Autumn Budget 2025

Lord Davies of Brixton Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

I strongly welcome this Budget, particularly the removal of the two-child limit. The remarks made by the noble Lord, Lord Bailey of Paddington, failed to change my mind on the issue. I took them as being the latest iteration of the age-old tactic of the immiseration of those who deserve social support.

Most of my remarks are devoted to the issue of pensions. I agree with my noble friend Lady Nichols of Selby, who is not in her place, about the action on the British Coal Staff Superannuation Scheme and the fact that members will get the full value of the contributions that have been paid on their behalf. I welcome the action being taken in relation to the Pension Protection Fund and the financial assistance scheme, where credit will be given for the increases that were guaranteed before 1997.

I welcome the action on salary sacrifice. The concern that has been expressed about the change is extraordinary. Private pensions get massive tax advantages, which, broadly speaking, I support. Perhaps there should be a proper review of how they work, but taking away less than 1/20th of those advantages in a way that targets that removal of support for those on higher incomes seems an entirely appropriate and reasonable measure.

I also welcome the action on the problems that arise when there are index-linked benefits and frozen tax thresholds. There is a clear potential problem, which I have been warning of since I entered the House about five years ago. This is the first time that any Government have formally acknowledged that this is an issue that needs to be tackled.

First, it is not that it becomes a problem when the new state pension overtakes the tax threshold. It is already a problem, because many pensioners have larger than that standard level of pension, on which they are already having to pay tax. That is entirely right; I am in favour of pensioners paying tax. However, at the moment, because the state pension is not included within the PAYE system, it creates difficulties. People get a brown envelope in the post saying that they must pay a certain amount of money, or their tax codes are adjusted in ways that cause them considerable problems. So this is already an issue and will increasingly become one; action was definitely needed.

My Government have not explained in detail how this simple assessment will work. I have some fears, because whenever a system is introduced as being a simplification, it all too often ends up making things a lot more complicated. So I welcome an assurance from my noble friend the Minister that this will be taken into account when we see what the appropriate solution should be.

Inheritance Tax: Pensions

Lord Davies of Brixton Excerpts

Monday 17th November 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question; I think the short answer is no. Let us be very clear: this is not a retrospective policy change. It takes effect for deaths on or after 6 April 2027, so that is in no way retrospective. As for the examples that the noble Baroness gives, it is important to be very clear that estates will continue to benefit from all the normal nil-rate bands, reliefs and exemptions available. An estate can pass on up to £1 million with no inheritance tax, and spouses are fully exempt from inheritance tax. More than 90% of UK estates will continue to have no inheritance tax liability following these changes.

[Lord Davies of Brixton (Lab)]

May I welcome my noble friend’s clear statement that the purpose of a pension fund is to provide pensions and not to assist the better-off in estate planning? Does he agree with me, given the frequent press comment that inheritance tax is, in many senses, a voluntary tax, that anyone will be able to avoid paying the higher rate of tax with a modicum of planning?

Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Davies of Brixton Excerpts

Thursday 13th November 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, we must thank the noble Lord, Lord Elliott of Mickle Fell, for introducing this debate. I welcome the opportunity to have a debate on these important issues; my main question is on what has been missing from it, which is any reference to 14 years of Conservative government.

The economy is heavily path dependent. The economy we have now is the result of that 14 years of Conservative government. My Government have done much that is good in the 16 months that they have been in power, but it is wrong to suggest that there is some magic solution that can overcome the problems that were created, starting with the ill-judged move to austerity, for which the Liberal Democrats should accept their share of the blame. I could run through the whole litany, ending with the last Conservative Chancellor’s ill-judged decision to make the unfunded cut in national insurance contributions, leading to the black hole that I am sure my noble friend the Minister will mention in his reply.

Various issues have been raised that are worth addressing during this debate. The noble Lord, Lord Swire, made a particular point of how much tax was paid by the highly paid. There is a very simple reason why highly paid people pay so much tax: it is because they are so rich. The level of economic inequality in our society is and remains substantial. It is absolutely right that those with the broadest shoulders—whether that includes the noble Lord or not, I do not know—should pay their fair share, and that means they pay considerably more.

The noble Lord, Lord Skidelsky, is not in his place, but I was interested in the issue he raised of the bond vigilantes, saying they should be ignored. I agree with that. In truth, the restriction on what our economy can do is the economy’s productive capacity—not the attitude of the bond vigilantes, as he termed them.

Reference has been made a number of times to the so-called welfare burden. I suggest that everyone reads the recent column by Chris Giles in the Financial Times, in which he stated that there was no need to panic and the costs of welfare are not spiralling; in fact, they have been remarkably consistent over time. Many of the statistics that people quote about increasing numbers in one particular type of benefit are explained by the fact that other forms of benefits are reducing. The overall welfare spend—you can read the article from Chris Giles, not from me—remains constant, and it is actually less than it was when David Cameron was Prime Minister. This idea that we are facing some existential crisis because of the burden of welfare is nonsense. I invite my noble friend’s reply.

Pension Funds: Use of UK-listed Investment Companies

Lord Davies of Brixton Excerpts

Tuesday 9th September 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I take this opportunity to pay tribute to her expertise and the consistency of her campaigning in this area. I fully understand the points that she is raising and recognise the important role that investment companies play in providing access to private markets. She talked about the recent Mansion House accord. I hope she agrees that the industry is moving in the right direction in diversifying its investments in the Mansion House accord, with 17 of the largest workplace pension providers having voluntarily committed to investing at least 10% of their defined contribution main default funds in private markets by 2030, with at least half of that invested in UK private assets.

I understand the noble Baroness’s concern about the scope of the proposed reserve power in the Bill. The approach that we have taken quite deliberately is to ensure that the powers are suitably targeted and contain guard-rails. They are not intended to be open-ended but should be capable of serving as a backstop to the commitments that pension providers themselves have made through the Mansion House accord and will be used only if we consider that the industry has not made sufficient progress on its own. None the less, I am grateful to the noble Baroness for her constructive engagement on this issue and happy to continue to discuss it with her. As we take the Bill through Parliament, her representations and those of the wider sector will be considered alongside our broader policy objectives. Our aim remains to ensure that the reserve power is effective and proportionate, and delivers for pension savers and for the UK economy.

[Lord Davies of Brixton (Lab)]

I express my support for my noble friend on the points made by the noble Baroness. There is an issue here that needs to be resolved. There is also a broader issue that I ask my noble friend to respond on: the use of private equity funds in pension schemes. To put it mildly, private equity has a mixed record. A blanket approval for the involvement of private equity in providing pensions has all the makings of a forthcoming disaster.

[Lord Livermore (Lab)]

I am grateful to my noble friend for his thoughts on that matter. I do not necessarily agree with him about private equity’s role in pension funds. It has an extremely important role in investing in the infrastructure and fast-growing companies that we want to see so that the UK economy can unlock that kind of investment. As for its inclusion in the Mansion House accord, he will be aware that this is an industry agreement and that the Government are not participants in it.

Financial Services Reform

Lord Davies of Brixton Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Lord Livermore (Lab)]

As the noble Earl says, the Bank of England has operational independence to achieve the inflation target set by the Government. We absolutely support it in the work that it does to do that. However, it is absolutely the case that the Government’s fiscal policy has created the space for the Bank of England to cut interest rates. At the risk of repeating an old favourite of ours, if we still had a £22 billion black hole in the public finances, it would not have had the space to do that. It is obviously right that fiscal policy and monetary policy work together.

[Lord Davies of Brixton (Lab)]

I think it is worth reminding the House that I spent my entire working life in the financial services industry in one form or another, and I am afraid to say that my practical experience of the industry has made me a sceptic of much of the promotion provided by it telling us how it will do the economy a favour. Does my noble friend agree that there are potential downsides to the financialisation of the economy that seems to lie behind these proposals? We need to realise that there is a form of resource curse in overfinancialising the economy. There is also a dynamic within the industry driven in large part by the inevitable asymmetry of information. You can provide all the education and explanation that you wish, but there will still be this asymmetry of information leading to a succession of scandals. There is a dynamic in the industry—in personal pension scandals, endowment scandals and the Northern Rock scandal there was a dynamic that has to be recognised.

Finally, I am concerned that, in the Statement, the Government appear to be giving people financial advice. I am sure my noble friend will deny that that is what they are doing, but saying that the Government are going to get people better financial returns is a very dangerous path to go down. Does my noble friend the Minister accept that there is a need for robust safeguards for ordinary investors? I press him to accept that those appear to be contemplated by some of those commenting on these proposals. Significant weakening is a grave danger to the economy and individuals.

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question, and I pay tribute to his experience in the industry that he outlined. I do not agree with his view of the industry. I am incredibly proud of the financial services sector in this country: it makes a massive contribution to our economy, and it is incredibly important that we enable it to grow and that that growth feeds through to the real economy so we can see the investment in the real economy that we want to see.

My noble friend talks, perfectly correctly, about finding the right balance between risk and growth. As I say, we are not dismantling any of the architecture that was put in place in the aftermath of the financial crisis, and it is quite right that we do not do that, but we believe that the pendulum has swung too far towards regulating only for risk. It needs to regulate not just for risk but for growth, and that is the right thing to do.

I think my noble friend is wrong to say that we are in any way giving financial advice. We are trying to put in place what has been called a targeted support framework that enables people to access the help they need to make the right financial decisions for them, and that will be ready to support consumers by ISA season next year. It would enable authorised firms, not the Government, to proactively suggest appropriate products or courses of action, using limited information about a customer and their circumstances. That could include helping people to make decisions about how to access their pension, supporting people with excess cash savings to consider investing for the first time. I cannot believe that anyone would think that was anything but a good idea.

Winter Fuel Payment

Lord Davies of Brixton Excerpts

Thursday 12th June 2025 Lords Chamber

[Lord Livermore (Lab)]

One thing that was ill-thought-through was the Liz Truss mini-Budget and the £22 billion black hole in the public finances, which is why we had to take the action that we did. It might be nice if the noble Lord took some responsibility for what we inherited. As I said already, when we came into office, we had to take a number of very difficult and urgent decisions to put the public finances back on a firm footing. That involved difficult decisions on welfare, on tax and on spending, and one of those was means-testing the winter fuel payment. We have listened to the concerns about the level of the means test and we are now able—all the while still means-testing the winter fuel payment, because that is the right thing to do—to extend eligibility so that this winter, all pensioners with incomes up to and including £35,000 will receive it.

[Lord Davies of Brixton (Lab)]

My Lords, I start by wishing my noble friend the Minister best wishes for his birthday today. He has the special treat of an Urgent Question and a Statement on the spending review—what more could anyone ask for?

I very much welcome the decision to reintroduce the winter fuel payment. In answer to the Question, my noble friend said that anyone with income above £35,000 would not receive the payment. There is one problem with that, in that some forms of income are not taxed. Someone with a substantial cash ISA—I understand that there is a Member on the Liberal Benches who has £1 million in his ISA; he has made no secret of it, and presumably receives a very substantial income—with a taxable income of less than £35,000, would presumably still receive the winter fuel allowance, or is some step going to be taken to avoid that problem?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question and for his birthday wishes—that was very kind of him. Obviously, we had to achieve the right balance between a simple system to administer and getting the support to those who need it most. The system that we have come up with sticks with the existing rules of the tax system and, I think, achieves the right balance, as I described.

Winter Fuel Payment

Lord Davies of Brixton Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, as someone who has spoken from these Benches against this proposal, I very much welcome the Government’s decision. The way the change has been characterised is a bit misleading. Does the Minister not agree that this represents a rejection of means testing and a return to universal benefits, with, quite rightly, the cost being handled for those on high incomes through a redistributive tax system?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his support for the change—I was going to say in the means test, and that is obviously exactly what his question is about. I am not sure I am expert enough to engage in a debate with him about the definition of a means test. Clearly, we are raising the level at which pensioners are entitled to and benefit from this policy. As he says, it will be paid universally to all pensioners, and those with an income over £35,000 will have the winter fuel payment recovered by HMRC through the tax system.

Mansion House Accord

Lord Davies of Brixton Excerpts

Wednesday 14th May 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. This commitment is voluntary and led by the industry, because the industry knows and is choosing to do this—because the evidence shows that higher-growth assets can boost returns to savers over time, as the noble Baroness, Lady Neville-Rolfe, said, in line with international counterparts, such as in Canada and Australia. Their pension funds and the levels of private asset allocation in those schemes is far higher. Pension savers will benefit from this accord through diversified savings, with potentially higher returns.

[Lord Davies of Brixton (Lab)]

My Lords, I thank my noble friend for his replies and for the Statement in the Commons. I understand why my noble friend and the Minister in the Commons avoided tackling the issue of mandation, even though there was clearly a Treasury-inspired leak about the issue on Monday. Does my noble friend understand that with mandation of investment policies, should the Government consider it, comes responsibilities, with effectively the Government having to guarantee the returns or benefits on members’ benefits.

[Lord Livermore (Lab)]

I am shocked that my noble friend uses the word “leak”—I have no idea what he is talking about. As I have said, it is important that this is a voluntary commitment and that it delivers the investment promised for the UK economy. As I say, funds are voluntarily—it is industry led—choosing to do this because evidence shows that high-growth assets can boost returns over time, and we are confident that the schemes are now moving in the right direction. But equally, as I say, the pension schemes Bill will have more details in it about how these developments will be monitored over time to make sure that that change is delivered, because in the end what we all want to see is higher levels of investment.

National Debt: It’s Time for Tough Decisions (Economic Affairs Committee Report)

Lord Davies of Brixton Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

It is a great pleasure to take part in this debate. It is a bit like the Economic Affairs Committee 2024-25 reunion tour, with added guest stars. I was a member of the committee, and preparing for the debate gave me an opportunity to reflect on what we achieved—or what I achieved, I suppose. I give great thanks to the chair of the committee, the noble Lord, Lord Bridges of Headley, who was an excellent chair who encouraged the full participation of members. I have no criticism of him at all. The committee was extraordinarily interesting—the members of the committee as much as the witnesses. We received formal evidence from witnesses but not from members of the committee, even though some committee members knew a lot more than the witnesses.

I am happy to add my name to the report, but that does not necessarily mean that I agree with everything in it. Another tribute to the noble Lord, Lord Bridges, is that he was assiduous in making sure that my views were made clear, even if they were not always successful. The key issue for me is that the committee did not say we were facing an inevitable crisis; it said we had a choice, expressed in terms of the state doing less or in increasing taxes. An increase in taxes was not ruled out by the report; it was in the report as a choice and, speaking for myself, that is the choice that I would make. There is actually a third choice that we did not consider, and I regret that we ruled it out: that we should borrow even more. I slightly regret that we did not explore that in more detail. We said, “We’re not interested in listening to the views of people who promote modern monetary theory” and we did not really hear from them. I think they may provide valuable insights, even if I do not necessarily agree with all their conclusions.

A big loss in this debate is, of course, my noble friend Lord Layard, who was a valuable member of the committee. He was assiduous in making the point that, with increasing demand for public services, with people getting older and improvements in medical technology, and with increasing demands for higher standards of public service, there is inevitably going to be an increased role for the state and for public expenditure within the total economic budget. In and of itself, increasing levels of public expenditure is not a cause of concern; it is a reflection of the needs of a modern society.

The standout for me within the evidence we received was from Professor Stiglitz, who raised the issue of investment. We rather kept out of the issue of investment because it was so big, but he asked what counted as investment. He gave the example of nurses’ training. Is that an investment? For the Government it is not, but in fact we need investments of that type and the narrow terms of investment that we see defined in the Chancellor’s letter do not reflect the changing needs of what we need from public services.

Spring Statement

Lord Davies of Brixton Excerpts

Thursday 27th March 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords—

[Lord Kennedy of Southwark (Lab Co-op)]

We will hear from the noble Lord, Lord Wigley, next and then from my noble friend Lord Davies of Brixton.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I am not in charge of the Chancellor’s correspondence unit, so I cannot say whether that letter has been replied to. I am also not responsible for appointing MPs to ministerial positions, so I cannot answer that point either.

What I can tell the noble Lord is that, as a result of the measures announced in the Spring Statement yesterday, £58 million of additional Barnett consequentials will be provided to the devolved Governments in 2025-26, £16 million of which will go to the Welsh Government. The UK Government have already made considerable progress on growth in Wales, including by confirming the Wrexham and Flintshire investment zone and designated tax sites in both the Celtic and Anglesey freeports, and by supporting steel communities through the Port Talbot Tata Steel transition board and providing £25 million of additional funding to the Welsh Government to keep coal tips safe.

[Lord Davies of Brixton (Lab)]

My noble friend will be aware that the two key figures projected in the OBR report are the future course of income in the form of taxation and expenditure. There is a high degree of uncertainty about both those projections, and yet under our fiscal rules, the Government are using the difference between those two highly uncertain figures as the control variable, causing an incredible degree of uncertainty. That is what the rules require. Does my noble friend share my surprise that using this highly uncertain figure is an appropriate basis on which to take away benefits from hundreds of thousands of people and put them into poverty?

[Lord Livermore (Lab)]

I hope my noble friend is not following the path of Liz Truss and the party opposite by criticising the OBR, because that is not a sustainable basis on which to build economic policy. The Chancellor has been clear that the fiscal rules are non-negotiable, and the OBR has confirmed that the Government are on track to meet them. On the wider policy of welfare reform, as I have said before, the system was unsustainable. It had the wrong incentives, and it is important that we get people back into work, because that is the best route out of poverty.