Pension Access Rules: Impact on Terminally Ill
Baroness Neville-Rolfe Excerpts(3 months, 3 weeks ago)
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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(3 months, 3 weeks ago)
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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(4 months, 2 weeks ago)
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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(4 months, 3 weeks ago)
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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(5 months ago)
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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(5 months ago)
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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(5 months ago)
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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.
Middle East: Economic Update
Baroness Neville-Rolfe Excerpts(5 months, 3 weeks ago)
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Baroness Neville-Rolfe (Con)
My Lords, the International Monetary Fund, in its latest World Economic Outlook, has warned that the energy shock stemming from the Iran war will hit the United Kingdom harder than any other advanced economy, notably in terms of growth and inflation. It is also the case that UK borrowing costs are higher than those in other comparable OECD countries. In short, the prospects are depressing in the extreme. What, we ask ourselves, are the Government proposing to do about it?
We read one apparent answer in today’s newspapers: freeze rents; in other words, adopt a policy which has always failed everywhere that it has been tried. Can the Minister tell us when we will be told the details of this latest whizz idea, or will he be willing to rule out the ridiculous idea definitively from the Dispatch Box, given the adverse effect on the share prices of some property companies today?
I turn a much more serious subject: defence. The world situation is becoming more worrying by the day, which makes the much-delayed defence investment plan even more important and the funding shortfall of £28 billion ever more disturbing. A responsible Government would act with vigour to progress matters. Experts are unanimous in the view that our capabilities are woefully short of what is necessary. What have the Government done about this unhappy situation? The answer is: very little, unless delay constitutes action. Can the Minister tell us when the defence investment plan will finally be published?
I turn to North Sea oil and gas, where there are possibilities that would help our economic situation by increasing output, increasing well-paid jobs and improving our balance of payments. But the Jackdaw and Rosebank decisions do not seem to have moved from the desk of the Secretary of State. His ideological prejudices are well known, though difficult to understand in the circumstances that now face us. When we last debated the Middle East, the Minister seemed warmer to North Sea exploitation than I had expected. But, in short, we are still seeing more delay.
We know that the Government face very difficult circumstances, many of which are exogenous and they can do little about, but what action they have taken has tended to make matters worse, and what they have left undone is significant. Will the Minister urge his ministerial colleagues to get serious, to avoid economically damaging ideas such as freezing rents, and to take those decisions which need to be taken as a matter of urgency?
The truth is that the Government’s position on energy is woeful, as we heard during today’s PNQ. Let us take the Jackdaw gas field: it is ready, the infrastructure is in place, the operators are prepared; it could supply enough gas to heat 1.4 million homes by the autumn, and more cleanly than much of the gas we currently import; and it would strengthen our energy resilience by 6%. So why, in the face of rising global instability, with energy security more critical than ever, are the Government not bringing the Jackdaw field online? Equally importantly, why is the industry so fearful that the Government will not approve the Rosebank field? Is it right?
From an energy perspective, Britain could scarcely be entering this crisis in a weaker position. We face the highest industrial energy costs in the developed world, crippling our manufacturing industries and making life very difficult for our SMEs—and consumer prices are not far behind. This is a dangerous position to be in, and I gently say to the Minister that the public will not thank the Government for ideological gestures. They will expect, and they deserve, practical action to secure our energy future.
What unites each of these issues is the absence of domestic resilience. The war in the Middle East has exposed that weakness, but it did not create it. So the question for the Government is a simple one: will they now act to strengthen the resilience of this country, restore credibility to their economic and energy strategy, and provide the certainty that our Armed Forces, our businesses and our households all need—or will they continue to rely on hope when what is required is action? The time for hope has passed, and the time for decision is now.
Baroness Kramer (LD)
My Lords, the impact of the Iran war has made previous economic forecasts pretty much redundant. We talked last week about warnings from the IMF and the OECD, repeated today by the noble Baroness, Lady Neville-Rolfe, which essentially assess that the UK would suffer more than any other G7 economy. This conclusion is being reinforced by recent inflation and unemployment numbers. The Government’s response has been limited and very much a “wait and see”. Uncertainty is a reason for resilient action, not a reason for inaction. We need to see action now from the Government.
Each day, as an ironic consequence of the war, the Treasury is taking in some £20 million more in taxes, including VAT and the electricity generation levy, so why are the Government not using this money proactively to help people with spiralling living costs? That money could be reducing petrol prices at the pump through a temporary cut in fuel duty. It could be used to cut rail and bus fares or to reduce the price of home EV charging. Families need help now—they need early reassurance on the energy price cap after June and a cancellation of the 5p duty rise due in September.
We strongly support reform of the energy pricing system. Our manifesto made a clear commitment to break the link between gas prices and electricity prices—ours was the only manifesto that had that in black and white—so we are glad that the Government have taken up that approach and that they are moving to a contracts for difference model. But we are still concerned about energy costs for individual households; for small businesses, including hospitality; and for the food and agricultural sector, which has such an impact on the cost of living.
So will the Government now work with the banks to introduce a scheme of low-interest loans for householders who want to adopt energy-saving measures but need a way to finance the upfront cost? Will the Government press Ofgem to investigate the broken energy market, which is in effect blocking small businesses and hospitality from accessing good energy deals? My colleague in the other place, Daisy Cooper, met last week with Ofgem, and it is absolutely clear that there is a case for the energy retail market to answer here in dealing with small businesses and specifically with hospitality. Will the Government recognise the particular need to act on costs in the food and agribusiness sectors, which are being so impacted by this war? That impacts clearly and directly on the cost of living for ordinary people.
Online Challenger Banks
Baroness Neville-Rolfe Excerpts(5 months, 4 weeks ago)
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Lord Livermore (Lab)
I fully recognise and understand many of the things the noble Lord says. I understand that being a politically exposed person means enhanced scrutiny and administrative burdens and has impacted many noble Lords. Banks and other regulated firms must apply additional checks to customers who meet the definition of a politically exposed person, as well as to their relatives and close associates. That is to mitigate the increased risk that they are targeted for bribery and corruption attempts. While those checks are important, it is essential that they are proportionate to the risks posed; checks should account for the nature of the proposed business relationship and the potential for the product to be misused.
The noble Lord will know that changes to the money laundering regulations now require banks to treat domestic politically exposed persons as inherently lower risk and, in the absence of any other high-risk factors, banks should apply due diligence measures proportionately. In July 2024, the FCA also published its review of the treatment of politically exposed persons, which identified a range of required improvements by the firms that it assessed.
Baroness Neville-Rolfe (Con)
My Lords, I think we all recognise that there is a balance to be found between protecting the consumer and encouraging enterprise and growth in this area. But my observation, the observation of many Peers and my own experience of trying to open a new account with Metro Bank is that there is a vast bureaucracy around the FCA and money laundering rules and that that is disadvantaging our challenger banks. Does the Minister agree that the current system tends to favour incumbents, which obviously harms growth and consumers? What practical steps can the Government take to help challenger banks meet the standards efficiently and compete on a level playing field, which we need for innovation?
Lord Livermore (Lab)
I do not think I agree with the noble Baroness on the question she asked about disadvantaging challenger banks. As I have said already, the regulations are not prescriptive in setting out specific steps that banks should undertake to satisfy customer due diligence; instead, they require them to take a proportionate approach. Each bank therefore has its own policies and procedures, which should be informed by each bank’s own assessment of the risks faced by its services and customers.
World Economic Outlook: UK Growth and Inflation
Baroness Neville-Rolfe Excerpts(6 months ago)
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Lord Livermore (Lab)
I absolutely confirm to the noble Lord all three of those points. As he knows, the price cap is giving households certainty on their bills until July, ahead of the winter months. As we respond to this crisis, we must absolutely learn from the mistakes of the past, some of which he mentioned. The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss, and they gave the most support to the wealthiest households. We will not repeat the mistakes of the previous Government. We are planning for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our fiscal rules, as the noble Lord said, to keep inflation and interest rates as low as possible.
Baroness Neville-Rolfe (Con)
My Lords, the economic forecasts set out by the IMF and, indeed, by the noble Lord, Lord Londesborough, are very concerning from a national standpoint. Party passions aside, I believe that we must pursue a national growth path in the national interest. That needs to include a reduction, not an increase, in regulation, especially in building and planning; a cut in welfare spending, as we have heard; support for enterprise; and full utilisation of our energy resources. Does the Minister agree with that?
Lord Livermore (Lab)
Yes, and we are doing most of that, but the noble Baroness is opposing most of it. She said that we need to pursue a growth path. She will know that one of the most important things for growth is keeping inflation and interest rates as low as possible, but her party has unfunded proposals to deal with this crisis that would stoke inflation and put up interest rates. Exactly the wrong thing to do now would be to have a knee-jerk response to this crisis that would put household finances at risk. During the last energy shock, the previous Government got the response completely wrong, which meant higher inflation, higher interest rates and higher taxes. We will not repeat those mistakes.