Financial Services Reform

Lord Livermore Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I spent two years on the Parliamentary Commission on Banking Standards following the 2008 crash. We were all aware that the financial sector and the City would, over time, work hard to erode the protections that we recommended to prevent a repeat of financial instability, casino-type risk-taking and consumer abuse. The financial sector plays a long game. Inch by inch the erosion is well under way, while the Government are seen as eager for nominal growth and too eager to resist that erosion.

Let me give a short list on the erosion: the competitiveness and growth objective for regulators; the changing to matching adjustment in Solvency UK, increasing the illiquidity of the insurance sector; the removal of the cap on bankers’ bonuses; the permanent permission for pension funds to transact derivatives without using central counterparties and holding margin collateral; the watering down of the senior managers regime, which is key to accountability; the weakening of the Financial Ombudsman; the pressure on pension funds to invest in high-risk and illiquid assets; and the weakening of bank ring-fencing, which was absolutely at the heart of the commission’s recommendations, removing that incentive to take free deposits and roll them in the casino. That list is just what springs immediately to mind. It is far from complete.

Regulation cannot be written in stone, and adjustment and streamlining are always necessary, but will the Government now issue a compendium of all the changes, along with a proper assessment of the cumulative shift in risk? I mean changes by not just the Government but the various regulators. Parliament will then be in a position to make a proper judgment.

The financial sector has approved this move back towards what it sees as a return to the light-touch regime, a regime that made it very rich. But remember that when the inevitable crash came, leading financiers were pretty much untouched. Ordinary people bore the brunt. It is crucial that this is not repeated.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their questions and comments. I will do my best to address all the points they raised.

The noble Baroness, Lady Neville-Rolfe, spoke about the economy in general. She will be aware that we have had to take very difficult decisions on the economy to generate the stability that we all want to see—not least to restore stability to the public finances in the Budget last October. The stability that we have restored is already delivering. We have seen four cuts in interest rates by the Bank of England since the general election, reducing the cost of mortgages and business lending. Real wages have risen more in the first 10 months of this Labour Government than in the first 10 years of the previous Conservative Government. Investment is returning to our economy. At the spending review, the Chancellor set out £120 billion of additional public investment. The IMF has long identified the insufficient amount of investment in our public sector as a barrier to growth. The UK has attracted £120 billion of private sector investment in just the last 12 months.

The noble Baroness mentioned recent growth figures. Those growth figures were disappointing, but we are determined to go ever further and faster to deliver on our growth promise. That is why we are doing all the reforms that we have embarked on—not least the spending review and increased investment. We have increased investment in better city region transport, have committed record funding for affordable homes and are backing major infrastructure projects such as Sizewell C. We are investing in the parts of the economy that genuinely will be growth generative.

The noble Baroness also talked about the importance of financial services to the economy. The financial services sector is critical to our growth ambitions for our country. It is one of the largest and most productive sectors in the UK, worth around 9% of total economic output, as she said, employing 1.2 million people in clusters right across the UK. London is the financial centre of the world, home to the deepest equity capital market in Europe and the third-biggest venture capital market globally. It is right that we support the sector as we have in the strategy that we have set out, to see the growth that we want to see and for that growth to feed through to the real economy.

I am grateful to the noble Baroness, Lady Neville-Rolfe, for welcoming what we have said about the rebalancing between risk, growth and competitiveness. The noble Baroness, Lady Kramer, struck a very different tone. I know that she has huge expertise in this. I do not for a second intend to in any way doubt her expertise. I know that she played a huge role post financial crisis in putting together much of the architecture that is in place. I disagree, though, with the way in which she characterised our reforms. She asked for a compendium of those reforms. The financial services growth and competitive strategy is the compendium of those reforms. I think that what have been called the Leeds reforms are the totality of the reforms that she identified.

We are not removing the regulatory architecture that was put in place and that she played a major role in after the global financial crisis. As the Chancellor has specifically said:

“The protections that were put in place … were the right thing to do, with better protections for consumers and more accountability injected into the system”.


The core elements of that—adherence to international standards, ensuring robust MREL, remaining committed to ring-fencing, which we do despite what the noble Baroness said, and the structure to the regulatory system—all remain in place. But we believe that the pendulum swung too far in the opposite direction. The balance of regulation has gone too far towards regulating for risk and not enough towards regulating for growth. Clearly, this is a highly competitive sector, and no other globally competitive financial services hub imposes such bureaucracy on its businesses. Neither should we if we want to be competitive.

So, absolutely, we are recalibrating. We are rebalancing the approach to risk so that it is more proportionate and so that, in the right places, consumers and industry can take informed risk and create the space for the innovation and growth in the sector that we want to see.

The noble Baroness, Lady Neville-Rolfe, mentioned the Financial Services Regulation Committee of this House and the fact that it identified many of the issues that have been addressed in this strategy. Obviously, I pay tribute to that committee and the work it has done. I look forward to debating its report in due course. That points to a degree of cross-party consensus in some of the challenges we face and want to address. She specifically mentioned financial education, for example, which was one of the key recommendations made in that report. I hope we can find consensus on the importance of that, if nothing else.

As the noble Baroness said, we need to build confidence for retail investment among the general public on a platform of greater education. As part of the Leeds reforms, we are looking to take forward a series of measures to give consumers the confidence to invest, so that they can grow their savings and access the long-term benefits that investing can bring.

There are three specific measures for that. The first is a new targeted support framework, enabling people to access the help they need to make the right financial decisions. The second is a cross-industry initiative to reframe how firms talk about investing, so that they talk about the growth benefits and not just the risk and warning people off. The third is an industry-led, multiyear advertising campaign to showcase some of the benefits of investing for the general public.

As the noble Baroness, Lady Neville-Rolfe, said, that of course has to come on the basis of greater financial education. We discussed this previously and I have looked into it. Financial education does form part of the school curriculum in all UK nations. In England, financial education forms a compulsory part of the curriculum for mathematics at key stages 1 to 4, and citizenship at key stages 3 and 4. Together, they cover personal budgeting, saving for the future, financial risk, managing credit and debt, and calculating interest. But the noble Baroness is quite right that of course we should go further. The Government have established an independent curriculum and assessment review covering ages five to 18 in England. The review is considering whether the curriculum provides sufficient coverage of key knowledge and skills, including financial education, to prepare young people for future life and to thrive in a fast-changing world. The review’s final report and recommendations will be published in the autumn with the Government’s response.

On that note, the noble Baroness also asked about the timescale for a lot of what we have announced. Many of the reviews we have announced as part of these reforms will report in the autumn. At that point, we will see a lot of the things she spoke about coming to fruition.

The noble Baroness asked about ISAs. The Government will continue to talk to industry and others about the options for ISA reform. We recognise the potential for ISA reform to improve returns for savers and access to capital for UK businesses. Although there are differing views out there among stakeholders, we are all united in wanting better outcomes for savers and the UK economy.

Finally, the noble Baroness, Lady Neville-Rolfe, asked about pensions and quite rightly paid tribute to my noble friend Lady Drake, as I do too. I cannot think of anyone better equipped to take part in that review. Many of the questions she asked will be answered in phase 2 of the pensions review, so I shall wait until that is in place before commenting on the points she raised.

[Baroness Ludford (LD)]

My Lords, I thank the Minister for the Statement. The Government want to reintroduce informed risk-taking into our financial services system to deliver prosperity for working people. As my noble friend Lady Kramer pointed out, the last time we had risk-taking in the financial services system in a context of global competitive deregulation, in 2008, it created a crisis that meant the taxes of working people bailed out the bankers. How confident are the Government that we are not going down that path again?

In that context, why is the Chancellor disagreeing with the Governor of the Bank of England, who said that

“we can’t compromise on … financial stability”

and, notably, failed to endorse the route the Chancellor is taking?

On what the Minister called “reforming the ISA system”, I certainly agree with the comments that have been made about the need for more financial education, and it may be that ISA reforms can be discussed. But I question the way in which the Chancellor went about this. She created a scare story about how cash ISAs were going to be abolished. That scare story has run for several months, which will surely discourage the normal punter who is not confident in retail investment from saving at all.

Should the Chancellor not sack the spad or speech-writer who is encouraging her to shoot from the hip, which she seems to have a bit of a tendency to do, and take the better route of launching a reasonable debate, instead of letting these issues float and scare people?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her contribution. There was a lot there. There was a crumb of truth in the things she said, but I certainly do not accept the characterisation of any of the three points she made. She started by talking about risk-taking. Do we want informed consumers to be able to take risks in order to get better returns? Yes, we do. She talked about how just that alone would take us back to the situation at the time of the financial crisis. I have already set out that I fundamentally do not accept that point. We are not removing any of the regulatory architecture that was put in place after the global financial crisis and, as I have said, the Chancellor said very clearly:

“The protections that were put in place … were the right thing to do, with better protections for consumers and more accountability injected into the system”.


Does the noble Baroness think it is right that if a consumer has a large amount of cash sitting in their bank account, the banks that money is with cannot say to them that there might be better ways to invest their money? That is at the core of what she talked about. She started her remarks talking about better returns for consumers. That is exactly what we are talking about: getting better returns for consumers. That is why introducing a greater level of risk is important.

The noble Baroness talked about the Chancellor being at odds with the Governor of the Bank of England. Again, I do not think that is the case. I have read the comments. He is talking about the things that we are doing, so I do not think that that is true, and I do not think that they are at odds.

I think I have already addressed the question on ISA reforms. As I have said, the Government will continue to talk to industry and others about the options for ISA reforms. Again, we recognise the potential for ISA reforms to improve returns for savers and access to capital for UK businesses. At the end of the day, all these reforms are about getting better returns for savers—surely, we can all agree with that—and better returns for the UK economy and, again, I hope we can all agree with that.

[Lord Sikka (Lab)]

My Lords, history shows that infatuation with deregulation of the finance industry always ends up destabilising the economy. At the moment, shadow banks are bigger than retail banking and totally unregulated. Private equity is devouring care homes, water, veterinary services, town centres and companies all over the UK. Its gearing ratio is higher than that which brought down Lehman Brothers and Bear Stearns, but the Government have still not moved to look at that sector. Under the so-called effective or tighter regulatory regime that we have now, money laundering by HSBC was buried, and we are still waiting for a report on the 2003 HBOS fraud and no regulator even wants to look at it. It will not get any better under the Government’s proposals, because the post-2008 crash reforms are being repealed and the regulator’s consumer protection duties have been diluted. There will not be enough money to bail out banks, businesses, markets and households when the next crash inevitably comes. Effective risk management must consider the likelihood of what are often called black swan events. What assessment have the Government made of the probability of a financial crash?

[Lord Livermore (Lab)]

I am always grateful to hear from my noble friend on all these topics. I disagree with him, as always. He said that the 2008 reforms are being repealed. I cannot see anywhere in the Chancellor’s statement where that is the case. As I have said clearly and as the Chancellor has said clearly, the protections that were put in place were the right things to do with better protections for consumers and more accountability in the system. My noble friend said that there would not be enough money to bail out banks in a crisis. We have been clear that the minimum requirement for own funds and eligible liabilities regime plays a crucial role in maintaining financial stability and ensuring that taxpayers do not pick up the cost of bank failures. However, it is important that the regime is proportionate so that smaller banks can scale up, expand and support lending to UK households and businesses. As my noble friend will know, the Bank of England has announced the outcome of its MREL consultation.

[The Earl of Effingham (Con)]

My Lords, the Minister mentioned how interest rates have been cut, and other noble Lords on the Government Benches have mentioned the same thing. Does he agree that the Bank of England dictates monetary policy, not the Government, and that the reason why the Bank of England has been cutting interest rates is because of clear evidence of a slowing economy, not because the Government’s policy is working?

[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.

[Baroness Bennett of Manor Castle (GP)]

My Lords, my question follows on from those of the noble Lords, Lord Davies of Brixton and Lord Sikka, both of whom spoke about financialisation. Earlier this year, the head of UNCTAD—UN Trade and Development —Dr Anastasia Nesvetailova wrote a piece on a path out of the “finance curse”. It offered suggestions to global South countries—developing countries—using the UK as a case study of what to be aware of from the finance curse. She wrote that

“financialisation had progressed against the backdrop of deepening asymmetries—sectoral and regional—in incomes, wealth, employment and even access to public services”.

I think we would all have to agree with that. She went on to say that

“the system … appeared to serve the interests of global asset owners rather than those of the people of the United Kingdom”.

How are the Government going to ensure, if indeed their changes have the effect that they desire, that the benefits are going to trickle down to people outside the financial sector? How else is the rest of the economy going to benefit?

[Lord Livermore (Lab)]

I have already made it clear in previous answers that I disagree with that analysis. It is not at all how we see the financial services sector.

How are people going to benefit? I think the 1.2 million people employed in the financial services sector right across the UK will benefit from that. That is a pretty substantial benefit. The noble Baroness will know that we need to get more investment into our economy, and we are not going to get that investment unless we have a growing and thriving financial services sector. So I am very clear that I disagree with the noble Baroness’s analysis.

[Lord Tunnicliffe (Lab)]

My Lords, any system of regulation consists of rules and administration. If you have good rules and bad administration, you will get bad regulation. Is my noble friend satisfied that the quality of administration is sufficient? If not, what is he doing about it?

[Lord Livermore (Lab)]

My noble friend sums up quite nicely the balance between rules and administration. We are maintaining many of the rules that were put in place, as I have tried to make clear this evening. We are maintaining the architecture that was put in place after the global financial crisis, but the way in which those rules were administered was overly burdensome and probably disproportionate, placed too much of a burden on the sector and stifled the growth there that we want to see. As I have said, the pendulum swung too far in the opposite direction, and the balance of regulation has gone too far towards regulating for risk and not enough for also regulating for growth. As I have said before, no other globally competitive financial services hub imposes such bureaucracy on its businesses, so neither should we.

My noble friend asks what we are doing about it. What we are doing about it underpins the entirety of these reforms. We are seeking to recalibrate and rebalance the approach to risk so that it is more proportionate and that, in the right places, consumers and industry can take informed risks so that we create the space for the innovation and growth in the sector that I think we all want to see.

[Viscount Chandos (Lab)]

My Lords, I welcome the Leeds reforms that have been announced, and I thank my noble friend the Minister for his comments. I am delighted that the noble Baroness, Lady Neville-Rolfe, agreed that the balance was being successfully struck between achieving financial stability and growth objectives. If some in the financial services industry have expressed disappointment, I suggest that that came from unrealistic expectations—perhaps a reminder of the challenge that it is for the Government to communicate the striking of that balance.

I particularly welcome the commitment to review and prospectively reform bank ring-fencing. The headlines resulting from the Governor of the Bank of England’s comment to the Treasury Select Committee that it was “not sensible” to scrap ring-fencing perhaps exaggerate the difference between his views and those of the Government. Will the proposed review assess the effect of unreformed ring-fencing on the supply and cost of credit to business?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his comments. He started his remarks on the reception for these reforms. I think there is quite a consensus that they are a sensible and proportionate attempt to rebalance the system in the way that he describes. He spoke specifically about the ring-fencing regime and the Governor of the Bank of England’s comments yesterday, which were also referred to earlier. What the governor said and what we are doing are entirely consistent because the Government remain committed to retaining the ring-fencing regime, and that is what the governor was saying should be the case. I think what he said and what we are doing are the same thing.

We have announced an intention to implement material reforms to the ring-fencing regime. This will be enacted via a Treasury-led review of the regime with input, crucially, from the Bank of England and the PRA, which will consider both legislation and PRA rules. The review will be published by early 2026. It will look in detail at how reforms to the regime could relieve unnecessary burdens, strengthen the banking sector’s ability to support economic growth and deliver against our commitment to ensure that post-global financial crisis regulation is balanced and proportionate. My noble friend asked about specific details of the reforms. These will be subject to the outcome of the review, so I am unable to detail them at this stage, but we will legislate to take them forward when parliamentary time allows if that becomes necessary.

Tackling Unsustainable Debt

Lord Livermore Excerpts

Thursday 17th July 2025 Lords Chamber

[Baroness Brown of Silvertown]

To ask His Majesty’s Government what progress they have made towards tackling unsustainable debt in cooperation with partners in the global South, as set out in the Labour Party Manifesto 2024.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, as set out in our manifesto, tackling unsustainable debt in low-income countries is a key development priority for this Government. We are working closely with partners to strengthen and speed up the G20 common framework to enhance debt transparency for debtor and creditors. We have set up the new London Coalition on Sustainable Sovereign Debt, co-chaired by my honourable friend the Economic Secretary, to promote contractual innovations for increased resilience and to make restructurings quicker.

[Baroness Brown of Silvertown (Lab)]

My Lords, the UK High Court has ordered South Sudan, one of the world’s poorest countries, to pay $657 million in debt servicing to a for-profit bank. That is half its annual income. Surely we have the power and moral responsibility to prevent this happening. The previous Government passed Andrew Gwynne’s debt relief Act, so will this Government consider introducing an updated law to support millions of people in debt-distressed countries?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for her question and I pay tribute to her considerable expertise on these issues; I know she served as shadow Minister for Africa for several years. The Government fully agree that private creditors must play their part in debt restructurings. The Paris Club and now the G20, as part of its commitment to co-ordinate on debt treatments under the common framework, are clear on our collective expectation that private creditors must participate in restructurings on terms at least as favourable as those provided by official creditors. Overall, we have seen evidence of private creditors’ willingness to engage and provide debt treatments where needed.

While the Government appreciate the intentions of those proposing legislation in this area, we are concerned about the potential negative impacts that such legislation could have, specifically on the cost of finance for developing countries. As such, the UK is not currently pursuing legislation, given the existing lack of evidence to justify such an approach and the potentially adverse wider consequences. We will, of course, continue to keep the evidence and our position under review.

My noble friend specifically mentioned South Sudan. As I understand the complex situation with Afreximbank—an African financial institution based in Cairo—South Sudan is not undergoing a multilateral restructuring with official creditors, so it is not clear that legislation would improve that situation.

[Lord Oates (LD)]

My Lords, does the Minister recognise that the concerns he just expressed about the legislation referred to by the noble Baroness, Lady Brown, are exactly the sorts of concerns that were issued in advance of Andrew Gwynne’s Act in 2010 and that were found, on review, to be without merit? Does he recognise that, for over 3 billion people living in countries that spend more on debt servicing than on public services such as health and education, the risk of action is far less than the devastating impact of inaction?

[Lord Livermore (Lab)]

I absolutely recognise what the noble Lord says. It is important to recognise that the debt relief Act was different in scope and scale. It targeted a small, ring-fenced amount of historical debt. Current proposals for legislation would impact all future debt contracts written under English law. We have significant concerns about the impacts of that on the cost of capital at a time when global liquidity is constrained.

That is not to say—as the noble Lord rightly advises—that we are not taking action. We are absolutely taking action and we believe that multilateral action is the right way forward, predominantly through the common framework established by the G20. The Chancellor has also established the London coalition, which was launched on 23 June and provides exactly what is needed: a formal avenue to engage with private creditors to ensure long-term stable flows of capital to emerging markets.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the global South has suffered for decades, trapped under an ideology imposed from the outside of privatisation, austerity and deregulation. Will the Minister and the Government ensure that future arrangements allow an escape from that ideology towards investment in the essential systems of health, education and democratic engagement?

[Lord Livermore (Lab)]

That is exactly what our approach is designed to do. As I have said, multilateral action is the right way forward. The G20 common framework remains the best available tool for us to tackle debt vulnerabilities, bringing together traditional and newer creditors to co-ordinate on debt treatment, which is critical given the more diverse creditor landscape that we currently face.

[Lord Blunkett (Lab)]

My Lords, reinforcing the point that global co-operation and international institutions need to be not only defended but promoted in dealing with world debt and poverty, it is exactly 20 years since the Gleneagles agreement, which was reached in 2005 after the Make Poverty History campaign—one of the most successful democratic campaigns ever. Does my noble friend agree that we should celebrate that and see off those who would destroy those international conventions and institutions, and destroy how we can use our democracy to bring about change?

[Lord Livermore (Lab)]

I absolutely agree with my noble friend and thank him for what he says. He and I were part of the last Labour Government who saw such historic action on debt relief, and I agree that we should celebrate that and remind the world of it. Of course, the world is a different place now; the creditor landscape is very different. Previously, most of the debt was held by Paris Club members and multilateral institutions. Now, borrowers increasingly rely on non-Paris Club members, specifically China and the commercial sector. So the action that we need to take now is different from that which was taken before. My noble friend rightly says that multilateral institutions are important; the onus is on us to strengthen those institutions, speed them up and ensure that they work better than they do currently.

[The Lord Bishop of Leicester]

My Lords, this year marks the 25th anniversary of the Jubilee 2000 campaign—a remarkable coming together of tens of millions of people from around the world, which led to around $130 billion of debt being cancelled across 36 countries. It allowed those countries to reinvest in education, healthcare and poverty alleviation. The Pope has also declared this year a year of Jubilee and set up a commission to look at international debt relief. What are the Government doing to learn from the Jubilee 2000 campaign and to engage with faith communities and charities working in this sector?

[Lord Livermore (Lab)]

My noble friend Lady Chapman tells me that we are doing exactly as the right reverend Prelate seeks. I completely agree with him on the history of the Jubilee movement. The UK wants to see effective solutions to those debt challenges. We strongly support the IMF’s three-pillar approach to providing support to countries facing immediate liquidity pressures. Where a country needs to restructure its debt, as I have said before, the common framework remains the best available tool to do so. We are focused on ensuring that the common framework delivers more timely, orderly and co-ordinated restructuring.

[Lord Purvis of Tweed (LD)]

My Lords, further to my noble friend’s question on the scale of the debt servicing costs as related to health and education costs, we know from Center for Global Development information that, as a result of western countries cutting development partnership support—the UK is cutting this by up to 40%—many of the least developed nations are borrowing more to fill the gap for the very programmes we are cutting. What assessment are His Majesty’s Government making of the countries for which we have cut development partnership support, which are borrowing more to fill the gap that we have created?

[Lord Livermore (Lab)]

I do not know the specific answer to the noble Lord’s question, I am afraid. I am very happy to write to him to fill that in. As I have said, the action we are taking at a multilateral level is proven to be the most effective route that we can take to tackle these issues.

[Baroness Neville-Rolfe (Con)]

My Lords, does the Minister agree that many countries themselves now need to focus on tackling their debt, which can so easily become unsustainable? That obviously includes countries in the global South and, indeed, much closer to home, where a tick back up in inflation risks increasing debt servicing costs. We have a debt problem on a wide scale.

[Lord Livermore (Lab)]

The noble Baroness is correct in saying that debt sustainability is the primary responsibility of borrowing countries, but I think lending countries such as the UK also have an important role to play in supporting these efforts through providing capacity-building support, following best practice in sustainable lending and pressing for reform of internationally agreed frameworks on assessing debt sustainability. In line with the UK’s commitment to the OECD sustainable lending practices, the UK considers debt sustainability when providing financing, particularly in cases of lending to countries deemed at high risk of debt distress.

Taxes

Lord Livermore Excerpts

Tuesday 15th July 2025 Lords Chamber

[Lord Booth]

To ask His Majesty’s Government whether they have any plans to raise taxes this year.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the OBR will produce a new forecast in the autumn for the annual Budget, and the Chancellor will take decisions based on that forecast. We will set out our fiscal plans at the Budget in the usual way.

[Lord Booth (Con)]

I thank the Minister for his Answer, which is much as I expected. The Government recently had their first anniversary, which was marked by a series of U-turns. Will the noble Lord use his persuasive powers to ask his Treasury colleagues to get rid of the jobs tax, making one further U-turn?

--- Later in debate ---

[Lord Livermore (Lab)]

I am not quite sure what tax the noble Lord is referring to, but absolutely not, because it is essential to stabilising the public finances and to funding our public services. The party opposite welcomed all the spending we announced in the spending review a few weeks ago, so if it wants the spending, it has to have the taxes to pay for it.

[Baroness Watkins of Tavistock (CB)]

My Lords, when the Treasury is considering how it is going to increase its revenue, will it give careful consideration to the fact that UK graduates repaying student loans are already disadvantaged, in that they are paying 9% additional tax above just over £20,000 to pay off their loans? Here is an example. A student spoke to me recently who is a young teacher with an old-fashioned loan that now stands at only £9,000, through very careful repayment, but who is paying £64.51 a month in interest on the loan. As we consider tax, I ask the Minister to encourage the Treasury to make student loan repayments, or at very least the interest on them, tax-deductible.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. It was premised on a hypothetical, and I am not going to speculate on the next Budget now. I absolutely understand the issues that she is raising, and I am very happy to take those points back to my colleagues in the Treasury.

[Lord Bridges of Headley (Con)]

My Lords, the Minister has said several times in this Chamber that the Government have no present plans to introduce a tourism levy. Will he repeat the same pledge about a wealth tax?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question, and I should start by wishing him a very happy birthday. I have said what I have said on tax. I am not going to give a running commentary on the fiscal forecast, nor am I going to speculate on tax rises now. As I said, we will do things in the usual way. The Chancellor will ask the OBR to produce a new forecast in the autumn for the annual Budget and will take decisions on that based on that forecast.

[Baroness Kramer (LD)]

My Lords, we understand that today at the Mansion House, the Chancellor will avoid the word “tax” and instead focus on pumping risk-taking into financial services as the mechanism for growth. The financial crash of 2008 was entirely generated by risk-taking, all of it legal, allowed by the regulation of the time, widely admired and never called to account. I can understand some streamlining of regulation, but since on every front, safeguards are being taken away slice by slice, will the Government now issue a summary of all the safeguards that both the Government and the regulators have discarded, so that we can assess whether or not we are repeating the past?

[Lord Livermore (Lab)]

The noble Baroness is speculating on a speech that has not been delivered yet, so perhaps we should wait for the Mansion House speech this evening to see what my right honourable friend the Chancellor of Exchequer says in it. Absolutely, though, the Chancellor wants to see a greater rebalancing from risk to growth. I think that is absolutely right, but of course, we must make sure that we continue to regulate to avoid risk while we also maintain growth.

[Lord Watts (Lab)]

My Lords, the Opposition seem to be suggesting that we can cut taxes without finding a way of bridging that gap in the Budget. Does my noble friend agree that it looks as though the Truss fantasy politics and economics that we saw nearly bring the country to its knees are still there with the Opposition?

[Lord Livermore (Lab)]

I completely agree with my noble friend on that point. Every time we hear from the party opposite, it opposes every single measure we have taken to stabilise the public finances, yet at no point has it opposed the spending that that has gone to fund. That is exactly the mistake Liz Truss made in her mini-Budget, which saw mortgage payments rocket for working people. They are still paying the price of those higher mortgages, and that is something we absolutely will not do.

[Lord Dobbs (Con)]

My Lords, I understand why the Minister refuses to give hypotheticals on forthcoming tax. However, this Government made a clear commitment not to introduce taxes on working people. They have looked very much like a fish on the end of a hook over the last 12 months when trying to define what a working person is. Perhaps they should have thought about that before they made such a clear, binding commitment. Without being hypothetical, does the Minister agree with the Chancellor, who, during that election campaign, defined working people as

“people who go out to work and work for their incomes … There are people who do have savings, who have been able to save up, and those are working people as well”?

Does the Minister stand by that commitment?

[Lord Livermore (Lab)]

A working person is someone who goes out to work. The Government have pledged not to increase taxes on working people. We stand by that, which is why we are not increasing their income tax, national insurance contributions or VAT.

[Lord Whitty (Lab)]

My Lords, the concentration during this Question has been on national finance and national taxation, but the real crisis is in the finance of local authorities of all descriptions in all parts of the country, and under all political control. Do the Government intend to look at the basis of financing local authorities so that we can introduce a robust scheme before the end of this Parliament?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. A council tax cap of 5% was introduced by the previous Government. Councils do not have to increase council tax by 5%, but under the rules they cannot increase it by more than 5% without a local referendum. That remains the position.

[Lord Clarke of Nottingham (Con)]

My Lords, when the Treasury team are preparing the Budget, will they have a look at the precedent of Sir Geoffrey Howe’s Budget of 1981, which was delivered in very similar economic circumstances to those of today? It was the most unpopular Budget of my political lifetime but also one of the most successful, because it paved the way for recovery with growth, lower inflation and rising living standards. Does the Minister think that the present Chancellor has the courage to concentrate on the public interest and the medium-term health of the economy, or will there be an obsession with rather reckless promises in the manifesto or short-term reactions in the newspapers and opinion polls?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and for his expertise. That Budget created the deepest recession in British history, so I do not know that we necessarily want to follow it in its entirety.

[Noble Lords]

Oh!

[Lord Livermore (Lab)]

I think that history is on my side here. On whether the Chancellor has the courage to do long-term reform and what is right for the British economy, she has shown that, absolutely she has.

[Lord Wigley (PC)]

My Lords, the Labour First Minister of Wales last week called for a wealth tax. Have the Government heard that, and will they take good notice of the Labour First Minister of Wales?

[Lord Livermore (Lab)]

We listen carefully to all Budget representations, but as I say, I will not speculate on the next Budget now.

[Baroness Neville-Rolfe (Con)]

My Lords, the fact is that we are all too close to a fiscal and economic crisis, much of which this Government have created. Debt interest is now a substantial proportion of departmental expenditure, productivity is flatlining and by 2028-29 the tax burden will be at its highest level in the country’s peacetime history. Does the Minister recognise that further tax rises are not the path to sustainable recovery? Will he affirm that he recognises that taxing people and taxing businesses ever more heavily will only undermine our productive capacity and further reduce the growth we all want?

[Lord Livermore (Lab)]

The noble Baroness has a rather selective memory: she seems to have forgotten about the last 14 years. But she is quite right that the most sustainable way to repair the public finances is through growing the economy. At the last fiscal event, the OBR scored our planning reforms as the biggest increase in growth of any non-fiscal measure, and we hope very much that it will continue to score our growth measures. As she says, that is the most sustainable way of repairing the public finances.

Tax on Imports under £135

Lord Livermore Excerpts

Monday 14th July 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government whether they plan to take action to tax imported goods worth below the £135 threshold for value added tax.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, VAT is already due on all imports into the UK. The Government are reviewing the customs arrangements for imports under £135 and are exploring the merits of reform to the online marketplace rules.

[Lord Leigh of Hurley (Con)]

My Lords, I am glad the Government are reviewing it; as the Minister is aware, the noble Lord, Lord Lucas, RAVAS, the British Retail Consortium and many others have been campaigning on this issue for many years. Now that President Trump is reducing the exemption tariff for goods into the US, there will be extra pressure on Chinese suppliers to send goods VAT and duty-free to the UK. I understand that the EU is minded to reduce the exemption to zero in 2028. Can we be assured that the United Kingdom will not wait for the EU in reducing our exemption to zero?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. Just to be clear, again, VAT is already due on all imports of goods into the UK, regardless of their value. Since 2021, VAT on imports below £135 is collected at the point of sale. There is some evidence of non-compliance, so the Government announced in April that we will review the online marketplace rules. We are engaging with stakeholders to understand the impact of any potential changes. On customs duty, given the concerns of domestic retailers about the lack of a level playing field, we have also announced a review of those arrangements. Since the Government announced the review in April, both Ministers and officials have engaged with a wide range of stakeholders on the impact and operation of the regime. The findings from that engagement will help determine the review’s next steps.

[Baroness Kramer (LD)]

My Lords, I will row in behind the noble Lord, Lord Leigh, on this issue. Could we get a slightly more satisfactory answer on why it is taking so long to find a solution so that the UK can collect the VAT that is due on small items? Will the Minister remember not just that we need the money for tax revenue but that the lack of a level playing field disadvantages British companies in this arena, which find that their goods are displaced by imports because they are not paying VAT?

[Lord Livermore (Lab)]

We fully recognise all the issues that the noble Baroness has set out, which is exactly why we established a review in April. That review will look at the online marketplace rules to establish whether they can be amended to remove opportunities for businesses to avoid their VAT obligations. All available options will be considered, and it will proceed in the way that we set out.

[Lord Anderson of Swansea (Lab)]

Further to the question from the noble Lord, how concerned are the Government that, as a result of the Trump tariffs, Chinese goods will be diverted to our market to our detriment?

[Lord Livermore (Lab)]

The Department for Business and Trade has set out our measures to try and prevent that from happening, and it will continue to monitor it, as you would expect it to.

[Lord Bridges of Headley (Con)]

My Lords, broadening the topic on taxation a little, at the weekend the Transport Secretary said that in Labour’s manifesto it committed not to put up taxes on people on modest incomes. Can the noble Lord tell us the Treasury’s definition of a modest income?

[Lord Livermore (Lab)]

The Government have pledged not to increase taxes on working people, which is why we are not increasing income tax, national insurance contributions or VAT.

[Lord Sikka (Lab)]

Can I help the Minister on how to collect a lot more in tax revenues by attacking the anomalies? By taxing capital gains and dividends at the same rate as wages, and by charging national insurance at the same rate, the Government could collect around £15 billion a year. Another £14.5 billion could be raised by restricting tax relief on pension contributions to basic rate only. Can the Minister explain why the Government have not tackled anomalies that favour the wealthy?

[Lord Livermore (Lab)]

I am always grateful to my noble friend for his Budget representations. He knows that I am not going to get into speculation about the next Budget and that, in terms of what we have done so far to tackle the tax gap, the Government announced the most ambitious package ever to close it, raising £6.5 billion of revenue in terms of the Budget. In the Spring Statement, the Government announced further measures which will raise over £1 billion in additional tax.

[Baroness Neville-Rolfe (Con)]

My Lords, to go back to the Question, foreign firms exporting to the UK are making increasing use of the current arrangements. As a result, domestic producers are disadvantaged and the Treasury is forgoing what could be a substantial amount of tax revenue. Given the concerns expressed across the House, does the Minister agree that the time has arrived to deal with this anomaly, and to do so as a matter of urgency? Has the Minister discussed options with the businesses affected in the UK, and when will the review that he talked about conclude? We would all like to see the conclusion of this debate so that our retailers are not adversely affected.

[Lord Livermore (Lab)]

I agree with almost everything that the noble Baroness said, but she failed to point out that it was her Government that established the existing system and it is this Government who are reviewing it with the intention of changing it. I agree with all the criticisms that she puts forward, but they are criticisms of her own Government. As I say, we have set out a review, and officials are currently engaging with stakeholders to understand the impact of any reforms and have so far held multiple round tables covering some 70 businesses. All available options will be considered, and we will come forward when we have concluded the review.

[Lord Watts (Lab)]

My Lords, can the Minister tell us how long this has been a problem, and whether anyone attempted to resolve it over the past 15 years? Can he say whether this is another case in which this Government have failed to put right 14 years of Tory mismanagement?

[Lord Livermore (Lab)]

It is not quite 14 years, I think; these rules came in in 2021. The previous Government prioritised trade facilitation in the aftermath of Brexit and, since 2021, VAT on imports below £135 is collected at the point of sale to prevent congestion at the border. However, this has opened up some opportunities for the rules not to be followed. We recognise that and have established a review, which the previous Government did not.

[Lord Kirkhope of Harrogate (Con)]

My Lords, this imprecision is not helping. In answer to my noble friend Lord Bridges and the noble Lord, Lord Sikka, there was an attempt by the Minister to indicate what modest incomes were. However, equally confusing and rather upsetting is the Government’s inability to define what exactly they mean when they talk about “wealthy people”. Can he be a little more precise and helpful to us?

[Lord Livermore (Lab)]

The noble Lord is very kind in trying to get me to speculate on the Budget, but that is something that I am not going to do. I will not be giving a running commentary on the fiscal forecast, nor will I be speculating on the next Budget now. The Government have pledged not to increase taxes on working people, which is why we are not increasing income tax, national insurance contributions or VAT.

[Lord Vaizey of Didcot (Con)]

My Lords, the last Government removed the VAT exemption for tourists—the ability to reclaim VAT—which hit a lot of retailers and crafts companies based in the UK. The unique campaign to get that tax removed united people like the Scottish National Party with the Labour Party. Is that now a done deal? Will the tourist tax remain in place, or will the Government ever review it in terms of attracting international visitors?

[Lord Livermore (Lab)]

Again, I am very happy to take that as a Budget representation. As the noble Lord knows, we keep all taxes under review, but I will not be speculating on the next Budget.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, the Government have very wisely produced a number of 10-year strategic plans for the country, which have generally been welcome. The one area where we have not done any serious work is on taxation, and the fact is that both the wealthy and less wealthy are going to have to pay more money in the future to deliver these strategies. On VAT, there is a good deal of opportunity for flexibility, and the Minister has indicated that a review is taking place. Could that not be widened to see how far VAT could be extended to raise additional funds? Beyond that, could we not think about a review for a 10-year strategy on taxation for the country? We might try and bring in the Opposition to get them involved with it, too.

[Lord Livermore (Lab)]

I know this is something that is close to my noble friend’s heart, and he has made those points to me several times. As I have said before, I am happy to take that as a Budget representation, but I am not going to speculate on the next Budget now.

[Lord Forsyth of Drumlean (Con)]

My Lords, would the Minister just like to confirm that, when he talks about working people, he means self-employed people and anyone with a payslip?

[Lord Livermore (Lab)]

I think that is a fair definition of that phrase, yes.

[Lord Hintze (Con)]

My Lords, I have a question to the Minister: why are we always talking about taxation and not being more efficient with our spending?

[Lord Livermore (Lab)]

We have just completed a zero-based review of the whole of government spending. If the noble Lord has areas of spending that he would like to cut, I am very happy to hear them.

Tourism Levy

Lord Livermore Excerpts

Monday 14th July 2025 Lords Chamber

[Lord Bassam of Brighton]

To ask His Majesty’s Government what evaluation they have made of the potential benefits of a tourism levy to alleviate funding pressures facing seaside and coastal communities.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government have no plans at present to introduce visitor levy powers in England. The spending review allocated place-based funding that aims to benefit many seaside and coastal communities.

[Lord Bassam of Brighton (Lab)]

My Lords, I thank the Minister for that encouraging reply. Will he ensure that powers which might be required to enable local authorities to develop such a tourist tax will be included in legislation extending devolutionary powers, so that local authorities can work with businesses and other civic institutions to help regenerate our poorer seaside and coastal communities—encouraging them particularly in the hospitality, arts and cultural sectors?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. I pay tribute to his consistent campaigning on this issue and on behalf of these communities in general, and to his expertise in this matter. He has led several reviews into it. We have been engaging with stakeholders to understand their proposals and will continue to do so, but we have no plans to introduce visitor levy powers in England. I hope he will have seen in the recent spending review that the Government announced communities funding for up to 350 places. Of the 75 places that were listed, 17 are on the English coast. We also announced funding for an additional 25 neighbourhoods over the next decade. Of the 20 additional neighbourhoods, eight are coastal. I hope that goes some way towards addressing the issues that my noble friend sets out.

[Viscount Thurso (LD)]

My Lords, I am sure that the Minister’s words will be greatly reassuring to the hospitality industry. However, in light of the important contribution that is made by the visitor economy to both wealth creation and jobs, can the Minister give the House an assurance that if any proposal were to be brought in, it would be for a fixed amount and not a percentage of room rate, that it would be modest and that it would be fully consulted on through DCMS? Further, given the heavy burden already being borne by the hospitality industry, will he study the example and possible mistakes of the Scottish system? I declare an interest as a former chair of VisitScotland.

[Lord Livermore (Lab)]

I cannot give the noble Viscount assurances on something we are not actually considering doing, so I am afraid I cannot give him what he wants. As he says, different places in different countries choose to raise revenue from overnight visitors in different ways, depending on whether they are seeking to attract them, accommodate the results of their visit, or deter them from coming—different scheme designs do different things. We have no present plans to introduce such a levy.

[The Earl of Clancarty (CB)]

My Lords, the tourist levy initiative is not just about seaside towns, important though those are. Manchester has introduced a voluntary charge; others are following. Are the Government at least looking at the recommendations of the Cultural Policy Unit’s report on this levy, which argues that it could provide an additional but potentially significant regional funding stream for arts and culture, but that to maximise impact and revenues, it would need to be legislated for?

[Lord Livermore (Lab)]

I am grateful to the noble Earl for his question but, at the risk of repeating myself, we have been engaging with stakeholders to understand their proposals, and we will continue to do so, but we have no present plans to introduce visitor levy powers in England. The noble Earl will be aware that councils and local businesses can choose to raise revenue by setting up business improvement districts; for example, Bournemouth has a coastal business improvement district with the objective of attracting visitors, improving and developing the visitor experience, and building prosperity. That levy will raise over £2 million over five years.

[Baroness Goldie (Con)]

My Lords, I understand that Edinburgh has become the first city within the United Kingdom to impose a city-wide visitor levy, which will come into effect next year. But it appears that HMRC now proposes to impose VAT upon the levy; it seems intrinsically unfair that a tax is imposed upon a tax. The matter appears currently to be shrouded in doubt—can the Minister clarify the position?

[Lord Livermore (Lab)]

I do not know the position on that. I will happily check and write to the noble Baroness.

[Lord Harris of Haringey (Lab)]

My Lords, I do not want to trespass on my noble friend’s usual reluctance to comment on anything that might appear in a future Budget, but is it not part of the devolution agenda to allow combined authority mayors—or, for that matter, the Mayor of London and other existing mayors—to make use of this as a tool to help regenerate their various services that tourists use and enjoy, as is commonly the case elsewhere? Could he also perhaps reflect on his earlier answer about business improvement districts? There, if I understand it, the levy is on existing businesses, not on the people who might use the services concerned. Can he say whether this is under active consideration in terms of the Government’s devolution agenda?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. As he says, there are devolved Administrations who have proposals in this regard. We have been engaging with them to understand their proposals. Obviously, we will continue to do so but, as I have said, we have no present plans to introduce such a levy.

[Lord Evans of Rainow (Con)]

My Lords, talking about business improvement districts, there is no better sector to help improve any town centre or business district than hospitality, which was hit very hard in the recent Budget by national insurance contributions, minimum wages and, indeed, business rates. How will this tourism tax help hospitality businesses continue to grow and invest in our town centres and seaside resorts?

[Lord Livermore (Lab)]

I do not know what tourism tax the noble Lord is talking about because, as I think I have made clear, we have no plans to introduce what he is describing. He talked about the recent Budget. In the Budget we introduced a number of policies to help this sector, including freezing the business rates small business multiplier, together with a small business rates relief. This will exempt over a third of properties from business rates. We have also taken steps to reverse the decline of high streets, where one in seven shops now lies empty, by empowering local authorities through high street rental auctions to bring empty units back into use, and committing to permanently lowering business rates for retail, hospitality and leisure properties from 2026.

[Lord Vaizey of Didcot (Con)]

It seems pretty clear that a tourist tax is emerging as a form of generating revenue. Edinburgh, as was said earlier, is imposing one next year, and there are two voluntary levies, in Manchester and Liverpool. It seems to me that the Minister should certainly look at this in a couple of years’ time to see whether it is feasible. But does he agree the key will be that it supports culture, and indeed the hospitality businesses on which it is levied, and does not simply become just another tax that disappears into the council’s coffers?

[Lord Livermore (Lab)]

The noble Lord is talking about something that, again, we have no present plans to introduce.

[Lord Snape (Lab)]

Will my noble friend bear in mind that cities as diverse as New York, Paris and Berlin have tourist taxes and that there is no noticeable lack of tourists in any of them? Would this not provide a valuable source of income, particularly for elected mayors, for example? Dynamic pricing—I understand that is what it is called—means that the price of a hotel room can vary by up to £100 a night, depending on the number of potential customers; a fiver or so will not make much difference in those circumstances.

[Lord Livermore (Lab)]

My noble friend rightly points to different cities that have different systems in place. I think I said that different places in different countries choose to raise revenue from overnight visitors in different ways, depending on whether they are seeking to attract them, to accommodate the results of their visits or to deter them from coming. As I have said a number of times, we have no present plans to introduce visitor levy powers in England.

[Baroness Neville-Rolfe (Con)]

My Lords, I do not believe that it is desirable to impose further costs on visitors to our seaside and coastal towns; nor will it incentivise them to come in greater numbers. We need to encourage visitors to these areas, not to discourage or tax them—as, happily, the Minister seems to be saying. A far better incentive for our seaside towns would be for the Government to reverse the devastating tax increases that they imposed recently on the hospitality industry, particularly with regard to national insurance. Given the hit to employment in that sector, do the Government have any revised plans to help with this difficult situation?

[Lord Livermore (Lab)]

The noble Baroness rightly talks about the importance of the visitor economy. The Tourism Minister has set a goal to grow inbound tourism to 50 million visitors annually by 2030. To help achieve this, DCMS has established a new visitor economy advisory council, which is currently helping to co-create a visitor economy growth strategy, due to be published in the autumn. The strategy endeavours to share the benefits of tourism across every nation and region, including coastal and seaside areas.

The noble Baroness speaks about national insurance increases; it is only a few weeks since we stood here and she supported all the spending in the spending review that that national insurance is funding, so she probably needs to make up her mind whether she supports the spending or does not support the tax that pays for it. As I have already said, we introduced a number of the policies in the Budget to help this sector, including freezing the business rates small business multiplier, together with the small business rates relief. This will exempt over a third of properties from business rates.

[Lord Lucas (Con)]

My Lords, one of the problems that face seaside towns is that homeless people tend to prefer to be there rather than inland. Do the Government have any plans to make sure that the cost of looking after homeless people is shared more fairly and does not fall to such a large extent on seaside towns?

[Lord Livermore (Lab)]

As I said, the Government announced significant place-based funding in the spending review. Part of that MHCLG funding was targeted specifically at helping homeless people.

Tax Increases

Lord Livermore Excerpts

Thursday 10th July 2025 Lords Chamber

[Lord Harper]

To ask His Majesty’s Government, following the decision not to proceed with changes to Personal Independence Payments, whether they have plans to increase taxes as a consequence.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the OBR will produce a new forecast in the autumn before the annual Budget, and the Chancellor will take decisions based on that forecast. We will set out our fiscal plans at the Budget in the usual way.

[Lord Harper (Con)]

I am grateful to the Minister for that Answer. It is very clear, following recent events, that this Government are not going to make any meaningful reform of the welfare system and save any money, despite saying that the system is broken. They have said they are not going to touch their existing spending plans, so that means tax rises are coming, as we predicted. In her Budget speech, the Chancellor said that it was the Government’s policy not to freeze tax thresholds any longer from 2028-29 because that would hurt working people, and that from 2028-29 thresholds will continue to be uprated. To be clear, I am not asking the Minister to write future Budgets today. I am simply asking him to repeat from the Dispatch Box that those words of the Chancellor’s remain the Government’s policy.

[Lord Livermore (Lab)]

The noble Lord is absolutely correct that there are financial consequences to the decisions that have been taken, but he will not be surprised to know that I will not speculate on the next Budget now. We will do things in the usual way. The Chancellor will ask the OBR to produce a new forecast in the autumn before the annual Budget and will take decisions based on that forecast. We will set out our fiscal plans at the Budget in the usual way.

[Baroness Kramer (LD)]

My Lords, in all our discussions of tax and spend, we very rarely address the third pillar—the state of the gilts market. Was the Minister as taken aback as I was to read in the OBR report that, at the end of June, the UK tenure bond yield had the third-highest borrowing cost of any advanced economy except for New Zealand and Iceland? With the withdrawal of pension funds from demanding treasuries as we come to the end of defined benefit plans, there seems to be no plan in place to expand the investor base. The United States is using stablecoin to increase the appetite to take up US treasuries. This is essential, so are the UK Government pursuing any such strategies?

--- Later in debate ---

[Lord Livermore (Lab)]

The noble Baroness knows that I will not comment on specific financial market movements, but I will write to her on stablecoin if that is okay with her.

[Lord Watts (Lab)]

My Lords, we have just heard that the benefits system is broken. Can the Minister remind us who broke it? Is this not a case of having to clear up the mess that they left?

[Lord Livermore (Lab)]

My noble friend is absolutely right to point out the mess that we inherited and why so many difficult decisions had to be taken. He is right to point to the mess they left us in the welfare system; I think we had the highest proportion of people not working and were the only country in the G7 where worklessness had not returned to where it was pre pandemic. We also had to clear up a mess in the public finances, which is why, as he rightly says, we have had to take so many difficult decisions.

[Baroness Laing of Elderslie (Con)]

My Lords, in answering his noble friend, the Minister seems to have forgotten that the cost of servicing debt is higher now than it was at the worst time under the last Conservative Government. Surely he must take responsibility for that. His Government have been in power for a year.

[Lord Livermore (Lab)]

Why does the noble Baroness think the UK has such a high stock of debt? Is it because her Government doubled the national debt? Yes, it is.

[Lord Wallace of Saltaire (LD)]

My Lords, I was very struck by the article in the Times the other day by Paul Johnson, former leader of the Institute for Fiscal Studies, in which he said that we have an entirely illusory debate about tax and spend. There are calls from a substantial number of newspapers and at least one political party for tax cuts, but nobody ever says where they will fall or what our spending parameters are. This Government have made a commitment to raise our defence spending by over 1% of GDP, which I assume that all the major parties support. That means that tax rises are likelier than tax cuts, unless there are severe cuts elsewhere—for example, in pensions. Could the Government not make some attempt to reach an agreement among the parties such that, when discussing taxes rising and falling, we also discuss what the spending priorities are and what cuts may necessarily be possible?

[Lord Livermore (Lab)]

In the spending review, the Government set out our spending plans and a fully funded path to spending 2.6% of GDP on defence. We have an ambition to increase it to 3% in the next Parliament, as the noble Lord knows. I will not speculate on the next Budget now. As I have said, there will be an OBR forecast in the autumn before the annual Budget and we will make decisions based on it, in the usual way.

[Lord Stirrup (CB)]

My Lords, just for clarification, the Minister said that the Government have an ambition to raise defence spending to 3% of GDP in the next Parliament. My understanding is that the Prime Minister has committed the UK to increasing it to 3.5% by 2035. Could the Minister please clarify?

--- Later in debate ---

[Lord Livermore (Lab)]

It is 3% in the next Parliament. I think those commitments are for the Parliament after next.

[Lord Altrincham (Con)]

My Lords, with rather delicate timing, the OBR published its Fiscal Risks and Sustainability report on Tuesday. It used the word “daunting” for our fiscal sustainability outlook. It expects health-related outflows to fall a little, not overall but towards the levels of a few years ago. How will the Government explain to the OBR the positioning of the outlook for personal independence payments?

[Lord Livermore (Lab)]

The OBR is aware of the Government’s policy. It is for it to certify the costings of that policy in its next forecast. As I have said, we will ask it for that forecast in time for the annual Budget and make decisions based on that.

[Lord Vaizey of Didcot (Con)]

My Lords, as this seems to be a free-for-all on putting forward our economic theories, could we ban discussions of tax cuts and rises and instead look at tax simplification? There is an excellent article in this week’s New Statesman—a magazine that I read assiduously every week—that regurgitates the excellent work by Paul Johnson, who has been mentioned. It points out that we have one of the longest tax codes in the world. George Osborne was undone by a pasty tax. Surely this Minister can see to it that we can tax an ice cream cone properly and really simplify taxes, which would have a huge impact on business confidence.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. It is not for me to ban conversations about tax rises or cuts, but I understand what he says about tax simplification and will take his thoughts about ice cream cones back to my colleagues in the Treasury.

[Lord Liddle (Lab)]

My Lords, is it not the case that we have a serious long-term question here, beyond what the Chancellor will do in the next year? We have underlying pressures on defence and demography, on top of which we have the reforms on disabilities and SEND in schools that the previous Government introduced, which have led to rocketing bills that something has to be done about at some stage. Will the Government therefore engage in a long-term debate about how we finance the welfare state, which most of the British population strongly adhere to?

[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.

Primary Stock Exchange Listings

Lord Livermore Excerpts

Thursday 10th July 2025 Lords Chamber

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the implications of the decision by a number of companies, such as Wise, to shift primary stock exchange listings from London to New York.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the Government want to see high-growth companies start, scale, list and stay in the UK. Current market sentiment is challenging, but the UK remains the top destination for equity capital raising in Europe. The Government are focused on further boosting the competitiveness of UK capital markets. In her Mansion House speech, the Chancellor will set out a 10-year vision for financial services.

[Baroness Neville-Rolfe (Con)]

Since tabling this Question, AstraZeneca, the biggest company on the London Stock Exchange, has discussed shifting its stock market listing to the US. This would be a real blow to our stock market of £160 billion. It is also increasingly feared that AstraZeneca could be redomiciled to the US, risking losses for London as a hub, hundreds of jobs and tax losses for the Chancellor. What changes will the Minister make to the UK’s investment environment to stop the troubling and damaging exodus of high-value firms from our market? We would love some detail.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. The Government recognise, as she did, that the UK’s equity markets have faced challenges in recent years, but that is not a new phenomenon; there has been a net decline in investment in UK funds for nine consecutive years. That is a matter for concern, of course, though it reflects global trends and the outflow in 2024 was £2.3 billion less than in 2023.

Firms may choose to list in other countries for a variety of reasons. The noble Baroness mentioned some specific companies. It would not be appropriate for me to comment on individual companies or on speculation, but, of course, the Government should do everything that they can, as she said, to improve the competitiveness of our market and the attractiveness of the UK as a place to list. We are taking forward reforms to boost competitiveness, including overhauling the prospectus regime and legislating for PISCES. This will complement the FCA’s rewrite of the UK’s listing rules, providing more flexibility to raise capital on UK markets. As I have said, next week at Mansion House, the Chancellor will publish our 10-year strategy for financial services, which will include capital markets.

[Lord Blunkett (Lab)]

My noble friend raises an important issue, and I am grateful for his reply. The noble Baroness raised the large companies, but surely the real problem is the rebalancing over several years of the London Stock Exchange away from the funding of small start-ups which are proving their worth and need to be able to scale up. Might it not be time to have an investigation into the direction, strategy and governance of the LSE?

[Lord Livermore (Lab)]

My noble friend is absolutely right on the importance of capital for start-ups and how we can enable them to scale up. It is why in the industrial strategy and the spending review we significantly increased the funding available to the British Business Bank to help innovative small companies to do exactly that. They now have record amounts of capital. We have increased the capital available to our funding streams in that way by 40% since the election, and I think that is exactly what my right honourable friend is seeking to do.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I declare my interest as a director of the London Stock Exchange. In addition to the pull of US investors, does the Minister recognise that there are push factors making the UK a hostile environment for innovative, high-tech growth companies? There are neither public nor private sector customers, as the chair of GSK told our Science and Technology Committee recently. Excessive government retention of IP exploitation rights in procurement and grant contracts undermines companies’ growth prospects.

We are 45 years behind the US, which ended such emasculating IP contract terms in the Bayh–Dole Act, leading to the boom in revenue-producing high-tech companies and university spinoffs. Will HMT put its weight behind the economic benefit and long-term value for money that growth-friendly licensing contracts would have? Will the Minister meet to discuss these and how the UK can get its own Bayh–Dole effect?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I do not necessarily share the overall pessimism that she started her question with. Of course, reform is necessary and that is why next week at Mansion House the Chancellor will publish the 10-year strategy for financial services, which I hope will cover some of the things the noble Baroness is talking about. We need to rebalance our system towards growth in the way she described.

[Lord Lamont of Lerwick (Con)]

My Lords, the loss of AstraZeneca, were it to happen, would be a devastating blow to the London Stock Exchange. Is it not therefore very important, if we are to retain the listings, that the Government have a supportive policy for life sciences in particular? Is it not regrettable, first, that the life sciences review has not yet appeared and, secondly, that the Government refused to back the vaccine plant at Speke near Liverpool? The Government also increased the rebate payable by pharma companies from drug sales from 15% to 22%—a stealth increase if ever there was one. Is it not important that, if we want to retain the listings, which will mean retaining the research, development and employment, we have a proper strategy with these companies and do not just regard them as cash cows but valuable investments to be encouraged?

[Lord Livermore (Lab)]

I fundamentally agree with the underlying point the noble Lord made about the importance of investing in and having the right environment for life sciences companies in this country; they are incredibly important to us. It is why they are fundamental to our industrial strategy.

In terms of specifics, I am not going to comment on speculation. We want to see high-growth companies start, scale, list and stay in the UK. He is absolutely right; the life sciences sector plan is forthcoming. If he is just a little bit more patient, he will see it very soon. Through that, we will seek to harness the life sciences sector to drive long-term economic growth and build a stronger, prevention-focused NHS.

[Lord Tyrie (Non-Afl)]

I think that most people would agree that there is a depressing lack of detail from the Minister in response to the important question about the lack of support given, compared with the United States, to high-growth businesses. Perhaps the Minister is not fully briefed on it. Could he come back to the House, if necessary in writing, and give us much greater detail rather than just saying we have to wait for a speech at the Mansion House for an answer?

[Lord Livermore (Lab)]

I cannot say what the Chancellor is going to say at her Mansion House speech now, otherwise there would not be much point in her giving her Mansion House speech then. She will publish a 10-year strategy for financial services at that point, and I am sure the noble Lord will enjoy reading it.

[Viscount Stansgate (Lab)]

My Lords, reference has been made to the Science and Technology Committee of your Lordships’ House, of which I am a member. It is investigating the crucial question of how we can scale up companies in Britain. I ask my noble friend the Minister what he hopes the effect of the Mansion House accords and reforms will be on trying to, for example, get more of our pension funds in this country to invest in British-based science and technology companies, because that will be crucial for the future of growth.

[Lord Livermore (Lab)]

I thank my noble friend for his question, and I pay tribute to his expertise in this area; I know it is something he is deeply passionate about. He speaks about the importance of scale-up in this country. For many years, we have been very good at start-up, but much less good at scale-up. That is something we are seeking to do. As I have already mentioned, the reforms and increased capital for the British Business Bank will be crucial to that. Throughout our work to develop the industrial strategies, we have seen that access to finance has been a central challenge for many companies. He talks about our pension reforms and the Mansion House compact. Those reforms aim to generate up to £50 billion of additional capital to help companies to start to scale up and for crucial funding at that stage of their life.

[Lord Leigh of Hurley (Con)]

My Lords, I declare an interest as a senior partner of Cavendish plc, the largest nominated adviser to listed companies on the stock exchange. We asked our clients why they are going to America. They give us two reasons: the multiples are higher in America—so be it—and the net remuneration package. Both founders of Wise and many directors of AstraZeneca were born abroad. The non-dom rules are driving away entrepreneurs in droves. This is why many companies are choosing to list abroad. We know that Labour is going to change its policy on non-dom tax—it is not a question of if; it is a question of when. Can I implore the Minister to speak to Treasury to make it as soon as possible?

[Lord Livermore (Lab)]

I commend the noble Lord for knowing more about government policy than I do. He talks about those companies listing abroad. It is interesting, just to look at some evidence, that IPOs on US exchanges show that non-US companies tend to perform much less well than US ones, suggesting that from a valuation perspective it is better for firms to list on their home market. In the last 10 years, of the 20 British companies that listed in the US, nine have already delisted, only four are trading above their IPO price and the rest are trading down on average by 80%.

Financial Services and Markets Act 2000 (Regulated Activities etc.) (Amendment) Order 2025

Lord Livermore Excerpts

Thursday 10th July 2025 Lords Chamber

Moved by

[Lord Livermore]

That the draft Order laid before the House on 19 May be approved.

Relevant document: 28th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument). Considered in Grand Committee on 7 July.

Motion agreed.

Government Performance against Fiscal Rules

Lord Livermore Excerpts

Tuesday 8th July 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, we on these Benches accept that fiscal rules are important, and we have noted the Government’s attachment to the current version and the widespread concern as to where they will turn for spending cuts or tax rises, as it is apparent that the rules are not going to be met. Today’s OBR Fiscal Risks and Sustainability report concludes:

“The UK’s public finances have emerged from a series of major global economic shocks in a relatively vulnerable position”.


We have heard from the OBR that the UK Government have the sixth-highest debt, the fifth-highest deficit and the third-highest borrowing costs among 36 advanced economies. In November, the Chancellor wrote to the Economic Affairs Committee in response to its robust and convincing report on the UK’s national debt. She said:

“The Budget took the necessary difficult decisions to put the public finances on a sustainable path—setting realistic plans for public spending while raising revenue—to create the conditions for growth”.


In the light of the dismal and depressing OBR report, does the Minister agree that this Statement and the Government’s entire economic strategy are in tatters and that the Chancellor needs to write another, more realistic letter?

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

The noble Baroness mentions many things. She mentions debt. Of course, the last Government doubled the national debt. There is one reason why we are where we are. It is because of the last Government losing control of the economy—something that this Government will not do. We will meet our fiscal rules at all times. I am not going to give a running commentary on those fiscal rules. Following the usual process, the Chancellor will ask the OBR to produce a new forecast in the autumn for the annual Budget, which will include an updated assessment of the Government’s performance against the fiscal rules. At that time, we will set out our fiscal plans in the usual way.

[Baroness Kramer (LD)]

My Lords, the Government have constantly asserted that meeting the fiscal rules is non-negotiable. Will the Minister now reassure the House that protecting the NHS and social care is also non-negotiable, and rule out any cuts to those services as the Government try to balance the books? Will he also accept that raising employers’ NICs, especially on small businesses, is actually holding back growth? Will he look instead at what we recommended—raising taxes on the broadest shoulders of the social media giants, the gambling companies and the big banks—to consider some proper relief and support for those small businesses?

[Lord Livermore (Lab)]

I normally try to agree with the noble Baroness, but that is one of the most extraordinary questions I have heard in these debates. She says that we should protect the NHS and then says that we should not have the main measure that is funding the NHS. If she wants the investment in the NHS, she has to stand up for the taxes that fund the NHS.

[Viscount Hailsham (Con)]

My Lords, on the fiscal rules, may I suggest the following? First, the welfare budget is far too high and must be substantially reduced. Secondly, economic growth is the only way out of our present mess. Thirdly, heaping taxes on primary wealth producers is highly counterproductive. Fourthly, if additional taxes must be imposed, they are best imposed generally, so that most people can understand the consequences of the policies they support.

[Lord Livermore (Lab)]

I may have agreed with the first half of the noble Viscount’s question; I am not sure I agreed with the second half of it. But, absolutely, the best way to repair the public finances is through economic growth. That is why it is our number one mission.

[Lord Clarke of Nottingham (Con)]

My Lords, since the 2008 financial crisis, this country has built an unsustainable level of public debt in relation to our GDP, and the cost of servicing that debt is a serious constraint on financing public services. Does the Minister agree that any easing of fiscal rules in those circumstances would run a serious risk of creating another financial crisis, with more hardship? Will he undertake to stick firmly to the rather lax fiscal rules we have, as the Chancellor keeps affirming, and try to put up more stalwart resistance to the left-wing Back-Benchers in his party who seem to have got into the House of Commons in rather considerable numbers?

[Lord Livermore (Lab)]

I slightly disagree with the noble Lord’s characterisation of the Parliamentary Labour Party, but I certainly agree with what he says about the fiscal rules. They are essential to maintaining our ability to invest in our public services. The second fiscal rule absolutely allows the additional investment into our public services, but, as he says and as I have said before, the previous Government doubled the national debt, and we have to fund that. The more that it looks like we will not, the harder it becomes. I give him that undertaking. Our commitment to the fiscal rules is non-negotiable.

[Lord Razzall (LD)]

My Lords, does the Minister agree that the original purpose of the change in the fiscal rules brought in by his Government was to ensure that we did not have a ball-by-ball commentary, every time there was the remotest whiff of a financial crisis, on whether or not the fiscal rules were being observed? As I understood it, there was going to be a five-year look at the fiscal rules, but, as things stand, it appears that we are going to be subjected constantly to the noble Baroness’s question about whether the Government is complying with them. I thought the whole point about these rules, as they stand, was that that question was unnecessary.

[Lord Livermore (Lab)]

There are two things here: the fiscal framework and the fiscal rules. On the fiscal framework, we have moved to one fiscal event a year, which is the November Budget. There are two fiscal forecasts, in the spring and in the autumn. The noble Lord is absolutely right: we should not give a running commentary on the fiscal forecast. That is, quite properly, for the Office for Budget Responsibility to do. It will do that in the usual way ahead of the annual Budget, and then the Chancellor will make decisions based on that forecast.

The noble Lord talks about the fiscal rules. The one thing I will say is that the changes to the fiscal rules that we made when we came into office were to enable us to invest sustainably in infrastructure and in public services, to stop the cannibalisation of investment to patch up day-to-day spending which we saw under the previous Government. It is interesting that the party opposite has opposed that change to the fiscal rules yet still supports the additional investment that that changed fiscal rule brings. Again, I am not sure that that is entirely consistent.

[Lord Watts (Lab)]

My Lords, will the Minister rule out following the example of the Truss Government, who crashed the economy? Has he received an apology for being left such a sad state of affairs in the economy that we have inherited?

[Lord Livermore (Lab)]

My noble friend is absolutely right. It is exactly because of the experience of the previous Government—that disastrous Liz Truss mini-Budget, which saw mortgage rates spiral and from which working people are still suffering higher mortgage payments—that it is so important that we maintain fiscal responsibility and why we absolutely continue to adhere to our fiscal rules.

[Lord Willetts (Con)]

My Lords, today’s OBR report shows that the cost of the pensions triple lock is running three times higher than previously forecast. It is costing over £10 billion a year, and we now know that pensioners, on average, enjoy higher living standards than working-age families. If tough decisions have to be taken to meet the fiscal rules, will the pensions triple lock be reviewed?

[Lord Livermore (Lab)]

I know that that is the policy of the noble Lord’s party; it is not the policy of this party. The OBR fiscal risks report talks about an ageing population and how that presents significant fiscal challenges in supporting pensioners. The landmark pensions review, in terms of delivering better outcomes for savers and strengthening the economy, is important in that regard.

[Lord West of Spithead (Lab)]

My Lords, does my noble friend the Minister agree that, if we get defence policy wrong and there is a war, welfare and the National Health Service will count for nothing?

--- Later in debate ---

[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.

[Lord Garnier (Con)]

My Lords, I think the public are getting a bit bored of the mantra of blaming the previous Government—that is a long time ago now.

[Lord Garnier (Con)]

What are the current Government going to do about the current problem?

[Lord Livermore (Lab)]

I do not think the public are getting bored of it. The noble and learned Lord may be getting bored of it, perhaps because he is slightly sensitive about it. If he thinks that 14 years of crashing the economy can be undone in one year, he is living in cloud-cuckoo-land. This Government will stick to their policies and grow the economy.

Unpaid Tax

Lord Livermore Excerpts

Monday 7th July 2025 Lords Chamber

[Baroness Alexander of Cleveden]

To ask His Majesty’s Government how much tax they estimate is unpaid each year, and what steps they are taking in response.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, the tax gap is estimated to be 5.3% of total theoretical tax liabilities. At the Budget last year, the Chancellor announced the most ambitious package ever to close the tax gap. The Government then built on this at the Spring Statement, setting out plans to make it easier for taxpayers to pay the right amount of tax for a modern and digital tax system. These measures will raise an additional £7.5 billion of tax revenue each year by the end of the Parliament.

[Baroness Alexander of Cleveden (Lab)]

I thank the Minister for his Answer. He will be aware that in May the National Audit Office reported on collecting the right tax from wealthy individuals. It noted that

“underlying levels of non-compliance among the wealthy … could be much greater”

than anticipated and that, based on the most recent figures available, HMRC’s “wealthy team” devoted just 5% of its casework to investigating offshore non-compliance. Given that, what timelines will the Government set for HMRC for tackling non-compliance by the wealthy, particularly surrounding offshore assets?

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble friend for her question. As part of the action we are taking to close the tax gap, HMRC is recruiting an additional 5,500 compliance officers by the end of the Parliament; 400 of them will work specifically on wealthy offshore risks. HMRC has also created a new team focused specifically on tackling offshore non-compliance cases and is expanding its counterfraud capability, targeting those who facilitate wealthy individuals hiding money offshore. In the report that my noble friend mentions, the National Audit Office recognises that this Government are scaling up compliance activity to tackle serious offshore non-compliance and have committed further funding to do so. Looking ahead, we will take further action to close the tax gap; we have published consultations on strengthening HMRC’s ability to act against tax advisers who facilitate non-compliance and to close in on promoters of marketed tax avoidance. Finally, my noble friend asked about timescales. We will set out further plans in the Budget and will shortly publish a road map setting out HMRC’s strategic ambitions and the transformation required to achieve them.

[Lord Leigh of Hurley (Con)]

My Lords, I welcome the Minister’s response—heaven knows, after last week the Government will have to raise a hell of a lot of tax to compensate for the extra expense they are incurring. On offshore tax avoidance, he will be aware that 3 million parcels a week arrive in the UK from offshore suppliers containing goods below £135 in value and therefore exempt from VAT. It is estimated that roughly £1 billion of additional VAT—that is not even in the tax gap—could be recouped. A number of actors, including RAVAS, have ideas on how to cure this. Will the Minister agree to a meeting with the Treasury and HMRC, which keep batting us away, to discuss how we can stop this tax gap?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I know that he has been in touch with my colleague the Exchequer Secretary to the Treasury and has discussed having a meeting. I am sure that he will be in touch in due course.

[Baroness Kramer (LD)]

My Lords, this is Whistleblowing Awareness Week. The Minister will know that HMRC, in its attempts to claw back large amounts of tax fraud, has announced a new scheme of rewards and incentives to bring whistleblowers into discussion with HMRC and to pursue fraudsters. However, there has been very little information about the structure around this, the mechanisms in place and the portals. Can he update us on what is meant to be the central pillar of the new attack on fraud?

[Lord Livermore (Lab)]

No. I am grateful to the noble Baroness for making me aware of the awareness week. She says that this is the central pillar of our strategy; it is one of them. Most importantly, we are recruiting an additional 5,500 compliance officers, which is the central piece in what we are seeking to achieve. On updates, if there is anything further to say, I will be happy to write to her.

[Lord Londesborough (CB)]

My Lords, back in February the Public Accounts Committee accused HMRC of not being

“sufficiently curious about the true scale of tax evasion”

in this country, suggesting that the tax authority’s estimate of £5.5 billion a year may be a significant underestimate. Does the Minister share the committee’s concern?

[Lord Livermore (Lab)]

After the measures we took in the Budget and the Spring Statement, no one could possibly say that we are not sufficiently resourcing the fight against the tax gap. As I said in my original Answer to my noble friend, the National Audit Office recognises in its report that this Government are scaling up compliance activity to tackle serious offshore non-compliance and have committed further funding to do so. It also recognises many of the measures we are taking, including, as I said earlier, significant additional investment in compliance officers by the end of the Parliament. The noble Lord will recognise that this is the most ambitious package to close the tax gap ever; we have committed an additional £660 million each year for measures to do so and by the end of the Parliament we will raise an additional £7.5 billion a year.

[Lord Watts (Lab)]

My Lords, is it not disgraceful that some of the richest people in Britain get honours despite registering for tax purposes in places such as Monaco? As well as that, they are usually first in the queue for tax payouts if they want a subsidy for their business. Is it not time that we took a tougher line on these freeloaders?

[Lord Livermore (Lab)]

I do not think the honours system is for me to comment on. The noble Lord will be pleased to know that we are taking the action I have already described, and we also intend to take further action to close the tax gap. At the Spring Statement, we published consultations on a wide range of issues, including widening the use of third-party data to help HMRC reduce error; strengthening HMRC’s ability to act against those tax advisors who facilitate non-compliance; and closing in on promoters of marketed tax avoidance.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, will the Minister give us an assurance that the Treasury will pursue Members, former Members and Members on leave of absence from this House with the same vigour as it pursues everyone else? In relation to one notorious tax dodger, will the Treasury accept the cash delivered in a JCB?

[Lord Livermore (Lab)]

It is not for me to comment on individual tax affairs, but of course HMRC will treat every taxpayer fairly.

[Lord Wallace of Saltaire (LD)]

My Lords, in pursuing tax evasion, the question of information from our dependent territories is key. There was an agreement between the Treasury and the dependent territories on the provision of fuller information about ownership of assets there as they relate to tax evasion here. We are well aware that a number of dependent territories— particularly the British Virgin Islands—have not yet implemented that agreement. Are the British Government pushing them to do so?

[Lord Livermore (Lab)]

Yes, those discussions are ongoing.

[Baroness Neville-Rolfe (Con)]

My Lords, at the end of 2024, it was reported that HMRC injected an extra £300 million into its compliance and fraud operations. Estimates suggest that these teams now have nearly 28,000 staff—which probably includes some of the 5,500 the Minister mentioned. What is the estimated cost benefit of this significant investment? Will the Minister agree to report to Parliament on the cost and on the tax actually recovered on a regular and consistent basis? We all want to see the success of this initiative.

[Lord Livermore (Lab)]

We have committed an average of £660 million each year on measures to do so. By the end of the Parliament, that will raise an additional £5.7 billion per year. That is quite a good cost-benefit ratio. Each Budget will report progress against that.

[Lord Sikka (Lab)]

My Lords, between 2010 and 2024, HMRC failed to collect around £500 billion of tax. I therefore welcome the additional investment, but I am really concerned about the trajectory. Page 95 of the spending review shows that the HMRC budget for 2025-26 is to be £6.8 billion, rising to £7.3 billion for 2026-27. After that, there is a real-terms cut: the budget will be £7.1 billion for 2027-28, and £6.9 billion for 2028-29. Does the Minister agree that a real cut to the HMRC budget is not conducive to a sustained fight against organised tax avoidance?

[Lord Livermore (Lab)]

What is conducive is the most ambitious package ever to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30 and an additional £1 billion as a result of the measures in the Spring Statement. The spending review fully funded HMRC to deliver on those commitments.