National Insurance Contributions (Employer Pensions Contributions) Bill

Debate between Lord Livermore and Lord Londesborough

Report stage
Thursday 5th March 2026 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I support broadly all the amendments in this group, but specifically Amendments 12 and 26 in the name of the noble Baroness, Lady Kramer, to which I added my name. I will be genuinely brief. These amendments, by raising the cap to £5,000 per annum, would address a core problem in the Bill: the limiting or deterring of the so-called moderate earners we have heard about from contributing sufficiently to their pension pots, which, as we already know, are nowhere near sufficient for the vast majority to fund their retirements. We are talking about retirement periods of 25 to 30 years if demographic trends continue. As we have heard, this includes many in the early stages of their working lives who need to get into the habit of contributing to pensions at the formative stages of their careers.

I remind the House of a stat that came out in Committee. On average, our current workforce will outlive their pension savings by eight to nine years, and this funding gap is widening year by year. Clause 1 is, in effect, raiding pensions to keep the Treasury within its fiscal rules in three years’ time. It is another crude example of kicking the can down the road, leaving another generation to sort out another widening deficit.

I was interested to hear the comments from the noble Lords, Lord Leigh and Lord Ashcombe. They raised some pertinent questions over the revenue-raising forecasts. I also fear that the Treasury has wildly underestimated the level of accelerated salary sacrifice over the next three years in the run-up to these measures. I have witnessed a number of business plans in companies that I am involved in; I should, of course, declare my interests as set out in the register.

To conclude, I fully endorse the excellent opening comments from the noble Baroness, Lady Neville-Rolfe, and the comments we just heard from the noble Baroness, Lady Kramer. I encourage your Lordships to support their amendments should they decide to test the opinion of the House.

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

My Lords, I am very grateful to all noble Lords who have contributed to this first group of amendments. I turn first to Amendments 1 and 17 in the names of the noble Baronesses, Lady Neville-Rolfe and Lady Altmann, and the noble Lord, Lord Altrincham, which seek to exempt basic rate taxpayers from the Bill. As the noble Baroness, Lady Neville-Rolfe, noted, the vast majority—74%—of basic rate taxpayers using salary sacrifice will be unaffected by the changes in this Bill. Specifically, three-quarters of those earning up to £50,270 and using salary sacrifice will be entirely protected, and that rises to 95% when looking at those earning £30,000 or less who use this mechanism to save into their pensions. The minority of basic rate taxpayers with contributions above £2,000 will continue to benefit from employee national insurance relief worth £160 a year in addition to the full income tax relief they receive on their pension contributions. Half of those basic rate taxpayers contributing above £2,000 will face an additional national insurance contribution liability of less than £50 a year.

Exempting basic rate taxpayers would also be exceptionally difficult to operate in practice and would add considerable additional administrative burden on to employers. That is because, unlike income tax, national insurance does not operate on an annual aggregated basis, nor does it determine liability by reference to an individual’s final tax position. An individual cannot be confirmed as a basic rate taxpayer until their full income position is reconciled at the end of the tax year, taking account of potentially multiple employments and other sources of income. To apply a tax band-based exemption, employers would be required to undertake year-end reconciliations across employments and account for other sources of income as well that sit wholly outside the design of the national insurance contributions system. This would represent a fundamental departure from established payroll processes, imposing significant complexity, cost and risk on to employers and payroll providers.

Amendments 16 and 29, in the names of the noble Baronesses, Lady Neville-Rolfe, Lady Kramer and Lady Altmann, and the noble Lord, Lord Altrincham, seek exemptions for small and medium-sized enterprises, charities and social enterprises. Exempting small and medium-sized enterprises and charities in the way proposed by the amendment would add considerable complexity to the tax system and would not be proportionate to the limited impact this policy is expected to have on those businesses. The changes in this Bill primarily affect larger employers, which are significantly more likely to operate salary sacrifice arrangements and to have employees contributing above the £2,000 cap.

Small businesses are significantly less likely to offer salary sacrifice than larger businesses. Only 28% of employees in SMEs use salary sacrifice for pension contributions, compared to 39% in larger firms. When it comes to contributions above the £2,000 cap, the difference is even clearer. Only 10% of employees in SMEs make pension contributions through salary sacrifice that exceed the value of the cap, compared to 18% of employees of larger firms. This underlines that the largest benefits from uncapped salary sacrifice are concentrated in bigger firms, not smaller firms.

In practice, the changes in this Bill will level the playing field between small businesses and their larger competitors, ensuring that the national insurance contribution advantages of salary sacrifice are not disproportionately concentrated among employees in big firms. More widely, the Government recognise the importance of supporting small businesses and charities alike.

This leads me to Amendments 7 and 23 in the names of the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham. These amendments seek clarity on the basis on which the Government consider certain employed earners to be higher earners for the purposes of the national insurance charge and how the contributions limit reflects that assessment. The Explanatory Notes for this Bill set out clearly that the Government’s objective is to limit the national insurance contributions relief available to higher earners on employer pension contributions made through salary sacrifice, while protecting lower-earning pension savers. These changes are about fairness and consistency across the labour market.

Additionally, groups who are most likely to be undersaving for retirement, such as those on the national minimum wage and the UK’s 4.4 million self-employed workers are completely excluded from using salary sacrifice altogether. The cap we are introducing through this Bill will protect the majority of basic rate taxpayers using salary sacrifice and ensure that the cost of national insurance relief on pension salary sacrifice is put on a fiscally sustainable footing.

I now turn to Amendments 5 and 21 tabled by the noble Lord, Lord Leigh of Hurley, and the noble Baronesses, Lady Altmann and Lady Kramer, which seek to exempt salary sacrifice pension contributions over the £2,000 limit from being included in the definition of earnings used to calculate student loan repayments for employees. Student loan repayments are calculated using the same earnings base as class 1 national insurance contributions. As a result, salary sacrifice currently reduces both national insurance contributions and the earnings used to calculate student loan repayments. Any change in student loan repayments arising from this measure is a mechanical consequence of restoring those earnings to the national insurance contributions base. It is not a change to student loan policy itself; rather, it flows from levelling the playing field between those who are able to use salary sacrifice arrangements to reduce their earnings for national insurance contributions and those who are not. Of those employees making pension contributions through salary sacrifice, younger people are far more likely to be protected by the £2,000 cap than those above the age of 30. Some 76% of those in their 20s—

Small Businesses: VAT Threshold

Debate between Lord Livermore and Lord Londesborough

Thursday 5th March 2026 Lords Chamber

[Lord Londesborough]

To ask His Majesty’s Government what assessment they have made of HMRC data showing that an increasing number of small businesses in the UK are earning below the VAT tax threshold.

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

My Lords, the data referred to does not show that an increasing number of small businesses in the UK are earning below the VAT threshold. It shows only the number of voluntarily VAT-registered businesses below the VAT registration threshold of £90,000 and does not include unregistered businesses. Of the 5.8 million businesses in the UK, 2.3 million are registered for VAT and 3.5 million are unregistered.

[Lord Londesborough (CB)]

I thank the Minister for his reply, but we have double trouble. First, an increasing number of registered small businesses are earning less than the VAT threshold of £90,000. Secondly, there has been a big drop in those earning £90,000 to £150,000—in fact, there was a decline of 26,000 businesses in the year 2025. Is that because some are deliberately suppressing their growth to avoid the additional tax and admin burden of complying with VAT, or is it because higher employment costs and taxation have choked off their incentive to grow? Either way, it is surely time to reset this threshold.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. It is neither of the things that he set out. As I have said, the data cited by the noble Lord relates only to VAT-registered businesses and does not include unregistered businesses, so I do not think it shows what the noble Lord claims that it shows. If a business is already registered for VAT, it has no incentive to suppress turnover to avoid VAT, because it is already charging VAT and would need to continue to do so even below the threshold. Why would they do what the noble Lord suggested? That would not make any sense. If he looks at a longer time series of this data, he will clearly see that it moves around significantly, so the conclusions he is trying to draw are very difficult to sustain.

National Insurance Contributions (Employer Pensions Contributions) Bill

Debate between Lord Livermore and Lord Londesborough

Committee stage
Tuesday 24th February 2026 Grand Committee

[Lord Londesborough (CB)]

I will very briefly add one question about the OBR forecast. I think that the noble Baroness, Lady Kramer, said at Second Reading that she found the timing “weird”. I certainly find it extraordinary that we have a five-year forecast of which the first three years are irrelevant—they are zero—and then we have a 48% fall in the second year. This begs the question: where are the forecasts for years three, four and five? If we are following this trend, we have a fireworks display. As the noble Lord, Lord Altrinchan, said, the Government should not be indulging in short-term fiscal levers. Where are the forecasts for those years? These measures do not actually come into effect until the financial year 2030.

[Lord Livermore (Lab)]

My Lords, I will first address Amendment 31, tabled by the noble Baronesses, Lady Neville-Rolfe and Lady Altmann, and the noble Lord, Lord Altrincham. I agree on the importance of transparency on the impact of this policy, including on employers. However, an additional publication is not necessary to achieve that objective. A number of documents have already been published in line with the usual practice for national insurance contribution changes, which comprehensively set out the impacts of this measure, including on employers.

The tax information and impact note was published alongside the introduction of the Bill. This sets out the number of employers expected to be impacted by this measure, the one-off costs—including familiarisation with the change, the training of staff and updating of software—and the expected continuing costs, including performing more calculations, and recording and providing additional information to HMRC, where salary sacrifice schemes continue to be used. This equates to a one-off £75 and an ongoing £99 per business per year. The Government also published a policy costing note, which includes detail on the costing of the measures, including the tax base, static costing and a summary of the behavioural responses expected by individuals and employers.

The Office for Budget Responsibility published its economic and fiscal outlook, which provides the OBR’s independent scrutiny of the Government’s policy costing. The OBR also published a supplementary forecast note, which provided additional information that it received in last year’s Budget to further increase the transparency of this measure. Taken together, these publications already provide an appropriate and comprehensive assessment of employer impacts.

On Amendment 32, the OBR’s economic and fiscal outlook and its supplementary forecast—

Public Sector Productivity

Debate between Lord Livermore and Lord Londesborough

Wednesday 7th January 2026 Lords Chamber

[Lord Livermore (Lab)]

No. As the noble Lord says, public sector productivity has dropped significantly since 2019. This Government inherited a situation in which public sector productivity was 5.6% below pre-pandemic levels. That is clearly unacceptable and there are far greater issues going on than those that the noble Lord raises. I hope, as I have said before, that he will acknowledge some of the things this Government are doing to drive greater productivity in the public sector. We are working with the Office for Value for Money to identify £14 billion of efficiencies. We have gone further than that and identified a further £2.8 billion of efficiencies. We are investing in digital and AI transformation, workforce reform, rationalising the Government estate and improving procurement processes.

[Lord Londesborough (CB)]

My Lords, there is growing support for a social media ban for all those under the age of 16. In the interests of public sector productivity, would the Minister consider a similar ban during working hours for all government officials and civil servants under the age of 60?

[Lord Livermore (Lab)]

I do not think I would. I suspect social media, when used correctly, can help enhance productivity.

Agricultural Property Relief and Business Property Relief

Debate between Lord Livermore and Lord Londesborough

Tuesday 6th January 2026 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to my noble friend for the support that he sets out for the measures that we have announced. He is right about the importance of the farming sector to our economy and our society. The Government have allocated a record £11.8 billion to sustainable farming and food production over the course of this Parliament. That includes the largest financial investment in nature-friendly farming that has ever been seen. My noble friend is also right to point to the importance of the EU reset to the farming sector. I was very pleased to see the commitment to an SPS agreement as part of that EU reset. I assure him that the UK Government are ready to move very quickly to secure that agreement and that the negotiations are ongoing.

[Lord Londesborough (CB)]

My Lords, I commend the Government on adjusting the threshold to £2.5 million, which I and other Cross-Benchers advocated a year ago in this place and which strikes the right balance. However, how many agricultural, forestry and fishing businesses closed in the 12 months since the 20% IHT measure was announced? How does that compare with the year before? I believe that the ONS has released this data. What redress, if any, will be offered to those businesses that have closed?

[Lord Livermore (Lab)]

I do not have that data to hand, but I am more than happy to write to the noble Lord.

OBR: Resignation of Chair

Debate between Lord Livermore and Lord Londesborough

Monday 8th December 2025 Lords Chamber

[Lord Livermore (Lab)]

I am not aware of any academic studies into what my noble friend asks about. I had the privilege of working in the Treasury for 10 years before the OBR came into existence, and I have now worked on two Budgets since the OBR came into existence. It is worth repeating that the Government are committed to the independence of the Office for Budget Responsibility. There is academic evidence that suggests that stability has a significant advantage in terms of the performance of the economy, economic growth et cetera. The OBR should and does remain at the heart of economic and fiscal policy-making, and the strength of that institution is a vital pillar in the Government’s commitment to economic stability.

[Lord Londesborough (CB)]

My Lords, I have two brief points for the Minister. First, given the importance of the OBR, why is it so lightly resourced? Those of us who run businesses or organisations of 50 staff will know that IT and security systems will essentially be back office and unsophisticated, as indeed is the case with the OBR. What are the lessons going forward on resourcing the OBR?

Secondly, this leak appears to be a technical systemic error—a serious one, yes, and naive, certainly, but not deliberate. If that is a resignation matter for the chairman, what does this mean for personnel in the Treasury and No. 11 who have been involved in deliberate and extensive pre-Budget briefings and operations?

[Lord Livermore (Lab)]

On the first question, the noble Lord is quite right to identify back-office systems as one of the issues identified by the report. He talks about systemic risk. We will look at wider questions of the systemic risk that this incident has uncovered, including the report’s conclusion that the OBR’s information security arrangements should have been regularly re-examined and assured by the management of the OBR.

His second question he expresses as fact. It is, of course, just an assertion. We take the Budget process very seriously and we put the utmost weight on Budget secrecy. As I have said, a leak inquiry is now under way with the full support of the Chancellor and the whole Treasury team. The Permanent Secretary to the Treasury will also conduct a review of the Treasury security processes to inform future fiscal events.

Public and Private Sector Productivity Trends

Debate between Lord Livermore and Lord Londesborough

Thursday 30th October 2025 Lords Chamber

[Lord Londesborough]

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

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

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

[Lord Londesborough (CB)]

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

[Lord Livermore (Lab)]

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

GDP Per Capita

Debate between Lord Livermore and Lord Londesborough

Monday 20th October 2025 Lords Chamber

[Lord Livermore (Lab)]

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

[Lord Londesborough (CB)]

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

[Lord Livermore (Lab)]

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

Unpaid Tax

Debate between Lord Livermore and Lord Londesborough

Monday 7th July 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, back in February the Public Accounts Committee accused HMRC of not being

“sufficiently curious about the true scale of tax evasion”

in this country, suggesting that the tax authority’s estimate of £5.5 billion a year may be a significant underestimate. Does the Minister share the committee’s concern?

[Lord Livermore (Lab)]

After the measures we took in the Budget and the Spring Statement, no one could possibly say that we are not sufficiently resourcing the fight against the tax gap. As I said in my original Answer to my noble friend, the National Audit Office recognises in its report that this Government are scaling up compliance activity to tackle serious offshore non-compliance and have committed further funding to do so. It also recognises many of the measures we are taking, including, as I said earlier, significant additional investment in compliance officers by the end of the Parliament. The noble Lord will recognise that this is the most ambitious package to close the tax gap ever; we have committed an additional £660 million each year for measures to do so and by the end of the Parliament we will raise an additional £7.5 billion a year.

Economic Growth

Debate between Lord Livermore and Lord Londesborough

Wednesday 11th June 2025 Lords Chamber

[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.

Mansion House Accord

Debate between Lord Livermore and Lord Londesborough

Wednesday 14th May 2025 Lords Chamber

[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.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Lord Livermore and Lord Londesborough

Consideration of Commons amendments and / or reasons
Monday 31st March 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I too thank the Minister for his comments. It is with regret that I will neither insist on my Amendment 8B nor plan to add any further amendments. The other place has played its financial privilege card for the second time, even though this amendment had been radically and pragmatically modified to simply provide the Treasury with the option of a statutory instrument to reverse the big drop in the NICs thresholds for small businesses. It will discover this in the economic damage that this Bill will potentially do to employment and growth.

In the meantime, I simply thank noble Lords—almost 300 of them—for voting for my amendments. I especially thank the noble Baronesses, Lady Kramer and Lady Neville-Rolfe, for their unflagging and invaluable support. I thank the Minister for his patience and for at least listening; I appreciate that he had little or perhaps no room for manoeuvre. I support the Government wholeheartedly on their overriding mission of economic growth, but I remain baffled, bemused and bewildered by their policies.

[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have spoken today and all noble Lords who have taken part in all stages of this Bill for their careful scrutiny; I thank them for their thoughtful contributions. I thank the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, specifically for indicating that they will not be insisting on their amendments today.

As I have set out, the other place has disagreed with Lords Amendments 1B, 5B and 8B, as they interfere with public revenue. They did not offer any further reason, trusting that this reason is deemed sufficient. The other place also disagreed with Amendment 21B for the reasons I have set out. On this basis, I hope noble Lords are content not to insist on these amendments.

Spring Statement

Debate between Lord Livermore and Lord Londesborough

Thursday 27th March 2025 Lords Chamber

[Lord Livermore (Lab)]

I am afraid that I do not know what that target is. If there is one, I will find out for the noble Lord and write to him.

[Lord Londesborough (CB)]

I will follow up on a key point raised by the noble Baroness, Lady Neville-Rolfe. While the OBR forecast for growth has halved to just 1%, which I think many would argue still looks optimistic, it is forecasting that we will see a net gain of 400,000 people joining the workforce and becoming economically active this year, even though unemployment is forecast to rise. Can the Minister shed any light on this forecast? Specifically, how many jobs will be created in the public sector and how many in the private sector?

[Lord Livermore (Lab)]

I do not know whether the OBR has set that out in it forecast, but I will be happy to go away and look at that for the noble Lord, if that is helpful. Clearly, a central part of our growth strategy is investment, which creates jobs right across the country. We have already seen many jobs being created in this economy, since we came to office, as a result of various investments right across the country. As I have discussed already, the additional investment in defence spending will see very highly skilled jobs created across the country. However, I will happily find out the specific breakdown for the noble Lord.

National Insurance Contributions: Hospitality Sector

Debate between Lord Livermore and Lord Londesborough

Thursday 13th February 2025 Lords Chamber

[Lord Livermore (Lab)]

My noble friend is quite right. We inherited a situation where there was a complete fiscal fiction. We have had a tough Budget, but we have wiped the slate clean and restored transparency and honesty to the public finances. We inherited a situation where there were no spending plans in place; we have a spending review and, for the first time, we have put certainty into public spending. We inherited a situation where capital spending was falling, and we have ensured that capital spending is rising. We are bit by bit restoring and rebuilding the foundations of this economy.

[Lord Londesborough (CB)]

My Lords, would the Minister acknowledge that SMEs employing part-time workers, particularly in hospitality and retail, are facing 20% to 50% increases in their national insurance contribution bills on April 5, and that this hardly fits with a world of flexible and part-time work, and nor will it help the Government’s mission to get Britain working?

[Lord Livermore (Lab)]

We know it is particularly important to protect the smallest companies, and that is exactly why we doubled the employment allowance, meaning that 865,000 employers will now not pay any national insurance at all and more than 1 million businesses will pay the same or less than they did previously.

Economic Growth: Public Spending

Debate between Lord Livermore and Lord Londesborough

Wednesday 12th February 2025 Lords Chamber

[Lord Livermore (Lab)]

I completely agree with my noble friend, and I am grateful to him for what he says. It is absolutely no approach to say that we should continue a previous Government’s cover-up and not be honest about the difficulties in the public finances. It is also completely wrong to say that we were wrong to deal with those challenges and should instead have maintained what my noble friend describes as a £22 billion black hole in the public finances. We were absolutely right to do what we did. We know that there are costs to responsibility, but the cost to irresponsibility would have been far greater—we saw that in the Liz Truss mini-Budget. Repeating the failures of the last 14 years is exactly not what the British economy needs.

[Lord Londesborough (CB)]

My Lords, taking together the impact of national insurance contribution increases and the 6.7% hike in the national minimum wage, can the Minister explain how raising the cost of employment by an average of £2,400 per employee is consistent with boosting economic growth?

[Lord Livermore (Lab)]

I am sorry that the noble Lord is not able to support the increases in the national minimum wage; that is a shame to hear. I do not know whether he was able to read the monetary policy report that was published alongside the growth forecast last week, but the Bank of England said that the combined effects of the measures in the Autumn Budget are expected to boost the level of GDP by around 0.75%.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Debate between Lord Livermore and Lord Londesborough

Committee stage
Wednesday 29th January 2025 Grand Committee

[Lord Livermore (Lab)]

We have not changed the policy; we have made the policy easier to use. The policy is absolutely as it was at the Budget, as is the amount of revenue that we are scoring from it. An impact assessment was put out alongside that. My point is that what we are doing on impact assessments, on all the taxes that the noble Lord mentioned, is absolutely in line with what all previous Governments have done on impact assessments. We are content that that is a sufficient amount of information, and we do not intend to put out any further impact assessments.

Finally, I turn to the amendments tabled by the noble Lords, Lord Londesborough and Lord Altrincham, and the noble Baroness, Lady Neville-Rolfe, which seek to increase the employment allowance for small businesses. Again, the proposals in these amendments would create additional costs, necessitating either higher borrowing, lower spending or alternative revenue-raising measures.

The Bill already seeks to protect the smallest businesses and is significantly increasing the employment allowance from £5,000 to £10,500. This means that, next year, 865,000 employers will pay no national insurance at all, and more than half of employers will see no change, or gain overall, from this package. For the reasons I have set out, I respectfully ask noble Lords not to press their amendments.

[Lord Londesborough (CB)]

I thank the Minister for his comments, but I am disappointed and, frankly, baffled that the Treasury can tell us specifically—he repeated these figures—how many employers are impacted by the national insurance increase, yet there is a curious resistance to answering my specific and fair question: what percentage of jobs will attract an increase in national insurance contributions?

In October, the Department for Business and Trade helpfully provided a sectoral breakdown, by company size and number of jobs, under each category. It is fairly simple maths to come out with a reasonable estimate. This is in the interests of transparency; I am not trying to nail the Government here. Everyone should be able to understand across our economy, as we all share an interest in trying to generate economic growth, how many jobs are impacted. “Working people” is a favourite phrase that we keep hearing; how many of their jobs will be impacted?

If the Minister cannot produce the figures today, which I would respect, I request just a few minutes of research between the Treasury and the Department for Business and Trade. I believe that these figures could be produced very simply and that they would be very helpful in looking at the impact of this Bill. I cannot understand the resistance to it.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his follow-up points. As I have said, we are not able to provide him with those figures and that remains the position.

Public Finances: Borrowing Costs

Debate between Lord Livermore and Lord Londesborough

Thursday 9th January 2025 Lords Chamber

[Lord Livermore (Lab)]

Clearly, ensuring that UK businesses have access to finance is crucial to this Government’s economic policy.

[Lord Londesborough (CB)]

My Lords, further to the point from the noble Lord, Lord Fox, about investor sentiment, the pound has suffered its biggest three-day slide in two years, and this morning’s yield on 30-year government bonds has risen to 5.385%. That is the highest level seen since 1998. Does the Minister accept that the pound’s weakness and the bond sell-off signal that investors are sceptical about the Government’s growth ambitions and particularly the impact of the October Budget?

[Lord Livermore (Lab)]

I repeat to the noble Lord what I said in my opening remarks. Financial markets are always evolving, so it is a long-standing convention that the Government do not comment on specific financial market movements. I will not break that convention today. Financial market movements, including changes in government bond or gilt yields, which represent the Government’s borrowing costs, are determined by a wide range of international and domestic factors.

National Insurance: GDP

Debate between Lord Livermore and Lord Londesborough

Thursday 19th December 2024 Lords Chamber

[Lord Livermore (Lab)]

I have the greatest respect for the noble Baroness’s consistent focus on the importance of social care. The answer to her last question is no, but the Government are providing at least £600 million of new grant funding for social care in 2025-26, as part of the broader estimated real-terms uplift to core local government spending power of approximately 3.2%.

[Lord Londesborough (CB)]

My Lords, does the Minister agree that the drop in job vacancies in November at the steepest rate since the pandemic is not only bad news for economic growth but reflects very poorly on both the run-up to the Budget and the Budget itself—in particular, raising employers’ national insurance contributions while increasing the minimum wage at three times the rate of inflation? Is this not a recipe for job destruction rather than job creation?

[Lord Livermore (Lab)]

Well, no. The OBR has been very clear that the number of people in employment will increase by 1.2 million over the course of this Parliament. As I said before, we had to take some very difficult decisions to clear up the mess that we inherited. I would simply ask the noble Lord and other noble Lords what their alternative is to the course of action that we took? Are they seriously saying that we should not have repaired the public finances? Are they seriously saying that we should not have restored economic stability? Quite frankly, that is the path that the Liz Truss mini-Budget took. We saw what happened then: she crashed the economy and working people are still paying the price today.

Economic Productivity

Debate between Lord Livermore and Lord Londesborough

Thursday 5th December 2024 Lords Chamber

[Lord Livermore (Lab)]

The noble Lord is correct to say that both parties are absolutely aligned on the importance of skills reform, which is why we have announced Skills England. We will be increasing the number of people in training and they will enter the workforce as soon as they graduate.

[Lord Londesborough (CB)]

My Lords, the Office for National Statistics may have inadvertently thrown some light on our so-called productivity puzzle. The slide in the quality of its workforce data appears to have coincided with the increasing practice of its staff working from home—in many cases five days a week. Indeed, ONS staff have recently threatened industrial action—to go on strike—if forced to work from the office for two days a week. Do the Government have plans to commission a study across the public sector of the impact that working from home has on productivity? It is a crucial issue.

[Lord Livermore (Lab)]

I know that the noble Lord cares deeply about this issue. He has spoken in debates on this topic before and has made some very important points about productivity. I have also answered a Question in this House on working from home and its impact on public sector productivity. As I said then, the current evidence is mixed. There are clear advantages to working from home for some and there are also clear disadvantages to working from home. Most studies seem to suggest that there are significant benefits to a hybrid model. But there are no such plans to commission the kind of study he mentioned.

Exports to the European Union

Debate between Lord Livermore and Lord Londesborough

Wednesday 20th November 2024 Lords Chamber

[Lord Londesborough]

To ask His Majesty’s Government, following the speech of the Governor of the Bank of England at Mansion House, what measures they are taking to increase the export of goods to the European Union.

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

My Lords, in his Mansion House speech, the Governor of the Bank of England observed that Brexit has weighed on the UK economy, particularly in goods trade. The previous Government’s Brexit deal imposed new trade barriers on business and, according to the Office for Budget Responsibility, permanently reduced GDP by 4%. That is why the Government are committed to resetting our relationship with the European Union, to strengthen ties and to tackle barriers to trade.

[Lord Londesborough (CB)]

My Lords, I thank the Minister for his response, and indeed for not mentioning that black hole—which is perhaps surprising, since the latest figures from the ONS show that our goods exports to the EU have fallen from £175 billion in 2018 to £153 billion last year, which is a drop of £22 billion. Not only that, our goods exports to the rest of the world over those same five years have fallen from £184 billion to £162 billion—yes, another £22 billion black hole. Does he therefore agree that these figures demonstrate a deeper-rooted weakness in our goods trading performance rather than simply Brexit being to blame?

[Lord Livermore (Lab)]

I thank the noble Lord for his Question and for mentioning the £22 billion black hole. He is absolutely right to point to the consequences of the previous Government’s ill-conceived Brexit deal. It imposed new trade barriers on business equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services. As a result, the Office for Budget Responsibility has found that the overall trade intensity will be 15% lower than if the UK had remained in the EU. Specifically, goods exports to the EU have fallen significantly, down 19%—or £42 billion—compared with 2018. Of course, he also raises the correct point that we must increase our trade right around the world, because increasing trade is good for increasing growth.

Working From Home: Public Sector Productivity

Debate between Lord Livermore and Lord Londesborough

Wednesday 23rd October 2024 Lords Chamber

[Lord Londesborough]

To ask His Majesty’s Government what assessment they have made of the impact of working from home on productivity in the public sector.

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

My Lords, the Government inherited a situation where public sector productivity remained 6.4% below pre-pandemic levels. This is clearly unacceptable. Our focus is on fundamental reform of our public services, to drive greater efficiency and productivity. Further details on this agenda will be set out in the Budget and spending review.

Assessments of the impact of working from home on productivity seem—so far—to be inconclusive. The Government are very clear on the benefits of collaborative face-to-face working, in the Civil Service in particular. Studies by the IMF, the University of Manchester, the CBI, Google and Amazon have set out clear advantages to a hybrid working model.

[Lord Londesborough (CB)]

My Lords, my Question was prompted by an interesting claim made by the Minister’s colleague the Business Secretary. He said that

“allowing working from home creates a more productive, loyal workforce”.

I suggest that that is a sweeping statement, lacking in hard evidence. This is clearly an area where one size does not fit all. When will we see some credible, data-driven research, across all areas of the public sector, to measure the real impact of working from home on productivity?

[Lord Livermore (Lab)]

I agree 100% with the noble Lord that one size does not fit all. So far, studies have been reasonably inconclusive. Some have shown significant drawbacks to working from home, including a lack of social interaction and the associated mental health impacts that that brings, less progression—especially in the early stages of a career—and less creativity and innovation. But there are also some clear advantages to a degree of hybrid working, including more focused working, the ability to work on confidential issues and some interesting labour-supply impacts, particularly for those with disabilities or childcare responsibilities. So I think the jury is out, but more studies are being undertaken all the time.