Regional Growth

Baroness Neville-Rolfe Excerpts

Thursday 5th June 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, the Statement given in the other place yesterday made many references to the benefits of growth, and the Chief Secretary to the Treasury could hardly contain his excitement when he said that increases in regional productivity could grow the economy significantly. We on this side of the House would of course welcome the prospect of economic growth. However, although the Statement mentioned “growth” nine times, there was little to no detail on how these proposals would in fact boost our economy.

One vital question is whether this level of investment—if it is in fact new money—will require an increase in taxation, given that national debt is already at around 100% of GDP. As we know from the country’s experiences with inheritance tax and the NICs hike, tax rises are bad for growth and bad for our economy. I hope that the Minister can provide the House with some clarity on this question. Can he confirm to the House what the net figure is for the projected cumulative impact of this policy on British economic growth by the end of the Parliament? Can he assure the House that this policy will not be met through any new or increased taxes?

This Statement also gives me a sense of déjà vu, because the measures announced are incredibly similar in scale and form to the funding announcements made by the previous Government under the City Region Sustainable Transport Settlements in 2023. In 2023, we promised £2.64 billion for the West Midlands, and the Government have announced £2.4 billion for the West Midlands. We promised £2.1 billion for West Yorkshire; now, the Government have announced £2.1 billion. We promised £2.5 billion for Greater Manchester; they have announced £2.5 billion. Indeed, much of this investment touted by the Government appears to have been recycled—money already announced in different forms under previous schemes and now repackaged. This needs careful examination. Perhaps the Minister could help us here with an honest assessment.

The Government quote the Green Book, which they are revising to give more opportunity for projects outside the south-east—so a change in the way value for money is approached. Given that this has already been briefed to the media, what are the key features here and have the projects announced yesterday been assessed on the old or the new basis? How will the rules be honed to avoid Whitehall-inspired or ministerially-inspired white elephants?

I had the honour of chairing the Built Environment Committee, with many from across the House, and leading its work in 2022 on Public Transport in Towns and Cities. We found that nearly two-thirds of journeys on public transport were by bus. What do the Government’s plans do for bus funding? I am less interested today in the rapid bus routes planned for Liverpool than in basic bus services that so many people take to work, especially when they live outside our cities and commute. The Government have increased the maximum £2 fare that we introduced and have not guaranteed its long-term future.

The committee also found that light rail schemes—basically, trams—are very expensive but that very light rail systems such as that in Coventry, and bus rapid transit schemes, had more potential and needed to be assessed and compared. What have the Government concluded about the balance here, and how is that reflected in yesterday’s package?

We support infrastructure investment when it is targeted, timely and impactful. But what we heard from the Chancellor and Chief Secretary yesterday was less of a plan and more of a press release. The funding, spread over nearly a decade, will not begin in earnest until 2027. That is two years from now before the money leaves the Treasury. For communities in the Midlands and the north, this will sound like delay dressed up as action.

Can the Minister confirm when we will see the effect of this policy reflected in regional and national growth and productivity rates? Can he assure the House that businesses in the areas identified will see a tangible improvement in their day-to-day operations as a result of these spending decisions? After all, it is business, not government, that is more productive and the main driver of growth.

The noble Lord and I agree on the importance of productivity growth. However, to achieve the £86 billion productivity improvement in cities cited in the Statement requires much more than this largely welcome transport investment. We need a revolution in skills, innovation, digitalisation and public sector efficiency, and to solve the problem of uncompetitive electricity prices crippling our industries, especially in the very regions we are talking about today.

Finally, I must raise a note of caution on the fiscal front. At a time of considerable pressure on the public finances, we must be clear-eyed about priorities. A commitment of this scale, without clear delivery mechanisms or clarity on the projected economic returns, risks becoming a drain rather than a driver. Transport investment must support productivity, growth, and value for money. It must not become an uncosted political gesture, reliant on anti-growth decisions such as tax hikes. It is incumbent on the Government to be responsible in the steps that they take, so I look forward to the noble Lord’s answers today and to next week’s spending review, when we will return to some of these issues.

[Baroness Pidgeon (LD)]

The Liberal Democrat Benches fully support measures to grow our economy across every nation and every region. We therefore welcome this Statement detailing planned investment in public transport and infrastructure. It is good to see not just plans but the money set aside for some city regions, giving long-term transport financial settlements. Frankly, that is the only sensible way to ensure investment in transport infrastructure, rather than the constant stop-start begging-bowl approach we saw with the previous Government, which benefits no one and delivers nothing. For too long, communities have heard promises only, to be left with phantom transport networks, so investment in transport infrastructure is vital if we are to grow our economy and create access to jobs across the country.

In particular, we are very pleased to see the Metrolink to Stockport in this announcement, which is testimony to the hard work of the local Liberal Democrats, who have been campaigning and working on this issue for many years—indeed, long before the mayor and the combined authority were created. However, we have a number of questions. It seems that areas without mayors are being left behind or ignored. Where is the plan and money for rural areas? There are parts of the south-west, for example, which would benefit hugely from transport infrastructure investment, yet this area has been ignored in this Statement. It feels as though Bristol is as far west as the Government can see.

Whether it is Cumbria, Shropshire, Norfolk, Devon or Cornwall, there is nothing in this Statement for them, so what plans do the Government have for a rural growth strategy? What funding is planned for our railways as they come under public ownership? There is a desperate need for major investment across the network to enable more frequent trains to serve our communities. Will there be a railway investment plan? Will the Mayor of London and Transport for London be allocated further funding to maintain and grow the capital’s transport system, creating jobs across the country?

The cost of fares is a real barrier to many people. What plans are there to reduce fares—in particular, to reinstate the £2 bus fare cap—and to reform rail fares to make them affordable for passengers? Alongside the investment in infrastructure, there is the challenge of the skills and workforce issues. What plans do the Government have to ensure that we have the skilled and trained workforce to build this transport infrastructure, including fixing the apprenticeship levy? This is a welcome first step, but key questions need to be answered to ensure that every area can grow and prosper.

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

I am very grateful to both noble Baronesses, Lady Neville-Rolfe and Lady Pidgeon, for their questions, and I welcome the noble Baroness, Lady Pidgeon, to her place and look forward to speaking with her in many more of these debates.

The noble Baroness, Lady Neville-Rolfe, asked a number of questions. She started by asking about growth. I noticed that she did not mention that, in this quarter, the UK is the fastest-growing economy in the G7. I noticed that she did not mention that our growth forecasts have just been upgraded by the IMF. I noticed that she did not mention that, in many business surveys, business confidence is now at its highest level for many years. I hope that, when she talks about growth, she will always give a rounded picture of where we are on growth.

She asked whether these measures will contribute to regional growth, and yes, of course they will: that is the whole point of them. For too long, we have relied on just one part of the country to generate economic growth. We need to make sure that more parts of our country are contributing to growth and more people throughout our country are feeling the benefits of that growth. That is absolutely why we are doing what we are. It is why we started with connectivity: because we know that connecting city regions is incredibly important, enabling more people to travel to work, connecting labour markets and connecting businesses to more places so that they can sell more goods to more people. That is absolutely central to what we set out yesterday. The answer to the question, “Will this contribute to growth?” is: yes it absolutely will. We saw in the Spring Statement the OBR, for example, scoring for the first time some of our growth measures, and of course we hope that it will continue to score our growth measures going forward.

She asked: is this new money? Absolutely, yes—yesterday, we announced £15 billion of new money. It is the biggest ever investment by any British Government in our regional transport network. As a result of the fiscal rules and the difficult decisions that we have taken, we are in the spending review increasing the overall amount of spending by £300 billion: £190 billion on day-to-day spending and an increase of £113 billion on capital spending. I noticed that the noble Baroness, Lady Neville-Rolfe, welcomed—slightly half-heartedly—what we announced yesterday. It is notable that she welcomed the additional spending, but she has at no point welcomed any of the difficult measures we have taken to raise that money so that we can spend it on the things that she is now welcoming. I think that her shadow Chancellor is today making a speech where he is seeking to distance himself from the Liz Truss approach from the previous Parliament. Yet it seems to me that the party opposite is repeating exactly the same mistakes of the Liz Truss mini-Budget of spending money that it does not have. I think that is a huge risk going forward. As I say, she has welcomed this spending, but she has opposed every single measure we have taken to raise the money to fund it. She asks: will this policy require any additional taxes? No, because we have already raised the taxes in the last Budget—£40 billion—to enable us to spend this money for the rest of this Parliament. So yes, these measures will be met within the envelope that was set at the last Budget.

The noble Baroness said that these are the same measures as the previous Government announced. She kept using the phrase, “We promised”. I think that is a really important phrase because, yes, the previous Government did promise many things, but they did not put a single penny of funding behind any of the promises made. The big difference between what we are doing now, what the Chancellor announced yesterday, and what the previous Government announced, was that they made lots and lots of promises that they never funded—not with a single penny of funding. She will have heard me refer to the £22 billion black hole in the public finances. That is exactly why that black hole occurred. What we announced yesterday was real funding for real measures going forward. That is the big, fundamental difference. She asked for an honest assessment, and I think I would call for some honesty from her too that the previous Government did not fund any of those promises.

She asked about the Green Book. We have set out that the Green Book was used by previous Governments against regional authorities and local mayors as a reason not to invest outside London and the south-east. We have changed that methodology. We will set out in the spending review next week the full details of that review, and I look forward to discussing the full details of that with her.

She said that funding would not be seen for two years from now. Of course, there was no funding seen under the last Government at all, so of course we have to start somewhere and we have to get the money out of the door—she is absolutely right. But spades will be in the ground in this Parliament, and we absolutely confirm that.

She asked: will we see improvements for business? Yes, it is absolutely the purpose of this announcement to connect businesses to more areas. It is why local transport networks are so vital and why we have started where we are. She talked about the fiscal front, and I completely agree with her. Of course there are increasing pressures, but that is why I say to her that we must not make promises that we cannot afford. The previous Government did exactly that; we will not make that mistake.

I am very grateful to the noble Baroness, Lady Pidgeon, for her welcome for the long-term nature of these announcements, and it is obviously great that national government is working with local government and local government leaders to deliver on these promises. She called it a welcome first step, and I would agree exactly with that sentiment. We were very clear about what we were and were not announcing yesterday. Yesterday, we were announcing the connectivity of city regions, so of course this focused on certain city regions. Next week, we will set out in the spending review the entire regional plan for growth: for the rest of England, Scotland, Wales and Northern Ireland. That is what we will do, but yesterday we were talking purely about the connectivity of city regions, and we were putting the transport connectivity first, because we know that that is the essential underpinning for so much else in our growth strategy.

She touched on a number of other things that are important to growth. She talked about skills, for example. I completely agree with her when it comes to skills. We will be setting out in the spending review, and then in the industrial strategy in the weeks following the spending review, the measures that we are taking. She talked about having the workforce to build this transport infrastructure. Absolutely: I completely agree with her on that point. She asked about funding for railways, the rest of the country and regional plans, and about the Mayor of London, et cetera. All those questions will be addressed in the spending review next week, and I look forward to discussing that with her and other noble Lords next week.

[Baroness Neville-Rolfe (Con)]

Will that include buses?

[Lord Livermore (Lab)]

It will include buses too, of course.

Denial of Banking Services: UK Defence Sector

Baroness Neville-Rolfe Excerpts

Wednesday 4th June 2025 Lords Chamber

[Lord Livermore (Lab)]

I agree very much with what the noble and gallant Lord says. The Government have made it very clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector.

[Baroness Neville-Rolfe (Con)]

My Lords, defence is a vital requirement of our nation; I think we are all agreed on that. There have been many bad examples, which is why we are debating this today. Does the Minister agree that it is preposterous, unpatriotic and concerning that investment in our defence sector—for example, by certain pension funds or others prioritising ethical investment—should be actively discouraged by those purporting to favour a sustainable approach to investment? This needs to change.

[Lord Livermore (Lab)]

I agree with the noble Baroness. As I said previously, the Government have made it very clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector, and at a time of increasing geopolitical instability, supporting the defence sector has never been more critical.

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?