London Stock Exchange: Decline in UK Funds

Debate between Lord Livermore and Lord Howell of Guildford

Thursday 13th February 2025 Lords Chamber

[Lord Livermore (Lab)]

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

[Lord Howell of Guildford (Con)]

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

[Lord Livermore (Lab)]

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

Pension Fund Reliefs

Debate between Lord Livermore and Lord Howell of Guildford

Tuesday 4th February 2025 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. He is correct that the Government spend around £70 billion annually on pension tax reliefs, because we want to encourage pension savings. That is why, for the vast majority of savers, pension contributions made from income during working life are tax free, and it is why, like many other countries, the UK exempts from tax the returns pension funds receive on the investments they make. Tax is not within the scope of the pensions review.

[Lord Howell of Guildford (Con)]

My Lords, one way of making pension funds better able to support British industry would be to amalgamate many of the smaller ones and increase their efficiency. I think this idea has already been mooted and discussed. Is there not a further thought that the large area of public service pensions, which are unfunded—not local government, which is funded—should be considered being made into funded pensions? Would that not also help to reinforce pensions’ contribution to our nation?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. He is absolutely right that consolidation and scale are key to the strategy behind the pensions review. I will certainly pass his ideas back to my honourable friend, the Pensions Minister.

Public Finances: Borrowing Costs

Debate between Lord Livermore and Lord Howell of Guildford

Thursday 9th January 2025 Lords Chamber

[Lord Livermore (Lab)]

I absolutely agree with my noble friend. Growth was one of the biggest failures of the previous Government and we are determined to turn that around. The OECD recently upgraded our growth forecast, which means that the UK’s economy is now growing faster than those of Germany, France, Italy and Japan over the next three years. Following the Budget, the OBR increased its forecast for GDP for 2024 and 2025 and, for the first time, it has looked at the growth impact across a decade. It is particularly clear that capital investment, which the party opposite opposes, will lead to a significant increase in growth over the longer term.

[Lord Howell of Guildford (Con)]

My Lords, the Minister will be aware—at least, I hope he is—that global Governments’ debt at present is running at about $95 trillion. That is expected to rise to $130 trillion in three years’ time. He is right that there are some countries where the debt is higher than ours at present, but does he accept that it is about not only the size of the borrowing but the bond markets’ and world opinion about the commitment of a Government to enterprise and growth and to dynamic economic policies, particularly affecting small and medium-sized business, which of course is 99% of all business? Will he therefore have a word with the Chancellor to ensure that she recognises that in her next Budget, as she did not seem to in her last Budget, because it would greatly improve our standing and may save us a few tens of billions in interest on our present enormous debt?

[Lord Livermore (Lab)]

I am happy to say to the noble Lord that the Government are absolutely committed to working in partnership with business to grow the economy and to doing what is required to do so. As he knows, the Government are committed to economic and fiscal stability. We have put in place those robust fiscal rules, and there is a significant fiscal consolidation during the course of this Parliament, taking borrowing as a share of GDP from 4.5% to 2.1%. If achieved, this would be the biggest current budget surplus in over 20 years.

Economic Productivity

Debate between Lord Livermore and Lord Howell of Guildford

Thursday 5th December 2024 Lords Chamber

[Lord Livermore (Lab)]

I completely agree with my noble friend on that point. Measuring public sector productivity is very difficult and contradictory measures are involved. My noble friend is right that, obviously, our priority is improving those public services and we will continue to do so.

[Lord Howell of Guildford (Con)]

My Lords, in the 1970s, we attracted enormous increases in productivity by also attracting vast quantities of Japanese inward investment, which saved our motor industry. Now, unfortunately, our motor industry needs saving again. Could we concentrate on attracting FDI by having the kind of Budget that really makes international investors keen to invest here on a scale much larger than anything that has come before?

[Lord Livermore (Lab)]

The noble Lord is absolutely correct to say that investment is one of the key drivers in raising productivity. Obviously, it was a matter of regret that, under the previous Government, the UK was the only G7 country with levels of private sector investment below 20% of GDP. We are absolutely determined to raise that: the recent international investment summit saw £64 billion of investment come into the UK, creating some 40,000 jobs. We are determined to continue that trend.