfe (Con)]

Amendment 3 in the name of the noble Baroness, Lady Kramer, seeks to establish a relief for early years settings, universities, charities and small businesses. These are all important sectors; they will be hit hard by the Government’s jobs tax, so we agree with the sentiments that she expressed. However, we have concerns about the financial implication of relief for all these sectors in one amendment. We are instead promoting some modest and separate amendments, which I am afraid makes for a big group.

Amendments 4, 14, 21 and 28 in my name would exempt charities with an annual revenue of less than £1 million from the increase in employer national insurance contributions. My noble friend Lord Leigh spoke persuasively in favour of this proposal, following the pre-emption of his own amendments. My Amendment 35 proposes an increased level of employment allowance for charities.

Noble Lords across the House have been contacted by many charities which are facing tough financial decisions. We have had many worrying examples throughout the stages of this Bill. My noble friends Lady Sater and Lady Fraser made the case for action strongly. My latest example was L’Arche in the UK, which brings together people with and without learning disabilities in life-sharing communities. Again, they are facing hugely steep rises in employment costs. The most vulnerable people in our society will pay the price for Ministers’ misguided Budget decisions.

Amendment 5 seeks to protect children with special educational needs or disabilities. I know that the Licensed Private Hire Car Association SEND transport operators group has written to many noble Lords highlighting the issues that families who rely on these services are facing. It estimates that the associated local funding shortfall in the next tax year, 2025-26, in respect of the services it contracts out to private providers, will be £40 million. That is a relatively small number compared with the overall revenue expected from the jobs tax— £23 billion to £26 billion, depending on the year—but the impact on vulnerable children is wildly disproportionate to that revenue. Like my noble friend Lady Fraser, we feel very strongly that these vital services should be protected. Like the noble Baroness, Lady Bennett, we prefer our formulation on SEND.

Finally, my Amendment 33 addresses early years provision by seeking to increase the employment allowance for early years providers. In government, we took strong action to support the early years sector, while expanding the free childcare offer to all children under five in England last year. The Government are right to adopt our expansion plan in full. We are grateful for that. However, some providers are worried that they will not be able to access the employment allowance because of the public work they do. It would be good if the Minister could look at that again. We are seeing very big cost increases in early years provision, which is extremely worrying.

In conclusion, the Official Opposition feel that the Government must change their approach. We are not satisfied by the Minister’s responses so far and our current intention is to divide on Amendments 4, 5 and 33.

[Lord Livermore (Lab)]

My Lords, I am very grateful to all noble Lords who have spoken in this debate.

I will first address the amendment from the noble Baroness, Lady Neville-Rolfe, which seeks to increase the employment allowance for early years providers. The Government recognise that early years providers have a crucial role to play in driving economic growth and breaking down barriers to opportunity. We are committed to making childcare more affordable and accessible. That is why we committed in our manifesto to delivering the expansion of Government-funded childcare for working parents and to opening 3,000 new or expanded nurseries through upgrading space in primary schools to support the expansion of the sector. Despite the challenging fiscal circumstances the Government inherited, in the October Budget the Chancellor announced significant increases to the funding that early years providers are paid to deliver Government-funded childcare places. This means that total funding will rise to over £8 billion in 2025-26.

The amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, would exempt providers of higher and further education from changes in the Bill. The Government of course recognise the great value of UK higher education in creating opportunity, as an engine for social mobility and growth in our economy and in supporting local communities. We will provide support for departments and other public sector employers for the additional employer national insurance contribution costs. This funding will be allocated to departments, with the Barnett formula applying in the usual way. In answer to the noble Lord, Lord Bruce, it is for devolved Governments to make their own decisions on how that money is allocated.

I say to the noble Lord, Lord Sharkey, that all additional cost pressures will be considered as part of the spending review. The Autumn Budget provided an additional £300 million of revenue funding for further education for the financial year 2025-26, to ensure that young people develop the skills this country needs. This funding will be distributed specifically to support 16 to 19 student participation. Approximately £50 million of this funding will be made available to general further education colleges and sixth-form colleges for the period April to July 2025. This one-off grant will enable colleges to respond to current priorities and challenges, including workforce recruitment and retention. The remaining £250 million of funding will be made available in 16 to 19 funding rates in the academic year 2025-26, with the aim of ensuring that all 16 to 19 providers are funded on an equitable basis from 2025 to 2026. Furthermore, the Budget provided £6.1 billion of support for core research and confirmed the Government’s commitment to the lifelong learning entitlement, a major reform to student finance which will expand access to high-quality flexible education and training for adults throughout their working lives.

I turn to the amendments tabled by the noble Baronesses, Lady Kramer, Lady Neville-Rolfe, Lady Bennett and Lady Sater, and the noble Lords, Lord Sharkey and Lord Leigh of Hurley, which seek to exempt charities from the changes in this Bill and increase the employment allowance for them. The Government of course recognise the important role that charities play in our society and the need to protect the smallest businesses and charities. That is why we have more than doubled the employment allowance to £10,500. This means that more than half of businesses, including charities, with national insurance liabilities will either gain or see no change next year.

As I have noted previously, it is important to recognise that all charities can benefit from the employment allowance. The Government also provide wider support for charities via the tax regime, with tax released for charities and their donors worth just over £6 billion for the tax year to April 2024. The noble Lord, Lord Leigh of Hurley, again asked me to cost his amendment; as I said in Committee, it is not for the Government to cost amendments that do not reflect government policy.

I turn to the amendments and proposed new clause tabled by the noble Baroness, Lady Neville-Rolfe, exempting providers of transport for special educational needs children to and from their place of education from the changes in this Bill and requiring the Government to publish an impact assessment on this topic. In the Budget and the recent provisional local government finance settlement, the Government announced £2 billion of new grant funding for local government in 2025-26, which includes £515 million to support councils with the increase in employer national insurance contributions. This additional funding has been determined based on a national assessment of the costs for directly employed staff across the public sector. However, this funding is not ring-fenced and it is for local authorities to determine how to use it across relevant services and responsibilities.

Furthermore, the Government are providing a real-terms increase in core local government spending power of 3.5% in 2025-26. To support social care authorities to deliver these key services, we announced in the provisional local government finance settlement a further £200 million for adult and children’s social care. This will be allocated via the social care grant, bringing the total increase of this grant in 2025-26 to £880 million. This means that up to £3.7 billion of additional funding will be provided to social care authorities in 2025-26.

On the amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, seeking to exclude town and parish councils from the employer national insurance rate change, the Government have no direct role in funding parish and town councils and are therefore not providing further support to them for the employer national insurance changes.

Finally, on the proposed new clause tabled by the noble Lord, Lord Bruce of Bennachie, requiring the Government to publish an assessment of the impact of the Bill on the Scottish public sector, as I have set out previously, the Government have published an assessment of this policy in a tax information and impact note. This clearly sets out that around 250,000 employers will see their secondary class 1 national insurance liability decrease and around 940,000 will see it increase. Around 820,000 employers will see no change.

The OBR’s economic and fiscal outlook also sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment growth and inflation. The Government and the OBR have therefore already set out the impacts of this policy change. The information provided is in line with other, similar tax changes and the Government do not intend to publish additional assessments. We will of course continue to monitor the impact of these policies in the usual way.

In light of the points I have made, I respectfully ask noble Lords to withdraw their amendments.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

4: Clause 1, page 1, line 1, at end insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”.(A2) After section 9(1A) of that Act insert—“(1B) A “specified employer” means a charity that has an annual revenue of less than £1 million.(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””Member's explanatory statement
Exemption for small charities: This amendment would exempt charities that have an annual revenue of less than £1 million from the Government’s planned increase in employer National Insurance contributions.

[Baroness Neville-Rolfe (Con)]

I wish to test the opinion of the House.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

5: Clause 1, page 1, line 1, at end insert—
“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”.(A2) After section 9(1A) of that Act insert—“(1B) A “specified employer” means a person providing transport for children with special educational needs and disabilities. (1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””Member's explanatory statement
Exemption for SEND transport: This amendment would exempt employers providing transport for children with special educational needs and disabilities from the Government’s planned increase in employer National Insurance contributions.

[Baroness Neville-Rolfe (Con)]

I wish to test the opinion of the House.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Neville-Rolfe Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

12: Clause 2, page 1, line 12, after “£96” insert “or,
(b) for a person providing transport for children with special educational needs or disabilities, £175.”Member’s explanatory statement
Exemption for SEND Transport: This amendment would exempt employers providing transport for children with special educational needs or disabilities from the Government’s planned changes to the weekly threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

14: Clause 2, page 1, line 12, after “£96” insert “or,
(b) for a charity that has an annual revenue of less than £1 million, £175.”Member’s explanatory statement
Exemption for small charities: This amendment would exempt charities that have an annual revenue of less than £1 million from the Government’s planned changes to the weekly threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

19: Clause 2, page 1, line 14, after “substitute” insert—
“(i) for a person providing transport for children with special educational needs or disabilities, £758, and(ii) in all other cases,”Member's explanatory statement
Exemption for SEND Transport: This amendment would exempt employers providing transport for children with special educational needs or disabilities from the Government’s planned changes to the monthly threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

21: Clause 2, page 1, line 14, after “substitute” insert—
“(i) for a charity that has an annual revenue of less than £1 million, £758, and(ii) in all other cases,”Member's explanatory statement
Exemption for small charities: This amendment would exempt charities that have an annual revenue of less than £1 million from the Government’s planned changes to the monthly threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

26: Clause 2, page 1, line 15, after "substitute" insert—
“(i) for a person providing transport for children with special educational needs or disabilities, £9,100, and(ii) in all other cases,”Member's explanatory statement
Exemption for SEND Transport: This amendment would exempt employers providing transport for children with special educational needs or disabilities from the Government’s planned changes to the annual threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

28: Clause 2, page 1, line 15, after "substitute" insert—
“(i) for a charity that has an annual revenue of less than £1 million, £9,100, and(ii) in all other cases,”Member's explanatory statement
Exemption for small charities: This amendment would exempt charities that have an annual revenue of less than £1 million from the Government’s planned changes to the annual threshold.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

33: Clause 3, page 1, line 20, at end insert—
“(2A) At end of section 1(2)(b), insert “or,(c) for an employer in the early years sector, £20,000.””Member's explanatory statement
This amendment, and another in the name of Baroness Neville-Rolfe to this Clause, would increase the employment allowance for employers in the early years sector from £10,500 to £20,000.

[Baroness Neville-Rolfe (Con)]

My Lords, I wish to test the opinion of the House.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

37: After Clause 3, insert the following new Clause—
“Review of effect on economic growthThe Chancellor of the Exchequer must, within six months of the day on which this Act is passed, lay before Parliament a review of the impact of the measures contained in this Act on the rate of economic growth in the United Kingdom.”Member’s explanatory statement
This amendment would require a review of the impact of the measures in this Act on economic growth within six months of the day on which it is passed.

[Baroness Neville-Rolfe (Con)]

My Lords, I will speak to my amendments in this group and to Amendment 42 in the name of my noble friend Lady Lawlor.

One of the difficulties the House has faced in dealing with this Bill has been the Government’s refusal to provide official estimates of the effects they expect the proposals to have on the individual sectors of the economy where its effects are likely to be the most profound. When we discussed their assessment in Committee, the Minister referred us to the impact note published on 13 November 2024. But I am afraid it is a very limited document, with only five pages of substantive text and no detailed assessment of the impact of the national insurance charge on a number of very important areas. Given the harm this policy will have in the many sectors we have already discussed, it is vital that the Government assess this properly. So, as a second-best measure, we have suggested additions to the Bill requiring the Government to look at the various areas of concern and make an assessment of the effect of the NICs changes—including the employment allowance, which should of course limit the damage to the very smallest businesses.

My Amendment 38 would require a sector-by-sector analysis of the impacts of the Government’s jobs tax. I am very grateful to my noble friend Lady Noakes and the noble Lord, Lord Londesborough, for supporting the amendment. It includes key areas that are adversely affected but that we have barely discussed today, notably hospitality, the creative industries and retail, whose challenges were starkly set out in Committee by my noble friend Lord Wolfson of Aspley Guise, with his unique experience of the sector.

Amendment 37 seeks to establish the Government’s view on the effect of the jobs tax on economic growth. We know that economic growth is the Chancellor’s number one policy, so I hope the Minister will be able to give the House some clarity on the Government’s expectations in this area. I also support my noble friend Lady Lawlor’s Amendment 42 and look forward to hearing from her.

We are very concerned about the Government’s failure to publish a full sector-by-sector impact assessment for this policy. I therefore intend to test the opinion of the House on my Amendment 38.

[Baroness Noakes (Con)]

My Lords, I have added my name to my noble friend’s amendment. We debated impact assessments several times in Committee and the Minister’s reply was always the same formula. It went along the lines of: “HMRC has published a tax information note”—which the rest of the Committee thought was wholly inadequate—“and the Government never do any more than this on tax legislation. The Government intend to do no more in respect of this Bill”. That was not a proper debate on impact assessments. The formula hardly changed over the four days we spent in Committee. The Minister eventually cited some precedents, but they were much smaller in scale and different in impact, and provided a precedent only really for the fact that the Treasury treats Parliament with contempt when it comes to providing full information on legislation. It is about time that Parliament stood up to the Treasury. I urge noble Lords to support my noble friend’s Amendment 38.

--- Later in debate ---

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

My Lords, I will briefly address the new clauses proposed by the noble Baronesses, Lady Neville-Rolfe, Lady Noakes and Lady Lawlor, requiring the Government to conduct assessments on the economic and sectoral impacts of this Bill. As we discussed extensively in Committee, the Government have published an assessment of this policy in HMRC’s tax information and impact note. This sets out that around 250,000 employers will see their secondary class 1 NICs liability decrease and around 940,000 will see it increase; around 820,000 employers will see no change. The OBR’s Economic and Fiscal Outlook sets out the expected macroeconomic impact of the changes to employer national insurance contributions on employment, on growth and on inflation. The Government and the OBR have, therefore, already set out the impacts of this policy change. The information provided is in line with other similar tax changes, and the Government do not intend to publish further assessments. The Government will, of course, continue to monitor the impact of these policies in the usual way. As a result, I respectfully ask noble Lords not to press their amendments.

[Baroness Neville-Rolfe (Con)]

I thank the Minister for his reply, but I am sorry that he does not feel able to go further. I am particularly grateful to my noble friends Lady Noakes, Lady Lawlor and Lord Hodgson, and the noble Lord, Lord Londesborough, for their support, and I agree with the noble Baroness, Lady Kramer, that the time has come to take a stand. I do not share the concern of the noble Lord, Lord Eatwell. This is the sort of assessment that we do in the private sector, and in some other departments, and it is possible for the Government to add to the amendment in the other House if they feel they need to do so. We heard earlier from my noble friend Lord Ahmad that the Treasury had failed to consult individual sectors on the proposals under discussion. I know how averse the Treasury can be to that, having been a Minister in a similar position in the Treasury. I also share the fascination of the noble Lord, Lord Davies with the state of the National Insurance Fund, but I think that is for another day.

The Government’s impact assessment has been woefully inadequate for a change on such a huge scale. It is in the interests of the public that we understand fully the impact of the Government’s jobs tax on individual sectors—albeit retrospectively—and the overall figures that we have received from the Minister, which have been helpful in themselves, are just not enough. So I intend to test the opinion of the House on my Amendment 38, but in the meantime I beg leave to withdraw my Amendment 37.

Amendment 37 withdrawn.

Moved by

[Baroness Neville-Rolfe]

38: After Clause 3, insert the following new Clause—
“Review of effect on certain sectors(1) The Chancellor of the Exchequer must, within six months of the day on which the Act is passed, lay before Parliament a review of the impact of the measures contained in this Act on the persons and sectors in subsection (2). (2) The review must consider the impact on—(a) charities;(b) creative industries;(c) dentists;(d) early years providers;(e) farms;(f) general practitioners;(g) hospices;(h) hospitality;(i) pharmacies;(j) retail;(k) small businesses;(l) social care;(m) universities.”Member’s explanatory statement
This amendment would require a review of the impact of the measures in this Act on certain sectors within six months of the day on which it is passed.

[Baroness Neville-Rolfe (Con)]

I wish to test the opinion of the House.