United Kingdom: Business Competitiveness

Baroness Neville-Rolfe Excerpts

Tuesday 1st September 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

I thank the noble Lord for that question. I have been trying to stay in the spirit of our new Prime Minister and to reach the greatest cross-party consensus that we can on this. What the Chancellor and the Prime Minister have said about being really careful about business costs, and making sure that business stays competitive, takes us some way in that direction. But every businessperson will tell you that you need to balance the books, and the comment from my Benches suggested that perhaps, three years ago, that was not taking place.

[Baroness Neville-Rolfe (Con)]

My Lords, I also very much welcome the Minister to his new role, and I thank the noble Lord, Lord Livermore, for his contribution in one of the more difficult Front-Bench jobs, as the Minister is discovering. I will focus on growth, which was the top priority when Labour was elected with a huge majority. Yet many of the measures introduced—higher taxes and an assault on business—have probably reduced growth and competitiveness. So what is the new Andy Burnham Government’s growth target, and when do they expect to achieve it?

[Lord Pitt-Watson (Lab)]

One swallow does not make a summer, but the UK’s growth was number one among G7 countries in the first half of this year and the previous year had record productivity. Dismissing that and saying that growth is not taking place misses the evidence that we are beginning to see. What do we intend to do on this? We intend to follow the policies that have been working: the industrial policy, the planning reforms, the new sources of finance, being sensible about government accounting so that capital is not discouraged, fiscal credibility and good trade deals.

Taxation (Energy and Vehicles) Bill

Baroness Neville-Rolfe Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 14th July 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, this Bill is presented by the Government as a series of targeted measures designed to address a specific issue: the war in the Middle East. I thank the Minister for his full explanation. However, the truth is that what we are discussing is a series of sticking-plaster measures designed to curb some of the worst excesses of what can be described only as an economy seriously in trouble.

The current Government—and, indeed, the one that is to come under the leadership of Andy Burnham—face a deeply serious situation. Last week, the Office for Budget Responsibility warned in its Fiscal Risks and Sustainability report that, without action, public debt is set to move on to an unsustainable upward path in the near future.

A key finding is that early action to head off difficult fiscal outcomes is much less costly than late action. This is partly due to the sheer scale of our national debt. Last year the Government borrowed £129 billion, 80% of which was spent on debt interest in an increasingly jumpy bond market. The OBR estimates that an additional £28 billion a year will be needed to meet the Government’s critical pledge to spend 3.5% of GDP on defence. At the same time, spending on the state pension and on health is projected to rise sharply in the next few years —one of the reasons why I called for a cap on expenditure on pensions as a percentage of GDP in my independent review of the state pension age as long ago as 2022 and why I deplore the failure to hold a full House of Lords debate on the 10-year plan for the NHS.

The Lords Economic Affairs Committee said much the same about the unsustainability of debt years ago in its report National Debt: It’s Time for Tough Decisions. The then chair, my noble and far-sighted friend Lord Bridges of Headley, was quoted at the time as saying that

“our national debt risks developing on an unsustainable path”.

Moreover, we are now spending more on welfare, £334 billion, than we collect in income tax, £331 billion. The new Prime Minister and Chancellor of the Exchequer face the choice of either significant tax rises or deep spending restraint if we are to stop debt spiralling further out of control. Yet the OBR has also made clear that tax rises cannot simply be treated as a limitless answer. Continually increasing taxes risks creating ever greater economic distortions, with the Laffer curve biting into receipts—for example, if the top rate of income tax goes up. Wealth taxes raise less than expected, as we know from overseas experience, and they certainly damage competitiveness. Further stealth taxes on earnings risk weakening work incentives and drag more people out of the labour market.

The key to squaring the circle, as I have discussed with the Minister on many occasions, is growth, particularly per capita growth or higher productivity. EU growth has been sluggish. Yet the Government want to get closer to the EU and agree to a package of changes that will certainly cost hundreds of millions a year, given the difficulties of negotiating with the EU, with no certainty that it will improve our economy to the extent hoped. I am also concerned about the impact on our legally binding obligations under CPTPP and our agreements with the US, particularly on vehicles, which I will come to later, and on pharma—agreements that are vital to UK growth. What is the nature of the legal advice that the Government are relying on in saying that they will continue to deliver such international obligations once a revised TCA is agreed?

The Government’s assault on business—rises in national insurance, business rates, and dividend and capital taxes, and the Employment Rights Act—is already having exactly the effect on business that we forecast, with employment squeezed and a crash in economic optimism and enterprise. A report this week from accountants BDO showed that business activity dropped sharply last month after a brief rebound earlier this year ran out of steam. The truth is that there is a deeply serious situation facing Mr Burnham, and we cannot divorce our discussions today from this backdrop.

That brings me on to today’s Bill. Increasing mileage payments to 55p for the first 10,000 business miles is a measure we support. It is right that workers who use their own vehicles for work, including carers, should not be left to absorb rising motoring costs. I know that the announcement was the early fruit of an ongoing review, as the Minister explained, but can he tell us about the logic behind the difference in treatment for hard-working carers and others who drive more than 10,000 miles a year?

I turn to the HGV excise duty holiday. HGV duty had been frozen since 2014 until Labour came into office. While reducing it to £1 for a year will provide some welcome relief to the sector, it does not solve the problem, and Ministers should not overstate the impact. More than 95% of road haulage firms are small businesses operating on tight margins. The Government say the measure will save around £600 for a typical lorry and £900 for the largest vehicles, yet, to put it into context, filling a single HGV at peak prices can cost more than £1,000. This does not offset the wider pressures that the Government have imposed through higher business rates, transport taxes and fuel duty, with duty and VAT receipts of course rising whenever petrol prices spike. If the Government are serious about supporting businesses in this country, and particularly small businesses, they must consider this policy as one of a series of changes they must make to create a tax and economic environment that backs business, especially small business, rather than penalising it.

I turn now to the electricity generator levy. This was introduced under the last Government as a temporary windfall tax and a short-term response to exceptional circumstances. It was due to end in 2028. However, we now see the Government proposing to increase the rate from 45% to 55% and to extend it beyond 2028 with no end date. The case put forward by the Government is that the increased rates will support the decoupling of gas prices by incentivising generators into voluntary wholesale contracts for difference. However, while the new higher levy applies from today, those new contracts are yet to be seen. I believe the proposed strike price is not known. The likelihood of generators accepting them is therefore unknown and in question, and the value for money for taxpayers is yet to be proven.

Moreover, the HMRC impact note for this Bill contains no figures for the Exchequer impact. We should have that, ideally now or at least during the consultations that the Minister referred to. Rather than acting to lower energy costs by taking sensible steps to increase the supply of energy, such as utilising our resources in the North Sea and moving forward with Jackdaw and Rosebank, the Government seem to be using tax as a long-term lever to alter the incentives faced by generators.

We introduced a short-term, emergency measure with a clear sunset date. Sunsetting is a responsible approach to temporary taxation and short-term regulation, and I think it can be very useful. It helps to avoid the accumulation of too much regulation, and I know the Minister worries about unjustified accumulation because it can have an adverse effect on productivity. Sunsetting has the merit of allowing periodic parliamentary scrutiny and of encouraging officials to think creatively about other routes to a desired end. Instead, the Government appear to be moving to a long-term, final answer when the relevant contracts for difference parameters are unknown and untested.

Before the Minister asks, as he sometimes does, what we would do, the Official Opposition have been clear that we would cut bills for businesses and consumers through our cheaper energy plan. We would take VAT off energy bills, axe the carbon tax and legacy subsidies, and again use our resources in the North Sea as the Norwegians are doing. Tax cannot and should not be the long-term solution to the problem of affordable energy.

At this juncture I might remind the Minister of the OBR’s warning. It also agrees that tax cannot be the solution to all this. As we can see on page 81 of its report, there is a significant fiscal cost to the commitment to reduce carbon emissions to net zero by 2050 due to the loss of revenues linked to such emissions. This is particularly true of fuel duty, with three-quarters of the decline in revenue due to the transition to electric vehicles. This is a good example of the difficulties the Government face in relying so heavily on taxation to finance spending.

This Bill contains measures that in isolation are not without merit, but they must be seen for what they are: limited interventions against a backdrop of rising costs, weakening confidence and increasingly strained public finances. Temporary relief has its place but is no substitute for a serious growth strategy, a competitive tax system, disciplined public spending and an energy policy that brings costs down by increasing supply rather than by reaching for higher taxes. That is the test by which this Bill should be judged.

Climate Change: Housing Insurability, Mortgage Lending and Financial Resilience

Baroness Neville-Rolfe Excerpts

Monday 13th July 2026 Lords Chamber

[Lord Livermore (Lab)]

The Government have already committed significant investment in the transition to net zero, including £2.6 billion to decarbonise transport, £1.4 billion to support the uptake of electric vehicles, £2.7 billion a year for sustainable farming and nature recovery, and £13.2 billion to support the rollout of heat pumps and other low-carbon technologies as part of the warm homes plan, so I do not accept what the noble Baroness has said.

[Baroness Neville-Rolfe (Con)]

My Lords, London is the world’s leading international centre for commercial insurance and reinsurance, which is a subject of this Question. Does the Minister agree that insurance companies, with their considerable long-term expertise, are best placed to determine how the effect of climate change is reflected in premiums? Does he agree that, going forward, that knowledge should influence those—not least our planners—determining where it makes sense to build, so that we get on with housing and infrastructure as we need to do?

[Lord Livermore (Lab)]

The noble Baroness is absolutely right about the importance of getting on with housing and infrastructure, and that is what this Government are seeking to achieve. She is absolutely right to say that a resilient and affordable insurance market is necessary for enabling businesses and households to recover quickly from climate events. The Climate Change Committee has assessed that the insurance gap is currently low relative to most countries. However, without sufficient adaptation, the number of properties that do not have the necessary insurance is expected to grow as climate risks increase. The Government are committed to ensuring that the long-term impacts of climate change are managed. The Government will strengthen the UK’s approach as part of the fourth national adaptation programme, which will set stronger adaptation objectives to improve preparedness for climate impacts.

Pension Access Rules: Impact on Terminally Ill

Baroness Neville-Rolfe Excerpts

Tuesday 30th June 2026 Lords Chamber

[Lord Livermore (Lab)]

Yes, I agree with my noble friend, and I am grateful to him for what he says about the review. As he says, individual private pension schemes have their own requirements for terminally ill people to access their pension savings. That does mean that, too often, individuals experience too many varying hurdles to access, depending on their scheme. The Government will examine the access options across these schemes and consider what changes may be needed to ensure people have appropriate access. To be clear, it is tax-free below the age of 75, up to a total sum of £1.073 million.

[Baroness Neville-Rolfe (Con)]

My Lords, The Pensions Review, along with a whole body of work done by organisations such as the Institute for Fiscal Studies, raises serious concerns about pension adequacy and retirement saving. What steps is the Minister taking to improve financial education and public understanding of the need to save adequately for retirement, particularly among groups such as the self-employed, who are less well served by the auto-enrolment system?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her ongoing championing of financial education. I know it is something that she feels passionately about and we have discussed it before. As she knows, financial education now forms part of the school curriculum in all UK nations. In England, financial education forms a compulsory part of the curriculum in mathematics at key stages 1 to 4 and in citizenship at key stages 3 and 4. Together, these cover personal budgeting, saving for the future, financial risk, managing credit and debt, and calculating interest. In terms of the adult population that she refers to, and small and medium-sized enterprises in particular, the DBT is considering this as part of its small businesses work, and I will certainly look into it further in light of her question.

Covid Fraud

Baroness Neville-Rolfe Excerpts

Monday 29th June 2026 Lords Chamber

[Lord Livermore (Lab)]

I am afraid I do not know whether we are still using the same consultants; I am more than happy to check for the noble Lord.

[Baroness Neville-Rolfe (Con)]

My Lords, I think we need to stand back and take a broad view of the problems. We all know that Covid was a challenge right across government and that fraud was an issue. However, the important thing is to do better next time, which is why we set up the Public Sector Fraud Authority in 2022 and introduced the use of AI into fraud detection, which helped with some of the sort of problems that have been raised. Given the doubt expressed in parts of the report, is the Minister confident that the Government of the day will, in practice, do significantly better next time? I am looking for a commitment here.

[Lord Livermore (Lab)]

I can fully understand the noble Baroness’s desire to stand back from this. On entering government, this Government found that £674 million of contracts were in dispute. However, we also inherited a recommendation from the previous Government that any attempt to reclaim that money should be abandoned. The commissioner’s report set out that £10.9 billion was lost to fraud and error from Covid spending. Failed pandemic-era PPE contracts cost the British taxpayer £1.4 billion and over £1.9 billion of bounce-back loans have been flagged as suspected fraud to the British Business Bank. The commissioner also found that the previous Government’s over-ordering of PPE and delays in quality-checking meant that £762 million is unlikely to ever be recovered, with substandard PPE gowns, masks and visors remaining uninspected for up to two years, preventing recovery of public money. Covid fraud and corruption is an appalling financial scandal which has cost UK taxpayers dearly. The noble Baroness asks for a commitment that we will do better next time; I think we could hardly do any worse.

Further Education Colleges: Recovery of VAT

Baroness Neville-Rolfe Excerpts

Tuesday 9th June 2026 Lords Chamber

[Lord Livermore (Lab)]

I agree with my noble friend’s overall point that we want greater levels of parity between FE colleges and other educational establishments. The Government are delivering those measures through our post-16 skills White Paper on developing the skilled workforce that our economy needs and on reaching the target of two-thirds of young people participating in higher-level learning. FE colleges are a vital part of that. One thing that I have not read out is that, in recognising rising student numbers, the Government are providing £87 million of exceptional in-year growth payments to colleges this year and are increasing funding by nearly £800 million next year.

[Baroness Neville-Rolfe (Con)]

My Lords, as noble Lords know, I am huge supporter of vocational education, so I welcome this Question. Does the Minister agree with the noble Lord, Lord Forbes, that it would cost the Exchequer £200 million to extend the scheme in the way proposed? More generally, do the Government consider that the criteria to reclaim VAT are fit for purpose?

[Lord Livermore (Lab)]

Both of those points are swept up in the point that I have already made: the Government are continuing to look into the VAT position of these colleges.

Middle East: Economic Response

Baroness Neville-Rolfe Excerpts

Monday 1st June 2026 Lords Chamber

This Government have the right economic plan. We promised to grow the economy, and we have. We promised to cut inflation, and we have. We promised to cut the cost of living, and we are—promises made by a Labour Government, promises delivered by a Labour Government. I commend this Statement to the House”.

[Baroness Neville-Rolfe (Con)]

My Lords, it is a pleasure to return to the House after such a sunny break and to be able to review calmly the Chancellor’s Statement of 21 May.

It was not a major package. It was a collection of small measures, welcomed by some people as far as it went. As far as I know, the Chancellor did not announce the total cost, but except for the short delay in the increase of 5p on petrol, we are told that it will be covered by the changes to corporation tax on overseas investment and the foreign branch exemption. I would be grateful if the Minister could tell us how much that corporation tax change will cost British businesses and in which tax years.

What investment allowances will be made? As someone who made major investments overseas at Tesco and built up some fine businesses in Korea, Thailand and eastern Europe, I can tell your Lordships that we would not have taken the successful risks we did if early losses had not been allowed against profits at home. How is the Treasury going to avoid this change chilling overseas investment—a beacon of British wealth creation, reputation and strength for centuries?

I read the new list of food, drink, fertiliser and fuel items that will attract zero tariffs until December 2028. I note that they are rightly out for consultation. I have two questions here. First, have the Government had regard to the impact on our aspirations for new trade deals, where the granting of tariff-free access is a major bargaining chip? We know that the new Canada deal seems stuck because it has indicated that there is not much extra we can offer it.

Secondly, while government has tried to avoid lifting tariffs in areas where there is significant UK production in the agricultural sector, many of the items—nuts, fruit and tuna, for example—are substitutes for UK-grown foods and will displace demand for them. Moreover, we have a vibrant and important food manufacturing industry now facing stronger competition in areas such as confectionery, biscuits and processed foods. What is the Government’s estimate of the impact on them and the vital jobs that they support? Is this a further nail in the coffin of our manufacturing industries?

This brings me neatly to the third area of concern, which also affects food manufacturing—the high energy costs in the UK. They have been made worse by the Middle East war, but the main reason for them is the Miliband obsession with a drive to net zero. This obsession is doing very little for climate change, as the UK is responsible for less than 1% of global emissions. The Official Opposition have repeatedly made clear, sometimes with some welcome support from the Minister, that we must make full use of the North Sea—not only with tie-backs but with an early go-ahead for Jackdaw and Rosebank. This becomes more urgent by the day, given that there seems little chance of an early opening of the Strait of Hormuz. When can we expect an announcement on these two licences?

Our high electricity prices are also a cause of wider de-industrialisation. I welcome the support for the ceramics industry. Stoke-on-Trent’s five towns were the Silicon Valley of Britain in their day, and I am an avid collector of Staffordshire pottery. However, something more fundamental is needed on energy to preserve our shrinking industrial base.

Given that the Statement was about the impact of war in the Middle East, I was surprised that it was so light on defence. I ask the Minister again: when will the defence investment plan be published? He used to say “in due course” but in the King’s Speech debate he said “shortly”, which offered more hope.

That brings me on to my final area of concern: the gravity of the wider picture of inadequate and crumbling defence forces because of lack of proper funding or a proper defence investment plan; the country’s finances in a mess; troubling social policies and divisions; and anaemic growth—the lack of that magic which makes governing so much easier. This is not surprising given the avalanche of taxes and business costs that we have experienced—national insurance, minimum wage hikes, the Employment Rights Act, a new visitors’ levy on our hotels, packaging taxes and vicious rates revaluations that, according to the weekend’s papers, risk closing down yet more of our country’s pubs. Further, only today I see that it is proposed to reduce checks on those claiming disability benefits. This would be going in precisely the wrong direction. Is the report correct?

To understand the damage that these policies have caused, we need only look back at the OBR’s March 2024 forecast for 2026. At that point, shortly before we left office, having navigated enormous challenges—not least the unprecedented inflation following the outbreak of the war in Ukraine—the OBR forecast UK GDP growth of 2%, unemployment at 4.2% and inflation at 1.6%. After Labour’s tax rises and spending spree, the OBR now forecasts UK growth at 1.1% in 2026, unemployment at 5.3%—and tragically much more among the young—and inflation of 2.3% for 2026. This is all in the wrong direction over those Labour years.

We face many serious problems in this country, and we on these Benches believe that we need a greater sense of urgency and a much better plan from the Government, especially on growth and productivity, defence, energy and debt reduction. Sadly, the latest package is another bit of unexciting incrementalism, mostly focused on lesser issues and badly managed, as we saw from the outcry of all experts on the proposal to fix supermarket prices. We can do better.

[Baroness Kramer (LD)]

My Lords, till sales at UK supermarkets slowed to growth of just 0.2% in the three weeks to mid-May. Families do not know how they will cope with higher fuel costs, higher council tax and expected inflation. I am sure the Minister will tell us that the Government have tried to ease costs on the most vulnerable, and I support those actions. But with no relief in sight from the consequences of Trump’s Iran war, will the Government look seriously at the emergency £2 billion transport relief package proposed by my colleagues, to be funded by the Treasury’s unforecast boost in tax receipts: a cut in fuel duty by 10%, a slash in bus fares to £1, a slash in rail fares by 10% and a cut on VAT on public EV charging to 5%?

Does he also recognise that this is not a short-term crisis? The Government will have to find ways to reverse or offset the national insurance increase to small employers, especially in hospitality and leisure. They must break the link between electricity prices and the oil price, intensify the move to contracts for difference to spur on renewables, provide an effective programme for individuals and small businesses to install energy saving, and overhaul business rates at least to exclude all new business investment in energy saving from business rate consequences. Can he take this series of actions, which would make a significant difference?

Higher Earners: Emigration

Baroness Neville-Rolfe Excerpts

Thursday 21st May 2026 Lords Chamber

[Lord Livermore (Lab)]

I am aware of the points that my noble friend makes and agree with much of what she says. As I say, successful businesses and entrepreneurs who create jobs here and wealth in the UK are the engine of economic growth and we need to support them to succeed. As my noble friend says, we must also ensure that the wealthiest pay their fair share towards the public finances.

[Baroness Neville-Rolfe (Con)]

My Lords, we should encourage rich people to reside and stay in the UK, as, for example, the top 1% of those paying income tax contribute 29% of receipts. Unfortunately, government policies not only on non-doms but on inheritance tax and other taxes have encouraged them to leave in large numbers—young as well as old people. Since this is against the national interest, will the Government adjust their policies to reverse this unfortunate trend and study the detail further?

[Lord Livermore (Lab)]

No, and I do not think the noble Baroness can make those claims based on the data that is available, as I have already said. The previous Government’s reforms assumed that there would be migration of non-doms. This Government’s reforms assume that there will be migration of non-doms, and the OBR has said that there is no evidence to change the estimated impact of the reforms on migration. Reforms to the tax treatment of non-doms have been designed specifically to make the UK competitive, with a modern, simple tax regime that is also fair. The noble Baroness mentioned other tax reforms; in the round, the Government’s reforms to the non-dom regime and to capital gains tax keep the UK an attractive place in which to live and invest, while ensuring that everyone who is a long-term resident pays their taxes here, helping to fairly fund our public services.

VAT Relief: Business Donations

Baroness Neville-Rolfe Excerpts

Tuesday 19th May 2026 Lords Chamber

[Lord Livermore (Lab)]

The location of supermarkets is largely a commercial decision for the supermarkets themselves and not one for me, but I believe that that is exactly what the social supermarkets that the Question relates to are trying to do.

[Baroness Neville-Rolfe (Con)]

My Lords, we on these Benches very much agree that food and other waste should be minimised, and we sympathise with the objective of this measure. However, are the Government satisfied that the proposal will be effectively administered? I speak, of course, as a former retailer.

Defence, Security and Resilience Bank

Baroness Neville-Rolfe Excerpts

Tuesday 19th May 2026 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble and gallant Lord for what he says. I am sure I was aware of it, but probably not as aware as he is because I am nothing like the expert that he is. But, absolutely, that is exactly what the defence industrial strategy is designed to do. It outlines how the Government will support a strong, innovative defence sector to equip and protect the Armed Forces. It focuses on securing supply chains, boosting high-skilled jobs, investing in new technologies and ensuring national security, while delivering value for money and supporting economic growth. The substantial investment in the defence industrial strategy will drive R&D and innovation across the UK, including developing technologies such as AI, quantum and space capabilities.

[Baroness Neville-Rolfe (Con)]

My Lords, the recent noise around Labour’s leadership meltdown has drowned out the fact that the Government have still not announced a date for the publication of what has become the “defence invisibility plan”. Does the Minister agree that the proposed defence, security and resilience bank is a distraction from the need for NATO countries—and that includes the UK—to increase defence expenditure both significantly and quickly?

[Lord Livermore (Lab)]

I welcome the noble Baroness’s conversion to spending more on defence; she had 14 years to do something about it but did not do anything. To ensure that the UK is prepared to respond to growing threats, the Chancellor has announced a £270 billion investment in defence over the course of this Parliament. We have already invested £5.6 billion more in defence this year alone compared with previous plans, and spending on defence is rising every single year of this Parliament. As the noble Baroness knows, NATO qualifying defence spending is set to rise to 2.6% of GDP by April next year. The Government have also set an ambition to spend 3% of GDP on defence in the next Parliament when economic and fiscal conditions allow. The defence investment plan will set out the MoD’s plans to ensure that resources are directed effectively to meet its priorities and deliver value for money for taxpayers. We are working hard to finalise that and it will be published shortly.