Autumn Budget 2025

Baroness Penn Excerpts

Thursday 4th December 2025 Lords Chamber

[Baroness Penn (Con)]

My Lords, in my four minutes, I thought I would focus on the good, the bad and the ugly of this Budget. Starting with the good, there was the welcome emphasis from the Minister in his opening speech on some of the measures for growth. These included: raising the threshold for the enterprise management incentive scheme; expanding the limits for the EIS; stamp duty exemptions for companies listing in the UK; and, after a little extra effort and persuasion, committing to delivering the nuclear regulatory review. The problem is that this represented so little of the Budget that we are debating, which brings me to the bad.

Growth forecasts are down and taxes are going up, hurting working people, as the Minister acknowledged. Inflation and interest rates will be higher for longer. Business investment will be down, housebuilding forecasts are down and rents are forecast to go up. Living standards are forecast to be lower than they would otherwise be, and debt interest is going up. As my noble friend Lady Noakes and others noted, according to the OBR not a single measure in this Budget will have an appreciable impact on growth.

That brings me to the ugly. As the Minister acknowledged, there has never been a Budget so dominated by speculation, with briefing before, during and after the event. Before last week, the Minister valiantly claimed there was nothing unusual in this process. At least by Monday, he recognised the unique nature of the Chancellor’s pre-breakfast pre-Budget speech. Unique is one word for it, and we do not need to relitigate who said what when. The heart of the matter is that trailing the expected downgrade to productivity without the more-than-offsetting unexpected upgrade to tax receipts left people feeling misled, and that is still unacknowledged. That unexpected upgrade was still unacknowledged in Monday’s Statement and in the Minister’s speech today.

That matters for two reasons. First, we have heard from my noble friend Lady Neville-Rolfe and others that the speculation damaged growth. Secondly, and more than this, it has damaged people’s trust in the Government. People were told before the election that every policy was costed and funded. Then, in last year’s Budget, we had record tax rises. The Chancellor and the Minister told people they had wiped the slate clean and there was no coming back for more, but last week they came back for £20 billion more.

The reason the Government have been tying themselves in knots is the attempt to justify this through claiming that the facts and circumstances have changed. But the facts have not changed; it is just that the Government have changed their mind that fairness does not mean taxing working people to fund increased welfare spending. Fundamentally, they have changed their mind that growth was the number one priority and only once you have that growth can you—to coin a phrase—share the proceeds of that growth. That is the reason I ask the Minister not who said what and when, but whether he can understand why people feel misled by the Chancellor and acknowledge that the speculation in advance of the Budget did real harm? If it cannot be acknowledged, then we cannot hope that the Government will learn from the events of this Budget and the last.

If the Government can learn those lessons, we can end on a note of hope. We are only 18 months into this Government—it may feel like more—so there is still time to change course, to genuinely focus on growth. We have heard ideas today for tax reform, welfare reform, cutting energy costs and increasing private investment, because it is growth that is the means to deliver everything else, whatever the Government determine that to be: tax cuts, spending increases, driving down waiting lists, or driving up housebuilding. I hope, therefore, that the Government will return to their number one priority of growth next year, and that is something in a Budget that we can all welcome.

OBR Forecasts

Baroness Penn Excerpts

Monday 1st December 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful for that question. The noble and right reverend Lord quite rightly says that the Chancellor was very clear that the productivity review would mean lower tax receipts, and the OBR confirmed that they are £16 billion lower. The OBR’s productivity review lays bare the economic consequences of the past 14 years. The OBR looked back at the productivity performance of the previous decade and concluded that austerity, Brexit and the pandemic have weakened the economy by far more than previously thought. That has an impact on the public finances and growth for the remainder of the forecast period.

[Baroness Penn (Con)]

My Lords, can the Minister tell the House why the increase to forecast tax receipts as a result of higher forecast inflation and greater taxes on employment was the only information not made public in advance of the Budget?

[Lord Livermore (Lab)]

The Chancellor was not going to set out the entire Budget in advance. She set out the Budget on Budget Day. As I have said before, what she did before the Budget and at the time of the Budget were entirely consistent. She set out her priorities and then delivered on them. She said that if the productivity review were to lead to a downgrade in productivity, it would mean lower tax receipts, and it did. The Chancellor said that she intended to build more headroom, and she did. She said in the summer that policy choices would need to be paid for, and she paid for them. The Chancellor was also clear that challenging decisions would need to be taken on tax, and she took several challenging decisions on tax, including freezing thresholds for a further three years.

Spending Review 2025

Baroness Penn Excerpts

Thursday 12th June 2025 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is absolutely right, and I pay tribute to the expertise that he brings to this question. In the summer of 2024, at the time of the election, prisons were operating at over 99% capacity. Clearly, the previous Government, as I was saying before, did not believe in investment spending, because they kept cutting it. Our social fabric was in a terrible state when we took over. We are having to do a lot of investment spending now to make up for the damage done over 14 years. The Government in this spending review are providing £7 billion to deliver 14,000 new prison places by 2031.

[Baroness Penn (Con)]

My Lords, today’s growth figures make tax rises in the autumn all the more likely, but one rise that we do not have to wait for is the 5% increase to council tax each year planned for in this spending review. The Minister will know that council tax is a regressive tax. He will also know that this is the biggest increase since the 2001 to 2005 Parliament. Can the Minister confirm to the House how much a 5% growth in council tax each year will cost the average working family?

[Lord Livermore (Lab)]

The noble Baroness says that we do not have to wait for it. She is absolutely correct: we do not have to wait for it because her Government introduced it. A 5% cap in council tax is something introduced by the previous Government—we have not changed that. It is a cap. Councils do not have to increase council tax by 5%, but, under the rules, they cannot increase council tax by more than 5% without a local referendum. We have not changed that. That is to invest in things such as social care, but also, as is normal, to put money into policing.

Winter Fuel Payment

Baroness Penn Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for what he says. Over 12 million pensioners are now benefiting across the UK from the triple lock. Their state pension is set to increase by up to £1,900 over the course of this Parliament. Almost 60,000 extra households are now receiving the pension credit that they are entitled to, which I think we can all agree is a very good thing. He said that he donated his winter fuel payments to charity; he is welcome to continue to do that if his income is below £35,000. If it is under that and he wants to opt out of receiving it, he is very welcome to do so. We will bring forward proposals before the Summer Recess enabling him to do that.

[Baroness Penn (Con)]

My Lords, when your Lordships’ House debated the original changes to the winter fuel payment, it was suggested that we should not means-test the winter fuel payment but tax it instead. The noble Baroness the Minister rejected that option, saying that it failed on two fronts: it did not meet the savings test or the fairness test. If the Government had listened to your Lordships’ House then, millions of pensioners who did not receive their winter fuel payment this winter would have done so. What has changed in terms of the practical ability to implement this policy now compared with when it was first suggested by your Lordships’ House?

[Lord Livermore (Lab)]

I thank the noble Baroness for her question, but to be clear: we are not taxing it. We are recovering it through the tax system, which is a different policy from the one that she is describing.

Tax: Changes

Baroness Penn Excerpts

Tuesday 29th April 2025 Lords Chamber

[Lord Livermore (Lab)]

As my noble friend will know, the UK’s approach to wealth through taxes on capital gains and inheritance generates substantial revenue for the Government and is on a par with other G7 countries. The OECD has said that capital gains and well-designed inheritance taxes can act as a more efficient and less administratively costly way of addressing wealth inequality than wealth taxes. Of course we want to ensure that we increase the incomes of the poorest people in society, which we have done, for example, through increases in the minimum wage.

[Baroness Penn (Con)]

My Lords, can the Minister confirm whether his Government agree with another of the OBR’s assessments, which anticipates that the Employment Rights Bill will have a net negative economic impact?

[Lord Livermore (Lab)]

The noble Baroness will know that the OBR has not included an assessment of that Bill in its latest forecast, because it has not yet progressed through Parliament.

Spring Statement

Baroness Penn Excerpts

Thursday 27th March 2025 Lords Chamber

[Lord Livermore (Lab)]

I thank the noble Lord for his question. I was lucky enough to work with him in the Treasury when he was an official there, so I know that he knows what he is talking about. Clearly, there are risks, as I set out to the noble Lord, Lord Forsyth. The job of the Government is to mitigate those risks and pursue a growth policy to ensure that we have sufficient growth and are resilient to the challenges that we are going to face. We have to get our public finances in order so that we have that resilience. We have to pursue stability, investment and reform. We are doing all those things to ensure that we have resilience. On tariffs, we are engaged in a conversation with the United States Administration, so we are doing what is necessary. We have rebuilt the headroom in full and we have, I think, provided the resilience needed to cope with an ever-changing and uncertain world.

[Baroness Penn (Con)]

The Minister has repeatedly cited figures on living standards. What impact will yesterday’s Statement have on the living standards of the poorest half of our population?

[Lord Livermore (Lab)]

The impact assessment that has been done so far does not include the £1 billion re-investment, so I am not sure that we can look at those figures right now. On real household disposable income, living standards will now grow this year at double the rate expected at the time of the Budget. The noble Baroness was a Treasury Minister when we saw the worst ever Parliament for living standards in history. Living standards will rise twice as fast in this Parliament compared with the last.

Strategic Priorities Statement: Defence

Baroness Penn Excerpts

Tuesday 25th March 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. The issues she raises will be addressed exactly by the defence industrial strategy. One of its key objectives, for example, is procurement—increasing its pace and opening it up to small and medium-sized enterprises, as she said. I hope that there will be more for her to hear in tomorrow’s Spring Statement.

[Baroness Penn (Con)]

My Lords, can the Minister confirm that any defence spending channelled through the National Wealth Fund will not be constrained by the Government’s fiscal rules, specifically the investment rule, as those investments will be scored as net financial assets under the new measure of debt introduced by the Chancellor?

[Lord Livermore (Lab)]

I can absolutely confirm that all National Wealth Fund spending will be within the fiscal rules.

Finance Bill

Baroness Penn Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 19th March 2025 Lords Chamber

[Baroness Penn (Con)]

My Lord, I too welcome the noble Baroness, Lady Caine of Kentish Town, who clearly brings a wealth of experience to the House. It is always somewhat strange debating a Finance Bill at this end. We cannot amend it; we do not have much time to make our contributions, and it is five months after the measures were first announced in the Budget and a week ahead of the spring forecast, which will provide us with our next update on the state of the public finances. In October, the Chancellor assured people that the spring forecast would not be a fiscal event, and I think everyone would appreciate it if the Minister could repeat that commitment today.

Perhaps in that context it is little wonder that these debates can range more widely than the contents of the Bill, but I shall try to reward the Minister’s hard work in preparing for the debate by focusing on four measures that are related to the Bill—one for each of my remaining minutes.

The first is the changes to stamp duty, which were touched on by several noble Lords, where the additional relief for first-time buyers has been removed and an additional surcharge for second homes increased. Stamp duty is a terrible tax economically speaking but I understand the temptation to increase it. It was our Government who first introduced an additional rate for second home owners. However, the IFS has said that the measures in the Budget will result in even more unaffordable rents, which is the opposite of what our housing market needs. Does the Government’s assessment of the impact of the stamp duty changes agree with that of the IFS that it will lead to higher rents?

The second measure I want to touch on are the changes to the energy profits levy. What assessment have the Government made of the impact of these changes on investment and jobs in the industry and have they made any assessment of the impact on consumers from lower production? More broadly, what is the cost in forgone revenue of the decision to grant no further North Sea licences? Have the Government made an assessment of the emissions impact of importing more gas to meet our domestic needs as we transition towards low-carbon power?

The third measure is the welcome extension of agricultural property relief to land management schemes, thereby supporting the success of those schemes, as noted by my noble friend Lady Coffey. Of course, that is against the background of the wider concerns about the impact of restricting APR and BPR, announced in the Budget but legislated for elsewhere.

To really understand the impact of these measures, it is important that we understand how much revenue the change to each relief is expected to generate. I asked the Minister this in January, but I think he misheard the question, so I will ask again in the hope of getting a response. Can the Government provide separate estimates for the revenue generated by the changes to APR and the changes to BPR?

Fourthly and finally, the Finance Bill sets unchanged income tax rates and thresholds in England and Northern Ireland for the 2025-26 financial year. At the time of the Budget, the Chancellor said this:

“Having considered the issue closely, I have come to the conclusion that extending the threshold freeze would hurt working people ... I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze … beyond the decisions made by the previous Government”.—[Official Report, Commons, 30/10/24; col. 821.]


Will the Minister repeat the Chancellor’s pledge today? At PMQs, the Prime Minister failed to do so, so perhaps the Minister can do the Prime Minister’s job for him in this debate.

Growing the UK Economy

Baroness Penn Excerpts

Monday 3rd February 2025 Lords Chamber

[Lord Livermore (Lab)]

I agree with the noble Baroness’s analysis, and we are absolutely dedicated to resetting our relationship with the EU, which is clearly our biggest trading partner. Following their meeting in Brussels in October, the Prime Minister and the President of the Commission agreed to strengthen the relationship between the UK and the EU, and last month at a Eurogroup meeting of EU Finance Ministers, the first to be attended by a UK Chancellor since Brexit, the Chancellor set out the need for a closer UK-EU economic relationship based on trust, mutual respect and pragmatism. The Chancellor has also said that she is absolutely willing to consider the customs partnership that the noble Baroness refers to. The noble Baroness is also right about speed: we recognise that delivering new agreements will take time, but we are ambitious, we have clear priorities and we want to move forward at pace.

[Baroness Penn (Con)]

My Lords, I am glad the Minister found something else to agree with my noble friend Lady Neville-Rolfe on: the importance of affordable energy for growth. Can the Minister therefore clarify whether the Government endorse the more than doubling of the carbon price in the next five years, which is needed to achieve and deliver another of the Government’s missions—that of clean power by 2030—as set out in the National Energy System Operator report?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for that question. I will leave it to my right honourable friend the Secretary of State for DESNZ to bring forward the Government’s response in that area.

Agricultural and Business Property Reliefs: OBR Costing

Baroness Penn Excerpts

Monday 27th January 2025 Lords Chamber

[Lord Livermore (Lab)]

I absolutely agree with everything that the noble Lord said. Last week’s publication from the OBR does not contain any new information about its view on the fiscal impact of this policy; it remains the same as it set out in its Economic and Fiscal Outlook for the 2024 Budget. The noble Lord’s question relates to that of the noble Baroness, Lady McIntosh of Pickering. The OBR described this as “highly uncertain” because such a wide range of tax planning options are available to respond to this policy change, including being able to pass on up to £3 million tax-free. The noble Lord was also correct to say that the current system, particularly the extent to which it drives up land prices, has locked out young farmers from being able to own property—and them being able to do so is undoubtedly a good thing.

[Baroness Penn (Con)]

My Lords, the costings we have seen for this policy tend to put APR and BPR together. Can the Minister provide figures for the effects of each separately?

[Lord Livermore (Lab)]

They have been costed jointly at £0.5 billion, as the noble Baroness, Lady McIntosh of Pickering, said.