Tackling Unsustainable Debt

Lord Oates Excerpts

Thursday 17th July 2025 Lords Chamber

[Lord Livermore (Lab)]

I am very grateful to my noble friend for her question and I pay tribute to her considerable expertise on these issues; I know she served as shadow Minister for Africa for several years. The Government fully agree that private creditors must play their part in debt restructurings. The Paris Club and now the G20, as part of its commitment to co-ordinate on debt treatments under the common framework, are clear on our collective expectation that private creditors must participate in restructurings on terms at least as favourable as those provided by official creditors. Overall, we have seen evidence of private creditors’ willingness to engage and provide debt treatments where needed.

While the Government appreciate the intentions of those proposing legislation in this area, we are concerned about the potential negative impacts that such legislation could have, specifically on the cost of finance for developing countries. As such, the UK is not currently pursuing legislation, given the existing lack of evidence to justify such an approach and the potentially adverse wider consequences. We will, of course, continue to keep the evidence and our position under review.

My noble friend specifically mentioned South Sudan. As I understand the complex situation with Afreximbank—an African financial institution based in Cairo—South Sudan is not undergoing a multilateral restructuring with official creditors, so it is not clear that legislation would improve that situation.

[Lord Oates (LD)]

My Lords, does the Minister recognise that the concerns he just expressed about the legislation referred to by the noble Baroness, Lady Brown, are exactly the sorts of concerns that were issued in advance of Andrew Gwynne’s Act in 2010 and that were found, on review, to be without merit? Does he recognise that, for over 3 billion people living in countries that spend more on debt servicing than on public services such as health and education, the risk of action is far less than the devastating impact of inaction?

[Lord Livermore (Lab)]

I absolutely recognise what the noble Lord says. It is important to recognise that the debt relief Act was different in scope and scale. It targeted a small, ring-fenced amount of historical debt. Current proposals for legislation would impact all future debt contracts written under English law. We have significant concerns about the impacts of that on the cost of capital at a time when global liquidity is constrained.

That is not to say—as the noble Lord rightly advises—that we are not taking action. We are absolutely taking action and we believe that multilateral action is the right way forward, predominantly through the common framework established by the G20. The Chancellor has also established the London coalition, which was launched on 23 June and provides exactly what is needed: a formal avenue to engage with private creditors to ensure long-term stable flows of capital to emerging markets.

Autumn Budget 2024

Lord Oates Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Oates (LD)]

My Lords, I declare my interest as chief executive of United Against Malnutrition and Hunger. I congratulate the noble Lord, Lord Booth-Smith, on his excellent maiden speech. I acknowledge the terrible fiscal legacy that was inherited by the new Government and the need to increase revenue, but I had hoped that the first Labour Budget in 14 years would be one that delivered sustainable development at home and reinvigorated our commitment to sustainable development overseas.

At home, the decision to hike employers’ national insurance contributions is one of the worst tax choices that could have been made. It will, as we have heard, cost jobs, reduce pay growth and impact care and GP services. Alongside that, there is one other thing I shall highlight: the hiking of the bus fare cap while fuel duty remains frozen. That is a deeply regressive move and is also counter to the Government’s climate agenda. If we want growth, we need not only better targeted tax rises, as my noble friend Lord Fox argued—and I commend in particular his call for increased taxes on the gambling industry that is spreading misery through our communities—but, beyond that, we need to overhaul our regulatory and bureaucratic systems.

In the Budget, the Chancellor referred to the importance of life sciences to our economy, but, while public investment in the Life Sciences Innovative Manufacturing Fund may be welcome, it will not do much good if the Medicines and Healthcare products Regulatory Agency remains swamped and its processes remain slow and expensive, leading UK firms to look to jurisdictions overseas. Equally, the increased R&D funding announced in the Budget is welcome, but it will not do much good if the system cannot deliver. Just last week, I was speaking with a leader of one of our medical diagnostic companies, who told me that applications for HMRC R&D tax credits used to be processed in six to eight weeks, but he was still waiting after 14 months for a determination. Businesses are going bust waiting. If we cannot get these basics right, we will not deliver sustainable development at home.

As to our commitment to sustainable development abroad, I share the profound disappointment of the noble Lord, Lord McConnell, at this Budget and the further cuts to the aid budget that result, coming on top of the drastic cuts under the previous Government, in breach of their clear manifesto commitment. One does not need to be an international affairs expert to recognise that need around the world is greater than ever, with rising levels of hunger and malnutrition, multiple crises and climate change bringing more misery to millions. As the Save the Children Fund has noted, the change to the debt rules in the Chancellor’s new fiscal framework have not been matched by a change in the fiscal tests that were set to return to our legal—and, I would say, moral—obligation to get back to our 0.7% commitment. This means that those tests are basically unmeetable, so the Government have effectively abandoned that 0.7% commitment.

This will not only diminish our international standing and impact millions of people around the world but is deeply harmful to our self-interest. The International Rescue Committee notes that 680,000 refugees have fled Sudan for Chad since April 2023, yet the humanitarian response plan for eastern Chad is just 27% funded. With tensions rising due to resource competition, refugees are on the move. Some are already in the camps around Calais and some will almost inevitably end up in the UK, at a cost to the Exchequer far higher than if they could have stayed where they were, close to their home country and able to return when, God willing, peace is restored. This is not the only short-term decision-making. Conflict prevention and stabilisation, as the noble Lord, Lord McConnell, also recognised, was cut under the previous Government and needs to be restored.

In conclusion, the Minister told us that this was a Budget of choices. On employment taxes and the aid budget, they have made the wrong choices.