Business Rates Avoidance Schemes

Baroness Neville-Rolfe Excerpts

Wednesday 16th September 2026 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

I accept that point. We have just introduced something to look at the impact we could have on shops that do not have any social responsibility, such as vape shops, through additional rates, et cetera, so that we can invest in shops in those communities that do a really good job, especially in rural areas. Living in a village, I know very well how important the local shop is.

[Baroness Neville-Rolfe (Con)]

My Lords, I know from having had ministerial responsibilities for public sector fraud that there is much scope for reducing it in local authorities. Scams relating to empty business premises are a very good example of this. Do the Government have any wider plans to tackle fraud in local authorities, perhaps with the support of the Public Sector Fraud Authority, and to get at the problems that we have been hearing about?

[Lord Wilson of Sedgefield (Lab)]

As I mentioned in answer to my noble friend Lord McCabe, the Government are looking seriously at this. We laid out our plans in the Finance Act 2026 earlier this year. We realise that the issues raised by the noble Baroness need to be taken into consideration, so a lot more initiatives will take place to accommodate them.

Fiscal Outlook

Baroness Neville-Rolfe Excerpts

Thursday 10th September 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful for the opportunity to contribute to what I agree has been an outstanding debate, and I thank my noble friend Lord Bridges of Headley for setting out the scale of the challenge facing the country in his usual persuasive style. He rightly drew attention to the conclusions of the Economic Affairs Committee two years ago that the UK’s national debt risked becoming unsustainable. This was echoed by my noble friend Lord Howell of Guildford.

Our public finances are in a worse state now than two years ago, when Labour took office. The party opposite likes to talk about Liz Truss, but, this morning, 10-year gilt rates were at 5.24%, which was more than in the financial crash of 2008. This is significantly higher than under Liz Truss. My noble friend Lady Morrissey warned us that there is no safety in numbers among bond investors. In some sense, we are

“in hock to the bond markets”.

We have heard that debt is approaching £3 trillion, borrowing was approximately £130 billion last year, and debt interest costs around £109 billion now and is expected to continue rising. We cannot allow this to happen. At the same time, the tax burden is forecast to rise to 38.5% of GDP by 2030-31, which will be its highest level since records began in 1948.

The truth is that our fiscal position is much worse than the public realise, and it will not take anything major to trigger a surge in the bond markets, leading to a crisis. The Chancellor would be wise to study what happened in 1976, when another Healey had to be bailed out by the IMF—and, indeed, the experiences of 1981 and 1993, referred to by the noble Lord, Lord Burns.

The international pressures we are experiencing come at a time when the UK is combining historically high levels of taxation and public spending with weak productivity, pressure on our public services and very little margin for error. Unfortunately, the Government do not have a credible plan to restore fiscal resilience, generate stronger economic growth and put the public finances on a sustainable, long-term footing.

I will make three further points. The first is that the Government’s fiscal rules cannot be a substitute for an economic strategy capable of delivering genuine growth. The Government’s so-called headroom is already extremely limited, but it is not nearly as important as the wider economic context. Growth is forecast at just 1.1% this year, while the deficit remains some 4% of GDP. This is unsustainable.

Over the past two decades, as we have heard, we have experienced a global financial crisis, a pandemic, war in Europe, energy shocks and repeated geopolitical disruption in the Middle East. It would be a reckless Government who constructed fiscal policy on the assumption that there will not be another crisis.

We need over £300 million every day simply to service the national debt—and we can all imagine what a difference that would make to our Armed Forces or our services, or, indeed, in tax cuts geared to generating growth. Dr Arthur Laffer, as we have heard, was in London this week, saying that we are taxing ourselves to death and explaining how, in contrast, over the years, tax cuts have increased revenues and fired growth in the United States.

My second point is that we cannot tax our way out of a productivity problem. The denominator in almost every fiscal ratio is the size of the economy. Without stronger growth, fiscal consolidation ultimately becomes an impossible choice between higher taxes, poorer public services and still more borrowing. Productivity must therefore sit at the heart of any credible fiscal strategy—it was good to hear from the noble Viscount, Lord Chandos, that it might be edging up. That means creating more of an enterprise culture, as the noble lord, Lord Londesborough, said, and using AI effectively, as we heard from the noble Baroness, Lady Lane-Fox. It is right to think of our strengths, as the noble Baroness, Lady Kramer, said. That includes our very strong network of SMEs in this country.

Productivity also requires conditions in which businesses are prepared to invest and innovate, energy is internationally competitive, skills are better matched to the needs of employers, regulation becomes simpler, and, most importantly, people who are able to work, work. The employment rate was estimated at 75.1% in the second quarter, in a soft labour market. At the same time, welfare spending is forecast to increase from about £334 billion to £409 billion by 2030-31.

Alan Milburn has rightly condemned the insane sick-note culture as NEET figures reach an all-time high, with £25 spent on benefits for every £1 spent on employment support, as we heard from my noble friend Lord Elliott of Mickle Fell. A CSJ report has laid bare a worrying post-pandemic trend of graduates coming straight from university on to sickness benefits. That is the opposite of how welfare should function. On this side, we are agreed on the damaging effect of the Employment Rights Act on new employment.

My third point is that we must become much more willing to confront our spending pressures. I agree with my noble friend Lord Redwood on this. The demands on defence, social care, infrastructure and public services will be substantial, especially if the PM seeks to move utilities into public ownership, as my noble friend Lady Meyer suggested he might. Every major new commitment should therefore be accompanied by a credible timetable, a long-term costing, an identified source of funding and a clear assessment of the consequences for wider public finances. That will be our conservative way under Kemi Badenoch.

In politics, we spend a great deal of our time discussing inputs. The Government announce another billion pounds here or another programme there, and present the scale of the expenditure as though it were in itself evidence of success. It is not. We need to know what expenditure actually achieves. The taxpayer is entitled to expect not simply higher spending—an input without an output measure—but better value and better outcomes.

Like others, I was particularly struck by the thoughtful contribution from my noble friend Lord Hill of Oareford. We need honesty over the challenge of things such as pensions, and a change to the 24-hour political system buffeted by the demands of different lobby groups. Incidentally, I agree with the noble Lord, Lord Rooker, that the poorest pensioners should not be taxed by stealth. I was also very concerned to hear from my noble friend Lord Elliott that public sector pay had risen by 6.9% compared with 2.8% in the private sector, with public sector numbers going up by 42,000 and numbers in the highly taxed private sector declining by 110,000. This is not right.

In a typically trenchant analysis, my noble friend Lady Noakes set out the dilemma facing the Chancellor in his Budget on 28 October—we must have some sympathy for him—and the need to learn from the last Chancellor’s record, which has hit business and entry-level jobs so hard. As my noble friend said, there is no living example of taxing into prosperity. I also look forward to the reply to the rather challenging questions from my noble friends Lord Bridges and Lord Howell.

In conclusion, the fiscal outlook is grim. I agree with those who argued that we should tackle that by reducing spending and not by tax rises, which would only reduce growth and risk a downward spiral. Yet today’s leading story is of a visitor levy, which will hit growth, and a TUC request for a bank tax. Is it a surprise that so many high-rate taxpayers are leaving the country?

Public/Private Partnerships

Baroness Neville-Rolfe Excerpts

Monday 7th September 2026 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

From next April, we are planning to reduce the allowance for investment in cash ISAs to £12,000 to encourage people to invest in stocks and shares ISAs. Figures for 2024-25 will be published later this month on how much more money is being invested in stocks and shares ISAs. We do not have the figures for the current year, but we will see from those figures the investment levels that are being transferred over to stocks and shares ISAs and how that money is going to be spent.

[Baroness Neville-Rolfe (Con)]

My Lords, will public/private partnerships form part of the Burnham Government’s new architecture for growth beyond the health sector, which the Minister has described, and decarbonisation? It is good to see the noble Lord, Lord Brooke, returning to the battle on this matter.

[Lord Wilson of Sedgefield (Lab)]

We will always look at public/private partnerships beyond health centres and beyond decarbonising the public sector, but, as I have continually said, we will do that only if it is in the best interest of the taxpayer and of the Exchequer. We are looking at how best to use public/private partnerships through the National Wealth Fund and we are bringing regional mayors into the system. That will broaden out what we can do with public/private partnerships beyond the two main initiatives that have been announced.

Financial Services and Markets Bill [HL]

Baroness Neville-Rolfe Excerpts

Report stage
Monday 7th September 2026 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

1: Leave out Clause 1
Member’s explanatory statement
This amendment, along with another in the name of Baroness Neville-Rolfe, seeks to allow for a debate on the Government’s intentions around a new regime to be laid down in the regulatory rule book in place of that established by the Consumer Credit Act 1974 and associated legislation, and how they will ensure parliamentary and industry oversight of such a regime.

[Baroness Neville-Rolfe (Con)]

My Lords, I am honoured to open our discussions on Report on the Financial Services and Markets Bill, which we support in general but seek to improve. I congratulate the Minister on his new position and thank him for his engagement. I also thank the noble Lord, Lord Stockwood, whom I am glad to see in his place, and other noble Lords for their constructive approach in six expert Committee sessions. Despite the scale of the Bill and the complexity of the subject, we also ran to time—to the satisfaction, I hope, of the noble Lord, Lord Wilson of Sedgefield. As it is the first day on Report, I declare my registered interest in Meta and Amazon.

This is a large group of amendments, reflecting the anxiety of many of us over the excessive use of delegated powers and the uncertainty this creates in the modernisation of consumer credit law—a move we support. I am moving Amendment 1 to Clause 1, but I intend to focus my remarks on the final amendments in this group: Amendment 93 and Amendments 100 to 103, in my name and that of my noble friend Lord Altrincham, whom I also thank for his work on this Bill.

I hope these amendments might provide a compromise. They address one of the most serious concerns that we and noble Lords across the House have raised about the approach taken in the Bill: the question of how we preserve meaningful parliamentary oversight as increasingly significant powers are transferred away from primary legislation and into the regulatory model established by the Financial Services and Markets Act 2000. That Act was passed when we were still in the European Union, with scrutiny of new areas of regulation in the European Parliament and at ECON, the committee chaired by the noble Baroness, Lady Bowles. Post-Brexit, there is a democratic gap and therefore a huge task for the Treasury Committee in the Commons and the Financial Services Regulation Committee in your Lordships’ House, which is so well chaired by my noble friend Lady Noakes.

We recognise that there are considerable advantages to the FSMA model: greater regulatory flexibility can allow the framework to respond quickly to changing markets, new technologies and innovation. In areas such as consumer credit, the industry itself has argued that moving away from parts of the Consumer Credit Act 1974 could make the regime simpler and less costly to operate. However, flexibility must not come at the expense of accountability. The effect of the Bill is to place considerable trust in the Treasury and, ultimately, the regulators to use their new powers proportionately, effectively and with sufficient clarity for both consumers and industry. Yet we simply do not know what the regulatory landscape will look like once these provisions have been commenced.

These amendments propose a simple and practical safeguard: before the relevant powers are brought into force, the Treasury would publish and lay before Parliament a report explaining how it expects them to be used. The requirement would apply both where the new areas of regulation are being transferred to the FCA, the PRA or the Bank of England, and where the Bill creates significant new powers. This includes: consumer credit regulation, currently provided for under the Consumer Credit Act 1974; payment systems; anti-money laundering supervision transferring from existing professional and industry bodies; the powers relating to overseas recognition regimes; and the new powers under Clause 46 concerning crypto assets. As will be apparent, many of these powers are presently in primary legislation. There is a further problem with the excessive powers on access to banking in Clause 3, but we will come on to discuss a different solution to that in group 2.

The transparency that would be achieved by our proposed approach would benefit not only Parliament but consumers and industry. Greater clarity before commencement should mean better scrutiny, greater certainty and better regulation. I hope the Minister will recognise these amendments for what they are: a constructive, workable and proportionate compromise on an issue that has plagued our discussions on the Bill because of the sheer scale of change envisaged. They preserve the flexibility that the Government say they need while introducing a modest but meaningful mechanism of parliamentary accountability.

I would be grateful if the Minister could set out what assurance the Government can give that Parliament will receive this kind of information before these significant powers are brought into effect. If we do not receive sufficient comfort from the Government, I reserve the right to test the opinion of the House on Amendment 93 and its consequentials on Wednesday. Finally, I thank other noble Lords for their amendments in this group and look forward to hearing from them. I beg to move.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I will speak to my non-diminution Amendments 2 and 3, and to Amendments 4 and 5, which stem from them. In Committee, the Government made it clear that they wish to remove tail risk for firms—a theme running through the changes to the CCA and FOS. I agree that issues such as font sizes and business practices need updating—I would certainly prefer not to have to agree instantly to a garbled recitation of terms and conditions over the phone just to access basic service contracts—but the Consumer Credit Act is fundamentally about protecting consumers from bad corporate behaviour. Aside from the much-cited font issue, tail risk usually arises from bad behaviour that simply takes a long time to surface. There is no justifiable reason for remedy to disappear.

Although I see the attractions of using the FCA framework, I do not accept that there should be a time limit after which bad behaviour is insulated from rectification, or that protections requiring judicial remedy might fall away—over which there is no current certainty. That is the purpose of my non-diminution amendments: to allow modernisation, but not at the cost of significant consumer rights.

A long-standing defect in the CCA illustrates the point: the Act was drafted in 1974, before securitisation existed. As a result, consumer credit has been sold on in ways that mean that the statutory definition, and thus obligations, of the lender no longer apply. This was a happenstance of financial evolution, not intentional design, yet it seriously degrades a regulated product and directly created the modern mortgage prisoner problem that my noble friend Lord Sharkey has brought to this House more than once. One can foresee the same happening with student loans once they are sold off.

The solution is straightforward. Whenever any right stemming from lending or credit is exercised, including the setting, levying or collecting of interest, the corresponding obligations must travel with that right. That must hold even where responsibilities are split across multiple entities under securitisation structures that currently allow each actor to claim it is not the statutory lender. This is entirely consistent with the CCA’s original assignment provisions, and we have precedent, because the MCOB rules already require obligations to follow the exercise of rights in mortgage services.

This principle works. We explained it to the previous Minister and officials before the summer, providing copies of my first amendment and documentary explanation. I recognise there have been changes on the Government’s side, but it is regrettable that there has been no engagement since, especially as collaborative working on good ideas was a stated commitment of the new Prime Minister.

Some may ask: who loses? The answer is that no one suffers unjustified loss. When a regulated consumer product is transferred, the protections attached to it must remain intact rather than be severed, whether by design or accident. For consumer credit, this simply maintains existing rights or, in the case of mortgage prisoners, restores them prospectively. But they had those rights when they took the mortgages out.

Taking the same principle to student loans, once sold into the private financial system, they must carry with them the standards of respectable financial products. Borrowers must be protected from predatory interest rates and, under international accounting rules, when projected non-repayment exceeds 50%, the entire corpus of loans, not just the unpaid part, is pulled on to national debt metrics. Allowing predatory interest rates simply deepens that problem.

This is the logic behind this family of amendments. I urge the Minister to engage constructively as the Bill progresses. As he will know, when I have a principled solution in my sights, it does not go away, because it rests on my conscience, as it should on his.

--- Later in debate ---

In the spirit of openness that has characterised this Bill throughout its transition, I would be more than happy to meet with the noble Baroness to discuss how the Government can continue in a spirit of openness. However, I do not think that legislation is the correct answer to this issue. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I am very grateful to the Minister for his response and his detailed explanation of how Clause 1 is framed. I am also grateful to the other noble Lords who have contributed to the debate—the noble Baronesses, Lady Bowles and Lady Altmann, and the right reverend Prelate the Bishop of Manchester—on the recasting of consumer protection law, which is very important to us all, and the noble Lord, Lord Sharkey, on mortgage prisoners. I would describe that as a sorry tale.

We remain of the view that, when this process of recasting takes place, Parliament and industry must have a practical mechanism through which they can exercise oversight and make such representations as they need to make, such as those that we have heard today, on how the powers are used. The system would not be undermined by that; it is a first-occasion proposal. That is what Amendment 93 and its consequentials seek to provide. It is a workable and proportionate mechanism which allows the Government to achieve their broader objective of introducing a more flexible regulatory framework, but not wholly at the expense of scrutiny, transparency and democratic accountability. We should not be signing away any rights and protections without knowing what will replace them.

I am very grateful to the Minister for engaging with us on our concerns. I do not think that the delegated power memorandum meets them, because it does not explain what all these new powers in these areas are going to be used for, including consumer credit. There must be a meaningful mechanism to acquaint the House with how the powers are exercised and to ensure that regulatory officials turn up to the committee at the convenience of the committee and are able to answer questions on a suitable report on how these important changes are taking place.

We support the general drift of these changes, as the Minister knows well, but we are worried about accountability. I am happy to have further discussions but, if need be, I plan to test the opinion of the House when we reach Amendment 93 on Wednesday. I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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[Lord Mackinlay of Richborough (Con)]

My Lords, I will say a couple of words on Amendment 10 in the name of my noble friend Lady Neville-Rolfe, which I fully support. The phrase:

“The Treasury may by regulations make such provision as they consider appropriate in connection with providing access to banking services”,


is not just wide; it is ocean-wide. It is far too wide, and it is without parliamentary consent or any investigation as to what our democratic processes consider to be the right level of banking services and access to banking across this country.

I will also say a few words on Amendment 8. I am very pleased that the noble Baroness, Lady Hoey, spoke about the Post Office. When I was a constituency MP, I faced—as anyone who lives in any part of this country faced—the closure of banking services, which always caused concern, particularly to older residents. I purposely kept my father, now deceased, away from digital banking because of the risk of scams and of those dodgy emails coming in. He was of perfectly sound mind and very capable, but he perhaps was not as scam aware as younger people are, so I wanted him a long way away from digital banking services—and why should he not stay away from digital banking services?

We were always told by the banks that were closing, “Fear not: we have a Post Office network for all that your constituents and customers need to do in terms of access to cash, banking cheques and that more standard stuff”. I do not know about other noble Lords, but I use digital banking—of course I do. However, when faced with cheques, which are a little bit rarer these days than they used to be, I struggle—for obvious reasons—to hold the camera and go up a bit, left a bit, right a bit, down a bit, get told, “It’s not all in the picture yet”, and press the button. I am sure we all share that frustration. Let me leave your Lordships with this about the Post Office: it is not the panacea of everything. Over the last few months, Lloyds Bank has stopped the use of Post Office services to its customers. I do not know why. This is a two-way street: at the banks’ discretion, they can have a relationship with the Post Office or not. For reasons known only to itself, Lloyds has decided not to use the services of the Post Office. For those reasons, I sympathise massively with the noble Lord, Lord Vaux, who now has to make a 100-mile round trip to a bank. No doubt there is a post office nearer than that, but if you are a Lloyds customer, hard luck: 100 miles.

This is not about the quantity and texture of tomato sauce in a can of beans, which might lead to officials and statutory instruments; these are fundamentals of life that everybody faces on a daily basis. To allow the extent of this power is a power too far. We see far too much Henry VIII in all legislation, not just from this Government but from the Government I was with over the years. There has been a temptation for this creep to happen, and it must not enter the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Baroness, Lady Hoey, and my noble friends Lord Holmes and Lord Mackinlay, for reminding us of the value of post offices and the importance of banking hubs, especially in this ever-expanding digital world. There are serious issues here across the country.

I will speak to my Amendment 10, which would do a very simple thing: remove Clause 3 from the Bill. My argument for it is equally simple: Clause 3 contains no detail about what the Government intend to do. Instead, as the noble Baroness, Lady Kramer, explained, it grants Ministers extraordinarily broad powers, including the power to amend primary legislation on access to banking.

Once the Richard Lloyd review has concluded, the Government may legislate for whatever they subsequently decide is necessary. That could include anything on banking services, with huge implications for consumers, banks, other financial services and the high street. As the noble Lord, Lord Vaux, said, the Government will have the power to amend any Act of Parliament. That is a huge power grab by the Treasury and a very significant delegation of power to ask Parliament to approve in advance. We do not know what problems these powers will ultimately be used to address, what regulations the Government envisage making, or which Acts of Parliament they wish to amend. Yet Parliament is nevertheless now being asked to hand over the power to do all these things.

We should be very cautious about giving any Government powers of this breadth on the basis that they will decide later, in good faith, how they wish to use them. Parliament should not be asked to give Ministers carte blanche, particularly where the powers include the ability to amend primary legislation with minimal parliamentary scrutiny. That would set a terrible precedent.

The right course is straightforward: Clause 3 should come out. Once the Government have completed the review of access to banking and know what they wish to do, they can return to Parliament with legislation setting out the policy, the powers required to deliver it and the appropriate safeguards.

I am very grateful to the noble Baronesses, Lady Kramer and Lady Altmann, the noble Lord, Lord Vaux, and my noble friends Lord Massey, Lord Mackinlay and Lady Lawlor for supporting this amendment. The Minister has a problem: we have a lot of concern across this House, not only among those engaged on the Bill. The amendment reflects the concerns of the Secondary Legislation Scrutiny Committee, with its very expert membership. The committee has also advised that Clause 3 be removed; I say to the Minister that that is usually a killer argument. For these reasons, I do not believe that Clause 3 can remain in the Bill. When Amendment 10 is called, I intend to test the opinion of the House.

[Lord Pitt-Watson (Lab)]

My Lords, I am hearing two arguments here: a strong consensus across the House for the need for access to banking and for the appropriate actions to be taken to make sure that that takes place; and a concern, also raised in Committee, about the breadth of the power, particularly its constitutional implications and the degree of scrutiny that Parliament would be able to exercise over any regulations made under it. These are serious points and the Government have considered them seriously, but they have concluded that Clause 3 is needed at this stage. Because the independent Lloyd review of access to banking has not yet concluded, we do not know whether it will recommend intervention, which consumers may be most affected, the nature of any detriment, and what form any intervention should take. Removing Clause 3 altogether, as Amendment 10 would do, would risk leaving the Government without a mechanism in the Bill to respond promptly if the review identifies a focused and time-sensitive need for intervention.

Amendment 9 would remove the ability to amend primary legislation through regulations made under Clause 3. If acting on the review’s findings required changes to an Act of Parliament, removing this ability would risk removing the mechanism to respond promptly to the review and could delay implementation. Amendment 7 would take a different approach by limiting the powers to matters arising directly from the review. I understand the intention behind that amendment and the review should clearly play the central role in shaping any future intervention. That is why the Bill already requires the Treasury to have regard to the review’s recommendations, but it would not be right to prevent Ministers from considering other relevant evidence alongside the review when deciding whether and how to act. The Government need to preserve the ability to respond proportionately to the full evidence that is available.

Amendment 8 is probably one on which we all agree. The noble Lord, Lord Holmes, and the noble Baroness, Lady Hoey, talked about the central part that post offices can play in making sure that banking access is available. I can confirm that the chair of the review into access to banking services has received representations from and has engaged with the Post Office and the National Federation of SubPostmasters and that officials will continue to engage as part of the development. As noble Lords know, the target is more than 350 full banking hubs, plus 10,500 post offices, involved in this, and I thoroughly commend the points that they have made.

I absolutely understand the concerns about the Henry VIII powers, which seem very broad. Clause 3 does not itself impose new obligations on firms, or any specific model of banking provision. Any regulations under the power would also be subject to the affirmative procedure. However, I assure noble Lords that the Government do not expect Clause 3 to remain in its current form. I forget how the noble Baroness, Lady Kramer, said her hopes would be fulfilled, but I think they would be fulfilled by amendments that were focused on the thing that we all agree on, which is the need for proper access to banking for older people, for younger people—for everyone.

The Government remain committed to keeping the scope of the power under review as the independent review completes its work. We expect to narrow this power after the review reports in October, when I expect the Bill will be in the Commons. Once the Lloyd review has concluded, the Government will be in a better position to consider the correct scope of this power. It would therefore be premature to narrow the power at this stage. For those reasons, I ask the noble Baroness to withdraw her amendment, though perhaps more in hope than expectation.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

10: Leave out Clause 3

[Baroness Neville-Rolfe (Con)]

My Lords, I seek to test the opinion of the House on this amendment.

--- Later in debate ---

[The Lord Bishop of Manchester]

My Lords, I have sympathy with all the amendments in the group, but I will focus my comments on Amendment 11 in the name of the noble Baroness, Lady Kramer, to which I added my name. As we have heard, this would require the FCA to establish a framework assessing banks’ and building societies’ provision of affordable credit.

Credit is a lifeline for families facing debt and financial hardship. According to a recent report, 60% of the clients of Christians Against Poverty—CAP—an organisation that is very active in my diocese, find that they have to borrow money to pay for household essentials and bills. They are not borrowing for luxuries: when credit is unavailable, they are left to delay essential spending and go without meeting their most basic needs. Sometimes, spending a little now will save you spending a lot more down the line.

I am extremely grateful for the remarks made by the noble Lord, Lord Holmes of Richmond. Credit inaccessibility has real consequences for those who are struggling the most. According to CAP, 47% of UK adults who currently have debt that they are struggling to manage have been unable to access their preferred credit option in the past two years.

This kind of financial exclusion means that we are locking vulnerable families into a cycle of poverty. We are depriving them of the tools they need to climb their way out. Unable to look beyond the pressing need to put dinner on the table, it is those with the most desperate need who are forced to sacrifice the most to get by. Left with limited choices, they are the ones most likely to enter riskier credit deals and to pay the greatest poverty premium. I have worked as a vicar in parishes where loans were enforced by men with baseball bats.

Since Committee, we have had the report of the Commons Treasury Committee on the Government’s financial inclusion strategy. The report highlights the need for

“proportionate firm-level financial inclusion metrics. These should focus on the largest providers and on markets where exclusion causes the greatest consumer harm”.

That specifically includes “affordable credit”. The report proposes that metrics

“should be designed to identify whether progress is being delivered consistently across firms and sectors”.

The committee also concluded:

“Voluntary action and pilots … cannot be the main driver of a national financial inclusion strategy unless there are clear routes to scale and clear consequences if voluntary action fails”.


What is proposed in this amendment clearly has much wider parliamentary backing than simply from the noble Baroness, Lady Kramer, and me. Indeed, several major lenders indicated to the Treasury Committee that they would be entirely happy to provide financial inclusion data as part of a statutory system.

This Bill, and this amendment to it, provide a sensible and practical solution to implement what the Treasury Committee advocated. Importantly, it will place responsibility for access to affordable credit on the lender, and introduce a clear framework by which banks and building societies can be assessed on how effectively they are meeting the financial needs of underserved communities. The new requirement for this framework to be kept constantly under review will ensure that those requirements remain open to scrutiny and adaptable to ever changing patterns of financial exclusion—patterns that could become more dynamic and entrenched as society rapidly changes. This amendment is an important step towards ensuring that our financial services meet the needs and uphold the dignity of real people, rather than expecting individuals to adapt to systems that too often exclude them from full participation in economic and community life. The only people who will not like it are the dodgy lenders who harass people in my diocese. I pray that we all support this amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to all noble Lords who have contributed to this interesting debate. I much look forward to the Minister’s response, particularly on child trust funds for those in that capacity. I agree with my noble friend Lord Mackinlay that we have a problem with HMRC administration of estates, with the risk of more chaos in prospect as IHT on pensions arrives. We should be finding a way to improve the system—for example, by widening the application of IHT423.

I will focus on Amendment 94 on financial education. This is an issue on which I have campaigned for a long time. It reflects my belief that financial capability is an essential life skill and, indeed, that it is essential if we are to have financial inclusion for those struggling to make ends meet. I will not repeat the strong case I made in Committee on 8 July which can be found in Hansard at column 149. Our revised amendment would require the FCA to take reasonable steps to work with the Money and Pensions Service, the Secretary of State for Education, relevant education bodies, providers of teacher training and professional development and industry bodies to support the effective delivery of financial education. It is good that I now have the support of the noble Baroness, Lady Kramer.

The financial decisions that people are expected to make are increasingly complex. Young people, as well as adults of all ages, need a working understanding of concepts such as compound interest, inflation, pensions, savings, taxation, borrowing and so on. My noble friend Lord Agnew was on the BBC this weekend. He has written about how 10 million adults in Britain right now have the numeracy of a primary school child, yet we are asking young people to make extremely significant financial decision—sometimes taking on tens of thousands of pounds of student debt—without necessarily giving them the grounding in financial concepts that would allow them to understand those decisions.

I was very grateful to the Minister for helping to arrange a meeting with the Money and Pensions Service. I recognise the work that it is doing. However, one concern I took away from that meeting was that a considerable amount of financial guidance focuses on moments when an individual has reached a major financial event, such as taking out a mortgage, dealing with a divorce, approaching retirement or experiencing financial difficulty. I believe we need to be more ambitious. Our objective should be to build financial capability throughout the population before people reach these moments and, indeed, to encourage sound investment and savings for a rainy day.

Preparing for an Ageing Society (Economic Affairs Committee Report)

Baroness Neville-Rolfe Excerpts

Friday 4th September 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, this is a valuable and timely report. It continues the tradition of high-quality reports from the Economic Affairs Committee, and I join the tributes to the noble Lord, Lord Wood of Anfield, in his role as chair, to the noble Lord, Lord Liddle, for his clear and compelling opening speech, and indeed to the clerks who have supported the committee.

This excellent report sets out with clarity the scale of the demographic challenge facing the country. The UK is ageing rapidly, birth rates have fallen to historic lows and the implications for our labour market, our tax base and our public finances are profound. The noble Lord, Lord Liddle, and my noble friend Lord Lamont were right to emphasise the consequences for fiscal sustainability and to cite the OBR in telling us that, on current forecasts, debt would rise to an unimaginable 270%. My noble friend Lord Willetts emphasised the possibilities of technology and robotics in heading this off, and many noble Lords have rightly focused on the need to increase employment rates among those in their 50s and 60s. That is a theme I will return to later.

We also heard from many about the need for transformation of adult care; I think we all wish the noble Baroness, Lady Casey, great success. There has been a debate about pensions, summarised by the noble Lord, Lord Razzall, and articulated very well by my noble friend Lady Coffey from her experience at DWP. There was a lack of agreement, but the arguments for the triple lock were set out very clearly and well by my noble friend Lord Redwood. I thought my noble friend Lady Bottomley was right to mention the value of occupational health, which is something I agree with from my business experience.

It is possible, in the time available, to cover only a few points. I will try not to repeat what has already been said, but I draw attention to the Government’s response. Unlike the noble Lord, Lord Razzall, I think it is a respectable one, although sometimes ideology is overinfluential. At the top of page 12, the commitment to

“halving the gap in healthy life expectancy between the richest and poorest”

is foolish. The Government’s ambition should be to improve healthy life expectancy for everyone, especially the least fortunate. We do not want the gap to be narrowed simply by reducing healthy life expectancy among the rich.

It is clear from the report that the problems of our ageing society would be much reduced if we could get our birth rate back up to the replacement rate. Although all countries have found this difficult, more efforts should be made. It is not a lost cause, as my noble friend Lady Penn explained. My view is that more help with nursery provision could make a big difference. Having a childcare system largely geared to school hours and school terms may be convenient to teachers, but it makes it very difficult for most working parents. They do it better elsewhere, not only in Scandinavia but in the United States and, indeed, in France, as described by my noble friend Lady Meyer. I know that from the experience of family members in those countries. The noble Baroness, Lady Nargund, explained that people also need to be taught more about fertility. Of course, the shift to starting families later can lead to lower replacement rates.

Otherwise, the best way to mitigate the problems outlined in this important report is to conjure up more economic growth. The then Chief Secretary to the Treasury, James Murray, described this in his response letter as the “central mission” of the Government. It is one of the best ways out of the dilemmas described and, indeed, many of the other problems we face. Unfortunately, many of the actions taken by this Government have reduced growth. Examples include the effective ban on new drilling in the North Sea, leaving Norway to grow instead. That and other policies have led to the highest electricity prices in the developed world. These have ruined our car and cement industries and hit data centres which support AI, one of the key new avenues of growth. We have seen a disastrous attack on large and small businesses: a £25 billion hit on NICs, a very high minimum wage, especially for the young, and the Employment Rights Act, the damaging consequences of which become more apparent by the day. I urge the Government not to launch another attack on wealth creators in the Budget on 28 October.

Improving productivity can also contribute. It was rightly on the list from the noble Lord, Lord Razzall. I am more optimistic than he is about the scope for improving productivity if we follow the right policies.

Demography is not only about births and deaths—or, indeed, immigration. We face a worrying trend of entrepreneurs and younger talent emigrating because of high taxation and growing burdens on business. If we want people to work longer, to invest more and to innovate here in Britain, we must stop making it harder for them to do so. I ask the Minister for reassurance: how do the Government intend to reverse the outflow of skilled, ambitious workers, who are essential to sustaining our future tax base and supporting our ageing population?

We also need a national conversation about retirement expectations. Too many assume that the system will simply provide. Yet, given the demographic realities, younger workers will need to save more for longer and will almost certainly retire later.

There are two mitigations in the report that I will highlight in conclusion. The first is to join others in persuading those able to do so to work for longer and allowing them to do that. People live much longer than they did, but a much smaller part of their life is spent in work than when pensions were devised. It is too easy for many of those contributing to the economy to retire early. My father’s farming business failed when he was in his 40s, but he retrained and worked into his 70s. We need more of this, and not only in the House of Lords. To achieve this, we need to call out the culture of age discrimination that I was shocked to discover when preparing my review of the state pension age in 2022. The latest figure from the Centre for Ageing Better suggests that one in three people reports experiencing age discrimination. The right reverend Prelate the Bishop of Coventry rightly described the amazing contribution that older people make to civil society.

My second issue is better financial education. It is welcome news that the Government will shortly consult on better provision in the national curriculum. On page 6, the response commendably tells us that, through their reforms, the Government will be

“building a generation better equipped to plan for and navigate significant financial decisions, such as those relating to retirement”;

obviously, I would add to that investment, which has been a subject of this debate. The response talks about young people learning

“about tax, scams, bank accounts, savings and pensions”,

to which I would add the power of compound interest when you save. I would also point to the value and importance of financial literacy across the population and in lifelong learning, which is the subject of amendments I have proposed to the financial services Bill.

In conclusion, I warmly thank the committee for all it has done in setting the scene in this vital area. I thank the noble Lord, Lord Liddle, all of the committee’s members and all those who have taken part so constructively today. They will, I hope, help the Minister move things forward, and I very much look forward to his response.

Electricity Bills: VAT Removal

Baroness Neville-Rolfe Excerpts

Thursday 23rd July 2026 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

We know the issues around VAT in Northern Ireland, for example on electricity bills. The Northern Ireland Executive will receive comparable funding to enable them to support NI households with the cost of living. We have taken into consideration all the issues around the Windsor Framework, and we will continue to help the people most in need who live in Northern Ireland.

[Baroness Neville-Rolfe (Con)]

My Lords, I, too, send my best wishes to the noble Lords, Lord Livermore and Lord Stockwood. I welcome the appointment of the noble Lord, Lord Pitt-Watson, and look forward to the more constructive approach favoured by the new Prime Minister. With 10-year yields above 5%, political and international instability is already increasing borrowing costs and placing the sustainability of the public finances under serious strain. Does the Minister recognise that unfunded spending commitments cannot simply be floated in the press or on podcasts without consequences? Markets react, investment and growth are discouraged, and working people ultimately pay the price, with increases in the cost of living.

[Lord Wilson of Sedgefield (Lab)]

I echo the noble Baroness’s comments about my noble friend Lord Pitt-Watson, who will be the new Minister, taking over imminently—after this Question, I hope. The Government are well aware of the international situation we have in the Middle East and Ukraine; we know about the issues that we face. I do not believe the announcements being made are unfunded; we are finding the money to face up to the problems that ordinary people around the country are facing. I repeat the facts again: £9.4 billion of unfunded pay awards and £2.6 billion of new unfunded policy announcements by the last Government. What we are doing pales into insignificance compared to the debt they left the country in.

National Savings (Remediation Scheme) Regulations 2026

Baroness Neville-Rolfe Excerpts

Wednesday 22nd July 2026 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

That this House regrets that the National Savings (Remediation Scheme) Regulations 2026 were introduced only after a prolonged delay affecting up to 37,500 bereavement claims; and that failures by National Savings and Investments have given rise to a substantial liability for the taxpayer.

Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[Baroness Neville-Rolfe (Con)]

My Lords, this instrument provides National Savings & Investments with the legal powers it needs to establish a compensation scheme and to return money that should have been paid to the estates of deceased customers, in some cases many years ago. That remediation must now proceed as quickly and comprehensively as possible.

However, it would be wrong to allow this negative resolution instrument to pass without formally noting the harm that has been caused and the serious failures that have surrounded this entire saga. It is significant that the Secondary Legislation Scrutiny Committee drew the regulations to the attention of the House because they raise significant public policy issues and because Ministers have not answered important questions. Moreover, the Commons Statement of 26 March on the problems at NS&I was not repeated in our House because we had broken for Easter.

I add that this is not the only problem we have heard about in relation to probate. There were terrible delays, especially during Covid—sometimes of years—and I have personal experience of lost submissions to the probate office.

As recently as 6 July, we debated my noble friend Lord Mackinlay’s amendment to force financial institutions, which would include NS&I, to use the IHT423 scheme to allow executors to source funds to pay inheritance tax in advance of the unrealistic six-month deadline for probate and to avoid the punitive rate of interest: 4% above base rate, so that is 7.75% at present. All this makes you weep for the poor bereaved already going through an emotional upheaval.

The wording of my regret Motion is intended to highlight two matters: first, the prolonged delay that has affected tens of thousands of bereavement claims, and, secondly, the substantial financial consequences arising from the failures of National Savings & Investments. I also have a number of questions for the Minister, and the responses may provide reassurance. I recognise that some of the failures to which I will refer will have occurred under Conservative Administrations and, indeed, previous Labour Administrations. This is not only an administrative or a technical problem; it has had a profound human impact. Bereaved families were entitled to receive the savings of their deceased relatives but, through no fault of their own, were denied access to that money.

The search process used by NS&I when handling bereavement claims did not always identify every product held by the deceased customer. As a result, estates were repaid only part of what they were owed. The Pensions Minister said on 19 May that around 34,000 estates may have been affected, with a total value of some £367 million. I hope the Minister will tell us how many estates are now believed to have been affected, how much money remains outstanding and how confident the Government are that they have identified the full scale of the problem.

Behind these large numbers are individual families and executors who suffered real distress. Some bereaved relatives have spent years trying to recover what belongs to them, facing uncertainty and obstruction. As a government-backed savings institution serving more than 24 million people, the fundamental attraction of NS&I products is their security and the fact that the savings are backed by the Government. When NS&I fails to locate customers’ holdings, fails to unite estates with their money and leaves families pursuing claims for years, trust in that important institution is damaged.

I hope the Minister can tell us when the Government first became aware of the full scale of a problem affecting tens of thousands of families, why action was not taken sooner and whether there were earlier warning signs within NS&I that were missed or not escalated. For how long had the defective search process been operating before the failure was identified? I believe that some cases date back as far as 2008. Why did internal and external audit and Treasury oversight fail to identify this earlier? Were there letters from MPs that should have woken Ministers up to the problems facing such a vulnerable group? The departure of the former chief executive, Dax Harkins, and the appointment of Sir Jim Harra, with his long-standing experience at HMRC, are welcome and are clear indications that the Government recognise the seriousness of what occurred.

Turning to the substance of the regulations, we welcome the decision that NS&I will act proactively. However, there is also the important question of funding. The money held in these accounts plainly belongs to the estates. Returning that principal sum is not a new cost to the taxpayer; it is the repayment of money that should never have been withheld. However, compensation, additional interest, professional fees and the administrative costs of identifying and contacting affected estates represent additional expenditure. The Treasury was unable to give the Secondary Legislation Scrutiny Committee an assurance that no further support from the public purse would be required. So I ask a simple question: will NS&I funds need to be increased to meet the extra burden or not? Can the Minister tell us now what the cost of compensation, additional interest, professional fees and the operation of the scheme will be? Will these costs be met entirely from NS&I’s existing budget? If additional funding is required, will Parliament be informed promptly and transparently by the Treasury?

The Government have said that NS&I aims to complete the remediation process during the first half of 2027 and will publish quarterly progress reports. That commitment is welcome, but those updates must contain meaningful, detailed information. The House should also be told what happens if the target of completion in the first half of 2027 is missed. Who will be accountable and what external oversight will there be of the scheme?

In conclusion, these regulations are necessary. Those relying most on NS&I products tend to be those who are less sophisticated financially than perhaps in other ways. In short, the vulnerable have been those most affected. This is an unhappy situation. Hundreds of millions of pounds were not reunited with the estates entitled to receive them. Some bereaved relatives were forced to struggle with NS&I for years and incurred costs simply to recover their family’s own money. We will allow the instrument to pass because delaying remediation would only compound that harm. However, we cannot allow it to pass without demanding accountability and transparency and extracting an undertaking that the Government keep on top of delivery of this vital remediation scheme. I very much look forward to hearing from the Minister, and I beg to move.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the noble Baroness, Lady Kramer, for her support and to the Minister for his helpful response. I do not think he answered my question about when the first signs of this scandal first emerged—for example, in MPs’ correspondence. I recognise that that is a difficult question to answer, but I am grateful for the regular reports that he has promised.

I do not wish to delay the establishment of the remediation scheme for vulnerable and bereaved families, which I obviously support. The money belongs to the affected estates, as the Minister said, and must now be returned, together with appropriate compensation and interest. It would therefore not be appropriate to divide the House. The important thing is to proceed with the mediation as quickly and comprehensively as possible. I beg leave to withdraw the Motion.

Motion withdrawn.

Financial Services and Markets Bill [HL]

Baroness Neville-Rolfe Excerpts

Committee stage
Wednesday 8th July 2026 Grand Committee

Debate on whether Clause 39 should stand part of the Bill.

[Baroness Neville-Rolfe (Con)]

My Lords, our amendments in this group concern the future of the bank ring-fencing regime. I will start by setting out clearly the position that we have reached as the Official Opposition. Through our diagnostic work, we have found a consensus that the bank ring-fencing regime is no longer fit for purpose. It adds costs to banks and their customers and it has been superseded by other rules since its introduction. A regulatory regime should not be preserved simply because it exists. It must continue to justify itself against present-day risks, tools and costs. In our view, the ring-fencing regime no longer does so. The next Conservative Government would repeal the post-global financial crisis ring-fencing regime, bringing the United Kingdom more closely into line with other international jurisdictions. Amendment 160A reflects that policy.

It is worth reminding ourselves what ring-fencing is. The regime was created through the Financial Services (Banking Reform) Act 2013, which amended FSMA 2000. The implementing regulations and orders came into effect in 2019, more than 10 years after the onset of the global financial crisis. At its core, ring-fencing is the structural separation of certain retail banking activities from activities normally conducted by international wholesale investment banks. In practice, that means a separate legal entity, with restrictions on what it can do and how it can interact with the rest of the banking group. Retail and small business deposit-taking is placed inside the ring-fence, while certain other activities must be conducted outside it.

The regime was introduced for serious reasons. The Parliamentary Commission on Banking Standards, convened after the financial crisis, identified three broad objectives: to make it easier to deal with failing banks without taxpayer-funded solvency support; to insulate vital banking services used by households and SMEs from problems elsewhere in the financial system; and to curtail implicit government guarantees, thereby reducing risks to public finances and incentives for excessive risk-taking.

Since ring-fencing was designed, the wider regulatory landscape has changed profoundly. We now have a much more developed resolution regime. We have recovery and resolution planning. We have operational continuity arrangements in resolution. We have stronger capital and liquidity requirements. We have the leverage ratio, the liquidity coverage ratio and the net stable funding ratio. The Bank of England, the PRA and the FPC have a broad toolkit for reducing the risk of bank failure and dealing with failure if it occurs. Moreover, we have sounder management of banks as a result of the senior management regime.

That is precisely the point that we wish to highlight in our amendment. The risks that ring-fencing was designed to address are now addressed through other more modern, more targeted and more internationally coherent tools. The 2022 Independent Panel on Ring-fencing and Proprietary Trading, chaired by Sir Keith Skeoch, reported that the regime has an annual cost to the UK banking sector of around £1.5 billion, which comes from running multiple separate legal entities, duplicating governance systems and raising the cost of capital and lending conducted by non-ring-fenced bodies. This is because large retail deposits inside the ring-fence cannot be used as sources of finance elsewhere in a group to support lending and investment. That review also found that the reduction in the implicit government guarantee and progress in ending “too big to fail” were not attributable to ring-fencing but instead to the development of the UK resolution regime. Ring-fencing is therefore a good example of a broader problem in financial services regulation: rules that are introduced in response to a crisis which then remain in place long after the conditions that justified the change.

We are now left with two regimes that are not aligned in the way that they aim to address “too big to fail”. That adds complexity, cost and burden. It also risks making the United Kingdom less competitive than jurisdictions that rely on resolution, prudential supervision and capital frameworks, rather than structural separation of this kind. Clauses 39 and 40 show that the Government recognise that there is a problem. They seek to make changes to the ring-fencing regime and give the PRA more flexibility over ring-fencing arrangements, but in our view these reforms do not go far enough.

Amendment 160A would repeal Part 9B of FSMA and the core statutory ring-fencing provisions introduced after the financial crisis. It would require the Treasury, the PRA, the FCA and the Bank of England to take the necessary steps to unwind the related rules and guidance. It would require an orderly transition, with attention paid to financial stability, continuity of core banking services and the competitiveness of the United Kingdom. Consumer savings would continue to be protected. Banks would continue to be subject to prudential supervision. Resolution planning would remain in place.

This reform matters for competitiveness. Other major financial centres do not operate a UK-style ring-fencing regime. If UK banks are required to carry costs and structural constraints that their international competitors do not face, that affects the cost and availability of finance. It affects the ability of banks to deploy capital efficiently and it affects the attractiveness of the UK as a place to operate and invest in. It also matters for customers. Regulations that increase costs without delivering commensurate benefit feed through into pricing, service innovation and lending capacity.

If the Government believe that ring-fencing remains necessary, will the Minister explain precisely what financial stability objective it now achieves that is not already achieved through the resolution regime and other prudential rules? Ring-fencing was created in response to a particular crisis at a particular moment for reasons that were understandable at the time. But regulation must evolve. It must be reviewed against current conditions. It must be removed when it no longer serves its intended purpose.

Finally, I would add that whatever changes are made, it is right to have a proper process of consultation with business and stakeholders and a follow-up report to Parliament. That is the purpose of my Amendments 159 and 174.

[Lord Pitt-Watson (Lab)]

My Lords, if I may respond to that, I had thought until recently that what we were debating was a response to the Skeoch commission established by the last Government, but we have new amendments now, it seems—Amendment 160A and the abandonment of clauses—that are really throwing ring-fencing out. I guess that they are tabled in response to a speech by the leader of the Conservative Party, Kemi Badenoch—a speech underpinned by a policy document from her party. That speech, the policy document and this amendment are not asking to think things through further from the Skeoch report: they have made their minds up. Kemi Badenoch announced that a future Conservative Government will end ring-fencing—definitive end of discussion. That, I believe, would be a bad idea. So did the review by Keith Skeoch, who was commissioned by the Conservative Government to opine on this and whose recommendations we are now trying to take forward.

Worse still, the evidence for Mrs Badenoch’s statement is based on really questionable claims, numbers and Mickey Mouse logic. For example, the claim was that the Skeoch report reckoned that the cost of ring-fencing was £1.5 billion. In fact, the report notes that that figure was presented to the review and that

“it has not been possible to draw a strong conclusion based on aggregating these costs”.

The report recognises that there are some costs to ring-fencing, but notes that that was expected and acknowledged by the Independent Commission on Banking, which said that that would not be a cost to the economy, but rather

“a consequence of returning risk to where it should be—with bank investors, not taxpayers—and so would reflect the aim of removing government support and risk to public finances”.

The policy paper has a Mickey Mouse logic that costs should be placed on the taxpayer, when they should be paid by the banks and the investors in the banks.

We should of course be in favour of reviewing the ring-fencing regime to be sure that it is properly doing its job. This is what Skeoch did and, now, if this Bill follows that report, I ask the Minister to ensure that we are careful with definitions in the implementation. For example, we should ensure that, within the growth allowance, the definitions are very carefully drawn up. We do not in future want the taxpayer subsidising proprietary trading—what many refer to as “casino capitalism”.

Badenoch suggests that her reforms would release £450 billion in capital—another number from nowhere. I know that the noble Baroness, Lady Neville-Rolfe, will not have a lot of time to sum up, but I would be grateful if she might write afterwards on how these numbers have been derived and what reduction in bank equity capital they assume. If these numbers do not stack up, that pulls the rug from under the policy document and the speech that was made by the leader of the Conservative Party.

The policy paper suggests that we should abandon the Financial Ombudsman Service. In this industry, which represents 8% of GDP but attracts 42% of corporate fines, Mrs Badenoch has decided that the front-line institution that protects consumers should be abolished. We could say that this does not matter and that Kemi Badenoch is unlikely any time soon to be Prime Minister, but it should matter to us. As the noble Baroness, Lady Noakes, has pointed out, there is considerable expertise in financial services across all parties in the House. Although we have differences, we are united, I hope, in trying to set a framework for the industry that allows it better to serve its purpose: to serve the outside world; to help get money from point A, where it is, to point B, where it is needed; to keep our money safe; to help us transact; and to help us share risk.

If the Opposition Benches feel mandated to follow the policy documented last month, we have a problem. I could not find a single reference in that document to any input from any consumer group anywhere. It felt like a lobbyist document from the City, but I have talked to at least one lobbyist who said “No, it goes way further than we would ever suggest”.

--- Later in debate ---

[The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)]

My Lords, I have enjoyed this exchange of views today. As the noble Lord, Lord Vaux, pointed out, it is refreshing and a little unsettling to find myself in the middle ground in a debate.

Before I turn to the specific amendments and stand part notices, it may be helpful if I briefly set out the Government’s approach to ring-fencing. The Government remain committed to retaining the ring-fencing regime as an important safeguard for financial stability and depositor protection. As the Chancellor set out in her 2025 Mansion House speech, the Government will uphold the regime while delivering meaningful reforms that support growth. Following a review undertaken by the Bank of England, and consistent with the conclusions of the independent Skeoch review, we concluded that aspects of the framework have become unnecessarily rigid and duplicative over time. The measures in the Bill address those issues by making the regime more flexible and proportionate while preserving its core protections.

I turn first to the question of whether Clause 39 should stand part of the Bill. Clause 39 addresses a key conclusion of both the Government’s review of ring-fencing and the Skeoch review: too much operational detail is fixed in legislation, meaning that even relatively minor and technical updates can require legislative amendment. Clause 39 therefore allows HMT, by order, to provide for certain detailed aspects of the excluded activities and prohibitions framework to be specified in the PRA rules, rather than in legislation. This will make the framework more flexible and responsive as market practice, prudential standards and firms’ business models evolve.

Importantly, the clause does not remove parliamentary oversight. Any future delegation would require secondary legislation and be subject to parliamentary scrutiny and approval. This allows the regime to evolve alongside market developments while ensuring that Parliament retains control of the overall framework. Where functions are delegated, the PRA will be subject to the same statutory tests and considerations as currently apply to the Treasury. The clause therefore preserves the existing safeguards while allowing detailed provisions to be updated more efficiently over time.

I now turn to the Clause 40 stand part notice, which was tabled by the noble Baroness, Lady Neville-Rolfe, and the noble Lords, Lord Altrincham and Lord Tunnicliffe. Clause 40 makes the ring-fencing regime more flexible and better aligned with the wider prudential and resolution framework. Since ring-fencing was introduced, those frameworks have evolved significantly and, in some areas, they now provide protections that overlap with ring-fencing rules. The clause reduces unnecessary duplication and helps the regime operate more coherently alongside the wider framework.

Some noble Lords have suggested that developments in resolution remove the need for wider ring-fencing altogether. I am afraid that I cannot agree. Ring-fencing and resolution perform different but complementary functions. Ring-fencing seeks to reduce risks and improve resilience before a firm gets into difficulty, while resolution provides the tools to manage failure if it occurs. Ring-fencing also complements resolution by creating simpler and more self-contained banking structures, which can support resolvability and make an orderly resolution easier to execute if a firm fails.

These resolution powers have been tested in practice, demonstrating that the framework can be used effectively. For example, the Bank of England used its resolution powers in relation to Silicon Valley Bank UK in 2023, facilitating its sale to HSBC without disruption to customers or the use of public funds. The independent review led by Sir Keith Skeoch concluded that ring-fencing has contributed towards the resilience of retail banks, while recommending reforms to improve its flexibility and align it more closely with the wider prudential and resolution framework. Clause 40 gives effect to that approach.

I turn to Amendments 159 and 174, which would require a further consultation and assessment before Clauses 39 and 40 could be commenced. I agree that it is important that proper procedures are followed. When exercising the powers in Clause 39, HMT will follow the better regulation guidance on consultation, and further legislation will be subject to parliamentary debate. The PRA is required by FSMA to consult and conduct cost-benefit analysis on most rule changes. So, in my view, the best point for detailed consultation and impact assessment is when specific changes are proposed.

Amendment 160A, tabled by the noble Baroness, Lady Neville-Rolfe, and the noble Lords, Lord Altrincham and Lord Howard of Rising, would repeal the ring-fencing regime in its entirety and require the Government and regulators to make arrangements for an orderly transition to a non-ring-fenced banking system. I am afraid I cannot agree with this. The ring-fencing regime was introduced following the global financial crisis in response to the recommendations of the Independent Commission on Banking. The commission concluded that separating core retail banking services from riskier activities would help protect the continuity of essential banking services and reduce the risk that taxpayers would be exposed to the costs of a bank failure. The Government’s view is that those objectives remain as relevant today as they were after the financial crisis. Ring-fencing continues to play an important role in supporting financial stability and protecting depositors by helping ensure that essential banking services remain resilient in times of stress. The Skeoch review recommended retaining the regime for now but reforming the regime, just as we are doing.

Several noble Lords highlighted the cost of ring-fencing. It is true that the regime results in costs, but those costs must be weighed against the benefits of a safer banking system, stronger deposit protection and a reduced risk for taxpayers. As I set out when speaking to Clause 40, the Government do not accept that developments in the resolution framework remove the need for ring-fencing. Ring-fencing and resolution perform different but complementary functions, and the Government remain of the view that both continue to play an important role in supporting financial stability. Our objective is therefore reform, not abolition, retaining ring-fencing’s core protections while ensuring that the regime remains effective, proportionate and, importantly, fit for the future.

Alongside the changes in the Bill, the Government are taking forward further reforms intended to support lending, investment and growth while maintaining financial stability. This includes a new growth allowance that will unlock significant additional financing for UK businesses and infrastructure. I assure my noble friend Lord Pitt-Watson that this will be subject to careful consultation.

This has been a genuinely fascinating debate. There has been a range of views, and I hope the Committee will agree that the Bill strikes the right balance between these different positions. For those reasons, I ask that Clauses 39 and 40 stand part of the Bill and respectfully ask the noble Baroness to withdraw her opposition to Clause 39.

[Baroness Neville-Rolfe (Con)]

I am grateful to noble Lords who have contributed to this lively debate, and to the Minister for his response. I am grateful for the support I have received, particularly for my Amendments 159 and 174 and, from some of my noble friends, for Amendments 160A. While I agree with the noble Lord, Lord Pitt-Watson, that this House is admirably expert, he tried to politicise the discussion in a way that I regret. I set out clearly why I think that ring-fencing should go. I want to be absolutely clear that our amendment is not about weakening financial stability or compromising the safety of firms. It is about looking forward, not backwards, as the noble Baroness, Lady Kramer, has done, and recognising that the financial stability framework has changed significantly since ring-fencing was first proposed and introduced. As my noble friend Lord Massey of Hampstead argued, we now have a much more developed resolution regime, stronger prudential supervision, capital and liquidity requirements, recovery and resolution planning, and operational continuity rules. They support financial services and consumers right across the country, as the noble Lord, Lord Pitt-Watson, rightly pointed out.

I am also going to quote from the Skeoch review, as I am winding:

“It was acknowledged at the outset that the regime would impose direct costs on the banks in setting up new structures and operating within the regime. Based on banks’ submissions, implementing the ring-fencing regime had a one-off cost for the industry of c. £2.9 billion, which has already been incurred, and has an annual aggregate ongoing cost of £1.5 billion”.


My noble friend Lady Noakes said that she thought that was a reasonable figure, and I think that is not something we are disagreeing on, which is good. She also said that the risk to the taxpayer is now much lower. The £450 billion figure came from UK Finance in its response to the FPC and the PRA’s capital assessment in April this year. That figure relates to the changes in capital requirements reform, which we have already debated.

I am very grateful to the Minister for his comments, including his reference to this new growth feature, which I will have a look at. But I remain concerned that the Government’s approach, while moving in the right direction, is too limited. Clauses 39 and 40 suggest that the Government accept that there is a problem with the current regime, but their answer is to adjust it rather than to ask the more fundamental question of whether it is still needed, following international practice, which has been quoted. In our view, ring-fencing has been superseded. It imposes real costs on banks, customers and the wider economy; it affects competitiveness, capital efficiency and lending; and it places the UK at a disadvantage compared with other international jurisdictions.

My noble friend Lord Massey of Hampstead rightly said that we will discuss the FOS on a later amendment, and he rightly referred to the risk-aversion problem in the sector, which I recall was a theme of the excellent report by our committee, now chaired by my noble friend Lady Noakes.

We will reflect carefully on what the Minister said, but my approach is a measured one, putting any unwinding in the hands of the Treasury and other stakeholders. But the central problem remains: if we are serious about growth, competitiveness and reducing unnecessary regulatory burden, ring-fencing cannot be exempt from scrutiny. Of course we must learn from the past and look after the consumers, but their savings would continue to be protected, and resolution and prudential supervision have changed our financial services framework since the financial crisis. For now, we have had a good debate, and I beg leave to withdraw my opposition to Clause 39 standing part.

Clause 39 agreed.

--- Later in debate ---

Moved by

[Baroness Neville-Rolfe]

163: After Clause 46, insert the following new Clause—
“Review of tokenisation in UK wholesale financial markets(1) Within 12 months of the day on which this Act is passed, the Treasury must lay before Parliament a report on the development of tokenisation in UK wholesale financial markets.(2) A report under subsection (1) must consider, in particular—(a) the extent to which the existing legal and regulatory framework supports the safe adoption of tokenisation in UK wholesale financial markets;(b) the extent to which current arrangements provide sufficient legal certainty in relation to the issuance, holding, transfer and settlement of tokenised financial assets;(c) the prudential treatment of tokenised assets and the extent to which such treatment is consistent with equivalent non-tokenised assets, where the underlying risks are equivalent;(d) the availability and suitability of settlement arrangements for tokenised financial market transactions;(e) the progress of the Digital Securities Sandbox and the extent to which it is expected to support the development of any permanent regulatory framework;(f) barriers to interoperability between tokenised and non-tokenised market infrastructure, and between different tokenised market infrastructure arrangements;(g) the effect of the current framework on innovation, investment and the international competitiveness of UK financial markets;(h) any further legislative or regulatory changes which the Treasury considers may be required.(3) In preparing a report under subsection (1), the Treasury must consult—(a) the Bank of England;(b) the Prudential Regulation Authority;(c) the Financial Conduct Authority;(d) such other persons as the Treasury considers appropriate.(4) The Treasury must publish the report.”Member’s explanatory statement
This probing amendment would require the Treasury to review the framework for tokenisation in UK wholesale financial markets, including legal certainty, prudential treatment, settlement arrangements and barriers to innovation and competitiveness.

[Baroness Neville-Rolfe (Con)]

My Lords, I will speak also to Amendment 164 and thank my noble friend Lord Ranger of Northwood for his very interesting amendments. This is a really important group. It is clear that digital assets are becoming an accelerating part of our financial and economic landscape, yet the Government, for all their warm words and the work done by the FCA, still lack a clear digital asset strategy. More than one in 10 UK adults now owns a digital asset. Sovereign bonds issued on blockchains, digital settlement systems and collateral, tokenised assets and new payment technologies are all developing fast. They are part of the future of financial services. With financial services changing at extraordinary speed, we have to ask ourselves whether the regulatory framework being created is fit for the future.

We raised this point at Second Reading and we return to it today. This is an area where we see a real risk of regulatory grey zones. Firms are innovating, consumers are participating, institutions are exploring tokenisation and market infrastructure providers are looking at distributed ledger technology. Yet, too often, the answer from the UK regulatory system is uncertain, fragmented or slow. Major banks, asset managers and market infrastructure providers are now exploring tokenised bonds, tokenised funds, digital collateral, digital repo markets and blockchain-based settlement systems. These products are increasingly part of the future of wholesale finance.

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[Lord Stockwood (Lab)]

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, and the noble Lords, Lord Altrincham, Lord Ranger of Northwood and Lord Holmes of Richmond, for these amendments and their contributions to this debate. It is an important discussion of how technology and finance will play an increasingly important role in global markets. I declare that I have been personally trading cryptocurrency since 2017; none of the gains have gone towards political donations—I think it is worth mentioning that at the moment.

Taken together, these amendments seek to support the UK’s focus on innovation, competitiveness and consumer protection in digital asset markets. The Government strongly support the digitisation of financial markets and share many of the objectives that noble Lords have set out today. However, before we turn to the detail of the amendments, it is important to recognise that the UK already has a comprehensive programme of work in train to support the development of digital assets and a tokenised market.

First, on the registry framework for crypto assets, the Government have legislated to establish a framework coming into force on 25 October 2027. This will bring a wide range of crypto asset activities within the registry perimeter, providing the legal certainty and consumer protections that noble Lords rightly identify as essential.

Secondly, I can assure noble Lords that we have a strategy on wholesale market digitisation and tokenisation and an expert to drive it forward within the sector. The Government published the Wholesale Financial Markets Digital Strategy last year, setting out an ambitious plan for government, regulators and the industry to support digitisation of the UK wholesale financial markets. As part of this work, the Government have appointed Chris Woolard CBE as the Wholesale Digital Markets Champion to provide market leadership and co-ordinate industry efforts on tokenisation. The champion has already established a cross-sectoral task force and will report to the Chancellor this year and next on progress on how the UK can further advance the adoption of distributed ledger technology in wholesale markets.

Thirdly, on payments, the National Payments Vision sets out our ambition for a world-leading payments ecosystem delivered on next-generation technology. The Government are working with regulators and industry to renew retail payments infrastructure and ensure that the regulatory framework keeps pace with innovation in digital settlement assets. There is clearly more to do in a fast-moving environment, but the Government see the opportunity and are moving to take advantage of it.

Turning specifically to Amendments 163 to 164A, these relate to the Government’s overall strategy for digital assets and engagement with industry. I agree that, as I said, the underlying objective has already been taken forward through the wholesale financial digital market strategy and the work of the Wholesale Digital Markets Champion. There are also a number of existing mechanisms via which the regulators engage with industry on the subject of digital assets and the wider strategy—whether that be joint Bank of England and FCA engagement with firms experimenting with new technologies in the digital security sandbox, or the recent Bank of England and FCA call for input on tokenisation, which is seeking views on opportunities and risks associated with the wider use of tokenisation in financial markets. I do not think that we need to push such engagement with industry on a statutory footing when it is something that regulators are already prioritising.

Amendments 164B and 164C seek reviews of banking access and consumer redress for digital asset firms. On banking access, the Government recognise the difficulties that some firms have encountered and we are engaged with the sector on those matters. While such decisions are commercial in nature, we also expect businesses to be treated fairly. Under the crypto asset regulatory regime, firms will need to be licensed by the FCA to provide relevant crypto asset services. We would not expect such licensed firms to be subject to the restrictions by banking service providers simply because of the sectors they belong to.

On consumer redress, the Government agree that consumers should have clarity about the protections available to them. However, the existing FSMA framework and the regulated activities orders are deliberately flexible. When new activities are brought within regulation, the relevant regulatory protections, including complaints handling and access to the Financial Ombudsman Service, can be considered as part of the process.

I therefore agree with the underlying objectives of these amendments but I think that the existing strategy and ongoing work provide the most effective route forward. I am a strong believer in the need to digitise financial markets, and I am confident in the actions that the Government are taking with this agenda, which is a key strategic priority for the UK. If I have missed any questions in my response, I will be happy to follow up and write. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I am very grateful to my noble friends Lord Ranger of Northwood and Lord Holmes of Richmond for their support and the amendments that they have tabled on this important topic of digital assets.

I am very glad to hear of the Woolard review of tokenisation and the progress on crypto assets. I hope that the Minister is right about that solving the debanking issue—we will see. However, I am slightly disappointed in his response, because I know that he comes from a sector where digital progress has underlined success. I think that the industry lacks the clarity it needs. That is what it has been telling us. Firms need to know what the Government’s overall strategy is and how the different regulators will work together—I am sure there are some good examples. There is also the question of what definitions will apply to digital assets, along with how the UK intends to remain competitive internationally. There has been a lot of progress around the world.

Therefore, the points that we have raised and those put forward by my noble friend Lord Ranger need to be addressed. I was very struck by the way that he has travelled the world in his international search for success and growth in digital assets. Listening to him, I believe that we can learn from what both Rishi Sunak and the current Government have done together to get behind AI. I also agree with the noble Baroness, Lady Kramer, that we can learn from the successes on fintech—which I remember being involved with probably nearly a decade ago.

If the UK wants to be a leader on tokenisation and digital assets, we need a clear strategy. We need a joined-up and proportionate regulatory approach and a framework that supports innovation, while—most important of all—protecting consumers. I think that we will want to return to this issue on Report. Progress is being made, but we would like to see a little more ambition. However, for now, I beg leave to withdraw my amendment.

Amendment 163 withdrawn.

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Moved by

[Baroness Neville-Rolfe]

167: After Clause 47, insert the following new Clause—
“Duty to promote public understanding of financial services and financial capabilityThe FCA must take such steps as it considers appropriate to promote public understanding of—(a) financial services and markets,(b) personal financial management,(c) saving, borrowing and long-term financial resilience,(d) financial decision-making and financial risk, and(e) pensions.”Member’s explanatory statement
This amendment would give the FCA a statutory duty to promote public understanding of financial services and financial capability, and to report annually on the steps it has taken, the groups most at risk of poor financial literacy or exclusion, and the contribution of improved financial capability to consumer resilience, competition and economic growth.

[Baroness Neville-Rolfe (Con)]

My Lords, in moving Amendment 167, I am grateful for the support of my noble friend Lord Altrincham and the noble Baroness, Lady Altmann.

Financial education is incredibly important, but it is unusually weak in the UK compared to, for example, Finland, the Netherlands, Singapore and Australia. The Times rightly has a campaign to improve it. Rishi Sunak has spent time and effort since leaving office trying to do so, citing how much better people do in life if they understand inflation, the magic of compound interest and the importance of diversifying risk. Financial education is an issue on which I have campaigned for a very long time, notably in my 2022 review of the state pension age. I believe it is central to how people live their lives, make decisions, protect themselves and participate responsibly in the economy. It helps them to make sensible decisions about borrowing, mortgages, insurance and pensions, to avoid scams and financial harm, and to understand basic financial and economic statistics. This is a mission that I hope noble Lords of all political perspectives can support.

Amendment 167 would give the FCA a new statutory duty to promote public understanding of financial services and financial capability. For example, it could produce succinct basic explanatory material on concepts such as compound interest, basic banking, and portfolio and asset diversification. The amendment would require the FCA to report annually on the actions it has taken to improve financial capability, the groups most at risk of poor financial literacy, the groups most vulnerable to financial exclusion, and how improved financial capability contributes to consumer resilience, competition and economic growth.

The reason this matters is that the FCA’s current objectives focus on consumer protection, market integrity, competition, and growth and competitiveness. There is not currently a primary statutory duty on the FCA to improve financial capability across society. Better-informed consumers are less vulnerable to fraud and more likely to save, plan for retirement, compare products, switch providers and exercise choice. That supports not only individual resilience but competition and growth. Poor financial literacy often falls hardest on those who are already vulnerable or excluded. If people do not understand the financial system then they are less able to access it, less able to challenge poor treatment, less able to avoid expensive mistakes and less able to make decisions which improve their long-term security.

One problem is that financial education provision is scattered and variable in quality. There are many good initiatives, some even by the private sector, as I remember from the work done by Tesco Bank in Scotland, but they are not joined up. The curriculum has been improved slightly, although mainly through citizenship and maths, with some schools doing very good work but others being less effective. As recent debates on student loans have shown, this is something that we really need to grasp. We ask 17 and 18 year-olds to make significant financial decisions with long-term consequences, yet we do not ensure that they are equipped with the skills and knowledge needed to make the decisions well.

Many teachers find financial education difficult, and, like people from all walks of life, they are not aware enough of it in their own lives, let alone skilled enough to teach the basics well. They need support, resources and confidence. Financial education needs to be included in teacher training and linked to university teaching. I echo the difficulties of the noble Lord, Lord Carlile, with the scope of the Bill, since an amendment I tabled on the subject was rejected.

The truth is we need a step change at every level. My amendment does not ask the FCA to replace schools, teachers, parents, charities, or the Money and Pensions Service—although that service is too divorced from most financial transactions to do a good job. Our amendment would impose a duty on the FCA to recognise that improving financial capability should be part of its mission, and would require it to report properly each year on what it is doing. That could have a catalytic effect.

I welcome Amendment 170, in the name of my noble friend Lord Holmes of Richmond, which would require the FCA to work with the Money and Pensions Service to produce a national financial education strategy. That is complementary to my amendment.

There is a strong case for a more joined-up national approach. Financial education should not be a patchwork of disconnected initiatives. We need a coherent strategy, covering budgeting, saving, investment literacy, pensions, debt, fraud prevention, digital finance and support for vulnerable groups. I was glad to have a positive response on this issue from the noble Lord, Lord Livermore, to a recent Question, and would be very grateful if the Minister could respond to our pleas. Better financial education could be a key pillar of consumer protection. This is an area where a legacy is waiting to be created. I beg to move.

[Lord Holmes of Richmond (Con)]

My Lords, it is an absolute pleasure to follow my noble friend Lady Neville-Rolfe. I support her Amendment 167, which, as she rightly identifies, has many common themes with my Amendment 170.

I have been working on financial education and financial capability for a long time. As my noble friend rightly identifies, and as we have mentioned in other groups, the need for a coherent cross-society, cross-economy financial education and financial capability strategy, covering every stage of life, could barely be more needed than it is today.

There are two pernicious forces striding our streets, walking hand in hand: financial exclusion and digital exclusion, one often causing and compounding the other. Becky Francis’s review found that it was absolutely key to have financial education and capability within the curriculum, but it is about how that naturally touches on digital capability, media literacy and capability, and AI literacy and capability. These threads all come together, and can do so a positive, additive fashion if they are seen as positive, and are personalised and focused on the individual at every stage of her or his life, to enable all of us to make choices and to be included. With so much in society going digital—to be fair, not much in the Bill is going digital, but that is perhaps an outlier—financial exclusion for want of financial education and capability could dramatically increase and exacerbate the exclusion already felt by those at the most extreme end of our society.

Education is not just about what happens with the curriculum; it is a matter for our regulator. Through that, when it is a primary concern for the regulator, it gives it a sharpness of focus, putting it right at the centre for the regulator responsible for our financial services. It works with the Government’s stated aims in other areas. If the Government constantly state that they want to take a domain-specific approach, a financial education and capability, together with a domain-specific approach, will mean that the FCA will bring in money advice and a pension service alongside that.

I add to this to ensure that financial education and capability go beyond traditional products. When one considers how many young people are engaging with and investing in—in some senses, I put quotes around “investing in”—crypto, it is clear that the financial education and capability need to cover all the financial products, instruments and assets that are currently out there and being used and traded, not least by young people, who need to be enabled, empowered and given the capability and capacity to choose which products they want to engage with in a meaningful and capable fashion.

Amendment 171 is a different matter. It is a very specific amendment on SME right of action with the FCA—a right of action that is currently not available to SMEs. One can see at first blush why this is the case, because there is a clear distinction between a private person and an SME. The difficulty is, as currently set out in Section 138D of FSMA on the definition of a private person, that a private person and an SME are, in reality, characters that represent a principle and policy that sit underneath them. That is what the amendment is all about. The principle being set out is the assumption that a private person is always in need of a right of action because of their circumstances, which an SME is not.

This is beguilingly appealing at first blush, but entirely wrong in being a coherent strategy that includes everyone. The reason is that it inevitably tends to the mean: the average private person on the famous omnibus or the average SME with levels of understanding, support and financial wherewithal. But that does not cut it. That should never have cut it, and it does not cut it for current situations, because, on the one hand, it is clearly entirely possible and a reality that thousands of small and micro entities out there do not have these assumed resources, capabilities and capacities. On the other hand, there are millions of private persons who are far more capable and economically sophisticated than these small and micro entities.

This amendment is specific, clear and coherent: it is to extend that right of action to small and micro entities. I am not suggesting that the drafting is perfect; there may need to be de minimis levels put in, or a clearer definition of what small and micro entities are. But again, if the Government want growth and to back our businesses, not least our small and micro businesses, it is a question of coherence, clarity and fairness. SMEs should have a right of action when it comes to the FCA. This should not be limited just to private persons, as currently set out. I look forward to the Minister’s response and I beg to move.

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[Lord Stockwood (Lab)]

My Lords, I am grateful to noble Peers for raising the important issues of financial education and the right of action for SMEs. On financial education, Amendment 167 would place a statutory duty on the FCA to promote financial capability, and Amendment 170 would require the FCA to publish a national financial education strategy. I am clearly supportive of the motivation, but I do not believe that new statutory duties on the FCA are the right way to achieve it.

The noble Baroness has already mentioned some of the good work that is being done by the Government on financial capability as part of their financial inclusion strategy, such as the work the Department for Education is doing in schools. The Government are also taking steps to improve financial education for adults. For example, we have announced the expansion of the Money Guiders programme, which is run by the Money and Pensions Service. This helps front-line workers, such as nurses and social workers, to have conversations about money with those they support. Fair4All Finance is also deploying £50 million funded by dormant assets in England to support financial capability initiatives. I assure the noble Baroness that the Money and Pensions Service already has a statutory function to develop and co-ordinate a national strategy to improve financial capability and education, as set out in the Financial Guidance and Claims Act 2018, and the FCA also carries out substantial work in this space. Helping consumers navigate their financial lives is already one of the FCA’s four priorities for 2025 to 2030.

Amendment 171 relates to SMEs and would significantly extend private rights of action. The Financial Services and Markets Act 2000 already draws a clear and deliberate distinction between general private law claims available to all parties, including SMEs, and the specific statutory right of action under Section 138D, which is limited to “private persons”—generally individuals and persons not acting in the course of a business. That reflects Parliament’s long-standing judgment that FCA rules are primarily regulatory and supervisory standards, rather than offering a comprehensive basis for civil liability for all market participants. SMEs can and do bring claims under contract, misrepresentation, negligence and other established causes of action.

I understand why the noble Lord is motivated to extend the right of action to SMEs for regulatory breaches. Historically, SMEs were often left with little option outside litigation, and I agree that those firms have fewer resources to seek redress. This was deliberately addressed in 2019 with the significant expansion of the Financial Ombudsman, which is now accessible to 99% of the UK’s small businesses.

I hope I have gone some way to reassuring noble Lords on the action the Government are taking on these important issues, and I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to all noble Lords who have contributed to this important debate, and to the Minister for his response. I commend the remarks of my noble friend Lord Holmes of Richmond and the work that he has done on financial education, and I support his complementary amendment on that subject. This has been a useful discussion, because it is an area that deserves a great deal of attention. There is clearly broad agreement that financial education is too important to be left to a patchwork of uneven provision.

The Minister cited the Money and Pensions Service, which I think is based in the DWP. To date, I have not been terribly impressed by the speed or breadth of the education that it provides. It is not only individual groups that I am worried about. We could get an enormous improvement in growth and performance if financial education were spread much more widely, but I should be happy, if it could be arranged, to talk to the service to understand what it is doing before we get to Report. It may be that some of the plans it has are dealing with this wider problem.

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Moved by

[Baroness Neville-Rolfe]

172A: After Clause 47, insert the following new Clause—
“Reform of financial services dispute resolution(1) The Treasury must, within the period of 12 months beginning with the day on which this Act is passed, publish draft legislation containing provision—(a) replacing the ombudsman scheme established under Part XVI of the Financial Services and Markets Act 2000 with a scheme to be known as the Financial Adjudication Service;(b) removing the requirement in section 228(2) of that Act that complaints be determined by reference to what is fair and reasonable in all the circumstances of the case; (c) requiring complaints within the compulsory jurisdiction of the Financial Adjudication Service to be determined by reference to such statutory requirements as may be specified.(d) providing free access to the Financial Adjudication Service for complainants;(e) providing that the expenses of the Financial Adjudication Service are met by levies or fees imposed on regulated persons;(f) providing that determinations of the Financial Adjudication Service are binding on both parties unless appealed as described in subsection (2);(g) making such amendments to Part XVI and Schedule 17 of the Financial Services and Markets Act 2000, and any other enactment, as the Treasury considers necessary for the purposes of that provision.(2) Draft legislation published under subsection (1) must propose the establishment of a chamber of the First-tier Tribunal to be known as the Financial Services Chamber to hear appeals against determinations by the Financial Adjudication Service and make decisions which are binding on the Financial Adjudication Service unless and until overturned on appeal.”Member's explanatory statement
This amendment would require the Treasury to publish draft legislation to replace the Financial Ombudsman Service with a Financial Adjudication Service and to establish a Financial Services Chamber of the First-tier Tribunal to determine appeals according to law, to provide speed, expertise and high settlement rates.

[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 172A is in my name and that of my noble friend Lord Altrincham. It would require the Treasury to publish draft legislation to replace the Financial Ombudsman Service with a new financial adjudication service, and to create a dedicated financial services chamber within the First-tier Tribunal. This is a significant amendment but also a serious and necessary one. As noted earlier, it follows the policy announcement made by the leader of my party, Kemi Badenoch, at TheCityUK’s conference last month.

The amendment reflects a wider concern about the way in which the Financial Ombudsman has evolved, and about the need for a consumer redress system that is fast, expert, accessible and legally certain. A little bit of history: the Financial Ombudsman Service was created to provide a low-cost and informal alternative to the courts. That purpose remains important. Consumers and SMEs need an effective way of resolving disputes with financial firms. Going directly to court can be expensive, intimidating and slow. There must, of course, be a route to redress that is accessible and free to use.

However, the FOS has moved far beyond a simple dispute-resolution function. It now operates in many respects as a quasi-regulator. Its decisions can set expectations for firms, shape market behaviour and influence the way in which FCA rules are understood. Yet it does not receive the same scrutiny as regulators such as the FCA, nor does it produce binding legal precedent in the way that a court or tribunal would. That creates a serious problem of legal uncertainty.

At the heart of this issue is the “fair and reasonable” test. The ombudsman is required to decide complaints, not simply according to law, but according to what it considers fair and reasonable in all the circumstances. That gives the FOS a broad discretion. It means that firms can comply with the law, the FCA rulebook and their contractual obligations but still be found against on the basis that the ombudsman takes a different view of what is fair and reasonable. That is not a stable foundation for a predictable regulatory system and that has been recognised, I am glad to say, by the Government but they are not going far enough.

Courts have confirmed that the FOS must take account of the relevant law but is free to depart from it. Firms do not know whether compliance with the FCA’s rules will be enough. They do not know whether the FOS will go further than those rules or whether an individual determination will be treated as an indication of wider expectations. That uncertainly drives gold-plating and overcompliance.

One example that has been raised with us concerns packaged bank accounts and the consumer duty. The concern is that the FOS may take the view that providers should look at whether a customer has used any of the benefits of a packaged bank account in the previous year and, if not, prompt them that this might not be the right account for them. That goes far beyond current FCA guidance.

The wider point is that if the FCA believes that its rules need to change, it should amend them prospectively. If Parliament believes that the statutory framework needs to change, it should legislate. We should not have a system in which major changes in practical standards emerge through a redress body applying a broad fairness jurisdiction.

There is also a serious performance issue, which we have touched on before. The FOS is under significant strain. The backlog has become very large and timeliness targets have been missed. The FOS is now being used as an instrument of mass redress when it was not designed to operate as a quasi-court, a quasi-regulator and a quasi-mass claims mechanism.

Our proposal is to reform the architecture. The financial adjudication service would retain the benefits of a specialist and accessible adjudication system. It would be designed to provide speed, expertise and high settlement rates. Consumers and SMEs would continue to have a route to redress without the cost and complexity of ordinary litigation. The key difference is that decisions would be made according to law. The “fair and reasonable” test would be removed. The new service would apply statute, FCA rules, contractual obligations and legal principles. Where the law is unclear, that uncertainty should be resolved through proper legal determination, not discretionary case-by-case judgment.

Where a dispute required appeal or authoritative determination, it would go to a dedicated financial services chamber of the First-tier Tribunal. That would create binding precedent. It would fill the gap that currently exists between the FOS and the courts, where the only meaningful challenge to an FOS decision is judicial review. Judicial review is not a proper merits appeal. It requires firms to show that the decision was not merely wrong but unlawful or irrational. In practice, this means that FOS decisions are rarely challenged.

A tribunal system would be different. It would allow principles to be determined clearly, openly and according to law. Over time, that would create a body of precedent that would help firms, consumers, advisers and regulators to understand what the rules mean in practice.

That is the point of our amendment. It is not about removing redress but about making redress clearer, faster, more expert and more legally certain. Nor is it about weakening consumer protection. Consumers benefit from certainty too. They benefit when firms understand their obligations, when decisions are consistent, when disputes are resolved quickly and when similar cases are treated in similar ways. This amendment therefore asks the Government to publish draft legislation for a new model. It would not require every operational detail to be settled in the Bill today. It asks the Treasury to come forward with the legislative architecture needed to move from an ombudsman model based on broad discretion to an adjudication and tribunal model based on law.

The purpose of the amendment is to begin a serious conversation about the future architecture of financial redress. We need a system that is accessible for consumers, fair to SMEs, predictable for firms and capable of generating clarity over time. The current model sadly no longer does that. It is too uncertain and discretionary. A financial adjudication service, backed by a dedicated financial services chamber of the First-tier Tribunal, would preserve access to redress while restoring legal certainty. That is the balance that we should seek to strike. I beg to move.

[Baroness Kramer (LD)]

I have one question for the noble Baroness, as my noble friend Lord Sharkey will speak for us on this. What will the cost be to the individual of going to the tribunal system? I am conscious that an individual needs to raise between £40,000 and £50,000 to get to preliminary hearing at the employment tribunal. Is that the kind of number that she has in mind?

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[Lord Stockwood]

I do not have it to hand. My apologies, I will bring it to the noble Lord. We are confident that the changes will improve trust and confidence that the FOS acts fairly and impartially, while ensuring that decisions are closely aligned with the high standards of conduct and consumer protection set by the FCA where relevant.

The right approach is this careful, targeted reform that preserves the core strengths and benefits of the FOS model—quick, informal and accessible dispute resolution—while delivering the necessary changes to improve the overall operation of the framework. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank all noble Lords who have contributed to this debate. I also thank the Minister for his response.

I recognise the concern that replacing the Financial Ombudsman Service with a financial adjudication service could make redress more formal, more logistic or less accessible. I understand that concern, but it is not the intention of our amendment. I say this also in response to the noble Baroness, Lady Kramer. The purpose of our amendment is to retain a specialist, accessible and free-to-use route for consumers and SMEs while ensuring that decisions are made clearly, consistently and according to the law.

Clearly there will be set-up costs. However, the Treasury could advise on that because part of our proposal is to require the Treasury to look at the issue and publish draft legislation for a new model. I agree with the noble Lord, Lord Sharkey, that parliamentary scrutiny would be important. There are also other questions that he addressed that the Treasury could answer. Indeed, some of the points that he made also apply to the proposal from the Government for the FOS. Like the noble Lord, Lord Sharkey, I would very much appreciate replies on those points before we get to Report, so that we can make sure that we understand what the Government are proposing properly.

I remain concerned that the Government’s approach does not go far enough. Recalibrating the existing model may improve some aspects of the system but it does not solve the fundamental problem, as I tried to explain at length. Firms and consumers still lack a body of binding precedent that explains what the rules mean and how they will be applied. Consumers would gain from extra certainty. They benefit when firms know what is required of them, when similar cases are treated consistently, and, above all, when disputes are resolved promptly and predictably; I know that from other parts of the consumer market. A system that is unclear and overstretched does not serve consumers well.

We will consider carefully what the Minister has said and look at any follow-up material but, for now, I beg leave to withdraw my amendment.

Amendment 172A withdrawn.

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Moved by

[Baroness Neville-Rolfe]

172D: After Clause 47, insert the following new Clause—
“Review of regulatory causes of debanking(1) Within 12 months of the day on which this Act is passed, the Treasury must lay before Parliament a report reviewing the extent to which individuals, businesses, charities and other organisations have been refused access to banking services, had banking services terminated, or had the use of banking services materially restricted as a result of regulatory requirements, regulatory uncertainty or risk aversion arising from the operation of the regulatory framework.(2) A report under subsection (1) must consider, in particular—(a) the scale and nature of debanking in the United Kingdom;(b) the categories of individuals, businesses, charities and other organisations most affected by debanking;(c) the sectors, industries or lawful activities most affected by debanking;(d) the extent to which debanking decisions are attributable, wholly or partly, to—(i) anti-money laundering requirements,(ii) counter-terrorist financing requirements,(iii) sanctions compliance,(iv) financial crime prevention requirements,(v) regulatory reporting, monitoring or due diligence obligations,(vi) regulatory guidance or supervisory expectations,(vii) fear of regulatory enforcement or supervisory criticism,(viii) uncertainty or confusion as to the proper interpretation of regulatory requirements, or(ix) the cumulative cost or burden of regulatory compliance.(3) In preparing the report under subsection (1), the Treasury must seek evidence from, and consult—(a) the Financial Conduct Authority;(b) the Prudential Regulation Authority;(c) the Financial Ombudsman;(d) relevant financial institutions;(e) persons who have been refused banking services, had banking services terminated, or had such services materially restricted;(f) politically exposed persons, their family members and known close associates;(g) persons appearing to the Treasury to represent the interests of politically exposed persons, their family members and known close associates;(h) persons representing firms operating in the defence sector or sectors connected with national security;(i) persons representing charities, voluntary organisations and civil society organisations;(j) persons representing small and medium-sized enterprises, start-ups and new market entrants;(k) persons with expertise in anti-money laundering, counter-terrorist financing, sanctions compliance and financial crime regulation;(l) such other persons as the Treasury considers appropriate.(4) The Treasury must publish the report.”Member’s explanatory statement
This new clause would require the Treasury to review whether debanking has occurred as a result of excessive regulation, regulatory uncertainty, confusion, supervisory expectations, enforcement risk or risk aversion arising from the operation of the regulatory framework. The review would identify the sectors and customer groups most affected, including politically exposed persons and their families, defence firms, charities, SMEs and other affected persons.

[Baroness Neville-Rolfe (Con)]

My Lords, in moving this amendment in my name and that of my noble friend Lord Altrincham, I shall speak also to Amendments 172E and 172F.

Amendment 172D probes on debanking. It would require the Treasury to carry out a review into whether individuals, businesses and organisations are being denied, having restricted access or losing access to banking services as a result of the way in which the UK’s financial regulatory framework operates. The core issue is this: the regulatory environment we have at the moment, and the way in which it is constituted, can mean that people, firms and organisations are denied access to banking services. Without access to a bank account, payment services or basic financial infrastructure, people and businesses are severely constrained in their ability to trade, to invest, to employ, to grow and to participate fully in the economy. The amendment asks the Treasury to examine whether debanking is taking place because of excessive regulation, uncertainty, regulatory confusion, supervisory expectations, enforcement risk or general risk aversion.

We have heard concerns from a number of sectors that they are, in effect, playing it safe. They are not necessarily closing accounts because there is a clear requirement to do so; they are doing so because the regulatory environment has become so complex and uncertain that the safest option is to avoid certain customers and sectors altogether. This matters for SMEs. A small business that cannot obtain or retain banking services may be unable to trade properly, receive payments, manage cash flow or invest. It matters for charities, particularly those operating internationally or in complex environments. It matters for defence firms, which may face additional scrutiny because of export controls, sanction concerns or reputational sensitivity, even where their activities are lawful and important to national security. It matters for politically exposed persons and their families; I am sure that many noble Lords will have experienced this. As we have discussed in relation to digital assets, it also matters for innovative firms that are trying to build new products and services but cannot access the banking or payment infrastructure they need.

My amendment therefore underpins our broader calls throughout the Bill for simplification, streamlining and clarity. I appreciate that the regulators have done some work on this, such as a new requirement to provide notice before closing an account and the recent FCA reviews of account closures. The amendment therefore asks the Government to look at how the regulatory landscape interacts with this work, as well as what other steps can be taken to address this problem more effectively.

I turn to Amendments 172E and 172F, which are probing amendments on the protection of sensitive commercial information and the ending of the compensation cap for senior managers under the Employment Rights Act. They were born of a conversation with my noble friend Lord Howard of Rising; I thank him for his insight. The financial services sector depends heavily on confidential and proprietary information. Firms hold business plans, client data, pricing information, trading strategies, algorithms, models, methodologies, internal systems and processes. Such information, as I know well from my business career, represents a major part of a firm’s competitive advantage. These amendments are designed to probe the Government’s position on the protection of that information, including the continued ability of employers in the financial services sector to use non-compete clauses, which can be an important mechanism for protecting commercially sensitive information.

I know that the Government have issued a working paper on options for the reform of these clauses in employment contracts. However, I want today to explain that their use in financial institutions and firms is crucial. I would welcome clarification from the Minister that no provision in the Employment Rights Act will prevent employers in the financial services sector using appropriate and proportionate non-compete clauses. It is important not only for individual firms but for the integrity and competitiveness of the UK financial services market. We have heard that the change could lead some firms to close up in London.

Finally, I turn to Amendment 172F, which is designed to probe the Government on the impact of changes to the rules for senior managers and, in particular, the wider implications of the removal of the compensation cap. The Bill reforms the statutory regime governing the recruitment, approval, mobility and accountability of people working at authorised firms. The Government have, in their Explanatory Notes, identified slow senior hiring and internal mobility as barriers to operational agility.

In the Government’s own analysis of the Employment Rights Act, they accept that high-paying sectors may be affected by the removal of the compensation cap. However, some in the financial services sector have told us that the removal could affect decisions on the future of UK operations because of the risk of enormous million-pound or million-dollar payouts to those who have highly paid roles. Indeed, an article in the Financial Times last month reported that firms were seeking urgent legal advice on how to prepare for the changes. This amendment therefore raises a financial services competitiveness and regulatory agility issue that is properly connected to the Bill; we believe that it is vital that the Government consider this issue as a part of financial services policy.

I would be grateful if the Minister could address three points. First, what assessment have the Government made of the sectors and groups most affected by the loss of access to banking services? Would a review not be useful? This amendment looks backwards. Secondly, can the Minister clarify the Government’s position on the continued use of proportionate non-compete clauses in financial services, where they are necessary to protect commercially sensitive information? Thirdly, will the Government assess the effect of changes to the rules on the employment of highly paid senior managers, and consider changing the rules in the interests of growth and competitiveness? Those are the rules that relate to compensation. Both amendments look forward, and the Minister should be concerned. I beg to move.

--- Later in debate ---

[Lord Stockwood (Lab)]

My Lords, this is the final group before Committee stage is completed. I am grateful for the discussions so far, not just on this group of amendments but on each of the more than 220 amendments we have discussed over the past three weeks. I appreciate the insights and wisdom shared by everyone in the six sessions. As someone relatively new to the House, I come away from this stage of the Bill’s journey with renewed faith and belief in the importance of scrutiny in the House of Lords. I thank noble Lords.

These amendments propose that the Treasury conducts reviews into a range of important issues in financial services. I will first speak to Amendment 172D, which would require HM Treasury to undertake a review into the scale and nature of debanking in the UK. The Government recognise the serious impact the loss of access to those services can have, but there is already a significant amount of work under way. Parliament has legislated to ensure that domestic politically exposed persons and their family members and close associates are treated in a more proportionate manner under the anti-money laundering framework. The FCA has also undertaken significant work on account access, account closures and debanking as required by Parliament. The FCA has collected evidence to understand where account closures and refusals are occurring and why, and has undertaken further work better to understand the reasons behind account closures and refusals.

I am not sure that regulation is a principal driver of debanking. Decisions to refuse, restrict or terminate banking services may arise for a range of reasons, including commercial decisions, firms’ assessments of risk, legal obligations and financial crime concerns. The FCA has emphasised that when accounts are closed or denied, providers must adhere to their consumer duty obligations. They include ensuring that all communication with customers is clear and easy to understand. The Government have also legislated to address concerns around account closures. This includes ensuring that providers give customers at least 90 days’ instead of two months’ notice before terminating payment services and provide a sufficiently detailed explanation of their decision and signpost appropriate complaints routes.

The Government have also taken steps to reduce the impact of anti-money laundering rules on legitimate customers through recent changes to the money laundering regulations. This included measures to make customer due diligence requirements more proportionate and effective while maintaining robust protections against economic crime.

Amendment 172E would require the Treasury to conduct a review into whether financial services firms have adequate means to protect commercially sensitive information. Confidentiality and the protection of commercially sensitive information is vital to the strength of the UK’s financial sector, and the Government take the importance of this matter very seriously. Without robust protection of commercially sensitive information, investors lose confidence, consumers are at risk and the reputation of the sector is degraded.

The FCA and the PRA have rules and expectations that address the protection of commercially sensitive information by firms. However, I am afraid that I am not an expert in the Employment Rights Act and the contracts that were mentioned are not within the scope of the Bill. While I am aware that I am giving Charles Dickens a run for his money in the number of letters I have suggested I will write, I will write to the noble Baroness on the Government’s position on this as well.

Amendment 172F concerns the effectiveness and operation of the senior managers regime. The Bill already introduces reforms intended to make the regime operate more proportionately, while preserving the accountability standards which are central to it. As I mentioned on Monday, the changes will help deliver the ambition of the Government and the regulators to reduce burdens from this regime by 50%; the reforms to this regime alone are expected to reduce administrative burdens on the sector by almost £600 million over the next 10 years. The detailed operation of the reformed framework will be taken forward by the regulators through their rules, subject to their statutory consultation requirements.

In those circumstances, the Government’s view is that the right course is to allow those reforms to be developed, implemented and monitored through the existing framework. The Government will also continue to engage closely with the regulators as they implement these changes, to ensure that the regime is more proportionate in its approach.

I will write on the compensation cap for senior managers, which the noble Baroness also mentioned, as this is a matter of employment law. I thank her for raising that issue. For those reasons, I ask the noble Baroness to withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank my noble friends Lord Howard of Rising and Lady Lawlor for their support, and the Minister for his response. These amendments have raised three distinct but connected issues: problems with access to banking services, protection of commercially sensitive information, and the ability of financial services firms to recruit, retain and deploy talent in the UK under the new Employment Rights Act. I hope the Government will reflect further on these issues before Report and provide more concrete evidence on what has been happening on debanking to those who have been involved in Committee. The Minister made some encouraging remarks, but some data would be useful. I very much look forward to his letter on the points that I have raised about the impact of the Employment Rights Act.

As the last speaker, I also thank all those who have been involved in the Committee. We have completed it on time and with great good humour, in general. I look forward to Report and, for now, beg leave to withdraw my amendment.

Amendment 172D withdrawn.

Declining Birth Rates

Baroness Neville-Rolfe Excerpts

Thursday 4th June 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I congratulate the noble Baroness, Lady Nargund, on securing her first QSD, and on her perceptive comments after a lifetime devoted to reproductive medicine. I thank all noble Lords who have spoken. I was particularly struck when the right reverend Prelate the Bishop of Chelmsford reminded us that children are a blessing; and by the emphasis of the noble Baroness, Lady Finlay, on the elderly avoiding falls, which is a very good example of preventive healthcare.

The collapse in the birth rate is not a new issue, but it is an increasingly urgent one. As we have heard, the number of babies born per woman fell to 1.39 in 2025, down from 1.9 in 2010 and well below the 2.1 needed to replace the existing population. The ONS projects that over the decade to mid-2034 there will be around 450,000 more deaths than births in the UK.

It is a trend replicated in other developed countries, with Japan and Korea worst affected. I have spent time in both countries, and they are well aware of the problem. I remember addressing a large room of women working at the then Tesco operation in Korea. At the end, the male CEO emerged at the back to thank me profusely. Inappropriately, he added that Korea would not be facing the difficulties it was if mothers there had taken a leaf out of my book and given birth to four boys.

The UK is moving from a model in which population growth came from a combination of such births and some migration to one in which future growth is expected to depend on migration. That is a profound shift. I am going to focus on three of the challenges.

With the steep fall in the birth rate, there will be fewer children entering our nurseries and schools. This could mean smaller class sizes and an improvement in teaching, but I fear that with pupil funding per head, it will mean that more schools have to close, forcing some very difficult choices on the authorities, especially in rural areas. But there should be cost savings, which should be banked, even if we would prefer that they did not arise.

The lower birth rate will also mean fewer people entering the labour market in years to come. Falling birth rates affect both the number of people who need public services and the number available to provide them. That is critical in sectors such as health and social care, where pressures are already acute, as we have heard. This matters because our economy urgently needs sustained growth. Yet demographic change is pushing us in the opposite direction towards greater demand for public services and a smaller working-age population. The answer is that people must stay in work for longer, as many of us have done in Parliament, and that means raising the state pension age, except perhaps for those who have had particularly physically taxing jobs, as I suggested in my report for DWP on the subject in 2022.

Another challenge is the cost of an ageing population to the public purse. The OBR has warned that on our current trajectory the long-term pressure of ageing and related spending could push borrowing and debt to absurd levels. But the markets will not let that happen, so we have to develop a response. State pension spending is projected to rise from around 5% of GDP today to 7.7% by the early 2070s. At the same time, an older population will mean rising demand for health and social care. The state is therefore being squeezed from both directions—higher spending on one side and a smaller tax base relative to the retired population on the other. That is why declining birth rates are not simply a social trend or a private matter for families; they are central to the fiscal sustainability of the country.

What can be done? I believe the matter should be addressed with real seriousness. This is not an undergraduate debate; it is the future of the country. Government policies across the board will need adjustment, as we have heard. That means taxation, childcare, fertility treatment, social and welfare rules, technology, and what we teach our children in our schools. First, can the Minister set out whether the Government have a cross-departmental strategy for responding to the UK’s persistently low fertility with a view to changing the situation over time? Secondly, what assessment have the Government made of the long-term fiscal consequences of the demographic shift, particularly for pensions and for health and social care? This is a vital topic affecting our country into the distant future. We need answers to this problem, and quickly. I hope the outlines of a way forward will emerge from today’s important debate.

El Niño: Impact

Baroness Neville-Rolfe Excerpts

Tuesday 19th May 2026 Lords Chamber

[Baroness Anderson of Stoke-on-Trent (Lab)]

The noble Baroness raises an important point that I was not aware of. I will speak to officials and come back to her.

[Baroness Neville-Rolfe (Con)]

My Lords, the weather is, of course, borderless. What contingent planning have His Majesty’s Government undertaken to mitigate the combined impact of potential shortages of essential supplies—including fertiliser, which is so important to British farmers—that might arise from the conflict in the Gulf and from a possible super El Niño event in 2026?

[Baroness Anderson of Stoke-on-Trent (Lab)]

The noble Baroness is right that each crisis moment is different and that we need to ensure that we have strong foundations, which I believe we do as a country in our resilience planning. COBRA is a very effective co-ordinating tool to make sure that we know that we are on top of all those challenges and that we can make assessments as and when required in this space.