Autumn Budget 2024

Baroness Wheatcroft Excerpts

Monday 11th November 2024 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, the UK economy has been in structural decline for many years; that analysis is absolutely true. My only surprise on hearing it delivered during this debate was that it came from a leading economist sitting on the Conservative Benches. The noble Baroness, Lady Moyo, at least had the decency to acknowledge the state of this economy—an economy that has been run for 14 years in a way that has left it, as she said, in structural decline. So it is very difficult for anybody to come up with a Budget that will put things right overnight.

Things were made worse, of course, by Liz Truss. Just two years ago, inflation in this country was running at more than 11%. We have not heard much about that from the Benches opposite this evening. Nevertheless, the ramifications of that continue to be felt by people up and down this country. The Resolution Foundation reckons that Liz Truss alone cost the country £30 billion. That is a significant contribution to anybody’s black hole. No Chancellor would want to start from here—but Rachel Reeves had no choice.

She made things even harder for herself by making a series of promises that I am sure she has already come to regret. As an editor, I would have had some difficulty justifying them as having been kept, in the light of what she has done during the Budget. National insurance by any other name is a tax, and increasing employers’ national insurance ends up being a tax on working people—and let us not get into a semantics debate about what constitutes a working person. I think it is probably rather wider than the definition Ms Reeves has ended up with. Nevertheless, this is where she had to start from. It was not a great hand and it could probably have been better addressed.

But there are some things in this Budget which I really do applaud, including the change in the fiscal rules. Despite what we just heard from the noble Lord, Lord Borwick, it is sensible to borrow for investment. It is what households do and it is what a Government could and should do. We need investment, we need big projects—but we do not need to overspend, so the monitoring of those projects has to be absolutely watertight. It has to be constant and it has to be totally transparent. We cannot find ourselves in the sort of mess that HS2 has got into, where nobody really seemed to have a handle on what was being committed. So let us invest, but invest carefully.

Let us not go anywhere near PFI, which was disastrous. As others have said, we are still paying the price. I would like to see the Government look at what is left of those PFI contracts and, if they cannot renegotiate—in most cases, they cannot—they need to find a way to simply break the contract. There are PFI hospitals which have to spend ludicrous amounts on changing a lightbulb, when what they need to do is spend money on patients. So, if you cannot renegotiate, find a means of either putting the health authority into bankruptcy or walking away from the contract. We cannot afford them any longer.

I was pleased to hear, in the Budget, that we are going to spend more on trying to find the tax that people should have paid. An estimated £5 billion a year goes on tax evasion—let us have some, or all, of that back in the Government’s coffers. Investing in more inspectors will be a great way of making a start on that, but we also need much more investment in technology and we need to be tougher on finding where this money is.

We need to make sure that we actually tax what needs taxing, and we need to simplify the tax system. It is crazy having a tax guide that now runs to more than 1,000 pages—the last Tolley’s guide was 1,020. But we have done away with the Office of Tax Simplification. So let us see the Government pledge to simplify the tax system and begin looking at how to do that. It is crazy: people do not understand it and those who do, pay expensive advisers to avoid or evade tax. We need to change it.

The main thing we need to—in the short term, and easily—is simplify the system of property tax. I urge the Government to do that.

United Kingdom Declining Birth Rate

Baroness Wheatcroft Excerpts

Wednesday 6th November 2024 Lords Chamber

[Lord Livermore (Lab)]

To clarify, the OBR is very clear that, over the next five years, employment will grow by 1.2 million people.

[Baroness Wheatcroft (CB)]

The Joseph Rowntree Foundation calculates that 30% of children are living in poverty. Does the Minister have access to any information on what that might mean for long-term fertility prospects in this country?

[Lord Livermore (Lab)]

The noble Baroness makes a very important point, which is why reducing child poverty is central to this Government’s objectives. The previous Labour Government made massive strides towards reducing child poverty and, unfortunately, we had to sit and watch while it rose under the party opposite over 14 years. We have established the Child Poverty Taskforce to ensure it falls. It is a contributing factor, but so are affordable housing and affordable childcare, as I have said, and we are prioritising all those things.

Fiscal Rules

Baroness Wheatcroft Excerpts

Tuesday 29th October 2024 Lords Chamber

[Lord Livermore (Lab)]

It may surprise the noble Lord but, yes, I absolutely agree with what he says. That will be a vital part of the guard-rails we set out in the Budget tomorrow.

[Baroness Wheatcroft (CB)]

My Lords, borrowing to invest in genuine projects that will improve the productivity of the country obviously makes sense, but if the Government are going to look at the fiscal rules again, will they consider when and how they will account for unfunded public sector pensions? At some stage, the country needs to know about those obligations too.

[Lord Livermore (Lab)]

I hear what the noble Baroness says. As I have said already, the Chancellor will set out the Government’s full fiscal plan, including the precise details of our fiscal rules, in tomorrow’s Budget.

Budget Responsibility Bill

Baroness Wheatcroft Excerpts

2nd reading & Committee negatived & 3rd reading
Monday 9th September 2024 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, I welcome this Bill, short though it may be. We have already heard different views of the Liz Truss mini-Budget. I would merely say that it does seem advisable to try to thwart cavalier, determined efforts to avoid scrutiny by the OBR; it makes one slightly suspicious. However, the OBR can only be as effective as the information with which it is provided. It should be a cause of concern that the OBR chairman, Richard Hughes, has intimated that he was not kept fully in the picture towards the end of the previous Administration. We need to be very wary about a repeat of that.

I believe the whole basis of government accounting is flawed. It focuses solely on the short term, to the detriment of the country’s longer-term interests. Take the current controversy over the winter fuel payment. I will not enter into the rights and wrongs of that decision—we have already heard about those today, and will hear a lot more—although it seems to be a very costly exercise in terms of political capital, for very little financial gain.

However, the £22 billion black hole that we keep hearing about that the Government intend to fill, in part with the proceeds of cutting the winter fuel allowance, is actually more of a bottomless pit, for a major contributor to that £22 billion is the pay rise for public sector workers. That pay rise brings with it huge ongoing costs that do not feature because public sector pensions are not provided for. That is a massive obligation which is simply swept under government carpets. According to the whole of government accounts, public service pensions are the largest single liability on the Government’s balance sheet. In 2021-22 they were calculated at £2.6 trillion—greater than the national debt.

The idiocy of this system of accounting was highlighted in a recent article by John Crompton, a former investment banker who has also done three stints at the Treasury. He suggests that the latest public sector pay awards, cited as contributing £9.4 billion to that black hole, could also bring unfunded liabilities of between £3.5 billion and £4 billion every year. Crompton calls this treatment of government liabilities “downright misleading”, and I am afraid it is. The short-term saving from cuts such as the winter fuel allowance will be wiped out year after year by numbers that do not appear in the accounting at superficial levels.

So, while I welcome the Bill as a minor improvement, I ask the Minister whether he agrees that the time has come for a much more radical rethink of government accounting. Yes, cash flow is important, but, as every household knows, concentrating solely on income and expenditure is not the way to build a healthy economy. Major infrastructure projects, such as those cited by the noble Lord, Lord Eatwell, are essential. Cancelling them because of a short-term need to cut expenditure, as this Government have done, may be foolhardy. A proper net worth finances method of accounting, dealing with government expenditure over the longer term, would enable a much more effective long-term view to be taken of the costs and benefits of investment. A change to a more sensible fiscal framework would make for much healthier, better management of public finances, and it would contribute to the growth that we absolutely need.

The Minister explained that the Government have three aims as far as the Bill and the economy are concerned: stability, investment and reform. I ask him to really be serious about reform.

Public Spending: Inheritance

Baroness Wheatcroft Excerpts

Tuesday 30th July 2024 Lords Chamber

[Lord Livermore (Lab)]

I am extremely grateful to my noble friend for his kind words. He is quite right: not only are the previous Government guilty of what we are discussing today, of running up an enormous overspend and of hiding that from Parliament, the public and the Opposition at the time, but they left us with possibly the worst economic inheritance since the Second World War. That contrasts sharply with the performance of the economy under the last Labour Government. Of course, growth is absolutely our priority. That growth will take time, but we are absolutely committed to doing what it takes to return this economy to a sustainable level of growth.

[Baroness Wheatcroft (CB)]

My Lords, I welcome the Minister to his position on the Front Bench. As we listen to this tale of consistent overspend and budget failures being swept under the carpet, it is very hard to imagine that civil servants in several departments were not increasingly unhappy about what was going on, including a lack of a spending review since 2021—extraordinary really. Can the Minister assure those civil servants that they will not be guilty if they come forward and talk of any pressures that have been applied to them? The previous Government had form on that, and I think that there should be an amnesty for any civil servant who was put in a deeply uncomfortable position by, in effect, telling untruths to the country.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. Of course, at the end of the day, civil servants advise and Ministers decide. We have full confidence in the Treasury and all civil servants in the way that they do their jobs. She is absolutely right that part of the problem was the continual delay to hold a spending review; the last spending review was in 2021. That sits behind so many of these problems: that budgets were never adjusted to account for any of the decisions that were taken subsequent to that spending review.

The Chancellor announced yesterday that she has commissioned the OBR to deliver a full economic and fiscal forecast, which will be presented alongside a Budget on 30 October. She also announced that the Government have launched a multi-year spending review to conclude in spring 2025, setting budgets for at least three years of the five-year forecast period. As part of this, final budgets for this year and next year will be set alongside the Budget on 30 October. The Government are also committed to holding a spending review every two years, which will set departmental expenditure limits for three years, to avoid uncertainty for departments and bring stability back to our public finances.

European Investment Bank

Baroness Wheatcroft Excerpts

Wednesday 24th July 2024 Lords Chamber

[Baroness Wheatcroft (CB)]

If the Government are to set a good example about investing in the UK, should they not perhaps start at home and invest a little more of the MPs’ pension fund?

[Lord Livermore (Lab)]

I think that is a question for Parliament rather than the Government.

Financial Services and Markets Bill

Baroness Wheatcroft Excerpts

Report stage
Tuesday 6th June 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, the UK is a leading jurisdiction for sustainable finance, and the Government are proud of that record and determined to maintain and further that position. Since Committee stage, London has been ranked as the leading global green finance centre for the fourth consecutive time. Government effort, including on sustainability disclosure and reporting, has played a vital role.

The Government’s success in green finance has been down also to the responsiveness and technical capability of our independent regulators, who have collaborated to drive forward our policy on sustainability disclosures. The Government’s approach was established in the 2021 paper, Greening Finance: A Roadmap to Sustainable Investing, where we set out the foundations of sustainability disclosure requirements—or SDR—which build on our world-leading implementation of the recommendations of the Task Force on Climate-related Financial Disclosures, or TCFD. This includes taking forward an approach across the economy to implementing international standards, enabling firms to plan for the transition and ensuring that this information flows to investors and financial consumers. Credible, usable information is a core component of green finance that will allow us to reach our goals on sustainability. When this information is available, market participants can use it to take sustainability into account when making investment decisions. Our plan for SDR is central to delivering this.

In Committee, some noble Lords raised concerns about the Government’s ongoing commitment to implementing these important reforms, the legal basis for implementing them, and the timelines for doing so. I am therefore pleased to be able to update noble Lords on a number of substantive developments since then.

Significantly, the Government published an updated green finance strategy on 30 March. This set out next steps across core elements of SDR. The Government will consult on extending the transition planning requirements—a core component of SDR—to the largest private companies once the Transition Plan Taskforce has completed its work later this year. The Government will also set up a framework to assess the suitability of the IFRS International Sustainability Standards Board’s standards for adoption in the UK. The Government remain committed to delivering a usable and useful UK green taxonomy and expect to consult on this in autumn 2023. They are also committed to setting out further detail on SDR implementation and the timeline for it this summer to reflect the rapid development of international standards.

Alongside this, the Financial Conduct Authority continues to take forward SDR for authorised persons, including consumer-facing disclosure requirements, under its existing objectives and rulemaking powers, which are sufficiently broad for the purpose. The FCA intends to issue its policy statement on SDR and investment labels in the third quarter of this year.

However, the Government recognise that SDR policy has strong links to wider environmental policy and that they therefore have an important role to play in shaping SDR. That should be recognised in legislation. Parliament must be able effectively to scrutinise the actions of government and the regulators in this area.

Amendment 4 will therefore require the FCA and the PRA to have regard to any policy statement made by the Treasury on SDR when they make rules in connection to sustainability disclosures. The amendment obliges the regulators to consider the Government’s wider policy goals when bringing forward SDR rules, while still maintaining their independence.

Regulators will also be required to report on how they have satisfied the requirement to have regard to any such policy statement on an annual basis. This will support Parliament in scrutinising the regulator’s actions on SDRs. This ongoing reporting will support transparent, structured co-operation between the regulators, government and Parliament to achieve the UK’s objectives in this space.

We will be debating a number of other sustainable finance issues today, and disclosures are at the heart of some of the matters that they raise. The amendment is therefore an important measure in that context as well as in its own right. I beg to move.

[Baroness Wheatcroft (CB)]

My Lords, I thank the Minister for her introduction of Amendment 4 and her willingness to engage with Peers on the topic of sustainable disclosure requirements. However, while a government amendment on this important topic is welcome, what we have heard is yet more delay. A cynic might judge the amendment to have a whiff of green- washing about it. It does not do enough and does not do what is required. The amendment seeks to give regulators and Ministers the necessary powers to bring forward rules and regulations on SDRs in fulfilment of commitments that they made in 2019, 2021 and again in the green finance strategy in March this year.

Amendment 114 is an effort to be helpful because, despite making commitments for five years, the Government still do not have the powers to make sustainable disclosure requirements happen. Amendment 4 does not confer those powers. The noble Baroness, Lady Ritchie of Downpatrick, submitted a Parliamentary Question on this issue on 14 November last year, and the Government’s response was that:

“The FCA has extensive powers to … impose some of the Sustainability Disclosure Requirements”.


The noble Baroness also asked about the powers available to the Department for Work and Pensions, which would legislate for sustainability reporting by occupational pension schemes. An extensive search of the powers held by the DWP in relation to public reporting and sustainable reporting has found none that is suitable.

Amendment 4 gives the Treasury the power to issue a policy statement on SDRs and to require the regulators to report against it, but it is not an obligation—the Treasury “may” prepare an SDR policy statement. As the Minister admitted in her response last year to the noble Baroness, Lady Ritchie, the FCA does not have the powers to actually implement SDRs. It seems that we are looking at a Whitehall paper trail that keeps everyone occupied but with no meaningful legislation.

I am in favour of easing unnecessary burdens on business. However, repeatedly indicating—as they have for five years—that the Government are planning to legislate but not actually doing it creates a burden in itself for business. Should it invest in data, in systems or in strategy? After so many reassurances but so little progress, and more reassurances today, no one really seems to know the answer.

I noted with interest that the Minister’s letter to Peers ahead of tabling this amendment said that

“the Financial Conduct Authority is taking forward Sustainable Disclosure Requirements (including consumer facing requirements) under its existing objectives and rulemaking powers which are sufficiently broad for the purpose”.

I would like to understand the misalignment between that statement and the earlier Answer to the Question from the noble Baroness, Lady Ritchie. Is it because there has been a change of heart and the Treasury has discovered that the powers exist after all? I would be grateful if the Minister could clarify that. Or has the Treasury limited its proposals from its original ones so, while it did not have the powers for the original proposal, it does for the new, limited proposals? Or—and it would be deeply disappointing if this were the case—is the reference in the Minister’s letter to the FCA to “taking forward” SDRs intended to mean that the FCA would be merely progressing the work but not actually implementing it? Again, I would be grateful for clarification. The FCA consultation on SDRs closed on 25 January. We are promised a policy statement in the third quarter but, without statutory powers, that would be pointless.

I hope the Minister will be able to answer those questions and now, if we are able to accept the amendment, I hope she will be able to go a little further. While the amendment sets the right tone, it does not do what is needed. It embraces the idea of SDRs but does not make them a reality. The same governmental reluctance to take real action lies behind my Amendment 7, concerning vote reporting. If investors are to make serious decisions on ensuring that their savings are put to work in a sustainable way, it is essential that they be able to see how those who manage the money choose to vote on corporate issues. That is a crucial part of being an engaged investor. The FCA itself acknowledges that. Earlier this year, its vote reporting group stated:

“Improving transparency of how asset managers vote on behalf of their clients will mean investors can better hold them to account on their stewardship”.


We would all want that, but currently it is not possible for investors always to learn how their investments are being voted. Yes, there is now an FCA requirement under the shareholder rights directive that fund managers and insurers produce an annual report on how they have voted, but it is only that they must comply or explain; and even then, the requirement is only that they should report on significant votes. The FCA gives no guidelines as to what should be deemed significant, and what one investor feels is significant may not concur with what a fund manager deems so.

The fund manager is required to report only at group level, so, in terms of the individual funds in which investors and pension funds might be invested, how their votes have been voted in the individual funds cannot be seen; it is only possible to see across the group, which is effectively meaningless for many people who want to find out how their money is being used. A report is required to be made only annually—a hopeless timescale in an industry that moves as fast as this one. Nor is there any standard form for vote reporting. It is not a lot to ask in a digital age. The SEC in the US certainly demands it.

For all those reasons, the current situation does not serve investors as well as it should. Amendment 7 would require FCA-regulated investment managers and insurers to provide clients and those investing with them with voting information that they requested in a standard format and within 30 days. In Committee the amendment on this topic included pension funds in the requirement to report but, mindful of the DWP review of pension fund reporting, the current amendment is much narrower and does not prejudge the review. However, in the meantime it should help pension funds to monitor the way their investments are being voted. It is true that the FCA vote reporting group has yet to reach conclusions, but there is no reason to wait for that. Parliament has the power to put demands on the FCA, and this is a case where it should.

The Government accept the need for good stewardship by investors, and transparency on voting aids that. It is important, indeed crucial, for good corporate governance that decisions taken on behalf of investors should be clear and easily ascertainable. Making voting records available speedily in a machine-readable way would be a service to investors that, thanks to digital innovation, should be easy and relatively cheap to implement. Why would the Government resist that? I beg to move.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet and apologise for the fact that I may need to speak a little longer than I normally would on Report. This is a very diverse group of amendments on different subjects, some of which are quite technical, but I can be brief in relation to Amendments 4, 7 and 114, which the noble Baroness, Lady Wheatcroft, has just so ably described. I appreciate that the Minister has done what she said she would on SDRs and tried to make some progress, but I fear there is still a legislative gap there—a gap that we could, on this Bill, usefully fill for her. I support what the noble Baroness has said and look forward to the debate on Amendment 91, on forest risk commodities, to which I equally give my support.

Tourist Spending: VAT

Baroness Wheatcroft Excerpts

Wednesday 24th May 2023 Lords Chamber

[Baroness Penn (Con)]

It is difficult to disaggregate the impact of this policy versus the overall take of VAT, which will be affected by a wide range of economic factors during this time. When we think about the tourism sector, we must remember that China represents a large number of visitors to the UK and China opened up only at the beginning of this year. Based on that, we hope to see a stronger recovery this summer, compared with previous summers.

[Baroness Wheatcroft (CB)]

My Lords, it is not the number of tourists that is important but the type of tourist. The higher-spending tourists are being deterred from coming to this country because of the lack of VAT-free shopping, as the figures quoted by the noble Baroness, Lady Doocey, made clear. Those tourists are heading to Spain and France and spending their money there. I declare an interest as chairman of the Association of Leading Visitor Attractions. Our members are losing out because these high-spending tourists are not coming to this country, doing their retail therapy and then taking in museums, galleries et cetera. Will the Minister undertake to take into account our cultural heritage when she looks at this issue?

[Baroness Penn (Con)]

I do absolutely appreciate the point that the noble Baroness is making. As part of the research that we did in considering this question, HMRC surveyed VAT RES users and the scheme did not make the top 10 in their list of reasons for visiting Britain—and that was for the 8% of visitors who qualified for the scheme who actually used it. We also asked them whether they would continue to purchase in the way they had previously. Two-thirds of those surveyed said that they would have purchased the same items regardless of the scheme, and 95% of people said that they would still shop. I appreciate that there is a wider impact, but we considered that when taking this decision.

Financial Services and Markets Bill

Baroness Wheatcroft Excerpts

Committee stage
Wednesday 1st March 2023 Grand Committee

All these amendments are modest and proportionate. With clarity on fiduciary duty, a functioning taxonomy, sustainable finance disclosures and transition plans, the UK has the opportunity to meet the ambitions set out at COP 26, and I hope the Minister will be able to respond positively.

[Baroness Wheatcroft (CB)]

My Lords, this group of amendments has already been spoken to by several eloquent speakers. I support the amendments in this group, but I shall speak particularly to Amendments 233 and 235 to 237, to which I put my name. The common thread in them is encouraging financial institutions to be serious about their intention of helping the country meet its net-zero target. If the Government are serious about that target, they will surely see the merit in these amendments.

Financial institutions may understand that the long-term health of countries, their economies and their businesses requires a focus on net zero, but short-term considerations such as this year’s profit all too often influence their decisions. Hence, in 2021, the 44 largest members of the Net-Zero Banking Alliance, a group that includes Barclays, HSBC, Lloyds, Nationwide and NatWest, provided $143.6 billion in lending and underwriting for the 75 companies doing the most to expand oil and gas. Principles sometimes come too expensive for these institutions to follow. If those organisations are to be discouraged from such behaviour, in their own long-term interests as well as ours, it will be by forcing them to make firm environmental commitments and to publicly report on them.

It seems that the Government have shared this view. According to a report in the Financial Times last May:

“Ministers made a last-minute decision to withdraw plans to force big UK companies and asset managers to disclose their environmental impact”.


They decided to drop that from the Queen’s Speech at the last moment. The sustainability disclosure requirements were apparently seen as being at odds with the Government’s deregulatory strategy. There is plenty of deregulation rhetoric around at the moment, but those of us who were in the Chamber yesterday for the agonising discussion of the Retained EU Law (Revocation and Reform) Bill might feel that the strategy was far from evident.

These amendments are intended to provide help to the Government as they seek to implement their net-zero strategy. Amendment 233 would do for financial organisations what the Government have been planning for business generally. It would require the financial regulators—the FCA and the PRA—and Ministers to make regulations by the end of this year requiring sustainability disclosures for listed firms, fund managers, personal pension providers, banks, insurers and pension schemes.

In addressing this amendment, perhaps the Minister will confirm that this complies with the Government’s thinking in the wake of COP 26, when the transition plan task force was set to work to look at how large companies and financial firms should be required to report on how they are managing the transition to net zero. If the Minister accepts that, will she explain why this Bill should not contain this amendment?

Amendment 236 further details requirements. Amendment 237 complements Amendment 201. It refers to pension schemes and requires trustees to have regard to the long-term effects of their investment decisions. Pensions are all about the long term, so they should have regard to the long-term effects of their decisions, not the short-term effect on the bottom line for the fund manager who is interested in his bonus that year. A little legislation to help them on their way to doing the right thing seems a good idea.

The aim of Amendment 235 in the name of the noble Baroness, Lady Hayman, is, essentially, to provide that help to institutions in making these crucial decisions. A green taxonomy—long discussed—needs measurable criteria and this amendment would require the Treasury to provide a framework for that. As the Minister said, the Government are—apparently—committed to implementing the green taxonomy. This amendment, like the others in the group, seeks only to encourage the Government to demonstrate their commitment with the sense of urgency that is now required.

[Baroness Meacher (CB)]

My Lords, I wish to speak extremely briefly to support my noble friend Lady Boycott—I am sorry, I did not see the noble Baroness, Lady Sheehan.

IMF Economic Outlook

Baroness Wheatcroft Excerpts

Tuesday 31st January 2023 Lords Chamber

[Baroness Penn (Con)]

I completely agree with my noble friend on the importance of the financial services Bill to unleashing further growth in our economy. It is also a really important example of how we will take the opportunity of the freedoms of Brexit to design regulation in a way that works best for the United Kingdom. Growth forecasts are inherently uncertain, but they still play a valuable role for government, economists, industry and others. Their uncertainty is a fact of life, but we should still look carefully at what they say.

[Baroness Wheatcroft (CB)]

My Lords, as of November this year, the EU will require additional travel documentation for those leaving the UK and heading into Europe. Do the Government have any estimates of the effect that will have on UK trade?

[Baroness Penn (Con)]

I do not, but I will write to the noble Baroness if there is something available on that matter.