United Kingdom: Business Competitiveness

Lord Pitt-Watson Excerpts

Tuesday 1st September 2026 Lords Chamber

[Baroness Meyer]

To ask His Majesty’s Government what assessment they have made of the cumulative impact of tax measures introduced since July 2024 on the competitiveness of the United Kingdom as a place to do business.

[The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)]

My Lords, it is an honour to be answering this Question from the Dispatch Box. British business is competitive. It creates jobs, it produces the goods and services on which we depend, and it pays tax that funds public services. Those services in turn support business, and paying for them fully generates fiscal stability. Those services and that discipline in turn underpin business competitiveness. It seems to me that, through the system, we should be thanking businesses for the huge burden they bear and for the amount they generate for our economy and society.

[Baroness Meyer (Con)]

My Lords, I welcome the Minister to his new position. I thank him for his Answer, but I am a little surprised by his optimism. Since the changes to capital gains tax and higher employment costs, 6,000 business owners and company directors have left the country, some 13,000 stores and 700 pubs have closed, and 7,000 hotels, restaurants and cafés have entered insolvency. The warnings are coming from everywhere: the Institute of Directors, the CBI, the IEA, the British Retail Consortium, the hospitality sector and major retailers all point to the burden of higher taxes. We cannot tax our way to growth. Does the Minister not agree that to get growth, we need more entrepreneurs and risk-takers, not policies that drive them abroad?

[Lord Pitt-Watson (Lab)]

I absolutely do think that we should be backing business. I hope there is some assurance in the first speech that the Chancellor of the Exchequer made when he said that he was just as concerned about the cost of doing business as he was about the cost of living. This Government have done lots of things to generate competitiveness. One is fiscal credibility. Another is the trade deals. A third would be the industrial policy. Perhaps we are beginning to see in the things that businesspeople are saying that although there is some bad news—there is always some bad news—there is also good news. For example, earlier this year 46% of members of the British Chambers of Commerce expected to grow this year, relative to 35% last year. I could quote many business organisations and individuals who are essentially saying that Britain is on the up and a great place to invest.

[Lord Bilimoria (CB)]

My Lords, I speak as the chair of the International Chamber of Commerce UK. This country has been a magnet for inward investment over the years, yet over the last decade the number of foreign direct investment projects is at its lowest level for many years. I congratulate the Minister on his appointment, but will he acknowledge that a reason for this is the highest level of taxes that we have had in 80 years? That is eroding our competitiveness, our attractiveness as an investment destination and, most importantly, growth. Ireland next door reduced its corporation tax to half ours at 12.5%, has grown rapidly and is a magnet for inward investment.

[Lord Pitt-Watson (Lab)]

We would all like tax to be as low as possible and investment to be as great as possible. Britain is the number two destination for external investment, according to the PwC CEO survey; the United States is number one. Huge investment is taking place in this country—£360 billion in the areas that have been identified for our industrial policy. The chief executive of Lloyds Bank said it is a “phenomenal” place to invest. Although one needs to be careful about the enthusiasm of entrepreneurs from Silicon Valley, Jensen Huang of Nvidia said it is

“a great place to invest … You’re the envy of the world”.

Of course we want to have more investment, but equally we are seeing that growth is coming—in the last six months, the highest in the G7—and last year productivity was the best for 10 years if you take out the effect of the pandemic.

[Baroness Kramer (LD)]

My Lords, I welcome the noble Lord, Lord Pitt-Watson, to his post. He has already allowed me and my colleagues to badger him, and we will continue to do so. When the Government increased employers’ NICs and reduced the threshold, it gave protection to the tiniest small enterprises. But surveys now estimate that more than 40% of small and medium-sized enterprises have been significantly negatively impacted. Have the Government tracked the growth lost from the impact on this critical sector, particularly in the most disadvantaged regions of the country?

[Lord Pitt-Watson (Lab)]

The noble Baroness is correct that 900,000 small businesses are protected from this. There are also protections for hiring people under 21 and apprentices under 25. But there is not a specific study of this, and the reason is because we view this as a system. People pay their tax and therefore we are able to do education, transport and all those other services. Would we want that tax to be lower? Absolutely, but we will do it in a way that balances the books and maintains the fiscal discipline to which this Government are committed.

[Lord Watts (Lab)]

My Lords, is it not the case that these tax increases are required only because the last Government left us with a £22 billion deficit and hollowed out public services with their policies over many years? Is it not about time they apologise rather than criticise?

[Lord Pitt-Watson (Lab)]

I thank the noble Lord for that question. I have been trying to stay in the spirit of our new Prime Minister and to reach the greatest cross-party consensus that we can on this. What the Chancellor and the Prime Minister have said about being really careful about business costs, and making sure that business stays competitive, takes us some way in that direction. But every businessperson will tell you that you need to balance the books, and the comment from my Benches suggested that perhaps, three years ago, that was not taking place.

[Baroness Neville-Rolfe (Con)]

My Lords, I also very much welcome the Minister to his new role, and I thank the noble Lord, Lord Livermore, for his contribution in one of the more difficult Front-Bench jobs, as the Minister is discovering. I will focus on growth, which was the top priority when Labour was elected with a huge majority. Yet many of the measures introduced—higher taxes and an assault on business—have probably reduced growth and competitiveness. So what is the new Andy Burnham Government’s growth target, and when do they expect to achieve it?

[Lord Pitt-Watson (Lab)]

One swallow does not make a summer, but the UK’s growth was number one among G7 countries in the first half of this year and the previous year had record productivity. Dismissing that and saying that growth is not taking place misses the evidence that we are beginning to see. What do we intend to do on this? We intend to follow the policies that have been working: the industrial policy, the planning reforms, the new sources of finance, being sensible about government accounting so that capital is not discouraged, fiscal credibility and good trade deals.

[Lord Barber of Chittlehampton (Lab)]

My Lords, I congratulate my good and noble friend on his appointment to this job, which is a wonderful thing for the country as well as for him. On growth, does he agree that, while the amount of tax is obviously important, so too is the effectiveness with which the tax is spent? Will he bring this perspective to his dealings with Treasury officials?

[Lord Pitt-Watson (Lab)]

Of course that is absolutely right: the money coming through the Treasury needs to be spent as well as it possibly can be. The delivery of public services, particularly in support of activities that are so critical for business—our universities, for example—is a central part of doing our job properly.

Financial Services and Markets Bill

Lord Pitt-Watson Excerpts

Tuesday 1st September 2026 Lords Chamber

Moved by

[Lord Pitt-Watson]

That the amendments for the Report stage be marshalled and considered in the following order:

Clause 1, Schedule 1, Clauses 2 to 13, Schedule 2, Clauses 14 to 31, Schedule 3, Clauses 32 to 53, Title.

Motion agreed.

Pension Access Rules: Impact on Terminally Ill

Lord Pitt-Watson Excerpts

Tuesday 30th June 2026 Lords Chamber

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her ongoing championing of financial education. I know it is something that she feels passionately about and we have discussed it before. As she knows, financial education now forms part of the school curriculum in all UK nations. In England, financial education forms a compulsory part of the curriculum in mathematics at key stages 1 to 4 and in citizenship at key stages 3 and 4. Together, these cover personal budgeting, saving for the future, financial risk, managing credit and debt, and calculating interest. In terms of the adult population that she refers to, and small and medium-sized enterprises in particular, the DBT is considering this as part of its small businesses work, and I will certainly look into it further in light of her question.

[Lord Pitt-Watson (Lab)]

I also thank my noble friend the Minister for carrying out this review. In doing so, I wonder if it will be possible to address the problem of inconsistencies in regulation. For example, the definition of “terminal illness” is different in pensions regulation and for the DWP. Can we come up with just one definition which is clear, consistent and also kind, given the circumstances under which it is going to be turned to?

[Lord Livermore (Lab)]

There is a great deal in what my noble friend says. Obviously, I cannot prejudge the outcome of the review, but the principles that he sets out for what the definition should look like sound very sensible and important. We will now review the situation because, clearly, the definition currently is out of step and does not align with wider legislation, including the DWP’s standard definition. I cannot prejudge it, but I agree that it would be ideal if there was now one standard definition.

Spring Forecast Statement

Lord Pitt-Watson Excerpts

Tuesday 17th March 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

My Lords, as many noble Lords have pointed out, we have been living in uncertain times, made considerably more uncertain in the last three weeks by the Iran war. Against that, the Spring Statement is creditable. Growth is returning, and that is the Government’s central mission. Inflation and borrowing are predicted to go down. Lots of that is through government action: beginning to balance the books, trade deals, industrial policy, planning reform, creating new sources of finance, training, sensible investment and direct investment. If I may be a bit cheeky, it has also led to a huge investment in the North Sea in offshore wind.

However, growth is not in the Government’s gift. It is not generated principally by Governments but by people, and particularly by businesses. That is what the noble Lord, Lord Bilimoria, and the noble Baroness, Lady Neville-Rolfe, were drawing our attention to. It was also the point my noble friend Lord Barber made in talking about what is happening in Devon and what Luísa Diogo was saying about releasing the music in people in Mozambique. For that reason, I will address my remarks to the role of business.

Some of the measures that the Government have taken have been tough on business. One in particular is national insurance. But I have not heard of any businessperson who says they do not want the Government to balance the books. Similarly, we need good working conditions for people. The wealth comes from them. It is hard if you are a businessperson and your competitor can undercut you by abusing zero-hours contracts, but it is tough if you are an employer and you have to pay for that. So, we should take off our hats to the businesses that are bearing this burden and that underpin our national prosperity. It is in partnership with them that growth will be delivered.

How does business feel? I was pretty encouraged by a recent interview with Andy Haldane. He is the former chief economist at the Bank of England and, I say to the noble Lord, Lord Bilimoria, the new president—taking over from the noble Baroness, Lady Lane-Fox—of the British Chambers of Commerce, which is part of the International Chamber of Commerce. In its survey, 46% of businesses said they expected to grow this year, up from 35% last year. He said that businesses have

“a pipeline of very investable projects”.

I talked to Andy about this a couple of weeks ago. Of course, Iran was a big concern to him, but he was keen that business should get on with it. He said that, given the economic challenges we face, this is a time for business to step up and lead, not lobby, demonstrating by deed what is needed to fire business dynamism, without which there will be no growth. I was delighted by that, because he is right: without business dynamism, there can be no growth.

As some noble Lords know, my own background is in finance. It is a topic that is debated greatly in the House. I have sat in debates, since my introduction a couple of months ago, on the report of the Financial Services Regulation Committee on how financial services regulators should encourage growth. This week, we are debating the pensions Bill, including provisions on how to get the UK pension funds to invest more domestically.

Here is some good news. I was talking to the chief executive of the ICGN—the International Corporate Governance Network—Jen Sisson. The ICGN, of which I am a former director, represents those responsible for the stewardship of shares and other securities: over £50 trillion of them. That is most of the world’s large institutional investors. It pointed out that international investors overweight the United Kingdom because of its accountable, honest and open capital markets, and its history of stable, code-based corporate governance. These long-term investors are keen for the UK to be proud of its position and to think about how they, the international stewardship community representing those big investments, could help our country engage business to grow and grow profitably.

The new group, the Governance for Growth Investor Campaign—with £200 billion of British pension funds, 40% of which is already invested domestically—is also eager to push for growth. I talked to its chair, Caroline Escott. She said, “Of course, we invest significantly in Britain and want to continue to do so. It is good for our returns and it is also good for the beneficiaries of our funds”. Again, the campaign is keen to work with the Government to see how best it can co-ordinate what is a mission for the nation.

I started by noting that growth was the central mission of the Government. I finish by advocating that, if growth is to be delivered, it needs to be a partnership and a national mission, particularly a mission for business. It needs to sing. The more uncertain the times, the more important that partnership is going to be. The Government already have a strong outreach to the business community. This is something they cannot do enough of. I am sure that I speak for many Members of the House, maybe not just those in my own party, when I say that, if we can help in the delivery of the growth mission, we will be more than happy to do so.