Economic and Taxation Policies: Jobs, Growth and Prosperity

Baroness Neville-Rolfe Excerpts

Thursday 13th November 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I also start by thanking my noble friend Lord Elliott of Mickle Fell for initiating this debate so compellingly and I echo his tribute to Lord Desai.

I agree with so much of what he said about the importance of growth—dismal again today—the disastrous effect of high energy prices, the need to remove regulatory obstacles to employment and the devastating effect of high taxation on enterprise culture and competitiveness. As the noble Lord, Lord Liddle, said, it was a balanced speech. It was good to hear the latter’s support for welfare reform and for sorting out the nonsense of the day-one rights in the Employment Rights Bill. Let us hope that happens.

It is helpful to look at the broad picture first. Sometimes implicitly, the debate has touched on two linked economic hypotheses, both of them relevant to how we run the economy and the level of tax. The first, touched on by my noble friend Lord Massey of Hampstead and reflected in the request from my noble friend Lord Frost for reversal, is that there is a level of overall taxation, in terms of a percentage of GDP, beyond which extra tax becomes ever more injurious and disincentivising, hence economically undesirable. Economists note that the current level of taxation in the UK is very high by historic standards. Many conclude that the UK has reached the stage where this hypothesis is becoming increasingly true.

The second hypothesis, touched on by my noble friends Lord Petitgas and Lady Meyer, states that high levels of national debt, judged as a percentage of GDP, is a bad thing. Unfortunately, UK debt now stands at around 100% of GDP—a very high level for peacetime. It holds that the responsible thing for the Government to do, when faced with high levels of debt, is to reduce it, not least since high levels of debt reduce the effectiveness of responses to outside shocks such as Covid.

Under this Government, we have a very high level of national debt and taxation, both of which ought to be decreased, but on present plans will increase. The only way to square this circle is to reduce national expenditure. Yet, as my noble friends Lady Stedman-Scott and Lord Young of Cookham have said, the Government’s own review of PIP is looking at no savings at all. We need welfare reform and, indeed, a single-minded determination to get expenditure down, in the words of my noble friend Lord Horam, who recalled a former Conservative Prime Minister. My noble friend Lord Harper said raising income tax to pay for welfare was not a wise way forward.

If they were responsible, the Government would be planning to reduce expenditure to improve the fiscal position. But, alas, all the signs are that this is as likely as finding a man on the moon. Britain is living beyond its means, locked in a doom loop of high spend, high debt and high taxes.

There were some interesting new thoughts in the debate. My noble friend Lord Howard of Lympne emphasised the importance of microeconomics and the the fascinating lessons of his firm Direct Special Measures in improving our jobcentres. My noble friend Lord Howell of Guildford talked about how Germany has been dealing with the fiscal challenges. It was also a pleasure to hear again the creative thinking of my noble friend Lord Saatchi and to hear from my noble friend Lord Kempsell, who noted that no one in the Cabinet has run a business, as of course many people in this House have done.

I turn to taxation, so eloquently addressed by one such person, the noble Baroness, Lady Noakes. According to the international index published last month by the Tax Foundation, the UK now ranks 32nd out of 38 OECD countries for tax competitiveness. In the G7 it is ahead of only Italy and France. This is not a good place to be. As another former businesswoman, I can confirm from experience that high rates of corporation tax affect investment decisions and that investors go where such taxes are low—just look at Ireland’s success.

The Government are keen to paint a picture in which the state of the economy is everyone else’s fault, but business leaders and the public know that the situation we are in is substantially a consequence of the Government’s own decisions. They started by claiming that growth was their overriding priority, which I supported, but quickly lost credibility with last year’s Budget decisions, notably on NICs, IHT—we heard from the noble Baroness, Lady Foster, about its devasting effect on rural communities—and, of course, the Employment Rights Bill.

It is obvious that, if professionals and innovators see a large share of each additional pound going to the tax man, their incentive to expand businesses or move to Britain diminishes. We can look at international examples as a cautionary tale. France’s experiment with a tax on top earners a decade ago led to an exodus of talent and embarrassment for the Government. We have ourselves seen a huge exit of the wealthy since the election. As the noble Lord, Lord Petitgas, said, some of those leaving are younger people, including members of my own family.

We need to find a way to reverse the incentives to move to Dubai, Singapore, the US or Gibraltar—which we heard about from the noble Lord, Lord Wharton. However, these Benches all agree that taxes on exit would be a disaster and lead to further problems.

In addition to the fiscal damage done to our economy, it is clear from the debate that the regulatory changes being introduced in the form of legislation, such as the Employment Rights Bill, are set to harm working people even further and discourage hiring. The Government themselves estimate that the Bill alone would add almost £5billion a year in costs to businesses, killing growth in the SME sector, which bears the highest burden, as my noble friend Lord Leigh said. The noble Baroness, Lady Kramer, is also very sound on this point about SMEs and we very much agree that it is a vital consideration. Many, including my noble friend Lady Fall, spoke about the problems in the labour market and the recent rise in the unemployment rate to 5%. His Majesty’s Opposition are clear that the Employment Rights Bill should be rewritten.

Unfortunately, this comes on top of other increases such as in business rates and in NICs—£25 billion— new environmental charges of various kinds, large increases in the national living wage at the same time, and energy costs, as my noble friend Lord Elliott emphasised, which are four times as high as they are in US and seven times as high as China’s. My noble friend Lord Trenchard talked of the impact of this growing pattern of regulation on investors such as Japan, and my noble friend Lord Risby made a compelling case for the devastating effect on SMEs, on which I have already touched.

We on this side of the House are clear that economic prosperity comes from productivity and growth, not from ever-higher taxes. Increased productivity is the foundation of raising wages and living standards. My noble friend Lord Elliott’s excellent book is worth reading for the number of policies that he sets out.

Another problem we have with productivity is the sheer size of the Civil Service, which is less productive than the private sector, employing 384,000 before the pandemic and 516,000 today.

The shadow Chancellor set out a menu of £47 billion in savings last month, without hitting most of the capital investment that the Minister so often cites, That includes the SMRs in north Wales that were announced today, which I also welcome. Mel Stride’s menu is the path to faster growth and higher productivity.

My noble friend Lord Bridges rightly registered our disappointment that the promise in the Chancellor’s Mais Lecture of a “fundamental course correction” for the British economy has not been delivered and said that the Chancellor has lost control of spending. To respond to the noble Lord, Lord Eatwell, we are clear that fiscal responsibility means honesty, consistency and transparency, but we have had none of this from the Chancellor.

I look forward to the Minister’s answers to some of these challenging questions, but the evidence is clear: since the election of July 2024, the trajectory of economic policy has tilted towards higher taxes and greater regulatory burdens, and it is clear that we are going to have more of both. This path is fraught with dangers for jobs, growth and prosperity in Britain. The record-high tax burden is squeezing businesses and households and risking a downturn in economic activity. A Budget that prioritises growth and productivity and reduces regulation would set Britain back on the path to rising incomes and expanding opportunity. That is what is needed.

Cryptocurrencies: US Regulation

Baroness Neville-Rolfe Excerpts

Wednesday 12th November 2025 Lords Chamber

[Lord Livermore (Lab)]

Possibly, but I do not at all share the characterisation made by my noble friend of a regulatory race to the bottom. As I have said, we will regulate in the UK’s national interest. The Government will bring forward the final legislation to create a financial services regulator regime for crypto assets this year. Clearly, we must strike the right balance between giving firms regulatory certainty, protecting consumers and ensuring that the sector has the space and flexibility to innovate.

[Baroness Neville-Rolfe (Con)]

My Lords, these markets are global. Can the Minister tell us what contingency plans the Bank of England and the Treasury have in place should a major crypto company in the US collapse, with consequences for UK savers and markets, now as well as once the legislation has gone through? When we last discussed this subject, the Minister helpfully agreed that the Government might present a discussion paper, which would help us all. When might we expect that, given the pace of change in this important area?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As she knows, the Bank of England is the independent regulator for systemic stablecoin and will design its regime as necessary to manage the associated risks. On 10 November, just earlier this week, the Bank of England launched a consultation to seek industry feedback on its systemic stablecoin regime, building on the initial proposals set out in its 2023 discussion paper. This includes up to 60% of backing assets to be held in short-term sterling-denominated UK Government debt securities, consistent with emerging regulatory regimes internationally, and the proposed cap of between £10,000 to £20,000 for individuals and £10 million for businesses applying for systemic stablecoins and only after consultation. The Treasury and the Bank of England are maintaining a close and ongoing dialogue on the legal and regulatory treatment of stablecoins in support of the Government’s objective to make the UK a global destination for digital assets. In terms of any wider discussion paper, I am very happy to continue discussing that point.

National Insurance: Partnerships

Baroness Neville-Rolfe Excerpts

Monday 10th November 2025 Lords Chamber

Asked by

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the Centre for the Analysis of Taxation’s proposal for increasing the National Insurance rate on partnerships, and of the impact of such an increase.

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

My Lords, the Government do not comment on tax speculation outside of fiscal events. The Chancellor will set out the Government’s fiscal plans at the forthcoming Budget.

[Baroness Neville-Rolfe (Con)]

My Lords, given that professional services contribute some 12% to GDP, and that almost all the UK’s leading accountancy and law firms operate as LLPs, has the Minister examined the potential for unintended consequences such as increased incorporation or outsourcing, which could reduce, rather than increase, the overall tax take? I originally tabled this Question to probe the bad but rumoured idea of taxing GP partnerships in this way. Can the Minister at least rule that out?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. However, she knows that I am not going to speculate or give a running commentary on the next Budget now. There has been much speculation, as is usual ahead of a Budget. A lot of that speculation is irresponsible. I am not going to comment on individual tax measures now. We will do things in the usual way. The Chancellor has asked the OBR to produce a new forecast. She will make decisions based on that forecast. We will set out our fiscal plans at the forthcoming Budget. The Chancellor will do so mindful of the importance of growth and investment to businesses and the economy.

Public and Private Sector Productivity Trends

Baroness Neville-Rolfe Excerpts

Thursday 30th October 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I agree. Fundamental skills are vital to improving our productivity. Labour quality is a key driver of productivity. The skills agenda is vital to that. That is why we recently set out measures to tackle that in the skills White Paper. I hope the measures she speaks about will also be looked at carefully.

[Baroness Neville-Rolfe (Con)]

My Lords, I very much agree on skills, but a large part of the productivity problem in the UK has been in the public sector. This is hardly surprising, since the Government awarded huge public sector pay rises last year without a direct productivity link. Civil service numbers have also increased. Low productivity and growing headcount are not a happy state of affairs. How does the Minister plan to improve that rather dispiriting situation?

[Lord Livermore (Lab)]

The noble Baroness is correct to say that public sector productivity is a major issue. I know that it is something she cares about deeply. Obviously, she will be aware that the Government inherited a situation where public sector productivity was 7.2% below pre-pandemic levels; that is obviously and clearly unacceptable. She said that pay rises were awarded without any link to productivity. That is factually incorrect. At the spending review, the Government established a programme of public sector service reform to drive greater productivity. Every department has committed to at least 5% savings and efficiencies over the spending review period, with the Office for Value for Money working closely with departments to agree bespoke targets. This will result in savings and efficiencies equivalent to nearly £14 billion a year by 2028-29, and public sector productivity has already risen by 1.5% since the election.

Rules on Duty-Free Goods

Baroness Neville-Rolfe Excerpts

Wednesday 22nd October 2025 Lords Chamber

[Lord Livermore (Lab)]

I am sure my noble friend and I agree on many things, but Brexit is not one of them. I hope that when he talks about our experience in the European Union he will acknowledge the OBR’s calculations that, had we remained in the European Union, by the end of this Parliament the economy would be £100 billion larger than it will be otherwise. That is a significant disbenefit of Brexit. As my noble friend knows, the manifesto stands.

[Baroness Neville-Rolfe (Con)]

My Lords, returning to the Question, we on these Benches fully recognise the importance of the agreements reached between the previous Administration and the European Union. However, there is a legitimate question about whether practical solutions could now be explored to address the specific anomaly. Will the Minister consider supporting a joint UK-EU technical group to examine practical options for restoring duty-free parity for Northern Ireland travellers, which could overcome the difficulties the Minister outlined? That process could be undertaken without undermining the Windsor Framework.

[Lord Livermore (Lab)]

Let me be absolutely clear, again. If you have duty-free, you have to have allowances. If you have allowances, you have to have checks and enforcement. If you have checks, you have to have border infrastructure, and if you have border infrastructure, that will be contrary to the Windsor Framework and the Good Friday agreement.

GDP Per Capita

Baroness Neville-Rolfe Excerpts

Monday 20th October 2025 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord is absolutely correct. That is currently a significant issue. As I understand it, the ONS is reviewing that data, and that review is ongoing.

[Baroness Neville-Rolfe (Con)]

My Lords, per capita GDP is, of course, a proxy for productivity in the longer run, and I am very concerned that productivity has become an increasing problem for the UK economy. What do the Government plan to do about it, in both the public sector and the private sector?

[Lord Livermore (Lab)]

The noble Baroness is absolutely correct to say that productivity is a long-standing problem in the economy. As I understand it, productivity fell to the lowest in the G7 under the previous Government, so clearly it is important that we have prioritised that. One of the most important things we are doing for productivity is increasing investment in our economy. We have revised the fiscal rules to enable us to increase investment in the economy, and I regret very much that the party opposite opposed those changes to the fiscal rules.

Stablecoin Ownership

Baroness Neville-Rolfe Excerpts

Thursday 16th October 2025 Lords Chamber

[Lord Livermore (Lab)]

I wish my noble friend a very happy birthday— his question allows me to give him a good present. It is fair to say that, right now, he cannot receive his state pension in stablecoin, but the fact that there is potential for that to evolve highlights the importance of the issues raised in this Question and of having exactly the right regulatory regime going forward.

[Baroness Neville-Rolfe (Con)]

My Lords, I also want to thank the Lord Speaker for all he has done for this House.

Although popular with some young people and tech entrepreneurs, most of us have little idea of what cryptocurrencies entail, their benefits or disadvantages—despite this week’s speech by Sarah Breeden, the Bank of England Deputy Governor. To return to my recent theme of financial education, will the Government take steps—perhaps by issuing a discussion paper—to ensure that all of us, from schoolchildren to pensioners such as the noble Lord, Lord Brennan, are better informed about them?

[Lord Livermore (Lab)]

There is definitely something worth considering in that. I have learnt a lot in preparation for this Question. I know very little about the subject, but much more than I did when I started. The noble Baroness raises an important question, in terms not only of financial education—obviously we should look at what she proposes—but of keeping consumers safe. The FCA financial promotion rules require promotions to be clear, fair and not misleading, with risk warnings displayed prominently, especially for high-risk investments. Firms must ensure promotions accurately reflect benefits and risks and consider the target audience, to help consumers make well-informed decisions. The FCA has also been cracking down on unlawful financial promotions by influencers as part of the regulatory regime being developed. The Treasury is working closely with the FCA to set conduct standards for firms.

School Fees: VAT

Baroness Neville-Rolfe Excerpts

Monday 13th October 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for the points that he makes, and I agree very much with what he is saying. As he knows, we are increasing per-pupil funding to record amounts. It is absolutely correct that we have heard many scare stories about this policy—that schools would close. Since VAT was applied on 1 January, private schools have continued to open and close in line with historic trends. As I have said already, 49 private schools have closed but 70 private schools have so far opened.

[Baroness Neville-Rolfe (Con)]

I start by echoing the tributes to Lord Campbell. It seems only yesterday that he was with us. I believe that taxing education is a shabby policy, and we have seen some 50 schools close since the VAT on private schools was introduced. This is another example of Labour attacking the sectors of Britain that are most successful: in this case, our private schools. They are very well regarded internationally and key to our country’s academic successes. Has the Minister learned anything from this regrettable episode about how and where we tax?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. What I have learned from this episode is not to listen to scare stories from the party opposite. She talks about school closures; I am sorry that she did not listen to the figures that I gave. Yes, 49 private schools have closed but 70 private schools have opened, so obviously there is a net increase in the number of private schools in our country. There has historically been a significant turnover in this sector, with around 75 private schools in the UK opening and closing each year and the overall number of private schools remaining broadly stable.

Road Pricing

Baroness Neville-Rolfe Excerpts

Thursday 18th September 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, much revenue is raised from motorists through vehicle licensing, fuel duty and indeed congestion charges. If there was a move towards raising more from road pricing, can the Minister confirm that it would be coherent and reasonable and not just a policy of soaking the motorist? I have in mind the Government’s decision to scrap our planned Conservative restrictions on low-traffic neighbourhoods, which create congestion and encourage overzealous enforcement, and the overuse of 20 mph limits that hit working people—who are rightly a concern of the noble Lord, Lord Spellar—across the country.

[Lord Livermore (Lab)]

The noble Baroness asks a hypothetical question that I have already dealt with. The Government have no plans to introduce road pricing. She mentions low-traffic neighbourhoods. We want to support local authorities to deliver streets that work for all road users and enable integrated journeys. Decisions on which neighbourhoods should be low traffic lie with local authorities.

Financial Services (Overseas Recognition Regime Designations) Regulations 2025

Baroness Neville-Rolfe Excerpts

Wednesday 17th September 2025 Grand Committee

I have one final comment. The UK has kept its role as a major player in global financial services because of its reputation for having reasonable rules but respecting rules. I want to be sure that the Government are being very careful not to damage that reputation.

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the Minister for introducing the statutory instrument crisply and clearly. I am also grateful to the noble Baroness, Lady Kramer, for her usual well-informed comments, including those on the digital aspects of this proposal. I think that I am, however, more in favour of growth and competition than she is.

I start by saying how important secondary legislation of this nature is. The topic of debate today is the modified reinstatement of legislation that we as a Parliament passed during the process of exiting the European Union. Now that we are able to table such legislation on our own terms, we can bring it fully in line with domestic regulations, to the benefit of British services.

Cross-border financial services must be both secure and effective. This is why having similar regulatory frameworks to collaborative countries is so important. It is all well and good having an efficient domestic system, but if that system is not aligned with foreign trading partners, markets are likely to be boxed in and limited. Some form of alignment criteria must therefore be established to allow cross-border services to function. The outline measures aims to define the parameters within which an overseas jurisdiction may be recognised as equivalent to that of the United Kingdom.

It is also welcome that His Majesty’s Treasury, in addition to the described powers of imposition or limitation of conditions on an overseas recognition regime, will now have the powers to require regulators to provide relevant information to support equivalence decisions, and will be required to co-ordinate with the relevant bodies when processing overseas recognition regime designation cases. This will help speed up and standardise the decision-making of such cases.

Although the Minister said that these powers may not be used very often, I have two questions. First, the Treasury requires either information or advice from a regulator. If it needs that, it must, by notice,

“specify a reasonable period within which the information or advice must be provided”.

What would be considered “a reasonable period”? Perhaps the Minister could clarify the timescales. We want to see efficiency in the interests of stakeholders, and we sometimes seem to be rather slow in the financial services sector. That is one of the reasons I have four Questions for Written Answer tabled today about the progress of the post-Brexit changes in financial regulation, which we initiated and would like to see the Government complete. I would be very happy to hear today how the Treasury is getting on.

Secondly, the Explanatory Memorandum states that the

“advice that the Financial Services Regulators will be asked to provide”

by the Treasury

“will be agreed on a case-by-case basis”.

The scope for this seems too wide. I am aware that it is specified in the legislation that advice may be given only in relation to an overseas recognition regime designation, or a proposal for one, but the breadth of these designations seems wide. Will the Minister consider issuing some further guidance on the extent of the information that the Treasury is able to ask for in the name of ORR designations?

I look forward to the Minister’s response. In closing, I say that the Official Opposition support the statutory instrument and the measures to encourage a growing, healthy, open—in the Minister’s words—and competitive UK financial sector.

[Lord Livermore (Lab)]

My Lords, I am grateful to both noble Baronesses for their detailed comments and scrutiny, as well as for their support for this secondary legislation.

The noble Baroness, Lady Kramer, asked a number of questions, which I will seek to address. First, she initially expressed her surprise that the Treasury required these new powers. I am told that this instrument replaces a similar instrument: the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which gave the Treasury the power to request information from the regulators when considering decisions under assimilated equivalence regimes. The Treasury has exercised the powers contained in the 2019 regulations in support of equivalence decisions made since our EU exit. To date, no new decisions have been taken under any ORR, meaning that the powers in this instrument being introduced today have not yet been required.

The noble Baroness, Lady Kramer, also spoke about her concerns—we have discussed them before in the main Chamber—around the Government’s overall agenda of rebalancing from risk towards growth and competitiveness. As the noble Baroness knows, the Chancellor has expressed her clear view that she wants to see greater emphasis on growth and competitiveness, but she has absolutely discussed how central the financial services sector is to the Government’s modern industrial strategy and the key role that it plays in financing growth across the economy. She remains committed to the highest standards of regulation and does not see those things as being in tension—the noble Baroness knows that; we have discussed it before. I do not necessarily agree with the noble Baroness’s concerns, in that there is absolutely no question of a race to the bottom on regulation. The UK will remain a global leader in promoting the highest standards that deliver for businesses and consumers across the UK.

The noble Baroness, Lady Kramer, asked a specific question about how the process will work and whether it is becoming too politicised. I do not think that that is the case. Many other countries have similar regimes; for example, the US makes comparability assessments. As I said in my opening remarks, the EU has equivalence, and our recognition process is consistent with international norms. Our guidance document sets out our approach. We have been clear that robust standards, safeguarding outcomes and technical advice from our expert regulators are all key factors in decisions on whether to designate another jurisdiction.

The noble Baroness, Lady Kramer, also asked about publishing regulator advice. The Treasury will always, as part of its designation process, summarise the evidence that it has received and considered in relation to the other jurisdictions’ regulatory frameworks.

I am grateful to the noble Baroness, Lady Neville-Rolfe, for her support for this statutory instrument. The drive towards growth and competitiveness, and the importance of this sector in doing that, is one of the rare areas on which we agree. I am also grateful for the noble Baroness’s support for the Mansion House announcements that the Chancellor made, building, as all Chancellors do, on the previous Chancellor’s work in this area.

The noble Baroness, Lady Neville-Rolfe, she asked two questions: one about timescales and another about speed. Unfortunately, I cannot read the answer that has been given to me. I will ask my team whether we have an answer on the scope of the designations. I will write to the noble Baroness on the two points that she made, if she does not mind.