Autumn Budget 2026

Baroness Neville-Rolfe Excerpts

Thursday 12th November 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the Minister for his introduction and his undertaking to respond to all noble Lords’ comments. I very much look forward to the maiden speeches of the noble Lord, Lord Neri, and the noble Baronesses, Lady Aglionby, Lady Kitching of Penistone and Lady Ussher. I also very much look forward to the contributions from such a large and distinguished gathering.

This was Labour’s third Budget in office and the first delivered by the new Chancellor of the Exchequer. He was dealt a poor hand by his predecessor but, in summary, he has done little in this Budget to improve matters. We are in a bad way. Today’s figures were encouraging, but growth has been weak for a long time. Inflation is high, real wages are stagnating, unemployment is rising, taxation is approaching historic highs and, above all, the national debt approaches 100% of GDP and debt interest is increasing, thereby consuming an ever greater share of public spending.

These are serious problems demanding serious decisions, yet what we received was a Budget of short-term fixes and promises of action tomorrow. This week, the NIESR warned that the Budget failed the credibility test. Its director, David Aikman, said:

“A plan that is not believed adds to the premium the Government pays to borrow”.


The OBR forecast growth of just 1.2% this year, falling to 1% in 2027. Inflation will remain above target until 2028, while the economy’s underlying productive capacity is expected to grow by only around 1.5% annually. The Minister cited the IMF’s endorsement of the Government’s deficit reduction plans, but the IMF did not give them a blank cheque; it told them explicitly to “stay the course” and warned against slippage. Since then, the OBR has revised borrowing upwards and reduced fiscal headroom to £15 billion, and the Government’s plans have not yet led to any reduction in the deficit, as we discussed in Grand Committee only last week.

Further, the OBR forecasts no real earnings growth in 2027, followed by only very modest increases in subsequent years. Real household disposable income per person is expected to fall in the near term and, even by the end of the decade, to stand only around 2% above its pre-pandemic level. Yet the Government plan to meet their financial targets by “planning”—the word must be in quotation marks—to reduce public expenditure significantly in the last two years of their term. They should pull the other one.

Taxation under this Government has increased enormously, mainly by freezing income tax thresholds and increasing national insurance in the Government’s unfortunate first Budget. Both eventually have the same effect as a tax rise on working people, whatever the Chancellor says. The Government have also imposed extra burdens on higher-rate taxpayers, but, in the end, part of that burden is also borne by those lower down the income scale.

Even the OBR warns that taxation at these levels risks damaging incentives to work, save and invest. On this side of the House, we have not forgotten the debilitating effect of the application of IHT on family businesses, farms and pensions; or VAT on school fees; or the new mansion tax that will be in the Finance Bill.

This Budget’s measures continue in the same vein, with a rise in savings and property taxes, so that a widow renting out a flat pays a higher rate than a footballer, and a tax surcharge on the banks, on which SMEs rely for investment. Britain cannot tax its way to prosperity. The way to the growth and prosperity that we all seek is to spend and tax less.

What of those people who are not in work? Unemployment is forecast to exceed 5% in 2027, vacancies are falling and young people in particular are struggling to find work. Yet the Government have made employing people more expensive through higher employer national insurance, rising costs and increasing regulation. Their answer is a jobs guarantee, but another government scheme is not a substitute for a thriving private sector.

We cannot afford a system in which fewer people work, those who do work pay ever more in tax, and the welfare bill continues to rise. Can the Minister point to where in this Budget the Government have seriously confronted this challenge? We on these Benches have struggled to find it.

However, despite record taxation and enormous borrowing, the Chancellor has left himself just £15 billion of fiscal headroom. The OBR puts his chances of meeting his fiscal rule at barely 56%. Indeed, a one percentage point change in interest rates could increase debt interest costs by £16 billion, wiping out the headroom. Meeting a fiscal rule by the narrowest of margins is not the same as restoring the fiscal responsibility we need.

In short, the great failure of this Budget was the absence of serious decisions on the greatest challenges facing our country. Where was the plan for welfare reform? Health and disability benefit spending alone is forecast to rise from £86 billion to £120 billion by 2031-32. This is plainly unsustainable, yet the Government continue to postpone the difficult reforms that are needed.

Where is the plan for defence? The Chancellor himself, when resigning as Defence Secretary, warned that failing to commit to spending 3% of GDP by 2030 makes Britain less safe. He has failed the very test he set himself and failed to explain how the 3% will be funded. The Chancellor has chosen to defer difficult decisions. Postponing these decisions does not make the problems disappear; it simply makes them more difficult for the Chancellor’s successors.

What would we have done? What should a serious Budget have delivered? First, a credible plan for growth. There are signs today that AI and services are helping, which is welcome, but today’s figures for construction are grim—down 0.7%. Job losses in the sector have also been reported today, and, as I have heard from the Institution of Civil Engineers, we see a disappointing government record on maintenance spending and delivery of infrastructure projects.

Secondly, cheaper energy has been the key to growth historically. The Government’s temporary measures, set out clearly by the Minister, do nothing to address the underlying costs facing households and businesses. We need to go further. Our cheap power plan would remove carbon taxes and levies and abolish VAT on household energy bills for three years, reducing average household electricity bills by an estimated £200 a year. We also need to see the Rosebank field approved and the Fingleton report implemented.

Thirdly, the Budget should have delivered action on housing. The OBR now forecasts substantially fewer homes being built than it expected in the spring. Unlike this Government, we would reduce unnecessary regulatory burdens, remove barriers to development and abolish stamp duty on primary residences.

Fourthly, we would make work pay. We would halve employer national insurance for workers aged 21 to 24 and introduce our get to work programme, helping young people into employment.

Above all, we would confront the question this Government refuse to answer: how do we control public spending without continually asking taxpayers to pay more? We have set out a programme of £71 billion in annual savings, including £36 billion from welfare reform. At least half would go towards reducing the deficit, with the remainder supporting lower taxes, enterprise and our national priorities. We would establish a funded path to spending 3% of GDP on defence by 2030, because economic security and national security must go hand in hand.

The British people need a Budget that would confront the underlying problems facing our economy; instead, they received a Budget which left the major decisions for another day. It again relied on rising tax receipts to reduce borrowing, while leaving the largest structural pressures on public spending unresolved. Overall, it was a missed opportunity. Our ambition should be to build an economy that grows faster, rewards work, encourages enterprise and offers every generation the opportunity to enjoy a better standard of living than the ones before. Unfortunately, the Budget did none of that.

Chelsea FC: Releasing Funds from Sale

Baroness Neville-Rolfe Excerpts

Wednesday 11th November 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

We fully agree with that position, but, as I have said, it would be ill advised for the Government to publicly discuss any potential future strategy.

[Baroness Neville-Rolfe (Con)]

My Lords, more than four years after the sale of Chelsea Football Club, these funds remain frozen, no doubt accruing interest, while the humanitarian need in Ukraine continues to grow, as we have heard. I am keen to know why the delay is so long. Is this partly related to a tax dispute, given the huge increase in value of the club during Mr Abramovich’s tenure?

High Streets Strategy: Business Rates

Baroness Neville-Rolfe Excerpts

Wednesday 11th November 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

I spent quite a lot of time trying to learn about rates, but I did not have a briefing on recording studios. I am more than happy to write to my noble friend. Perhaps he could write to me on the points that he was raising with my noble friend Lord Livermore, and I can then catch up on where that is getting up to, as I do not have an answer for him right now.

[Baroness Neville-Rolfe (Con)]

My Lords, this Question recognises the parlous state of many high streets, due in large part to taxes of all kinds, including national insurance contributions and business rates, and indeed the impact of the higher minimum wages and increased energy costs and parking charges. Will the Government now see sense and reduce the burden of taxes and regulation that they have imposed? We all care about our high streets.

[Lord Pitt-Watson (Lab)]

I can only reiterate what was in the Budget: pubs and venues have 20% off, other rates are frozen in real terms and, most specifically, 70,000 high street venues will now no longer be liable for rates. That is a very substantial incentive, I hope, for the rebuilding of high streets, together with the wider high streets strategy.

Interest Rates

Baroness Neville-Rolfe Excerpts

Tuesday 10th November 2026 Lords Chamber

Asked by

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the recent rise in interest rates and the effect of this on economic growth, inflation and on their borrowing costs.

[The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)]

This is an important Question. Last week, the independent Monetary Policy Committee increased the Bank rate in response to the high inflation that was driven by the conflict in the Middle East. I should point out, however, that the Office for Budget Responsibility noted that higher rates would weigh on activity and increased borrowing costs, contributing, in the projection that we saw with the Budget, to the slowing of growth next year. Of course, higher rates should reduce inflationary pressure, which is itself essential for longer-term growth.

[Baroness Neville-Rolfe (Con)]

What does the Minister say to the millions of people whose mortgages will have become more expensive as a result of this rise and, more than likely, further rises in UK interest rates?

[Lord Pitt-Watson (Lab)]

It is a difficult question. We are living in uncertain times and things are difficult for people on mortgages. It will be different depending on the type of mortgage you have: is it a fixed-rate mortgage or a variable-rate mortgage? If it is a fixed-rate mortgage, you might be very pleased, when your mortgage is renewed, that we are getting medium-term inflation down, but I understand that it is more difficult for interest-only mortgages. I finish by saying that the Bank rate in May 2022 was 1%, but by August 2023 it was 5.25%—a 4.25 percentage point increase. I am sure that people who were on the Front Bench in those days will also be able to help answer the noble Baroness’s question.

Fortifying the Fiscal Framework (Economic Affairs Committee Report)

Baroness Neville-Rolfe Excerpts

Tuesday 3rd November 2026 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the Economic Affairs Committee for producing this excellent report and the noble Lord, Lord Liddle, for his enjoyable and historically-focused introduction. As he said, we are lucky to have two Permanent Secretaries, the noble Lords, Lord Burns and Lord Macpherson, speaking in the debate. I also want to pay tribute to the noble Lord, Lord Wood of Anfield, for his work in chairing the committee and congratulate him on the positive start he has made as FCDO Minister. I look forward to the Minister’s response to the interesting points made by my noble friend Lord Redwood on different macroeconomic targets, 2% inflation and 2% growth, and on the quirks that he identified in national insurance funding and the ownership of bonds by the Bank of England, a theme that was also picked up the noble Lord, Lord Sikka.

His Majesty’s Opposition broadly support the report’s conclusions. This debate is exceptionally timely coming, as it does, in the immediate aftermath of an unsatisfactory Budget. Let us quickly come to the essence of the matter, which is to be found in the final paragraph of the report’s summary:

“On current tax and spending settings, the UK is on a path to unsustainable debt levels”.


There we have it, starkly put. Noble Lords may ask if the position has been affected by the recent Budget? The answer is “not much”. This Budget can only be described as a missed opportunity. However, since the necessary decisions have been put off—yet again—the position has deteriorated somewhat since the Committee’s report was drafted.

In short, the recent Budget presented 108 tinkerings to the Commons, while probably the most pressing and ominous shadow facing us as a country went unaddressed. When the markets decide, as at some unknown time they will do, that enough is enough and the prospect of debt being repaid eventually has become too small to countenance, 10-year plans and other gimmicks will not cut the mustard. Very unpleasant things will happen. Just look at the experience of another Healey, Denis, Lord Healey, in 1976.

With the level of national debt close to 100% of GDP, a responsible Government would be planning to move as quickly as possible to a position of surplus, not making up excuses for doing nothing about it. My noble friend Lord Howell of Guildford quoted the £3 trillion debt figure on this point, which was echoed by the noble Lord, Lord Londesborough, who said it had trebled over the last 15 years.

I turn to two lesser, but still important, matters. The first is the committee’s conclusion, echoed in discussion, that the current debt rules can be gamed. As noble Lords will know, the existing rule requires debt to fall as a proportion of GDP only in the final year of a rolling forecast, meaning that debt can rise substantially in the preceding years, while the Government continue to promise a reduction. As the forecast period moves forward, this may never materialise. In other words, a Government can comply with their fiscal rules year after year, even as the national debt continues to rise. The committee recommended an additional debt target, requiring debt in the third year of the forecast to be lower than in the first. This is an interesting and sensible proposal that warrants serious consideration, as the noble Lord, Lord Razzall, said.

The Government have rejected this recommendation. I would be grateful if the Minister could explain why. How do the Government consider that the present debt rule provides a meaningful guarantee of fiscal discipline, when it is possible to meet that rule without achieving a genuine reduction in debt over the forecast period? The current system is satisfied if you predict a fall, rather than measuring one that has actually taken place, resulting in an upward spiral. Is that the Government’s plan? I add that the OBR is unlikely to go along with that indefinitely. I agree that Jonathan Haskel will be a respected new chair, and I am sure we all miss his father, Lord Haskel.

I agree with the noble Viscount, Lord Chandos, that the long list of changes in the fiscal rules in Appendix 4 is unsettling. I remember presenting a similar annexe for our Built Environment Committee report on demand for housing, but that listed the large number of Housing Ministers that there had been. These long lists are worrying.

A further risk arises from the growing use of public financial institutions. Under the Government’s chosen debt measure, borrowing can appear less burdensome where it creates a corresponding financial asset. Ministers must ensure that PuFins, such as the British Business Bank, do not become a means of moving borrowing outside the effective constraint of the fiscal rules, while leaving the public exposed to the risk of future losses.

My second point concerns the so-called fiscal headroom. The current Budget rule requires receipts to cover day-to-day public spending, with a deficit of no more than 0.5% of GDP permitted in 2029-30. Once that year becomes the third year of the forecast, the current Budget must be forecast to be in surplus in the third year of the rolling forecast period. Fiscal headroom is the estimated margin by which the Government are forecast to meet that rule. It is intended to provide some protection against adverse changes in the economy, higher spending, lower tax receipts and the ordinary uncertainty inherent in forecasting. Of course, if there were a serious plan to reduce the deficit over time this would be of less importance—but, for now, it is important. Following the Budget, the Government now have just £15 billion of headroom, down from £24 billion in the spring forecast and contrary to the recommendation in paragraph 40 of the report, which the noble Lord, Lord Razzall, also supported.

Indeed, the OBR estimates that the Government have only a 56% probability of meeting that rule, which I find extraordinary. We face a time of considerable economic and geopolitical uncertainty, while the Government have left themselves with a margin for error which could be eliminated by a relatively modest deterioration in the forecast. The OBR has noted, for example, that a 1 percentage point change in gilt yields and bank rate expectations across the forecast could change medium-term borrowing by approximately £16 billion. That single risk is greater than the Government’s entire £15 billion margin against the current Budget rule.

Further, the Government’s forecast assumes that the extraordinary post-pandemic growth in health-related benefit caseloads will moderate significantly. The OBR forecasts that annual spending on health and disability benefits will nevertheless rise from £86 billion in 2025-26 to £120 billion in 2031-32, an increase of almost £35 billion under its central forecast. However, if incapacity and disability caseloads continued to rise at their post-pandemic rates, the OBR estimates that welfare spending in 2031-32 would be approximately £25 billion higher than in its central forecast. That additional expenditure is for one year alone. The fact is that just one assumption in one department could eliminate the headroom the Chancellor has left himself.

Nor is welfare the only area of concern. We have growing commitments to defence, considerable pressures across our health and social care systems, and a prison and justice system that requires substantial investment to meet its existing obligations. These are not some remote or unforeseeable possibility. That, to me, is the central problem. If our fiscal rules can be breached by the continuation of existing spending trends, an ordinary forecasting revision or a relatively modest economic shock, what confidence can we have that those rules are being met today?

This brings me to the wider economic picture presented in the Budget. The OBR forecasts real growth of just 1.2% this year and 1% next year, with no real earnings growth in 2027 or 2028. This is too low. I agree with the noble Lord, Lord Liddle, that we need a simpler tax and welfare system and need to do more on public sector productivity. However, I do not agree that we should reopen Brexit, ushering in years of more uncertainty for business and citizens.

The situation is worrying. May I give noble Lords one or two more figures? Borrowing remains at approximately £133 billion this financial year, debt is expected to reach around 97% of GDP, and the tax burden is forecast to reach a record 38.6% of GDP, as we heard from the noble Lord, Lord Bilimoria. Meanwhile, the cost of servicing government debt has risen from £39 billion in 2019-20 to £109 billion in 2025-26 and is forecast to reach £160 billion, which is 4.2% of GDP, by 2031-32. 

These are enormous sums increasingly being spent on servicing debt. They are burdens on our children, grandchildren and later generations. That is a reason, indeed, for a greater focus on the OBR’s annual risks and sustainability report, as recommended by the committee. The noble Lords, Lord Liddle and Lord Bilimoria, drew our attention to the enormous figure for the 2070s if markets were to allow that, and the noble Baroness, Lady Wolf of Dulwich, and the noble Lord, Lord Macpherson, rightly praised this annual report by the OBR. I very much agree that this should be given a higher profile.

Despite the historically high level of taxation, as I said earlier, the Budget contains no plan to reduce the deficit. That is why I welcome the committee’s emphasis on the long-term sustainability of the public finances, rather than simply considering the Government’s compliance with an arbitrary target in a particular year. Fiscal rules matter, independent forecasting matters, and the credibility of our public finances matters enormously—not simply to financial markets but to every household and business.

We all know why the Government are not dealing properly with this huge challenge: their Back-Benchers will not face up to the actions necessary to do so. As the committee has effectively demonstrated, meeting the rules on paper is no substitute for achieving those objectives in practice. I fear that the Budget has illustrated precisely the weaknesses which this excellent report identifies. We will return to that in our debate next week—by then, I will have seen the Keynes play mentioned by my noble friend Lord Howell of Guildford.

Binance Security Breach: Consumer Exposure and Interim Safeguards

Baroness Neville-Rolfe Excerpts

Tuesday 3rd November 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

I would be very happy to meet, but I wonder whether there is a misunderstanding here. Binance, which is the institution that has been hacked, is not authorised in the UK. It is not registered in the UK; it is a foreign entity. While I am sure that there will be lessons to be learned from the issues that the noble Lord is talking about, what happened with Binance did not happen under any registration in the UK.

[Baroness Neville-Rolfe (Con)]

My Lords, this incident shows that society as a whole faces very serious risks from cyber crime and that lessons need to be learned, as the Minister has said. I know that the Minister is concerned about financial education. Will he use his influence to ensure that the prevention of fraud in all its aspects, including cyber crime, plays a full part in plans to improve financial education?

[Lord Pitt-Watson (Lab)]

I would be more than happy to do that, and to do it jointly with the noble Baroness.

Defence Sector Banking Services: Environmental, Social and Governance Rules

Baroness Neville-Rolfe Excerpts

Monday 26th October 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

Again, I am in desperate agreement with the noble Lord. The first communication they are going to receive is from their regulator, the Financial Conduct Authority—I have it here—which is going to be clear that there are no sustainability requirements that prevent companies serving defence firms. When they serve defence firms, they should consider the risks associated with them, but they should do that proportionately and consistently across all the companies they are funding. If this FCA action does not work, I am sure I will have another round of Questions in a few months’ time.

[Baroness Neville-Rolfe (Con)]

My Lords, like others, I have been appalled by this long-standing problem with finding bank accounts, especially for the small and innovative defence companies that we really need at the current time. On 8 June, the FCA said:

“Our sustainability rules do not prevent investment in or finance for defence companies”.


I am not sure what today’s welcome announcement changes, because banks continue to have their own ESG-style exclusions—and I know ESG is an area in which the Minister is an expert. So, can he undertake to sort that out as well?

[Lord Pitt-Watson (Lab)]

I think that is also covered in the FCA letter. One can overdo how significant ESG disclosures and regimes have been in preventing investment in defence. At one time, that was an issue, and there has been some concern among supporters of allowing ESG investment, along with some reform. My co-author, Stephen Davis, of Harvard Law School, is among those who has campaigned on this. I note that RUSI agrees that ESG disclosure regimes generally do not prevent investment in defence, and the push now being given by the FCA is the right next step for us to take to ensure that defence companies are treated in exactly the same way as any other companies seeking finance.

Cash and Card Payments: Reduction in Availability

Baroness Neville-Rolfe Excerpts

Tuesday 20th October 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

On this question of resilience, yes we are. For example, there is a project with Mastercard to support point-of-sale terminals from 2027 if the system failed, so that the system would still work. There is also a multi-year campaign on preparedness more generally—on the notion of what backups there are if, for example, our payment systems and ATMs failed. Again, that is work in progress, as is the Mastercard project, because it is not here yet.

[Baroness Neville-Rolfe (Con)]

My Lords, the truth is that not everyone is sophisticated financially, and those who are not tend to use cash, especially the elderly. There is a lot of concern in the House, given the increasing drift away from cash—for example, in car parks. Will the Government take steps to ensure that those who use cash can play a full part in the life of our nation, and actually get on with this?

[Lord Pitt-Watson (Lab)]

That is a good question. We are on top of the availability of cash through the banking system, but it is the case that acceptance of cash is voluntary, whether it is a car park, a retailer or the rest of it. That issue is under observation, rather than something on which there are direct plans. I point out that the other way that one can deal with this is to make sure that people have a way to pay by card. For example, the reduction of people who do not have bank accounts—from about 1.2 million to 900,000 over the past four years—is positive progress, but the noble Baroness makes a good point.

Government Debt

Baroness Neville-Rolfe Excerpts

Wednesday 16th September 2026 Lords Chamber

Asked by

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what plans they have to reduce the £110 billion annual interest bill for servicing Government debt.

[The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)]

My Lords, this Question about the Government’s interest bill is a really good one: £1 in every £10 of government money is now spent paying interest. There are three elements causing this. One is the overall level of borrowing, and consistent, disciplined fiscal rules that are kept to are, we believe, the right answer. There is also the growth in global interest rates, for example following quantitative easing. We are also living in an extremely uncertain world, particularly in the Persian Gulf. The third element is the premium that the UK now pays over the G7 average—a premium that has been apparent since September 2022. Again, the best remedy for that is sustained fiscal discipline, including respecting the independence of the Bank of England in particular and, of course, the Office for Budget Responsibility.

[Baroness Neville-Rolfe (Con)]

My Lords, as most of us agreed in my noble friend Lord Bridges of Headley’s debate last week, we need to be honest about the trade-offs that we face, given the sheer scale of our national debt and the moron premium on our gilts, which the Minister mentioned. I believe that the only way to avoid a financial crisis is to reduce spending. Does the Minister agree?

[Lord Pitt-Watson (Lab)]

Overall fiscal discipline is the central question. Discipline is really important. The noble Baroness mentioned the moron premium. I do not know whether all noble Lords understand what that term refers to: it was a slight by an economist describing the behaviour of the team responsible for the September 2022 mini-Budget. To give a sense of the cost, it is £15 billion a year. I think we have learned lessons from that. When I spoke in the debate last week, speakers from across the House agreed that fiscal discipline, independent oversight and not moving the goalposts were critical. The balance of spending on tax might be something on which we disagree, but on fiscal discipline we agree entirely.

Financial Services and Markets Bill [HL]

Baroness Neville-Rolfe Excerpts

3rd reading
Tuesday 15th September 2026 Lords Chamber

[Baroness Kramer (LD)]

My Lords, my colleagues and noble friends Lady Sheehan and Lady Northover spoke eloquently on these issues on Report. If this amendment is pressed and the others are moved by the Government, we will support them.

[Baroness Neville-Rolfe (Con)]

My Lords, as this is Third Reading, I want to start by extending my warm thanks to the Minister and his team for their work on the Bill. I welcome the movement that the Government have shown on several of the issues that we have raised during the passage of this 137-page Bill, which in general we support.

Chief among them is proportionality, which will continue to apply to the regulators in the exercise of their day-to-day functions. That change reflects concerns on all sides of the House; my hope is that it will help to reduce the burden on SMEs, so I thank the Minister for this. I also welcome the movement we have seen on the important issue of financial education and look forward to engaging on that. It is becoming ever more important, whether you are a pupil, a student applying for a loan, or an adult managing your finances or thinking about retirement.

However, there remain important issues which the Government have not yet addressed sufficiently. Among them are the Henry VIII powers in Clause 3 and Clause 50 and the first use of the extensive new powers in the Bill. I understand the Government intend to reintroduce Clause 3 at a later stage in the Bill’s passage with further detail, and that is welcome, but it does not detract from the fundamental point at issue. One of Parliament’s principal functions is to scrutinise government legislation, and we simply cannot do so properly when Bills confer broad powers without setting out clearly how they are to be used.

A digital asset strategy to support faster action to stop further loss of digital entrepreneurs and less aggressive use of Section 166 are two areas where we believe the Government should go further, because we have heard consistent concerns from industry.

Turning to the amendments, I deeply regret the amendments the Government are introducing today on climate change. This represents a serious U-turn by the Government. Their original proposal was to move these considerations into five-year strategies. The existing requirements they dispensed with are largely superfluous and burdensome. There is little evidence that today’s amendments to restore them make any meaningful contribution, either to reducing climate change or to protecting the environment. At a time when businesses are already facing considerable pressure, and when our wider economic circumstances demand an unrelenting focus on growth, competitiveness and investment, imposing further needless regulatory burdens is the wrong direction of travel.

I would also suggest that, for an economy as dependent as ours on international investment, these amendments send entirely the wrong signal. We should be demonstrating to investors overseas that the UK is a predictable and attractive market. Instead, they reinforce the perception that doing business here means ever more regulation, additional cost and greater complexity for no clear practical benefit. At Second Reading, the then-Minister, the noble Lord, Lord Stockwood, who I am glad to see in his place, said that the purpose of the Bill was to

“modernise how the sector is regulated”

and

“enable it to grow”.—[Official Report, 8/6/26; col. 1146.]

These amendments seem to run directly contrary to that objective. I am deeply disappointed that the Government have abandoned that principle so quickly and with so little resistance. We on these Benches have been consistent in our opposition to this duty, which we have made clear in the House and in discussions with the Minister. I shall seek to divide the House when the amendments are called.

[Lord Pitt-Watson (Lab)]

My Lords, I think there is wide agreement that finance is essential for the running of our economy and that we want the British finance industry to be as successful as possible. I think that few of us would think that climate finance was not one of the most important areas to which the industry needs to contribute. I think all of us would feel proud that our country, particularly London, is rated as the number one centre of green finance in the world.

I understand the noble Baroness, Lady Neville-Rolfe, wanting to minimise regulation and thinking that this might be superfluous, but I note that climate is everywhere in the financial world. Why? It is because you are managing other people’s money. How does a fund manager, possibly with millions of people’s savings, think about appropriate investment? If you are responsible for the stewardship of a company, what is the sensible line to take in making sure it is as profitable as it can be but without risking the sustainability of the world? If you are an investment banker and somebody is issuing a bond, is it fair for it to be a green bond? Are you thinking about the reporting on the Stock Exchange? Should you have taken into account that the carbon assets you have will need to be written off and you will need to have a fund and tell your investors about that? Are you interested in impact investment? We were talking a lot about deforestation. How is it that we manage to get private money into deforestation? The noble Baroness, Lady Hayman, talked about insurance. Even in operations, look at the sort of thing that Bloomberg has done; all its electricity is now zero carbon. There is lots of stuff, and the UK is a leader. It is a growing area, and we should be proud of that.

Does regulation make a difference to this? That is a good question. If you were to look at the UK’s regulation on this and compare it with that of the United States—London versus New York—you would be in no doubt which was the better for promoting green finance. Frankly, I do not know of many financiers who would say that the United States now has more predictable regulation than we have in the United Kingdom. You could say that the regulator is already doing enough. Although I cannot respond to the noble Baroness, Lady Bennett, by having a national conversation, I did organise the FCA to do a drop-in to talk to noble Lords about what it was doing in this area. Every noble Lord I talked to afterwards thought that it would be a mistake to withdraw the “have regard” and that therefore this amendment was the right thing to do.

Whether noble Lords believe in the importance of climate and environmental issues or whether they want to be sure that Britain maintains its USP in this critical area of finance, I urge them to vote for these amendments.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I close by acknowledging the considerable degree of cross-party support and engagement that has underpinned most of our discussions on the Bill. I thank the Minister and his officials for their work, as well as the noble Lord, Lord Stockwood, for guiding the Bill through Second Reading and Report. I also thank the noble Lord, Lord Wilson, for his support. I agree with the Minister that the Bill has benefited from its passage through the House in major ways.

I am particularly grateful to the noble Baronesses, Lady Kramer and Lady Bowles, and the noble Lords, Lord Sharkey and Lord Vaux, for the constructive way in which they have worked with us on a number of shared priorities. Across the House, we have identified a number of targeted and largely non-partisan areas in which the Bill could be improved. Serious concerns have been raised, and serious, well-intentioned proposals have been brought forward in response; I hope that they will be progressed by the Government.

I also thank my noble friends Lady Noakes and Lord Bridges of Headley for the deeply constructive approach they have taken to the important question of accountability and oversight. I strongly urge the Government to continue working with my noble friends on this issue. As I am sure the Minister recognises, they have approached it throughout in the interests of good governance and effective parliamentary scrutiny and with the support of the excellent Financial Services Regulation Committee.

My noble friends Lord Ashcombe, Lord Ranger of Northwood, Lord Holmes of Richmond, Lord Massey of Hampstead, Lord Howard of Rising, Lord Mackinlay, Lord Hunt of Wirral and Lady Lawlor have all made important and valuable contributions to our discussions, and I am grateful for their work in raising important matters with the Minister.

This is, in many respects, a model of how your Lordships’ House can work at its best: identifying genuine concerns, drawing on expertise from across the House, and working constructively to make legislation more effective, more accountable and better. I hope the Government will take forward the amendments passed and suggestions made as the Bill progresses. Most of all, I thank my noble friends Lord Altrincham and Lord Reay and our team of officials for their support on this complex Bill. Their experience and expertise in this area have been invaluable.