Budget: Small and Medium-sized Businesses

Lord Livermore Excerpts

Thursday 27th November 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the effect of the Budget on small and medium-sized businesses.

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

My Lords, yesterday’s Budget rejects austerity, instead building a strong and secure economy—

[Noble Lords]

Hear, hear!

[Lord Livermore (Lab)]

It does this by cutting the cost of living and reducing inflation, cutting NHS waiting lists and cutting government borrowing every year so interest rates keep falling. For small and medium-sized businesses, the Budget supports high streets with permanently lower tax rates for 750,000 retail and hospitality properties, backs entrepreneurs by doubling eligibility for tax breaks that make it easier for fast-growing start-ups to scale and stay in the UK, makes the training for under-25 apprenticeships completely free for SMEs and maintains the lowest rate of corporation tax in the G7.

[Lord Leigh of Hurley (Con)]

My Lords, yesterday was the benefits Budget. The Chancellor has broken her promise not to increase income taxes. As she said in her Budget, because no national insurance is charged on dividend income, she will increase the income tax on dividends. Does the Minister think that she understands that national insurance is on employed income, for which an employee is paid a risk-free salary, but SME dividends are the reward paid to people who take a risk and invest in their own business to help the business grow? For some reason—perhaps he can explain—she failed to put national insurance on the huge incomes of lawyers and others in LLPs. Does he share my concern, and that of many others in the UK, that she has no understanding whatever of basic economic principles such that she does not understand the difference between salary and dividends that SMEs get for return on capital?

[Lord Livermore (Lab)]

Unsurprisingly, no, I do not agree with the noble Lord. He will remember that, in the last five years of the previous Government, spending on welfare increased by £88 billion. The Government are taking action to ensure income from assets is taxed fairly, narrowing the gap between taxes paid on work and tax paid on income from assets. Those with dividend income pay considerably less tax than those whose income comes from employment or self-employment, as they do not pay national insurance contributions. It is not fair that the tax system treats different types of income so differently, so tax on dividend income will increase by two percentage points. Over 90% of UK taxpayers do not pay dividend tax.

[Lord Pitkeathley of Camden Town (Lab)]

My Lords, we know the vital role that the start-up community, and innovation within it, plays in our economy and its future growth. Would my noble friend talk a little bit more about what the Chancellor did yesterday to help that sector with its scale and stay agenda? Also, declaring an interest as a member of the London Partnership Board, and perhaps playing the Millwall card, may I ask my noble friend to acknowledge the role that London is playing in bearing a share of the burden again that is perhaps disproportionate?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for what he says about the action we took to help scale-up businesses in the UK. As many noble Lords will know, the UK is already a great place to start a business, but our companies are not scaling at the same rate as their US peers and raising less at later-stage investment. As a result, UK companies are either acquired, fail, or choose to go abroad to raise that investment. We will change that and make the UK the best place to start, scale and stay, because today’s fast-growing firms are tomorrow’s engine of jobs and growth. We are doubling the eligibility of our enterprise tax incentives, investing billions of pounds in public capital and delivering reforms to boost the attractiveness of the UK markets, making sure that those companies can access the capital and the talent that they need to succeed in the long term.

[Lord Fox (LD)]

My Lords, I am sure the Minister and I will agree that the best way of helping businesses of all sizes is for there to be growth—meaningful growth—over the period. Given the words of the OBR boss, Richard Hughes, this morning on the “Today” programme that none of the measures in this Budget will lead to growth, it is very clear that the OBR does not rate the trade deals, investments in Heathrow or any of the measures as delivering growth over the period covered by the Budget. Where will the growth come from?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. The OBR has upgraded Britain’s growth forecast for this year from 1% to 1.5%, reaching the same conclusion as the IMF, the OECD and the Bank of England, which have already upgraded their growth forecasts. We were the fastest-growing economy in the G7 for the first half of this year, and we are on course to be the second fastest for the year as a whole. He is right that the OBR has looked back at the previous decade and concluded that policies such as austerity and Brexit have weakened the economy more than previously thought, and that assessment then directly impacts its view of GDP for the remainder of the forecast period, but the past does not have to determine the future, and we will go further and faster with our growth mission. We are cutting inflation and cutting borrowing every year of the forecast so that interest rates can keep falling, giving businesses the confidence to invest; we are maintaining public investment to build critical infrastructure; and we are backing our fastest-growing companies. We beat the growth forecasts this year, and we will beat them again.

[Lord Tyrie (Non-Afl)]

Well, it is goodbye Budgets for growth and hello tax and spend, is it not? When Ministers are forced back just to reading scripts—completely unedited, as far as I can tell—we get a gist of the sense of lack of authority behind some of the remarks that have just been made. Budgets used to have detailed studies of incentive effects attached to them. Could the Minister tell us, and publish, any such studies of the incentive effects on small business growth for the tax measures in this Budget?

[Lord Livermore (Lab)]

The noble Lord was characteristically rude, but I will resist being rude back to him. There were very many measures—

[Lord Tyrie (Non-Afl)]

Could the Minister possibly say where I have been rude?

[Lord Livermore (Lab)]

There were several measures to help businesses scale up. The enterprise management incentive scheme will be significantly expanded and made available to more companies. Enterprise investment scheme investment limits and gross asset thresholds will be doubled, and venture capital trust investment limits and gross assets thresholds will also be doubled. The Government will obviously publish impact assessments for all those measures.

[Baroness Elliott of Whitburn Bay (Lab)]

My Lords—

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[Baroness Elliott of Whitburn Bay (Lab)]

My Lords, I welcome the news of free apprenticeships for under 25s in small and medium-sized enterprises. This is good news for young people and businesses. What impact does the Minister think it will have on the number of people coming into apprenticeships in those arenas?

[Lord Livermore (Lab)]

I am grateful to my noble friend for her support for what we announced yesterday in terms of apprenticeships. We are investing £1.5 billion over the spending review period for investment in employment and skills support, including £725 million for the growth and skills levy to help support apprenticeships for young people and to fully fund SME apprenticeships for under-25s. We will also introduce new reforms to simplify the apprenticeship system and make it more efficient when short courses are introduced from April 2026.

[Baroness Neville-Rolfe (Con)]

My Lords, as someone who champions SMEs and regularly has my amendments rejected by the Government, I welcome some of what the Minister has set out. It will, however, be offset by the increase in dividend tax, which has been mentioned, and the negative effect of wider tax increases. Our main disappointment with the Budget, as has already been said, is the disappearance of growth as the principal objective, with no significant positive impact by 2030 according to the OBR. Does he agree that this neglect is particularly bad for SMEs, and can he answer the two questions on the overall impact of the Budget on SMEs now?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. No, I do not accept that the Budget is bad overall for growth and for SMEs. As I have said, the OBR has upgraded Britain’s growth forecast for this year from 1% to 1.5%. The noble Baroness’s policy of going back to austerity and cutting spending by £47 billion would be exactly the wrong thing to do at this point for growth. We need to maintain investment in our economy. In this Budget, we are cutting inflation, cutting borrowing every year of the forecast and keeping interest rates down. We are maintaining higher levels of public investment for decades, building houses, roads, railways and energy infrastructure, and backing our fastest-growing companies. She mentioned growth. She may have seen this morning that JP Morgan, the global investment bank, announced a $10 billion investment in the UK with its intention to build its new landmark tower in London. Jamie Dimon, the CEO, said:

“The UK Government's priority of economic growth has been a critical factor in helping us make this decision”.

[Baroness Bowles of Berkhamsted (LD)]

If the Government are supporting scale-ups and start-ups, what do they think about the fact that every single start-up and scale-up, even those very successful at fundraising, has been eliminated from the Department for Transport’s recent procurement framework and that they were asked to provide indemnities if they were to participate? How does that measure up with HMT asking regulators and the private sector to take more risk and not doing so itself? How do they get value out of the investment that they are putting in if it is not followed up with routes to revenue?

[Lord Livermore (Lab)]

The noble Baroness is absolutely right about the importance of procurement to scale-up firms; I completely agree with her on that point. As part of the announcements that we made yesterday, we said that the Government will act as a better early customer to help UK firms prove commercial potential, including through a new innovation marketplace to fast-track strategically important firms into public procurement.

Forthcoming Fiscal Changes

Lord Livermore Excerpts

Tuesday 25th November 2025 Lords Chamber

[Baroness Altmann]

To ask His Majesty’s Government what assessment they have made of the impact on the economy, businesses and individuals of Ministerial comments which have been interpreted as suggesting forthcoming fiscal changes.

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

My Lords, the Chancellor will deliver the Budget tomorrow. She has rightly been clear with the country about the challenges we face and the need to deliver stability in the public finances. The Budget will build more resilient public finances to withstand global turbulence. It will reduce inflationary pressure in the economy and get the cost of living down. It will protect the NHS and public services from a return to austerity, and it will support growth and innovation. I will not comment on individual measures ahead of the Budget.

[Baroness Altmann (Non-Afl)]

My Lords, I thank the Minister for his Answer. I have the upmost respect for him and believe he has acted commendably ahead of this Budget. He has been left in the position of having to issue constant denials by an approach from his colleagues which has damaged the economy, businesses and individuals. The Government are supposedly pro-business, pro-wealth creation and pro-growth. Other Ministers should not have been speculating and could have issued the kinds of robust denials the Minister has issued—much to the frustration of this House, I understand, and difficulty for himself. I would like to put on record that the communications have been shambolic and unnecessary.

Does the Minister agree with his right honourable friend the Secretary of State Peter Kyle, who said that we are in a “growth emergency”? If so, does he believe the policy change pitch rolling, constant kite flying, and policies that are withdrawn, brought back and then changed, help business or individuals planning their lives? Businesses have put investment on hold. Individuals have rushed to take money out of their pensions. I urge the Minister to urge his department in future not to engage in the same kind of speculation and kite flying ahead of Budgets that we have seen now.

[Lord Livermore (Lab)]

I am most grateful to the noble Baroness for her question. As she knows, I am not going to comment on the ongoing Budget process, which will conclude tomorrow when the Chancellor delivers her Budget. She asked about growth. Growing the economy, and supporting businesses to create jobs and innovate, will be absolutely central to tomorrow’s Budget alongside protecting our NHS and public services from a return to austerity, improving the cost of living, doing what is necessary to protect families from high inflation and interest rates, and keeping debt under control.

[Baroness Kramer (LD)]

My Lords, can the Minister tell us whether there are any significant measures in the Budget which have not been announced in advance or leaked? I would invite him to mention them to us, then he can have a clean slate.

[Lord Livermore (Lab)]

The noble Baroness need only wait 22 hours and then she will know for herself.

[Lord Hayward (Con)]

My Lords, according to opinion polls, the public at large in this country think that Rishi Sunak was a better Chancellor of the Exchequer than the current one by a ratio of over 2:1. Does the Minister agree with the public at large?

[Lord Livermore (Lab)]

Why do we not just compare their records? Where the previous Government delivered the slowest projected growth in the G7, growth in the first half of this year was the fastest in the G7. Where they presided over the worst Parliament ever for living standards, living standards have increased by 2.1% since the election. Where they oversaw the worst pay growth in a century, real wages grew more in the first 10 months of this Government than in the first 10 years of the previous Government. Where they continually cut capital spending and deterred investment, we are investing for the long term, with £120 billion extra over the next five years. We will continue to rebuild the economy after 14 years of failure from the party opposite.

[Lord Hintze (Con)]

My Lords, why does the Minister never look at GDP growth per head?

[Lord Livermore (Lab)]

I do, and that is rising too.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, does the Minister consider that, apart from him, the days of trying to avoid government-induced market glitches are history? Do the Government and Chancellor think that markets will cease to be responsive or that investors will not go elsewhere as they have done for other countries exhibiting inconsistency?

[Lord Livermore (Lab)]

As the noble Baroness knows, and as I think I have made clear, I am not going to comment on speculation ahead of the Budget, neither am I going to comment—I never do—on market movements.

[Lord Bridges of Headley (Con)]

My Lords, the Minister just said that the Budget tomorrow will be focused on protecting our NHS, reducing our national debt and improving the cost of living, which the Chancellor has said in one of her many scene-setters are the priorities of the British people. However, back in May, the Prime Minister said that the Government

“see security and defence not as one priority amongst many others but as the central organising principle of government – the first thought in the morning – the last at night. The pillar on which everything else stands or falls”.

Therefore, why is not defence one of the priorities, or has No. 11 not yet got the memo?

[Lord Livermore (Lab)]

I know that the noble Lord thinks that his question is terribly clever, but it is perfectly possible for the Government to have ongoing priorities and for there to be specific priorities for this Budget. Those two things are not in any way contradictory. He will see what we have to say about defence in the Budget tomorrow; likewise, he will see what we have to say about the NHS, growing the economy and the cost of living.

[Lord Blunkett (Lab)]

Does my noble friend agree that the investment in Sheffield Forgemasters, and through BAE Systems in other aspects of defence procurement in Sheffield, has substantially improved the growth prospects, job prospects and prosperity of the people of my city?

[Lord Livermore (Lab)]

I 100% agree with my noble friend. Defence spending and growth go hand in hand. We will see far higher levels of growth in our economy as a result of the investment we are putting into our defence industry and increasing the security of our country.

[Lord Fox (LD)]

My Lords, looking back rather than forward, it is quite clear that UK business cannot take another Budget like the last one. I was reminded by the introduction of our new and very welcome Peer of the apocryphal medical ethical oath. Could the Minister please carry back to the Chancellor one thing: do no harm?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for that. As he knows, I am not going to comment on specific measures or any speculation ahead of the Budget. I have set out clearly what our priorities are for tomorrow’s Budget; he will just have to wait a few more hours until he finds out for himself.

[The Earl of Clancarty (CB)]

My Lords, how much do the Government now blame Brexit for the black hole?

[Lord Livermore (Lab)]

As the noble Earl knows, alongside the Budget tomorrow, the Office for Budget Responsibility will set out the conclusions of its review of the supply side of the UK economy. I will not pre-empt those conclusions, but it is likely that the OBR will downgrade its historic assessment of the UK’s productivity and find that the productivity performance we inherited from the last Government is weaker than previously thought. The causes of this economic underperformance are well understood: austerity, Brexit and the Liz Truss mini-Budget have left deep scars on the British economy that are still felt today.

[Baroness Neville-Rolfe (Con)]

My Lords, one of the main objectives of the Treasury, as stated on its own website, is to:

“Ensure the stability of the macro-economic environment”.


Few people believe that this stability objective has been achieved in recent weeks, which have instead been characterised by presentational chaos. As my question is not a Budget question, does the Minister agree?

[Lord Livermore (Lab)]

The noble Baroness talks about stability and chaos; let us talk about 14 years of chaos. First, there was austerity, which took demand out of the economy at exactly the wrong moment, cutting investment and undermining the economy’s ability to grow. Then we saw a disastrous and tragically misjudged Brexit deal, which imposed new trade barriers equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services, reducing total trade intensity by 15% and permanently reducing GDP by 4 percentage points. Finally, the Liz Truss mini-Budget crashed the economy and sent mortgages soaring by £300 a month. We on this side will take no lessons from the party opposite on how to manage the economy.

[Lord Harper (Con)]

My Lords, the noble Lord, Lord Fox, simply asked whether the Minister could rule out doing harm in the Budget—he did not ask about lots of specific measures—so let me ask him again: can he just rule out the Budget doing harm to British business?

[Lord Livermore (Lab)]

As I have said already, I am not going to comment on individual measures ahead of the Budget.

[Lord Pannick (CB)]

Can I ask the Minister a question of facts and not speculation? Will he confirm that Ministers and officials have been floating possible Budget proposals over the last few weeks?

[Lord Livermore (Lab)]

As the noble Lord well knows, I am not going to comment on the ongoing Budget process, which will conclude tomorrow when the Chancellor delivers the Budget.

Budget: Press Briefings

Lord Livermore Excerpts

Tuesday 18th November 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, two weeks ago the Chancellor held an unprecedented press conference at Downing Street. As a result, everyone believed that income tax rates would be increased in the Budget. However, last Friday, the Financial Times, obviously briefed by Downing Street, said that this plan had been scrapped, leading to an instant increase in bond rates and debt servicing costs. Has the Treasury launched an investigation into the source of this and related leaks? If not, why not? Is it that the source of such leaks is all too obvious—the noble Lord’s political friends?

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

I am grateful to the noble Baroness for her question. She claims that it is unprecedented for a Chancellor to comment on the economic situation ahead of a Budget. I do not think it is in any way unusual; there is always speculation ahead of it. As she knows, I am not going to speculate on the next Budget now or comment on any individual tax measure, nor will I comment on the ongoing Budget process. The Chancellor has asked the OBR to produce a new forecast. The OBR and the Treasury exchange information throughout the forecast process, which is usual practice, established over many years. The Chancellor will then take decisions based on that forecast and set out our fiscal plans in the Budget. She has been very clear that the Budget will protect the NHS, reduce the cost of living and reduce the national debt. We will continue to rebuild the economy after 14 years of failure from the party opposite.

[Baroness Kramer (LD)]

My Lords, the country was led up the hill and then marched right back down again. Does the Minister recognise that this sort of kite-flying is really undermining confidence in the comments that anybody now makes from the Treasury Benches? Does he accept that, although bond yields steadied a few days after flurrying, with that flip-flop and change in policy, we still find ourselves paying over the odds for issuing gilts, largely because markets are so uncertain about the direction of public finances? Steadying and calming surely ought to be the order of the day.

[Lord Livermore (Lab)]

The noble Baroness says that comments from the Treasury Benches create uncertainty and then invites me to comment, so I shall not do that. I shall not comment on bond yields as she asks me to do; as she knows, I never do. I will not comment on the ongoing Budget process or on speculation on individual tax measures.

[Lord Harper (Con)]

My Lords, it is not good enough for the Minister to talk just about speculation, as his colleague did in the House of Commons. This comment was driven, first, by the Chancellor’s speech, which was not about economic policy but specifically about the Budget, and then by the interview that she did on Matt Chorley’s programme, specifically on the Budget. This information has been put into the public domain by Ministers. It has had real-world economic effects and it should stop.

[Lord Livermore (Lab)]

With the greatest respect to the noble Lord, I am not sure that it is for him to say what is and is not good enough. He expresses shock and horror that the Chancellor should comment on the Budget; that is somewhat overdone. It is perfectly in order for the Chancellor to comment on the Budget before, during and after it. As I say, I am not going to comment on the ongoing Budget process.

[Lord Moore of Etchingham (Non-Afl)]

My Lords, may I ask the Minister a question as a journalist? I wonder what happened to Budget purdah. For years, we journalists could never get anything out of the Treasury before the Budget approached. Nowadays, we print story after story that the Government have kindly given us, then we print the contradictions to those stories which the Government have also kindly given us. That seems to be of great benefit to our headlines but of very little benefit to the country. Is the Minister planning to bring a return to purdah?

[Lord Livermore (Lab)]

The noble Lord is far more experienced in these matters than I am, but he will know very well that there is always speculation ahead of a Budget. I do not think there is anything unusual about that. I am slightly unclear whether I am being told that speculation is wrong or being invited to speculate. As I have been clear, I am not going to comment on the Budget process, on speculation ahead of the Budget or on any individual tax measures.

[The Lord Bishop of Hereford]

My Lords, over the last few months not only have the bond markets been affected by this speculation, but people have made life-changing financial decisions, in part fuelled by speculation rooted in private government press briefings. These decisions may prove to be unwise when the Government’s actual decisions are revealed. Have the Government considered other, less damaging means of gauging public opinion than fishing through the media?

[Lord Livermore (Lab)]

The right reverend Prelate says that the Government are the source for this speculation when he has no such evidence for that. I am not going to comment on the ongoing Budget process, as I say, nor on the speculation that is perfectly usual ahead of a Budget.

[Lord Watts (Lab)]

My Lords, is the Minister surprised at the criticism that has come from the Opposition Benches about leaks when, in the past, leaks went as widely under any previous Government as under this Government? Is he surprised to hear criticism about the impact on the bond markets after we have had one of the worst times, financially, as mismanagement by the previous Government caused a crash in the market?

--- Later in debate ---

[Lord Livermore (Lab)]

My noble friend is absolutely right to say that there is always speculation ahead of a Budget. As he knows, I am not going to comment on the bond markets, but he is right to point out that the Liz Truss mini-Budget crashed the economy and sent interest rates soaring.

[Lord Bridges of Headley (Con)]

My Lords, on 10 November, the Chancellor said on BBC Radio:

“It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending”.


Does that statement still stand?

[Lord Livermore (Lab)]

As I have said, I am being told by noble Lords opposite that speculation is wrong and now the noble Lord is asking me to speculate. As I have made very clear, I will not be commenting on individual tax measures.

[Lord Scriven (LD)]

My Lords, does the Minister agree with his colleague, the Chancellor of the Exchequer, who, when she was shadow Chancellor, said that teasing major policy shifts can create market uncertainty and should be avoided?

[Lord Livermore (Lab)]

As a general principle, I always agree with my right honourable friend the Chancellor of the Exchequer. As I said already, I am not going to comment on the ongoing Budget process.

[The Earl of Effingham (Con)]

My Lords, the Minister mentioned October 2022 in his previous response, so I ask him: is the yield on the 30-year UK government bond higher now than it was in October 2022?

[Lord Livermore (Lab)]

The noble Earl knows full well that I will not be commenting on the movements of bond markets.

[Baroness Penn (Con)]

I will not ask the Minister to comment on bond markets or to speculate. I will simply ask him whether he agrees with himself when he told this Chamber last year that a freeze on income tax thresholds would be a tax rise on working people costing them billions of pounds.

[Lord Livermore (Lab)]

The noble Baroness did exactly what she said she would not do and asked me to comment on individual tax measures—something she knows that I am not going to do.

[Lord Murray of Blidworth (Con)]

Mr Sam Coates on Sky News said that this Budget had “unravelled” before it had been given. Does the Minister agree?

[Lord Livermore (Lab)]

As I have said several times already, I am not going to comment on the ongoing Budget process.

[Baroness Foster of Oxton (Con)]

My Lords, following the Chancellor’s climb-down on increasing income tax, £27 billion was wiped off the FTSE 100 on Friday. Does the Minister think that that was helpful?

--- Later in debate ---

[Lord Livermore (Lab)]

As I have said already, I am not going to comment on the ongoing Budget process.

[Baroness Fox of Buckley (Non-Afl)]

No one was speculating until the Chancellor raised the subject of income tax. Does the noble Lord take the public for fools by thinking that there is nothing to see here, when we can all see that there is something to see here? Secondly, if any of the public are looking at these Questions, does the Minister think that this behaviour in answering the last two questions is likely to engender trust in politicians or undermine it?

[Lord Livermore (Lab)]

The answer to the noble Baroness’s first question is no. On her second question, I am not going to comment on the ongoing Budget process. There is always speculation ahead of a Budget and it is quite right that I do not comment on any individual tax measures.

[Baroness Jones of Moulsecoomb (GP)]

Does the Minister understand that he has to answer questions and not just butt them away?

[Lord Livermore (Lab)]

Yes.

[Lord Weir of Ballyholme (DUP)]

My Lords, given the answer that the Minister has given on a number of occasions that he is not prepared to comment or speculate, could he perhaps outline to the House which matters he is prepared to comment on?

[Lord Livermore (Lab)]

That would be quite a long and exhaustive list. Right now, I am not prepared to comment on individual tax measures, speculation ahead of the Budget and the ongoing Budget process.

[Lord Geddes (Con)]

Going back to a previous question, my noble friend behind me asked whether the noble Lord would comment on something that he had said. It was nothing to do with the Budget. Would the noble Lord please reply?

[Lord Livermore (Lab)]

I was asked to comment on individual tax measures, which is something that I said I would not comment on.

Inheritance Tax: Pensions

Lord Livermore Excerpts

Monday 17th November 2025 Lords Chamber

[Baroness Altmann]

To ask His Majesty’s Government what assessment they have made of the impact on bereaved families, confidence in pensions and future levels of pensioner poverty of proposals to impose inheritance tax retrospectively on unused pensions and death benefits.

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

My Lords, the Government continue to incentivise pension savings for their intended purpose of funding retirement. Most unused pension funds and death benefits payable from a pension will form part of a person’s estate for inheritance tax purposes from 6 April 2027. This removes distortions resulting from changes made over the last decade, which have led to pensions being openly used and marketed as a tax planning vehicle to transfer wealth, rather than to fund retirement.

[Baroness Altmann (Non-Afl)]

I thank the Minister for his Answer, but my Question was whether the Government have actually properly considered the real-world impact of these unworkable proposals. With its aim to hit the minority of wealthy pension owners, this policy could actually damage millions of less well-off families who will see a 40% cut in death benefits, especially if they are in a defined contribution scheme, much less so in defined benefit. A single parent with a house and children will lose out significantly. Does the noble Lord recognise that this retrospective confiscation without transitional protection undermines confidence in long-term planning, reduces long-term investment and will lead to more people rushing to take money out of their pensions quickly, just in case they may face the inheritance tax? This is especially the case if they can take out thousands of pounds a year at just 20%, which will mean more pensioners in future in poverty, despite the Government’s aim to get more people saving for a good pension.

[Lord Livermore (Lab)]

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

[Lord Davies of Brixton (Lab)]

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

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[Lord Livermore (Lab)]

I very much agree with the first part of my noble friend’s question. It is very important to state that the intended purpose of pension savings is to fund retirement. The Government continue to incentivise pension savings, with tax relief on both contributions to pensions and the growth of funds held within a pension scheme. These tax incentives are very significant, costing taxpayers £78 billion a year. It is therefore right, as my noble friend said, that it is important to ensure that these tax reliefs are being used for encouraging savings for retirement, rather than ordinary taxpayers subsidising the wealthy to pass on their wealth free of inheritance tax.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, does the Minister agree that it is an important principle of the tax system that tax reliefs, and therefore tax expenditures, should be tightly drawn? Does he also agree that the point of pension relief is to provide a pension in retirement, and therefore that pension savers should draw down their pension, rather than using it as a device to avoid inheritance tax and to improve the lot of their descendants, rather than themselves?

[Lord Livermore (Lab)]

I do agree with everything the noble Lord said. I enjoyed discussing these matters with him when he was a Treasury official and I was a special adviser. I probably learned a lot of this from him then, so I completely agree with what he said. To repeat, the purpose of pension savings is to fund retirement. If taxpayers are spending £78 billion a year on that, it is very important that it is used for its intended purposes rather than for estate planning, as the noble Lord says.

[Baroness Kramer (LD)]

My Lords, does the Minister agree that in real life, many people restricted their lifestyles, spending and gifting in order to build a sufficient defined contribution pension that could pay, if needed, for years in a care home—not knowing how long they would live or their health condition—and because they did not want to burden the state or their children? They now see that they were being gullible in believing the assurances that anything unused could go to their loved ones free of inheritance tax, and that the Government simply regard their sense of responsibility as rather stupid. What would the Minister say to those people?

[Lord Livermore (Lab)]

More importantly, what would I say to the noble Baroness? I would say that she is saying things that are completely misleading. As I have said already, estates will continue to benefit from all the normal nil-rate bands, reliefs and exemptions available, so an estate can pass on up to £1 million with no inheritance tax, and spouses are fully exempt from inheritance tax. It is also important to say that we have equal treatment here. There is equal treatment for inheritance tax purposes between pension and non-pension assets, and I think that is perfectly fair within the system.

[Baroness Neville-Rolfe (Con)]

My Lords, I speak as someone whose relatives have struggled for years, rather than months, in coping with the probate system, partly because of the problems caused by the inefficiencies of the probate office. Executors will not be able to deal with the extra complexity of adding pensions to IHT, particularly those with lots of small pension pots. My noble friend Lady Altmann, in her submission to our Finance Bill Sub-Committee, has suggested a simpler mechanism for dealing with this and raising the necessary revenue. Will the Government examine this sympathetically?

[Lord Livermore (Lab)]

I presume the noble Baroness is referring to the proposal of the noble Baroness, Lady Altmann, for a flat tax, and it is very interesting that she raises that. Currently, fewer than 10% of estates will have an inheritance tax liability. If you put a flat tax on all pensions, you are asking 90% of estates to pay more so that 10% of estates can pay less. I do not consider that to be fair.

[Lord Massey of Hampstead (Con)]

My Lords, interest charges for late payments of tax are charged at 8% per annum and apply to estates after six months. Does the Minister agree that, given potential complications in finalising and executing wills, six months is rather short and that a longer grace period of at least one year should apply before interest charges are levied?

[Lord Livermore (Lab)]

I understand the point that the noble Lord raises. As I understand it, six months is standard within the tax system.

[Lord Evans of Rainow (Con)]

My Lords, the Minister may recall that this time last year I asked a Question about pensioners who are coming up to the time when their pensions are ready to be drawn down, and they are looking forward to the 25% tax-free lump sum. Despite the noble Lord’s reassurances, thousands of pensioners took their pension early. Can the Minister reassure pensioners waiting to draw down their pension that there will be no changes to the 25% tax-free lump sum?

[Lord Livermore (Lab)]

I remember the noble Lord’s Question last year. As he knows, I will not speculate on the next Budget now or comment on individual tax measures ahead of time.

[Lord Forsyth of Drumlean (Con)]

My Lords, does the noble Lord accept the principle that it is wrong to raise any tax of any kind on people who do not have the cash to pay it?

[Lord Livermore (Lab)]

As I say, given that all the normal nil-rate bands will continue to apply, an estate can pass on up to £1 million with no inheritance tax. If you are leaving £1 million, you probably have the cash to pay the tax.

[Baroness Altmann (Non-Afl)]

My Lords, I fully agree with the noble Lord that pension funds should be used to fund retirement. The point is that this is a retrospective tax, because people have already put the money in and made long-term plans, of which now a significant proportion, and sometimes the majority, is being confiscated by HMRC if they are unlucky enough to die before they draw down. The worry is about people who are younger, not those who are deliberately avoiding taking their pensions. People die unexpectedly young, and their families will lose out and their death benefits will be cut. These are people who have made long-term plans. I am concerned about the impact on future pension savers, who will think, “The Government might just come and take this money away from me. I’m not going to invest it for the long run—pensions is just not something I want to bother with”, even if they would not eventually pay IHT. That is the problem and why I was suggesting a flat-rate levy, which can recover some of the tax relief given on unused pensions but still not impact the future confidence in pensions.

[Lord Livermore (Lab)]

All the points that the noble Baroness raises have been covered in previous conversations. It is clearly not a retrospective tax because it takes effect for deaths on or after 6 April 2027. I have also dealt with the fact that a flat-rate tax would mean that 90% pay more so that 10% can pay less, and that an estate can pass on up to £1 million with no inheritance tax due.

Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Livermore Excerpts

Thursday 13th November 2025 Lords Chamber

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

My Lords, I congratulate the noble Lord, Lord Elliott of Mickle Fell, on securing this debate and on his thoughtful, interesting and wide-ranging opening speech. I very much look forward to reading his book, once I receive the free copy that I was promised. I also join the noble Lord in his heartfelt tribute to the late noble Lord, Lord Desai.

It has been most enjoyable today to listen to the contributions from so many distinguished noble Lords, and it is a pleasure to respond to this debate. It has been a particular pleasure to hear from noble Lords from the party opposite about how to grow the economy; it is perhaps a pity they did not take their own advice over the past 14 years.

We have heard in this debate from members of the previous Government about how to grow the economy and increase prosperity, despite growth in living standards being one of their greatest failures; we have heard from some of the most prominent supporters of Brexit about how to grow the economy, despite their own disastrous Brexit deal permanently reducing GDP by four percentage points, as mentioned by my noble friend Lord Eatwell; and we have heard from some of the most enthusiastic acolytes of Liz Truss about how to grow the economy—

[Lord Lamont of Lerwick (Con)]

If the Minister will allow me, he spoke about GDP being reduced by four percentage points. I assume he is referring to the OBR’s original projection, which was over the next 15 years. So far, we have not had the 15 years, and he is thoroughly misrepresenting the situation if he is implying that this has already happened.

[Lord Livermore (Lab)]

I do not think I have misrepresented the situation in any way, shape or form. The OBR forecast that around two-fifths of the 4% impact had already occurred by the time the EU-UK Trade and Cooperation Agreement came into force and that GDP will be 2.7% lower by 2025, with the remaining reduction occurring by 2030, meaning the economy will be over £100 billion smaller than it otherwise would have been.

As I was saying, we have also heard from some of the most enthusiastic acolytes of Liz Truss about how to grow the economy, despite the Liz Truss mini-Budget crashing the economy and sending mortgage rates spiralling. I think we have long since abandoned any hope of an apology to the British people from the party opposite for its record on the economy over 14 years, but what is still shocking is its inability to show even the slightest hint of self-awareness for the damage it did to the British economy over the past 14 years or any awareness that that damage continues to scar our economy today, as my noble friend Lord Davies of Brixton clearly set out.

The reality of that record over 14 years is stark, as my noble friend Lord Liddle said. First, there was austerity, mentioned by my noble friend Lady O’Grady of Upper Holloway, which took demand out of the economy at exactly the wrong moment and cut investment, undermining the economy’s ability to grow, and left us ill-prepared for the future. Then a disastrous and tragically misjudged Brexit deal—interestingly, not mentioned by the noble Lord, Lord Elliott, in his opening speech—imposed new trade barriers equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services, reducing total trade intensity by 15%. As a result, as I have said, the economy will be over £100 billion smaller by 2030.

The combined effect of these costly mistakes was devastating. Had the UK economy grown by the average of other OECD countries over those 14 years, it would be more than £150 billion larger today. The previous Parliament was the worst ever for living standards. Inflation hit 11.1% and was above target for 33 months in a row. The noble Baroness, Lady Noakes, mentioned business investment. She may recall that, under her Government, the UK had the lowest private investment levels in the whole of the G7, productivity growth entirely stalled and output per worker grew more slowly than in nearly every other G7 country.

These policy errors, chronic instability and low levels of investment have left deep scars on the British economy, as my noble friend Lord Eatwell set out. As mentioned by the noble Lord, Lord Harper, alongside the forthcoming Budget, the Office for Budget Responsibility will set out the conclusions of its review into the supply side of the UK economy. I will not pre-empt those conclusions today, but the OBR may downgrade the historic assessment of the UK’s productivity and may conclude that the productivity performance we inherited from the previous Government was even weaker than previously thought.

[Lord Bridges of Headley (Con)]

Can the Minister clarify that his argument is that the Government have made no policy errors regarding their economic management over the last year?

[Lord Livermore (Lab)]

I am only five minutes into my speech; let us hear my whole speech before we conclude on that.

The OBR’s productivity assessment will be a look in the rear-view mirror, but the past mistakes of the previous Government do not need to determine our country’s future. While the record of the past 14 years may be even worse than previously realised, it underlines the importance of delivering higher and more sustainable economic growth, which has been the defining mission of this Government since we entered office. The noble Lords, Lord Elliott, Lord Harper and Lord Bridges, and the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, mentioned today’s growth figures. While they are, of course, lower than any of us would want to see, they confirm that the UK was the fastest growing economy in the G7 in the first half of this year and show just how much more there is to do.

We will move further and faster with our growth strategy, set out clearly many times and built on the three pillars of ensuring economic and fiscal stability, reforming the economy and increasing investment. It is welcome that the IMF has said that this strategy focuses on the right areas to increase productivity. This strategy recognises that growth comes not from government but from businesses and investors and that there is a role for a strategic state, not to step back and let businesses fend for themselves, but to act in partnership with business by systematically removing the barriers to growth that it faces.

The first pillar, stability, is the foundation all else is built on. That began with the Government’s first Budget last October. The noble Lords, Lord Harper, Lord Swire and Lord Leigh of Hurley, could not help but mention the £22 billion black hole in the public finances we inherited, which the previous Government sought to conceal from the OBR, but once again—

[Lord Harper (Con)]

Will the Minister confirm that at no point would the OBR, either in interviews or in its documents, confirm the existence of a £22 billion black hole because it absolutely did not?

[Lord Livermore (Lab)]

The report that it produced stopped before the conclusion of the previous Government. It stopped at that Government’s last Budget and of course they had several months left to run. The OBR reported on the period it was asked to report on, yet the previous Government still had several more months to run. The OBR has absolutely concluded that that information was concealed from it, and I think that is a very serious thing for us to know. Once again, noble Lords who mentioned it in their speeches today sought to deny and downplay that black hole—exactly the behaviour that got the country into the mess the previous Government left behind.

Faced with that inheritance, any responsible Government would need to act. One of the decisions we took was to increase the level of employers’ national insurance contributions to help repair the public finances, rebuild public services and restore economic stability, as mentioned by so many noble Lords in today’s debate. Contrary to what the noble Lord, Lord Bridges, said, I acknowledge, as we have always acknowledged, that there are consequences to responsibility and that the increase in employers’ national insurance would have costs to businesses and beyond, but the consequences of irresponsibility for the economy and working people would have been far greater, as we saw in the Liz Truss mini-Budget. Many noble Lords opposite mentioned the importance of small businesses, and I completely agree with them. The Government protected the smallest businesses from these changes by increasing the employment allowance from £5,000 to £10,500. This means that 865,000 employers will pay no national insurance contributions at all, and more than half of all employers will either gain or see no change.

Another area highlighted in this debate by the noble Lords, Lord Elliott and Lord Bilimoria, the noble Viscount, Lord Trenchard, and the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, was the non-dom regime. It is right that everyone who makes their home in the UK pays their taxes here. The Government have therefore removed the outdated concept of domicile status from the tax system and introduced a new residence-based regime. The OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue, and that figure accounts for some non-doms who are ineligible for the new regime choosing to leave the UK in response to these reforms. The Government will of course continue to work with stakeholders to ensure that the new regime is internationally competitive and focused on attracting the best talent and investment into the UK.

The noble Baroness, Lady Foster, and the noble Lord, Lord Bilimoria, among others, mentioned changes to agricultural property relief and business property relief. The Government made these changes better to target APR and BPR and to make them fairer. The reforms mean that, despite the tough fiscal context, we are maintaining very significant levels of relief from inheritance tax beyond what is available to others. These reforms mean that almost three-quarters of estates claiming APR, including those that also claim BPR, will not pay more inheritance tax.

The economic stability provided in our first Budget is underpinned by our fiscal rules, mentioned by my noble friend Lord Eatwell and the noble Lord, Lord Young of Cookham. Those rules allow us to invest more in capital, alongside a credible plan to grow our economy and bring debt down within this Parliament. We met these fiscal rules in the Budget last year and at the Spring Statement in March, and we will meet them again at the forthcoming Budget.

The second pillar of our growth strategy is to deliver whatever reforms are necessary to remove the barriers to growth faced by businesses and investors. These include planning reforms, which the OBR estimates will add 0.4% to GDP—the biggest policy-driven booster growth with no fiscal cost that it has ever scored. Our pension reforms will unlock £50 billion of investment for businesses and major infrastructure. Our skills reforms will equip firms with the skilled workforce they need to grow. We have begun a reset with the European Union, which I hope the noble Baroness, Lady Kramer, will support, despite not going as far as she argued for in her speech today. We have also reached a trade agreement with the US and signed a new trade deal with India. We have set out a new modern industrial strategy to target high-growth sectors. As mentioned by the noble Lord, Lord Risby, we are cutting the administrative costs of regulation on business by 25%, and we are delivering the Leeds reforms, the widest-ranging reforms to financial services regulation in over a decade.

The final pillar of our growth strategy is investment, which stability and reform are designed to increase. The Government have an important role to play here. The IMF has long warned that a lack of public investment was a significant barrier to growth. That is why we have committed an additional £120 billion of public investment over the next five years, made possible by reform of the fiscal rules. Our fiscal rules ensure that we do not need to cut capital spending, unlike the previous Government which planned to cut it even further, as my noble friend Lord Eatwell observed, which got us into this productivity hole in the first place. We are directing our additional capital investment into growth-driving projects, including new homes, improved transport connectivity and new nuclear projects such as Wylfa, as mentioned by my noble friend Lady O’Grady of Upper Holloway and the noble Lord, Lord Bilimoria, and we are catalysing private investment through the new National Wealth Fund and British Business Bank.

As so many noble Lords opposite have said today, the real prize is increased private sector investment in our economy. Whereas under the previous Government the UK had the lowest level of private investment in the G7, since the election private sector companies have committed over £325 billion-worth of investment into the UK, including during the US state visit in September and, as mentioned by my noble friend Lord Chandos, at the regional investment summit last month—the first, we hope, of many.

Real progress takes time and, as my noble friend Lord Chandos said, we cannot reverse 14 years of underinvestment overnight. But real wages grew more in the first 10 months of this Government than in the first 10 years of the previous Government. Under the previous Government, we saw the worst pay growth in a century, with barely 0.3% growth between 2010 and 2024. The noble Lord, Lord Elliott, spoke about living standards in his opening speech. Living standards are up 2.1% since the election, compared to the 1.8% fall over the last Parliament. That was the only Parliament on record where living standards were worse at the end of the Parliament than at the beginning, as referred to by the noble Lord, Lord Skidelsky.

Whereas the UK was ranked seventh out of seven for projected 2025 growth in the G7 under the previous Government, our growth was the fastest in the G7 in the first half of this year. But we do not expect anyone to be satisfied with growth of 1%. Today’s growth figures reinforce the fact we need to go further and faster, not repeating the previous Government’s mistakes of cutting investment but continuing to create the right conditions for growth.

The first part of our planning reforms will add an additional £6.8 billion to the size of our economy in the next five years, but the next part, our planning Bill, must complete its passage through Parliament before it can make a difference. Interest rates, which rose consistently in the last Parliament, have now been cut five times since the election, but at 4% they are still a constraint on business borrowing and a burden on family finances. Inflation is clearly much lower than the double digits seen under the previous Government, but the choices we make must be focused on getting inflation falling and creating the conditions for interest-rate cuts to support economic growth and improve the cost of living.

As mentioned by the noble Lord, Lord Elliott, in his opening speech, while we have taken action in the industrial strategy to reduce business energy costs by up to £420 million a year, they are still too high and we must go further.

Noble Lords, including the noble Lords, Lord Elliott, Lord Harper and Lord Bilimoria, mentioned the importance of employment. The latest figures show that 138,000 jobs have been created since the election. The OBR forecasts that over this Parliament employment will rise and unemployment will fall, but the figures published this week show exactly why we must go further to get Britain working and get our economy growing. I am grateful for the support for the youth guarantee from the noble Lord, Lord Skidelsky; and the noble Lord, Lord Howard, mentioned the importance of jobcentre reform.

Noble Lords, including the noble Lords, Lord Elliott, Lord Leigh of Hurley and Lord Massey of Hampstead, the noble Viscount, Lord Trenchard, my noble friend Lord Liddle and the noble Baroness, Lady Neville-Rolfe, mentioned the Employment Rights Bill. As noble Lords know, the Bill is still going through its final parliamentary stages. The Government are also supporting businesses to create jobs, innovate and grow, including by reforming our regulatory framework to reduce barriers to growth and investing in our economy.

Many noble Lords, including the noble Lords, Lord Young of Cookham, Lord Petitgas, Lord Horam and Lord Bridges of Headley, and the noble Baroness, Lady Stedman-Scott, mentioned welfare. The Government are committed to reforming our welfare state. We are shifting the focus from welfare to work, skills and opportunities. We have backed that up with £1 billion a year for employment support by the end of the decade. As my noble friend Lord Liddle said, the Government have also announced an independent report into young people and work, to be led by Alan Milburn, which will examine why increasing numbers of young people are falling out of work or education. He will publish his final report by next summer.

Many noble Lords, including the noble Lords, Lord Elliott, Lord Harper, Lord Petitgas, Lord Swire, Lord Wharton of Yarm, Lord Massey of Hampstead and Lord Kempsell, the noble Baronesses, Lady Stedman-Scott, Lady Fall and Lady Kramer, and my noble friend Lord Liddle, spoke about the forthcoming Budget in just under two weeks’ time. There has been much speculation about the forthcoming Budget, as mentioned by the noble Lord, Lord St John of Bletso, but, as my noble friend Lord Chandos rightly suggested, I am not going to comment on individual tax measures today. The Chancellor has asked the OBR to produce a new forecast. She will take decisions based on that forecast, and we will set out our fiscal plans at the Budget in the usual way. The Chancellor will, though, make those decisions mindful of the importance of growth and investment to businesses and to the economy, and it is vital that the tax system supports our growth mission.

The noble Lord, Lord Elliott, spoke of the importance of innovation and enterprise, mentioned also by the noble Lord, Lord Marks of Hale, while the noble Baroness, Lady Fall, rightly spoke about the importance of supporting scale-up businesses. The current rate of corporation tax is the lowest in the G7, and that is supplemented by generous business investment reliefs that directly support investment, including full expensing, R&D tax reliefs and the patent box regime.

The noble Lord, Lord Bridges, mentioned headroom. As the Chancellor said earlier this week, we will continue to

“build more resilient public finances—with the headroom to withstand global turbulence … giving business the confidence to invest and leaving government freer to act when the situation calls for it”.

We have been clear about the principles that will guide the forthcoming Budget. It will protect the NHS and public services from a return to austerity, because it was austerity that choked off investment that would have put our country on a path to recovery after the financial crisis. Instead, we will protect investment in our economy and build on the progress already made to repair the public services. The Budget will support growth, enabling businesses to create jobs and innovate. It will improve the cost of living by doing what is necessary to protect families from high inflation and high interest rates, and it will keep debt under control because the less we spend on debt interest, the more we can spend on the priorities for working people, as the noble Baroness, Lady Kramer, rightly said,

I am grateful to all noble Lords who have spoken in today’s debate, but we will take no lectures from the party opposite, which presided over 14 years of instability, low productivity and economic decline. Where it delivered the slowest projected growth in the G7, growth in the first half of this year was the fastest in the G7. Where it presided over the worst Parliament ever for living standards, living standards have increased by 2.1% since the election. Where it oversaw the worst pay growth in a century, real wages grew more in the first 10 months of this Government than in the first 10 years of the previous one. Where it continually cut capital spending and deterred investment, we are investing for the long term, with £120 billion over the next five years, alongside £325 billion committed by the private sector since the election.

The OBR may conclude shortly that the productivity record of the previous Government was even worse than previously thought, but we will not let those past mistakes determine our country’s future. This Government will invest in the NHS, support growth and improve the cost of living. We will continue to build strong foundations for our economy because that is the only route to securing Britain’s long-term future.

[Lord Elliott of Mickle Fell (Con)]

My Lords, I will be brief. I thank the Library for its excellent briefing note, and all noble Lords for their thoughtful contributions. It has been a superb and stimulating debate; we should consider making it an annual fixture in the Lords calendar.

There are lots of points I would love to pick up on, not least on welfare, the notion of an exit tax, even capital controls, but I get the sense from the House that the thing noble Lords would like to hear from me most on is perhaps Brexit. It was mentioned by the Minister, the noble Lord, Lord Eatwell, and the noble Baroness, Lady Kramer.

There was a lot of talk about the OBR report. I have read that report and it is based on projections brought together before the referendum, before we knew what sort of deal it would be from the EU. It is actually a very old report. Since 2016, it is worth noting that UK economic growth, although less than expected, has been higher than most western European countries. UK trade—

[Lord Livermore (Lab)]

It is just worth noting that the OBR updated those forecasts in 2024 and 2025 and maintained its view that it will reduce GDP by four percentage points.

[Lord Elliott of Mickle Fell (Con)]

It is also worth noting that UK trade with the EU is now higher than it was in 2019, as is UK trade with the rest of the world. The referendum was over nine and a half years ago and we left the EU five and a half years ago. I think it is time to take responsibility for what is going on now with economic growth. The Government should be commended for some measures which have increased economic growth, such as the post-Brexit trade deals—not possible without Brexit—with the US, the Gulf states and India.

I liked the intellectual honesty of saying that we should rejoin the customs union and think the Government should be more intellectually honest if they talk about Brexit. It is worth noting, though, that were we to rejoin the EU, what would the annual membership fee now be? Perhaps £22 billion a year—that would be another £22 billion to think about. I hope the Government consider some of the proposals put forward in the Budget and I beg to move.

Cryptocurrencies: US Regulation

Lord Livermore Excerpts

Wednesday 12th November 2025 Lords Chamber

[Lord Davidson of Glen Clova]

To ask His Majesty’s Government what assessment they have made of the risks to the finance system in the United Kingdom arising from the loosening of regulation of cryptocurrencies in the United States of America.

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

My Lords, the UK is engaged with the US on crypto asset risks through international fora, and we have created a joint UK-US Transatlantic Taskforce for Markets of the Future, for enhanced collaboration on digital assets. The Government are legislating this year for a crypto assets financial services regulatory regime, with the Financial Conduct Authority as the lead regulator, so consumers are protected and firms have the certainty needed to invest and grow in the UK.

[Lord Davidson of Glen Clova (Lab)]

I thank my noble friend the Minister for his Answer. The risks normally associated with cryptocurrencies are volatility, fraud, money laundering and access to criminality. Have these risks been assessed by the Government, and if so, with what result?

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble and learned friend for his question. The Government’s approach to crypto assets seeks to strike the right balance between giving firms regulatory certainty and ensuring the sector has the space and flexibility to innovate. The Government recognise that our financial stability, as well as the other considerations that my noble friend mentioned, are associated with crypto assets, but they need to be balanced against supporting innovation and ensuring the UK positions itself as a competitive global destination for digital assets. Internationally, the UK financial authorities have been working, through the Financial Stability Board, to assess and develop supervisory and regulatory approaches to address the global financial stability risks posed by crypto assets and global stablecoins. We are also currently working to put in place a comprehensive domestic regulatory regime for crypto assets as financial services, to ensure the UK has the necessary protections for crypto asset usage.

[Lord Vaizey of Didcot (Con)]

My Lords, I declare my interest as the chair of the All-Party Group on Crypto and Digital Assets. The Minister’s remarks are very welcome. Does he agree with me that the risks around crypto are the risks of not regulating it? With one in four people in Britain now trading cryptocurrency —half of them under the age of 35—regulation has never been more needed. In essence, the key issue is time: we need to get on with it.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and pay tribute to his considerable expertise in this matter. I agree with what he said. Crypto assets have the potential to play a significant role in the financial services sector, and the economy more broadly, including through greater transparency, efficiency and security. We are already seeing the benefits that stablecoin can provide in cross-border payments by reducing costs and improving efficiency. Unlocking the full potential for digital assets and blockchain technologies requires payments that interact with them directly, and stablecoins can play an important role in achieving that. It is therefore important for the UK to harness those opportunities and—I agree with him on this—to bring forward legislation, and we will do so.

[Baroness Kramer (LD)]

My Lords, my concern is about the geopolitics. Much of the UK’s trade today is conducted in offshore dollars, which sit beyond the reach of the US Government. As dollar stablecoin replaces traditional dollars, the US Government will get their hands on levers to pressure us and others by threatening to curtail access. Are the Government looking at the key issues of monetary sovereignty? The regulators clearly are not.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. She is not correct to say that the regulators are not looking at that; of course they are taking it into account. She is absolutely right that the US is taking forward US-denominated stablecoin. It is very important that the UK does the same. The Government see stablecoin playing an important role in the diverse and competitive UK payments landscape. We hope that firms will see the advantages of being regulated as stablecoin issuers in the UK and will seek permissions under the new regime for that.

[The Earl of Devon (CB)]

My Lords, at the same time that the US is loosening regulation, as the Minister mentioned, the FCA is midway through its multi-year review of a comprehensive crypto asset regulatory regime. Can the Minister confirm that that review is proceeding in accordance with the published crypto road map? Is there any concern that the crypto sector and the UK’s innovation will be hampered by increased regulation at a time when other jurisdictions are loosening their regulations?

[Lord Livermore (Lab)]

I am not sure I share the noble Earl’s characterisation of the distinction between the two regimes. The US will legislate for their interests, and we will legislate for ours. The US passed legislation for the regulation of stablecoin in the summer. US regulators will publish their regulatory rules in mid-2026, with a backstop date of January 2027 for the US regime to go live. In the UK, the Government published draft legislation in April, with the final legislation due before the end of the year. Alongside that, the FCA is at an advanced stage in its consultations on the details of its regime, with a view to finalise its detailed rules and requirements in 2026. As I said at the outset, we have also created a joint UK-US Transatlantic Taskforce for Markets of the Future, to enable enhanced collaboration on digital assets.

[Lord Ranger of Northwood (Con)]

My Lords, I welcome the comments from the Minister on this topic and note my interest as co-chair of Digital Markets and Digital Money APPG. Two weeks ago, I was in Washington and met members of the US Securities and Exchange Commission—its chair, Paul Atkins, and its commissioner, Hester Peirce—to discuss “Project Crypto”, the road map it announced in August to modernise regulations for the digital asset economy. Its goal is to enable American financial markets to move on-chain and to position the US as a global leader in blockchain and crypto by creating a clearer, more innovative-friendly regulatory framework. While recognising the need to manage risks in financial stability, does the Minister agree that the greater danger to the UK is falling behind jurisdictions such as the US, if they move faster to enable innovation in crypto and digital assets?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and pay tribute, too, to his expertise in this matter. There is a lot of truth in what he said, which is partly why HM Treasury has jointly established the transatlantic task force with the US Treasury. The purpose of the task force is threefold: first, to identify and explore options for short to medium-term collaboration on digital assets, while legislation and regulatory regimes are still developing; secondly, to identify options to improve links between our capital markets, to enhance the growth and competitiveness of both UK and US markets; and, thirdly, to report, ideally, within 180 days. It is chaired by officials of HM Treasury and the US Treasury, including representatives from the UK and US regulators responsible for capital markets, so that we can share lessons between the two authorities.

[Lord Brennan of Canton (Lab)]

My Lords, do the Government have in mind any lessons from history when considering the potential consequences on the finances of ordinary people of a regulatory race to the bottom with regard to any kind of financial instrument?

[Lord Livermore (Lab)]

Possibly, but I do not at all share the characterisation made by my noble friend of a regulatory race to the bottom. As I have said, we will regulate in the UK’s national interest. The Government will bring forward the final legislation to create a financial services regulator regime for crypto assets this year. Clearly, we must strike the right balance between giving firms regulatory certainty, protecting consumers and ensuring that the sector has the space and flexibility to innovate.

[Baroness Neville-Rolfe (Con)]

My Lords, these markets are global. Can the Minister tell us what contingency plans the Bank of England and the Treasury have in place should a major crypto company in the US collapse, with consequences for UK savers and markets, now as well as once the legislation has gone through? When we last discussed this subject, the Minister helpfully agreed that the Government might present a discussion paper, which would help us all. When might we expect that, given the pace of change in this important area?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As she knows, the Bank of England is the independent regulator for systemic stablecoin and will design its regime as necessary to manage the associated risks. On 10 November, just earlier this week, the Bank of England launched a consultation to seek industry feedback on its systemic stablecoin regime, building on the initial proposals set out in its 2023 discussion paper. This includes up to 60% of backing assets to be held in short-term sterling-denominated UK Government debt securities, consistent with emerging regulatory regimes internationally, and the proposed cap of between £10,000 to £20,000 for individuals and £10 million for businesses applying for systemic stablecoins and only after consultation. The Treasury and the Bank of England are maintaining a close and ongoing dialogue on the legal and regulatory treatment of stablecoins in support of the Government’s objective to make the UK a global destination for digital assets. In terms of any wider discussion paper, I am very happy to continue discussing that point.

[Lord Fox (LD)]

My Lords, my question concerns the Bank of England’s control over money supply. At what point, when the public are adopting cryptocurrencies, does the Bank lose control of the money supply? What calculation has the Treasury done, or has the Treasury done in conjunction with the Bank of England, to maintain national control over our money supply?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. The Bank of England’s Financial Policy Committee and the multilateral Financial Stability Board currently agree that crypto asset markets do not currently pose material risk to financial stability in the way the noble Lord describes but that stability risk may grow as connections between the traditional financial services sector and crypto markets increase. International and UK financial authorities have been working through the Financial Stability Board to assess and develop supervisory and regulatory approaches to address global financial stability risks posed by crypto assets and global stablecoins.

National Insurance: Partnerships

Lord Livermore Excerpts

Monday 10th November 2025 Lords Chamber

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

My Lords, the Government do not comment on tax speculation outside of fiscal events. The Chancellor will set out the Government’s fiscal plans at the forthcoming Budget.

[Baroness Neville-Rolfe (Con)]

My Lords, given that professional services contribute some 12% to GDP, and that almost all the UK’s leading accountancy and law firms operate as LLPs, has the Minister examined the potential for unintended consequences such as increased incorporation or outsourcing, which could reduce, rather than increase, the overall tax take? I originally tabled this Question to probe the bad but rumoured idea of taxing GP partnerships in this way. Can the Minister at least rule that out?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. However, she knows that I am not going to speculate or give a running commentary on the next Budget now. There has been much speculation, as is usual ahead of a Budget. A lot of that speculation is irresponsible. I am not going to comment on individual tax measures now. We will do things in the usual way. The Chancellor has asked the OBR to produce a new forecast. She will make decisions based on that forecast. We will set out our fiscal plans at the forthcoming Budget. The Chancellor will do so mindful of the importance of growth and investment to businesses and the economy.

[Lord Carlile of Berriew (CB)]

My Lords, does the Minister, as an expert in taxation matters, agree that in reality, the great majority of those who are partners in limited liability partnerships do not have any of the autonomy of self-employed persons but are treated as having such autonomy, and that it would be logical for all those who are in reality employed persons to be treated in the same way by the tax system?

[Lord Livermore (Lab)]

I am sorry to disappoint the noble Lord, but I am afraid I am not going to comment now on individual tax measures.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, does the Minister recognise that the self-employed sector creates growth and increases economic participation and that self-employed people are risk absorbers without access to various state benefits? Is the suggestion floated concerning LLPs potentially the thin end of the wedge to attach more tax to all self-employment? Possibly, there is an issue, in that LLP status transfers risk from partners to societies at no cost to the partners. If there is a moral case for payment for that risk transfer, surely, it must be separately investigated, not wangled through national insurance.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question, the first part of which I agree with. On the rest of it, as she knows, I am not going to comment on individual tax measures right now.

[Lord Bridges of Headley (Con)]

My Lords, may I ask the Minister a very simple question? In terms of his definition of a working person, is a partner in a law firm a working person?

[Lord Livermore (Lab)]

I applaud the noble Lord’s attempt at his question. I am not going to comment on individual tax measures right now.

[Lord Sikka (Lab)]

My Lords, whether someone trades through a company or a partnership is a personal choice. That choice should not be incentivised by the national insurance system. It is wrong to hand incentives to rich accountants and lawyers to dodge employers’ national insurance just because they trade as partnerships. That differential treatment encourages abuse and avoidance strategies. Does the Minister agree, and if not, can he give reasons?

[Lord Livermore (Lab)]

My reason is very simple: I am not going to speculate on the next Budget now. I am, of course, grateful for my noble friend’s expertise in these matters.

[Lord Pannick (CB)]

My Lords, will the Minister accept that it not speculation but fact that the legal services sector brought in exports worth £9.5 billion last year? Will he also accept that it is fact, not speculation, that to increase the tax burden would inevitably damage the ability of law firms to attract cases such as international arbitration and dispute resolution from abroad when we are in competition with Singapore, Dubai and other litigation centres?

[Lord Livermore (Lab)]

I certainly agree with the first fact that the noble Lord set out, and I am happy to do so. On his second fact, that is inviting me to speculate, which I think I have made clear I am not going to do.

[Lord McLoughlin (Con)]

My Lords, without asking the Minister to speculate on what might be in the Budget, will he tell us what was meant when the Chancellor and the Prime Minister said they would not increase income tax?

[Lord Livermore (Lab)]

Again, I think that that may be inviting me to speculate on the next Budget. I am not going to give a running commentary on the speculation there has been so far. The Chancellor will set out the Government’s tax policy at the forthcoming Budget.

[Baroness Wheatcroft (CB)]

My Lords, will the Minister accept that although he continues to tell us that he is conducting his responses in the normal way ahead of a Budget, it is not the normal way, ahead of a Budget, for the Chancellor to give a speech to a press conference which is simply about the Budget?

[Lord Livermore (Lab)]

The Chancellor is entirely at liberty to set out what she wants to set out at any given point. As I said, there has much speculation ahead of the Budget. I am not going to comment on the Budget. We will do things in the usual way. She has asked the OBR to produce a new forecast for the Budget. She will take decisions based on that forecast and set them out at the forthcoming Budget.

[Baroness Kramer (LD)]

My Lords, will the Minister advise his colleagues that any new partnership NICs applied to LLPs will exclude small entities that genuinely are a variant on self-employed organisations, with similar risks, precarious income, limited benefits and lack of employment opportunity, and are, indeed, a very important path for a lot of people returning to employment or getting into employment for the first time?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I am not quite sure how many more ways I can say this: she is inviting me to comment on tax speculation, and I think I have made it clear that I am not going to do that.

[Lord Leigh of Hurley (Con)]

My Lords, going back to the last election after Labour were previously in power, Labour had to leave a note saying that there was no money left. The next time, it will have to leave a note saying that there is no money left and no entrepreneurs left. Has the Minister read the Walker report, which shows that the HMRC assessment of non-doms leaving the country was underestimated by 50% because it looked at people only on a remittance basis and had not taken into account wealthy investors who are not under PAYE, and who are leaving the country in droves?

[Lord Livermore (Lab)]

If the noble Lord wants to talk about the amount of money that is left, I am very happy to point him to the £22 billion black hole in the public finances that we inherited and that his Government sought to hide from the Office for Budget Responsibility. The same OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue over the five-year forecast period. This figure accounts for some non-doms who are ineligible for the new regime, choosing to leave the UK in response to these reforms. The Government will continue to work with stakeholders to ensure that the new regime is internationally competitive and focus on attracting the best talent and investment into the UK.

[Lord Garnier (Con)]

My Lords, in his earlier answer, the Minister said that much of the speculation was irresponsible, which suggests that some of it was not. Could he please list it?

[Lord Livermore (Lab)]

No. As I think I have made clear, I am not going to comment on individual tax measures.

[Lord Watts (Lab)]

Does the Minister agree with me that, if there are going to be tax increases of any sort, they should be fair and should not be borne by people who are paying PAYE, who have no choice about paying their tax—but that everyone over there seems to think that everyone else should have an opportunity to avoid it?

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. I am not going to comment, as he knows, on individual tax measures, but I think we can be clear that the priorities for the forthcoming Budget will be protecting our NHS and public services from a return to austerity. It should be a Budget for growth that supports businesses to create jobs and innovation; we should improve the cost of living, doing what is necessary to protect families from high inflation and high interest rates; and we should keep debt under control.

[Lord Johnson of Lainston (Con)]

My Lords, I think there may be a misunderstanding about what LLP structures are. Will the Minister agree with me on the importance of these structures, which enable people to pool their own labour? This is not a loophole; it is an opportunity for people to come together, and they are effectively charging tax on employing themselves. Will the Minister agree with me that, in principle, LLPs are a good idea, and that getting rid of them would be throwing the baby out with the bathwater? We have just had a baby in the Chamber, so I am very reminded of that. If he could answer my question, I would be very grateful.

[Lord Livermore (Lab)]

I do not know if the noble Lord was paying attention for the last 10 minutes, but I have made it extremely clear that I am not going to comment on individual tax measures.

Public and Private Sector Productivity Trends

Lord Livermore Excerpts

Thursday 30th October 2025 Lords Chamber

[Lord Londesborough]

To ask His Majesty’s Government what assessment they have made of the United Kingdom’s productivity trends across both public and private sectors.

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

My Lords, in the decade from 2010, the UK economy saw the lowest productivity growth since the Napoleonic Wars, which led to the lowest growth in living standards ever recorded. This Government also inherited a situation where public sector productivity was 7.2% below pre-pandemic levels. Reversing that poor productivity performance is the number one mission of this Government. As part of our growth strategy, we have set out measures to increase productivity, including reforms to planning and skills, record levels of investment in R&D, new investment in transport connectivity, a modern industrial strategy and a 10-year infrastructure strategy.

[Lord Londesborough (CB)]

My Lords, I thank the Minister for his reply. Low productivity has indeed been a running sore for almost 20 years now. Frankly, there are no real signs of progress, which is why the OBR is poised to downgrade its trend forecast and leave the Chancellor with an even deeper black hole. We need a major reset, so is it not time to set up an office for productivity alongside the Office for Budget Responsibility if we want to achieve per capita growth and fiscal discipline? This would be an office with experts with first-hand industry experience delivering on productivity, including how to lead, manage, train, set targets, and reward and incentivise our workers in public and private sectors.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and suggestion. On the progress that has been made, he will know that the drivers of productivity are fundamental and deep-seated challenges that exist in our economy, that they are long-standing, and that obviously we cannot come in, click our fingers and improve that productivity performance—it will take time. For example, investment is one of the most important drivers of productivity. That requires changes to our planning system and the planning Bill is still going through this House, so of course it is going to take time. As I say, the productivity performance that we inherited from the previous Government has been too weak. Austerity, Brexit and the Liz Truss mini-Budget have left deep scars on the British economy that are still being felt today, but those past mistakes do not need to determine our future. That is why, as part of our growth strategy, we have set out measures to increase productivity in the British economy.

[Lord Leigh of Hurley (Con)]

My Lords, on the point from the noble Lord, Lord Londesborough, would the Minister consider looking at how the figures are compiled? Personally, I think that the contribution from the services sector is underplayed and undervalued in the calculation of productivity. Would the Minister also recognise the contribution from the 13 leading business representative bodies—indeed, pretty much every business in the UK—that the Employment Rights Bill will reduce productivity and growth?

[Lord Livermore (Lab)]

On the noble Lord’s first point, I am very aware of some issues around the data, and I believe the ONS has been reviewing it along the lines he suggests. On the Employment Rights Bill, he will know that labour supply is also a fundamental component of driving productivity, and that a more motivated and more secure workforce is a more productive workforce. I hope he will take that into account.

[Baroness Kramer (LD)]

My Lords, we hear this week that only 11% of UK SMEs say they use technology to a great extent to automate or streamline operations. Do the Government understand that the slow pace of adoption of new technology by SMEs—many of which have not even adopted first-generation technology—lies at the heart of our productivity problem, which is why it remains incomprehensible that the Government keep adding burdens on SMEs? I know the Minister cannot tell us what is in the Budget, but can he at least tell the House that he recognises the problem?

[Lord Livermore (Lab)]

Yes, I absolutely recognise the problem and I agree with 90% of what the noble Baroness said. The only part I disagreed with was when she criticised the Government. I agree: digital adoption and AI adoption will be central to solving the productivity problem. SMEs are vital to that. It is why digital adoption was a key part of our small business strategy. I hope we can work together on this important issue.

[Lord Howell of Guildford (Con)]

My Lords, the period from 1970 to 1990 was a time of rapidly increasing productivity, of rapidly increasing Japanese investment in particular, and of great reduction in trade union restrictive practices, which the Japanese would not put up with. What lessons does he draw from that for today?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his insight from that period. He is absolutely right. It was a time of high productivity; it is a shame that the second Conservative Government after that did not maintain it. We now have to deal with the inheritance from that Government. He is right to say that private sector investment is a key driver of productivity, so the lesson I draw from that period is that we have to encourage greater levels of private sector investment. Under the previous Government, private sector investment fell to the lowest in the whole G7. We have so far welcomed £120 billion in private investment and a further £150 billion during the US state visit last month alone.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, does my noble friend the Minister agree that we are very good at telling other people what to do? Is it not time that we started having a look at our practices and productivity to see whether we can run Parliament and the Commons much more effectively than we are at the moment?

[Lord Livermore (Lab)]

I am very happy to say that that may be a question for someone other than me.

[Baroness Bull (CB)]

My Lords, the Minister will know that, with 52% of the adult population having numeracy levels at or below those of a primary school leaver, low numeracy acts on a drag on the UK economy, leading to a critical skills gap and, ultimately, limiting productivity. Does he agree that unless we address low numeracy, as we have addressed core reading skills, we will struggle to achieve the economic growth that is at the core of his Government’s ambitions?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I agree. Fundamental skills are vital to improving our productivity. Labour quality is a key driver of productivity. The skills agenda is vital to that. That is why we recently set out measures to tackle that in the skills White Paper. I hope the measures she speaks about will also be looked at carefully.

[Baroness Neville-Rolfe (Con)]

My Lords, I very much agree on skills, but a large part of the productivity problem in the UK has been in the public sector. This is hardly surprising, since the Government awarded huge public sector pay rises last year without a direct productivity link. Civil service numbers have also increased. Low productivity and growing headcount are not a happy state of affairs. How does the Minister plan to improve that rather dispiriting situation?

[Lord Livermore (Lab)]

The noble Baroness is correct to say that public sector productivity is a major issue. I know that it is something she cares about deeply. Obviously, she will be aware that the Government inherited a situation where public sector productivity was 7.2% below pre-pandemic levels; that is obviously and clearly unacceptable. She said that pay rises were awarded without any link to productivity. That is factually incorrect. At the spending review, the Government established a programme of public sector service reform to drive greater productivity. Every department has committed to at least 5% savings and efficiencies over the spending review period, with the Office for Value for Money working closely with departments to agree bespoke targets. This will result in savings and efficiencies equivalent to nearly £14 billion a year by 2028-29, and public sector productivity has already risen by 1.5% since the election.

[Lord Fox (LD)]

My Lords, in 1964 the then Labour Government sought to separate the Treasury into two pieces: one to look after the short-term fiscal tax-raising element and one to look at economic development. The same tension exists today. Can the Minister tell your Lordships how the Treasury is balancing them? At the moment, it looks as if short-term fiscal concerns are outweighing long-term economic needs.

[Lord Livermore (Lab)]

I disagree with the noble Lord. I do not think that there is any tension between economic stability and economic growth. As I say, under the Liz Truss mini-Budget we saw the damage that grotesque economic instability did to business confidence and business investment in this country. Maintaining stability—that starts with stability in the public finances—is why our fiscal rules are so important to our growth mission. Stability is the precondition for economic growth in this country, so the two go very much hand in hand.

[Lord Bird (CB)]

My Lords, would the Government agree that, because we have a low-wage economy, we also have a low-investment economy? That is shown in the fact that 80% of all the transactions carried out by our banks, which were formerly owned by us, are in buying and selling private property, not in investing in new businesses and the kind of investment that the Government are now calling for.

[Lord Livermore (Lab)]

I am not quite sure what the question was. I do not think that I agree with noble Lord’s diagnosis.

Rules on Duty-Free Goods

Lord Livermore Excerpts

Wednesday 22nd October 2025 Lords Chamber

[Baroness Hoey]

To ask His Majesty’s Government what plans they have to ensure that the same rules on duty-free goods apply for those flying from Belfast to the European Union as those flying from the rest of the United Kingdom.

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

My Lords, duty-free shopping between Northern Ireland and the EU would require the application of personal allowances and associated border checks to prevent the uncontrolled flow of tax-free goods into either Northern Ireland or the EU. The enforcement controls required for this would run counter to the Windsor Framework and to the principle of the frictionless movement of people and goods between Northern Ireland and Ireland.

[Baroness Hoey (Non-Afl)]

My Lords, I thank the Minister for that rather predictable Answer. Could I press him? Does he understand the frustration and anger that families in Northern Ireland have when they travel on their well-earned holidays to sunny parts of the EU and cannot get duty-free, while other citizens of the rest of the United Kingdom can? Does he understand that not having duty-free is costing Northern Ireland’s small airports about £5 million a year? Does he have any sympathy or empathy with the people of Northern Ireland? Will he make a commitment that when His Majesty’s Government are involved in the much-heralded reset, this will be one of the issues—it may seem a minor issue to some people, but it is quite an important one—to be negotiated with the European Union to change?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. She says that my Answer was predictable, but one thing that was entirely predictable was the impact of Brexit, which she campaigned for. Back in 2016, Sir John Major and Sir Tony Blair said clearly that Brexit would present specific challenges for Northern Ireland, given its land border with an EU member state and the importance of safeguarding the Good Friday agreement, yet the noble Baroness dismissed those concerns. Now that the reality of Brexit does not match up to the fantasy version which the noble Baroness had, she seeks to blame others for the consequences of her own actions.

Let me be very clear: the Windsor Framework is the best workable solution to Northern Ireland’s unique circumstance. The noble Baroness asked whether I have empathy—absolutely I do. Placing Northern Ireland in a uniquely beneficial position within the United Kingdom, by being part of the UK internal market and the EU single market for goods, provides significant opportunities for growth and ensures that there is no hard border on the island of Ireland. She mentioned the reset. As part of the EU reset, the EU and the UK have agreed to negotiate an SPS agreement. I urge the noble Baroness to support that reset.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, does my noble friend the Minister agree that it would be much better for Members of your Lordships’ House to argue for and underpin the value of dual market access whereby businesses and communities in Northern Ireland can avail themselves of access to the UK internal market and the EU single market? I agree with my noble friend when he said that Brexit was the cause of all these difficulties. It would be better if noble Lords sought to work to eradicate the difficulties and challenges presented by the Windsor Framework to underpin our local economy.

[Lord Livermore (Lab)]

I am very grateful to my noble friend for her question and I agree with every word she said. The Windsor Framework is the best workable solution to Northern Ireland’s unique circumstances. As she said, it places Northern Ireland in a uniquely beneficial position within the United Kingdom—which I hope we can make a lot of—by being part of the UK internal market and the EU single market for goods. That provides significant opportunities for growth and ensures that there is no hard border on the island of Ireland.

[Lord Weir of Ballyholme (DUP)]

My Lords, the Minister highlighted the principal rationale for there not being duty-free at Northern Ireland airports when flying to the EU as the need to maintain frictionless trade with the Irish Republic, presumably on flights to the Irish Republic. Is the Minister aware that not a single flight goes from Northern Ireland to the Republic of Ireland? Does he agree that we are left in the absurd position of creating an additional problem to solve a problem that, in practice, does not actually exist?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I will clarify this for him. The original Question asked about flights from Belfast to the European Union, so that is what this Question is about. I will be very clear. If we have duty-free, we have to have allowances. If we have allowances, we have to have checks and enforcement. If we have checks, we have to have border infrastructure, and border infra- structure is contrary to the Windsor Framework and the Good Friday agreement.

[Lord Bellingham (Con)]

My Lords, one of the key outcomes of the Windsor Framework was the plan for green lanes for goods leaving the UK but staying in Northern Ireland rather than being transported to the Republic. Can the Minister tell the House what progress has been made on the introduction of those green lanes?

[Lord Livermore (Lab)]

This may have been another of the fantasies that people had about certain Brexit outcomes rather than reflecting reality. What we have ended up with—I pay tribute to the previous Government for negotiating this—is the Windsor Framework, which, as I said, is the best workable solution to Northern Ireland’s unique circumstances. We absolutely support the implementation of the Windsor Framework.

[Baroness O'Loan (CB)]

My Lords, the Minister described a very glowing situation in Northern Ireland, which is not necessarily the experience of the people in Northern Ireland, subsequent to the Windsor Framework. While accepting that the Windsor Framework is what we have to live with at the moment, does the Minister accept that there are many problems, that people cannot get access to many goods and services, and that goods are increasingly not being supplied to Northern Ireland because of the bureaucratic difficulties and economic costs? Would the Minister commit to considering all these matters and to bringing forward a reset that actually benefits Northern Ireland?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question and insight. I will say up front, as I have said before, that we are committed to implementing the Windsor Framework in good faith and to protecting the UK internal market. We will work constructively with all stakeholders—the EU, the Northern Ireland Executive, businesses, and political parties and civic society in Northern Ireland—to achieve that aim, taking into account the implementation deadlines. As the noble Baroness said, the Windsor Framework agreement secured substantial legally binding changes and flexibilities that do improve things. I hope that the EU reset will further improve things, and I therefore urge all noble Lords to support it.

[Baroness Kramer (LD)]

My Lords—

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, will the Government please start to renegotiate our entry into the customs union? It would eliminate the issues raised by the noble Baroness, Lady Hoey, and many others and increase prosperity for us. There is a very simple and direct set of answers.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question and I pay tribute to her consistency on this matter. We share many similarities in our observations and analysis of the impact of Brexit. She will know that we are engaged in the EU reset, which will achieve substantial benefits for growth in the UK and for British citizens travelling around the European Union. I urge her to support the reset.

[Lord Grocott (Lab)]

My noble friend, on this Question and a number of others that I have heard him reply on, demonstrates the passion that he feels for the European Union. It is a passion not shared by everyone. Some of us remember that the 40 years when we were in the European Union were not exactly flowing with milk and honey as far as the British economy was concerned.

--- Later in debate ---

[Lord Grocott (Lab)]

My noble friend will notice the support he gets from the Liberal Democrat Benches.

Can I have my noble friend’s assurance that we stand very strongly by the Labour Government’s manifesto promise that there will be no question of us rejoining either the customs union or the single market?

[Lord Livermore (Lab)]

I am sure my noble friend and I agree on many things, but Brexit is not one of them. I hope that when he talks about our experience in the European Union he will acknowledge the OBR’s calculations that, had we remained in the European Union, by the end of this Parliament the economy would be £100 billion larger than it will be otherwise. That is a significant disbenefit of Brexit. As my noble friend knows, the manifesto stands.

[Baroness Neville-Rolfe (Con)]

My Lords, returning to the Question, we on these Benches fully recognise the importance of the agreements reached between the previous Administration and the European Union. However, there is a legitimate question about whether practical solutions could now be explored to address the specific anomaly. Will the Minister consider supporting a joint UK-EU technical group to examine practical options for restoring duty-free parity for Northern Ireland travellers, which could overcome the difficulties the Minister outlined? That process could be undertaken without undermining the Windsor Framework.

[Lord Livermore (Lab)]

Let me be absolutely clear, again. If you have duty-free, you have to have allowances. If you have allowances, you have to have checks and enforcement. If you have checks, you have to have border infrastructure, and if you have border infrastructure, that will be contrary to the Windsor Framework and the Good Friday agreement.

GDP Per Capita

Lord Livermore Excerpts

Monday 20th October 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the latest estimates of the current GDP per capita, and of the factors contributing to it.

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

My Lords, the latest data from the ONS shows that GDP per capita has risen by 0.9% over the past year, in line with the OBR’s forecast, and this is the second fastest in the G7. This compares with a fall of 0.1% during the previous Parliament. The increase in GDP per capita in the past year is due mainly to the strong rebound in both private consumption and investment. Of course, we want to go further, which is why economic growth is the Government’s number one priority.

[Lord Leigh of Hurley (Con)]

Indeed so, but the Minister will be aware that the ONS’s latest figures show that in the most recent quarter, economic growth per capita grew by only 0.2%—less than half than in the previous quarter. Will he accept that this is entirely due to the Government’s policies on the national insurance increase, the lack of business confidence because of the Employment Rights Bill, and the wholly unnecessary delay in the Budget? Would he like to clarify his previous remarks about the effect of Brexit being 4% on growth and productivity, when he knows very well that the OBR said that that would be over 15 years? This means that on a per annum basis, the effect is teeny and within the margin of error.

[Lord Livermore (Lab)]

The answer to all the noble Lord’s questions is no. He points out that GDP per capita grew by 0.2% in the second quarter of this year; that compares with 0.1% over the entirety of the previous Parliament. If he wants to make comparisons, I am more than happy to do that. I do not accept the points he makes about the Government’s other policies. We are currently the fastest-growing economy in the G7. On his points about Brexit, the OBR has been very clear that Brexit has permanently reduced the size of our economy by 4%. Its calculations are absolutely clear on that point.

[Lord Watts (Lab)]

My Lords, does the Minister agree with me that GDP would have been higher had we not had a Government previously who wrecked the economy, wrecked public services, gave us Brexit and left us with massive debt?

[Lord Livermore (Lab)]

My noble friend is absolutely correct. The previous Government gave us austerity, taking demand out of the economy at exactly the wrong moment; a Brexit deal, which reduced GDP by 4%; and the Liz Truss mini-Budget, which crashed the economy. We will take no lessons from the party opposite when it comes to growing the economy.

[Baroness Kramer (LD)]

My Lords, the UK is the sixth-largest economy, measured by GDP. But, on the measure of GDP per capita, it is only the 18th largest. Our demographic profile, with a heavily aging population, is a key reason for this. This year, we expect to reach the scary benchmark of having more deaths than births. Of course, we need to upskill our population in advancing technology. Do the Government accept that we rely on net immigration to sustain the economy in the public sector and that there is no way out of that?

[Lord Livermore (Lab)]

I hear what the noble Baroness says. The OBR is currently considering the economic and fiscal impacts of the immigration White Paper published in May and will report back in its forecast in the autumn. Of course, she is right that we are in a global race for talent, with many countries seeking to improve the attractiveness of their immigration systems for highly talented individuals. The immigration White Paper announced that the Government will review the visa offer for highly talented individuals by expanding the high potential individual visa and reforming the global talent and innovator founder visas. We have also agreed that we will work towards an ambitious youth mobility scheme with the EU, creating maximum economic and cultural opportunities between the UK and the EU. Any scheme would give young Brits the opportunity to travel, to experience other cultures and to work and study abroad.

[Lord Londesborough (CB)]

My Lords, can the Minister confirm that the Government’s pledge still holds—specifically, that the UK will deliver the G7’s fastest growth in GDP per capita for two straight years by the end of this Parliament—and explain why investors, both debt and equity, should buy into this view?

[Lord Livermore (Lab)]

Yes, I can absolutely confirm that that remains our mission. Our growth mission is to have the fastest-growing economy in the G7. We are currently the fastest-growing economy in the G7, and the IMF recently revised up the growth forecast for this year, the second time it has done so. I think both the IMF and the OECD currently forecast that the UK will be the second fastest-growing G7 economy this year. Our growth mission also includes living standards; since the election, living standards are up 2.1% compared with the 1.8% fall over the last Parliament—the only Parliament on record in which living standards were worse at the end of it than at the start. We also have a commitment on GDP per capita, as the noble Lord rightly says; the OBR currently forecasts GDP per capita to rise by 5.6% over this Parliament.

[Lord Massey of Hampstead (Con)]

My Lords, the ONS reported recently that 53% of the population are net recipients of state benefits and therefore make a very modest, to say the least, contribution to GDP. Meanwhile, 1% of the population are producing 13% of GDP and paying 28% of our tax. Whether we like it or not, the UK is becoming ever more financially dependent on its top earners but at the same time making it less attractive for them to stay and contribute to the UK. The evidence is mounting—we saw it from France yesterday—that people are considering moving their assets abroad and potentially leaving the country. So does the Minister agree with me that, whatever your ideological view of wealth distribution might be, the UK needs to focus on retaining its high earners, and does he recognise that if only 10% of the top 1% leave—that is 35,000 people—our fiscal black hole would increase very substantially?

[Lord Livermore (Lab)]

That is a very long question but I can give the noble Lord a very short answer. Yes, of course, I agree with him. It is very important that we retain our high earners and retain as much talent in this economy as we possibly can.

[Lord Sikka (Lab)]

My Lords, the equitable distribution of income to enable people to buy goods and services is essential for sustained economic growth, but all is not well. At Melrose, the CEO to average worker pay ratio is 1,112; at Tesco 375; at Marks & Spencer 261; at Associated British Foods 218; and 195 at Sainsbury’s. In view of this scale of inequity, what is the Government’s plan to secure equitable distribution of income for workers and, in doing so, also secure economic growth?

[Lord Livermore (Lab)]

Clearly, we need to make sure that we retain top talent in this country, as the previous questioner asked me about, but we also need to make sure that we increase the living standards right across the income distribution, and particularly for working people. My noble friend will know that wages continue to grow and that in the first 10 months of this Government, real wages rose more than in the first 10 years of the previous Government.

[Lord Fox (LD)]

My Lords, one of the problems facing the Treasury and the Bank of England is the quality, or lack of it, of workforce data. Can the Minister tell us what progress is being made with the ONS to improve the quality of the data that the Government have to make their decisions?

[Lord Livermore (Lab)]

The noble Lord is absolutely correct. That is currently a significant issue. As I understand it, the ONS is reviewing that data, and that review is ongoing.

[Baroness Neville-Rolfe (Con)]

My Lords, per capita GDP is, of course, a proxy for productivity in the longer run, and I am very concerned that productivity has become an increasing problem for the UK economy. What do the Government plan to do about it, in both the public sector and the private sector?

[Lord Livermore (Lab)]

The noble Baroness is absolutely correct to say that productivity is a long-standing problem in the economy. As I understand it, productivity fell to the lowest in the G7 under the previous Government, so clearly it is important that we have prioritised that. One of the most important things we are doing for productivity is increasing investment in our economy. We have revised the fiscal rules to enable us to increase investment in the economy, and I regret very much that the party opposite opposed those changes to the fiscal rules.

[Baroness Curran (Lab)]

My Lords, can my noble friend the Minister explain to the House the role of record levels of public investment and how they contribute to economic growth? In his answer, lest we forget, can he remind the House of the financial legacy that we inherited from the last Government—particularly the amount of the financial black hole?

[Lord Livermore (Lab)]

My noble friend is very generous in inviting me to mention the £22 billion black hole. She is correct that capital spending is a significant driver of growth in our economy. The OBR estimates that the increases in capital spending that we have seen have increased growth by 0.14% over five years, 0.43% over 10 years and 1.4% in the long term. It is very regrettable that the party opposite opposes those capital spending plans.