UK Economy

Lord Livermore Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Livermore (Lab)]

My Lords, the UK’s growth forecast was recently downgraded for every single year for the next three years. Debt is set to surpass £3 trillion for the first time ever. We are seeing the biggest ever fall in living standards and the tax burden is set to reach its highest ever level. Now, the ONS has confirmed that Britain has fallen into recession, with GDP per capita falling in every single quarter of the past year. Yet the Chancellor says, “Our plan is working”. Was it part of the Government’s plan, having spent 14 years in the economic slow lane, to now put our economy into reverse?

[The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)]

I absolutely believe that our plan is working. It is critical that we continue along the path that we have set out. One of the biggest challenges we have faced in this country over recent months is high inflation. That is the biggest barrier to growth and that is why halving it is still our top priority. Thanks to decisive action, supported by the Government, inflation has fallen. If one looks at what happens when inflation falls, one sees that interest rates can also fall, which will also mean that growth will begin to rise. The noble Lord mentioned growth. It is the case that the Government have very clear policies for growth. Noble Lords will discuss them with me shortly, as we debate the Finance Bill.

Finance Bill

Lord Livermore Excerpts

2nd reading & Committee negatived & 3rd reading
Wednesday 21st February 2024 Lords Chamber

[Lord Livermore (Lab)]

My Lords, the Finance Bill that we are debating today was published following the Chancellor’s Statement in November last year, in which he claimed to be delivering an “Autumn Statement for growth”. It was the 11th such growth plan that we have seen from this Government over the past 14 years, and, over that time, the UK’s growth record has been poor.

The noble Lord, Lord Leigh of Hurley, mentioned comparative growth rates. We have languished in the bottom third of OECD countries, with 27 OECD economies growing faster than us since 2010. Looking ahead, over the next two years, no fewer than 177 countries are forecast by the IMF to grow faster than the UK. Against this backdrop, in the so-called Autumn Statement for growth, the Office for Budget Responsibility actually downgraded its forecast for growth in each of the next three years—it was revised down this year, next year and the year after that. Growth this year is forecast to be just 0.7%, which is more than halved from the 1.8% predicted in the Budget, with the economy forecast to be £40 billion smaller by 2027 than the Chancellor expected back then. Now, the Office for National Statistics has confirmed that Britain has fallen into recession. We know too, as the noble Baroness, Lady Kramer, observed, that GDP per capita fell in every single quarter of the past year.

Britain is trapped in a spiral of economic decline. Having spent 14 years in the economic slow lane, the Government have now put our economy into reverse—the latest chapter in a 14-year story of failure and economic stagnation. First, we had austerity, which choked off investment, and then years of political instability, which in turn fuelled economic instability; then Brexit without a plan; then the disastrous mini-Budget, which, as the noble Lord, Lord Desai, observed, crashed the economy, sending mortgages and interest rates soaring. We have had five Prime Ministers, seven Chancellors, and 11 plans for growth, each yielding less than the last.

If the UK economy had grown at the average rate of the OECD over the past decade, it would now be £140 billion larger, equivalent to £5,000 per household every year. This would mean an additional £50 billion in tax revenues to invest in our public services. Instead, with growth so weak, taxes have risen remorselessly, with less and less to show for it. While our public services crumble, we have seen 25 tax rises in this Parliament alone. The tax burden now rises every single year for the next five years, rising to its highest ever level and making this the biggest tax-raising Parliament ever, with an average tax rise of £1,200 per household.

However, there is one small group of people who will continue to be protected from this Government’s tax rises on much of their income. Missing from this Finance Bill, once again, is any action to tackle non-dom tax status: those people who live in Britain but do not pay UK taxes on their income from overseas. Closing this loophole and replacing this archaic status with a residence scheme like other countries have could raise crucial funding to bring NHS waiting lists down. Labour believes that those who make Britain their home should pay their taxes here. That patriotic point should be uncontroversial; yet, while families across the UK face higher taxes year on year, the Government continue to enable those who keep their money overseas to avoid paying their fair share of tax. So, while we have yet another Finance Bill that leaves this loophole open, families across the UK face a tax burden that is climbing to a post-war high.

The chair of the UK Statistics Authority rebuked Government Ministers this week for making misleading claims about their record on tax. Let us be clear: while the cut in national insurance announced in the Autumn Statement was welcome, it was more than eclipsed by increases in taxes that the Government had previously announced. For example, as my noble friend Lord Davies of Brixton mentioned, the freezing of national insurance and income tax thresholds for six years is now expected to cost taxpayers £45 billion. This fiscal drag means that nearly 4 million more people will pay income tax and 3 million more people will pay the higher rate. To quote Paul Johnson from the Institute of Fiscal Studies, the cut in national insurance rates

“pales into … insignificance alongside the … increase in personal taxes created by the six year freeze in allowances and thresholds”.

The IFS has calculated that, extraordinarily, almost every single person in the UK who is liable for income tax or national insurance will now be paying higher taxes overall. As a result, the tax burden will now reach 37.7% of GDP by the end of the forecast period, an increase equivalent to an astonishing £4,300 additional tax for every household in the country.

We have an economy in recession, the tax burden rising to its highest ever level and the biggest fall in living standards since records began. We must break this spiral of economic decline. Increasing growth is clearly the biggest economic challenge that our country faces. In government, Labour’s defining economic mission will be to restore growth to Britain, with good jobs and productivity growth in every part of our country. Our plan to deliver that mission, supported by British business and developed in partnership with British business, is built on three pillars: stability, investment and reform.

Stability will be brought about by strong, robust and respected economic institutions. Rather than criticising the Bank of England, as a number of prominent Conservative politicians have, we will protect its independence, and we will strengthen the Office for Budget Responsibility. We will introduce a new fiscal lock and tough new fiscal rules. Iron discipline will ensure that every policy we announce, and every line in our manifesto, is fully costed and fully funded. With a Labour Government, never again will a Prime Minister or Chancellor be allowed to repeat the mistakes of the Liz Truss Budget. Never again can we allow a repeat of the devastation that that Budget brought to family finances or allow a plan to be pushed through that is uncosted, unscrutinised and wholly detached from economic reality.

We prize stability and predictability for business, as we know how highly businesses that are considering investing in the UK prize stability, predictability and a long-term plan. This Finance Bill contains a number of measures that we have been calling for for some time. We welcome the Government finally making full expensing permanent after so many years of chopping and changing capital allowances; we have made it clear we will maintain this policy if we are in government. We have also made it clear that we will maintain the system of R&D tax credits introduced by this Finance Bill—again, after so many years of this Government chopping and changing the design of the scheme.

Of course, there is still a general election to face, so I use this opportunity to invite the Minister to put on the record whether the Government will follow our lead. Will she confirm that, should they win the general election, they will maintain permanent full expensing? I am sure that many businesses would welcome the certainty that comes from knowing that both main parties are going into the election fully committed to keeping this policy in place.

Let me be clear about another area where we will provide certainty, should we win the next general election. As the shadow Chancellor has set out, we believe that the current corporation tax rate strikes the right balance between what our public finances need and maintaining our competitiveness in the global economy. That is why we are pledging to cap the headline rate of corporation tax at its current rate for the whole of the next Parliament. We would take action if tax changes in other advanced economies threatened to undermine UK competitiveness. That choice provides predictability and has a clear rationale; that is the pro-business and pro-growth choice. So, again, to offer businesses as much certainty as possible, I ask the Minister whether the Government will follow our lead and also pledge, today, to cap corporation tax at its current rate for the next Parliament?

Our commitment to stability will be matched by a commitment to investment, through partnership with the private sector, to power the industries of the future with a modern industrial strategy; a new national wealth fund to invest alongside business, in our automotive sector, in our ports, and in the future of our steel industry; and a new national champion in homegrown power, leading the way on floating offshore wind, tidal and nuclear power, to ignite growth, boost our economic security, drive down energy bills, and create good, well-paid jobs across Britain. This will be combined with our commitment to reform, starting with our planning system, taking on vested interests to get Britain building again. Stability, investment, reform—the foundations of a plan to break free from the vicious cycle over 14 years of stagnant growth, rising taxes, and falling living standards.

[Lord Leigh of Hurley (Con)]

Can the noble Lord clarify a point that he made in response to a point that I made about non-dom taxation? I understand that the Labour Party originally thought that taxing non-doms in the way that he described would raise £3 billion—it then reduced it to £2 billion and I think that it now thinks that it is £1 billion. It would be very helpful to have precision and clarity on the estimate that this will raise. Will he also confirm, now that Labour Party officials are talking to the Treasury, that they have asked the Treasury for its figures on the Labour Party’s proposals on non-doms, which, as I understand it, show a net loss to HMRC in respect of those proposals?

[Lord Livermore (Lab)]

I do not think that I am at liberty to divulge the exact nature of those discussions, but I can certainly say that that is not correct.

[Lord Leigh of Hurley (Con)]

Does the noble Lord have an answer to my question on the specific amount that the non-dom tax proposals will raise?

[Lord Livermore (Lab)]

I do not have the exact number to hand.

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2024

Lord Livermore Excerpts

Tuesday 13th February 2024 Grand Committee

[Lord Sharkey (LD)]

My Lords, we support this pensions dashboard SI, just as we supported the pensions dashboards project during the passage through the House of what became the Pension Schemes Act 2021. We continue to believe that the dashboards should deliver more information to the consumer in a comprehensive and easily understood way, and that this will make it easier to make better choices.

We understand that providing these dashboards, both for MaPS and for commercial suppliers, is a very complex undertaking. We were not terribly surprised by the delays the project has suffered but we would like some reassurance about progress from the Minister. The new connection date is set for 31 October 2026, but some services may be available before then. Could the Minister tell us when we may now expect the MaPS dashboard to be available to consumers, when we may expect commercial variants to be available and what services short of a full dashboard may be available sooner?

It would also be very helpful if the Minister could tell us when she expects the FCA rules that she mentioned, which were previously consulted on, to be published. It is hard to see commercial enterprises being able to finalise their own dashboards without sight of and understanding of the new FCA rules.

During the debates in the House on what is now the Pension Schemes Act 2021, many of us thought that the MaPS version of the dashboard should be allowed at least a year of operation before commercial versions were allowed to enter the market. Can the Minister tell us whether there is likely to be a period when the MaPS version runs alone?

We also debated the issue of allowing consumers to make transactions via commercial dashboards. Can the Minister say what the current position is? Will transactions be allowed?

The mechanics of the SI before us seem entirely straightforward and are clearly vital to consumer protection. We have no issues with either its purpose or its mechanism. We do have a couple of very minor and tangential questions. First, we are curious about the date of the SI coming into force. Why is it 11 March? Does that date have any particular significance?

The second question relates to the final sentence of paragraph 7.4 of the Explanatory Memorandum, which reads:

“Operating a dashboard may include taking regulatory responsibility for any third parties involved in connecting to MaPS digital architecture on their behalf”.


I would be very grateful if the Minister could unpack that a little. Perhaps she could give an example of such an arrangement. What circumstances would trigger the assumption of responsibility?

[Lord Livermore (Lab)]

My Lords, this SI makes good on a commitment given during the passage of what became the Financial Services Act 2021 to ensure that entities running a pensions dashboard will have to be authorised and regulated by the FCA. This is an important safeguard for pension holders and we welcome the SI, even if it has taken longer than expected to arrive and is not quite the final piece of the pensions dashboard puzzle.

In an age of scams, uncertainty about AI and increasing consumer concern about online safety, perhaps I might ask the Minister about technical safeguards that providers are expected to put in place. I understand that dashboards themselves will not store data, so there is no risk of mass collection. But if an app is not secure and someone is using a device infected with malware, for example, could bad actors still be able to view and therefore exploit data such as account names, numbers and balances? It would be helpful to know what specifications private providers will have to meet—or, indeed, whether the Government or the FCA will be setting any technology specifications at all.

Paragraph 7.1 of the Explanatory Memorandum to this SI states that the regulated entity will be responsible for the actions of third parties connecting to the Money and Pensions Service digital architecture on their behalf. In recent years, there has been a number of examples of websites or apps using plug-ins to process logins which it then turned out had been infiltrated and customer data breached. Are the Government satisfied that the FCA and dashboard providers will be on top of these issues and that they will go to the Information Commissioner if needed?

Although more guidance is being issued about pensions dashboards, it is still not clear when the Government expect the first products to be operational. Does the Minister have a specific target date in mind?

Finally, when this SI was debated in the Commons, the shadow Economic Secretary asked the Minister whether he could confirm whether pensions dashboards would be using the Government’s OneLogin service. The Economic Secretary said he would write on the matter but, as far as I am aware, has not yet done so. Does the noble Baroness have an answer to that point in her brief and, if not, whether she will commit to copying the Economic Secretary’s reply, when it comes, to the participants in this debate today?

[Baroness Vere of Norbiton (Con)]

My Lords, I am very grateful to both noble Lords for their contributions to this short debate on a topic of great interest to all of us pensioners. I, for one, am looking forward to being able to see whether I have any lost pensions that suddenly pop up on my dashboard and it turns out that I am a multimillionaire. I am not holding my breath.

However, I think all noble Lords recognise that it is an incredibly complex undertaking, and it is right that we take the time to ensure that it is done to the level that consumers will expect—particularly given the amount of data available out there relating to pensions. It must be safe and secure; pensions dashboards will allow users to search their pensions and view their data, and they will be connecting to potentially thousands of schemes offered by technologically advanced organisations in some circumstances, and in others, frankly, organisations that are not quite so advanced. It is those laggards that we need to make sure are up to scratch.

Essentially, we expect the digital architecture to facilitate the search of more than 71 million pensions records held by thousands of pension schemes and providers. Each of those—or many of them—will have different IT systems and ways of calculating values. Pulling all of that together is the complex thing behind this, but, as the noble Lord, Lord Livermore, rightly pointed out, we also have the issue of identity verification to consider, and various other critical elements of the ecosystem. Around that sit things such as standards and guidance to pension schemes, in order for them to be able to connect.

The timelines at the moment are that the DWP’s amending regulations came into force in August 2023. That set out a new connection deadline for schemes of October 2026. At the moment the DWP is engaging extensively with industry and has been since last year. It will issue guidance on a connection timetable in spring 2024.

The reason for the delay is that it is a slightly more complex technical issue and solution than initially anticipated. This became apparent once we were able to speak to industry stakeholders to find out how they store their data and present it to their pension holders. But I am convinced there will be a point when we get to the dashboard available point—DAP—at which stage the dashboard will be made publicly available. However, before the DAP can be reached, the Secretary of State for the Department for Work and Pensions will have to issue a notice. He or she will do so only after having regard to whether there is sufficient coverage on the dashboards, that the service is working effectively and that the overall user journey on the dashboard is positive. This will be informed by extensive user testing to ensure the success of the pensions dashboards services from the outset.

I think that it was the noble Lord, Lord Livermore—forgive me, I cannot remember—who asked whether MaPS would be first and then others would follow. In fact, it was the noble Lord, Lord Sharkey. It is too early to say now. Certainly, MaPS will be first, but we are not yet clear whether there will be other private sector providers ready to go at that time. There will not be a rush to try to get private sector providers there because, of course, the FCA is still working on its rules, and we will allow private sector providers only once the FCA has published its final rules. The applicants would need time to prepare accordingly, the dashboard architecture would need to be complete and the private operators would then have to have applied to the FCA, which would have gone away, checked the business model and looked at its usability—all of those things—before it would also be allowed to sit alongside MaPS. So it is too early to say whether a private sector provider would be launched at the same time.

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024

Lord Livermore Excerpts

Tuesday 13th February 2024 Grand Committee

[Lord Livermore (Lab)]

My Lords, we support this SI. It is a common-sense approach to ensuring timely updates to the UK list of high-risk countries, and it retains the flexibility needed to ensure that other countries can be added via affirmative SI if that is deemed appropriate. I note that the Minister mentioned that letters will be placed in the Libraries of both Houses, but what mechanisms will exist under this new regime if noble Lords wish to raise questions or concerns about high-risk countries, should they have them?

I note that we debated the latest update to the list only a few weeks ago and that this SI does not make any further updates to the list of countries. I therefore have no additional questions.

[Baroness Vere of Norbiton (Con)]

My Lords, I am very grateful to both noble Lords for their support for this SI, which I believe is entirely sensible. One of the things that I was unable to bring out in the opening statement as to why I think it is so sensible is that one of the key things about us being aligned to FATF, and the timing of a country being listed by FATF and immediately going on to the list here, is that we can act globally and in a co-ordinated manner so that the international community can ensure that it acts together to magnify the preventive effects.

The noble Lord, Lord Sharkey, mentioned Russia. It is true that Russia is not currently on a FATF list as, of course, a cycle of mutual evaluations needs to be gone through. However, Russia is obviously subject to extensive sanctions by the UK. I think there is sometimes a little confusion about the money laundering regime and the sanctions regime. In the money laundering regime, you are regulated under the money laundering regulations. Therefore, as a regulated person you must do certain things. However, everybody needs to be aware of sanctions, sanctioned individuals and sanctioned organisations. Obviously, for Russia, that is quite significant.

That brings me on to notification. As committed to, we will place a letter in both Houses with a summary of the plenary and whether any countries have gone on or off any list. Perhaps we will provide a reminder to noble Lords as to who is currently on the two lists.

The noble Lord, Lord Livermore, asked how he could raise questions. I suggest that, in the first instance, I would write to the Minister. Obviously, one could use Parliamentary Questions, but a letter would be better and probably elicit a fuller response. If not, there is always the opportunity to request a meeting with the Minister. It is a very important issue and I do not think that there would be any reason at all for us not to agree to do that.

That is about keeping Parliament informed, but then, of course, the regulated organisations need to be kept informed as well. If, as a regulated organisation, you do not have a process for checking who is on or not on a FATF list, I am afraid you are not a particularly well-run regulated organisation. All sorts of different organisations are regulated, but they will have to have controls and processes in place. We would put a notice up, as we always do, in a specific place. Two things would then happen: the regulated organisation itself would see the update—I know that many thousands of them do—but the supervisors, who are the overarching body of the different types of regulated organisations, would also send out reminders to those organisations about any changes. So there are two lines of attack, but, frankly, it should be beholden on the organisation as a regulated body to keep itself in the loop.

With that, I commend the regulations to the Committee.

Self-employment: A1 Forms

Lord Livermore Excerpts

Monday 12th February 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

It is not entirely right that costs incurred in the EEA should be offset against UK tax; that would seem slightly odd. However, I reassure the noble Lord that of course some of the costs will be tax deductible: for example, if a group were to hire a conductor from the US and use that conductor for performances in the UK. Obviously, we have to make choices in this area. We are content with where we are headed in terms of removing EEA activity from the orchestra tax.

[Lord Livermore (Lab)]

My Lords, the A1 form is required for each travelling worker, for each trip and for each EEA country they intend to visit. Industry bodies tell us that this represents a significant burden for their members, particularly for those who are self-employed or work for small organisations. Given that HMRC processes are increasingly digitised, do the Government believe that there is scope for simplifying the application process, such as moving from paper to digital certificates, or allowing people to use previously completed applications as a template for their next submission?

[Baroness Vere of Norbiton (Con)]

As I explained in my opening remarks, the forms are now digital.

[Lord Livermore (Lab)]

The certificates.

Buy Now, Pay Later: Regulation

Lord Livermore Excerpts

Wednesday 7th February 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

I do not believe so, because, as I said, it is not a huge amount of debt. The average balance for younger people aged 25 to 34 is just £185. One experience that I think many users have of buy now, pay later is that they may, once, have a late fee—I know that my children certainly have—and then they learn, and they do not do it again. Those fees are not particularly expensive, but Experian, for example, would say that 99% of agreements were settled on time in January and February. We cannot shut off access to a form of interest-free credit which has saved consumers more than £100 million. It is really important that we get the balance right.

[Lord Livermore (Lab)]

My Lords, in February 2021, the Government promised to act swifty to regulate buy now, pay later. Three years later, legislation is nowhere in sight. While the Government have delayed, leaving millions of consumers unprotected, Labour has set out plans for regulating the sector. That includes a requirement for clearer information, while ensuring the same protections for consumers as they get when using a credit card. To move things along, will the Government now adopt Labour’s plan, which has received broad support from all major buy now, pay later providers?

[Baroness Vere of Norbiton (Con)]

I have to be honest with the noble Lord in saying that I have not read Labour’s plan, but he talked about clarity of information. It is worth pointing out that it is not just the FCA that looks at advertising and financial promotion. We have the Consumer Protection from Unfair Trading Regulations 2008; we have the Consumer Rights Act, and then we have the UK advertising code. In terms of information, it is clear that consumers have a number of recourses, but I return to what I said at the outset: the consultation closed in April 2023; the Government have reiterated our position that regulation must be proportionate. I am quite surprised that the Labour Party thinks that it has a solution that has been backed by all buy now, pay later firms, because it is a very complex area and we need to achieve a balance.

Climate Risk Models

Lord Livermore Excerpts

Thursday 25th January 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

No, I do not quite agree with my noble friend, because the Bank of England has a responsibility to look at all risks. He pointed out many risks that are not climate related. However, underlying all of this is that all those risks—and, indeed, climate risk—are interdependent. One cannot single out one at the expense of others; one has to consider them all in the round. That is why we make it clear when we correspond with the Bank of England and the independent regulators that climate risk is just one of the many risks to our financial system that need to be considered.

[Lord Livermore (Lab)]

My Lords, the Government have made a series of important commitments relating to forest risk commodities. Those commitments, including in the Financial Services and Markets Act to carry out a review of the adequacy of financial regulation in tackling illegal deforestation, rely on the laying of regulations under the Environment Act. Can the noble Baroness tell us when those regulations will be laid and, once they are, how long the review will take?

[Baroness Vere of Norbiton (Con)]

I am well aware of the Government’s work on forest risk commodities, which is under way, as it falls within my portfolio. I cannot give the noble Lord any further timings at this moment, but suffice it to say that we are working on it.

High Street Banks and Banking Hubs

Lord Livermore Excerpts

Thursday 25th January 2024 Lords Chamber

[Lord Livermore (Lab)]

My Lords, I join others in congratulating the noble Baroness, Lady Tyler of Enfield, on securing this debate, and for her excellent opening speech, a great deal of which I agreed with.

As many noble Lords have said, this is indeed a very timely debate. Around half of all bank branches in the UK have closed since 2015. That is almost 6,000 banks closing their doors, with some regions such as the south-west or Yorkshire losing nearly two-thirds of their branches. This has cut off countless people from essential services and has been a major factor in the decline of Britain’s high streets.

It is of course welcome that, after many years of delay, the Financial Services and Markets Act finally introduced protections for access to cash, but far too little has been done to protect essential face-to-face banking services, which the most vulnerable in our society depend on for financial advice and support.

Instead, the Government have relied solely on a voluntary arrangement with the banks, which has managed to deliver just 30 out of a promised 70 banking hubs. As a result, 33 towns across the UK are now left without a single bank, despite all of them being promised a banking hub over six months ago. Even if delivered, the promise of 70 hubs under the voluntary arrangement is completely inadequate to meet the scale of the problem.

In the last 24 months alone, an additional 320 towns have seen their last remaining bank branch close, leaving more and more people and small businesses in banking deserts, without any options to bank locally. My noble friend Lord Berkeley gave me just one example from the Isles of Scilly, where he lives. The last bank there closed 10 years ago. The population of 2,500 people have to go to Penzance to visit a bank, at a cost of a £160 return ferry journey, just to use essential banking services.

Cases such as this have led the Labour Party to commit to a national strategy on banking hubs to quickly deliver at least 350 hubs on Britain’s high streets. As part of that commitment, areas that currently have no high street banks would be first in the queue. We will work with the banks and give the FCA the powers it needs to stop people being left in these banking deserts, guaranteeing communities access to face-to-face banking services.

To be clear, this does not mean that we believe banks should be prevented from closing branches that are no longer needed—far from it. In fact, where possible, access to face-to-face services is in many cases better delivered through a shared banking hub, whether through the Post Office or other models of community provision. Doing so can lead to significant cost savings for banks too. FCA data shows that, whereas a bank branch costs over £600,000 a year to run, that cost is less than £200,000 for a banking hub—a figure which itself will be divided among the participating banks according to local market share.

It is, of course, also inevitable that payment and banking systems will continue to innovate. This is a good thing—online banking is a far more convenient way for many people to manage their finances—but we must ensure this digital revolution does not further deepen financial exclusion, which means we must protect face-to-face services while also putting in place a proper strategy for financial and digital inclusion. Here, again, banking hubs can play a vital role. These spaces have the potential to tackle digital exclusion through their dedicated staff, who can teach people how to bank online and provide internet access for those without it, as well as to promote financial inclusion by providing access to financial advice for people who are struggling.

Labour’s banking hub guarantee will also be a key part of our plan to reverse the decline of Britain’s high streets by ensuring that working people and local businesses have the banking services they need on their high streets. The community access to cash pilots demonstrated that shared banking hubs can be a major boost to local businesses in communities where they have lost every single one of their bank branches. In the areas that trialled banking hubs, 34% of businesses reported they could reduce the amount of time they needed to close their shop in order to carry out their banking; 37% of businesses reported that footfall had increased in their shop; and 51% of consumers reported shopping locally more as a result of the pilot services. This rose to 69% among respondents who considered themselves to be financially vulnerable.

The national rollout of banking hubs can play a vital role in providing much-needed face-to-face banking services. It could help tackle financial exclusion and could be worth billions of pounds to small businesses and high streets across the country. So I end by asking the Minister two questions. Will she commit to giving the Financial Conduct Authority the power to regulate and protect essential in-person banking services for communities, comparable to the regulatory powers it already has to maintain access to cash? Will the Government match Labour’s plan to work with the banks and the Financial Conduct Authority to rapidly expedite the rollout of at least 350 banking hubs in the communities with the highest need for essential in-person banking services? If we prioritise it properly, a national network of banking hubs could tackle ghost high streets and ensure that every community has access to the high street banking services they need.

Pension Investments

Lord Livermore Excerpts

Tuesday 23rd January 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

I would be more than happy to take lots of debates on this issue because it is incredibly important, and the Government are making great strides in this area. For example, on local government pension schemes, hundreds of billions of pounds has been invested for employees’ longer-term pensions. They are invested in pots that are too small; they need to be bigger, so we have set a deadline of March 2025, when we want to see local government pension schemes consolidate into fewer asset pools of greater than £50 billion. We expect that, by 2040, those pension schemes will be invested in pools of around £200 billion. With that sort of money, it is really easy to diversify.

[Lord Livermore (Lab)]

My Lords, when the Labour Party sought to amend the Financial Services and Markets Bill to encourage pension funds to invest in high-growth businesses, the Government opposed our amendment, so the Chancellor’s recent announcement that he is now following our lead was most welcome. However, the Mansion House compact does not, as many noble Lords have said, ensure that the unlocked capital is invested in UK equities, rather than finding its way overseas. What steps will the Government take to incentivise pension funds to put their wealth into the British economy by backing UK assets?

[Baroness Vere of Norbiton (Con)]

I am not aware of the detail of the amendment to that Bill tabled by the Labour Party, but we are taking a very measured approach to market intervention. It is clear to me that we need to do this and, as I said previously, it is evolution not revolution. However, there are many ways in which the Government are focusing on UK high-growth companies in particular. I point the noble Lord to LIFTS, or long-term investment for technology and science—investment vehicles tailored to direct contribution schemes. The Government will coinvest in or support those schemes up to £250 million. The bids have already been submitted, and we expect those funds to be operational and investing in UK growth companies by mid-2024.

Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024

Lord Livermore Excerpts

Tuesday 23rd January 2024 Grand Committee

[Lord Jones (Lab)]

My Lords, the Minister is clearly up to speed on these detailed matters, as I know my noble friend Lord Livermore is—but I am not. I recollect that, when I was in another place, the late Lord Cecil Parkinson, a very able Minister, introduced his great City finance reforms—what we knew then in the other place as the “big bang”. Lord Parkinson was a clever and adept Minister; he rose to even higher rank in government, and was a party chair for the late Lady Thatcher. But it seems to me that, in his reforms, simplicity was not one of the ingredients. With reference to the Explanatory Memorandum, at paragraph 7.1, what are sub-funds? Might the Minister throw some light on that detail?

[Lord Livermore (Lab)]

My Lords, I am grateful to the Minister for introducing this statutory instrument. We support these regulations, as they will provide smoother market access for overseas funds that have been determined to be equivalent to the UK’s in relation to consumer protection. This SI is part of a wider set of measures to bring the overseas funds regime, or OFR, online. The regime will apply to funds from jurisdictions that the Treasury has deemed “equivalent”, so the OFR will become operational only once those decisions by the Treasury have been made.

When this SI was debated in the Commons, my honourable friend the shadow Economics Secretary asked the Minister when the Secretary expected to take the equivalence decisions that would enable overseas funds to utilise the streamlined approach envisaged under the new overseas funds regime. In his answer, the Minister was able only to say, “very soon, I hope”. Given this, is the Minister able to go any further in providing greater clarity on the timing of these equivalence decisions? Is she able to provide any indication of how many equivalence decisions the Treasury expects to make in the first instance?

[Baroness Vere of Norbiton (Con)]

I am grateful to all three noble Lords for their contributions to this brief debate. On the matter of timing, both of the laying of the SI and where things will go in the future, the laying of the SI is being done now because there is parliamentary time. The assessment of equivalence is still under way, and therefore there is no urgency about this. As the noble Lord, Lord Sharkey, pointed out, the consultation took place a little while ago. The only real rationale is that the technical changes need to be made by the time that the funds are recognised under the overseas funds regime. Obviously, there is a lead-in time required for an assessment to be undertaken of any countries, or indeed territories.

The noble Lord, Lord Sharkey, pointed out that there is an ongoing assessment of the EEA. I can go no further than the Economic Secretary did in the other place. It is right that the ongoing assessment does its work effectively. As noble Lords will know, it started in autumn 2022, but we cannot possibly commit to timelines at this stage, as it is key that the work is done well. However, the overseas funds regime remains a government priority and we are working at pace to finalise this assessment. The temporary arrangements are in place until 2025, so there is a little time available.

The noble Lord, Lord Sharkey, mentioned the consultation. A significant amount of consultation went on prior to the primary legislation that was put in place. He asked some specific questions about consumer protections and the absence of FOS cover. I will write to him with further information on that.

The noble Lord, Lord Jones, spoke about the “big bang”. I joined the City slightly after that. It introduced an element of simplicity—that is clear—but, sadly, the City is now a different place and complexity has crept back in. This includes sub-funds, which are basically funds that sit under an umbrella fund, each of which may have different investment objectives. This is just to make sure that, if somebody has invested in a sub-fund, it can be reflected properly in their accounts in Wales and that the laws on the disclosure of spent convictions apply.

I cannot go further on timings but I am grateful to all noble Lords. As I said, I will write with further details on a couple of other things, in particular the measures around consumer protections that were mentioned by the noble Lord, Lord Sharkey.