Tax Increases

Lord Hannan of Kingsclere Excerpts

Thursday 10th July 2025 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is right to point out the long-standing and long-term challenges that we face in fiscal policy. As the noble Lord opposite said, the OBR set out some long-standing economic realities in its fiscal risks report this week. That is why it is so important that we are committed to ensuring stability in the economy through our fiscal rules. My noble friend mentioned special educational needs. He is absolutely right that, right now, the system is not working; less than half of education, health and care plans are issued within the 20-week deadline and only 22% of children with special educational needs are reaching the expected levels in maths and English. We absolutely need to deliver better support for vulnerable children and their parents, which is why we will set out wider plans for SEND reform later this year as part of the upcoming schools White Paper. On the longer-term debate that my noble friend talks about, I am always more than happy to discuss those issues with him.

[Lord Hannan of Kingsclere (Con)]

My Lords, does the Minister accept that there is a point when higher tax rates lead to lower government revenues? We heard an example from my noble friend Lord Leigh in the last Question that the Minister dealt with about non-doms provoking some companies to change their domicile or listing. There will come a point when it causes people to retire early, emigrate or work differently. If he accepts that there is such a point, how close does he think we have got to it?

[Lord Livermore (Lab)]

The noble Lord is just talking about the revenue maximisation point. We are past that, for example, on tobacco taxes, as a deliberate government policy. Of course it exists; I do not think it is particularly novel.

Government Performance against Fiscal Rules

Lord Hannan of Kingsclere Excerpts

Tuesday 8th July 2025 Lords Chamber

[Lord Livermore (Lab)]

Yes.

[Lord Hannan of Kingsclere (Con)]

My Lords, in his first answer, the Minister used the phrase, “lost control of the economy”, which is familiar from the election. It is a very telling phrase. Which bits of the economy would he like to control that are not currently controlled? Is not the reality that the problem is losing control not of the economy but of the deficit? I have to ask: in what areas will the Government slow the increase in welfare spending? If they are not going to do PIP or child benefit, where is he going to find the savings?

[Lord Livermore (Lab)]

My Lords, I will tell the noble Lord what matters in terms of controlling the public finances: economic growth, which his Government singularly failed on. Whether it was the Liz Truss mini-Budget, the Brexit deal that he supported and championed, or austerity at exactly the wrong moment for the economy, the previous Government’s record on economic growth was woeful.

Gulf States: Trade and Human Rights

Lord Hannan of Kingsclere Excerpts

Tuesday 3rd June 2025 Lords Chamber

[Baroness Gustafsson (Lab)]

First, there is no signed agreement with the GCC yet; it is under continuous negotiation. However, one of the opportunities we have is to reaffirm what standards a country should have and how it can rearticulate them within the terms of a free trade agreement. Then there are other aspects: consider the Modern Slavery Act here in the UK, which requires any business, anywhere in the world, trading with the UK to comply with efforts towards transparency around its supply chain, to identify forced labour and to eradicate that wherever possible. Where we have opportunities to expand those trading relationships, such as with this free trade agreement, we will only increase the number of businesses that will then be bound by those standards of transparency.

[Lord Hannan of Kingsclere (Con)]

My Lords, I thank the Minister for her answers to the noble and right reverend Lord, Lord Harries of Pentregarth, and the noble Lord, Lord Purvis of Tweed. Will she confirm that trade agreements are about trade? They are about the removal of barriers and other obstacles to the free flow of commerce. All the other things that we are hearing about—women’s rights, freedom of expression and workers’ rights—are terribly important, but they do not belong as a coda in a trade agreement; they are matters to be addressed in their own terms. Here is a terrific opportunity for us to increase the value of our trade by getting on for £2 billion with these old allies of ours, the former Trucial States and other Gulf monarchies. Is that not good for us, good for them and —in a world that is increasingly moving to protectionism —good for everybody else as well?

[Baroness Gustafsson (Lab)]

Trade is the consequence of a relationship: working with someone across the table with whom you have a shared ambition to work together. That drives both economic benefit and influence, and I do not believe that one ever comes at the cost of the other.

Carbon Border Taxes

Lord Hannan of Kingsclere Excerpts

Wednesday 12th March 2025 Lords Chamber

[Lord Livermore (Lab)]

Yes—I agree with the noble Baroness that energy prices are too high. I just wonder what the previous Government did to tackle that over 14 years. This Government have invested in CCUS, for example, which the previous Government did not. I do not know whether the noble Baroness agrees with our investments in that; she opposes the revenue-raising measures that we have taken to raise the funds to invest in those measures. It is an interesting question, but I of course agree with her. That is why the tax is designed in exactly the way that it is.

[Lord Hannan of Kingsclere (Con)]

My Lords, to return to my noble friend Lord Fuller’s question, how is this different from a tariff? One effect of a tariff is that it results in the outsourcing of manufacturing. People will take car-making or whatever to places that are not affected by this additional levy. Have the Government made any assessment of how much deindustrialisation there will be as a consequence of imposing what is, in effect, a tariff on ourselves?

[Lord Livermore (Lab)]

As I understand it, the noble Lord likes market-led approaches. The UK Emissions Trading Scheme is a market-led approach whereby those domestic firms and industries that are able to decarbonise quickly do so first, while technological solutions are found for those where it is more difficult. To maintain the integrity of the UK’s decarbonisation efforts through the emissions trading scheme, we must mitigate the risk of carbon leakage, which means that we must have a carbon border adjustment mechanism.

London Stock Exchange: Decline in UK Funds

Lord Hannan of Kingsclere Excerpts

Thursday 13th February 2025 Lords Chamber

[Lord Livermore (Lab)]

The decision on whether a firm can list in the UK is a matter for the independent regulator, the FCA, subject to a firm meeting its listing rules and relevant disclosure requirements.

[Lord Hannan of Kingsclere (Con)]

My Lords, the chief beneficiary of the loss of business from London has been New York, where companies are not subject to stamp duty. Is the Minister’s department prepared to consider lifting this handicap from the London Stock Exchange to give us more of an equal chance?

[Lord Livermore (Lab)]

Stamp taxes on shares raise more than £4 billion a year in revenue. Targeted design features such as the exemption for transfers made on growth markets also support the UK’s competitiveness. This matter is out of scope of the pensions review, but we of course keep all taxes under review.

EU Law

Lord Hannan of Kingsclere Excerpts

Tuesday 28th January 2025 Lords Chamber

[Baroness Gustafsson (Lab)]

I would stand by our position that economic growth is an important factor. Understanding the skills required to accomplish that growth is something this Government take very seriously. Making sure we are respecting the rights of our workers has come under a lot of scrutiny and review as part of the Employment Rights Bill, and that will continue to be a priority of this Government. We are making sure we have the right aspirations and ambitions regarding growth and the right skills and talent within the UK to support that growth.

[Lord Hannan of Kingsclere (Con)]

My Lords, can the Minister tell the House which aspects of the reset will impact directly on our pursuit of a free trade agreement with the United States—a goal to which the Government remain laudably committed?

[Baroness Gustafsson (Lab)]

I cannot comment on the specifics of the exact regulation that may or may not be coming. With regard to the trading relationship and making sure we have trade agreements in place, the Government are constantly and doggedly pursuing that to make sure we have a clear trade relationship that is free from barriers that get in the way and impede trade.

Bank of England (Economic Affairs Committee Report)

Lord Hannan of Kingsclere Excerpts

Thursday 2nd May 2024 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, I think we just heard a flavour of why at least one former Prime Minister was in the habit of publicly saying that my noble friend Lord Moynihan was a far more reliable forecaster than the Treasury. It is a great privilege and pleasure to follow his maiden speech.

I hope I can say this as an ex-politician among other ex-politicians: if you have been close to government, you can see how far a politician can go by just saying the right things and voting the right way but making barely a dent on the real world. That option is not open to the entrepreneur. My noble friend has gone through life making a tangible and benign difference in field after field. Most obviously, in business he has turned around hundreds of companies, perhaps most spectacularly the firm PA. I speak not of the wire service, I should say in this place, but of the technological and scientific consultancy, which was effectively bankrupt when he took it over and which he left with a valuation of $2.5 billion.

He has done the same thing as president of the Albert Hall. Look at the outside next time you are there and see the transformation made possible by the £11 million surplus that my noble friend created as president. He did the same—I am conscious that I may be queering his pitch with a great many of those in the Chamber now—as the chairman of the committee of Vote Leave, taking over with a deficit and leaving with a victorious outcome.

He is very hands-on. He has most recently been not just purchasing and supplying ambulances for Ukraine but driving them across the border himself in quite difficult conditions. As much for his cheerful and infectious optimism as for his keen intellect and focused pragmatism, we are very fortunate to have him alongside us in this place.

We are living through an unprecedented and uncontrolled monetary experiment. Starting in March 2009, the Bank of England began a programme of money printing that would have put to shame a 1970s Latin American junta. Since then we have increased the amount of money in circulation by an almost unbelievable 50%. Nearly half of that increase has been since 2020 as a consequence of the pandemic.

You cannot magic up that amount of currency without deleterious impacts on people’s lives, although people do not always join the dots. A number of the things that people complain about in this country have their root cause in excessively loose monetary policy—most obviously the squeeze on living standards, but also the rise in house prices, the divergence between haves and have-nots in terms of assets, and the public sector strikes that continue to plague us, as noble Lords will know if they travel here by train. They all have their roots in excessive inflation.

We heard about the malign consequences of inflation from the noble Lord, Lord Macpherson of Earl’s Court. I think I would go further than he did. He said that QE exacerbated but did not cause inflation. What else will cause inflation if not such a massive expansion of the money supply? Milton Friedman said that inflation is always and everywhere a monetary phenomenon; it is caused by too much money chasing too few goods—“Milton! thou shouldst be living at this hour: the Bank of England hath need of thee”.

It was quite extraordinary to hear Gertjan Vlieghe, then a member of the Monetary Policy Committee, say in April 2020 that the balance sheet of the Bank would be comparable to those of the central banks of the Weimar Republic or Zimbabwe—his words, not mine. How can we look at that and not consider the consequential impact on people’s lives in the real world?

I have little to add to the brilliant analyses of my noble friends Lord Bridges and Lord Lamont, but let me make a point about accountability. When people complain about rising prices, rising asset values and the difficulties of having to run to stand still, to whom should they direct their complaints if the root causes are independent authorities, which have been put deliberately beyond the reach of elected Ministers? If the vast majority of the decisions that impact on our lives are taken not just by the Bank of England but by a series of other quangos and agencies, from the Climate Change Committee to the European Court of Human Rights and the Office for Budget Responsibility, the act of casting a ballot is devalued.

That is something that this report takes some steps towards addressing. My noble friend Lord Bridges hinted at this, but he could have gone a little further. He talked about the mandates and appointment processes for governors and other senior staff at the Bank of England. If you are in for a couple of terms and then no one will bother you again, that strikes me as a fairly weak form of accountability.

I would also like to see Parliament taking some responsibility for the mandate of the Bank. Specifically, I would like to see its terms of reference tweaked so that this kind of unprecedented monetary expansion cannot happen without approval. I would like to see the terms of the Bank of England changed so that the maintenance of the value of the currency, sound money, is expressly recognised as one of its goals. Whether or not you agree with me, and whether or not you think that is a proportionate policy, surely we need stronger mechanisms of oversight.

Today is local election day. It is one of the few elections that your Lordships are allowed to participate in. The polls are still open, but I will go out on a limb here and say that the election result will be a massive win for the “Can’t be bothered” party. The number of people who took the trouble to register to vote but did not bother to cast a ballot today will be greater than the votes cast for all the other parties put together. Why is that? Is it sheer cynicism or apathy? Is it not that the decisions that most directly touch on people’s lives have been lifted out of the democratic process and placed in the hands of bodies that are invulnerable to public opinion? Changing the mandate of the Bank of England will not solve that problem on its own, but it is part of a process of restoring the supremacy of the elected representative and thereby restoring honour, meaning and purpose to the act of casting a ballot.

Alternative Investment Fund Designation Bill [HL]

Lord Hannan of Kingsclere Excerpts

2nd reading
Friday 1st March 2024 Lords Chamber

[Lord Hannan of Kingsclere (Con)]

My Lords, I congratulate my noble friend Lady Altmann on introducing this proportionate, timely and sensible measure. I also congratulate the noble Baroness, Lady Bowles, on setting out clearly where the existing legislation is going wrong. Some 11 years after the event, I belatedly offer an apology to the noble Baroness and some of her colleagues in the European Parliament. We served there together, representing the same region. In common with a number of Conservative MEPs, I used to tease our Lib Dem colleagues by saying, “They will sign anything that is put in front of them from Brussels. They never read it; they unambiguously support it”. But that was not really true—and it was not true on this occasion.

For all the reasons we have heard, this legislation was using a sledgehammer to miss a nut. This was legislation intended as a response to the financial crisis, but, as somebody put it, when there was a general melee in the bar brawl, instead of looking for the person who started it, they just hit the nearest person.

I remember the unanimity in this country against the AIFMD in 2013, in the industry itself, in the City more widely and among all the political parties. I remember one of the fund managers saying, “This is such a needless and costly measure that we are exploring whether just to break it and pay the fine and call that a fee. We think that that may be less intrusive than having to assimilate the compliance costs”.

I assumed that, the day after Brexit, this would be at the top of the list of the measures to be axed, since it had literally no support. In fact, I had assumed—rather innocently and naively, I now see—that the first response of the Government after Brexit would be to go back and look at all the measures that the UK had opposed and voted against in council, and at the departmental arguments raised against them, and then see whether those still applied. I am afraid that that has not happened. I had underestimated what Milton Friedman called the tyranny of the status quo: the way in which, however irrational and arbitrary your arrangements, some people have found a way of making a living out of them and become opponents of change.

I am afraid that this is one of the dynamics that makes deregulation very difficult. AIFMD is maybe not the best example, but it is an example none the less of the entire industry opposing something, yet, once people have assimilated the compliance costs themselves, they lose interest in repeal. Indeed, in some cases it is not just that they lose interest in repeal; they do not want the next guy to come in and undercut them, so they sometimes perversely become advocates for the thing they used to oppose, because they now see it as a barrier to entry.

By the way, this goes way beyond the field of financial services. It applies to some of the more bizarre SPS and food safety things we have inherited, right the way through to the REACH directive. People say, “Well, the industry is now in favour of it”. Of course they are—once they have taken on the compliance costs. However, the role of a Minister and of a Government is not just to act as the agent, tool or mechanism of the existing producer interest, but to think about the companies that do not yet exist and about the consumers, the start-ups and the entrepreneurs.

As some of your Lordships know, I was quite wet about Brexit: I wanted a Swiss-type deal all the way through, and I argued that we should have maintained a lot of the accumulated single market measures, which would have solved a lot of problems. We did not do that. The Theresa May Administration took a different attitude, and we paid a fairly high price in the disengagement talks for the right to regulatory autonomy. Okay; I am on board with that if that is the policy. However, surely we can all agree that the worst of all worlds is to pay that price in the talks and then not use the regulatory autonomy. It is bizarre to insist on the ability to have these freedoms and then, even in a case like this, where all sides agree that we are doing something costly and needless, we do not use them.

I get that there will be probably a majority in this House who, in other areas, want a much closer deal now with the EU and to go back into some kind of customs union arrangement. Fine; but I think we are all agreed that we are now autonomous and competing globally in financial services, and we need to make the City of London a place where people want to invest.

I close by saying to my noble friend the Minister that when she sees my noble friends Lady Altmann and Lady McIntosh of Pickering, and the noble Baroness, Lady Bowles—and indeed, I assume, the noble Baroness, Lady Kramer, although she has yet to speak—all effectively lining up and saying, “We need to be doing more to take advantage of our Brexit freedoms”, perhaps something has gone wrong and this is the time to act.

Overseas Territories: Tax Haven Status

Lord Hannan of Kingsclere Excerpts

Monday 26th February 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

Obviously, I cannot comment on any individual’s tax affairs, but it is the case that overseas territories are non-sovereign jurisdictions. They have a unique relationship as part of the British family, but they set out their own tax legislation within their own legal structures and it is certainly not for the UK Government or Parliament to drive a coach and horses through that.

[Lord Hannan of Kingsclere (Con)]

My Lords, has the Minister’s department carried out any assessment of how much higher tax rates would be in the rest of the world if there were not competition from these lower-tax jurisdictions to keep us in check?

[Baroness Vere of Norbiton (Con)]

I am afraid I have to say to the noble Lord that we have not carried out that assessment.

Alternative Investment Fund Managers Regulations 2013

Lord Hannan of Kingsclere Excerpts

Monday 13th November 2023 Lords Chamber

[Baroness Penn (Con)]

My noble friend is absolutely right about ensuring that pension funds are invested in the future of British industry. In fact, this was the theme of my right honourable friend the Chancellor’s Mansion House speech this year. He set out a number of reforms that the Government are taking forward to support this. There was rapid consultation on a number of those areas, and we expect further updates at the Autumn Statement.

[Lord Hannan of Kingsclere (Con)]

My Lords, repeal of the AIFMD should have been straightforward. When it was brought in some 16 years ago, it was opposed by every party. It was opposed by Labour and the Conservatives, the industry and financial services more widely. What we are seeing here is the way in which, once a sector absorbs the administrative costs of doing something, however much it opposed it coming in, it then becomes an opponent of repeal. Is it not the role of Ministers to look beyond producer capture and look at the interests of the companies that do not yet exist and, above all, at the interests of consumers?

[Baroness Penn (Con)]

My noble friend is absolutely right. The Government consulted extensively when the Alternative Investment Fund Managers Regulations were introduced. That was some time ago but, as part of the smarter regulatory framework, we are working closely with the FCA to explore what changes can be made to AIFMD to make it more streamlined and tailored to UK markets. I assure all noble Lords that that work is being taken forward with urgency.