Capital Investment and Share Ownership

Lord Livermore Excerpts

Thursday 13th March 2025 Lords Chamber

[Lord Brooke of Alverthorpe]

To ask His Majesty’s Government what consideration they have given to implementing an updated public-private partnership model to attract capital investment and to open share ownership to more people.

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

My Lords, the Government are committed to working in partnership with the private sector to deliver the infrastructure that our country desperately needs. We will set out our approach to unlocking greater private investment in UK infrastructure in the 10-year infrastructure strategy, which will be published alongside the spending review in June.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I am grateful for that response. I wonder whether I can persuade the Minister to move rather faster with the suggestion, which some of us have been pursuing, that we need to review the structure of the PPPs that we had under the previous Labour Government. We need to extend it so that we have wider participation of not just government departments but cities and mayors. On the other side of the fence, we need to extend the private side and give individual citizens the right to shares in these new ventures. Is the Minister prepared to meet a small group of us to talk in advance of the review?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. As I say, the Government will publish a cross-cutting 10-year strategy for the UK’s social, economic and housing infrastructure in June, alongside the spending review. It will help to drive growth, deliver net zero and support improved public services by providing more coherence across different types of infrastructure than has been the case in the past. Of course, I am more than happy to meet my noble friend and the group he mentioned.

[Lord Fox (LD)]

My Lords, some public/private partnerships have worked very well. The contract for difference system has been very good at getting a huge amount of private sector investment into the offshore wind sector. Others have proved far less successful. For example, there have been crippling costs for schools that have had long-term, low-quality, high-cost maintenance programmes. It would be helpful if the Minister could tell your Lordships’ House how the Treasury is learning from this. How is it involving the private sector in developing the right risk and reward structures for the right projects? How is it involving local authorities, which often end up picking up the cost of these public/private partnerships

[Lord Livermore (Lab)]

The noble Lord is absolutely right in much of what he says. The private finance initiative was a specific public/private partnership model that was developed 20 years ago. The Government are actively managing the legacy PFI portfolio and learning lessons from that. The Infrastructure and Projects Authority believes that there is an opportunity for the public and private sectors to reset relationships, improve performance and deliver high-quality public facilities and services. Of course, lessons have been learned from the past. On 24 March the National Audit Office will publish a report called:

“Lessons learned: Private finance for infrastructure”.

[Lord Tyrie (Non-Afl)]

The PFI has been a very mixed bag, but parts of it have been highly successful. Unfortunately, the Treasury’s approach to negotiating run-off in PFI has led a large number of top-flight managers in these good PFI projects to leave the industry altogether and seek work elsewhere. What steps are the Government taking to make sure that there is no further attrition?

[Lord Livermore (Lab)]

As the noble Lord says, many of the private finance initiative contracts are coming to an end within the next decade. It is important to prepare early for a seamless transition to the public sector to protect taxpayers’ money. The Infrastructure and Projects Authority is responsible on the Treasury’s behalf, providing oversight and support to the portfolio of operational PFIs. It carries out regular health checks and, to date, around 215 expiry health checks have already taken place.

[Baroness McIntosh of Pickering (Con)]

My Lords, a variety of Governments have tried to introduce private sector investment into water sector projects. The Pickering Slow the Flow pilot scheme that I was involved in at a later stage was hugely successful in factoring in a number of public partnerships. Can the Minister look at this to open up, for example, supermarket involvement and farmers contributing to flood resilience in catchment areas?

[Lord Livermore (Lab)]

I am very interested in what the noble Baroness says, and I will look at that further. As I say, the 10-year infrastructure strategy will be the point at which we set out the Government’s approach to private investment in infrastructure. I cannot say more than that at this point.

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

My Lords, does the Financial Secretary agree that, generally, the quality of PFI projects has improved over time, with an increasing number transferring risk successfully to the private sector and the projects being delivered on budget and on time? Given that the ONS now classifies pretty much all PFI projects as being on balance sheet, can he encourage the Treasury to provide sufficient expenditure cover in the spending review to support innovative public/private partnership proposals?

--- Later in debate ---

[Lord Livermore (Lab)]

As the noble Lord describes, there have of course been positive examples of PFI projects. For example, more than 100 hospitals were built by the previous Labour Government’s PPP programme. The Government are absolutely committed to harnessing private investment and restoring growth. On the latter part of his question, as I said before, the 10-year infrastructure strategy will be the point at which we set out the Government’s view of that, and it will be published alongside the spending review in June.

[Baroness Neville-Rolfe (Con)]

My Lords, does the Minister agree that we should be wary, not least because of the experience with PPI in things such as schools and hospitals, which several noble Lords have mentioned, about the establishment of public/private partnerships? Can I encourage him to be a little more forthcoming? What does he see as the risks? How will the Government assess value for money for the new schemes, perhaps with the help of the Infrastructure and Projects Authority, which he mentioned, whose work I respect?

[Lord Livermore (Lab)]

I am afraid the noble Baroness cannot encourage me to be more forthcoming. As I have said, the 10-year infrastructure strategy will be the point at which we set out the Government’s approach to private investment in infrastructure. I think she will agree with me that private investment is vital for the country’s infrastructure. The Chancellor has established the British Infrastructure Taskforce, made up of some of the UK’s biggest financial companies. That will support the Government’s infrastructure goal and ensure that the strategy is credible and deliverable.

[Lord Reid of Cardowan (Lab)]

My Lords, of course the public/private partnerships and PFIs had risks, and of course there were failures. That is almost inevitable in any new experimental and radical approach to funding services. But the truth is that over the last 20-odd years, the level of services to people in Britain has been much higher because of our engagement with the private sector. Can I therefore encourage my noble friend the Minister and his colleagues not to be deterred when it comes to infrastructure? There is no doubt in my mind that huge added value is possible if we are prepared to be bold in public/private partnerships.

[Lord Livermore (Lab)]

I am grateful to my noble friend for those words, and I agree with much of what he said. The Government remain absolutely committed to harnessing private investment and restoring growth. We will work in partnership with the private sector while ensuring that projects provide value for money for taxpayers, now and in the future, and that appropriate lessons are learned from the past.

[Lord Forsyth of Drumlean (Con)]

My Lords, is not the key to a successful private finance initiative the appropriate transfer of risk? To ensure that happens, it is important to have the people in the Treasury or elsewhere with the necessary skills to negotiate the appropriate contracts. In wishing the Government well in taking this forward, I ask them to give consideration as to how they will achieve that.

--- Later in debate ---

[Lord Livermore (Lab)]

The noble Lord is right. He is far more expert in these matters than I am, but I absolutely agree with him. Clearly, the public sector needs to be an intelligent client when it is negotiating with the private sector. That skill set is vital both within the Civil Service and in the skills we can draw on. As I mentioned, the Chancellor has established the British Infrastructure Taskforce to try to help with skills and advice. It is made up of some of the UK’s biggest financial companies, and it will support the Government’s infrastructure goals and ensure that the strategy is credible and deliverable.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Minister referred to the disastrous Blair PFI NHS hospitals scheme. I do not think there is much awareness that about half the money is still to be paid off. The noble Lord, Lord Fox, referred to the cost to local government. The Minister is probably aware of the National Institute of Economic and Social Research figure: local government is paying £13.5 billion. The institute also found that £1 billion had been made in pre-tax profit by a handful of companies, often registered in Guernsey and Jersey. Is PFI not simply a benefit to the financial sector?

[Lord Livermore (Lab)]

I think it was probably a benefit to the people who were able to be treated in the 100 hospitals that were built as a result of it. As I say, the private finance initiative was a specific public/private partnership model that was developed 20 years ago. The Government are actively managing the legacy PFI portfolio, and we are learning lessons from that.

Carbon Border Taxes

Lord Livermore Excerpts

Wednesday 12th March 2025 Lords Chamber

[Lord Fuller]

To ask His Majesty’s Government, further to the proposals by the European Union to exempt 80 per cent of eligible EU companies from new carbon border taxes, what plans they have to ensure that equivalent businesses in the United Kingdom are treated similarly.

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

My Lords, this is already the case. To ensure that the costs of complying with the UK carbon border adjustment mechanism are proportionate, it will apply only to those firms importing CBAM goods valued at £50,000 or more over a rolling 12-month period. The Government estimate that this will exclude 80% of CBAM-eligible firms while retaining more than 99% of imported emissions within the scope of the tax.

[Lord Fuller (Con)]

My Lords, the carbon border adjustment mechanism is a tariff by any other name. I am involved in an industry affected by CBAM, so I know more than most about the astonishingly divergent way in which the UK Government plan to introduce this tax. It will damage competitiveness, be complex to administer and drive growing inflationary pressures. There are even proposals to levy the tax to protect industries that do not even exist anymore. The EU has worked out for itself—

[Lord Fuller (Con)]

I am just about to ask the question. The EU has worked out for itself that building a walled garden around the economy will damage its own competitiveness. The Prime Minister said today in PMQs that all options were on the table in so far as tariffs are concerned. Does the Minister agree that the whole UK proposal needs a fresh look, or is he prepared to see us sleepwalk into a trade war with our friends and allies in the United States while damaging trade with our close EU partners?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. However, the answer is no, I do not agree with him. Reducing the UK’s carbon emissions is necessary to meet our emissions targets, and the emissions trading scheme and the carbon border adjustment mechanism are necessary tools to do that. Our approach is very similar to that of the EU. As the noble Lord said in his Question, we are doing exactly what the EU is doing—in fact, I think it has followed us, rather than the other way around, so our approaches are extremely similar. The US Administration have made no public comment on the UK CBAM, and I am not going to speculate on a hypothetical.

[Earl Russell (LD)]

My Lords, does the Minister agree that the UK and the EU running separate carbon markets only adds regulatory burdens and damages our energy transition and national industries? Is it time to work with our EU partners and look at relinking carbon markets to help to make our industries more competitive and drive down our energy bills?

[Lord Livermore (Lab)]

I absolutely agree with the noble Earl that alignment is helpful to UK competitiveness. We recognise that alignment with existing regimes can reduce administration burdens, so we will align where appropriate and we will follow developments on the EU CBAM very closely. We also continue to explore all options to improve trade and investment with the EU, which includes the UK and EU giving serious consideration to linking our emissions trading schemes.

[The Earl of Devon (CB)]

My Lords, given that we now produce no nitrogen fertiliser at all in the United Kingdom, and all of it is imported, have the Government calculated the impact of the carbon border tax on the price of food grown in the UK?

[Lord Livermore (Lab)]

Fertiliser production in the UK is subject to carbon pricing under the UK Emissions Trading Scheme. A UK CBAM will ensure that fertiliser produced overseas faces a comparable carbon price to equivalent goods produced in the UK. Most UK agricultural prices are a function of a range of international factors and the Government do not expect a CBAM on fertiliser to put UK farmers at a competitive disadvantage.

[Lord Bellingham (Con)]

My Lords, I declare an interest in this subject. Further to the question asked by the noble Earl, Lord Devon, can the Minister say whether the Government have made any assessment at all of the impact that this could have on our balance of payments?

[Lord Livermore (Lab)]

I do not think that that is relevant to this policy. Most of our trade in food is with the EU, and the EU has a similar scheme to ours.

[Lord Watts (Lab)]

My Lords, is not this another example of the mess that has been left by the previous Government? Does my noble friend agree that they did nothing to negotiate this, which is now causing problems to our industry?

[Lord Livermore (Lab)]

I am very tempted to agree with my noble friend. I think that what he says is absolutely the case.

[Baroness Neville-Rolfe (Con)]

My Lords, UK energy prices are far too high, notably for industrial uses such as steel, cement and ceramics, and for manufacturing, which are vital to the UK economy. Does the Minister agree that the arrangements for a carbon tax here and any border mechanisms must always be considered against the need to reduce energy costs for users and, as has been foreshadowed, to keep prices down, especially for hard-pressed consumers?

[Lord Livermore (Lab)]

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

[Lord Hannan of Kingsclere (Con)]

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

[Lord Livermore (Lab)]

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

Supply and Appropriation (Anticipation and Adjustments) Bill

Lord Livermore Excerpts

2nd reading & 3rd reading & Committee negatived
Tuesday 11th March 2025 Lords Chamber

Moved by

[Lord Livermore]

That the Bill be now read a second time.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Child Benefit and Guardian’s Allowance Up-rating Order 2025

Lord Livermore Excerpts

Wednesday 5th March 2025 Lords Chamber

Moved by

[Lord Livermore]

That the draft Order and Regulations laid before the House on 15 January be approved.

Considered in Grand Committee on 3 March.

Motions agreed.

Crown Estate Bill [HL]

Lord Livermore Excerpts

Consideration of Commons amendments and / or reasons
Tuesday 4th March 2025 Lords Chamber

Moved by

[Lord Livermore]

That this House do agree with the Commons in their Amendment 1.

1: After Clause 4, insert the following Clause—
“Territorial seabed
After section 3A of the Crown Estate Act 1961 (inserted by section 1 of this Act) insert—
“3AA Restriction on permanently disposing of interest in seabed etc
(1) The Commissioners may not without the consent of the Treasury permanently dispose of—
(a) any part of the territorial seabed, or
(b) any interest, right or privilege over or in relation to the territorial seabed,
which forms part of the Crown Estate.
(2) Accordingly, without that consent, any purported disposal of a kind mentioned in subsection (1) is void.
(3) In subsection (1), “territorial seabed” means the seabed and subsoil within the seaward limits of the United Kingdom territorial waters.””

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

My Lords, with the leave of the House, I will also speak to Amendments 2, 2A and 3. It is a pleasure to present the amended Crown Estate Bill to your Lordships’ House following its passage through the other place. As noble Lords will recall, this Bill focuses on removing existing limitations that hamper the Crown Estate’s ability to compete and invest as a commercial business, ensuring it has a sustainable financial future for years to come. In doing so, the Bill supports the Crown Estate to build on its strong track record of creating long-term shared prosperity for the nation.

Two main changes were made to this Bill in the other place. The first was the addition of a clause on the territorial seabed. I am very grateful to the noble Baroness, Lady Vere, for bringing this important issue to the Government’s attention. As noble Lords may remember, this issue relates to the ability of the Crown Estate to dispose of the seabed, given that it is a unique national asset.

As I noted on Report, the law on the seabed is complex. I committed to explore the matter further and, if required, bring forward a legislative provision to restrict the Crown Estate’s ability to permanently sell the seabed. I am grateful to the noble Baroness, Lady Vere, and the noble Earl, Lord Russell, for their support for proceeding in this way.

Clause 5, as inserted in the other place, delivers on this commitment and seeks to address the legitimate concerns raised by the noble Baroness, Lady Vere. It puts special protections in place for the seabed by requiring the Crown Estate commissioners to obtain consent from the Treasury before they permanently dispose of any part of, or the Crown Estate’s interest in, or rights or privileges in relation to, the territorial seabed.

To be clear, this does not mean that the Crown Estate could never be permitted to dispose of seabed. It may be that national or local interests would be best served by such a sale—including, for example, by the sale to another part of the public sector to enable local infrastructure development—but any such sale could take place only with the agreement of Ministers, and it is right that they are the decision-makers on such sales.

This clause would not fetter the Crown Estate’s existing right to agree licences or leases in relation to the seabed that, by definition, do not represent a permanent disposal of the asset. The ability to agree long-term licences and leases for use of the seabed will continue to be an important feature for the Crown Estate to attract the significant investment needed for offshore clean energy developments. I believe this fulfils my commitments to your Lordships’ House and addresses the important points raised.

The second change made to the Bill in the other place was, I am afraid, the removal of Clause 5, introduced by the noble Lord, Lord Forsyth, on Report, which would require the Crown Estate commissioners to assess the environmental impact and animal welfare standards of salmon farms on the Crown Estate on an ongoing basis. I thank the noble Lord, Lord Forsyth, for raising this important issue during the passage of the Bill, and for our constructive engagement on the subject since. As I said on Report, I wholeheartedly support the objectives behind his amendment, but I regret that the Government are still unable to support it. It remains the Government’s position that this amendment would duplicate protections that already exist in legislation or that are required by regulators as part of the licensing process for aquaculture.

As I also noted on Report, fisheries policy is the responsibility of the devolved Governments in Scotland, Wales and Northern Ireland. All fish farming in England is regulated to ensure it is carried out in a responsible manner that respects the environment and protects consumer health and animal welfare. At present, virtually all salmon aquaculture in the UK takes place in Scotland, where the management of the Crown Estate in Scotland is a devolved matter.

However, as this House has previously heard from my noble friend Lady Hayman of Ullock on 12 September 2024, according to the International Union for Conservation of Nature’s red-list criteria, Atlantic salmon are now endangered in Great Britain and near threatened globally. To provide further reassurance to noble Lords, I have spoken to the Crown Estate and the Government are now prepared to go further. I can make two commitments to the noble Lord, Lord Forsyth, should he choose not to push his amendment to a vote.

First, on auditing standards, the noble Lord’s amendment on Report provided for Crown Estate commissioners to assess the environmental impact and animal welfare standards of salmon farms on the Crown Estate. Today, I can say to the noble Lord that the Crown Estate will undertake an audit to ensure that all salmon farms leasing land on the Crown Estate in England, Wales and Northern Ireland comply with all relevant regulations on salmon farming in England, Wales and Northern Ireland. The outcome of this audit would be set out in its 2024-25 annual report, which will be published in June. If this audit were to find that salmon farms are not complying with their legal obligations and regulatory requirements, the Crown Estate will ensure these practices are corrected. In extreme cases this may involve exercising forfeiture rights, in the event of non-compliance of covenants.

Secondly, the relationship between the Crown Estate and the Treasury is governed by the framework document. The Government will amend this document to ensure that the environmental impact and animal welfare standards of salmon farms is considered at all times. The updated framework document will be amended to read: “The Crown Estate will continue to keep under review the environmental impact and animal welfare standards of salmon farms on its estate”. This amended framework document will be published on Royal Assent. I trust that these two commitments go some way to resolving the noble Lord’s concerns on this matter, and I hope he feels able not to press his amendment.

In addition to these substantive amendments, a procedural amendment was made in the other place. In line with existing convention, every Bill that begins in your Lordships’ House that requires a money resolution in the other place has an additional clause added to it that indicates that nothing in the Bill shall impose any charge on public funds. Once the Bill has been considered by the other place and authorised by a money resolution, this redundant clause is then removed.

I reassure noble Lords that the removal of the privilege amendment does not alter the position I previously set out on borrowing controls. To be clear, the Crown Estate will be able to borrow only with the consent of the Treasury and in line with the parameters set out in the memorandum of understanding that I have previously made available in draft. This includes that borrowing is not to exceed more than 25% of a net debt to asset value ratio.

Pre-appointment scrutiny was another important issue raised by noble Lords during the passage of the Bill in your Lordships’ House. In Committee, I committed to work with the Cabinet Office to ensure that pre-appointment scrutiny applied to the role of chair of the Crown Estate. I take this opportunity to confirm that the role of chair has now been formally designated as a public appointment for which parliamentary pre-appointment scrutiny now applies. The Government announced on 23 December that their preferred candidate would face pre-appointment scrutiny by the Treasury Committee in the other place. This hearing is set to take place on 19 March, with the committee’s report expected to follow shortly after. I am grateful for the opportunity to update your Lordships’ House on all these issues, and I beg to move.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I very much take my noble friend’s point. I was thinking, in clarification, that problems in Scotland would be addressed by the measure that the Minister has very helpfully brought forward today, so that this is looked at in the round wherever the salmon may be. I think that my noble friend and I are at one about this.

Government Amendment 1 seeks to restrict the permanent disposal of interest in the seabed. It would ensure that the commissioners may not dispose of the seabed without the consent of the Treasury. In Committee and on Report, noble Lords across the House, including, as has been said, my noble friends Lord Holmes of Richmond and Lady Vere of Norbiton, raised concerns about the disposal of the Crown Estate’s assets and emphasised the duty of the commissioners to protect the seabed. As stewards of our seabed, the Crown Estate and its commissioners bear a profound and unique responsibility to ensure its protection. It is not merely an asset; it is actually the foundation of our oceans and a vital natural resource that supports marine life and holds cultural and ecological significance. In a spirit of compromise, we can accept the Government’s amendment and reformulation.

In conclusion, I warmly thank the Minister for his efforts to meet our concerns on the Bill. That includes what he has not mentioned, the important 25% cap on borrowing that will be in the framework document, and it includes the agreement on pre-appointment scrutiny. I thank all noble Lords across the House—it has been a cross-party effort—who have taken part in the scrutiny of the Bill. I particularly thank my noble friend Lord Forsyth of Drumlean again for his persistence in this matter, and success. Above all, I thank my predecessor and noble friend Lady Vere of Norbiton, and my noble friend Lord Roborough, for their work on the Bill.

[Lord Livermore (Lab)]

My Lords, I thank all noble Lords who have spoken today. I am very grateful to the noble Lord, Lord Forsyth, for what he said and his agreement on the way forward. As the noble Baroness, Lady Neville-Rolfe, knows, the Crown Estate is devolved to Scotland, so the measures I have set out will not apply to Scotland and I cannot ensure that they will.

In answer to the noble Lord, Lord Wigley, as the Crown Estate is not devolved to Wales, the audit that the Crown Estate will conduct will apply to England, Wales and Northern Ireland. However, I do not believe that there is a salmon farm in Wales, so I do not know whether the audit will apply, but, clearly, all salmon farms on Crown Estate land in England, Wales and Northern Ireland will be looked at.

In answer to the noble Lord, Lord Bellingham, the outcome of the audit will be set out in the Crown Estate’s annual report, which will be published in June, giving an opportunity for scrutiny. In answer to the noble Earl, Lord Russell, in terms of the seabed, the Crown Estate is limited to 150-year leases.

I am glad that we have been able to agree to the changes made by the other place to this Bill. Once again, I thank all noble Lords for their efforts on the Bill since last July.

Motion on Amendment 1 agreed.

Motion on Amendment 2

[Lord Livermore]

Moved by

That this House do agree with the Commons in their Amendment 2.

2: Clause 5, page 2, line 29, leave out Clause 5

--- Later in debate ---

Motion on Amendment 3

[Lord Livermore]

Moved by

That this House do agree with the Commons in their Amendment 3.

3: Clause 7, page 4, line 4, leave out subsection (4)

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Livermore Excerpts

3rd reading
Tuesday 4th March 2025 Lords Chamber

Moved by

[Lord Livermore]

That the Bill be now read a third time.

Clause 1: Rate of secondary Class 1 contributions

Amendment 1

Moved by

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I am concluding for the Opposition on this amendment. We are content with the amendment, which we see as a technical, tidying-up amendment.

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

My Lords, the amendment tabled by the noble and learned Lord, Lord Wallace, seeks to make a minor adjustment to the Bill to more accurately define care workers in Scotland. While the amendment does not change the fundamental principles or objectives of the Bill, it enhances the clarity and precision of the text. I am therefore happy to accept this amendment.

[Lord Wallace of Tankerness (LD)]

My Lords, I thank the noble Lords and noble Baronesses who have participated in this debate. In particular, I thank my noble friend Lady Kramer for accepting the spirit of the amendment to what was originally her and my noble friend Lady Barker’s amendment. I also thank the Minister for the spirit in which he has accepted the amendment.

The noble Lord, Lord Eatwell, has been very consistent; he said much the same last week. The noble Lord, Lord Leigh, as well as the noble and learned Lord, Lord Hope of Craighead, made the point that, if the increase in national insurance contributions from bodies in the charitable sector should lead to diminution of services, it will be the people in receipt of the services who will suffer. That, in turn, could put a burden on government, possibly greater than the cost of being consistent with this amendment.

With that, and with thanks also to the noble Baroness, Lady Fraser, I am pleased to move this amendment.

--- Later in debate ---

Moved by

[Lord Livermore]

That the Bill do now pass.

[Lord Livermore (Lab)]

My Lords, it was this Government’s duty in October last year to repair the public finances and rebuild the public services. We did so in the fairest way possible, by keeping our promises to working people not to increase their national insurance, VAT or income tax. The Government did, however, need to take some very difficult decisions, including some of the measures contained in this Bill. As a result of those decisions, we have now wiped the slate clean, creating a platform of stability and enabling us to make significant additional investment in the NHS.

I thank all noble Lords who have given their time and expertise to scrutinise the Bill during its passage through your Lordships’ House. Specifically, I thank the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their constructive engagement and scrutiny.

While I acknowledge the commitment of your Lordships’ House to the scrutiny of the Bill, the Government have not found themselves in agreement with the amendments proposed. We believe that the Bill in its original form provides the right way in difficult circumstances of raising the revenue needed to repair the public finances and rebuild public services.

I thank my noble friends Lord Eatwell and Lord Chandos for their supportive contributions and thank my officials who worked hard to bring this Bill before your Lordships’ House, including Joe Oakes, Isabelle Urban, Alex Nevitte, Henry Lodge, Hannah Bewley and Will Smith. I beg to move.

[Baroness Kramer (LD)]

I am sorry to disrupt the House, but it is common to use do now pass to say thank you and I certainly have thank yous to say.

I thank the House for passing a number of amendments that will substantially reduce the damage and harm being done by this Bill. The noble Lord, Lord Londesborough, took the lead on small businesses, the Conservative Benches took the lead on charities and transport for special needs children, and my own party took the lead on community health and social care. Those are all exceedingly important and I hope the Government will take the issues very seriously. I do not think we have ever heard better debates, frankly, than those in this House that talked about real-life experience to convey the significance of the impact of the original Bill.

I thank the Minister. He and his team were unable to give us any concessions but they said no in the nicest of ways. I thank all the other Benches. We worked closely together—Cross Benches, Conservatives and our party—because we all felt in an almost non-political way that it was really necessary to try to come to the rescue of the damage that we could see was going to occur.

There is one amendment that I did not mention and which I think is important because it may survive some of this process and that is from the Conservatives on an impact assessment. That is becoming a recognised vehicle for important assessment of Bills such as this and has historically not been adequate. Perhaps we could now change that for the future.

Lastly, I thank my own Benches. I thank my noble friends Lady Barker and Lord Scriven and the others who led on various areas within this. I also thank Elizabeth Plummer of our Whips’ Office who did so much of the heavy lifting. She will have my eternal thanks. It is so good to have somebody covering one’s back when trying to deal with complex issues. I thank the House in general for taking this issue so seriously and recognising its significance to so many people.

[Baroness Neville-Rolfe (Con)]

My Lords, in concluding for the Opposition, I thank the many Peers on my Benches who have made valuable contributions during the Bill’s passage. I cannot thank them all today as the list is too long but I thank particularly my noble friend Lord Altrincham—my comrade in arms—and our opposition research team.

I also thank noble Lords from across the House, because this has been a cross-party effort, reflecting the widespread damage this Bill will cause. I particularly thank the noble Lord, Lord Londesborough, for his amendments to protect small business, the noble Baroness, Lady Barker, for her amendments on health and social care, and the noble Baroness, Lady Kramer, for her support across the board, including for the amendment calling for a review of the impact of the Bill.

I will say a couple of things. We have consistently heard that this is a job tax, plain and simple. It is the most important economic measure the Government have introduced so far, and it will have wide-reaching damaging impacts across the whole economy. It is being brought in on a tight timescale, creating a cliff edge on 6 April with no staggering for those who may be hurt. It has not been accompanied by an adequate impact note. It has led to businesses losing confidence in the Government, and that, I believe, is very bad for growth, of which I am very supportive. Despite the Minister’s protests, Peers from all Benches have agreed that the short document the Government call an impact note is an affront to the House, and that the Government have failed to provide sufficient sectoral information to allow for the effective scrutiny we try to bring. That is why we must have the review of the impact on affected sectors.

Despite the importance of these measures, the Government have made no effort to engage constructively. This House therefore voted to exempt small charities, transport providers for children with special educational needs and disabilities, early years providers and, as I have already said, small businesses and health and social care providers that provide public services in the private sector.

Of course we understand that taxes should be simple, as the noble Lord, Lord Eatwell, has explained, but when the Government fail to recognise the egregious impact this Bill will have on real people, we believe that some rethinking is necessary. Some of our changes would be modest in cost terms, but I know they would earn the thanks of many right across society.

I end by encouraging the noble Lord to use all his charms to persuade the Chancellor to think again.

[Lord Livermore (Lab)]

My Lords, I once again thank all noble Lords for their efforts on this Bill. I beg to move.

Bill passed and returned to the Commons with amendments.

Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2025

Lord Livermore Excerpts

Monday 3rd March 2025 Grand Committee

Moved by

[Lord Livermore]

That the Grand Committee do consider the Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2025.

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

My Lords, I beg to move that the Committee approves these regulations, which are made each year to set national insurance contributions rates, limits and thresholds; and to uprate child benefit and the guardian’s allowance.

First, the Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2025 set the national insurance contributions —NICs—limits and thresholds of a number of national insurance contributions classes for the 2025-26 tax year. The lower earnings limit, the small profits threshold, the rate of class 2 and the rate of class 3 will all be uprated by the September CPI of 1.7%, while the other limits and thresholds that these regulations cover will remain fixed at their existing level.

The regulations also make provision for a Treasury grant to be paid into the National Insurance Fund if required for the same tax year, which is a transfer of wider government funds to the National Insurance Fund, and for the veterans’ employer NICs relief to be extended for a year until April 2026. The scope of the regulations under discussion today is limited to the 2025-26 tax year.

National insurance contributions are social security contributions, paid when individuals are in work to receive contributory benefits when they are not working—for example, after they have retired or if they become unemployed. NICs receipts fund these contributory benefits, as well as helping to fund the NHS.

The primary threshold and lower profits limit are the points at which employees and the self-employed start paying employee class 1 and self-employed class 4 NICs respectively. The primary threshold and lower profits limit have been frozen by the previous Government at £12,570 until April 2028. However, the level of these thresholds does not affect people’s ability to build up entitlement towards contributory benefits, such as the state pension. For employees, this entitlement is determined by their earnings being above the lower earnings limit, which these regulations will uprate from £123 per week in 2024-25 to £125 per week for 2025-26. That is equivalent to an uprating from £6,396 to £6,500 per annum. For self-employed people, their entitlement is determined by their earnings being above the small profits threshold, which these regulations will uprate from £6,725 in 2024-25 to £6,845 for 2025-26.

Uprating the lower earnings limit and small profits threshold maintains the real level of income where someone gains entitlement to contributory benefits and is the standard approach that has been taken by Governments in most years since 1999 for the for the relevant thresholds. Wage growth is currently higher than inflation, which means that, following the uprating by CPI, there will be a reduction in the number of hours that someone who has received a typical wage increase needs to work to gain entitlement compared to last year.

The upper earnings limit, the point at which the main rate of employee NICs drops to 2%, and the upper profits limit, the point at which the main rate of self-employed NICs drops to 2%, are aligned with the higher rate threshold for income tax at £50,270 per annum. The previous Government also froze those thresholds until April 2028.

Self-employed people earning below the small profits threshold of £6,845 may pay class 2 NICs voluntarily to protect their entitlement to certain contributory benefits. The flat cash rate of class 2 NICs will increase from £3.45 in 2024-25 to £3.50 in 2025-26, in line with September CPI of 1.7%. Class 3 NICs allow people to voluntarily top up their national insurance record. The rate for class 3 will increase in line with inflation from £17.45 a week in 2024-25 to £17.75 a week in 2025-26.

On thresholds for employer NICs reliefs, noble Lords will be aware that the Government have had to make difficult decisions to fix the public finances. One of the toughest decisions that we faced was to increase the rate of employer NICs and reduce the secondary threshold. Although those changes are contained in the National Insurance Contributions (Secondary Class 1 Contributions) Bill, and not the regulations before us, they are the context in which our decision to maintain other targeted NICs reliefs is so important. Those employer NICs reliefs include those for under-21s, under-25 apprentices, veterans and new employees in freeports and investment zones. The regulations that we are debating set these thresholds in line with other personal tax thresholds or maintain the existing level.

The regulations also make provision for the NICs relief for employers of veterans to be extended for another year until April 2026. This measure means that next year businesses will continue to pay no employer NICs on salaries up to the veterans’ upper secondary threshold of £50,270 for the first year of a qualifying veteran’s employment in a civilian role. The continuation of this relief is part of the Government’s commitment to support our veterans. It is intended to further incentivise employers to take advantage of the wide range of skills and experience that ex-military personnel offer; it supports those who have given so much to our country, and it helps make sure that our country further benefits from the skills and potential of our service leavers.

I will now move on to the Treasury grant and National Insurance Fund, which is where the majority of NICs are paid, and which is used to pay the state pension and other contributory benefits. The National Insurance Fund is generally self-financing, with NICs receipts paying for contributory benefits. However, the Treasury has the ability to transfer funds from wider government revenues into the National Insurance Fund in the event that the balance of the National Insurance Fund falls below one sixth of estimated annual benefit expenditure. The regulations before us make provision for a transfer of this kind—known as a Treasury grant—of up to 5% of forecasted annual benefit expenditure to be paid into the National Insurance Fund, if needed, during 2025-26. A similar provision will be made in respect of the Northern Ireland National Insurance Fund.

It is important to note that the Government Actuary’s Department report laid alongside these regulations forecasts that a Treasury grant will not be required in 2025-26, but, as a precautionary measure, the Government consider it prudent to make a provision at this stage for a Treasury grant, which is consistent with previous years.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the Minister for clearly outlining the essence of these two SIs, and the noble Baroness, Lady Kramer, for her comments. We had substantial discussions about national insurance in this House last week, on the national insurance contributions Bill, during which significant amendments were made. If carried through the whole legislative process, the changes agreed would result in significant changes to declared government policy. But from those political highs, we move to today’s debate, which is at a much more technical level and, as the Minister said, does not impinge directly on the proposed changes in the Bill.

I note in passing that I read with great interest the Government Actuary’s report, the existence of which I confess I was previously unaware. It provides first-rate briefing across the whole complex of social security benefits, and I thank the Government for it. Reflecting on the references to the National Insurance Fund, already mentioned by the noble Baroness, Lady Kramer —and, sadly, in the absence of the noble Lord, Lord Davies of Brixton—I ask the Minister whether the Government have any plans to put matters on a more realistic basis. The fund does not do what it says on the label.

In particular, the projections in the report indicate that the estimated 2025-26 end-year fund balance of £81.6 billion is only 53% of the estimated benefit expenditure of £152.9 billion. This is another factor in the case for reform of the welfare system, which we in the Conservative Party have called for to incentivise work, cut costs and fraud, and raise productivity. This is not least because of the significant long-term demographic changes which, as the last quinquennial review published in 2022 shows, are projected to exhaust the fund before 2085. There is a big challenge ahead.

Finally, on the measures in these two orders, the Minister will be glad to know that we are also broadly content. I welcome especially the rollover of support for Armed Forces veterans entering the civilian workforce, which we introduced in April 2021. The truth is that readjusting to civilian life is a major problem for many, and this measure is an imaginative incentive to employers to give them a chance and take advantage of their skills and experience, as the Minister pointed out in his opening remarks. Incidentally, the arrangement also shows that exemptions from the standard national insurance rules are possible.

[Lord Livermore (Lab)]

My Lords, I am very grateful for the support from the noble Baronesses, Lady Kramer and Lady Neville-Rolfe, for the measures I outlined.

The noble Baroness, Lady Kramer, asked some questions about the National Insurance Fund and the review. The noble Baroness, Lady Neville-Rolfe, also touched on the Government Actuary’s Department report and the National Insurance Fund. The next quinquennial review of the fund will provide an update of these longer-term issues and projections over the period starting April 2025, so perhaps we will return to debate some of these issues at that point.

The noble Baroness, Lady Neville-Rolfe, also talked about reform of the welfare system. She will know that we are coming forward very shortly with a Green Paper to achieve exactly the things that she set out. I know we tend to be less political in this Room, but I will say that they were in power for 14 years and did not do those things. However, I hope that we will be doing those things very shortly to ensure that the welfare system incentivises work in the way the noble Baroness described.

I am very grateful to both noble Baronesses for their support of the extension of the veterans’ relief, which I totally acknowledge the previous Government introduced. The relief is part of the Government’s commitment to make the UK the best place in the world to be a veteran. It is intended to further incentivise employers to take advantage of the wide range of skills and experience that ex-military personnel offer. I totally take the points that the noble Baroness, Lady Kramer, made: you see homeless veterans across London and the transport network, and of course we need to do more work across government to support them in their efforts to get back into work and to eliminate that homelessness.

Finally, I take the point made by the noble Baroness, Lady Kramer, around CPI for child benefit. The noble Baroness, Lady Sherlock, in the previous debate very eloquently made the point that some of those smaller upratings compound previous upratings when CPI has been so much higher. I echo the words she said. I hope I have covered the points made by both noble Baronesses.

Motion agreed.

Child Benefit and Guardian’s Allowance Up-rating Order 2025

Lord Livermore Excerpts

Monday 3rd March 2025 Grand Committee

Moved by

[Lord Livermore]

That the Grand Committee do consider the Child Benefit and Guardian’s Allowance Up-rating Order 2025.

Motion agreed.

UK Border Strategy: Single Trade Window

Lord Livermore Excerpts

Tuesday 25th February 2025 Lords Chamber

[Lord Kirkhope of Harrogate]

To ask His Majesty’s Government why they have paused the implementation of the Single Trade Window as set out in the 2025 UK Border Strategy (CP352), published in December 2020.

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

My Lords, in the context of a challenging fiscal inheritance—

[Noble Lords]

Oh!

[Lord Livermore (Lab)]

In the context of a challenging fiscal inheritance, the Government paused the delivery of the single trade window as part of a wider value-for-money review across public spending. It remains our long-term intention to deliver a single trade window to support businesses trading across the UK border, and we will provide an update as part of the next phase of the spending review.

[Lord Kirkhope of Harrogate (Con)]

I find that Answer somewhat disappointing and repetitive. I put it to the Minister that this trade window has been accepted. It was a Conservative proposal, which, for once, I believed that the new Government were going to agree to. It has massive support among our traders and all our businesses. It will save them £2 billion in the next 10 years in extra paperwork and red tape. Does the Minister not agree that having the trade window would fit exactly within the Government’s policies of improving the growth in our economy and encouraging trade around the world?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. He is absolutely right when he talks about additional bureaucracy and red tape—created by the Brexit trade deal that the previous Government agreed to. That is the only reason why we need to try to ameliorate the difficulties created by that trade deal. It remains our long-term intention to deliver a single trade window. Businesses benefit from trade, so minimising administrative burdens and reducing trade frictions remain a priority for this Government. We will consider the role the single trade window can play in that, and we will provide an update as part of the next phase of the spending review.

[Lord German (LD)]

My Lords, the European Union is the biggest trading partner for the United Kingdom. Obviously, a single trading window is very important, so can the Minister outline when and whether we will get a single customs review, and a single customs window with the European Union?

[Lord Livermore (Lab)]

I agree, I think, with the underlying point that the noble Lord is making. Clearly, trade with the European Union is incredibly important. The European Union is our largest single trading partner. Four of our top five export markets are in the EU, and eight out of the top 10 in the EU account for nearly 50% of our trade. This is exactly why we must reset our relationship with the EU, our single biggest trading partner. We recognise that delivering new agreements will take time, but we are ambitious, we have clear priorities, and we want to move forward at pace.

[Lord Watts (Lab)]

My Lords, is the Minister as bored as I am by the Opposition’s attacks on the Labour Government for trying to resolve the problems that were created by the last Government? When will he remind them what Boris said about the benefits of the leaving the European Union? We have seen all the problems with it, but we have not seen many of the benefits.

[Lord Livermore (Lab)]

My noble friend is obviously absolutely right on that point. We are being attacked here for not implementing the solution to the problems that they created. Importers now face up 40 pages of forms that they must fill in: customs declarations, goods movement records and agricultural declarations. Exporters face up to 100 questions every time they wish to move goods to the European Union. We were told that, as a result of Brexit, we would continue to enjoy the exact same benefits. I think nothing could be further from the truth.

[Lord Holmes of Richmond (Con)]

My Lords, I declare my technology interests set out in the register. What steps are the Government are taking to promote the benefits of the Electronic Trade Documents Act, to both current exporters and exporters, and to get nations around the world to pass similar legislation so that the whole world can benefit from electronic trade documents? These cut the time it takes to trade from days to minutes, delivering economic, environmental and social benefits for all.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and his expertise on this matter. It is not something I know about, I am afraid, but I will happily write to him on this issue.

[Baroness O’Loan (CB)]

My Lords, in the context of the endless reiteration of the fiscal hole that the Government keep referring to, I was reading last night that the OBR did not recognise the figures given. I do not think it helps the House when we go round in circles on that. At a time when the Minister seeks to develop trade and industry, when the Government are moving to improve the economy, and when a single trade window would undoubtedly deliver significant benefits for the British economy, the Government are imposing additional burdens on business, such as the measures on which we will vote this afternoon. Would it not enable significant development simply to move on this process?

[Lord Livermore (Lab)]

Yes, I agree with some of what the noble Baroness says about the benefits of a single trade window. Again, we have to be able to pay for these things. We have had to pause many of the previous Government’s spending commitments because the money was simply not there to pay for them, which goes to the heart of the issue that she started her question on. She may dispute the figures, but I do not think anyone disputes the fact that those spending commitments were there but there was not the money there to pay for them. As I say, it remains our long-term intention to deliver the single trade window, but we will have to do so when resources allow, and we will update noble Lords at the time of the next spending review.

[Lord Cameron of Lochiel (Con)]

My Lords, given that this is the second delay to the single trade window announced by this Government since they took office, and that the rollout will be halted until April 2026 at the very earliest, does the Minister accept that there is a significant cost from such a lengthy delay, not least in the view of the National Audit Office, which reported that a 12-month delay in delivering the STW could reduce the benefits realised by more than £850 million over 10 years?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question, but let us remember what the costs are that we are trying to reduce here: they are from the previous Government’s ill-conceived Brexit deal, which imposed new trade barriers on businesses equivalent to a 13% increase in tariffs for manufacturing and 20% in tariffs for services. As a result, the Office for Budget Responsibility found that GDP will be 4% lower and overall trade intensity will be 15% lower than had the UK remained in the European Union. Of course, we want to try to ameliorate the difficulties of the previous Government’s disastrous Brexit deal, but it will take time to ensure that the fiscal resources are there. As I say, it remains our long-term intention to deliver that single trade window, but we can do so only when resources allow.

[Lord Brennan of Canton (Lab)]

My Lords, it is not just trade in goods that is important but trade in services. The last Government promised free cultural touring after Brexit, but they were unable to deliver it. What progress are this Government making in delivering a cultural touring agreement with the European Union to allow musicians and other artists to perform more freely across Europe?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. It was a key manifesto commitment of this Government to deliver those touring visas and it remains a key ask of ours in the EU reset negotiations. We recognise that delivering such new agreements will take time, but we are ambitious and we want to move forward at pace.

[Lord Newby (LD)]

My Lords, I agree with the Minister’s analysis about the bad economic consequences of Brexit, with 12% lower GDP. Does he not agree that the only way that we can get rid of trade costs, as he wishes, is by rejoining the customs union and single market? Tinkering at the edges will have virtually no positive benefit for most small exporters.

[Lord Livermore (Lab)]

I agreed very much with the beginning of the noble Lord’s question but less as he progressed. He is absolutely right that the measures he proposes would eliminate those challenges and I pay tribute to him for consistently advocating a pro-European case. We are committed to resetting our relationship with the EU. It is our biggest trading partner. As I said, the Prime Minister was the first Prime Minister since Brexit to have attended a meeting of the EU Council and the Chancellor was the first Chancellor since Brexit to have attended a meeting of the Eurogroup of EU Finance Ministers. We are ambitious to reset that relationship and we will continue to move forward at pace.

[Lord Young of Cookham (Con)]

My Lords, further to the original Question, can the Minister explain why it would cost the Government quite so much to introduce this window?

[Lord Livermore (Lab)]

There are costs from designing, developing and administering the technical delivery platform, which have been clearly set out by Deloitte, with support from IBM. We have retained the technical platform in order to retain the option for a future restart of the project. This would allow us to capitalise on the previous investment and could enable a simpler and faster restart of development activity in the future. As I say, we will update the House at the next spending review.

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

My Lords, returning to the initial Answer, could the Minister remind the House of the challenging fiscal deficit that we inherited?

--- Later in debate ---

[Lord Livermore (Lab)]

I am grateful to my noble friend for giving me the opportunity to say “£22 billion” just once.

London Stock Exchange: Decline in UK Funds

Lord Livermore Excerpts

Thursday 13th February 2025 Lords Chamber

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the net £9.6 billion decline in investment in UK funds in the London Stock Exchange in 2024.

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

My Lords, there has been a net decline in investment in UK funds for the past nine consecutive years. This is, of course, a matter of concern, although this does reflect global trends, and the outflow in 2024 was £2.5 billion less than in 2023. The UK’s capital markets remain some of the strongest and deepest in the world, and the UK is a leading centre for international capital raising, last year raising over £20 billion of equity capital—more than the next three European exchanges combined.

[Baroness Neville-Rolfe (Con)]

My Lords, I was very glad to visit the stock exchange this week with other parliamentarians from the Industry and Parliament Trust. The stock exchange is important to national economic welfare. It is therefore unfortunate that the Government have scrapped the last Government’s plan for a tax-free Great British ISA, incentivising savers to invest in British stocks and shares. How does the Minister intend now to encourage people, including first-time investors, to invest in such shares?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question and for telling us about her first-hand experience this week. She may know that feedback from industry and consumers on the last Government’s proposed Great British ISA was mixed at best, and no clear value-for-money case was made for that, so, as she says, we will not be proceeding with it. But as she will know, at the Masion House speech the Chancellor published the interim report on the pensions investment review and launched consultations on measures that would deliver a major consolidation of the defined contribution market and local government pension schemes. They could unlock around £80 billion for investment in private equity and infrastructure, but of course, there is no guarantee that that will be invested in UK markets, as she says. The pensions review is absolutely committed to looking at further ways in which that can be achieved.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, when the Government chose not to follow the overwhelming response calling to exempt listed investment companies, otherwise known as listed funds, from consumer collective investments and to refer them to the Financial Conduct Authority consultation, did they realise that it would cost another £30 billion in lost investment? Did the Government realise that their interim solution, which the FCA is not enforcing, is a short-term solution and cannot give confidence to what are long-term investors and investments? Does the Minister agree that correct arithmetic cannot be a matter for consultation, and will he facilitate my meeting with officials to explain that beneath the jargon, smoke and mirrors, this issue is a simple matter of correct arithmetic?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question, and once again, I pay tribute to her for her campaigning on this issue. The Government absolutely recognise the key role the investment company sector plays in the UK economy; it represents over 30% of the FTSE 250 and invests in assets that support the Government’s growth agenda. We have listened carefully to the noble Baroness’s concerns, not least through her campaigning in the previous Parliament and her Private Member’s Bill in this Parliament. Last year we legislated, I think as a direct result of her campaigning, to reform retail disclosure, with the FCA launching a consultation on an entire replacement regime in December.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am sure the Minister is aware that the tax-dodging fast-fashion firm Shein, having been rejected in New York, is now apparently seeking to list on the London Stock Exchange. Does the Minister agree with Liam Byrne, the chair of the Business and Trade Committee, who wrote to LSE asking if it agreed that it was important that firms seeking to list on the exchange have safeguards against forced labour in their products?

[Lord Livermore (Lab)]

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

[Lord Hannan of Kingsclere (Con)]

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

[Lord Livermore (Lab)]

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

[Baroness Kramer (LD)]

My Lords, the London Stock Exchange suffered its biggest exit in a decade in 2024, with 88 companies moving out of the market compared with 18 new listings. The drop in liquidity and trading activity began with the 2008 financial crash but accelerated significantly with Brexit. We all want a rebound, but will the Government take the necessary steps to rebuild liquidity by strengthening our relationship with the EU? A customs union would be a good first step; as one investor said to me, “Outside of the EU, why choose London over New York?”

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question, and she knows I agree with her analysis of the effects of Brexit. Firms may, of course, choose to list in other countries for a variety of reasons, and the Government appreciate that there is a perception that firms, especially tech firms, will have larger valuations in the US. We are determined to change that perception, which is why the Government are taking forward an ambitious programme of reforms to boost the attractiveness of UK markets and to support firms to start, scale, list and, importantly, stay here. As she knows, through the Government’s work on the EU reset, we will absolutely strengthen our relationship with the European Union.

[Lord Howell of Guildford (Con)]

Does the Minister know that Australian pension funds invest 80% in Australia? Thirty years ago in this country, it was 40%, and in earlier years it was 60% and 70%. It seems to me that the situation is rather more serious than just “looking at further ways”. Does the Minister agree that if we really are to attract more FDI and sovereign wealth funds and create an attractive centre for high-innovation investment in this country, we need something a little beefier than what he has indicated so far?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question, and I agree with every word he said. We have been very guided by the Australian experience. We have been clear that UK pension funds are investing a lot less in the domestic economy than overseas counterparts. Australia and Canada are two that have been spoken about. He talks about beefier measures, but the pensions review is the most fundamental review of pensions for a generation, and it is actively considering what further interventions may be needed by the Government to ensure that our reforms to the UK pension system benefit UK growth.

[Lord Evans of Rainow (Con)]

My Lords, the Minister previously referred to corporation tax. Corporation tax in this country is uncompetitive compared to corporation tax across the water in the Irish Republic, where it is about half. The Republic has succeeded in attracting a number of international tech companies to set up their businesses there, at the expense of the United Kingdom. My home town of Macclesfield lost a significant investment of £400 million by AstraZeneca, which went directly into a pharmaceutical cluster in Cork. Can the Minister ask his officials to look into why, notwithstanding our uncompetitive corporation tax, we consistently lose out to the Republic of Ireland? Its civil servants are very good at working around ours, at the expense of the United Kingdom.

[Lord Livermore (Lab)]

The noble Lord says that the corporation tax is uncompetitive, but it is where his Government put it. We have said that we will cap it at that level for the remainder of this Parliament; it is one of the most competitive in the G7. We have also said that if it looks uncompetitive at any point, we will act.

[Lord Kamall (Con)]

My Lords, can the noble Lord enlighten the House on the conversations his department has had with UK pension funds on the barriers to them investing in the UK? What sort of concerns do they express, and what are the Government doing to overcome them?

[Lord Livermore (Lab)]

As I have already set out, that is exactly what the pension review is looking at: identifying those barriers and why UK pension funds invest less in the UK than their overseas counterparts. The consultation is currently live and we will feed back on it in due course.

[Baroness Stowell of Beeston (Con)]

My Lords, can the Minister tell us why, in opposition, the Labour Party proposed that it would follow the French Tibi approach to pension investment when they got into government, but since getting in, it has decided not to mandate investment from pension funds?

[Lord Livermore (Lab)]

As I say, the pension review is considering whether further government intervention may be needed to ensure that our reforms to the UK pension system benefit UK growth. Of course, throughout this process, we will continue to work with the pensions industry to improve saver outcomes and increase investment in UK markets.