King’s Speech

Lord Livermore Excerpts

Thursday 14th May 2026 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I thank His Majesty for his gracious Speech and all noble Lords for their thoughtful contributions today. I congratulate my noble friend Lady Anderson on her excellent opening speech, and it is now a great privilege to close this debate. It is nearly two years since the first King’s Speech of this Labour Government and two years since the first time I stood at this Dispatch Box with the honour of being a Treasury Minister. In the many debates I have spoken in in that time, this House has provided an education like no other, and I am grateful for the kindness and good humour shown to me by so many noble Lords. It is a privilege to learn from the knowledge, expertise and real-world experience that combines to make the collective wisdom of this House.

I particularly pay tribute to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer. We have not yet agreed as often as I was perhaps hoping, but they are always warm and decent in all their dealings with me, and I am certain that all noble Lords recognise their commitment to serving this House. I look forward to continuing to work with both noble Baronesses on the measures contained in this King’s Speech.

As the noble Baroness, Lady Finn, noted in her opening speech, and the noble Baroness, Lady Neville-Rolfe, noted in her closing speech, economic growth has been this Government’s number one priority over the past two years. Economic stability has been the cornerstone of our approach, and we have seen in recent days the economic damage done by the risk of deviating from that approach, and the importance of sticking to our economic plan. Now is not the time to put our economic stability at risk.

In our first Budget, we took action to fix the foundations of the economy by repairing the £22 billion black hole in the public finances left by the previous Government. As my noble friend Lord Barber of Chittlehampton said in his contribution on how we spend public money—a theme also raised by the noble Lord, Lord Shinkwin—at the spending review last summer we stuck to our fiscal rules, keeping a tight grip on day-to-day spending and getting debt on a downward path, while investing an additional £120 billion in growth-driving infrastructure such as roads and rail, and record levels of R&D.

In our second Budget last November, we built greater resilience by doubling the headroom against the stability rule and cutting borrowing as a share of GDP in every year of the forecast. This year’s spring forecast showed that our plan was the right one. Inflation was at 3% and set to fall to target. Borrowing was set to fall more over this Parliament than in any other G7 economy. GDP per capita was forecast to rise by 5.6% over the Parliament, compared to a fall of 0.2% in the previous Parliament. We increased headroom to over £23 billion. Unemployment was coming down, real wages were continuing to rise and borrowing in the year to February fell by £20 billion compared to last year.

Many noble Lords spoke about economic growth, including the noble Baronesses, Lady Finn and Lady Neville-Rolfe, the noble Lords, Lord Burns, Lord Redwood, Lord Bridges of Headley, Lord Stoneham of Droxford, Lord Fuller, Lord Horam and Lord Kempsell, and my noble friends Lady Bi and Lord Pitkeathley of Camden Town. Today’s data release shows that growth was faster than previously estimated at the end of last year and accelerated sharply in the first quarter of this year, at 0.6%, making us the fastest-growing economy in the G7.

As a result of the action we have taken, Britain today is in a stronger position to withstand the uncertainty created by the conflict in the Middle East, which is putting pressure on energy markets and creating renewed fragility in trade and supply chains. We did not start this war and we did not join it, but it will have consequences for our country and our economy. The Government are continuing to plan for every eventuality, as well as dealing with the economic costs already being felt by families and businesses. The IMF described our plan as the “appropriate response” to the conflict. The decisions we take going forward will continue to be responsive to a changing world and responsible in the national interest.

The noble Baronesses, Lady Finn and Lady Penn, spoke about the importance of energy security. The Government have announced steps to delink the price of electricity from the price of gas, protecting households and businesses from rising bills caused by gas price spikes. This includes offering voluntary long-term fixed contracts to existing low carbon generators not on fixed-price contracts. More widely, we are investing in clean, home-grown energy in renewables and in nuclear. In 2025, we imported 17% less gas than in 2021. Gas generation now sets the wholesale price for electricity around one-third less frequently than it did in the early 2020s.

Several noble Lords spoke today about defence spending, including the noble Baronesses, Lady Penn and Lady Neville-Rolfe, the noble Lords, Lord Burns, Lord Alderdice and Lord Bruce of Bennachie, and, of course, my noble friend Lord Robertson of Port Ellen. We are delivering the biggest sustained increase in defence spending since the Cold War; we are investing £270 billion over this Parliament, after years of our Armed Forces being neglected under the previous Government. We will increase defence spending to 2.6% of GDP from 2027, and we are increasing spending on defence by £5 billion in this year alone. Our ambition is to reach 3% in the next Parliament, when fiscal and economic conditions allow, and the defence investment plan will be published in due course.

Some noble Lords also mentioned welfare spending, including the noble Baronesses, Lady Finn, Lady Penn and Lady Neville-Rolfe, and the noble Lord, Lord Tyrie. As many noble Lords know, this Government inherited from the previous Government a broken welfare system, and we are committed to ensuring welfare spending is fair and sustainable. Through the Milburn report on young people and work, as well as the Timms review of personal independence payments, we will ensure we have a system of benefits and employment support that meets the needs of people and the economy.

As well as immediate support with the cost of living, we must also continue to build growth that is secure and resilient, as my noble friend Lady O’Grady of Upper Holloway said. She also spoke about the importance of our industrial strategy and rightly said that we must continue to turn around the UK’s productivity performance and build an investment-led growth model. We will do that through stability, investment and reform—stability to create a strong foundation for businesses to plan and invest; public investment to deliver growth-driving infrastructure and to crowd in private investment; and reform to systematically remove the barriers to growth across the economy.

My noble friend Lord McNicol of West Kilbride spoke about the importance of AI to future growth and social mobility, a key theme of the Chancellor’s recent Mais lecture. As the noble Lord, Lord Burns, said, many of the issues facing us are for future fiscal events, but they are also the priorities on which the pro-growth legislation set out in the gracious Speech is being delivered. First, we are introducing legislation to reform regulations and remove the barriers to growth faced by businesses, including in financial services. The UK is the world’s largest net exporter of financial services and a leading global financial centre, but we face rapidly growing competition from other markets, as noted by the noble Baroness, Lady Kramer. That is why our financial services and markets Bill will maintain the UK’s competitive advantage by delivering key parts of the Chancellor’s Leeds reforms, the most wide-ranging package of reforms to financial services regulation in more than a decade. I am grateful to the noble Lords, Lord Burns and Lord Johnson of Lainston, for their support for this Bill in their speeches today.

Alongside this, the new competition reform Bill will improve decision-making in mergers and markets investigations, speeding up the work of the Competition and Markets Authority and ensuring that its remedies are regularly reviewed. The noble Lord, Lord Sharpe of Epsom, asked about safeguards to ensure that decisions remain independent. We will ensure appropriate governance and procedural safeguards to maintain expert decision-making that is independent of government.

The noble Lord, Lord Fox, and my noble friend Lord Pitkeathley mentioned the small business protections Bill. It will tackle the scourge of late payments, which costs the UK economy £11 billion each year and leads to the closure of 38 UK businesses every day. This was mentioned, too, by the noble Lord, Lord Sharpe of Epsom, who also asked about future business rate reform—mentioned too by the noble Baroness, Lady Kramer—which the Government remain committed to over the course of this Parliament.

The noble Baronesses, Lady Penn and Lady Finn, spoke about the importance of regulatory reform, which is something I agree with. The regulating for growth Bill will strengthen the duty on regulators to promote economic growth, as mentioned by the noble Lord, Lord Bridges of Headley, and will introduce new sandboxing powers so that businesses can safely test cutting-edge new products and technologies. To address a question posed by the right reverend Prelate the Bishop of Newcastle, there will be no dilution to the protections provided by the regulatory system as a result of the Bill. Maximising growth and innovation are key to this country’s future success, but this will never be at the expense of wider protections.

Secondly, we are building resilience to protect the critical infrastructure needed for growth. As the Prime Minister said earlier this week:

“Steel is strategically important to our economy and our national resilience. That’s why we acted last year to avoid a sudden halt to production at Scunthorpe, protecting workers and the community that depend on the site, and why we’re now bringing forward legislation to give us options to protect Britain’s steelmaking capability”.


The British Steel Bill was focused on by the noble Lords, Lord Fox and Lord Hunt of Wirral, and my noble friends Lady O’Grady of Upper Holloway, Lord Murphy of Torfaen and Lord Sikka. Since our intervention last year to stop steel production in Scunthorpe coming to a halt, we have been talking to British Steel’s owners to find a realistic solution for the business. It has not been possible to agree a commercial sale with the current owners, and we do not believe an agreement which delivers value for money for taxpayers can be met. British Steel is an important asset for UK steelmaking. It plays a strategic role for UK critical national infrastructure, our wider steel sector objectives, local jobs and the economy, given its unique production capabilities. Securing the long-term future of the UK’s steel sector relies on both public and private investment for modernisation.

The nuclear regulation Bill, mentioned by the noble Baroness, Lady McIntosh of Pickering, will modernise the way that new nuclear projects are regulated so we can deliver safe, secure and affordable nuclear power and infrastructure sooner, while maintaining strong environmental protections.

On energy, the energy independence Bill will help to protect households against volatile fossil fuel markets, create more highly skilled jobs across the UK and mobilise investment in clean technologies. The noble Baronesses, Lady Finn and Lady Neville-Rolfe, spoke about the importance of the North Sea, which I agree with. We must harness our domestic supply of oil and gas production from the North Sea. That is why we are managing existing fields for their entire lifetime, including by allowing tiebacks for those fields to ensure they remain viable. In advance of legislation, we have published further details on tiebacks, which external analysis has predicted could result in tens of millions more barrels of oil being available for UK supply. Our clean water Bill will help to build a resilient water system to supply businesses and attract investment, and I am grateful to the noble Baroness, Lady McIntosh of Pickering, for her support for the Bill and the Cunliffe review.

As the Chanceller set out in her Mais Lecture, we are also delivering on our manifesto commitment to transfer power out of Westminster by granting new revenue-raising powers to local leaders in the overnight visitor levy Bill, mentioned by the noble Lord, Lord Sharpe of Epsom.

The right reverend Prelate the Bishop of Newcastle spoke about the importance of connectivity. I agree, and we are improving connectivity to unlock growth. In our economy today, too many parts of Britain lack reliable transport connections and the agglomeration benefits that come with them. Northern Powerhouse Rail will help build a northern economy that reaches its full potential. The Northern Powerhouse Rail Bill, touched on by the noble Lord, Lord Burns, is an essential part of delivering this transformational scheme. It confirms the high-speed route from Manchester to Millington, providing fast and more frequent services for people and businesses across the north’s key economic centres.

We are also delivering on our commitment to support a third runway at Heathrow. Our hub airport connects us to emerging markets all over the world, opening up new opportunities for growth, but for decades Heathrow’s growth has been constrained. Our civil aviation Bill will support Heathrow expansion and that of the entire aviation sector by reforming airport slot allocation and modernising airspace to meet future needs.

Economic resilience in an uncertain world cannot be about turning inwards. Britain’s future prosperity will not be built in isolation but through partnership with those who share our interests and values. No partnership is more important than that between the UK and our European neighbours. Many noble Lords focused in their contributions on the EU partnership Bill, including the noble Baronesses, Lady Finn, Lady Bennett of Manor Castle, Lady McIntosh of Pickering and Lady Ludford, the right reverend Prelate the Bishop of Newcastle, the noble Lords, Lord Fox, Lord Lilley, Lord Redwood, Lord Frost, Lord Bridges of Headley, Lord Jackson of Peterborough, Lord Kirkhope of Harrogate, Lord Stoneham of Droxford, Lord Tyrie, Lord Moynihan of Chelsea and Lord Kempsell, and my noble friends Lord Liddle, Lady Bi, Lord Murphy of Torfaen and Lady Gill.

The noble Lord, Lord Frost, with apparently no irony, accused this Government of messing up negotiations. The truth is, Brexit has done deep and lasting damage to our economy. Recent independent statistics indicate that its GDP impact could be as much as 8%. The noble Lord, Lord Redwood, spoke about the OBR figures, which show clearly that, by the end of this Parliament, the British economy will be £100 billion smaller than it otherwise would have been, which the OBR continues to believe is happening. The reality is that Brexit has created new trade barriers, equivalent to a 13% increase in tariffs for manufacturing and a 21% increase in tariffs for services. Goods exports have fallen by 19%—some £42 billion—and 20,000 small businesses no longer export to the EU at all. It has meant higher costs for businesses, shrinking markets for UK exporters and our strategic industries exposed. It has damaged many other sectors, including the creative industries, as the noble Lord, Lord Strasburger, and the noble Baronesses, Lady Kramer and Lady Ludford, all reminded us.

My noble friend Lord Liddle and the noble Lord, Lord Kirkhope of Harrogate, said that we should be more ambitious and that we should move quickly. I agree. Just as the previous Government were defined by breaking Britain’s relationship with Europe, this Government should be defined by rebuilding our relationship with Europe. We are already making significant progress on agri-food, electricity, emissions trading and Erasmus—but there is a strategic imperative for deeper integration between the UK and the EU, and we must look towards a new and stable future relationship.

The noble Lord, Lord Fox, and my noble friend Lady O’Grady of Upper Holloway, asked about Made in Europe. We are of course engaging with the EU on this vital issue. I cannot say more than that at present.

In answer to the noble Baroness, Lady McIntosh of Pickering, we will pause further implementation of the BTOM while we negotiate new arrangements with the EU. Where it is in our national interest to align with EU regulation, we should be prepared to do so, including in further areas of the single market. That alignment should be forward-looking and durable, providing the certainty that businesses on both sides need to invest and grow.

The EU partnership Bill in this King’s Speech will enable us to implement our agreement with the EU on electricity, emissions trading, and food and drink, now and in the future. Where it is in our national interest to align with EU regulation, including in the single market, the Bill will enable us to do so.

Several noble Lords spoke about the customs union, including the noble Lord, Lord Fox, and the noble Baronesses, Lady Kramer and Lady Ludford. Some of my noble friends spoke about eventually rejoining the EU, including my noble friends Lady Bi and Lady Gill. At the next EU summit, we will set out a new direction for Britain, with significant moves forward on trade, the economy, defence and security, as well as an ambitious youth experience scheme, all of which will create a platform on which we can build as we go forward.

The prize is considerable: costs for doing business reduced for UK companies; new opportunities to export; new experiences for travel, work and study for our young people; a more reliable and efficient energy system across Europe; scale-ups gaining access to deeper pools of capital and talent; and greater choice for consumers, helping to bring down prices and inflation. Closer alignment with the European Union is clearly the right choice for Britain in our national interest.

The noble Baroness, Lady Finn, asked about parliamentary scrutiny. We are committed to being open and transparent in our engagement with Parliament regarding implementation of the summit outcomes and further negotiations to put into effect what the UK and EU have agreed, as well as throughout the passage of the Bill itself. Where we are making commitments to introduce new laws, Parliament will as always play its role in scrutinising the legislation that implements those commitments. We look forward to working with Parliament on the exact arrangements for scrutiny of the legislation as negotiations progress.

The noble Baroness, Lady Finn, also asked about fiscal contributions, which were also spoken about by my noble friend Lord Liddle and the noble Lord, Lord Kirkhope of Harrogate. We accept the principle that when the UK participates in an EU instrument, programme or other activity, we should make a fair financial contribution to its budget to cover the costs of our participation. Any UK financial contribution would be subject to negotiations with the EU, and no contributions have yet been made or agreed on. The Government are clear that agreements made with the EU must be in the national interest, and that although trade-offs will be required, these are worth making where the benefits to the UK exceed the costs.

My noble friend Lord Murphy of Torfaen spoke about the importance of the Bill to Northern Ireland, and I am of course very grateful to him for the work he did on his review of the Windsor Framework. The application of these agreements, alongside the Windsor Framework, will sweep away the majority of regulatory barriers for businesses moving agri-food goods. This will support GB to Northern Ireland and EU movements as well as boosting exports. Businesses moving goods into Northern Ireland will continue to be able to use the vital facilitations under the Windsor Framework for the limited number of requirements not covered by these agreements. Northern Ireland will also benefit from lower energy prices and assurances that there will be no divergent approach to emissions trading.

This Government have consistently made the responsible choices to bring stability to our economy and to raise economic growth through our economic plan. The spring forecast showed that this plan is the right one, with lower inflation and borrowing, higher living standards and a growing economy. As a result, Britain today is in a stronger position to withstand whatever uncertainty comes our way. We did not start the war in the Middle East and we did not join it, but it will have consequences for us all. That is why we have taken action to deal with the economic costs already being felt by families and businesses.

We must also build prosperity that is secure and resilient in a fast-changing world—this is the basis on which the pro-growth legislation set out in the gracious Speech is being delivered. This legislation will remove barriers to growth faced by businesses, build resilience to protect the critical infrastructure needed for growth, and improve connectivity and boost trade to unlock growth, including through a deeper economic partnership with the EU. Those are the right choices and this is the right economic plan to build a stronger and a more secure economy for our country’s future.

Debate adjourned until Monday 18 May.