Mansion House Accord

Baroness Neville-Rolfe Excerpts

Wednesday 14th May 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is disappointing that UK pension funds now invest only around 4.4% in British assets, in contrast to between 12% and 18% in Canada. That is no longer good value, given the scale of tax reliefs in the UK. Equally, a mandatory backstop, as apparently favoured by the Chancellor, is hard to reconcile with pension trustees’ fiduciary duties to put our millions of savers first. Does the Minister agree that experience in Australia and Canada should encourage us to move forward sensibly? Does he also acknowledge that the task of balancing important domestic investment with the need to invest in the best interests of our savers is actually best left to the providers themselves, and not directed by the Government?

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

I am grateful to the noble Baroness for her questions. I am sorry that she started her remarks with the word “disappointing”, because this is a really important initiative by the industry and one that the Government very much welcome. Of course, it builds on the work that the previous Conservative Government did, which the previous Conservative Chancellor began, so I hope that there is cross-party support for these steps. This is very important to our growth mission, by increasing investment in infrastructure, and it supports better outcomes for savers. As the noble Baroness will know, this is an industry-led, voluntary accord. Pension funds are choosing to do this, because evidence shows that high-growth assets can boost returns over time. We are confident that schemes are moving in the right direction, and this accord shows what government and business can achieve together, when working in partnership. The pension schemes Bill will contain more details about how these developments will be monitored to make sure that change is delivered.

Bank Resolution (Recapitalisation) Bill [HL]

Baroness Neville-Rolfe Excerpts

Consideration of Commons amendments and / or reasons
Monday 12th May 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I have to say that I appreciate the explanation that we have just had from the Minister, but I and others remain disturbed by the Government’s decision not to accept the amendment, which was not just rational but well crafted, introduced by your Lordships in this House. The underlying Bill was initially presented to the House as providing a mechanism to save significant small banks from failing by recapitalising them from the Financial Services Compensation Scheme, rather than having to turn to the taxpayer. Regulated banks, as this House will know, are then required to replenish the FSCS when it is depleted for any reason, but, because the thrust of the language was around small banks—that was the intent, and that was the discussion that is in all the notes—this House very much agreed to it, with just a few probing points engaged with.

Thank goodness that we have a lot of very good brains in this House. The combination of my noble friends Lady Bowles and Lord Fox and the noble Baronesses, Lady Noakes and Lady Vere, realised that there was a significant loophole in the language. We did not realise in the beginning that any of this could be applied to the larger banks; that became clear only as those pursuing the legislation became more aware of the implications of its content. Now we have a Bill that permits the regulator to use the FSCS as its mechanism to rescue large banks. Let us be frank: it completely changes the whole profile of both risks and consequences. The amendment would have effectively closed that loophole.

The larger banks, as the Minister has said, already have their own dedicated process to recapitalise in case of failure, a process that was introduced after the 2008 crisis. The Bank of England requires each large bank to hold a tranche of MREL—in plain English, bail-in bonds—which can be converted to capital by the regulator in case of failure, with the consequence that the bank is thereby rescued. We need to understand why that is not considered by the Government to be an adequate system. The Minister has just said—if I understood him—that the regulators will always require that bail-in bonds are used first, and the FSCS is a resource of last resort. But that is not in the legislation. The legislation allows the regulator to turn first to the FSCS and ignore bail-in altogether. He will be very conscious that the Swiss regulator, with the failure of Credit Suisse, completely ignored the bail-in capability and chose other routes to manage the rescue of Credit Suisse.

Those who hold bail-in bonds—the investors who buy them—are extremely well remunerated for carrying the risk associated with a bail-in bond. I am trying to work out why they can now look at this legislation and begin to assume that they will have the benefits of receiving a risk premium for holding those bonds but never actually find that those bonds are forced into use in case of a failure. How can we rely on just a code to continue to determine that bail-in will be the first resort and not a later resort or no resort at all? Are the Government basically saying that there are now many circumstances they have identified in which bail-in is neither usable nor adequate? I refer to the Swiss example. What are the consequences for financial sustainability if we are saying that bail-in is a slightly busted system? Have there been blandishments from the various investors who have purchased bail-in bonds, trying to pressure the Government into creating an alternate route? What are the consequences for our small- and medium-sized banks if the FSCS is depleted by big bank failure?

The Minister says that the regulators will not ask for an unaffordable contribution from the various banks to replenish the FSCS, but it is our mechanism that ensures small depositors’ accounts. Who is going to do the replenishment if the number is too great to ask the banks to commit to it? I am quite troubled by this change in responsibility for where risk lies that is embedded in the Bill. If the Minister is so sure that the items in the code should be giving us reassurance, why have they not been introduced in this Bill as part of the legislation?

[Baroness Neville-Rolfe (Con)]

My Lords, this is an important Bill, which provides the Bank of England with extra flexibility to manage bank failures, particularly those of smaller banks, in a way that strengthens protections for taxpayers. It reflects proposals by the last Government in the light of experience with the demise of Silicon Valley Bank. As such, it had cross-party support and, starting in the Lords, was a good example of expert scrutiny across the House.

Special thanks go to my noble friend and predecessor Lady Vere, my noble friends Lady Noakes and Lady Penn, the noble Lords, Lord Vaux of Harrowden and Lord Eatwell, the noble Baronesses, Lady Kramer and Lady Bowles, officials on all sides—of course, not forgetting the Whips—and, above all, the Financial Secretary to the Treasury, the noble Lord, Lord Livermore. I thank him both for the government amendments, notably that which was made to Clause 3 on the involvement of the Treasury Committee and the House of Lords Financial Services Regulation Committee, and for the timely publication of the draft code of practice, which helped us to overcome some substantial difficulties, as he has already mentioned.

Banking and financial services are very important to the success of the British economy. In 2022, the UK financial system held assets of around £27 trillion and in 2023 the financial insurance services sector contributed £208 billion to the UK economy. Legal regimes which govern how our banking and financial sectors operate need to promote growth and competitiveness and be easy to navigate and use. They must also balance ambition with prudence—an understandable driver of the Bill.

Noble Lords will recall the amendment we successfully added that was championed by my noble friend Lady Vere. This sought to prohibit the use of the funds from the Financial Services Compensation Scheme to recapitalise large financial institutions, defined as those which had reached an end-state MREL. The object was to reflect in law the Government’s stated objective of using the resolution framework in the event of a smaller bank requiring intervention, thus preventing the associated risk of contagion. The truth is that the Banking Act 2009 provides a robust framework for dealing with the large banks that have achieved end-state MREL status. They and the Bank of England should not be taking comfort from the fact that they could fall back on an ex-post levy of the banking sector through the FSCS in times of trouble. Resources should be focused on the SME banking sector, as the noble Baroness, Lady Kramer, reiterated.

In view of this, I am joined by noble Lords across the House in expressing disappointment that Members in the other place voted to remove this amendment from the Bill. We are confident that it would have improved the Bill in meeting its objective and helped to embed the balance I spoke of. However, we must accept that Treasury Ministers, with their battalions of support in the other place, wish to maintain flexibility; for example, as the Minister explained, to deal with a large, unexpected redress claim leaving the taxpayer exposed, although this is very much a backstop arrangement, with a £1.5 billion cap, as the Minister confirmed. So I do not propose to test the opinion of the House again.

It was also disappointing to see the rejection of other prudent proposals put forward by colleagues in the other place in good faith. Regardless, I hope the Government will consider these proposals seriously as we try together to create a system which is balanced and simple and promotes growth—an objective that the Minister and I share.

We support the thrust of the Bill, which continues the work that we did in government to support our banking sector, protect consumers and safeguard the public finances. However, there are still outstanding questions which I hope the Government can address today or in writing. They are even more important now that the Vere amendment has been rejected.

The Financial Conduct Authority and the Prudential Regulation Authority have proposed an FSCS operating budget for 2025-26 of £109 million. This budget covers the FSCS’s administrative expenses and does not represent the total funds available for compensation payouts. Over the three financial years from 2021 to 2024, the FSCS paid just £10 million in compensation relating to deposit claims, due primarily to the defaults of 11 credit unions and one small bank. Will the Minister kindly outline the steps the Government are taking to minimise the operating costs of the FSCS?

The FSCS is a quango, which is overseen by a quango, in conjunction with another quango. The fact that it uses an industry funding model does not change this. The money in its operating budget is money that is not being utilised in the banking sector, which employs millions of people and contributes billions to our economy and to growth. Does the Minister agree that the FSCS should focus on efficiency and on keeping as much money as possible available to banks for their use and not tied up unnecessarily in its operating budget and that, like other regulators, it should have regard to the Government’s overall objective of growth?

I end by saying that this is a broadly sensible proposal designed to safeguard public finances, ensure the security of our financial sector and limit public risk. We will support the Government in their ambition to achieve the objectives of the Bill, but I hope the Minister will seriously consider the points that have been raised today and will take the opportunity to clear up some of the questions that have been asked.

Inheritance Tax: Impact on Rural Businesses

Baroness Neville-Rolfe Excerpts

Thursday 1st May 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

The Government claim that family farms are safe from the changes to IHT. However, they have set the threshold too low, as subsequent examination has clearly demonstrated. It was also chilling to see the CBI’s economic analysis, which showed a net fiscal loss from the changes to business property relief of £1.26 billion over five years, with the tax revenue of £1.4 billion trumped by the loss of tax on production, spending, income and NICs. Has the dismay across the countryside at this mistaken policy been reflected in the responses to the very narrow HMRC consultation of 27 February? Will the Government think again before the changes take place next April?

[Lord Livermore (Lab)]

No. The analysis undertaken by CBI Economics is not robust nor representative. It is based on a self-selecting survey from members of groups campaigning against these reforms. The independent Office for Budget Responsibility certified the costing at the Budget in October. The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. If the noble Baroness would like to tell me where she would get the £520 million that she would like to remove, I would be very interested to hear it.

Tax: Changes

Baroness Neville-Rolfe Excerpts

Tuesday 29th April 2025 Lords Chamber

[Lord Livermore (Lab)]

I remember the “citizens of nowhere” comment that the noble Lord refers to. I think that, like much of what the previous Government did, it was not an encouraging thing to say. But let us remember that it is not for me to justify what the previous Government did. This Government are committed to addressing unfairness in the tax system so that everyone who makes their home in the UK pays their taxes here. I think that is absolutely the right principle from which we should proceed. Both the previous Government and this Government increased taxes on non-doms because it is necessary to raise revenue to repair the public finances and fund our public services. That is the fairest way of raising the necessary revenue while ensuring the UK remains an attractive place to live and invest.

[Baroness Neville-Rolfe (Con)]

My Lords, last Friday there was an important debate here about the serious threat that the current and increasing level of national debt poses for the UK. The Chancellor has failed to give herself enough headroom, and her fiscal rules are flawed. Hence, every reduction in tax receipts ought to be met by further spending cuts or by an increase in taxes elsewhere. Now we hear that tax revenue from wealthy people, such as non-doms, is going down sharply as many flee the country because of the Government’s policies. There is a clear tipping point. Will the Government reverse their non-dom policies? If not, which taxes will they increase to compensate for the loss of revenue?

[Lord Livermore (Lab)]

No is the answer. The noble Baroness says that taxes should rise or spending should be cut. I ask her the same question: she says repeatedly that we are raising the wrong taxes, but she never says which taxes we should be raising. She says repeatedly that we should cut spending, but she never says what we should cut spending on. The OBR’s March forecast shows that the Government meet our fiscal rules with the same headroom as at the time of the Budget, thanks to decisive action to reduce spending and to grow the economy. Average borrowing over the next five years will be 2.6% of GDP, compared with 5.6% of GDP over the previous 14 years. There is now a significant fiscal consolidation during the course of this Parliament, taking borrowing as a share of GDP from 4.5% to 2.1%, achieving the biggest current budget surplus in over 20 years.

British Steel

Baroness Neville-Rolfe Excerpts

Thursday 24th April 2025 Lords Chamber

[Baroness Gustafsson (Lab)]

With regards to the specifics of Scunthorpe, I am not yet in a position to be able to confirm how much that would be used domestically. Currently only 40% of the UK’s demand is provided domestically, so there is a significant domestic market that we could be looking to serve here.

[Baroness Neville-Rolfe (Con)]

My Lords, steel is a strategic national asset, which is, of course, why our Front Benches worked together on that long Saturday 12 April in a very enlightening debate, which was also informed by the background of US tariffs. Are the Government worried about the future of other strategic national assets, perhaps as a result of sky-high electricity price or inappropriate Chinese involvement? Cement might be one area, but I am sure the noble Baroness will be able to tell us what the Government are looking at in this area, whether there are causes of concern and how they are dealing with them.

[Baroness Gustafsson (Lab)]

The noble Baroness is right. Today’s world feels like it is changing from a Monday to a Tuesday. We must not forget that in all of this, we should have that north star—what are those assets that we have within the UK and those industries that we see encouraging all our future growth, and how can we support them? The purpose of the Government’s industrial strategy is to illuminate exactly that: how do we identify those key sectors and what are the facets that we need to intervene in to be able to support the growth? A key aspect of that is energy costs, which is why things such as the supercharger scheme is so important. They need to be targeted at those sectors that we see as really essential to the UK.

Basel 3.1

Baroness Neville-Rolfe Excerpts

Thursday 3rd April 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, the removal of the SME support factor when Basel 3.1 is implemented will lead to higher capital charges for loans to our vital small and medium-sized companies. Can the Minister update the House on the Government’s assessment of the implications for small business, especially for those ready to take entrepreneurial risk, which is needed for the growing economy that he mentioned?

[Lord Livermore (Lab)]

We very much support small businesses, and we will do all that we can to support them in this economy. We will come forward soon with a small businesses strategy that will set out this Government’s approach. I do not think that the delay to Basel 3.1 is directly relevant to that issue. It is about ensuring that we have a level playing field and that we maintain the competitiveness and growth objectives that we have set out.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, as there is a little bit of time, I also wish the House and the Minister a happy Easter and come back to him on the question of small businesses and Basel 3.1. There is a concern that when that comes in it could affect lending to the smaller businesses. I hope the Minister will have a look at that. I note that it has been delayed, but when it comes in, we want to make sure that our small businesses, and indeed our smaller banks, are not discriminated against.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her comments. I wish her and the whole House a happy Easter as well.

I continue not to agree with her on Basel 3.1’s impact. Basel 3.1 is an update to the Basel III regulatory framework, aimed at further strengthening bank capital requirements and risk management by refining the calculation of risk-weighted assets and enhancing transparency. I am not sure it is about what she is saying it is.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Baroness Neville-Rolfe Excerpts

Consideration of Commons amendments and / or reasons
Monday 31st March 2025 Lords Chamber

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

My Lords, I will also speak to Motions B, C and D. On Motions A, B and C, the other place has disagreed with Amendments 1B, 5B and 8B as they would interfere with public revenue. The other place did not offer any further reason, trusting that this reason is deemed sufficient. On that basis, I hope that noble Lords are content not to insist on Amendments 1B, 5B and 8B.

I turn to Motion D. The other place has disagreed with Amendment 21B for the reason that the Government and the OBR have already outlined the impacts of this policy change. I have no doubt that the amendments tabled at previous stages of the Bill by the noble Baronesses, Lady Neville-Rolfe and Lady Noakes, and the noble Lord, Lord Londesborough, were well intentioned, and I am grateful to them for ensuring that these important matters have been properly addressed during our debates.

More broadly, I assure all noble Lords that giving careful consideration to and properly assessing the impact of the Bill is a priority for this Government. I commit on behalf of the Government to continually monitoring and assessing the impacts and effects of these policies.

Specifically with regard to special educational needs and disability, which has been the subject of several such amendments, the Government recognise the challenges within the SEND system, where outcomes for children and young people are often poor. The Government understand that change is urgently needed and we are committed to delivering long-term, sustainable change.

On the issue of SEN transport, while the Government do not expect the changes to national insurance to have a significant impact on home-to-school travel for children with SEND, I can commit that all these issues will be fully considered as part of the forthcoming spending review. On that basis, I hope that noble Lords will be content not to insist on Amendment 21B. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I simply thank the Minister and, again, all who have been involved in the passage of this difficult Bill, especially those who have supported me and my noble friend Lord Altrincham. We have had seven days of debate in the House and nine successful votes, in collaboration with other Benches. That demonstrated the serious concerns about this Bill, right across the House.

There is a strong feeling, echoed externally in our hospices, in hospitality, on the high street and in many other places, that the Bill is not the best way to meet the challenges that the country faces, and that it will endanger the growth we need so badly. However, this is a House of scrutiny, and the other place has taken a different view. As a responsible Opposition, we will not seek to defeat this Bill, no matter how deeply we feel about it. His Majesty’s Government must be able to set their tax policy, and of course we respect that.

I should add that I am grateful to the Minister for his closing words, especially in relation to SEND transport, and for his undertaking to monitor—as I think he said—the impacts and effect of the Bill going forward. We will hold him to that. Moreover, he knows that I and one or two others will continue to encourage the Treasury to learn from all of this and experiment with fuller sectoral assessments in the future.

[Baroness Kramer (LD)]

My Lords, the amendments that underlie Motions A and B that came from the House of Lords were in the name of my colleague and noble friend Lord Scriven. On his behalf, and on behalf of my Benches, we recognise that we have come to end the of the road on this Bill and we will not press for any further amendments.

I will make a couple of comments. I have just come from a fairly extensive meeting with R3, the insolvency and restructuring professionals’ body. Those around the table were telling me of the cascade of small businesses that are already going into voluntary insolvency because of the increasing costs that they face this April. When the Minister says that he will look at evaluating the Bill and its impacts, I hope he will make sure that his view casts across that territory, because it is obviously fundamental to the agenda for growth. Within those discussions, of course, were many private social care providers. A number of the smaller ones—at least three of the practitioners around the table—were dealing with insolvencies triggered over the last few weeks.

From what the Minister said, I hope that he and his Government will recognise that they now need to use other means to step in and shore up the key sectors that are faced with costs they cannot sustain and are therefore closing services which we absolutely need. I hope very much that his commitment to ongoing evaluation will incorporate all of that and be granular—we were hopeful when we heard his words on SEND transport, because that is quite a granular issue—rather than the overarching kind that we have been dealing with in this House.

However, the Minister has always been gracious. I understand that this has been exceedingly difficult and that the Government face very difficult and strenuous times. We recognise that, at this point, we can take this Bill no farther. We thank everyone who has participated, from all Benches, and all the people in our back offices and Whips’ offices who have provided so much support.

Spring Statement

Baroness Neville-Rolfe Excerpts

Thursday 27th March 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

Let us start by standing back and considering this Statement—which is really an emergency budget—and the Government’s actions more generally against their stated economic objectives. The main one, emphasised by Ministers many times, is growth. Fine—we all want growth. One would expect, therefore, that the Government’s policies and actions would be consistent with that objective, but they are not. First, the Chancellor and other Ministers talked down the economy, ruining morale. Then she chose to put taxes up by £40 billion, depressing animal spirits further and taking tax in the UK to its highest level in the last 50 years. The most egregious announcements were the wholly unexpected jobs tax of £25 billion—devastating businesses and social enterprises such as hospices—and, out of the blue, the farms tax, which imposes IHT on family businesses and undermines confidence across the country.

The Government also gave large pay rises to their friends in the unions, without any productivity strings. Even today, they are proceeding with the Employment Rights Bill, which will undoubtedly have negative effects on the supply side and hence on growth. Interestingly, the OBR has said—ominously, for the Government—that it has yet to take a view on the Bill’s effect on growth, should it pass. If growth is the main objective, the Government’s economic policies are, quite simply, incoherent.

The Government are also in a mess about the position of the OBR. The OBR is given a status by the Government above anything warranted. UK fiscal policy now appears determined by the need to meet detailed targets derived from the Government’s rules and the OBR’s estimates. Instead, the Government need to take informed common-sense choices that promote growth and, crucially, confidence in our economy, using best estimates as a guide to sensible behaviour.

In short, the Chancellor appears, wrongly, to believe that openly fiddling with the numbers to please the OBR leads to positive economic outcomes. It does not. Paul Johnson, the director of the Institute for Fiscal Studies, concluded yesterday by saying that

“the Chancellor has all but guaranteed … another six months of damaging speculation and uncertainty over tax policy”.

It does not take an economist to see that these conditions are damaging for growth, business and people across the country. Our economy needs certainty and stability. The Chancellor’s Statement leaves our country vulnerable, and it will be British business and the British taxpayer who pick up the pieces when her plans come into contact with reality.

My first area of questioning is: how would the Treasury react to adverse events—if, for instance, the UK were to become the victim of tariffs, which seems all the more likely this morning? It has no reserve for a rainy day. The OBR’s model suggests that the introduction of tariffs could

“entirely eliminate the headroom against the fiscal mandate”.

Can the Minister say which taxes the Government would hike, or which services he would cut, to keep in line with the Chancellor’s recklessly tight limits?

We are not in a good place, as can be seen from the numbers published yesterday. Public spending is far too high as a share of GDP. It is forecast to rise to 45% in 2025-26 and will still be at 43.9% in 2029-30, according to the OBR. Moreover, debt interest is at an appalling £101.3 billion, rising to £105.9 billion in 2029-30. The prospects for improving the position are modest. The OBR has halved its forecast for growth from 2% to 1% this year, and growth thereafter remains relatively anaemic, despite some welcome policy changes that I will come on to.

As we have discussed on previous occasions, growth and productivity are intimately linked, and we desperately need productivity to grow, especially in the public sector. The measures announced so far will not go very far to improve it. If we want growth, we need a step change in the public sector and a bigger share of the economy in the more productive private sector.

Defence spending was a key element of the Statement, and we on these Benches support an increase in funding for our Armed Forces. However, the Chancellor has not been clear about how and where the money from overseas development aid is going. Can the Minister kindly clear this up?

We support reform of planning and more housebuilding, on which the growth forecasts depend. However, can this be realised quickly? The plan is to invest £2 billion in social and affordable housing in 2026-27, which is, I understand, lower than the average under the previous Government. I welcome the £625 million to train up to 60,000 more construction workers. However, with my experience of the sector, I have doubts as to whether the proposed changes will speed up planning sufficiently or provide the skills needed in the building and planning trades quickly enough to fill current gaps and fire up major expansion.

We also believe that welfare reform is necessary, but it must be done in the right way and the process in the run-up to this Statement was, frankly, shambolic. For a very complicated subject, this is no way to proceed.

Before I sum up, perhaps the Minister can clear up one puzzle. I cannot understand how the OBR can legitimately assume—see the table on page 10 of the Green Book—that employment is going to rise by 400,000 people this year when everything seems to be going in the opposite direction.

The Chancellor’s decision to leave herself with such little headroom means that the Government’s fiscal policy is not about making the right decisions to support our economy in the long run. It is now about fiscal fine-tuning, which leaves us inflexible, vulnerable to external events and liable to future tax rises—which the Chancellor failed to rule out. Since the Budget, our economy has been wallowing in the doldrums of stagflation. Unemployment is up, the gilt rate has remained sky-high, businesses are staring down the barrel of crippling national insurance hikes, and we face the punitive Employment Rights Bill.

When we discuss all these technical terms and percentages, we need to be clear that what the Chancellor announced yesterday will hit taxpayers in this country hard. They will notice the effects of this Statement in their everyday lives. That includes those who are affected by her welfare changes, those who will be made redundant as a result of her national insurance hikes, and those who may find themselves paying more tax come the Budget later this year. It is these factors which affect living standards. We need to build an economy that supports investment, rather than encourages some of our most talented entrepreneurs to move overseas; to see high levels of employment; to allocate money sensibly to efficient public services; and to show flexibility in the light of external events—thus directly improving the lives of people across our wonderful country.

I am afraid that the Statement delivered by the Chancellor yesterday did not meet these standards. We need a Treasury, and a Chancellor, willing to make the decisions needed to support business, promote growth and confidence, and make Britain productive again.

[Baroness Kramer (LD)]

My Lords, when I listened to the Chancellor yesterday, the only thought that kept chasing through my head was that this is someone who is completely out of touch with the real experience of people today. The whole Statement glossed over a halving of the growth forecast for this year to 1%, and the reality of benefit cuts. These and ongoing high inflation—an average of 3.2% forecast for this year—are pains that people will experience in their daily lives.

The average loss for an individual on PIP is £4,500 a year. According to the Resolution Foundation, a couple on universal credit, where one is disabled and the other is a full-time carer, could lose £10,300 a year.

We all agree that people need to work if they can, but this is not primarily a back-to-work programme; it is a cutting programme. It does not just hit vulnerable individuals; it hits their communities and will have a knock-on effect particularly in disadvantaged areas of the country. It looks to me as though the cuts are very much front-loaded and back-to-work support is back-loaded. Can the Minister tell me if that is correct?

As a result of the cuts, a quarter of a million people of working age will now fall into poverty, and worse, 50,000 children—I am using the Government’s own numbers. Was this really Labour’s goal? Should this not have been the time to revive the bank levy, raise tax on online gambling, close capital gains loopholes and increase the digital services tax? I will say more on that tax in a moment.

Even at the end of the forecast period, despite all the pain, borrowing is expected to be £3.5 billion higher than forecast in October, and the Chancellor will be faced with very little headroom—only £9.9 billion. Can the Minister tell us how much of that headroom disappeared just last night with Trump’s tariff announcements? The headroom also relies on very uncertain expectations of a major increase in productivity. In other words, uncertainty about tax rises and spending cuts will continue; they were not ended by this Statement. That uncertainty will further undermine any possible growth scenario.

Since the focus of this Statement was supposed to be growth, why was there nothing in it for small businesses, which face a crunch in just a few days as the rise in employer NICs kicks in? It is no wonder that the Federation of Small Businesses reports the lowest levels of confidence post-Covid. When the Chancellor spoke of cutting red tape, she could at the very least have focused on the endless Brexit red tape. If she had announced negotiations on rejoining the customs union and removing the current trade barriers, small businesses would be quickly planning a return to exporting and recovery of their roles in European supply chains.

And there was nothing in the Statement to shore up social care, GPs, dentists, hospices and all the services which are crucial to the NHS and to the return-to-work project, but which are making cuts now as higher employer NICs hit home.

I conclude by pressing the Government on the digital services tax. This exists not as some kind of windfall tax or as a special punishment for tech companies; it is a modest attempt to claw back a portion—some £800 million this year—of aggressive tax avoidance by the mega US tech companies. We have just voted into law with the Finance Act an undertaxed profits rule, which would let us claw back much more of that money lost to tax avoidance by this group, in the range of £2 billion to £3 billion a year. However, the Government are now hinting that the digital services tax will be cancelled and the undertaxed profits rule mothballed if they offend the Americans—I refer the Minister to a Treasury press release on 17 January.

The Chancellor spoke, as she should, of reducing tax avoidance by British people and companies, but why should American firms be exempted? Will the Minister give me an answer? Are the Government going to turn a deliberate blind eye to aggressive tax avoidance by the US mega tech companies in the faint hope of winning favour with President Trump, while at the same time they slash benefits to disabled people, burden social care and small businesses, eviscerate overseas aid and need to increase spending on defence?

Strategic Priorities Statement: Defence

Baroness Neville-Rolfe Excerpts

Tuesday 25th March 2025 Lords Chamber

[Lord Livermore (Lab)]

I will absolutely pass that on to the Chancellor.

[Baroness Neville-Rolfe (Con)]

My Lords, defence is the single most important activity of the state, and it is therefore unfortunate that many ESG funds have excluded investment in defence stocks, hitting our innovative UK companies. Does the Minister agree that the rebranded National Wealth Fund must lead the way more clearly and work with private sector funds to spur significant investment in the UK defence sector, as well as in other priority areas?

[Lord Livermore (Lab)]

I do agree with that, because the noble Baroness described exactly what the National Wealth Fund is there to do: to work closely with the private sector to catalyse more private sector investment in industries that we consider to be priority sectors. As the rest of this Question has shown, defence is very much one of those priority sectors.2

Closed-Ended Investment Companies: Cost Disclosure

Baroness Neville-Rolfe Excerpts

Monday 24th March 2025 Lords Chamber

[Lord Livermore (Lab)]

Yes, I do share the noble Baroness’s concern, which is exactly why we have done all the things that I have set out so far in this Answer. The Government’s policy regarding saving is that we think it is a good thing and we want to encourage more of it.

[Baroness Neville-Rolfe (Con)]

Does the Minister agree that the most important objective in the savings area is to ensure that sufficient investment opportunities are available, whatever their nature, to allow and encourage UK investors to save and invest, especially in UK stocks? Will he outline how the Government intend to support products that facilitate private investment in important areas such as property and infrastructure, as closed-ended funds are generally well suited to that?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. What she is saying is right; the Government share her view. That is exactly why the Chancellor established the pensions review, for example, in her recent Mansion House speech. Her view is that the pensions review could unlock billions of pounds in additional investment in fast-growing businesses and infrastructure while improving outcome for savers. That is exactly the objective of that policy.