Middle East: Economic Response
Lord Wilson of Sedgefield Excerpts(1 week, 6 days ago)
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The Financial Secretary to the Treasury (Lord Livermore) (Lab)
I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their comments and questions. The noble Baroness, Lady Neville-Rolfe, ended her remarks with her usual doom and gloom and talking down the British economy. Unfortunately, she did not mention any of the positive economic news that we have heard in the last few weeks.
She shares with us a belief in the importance of growing the economy and knows that that is our number one objective. She did not mention the fact that last week’s figures confirmed that Britain’s economy was the fastest growing in the G7 for the first quarter of this year. She did not mention that we beat the OBR’s spring forecast, with economic growth at 0.6% in the three months to March. She did not mention the fact that, because of the resilience in our economy, last week the IMF upgraded Britain’s growth forecast for this year.
She also did not mention the positive news on public finances that borrowing last year was £20 billion lower than in the previous year and is falling in every year of this Parliament. She did not mention the fact that the IMF backed our economic plan, saying that the Government’s fiscal framework strikes
“a good balance between deficit reduction and growth-friendly spending”.
She did not mention any of the things that we are doing to ease the cost of living, including that interest rates have been cut six times since the election, that real wages have continued to rise in every month of this Government and that inflation fell in April faster than expected, making the UK the only G7 economy where inflation fell last month. She did not mention any of those things, and I think that continuing to talk down the economy when we are doing all that we can to help it through this difficult period, with the war in the Middle East, does not benefit anyone.
She talked about the cost of the measures that we are introducing and about the foreign branch profits. I hope she will agree with us that, when a country faces challenges because of higher oil and gas prices, we must ensure that those who benefit from increased prices and volatility pay their fair share.
She will remember that, in our first Budget, the Government extended and increased the energy profits levy, last year we announced a new permanent windfall tax regime for oil and gas price shocks, and last month we increased the electricity generator levy, alongside further action to weaken the link that the noble Baroness, Lady Kramer, mentioned between high gas and electricity prices.
Now, the Government are making specific changes to the taxation of foreign branch profits, changing how companies are taxed in relation to their overseas activities. The noble Baroness will know that, until now, some businesses have structured their affairs with taxable branches to pay little or no corporation tax on UK profits. The change that we are introducing removes the ability to achieve disproportionate relief for overseas costs without UK taxation or future profits. The change, from 1 September 2026, for oil and gas-extracting UK resident companies will ensure that the UK continues to have a robust and effective corporation tax regime in line with international best practice and will ensure the effective taxation of profits attributable to UK activities.
The noble Baroness talked about the cost. She is absolutely right to say that we expect these reforms to raise hundreds of millions of pounds per year and that they will fully fund the package of measures announced by the Chancellor. The costings will be certified by the OBR forecast in the usual way at the next fiscal event.
The noble Baroness talked about zero tariffs and rightly said that they are out for consultation. Obviously, that is the case and I am pleased that she agrees with that. She mentioned the impact on trade deals. These are temporary suspensions to tariffs and so will lapse long before any trade deals are negotiated. So I think we will be able to see immediate improvements in the cost of living, and perhaps over time there will be trade deals that achieve that more permanently.
The noble Baroness talked about high energy costs and blamed them on the drive to net zero. I think we had an Oral Question in this House when the IMF put out its previous forecasts, and she will know that the IMF said that we faced higher energy costs in this country exactly because the previous Government had failed to take action to make the UK more self-sufficient in energy. So blaming the solution to the problem and saying it is the problem itself is a little perverse. The problem for the UK is that we are too exposed to imports of energy and we are, as she knows, taking action as a Government to reverse that.
The noble Baroness knows I agree with her when it comes to oil and gas production from the North Sea and how important and valuable that is. She asked me specifically about two fields, Jackdaw and Rosebank. She will know that the development proposals are a matter for the North Sea Transition Authority and the Offshore Petroleum Regulator for Environment and Decommissioning. I am unable to comment on the specifics of any individual project while the regulatory process is under way, or on the investment decisions of individual operators. As I understand it, the Secretary of State for Energy Security and Net Zero will be making a decision regarding the environmental impact assessments of these projects in the coming months.
I am pleased that the noble Baroness welcomed the support for the ceramics industry. She is right to say that there are far longer-term issues at play in terms of the competitiveness of many of our industries: the foundational sectors so important to the industrial strategy. That is why we have already increased support for our most energy-intensive companies through the British industry competitiveness scheme that we announced a couple of weeks ago.
The noble Baroness asked me about defence spending. As she knows, the defence investment plan is the first zero-based review of defence spending in almost two decades. It will set out the MoD’s plans to ensure that resources are directed effectively to meet its priorities. The Government are working hard to facilitate this and to ensure that the plan delivers the outcomes the UK needs for defence and for taxpayers. I shall repeat what I said previously: it will be published shortly.
The noble Baroness asked about supermarkets, finally. As she knows, it is quite right that we have discussions with supermarkets, as we have with fuel retailers and high street banks, to discuss ways we can work together to ease the cost of living on households. But, as I said to her, I think in a previous Private Notice Question, this is not about price caps, as some speculation has suggested; we would never advocate for that, and it is not for us to tell supermarkets how to run their businesses.
The noble Baroness, Lady Kramer, focused primarily on quite a long shopping list of support that her party would like to see introduced. Obviously, we did introduce some support last week, as the Chancellor set out, but I am not convinced that the funding that the noble Baroness thinks is there for her package of support actually is. Unfunded commitments are not the way to ease the cost of living crisis. We saw exactly that with the Liz Truss Government, and we saw exactly that with the previous Conservative Party Government. Introducing unfunded support now would mean higher inflation and higher interest rates in the long term, meaning that the very people we are trying to help now would pay more for their rent, bills and mortgages in the long term. I do not believe that is a sustainable way to help people with the cost of living crisis.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
Before we move on to Back-Bench questions, I have been asked to remind noble Lords that the next 20 minutes are only for Back-Bench questions and not for Front Benches.
Lord Fuller (Con)
My Lords, over three months ago, I was one of the first people to raise in this House the consequences on food security from the war in the Gulf. I declare my interest as somebody involved in the fertiliser industry, which makes me one of the better-informed commentators in this space. All around the world, nation states are taking steps to secure supplies. The EU is modifying its scheme to increase supply and mitigate costs. Other nations are implementing export bans. Ukrainian strikes on Russian production, taken together with the damage in the Gulf, are putting 50% of the world’s nitrogen fertiliser production at risk, and that has not been fully appreciated. Now, of course, sulphur shortages are creating a phosphate catastrophe. In this country, we hardly have tariffs on imported fertiliser, so announcing that as a concession is not going that far. The Government’s response, thus far, has been to propose insane fertiliser taxes that will drive food price inflation to new heights, increasing the price of beer, bread and biscuits. With the Cereals event, where British farmers congregate, next Tuesday and Wednesday—
Lord Fuller (Con)
With the Cereals event next Tuesday, what good news can the Minister give to farmers who are planning for harvest 2027? When are the Government going to take the impact of this seriously and can these extra charges, which do nothing to reduce carbon emissions globally and increase the importation of the most polluting fertilisers produced from coal fire in China?
National Insurance Contributions (Employer Pensions Contributions) Bill
Lord Wilson of Sedgefield ExcerptsTuesday 24th February 2026
(3 months, 3 weeks ago)
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Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
Can we just let the Minister reply to that?
Lord Livermore (Lab)
I have set out very clearly which will be approached with the negative procedure and the affirmative procedure, and I do not think it is our intention to deviate from that very clear precedent.
Amendment 33, tabled by the noble Lord, Lord Leigh of Hurley, and the noble Baroness, Lady Altmann, relates to the operability of the contributions limit for those with multiple concurrent jobs. Amendments 4A, 4B, 17A, 17B and 29A, tabled by the noble Lord, Lord Fuller, also relate to operability of the contributions limit, with a focus on those with fluctuating earnings and their employers.
I fully understand the concerns that noble Lords have raised about how this measure will operate in practice, particularly for those with more complex employment arrangements and irregular patterns of remuneration. While the Bill provides the necessary powers, the full operational detail of the £2,000 cap will be set out in regulations that are yet to be published. The purpose of this two-stage process is to ensure that when the cap is introduced, it operates effectively across a wide range of real-world circumstances, including for individuals with multiple jobs, complex payroll arrangements, changing employment or fluctuating remuneration patterns over the course of a year.
Lord Wilson of Sedgefield (Lab)
There is agreement on my side that we will go on for a little while after that.
Baroness Neville-Rolfe (Con)
Sorry—I was advised that there is no agreement beyond 7.45 pm.
Lord Wilson of Sedgefield (Lab)
It has been agreed with the clerks and everyone that we will go beyond that to 8 pm so that we can try to get it all finished.
Baroness Neville-Rolfe (Con)
Well, I have been told that there is no agreement beyond 7.45 pm. I do not have a Whip in here.
Lord Wilson of Sedgefield (Lab)
We will stick with 8 pm. If we start now, we will be able to finish it by then; if not, we will not.
Autumn Budget 2025
Lord Wilson of Sedgefield Excerpts(6 months, 1 week ago)
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Lord Massey of Hampstead (Con)
My Lords, I will make some general comments about the Budget and then some suggestions that might help the Government to generate some growth via the financial sector. I declare my interest as a director of a financial services firm.
This was a budget for politics, not economics. Other than restoring some financial headroom, this was a Budget for ideology at the expense of the promises made to voters about tax and growth. It was a reinforcement of the culture of dependency that is slowly but surely strangling the economies of western Europe. We are living in a society where rights and entitlements are everywhere, but duties and responsibilities no longer seem to matter. Of course, there should be a safety net, but we are now in a position where in many cases it is more remunerative, as many other noble Lords have said today, to stay at home than go to work. This is a disaster for our economy, our culture, and the development of our children, as my noble friend Lord Bailey said earlier.
The abolition of the two-child benefit cap magnifies the problem—and, which has not been mentioned, adds to the pull factors attracting even more immigration to this country, both legal and illegal. The dependency culture was illustrated by a radio interview given this week by the Chief Secretary to the Prime Minister, who described the additional benefits in the Budget as
“an investment in support for poorer families”.
The UK needs more investment, but transfer payments do not add to real growth or competitiveness. What we need is investment in the businesses of the future that can create jobs and wealth.
The Government recognise the importance of private sector investment, as the Minister said in his opening speech, and of scale-ups, and sensibly increased the thresholds for qualifying EIS and venture capital trusts in the Budget. This was welcome—but in the same breath the Chancellor reduced the incentive to invest in these high-risk companies by cutting the income tax relief from 30% to 20%. The last time the Government cut relief in this way was in 2007, which led to a catastrophic reduction in inflows into venture capital. Inflows actually fell by 80% over the subsequent years, and it took 16 years to recover to the original peak.
Investor demand in high-risk companies from private investors is, understandably, very sensitive to levels of tax incentives. We are already seeing a substantial reduction in demand for AIM stocks following last year’s reduction in the BPR from 40% to 20%. I urge the Government to look again at the impact of the reduction in tax relief, which may lead to a much sharper decline in investment than is currently envisaged.
In addition, it is worth looking at these measures in relation to AIM. The reductions in BPR and VCT relief affect listed companies, but not unlisted companies. EIS and unlisted IHT schemes now have a clear advantage over AIM. This may be an unintended consequence of these measures, as I know the Government are keen to promote London public markets as they are so important for scaling up.
Another source of potential growth for UK plc is the stocks and shares ISA. ISAs attract more than £100 billion of investment from private individuals. Two-thirds of this goes into cash ISAs. The Budget reduced the investable limit from £20,000 to £12,000. I understand this decision, as cash ISAs do little to generate growth. I will make a suggestion for the future of stocks and shares ISAs, which constitute a significant £30 billion of investment. The reality is that most of the investment going into these ISAs ends up in foreign companies, as is the case with our £3 trillion defined benefit pension schemes, where only 4% is invested in UK companies. Why do we provide tax advantages to invest in Microsoft of Nvidia when there are excellent investment opportunities here which would help grow our economy? Given our urgent need for investment—on which I think we all agree—now is the time for the Government to get a return on their tax breaks and require ISA investors to buy UK companies only. There is an opportunity here to kick-start a recovery—
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
I ask the noble Lord to bring his remarks to an end, as he is over the time limit.