King’s Speech

Lord Bruce of Bennachie Excerpts

Thursday 14th May 2026 Lords Chamber

[Lord Bruce of Bennachie (LD)]

There goes Liz Truss’s trusted adviser—I think we all know how that turned out.

In 2024, Labour won 411 seats on 33.7% of the vote and a turnout of 59.7%. Last week, the results were fragmented across six or seven parties. There were gains for Reform, the Lib Dems and the Greens in England, and heavy losses for Labour and the Conservatives. Reform was actually down compared with last year, although you would not know it from the comments.

What is clear is that first past the post in the present circumstances is likely to produce distorted results, leaving most voters dissatisfied with the outcome. That in itself possibly explains why the turnout is down. In Scotland, we had Scottish Parliament elections, and turnout was down there too. The vote share for the SNP, Labour and the Conservatives was sharply down. Reform and the Lib Dems were up, and the Greens were marginally up. That election in Scotland was widely described as a “meh” kind of election.

My take—and I was knocking on quite a lot of doors—is that most people wanted to see measures to turn Scotland around, to address declining education standards and waiting times in the health service, to provide care support, to focus on the weak economy and to address the cost of living. Independence was not the issue, and the fact that the SNP is absurdly claiming a mandate is a distraction from its monumental failure on all the issues for which it actually has direct responsibility.

The SNP’s incompetence in government will result in a massive financial, unfunded deficit, with alarming consequences coming down the track in Scotland. Something as important as breaking up the UK needs an honest and open debate and overwhelming support from the population—there is no such support, no open debate and no idea of where it is heading.

However, one economic issue that was live in the Scottish debate was the energy industry. The offshore oil and gas sector is in natural long-term decline and renewable energy investment is increasing; however, this is anything but a zero-sum game. The jobs created by renewable energy are not as numerous or well paid as those created by oil and gas, nor are many of them interchangeable. In this debate, Reform—let us be honest—are aggressive climate change deniers and would reverse the renewables policy and destroy the jobs that are being created in that sector. The Conservatives also prioritise oil and gas over renewables and would delay, or possibly abandon, net-zero targets.

The fact is that, thanks to the Iran war and the actual pace of transition, the UK is facing higher costs and increasingly relying on imported gas, mostly from the USA and a security-compromised Middle East, when we still have significant economically recoverable reserves of our own. There is a contradiction here. We have signed a contract with Norway to bring gas from its gas fields through our gas fields, which we will apparently not exploit. I have been a long-term supporter of policies to achieve net zero—I was writing pamphlets in favour of renewable energy in the 1970s—but I have always agreed that the transition will take time, both in terms of jobs and investment and in terms of energy diversification. Net zero means just that—even when achieved, there will still be oil and gas in the mix. It makes no sense, especially faced as we are now with the insecurity of dependence on the Middle East, to accelerate the rundown of our own naturally depleting resources and to increase imports from Trump’s America, which may also prove uncertain as there are calls for America to keep it at home.

We are currently losing around 700 jobs a month, and major operators, such as our own BP and Harbour Energy, are talking of complete withdrawal from the UK continental shelf. I repeat: BP is talking about withdrawal from British oil and gas. A Government who are struggling for growth should think very carefully about policies that would destroy jobs and investment. I hope the Minister will address this issue, because there is growing pressure on the Government to do so. Briefing on the energy independence Bill says the aim is to:

“Manage existing oil and gas fields for their lifetime through legislation to introduce Transitional Energy Certificates, and show climate leadership by meeting the manifesto commitment not to issue new licences to explore new fields”.


There is therefore scope for enhanced recovery from existing fields by reducing the tax burden and allowing associated drilling—that is compatible with the Government’s policy. Without such changes, the lifetime of existing fields is likely to prove short. The argument that because world oil prices determine the price we pay, there is no benefit in production ignores energy security, balance of payments benefits and the retention of jobs and investment in the UK instead of exporting them to the USA and elsewhere.

On another tack, as a member of the International Relations and Defence Committee—our illustrious chair is sitting opposite me—my information on the impact of the war in Ukraine and the depleted state of UK defence has been pretty sharply brought home to me. I am astonished that defence and security do not have a higher salience in the debate in Scotland, when we know that Russian ships, subs and planes are cruising our seas and airspace all the time. The contract to build frigates for Norway on the Clyde, as well as for the home fleet, is surely positive, especially when the Scottish Government struggle to build ferry boats. But the idea that closing our air and marine bases—which is presumably what an independent Scotland would do—would make Scotland safer is mind-bogglingly naive. The defence investment plan is long overdue. It is urgently needed if we are not to signal weakness to our enemies, and it needs to focus on the capacity we have and that we can quickly develop.

That leads me to my final point, which binds everything together: reconnecting with the EU. Leaving the EU was a monumental error that weakened the UK and the EU. Had the vote taken place when the Ukraine war was under way and Trump was ensconced in the White House, I am certain that the result would have been different. As it is, we have been left bobbing around in the uncertain waters of the north-west Atlantic. Scotland voted to remain in the EU, but many have not recognised that the world is much changed. For the UK, including Scotland, the way back is not clear or straightforward; I accept that—our standing in the world has diminished. But asking for a reset while ruling out rejoining will sharply limit what can be achieved. The EU will not want to go down the Swiss route of myriad and ever-changing treaties and rules. Of course we should strengthen our relationships with Canada, Australia, New Zealand, the Commonwealth and others, but we should be clear that we accept that the reset is to set in train a process for Britain to become a fully participating part of the European Union.

For our own domestic reasons, we also need to adopt a reformed and more proportional electoral system. If we do not, we could end up with a Government with a strong electoral majority with under 30% of the vote. I doubt if the EU would have confidence in any agreement while that is a real possibility. Otherwise, we will be outsiders paying heavily for the privilege of trading on terms we have no part in shaping. EU negotiators will surely reach a point of saying, “Thus far and no further unless you rejoin”.

The situation is quite clear. We have a voting system that will give confidence that the UK can rejoin and stay within the EU, and we will recognise that unless we take a clear and decisive decision, we are going to drift in the north-west Atlantic for the foreseeable future.

Devolved Authorities: Use of Resources

Lord Bruce of Bennachie Excerpts

Wednesday 23rd April 2025 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

The Barnett formula does succeed in delivering for our nations around the country. It is fair to say also that the settlement this year is the largest that has been delivered since devolution.

[Lord Bruce of Bennachie (LD)]

My Lords, since the establishment of the Scottish Parliament, the proportion of income raised from taxes on Scottish citizens has risen from under 10% to around 40%. The Scottish Finance and Public Administration Committee has agreed that accountability and scrutiny need to be improved. I suggest that it might be to great mutual benefit if the Public Accounts Committee in the Commons and the Constitution Committee in this House reach out to relevant committees in the Scottish Parliament and the other devolved assemblies to see how they can improve financial scrutiny and accountability across all our parliaments, because none of it is as good as it should be.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Lord for that question. I think there is nothing wrong and probably everything right with parliaments across the UK working together to deliver better for their citizens. I think that is probably a welcome suggestion.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Bruce of Bennachie Excerpts

Report stage
Tuesday 25th February 2025 Lords Chamber

[Lord Bruce of Bennachie (LD)]

My Lords, I will speak briefly to Amendments 2 and 36, to which I have added my name. On Amendment 2, I do not need to add much to what has been said, other than that the disproportionate hit on part-time workers seems to me to be extraordinarily damaging. As has been said, very often these are incipient businesses that might grow to be full-time businesses. There are whole swathes of the economy, such as students, which nearly all of us have in our family, who depend on this kind of work to get them through their studies. So it is a significant impact, as has been said.

The hospitality industry has not just had five difficult years. I have personal knowledge of a number of hospitality businesses that did not survive Covid, and many that survived Covid but with a massive debt overhang that they are still trying to pay off. Add this particular measure on top of that and those that just managed to survive will now probably fail, and those that can hang in there will struggle to get themselves back into viability.

I have an amendment I shall speak to later about the impact of these taxes on the public sector in Scotland. In the private sector, there is a difference in hospitality business rates between Scotland and England. Although the way the business rates are determined is not exactly comparable, UKHospitality Scotland has done an analysis of businesses in Scotland in a comparable sector. It gives an example: a local pub, an average kind of pub, would pay £6,000 more in business rates, 66% more than an equivalent business in England. A town centre restaurant would pay almost £10,000 more, which is also 66% more, and a hotel would pay £26,000 more, which is 70% more than an equivalent business.

I am not here to apologise for or justify the measures of the Scottish Government, who obviously have not followed the UK Government in terms of business rate discounts—it would have been helpful if they had—but I challenge the Government to recognise that the combined activities of two Governments on businesses in Scotland is leaving many businesses in Scotland comparable to similar businesses all over the rest of the UK substantially disadvantaged compared with the rest. I do not believe the Government gave any consideration to that unintended consequence and they have not recognised that it means that the Scottish economy will be disproportionately hard hit by this.

I will throw one political grenade into the mix. It is fine to say that we have an SNP Government, but the majority of people in Scotland did not vote SNP and I think they are entitled to look to a UK Government to at least give some recognition that they are looking for an approach to their businesses that shows some appreciation and understanding that things are different north of the border. Just occasionally, it would be helpful if the UK Government acknowledged that.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have not spoken on the Bill before but I add, very briefly, my support to the proposals from the noble Lord, Lord Londesborough. I have spent a lifetime in the city helping businesses grow—funding them, looking after them and developing them. They are vulnerable throughout, but they are particularly vulnerable in their early stages, which is the point of the noble Lord’s amendment.

With 25 people or fewer, it is easy to forget just how difficult it is, and how persistent an effort is needed, to get a business going, keep it going and to eventually grow it, hopefully, to a great size where it will employ people and increase the prosperity of the country. It is our feedstock—this is where I take issue with the noble Lord, Lord Eatwell, who served with me on a City regulatory body many years ago—and if you cut down the trees in any one year, those trees will never reappear. We shall have a smaller number of growing companies from the years when this proposal has its impact.

It is also surprising, when I hear debates in your Lordships’ House, how many Members cannot conceive of circumstances when the pay cheque will not turn up at the end of the month. A lifetime in public service insures you against that. But, if you run a business, you have to think every day about will happen at the end of the month. Will there be a call from the bank manager saying, “I’m very sorry, I’m not going to be able to meet your payroll”? When you have responsibility for other people, that ghastly pressure is increased by the sorts of measures the Government propose to take here.

I say to the Minister, very gently, that the phrase is: revenue is vanity, profit is stability, but cash is reality. In this Bill the Government are proposing to undermine the reality of the cash that is desperately needed by the very smallest among our companies.

--- Later in debate ---

[Baroness Grender (LD)]

My Lords, I support Amendment 3, moved by my noble friend Lady Kramer and supported by my noble friend Lord Sharkey, and other amendments in this group, but I will not mention them so that we can speed through as quickly as possible and get to the vote. We discussed in some detail in Committee the plight of charities, with a view to moving an amendment of this nature at this point.

I have a plea around the simplification of the tax system. I think everyone would acknowledge that national insurance contributions will never be part of asking, “Would we start from here?”, and then simplifying the tax system. Perhaps there is culpability on these Benches: they were introduced by Lloyd George, but massively expanded by Clement Attlee, so I am looking at the Benches opposite to share a bit of the responsibility from some time ago.

Failure to retain charities at the current rate will cost the sector £1.4 billion in the next financial year according to the NCVO. This compounds levels of underfunding in the long term and threatens services for some of the most vulnerable in society. To take just one example, Homeless Link is a charity with 800 member organisations, all of which work on the front line of homelessness. It estimates that the national insurance changes alone could take between £50 million and £60 million out of the homelessness sector. That is peanuts when it comes to revenue raising but absolutely fundamental to services run by 800 different organisations.

Most charities do not function as profit-making businesses and cannot adapt to increased costs, as the private sector can, by putting up prices or recovering elsewhere. Instead, the increase in national insurance must be accounted for by cutting costs in staff, and therefore services to people in acute need, such as those who need a bed for the night. The Government’s very welcome objective to develop a cross-departmental homelessness strategy is undermined by this additional cost.

At Second Reading, the Minister defended the current UK tax regime for the charity sector, arguing that it is

“among the most generous of anywhere in the world”.—[Official Report, 6/1/25; col. 601.]

I ask the Minister to study with care the latest results of the Charities Aid Foundation’s World Giving Index, which has the UK now at number 22—its joint lowest position ever, having fallen out of the top 20 at the end of last year after a recent period of decline.

The charitable sector is a significant partner in many of this Government’s future plans. This change in national insurance directly harms charities and the people who they need to serve. We urge the Government to reconsider this additional financial burden.

[Lord Bruce of Bennachie (LD)]

My Lords, I will briefly speak to Amendment 40, which is in my name. It asks for an impact assessment of this Bill on Scotland, because of the differences that have been identified.

The Government have said that they will compensate the public sector, but we are all waiting for the detail of how they will do it. A figure of £4.7 billion as the global sum has been mentioned, but not the detail. There is a concern that the structure of the public sector in Scotland is significantly different from that in England and that it may not be sufficient to sustain public services at even the current level in Scotland, where they ae struggling, as they are everywhere else. My own health board, Grampian, has had to absorb a £20 million charge just for this Bill, on top of a £75 million deficit that it is currently running. It is in a substantial crisis.

I have questions for the Minister. He will have seen the Fraser of Allander review of the impact; it may not be definitive but it is independent. It suggests that the impact is something around £550 million in Scotland. If one applied the normal rules of the Barnett formula, £4.7 billion would presumably give Scotland something between £400 million and £450 million. However, government officials in Scotland tell us that the Treasury has said the Barnett formula will transmit £300 million, or just over that. How can the Minister justify a £300 million transfer through the Barnett formula against a £4.7 billion overall budget for compensation?

More to the point, how will the Government establish the criteria for what level of compensation they will give to which kind of public bodies? If they do that, can they ensure that the same conditions that apply in England will follow through in Scotland, and that the money will go with them? All I am asking for is equality of treatment, not special treatment.

As I have said before, there is quite a lot wrong with what is going on in Scotland. The Scottish Government are not known for their efficiency in management; I am not trying to defend them and I do not think the UK Government should compensate them for their incompetence. However, I do not think that the public sector and the people of Scotland should suffer because of that, when an additional measure brought by the UK Government has added insult to injury or misery to misery.

Will the Minister acknowledge that, if he is talking about compensation of just over £300 million, that falls a long way short of the comparable impact, pound for pound, in Scotland compared with England? What are the criteria? Will they be applied fairly and consistently across the UK?

[Lord Leigh of Hurley (Con)]

My Lords, I will speak to Amendment 9, which is in my name. I suspect that it may have been subject to pre-emption, along with Amendment 8. If the noble Baroness, Lady Bennett of Manor Castle, is surprised, I am equally surprised that I think I agree with all of her remarks. That means that I would like to focus on Amendment 4, dealing with charity revenues of less than £1 million, which I believe is not subject to pre-emption.

According to the Charity Commission website, there are about 170,000 charities in the UK, with about £100 billion of income in aggregate and 1.3 million employees. My noble friend Lady Neville-Rolfe wants us to concentrate on those charities with an annual revenue of below £1 million.

There is different terminology that can be used by the Charity Commission, because it talks about gross income. On average, charities’ donations and legacies are about one-third of their total income, as was the case with the Thames Hospice, which I described earlier. The rest of the income is grants, investments and so on. A charity with £1 million of revenue will probably raise only some £350,000 in donations. I calculate from the available information that the sums raised by charities with revenues of less than £1 million total some £12 billion, which is 12% of total charity income. But there are 162,000 charities with an income of under £1 million, which means that we are talking about 95% of all UK charities.

As for their spend on national insurance, it is hard to determine, because we do not know exactly how much they spend on employment. We do know how much they spend on total expenditure, which is some £12 billion. If we assume that 50% of that—it is a very generous assumption—is on employee costs, and if we assume a salary of around £25,000, because it is a low-paid sector, then my noble friend Lady Neville-Rolfe’s amendment would impact only 240,000 people.

To try to answer the criticisms from the noble Lord, Lord Eatwell, I calculated that my noble friend’s amendment would cost the Government around £480 million—half a billion pounds. Is the Minister going to tell us that he is not prepared to protect 95% of charities for just £500 million? Does he recognise my figure? If not, what is the cost of the amendment? I invite him to join us in pausing the hike until we work out what it is, so that we can then have a meaningful discussion.

I remind the Minister that in a speech to the civil society summit last year, hosted by Pro Bono Economics, Sir Keir Starmer promised to reset the relationship between civil society and government. Is this what he meant? He said that

“for too long, your voice has been ignored”.

I have read the full speech, and he also said,

“we know it’s people on the ground, people with skin in the game, who understand the problems best and have the best answers”.

He continued in his speech to civil society leaders, which largely rubbished Tory policies, by saying,

“let’s be honest, for too long, your voice has been ignored between the shouts of the market and the state”.

Are the Prime Minister and his Ministers listening now? Those leaders are calling for this national insurance hike to be dropped.

Why would the Government want to penalise 162,000 charities, where our fellow citizens give so much of their time freely, and in many cases their cash, simply for the betterment of fellow citizens at home and abroad? It is a shameful imposition.