Public Sector Productivity

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

Thursday 30th October 2025 Lords Chamber

Asked by

[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

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

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

Lord Londesborough Excerpts

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.

UK-US Trade

Lord Londesborough Excerpts

Monday 12th May 2025 Lords Chamber

[Baroness Gustafsson (Lab)]

I thank the noble Baroness for her question. It is an important point that we have been able to open up such trading opportunities while protecting our incredibly powerful and well-respected food standards. I am not necessarily familiar with the specifics of how we can detect whether those standards have been complied with, and I will endeavour to write to her to follow up on that matter.

[Lord Londesborough (CB)]

My Lords, I give some credit to the Government for signing a damage-limitation deal with the US, for that is what it is, but this five-page agreement does not actually constitute a legally binding document. Can the Minister confirm that, currently, it can be terminated at will by either side? If so, what longer-term assurances can the Minister offer to UK exporters, given the erratic nature of US trade policy?

[Baroness Gustafsson (Lab)]

We are operating in incredibly fast-moving times. This agreement lays down those anchor points and principles to allow our great industries to be able to continue to trade, but there is more work to be done in fleshing out the specifics and making sure that this is enacted and is something that people can use day to day in their trade. Our brilliant team of officials are working very hard on ensuring that this gets done within the coming weeks.

National Debt: It’s Time for Tough Decisions (Economic Affairs Committee Report)

Lord Londesborough Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, it is a pleasure, if somewhat daunting, to follow the former Permanent Secretary of the Treasury and the former Chancellor of the Exchequer, and to be shortly followed by the former Governor of the Bank of England. However, as a member of the Economic Affairs Committee, I first acknowledge and salute the noble Lord, Lord Bridges, for his astute and incisive chairmanship of the committee and his spot-on introductory comments.

It is indeed time for tough decisions, but I have to admit to growing increasingly cynical about our appetite to face up to them, let alone to take them. We have ducked those decisions for the majority of the last 20 years, and I fear we will go on doing so for the next 20. This highly topical report was published last September, just weeks before Rachel Reeves’s first Budget, which saw another rewriting of the fiscal rules as we ushered in another £30 billion of borrowing. Yes, taxes were raised by £40 billion, but at the cost of future growth.

Our public sector net debt has grown by almost 10 times over the last 25 years, from £300 billion in 2001 to approaching £3 trillion next year. We have had the financial crisis, the pandemic, Russia’s invasion of Ukraine and this ensuing energy crisis. Each event led to exceptional, “one-off” increases in government spending financed entirely by borrowing. But I argue that those shocks explain less than half of this £3 trillion debt pile and obscure the real malaise: low growth and poor productivity.

Not only is there no peace dividend or surplus in stable years, but we routinely borrow at least £100 billion a year to fund our budget deficits. In fact, it was £130 billion last year and, as we have learned this week, in the year to March it has grown to £152 billion—rather worryingly, £15 billion more than the OBR predicted; more on that in a moment.

The resulting interest bill of more than £100 billion a year cannot be paid by tax revenues. We meet those interest payments only through additional borrowing. It is a vicious cycle and it is, of course, unsustainable. I am afraid that business is usual is that R, representing interest rate on debt, exceeds G, our GDP growth rate, even in non-crisis years. So we are caught in a cycle of low growth and productivity accompanied by high borrowing and, crucially, that borrowing has not led to productivity gains.

This raises the uncomfortable question: how much of this £3 trillion debt has been channelled into truly productive areas that will accelerate growth, as opposed to simply financing budget deficits? I suggest to the Minister that we produce an asset register on our borrowing worthy of its name, with a proper impact assessment focusing on ROI—return on investment—to answer this very question.

My final point is on the rolling fiscal rule that foresees a budget surplus in five years’ time. It is a recipe for deferring tough decisions, as we have already heard, and it is aided and abetted by the OBR’s record of optimistic forecasting. Since its inception, the OBR has predicted budget surpluses five years out in 20 of its 28 forecasts when, in fact, the UK achieved such a surplus just once in the last 20 years. Let us have some economic realism.