Secondary International Competitiveness and Growth Objective (FSR Committee Report)

Baroness Neville-Rolfe Excerpts

Wednesday 11th March 2026 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I thank my noble friend Lady Noakes for her typically clear and telling introduction as the new chair of the committee, my noble friend Lord Forsyth of Drumlean—now our distinguished Lord Speaker and the masterful previous chair—and other members and the staff of the Financial Services Regulation Committee for their work. The committee has done a great job; it tackled a very important question, which hangs over one of the great problems we face at the moment: the sluggishness of economic growth since the financial crisis, exacerbated by the present Government’s actions on employment, tax and energy.

How did we get here? We got here by a predictable overreaction to the financial crisis of 2008 and by the failure of many to recognise that regulation itself has a cost, particularly in compliance. The more of it there is, the greater the cost.

Moreover, the costs of regulatory failure, which the noble Baroness, Lady Bennett of Manor Castle, concentrated on, are more obvious than the costs of regulatory overreach. The former leads to people losing money in criminal or near-criminal enterprises, while the latter leads to lost opportunities and competitiveness, and is much less visible. The noble Baroness, Lady Moyo, gave a telling example from her experience of Barclays’ departure from its international businesses, and the noble Lord, Lord Eatwell, described the shift of fintech finance to US venture capital.

The performance of the UK financial sector since the financial crisis suggests that excess caution may be even more costly over time. It is likely that the country has paid a high price over the last 15 years for overregulation of the financial sector, so let us hope that my noble friend Lord Hill of Oareford is right in saying that the secondary objective is improving things. It was introduced by the last Government, and I am grateful to my noble friend Lord Johnson for helping us to make it a reality. The noble Baroness, Lady Kramer, came from a different perspective, but there is quite a lot of common ground on things like complexity, uncertainty and the lack of parliamentary scrutiny, and the fact of absent growth.

That brings me on to the role of the FCA, the PRA and the Financial Ombudsman. The report makes uncomfortable reading for these organisations. The truth is that, while the first job of a regulator is to protect consumers, that is insufficient. If they act as a break on innovation and growth, as they appear to have done, their net contribution to national life is much reduced and could even be negative.

The problems identified in the report are numerous, and the committee has done well to cover so many, although perhaps it would have had even more impact with a shorter report. I commend the then Minister Emma Reynolds MP, now transported to higher things, for the five-point summary of objectives in her letter to my noble friend Lord Forsyth of 2 September. However, she missed out two essential objectives for UK growth: reducing regulation, bureaucracy and the attendant compliance costs, and improving and prioritising financial education.

Because of the length of the report, I shall limit myself to three areas. I begin with the regulatory culture. What emerges clearly from the report is the existence of a damaging “culture of risk aversion” within the UK financial regulators. I note that the findings of the Fingleton report on nuclear regulation were very similar. We have identified a pernicious trend.

The noble Lord, Lord Kestenbaum, provided some telling examples, showing the need for culture transformation and mentioning the concerning difference in candour between private and public hearings—a point also picked up by my noble friend Lord Johnson of Lainston.

In the years since the financial crisis, the regulatory framework has increasingly tilted towards the prevention of risk at almost any cost. While the intention behind this shift is understandable, the report suggests that it has had significant consequences for how regulation operates in practice. That culture of caution has shaped regulatory behaviours in ways that translate into tangible duties and processes for firms.

Firms describe being inundated with extensive information requests from regulators. Regulators themselves are said to adopt highly cautious approaches to approvals and supervisory decisions. Perhaps most concerningly, the report suggests that the environment has begun to erode trust between regulators and the firms that they supervise. The noble Lord, Lord Pitt-Watson, introduced a wonderful new concept of building a Jenga tower of regulation. He reminded us of the cost of regulatory whack-a-mole and the huge difficulty in opening a bank account in the UK; I have also had experience of this. All of this creates a relationship that is defensive rather than collaborative. Something needs to be done.

The second area that I will therefore address is complexity. The complexity of the regulatory system has developed as a result of the broader culture. It is telling that financial services represent such a large component of GDP—9%, or more if you add legal and other related services—but, as we have heard, their contribution to output and productivity growth has fallen behind the rest of the economy. This growth-sapping complexity has to change.

We have spoken about the “twin peaks” system covering the FCA and the PRA, but there are many other bodies, all with their own acronyms, forming the regulatory landscape that firms have to navigate. We have the Financial Ombudsman Service, the Financial Services Compensation Scheme, the Competition and Markets Authority, the Payment Systems Regulator, the Information Commissioner’s Office and the Financial Reporting Council. All these organisations constantly try to prove the need for their existence, so the report’s finding that there is extensive regulatory overlap is not a surprise.

This is in stark contrast to the helpful concierge service operated in Singapore, which my noble friend Lord Lilley referenced and which my noble friend Lord Johnson has enjoyed. My noble friend Lord Lilley also told us how US banks were freer than UK banks to increase their lending to the real economy. We heard from my noble friend Lord Altrincham that the CEO of Marsh McLennan UK said that UK regulation is the “most expensive” in his wide experience—that was worrying. This has had a marked effect on firms already operating in the UK, which are required to direct capital away from productive investment into filling out forms, sifting through regulations, communicating to these organisations and so on. They are also worried about getting the blame for failure, as my noble friend Lord Lilley emphasised.

The other effect, which is harder to measure, is the chilling effect that this has had on international investment in the UK. Firms operating around the world take one look at the web of regulations and take their business elsewhere. The economy grew by just 0.1% in the final quarter of 2025, and across the whole of 2025 it expanded by 1.3%. The OBR has lowered its 2026 growth forecast to an anaemic 1.1%, as the noble Baroness, Lady Moyo, said. To say that this is growth in any meaningful sense is laughable. Growth must be an important priority for regulators, and the report provides the Government with some useful suggestions: reduce regulatory overlap, strive properly to understand the burden regulation imposes on business and perhaps help them, improve the spread of authorisation processes, and provide simpler rules for smaller domestic banks. My noble friend Lady Noakes was right to point out that the Basel rules applied across the UK are aimed at international banks, so small and medium-sized banks have a hard time here. I know this because I served as a director of Secure Trust Bank, and I therefore welcome the cut in tier 1 capital in December last year from 14% to 13%—that is a good development.

My third area is financial literacy and education. The committee expresses real concern about the chronically low levels of financial literacy and numeracy among adults in the UK. The consequences of this are far-reaching. Too many people lack confidence in financial markets. Many shy away from investing and, as a result, savings often remain concentrated in low-yield products. That means that neither they as savers nor our wider economy benefit from the sort of capital that could be unlocked if people were more confident in investing their money. Traditional advice is often too expensive, and guidance is not always available. Those who stand to gain the most from it are frequently the least able to obtain it and indeed are fearful of financial products—the noble Baroness, Lady Bennett, and I come together on this recommendation, albeit from different perspectives. If we are serious about building a stronger investment culture, financial education cannot begin when people first open a pension or savings account. It must begin in our primary schools. By embedding financial literacy in schools and universities, we can equip future generations with the confidence they need to invest wisely.

There seems to be a degree of agreement that the mandation powers in the Pension Schemes Bill, which could be used from 2030, will have a chilling effect. They could harm growth and deter investment, especially from overseas. As the Official Opposition, we believe that that should be abandoned when the Bill comes to Report next week.

I have a number of questions for the Minister, which go beyond the excellent questions from my noble friend Lady Noakes and the noble Lord, Lord Eatwell, although I am less sure about his idea of a new kind of mandation in respect of venture capital—or indeed about the version of the noble Baroness, Lady Kramer, which would be the mandation of a community element. That would mean new rules and new additions to the Jenga tower.

My questions to the Minister are the following. First, it is encouraging to note that the Government appear to acknowledge that regulation of the financial sector has gone too far. Will the Government continue to press for change in the direction advised by the committee? Secondly, will the PRA be asked to consider setting bank capital requirements for SME banks in a more proportionate way, rather than slavishly following Basel III? Thirdly, what concrete steps will the Government take to improve the competitiveness of the City of London, compared to centres such as New York, Milan and Singapore? Fourthly, will the Government think again about benchmarking—perhaps even a one-off benchmarking report—to look at our performance against our competitors overseas? The noble Lord, Lord Vaux, talked about that. It may be difficult, but it must be done, given that competitiveness is a key part of the secondary objective.

The UK faces a real and pressing challenge when it comes to economic growth. Growth, we are told, will be the central pillar of this Government’s economic strategy in the years ahead, and I have welcomed that on many occasions. Although their achievements so far have been disappointing, I encourage them not to give up but to try harder, especially in the financial services sector, which has contributed so much to growth historically. I very much hope that the Government will look carefully at the suggestions contained in this powerful report, and at the further suggestions made today, as they develop their fiscal and economic strategy.

Crown Estate: Wales

Baroness Neville-Rolfe Excerpts

Monday 9th March 2026 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

My noble friend is absolutely right that we need to think about energy security. One thing that is coming out of what is happening, tragically, in the Middle East at the moment is that, because oil and gas prices are set internationally, this impacts on every country’s economy. That is why we need to invest in the green economy, in nuclear, in wind turbines and in solar—so that we become independent. When issues such as this happen and when there are shocks to the international energy markets, we do our best to ensure that we are insulated from them.

[Baroness Neville-Rolfe (Con)]

My Lords, in my ministerial experience, the Crown Estate arrangements, in fact, worked pretty well. The Minister will be glad to hear that. But the more important question for the Minister today is: would Welsh households not have been helped by lower bills if Labour had not gone down the dangerous road of banning North Sea oil and gas? That looks even more irresponsible, with oil prices spiking because of the war in the Middle East.

[Lord Wilson of Sedgefield (Lab)]

Just to repeat my response to the previous question, we have to make sure that we are independent of these problems that we are facing. Rather than relying on fossil fuel, the prices of which are set internationally, we need to have home-grown green energy to ensure that we can resist these problems. I just want to point out one or two things about how we are helping people in Wales. We are cutting household energy bills, saving the average household £150. We have helped over 160,000 people with the minimum wage. We have increased pensions by 4.8%, and we have increased benefits for people out of work by 3.8%. The 700,000 pensioners in Wales are going to be better off because of this Government.

National Insurance Contributions (Employer Pensions Contributions) Bill

Baroness Neville-Rolfe Excerpts

Report stage
Thursday 5th March 2026 Lords Chamber

Moved by

[Baroness Neville-Rolfe]

1: Clause 1, page 1, line 10, after “tax” insert “at the higher or additional rate”
Member’s explanatory statement
This amendment would exempt basic rate taxpayers in England, Wales and Scotland from the £2,000 cap.

[Baroness Neville-Rolfe (Con)]

My Lords, I am pleased to be opening our deliberations on Report by speaking to a powerful group of amendments tabled by not only the Opposition but noble Lords from across the Chamber. This group in many respects shows the scale and breadth of the concerns that are held by noble Lords with respect to this Bill.

My first amendments in this group seek to exempt basic rate taxpayers from this policy. I am grateful to noble Lords from across the House who supported Amendment 1 in Committee and who recognise the seriousness of the issue that it seeks to address. This Bill is a mistaken Bill. It will limit incentives to save into pensions and reduce pensions adequacy. In our lively Committee discussions, Peers with business and tax experience and knowledge of pensions and payroll exposed its failings. The responses from the noble Lord, Lord Livermore, did not allay our concerns. On the contrary, they reinforced them.

The Government have been clear in the Bill’s Explanatory Notes and in Statements made in this House and the other place that this policy is intended to target higher earners. That is the stated purpose and the political justification, but it is not the reality. The Society of Pension Professionals has told us that around one-quarter of those who use salary sacrifice and who will be caught by these changes are basic rate taxpayers. When this was put to the Minister, he did not dispute it. In fact, he went further. He told us that around 74% of basic rate taxpayers currently using salary sacrifice will be protected by the £2,000 cap. That is the current position and, as far as I know, does not allow for wage inflation in the period before the measure takes effect. That could increase the number of basic rate taxpayers who are affected.

The new arrangements take effect in 2029-30, conveniently helping the Government with £4.7 billion of revenue to satisfy their fiscal rules in that crucial year. However, the Minister’s exclamation means that 26% of basic rate taxpayers will not be protected. More than one in four basic rate taxpayers using salary sacrifice will be hit. The Minister also acknowledged that some people earning under £30,000 would be affected. Let us pause on that. This is a policy presented as targeting high earners, yet it will impact workers earning under £30,000. Surely that is, by the Treasury’s own admission, a fundamental contradiction between rhetoric and reality. For a basic rate taxpayer, the 8% national insurance charge represents two-fifths of the value of their income tax relief. In practical terms, the marginal cost of this policy is four times higher for a lower-paid worker than for someone on a higher income. That is a very different definition of a progressive tax. The lower your income, the greater the relative blow.

Our amendment offers the Government a straightforward way out. By exempting basic rate taxpayers from the cap, we would align the policy with its stated objective. If the aim is to target higher earners, let us do precisely that. Let us not drag lower and middle earners into a measure that they were repeatedly told would not affect them. Lower savings today mean lower retirement incomes tomorrow, and lower retirement incomes tomorrow mean greater reliance on the state. That is neither fiscally prudent nor socially responsible.

This is closely related to another of my amendments in the group, Amendment 7, which would require that regulations made under Clauses 1 and 2 should explain the basis on which the Treasury considers certain employed earners to be higher earners for the purposes of the national insurance charge and how the contribution limit reflects that assessment in Great Britain and Northern Ireland. This amendment, which we also tabled in Committee, received a wholly inadequate response. I asked the Minister who in the Government’s view were higher earners. I asked for a number. Was it people on £50,000 a year or £60,000 a year? The Minister refused to give one. Indeed, he did not engage with the point at all. Remember, some basic rate taxpayers will be affected by this policy. They are not higher earners. The Government should be honest about that.

Amendment 7 seeks to ensure that when regulations are forthcoming—and there are a lot of them provided for in the Bill as it stands—the Treasury will do the right thing and explain how the regulations meet the policy intent of affecting only higher earners. It would not impose costs on the Treasury or affect how the policy works but would ensure that we get an explanation of how lower and medium-income workers are to be protected. That is the Government’s stated aim. If the Minister is confident that regulations will meet the Government’s own test, he should accept this amendment.

The final one of my amendments to which I wish to speak, Amendment 29, concerns SMEs and charities. Throughout the passage of this Bill, and in debates far beyond it, many of us have warned about the cumulative burden this Government are placing on smaller employers. Think about the Employment Rights Act, the minimum wage hikes, the spiralling business rates, U-turns and uncertainty, compliance and regulatory costs and, indeed, the previous NICs hike. The list goes on. Each item is a policy that damages small and medium-sized enterprises in our country. They include family firms, start-ups, local manufacturers, high-street shops, care providers and charity and community employers. They often do not have in-house tax teams or compliance departments. They do not have margins that allow them quietly to absorb new fiscal shocks. Many do not offer salary sacrifice, but some do and more may do so now that it is more in the public consciousness thanks to this change.

My amendment simply says that, where the employers are a small or medium-sized enterprise, or a charity or a social enterprise, the provisions of this clause should not apply. If the Government’s intent is to truly address behaviours concentrated in large corporates then they should have no difficulty accepting that smaller employers ought to be shielded.

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[Lord Livermore (Lab)]

I am grateful to the noble Lord. I think the position remains the same, though.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank all noble Lords who contributed to this debate. I welcome the noble Lord, Lord Freyberg, to the fray and thank the Minister for his responses. He did not respond to the question raised by my noble friend Lord Ashcombe, the noble Lord, Lord de Clifford, the noble Baroness, Lady Altmann, and me about who high earners are and why those in the £40,000 to £50,000 band should pay 8% not 2%—four times higher. Indeed, why has the £2,000 limit been chosen in the first place?

On SMEs, on which I will also divide the House later, I think the lower incidence of the use of salary sacrifice actually makes the case for not imposing the complexities and administration of salary sacrifice on SMEs and charities. I will leave my noble friend Lord Leigh to wind up on student loans.

I am afraid that we on these Benches are unconvinced that the Government are meeting their policy objective of protecting workers on lower and medium incomes. As my noble friend Lord Leigh said, we are not sure that the Government are even going to raise the desired revenue. The Bill obviously hits those on lower and medium incomes and the protections are not in the Bill, which would ensure that the Government’s own policy objective is achieved. What is the hurry? I would like to test the opinion of the House on exempting basic rate taxpayers from the £2,000 cap.

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[Baroness Kramer (LD)]

My Lords, I will slightly anticipate the noble Baroness, Lady Rolfe, moving Amendments 9, 10, 24 and 25, which would require affirmative resolution for key elements of the Bill. Frankly, I do not think I have ever seen a Bill for which affirmative action was more required. In the other amendments, which have been brought forward so eloquently from across this House, we have some flavour of the extraordinary complexity.

I suspect that decision-makers at the top of the Government thought that this was something really simple, and that they were just going to put a cap on, with the rest being relatively easy to manage. However, the actual management of this is a complete nightmare. I cannot believe that a Bill that has been through the House of Commons already is on Report in the House of Lords, and yet we still do not know if the cap is going to apply to each employee or to each employment—which, to my mind, is two different Bills.

I completely agree with the noble Lord, Lord Leigh. I can see the nightmare of people wondering, “If I say this sentence, will I be caught by operational remuneration? Do I have to pretend, wink, or make sure I do not put anything down in an email?” We should not be putting people into situations where they have to try to work out how they handle this whole range of arrangements. The noble Lord, Lord Freyberg, knowing the creative industry so well, has thrown further complication into this. I very much suspect that the Government had absolutely no idea of the mare’s nest they were getting themselves involved with. I wish these issues had been teased out before this point.

The response brought forward by the noble Baroness, Lady Neville-Rolfe, of at least having affirmative resolution gives us some possibility of trying to scrutinise what has happened. This is an extraordinary situation. We do not know the core character of this Bill, so we will be dependent on those working through the affirmative resolutions to decide how on earth they will deal with what will turn out to be the form that eventually comes before us.

[Baroness Neville-Rolfe (Con)]

My Lords, I begin by thanking noble Lords with amendments in this group—my noble friends Lord Fuller, Lord Mackinlay and Lord Leigh and the noble Baroness, Lady Altmann—for their proposals, and for their forensic questions on the detail of the schemes and on any guidance that the Government might issue to minimise errors and problems.

There are numerous shortcomings in the Bill around operational detail and how everything will apply in practice. The reality is that we have very little clarity on how the Bill will work. It is designed to apply to a very narrow and limited set of employment and remunerative circumstances, and anyone who falls outside that definition has to wait for regulations, which will not be subject to the affirmative procedure.

We have no clarity on how the policy will apply to people working in numerous jobs. Is the cap per employment or per person? If it is per person, it will be very difficult to administer. We also need to know where responsibility for enforcement lies. There is no clarity about people with fluctuating remuneration: will they be penalised for saving during higher income periods because they hit the cap in some years and have no income to pay into pensions in others? What about anyone who has an unconventional pattern of remuneration for their job or jobs? How will it work for them? We have heard already that the arrangements for student loans are unclear, even after recent discussion, and we heard from my noble friend Lord Mackinlay about GDPR and from the noble Lord, Lord Freyberg, about the off-payroll rules. That is quite a lot of detail that has to be worked out.

My amendments in this group would help to deal with that by ensuring that all regulations would be subject to the affirmative resolution procedure, aside from those designed to increase the cap—that would be positive if it goes up, and you would not need to have an affirmative resolution because it would be beneficial. I am very grateful to the noble Baroness, Lady Kramer, and my noble friend Lord Ashcombe for their understanding and their vocal support for having this extra scrutiny.

When the regulations are developed, they will apply the cap to thousands of people and businesses who will be drawn into complications for the first time. My proposals would not impose a cost on the Exchequer or undermine what the Government are trying to do; they would simply ensure that, when the Treasury comes up with an answer to the questions that have been raised today, we will get a meaningful chance to debate and scrutinise the answers, as we are doing with the Bill at the moment. The Government really should have put the detail in the Bill but, in the absence of that, my amendments would ensure that we retain as much oversight as possible as the detail comes through. I can think of no reason why the Minister would not adopt the affirmative resolution if he cares about oversight, due process and the scrutiny of a policy which will affects millions of people. There are 7.7 million people using salary sacrifice and Amendment 9 should be an obvious amendment to support.

[Lord Livermore (Lab)]

My Lords, I am grateful to all noble Lords who have spoken in this debate. I will begin by addressing Amendments 6, 22, 36 and 39, tabled by the noble Lords, Lord Mackinlay of Richborough, Lord Fuller, Lord Leigh of Hurley and Lord de Clifford, and the noble Baronesses, Lady Altmann and Lady Kramer, which seek clarity on the operation of the cap. I listened carefully to the requests made in Committee and again today to provide further reassurance to employers, payroll providers and individuals. Having put noble Lords’ concerns to officials in HMRC and the Treasury, I am pleased to confirm to your Lordships’ House that the cap will operate in line with other limits and thresholds within the national insurance regime. That is, the £2,000 cap will apply to each employment an individual undertakes.

To be clear, each employment will be treated separately for the purposes of the contributions limit for national insurance contributions. Any individual who has more than one employment and who sacrifices salary in more than one of those jobs will be able to do so independently in each case. Only 2% of those using salary sacrifice for their pensions have more than one job, and not everyone in this small group can or will use salary sacrifice in both their jobs. None the less, the approach I am confirming today provides clarity, aligns with the existing principles of the national insurance regime, and avoids the operational and administrative risks and burdens that could arise from attempting to operate a single cap across multiple employments. I confirm that this will be set out in legislation in subsequent regulations. The Government will also continue to engage with employers, payroll providers and other stakeholders to work through the detail of the policy ahead of its implementation.

I turn to Amendments 2 and 3 and the corresponding Northern Ireland Amendments 18 and 19 from the noble Lord, Lord Fuller, which each seek to introduce a carryover mechanism for any unused amounts of the cap allowance, including for those with fluctuating earnings.

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Moved by

[Baroness Neville-Rolfe]

9: Clause 1, page 2, line 19, leave out from “4(6A)” to end of line 21
Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.

[Baroness Neville-Rolfe]

My Lords, I beg leave to test the opinion of the House.

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Moved by

[Baroness Neville-Rolfe]

10: Clause 1, page 2, line 21, at end insert—
“(b) after subsection (1), insert—“(1A) Subsection (1) does not apply to regulations under section 4(6A) which make provision only for increasing the amount of the contributions limit for a tax year.””Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.

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Moved by

[Baroness Neville-Rolfe]

16: Clause 1, page 2, line 27, at end insert—
“(5) The amendments made by this section do not apply where the employer—(a) is a small or medium-sized enterprise, or(b) is a charity or social enterprise which meets the conditions in subsection (6).(6) The conditions are that—(a) the employer meets the definition of a small or medium-sized enterprise in section 465 of the Companies Act 2006 (companies qualifying as medium-sized: general), and(b) the employment is carried out wholly or mainly for the purposes of that charity or social enterprise.(7) In this section—“charity” has the meaning given by section 1 of the Charities Act 2011; “social enterprise” means an undertaking which—(a) has as its primary purpose the achievement of social or environmental objectives, and(b) principally reinvests its profits for those purposes;“small or medium-sized enterprise” has the meaning given by section 465 of the Companies Act 2006.”Member’s explanatory statement
This amendment exempts small and medium-sized enterprises, and small and medium-sized charities and social enterprises, from the provisions of the Bill in Great Britain.

[Baroness Neville-Rolfe (Con)]

My Lords, I wish to test the opinion of the House on this amendment relating to SMEs and charities.

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Moved by

[Baroness Neville-Rolfe]

17: Clause 2, page 2, line 38, after “tax” insert “at the higher or additional rate”
Member's explanatory statement
This amendment would exempt basic rate taxpayers in Northern Ireland from the £2,000 cap.

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Moved by

[Baroness Neville-Rolfe]

24: Clause 2, page 3, line 31, leave out from “4(6A) to “shall” in line 32
Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.

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Moved by

[Baroness Neville-Rolfe]

29: Clause 2, page 3, line 41, at end insert—
“(5) The amendments made by this section do not apply where the employer— (a) is a small or medium-sized enterprise, or(b) is a charity or social enterprise which meets the conditions in subsection (6).(6) The conditions are that—(a) the employer meets the definition of a small or medium-sized enterprise in section 465 of the Companies Act 2006 (companies qualifying as medium-sized: general), and(b) the employment is carried out wholly or mainly for the purposes of that charity or social enterprise.(7) In this section—“charity” has the meaning given by section 1 of the Charities Act 2011;“social enterprise” means an undertaking which—(a) has as its primary purpose the achievement of social or environmental objectives, and(b) principally reinvests its profits for those purposes;“small or medium-sized enterprise” has the meaning given by section 465 of the Companies Act 2006.”Member's explanatory statement
This amendment exempts small and medium-sized enterprises, and small and medium-sized charities and social enterprises, from the provisions of the Bill in Northern Ireland.

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Moved by

[Baroness Neville-Rolfe]

31: After Clause 2, insert the following new Clause—
“Review of impact on small and medium-sized enterprises(1) The Secretary of State must, within 12 months of the passing of this Act, lay before Parliament an independent report assessing the impact of the provisions of this Act relating to employer National Insurance contributions on small and medium-sized enterprises, including social enterprises in Great Britain and Northern Ireland.(2) The report under subsection (1) must, in particular, assess the impact on—(a) administrative and compliance costs arising from changes to payroll, pension and benefits administration,(b) the complexity of operating salary sacrifice and workplace pension arrangements,(c) the operability of these changes for those in receipt of irregular remuneration, those with seasonal working patterns or those with multiple employments(d) employment costs, and(e) the ability of small and medium-sized enterprises to attract, retain and reward staff.(3) The report under subsection (1) must assess the impact of this Act in the context of the cumulative impact of changes to employer National Insurance contributions affecting small and medium-sized enterprises since July 2024.”Member's explanatory statement
This amendment requires the Treasury to commission and lay before Parliament an independent review of the impact of the Act’s employer National Insurance provisions on small and medium-sized enterprises and social enterprises, including administrative complexity and employment costs, and in the context of the cumulative effect of recent changes to employer National Insurance contributions.

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[Baroness Neville-Rolfe (Con)]

My Lords, Amendment 31 is in my name and that of my noble friend Lord Altrincham. I thank the noble Baroness, Lady Altmann, and the noble Lord, Lord Londesborough, for putting their names to it. I will also speak to Amendment 33 in the name of the noble Baroness, Lady Sater, a charity professional in the best meaning of the word. She is very sorry not to be here today. Her amendment is in the same spirit as ours, and she is right that the impact on charities is very important and should be kept under review.

His Majesty’s Official Opposition will continue to be a voice for small and medium-sized enterprises. We have heard, time and time again, from small businesses about the weight of burden that this Government continue to pile upon them—tax after tax, regulation after regulation. The Minister did not even answer my question at Question Time this morning about whether he would consider options for exempting SMEs from the burden of regulation. This amendment presents such an opportunity for the Government and would demonstrate that they listen; to show that they take seriously the mountains of complexity heaped upon small businesses and small social enterprises; and to provide some measure of relief and some acknowledgement publicly that these cumulative pressures cannot be ignored indefinitely.

The Minister suggested in Committee that only some 10% of employees in small and medium-sized enterprises have pension contributions through salary sacrifice that exceed the proposed cap. That may well be the case today, but with public awareness, more SMEs may introduce it. We on these Benches would like to see that figure grow, as saving for a pension is one of the most desirable and cost-effective methods of saving, as I am always explaining to the next generation. Salary sacrifice is also one of the few tools available to a small employer competing against a large corporation for talent and productive workers.

An independent review over a year would allow us all to consider the impact of the changes on SMEs and charities. I beg to move.

[Baroness Altmann (Non-Afl)]

My Lords, I have added my name to Amendment 31, and I support Amendments 32 and 33. All these amendments seek to help the Government to recognise that there is a serious impact if this Bill goes through as currently proposed, particularly on employers in smaller and medium-sized companies. I believe that the Minister confirmed that some 99% of employers in auto-enrolment are SMEs. The costs of complying with pension auto-enrolment have already been significant. Some of those employers have been advised that it is a “no-brainer” for them to use salary sacrifice as a way of mitigating some of the extra costs involved in having to provide pensions for their staff who want to stay in them.

We have imposed these extra costs on employers already; some employers have been good enough to put in more than the auto-enrolment minimum. What this Bill would do is to pile extra costs on to them, because if they are using salary sacrifice, they will have to renegotiate employment contracts, change payroll software systems, change the information that they give to their workforce about their pension arrangements and answer lots of questions that are bound to arise as a result of any of the changes that are proposed.

It should therefore be incumbent on the Government—indeed, it is quite astonishing that this was not already done before we got the legislation—that there is a proper, independent review of the costs imposed on smaller and medium-sized employers as a direct result of this legislation. That should inform the way in which the legislation is implemented, so that we try to do whatever we can to avoid the kind of problems that we have seen, where there are implications for employment levels, salary levels and indeed for pension investment and provision as an unintended consequence of perhaps well-meaning legislation, or legislation designed to hit an entirely different target, that is potentially going to fall on both employers and their workforces. We have seen that the extra national insurance costs have had an impact on employment levels already. I ask the Minister again: what is the rush in getting this legislation on to the statute books before we know its implications and what it will mean in practice for the corporate sector? First, can the noble Lord explain the rush and, secondly, consider putting this on hold until the full implications are better understood?

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, I thank noble Lords for their contributions to this debate, which is an important one, and I am grateful to those who spoke in support. We heard from the noble Lord, Lord Freyberg, about the positive implications for the creative sector, and of course my noble friend Lord Leigh, who is very much in touch with trade representative bodies and charities, supported the amendment. The noble Lord, Lord Londesborough, raised again the question of data, which we were talking about at Question Time, and his concerns about the demise of SMEs under the burden of red tape.

Finally, I strongly support the noble Baroness, Lady Kramer, and the Federation of Small Businesses, which is such a useful source of information, on the need to be able to keep employees happy and to retain them. The same is true in charities and social enterprises, as I am sure my noble friend Lady Sater would say if she had been able to be with us today.

The case for a comprehensive and independent impact assessment of this legislation on small and medium-sized enterprises and social enterprises could not be clearer, nor, I am afraid to say, could the Government’s failure to undertake one. We have heard today of the depth and breadth of concern, and that is why we have voted and agreed on an exemption for SMEs and charities. But there is a risk that this will be rejected in the other place, in which case this review will be even more important.

Although some documents have been published, as the Minister said, the Office for Budget Responsibility’s own analysis points to significant uncertainty surrounding the effect of these measures. That uncertainty is not a reason for the Government to look away; it is precisely the reason that they must look more closely. When the OBR itself signals uncertainty, the duty falls on the Government to acknowledge what they do not yet know and to commit to finding it.

That brings me to an important matter which the Minister may want to comment on or follow up, perhaps in the next group. The Government announced last year a commitment to reduce the administrative burden on business by 25%. I remember welcoming that announcement. It was not a quiet aspiration buried in a footnote; it was a public commitment made with fanfare. Yet if the Government’s answer whenever we ask about the administrative impact of a specific policy is simply that such an impact cannot be measured, one must ask how precisely the Government intend to meet that target.

I fear there are only two conclusions. Either the Government have a means of measuring administrative impact, which they have chosen, curiously, not to deploy on this occasion, in which case they should do so, or the commitment to reduce the burden on business by a quarter was an empty promise from the outset.

But we have had a good debate today, and time is getting on. In the circumstances, I beg leave to withdraw my amendment.

Amendment 31 withdrawn.

Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025

Baroness Neville-Rolfe Excerpts

Wednesday 28th January 2026 Grand Committee

Finally, I am concerned that this statutory instrument attempts to future-proof by giving the regulator powers to act pretty much as it chooses without any further reference to Parliament. Given the rapidly shifting sands in this area, both domestically and globally, is it really appropriate for the FCA to be immune to further oversight? Could the Minister respond to that?

[Baroness Neville-Rolfe (Con)]

My Lords, as we move forward in an age of rapid technological change, it is right that we legislate to keep pace. This statutory instrument is, in many ways, an example of how Parliament can embrace that change. I thank the Minister for setting out how the regulations will work and for responding to the scrutiny committee’s concerns.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

I was thanking the Minister for his response to the scrutiny committee’s concerns. I also thank the noble Baroness, Lady Kramer, for her well-informed insights, as usual, and her correct reference to risk. I very much look forward to the Minister’s response on that point.

While the Official Opposition are supportive of the direction of travel, we believe that the drafting is flawed. My noble friend Lord Holmes of Richmond explained that well; he called it a “wrinkle”. Fortunately, following the debate in the other place, I believe that the Minister and his crypto asset team have agreed to look into this with interested parties and that a follow-up meeting is planned between the Minister and our shadow Minister. I say at the outset that this is most welcome.

Crypto assets such as Bitcoin are commodities. They are bought and sold in anticipation of changes in value, much like shares or bonds. Stablecoins are different. They are backed by a fiat currency and act as a proxy for that currency. As such, stablecoins sit within the payment system and should be regulated as part of it. The draft instrument establishes the regulatory framework for crypto assets in the UK, including stablecoins. What we are therefore debating is critical to the delivery of the Government’s stated ambition for the UK to become a global hub for digital assets and blockchain technology—although I believe that the vast majority of such assets are held in the United States at present.

Equally, according to Bitpanda and Opinium, one in five adults in the UK has invested in crypto assets, and 40% of them are under 35. The possibility of high returns seems to be the main motivator, with portfolio diversification also being important. According to the same survey, the prime reason for transferring crypto is for the purchase of goods and services.

The Government’s policy note accompanying the original draft of these regulations made clear that it was published to identify errors or oversights that could lead to unintended consequences. My concern today is that such an oversight remains, so the instrument fails to achieve its stated aim.

A thriving digital asset market requires an effective form of digital cash. There are three such forms: central bank digital currencies, tokenised commercial bank deposits and regulated stablecoins. All three should be able to operate seamlessly alongside traditional fiat money with regulations that reflect how each functions in practice. The Bank of England has recognised that regulated stablecoins could deliver faster, cheaper and more functional payments, both domestically and across borders, as part of a multi-money system alongside commercial bank money. If we fail to regulate stablecoins in a way that reflects the real-world function, we risk losing ground to other jurisdictions. If using stablecoins means facing new regulatory hurdles, they simply may not be used.

In the UK, we have a long history of encouraging innovation in a regulated financial services sector. This record and the ability to innovate is vital to both growth and stability. With the current wording of the instrument, the UK could see the prize of innovation slipping away. Will the Minister comment on that concern?

The Government have attempted to address the problem in the context of payments by importing an existing exemption for the purchase of goods and services. However, that approach is ill suited to stablecoins and fails to provide clarity for all participants, particularly those who convert fiat into stablecoin and back again. Without certainty for these actors, the payment system may not be able to function effectively. A clearer approach would be a bespoke exemption for stablecoins or the use of an existing definition that captures payment activity within payment services regulations. I would be interested to hear about the current direction of travel on these various ideas.

Before I conclude, I would be grateful if the Minister would reflect on a number of broader questions that arise from this statutory instrument and the wider regulatory architecture within which it sits, and let me have a response—either today, which would be ideal, or in writing. I was very grateful to the Minister for the helpful letter he sent me following our last financial services discussion in Grand Committee. He will be aware that the House of Lords Financial Services Regulation Committee is planning an inquiry into crypto assets, so these questions are important, and the answers might be helpful to the debates that that committee will have.

First, how confident are the Government that the regulators are striking the appropriate balance between their statutory objectives for consumer protection, market integrity and financial stability, while also enabling the growth and innovation in our financial services sector that I think we both want? Given previous concerns that our regulatory system can at times err on the side of excessive caution, are the Government satisfied that the framework will not result in valuable crypto-related activity being driven offshore?

Secondly, how big is the risk of fraud, and what is being done to combat it? The noble Baroness, Lady Kramer, rightly talked about the danger of scams. Although she was less concerned about individual consumers, whom she sounded as though she felt were reasonably well protected, she made a very important point about scams hitting SMEs.

Thirdly, turning specifically to stablecoins, how significant do the Government believe sterling-denominated stablecoin activity could become in the United Kingdom? Does the Minister have concerns about potential disintermediation from the regulated banking sector and any consequent implications for banks’ capacity to lend to the real economy? If so, how do the Government intend to balance the imperative of supporting economic growth with the opportunity to foster innovation?

Finally, what steps are being taken to improve public understanding in this area? There is evidence that some young people are engaging with cryptocurrencies in a highly speculative manner, while others are deterred entirely by a lack of accessible information. Does the Minister share my concern that the continued absence of meaningful financial education within our various education curricula leaves many citizens ill equipped to make informed decisions in what is now an increasingly complex financial landscape?

We are united in our desire for the UK to do well in this field. It seems that the technical flaw, of which my noble friend Lord Holmes of Richmond also spoke, can be corrected, although I assume that this would have to be done by an amending SI rather than the withdrawal of the SI under discussion. In any event, I look forward to the Minister’s response to this and to the other questions that I have set out. This is an important area, and it is right that we take the time to scrutinise the intentions and effects.

[Lord Wilson of Sedgefield (Lab)]

My Lords, I thank noble Lords for their contributions. This has been an interesting debate. There are a lot of questions on this and I will do my best to answer them—I have been making notes. I may not get to respond to them all but, if I do not, as before, I will scour through Hansard and respond accordingly.

I welcome what the noble Lord, Lord Holmes, said about this going in the right direction, although there might be one or two problems—a wrinkle—that the department will probably look at and try to iron out, if they exist. We welcome the feedback. This SI enables the FCA, we believe, to respond nimbly to emerging demands. This is an area of continuing development. We will keep the regime under review, but we are not proposing to alter the instrument at this stage of the legislative programme.

Stablecoin and bitcoin are treated the same. It is right to note the difference between stablecoin and other more volatile crypto assets and to recognise the potential for stablecoin to play a significant role in payments. While stablecoin and other crypto assets are different in some ways, they share many characteristics and, therefore, risks. Regulating stablecoin in line with other crypto assets is, in many circumstances, the right approach. For example, firms dealing in or safeguarding stablecoin should be subject to similar rules as those for firms dealing in or safeguarding other crypto assets.

--- Later in debate ---

[Lord Wilson of Sedgefield (Lab)]

That is a very important question about monetary sovereignty. While most stablecoins today are US-denominated—I think about 99%—and issued overseas, this instrument lays the groundwork for a thriving ecosystem, including UK- issued pound-denominated stablecoins. The Government are considering the regulators’ proposals on stablecoin-backed assets that include UK government debt. The Treasury will assess the fiscal implications and benefits of stablecoins in this context, and I think the Treasury is well aware of the noble Baroness’s concerns. It is something that we take very seriously, and we will probably hear more about that as time goes on.

The Government are committed to ensuring that the UK remains an open and connected financial centre, as we need to be in a globalised economy, and to upholding its commitment to international regulatory standards. We are working with the transatlantic taskforce on all these issues to enhance US-UK collaboration. We are aware of the issues that the noble Lord raised on capital markets, and the taskforce will explore options for short to medium-term collaboration on digital assets, additional opportunities for wholesale digital markets innovation and ways to improve links between our capital markets to enhance the growth and competitiveness of both UK and US markets.

On the specific quote used by the noble Baroness, Lady Kramer—

“same risk, same regulatory outcome”—

we think that this instrument allows the FCA, as the regulator, to set appropriate and detailed rules addressing market risks. We therefore do not believe that we have the same regulations as always for the risks.

Noble Lords asked whether there is a problem with the anti-money laundering requirements and whether this instrument goes far enough to look after consumers. To be clear, the Government are not weakening the anti-money laundering requirements; for example, they will continue to apply to crypto asset firms exactly as they do today. This legislation goes further by introducing a robust financial service regulatory regime that will require all firms offering crypto asset services, either in the UK or for UK consumers, to be authorised and regulated by the FCA and to comply with comprehensive conduct and prudential rules.

It is fair to say, I think, that this SI goes a long way to help to protect consumers. The creation of a register of authorised crypto asset firms will make it easier for consumers to identify legitimate firms. The requirement for those firms to comply with the comprehensive conduct regime will reduce the risk of poorly run firms and bad practice resulting in consumer harm. By defining and prohibiting market abuse—as well as placing an obligation on firms to put systems in place to prevent, detect and disrupt such abuse—this instrument will improve the integrity of crypto asset markets and lead to better consumer protection.

Also, the regime will leave the UK well-placed. There was a question about what Europe is doing as well. We continue to co-operate internationally with our partners, including the EU; we also continue to watch the development of the digital euro with great interest.

Both noble Baronesses asked about parliamentary scrutiny, in essence. We believe that this instrument sets out a clear regulatory framework that will ensure that the Government’s aims and objectives for the sector are reflected in the regulations’ final rules. Giving the FCA flexibility on the detail of the regime will allow it to respond nimbly to developments in this fast-evolving sector; that said, Parliament will be able to hold the regulator and government to account on an ongoing basis using the regime, once it is live, through normal means such as requiring attendance at Select Committees. Also, should it become apparent that the regime is not working as intended, the Government will have the option to return to Parliament and amend the framework under which the FCA operates.

Someone asked what the impact on small businesses will be. The impact assessment published alongside the instrument sets out the impact that the Government expect the regime to have on all businesses, including small businesses. The FCA has existing duties to consider the most appropriate way of implementing this regime.

I hope to get through all noble Lords’ questions. As far as our people know, in terms of what is regulated, firms authorised for the new crypto asset activities will appear on the FCA register in the same way as firms authorised for traditional financial services activities.

As far as payments are concerned, I think stablecoin was mentioned. Government work is under way in order to take forward broader work to modernise assimilated law on payments, including to ensure that the UK’s payments regime is fit for tokenised payments such as stablecoin. That work is ongoing.

We all know about the opportunities for cryptocurrency. We cannot disinvent it. We have to make sure that it works for the British economy and the British people; and that people are protected. This SI lays down a framework so that consumers can be protected.

I turn to the two final questions. The Government are committed to making the UK a world-leading destination for digital assets. Our regulatory regime has been developed through extensive engagement with industry and international partners, ensuring it is both internationally competitive and aligned with global standards. This legislation will support UK growth by giving crypto asset firms the regulatory certainty needed to invest here and drive innovation in our financial services sector. So, in answer to the question of the noble Baroness, Lady Neville-Rolfe, we do not think that this is too restrictive.

Finally, on financial education, which we are all keen to see in our schools and broader society, the Government want people to have the confidence and skills they need to manage their money. The Money and Pensions Service, an arm’s-length body of government, provides free, impartial guidance to consumers at every stage of their financial lives. More widely, the Government are taking steps to improve financial education. In November, we set out our plans for all school children in England to receive financial education. This reflects the Government’s wider commitment to financial literacy and building a population better able to make informed decisions about financial products.

I hope I have hit all the questions. If I have not done so, we will go through Hansard and get back to noble Lords about what perhaps we have missed out.

[Baroness Neville-Rolfe (Con)]

The Minister’s reply was extremely helpful. One thing I am a little uncertain about relates to the Treasury, or the crypto assets unit, looking at the possible wrinkle or flaw that my noble friend Lord Holmes mentioned. If that led to a change in the SI, my understanding is that it would not come back here. That is because, in answer to the question of the noble Baroness, Lady Kramer, the Minister explained that this is a ground-breaking SI and after that, because it is important to be flexible, the FCA would make any changes. Assuming that is right, this is a plea from us for an update as to the progress of those discussions when they have taken place. My understanding from our shadow Minister in the other place was that discussions were ongoing on this matter, which he was extremely grateful for. It would be useful for us to know the final outcome of those. If a small change has to be made to the regulations, I am sure we will be supportive.

I am delighted to hear about financial education. I look forward perhaps to giving the Minister a cup of tea and learning a bit more about that on a future occasion because it goes beyond the framework of today’s discussion. On SMEs, it is not only that we want the Government to think about them, which they are obviously doing, but to make sure that the scam issue with SMEs is part of either the Government’s or the FCA’s thinking. It is an important matter for struggling small businesses in the country. We do not want that issue to go further. I am happy to agree to the passing of this statutory instrument and thank the Minister and the Treasury for all the work that they have done in this area.

[Lord Holmes of Richmond (Con)]

My Lords, I likewise thank the Minister and the team for the thoroughness of the answers. To underline the point raised by my noble friend Lady Neville-Rolfe, can the Minister say today clearly whether there are ongoing negotiations, which is our understanding, around this specific point or whether this SI will through unamended and that is the Government’s position? Secondly, do the Minister and the Government accept the issue of double regulation, which would be a consequence of these regulations, and the broader point around that? That is because of the roles that particularly the Bank of England and the FCA are playing in this process, with firms potentially finding themselves subject to double regulation at different stages of their development.

The UK’s Demographic Future

Baroness Neville-Rolfe Excerpts

Thursday 11th December 2025 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is a great pleasure to take part in this important debate and to follow the noble Lord, Lord Faulks. It is, however, an occasion tinged with sadness, because it marks the retirement of one of our most talented, fair, honest and hard-working colleagues, my noble friend Lord Hodgson of Astley Abbotts. I endorse everything that has been said today about his character and his generosity. He was one of a small band that kept forensic, intelligent and constructive opposition going through the, for us, bleak years of the Blair Government, and his experience of that will be a great loss.

Since I joined the House in 2013, the noble Lord has been a great support and a fount of knowledge for me as I battled with business legislation, including the tricky reforms on pubs as a Minister in the coalition Government. He also made a superb contribution as chair of the Secondary Legislation Scrutiny Committee, as my noble friend Lord Blencathra has already said. That is a body that makes our scrutiny more effective and is incredibly important.

When we sat on the Back Benches together through the Brexit years, we tried to improve the Immigration and Social Security Co-ordination (EU Withdrawal) Bill in 2020, wresting back some parliamentary control with a cap on arrivals, or the advertising of vacancies in the UK before they were offered to newcomers, or higher salary thresholds. All these ideas were rejected at that time—wrongly, as is now clear. My noble friend Lord Hodgson’s underlying rationale then was the likely surge in immigration and the impact of that on demand for housing and the consequences for water and nature. On 30 September 2020, he criticised the Home Office for an attitude which essentially said, “Don’t worry; it will be all right on the night”. His measured warnings on demography and his call even then for an office for demographic change were well grounded and admirably unemotional. I am only sorry that he had to be a Cassandra in this respect.

I hope nobody will deny the proposition that demography is a very important subject. It is especially important when populations are changing rapidly, as we have seen in recent years. Indeed, demography, in the form of one of its components—namely, immigration—has for many years been at the top, or near the top, of the subjects that voters deem to be the most important political issues of the day. So UK citizens were fully seized of its importance. They judge correctly. After all, immigration policy—an aspect of demography—was plausibly a principal cause of Brexit and of the rise of Reform, which now leads in the polls, as we have heard. “Take back control” was largely a political response to what was then regarded as large waves of immigration for which nobody had voted or, indeed, been asked to vote.

Unfortunately, Governments, political parties and legislatures have not shown the same clear-headedness as our voters. Indeed, they frequently acted like the proverbial ostrich, determined to see nothing and to direct attention elsewhere. This went on for many years before the very recent reluctant tacit acceptance by all parties, including the party currently in government, that the subject deserved more attention and more action.

I am afraid that, in this process, we in this House have not covered ourselves in glory. When presented by my noble friend Lord Hodgson with the opportunity to consider what was known to be of major importance to many voters, we have instead been content to pretend that much lesser issues deserved more attention. We did not support his proposal for a new office, and we repeatedly turned down his request for a special committee of inquiry on this subject. So, to our shame, we join the ostriches in that.

Today we have the opportunity to set this right by properly and fairly examining the noble Lord’s report, and we should do so. In reading it, I was immediately struck by the stark simplicity of his statistics and the quality of the different contributors. The population grew from 55.9 million in 1971 to 67.6 million in 2022, and of course that has accelerated. The fertility rate, however, has fallen rapidly, from 2.44 in 1970, as the report shows. The most recent figures from the ONS are 1.41 per woman in 2024 in England and Wales—the lowest on record—and 1.25 per woman in Scotland. Unfortunately, as Professor Sefton points out, pro-natal policies do not seem very effective. The most pragmatic response is to reinforce the trend of older workers retiring later. So we need to make that easier and improve the incentives for employers, who tend to discriminate against older workers, as I found when I conducted the review of the state pension age in 2022.

Another worrying statistic, highlighted by Professor Sarah Harper, is that the UK population over 65 is predicted to reach some 25% by the middle of the century, with 2% over 85. That is some 1.5 million people, and it is likely to double within two decades. This means smaller numbers of productive people paying for the non-productive in a country where productivity has already been flatlining since the financial crisis during the last Labour Government.

We know from the work of the OBR how disastrous the increase in the proportion of the elderly will be for the nation’s finances—one reason why I proposed a GDP-related growth cap on pension expenditure in my review. As the report says, we can also learn from Japan, which has a more open attitude to employing older workers. This could have a dramatic effect on the dependency ratio, the UK’s future finances and, indeed, the nation’s health. As those of us who are lucky enough to work in this House know, working has a generally positive effect on health.

Some little-known and puzzling statistics on page 21 of my noble friend’s report are those on national insurance numbers in 2024. It is difficult to see how the 940,000 national insurance numbers—60% for Asian nationals—can be reconciled with the much lower number of work visas that have been issued. My noble friend Lord Hodgson and I quizzed Home Office Ministers on the defects of immigration statistics during the passage of past legislation, but they appeared to have a surprising degree of faith in their statistics and a resistance to looking forward at the future implications. It took several precious years for the establishment to accept that reality. Other important statistics have been mentioned. For example, England has a population of 438 people per square mile and will have a larger population than Germany on current trends. This is highlighted by Professor Michael Clarke in a very interesting contribution on national security, which the noble Baroness, Lady Stuart of Edgbaston, rightly mentioned.

This all leads to the report’s conclusion that there is a problem finding properly based and appropriately focused data to tell us what is going on. It means that there is a strong case for a new body following the precedent of the independent Dutch state commission on demography 2050, as advocated for so eloquently and frequently by my noble friend.

We have a problem, as the report makes clear, in the widely differing levels of acceptability of discussing big strategic decisions. Climate change and net zero have been the subject of extensive debate and have their own well-resourced Climate Change Committee, yet adding 6 million to 10 million more people to our population will not only hasten climate change but will have a major effect on our country, our children and our grandchildren—and, of course, our schools, hospitals, housing and infrastructure.

We also need to get under the skin of net migration. As we discussed in the Budget debate last week, we are now losing many entrepreneurs and more of the young and ambitious because of the weight of taxation and the growing burdens on business ushered in by this Government. Net migration has reduced significantly from its record levels, but in the year to June 2025, we were still seeing 898,000 new arrivals, many of them hard to accommodate here and creating a drain on public expenditure and pressure on benefits. We need to understand this and the social and regional ramifications much better.

In closing, I thank the Leader of the Opposition and his Chief Whip for finding time at last for this important debate and invite the Government to establish a new demography or population authority. Given the expertise in this House and its convening power, we should also tackle the issues in one of our committees. Such changes would be an appropriate legacy of my noble friend Lord Hodgson’s 50-year contribution to Parliament, to public life and to evidence-based debate.

Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025

Baroness Neville-Rolfe Excerpts

Monday 8th December 2025 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I, too, rise to speak to the two statutory instruments: the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025, and the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025.

I am content with the second of these instruments, but I have some broader questions which it may be helpful to address first. My first question is a repeat of one posed in the summer. How is the Treasury getting on with the post-Brexit regulatory changes for which it is responsible? The answer in the summer was that 51% of assimilated law from the retained EU law and assimilated law dashboard had been dealt with. It seems extraordinary not to have completed this task more than nine years after the vote on Brexit. A second question is, now that we are no longer bound to match the EU, have we taken advantage of the obvious opportunities? I highlight helping smaller financial service providers and banks, addressing the perennial problem of finance for SMEs, and encouraging innovation. I look forward to hearing from the Minister on this, and on the progress of the Government’s financial services growth and competitiveness strategy, including the welcome announcement on 4 December on plans to lower barriers to authorisation for new firms.

That brings me to how our onshored EU law is being replaced by regulator rules, and how Parliament can maintain proper oversight of it. Can the Minister tell us how the Treasury and the regulators are co-ordinating the mapping exercise from the EU’s capital requirements regulation provisions into our PRA rulebook? In particular, how are the Government assuring themselves, and by extension this House, that the cumulative effect of these changes will preserve and enhance the safety and soundness of firms—a concern of the noble Baroness, Lady Kramer—and the competitiveness of the UK as a financial sector, which, given its sheer scale, is critical to the future of our country? The noble Baroness explained the importance of continued parliamentary involvement, rather than leaving everything to the regulators and their rule books. Does our Financial Services Regulation Committee, with its distinguished membership, perhaps have a role to play?

As we move further into the FSMA 2023 framework, what is the Government’s plan for post-implementation review? I know from my business experience that for success, implementation far outweighs strategy. Will the Treasury undertake a structured evaluation of whether the shift from detailed retained law to rules made by the regulator is delivering the outcomes envisaged by Parliament: high standards of prudential regulation, clear and accessible rules for firms, and a regime that supports innovation and growth? The noble Lord, Lord Jones, said he wanted to see a smarter regulatory framework, and I will be interested in the Minister’s reply. These are, I hope, constructive and broadly supportive questions.

I turn to the instrument on ESG ratings. As the Minister has said, this market has grown rapidly in recent years without formal regulatory oversight. That has inevitably led to concerns being raised around transparency, governance arrangements, internal controls and potential conflicts of interest for ESG rating providers. Both the International Organization of Securities Commissions and the OECD have recommended that national authorities bring greater scrutiny to bear on this part of the market, and I suppose that the UK was bound to fall into line. I understand the need to ensure that ratings are given in a proper way for market integrity, although I regret that the market has not sorted itself out voluntarily—though that may be difficult, given that so many territories are involved.

I am not convinced about the evidence base for intervention, in terms of harms caused by incorrect ESG ratings. I also question why the Government have defaulted to bringing organisations into the FCA’s sphere using the Financial Services and Markets Act 2000 rather than the simpler and less costly designated activities route, which the 2023 Act created. Why have the Government not started with making ESG ratings a designated activity to see whether that could cope with the issues satisfactorily? The Explanatory Memorandum simply asserts that full regulatory oversight is necessary. This is against a background of an

“entrenched culture of risk aversion”

and regulatory complexity, in the words of the House of Lords Financial Services Regulation Committee. I believe that the FCA route on ESG risks adding such needless complexity. I am sure that the Minister will want to answer this point. The Prime Minister has focused as recently as last week on the importance of growth and lighter regulation, which, as the Minister knows, I welcome. Is there a left hand/right hand issue underlying today’s apparently technical discussion? Is this use of the 2000 Act rather than the 2023 Act the direction of travel for the future? Will that deliver the simpler, smarter regulation that many of us crave?

For similar reasons, I am cautious about the state telling the market whether such ratings ought to be used at all. Companies and investors must remain at liberty to make a business decision on whether ESG ratings add value to their processes. In my view, it is not the role of government or regulators to favour particular investment philosophies or to promote one set of metrics over another. Against that background, can the Minister confirm that it is not the Government’s intention that the FCA, through its supervisory expectations or guidance, should in practice encourage or pressure firms into using ESG ratings or into favouring particular ESG ratings providers or methodologies? In other words, can the Minister assure the Committee that the regime is about the integrity of the ratings, where they are used, rather than about mandating or promoting their use?

In the same vein, can the Minister say what safeguards will be in place to ensure that ESG ratings are not indirectly hard-wired into other parts of the regulatory framework—for example, into prudential rules, disclosure regimes or stewardship expectations—in a way that would amount to de facto regulatory endorsement of specific ESG approaches without further and explicit parliamentary scrutiny? The Minister mentioned that this ESG instrument has been supported by business. Which businesses? Did they include SMEs and their representatives?

I end with a thank you. It is helpful that the Government regularly come to the House and explain the purpose of the panoply of financial regulations that are being made. This is a major constitutional and regulatory transition—hence it is right that we have the chance to examine carefully each step in the process, its progress and its broader impact. The sunlight of transparency makes for better government and better regulators.

[Lord Wilson of Sedgefield (Lab)]

My Lords, I thank noble Lords and noble Baronesses for the one or two questions that I have been asked. I will do my best to get through them all; I very much doubt that I will, as they came thick and fast, but, obviously, we will scour Hansard and respond by letter to anything to which I do not respond.

First, I thank my noble friend Lord Jones for his questions about the PRA. There were some questions about its consistency and how it works institutionally; I can write to him about that. The PRA produces an annual report in which all the costs and everything else that my noble friend asked about are laid out, but, if the answer is not in there, I am sure that we can come back with an answer to his question. I am pleased that he welcomes the statutory instruments that we have here.

The noble Baroness, Lady Kramer, asked a lot of precise questions, which I will try to answer. The main thing I took away from what she said was partly to do with parliamentary oversight: whether we have forgotten what happened in 2008 and why we are essentially allowing the regulators to take over on prudential regulation. Basically, we are revoking the capital requirements regulations, allowing the PRA and FCA to set rules relating to the prudential regulation of banks. Parts of the CRA were revoked in July 2025 and this will come into force on 1 January next year. This SI makes consequential amendments relating to the parts of the CRA revoked in July. This is necessary to ensure that the statute book functions properly, and there is nothing in this SI that is additional to what was there before. Obviously, the Leeds reforms and the Basel 3.1 reforms will ensure that these transitional measures will work into the future.

I turn to the questions from the noble Baroness, Lady Neville-Rolfe. On adjusting to being outside the EU, it has been nine years since the referendum; we have been in power for just over one of those years, so the question is what happened in the previous eight years to get us to the position where the noble Baroness thinks we should be.

There were also questions about cutting regulation on firms by 25%. This Government are committed to cutting administration. The Financial Services Growth and Competitiveness Strategy set out the Government’s plans to stabilise the streamlined regulatory framework for sustainable finance, prioritising policies that will have the greatest impact. This SI is one of those priorities. It improves clarity around the ESG rating methodology, giving investors greater confidence in their decisions. It will also promote more accurate understanding of how companies are evaluated. That is why the sector itself has been strongly supportive of the proposed regulations: 95% of those consulted supported them. In the Mansion House speech in November 2024, the Government published the consultation response and draft legislation, and we are now following on from that. Some 5,400 UK financial services firms now use ESG ratings.

As far as the international context is concerned, the EU will regulate ESG rating providers from July 2026. I believe that two or three other countries—Japan, Hong Kong and Singapore—have a code of conduct on this, and I think India is taking a similar approach.

Both noble Baronesses raised the Government’s delegation to the FCA of rules about transparency. What we have done is in line with the UK’s general approach to financial services regulation. This is founded on the Financial Services and Markets Act 2000, under which Parliament sets the overall policy framework, with the detailed regulatory requirements set by the expert independent regulators. The regulators are required to conduct an open and transparent consultation process, which includes undertaking a rigorous cost-benefit analysis before introducing new rules. The regulators are also required to keep their rules under review and to provide clarity and transparency to stakeholders now and when the rules are reviewed. They must also stay within the parameters of the statutory requirements.

As far as parliamentary scrutiny is concerned, the FCA is an independent body. It is a non-governmental public body and its independence as a statutory regulator is vital to its role. However, it is fully accountable to the Government and Parliament as to how it exercises its functions. This accountability is critical in ensuring that the FCA is advancing the objectives that are given to it by Parliament. Senior representatives of the FCA regularly give evidence to parliamentary committees. The Financial Services and Markets Act 2023 introduced secondary growth and competitiveness objectives for the FCA. This creates a clear legislative framework for the regulator to follow.

--- Later in debate ---

There are probably a lot of questions that I have not got around to. I will write to the noble Baronesses with answers.

[Baroness Neville-Rolfe (Con)]

I thank the Minister so much for saying that he will look at the details—we asked a lot of detailed questions—and follow up, as he has done on previous occasions. That is extremely helpful and much appreciated.

I want to come back on a couple of points which might be the subject of correspondence. First, on the pace of change, this 51% and how we are getting on, I appreciate that we were in power for a lot of the time. However, there is a common wish that the regulatory regime should be up to date. We did a lot of work and some of that the Government have, fortunately, moved forward with. How are we getting on?

Secondly, I focused on small business because smart regulation is so important to small business. The Minister did not talk much about that. Could he follow up a little more on the good things that I think are planned? On ESG, he mentioned the number of firms. Does that mean that there is a de minimis rule with ESG? If so, I would be interested to know whether small companies are not covered by this regulation—or will they get a lot of extra burdens as a result of rules that are not that relevant?

The Minister did not really answer on why we are using the 2000 Act rather than the 2023 Act. The Treasury has done it this way for this instrument, and I understand that. I am interested to understand why it is being done that way and whether there would be a quicker, smarter approach using the powers in the 2023 Act as well. But with that, I thank the Minister for his full and helpful reply.

[Lord Wilson of Sedgefield (Lab)]

In response to that, we are using the legislation that we are using essentially because it is the appropriate piece of legislation that we need for what we are introducing today, but I will obviously give her a fuller answer on why that is. As far as small businesses are concerned, 5,400 UK financial service firms used the ESG ratings in 2024. The FCA analysis said circa 80 providers are active in the UK ESG ratings market, with potential growth of up to 150 providers. Globally, the top five providers represent 75% of the market. That is the make-up of the industry. As to whether the small companies were consulted, we can get that information to her.

[Baroness Neville-Rolfe (Con)]

I am interested in the impact of the regulations on the financial services people less than on the ESG companies themselves. The ESG companies are providing services. Some of them will be small firms; that is fine. In terms of growth and innovation—the sort of objectives that are rightly set out in the strategy—is that holding back London in an inappropriate way?

[Lord Wilson of Sedgefield (Lab)]

I do not think that it is holding back London and the City of London in any way whatsoever. What is important is that we have the right regulation on this. The consultation that we took part in was not just among the regulators; it was with trade bodies et cetera. It was a wide consultation. I am sure that I can get a more detailed response on the consultation to the noble Baroness.

Barnett Formula: Wales

Baroness Neville-Rolfe Excerpts

Wednesday 12th November 2025 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

I thank my noble friend for that question. I repeat that this is the largest spending review settlement received by the Northern Ireland Executive in real terms since devolution started in 1998. The Northern Ireland Executive are receiving at least 24% more per person than equivalent UK government spending in the rest of the UK, an average of £19.3 billion per year between 2026-27 and 2028-29.

[Baroness Neville-Rolfe (Con)]

My Lords, does the Minister agree that the immediate issue in Wales is not the mechanism by which funds are now allocated but how effectively those funds are spent in Wales? The Welsh Government’s record of waste, inefficiency and misplaced priorities has deprived the Welsh people of value for money and of a really strong NHS, despite the record levels of funding that the Minister has pointed out.

[Lord Wilson of Sedgefield (Lab)]

I would dispute what the noble Baroness has just said—I do not recognise that picture of what is going on in Wales. Obviously, the increase in the amount of funding that will go to Wales through the Barnett formula is welcome. As I pointed out, there is more direct funding to Wales as well, such as the £80 million for port investment to support floating offshore wind developments in Port Talbot, and £160 million each over 10 years for investment zones in Cardiff city region and Wrexham and Flintshire. There is a lot going on in Wales, there is a lot to be proud of, and there is a lot for the Welsh Government to boast about.

Public/Private Partnerships: Shares

Baroness Neville-Rolfe Excerpts

Monday 3rd November 2025 Lords Chamber

[Lord Wilson of Sedgefield (Lab)]

I thank my noble Lord for that question. I think I will leave off there; obviously, we have the Budget in three and a half weeks’ time and other announcements will be made then. We want to make this a success for the public, and that is why from next April we are going to open up stocks and shares ISAs to long-term asset funds so that everybody can benefit.

[Baroness Neville-Rolfe (Con)]

My Lords, there is a shortage of capital for public projects, so permitting the public to provide some more of that capital is very sensible. The recently opened Thames Tideway tunnel is a very good example of a public/private partnership: it was on time and on budget with a good independent board. However, the shareholders were companies such as Dalmore Capital UK and foreign investors, and not individuals. Will the Government work up ideas drawing on this and on overseas success to allow us to attract more public finance from a larger number of corporate and individual UK shareholders? Might that include the type of populist share sales beloved of Baroness Margaret Thatcher?

[Lord Wilson of Sedgefield (Lab)]

I was agreeing with some of that until it got to the very end. I thank the noble Baroness for her question. Obviously, we need to look at this closely. We want to open up public/private partnerships, where they are to happen, to investment from consumers and shareholders, but we need to wait until the Budget to find out exactly what is going to be done.

Financial Services and Markets Act 2023 (Mutual Recognition Agreement) (Switzerland) Regulations 2025

Baroness Neville-Rolfe Excerpts

Tuesday 21st October 2025 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for introducing this statutory instrument, which, as he said, implements the UK’s commitment to the agreement between the UK and the Swiss Confederation on mutual recognition in financial services.

I note that the explanation of the SI says that it will, as the Minister said, allow the Financial Conduct Authority and the Prudential Regulation Authority to essentially oversee and ensure that nothing is going wrong and have oversight of Swiss operations here. That is perhaps not as reassuring as one might hope. I note a report in the Times yesterday that the Financial Conduct Authority had privately shared concerns about the 79th Group with the City of London Police eight months before the group collapsed, owing thousands of people more than £200 million. It is, to quote the Times,

“suspected of being one of the largest Ponzi schemes in British history”.

I note for the record that the company denies any wrongdoing. None the less, the Financial Conduct Authority appears to have had concerns but did not share those with consumers, who are clearly now very much paying the price.

It is worth reflecting that it is a little bit surprising that, as the Minister said, this reflects an agreement that was struck in December 2023 by the previous Government. They said that this was a

“ground-breaking pact on financial services cooperation”

and that it would enable

“frictionless, cross-border provision of financial services between the UK and Switzerland”.

It is interesting that a Government who have been elected on a promise of change now appear to be delivering exactly the agenda with the same kind of terminology as that of the previous Government who they replaced.

It is important to put on the record and focus on the reality of Swiss banking, which is deeply corrupt and non-transparent. If we take, for example, the Tax Justice Network’s financial secrecy index, Switzerland ranks second, and that is not a good result—it is second worst. The UK ranks at number 20, which is relatively good comparatively. Yet we now appear to be seamlessly linking up these two systems, linking our system into a more secret system, with considerable risks. Switzerland also ranks fifth on the Tax Justice Network’s corporate tax haven index, so it is complicit in multinational companies’ tax abuse in particular. The Tax Justice Network estimates the cost to other countries of the Swiss operations to be $21 billion a year.

Perhaps this is a specific question to the Minister. As regards the worldwide rise of automatic exchange of information notes in the past decade or so, in which Governments are supposed to exchange relevant financial information with their peers to help them enforce criminal and tax laws, Switzerland has carved out exceptions to these so-called AEOI notes. So, Article 47 of the Federal Act on Banks and Article 127 of the direct federal tax Act, which still provide for secrecy, have not changed. That is going to be accessing our system and under Swiss law we will not be able to see what is happening. There has been talk of using trusts to replace some of the secrecy instead, but of course trusts are one of the issues that are a major problem.

I note in particular the work of Maria-Gabriella Sarmiento—I do not know whether the Minister has seen this, but I certainly encourage him to look at it—who completed a PhD at the University of Zaragoza about the estimated losses of between $20 and $40 billion for corruption practices, of which Switzerland is a significant destination for that money. Over 20 years,

“assets from at least 33 jurisdictions have been traced to Swiss banks … primarily proceeds of grand corruption, money laundering and other crimes”,

with their estimated values ranging between $112 billion and $514 billion.

The reality is, of course, that the UK and Switzerland are quite similar: they have expansive banking sectors, sophisticated wealth management services and market high-value assets. They are prime destinations for the corrupt to stash their money. To take one practical example from Transparency International, Carlos de São Vicente, a former CEO of a partially state-owned insurance company in Angola, embezzled more than $1.2 billion through Bermuda-registered companies; he then transferred substantial sums to Switzerland. That is one case where someone has been found out, but it is a sample of what a great many people we know are doing without being found out and without me being able to name the details.

I note also that, in 2023, Swiss regulators inspected their institutions and found that 50% had largely unsatisfactory anti-money laundering systems. I do not know whether the Minister can tell me whether there have been significant improvements in that area of money laundering since then.

It is very sad that this important statutory instrument is getting so little attention and focus and that it is happening in this Room, because it is crucial. We have to situate this in the context of the grave concerns—it is not just me who is expressing them—about the state of financial stability in our current system, for all kinds of reasons that I will not go into here. This is about linking up two systems that have great problems with corruption and a lack of transparency—two of the biggest systems in the world—and I cite a former Conservative Minister saying that 40% of the world’s dirty money goes through the City of London and the British Crown dependencies. I do not have a comparable figure for Switzerland, but I have no doubt that it is significant. We are linking up these two sets of money flows, which has to be a concern.

[Baroness Neville-Rolfe (Con)]

My Lords, this statutory instrument gives legal effect to the mutual recognition agreement between the UK and Switzerland known as the Bern financial services agreement. As the Minister has so clearly outlined, the agreement enables the UK and Swiss financial firms to provide services to each other’s markets, particularly in wholesale sectors, such as investment services, insurance and banking, without needing to establish a local presence or duplicate regulatory approvals.

The UK’s position as a global financial centre depends on maintaining strong transparent relationships with trusted international partners. We therefore welcome this agreement with Switzerland, developed on our watch. Mutual recognition, when accompanied by effective supervision and regulatory co-operation, can deliver meaningful benefits to both markets. Under this agreement, Swiss firms will be able to operate in the UK under the supervision of Swiss regulators, with the FCA and PRA granted powers to step in if issues arise—as the Minister explained. The same applies to UK firms offering services in Switzerland.

With that in mind, I would be grateful if the Minister could address the following points. First, I would like to probe the Swiss end. Has Switzerland yet put in place what is needed there to allow UK firms to benefit from mutual recognition? If not, when will this be done? What are the nature and scale of benefits to the UK financial institutions? That seems an important point.

Secondly, turning to our end, how confident are the Government that UK regulators have the necessary tools to monitor Swiss firms’ activities and act swiftly if concerns emerge? What protections are in place for UK clients—not only high net-worth individuals but small firms—should something go wrong?

Thirdly, on timing, why has it taken nearly two years from signing the agreement in December 2023 to putting this framework in place? Has there been a problem with the regulators not being ready or is the Treasury not working at pace?

I was grateful for the reply of the noble Lord, Lord Livermore, to my Question on 16 September, reporting that, by July this year, 51% of assimilated EU law—most of it in financial services—had been repealed, amended or replaced. This was a much lower figure than I had hoped for, given the importance of financial services to growth. I am not sure whether the Swiss regulations—the one set that we are debating and the negative set that is not being debated—will be included in the count in that definition, but the point about pace generally is important. The Official Opposition have been supportive of the transformation process, and there is no excuse for delay.

No doubt the Minister will respond on some of the reservations of the noble Baroness, Lady Bennett, and perhaps explain how things have improved in Switzerland over time. But I note that there will be information sharing as part of the deal, which is important. However, how will Parliament be kept informed of the operation of this agreement, particularly in the event of regulatory diversion or dispute, or a bad case of the kind that was asked about?

In conclusion, we support efforts to deepen co-operation with trusted international partners in financial services, but it is vital that it is done without compromising consumer protection or financial stability, and that it delivers the trading benefits that we all hope to see. I look forward to the Minister’s response, ideally today but otherwise in writing.

[Lord Wilson of Sedgefield (Lab)]

I thank both noble Baronesses for their comments on this SI, which were gratefully received. This is an important SI because it is all about growth and building a relationship with a trusted trader in Switzerland that we can build on into the future.

On security and trust, the UK and Switzerland have a strong and established relationship in financial services, and last year we increased the number of transactions et cetera by 27%, and the amount by £4.9 billion. I cannot give a figure for how that is going to extrapolate into the future, but we are doing this to make it easier to have growth. Those figures will hopefully improve—they will improve, in my view—over the coming years.

In response to the noble Baroness, Lady Bennett, the agreement includes, for us, robust safeguards. Swiss firms must be authorised and supervised by FINMA, and the UK regulators retain powers to intervene if risks arise, including restricting activities and managing wind-downs, which both noble Baronesses raised. The FCA and the PRA act swiftly in urgent cases and collaborate closely with Swiss authorities. These measures ensure that, for UK consumers, market integrity and financial stability remain protected, while enabling the benefits of cross-border market access.

How they will be held to account was another issue raised by both noble Baronesses. Regulators will be held to account through clear statutory duties set out in regulations requiring transparency in their actions and co-operation with His Majesty’s Treasury. Their decisions, such as interventions against Swiss firms, are subject to oversight and include the right of affected firms to refer matters to an independent tribunal. The FCA public register will provide visibility of Swiss firms’ activity, supporting scrutiny by clients and stakeholders. Regular engagement with industry and reporting to the joint committee further ensures regulators’ accountability in implementing and managing the agreement. On the anti-money laundering aspect that was raised, Swiss firms will still need to comply with the UK anti-money laundering regime that we have in place.

On timing, it has taken two years—longer than that, actually, because the negotiations have been going on for a few years. Ultimately, we want to get this right. It is not just us but Switzerland that wants to get this right. There are two different kinds of regimes that have to agree this. After it was agreed by the Swiss Parliament, they had to allow 100 days for a potential referendum to be held. It was not held—it was not called for, so it did not take place—but that is 100 days of that two year period that the noble Baroness mentioned. International agreements often take time. We have to get it right.

--- Later in debate ---

[Lord Wilson of Sedgefield (Lab)]

Obviously, I will write with further detail but, as I said, the regulators will be held to account for what they do. This requires transparency—that is one of our stipulations—but I can write to the noble Baroness with further detail about that.

[Baroness Neville-Rolfe (Con)]

I am grateful to the Minister for explaining the scale of the opportunity to date and, therefore, our ambition for more; this is very good news. I am not sure that it has been quite quick enough for me—from May 2024 to today seems like quite a long time—but, of course, the Government are new and have been very busy with many things, so it is understandable.

Perhaps I could just come back to the point about parliamentary scrutiny. The Minister mentioned a Joint Committee; I am not sure which Joint Committee that was. Clearly, it is important that parliamentarians should be able to see the progress of important financial agreements such as this. I am not quite sure what the mechanism is. Is there an annual report from the FCA that covers this? That would be the FCA and the PRA. I am interested in how parliamentarians will be able to scrutinise this. What will be the best approach?

Amazon Web Services

Baroness Neville-Rolfe Excerpts

Tuesday 21st October 2025 Lords Chamber

[Lord Leong (Lab)]

I thank my noble friend for that point. The Government are obviously aware that we need to give guidance to businesses as well as to people working within government. The NCSC has published a lot of guidance and toolkits, and I encourage my noble friend to look at its website and at all the various guidance and toolkits available to individuals, schools, businesses and other stakeholders.

[Baroness Neville-Rolfe (Con)]

I think the Minister can hear that everybody is rather concerned about this development and the related developments on things such as mobile. I wonder whether it is time for a debate in this House on this and on cyber in advance of the Bill, which is most welcome.

[Lord Leong (Lab)]

I thank the noble Baroness for that. As for a debate, I leave it to Members of the House to table it accordingly. I would welcome a debate to look at this in further detail. As far as the Bill is concerned, we have been working on it for some time, as most noble Lords know. The Bill itself will ensure that the UK economy and information systems relied on by most important digital services and suppliers are better protected. As a result, businesses and public services that rely on them will also benefit. The Bill will include powers for the Secretary of State to update the security requirements that companies in scope of the regime must have in place to protect their systems from any further disruption, whether because of a cyberattack or for other reasons, even simple things such as human error, system outage or physical damage.