Winter Fuel Payment

Lord Livermore Excerpts

Thursday 12th June 2025 Lords Chamber

[Lord Young of Cookham]

To ask His Majesty’s Government what steps they are planning to take to change the entitlement to the Winter Fuel Payment.

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

My Lords, we are extending eligibility so that this winter, all pensioners with incomes up to and including £35,000 will benefit from the winter fuel payment. That means 9 million pensioners will now receive it—more than three-quarters of pensioners.

[Lord Young of Cookham (Con)]

My Lords, since tabling this Question, we have had 40 minutes of exchanges on Tuesday. In fairness to the Minister, he addressed most of the questions, albeit at times provocatively. However, he did not answer the question from my noble friend Lord Hailsham, who asked why, when the Government needed to save money on the winter fuel allowance, they did not simply abolish it and then increase in November each individual’s entitlement to the state retirement pension by the same amount and recover it through the tax system. The Minister said:

“That may be one option, but it is not the option we have chosen”.—[Official Report, 10/6/25; col. 1224.]


Would that not have been simpler?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for the question. We have to remember the circumstances in which we found ourselves back in the autumn. We had to take many difficult and urgent decisions, because we needed to find in-year savings due to the £22 billion black hole in the public finances that we inherited. We had to come in and make urgent in-year decisions. We therefore had to put in place a system that was able to generate immediate savings. The system that the noble Lord describes was not able to generate those immediate savings. That is why we did what we did. We are now able to extend eligibility, as I have said. We are extending it so that this winter, all pensioners with incomes up to and including £35,000 will benefit from the winter fuel payment.

[Lord Palmer of Childs Hill (LD)]

My Lords, the noble Lord asks whether there is a plan. Can the Minister confirm that there is a plan, and whether, if it does not work, they will again have another plan? Things change so much. Is there a reserve plan for when this plan does not work?

[Lord Livermore (Lab)]

I am not sure I entirely followed the noble Lord’s question. We have set out clearly what the policy is. All pensioners with incomes up to and including £35,000 will benefit from the support, as will all those on pension credit and certain other income-related benefits. The payment of £200 per household, or £300 per household where there is someone over 80, will be made to all pensioner households in England and Wales. Individual pensioners with taxable income above £35,000 will have any winter fuel payment automatically recovered by HMRC without the need for them to take action.

[Lord Harper (Con)]

My Lords, earlier this week, when the Prime Minister was explaining the rationale for the Government’s change on the winter fuel payment, he said that because the economy was now growing as a result of the Government’s policies, they were now able to make this change. Given the news yesterday that the economy is no longer growing, but actually shrank in April, would the Minister like to have another go at explaining the reason for the reversal of policy, and perhaps be honest about the fact that it was just incredibly unpopular and very ill-thought-through in the first place?

--- Later in debate ---

[Lord Livermore (Lab)]

One thing that was ill-thought-through was the Liz Truss mini-Budget and the £22 billion black hole in the public finances, which is why we had to take the action that we did. It might be nice if the noble Lord took some responsibility for what we inherited. As I said already, when we came into office, we had to take a number of very difficult and urgent decisions to put the public finances back on a firm footing. That involved difficult decisions on welfare, on tax and on spending, and one of those was means-testing the winter fuel payment. We have listened to the concerns about the level of the means test and we are now able—all the while still means-testing the winter fuel payment, because that is the right thing to do—to extend eligibility so that this winter, all pensioners with incomes up to and including £35,000 will receive it.

[Lord Davies of Brixton (Lab)]

My Lords, I start by wishing my noble friend the Minister best wishes for his birthday today. He has the special treat of an Urgent Question and a Statement on the spending review—what more could anyone ask for?

I very much welcome the decision to reintroduce the winter fuel payment. In answer to the Question, my noble friend said that anyone with income above £35,000 would not receive the payment. There is one problem with that, in that some forms of income are not taxed. Someone with a substantial cash ISA—I understand that there is a Member on the Liberal Benches who has £1 million in his ISA; he has made no secret of it, and presumably receives a very substantial income—with a taxable income of less than £35,000, would presumably still receive the winter fuel allowance, or is some step going to be taken to avoid that problem?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question and for his birthday wishes—that was very kind of him. Obviously, we had to achieve the right balance between a simple system to administer and getting the support to those who need it most. The system that we have come up with sticks with the existing rules of the tax system and, I think, achieves the right balance, as I described.

[The Lord Bishop of Southwark]

My Lords, like other Peers, I welcome this decision. The other day, I asked the Minister something to which he did not respond, and I wonder if I might ask it again. Is one of the lessons learned from this for the Government that, should they be making further cuts in spending, they might not look to vulnerable or disabled people.

[Lord Livermore (Lab)]

I am grateful to the right reverend Prelate for his question. I am sure that all of us have lessons to learn in life. I believe that it is very important that we reform our welfare system; it is not working and it needs reform, and I think everyone agrees with that. We will do this on a principled basis—namely, that those who can work should work, that those who want to work should be supported so that they can do so, and that we protect those with the most severe disabilities who will never be able to work.

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

My Lords, as the Minister knows, I did not welcome this decision. Turning to principles, does he agree that cliff edges in the tax and benefits system are undesirable? Can he explain whether, when a pensioner’s income moves from £34,999 to £35,000, support will be tapered away, or whether £1 in extra income will result in a £300 loss of winter fuel allowance?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. He knows much more about the tax and benefits system than I do, I suspect, having spent many more years working on it than me. The answer to his question is that it is the latter: it is up to and including £35,000, so it will be at £35,001 where that happens. At that point, they will lose the winter fuel payment in its entirety.

[Baroness Neville-Rolfe (Con)]

I am glad of the opportunity to wish the Minister a happy birthday from these Benches.

We welcome the decision by the Government partially to reverse their decision on the winter fuel allowance. That will ensure that our oldest and most vulnerable citizens are better protected through the dark and cold of the winter months. However, when he answered questions before, the Minister did not adequately answer how this £1.25 billion reversal will be funded. Can he tell us today whether it will result in further tax rises, in departmental spending cuts or in increases in borrowing, and, if not, where the money will come from?

[Lord Livermore (Lab)]

I am very grateful to the noble Baroness for her kind words. We are setting out these changes now to ensure that more pensioners are able to receive support this winter. That is important. As she knows, we have moved to just one fiscal event a year, so, as is now normal, these changes will be fully funded at the next fiscal event, which is the Budget in the autumn. This will ensure that final costings and funding decisions come alongside a full forecast from the OBR—something that the previous Government did not do—and we will ensure that the fiscal rules are met at all times.

[Lord Purvis of Tweed (LD)]

My Lords, following the reference to those on these Benches and ISAs, I should perhaps declare to the House that I do not have £1 million in my ISA—I wish.

The Minister said that all pensioners earning up to £35,000 would benefit from this. Where I live, in the Scottish Borders, he will be aware that there is a degree of uncertainty, because of the interaction with devolved responsibilities, and because the benefits and tax system is reserved. Can the Minister reassure those where I live, in the Scottish Borders, that they will indeed benefit from what the Government have announced?

[Lord Livermore (Lab)]

The noble Lord knows that winter fuel payments are a devolved policy in Scotland. The Scottish Government will receive a mechanical uplift in their funding as a result of the change in England and Wales. The Minister for Pensions spoke to his counterpart in Scotland on the day that this policy was announced. We are very conscious of the need for sufficient lead-in time, and those discussions will continue.

Economic Growth

Lord Livermore Excerpts

Wednesday 11th June 2025 Lords Chamber

[Lord Booth (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I apologise to the House because I have only half a voice today.

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

My Lords, the Government’s plan for change set out three metrics for the economic growth mission: first, that we will aim for the highest growth in the G7—we are currently the fastest-growing economy in the G7; secondly, higher living standards in every part of the country—living standards are now forecast to grow more than four times faster than in the previous Parliament; and thirdly, rising GDP per capita. Whereas this fell in the previous Parliament, GDP per capita is now forecast to rise by 5.6% in this Parliament.

[Lord Booth (Con)]

I thank the Minister for his reply. On GDP growth, I doubt the 0.7% increase in the first quarter will be replicated later in the year. There is an old expression: one swallow does not make a summer. I suspect that that will be the case. Moody’s rating agency recently said that the Chancellor’s £25 billion tax raid on employers last October has already dented confidence in the British economy and it will weigh on growth very heavily in 2025. In fact, I believe that these policies which came into effect—

[Lord Booth (Con)]

I will get to my question in a second. I believe the policies that came into effect in April will affect the British economy like an earthquake. My question is this. I live in south Cornwall, in a small-harbour fishing village. We no longer have any fishing in that village. There is fishing in Mevagissey, Looe and Newlyn. Will the Minister explain to the House how he expects the fishing industry to grow over the next 13 years?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for eventually getting to his question, but I am sorry that he chose to talk down the economy in the way that he did. I remind him that, when this Government took office, the UK was ranked seventh out of seven G7 economies projected for 2025. We currently have the fastest-growing economy in the G7. He talked about a report; let me give him another report. When the IMF last week upgraded the UK’s growth forecasts, it said that the Government’s fiscal strategy was striking a good balance between supporting growth and safeguarding fiscal sustainability, that the growth mission focuses on the right areas to lift productivity, and that our spending plans are credible and growth-friendly—spending plans that his party opposes. His party has opposed every single measure that we have taken to grow the economy.

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

My Lords, is the Minister aware that earlier this afternoon I had the great pleasure of being in the Peers’ Gallery to hear a brilliant speech by the Chancellor of the Exchequer, which was followed by an awful diatribe from Mr Stride, or “Baby Steps” as he is now called? Does the Minister agree that he was not just talking down the economy like the noble Lord, Lord Booth; he was talking down Britain?

[Lord Livermore (Lab)]

I very much agree with my noble friend on every word that he said. The spending review that we saw this afternoon from the Chancellor set out capital spending that increases growth by 1.4% in the long term. Every single penny of that capital spending has been opposed by the party opposite. The spending review set out a housing settlement—the biggest investment in a generation. It set out record levels of R&D spending, the biggest ever transport settlement, and a record commitment to skills investment. Every single penny of that spending was opposed by the party opposite. It can talk down Britain, but it opposes every single measure this Government are taking to increase growth in the economy.

[Lord Londesborough (CB)]

My Lords, perhaps I might offer some Cross-Bench objectivity. Here it comes. The 0.7% growth rate in Q1 was encouraging, but the growth rate over the last three quarters, which covers this Government’s tenure, is just 0.8%. That is less than in both the eurozone and the US. Does the Minister agree that it is growth per capita that matters—not the forecast but the track record here and now? And how concerned is he that our economic growth rate continues to lag our population growth?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. He did indeed show his characteristic objectivity. I will simply say that, where GDP per capita fell in the last Parliament, GDP per capita is forecast to rise by 5.6% over the course of this Parliament.

[Baroness Kramer (LD)]

My Lords, I hope the Minister will agree that to achieve growth in the UK we need a liquid and effective investor market. Despite London Tech Week, Wise plans now to shift its listing from London to New York and on Monday Spectris, Alphawave and Oxford Ionics, all key creative tech companies, announced that they would be taken over by US investors. In 2024, UK equity funds suffered £9.6 billion in outflows when most other equity funds had huge inflows—a pattern that dates from Brexit. I understand that the Government plan to press the pension sector to invest in UK companies, but what other steps are they taking to restore those key investment flows that used to come from Europe into the UK and to counter the US’s use of tariffs to incentivise the takeover of British tech?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. She mentions the outflows. The outflows in 2024 were less than in any previous year over the last 14 years so, although they are not what we want to see, they are perhaps not as doom-laden as she might want to make out. The Chancellor set out extensive capital market reforms in her last Mansion House speech. She has another Mansion House speech due on 1 July, at which point we will also publish the financial services growth and competitiveness strategy. I hope that will help to answer some of the questions that the noble Baroness asks.

[Baroness Neville-Rolfe (Con)]

My Lords, the Government’s tax hikes last year are believed—by the Bank of England, no less—to have reversed the frankly anaemic growth we have seen in the last couple of months, and we shall see what happens in the coming months. Since growth is the Government’s stated economic priority, which I agree with, it is unfortunate that today’s Statement by the Chancellor does so little to improve the position—for example, by boosting productivity across the economy. How do the Government plan to improve the situation, particularly in the coming months?

[Lord Livermore (Lab)]

My Lords, the noble Baroness says that growth was anaemic under this Government. As I said before, the UK was ranked seventh out of seven for projected 2025 growth when this Government took power but is now the fastest-growing economy in the G7. We all know what the Tory record on growth was; had the economy grown over their 14 years at the average of other OECD economies, it would have been £150 billion larger. The noble Baroness asked what was in the spending review to boost growth. I have already listed some of the measures: record investments in housing, R&D, transport and skills, more money to reduce inactivity, more money for childcare, access to finance and a record investment in nuclear. Every single penny of that her party opposes. She says she supports growth, but she does not support a single one of the measures to get it.

[Lord Razzall (LD)]

My Lords, do the Government not recognise that the most obvious thing they could do to improve our growth record would be to improve our trading relationship with Europe? What do the Government propose to do in that regard?

[Lord Livermore (Lab)]

I agree with the noble Lord’s point, which is exactly why we have embarked on the EU reset and negotiated a new strategic partnership with the EU that is in the national interest. I completely agree that the EU is our closest partner and biggest market. In 2024, almost half the UK’s total trade was with the EU and around 94,500 UK businesses exported goods to the EU, which is why the EU reset is so important. We negotiated a defence pact with the European Union, and we negotiated an SPS agreement with it to make exports easier. We have moved closer to agreeing closer co-operation with the EU on energy and the ETS, and we have agreed that we will work towards establishing a balanced youth experience scheme with the EU. All these things will move us closer to our biggest and most important market.

[Lord Watts (Lab)]

My Lords, is it not the case that we inherited a bankrupt economy and low growth, and that we had no prospects in the UK until we had a Labour Government? Is it not going to take more than a couple of months to turn around the mess that the last Government left?

[Lord Livermore (Lab)]

I completely agree with my noble friend.

[Lord Forsyth of Drumlean (Con)]

On a constructive note, will the Minister give an undertaking to take an early opportunity to read the report that will be produced on Friday by the Financial Services Regulation Committee of this House, which sets out a clear agenda for how the regulators can help to establish growth in financial services, which should be a matter of consensus across the board? It certainly is a unanimous report by this House of the kind of quality that this House is famed for but which does not always result in immediate action by Governments.

[Lord Livermore (Lab)]

I am very grateful to the noble Lord for his question. I absolutely will read the report as soon as it is published. I was lucky enough to serve on the Economic Affairs Committee when the noble Lord was its chair and I know he is now the chair of the committee producing this report, so I know it will be a report of incredible quality and I look forward to reading it. I know the Chancellor shares many of the committee’s objectives when it comes to financial services, and I hope the noble Lord will see much of that agenda laid out in her next Mansion House speech. I look forward to debating the report with him in this House in due course.

Winter Fuel Payment

Lord Livermore Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, this surely must be the Government of unintended consequences. When this policy was first mooted, I asked the Minister whether there would be any financial gain from it because, with the further uptake in pension credits, the actual money saved is miniscule. It is nothing like what the Government said they would get, so we have gone through all this pain and people have suffered, all for a strange bit of ideology.

Following on from what the noble Baroness on the Conservative Front Bench said, reports in the media suggest that winter fuel payments will be made automatically as a universal benefit this winter. Money will then be reclaimed when higher-income pensioners fill in their tax returns. Can the Minister say how the Government will ensure that the new system does not mean that the bereaved families of tens of thousands of dead pensioners—not only widows and widowers but dead pensioners—will be pursued by tax officials to recoup the payments? The Government of unintended consequences strike yet again.

Although the Chancellor has finally acknowledged the failure of this policy—thanks to sustained efforts by the Liberal Democrats and others—the scale of the distress created must not be forgotten. Do the Government intend to uprate the £35,000 threshold in line with inflation in future years?

This has been a disastrous policy. It has not raised the money we were told it was intended to raise. There will be further distress down the line while they try to sort out this mess.

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

My Lords, I am very grateful to the noble Baroness, Lady Stedman-Scott, and the noble Lord, Lord Palmer of Childs Hill, for their questions and comments. I am grateful to the noble Baroness for welcoming this change of policy, and I thank both speakers for the consensus that now exists across the House on the current policy position.

The noble Baroness began by asking how we got here. We got here, of course, because when we came into office, we had to make a number of very urgent decisions to put the public finances back on a firm footing. That involved us taking some very difficult decisions on welfare, tax and spending, including means testing the winter fuel payment. I am very grateful to her for noting that we have now listened to the concerns raised, inside and outside this House, about the level of the means test.

The noble Baroness asked about the savings that will be generated from this policy. As she rightly said, we expect the policy to cost around £1.5 billion a year in total, including £1.25 billion in England and Wales, by the end of this forecast period. She asked about the savings that this would generate. It is estimated to save around £450 million a year, compared to universal winter payments.

The noble Baroness asked when and how this would be paid for. We are setting out these changes now to ensure that more pensioners can receive support this winter—that is the right thing to do. There is now just one fiscal event a year, so, as is normal, these changes will be fully funded at the next fiscal event, which is the Autumn Budget. This will ensure that final costings and funding decisions come alongside a full forecast from the OBR, and we will ensure that the fiscal rules are met at all times.

The noble Baroness also asked about the other policies we are pursuing. It was appropriate that, ahead of tomorrow’s spending review, she reminded us that the party opposite has not supported a single policy that we have put in place to stabilise the public finances or to raise money for public services. When we have tomorrow’s spending review, it will be very interesting to hear from the party opposite that it now supports all the spending we are doing, even though it did not support a single one of the difficult measures we took to raise money for public services. It is very interesting that she opposed the Employment Rights Bill, because we again see that her party does not support a single measure to improve the lives of working people.

[Baroness Stedman-Scott (Con)]

That is not true.

[Lord Livermore (Lab)]

Well, I think it is true.

The noble Baroness asked specifically about the tax system. No additional pensioner will be brought into the tax system because of this change; we can give that assurance to the House today.

The noble Lord, Lord Palmer of Childs Hill, asked about recouping payments from deceased people. HMRC has established processes in place to recoup payments and finalise the tax affairs of deceased people, so nothing will change because of this policy. This is not a taxable payment. We assure the House that, if this is the only outstanding tax charge remaining from a deceased person, HMRC will not pursue anyone just for this specific amount of money. The noble Lord also asked whether we will uprate the threshold of £35,000. We will set that out in the Budget.

[Lord Davies of Brixton (Lab)]

My Lords, as someone who has spoken from these Benches against this proposal, I very much welcome the Government’s decision. The way the change has been characterised is a bit misleading. Does the Minister not agree that this represents a rejection of means testing and a return to universal benefits, with, quite rightly, the cost being handled for those on high incomes through a redistributive tax system?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his support for the change—I was going to say in the means test, and that is obviously exactly what his question is about. I am not sure I am expert enough to engage in a debate with him about the definition of a means test. Clearly, we are raising the level at which pensioners are entitled to and benefit from this policy. As he says, it will be paid universally to all pensioners, and those with an income over £35,000 will have the winter fuel payment recovered by HMRC through the tax system.

[Lord Clarke of Nottingham (Con)]

My Lords, this is certainly a shambolic way of conducting a government, but otherwise, I find myself unfortunately rather out of step with the exchanges so far.

The winter fuel payment had nothing to do with the level of fuel bills. It was paid to everybody, rich or poor, as a prize for reaching a certain age, which is why, at the last general election that I fought successfully as a candidate, the Conservative Party manifesto contained a commitment to abolish it. Unfortunately, we never got round to that.

The Government failed to make their case, which was exploited very successfully by Nigel Farage, so now they are introducing an extraordinarily generous means test. I quite accept that this should be means tested, but we are now going to pay it out to some of the better off households in this country. Does the Minister not accept that if the Government can somewhere find £1.5 billion to spend on the alleviation of poverty, there are very many more sensible ways of spending it that might help relieve the quite excessive levels of poverty that exist in our society at the moment? Meanwhile, I thank him for the £300 that I shall be receiving in a week or two’s time, although apparently, I shall be giving it back eventually.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I am sorry that he does not share the consensus in the House on the new policy position. He is absolutely right in his characterisation of the policy. I do not know what he earns, so it is not right for me to comment on that, but if he earns above the £35,000 threshold, it will be recovered through the tax system. He describes it as an extremely generous means test. It is kind of him to say that, but it is in line with average earnings and we have decided that that is the appropriate level it should be paid at.

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

My Lords, I declare an interest as co-chair of the all-party group on older persons. Is the Minister aware that Age UK, which really understands this issue and campaigned on it, welcomes unreservedly the Government’s decision—unlike the Conservatives, who say that they welcome the decision but would not find the money to pay for it? [Interruption.] That is exactly what the noble Baroness said. Will the Minister use his undoubted talents and tell them how they can reconcile that difference?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. I pay tribute to him and to Age UK for the campaigning work they have done, not least to increase pension credit uptake. There was a record increase this year in the take-up of pension credit. An additional 60,000 people are now claiming pension credit, which is incredibly welcome.

We have listened to the concerns raised by Age UK, among others, about the level of the means test. We have now acted to ensure that, although we are still means testing the payment, we are raising the threshold to extend eligibility, so that this winter, more pensioners will be able to benefit from it. Nine million pensioners will now receive it—more than three-quarters of pensioners in total.

My noble friend is absolutely right about the party opposite: they are more than happy to spend the money, but they are less keen on raising it.

[Viscount Hailsham (Con)]

My Lords, would it not be better to incorporate the allowance into the pension, which is taxable, making it easier and fairer to administer?

[Lord Livermore (Lab)]

That may be one option, but it is not the option we have chosen.

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

My Lords, as one of the few supporters of the original measure—like my friend, the noble Lord, Lord Clarke—I feel the Minister’s pain. But when the Treasury has to retreat, it is best to concede more rather than less; in that respect only, I congratulate the Minister on the proposal. Can he provide an assurance that, as and when the Government have the resources to consider further tax and benefit changes, they will prioritise working-age families rather than the elderly, who have benefited from considerable government largesse, not least through the triple lock?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his qualified support for the policy. The Government absolutely know that their number one concern and mission is to increase the living standards of working people and to do so through increasing growth in the economy, and that absolutely will be the focus of our policies going forward.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, I welcome the position of the Minister, and it was also good to hear praise for his leadership from the Benches opposite. But does he agree that it is unfortunate to hear attempts to pitch pensioners against workers’ interests in fair pay and stronger employment rights, not least because the workers of today will become the pensioners of tomorrow, and we know that low pay, weak security and poor rights lead to poverty in old age?

[Lord Livermore (Lab)]

I am grateful to my noble friend and I agree with everything that she says. I will just add to what she said at the end: low pay and insecurity at work are detrimental to growth, and obviously we need growth in our economy to pay for the benefits that we want to pay to pensioners and others. Once again, the party opposite calls for the growth but they are not willing to support the policies that get us there.

[Lord Harper (Con)]

My Lords, when the Chancellor was doing her various media interviews setting out the retreat on this policy, she rather unbelievably tried to suggest that it was done not because it was incredibly unpopular but because somehow the economy has got rather better since last year. Given that we have seen inflation up, unemployment up and the OBR slashing its growth forecast, the Minister should get some personal credit for not trying to insist on that nonsense in your Lordships’ House. When the Treasury analyses the cost of both the original policy and its reversal and takes into account the extra people claiming pension credit and the cost of reversing this policy, can he set out, either today or at the fiscal event, whether this whole set of decisions has saved or cost the taxpayer money?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. On the facts about growth, we inherited forecasts from the previous Government for 2025 growth where we would have been seventh out of seven in the G7. In quarter 1 of this year we were first out of seven in the G7, so we will not take any lectures from him about the growth performance of the economy. He asked about the costings of the policy. The costings of the previous policy included assumptions about take-up of pension credit, so that pension credit increase figure was already in the costings for the previous policy. The costings of this policy will be certified by the OBR and scored at the Autumn Budget, and we will set out what he asks for.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I commend my noble friend the Minister on the courageous decision to make the necessary changes to the winter fuel payment and bring some joy to many pensioners. The Government should be congratulated on actually listening to what the people are saying. In that respect and under the principle of parity as it relates to the payment of benefits in Northern Ireland, can the Minister outline what discussions have taken place between the Treasury, the Department for Communities and the Department of Finance in Northern Ireland about ensuring that pensioners—I declare an interest—qualify for this restoration of the winter fuel payment?

[Lord Livermore (Lab)]

I am grateful to my noble friend for her question. As she knows much better than I do, winter fuel payments are transferred in Northern Ireland. The Minister for Pensions spoke to his counterpart in the Northern Ireland Government yesterday. We are of course very conscious of the need for sufficient lead-in time so that the necessary policies can be put in place in good time for this winter. The Northern Ireland Executive will receive a mechanical uplift in their funding as a result of this change in England and Wales.

[Lord Harries of Pentregarth (CB)]

I welcome the new policy, but does the Minister agree that the public would find it helpful if some thinking was given by the Government about the choice of the figure of £35,000? I have no feelings one way or the other, but I think the general public might find it helpful to find some kind of rationale behind this figure. Why was it not higher or lower? Why that particular figure?

--- Later in debate ---

[Lord Livermore (Lab)]

My Lords, £35,000 is broadly equivalent to average earnings. It means that 9 million pensioners will now benefit from this. That is roughly three-quarters of pensioners.

[Baroness Smith of Llanfaes (PC)]

My Lords, last week the Intergenerational Foundation released a report that found that the public spending gap between children and pensioners has widened by 170%. That means that in 2023-24 pensioners received around £31,000, in comparison to children at £18,000. The winter fuel allowance has meant that there are fewer pensioners in poverty, and that is a good thing, but when we look at child poverty stats, they are almost double those of pensioners in poverty. Will His Majesty’s Government review abolishing the child benefit cap?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question, and I absolutely share her commitment to tackle child poverty in this country. We have made initial steps with the free school meals policy that the Prime Minister and the Secretary of State for Education set out last week. I hope that the spending review will have more to say on that subject, and on the child poverty strategy published alongside the Budget.

[Lord Sikka (Lab)]

My Lords, I have two points. First, can the Minister say how many more pensioners will now have to submit a tax return? Secondly, this policy is full of anomalies. To give just one example, somebody who has saved diligently since ISAs began will have a portfolio of about £400,000. The income from that is not reported on any tax return at all. Therefore, somebody with £35,000-plus—at least £20,000, £30,000 or £40,000 more—can still get winter fuel payment under the Government’s announcement. How are the Government going to force people to disclose the income from ISAs and other tax-free savings?

[Lord Livermore (Lab)]

Well, the tax system stays exactly as it is now, so I do not quite understand how my noble friend’s question arises. As I said before, no one will be brought into the tax system as a result of this policy who currently is not in the tax system.

[The Lord Bishop of Southwark]

My Lords, I welcome the reversal of the decision on winter fuel payments, having spoken, like others, cautioning against so many pensioners who are vulnerable and in need being deprived of it—not against the principle of changing it and restricting it to some degree. I just wonder whether, in terms of lessons learned, a more general principle might be acknowledged that in future cuts, the Government will not look to making them from vulnerable or disabled people.

[Lord Livermore (Lab)]

As I have said all along, we have listened to the concerns about the level of means tests. We are still means-testing the winter fuel payment, because we think it is right that the very richest pensioners do not have their fuel bills subsidised when there are other calls on public spending, but I am grateful to the right reverend Prelate for supporting the policy now to extend that eligibility so that this winter more pensioners are able to benefit from it.

[Baroness Altmann (Non-Afl)]

My Lords, I declare my interests, and I am glad that the Government have listened. I welcome the undoing of a terrible wrong. Can the Minister confirm that the Government estimate that about 50,000 more pensioners were in poverty last winter and 100,000 more pensioners ended up in A&E? Does this not show the difficulties of making short-term changes, without proper planning, which affect some of the most vulnerable people in our country? I ask for a commitment that, first, there will not be a consideration of means testing of the state pension itself and, secondly, the Inland Revenue’s helplines for simple assessment will be sufficiently staffed so that pensioners worried about whether they are going to have to pay back this money will get answers in a reasonable period of time.

[Lord Livermore (Lab)]

I am happy to give the noble Baroness those commitments.

[Lord Watts (Lab)]

My Lords, the Opposition suggested that the Government have put pensioners behind the NHS and teachers. Does the Minister agree that the Tories do not seem to want to tell teachers or NHS staff that they want them to be poorer?

[Lord Watts (Lab)]

That is what they are doing.

[Lord Livermore (Lab)]

My noble friend is obviously right to point out that the party opposite has consistently criticised the public sector pay rises that we have given.

[Lord Bellingham (Con)]

My Lords, following on from the question asked by the right reverend Prelate, I hope that the Minister is aware that roughly 750,000 pensioners on pension credit and therefore eligible for the winter fuel allowance applied for it last winter but have not yet had it. Will he look at this problem?

[Lord Livermore (Lab)]

I will look at that and discuss it with my noble friend Lady Sherlock.

[Lord Young of Norwood Green (Lab)]

My Lords, I perhaps take a slightly different view on this. Of course, I welcome people being able to get their winter fuel payments. We are still applying the pension credit, which is absolutely right. I do not know what everybody else in this House who got winter fuel payments did with them, but I donated mine to charity; I certainly did not need that £300, and there are plenty of others like me.

If I have a concern about government policy, it is this. Nobody seems to recognise that pensioners benefited very well from the triple lock. I do not agree with the triple lock. I may be in a minority, but that money could be used, as people have said, for alleviating child poverty—probably one of the biggest challenges that we face. I am not expecting the Minister to do an about-turn on that one; I am just making a comment. When we go for the triple lock, there is an expensive cost. Tomorrow, we will hear the Chancellor make known how she will balance that budget. I welcome that people on pension credit—who we wanted to claim pension credit—will be able to get their winter fuel payments. In that respect, this is good. I have only expressed my one area of concern.

[Lord Livermore (Lab)]

I am grateful to my noble friend for what he says. Over 12 million pensioners are now benefiting across the UK from the triple lock. Their state pension is set to increase by up to £1,900 over the course of this Parliament. Almost 60,000 extra households are now receiving the pension credit that they are entitled to, which I think we can all agree is a very good thing. He said that he donated his winter fuel payments to charity; he is welcome to continue to do that if his income is below £35,000. If it is under that and he wants to opt out of receiving it, he is very welcome to do so. We will bring forward proposals before the Summer Recess enabling him to do that.

[Baroness Penn (Con)]

My Lords, when your Lordships’ House debated the original changes to the winter fuel payment, it was suggested that we should not means-test the winter fuel payment but tax it instead. The noble Baroness the Minister rejected that option, saying that it failed on two fronts: it did not meet the savings test or the fairness test. If the Government had listened to your Lordships’ House then, millions of pensioners who did not receive their winter fuel payment this winter would have done so. What has changed in terms of the practical ability to implement this policy now compared with when it was first suggested by your Lordships’ House?

[Lord Livermore (Lab)]

I thank the noble Baroness for her question, but to be clear: we are not taxing it. We are recovering it through the tax system, which is a different policy from the one that she is describing.

[Lord Brooke of Alverthorpe (Lab)]

Of the 12 million pensioners, how many are millionaires? Is it true that it is 3 million?

[Lord Livermore (Lab)]

I do not have those numbers to hand, but I will see whether they exist. If they do, I will write to my noble friend.

Social Care and Special Education Charities: Employer National Insurance Contributions

Lord Livermore Excerpts

Monday 9th June 2025 Lords Chamber

[Lord McColl of Dulwich (Con)]

My Lords, I beg leave to ask the Question standing in my name in the Order Paper and declare my interest as vice-president of the Shaftesbury Society and my involvement in many other similar charities.

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

My Lords, the Government have had to take difficult decisions to repair the public finances and rebuild the public services. Giving careful consideration to and properly assessing the impact of these decisions is a priority. A tax information impact note was published alongside the introduction of the Bill containing the changes to employer national insurance contributions, which sets out the impact of the policy on individuals, businesses and civil society organisations. As I committed to your Lordships’ House during the passage of the Bill, we will continually monitor and assess the impacts and effects of these policies.

[Lord McColl of Dulwich (Con)]

The Government’s national insurance increase to 15%, plus lowering the threshold to £5,000, will cost charities an additional £1.4 billion annually. One in four employers are implementing redundancies as a result. This will drastically cut charitable services, which is akin to kicking in the teeth the most vulnerable in our society. Has any assessment been made of the impact on charities serving vulnerable young and old people?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. Of course the Government recognise the important role that charities play in our society as a trusted and independent partner to the public sector in helping deliver vital public services. We also recognise the work done by unpaid careers and welcome this week’s Carers Week as an opportunity to pay tribute to the invaluable work that they do throughout the UK. As I said in my opening Answer, we had to take a number of very difficult but necessary decisions, including on employer national insurance, to fix the public finances and restore economic stability. In doing so, though, we recognised the need to protect the smallest businesses and all charities, which is why we have more than doubled the employment allowance to £10,500, meaning that more than half of businesses, including charities, either gain or see no change in the amount that they will pay. As I also said in my Answer, we will continually monitor and assess the impact and effect of those policies.

[Baroness Grender (LD)]

My Lords, does the Minister agree that the Government have already published several comprehensive spending review announcements over the past week? Does he further accept that social care funding is inextricably linked to the NHS’s recovery? Will he therefore use this opportunity to reassure the House that social care will not be cut in the comprehensive spending review?

[Lord Livermore (Lab)]

I agree with the noble Baroness’s first statement of fact; we have already made several spending review announcements. She will know that the Government are making available so far £3.7 billion of additional funding for social care authorities in 2025-26, including an £880 million increase in the social care grant. This is part of an overall increase to local government spending power of 6.8% in cash terms. As for future years, she will have to wait for Wednesday to find out the details of the spending review.

[Baroness Pitkeathley (Lab)]

My Lords, in addition to their role in providing many social care services, charities perform a very important function in speaking up for patients, users and carers, enabling them to find their voice and claim their rights. Would my noble friend agree that this advocacy function is extremely important and should be supported and encouraged? I draw attention to my registered interests and thank the Minister for his acknowledgement of Carers Week.

[Lord Livermore (Lab)]

I am grateful to my noble friend for her question and I wholeheartedly agree with what she says. Civil society organisations play an absolutely vital role in speaking out and advocating on behalf of their beneficiaries. This role is a fundamental part of a thriving democracy. We have a rich history of charities campaigning for change in this country. Examples span the huge breadth of the voluntary sector, from the NSPCC on child protection to the RSPCA promoting animal welfare, international development charities tackling global poverty and inequality, environmental charities raising awareness of global warming, and many other examples.

Civil society’s campaigning and advocacy roles should of course be recognised and celebrated, which is why the civil society covenant framework, launched in October 2024, aims to establish a renewed partnership between the Government and civil society organisations. It outlines four foundational principles: recognition, partnership, participation and transparency. Following extensive engagement across the sector, we aim to launch the civil society covenant later this year.

[Baroness Finlay of Llandaff (CB)]

My Lords, given the worrying data from the National Care Forum that 73% of providers reckon that they will have to refuse new care packages from local authorities or the NHS, and that 22% plan to close their businesses entirely, what consideration are the Government giving to renegotiating completely the national insurance contributions, to ensure that those who provide direct care are not burdened with an expenditure that risks putting up the load and demand on the NHS itself and on local authorities, so that we get circular downward spiralling of excess expenditure?

[Lord Livermore (Lab)]

I do not think I can give a positive answer to the main thrust of the noble Baroness’s question. As she will know, and as I said already, the Government are making available £3.7 billion of additional funding for social care authorities in 2025-26. We will set out future years’ allocations in the spending review on Wednesday. As she knows, the Government will provide support for departments and other public sector employers for the additional employer national insurance costs.

[Lord Leigh of Hurley (Con)]

My Lords, in Committee on the national insurance Bill we put an amendment down to exempt hospices specifically from national insurance increases. The CEO of Thames Hospice, to which I declare I am a donor, said that, as a result of the proposed changes, more people will die in pain and agony than would otherwise need to be the case. What assessment have the Government made of the cost of these national insurance increases on hospices specifically, and what advice would he give to the chief executive of Thames Hospice?

[Lord Livermore (Lab)]

As the noble Lord knows, the Government recognise the vital role hospices play in supporting people at the end of their life and their families. The Government are determined to shift more healthcare into the community and ensure that patients and their families receive high-quality, personalised care in the most appropriate setting. Hospices will have a very big role to play in that shift. The Government are supporting the hospice sector with an additional £100 million for adult and children’s hospices, to ensure that they have the best physical environment for care, and £26 million revenue to support children and young people’s hospices.

[The Lord Bishop of Southwark]

The Minister will recall from the amendment I tabled in Committee to what was then the Bill that my twin brother was an early beneficiary of SEND transport. Will the Government monitor the impact of national insurance increases on the effectiveness and continuity of provision in this area and inform the House of such findings in due course?

[Lord Livermore (Lab)]

I am grateful to the right reverend Prelate for his question. The answer is yes; I think I committed to doing so during the during the legislative process of that Bill. As I said then, the Government do not expect the changes to national insurance to have a significant impact on home-to-school travel for children with SEND. The Government have increased funding for the core schools budget by £2.3 billion, increasing per-pupil funding in real terms in 2025-26, and £1 billion of this funding will go towards supporting the special educational needs and disabilities system. The Chancellor will set out funding for schools as part of the spending review on Wednesday.

[Baroness Neville-Rolfe (Con)]

My Lords, the fact is that these increases have devastated the charitable sector. For example, Noah’s Ark Hospice in north London said recently that the rise in national insurance represented

“basically a £100,000 tax on us that we hadn’t budgeted for”.

Yet the need for these services has never been greater, as the Minister has just acknowledged. Will he assure the House that the Government will not increase national insurance contributions again and that his review will look sectorally in detail at the effect on charities, hospices and social care before the next Budget?

[Lord Livermore (Lab)]

On the first half of the noble Baroness’s question, as she knows, as part of the changes to national insurance, the Government recognised the need to protect the smallest businesses and charities, which is why we more than doubled the employment allowance to £10,500, meaning that more than half of businesses with national insurance liabilities will either gain or see no change this year. The Government provide a great deal of additional support to charities via our tax regime, which is among the most generous anywhere in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.

[Lord Sikka (Lab)]

My Lords, partners of big law and accountancy firms derive most of their income from one source but, despite that, they are not deemed to be employed by the firm. Therefore, the firms do not pay employer’s national insurance on the partners’ share of profits. The big four law firms are avoiding about £4 billion a year in employer’s national insurance contributions. Can I urge the Minister to look into this and bring forward reforms, so that we can have lots more revenue for the things that we need?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for his suggestions, which I will always take very seriously.

Regional Growth

Lord Livermore Excerpts

Thursday 5th June 2025 Lords Chamber

[Baroness Pidgeon (LD)]

The Liberal Democrat Benches fully support measures to grow our economy across every nation and every region. We therefore welcome this Statement detailing planned investment in public transport and infrastructure. It is good to see not just plans but the money set aside for some city regions, giving long-term transport financial settlements. Frankly, that is the only sensible way to ensure investment in transport infrastructure, rather than the constant stop-start begging-bowl approach we saw with the previous Government, which benefits no one and delivers nothing. For too long, communities have heard promises only, to be left with phantom transport networks, so investment in transport infrastructure is vital if we are to grow our economy and create access to jobs across the country.

In particular, we are very pleased to see the Metrolink to Stockport in this announcement, which is testimony to the hard work of the local Liberal Democrats, who have been campaigning and working on this issue for many years—indeed, long before the mayor and the combined authority were created. However, we have a number of questions. It seems that areas without mayors are being left behind or ignored. Where is the plan and money for rural areas? There are parts of the south-west, for example, which would benefit hugely from transport infrastructure investment, yet this area has been ignored in this Statement. It feels as though Bristol is as far west as the Government can see.

Whether it is Cumbria, Shropshire, Norfolk, Devon or Cornwall, there is nothing in this Statement for them, so what plans do the Government have for a rural growth strategy? What funding is planned for our railways as they come under public ownership? There is a desperate need for major investment across the network to enable more frequent trains to serve our communities. Will there be a railway investment plan? Will the Mayor of London and Transport for London be allocated further funding to maintain and grow the capital’s transport system, creating jobs across the country?

The cost of fares is a real barrier to many people. What plans are there to reduce fares—in particular, to reinstate the £2 bus fare cap—and to reform rail fares to make them affordable for passengers? Alongside the investment in infrastructure, there is the challenge of the skills and workforce issues. What plans do the Government have to ensure that we have the skilled and trained workforce to build this transport infrastructure, including fixing the apprenticeship levy? This is a welcome first step, but key questions need to be answered to ensure that every area can grow and prosper.

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

I am very grateful to both noble Baronesses, Lady Neville-Rolfe and Lady Pidgeon, for their questions, and I welcome the noble Baroness, Lady Pidgeon, to her place and look forward to speaking with her in many more of these debates.

The noble Baroness, Lady Neville-Rolfe, asked a number of questions. She started by asking about growth. I noticed that she did not mention that, in this quarter, the UK is the fastest-growing economy in the G7. I noticed that she did not mention that our growth forecasts have just been upgraded by the IMF. I noticed that she did not mention that, in many business surveys, business confidence is now at its highest level for many years. I hope that, when she talks about growth, she will always give a rounded picture of where we are on growth.

She asked whether these measures will contribute to regional growth, and yes, of course they will: that is the whole point of them. For too long, we have relied on just one part of the country to generate economic growth. We need to make sure that more parts of our country are contributing to growth and more people throughout our country are feeling the benefits of that growth. That is absolutely why we are doing what we are. It is why we started with connectivity: because we know that connecting city regions is incredibly important, enabling more people to travel to work, connecting labour markets and connecting businesses to more places so that they can sell more goods to more people. That is absolutely central to what we set out yesterday. The answer to the question, “Will this contribute to growth?” is: yes it absolutely will. We saw in the Spring Statement the OBR, for example, scoring for the first time some of our growth measures, and of course we hope that it will continue to score our growth measures going forward.

She asked: is this new money? Absolutely, yes—yesterday, we announced £15 billion of new money. It is the biggest ever investment by any British Government in our regional transport network. As a result of the fiscal rules and the difficult decisions that we have taken, we are in the spending review increasing the overall amount of spending by £300 billion: £190 billion on day-to-day spending and an increase of £113 billion on capital spending. I noticed that the noble Baroness, Lady Neville-Rolfe, welcomed—slightly half-heartedly—what we announced yesterday. It is notable that she welcomed the additional spending, but she has at no point welcomed any of the difficult measures we have taken to raise that money so that we can spend it on the things that she is now welcoming. I think that her shadow Chancellor is today making a speech where he is seeking to distance himself from the Liz Truss approach from the previous Parliament. Yet it seems to me that the party opposite is repeating exactly the same mistakes of the Liz Truss mini-Budget of spending money that it does not have. I think that is a huge risk going forward. As I say, she has welcomed this spending, but she has opposed every single measure we have taken to raise the money to fund it. She asks: will this policy require any additional taxes? No, because we have already raised the taxes in the last Budget—£40 billion—to enable us to spend this money for the rest of this Parliament. So yes, these measures will be met within the envelope that was set at the last Budget.

The noble Baroness said that these are the same measures as the previous Government announced. She kept using the phrase, “We promised”. I think that is a really important phrase because, yes, the previous Government did promise many things, but they did not put a single penny of funding behind any of the promises made. The big difference between what we are doing now, what the Chancellor announced yesterday, and what the previous Government announced, was that they made lots and lots of promises that they never funded—not with a single penny of funding. She will have heard me refer to the £22 billion black hole in the public finances. That is exactly why that black hole occurred. What we announced yesterday was real funding for real measures going forward. That is the big, fundamental difference. She asked for an honest assessment, and I think I would call for some honesty from her too that the previous Government did not fund any of those promises.

She asked about the Green Book. We have set out that the Green Book was used by previous Governments against regional authorities and local mayors as a reason not to invest outside London and the south-east. We have changed that methodology. We will set out in the spending review next week the full details of that review, and I look forward to discussing the full details of that with her.

She said that funding would not be seen for two years from now. Of course, there was no funding seen under the last Government at all, so of course we have to start somewhere and we have to get the money out of the door—she is absolutely right. But spades will be in the ground in this Parliament, and we absolutely confirm that.

She asked: will we see improvements for business? Yes, it is absolutely the purpose of this announcement to connect businesses to more areas. It is why local transport networks are so vital and why we have started where we are. She talked about the fiscal front, and I completely agree with her. Of course there are increasing pressures, but that is why I say to her that we must not make promises that we cannot afford. The previous Government did exactly that; we will not make that mistake.

I am very grateful to the noble Baroness, Lady Pidgeon, for her welcome for the long-term nature of these announcements, and it is obviously great that national government is working with local government and local government leaders to deliver on these promises. She called it a welcome first step, and I would agree exactly with that sentiment. We were very clear about what we were and were not announcing yesterday. Yesterday, we were announcing the connectivity of city regions, so of course this focused on certain city regions. Next week, we will set out in the spending review the entire regional plan for growth: for the rest of England, Scotland, Wales and Northern Ireland. That is what we will do, but yesterday we were talking purely about the connectivity of city regions, and we were putting the transport connectivity first, because we know that that is the essential underpinning for so much else in our growth strategy.

She touched on a number of other things that are important to growth. She talked about skills, for example. I completely agree with her when it comes to skills. We will be setting out in the spending review, and then in the industrial strategy in the weeks following the spending review, the measures that we are taking. She talked about having the workforce to build this transport infrastructure. Absolutely: I completely agree with her on that point. She asked about funding for railways, the rest of the country and regional plans, and about the Mayor of London, et cetera. All those questions will be addressed in the spending review next week, and I look forward to discussing that with her and other noble Lords next week.

[Baroness Neville-Rolfe (Con)]

Will that include buses?

[Lord Livermore (Lab)]

It will include buses too, of course.

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I very much welcome the Statement on connectivity across England, and I welcome the noble Lord’s commentary in relation to the spending review next week, particularly in relation to the connectivity of the different parts of the United Kingdom. He will know that I have mentioned the report of the noble Lord, Lord Hendy, on union connectivity many times, and I urge the Minister and his colleagues to look at that report again, particularly in relation to the A75 in Scotland, which is very important for people and businesses travelling from Northern Ireland to England, because that road really needs an upgrade. I commend the Government for taking this initiative. I really believe in capital investment leading to economic growth, and I think that connectivity will be very much helped by that. I urge him to look at that connectivity review and to link up the rest of the Kingdom as well.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question and the points that she makes. I think we would agree with a lot of what she says. She is supporting the importance of connectivity underlying much of our growth mission. That is obviously what we were starting to set out yesterday—as I say, just in the city regions for now, but next week, in the spending review, in the rest of the United Kingdom. I cannot comment on the specific road that she mentions ahead of that spending review, but of course I will take away what she says about that report and very much support what she says about connectivity.

[Lord Wigley (PC)]

Does the Minister accept that a key step in overcoming regional economic disparities is the mobilisation of the full labour force and, in particular, bringing into worthwhile employment young people who are fit to work and not in full-time education or training? What progress has been made to overcome regional disparities in that regard?

--- Later in debate ---

[Lord Livermore (Lab)]

I very much agree with the noble Lord in what he says about bringing people in. We have far too many people inactive in our labour market. I think we are the only country in the G7 where inactivity rates have not returned to where they were prior to the pandemic, for example. At a time when, as the noble Baroness, Lady Pigeon, mentioned, we need the workforce there to build this infrastructure, there are far too many people who are currently inactive, and it is a huge waste of potential. We have started, with the welfare reforms that we have set out, to get more people back into the labour market. There will be more detail in the spending review next week, or perhaps following the spending review, on the settlement that the Department for Education and the Department for Work and Pensions will be receiving to ensure that we get more of those people who are not in education or training back into the workforce.

[Lord Mohammed of Tinsley (LD)]

My Lords, like my noble friend Lady Pidgeon I support the announcement from the Government. I also support her call for the reinstatement of the £2 bus fare cap.

I listened with interest to the Minister’s comment about connectivity in city regions. I want to press him regarding South Yorkshire. I welcome the tram renewal. However, in addition to tram renewals, did the ask from the regional mayor include tram extensions? The Supertram system in Sheffield has been in place since the early 1990s, albeit that a small extension from Meadowhall in Sheffield to Rotherham was done during the coalition years. Was a tram extension asked for?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his support for what we have set out and for connectivity in general. We announced £1.5 billion for South Yorkshire, to support the reopening of Doncaster Airport and to renew the existing and now publicly controlled Supertram network with track replacements, overhead line maintenance, rolling stock renewal and a full fleet of new vehicles by 2032, linking jobs and homes in Sheffield and Rotherham. It was also to reform South Yorkshire’s buses—the noble Baroness, Lady Neville-Rolfe, is keen on buses—with franchise buses operating in Sheffield, Doncaster and Rotherham by 2027 and across South Yorkshire by 2029.

[Lord Moylan (Con)]

My Lords, I am curious about the relationship between the timing of this announcement and the review of the Green Book. The figures announced today are practically the same as those promised by the Conservative Government a year ago. We are expecting from the Government a review of the Green Book which is meant to tilt investment further towards the city regions outside London. The Chief Secretary to the Treasury confirmed in his Statement yesterday that the Green Book review will be published next week. Why have the Government rushed out these figures, which are clearly based on the existing Green Book and the Conservatives’ financial methodology? Would the city regions not have benefited more had the Chief Secretary waited until after next week’s announcement, when the new Green Book—we do not know what it will contain yet—is in place?

--- Later in debate ---

[Lord Livermore (Lab)]

No, that is not the case at all. The noble Lord refers to promises made by the previous Government, which the noble Baroness, Lady Neville-Rolfe, also referred to. Promises were made. Let us be clear: not a single penny was allocated by the previous Government to a single promise that they made. The noble Lord can compare what this Government are doing with what the previous Government did, but this Government are putting money towards those announcements.

The noble Lord then said that announcements were—in his bizarre phrase—“rushed out”. Making announcements is not rushing anything out. It is setting out very clearly what our policy is for the connectivity of the city regions. We will publish the review of the Green Book next week. That will make sure that, in future, additional investment is not biased towards any one region but that the entirety of the country is considered when it comes to those announcements. That makes perfect sense. I do not recognise the analysis that the noble Lord is putting forward.

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

My Lords, I welcome the Government’s announcements in relation to regional growth. As the sometime author of the Green Book, I welcome the direction of travel in terms of investment appraisal. However, inevitably, resources are finite. Can the Financial Secretary confirm that the Government are prioritising those projects with the greatest economic return? Does he agree that the private sector also has a critical role in delivering regional growth? Can he reaffirm the Government’s commitment to sound public finances, the better to bear down on the cost of borrowing?

[Lord Livermore (Lab)]

I agree with the noble Lord’s points. He asks about the Green Book. He has much more experience in this matter than I do. We have set out—and I hope that he agrees—that for too long the guidance in the Green Book has been biased against certain parts of the country. We want to address that. On whether we will prioritise the spending on where it has the greatest return, yes, this is key to the methodology that the Green Book sets out. The Green Book reinforced investment in areas that were already successful. It did not necessarily enable investment in areas where there was a high degree of potential. That is what we want to do. By investing in areas of high potential, there will be huge returns. We have already set this out. There could be a potential increase of about 3% of GVA if we can get the city regions up to the average productivity of the country, as the noble Baroness, Lady Neville-Rolfe, said. That is the intention and why we are doing what we are doing.

The noble Lord talked about the importance of fiscal responsibility. He will know that this Government inherited a £22 billion black hole in the public finances. Restoring fiscal responsibility is the central driving purpose of the stability pillar of our growth mission. We have set out very clear fiscal rules that require no borrowing for day-to-day spending, unlike the previous Government, who had that £22 billion black hole in their day-to-day spending. We have repaired that. At the first opportunity, when the fiscal rules were tested at the Spring Statement, we repaired the headroom against the fiscal rules in full to what it was before. We have set out very clear fiscal rules. We will stick to them, and everything that we set out in the spending review next week will be shown to be fully funded and fully in line with the fiscal rules.

[Lord Wallace of Saltaire (LD)]

My Lords, I welcome the proposals. I remind the Minister that the Leeds tram scheme was cancelled by the last Labour Government in 2009, so it is very good to see it coming back 26 years later.

I note that the Statement says that modern growth

“relies on dynamic, interconnected city regions”.

I live on the outskirts of Bradford, the largest city in Britain without a mainline station. I am conscious that the lack of a decent trans-Pennine link and the overcrowding of the existing rail links between Leeds and Manchester is a huge problem for interconnection between three potentially vital regions of Britain—West Yorkshire, South Yorkshire and Greater Manchester. I remind the Minister that a new trans-Pennine rail link, Northern Powerhouse Rail, was talked about, planned and proposed, on and off, throughout the last Government. We need to make something which will be transformative for the entire north of England.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his support and for what he says. He knows much more about that region than I do. He will know that in the previous Budget, we funded the trans-Pennine upgrade for the work that was under way. We gave a further £2.1 billion investment for West Yorkshire yesterday, which will deliver for the West Yorkshire mass transit system, linking up Bradford, Kirklees, Calderdale, Wakefield, Pudsey and Leeds. I hope that goes some way towards what he is asking for. There will be further transport announcements in the spending review next week. I look forward to debating those then.

[Lord Bach (Lab)]

My Lords, I must apologise to the House and my noble friend the Minister for being a couple of minutes late for the start of the Statement. I hope that the House will forgive me; it is the first time that I have done that.

I want to ask the Minister about the east Midlands. We have felt very left out over many years in that important part of England, but I was delighted by yesterday’s announcement as it affects transport links between the two great cities of Nottingham and Derby. That is a great plus which we are very pleased about. Now for my slight gripe: I spring from Leicestershire, and we are feeling slightly left out, not from yesterday’s announcements but because, generally, Governments, and particularly the previous one, have failed to do anything to help in this way in the east Midlands and around Leicester in particular. Can the Minister and his colleagues consider that when future decisions are made?

[Lord Livermore (Lab)]

I am very grateful to my noble friend. Even though he was late, I was very happy for him to contribute when he was welcoming what we have done, for which I am grateful; I was less keen once he started with his gripe. We have pledged £2 billion of additional investment in the East Midlands to develop the Trent Arc, linking Derby and Nottingham to create tens of thousands of new jobs and homes, and to connect Infinity Park Investment zone and the East Midlands Freeport with sites including Ratcliffe-on-Soar clean energy and advanced manufacturing and East Midlands Intermodal Park—home of Toyota in the region. I absolutely hear what he says about Leicester; I will take that back and hopefully will have more good news for him in the spending review next week.

[Baroness Coffey (Con)]

My Lords, I am conscious that some of these announcements sound familiar—that is why I welcome them—but I was concerned that the Ely Junction upgrade was not mentioned. I hope for better news later next week. The Minister referred to the Green Book. I am very interested in this, because it was changed in December 2020 specifically to make sure that the Government’s strategic priorities—of which growth around the country was one—meant that a project’s BCR could be lower than for other projects, but that it would still be awarded and could go ahead.

Based on what the Minister has said, I am just wondering what further changes are going to be made in the Green Book on the back of the changes that have already happened, which have meant that projects could be deployed—that is why so many of these projects were announced two years ago. I would be grateful if he could explain this further. He talks about black holes and the like; of course, he knows that the OBR does not agree with that assessment. I would also be grateful if he could clarify the spending announcement, because he said that this would be new money. Is that on top of the £36 billion announced two years ago for many of the projects that were re-announced yesterday?

[Lord Livermore (Lab)]

The noble Baroness has asked a number of questions. When she stood up, I was hoping she was going to defend the Liz Truss mini-Budget that her party is trying to distance itself from today. I was disappointed that she did not do that. She did try to defend the £22 billion black hole, which is almost as enjoyable as defending the Liz Truss mini-Budget, and she will know that that is what we inherited.

The noble Baroness talked about re-announcements made yesterday. I will just make this point again: they are not re-announcements if actual money is put behind them. The previous Government announced many things and made lots of promises—the noble Baroness, Lady Neville-Rolfe, used the word “promises” lots of times—but they did not put a single penny behind any of those things. Not one penny or pound of any of those announcements was ever funded. We are now funding those announcements, so it is a very different situation.

The noble Baroness asked about the Green Book. As she knows, the Treasury Green Book sets out the guidance for public servants on how to assess the value for money of Government projects. We have heard from many regional mayors that previous Governments wielded the Green Book against them as an excuse to deny important investment in their areas. That is why in January the Chancellor ordered a review of the Green Book and its use to make sure that this Government give every region a fair hearing on investment. The purpose of the review is to determine whether the Green Book is being used to provide Ministers with fair, objective and transparent advice on public investment across the country, including outside London and the south-east of England. We will publish the full conclusions of that review next week alongside the spending review.

[Baroness Butler-Sloss (CB)]

My Lords, having just heard what the Minister said about the various regions, may I ask him what, if anything, will happen further west than Bristol?

[Lord Livermore (Lab)]

I tried to address that in answer to the question from the noble Baroness, Lady Pidgeon. Yesterday we talked about interconnectivity within the city regions. We will be announcing the full regional transport plan and regional growth plan for the whole of the country—England, Scotland, Wales and Northern Ireland—next week in the spending review.

[Lord Wood of Anfield (Lab)]

My Lords, one way you can tell that I am a Treasury nerd is that I am really looking forward to the Green Book review being announced next week, and I welcome what my noble friend has said about that today. There are many problems with the way the Treasury has, historically, allocated money for long-term investment. One is the regional bias that we have discussed today, but another is that capital budgets are allocated for short periods with an incentive to spend them by the end of a three-year cycle, whether it is appropriate or not for the project. Does the Treasury still intend to move towards longer-term capital budgeting, and will we hear something about that next week in the spending review?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for his question and for his expertise in this matter. He is right on capital budgets, with which, historically, there have been two problems. The previous Government’s fiscal rules did not prioritise capital investment, so when they had holes in their day-to-day spending plans, they would raid the capital budget to top up them up. That is why we have seen the infrastructure of our country deteriorate over the past 14 years. This Government’s fiscal rules ensure that we do not cannibalise those investment budgets to fund day-to-day spending. That is incredibly important, and it is why we have this £113 billion of extra capital spending to announce in the spending review. My noble friend is also absolutely right about the short-term nature of those capital budgets. Yes, three years is probably too short a planning horizon, which is why we will be announcing five-year capital budgets in the spending review.

[Lord Evans of Rainow (Con)]

My Lords, I apologise for not being here at the beginning of this important Statement. I was on the Social Mobility Committee, which is related to regional growth. As an MP, I represented the new town of Runcorn, and I was interested to see that the proposed new towns are in Essex, Surrey, Oxfordshire, Cambridgeshire, Buckinghamshire, Bristol, Wiltshire, Warwickshire and North and South Yorkshire. There is no mention of the north-west or north-east of England. That is quite concerning when we look to achieving the growth we want to see in all the regions of our country. Can the Minister update the House on whether there are any proposals for new towns in the West Midlands and the north-west and north-east of England?

[Lord Livermore (Lab)]

I will have to check with my colleagues in MHCLG on that point, and I am more than happy to write to the noble Lord to answer it. On growth plans for the rest of England—and for Scotland, Wales and Northern Ireland—outside of the city regions that we announced yesterday, there will be much more to say in the spending review next week, but I will write to him on this point.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I welcome yesterday’s Statement. London is grinding to a halt while, hopefully, we are seeing the rest of the country improve its communications. The Mayor has recently made announcements about changes to the congestion charge. I know this is not my noble friend’s direct area of responsibility, but should we not review the possibility of extending the congestion charge to the western part of London? We are grinding to a halt, and it is time we did something fundamental to stop it.

[Lord Livermore (Lab)]

I think that may be a question for the Mayor of London.

Denial of Banking Services: UK Defence Sector

Lord Livermore Excerpts

Wednesday 4th June 2025 Lords Chamber

[Lord Sharpe of Epsom]

To ask His Majesty’s Government what progress they have made in reforming environmental, social, and governance rules to ensure that they are not used by financial institutions to deny banking services, including loans, to the UK defence sector.

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

My Lords, the Government have been clear that there is nothing contradictory between ESG considerations and defence. No company should ever be denied access to financial services solely on the basis that they work in the defence sector. The Government are working closely with the defence sector and financial services to identify the extent of this issue, to reduce barriers to essential banking services and to support a resilient defence industry.

[Lord Sharpe of Epsom (Con)]

My Lords, I am grateful to the Minister for that Answer, and somewhat reassured. However, there is still evidence—plenty, in fact—of the threat of debanking faced by SMEs in this sector because of an absurdly overzealous interpretation of ESG considerations. The Government’s defence commitments are welcome, but private capital will of course be necessary to deliver those. Can the Government commit now to bringing ESG rating agencies within the regulatory perimeter, which will force greater transparency? Will they also take a leading role in underlining the desirability of investment in defence and national security, such as by using the National Wealth Fund and encouraging local government pension funds and other public investment vehicles to allocate funds to the sector? While they are at it, can they perhaps also remind the banks that defending the nation is profoundly ethical?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his Question, and I am happy to say that to all three of his supplementary questions the answer is yes. I agree with a lot of what he says. Access to finance is a significant issue for defence SMEs, and as a result it will be one of the key considerations for the forthcoming defence industrial strategy. It is not entirely clear-cut that all those access to finance issues are a result of ESG considerations; there are many more, and it is quite a complex picture. As for the noble Lord’s three questions, we recognise that the ESG market has developed quickly and without formal oversight, leading to some stakeholders raising significant concerns. To address those concerns, the Government will lay secondary legislation later this year to bring ESG ratings providers into regulation so that they are subject to rules set by the FCA. We have also set defence as one of the priority sectors that we want the National Wealth Fund to invest in—I think that was the noble Lord’s second question. Finally, we are working closely with the banking sector to make sure that it understands the importance of the defence sector to the economy.

[Baroness Smith of Newnham (LD)]

My Lords, apart from ESG questions, there are wider questions about investment in defence companies. I declare an interest as an academic. Obviously, often it is students, and some of my colleagues as academics, who may think that the defence sector is not suitable to invest in, just as they are not keen to invest in tobacco or oil. What can His Majesty’s Government do to help launch the national conversation that the strategic defence review says we need to help people, not just the banks but other investors, understand that we need to work with defence companies, because the defence of the realm is the most important duty of the state?

[Lord Livermore (Lab)]

I was not quite sure where the noble Baroness’s question was going, but I definitely agree with where it ended up. The Government have made it absolutely clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector. At the end of the day, it is not for the Government to tell investors what they can and cannot invest in, but at a time of increasing geopolitical instability, supporting the defence sector has never been more critical.

[Lord Browne of Ladyton (Lab)]

My Lords, perhaps I may ask a supplementary to the excellent Question asked by the noble Lord, Lord Sharpe of Epsom, based on the experience of an entrepreneur and inward investor who plans to build a much-needed factory in the United Kingdom to manufacture weapons-grade ammunition and who has been refused access to banking facilities, because of the defence nature of his proposal, by one of our leading banks. As the strategic defence review makes clear, one criterion for success over the next few years will lie in the number, scale and diversity of defence and dual-use technology companies in the UK. The review also emphasises the need for a whole-of-society approach to defence. With that in mind, does the Minister agree that we must ensure that banking facilities are more readily available beyond the historic primes to defence companies, particularly those which aspire to be, or are, suppliers to the UK Government, and that our procurement should support SMEs to do just that?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question, and I agree with everything he said. The Government have been clear that no company should ever be denied access to financial services solely on the basis that they work in the defence sector, and the banking sector should never take a blanket approach to any one sector. I very much recognise the story that my noble friend tells, and that SMEs face unique challenges working in the defence sector, compared with larger, more established suppliers, including in accessing financial services, as the noble Lord said in his original Question. As my noble friend said, they face difficulties opening bank accounts and an increased risk of sudden bank account closure, as well as higher costs of borrowing and access to capital, and they often face a higher compliance burden. That is why we have set out that supporting and unlocking the full potential of SMEs will be a key consideration of the forthcoming defence industrial strategy.

[Lord Howell of Guildford (Con)]

My Lords, it sounds as though the Government are well aware that this is a fairly widespread practice, particularly among the larger lending banks. What advice have they therefore given to the banks about defining what the defence sector is? The defence sector, of course, through its supply chains, affects the vast bulk of British industry, so it is important that they define it in a sensible way.

[Lord Livermore (Lab)]

I do not think any specific guidance has been given in the way that the noble Lord asks, but the most important thing to say here is that the banking sector should never take a blanket approach to any one sector. Of course, the decision as to what banking services to offer is ultimately a commercial decision but, as I said, banks should not take a blanket approach and they should make sure that decisions are taken on a case-by-case basis. The Government are actively engaging with banks to ensure that they understand the importance of the defence sector. The FCA has worked to understand why banks might close or reject accounts, and where it has found areas where firms need to improve customer outcomes, the Government expect them to consider the FCA’s findings and take them very seriously.

[Lord Watts (Lab)]

My Lords, is this another case of a regulator letting the British public down? Should we not press the regulators to do the job that they are supposed to do, and if they do not do it, remove them?

--- Later in debate ---

[Lord Livermore (Lab)]

No, I disagree with my noble friend on that point. As I said before, the ESG market has developed quickly and without formal oversight, so it is the responsibility of government to make sure that that sector is brought under the scope of regulation. As I have said, we will lay secondary legislation later this year to bring ESG ratings providers into regulation so that they will be subject to the rules set by the FCA. Once that legislation is passed, the FCA will consult on regulatory requirements for ESG ratings providers.

[Lord Stirrup (CB)]

My Lords, the Minister has said that it is not for the Government to tell banks to whom they should lend and in what they should invest, but it seems to me that the banks, particularly the large banks, are never slow to beg for public money when they get themselves into trouble. Should the Government not make it clear to those banks that they have a moral obligation to help to defend the public on whose money they depend in times of difficulty?

[Lord Livermore (Lab)]

I agree very much with what the noble and gallant Lord says. The Government have made it very clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector.

[Baroness Neville-Rolfe (Con)]

My Lords, defence is a vital requirement of our nation; I think we are all agreed on that. There have been many bad examples, which is why we are debating this today. Does the Minister agree that it is preposterous, unpatriotic and concerning that investment in our defence sector—for example, by certain pension funds or others prioritising ethical investment—should be actively discouraged by those purporting to favour a sustainable approach to investment? This needs to change.

[Lord Livermore (Lab)]

I agree with the noble Baroness. As I said previously, the Government have made it very clear that we consider defence an ethical investment. We do not see a conflict between sustainable investment and investment in our world-leading defence sector, and at a time of increasing geopolitical instability, supporting the defence sector has never been more critical.

Mansion House Accord

Lord Livermore Excerpts

Wednesday 14th May 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is disappointing that UK pension funds now invest only around 4.4% in British assets, in contrast to between 12% and 18% in Canada. That is no longer good value, given the scale of tax reliefs in the UK. Equally, a mandatory backstop, as apparently favoured by the Chancellor, is hard to reconcile with pension trustees’ fiduciary duties to put our millions of savers first. Does the Minister agree that experience in Australia and Canada should encourage us to move forward sensibly? Does he also acknowledge that the task of balancing important domestic investment with the need to invest in the best interests of our savers is actually best left to the providers themselves, and not directed by the Government?

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

I am grateful to the noble Baroness for her questions. I am sorry that she started her remarks with the word “disappointing”, because this is a really important initiative by the industry and one that the Government very much welcome. Of course, it builds on the work that the previous Conservative Government did, which the previous Conservative Chancellor began, so I hope that there is cross-party support for these steps. This is very important to our growth mission, by increasing investment in infrastructure, and it supports better outcomes for savers. As the noble Baroness will know, this is an industry-led, voluntary accord. Pension funds are choosing to do this, because evidence shows that high-growth assets can boost returns over time. We are confident that schemes are moving in the right direction, and this accord shows what government and business can achieve together, when working in partnership. The pension schemes Bill will contain more details about how these developments will be monitored to make sure that change is delivered.

[Baroness Kramer (LD)]

My Lords, we all want to see more investment in the UK’s productive economy, but what protection is to be provided for people with small DC pension pots who cannot risk losses and see their pensions as a savings product, not as an investment, especially if that investment is high-risk and illiquid, as envisaged in the original Mansion House accords?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. This commitment is voluntary and led by the industry, because the industry knows and is choosing to do this—because the evidence shows that higher-growth assets can boost returns to savers over time, as the noble Baroness, Lady Neville-Rolfe, said, in line with international counterparts, such as in Canada and Australia. Their pension funds and the levels of private asset allocation in those schemes is far higher. Pension savers will benefit from this accord through diversified savings, with potentially higher returns.

[Lord Davies of Brixton (Lab)]

My Lords, I thank my noble friend for his replies and for the Statement in the Commons. I understand why my noble friend and the Minister in the Commons avoided tackling the issue of mandation, even though there was clearly a Treasury-inspired leak about the issue on Monday. Does my noble friend understand that with mandation of investment policies, should the Government consider it, comes responsibilities, with effectively the Government having to guarantee the returns or benefits on members’ benefits.

[Lord Livermore (Lab)]

I am shocked that my noble friend uses the word “leak”—I have no idea what he is talking about. As I have said, it is important that this is a voluntary commitment and that it delivers the investment promised for the UK economy. As I say, funds are voluntarily—it is industry led—choosing to do this because evidence shows that high-growth assets can boost returns over time, and we are confident that the schemes are now moving in the right direction. But equally, as I say, the pension schemes Bill will have more details in it about how these developments will be monitored over time to make sure that that change is delivered, because in the end what we all want to see is higher levels of investment.

[Lord Forsyth of Drumlean (Con)]

My Lords, if the Minister is right that this is an entirely voluntary scheme, why is it necessary for the Government behind the scenes to threaten to make it mandatory?

[Lord Livermore (Lab)]

Because it is very important that this voluntary commitment delivers the investment that is promised for the UK economy.

[Baroness Altmann (Non-Afl)]

My Lords, I welcome this initiative. Indeed, I would be pleased to see the Government go even further in ensuring that our long-term pension funds have faith in Britain, invest in Britain and use the £70 billion of taxpayer money that goes into pensions every year to add to contributions made by individuals and employers to benefit Britain, rather than being free to put 100% into overseas markets. But of course we need to make it more attractive to invest in the UK, and I urge the Minister to look into the possibility of using closed-ended investment companies that do exactly that kind of investment, are selling at discounts and have been hit by unfair regulation, which has stopped them being able to raise new capital and provide long-term returns of this nature for pension funds.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I know that she has a great deal of expertise in this matter, and I enjoyed the meeting that she and I had with my honourable friend the Pensions Minister on this exact topic—he mentioned her in his remarks in answer to this UQ yesterday in the other place, so she has clearly had a big impact on his thinking. I am pleased, and I welcome the fact, that she welcomes these reforms. She has often called for greater investment by pension funds in productive assets, which I think is exactly what is being delivered. She has called for greater investment by pension funds in UK assets, which is again what is being delivered. Of course, there is always more that can be done; I hear what she says about the campaign that she has led for many months now, and I am sure that my honourable friend will look further at that issue.

[Lord Londesborough (CB)]

My Lords, a number of pension providers have warned that progress will be dependent on

“a steady supply of high-quality UK investment opportunities”.

That is a big pipeline challenge, because our record of financial returns on infrastructure projects is, as we know, suboptimal. Investing in fast-growing start-ups and scale-ups, whether here in the UK or overseas, carries far greater risk. In many sectors such as tech, the failure rate of such start-ups is over 90%. Can the Minister therefore explain how these sorts of investment opportunities sit with the pension funds’ fiduciary and consumer duties to act in their clients’ interests in terms of maximising returns for pensioners without taking excessive risk?

[Lord Livermore (Lab)]

The noble Lord is absolutely right about the importance of the pipeline that he speaks about. The Government are playing our part in that, with £100 billion of additional public investment over the course of this Parliament. Our job as the Government is also to support the pipeline of investable projects, which is why we are getting the country building through our planning reforms; why we have ended the ban on the development of onshore wind; why we have set up the National Wealth Fund; and crucially, why we will be publishing, at the time of the spending review, the 10-year infrastructure strategy and modern industrial strategy.

The noble Lord is also right when he talks about the long-standing problem in the UK economy of the ability for growing firms to get hold of scale-up finance, which this accord will help to address. The accord will provide investment for infrastructure but also provide growth capital to a much wider range of firms. These are often smaller-ticket items, and pension funds will need them to be aggregated to a higher level, which is exactly the work of the British Business Bank.

[Lord Lee of Trafford (LD)]

My Lords, if the Government are keen, quite rightly, to encourage more investment into the United Kingdom, why do they still give tax relief to those with ISAs who invest in overseas equities?

[Lord Livermore (Lab)]

The Government of course want to see more consumers participate in capital markets and benefit from the long-term financial security that investing can provide. We are committed to incentivising greater saving and investment, and we recognise that ISAs play a very important role in helping households to build a financial buffer for a rainy day.

[Lord Balfe (Con)]

My Lords, having spent much of my life as a pension fund trustee, I am aware that this is not a new proposal. Can the Minister give us an undertaking that voluntary will not precede compulsory? What pension fund trustees are concerned about is being ordered what to do with their members’ money, which they are trustees of, not for.

[Lord Livermore (Lab)]

I think I may have covered that several times already. I do not agree with the noble Lord when he says that this is not new. For the first time, we have 17 providers signing an accord, giving a commitment from industry to bring more assets into scope, doubling the target from 5% to 10% and including a specific commitment to investing half of that in the UK. That commitment has not been given before. As I have said, the pension schemes Bill will include more details about how these developments will be monitored to make sure that that change is delivered.

Bank Resolution (Recapitalisation) Bill [HL]

Lord Livermore Excerpts

Consideration of Commons amendments and / or reasons
Monday 12th May 2025 Lords Chamber

Moved by

[Lord Livermore]

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

1: Clause 1, page 1, line 21, leave out subsection (3)

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

My Lords, with the leave of the House, I will also speak to Amendment 2. I would like to thank noble Lords for their continued interest and engagement in this important legislation. I know that some noble Lords will be disappointed to see the other place overturn the amendment inserted by your Lordships’ House, relating to the scope of the new mechanism, but I hope that I can offer some reassurance today on this matter.

As noble Lords will know, this Bill is intended to enhance the toolkit that the Bank of England has to manage the failure of a banking institution. In particular, it seeks to provide a new source of funding to cover certain costs associated with resolution and, in doing so, to strengthen the protections for the taxpayer, given the importance of protecting public funds in the event that a bank fails.

That said, I do understand the concerns that noble Lords have about any potential costs that would be placed on the banking sector if the Bill’s mechanism were used to support the resolution of some of the largest banks. Here, I would reiterate that it is the Government’s strong expectation that this mechanism would not be used to support the failure of the largest firms.

Noble Lords will recall that the Government published draft updates to its code of practice in October last year, which contained important language clarifying this expectation. I also met with many noble Lords in person during the Bill’s passage to listen carefully to concerns and to seek to explain the Government’s views on this matter.

Ultimately, the other place has taken the view that the scope of the mechanism should not be limited. The Government continue to believe that it is important to retain some flexibility for the Bank of England. I would like to make three further points to help explain that position.

First, as I have mentioned, the Government published draft updates to the code of practice to clarify our expectation that the Bank of England would bail in all readily available MREL that a bank holds, on top of the regulatory capital that must be bailed in, before using this mechanism. The Government therefore envisage that the mechanism would only be used on larger banks as a backstop, and any funds required would be only a top up to these other sources of recapitalisation.

Secondly, allowing the Bank of England the option of using the recapitalisation mechanism on larger banks means that it will be more able to respond to unexpected factors when resolving a bank. While of course the Bank of England works hard to ensure that it is fully prepared for a failure scenario, the manner in which banks fail is always highly uncertain. It is therefore important to ensure that the Bill is not overly restrictive in curtailing the Bank’s ability to use the mechanism flexibly.

As we have discussed in previous debates, there are some circumstances where retaining that flexibility could help to protect public funds. Although unlikely, there are circumstances in which larger banks may not be sufficiently capitalised to self-insure against their own failure, even if the bank in question has been directed to maintain end-state MREL requirements. An example of that might be if the firm was subject to a large redress claim, resulting in larger recapitalisation requirements than envisaged. Similarly, changes in the market value of the firm’s assets over time could result in higher losses than expected at the point of failure, again resulting in higher recapitalisation requirements to manage the failure of the firm in question.

While unlikely, those examples demonstrate a clear benefit in having the flexibility to source additional resources from the mechanism, having already written down the firm’s available MREL. Restricting the scope of the Bill would prevent the mechanism from being available in such scenarios, leaving public funds and therefore the taxpayer exposed instead. The Government therefore consider the theoretical possibility of using the recapitalisation mechanism on a larger bank a prudent step, providing comprehensive protection for public funds.

Thirdly, any levying by the Financial Services Compensation Scheme to recover funds provided to the Bank of England will be subject to an affordability cap set by the Prudential Regulation Authority, which is currently £1.5 billion per year. In line with its safety and soundness objective, the PRA carefully considers the affordability of the FSCS levy for firms, providing an important safeguard against the sector being hit by unaffordable levies to prop up the largest firms.

I hope those points will go some way to reassuring noble Lords, and that they will be able to support the Bill as it now stands. Noble Lords will note that Amendment 2 is a straightforward amendment to remove the financial privilege amendment that was inserted by this House at Third Reading. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I want to ask the Minister a question that arises from this change. First, though, it is over six months since we debated these amendments. That does seem like an awfully long time for the Bill to disappear into limbo and come back, particularly when other Bills are being rushed through this House.

I wanted to ask the Minister to explain more about whether the resolution process could be used for larger banks, but I think he has actually answered that question. I am not sure his answer gives me an awful lot more confidence or comfort, but I am not going to oppose the Commons amendments. However, in the last six months, various comments have come from the PRA or the Bank of England about the fact that this Act, as it will be, may allow them to take some banks out of the MREL process. I wondered if the Minister might wish to comment on that and whether there are any consequences the other way round.

--- Later in debate ---

[Lord Livermore (Lab)]

My Lords, I again thank all noble Lords for their efforts on the Bill since July last year, and all noble Lords who have spoken in this brief debate today. I am also grateful to all three noble Lords for indicating that they will not oppose the Bill further. I will briefly attempt to respond to the questions and points made in this brief debate.

First, I reiterate what the noble Baronesses, Lady Kramer and Lady Neville-Rolfe, said about the expertise in this House; I was on the receiving end of much of that expertise and it certainly tested me. However, to a large extent, the Bill was improved by the debates we had in this House, and I am grateful to all noble Lords for that.

The noble Lord, Lord Vaux, talked about the gap between Third Reading and us returning today for this ping-pong session. It is somewhat out of my hands, although I do agree that it feels like rather a long time since we last debated these issues. He asked about the circumstances in which this power will be used, and I hope, as he said, that I covered that in my opening speech. He also raised some other questions.

On MRELs, the Bank of England sets MREL requirements independently of government, as he knows, but within a framework as set out in legislation. The Bank of England has consulted on proposals which seek to ensure that the MREL regime remains proportionate and evolves over time. The Government are engaging closely with the Bank of England as it considers its responses to that consultation, and its engagement includes consideration of the impacts on economic growth.

The noble Baroness, Lady Kramer, talked about MREL being used as the first resort. The Government believe there are sufficient safeguards in place to ensure that shareholders and creditors are exposed to losses before the new mechanism is used. These include the principle in legislation requiring the Bank of England to ensure that shareholders and creditors bear losses when a banking institution fails. As set out in the draft updates to the code of practice, the Bank of England would first look to write down or otherwise expose to loss all readily available MREL resources before requiring a recapitalisation payment from the FSCS. Noting these points, the Government believe that specifying the extent of losses that must be imposed before the new mechanism is used would be an unnecessary restriction on the Bank of England’s flexibility.

The noble Baroness, Lady Neville-Rolfe, asked about the FCSC budget and minimising operating costs. It is in fact a legal duty on it to minimise those costs, and I would expect it to adhere to that legal duty. The noble Baroness also spoke about the importance of financial services to the growth of the UK economy, on which I very much agree with her.

The Bill plays a vital role in upgrading the UK’s toolkit to manage bank failures, strengthening protections for taxpayers and financial stability which are, in turn, key to the Government’s number one priority of economic growth. I look forward to the Bill’s enactment and I hope noble Lords will join me in supporting the amendments made in the other place. I beg to move.

Motion on Amendment 1 agreed.

Moved by

[Lord Livermore]

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

2: Clause 8, page 6, line 1, leave out subsection (5)

Inheritance Tax: Impact on Rural Businesses

Lord Livermore Excerpts

Thursday 1st May 2025 Lords Chamber

[Baroness Rock (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and draw attention to my interests as set out in the register.

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

My Lords, the Government have taken difficult decisions on welfare spending and on tax necessary to repair the public finances and rebuild public services. This includes measures to better target agricultural property relief and business property relief. These measures mean that, despite the difficult fiscal context, we are maintaining significant levels of relief from inheritance tax beyond what is available to others, and that almost three-quarters of estates claiming agricultural property relief and business property relief will not pay more inheritance tax. The independent Office for Budget Responsibility does not expect the reforms to have a significant macroeconomic impact.

[Baroness Rock (Con)]

I thank the Minister for his Answer, but these changes are already stifling investment. A Farmers Guardian and Tenant Farmers Association joint survey reports that 55% of tenant farmers will invest less in their farms and 25% of tenant farmers expect their landlords to take back land for non-farming purposes and reduce their investment. Furthermore, over half say their mental health is suffering. They fear eviction. I have had many heartbreaking messages from farmers who fear they just cannot go on. Is the solution not to follow the recommendation in the Rock review to allow landlords letting land for eight years or more to be able to include the value of that land as part of the zero-rate threshold for inheritance tax?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I fully recognise that she has a great deal of expertise in this area and I pay tribute to the work that she has done, particularly on behalf of tenant farmers. I do not accept the premise of her question. I fully respect the commitment that has gone into the survey that she spoke of but do not necessarily accept its conclusions. Our commitment to tenant farmers remains steadfast, which is why we are investing £5 billion in farming over two years, the largest budget for sustainable food production in our country’s history.

I take seriously what the noble Baroness says about mental health. Mental health is of course an issue that the Government take extremely seriously, which is why we are working to improve mental health services across the country, including through plans to recruit an additional 8,500 mental health workers. We fully understand the strength of feeling on this issue, and we urge people to make sure they use the correct data to prevent further inflaming the debate.

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, the nature of farming across the UK varies greatly. For example, in Northern Ireland the size of family farms is smaller but the price of land is a lot higher per acre. Given that that is the case, and given that families in Northern Ireland are concerned about the incoming changes, will the Minister commit to looking at an impact assessment not of the macro situation in the UK but of the different regional variations?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As she may know, as is standard practice, we will publish a tax information impact note alongside the draft legislation before the relevant Finance Bill. My honourable friend the Exchequer Secretary has engaged extensively with stakeholders in this area, including with the Ulster Farmers’ Union. We have fully listened to the issues that the noble Baroness raises. However, it is worth saying that individuals will still benefit from 100% relief for the first £1 million of combined business and agricultural assets, and above that amount there will be 50% relief, meaning that inheritance tax will be paid at a reduced effective rate of up to 20%. That is considerably more generous than in any other part of the economy.

[Baroness Kramer (LD)]

My Lords, the problem is not just the damaging inheritance tax changes but delinked payment reductions, as we debated yesterday, sky-high energy bills, a botched trade deal and extreme weather. Defra anticipates that 7% or 8% of farms will not survive, and most people accept that that is on the optimistic end of the scale, and the sale will be to corporates that have no real link with, and put very little into, the local economy. In the analysis that the Minister says is coming, will there be a broader analysis of the state of the rural economy—not just macro-level analysis, and not even regional analysis, but something that genuinely focuses on the rural economy because it needs different solutions?

[Lord Livermore (Lab)]

It is worth saying that the Government are investing £5 billion across this year and next year to support the transition to a more sustainable and productive sector, including the biggest budget for sustainable food production and nature recovery in our history. I do not necessarily accept the characterisation that the noble Baroness seeks to put forward of what is going on and what this Government are doing. As I say, there will be a full impact assessment at the time when the legislation is published, and I am sure it will cover many of the things that the noble Baroness asks about.

[The Lord Bishop of St Albans]

My Lords, there is no doubt that there is some sort of mismatch between the assurances being given and the experiences of some of our smaller farmers, who are deeply concerned at what is going on. What consideration have His Majesty’s Government given to having some sort of clawback clause? If assets were disposed of within, say, seven years after a death, that would deal with the problem of the tax loophole whereby some people are using land simply to get out of paying tax.

[Lord Livermore (Lab)]

I am grateful to the right reverend Prelate for his question and I pay tribute to the work that he is doing with the communities that he is discussing. The Government believe that introducing a clawback mechanism such as he describes could still result in some of the wealthiest estates paying less inheritance tax than under the proposed reforms. That would raise considerably less money, and therefore would not go towards repairing the public finances and supporting the public services in the way that we seek.

[Baroness Butler-Sloss (CB)]

My Lords, I own a farmhouse in Devon, which, like Northern Ireland, has very small farms. My house is worth over £1 million as a farmhouse, and all the farmhouses around me, with small farms of 100 or 150 acres, are worth at least £1 million. Does the Minister appreciate that? You are at the £1 million situation even before you look at the cost of the land.

[Lord Livermore (Lab)]

I am grateful to the noble and learned Baroness for her question. As I say, individuals will benefit from 100% relief for the first £1 million of combined business and agricultural assets, but that £1 million sits on top of the existing reliefs and all other spousal exemptions and nil-rate bands. Full exemptions for transfers between spouses and civil partners will continue to apply; therefore a couple with agricultural or business assets can typically pass on up to £3 million-worth of assets without paying any inheritance tax at all. That is considerably more generous than in any other part of the tax system.

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

My Lords, did my noble friend notice that, when the farmers blocked Whitehall with their tractors—sparkling, new, expensive tractors—they did not look very poor? Has he noticed that, when the Tories talk about tax, they always want to make the rich even richer?

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

They do. Will my noble friend confirm that, when poor people get tax deductions, they spend money on food and other essentials, and that helps growth?

[Lord Livermore (Lab)]

It is incredibly important that the decisions we take make the tax system fairer and more sustainable, and I believe that is absolutely what we are doing. Despite a very tough fiscal context, we are maintaining considerably more generous reliefs in this sector than exist anywhere else in the tax system.

[Baroness Neville-Rolfe (Con)]

The Government claim that family farms are safe from the changes to IHT. However, they have set the threshold too low, as subsequent examination has clearly demonstrated. It was also chilling to see the CBI’s economic analysis, which showed a net fiscal loss from the changes to business property relief of £1.26 billion over five years, with the tax revenue of £1.4 billion trumped by the loss of tax on production, spending, income and NICs. Has the dismay across the countryside at this mistaken policy been reflected in the responses to the very narrow HMRC consultation of 27 February? Will the Government think again before the changes take place next April?

[Lord Livermore (Lab)]

No. The analysis undertaken by CBI Economics is not robust nor representative. It is based on a self-selecting survey from members of groups campaigning against these reforms. The independent Office for Budget Responsibility certified the costing at the Budget in October. The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. If the noble Baroness would like to tell me where she would get the £520 million that she would like to remove, I would be very interested to hear it.

Tax: Changes

Lord Livermore Excerpts

Tuesday 29th April 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the loss of tax revenue from wealthy individuals leaving the country following recent tax changes.

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

My Lords, the OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue over the five-year forecast period. That figure accounts for some non-doms who are ineligible for the new regime choosing to leave the UK in response to these reforms. The Government will continue to work with stakeholders to ensure that the new regime is internationally competitive and focused on attracting the best talent and investment to the UK.

[Lord Leigh of Hurley (Con)]

The ideologically driven decision to include overseas assets in IHT for both non-doms and former non-doms is described in the national press as Rachel Reeves’s biggest mistake. Despite what the OBR says, capital gains tax receipts have fallen by 10% and, as we heard on Friday, the national debt is ballooning. Does the Minister agree with me that, given that 30% of income tax receipts come from 1% of taxpayers and they are leaving in droves, it is a question not of whether this policy is reversed but of when? It is time to put country before party.

[Lord Livermore (Lab)]

I do not agree with the substantive bulk of the noble Lord’s question. He mentions the capital gains tax figures. The latest outturn data for capital gains tax relates mainly to capital gains tax liabilities in the 2023-24 tax year, so pre-dates the announcement of non-dom reforms by the previous Government and this one. This Government’s tax reforms to the non-dom regime and to capital gains tax keep the UK an attractive place to live and to invest, while ensuring that everyone who is a long-term resident pays their taxes here, helping to fairly fund our public services. The UK’s main rate of capital gains tax is lower than in any other European G7 country, as is our corporate tax rate, and our new residence-based regime is simpler and more attractive to new arrivals than the non-dom regime it replaces.

[Lord Rooker (Lab)]

Given the answer that my noble friend has just given, the best estimate I have seen is that the top 10% of taxpayers pay about 34% of their income in total tax while the bottom 10% pay 47% of their income in tax. Should we not be looking at the inequalities of the tax system a little quicker?

[Lord Livermore (Lab)]

I agree with my noble friend that it is important to look at inequality right across the tax system and across our society. This Government are of course committed to reducing that through measures such as the minimum wage increases we have seen recently. Of course, successful businesses and entrepreneurs who create jobs and wealth are the engine of economic growth in our society. We will support them to succeed while ensuring that the wealthiest pay their fair share towards the public finances.

[Lord Lilley (Con)]

My Lords, are the Government trying to prove the truth of the law first articulated by the late lamented Lord Harris of High Cross that punitive taxes on the rich do not redistribute income but redistribute people, to the immense loss of the Treasury in this country?

[Lord Livermore (Lab)]

No, we are not. The UK’s main rate of capital gains tax is lower than in any other European G7 country, as is our corporation tax rate. Our new residence-based regime is simpler and more attractive to new arrivals than the non-dom regime it replaces—the regime put in place by the party the noble Lord supported for 14 years.

[Baroness Kramer (LD)]

My Lords, my eldest granddaughter is a British subject and an American citizen. She lives in the UK and has started to earn some money, only to find that she cannot avail herself of something like an ISA because it would be taxed from day one in the US and vice versa. This is one of anomaly after anomaly and Catch-22 after Catch-22 that the UK Government have refused to address. Does the Minister understand that, with non-dom status gone, this is becoming a major problem and driving out people who are tax resident in more than one country?

[Lord Livermore (Lab)]

I absolutely understand the point the noble Baroness is making, but I do not necessarily agree that it is driving out the people she describes. I completely understand her point, but I am not sure I agree with the conclusions she is reaching.

[Lord Sikka (Lab)]

My Lords, the richest fifth pay 30% of their gross household income in direct taxes; the poorest fifth pay 16%. The richest fifth pay 11% of disposable household income in indirect taxes; the poorest fifth pay 27%. Altogether, the poorest pay a higher proportion of income in taxes than the richest. The Government can promote tax justice and stimulate the economy by cutting taxes for the poorest and eliminating the tax perks of the richest. How quickly can we expect action from the Government?

[Lord Livermore (Lab)]

As my noble friend will know, the UK’s approach to wealth through taxes on capital gains and inheritance generates substantial revenue for the Government and is on a par with other G7 countries. The OECD has said that capital gains and well-designed inheritance taxes can act as a more efficient and less administratively costly way of addressing wealth inequality than wealth taxes. Of course we want to ensure that we increase the incomes of the poorest people in society, which we have done, for example, through increases in the minimum wage.

[Baroness Penn (Con)]

My Lords, can the Minister confirm whether his Government agree with another of the OBR’s assessments, which anticipates that the Employment Rights Bill will have a net negative economic impact?

[Lord Livermore (Lab)]

The noble Baroness will know that the OBR has not included an assessment of that Bill in its latest forecast, because it has not yet progressed through Parliament.

[Lord Boateng (Lab)]

My Lords, does the Financial Secretary agree with the Chancellor of the Exchequer who said that

“it is not fair that people live in this country for very long periods of their lives benefit from our public services and yet operate under different tax rules from everyone else”.—[Official Report, Commons, 8/7/15; col. 325.]

Does he agree with that statement? Was that not in fact the statement of George Osborne, the Tory Chancellor of the Exchequer? If that is the case, is there not a lot of hypocrisy and cant being shoved at this from the other side?

[Lord Livermore (Lab)]

I agree with much of what my noble friend says. The previous Government resisted taking action in this way for many years, but then did a screeching U-turn and implemented a series of reforms. Their reforms raised £21 billion in revenue. Our reforms will raise an additional £12 billion in revenue.

[Lord Wallace of Saltaire (LD)]

My Lords, do the Government remember the distinction made by the previous Conservative Government between people who were from somewhere and people who might be from anywhere? It was made with the clear intention of saying that people who liked going abroad were somehow not fully loyal to England; they were more European or something else. Given that distinction, which the previous Conservative Government and their Prime Minister made, is it not now a little hypocritical to say we need to defend those who might easily move away to Dubai, Thailand or Monaco, rather than the interests of people who are committed to this country?

[Lord Livermore (Lab)]

I remember the “citizens of nowhere” comment that the noble Lord refers to. I think that, like much of what the previous Government did, it was not an encouraging thing to say. But let us remember that it is not for me to justify what the previous Government did. This Government are committed to addressing unfairness in the tax system so that everyone who makes their home in the UK pays their taxes here. I think that is absolutely the right principle from which we should proceed. Both the previous Government and this Government increased taxes on non-doms because it is necessary to raise revenue to repair the public finances and fund our public services. That is the fairest way of raising the necessary revenue while ensuring the UK remains an attractive place to live and invest.

[Baroness Neville-Rolfe (Con)]

My Lords, last Friday there was an important debate here about the serious threat that the current and increasing level of national debt poses for the UK. The Chancellor has failed to give herself enough headroom, and her fiscal rules are flawed. Hence, every reduction in tax receipts ought to be met by further spending cuts or by an increase in taxes elsewhere. Now we hear that tax revenue from wealthy people, such as non-doms, is going down sharply as many flee the country because of the Government’s policies. There is a clear tipping point. Will the Government reverse their non-dom policies? If not, which taxes will they increase to compensate for the loss of revenue?

[Lord Livermore (Lab)]

No is the answer. The noble Baroness says that taxes should rise or spending should be cut. I ask her the same question: she says repeatedly that we are raising the wrong taxes, but she never says which taxes we should be raising. She says repeatedly that we should cut spending, but she never says what we should cut spending on. The OBR’s March forecast shows that the Government meet our fiscal rules with the same headroom as at the time of the Budget, thanks to decisive action to reduce spending and to grow the economy. Average borrowing over the next five years will be 2.6% of GDP, compared with 5.6% of GDP over the previous 14 years. There is now a significant fiscal consolidation during the course of this Parliament, taking borrowing as a share of GDP from 4.5% to 2.1%, achieving the biggest current budget surplus in over 20 years.