Lords Chamber

Thursday 13th November 2025

(began 1 month, 2 weeks ago)

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11:06
None Portrait Oral questions: Effectiveness of learning disabilities mortality review (LeDeR) reports in improving life outcomes Lord Scriven (Liberal Democrat)
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This This is.
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None Portrait Oral questions: Effectiveness of learning disabilities mortality review (LeDeR) reports in improving life outcomes Lord Scriven (Liberal Democrat)
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Lord Scriven I beg leave to ask the question standing on in my name on the Order Paper.
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None Portrait Oral questions: Assessment of the jobs market and the implications for the wider economy Lord Hunt of Wirral (Conservative)
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Second oral question Lord Hunt of Wirral my Lords, I beg leave to ask the question. Standing in my name on the Order Paper. name on the Order Paper.
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Baroness Sherlock Portrait Baroness Sherlock, The Minister of State, Department for Work and Pensions (Labour)
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both on the potential for job displacement in some sectors and the creation of new roles? And what is the government's strategy to manage to manage this transition

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and equip the British workforce with the skills to drive the new AI economy? Thank you.

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Thank you. And this is this is a really great question. It's a question that's obsessing both most government departments and most government departments and most employers at the moment. As as the noble Lord will know, I think the impact depends on on the sector and impact depends on on the sector and it depends on the individual job, but the evidence is quite clear, which is that across the piece, it which is that across the piece, it is definitely better for businesses to embrace AI than not to embrace AI.

The biggest risk to to our country is not embracing artificial intelligence. It's if we don't take the opportunities it offers. But the opportunities it offers. But what will happen. The World Economic Forum, for example, has forecast that AI will create 170 forecast that AI will create 170 million new jobs globally over the next five years and displaced 90 million. So what we will find is million. So what we will find is there will be jobs out there, but there will be different. And what we have to do in our country is we have to do in our country is make sure we get those good jobs in the UK.

So what we are doing as a government is analysing that very carefully and supporting businesses and individuals to make sure they have the skills they need to move on to the next area. So we've on to the next area. So we've reformed skills. We're bringing skills into DWP for many young people. We've got a brand new skills academy. We're looking at skills academy. We're looking at developing apprenticeships and also focusing on supporting education to give young people the skills they need. There will be jobs there in the future.

We just want to make sure our people get them.
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Baroness Sherlock Portrait Baroness Sherlock, The Minister of State, Department for Work and Pensions (Labour)
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thank the noble Lady, the Minister. What she said. But I'd like to a bit more information. Yeah, thanks.

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Could I just say to the to the noble Lord on the unemployment figures, different things are going on under the surface, as I'm sure if he's dug down into the figures, which I'm sure he has done, for example, he may be aware that two things are going on. One is that the on the quarter increases and on the unemployment level, a chunk of that has been driven by young people aged 16 to 24, including those in full time education. Crucially, falling in activity has actually contributed to increasing unemployment.

We're tackling people who are economically inactive, but as people return to the labour market, they move from the figures of economic inactivity into the figures for unemployment. And one of the things that has happened is that the the significant rise in economic inactivity down to health has actually been flattened, and that's really significant in terms of skills. I'd love to talk to him a greater length about this because as he now knows, I have the great joy is that my my noble friend Lady Smith, who is, is now a Minister not only in DfE but also in DWP because she's the Minister for skills.

We're joining up the two departments and the other one, the other. Sorry. Yes. Yeah I was I was going to say the less important but I'll get in trouble any which way I do this. But actually what we're what we're doing is joining up what we're doing with DfE to invest heavily in skills. We've got new qualifications coming online, new apprenticeships coming online investment and skills strategies. There's a huge amount going on, more than I can say at the Dispatch Box, but I'd love to talk to you Box, but I'd love to talk to you more about this.
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None Portrait Oral questions: Status of Palestinian refugees following the recognition of the state of Palestine Baroness Deech (Crossbench)
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Lord Hall question Baroness Deech.
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Baroness Morgan of Cotes Portrait Baroness Morgan of Cotes (Non-affiliated)
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resilience of so many and that as a country, we do not forget.

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Nobili, the Minister, very much indeed for her comments. I would like to thank the government for like to thank the government for their considered and thoughtful response published today. The noble response published today. The noble Lady, the Minister, but also her predecessors, both in this administration and the last. I would like to thank the Cabinet would like to thank the Cabinet Office and DCMS officials who have been outstanding throughout this process, as well as my fellow commissioners and also those who gave us evidence, including the key workers who gave us evidence about workers who gave us evidence about their public service.

But above all, as the noble Lady said, I would like to thank those bereaved families who shared their perspectives on what it was like to perspectives on what it was like to lose a loved one in the course of the Covid 19 pandemic. Many of them the Covid 19 pandemic. Many of them are here in Parliament today. They were generous in their time and commitment in the public commitment in the public consultation events. And I remember two things. Two comments that really struck me.

The first was somebody saying during the pandemic, somebody saying during the pandemic, everyone lost something, but secondly was their determination both to honour their loved ones, both to honour their loved ones, but also to learn the lessons of the pandemic for the future. So perhaps I could just ask the noble perhaps I could just ask the noble Lady, the Minister, just to set out a little more detail before that, because many of us have not had a chance to read the considered and thoughtful response, how the government has struck the balance between both commemoration, remembering the loss and the loved ones, but also in relation to future preparedness for a future natural hazard or other pandemic.

natural hazard or other pandemic.
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Baroness Twycross Portrait Baroness Twycross, The Minister of State, Department for Culture, Media and Sport (Labour)
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The government is clear that the impact of Covid 19 should never be forgotten. And I'd like to echo the noble Ladies words about that. She quoted the evidence given to the commission in terms of everybody losing something, but quite clearly, for a quarter of a million people, they lost their lives. And that leaves a huge tragic legacy for those left behind. And I think we want them to be central to the Covid commemoration programme.

So we're continuing to support the UK wide Covid 19 Day of Reflection that will take place each March, and we are going to confirm the dates for the next few years. We're working with Forestry England and NHS Charities Together on the creation of new Covid 19 commemorative green spaces across England's forests and in the grounds of NHS sites, and we are setting out our support for the long term preservation of a national Covid memorial wall, which is obviously just across the river from Parliament, where we're sitting today as a national memorial to the lives lost to Covid 19.

And to do that, we're going to continue to work closely with friends of the wall, but also with a range of other partners. We need to include in that work in relation to prevention of future natural hazards, including pandemics. We're launching a new UK wide fellowship scheme on natural hazards to support future national resilience, as recommended by the Commission. And I am pleased to say that the first cohort will start next year in February 2026. Alongside this, we're launching new web pages on Gov.uk, specifically dedicated to Covid commemoration, which will include education materials, a repository of oral histories, and a map highlighting over 100 memorials that already exist to allow the public to easily find this information.

I do have a lot more information, but I'm clear other information, but I'm clear other questions.
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Baroness Twycross Portrait Baroness Twycross, The Minister of State, Department for Culture, Media and Sport (Labour)
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can have safe public spaces in that environment. Ensuring the UK is prepared for

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Ensuring the UK is prepared for future pandemic is absolutely a top priority for the government, and we are embedding lessons from the are embedding lessons from the Covid 19 pandemic, including the inquiries recommendations within our pandemic preparedness. And I think, like other noble Lords, we're hugely grateful to noble Lady Baroness Hallett and her team for their important work. Just to reassure the noble Lady. The UK government has been conducting a national exercise on pandemic preparedness, which is exploring a lot of these issues, which is called Exercise Pegasus and which is involving both Ministers from across the UK government, but also working very closely with devolved, devolved governments to try and ensure that we do have the preparedness that we need for a future pandemic.

We're very clear that this won't necessarily be another 100 years, and we need to be prepared now. It was the first of its kind, nearly a decade and the largest simulation. So the the exercise is the first of its kind in nearly a decade, and the largest simulation of a pandemic in UK history. The findings of the exercise and the Postexercise report were delivered in due course, and I'm sure will be of interest to your Lordships' House. your Lordships' House.
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None Portrait Business of the House
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My Lords, before we move on to the next business, I wanted to make a brief statement of how we will handle the Committee stage of the Terminally Ill Adults Bill tomorrow. I'll also send this statement out by email to all members shortly. I understand colleagues are keen to prepare, so hopefully this will help in planning this in line. How it would usually move forward. First, I would like to thank the staff of the public Bill office, who worked tirelessly to produce the Marshall List for the Thursday Committee.

The list, which contains over 900 amendments, were produced at 116 this morning. I'm sure the

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whole House appreciates the hard work they've gone through on our behalf. Yeah.

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Yeah. Turning to the process, the whips office will shortly distribute draft groupings to noble distribute draft groupings to noble Lords with amendments in the usual manner, as the government is neutral, any changes requested will neutral, any changes requested will be simply actioned. The sponsor, my noble friend Lord Falconer of Thoroton, will lead on negotiating any changes should should he wish to do so. The government will then to do so. The government will then communicate the final groupings in the usual manner, in order to aid the House in having an orderly the House in having an orderly debate.

The normal practice, including for PMS, that the government does not support, that government does not support, that have committee stages. Lord Faulks will set a target at the end of today to aid colleagues in knowing today to aid colleagues in knowing where they might need to prepare speeches for, or if topics they know are interested in may be debated. Tomorrow, we expect the House to rise at a convenient point around 3 p.m. as per the usual around 3 p.m. as per the usual conventions of the House, which retain the typical flexibility of the House.

We need to move slightly beyond this point or slightly beyond this point or slightly before this point in order to conclude groups being debated. This ensures orderly debate, and the ensures orderly debate, and the spirit of good business management means we do not have to undertake the complex exercise of noting down everyone in attendance in order to ensure they're there when the group resumes on a subsequent day. It also aids the overall flow of debate on such an important topic. At the conclusion of that final group, at a convenient point, I will move to adjourn the House.

My Lords, I ask all noble Lords to respect the usual conventions regarding speaking, times of committee and respect all noble Lords who are speaking in the debates. The whips, of course, will continue to monitor debate in the usual manner. Finally, my Lords most important, sincerely held views are held on all sides regarding this Bill. Please respect that and the upcoming debates tomorrow. Remember courtesy and respect and show those watching the House of Lords at its best. I trust that if we continue to respect each other with a thought provoking debate tomorrow, my.
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Lord Marks of Henley-on-Thames Portrait Lord Marks of Henley-on-Thames (Liberal Democrat)
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My Lords, the releasing of Shadow Sharif from Wandsworth and all other such accidental releases would have been far too numerous, are symptomatic of a system woefully prone to error. The noble and learned Lord, Lord Kiely Lord Keen of Elie, has seriously criticised the answer given by the Deputy Prime Minister to the House of Commons on the 5th of November. And it may be that the Deputy Prime Minister did make the wrong call in withholding more detail because he felt he did not have the full picture.

And it may also be that there were errors in the detail of his response. But if he made a wrong call on that decision to give less detail, I accept that it was a difficult call and it was a call made in good faith and of itself. It had no consequences. The more important question, my Lords, is how and in what timescale we improve the system. Now we on these benches applaud the appointment of Dame Lynne Owens to conduct a full review.

Accidental releases and the systems for avoiding them are very important, not just of themselves, but for the confidence of the public in our systems. The statement says that Dame Lynne's report will come at the end of February, three months from now. And I have to say, we think that's a long time. So I ask, is there scope for an interim report within days of Mr. Kabatas release, the MoJ took some urgent steps set out in the statement to tighten up the system and introduce for one for one measure, a more robust checklist.

May we ask for a further action plan pending Dame Lynn's final report from her and her team if possible. My Lords, we expect, as I think the noble Lord does, that much of the improvement required will involve the introduction of more robust digital procedures initially, no doubt alongside strengthened paper procedures. And I ask the noble Lord if he will give an undertaking that the implementation of those of Dame Lynn's recommendations, as the government accepts, will be treated with the greatest urgency.

Only in that way, and with that urgency, can the serious loss of public confidence that flows from these accidental releases in our prison accidental releases in our prison security be recovered? Yes. security be recovered? Yes.
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Lord Timpson Portrait Lord Timpson, The Minister of State, Ministry of Justice (Labour)
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My Lords, I thank the noble and learned Lord Keen and the noble Lord marks for the points they have made on this important issue. On Tuesday at 3:30 p.m. the Deputy Prime Minister set out in the other place that we were aware of three releases in error from prison. We were also investigating a further case of a potential release in error on the 3rd of November of a person who may have still been at large. I can now tell you, Lordships' House, that the potential case to which the Deputy Prime Minister referred was indeed a release in error.

I can also confirm that this individual was swiftly returned to police custody on the same day, and returned to prison the following morning. I'd like to thank the diligent work of Leicestershire Police. Finally, the foreign national offender, who was one of the three the Deputy Prime Minister referred to, was today classified as a lawful release following additional checks that took place. What I've just set out means that the current total of releases in error from prison stands at two as of 9:00 These are a matters, as I'm sure noble Lords appreciate.

Things can change quickly. The Deputy Prime Minister and I get regular updates on the situation. My Lords releases an error are symptomatic of a system stretched to its limits. Prisons are full, almost a breaking point, which makes them an even more challenging environment. I pay tribute to the prison staff working under incredibly difficult circumstances. What we're talking about here is a paper based system with individual prisoners, sentences worked out every time they arrive to a new prison. Prison staff must consider the type of offence committed and each individual piece of legislation it comes under.

This process has become increasingly complex in recent years, owing to the previous government's early release programme and the scheme this government was forced to put in place upon coming into office to prevent the collapse of our prisons. A 2021 review found more than 500 pages of sentence management guidance. Of course, prison staff go through full and proper training before they start their jobs, but the reality is that prisons suffered staffing cuts of around a quarter between 2010 and 2017. That is around 6000 fewer people.

The knock on effect is that today, over half of frontline prison staff have less than five years experience. That makes mistakes more likely. My Lords, the previous government had 14 years to sort this problem out, and the reason they didn't is not because they didn't try. It is because it is a very complex and difficult task. I've taken on this challenge, and what we're putting together is a sensible and achievable plan. I can tell noble Lords that of the 57,000 or so routine prison releases in the year to March 2025, there were 262 releases.

An error. This is clearly too many. Typically, prisoners are flagged for release based on sentence length and statutory release points, usually at 40 or 50% of the sentence for standard determinate sentences and two thirds for serious offences. Life and indeterminate sentence is required. Parole board approval before release. Eligibility checks. Identifying verification, outstanding legal orders and exclusion criteria such as sexual offences and terrorism are all reviewed before release. I accept that there has been uncertainty around the precise number of releases.

An error. This is down to the data challenges this government inherited. It is why on Tuesday we published new data showing 91 releases in error from prisons from April to October. Further data on the breakdown of offences are official statistics that need to be combed through in detail before being put in the public domain. There was not a publication due this week, but we recognise the public interest in being transparent about the overall number and I can tell noble Lords that further breakdowns will be published in the normal way through our regular statistics and Dame Lynn Owens.

Owens will be looking at data and transparency as part of her independent review, and as the noble Lord Marks inferred, it is really important that we learn from her review, as my noble Lord Dear will recall. Following the release in error of in October, the Deputy Prime Minister announced stronger release checks. There is now more senior accountability, including a new checklist to be completed by duty governors the night before a release. In the specific case of Ibrahim Kader Sharif, the error leading to his release, a warrant for his remand being incorrectly forwarded by email from HMP Pentonville to HMP Wandsworth took place before the new checks were put into place.

Human error will of course always happen. It would be impossible to adequately to eradicate it completely and no government should pretend otherwise. I believe our staff turn up every day to do their best. What we must do now is modernise the release process with digital systems, which reduce the scope for error. Over the next six months, we will provide up to £10 million to deliver AI and technology based solutions, to support prison staff to detect mistakes and calculate sentences correctly, but also to ensure they have accurate data available to them.

Public safety is, of course, this government's top priority. The Deputy Prime Minister has already given an unequivocal apology to all those who face fear, distress or worse, as a result of the accidental release of prisoners. And I echo that apology in terms of those released in error who are still at large. For those victims eligible to receive the services provided under the Victim Contact Scheme, their Victim Liaison Officer will notify them when the offender is apprehended and returned to prison custody.

My Lords, releases an error are the consequence of a system pushed beyond its limits. It is a legacy this government is determined to fix and we are already doing so. This government has gripped this issue where others have failed to act. act.
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Lord Carter of Haslemere Portrait Lord Carter of Haslemere (Crossbench)
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Prisoners have been released in error for decades. I know because I used to advise on sentence calculation in the 1990s in the Home Office Legal Advisers branch, and I was Prison Service legal adviser, and it was difficult then. It is now fiendishly difficult. And that's because of all the changes to the statute book that the noble Baroness, Lady Chakrabarti, she knows well, she was with me in the Home Office that I was indeed that that have happened since then.

So the the statute book is a total mess as far as trying to calculate what, when a release date applies for a particular prisoners, they're all in a different position. Some have got additional days, some have served different remand time. All of these factors need to be taken into account, as has been said by the noble Lord Marks and Lady Chakrabarti, a digital answer has to be the way forward because, as she said here, it's it's just obviously something that will work because you can punch in the details of the sentence to work out exactly when the release date comes up.

It'll have to be updated, of course, as additional days are added to the sentence and so on in the future. But my question is, there's been we've got to go to a digital solution, but how long will it take for that to be up and running? Because there's going to be a procurement process. These things take ages and ages. We haven't got ages and ages. You know, we've identified the crisis that we have taking place. So is there any estimate of when this will be actually up and running functioning actually up and running functioning to these releases?
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None Portrait Debate: Government’s economic and taxation policies on jobs, growth and prosperity. Lord Elliott of Mickle Fell (Conservative)
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A A motion A motion for debate. The impact of economic and taxation policies, the Lord Elliott

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of micklefield. Yes. My Lords. I beg to move the motion

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I beg to move the motion standing in my name on the Order Paper. It's a privilege to lead today's debate on the impact of the government's economic and taxation policies on jobs, growth and policies on jobs, growth and prosperity. May I begin by noting an absent friend? I am saddened an absent friend? I am saddened that the coming budget will be the first 1 in 35 years that will take place without the thoughtful and place without the thoughtful and perceptive comments of the late noble Lord, Lord Desai.

Like the noble Lord, the Minister I studied noble Lord, the Minister I studied at the London School of Economics in the 1990s and was taught by Lord in the 1990s and was taught by Lord Desai. I am sure he would have spoken in this debate, and I know the whole House will greatly miss the whole House will greatly miss his contribution. At the heart of today's debate is the quest for today's debate is the quest for economic growth, and today's growth figures are not encouraging, suggesting that the economy shrunk by 0.1% in September and GDP per by 0.1% in September and GDP per capita is flatlining or possibly falling.

Since the figures are calculated using population calculated using population estimates from three years ago in 2022. In the year 2000, when the noble Lord, the Minister, was working as a special adviser in the Treasury, and I was a humble researcher, working for the late for the noble Lord Lord Kirkhope of Harrogate. Economic growth was 3%, taxation was 33% of GDP, public spending was in surplus and we were paying down the national debt. Earlier this year, I asked Sir Tony Blair what he ascribed that economic miracle to.

He was quite clear. It was down to the economic foundations laid down in the 1980s, and his decision not to tinker with the fiscal plans laid out by the noble Lord, Lord Clarke of Nottingham. The story since 2007 has not been so rosy. Our average real GDP growth has been 1.3% per annum, with an average population growth of 0.5 0.7% a year. This equates to a measly rise in GDP per capita each year of just 0.6%.

This means that living standards have stagnated. For many, this means millions of personal recessions where people have become worse off year by year. In contrast, over the same period, the average American has gone from being 10% richer than the average Brit in 2007 to now being 40% richer. It's a hope around the corner. I fear it isn't. Recent World Economic League table projections of GDP per capita by the centre for Economic Research paint a stark picture of where the UK is headed in 2030 will be poorer per capita than Lithuania, in 2034 will be worse off than Poland, and in 2043 will be poorer than Turkey.

That's the path we're on, and that's why today's debate is so important. Fundamentally, we all agree on all sides of the House on the need for economic growth and boosting living standards and prosperity, kick starting economic growth is one of this government's five missions. The Prime Minister put wealth creation at the heart of his manifesto, and the Chancellor says that economic growth is the government's number one mission. But it's clear that the government lacks a comprehensive plan. I agreed with what a senior Labour figure said in a podcast recently, where they suggest the Chancellor needs to use the budget to present, and I quote, a growth plan for the long term, turning public services round and making them better.

It has got to be a plan that sticks, which lasts, which doesn't unravel in the markets or in the Parliament or with the public. In 48 hours. Those are the words of a previous colleague of the Minister, Labour's former shadow Chancellor, Ed Balls, speaker, on his Political Currency podcast on the 30th of October. I agree with him and I hope the government addresses his challenge in the forthcoming budget. There's much I could say about the about a long term plan for economic growth.

Noble Lords who are interested in reading more about this might like to take a look at a new book I've written called Prosperity Through Growth, and I've placed a copy in the library, The Economic Brain spine of the book. My co-authors, Doctor Arthur Laffer and Doug McWilliams, and the geopolitical content came from the from my noble friend Lord Hintze, who sadly has long standing speaking engagements in Australia to pass on his apologies for this debate. I will limit myself to three key elements of a growth plan where I believe there's mainstream agreement.

These are abundant energy, abundant employment and abundant enterprise. I'll take these in turn. Abundant energy is a necessary prerequisite of economic growth, so we need the cost of energy to come down. The world Bank summarises literature by saying affordable, accessible energy is at the heart of development, driving job creation, growth and shared prosperity. Our energy is immensely expensive compared to our competitors. Wholesale energy costs in the UK are double costs in most European countries, and almost half of each bill is down to policy costs.

The government knows that mainstream opinion is shifting on this issue. The Prime Minister acknowledged in his remarks that the Cop 30 summit that, and I quote, consensus is gone on climate change policy. Sir Tony Blair told us for prosperity through growth that net zero should be delayed as other countries are not following our lead. Even previous major advocates from outside politics seem to be responding to change circumstances. Bill gates remarked in October that for the vast majority of people, climate change will not be the only or even the biggest threat to their lives and welfare.

The biggest problems are poverty and disease, just as they always have been. Other senior figures in the labour movement have also expressed scepticism about pursuing net zero. By 2050, the noble Lord Lord Glasman will be giving a lecture the week after next on why it's good to be warm energy as a common good Sharon Graham, general secretary of unite, has suggested that the Energy Secretary has been, and I quote, completely irresponsible in his approach to energy security and jobs in the oil and gas sector.

I agree with her, and I believe the Prime Minister also agrees with her as he tried to move Ed Miliband in September's reshuffle. I wish him better luck next time, because it's essential for economic growth that we focus on lower energy bills rather than net zero alone. A second essential element for accelerated growth is abundant employment. The importance of jobs and work is something I speak about regularly in your Lordships' House. I continue to commend the government for their ambition to bring the employment rate up from 75% to 80%, and since they've been elected, they've succeeded in increasing the employment rate by 0.3%, putting them on track to hit their target in 2048.

At the same time, unemployment is up from 4.2% to 5%. The number of Universal Credit claimants who have no requirement to work is up from 2.9 million in October 20th 24 to 4 million in October 2025, a 39% rise in the space of a year. The number of job vacancies, down from 870,000 to 723,000. The number of new jobs which need to be created by the private sector to achieve 80% employment, is now 1.4 million rather than 1.2 million.

Crucially, the Employment Rights Bill reduces job creation, which is why the Treasury is rightly trying to water it down. A Tony Blair Institute report last week said that day one rights risk and, I quote, eroding business confidence to hire. The Resolution Foundation argues that day one rights offer and I quote little obvious gain for workers and has the potential to inhibit hiring and even the prime minister's chief economic adviser, the noble Lady Baroness Shafik, expressed significant concerns about the bill, saying if you've got lots of people on benefits who are hoping to get into the labour market, then you need to give employers some flexibility to take risks on those people.

It's time to make employing people more flexible and affordable for businesses and bring about abundant employment. This isn't solely about economic growth. It's about giving people their first step on the employment ladder. No jobs, no ladders of opportunity. The final factor we need for economic growth is abundant. Enterprise and taxation is a crucial driver of that. In 1998, Gordon Brown introduced taper relief for capital gains tax. This scheme incentivised long term investment and had no lifetime limit on holding assets, with a long term CGT rate of just 10% today.

The picture is very different. From next April, the rate will be 18%, up to £1 million and 24%. Beyond that, we need to acknowledge the impact that these and other changes to incentives have on our economy as we see the rise of remote working, the mobility of people must be a key consideration when making any tax changes. This is already happening with 16,500 high net worth individuals, many of them entrepreneurs and investors expect to leave the UK in this year alone, and it includes members of your Lordships' House.

The minister's former colleague in Downing Street, the noble Lord Lord Carter of Barnes, recently left the UK to go to Dubai. On another podcast recently, a senior Labour figure suggested that the Chancellor undid the damage done by the changes to the non-dom rules and moved to an Italian style system for taxing wealthy individuals. And I quote, what they should think about doing is a kind of flat tax deal, because that's what the Italians have done. They're basically saying, look, you come here, you pay 300,000 a year and you keep the rest of it, but we want you to be here.

I think Labour could get away with that saying. Say that Non-doms half a million. That's all you pay. End of quote. I don't often agree with what I hear on the rest is politics, but on this issue, I think Alastair Campbell is spot on. We do we do need we do need to change the incentives to attract more entrepreneurs to the UK rather than drive them away. And we need to ensure that young entrepreneurs set up their businesses here rather than go overseas.

Many other people within the Labour Party also agree with the sentiment. Sir Tony Blair acknowledged when speaking to a scrapbook that taxes are immensely high by historic standards, and he even suggested a 40% top rate of income tax, saying that actually saying it was probably too high in today's highly mobile world. And the noble Lord, Lord Mendelsohn, expressed it perfectly in a recent report for onward, a small group of wealthy individuals pay a significant proportion of the tax we rely on.

I do not agree with some colleagues that we should wave goodbye to the wealthy. We should be doing whatever we can to welcome them back. And new investors, entrepreneurs and high spenders to our shores. And he's right. If we have abundant enterprise, a key element of any serious growth plan, the Treasury needs to start attracting people back to the UK. Last week we heard the Chancellor, Rachel Reeves, say that she's willing to take tough but necessary choices and do the right thing.

This is welcome, but raising income tax is not the right tough choice. Chasing limited liability partnerships away from the UK is not the right tough choice. Letting the welfare bill continue to escalate is not the right tough choice. Instead, the chance should look at the policy options I've highlighted today, which are supported by mainstream opinion, including respected voices in the Labour Party. In his closing statement, Will the noble Lord, the Minister, respond to Ed Balls and outline what the government's long term economic plan is on energy? Does the Minister agree with Bill gates? Unite and the noble Lord Lord Glasman that should focus more on jobs and poverty and less on net zero by 2050 on employment? Does the Minister agree with the Resolution Foundation, the Tony Blair Institute and the noble Lady Baroness Shafik that the Employment Rights Bill will make it less likely that businesses take on riskier hires and on enterprise? Does the Minister agree with Alastair Campbell, Sir Tony Blair and the noble Lord, Lord Mendelsohn and Lord Patten of Barnes, for that matter? Do we need to do more to attract entrepreneurs and investors to come to the UK rather than chase them away? This month's budget will have a critical impact on our economic standing.

In 20 years time, will we maintain our position? Will we perhaps even improve it? Or will we fall behind Turkey? Britain's decline is not inevitable. The path to prosperity is open to us. It's time to take it. It's time to make

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Britain rich again. I beg to move. The question is that this motion

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The question is that this motion be agreed to. My Lords, we are all grateful to

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My Lords, we are all grateful to the noble Lord, Lord Eliot, for having secured this debate. As noble Lords will know, Lord Elliot noble Lords will know, Lord Elliot is one of the most brilliant political campaigners of his generation, evidenced in speech generation, evidenced in speech we've just heard and most notably in his leadership of the successful in his leadership of the successful Vote Leave Brexit campaign. Hence, Vote Leave Brexit campaign. Hence, according to estimates by the Institute for Fiscal Studies, confirmed recently by the United confirmed recently by the United States National Bureau of Economic Research, he is, at least in part, personally responsible for a permanent reduction in UK GDP of permanent reduction in UK GDP of between 4 and 6% per annum, with estimates on tax revenue in excess estimates on tax revenue in excess of -£50 billion per year.

This makes his negative assessment of the government's economic policies seem rather small. Beer. The common rather small. Beer. The common conclusion of serious economic studies is that Brexit has, unsurprisingly damaged trade. But even more seriously, it is having a long term negative impact on investment in the UK. The American study I've just cited estimates that is a reduction in investment of between -12% to -18%, and that's where the long term damage is being done. Investment is the foundation of productivity growth, embedding
13:02
Lord Eatwell Portrait Lord Eatwell (Labour)
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innovation in the production of goods and services. In recent years, goods and services. In recent years, Britain has had a dreadful record, with the share of business investment in GDP consistently investment in GDP consistently lower year after year than other G7 economies. If we don't invest more economies. If we don't invest more in productive capacity, R&D and skills, then the growth prospects skills, then the growth prospects for the UK are very poor indeed. So we must look to investment for the enduring impact of the government's economic policies.

Now, at the core of the government's policies are Rachel Reeves fiscal rules, notably the commitment to balance the current budget. Day to day spending must be funded by revenues. However, must be funded by revenues. However, this does not apply to investment. Borrowing is allowed for investment. Borrowing is allowed for investment. Indeed, the rule is designed to protect long term projects from short term exigencies. Hence, in the 2024 budget, the Chancellor funded public investment growth of 2.5% per year, year on year to 2029, 2.5% per year, year on year to 2029, replacing the conservative plan to cut cut my Lords investment growth to a miserable 1.7% per annum, a different of £20 billion worth of investment per year.

Government investment in transport, housing, research and development and energy is the much needed long term commitment to the British economy, protected by the fiscal rules. Given that the fiscal rules are central to government policy. Oddly, they were not mentioned by the noble Lord in his introduction. It is surely incumbent on the party opposite, particularly the conservative front bench, to state clearly whether they support the fiscal rules or not. The fiscal rules protect long term public investment. What is their impact on business investment? Well, the OBR estimates that a 1% increase in public investment leads to an up to 1% increase in business.

Investment to. The Bank of England has noted recently that public investment in R&D and infrastructure tends to have a stronger, longer lasting crowding effect than short term spending. Growing public investment causes growing private investment. The fiscal rules are not just supporting public investment, they are supporting business investment too. That surely is an impact of the government's fiscal policy that all sides of this House should celebrate here. Yeah. Yeah,

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My Lord sir, like I would also like to thank the noble Lord Lord Elliott for introducing giving us a
13:05
Lord Skidelsky Portrait Lord Skidelsky (Crossbench)
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Elliott for introducing giving us a chance to discuss this important question. And it's always a pleasure to follow the noble Lord. Lord Eatwell economic commentary has been dominated by the fiscal hole facing the Chancellor, said to be 330 billion. Sorry to stick to fiscal rules, Rachel Reeves will have to raise taxes or cut spending or do both. But she has promised not to raise taxes and has promised to increase public spending. So she's in a bind. However, this fiscal straitjacket depends on two assumptions.

First, there'll be no little or no economic growth in the next four years. Second, the British economy is already at or near full employment. And these are reasonable. These are reasonable forecasts based on recent trends, however, and since 2008, average economic growth has been about 1.5% a year, a full percentage point lower than before, and much of it down to the increase in population. That is, living standards for the majority have hardly risen, productivity has been flat and the OBR expects this to continue.

Lord noble Lord Elliott emphasised the need for abundant employment, but I'd suggest a different path to the one he's he's outlined with headline unemployment at 1.8 million, we're tolerably close to what we think of as full employment, though it has gone up a little to 5% recently. But is this a true measure of spare capacity? Apart from the headline count, we have 4 million or 10% of working age people claiming either disability or incapacity benefits, plus 1 million NEETs, that is, those between 16 and 24 not in education or in employment.

In addition, 7.7 million are employed part time. Then there are those who have left the labour market altogether. Now, if we add up all these, and of course some of these categories overlap, what if you add up full, full time unemployed part time workers who want to work more, those on disability benefits, who could do some work, and the discouraged? You could get a better measure of spare capacity than the headline count alone. Estimates of that would be about 1010% to 15% of the labour force.

Now, this would justify if this is true, this would justify greater fiscal loosening than the OBR considers prudent. That's the first point I want to make. How do we get the underemployed back into work? It's not simply a question of increasing demand, as the old the old Keynesian formula one has to rebuild supply. Let me give just one example. The government has unveiled a youth job guarantee scheme covering ages 18 to 21. Every young person has been on Universal Credit for 18 months without earning or learning, will be offered a guaranteed work placement, with the aim of helping them to transition into full employment.

Now, I welcome that initiative. I think it's very important, and I'd like to think that it was influenced by a paper entitled A Job Creation is the New Game in Town, which I co-authored with Gordon Brown five years ago. In it, we wrote regional and local government job and training schemes for young people are central to the task of reallocating work and skills into the labour market. We went quite a lot further than that, and I haven't got time to go into that.

But basically the idea was there should be a public sector job guarantee with a buffer stock of state supported jobs and training schemes that expands and contracts with the business cycle. A job guarantee of this kind could take up a large part of the slack in the labour market. By raising the rate of economic growth, it would help reduce the deficit and the guaranteed training apprenticeship part of the scheme would directly address the productivity problem. So I urge the government to fight the bond vigilantes and the tax cutters with a positive programme

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of economic renewal. I draw attention to. My entry in the.

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My entry in the. Register and in particular to my chairmanship of Direct Special
13:09
Lord Howard of Lympne Portrait Lord Howard of Lympne (Conservative)
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chairmanship of Direct Special Metals, a company whose recent experience I shall refer to in my brief contribution. It's always a pleasure to follow the noble Lord Lord Skidelsky and I join others in thanking my noble friend Lord Elliott for securing this debate, and also on the work of the Jobs Foundation over which he presides. My Lords, much of the debate so far. In fact, I think all of the debate so far has understandably been taken up with macroeconomic policy, which is, of course, vitally important.

I want to talk about the micro, about ways in which apparently small improvements can have a dramatic effect on the economy and on people's lives. And I want in particular to talk about the recent experience of direct special metals, when we wanted to offer people jobs. Direct Special Metals is a recycling company based in Sheffield. We were expanding and we wanted to recruit. We went to the local job centre. The story of what happened is recounted by Ian Crew, the company's co-founder in Ladders of Opportunity, a recent publication by the Jobs Foundation.

First of all, says Ian, they got the volume of people wrong. Then they got the job description wrong. But DSM persisted, and eventually we were offered 25 people. Ten of them couldn't hold a conversation. Of the 15 who were offered an interview, only five turned up. Of the five that turned up, four of them weren't a fit at all. So we ended up employing just one person from the job centre. Ian Crew was stunned. He says local jobs well paid and we do pay well.

Solid hours, not flexi hours, nothing like that. You'd have thought they'd be queuing at the door, but we got just one person. I couldn't believe it, he says. But Ian didn't as so many would have done, give up. He contacted Sheffield City Council and they got involved, and soon he was dealing with the side of the job centre, which had previously been invisible. Two people from the Job centre visited the company. Ian told them what the company wanted and after this conversation things improved dramatically.

The quality of the candidates got better and soon we were getting most of our staff from the job centre. But how many people would have persisted as Ian did? How many employers would have got in touch with the council? Indeed, why was it necessary for Ian to get in touch with the council at all? So, my Lords, the moral of this little story is that job centres need to be pro-active. They need to make more of an effort to understand the needs of local employers to match the vacancies with the people on their books.

And if they do, we might suggest a little more progress in reducing the numbers of jobless people in our country. As we've heard this week, now higher than it ever time since the pandemic, and make a contribution to the growth and prosperity which we all want so

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very much. Yeah. My Lords, great privilege and
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Baroness Foster of Aghadrumsee Portrait Baroness Foster of Aghadrumsee (Non-affiliated)
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pleasure to follow the noble and learned Lord Lord Hart. And can I first of all, thank the Lord Elliott of Mickle Fell for bringing this motion before the House today and allowing us time to debate the various issues which have become clearer since the general election last July. Government has told us growth is their number one priority. However, the policies and taxes which have been introduced or which are about to be introduced have made this aspiration harder and harder to achieve.

And many in this debate already have spoken to the macroeconomic indicators and prospects. But I want to use the short time available to focus on the plight of rural dwellers. Now we rural dwellers are known for our laid back ways, but being sanguine about the current economic prospects is not where we are at present. Sir Keir Starmer told farmers before the election in July that he would not raise taxes. Then the budget of last year revealed the biggest change for farming families for over half a century.

The cap on agricultural property relief and business property relief for inheritance tax set at £1 million, will have huge consequences for rural communities in terms of investment, succession planning and continuity of family owned enterprises. Indeed, the are Taxing futures research conducted by CBI economics shows that these changes will, instead of growing the economy, put 208,500 jobs at risks, result in a GVA reduction of 14.8 billion and produce a net fiscal loss to the government of 1.9 billion.

I received an email at the beginning of this week from someone who farms in the north west of Northern Ireland. This woman, who lives with her family and her former husband, was in total despair. She told me that the proposed tax will have a devastating impact for each generation, as it will stifle any future innovation and investment on farms. The reality for many farms is that they will have to sell off fields each generation, due to low profits and returns on farms, as there will not be the money to pay it.

This will result in ever smaller farms, and already farms in Northern Ireland are small as we know, and there is no point in saying there will be ten years or to pay off the tax. As with low returns from farming, there will be nothing left for farm improvements or future developments. She continued this proposed tax will ultimately change rural farms in Northern Ireland, as many farms will become unviable and unsustainable. Consequently, many young families may leave and go to Canada or Australia as is happening at present.

We have many part time farmers, but their vital off farm income sustains their farms and multi generations of their family. In addition to supporting many other off farm employment throughout Northern Ireland, all contributing to the Northern Ireland economy. She also made a very important point around succession, and I know sometimes we've been told that this will help with farm succession. But she told me that she believed that older farming parents are becoming increasingly more vulnerable and often pressurised by their younger family members to sign over their land, to their sons and daughters, and can reduce can result in elder abuse, something which I am very concerned about.

So the reality is policy change on inheritance tax poses a direct threat to the continuity of family farming across the UK, and in particular in Northern Ireland. And the Ulster Farmers Union has said that the absence of a credible evidence base and meaningful consultation, or any impact assessment has led this government, unfortunately, to implement this tax increase, which is effectively what it is, and meant that many farm families are in a state of uncertainty and panic. I urge the government to think again.



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If you. Want a bigger slice of cake, the best thing to do is bake a bigger
13:17
Lord Saatchi Portrait Lord Saatchi (Conservative)
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best thing to do is bake a bigger cake. Then everyone gets a bigger slice. That, my Lords, is my noble friend Lord Elliott knows very well is how Mrs. Thatcher tried to give a whole generation of young people, including me, the hope of a better life. Her famous bigger cake was economic growth the only way you could have confidence in the country's future and your own? Instead, my Lords, we now have the exact opposite. A general feeling of disillusionment, recognising the national mood, the Prime Minister recently asked his officials for is called an uplifting plan to stimulate economic growth.

It has yet to see the light of day. My Lords, and the reason for postponement is said to be quoting lack of content. So I bravely went to the fount of economic wisdom, the London School of Economics, and very bravely asked a roomful of economics professors if any of them had a brilliant idea for how to get economic growth in Britain. Their response, my Lords, they laughed. It would take a complete change in the entire culture of the society.

Inconceivable, unimaginable, impossible. Well, whisper it, my Lords, but maybe the professors are wrong about what is possible and what is not, because there is one proven way to change the culture of a society. It's called the law. Smoking bans, seat belts, abortion, capital punishment, slavery, homosexuality, contraception. I can go on. We all remember, with warm approval, Lord Denning, Britain's most senior judge, who said, be you ever so high, the law is above you. We all like that idea, don't we? My Lords, it means a lot to us.

So I wonder if I could take a moment to describe, just for the sake of the argument, my Lords, what a what it would be like if one was to file a lawsuit against the government, the people versus the UK government. That has a good ring to it, doesn't it, my Lords? Yes, my Lords, the government has defended. We would of course, be very humble about such a lawsuit and concentrate only on tax, because, my Lords tax is ungainly.

Current tax law is an ungainly camel, designed by a committee which has been in standing session for 200 years. This, my Lords, is how such an indictment of the UK government might look. There are five counts here. Count one conspiracy to enslave United Kingdom citizens and make them unnecessarily dependent on the state. Count two conspiracy to force United Kingdom nationals to claim benefits to pay higher taxes. Count three solicitation of multiple tax revenues by stealth. Count four. Attempt to obstruct, interfere, impair, impede, and defeat the right of United Kingdom nationals to independence.

Count five conspiracy to provide material support and resources to Mesmerise and Anaesthetise. United Kingdom citizens. How would such a case end, my Lords? I'm. I'm going to suggest here, just for the sake of the story, that on the morning of the trial, the Attorney General of the United Kingdom would come out on to the top of the steps of the Royal Courts of Justice and say something like this without any admission of liability or wrongdoing on the government's part.

Today, the British government has withdrawn its objection to this case. We have reached an out of court settlement with the claimant. This will avoid the expenditure of court time and taxpayer money in prolonged litigation. The Attorney General would then continue, my Lords, in front of the astonished crowd. The government agrees to bring forward legislation at the earliest opportunity to ensure the following. Millions of British people living below the official poverty line no longer pay income tax. A massive saving in the administrative cost of collecting tax or distributing benefits.

A huge change in the attitude of millions of British citizens. Citizens who thought it was pointless to go out to work because benefits produce more after tax income than working. I'm going to speed up a dramatic fall in immigration, as the British army of young, unemployed people is motivated to get a job. Total clarity about tax, the share of people's income tax to use only to pay interest on government debt. Now 30% published every year. The effect of a frozen tax threshold subject to full disclosure.

And finally, the Attorney General will say that economics will become a compulsory subject in the national curriculum. My Lords, is such a dramatic action necessary? I will finish right away. Surely we can keep muddling through, can't we? Well, maybe not, my Lords, because maybe this time democracy isn't working. Yes, my Lords, we do change the government. We can. Every few few years, from one political party to another. That is true. But nothing much actually seems to change, does it? The same old story over and over again.

The King himself recently showed firm, decisive leadership to end. Can I ask the Lord to bring things? Perhaps we need something similar, my Lords, to end our economic problem. Someone to take away the stale pudding now on our plate and bring us a lovely big, freshly

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baked cake. Thank you. Hello. It's always a pleasure to
13:23
Lord Howell of Guildford Portrait Lord Howell of Guildford (Conservative)
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Hello. It's always a pleasure to follow my noble friend Lord Saatchi in his considerable wisdom in these in his considerable wisdom in these affairs. The government's multiple dilemmas over its economic and budgetary policies are well known, and have been widely aired in the press, and many media experts and economists have declared them to be completely insoluble. One way, they say, is blocked politically, and other ways are blocked by the simple facts of arithmetic and life. There are limits to the amount of tax you can squeeze out of an economy, especially one that's not growing much, and that if you borrow more, bondholders will want to be paid more interest.

That, incidentally, that never happened in the distant past. Monetary policy and fiscal policy have become more recently inextricably intertwined, so much so that there appears no way out. But but I wonder. I wonder whether looking, for instance, at Germany, which has been in roughly the same situation as us, whether this whole messy scene may not be based on some false assumptions. Germany faces the same sort of dilemmas as us having planned too much spending inevitably at the Covid time, and when the price of gas suddenly erupted four years ago, and in welfare, and in meeting the immigration wave and now on defence.

So what do they do? They have arranged to borrow another trillion euros as around £900 billion, or thereabouts, to pay for the endless and extra spending demands upon them, and to do so without blowing up their fiscal rules, which are just as tight as ours. In fact, they are constitutionally embedded in Germany, unlike others. Now, how on earth are they doing that with so much difficulty? Answer by building on a reputation of past and fiscal prudence and the lessons of the 20th century, which, of course destroyed Germany by having a reasonably clear forward strategy and national direction on which they're going to, how they're going to use the extra money, which will be mostly defence and infrastructure.

Although there's an argument in Berlin about exactly how we allocate allocated. And by having a political system, a machinery capable of driving their plans through all with the right mix of private enterprise resources within a government framework of determination and initiatives to meet public needs and purposes with both public and private resources, and my methods, which do not swell the what we used to call the PSBR and is now called the public sector net cash requirement. Here at home, we know that considerably greater funds could be raised by smart new ways of public and private cooperation in building and financing capital products projects in areas such as health and the NHS, in military projects, projects in financing new development aid through the world Bank bonds, through new through new build nuclear power stations which can be done without huge government burden on government finances, all delivering what is needed in a modern society.

I heard Nsh chiefs seeking permission to raise billions from combining with private finance. Although they're being blocked by the Treasury rules. The old story all in all, my Lords, a picture builds up of a potentially greatly reduced burden on the public purse and on borrowing and on interest rates and on taxpayers. My Lords, that's not ideology. It is a matter of proven experience all over the world, even in Here the intention of fiscal balance is okay, but the public needs with private cooperation and resources.

Indeed, the government has relied on its own propaganda by blaming everything on their predecessors and has for the Covid, for Russias illegal Ukraine assault, for the lot. That's, of course, political fun, but actually it's based on a completely false proposition. And assuming that everything would come right when Labour was elected, which of course it hasn't. We were promised stability when Labour swept in. Since then we've had endless instability, and now the Prime Minister has spoken to the Health secretary.

So I'm sure that's going to be all right. And the bond market will be very pleased to hear the news. All we can do is wish for a more honest stance before a hurricane of wishful thinking and wrong headed policy brings our non-growth

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economy to a complete halt. One. Of the advisory speaking limit of four minutes.

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of four minutes. My Lords, we all agree that faster economic growth is the faster economic growth is the priority, but only Labour has a plan to rebuild our productive base and to make sure that the benefits
13:28
Baroness O'Grady of Upper Holloway Portrait Baroness O'Grady of Upper Holloway (Labour)
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and to make sure that the benefits of growth are shared fairly. Just today, we've heard about a magnificent win for the Rolls-Royce workforce with the decision to build and deliver Britain's first small nuclear reactor at Millville in North Wales that will create thousands of local jobs and cut energy bills, which in turn will attract more investment, more jobs. And think about the support for JLR when a cyber attack cut car production by over a quarter. This government provided guaranteed loan guarantees of £1.5 billion, critical to confidence in supply chains.

Now how had car production not been hit? Of course, economic growth would have been double, but even so, it was our government's readiness to step up and back industry, back workers, back jobs that saved the day. The party opposite tries to draw a false trade off between workers rights and jobs. Opposing Labour's plan for day one rights to make work pay and to call time on exploitative zero hours contracts. But under the last government, insecurity at work soared and living standards slumped to a historic low that sucked demand out of local economies and was bad for growth.

And let's not forget the damage caused by conservative policies of austerity. It is far too soon to try and gloss over the findings of the Covid public inquiry. Our services were left scrambling to meet the challenge, relying on the dedication of shamefully underpaid and overstretched staff. As recently as the 5th of June, in a speech to the RSA, Shadow Chancellor Mel Stride admitted the previous government had failed. And I quote, many have lost trust in us and many are right to be angry.

The previous government's trickle down approach to the economy simply didn't work for the vast majority of people in this country. Getting into work, getting a job was no longer a guarantee of freedom from poverty. Many saw their pay packets shrink, while profiteers racked up rents and prices. And according to the New Economics Foundation, those on the lowest incomes have faced an effective tax rate of 44% on their income, and wealth increases double that double that of the richest.

Finally, our economy faces an increasingly volatile world Brexit, Covid conflict, climate change and a global financial sector that can be impulsive, destructive and dedicated to self-interest at the expense of society. As the economist Larry Elliott noted during the global financial crisis of 2008 and the Covid pandemic of 2020, the markets were only bailed out thanks to the willingness of governments to print money and run big budget deficits. There was no talk of the need for bond vigilantes.

Bond market vigilantes to impose financial discipline back then. We must defend Labour's programme to invest and rebuild for the people of this country against future risk. Perhaps my noble friend, the Minister can comment on whether, if necessary, consideration should be given to the case for targeted and transparent capital controls to prevent short term capital movements blowing the economy off course. The conservative prescription is to shrink the state, slash employment and welfare protection, and let the markets rip.

Labour's remedy must be to rebuild and renew the public realm, raise living standards and make the

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markets our servant, not our master. Yeah.

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Yeah. It's always a pleasure to follow the noble Baroness O'Grady of Upper Holloway, but she will not be Holloway, but she will not be surprised to find that I agreed with very little of what she said, and indeed I was horrified by some
13:33
Baroness Noakes Portrait Baroness Noakes (Conservative)
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and indeed I was horrified by some of it. My Lords, four minutes is not long enough to cover the very many ways in which the government are damaging our economy. So I am going to concentrate on just one area, which is how the government's tax policies impact business investment in the UK. Now, this morning's dismal GDP figures, which are the result of this government's policies, underscore the growth problem. If the UK is going to escape from that, we need businesses, both existing ones and new investors from abroad, to invest.

Tax really matters when it comes to investment decision making. This year's Tax Competitiveness Index ranked the UK 32nd out of 38 countries, with a corporate element only marginally better at number 28. These are terrible figures. The key drivers of this are the headline rate of corporation tax, the complexity of the tax system and low levels of tax allowances. First, the headline rate. We used to have a rate of 19%. And then it was raised to 25%. The current government have said that they will keep it at 25%.

And this is a mistake. When CFOs run the numbers on investment decisions, a key determinant of the outcome is corporation tax, because it's such a big drag on net investment returns. Low corporate tax rates both encourage investment and increased tax yields. And Ireland, with its 12.5% corporate tax rate, is the living proof of this. Secondly, on complexity, we notoriously have the longest tax code in the world at over 22,000 pages. Now, size is not synonymous with complexity, but is a pretty good proxy.

Businesses want to be able to understand the tax rules which affect them, and also to be able to interact efficiently with the tax authorities. We fail on both counts. Thirdly, while we have a competitive system of tax allowances for plant and machinery, we are not competitive for structures and buildings, which is important for some kinds of business investment. Research by the Tax Foundation suggests a significant GDP boost if tax expensing were widened. Now, in last year's budget, the Chancellor made the terrible decision to raise employers national Insurance on top of the minimum wage hike.

This has already led to higher prices and lower employment, and it is now a big negative factor in investment decisions, which create jobs. Similarly, business rates are now weighing heavily on business investment, which needs a large physical footprint. On top of all of this, as my noble friend Lord Eliot explained, the non-dom tax regime actively deters entrepreneurs from making the UK their investment base. Wealthy business people are already relocating. Soon they will not come at all.

My Lord. The. The government did not create all of these problems, but they certainly made them a lot worse. A decent rate of growth is a pipe dream. If the government continue with policies which actively deter business investment.

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My Lords. This debate got off to a fine start with an excellent speech from start with an excellent speech from my noble friend, and it's always a pleasure to follow my noble friend Baroness Noakes. I agree with what Baroness Noakes. I agree with what she said about the complexity of the tax system. I think there's been a consensus that we should
13:37
Lord Young of Cookham Portrait Lord Young of Cookham (Conservative)
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been a consensus that we should stick to the fiscal rules. One third of government debt is held overseas, one more of it, more and more of it by hedge funds who know no loyalty to this country. So we should stick to the fiscal rules. And that means the government has either got to increase taxes or. Cut expenditure. This time it's absolutely clear they've made their choice. They're going to increase taxes. And that's going to make the mantra of last year growth, growth, growth even more difficult to achieve.

But looking ahead, the point I want to make is that they should revisit that decision and look again at expenditure, particularly the ballooning welfare bill with 1 million more people than a year ago claiming the main out of work benefit without any requirement to look for a job. A point made by the noble Lord Lord Skidelsky working age sickness rates in advanced economies have fallen since the pandemic, but here they continue to rise. Forecast to be 4.1 million by the end of this Parliament.

Now, what is the view of Ministers on this? Not my view, but of Ministers. Last week, Pat McFadden said the growing costs of welfare are unsustainable, with a city the size of Leicester being added to the benefit population each year. The Chancellor has warned Labour MPs that there was nothing progressive about a benefit system that left 1 in 8 young people, neither in education or employment. The Prime Minister has said the current welfare system is, I quote, unsustainable, indefensible and unfair.

As our Economic Affairs Select Committee reported earlier this year, I quote, we concluded that people without work have incentives to claim health related benefits and once in receipt, have neither the incentive nor support to accept the job. Work does not pay. End of quote. But, my Lords, the government refuses to act on their own pronouncements. The terms of reference of the Timms review, which came out last week, say I quote the review, would not generate proposals for further savings.

But why won't they act? They won't act because 123 Labour MPs tabled an amendment to the welfare Bill, proposing a modest 5 billion reduction in welfare costs, and that has simply stopped the government in its tracks. But the only point I want to make today is that there is an overwhelming majority in the other place for welfare reform. My party shares the view of the Prime Minister. Unsustainable, indefensible and unfair. So rather than continue to stunt growth with proposals for a high welfare bill funded by high taxation, the government should reach across to find a consensus on welfare reform, as they are planning to do on social care, but hopefully on a faster timescale and at a time when public opinion is polarising at the extremes of the political spectrum.

Should not the mainstream parties come together to

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find a solution on welfare reform? Yeah, yeah. My Lords, it's a great pleasure

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My Lords, it's a great pleasure to speak in this debate and congratulate my noble friend Lord Eliot for securing it. And it is genuinely a great pleasure to genuinely a great pleasure to follow my noble friend Lord young, with a speech with which I
13:40
Lord Harper Portrait Lord Harper (Conservative)
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with a speech with which I wholeheartedly agree. I want to start by congratulating the Minister on his personal contribution to the productivity and the economy. For those noble Lords that don't know as well as being the Financial Secretary to the Treasury and the Minister for growth. He's also recently become Labour's campaign coordinator. And in such a way, he's taken another job which presumably comes with no pay. So he's increased the productivity of the economy at least a little bit. So I congratulate him and incidentally, on his courage, because given the Chancellor seems to be leaning into the unpopularity of her forthcoming budget, it's it's it must be interesting.

The noble Lord must then be contemplating the consequences for his other job next year, as he tries to raise Labour's fortunes in Wales, Scotland and across England. So I wish him the very best of luck. I just wanted to set out for noble Lords, the list of excuses that we've heard from both the noble Lord and the Chancellor ahead of the budget, for the reasons why it sounds like she's going to break her manifesto commitments. She said it's because the OBR has changed their view about productivity, not actual productivity.

It's just their view coming into line with, I think, most other forecasters. She's blamed Brexit, she's blamed Donald Trump and she's blamed the pandemic. Now, if we look at what the public think and whether those excuses are going to wash. I think probably not the public think. In a recent poll published by taken by Ipsos Mori and published in The Times and The Sunday Times, only 10% of the public think that the productivity of British workers is the problem with the poor state of the economy.

Only 29% think it's Donald Trump's fault. 59%. So the the outright winner think it is the fault of the Prime Minister and the Chancellor. So I think they have their their work cut out for them in trying to land those arguments. Now, if we look at the key economic statistics, several noble Lords have already mentioned today's growth figures. We see growth slowing and many economic forecasts getting slower still. Inflation at the time of the general election was at 2%.

Bang on the Bank of England's target that it's been set. It's now 3.8%, almost double. That has a real impact on family finances. And we see unemployment having risen from 4.4% at the time of the election to 5%. And that does remind us that's the highest since lockdown. And it does remind us, my Lords, that every Labour government there has ever been has left office with unemployment higher than when it came in every Labour government. That's a fact that I remember when I was in the other place, Labour MPs hated being reminded of, and I suspect Labour peers don't like being reminded of it, but it nonetheless remains true.

Why might that be? Well, I think it's because of taxes. The last budget labour came up with this fiction, and I say it's a fiction because it wasn't stood up. The OBR refused to stand it up, both in interviews and in their documents, of of £22 billion black hole. The Chancellor then raised taxes by £40 billion, but she increased spending by £70 billion. So it's not really surprising there's a problem. She then said that she wasn't going to raise taxes or borrowing for the rest of the parliament.

She was interviewed by Trevor Phillips. She confirmed that for the rest of the parliament, she would keep income tax rates, National Insurance rates and VAT rates unchanged. And when he challenged her on this, she said that it was on us. She said the responsibility for the economy. So I say to her, to the noble Lord, the Minister in closing, if he thinks that raising income tax in the budget, particularly to raise welfare benefits, as the Chancellor indicated in her interview earlier this week, is going to be a winning formula that I think he is going to be sorely disappointed, and it's going to be at the cost of the livelihoods and the growth

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opportunities of everyone in the United Kingdom. Yeah. The noble Lord.

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The noble Lord. Lord Elliott of Mickle Fell for. Securing and introducing this debate, even if its timing in peak debate, even if its timing in peak budget purdah means its scope is necessarily either backward looking necessarily either backward looking or about broad principles. In responding on Monday to the noble Baroness, Lady Neville Rolph's
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Viscount Chandos Portrait Viscount Chandos (Labour)
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Baroness, Lady Neville Rolph's question, my noble friend, the Minister displayed the mastery of Stonewall Jackson or of Geoffrey Boycott in avoiding breaching that purdah. I suspect he may still need to draw on those skills again this afternoon. In looking back briefly, I do not propose to get into a battle of statistics. 16 months into the Labour government's period of office. Of course, we would all like to see stronger growth already coming through, but 16 months is but a twinkling of an eye in relation to the long term investment which will drive the achievement of those growth targets.

As my noble friend Lord Eatwell set out, I was fortunate to attend in a non-parliamentary capacity last month's regional investment summit in Birmingham, attended by, among others, my noble friend, the Minister, superbly hosted by the West Midlands mayor and his team at the Combined Authority, the summit was a powerful showcase for the underlying talent and potential in the UK. The confidence of companies, investors, domestic and international, despite the impact of Brexit, referred to by my noble friend and the government's consistent and vital work in creating the environment.

For this to deliver growth, jobs and prosperity. This was the first investment summit to be held outside of London, and vividly demonstrated the depth and breadth of opportunities throughout the country. Can my noble friend, the Minister, confirm that Future Investment Summit will follow this important precedent? My right hon. Friend the Chancellor and the whole of the government have set out to balance fiscal discipline, a necessary condition for achieving all other objectives, growth and fairness in considering the challenge of restoring financial discipline, it is impossible to ignore the legacy of the last government.

I will not explain the significance of the number of 22 billion. My noble friend. The Minister is now more expert on the subject of black holes than the Astronomer Royal. I will, however, again quote the evidence given to the Economic Affairs Committee by Richard Hughes, chair of the OBR, about the last government submission to the OBR. Some people have referred to that as a work of fiction. That is probably generous, given that someone has to bother to write a work of fiction, whereas the conservative government have not even bothered to write down their departmental spending plans.

It is because this government, in contrast, has brought rigour and responsibility to budget planning that commentators have had so much data about which to speculate. I do not envy my right hon. Friend, in having to strike the balance between fiscal discipline and growth measures, though I have great confidence in her ability to do so, but would like to end with a few words about fairness. Jalan Ganesh DfT, the biographer of George Osborne, the architect of austerity, wrote in 2015 A country's tax code is not just a mesh of rules and rates.

It is a secular Bible of moral signals. There is clear evidence that people's attitude to their own tax payments is significantly influenced by their perception of fairness. So when the Chancellor announces budget measures in two weeks time, if there are any adjustments to taxes on higher earners or asset owners, these should not be seen as vindictive or anti entrepreneur or anti-business. They will represent a considered judgement to rebuild public trust in the fairness of the tax system and indeed in our democratic congratulating.
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Lord Bridges of Headley Portrait Lord Bridges of Headley (Conservative)
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My noble friend Lord Eliot on securing this debate, his excellent book, and all the work he's been doing on jobs. And also, I'd like to congratulate a number of noble Lords who've spoken, especially my noble friend Baroness Noakes, in her remarks as well, which I entirely agree with. And my noble friend Lord young and Lord Harper, who I'll return to in a moment. My Lords, when thinking about this debate, I happen to read again the lecture that the then Shadow Chancellor, now Chancellor, gave at the Mays lecture last year, in which she promised, and I quote, a fundamental course correction for the British economy.

And as the noble Lord Viscount Chandos has just said, it's now 379 days since the Chancellor gave her first budget. So how is this fundamental course correction going? There is, as I'm sure we all have read and seen, a growing sense of instability fuelled by speculation, a lack of confidence in the future, more people worrying about keeping their jobs. And that, my Lords, is just among members of the Cabinet out in the country. It's far worse. The Chancellor herself has said that the UK economy feels stuck and today's growth figures confirm that.

So why are we in this sorry predicament? My noble friend Lord Elliott and Baroness Noakes made a number of points as to why this might be, and I won't repeat them in the time I have. Top of my list is a point that my noble friend Lord young made. The Chancellor has lost control of spending. Rather than take the right. But tough decisions to slow down the spiralling cost of welfare. Not even to stop its rise, the Chancellor backed down when Labour MPs said no.

And despite the fact, as my noble friend Lord young said, despite the fact, the Prime Minister says the current system is unsustainable. Spending overall has overshot forecasts by over 4% since the spring of 2024. Adding to the pain is the impact of the misguided 25 billion tax rise on employers, which my noble, my noble friend Baroness Noakes referred to stoking unemployment and making inflation stickier. So, my Lords, the reason the Chancellor may have to raise income tax for the first time in 50 years, 50 years.

Breaking Labour's promises is because of her fundamental course correction. But as my noble friend Lord Harper just said, the government refuses to accept any blame or any fault for the situation we are in. As he said, they're blaming everyone but themselves. Now everyone knows, my Lords, this is nonsense. Last autumn, the Economic Affairs Committee, of which I was then chair, published a report warning that the government must rebuild the nation's fiscal buffer given the global volatility and risks we face.

The Chancellor's reply assured the Committee that, and I quote, the budget took the necessary difficult decisions to put the public finances on a sustainable path, setting realistic plans, realistic plans for public spending while raising revenue to create the conditions for growth. Now, my Lords, she clearly thought she had done enough to rebuild our fiscal defences. She said she had built a fiscal buffer, but in reality it has turned out to be a wafer. My Lords, a tragedy is therefore unfolding in front of us with an enormous majority.

This government has the ability, the ability to take tough decisions, to reform our public services and cut welfare. But they have ducked those tough decisions. The Prime Minister and the Chancellor mouthed the right sentiments about growth, stability, security, but their actions undermine those aspirations. 379 days after its cataclysmic budget, what do we see? The fundamental course correction the Chancellor has given us is taking us deeper into the mire insecurity, instability, stagnation, the reverse of everything they've promised.

The fear, my Lords, is that it will require things to get even worse for the Prime Minister, the Chancellor and the noble Lord to do what they promised last year and give us the fundamental course correction. This country really badly needs.

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Yes. Pleasure to follow my noble friend Lord Bridges. And can I start by congratulating Lord Elliott on securing this important Elliott on securing this important debate? I'd like to start with a discussion about measuring productivity, which is, at the end
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Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Conservative)
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productivity, which is, at the end of the day, crucial to growth, which, despite Baroness O'Grady rose tinted view of the country's growth at the moment, is at a desperate level, mainly because of government decisions which have turned a fictitious 22 billion black hole into a hard, 40 billion black hole. However, I am going to be as helpful as I possibly can to the government, which may come, I'm sure will come as a surprise to the noble Lord, the Minister. He will see.

Specifically, I have great concerns about the measurement of productivity used by the ONS. The ONS primarily measures labour productivity as output per unit of labour, which is usually measured by gross value added per hour worked in this country. Certainly in the private sector, we have a long hours culture unlike, say France. So our output per hour is bound to be lower. Unusually, in the UK we include public sector productivity in our calculations. This is extremely difficult to measure and of course extremely hard to detect any improvements.

Heroic assumptions have to be made about the output, which are probably wrong. In the private sector. The gross value added is the key determinator and that, believe it or not, is determined by monthly or even annual business surveys. So let us bear in mind that the UK economy is now 80% services, not trade, and a large proportion of that is in digital and intangible services, which are one of the fastest growing parts of the UK private sector and are extremely difficult to measure.

Surveys are very unreliable. Hard stats, such as we see in the employment data, which we know to be correct, as Lord Harper has reminded us, going rocketing up under labour our hearts. That's a much more reliable but harder to find. So I won't say much more on this particular issue, other than to ask the Minister and to remind the Minister that I have long argued that I don't think our productivity measures. Measures are reliable. I have argued it under the previous governments, and I think we actually may be more productive than the ONS figures indicate.

So I hope you will confirm that the Cabinet Office are working to improve them. I also want to comment on the terrible damage to the economy being inflicted by the current government on a particular area. I have many concerns National Insurance and so on, but particularly the dire effect of the Employment Rights Bill, which is currently going to hinder both productivity and growth. The suggestion that government make that as a result of the IRB, we will have happier workers who will be more productive is frankly worthy of derision, and the refusal to exempt SMEs is going to do great damage.

The Minister, the Labour Lords Minister will assume my remarks are politically driven. So for the benefit of him and Baroness O'Grady, I'm going to quote from an unsolicited letter I received from a mr. Jerry Dunham. He says we are a third generation family run manufacturer based in Norfolk since 1968. Our factory in Neatishead employs many local people, most of whom live within our community. The bill, in its current form, would impose unsustainable costs and compliance measures that SMEs cannot absorb.

It would reduce flexibility, make day to day operations harder, and force us to reconsider employment numbers and future job creation. For businesses like ours, which operate in the education sector, which is of course, very seasonal, these proposals will make it harder to manage staffing and maintain employment during quieter periods. Finally, he says, these changes will discourage hiring, particularly for young people and those without prior experience. That is from the coalface. I attended a great, great GB seminar organised by the Cabinet Office this morning about inward investment into the UK.

People representing American investors came to me and said The American investors are very nervous about investing in the UK at the moment because of the potential effects of the air. So I urge the noble Lord

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to the Minister to assure Mr. Dunham and all SME owners that this bill will be put on hold. Amen.

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Yeah. My Lords, the forthcoming. Budget. Due on the 26th of November, is

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Due on the 26th of November, is perhaps the most anticipated that I can remember. We've had a summer of can remember. We've had a summer of speculation, an autumn of uncertainty. And now, as winter approaches, we know what this approaches, we know what this coming tax rises. And we know this is not an this is not an inevitability. It's a political
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Baroness Stedman-Scott Portrait Baroness Stedman-Scott (Conservative)
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inevitability. It's a political choice. It's the choice of a Chancellor who is deliberately decided not to tackle the soaring welfare bill, and in doing so, has failed to confront the deeper question of how we restore the value of work in our society. Once again, rather than make the structural reforms our economy so desperately needs, this government reaches for the taxpayer's wallet. But my Lords, we cannot tax our way to prosperity. We cannot grow an economy by burdening those who work, create and invest while allowing the welfare budget to expand unchecked.

The cost of economic activity through ill health is now estimated at 212 billion a year, and around 235,000 people aged 25 and under are claiming long term sickness benefits, many citing mental health. Some 5000 people a day are moving on to sickness benefits, and this represents not only a fiscal challenge, but a moral one. The loss of potential, of dignity, of contribution. If we are serious about jobs, growth and prosperity, this is where our focus must lie. A welfare system that traps people rather than supports them is not compassionate.

It's corrosive. Yet too often welfare policy has become morally untouchable. Just because a policy is founded on noble intentions, compassion, equity and justice does not mean it should be immune from scrutiny. In fact, the more moral appealing a policy appears, the more resistant it becomes to critique, creating a dangerous blind spot. My Lords, the welfare Bill is now one of the greatest barriers to economic renewal. Not simply because of its size, because of what it represents a failure to match compassion with accountability and support with expectation.

Until we confront that reality, we will continue to balance the books not through reform, but through ever higher taxes on those already doing their bit. The government should be clear. While value for money considerations and the reductions of inefficiency are not explicit objectives. My noble friend Lord Young of Cookham has already referenced the terms of reference of the The Timms review, but it is really important that Pip is fair and fit for the future, and is something that we can afford as a country.

It is a deliberate exclusion. My Lords, and one that raises serious questions about priorities. The government should also confirm that improving outcomes and securing better value for the taxpayer remains central to the design and delivery of disability benefits, and commit to publishing an implementation plan with clear, measurable efficiency gains. My Lords, this debate matters. I congratulate my noble friend Lord Elliott of Mickle Fell for securing the debate and your book. It's a good one. I can recommend it.

And in fact, because I'm feeling a little bit generous now, I'm very happy to buy one for the noble Lord Livermore and I am sure you will enjoy every page. So let me just ask the noble Lord a couple of questions. Can the Minister explain why? Value for money considerations and reducing inefficiency are not explicit objectives? And will the government confirm that improving outcomes and securing better value for the taxpayer remains central to the design and administration of disability benefits, and commit to publish an implementation plan with measurable efficiency gains? My Lords, I spent 34 years helping unemployed people with every problem in the book.

Back to work. It can be done, but it needs to be done against a backdrop of a good economic performance of a country. And I leave you with this. You can't make a poor man rich by making a rich man poor, and you cannot help the wage earner by punishing the wage payer.
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Lord Bilimoria Portrait Lord Bilimoria (Crossbench)
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My Lords, the government has spoken about growth from day one as its priority. And to be fair, it's doing a few good things. It's carried on the Government Help to Grow management programme, which was started by the previous government. 10,000 businesses have already gone through this programme that 12,000 enrolled on it. It's delivered by 60 business schools around the country. And I'm proud to be patron of the Small Business Charter, which I took over from my late friend, Lord David Young.

It's a 12 week mini MBA, just the right thing to be doing. Baroness O'Grady spoke about the small modular reactors and nuclear reactors when I was president of CBI 2020, 2022. I was like a stuck record saying, let's build these, let's build these. Finally, now, five years later, we're starting to build them. And in entrepreneurship it's problem, solution, action, but quickly. So the government, I'm glad, is finally doing this. And the priority with research and development and innovation. We spend 1.7% of GDP.

America spends over 3%. We need to increase expenditure on R&D and innovation. And I'm chair of the International Chamber of Commerce UK. The ICC is the largest business organisation in the world with 45 million members. And we have promoted digital trade, which I'm glad to see the government has taken as part of their industrial strategy. I mean, the UK now stands at a crossroads. Outdated paper based systems are stifling growth and we can be, as the UK, a leader where trade represents £1 trillion of the UK economy and by implementing digital trade with the Minister, agree £25 billion in trade growth, £220 billion in efficiency savings, 35% efficiency gains for SMEs, £22 billion in SME working capital unlock trade transaction times cut from two months to one hour 80% reduction in trade transaction costs.

Shipping costs reduced by 18%. Workforce productivity increased by 60%. I thank the noble Lord Lord Elliott for initiating this debate. But. But the government talks about growth, and yet so many of the measures it has implemented are anything but going to help growth, the hampering growth, whether it's the employers now going up, whether it's inheritance tax on farmers and family businesses, whether it's VAT on private schools and removing business rates, exemptions for private schools, whether it is VAT reclaim for tourists, which was taken away by the previous government, shouldn't the government bring back that relief? We'd have more tourists spending money and spending on goods, as well as staying here and on restaurants.

The non-dom regime change already over 10,000 people have left many, many people that I know. They pay £8 billion of taxes. They employ people, they invest, they conduct philanthropy in this country. We're going to be losing all that because money walks. And now there's talk of the £30 billion hole to be filled. And there talk of more taxes going up on the budget, which sadly is on my birthday, we have 1 million NEETs in this country, young people who do not work.

We have 9 million people of working age who don't work. We need to get these people back to work. I co-chair the International Students All-Party parliamentary Group. Would the Minister confirm there's talk now there's going to be a levy on international students going to be introduced in the budget. The two year post-graduation work visa is going to be reduced from two years to 18 months. These international students bring in £42 billion to the economy. We treat them as immigrants. Shouldn't they be taken out of the net migration figures? And when it comes to immigration, this fear of immigration, bad immigration is bad for this country.

But good immigration is great for this country. And without the 16% of ethnic minorities, this country wouldn't be the sixth largest economy in the world. And as part of the PM's delegation to India last month, it was fantastic. And I spoke with the finance Minister of India's annual economic conclave, the Finance Ministers Conference. The title was prosperity in turbulent times, and India is growing at 6.5% a year with a target of 8% and our latest figures released today, we've grown at 0.1% a flatlining economy.

We have debt to GDP of 100%. We have high debt servicing costs. We have the highest tax burden in over 70 years. We have high government expenditure. We have unemployment of 5%. We have inflation almost double the target of 3.8%. We have defence expenditure that needs to go up to 3%. We need to have a plan. We need to be bold. And I conclude with this. In June I visited Argentina and I met with President Miley and I met with his whole team.

He has a very clear plan of bringing down expenditure, bringing down inflation, and every single Minister that we met sang from the same hymn sheet. This government

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needs to have a plan. It needs to be bold. Then we can get growth. I wish to thank my hon. Friend

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I wish to thank my hon. Friend Lord Elliott for securing this timely debate, and also admire Lord Bilimoria sort of speed of of Bilimoria sort of speed of of speech, the economic the economic path of our country is alarming. We're living beyond our means,
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Lord Petitgas Portrait Lord Petitgas (Conservative)
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We're living beyond our means, taxing more and getting less and stifling any incentive to work and stifling any incentive to invest. And I want to set out five compounding and depressing facts. First, the growth is weak, while the tax burden is the highest in peacetime, when taxes rise and growth stalls, the message to investors is clear something is structurally wrong. Second course spending, welfare, pensions and health mainly consumes more than half of all tax revenue. It is growing way faster than the economy.

This must be brought under control, otherwise taxes will just keep on rising, as Lord Leong rightly said. Third, labour participation has fallen. Around 1 in 4 working age adults is not working and not seeking work. No modern economy can seriously prosper if participation falls while welfare spending rises. Compassion matters, but work must pay, and those who can work must work. Fourth, public debt is near 100% of GDP. That is two thirds more than Germany's. That interest c revenues.

Global markets have noted the highest borrowing costs in the G7. That's a third higher than France or Italy, and two thirds higher than Germany's. Our higher cost of capital bears down on everything in this nation. Fifth, confidence as we discuss matters greatly. It is the engine of an economy and society, and it is an all time low. Business sentiment has been negative for most of the year, but surveys also show that many young Britons are considering working abroad. That is not just wealth leaving it is talent.

The next generation wants to go. So there you have it. We're stuck. We're caught in a loop of high spending, leads to high taxes, leads to weaker incentives, leads to lower growth, higher debt, higher borrowing costs, and pressure for further tax rises. Now, we cannot break this loop by taxing or shrinking base more heavily, nor can we escape it in a single budget. Britain does all it takes for a dynamic economy, and yet we behave like a high intervention, high friction and inefficient state.

And so enterprise slows and talent goes elsewhere. We need indeed a course correction, one that rewards people who work and invest here. Let me suggest three ideas. And there are many others. First, like Baroness Noakes, I actually think we need to start a path towards lowering corporate corporation tax. Even a modest step will show that Britain means business once investment, not capital flight. Second, reward both enterprise and reinvestment in the UK reduce capital gains for entrepreneurs. I think it was a measure that Gordon Brown had put in and allowed deferral.

When those gains are reinvested into UK companies. If you build here, you should benefit here and there. We will not need the capital controls that this mooted 20% exit tax would suggest, which I would I think is would be a disaster for this country. Third, make work pay and expect work support must remain, but the system should encourage contribution, not dependency. So in summary, we have three crucial levers to make it very simple. The debt, the spending, the tax. It is correct to keep a lid on the debt.

Lord Young of Cookham was eloquent on the tug of war between spending and tax, both at an all time high. But if we want growth, we must reduce costs. This is like a company and free up productive forces and reward work and enterprise taxes cannot be the

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residual variable. Thank you. Yeah, yeah.

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Yeah, yeah. Well my Lords, I would to like to join in the congratulations to my noble friend Lord Elliott of Mickle Fell for obtaining this debate just 13 days before budget. A budget, incidentally, which I expect, I think we can all expect will be a highly political budget. will be a highly political budget. And I rather fear that common sense will be sacrificed for short term will be sacrificed for short term political gain gain. And we can all expect from what has been a well trailed budget, that the
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Lord Swire Portrait Lord Swire (Conservative)
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trailed budget, that the Chancellor's red meat to the left, not necessarily enough for noble Baroness Nye Baroness O'Grady will be to change the two child benefit cap, which to my way of thinking, has the distinction of being both unaffordable and undesirable. My Lords, we will hear over the next few days and no doubt from the Minister today about the black hole, one of his favourite subjects. The will, of course, be no mention of the fact that the government, within a matter of months doubled that black hole.

And we will hear from the Chancellor the old hackneyed phrase that those with the broadest shoulders must bear the brunt of the pain. So I don't know about anyone else, but my shoulders are pretty sloping at this moment. But let's just examine others whose shoulders have more right to slope. I am grateful to Fraser Nelson, who with the Freedom of Information requests, discovered that the top 0.1% of the population pay more in income tax than the entire bottom 50%.

Put together the top 4000 taxpayers. That 0.01% pay more than the entire bottom quarter. That's 8 million people of taxpayers. The top 100 taxpayers pay almost as much money generate as is generated from North Sea oil revenues. As my noble friend Lord Elliott of Mickle Fell said, more ultra rich people are set to leave the United Kingdom than any other developed country. Those are not his words. They come from a study recently undertaken by UBS.

It was my Lords, Denis Healey, who, and to slightly misquote him, said he would wanted to tax the rich until the pips squeak. Unfortunately, that squeaking is now an ever increasingly distant noise coming from Milan, Dubai, Lisbon and other places to which our wealth creators have already relocated. This may give a frisson of pleasure to the left, but it is the economics of the madhouse. Like the Chancellor, I'm no economist, but how, my Lords, can it make sense to drive away the wealth creators whilst rewarding the wealth consumers? It's a one way ticket to an economic crisis.

And actually talking of introducing an exit tax as well will not only achieve the twin amazing achievements of not relocating people back to their country, but equally others will not come for the first time to this country if they feel that in some way they cannot leave with the money they create here. And when she has succeeded in doing all this, she will have to come after Middle England, the doctors and the nurses and so forth, to fit and to fill her fiscal hole.

My Lords, I spent a good part of my ministerial career talking up the United Kingdom around the world and trying to attract inward investment. And it pains me to be so negative. But like my noble friend Lord Petitgas, I think this is a matter of confidence. And I would like to hear from the government how we can instil some confidence in overseas investors to bring them here. The ONS data shows our jobless rate increased by 5% against a projection of 4.9%.

Wage growth has slowed. The unemployment payroll has fallen by 180,000 since the Chancellor announced higher taxes on employers in the last year's budget. And in conclusion, I would just say, my Lords, I think the government's failure to tackle the welfare issue, I can understand it from their ideological point of view. I understand it from their political constraints, given where they are in the other place. But I think they need to rediscover moral fibre and a moral backbone to reform the welfare state, which is not in the interests of those who not in the interests of those who are on it and trapped in it, nor of those who have to pay for it.
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Baroness Fall Portrait Baroness Fall (Conservative)
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on the debate. Today we meet at an unsettling moment between the Chancellor's furious pitch rolling Chancellor's furious pitch rolling of the last week and the budget itself, which does loom somewhat ominously. We must all do our bit, ominously. We must all do our bit, she said last week. And she's not wrong to call the nation together in a common endeavour. And were it in a common endeavour. And were it truly aimed to deliver growth and create jobs, she would certainly have my support.

But her record so far has suggested otherwise. The fundamental challenge is that we seek growth at home against rising seek growth at home against rising debt, welfare dependency and as we navigate uncertain global outlook navigate uncertain global outlook in practice, this means we have to deal with the complexity and often changing global trade climate with its tariffs, export controls, import controls, interventionist industrial strategies are the name industrial strategies are the name of the game, My Lords, and the only certainty in geo economics is uncertainty.

So the question for uncertainty. So the question for the Chancellor, in my view, is this what is our response to these economic and social challenges? So economic and social challenges? So far we have heard little strategic coherence and nothing to me that looks like a growth plan. Right looks like a growth plan. Right from the start, we saw the government settling pay disputes without any conditions to drive productivity and reform. Then, instead of confidence building measures for business to create jobs, we saw hikes to NICs, an extensive programme of workers rights to be rolled out from day one, making it very expensive to hire, impossible to reassess and then difficult to fire.

The stats released this week speak for themselves. Less jobs, less hires, more unemployment. One of the worst jobs markets for generation. How is this helping working people? My Lords, in this age of economic nationalism, a key strategic question for the Chancellor should be what is our competitive advantage and how are we thinking about nurturing it and protecting it? We are not a rich nation in raw materials. We are a nation of entrepreneurs and inventors. In other words, we live by our wits, not by our wealth.

And just look at our record. On start ups. London ranked the second best place in start ups, tied with New York. And yet we're not we're not seemingly able to scale up incubating brilliant businesses, only to have them picked off by foreign investors. The solution is not one simple fix, but a set of policies and cultural changes which require political will. Whether it is nurturing our first class universities, commercialising their research, backing risk, backing a tech winner would be a game changer.

Using public money, yes, but at a critical moment, backing talent. And that means global talent. And it certainly does not mean implementing a raft of strategies designed to show entrepreneurs the door. Finally, I want to turn briefly to welfare and echo some remarks from others today. Lord Bridges, Lord Singh, Baroness Stedman-Scott and Lord Petitgas behind me. The rise of cost of welfare bill is alarming, but not half as alarming as the tally of wasted lives. Let us remember what welfare is, for.

It is there to support those who can't support themselves and encourage those who can into work. Welfare is also about fairness. Fairness to those who need support and fairness to the taxpayers who pay for it. Designing a system which encourages people, especially young, to a life on benefits with no checks, no redress, is a tragedy for each person. It is a national disaster which we simply cannot afford. And as conservatives, I do say we must support welfare reform at every opportunity, even if it does mean voting with the government.

Taken together, my Lords, the burdens on business, the policies which discourage entrepreneurs, the lack of strategic thinking for growth, the inability to tackle welfare means we face the labour solution to our fiscal woes, which is more tax. I cannot see where the growth plan is in this. I would urge my Lords that we return to the simple but important principle of living within our means, not because we have the minds of an accountant, but because we understand that the happiness and safety of our nation

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comes from economic security. Yes. Here. Yeah.

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Yes. Here. Yeah. We must thank the noble Lord Lord Elliott of Mickle Fell for Lord Elliott of Mickle Fell for introducing this debate. I welcome the opportunity to have a debate on
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Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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conservative government? The the economy is heavily path dependent. The economy we have now is the The economy we have now is the result of that 14 years of conservative government. My government has done much that's government has done much that's good in the 16 months that it's been in power, but suggest that been in power, but suggest that there's some magic solution that can overcome the problems that were created, starting with the ill judged move to austerity, for which judged move to austerity, for which the Liberal Democrats should accept their share of the blame to.

I their share of the blame to. I could run through the whole litany, ending with the last conservative ending with the last conservative Chancellor's ill judged decision to make the unfunded cut in National make the unfunded cut in National Insurance contributions, leaving to the black hole that I'm sure my the black hole that I'm sure my hon. Friend the Minister will mention in his reply. Now, various mention in his reply. Now, various issues have been raised that are worth addressing during this debate.

worth addressing during this debate. Noble Lord Lord Swire made a particular point of how much tax was paid by the highly paid. It's a very simple reason why highly paid people pay so much tax is because they're so rich. The level of economic inequality in our society is and remains substantial. And it's absolutely right that those with the broadest shoulders, whether that includes the noble Lord or not, I don't know. But they should pay their fair share, and their fair share means they pay considerably more.

I also I was interested noble Lord Lord Sewell Skidelsky is not in his place, but he raised the issue of the bond vigilantes saying they should be ignored. Well, I, I agree with that. In truth, the restriction on what our economy can do is the economy's productive capacity. It's not the attitude of, as he termed the bond vigilantes. Now, reference has been made a number of times to the. In quotes welfare burden. Well, I would suggest everyone reads the recent column by Chris Giles in the Financial Times, in which he stated there was no need to panic, that the costs of welfare are not spiralling.

In fact, they have been remarkably consistent over time. Many of the statistics that people quote about the increasing numbers in one particular. Type of benefit is explained by the fact that other forms of benefits are reducing the overall welfare spend. And you can read the article from Chris Giles, not from me in the Financial Times remains consistently constant, and it's actually less than it was under the Prime Minister, under the when David Cameron was the Prime Minister.

So this idea that we are facing some existential crisis because of the burden of welfare is nonsense. I invite my noble friends,

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applies here. My Lords. I too.

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Am grateful to my noble friend Lord Eliot for securing this very timely debate today. For timely debate today. For inspiration as to what to say, I referred to the Taxpayers Alliance, a highly respected body founded by my noble friend, and I agree wholeheartedly with the view
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Viscount Trenchard Portrait Viscount Trenchard (Conservative)
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expressed by John O'Connell, the chief executive, who said it's still not too late for the Chancellor to abandon plans to increase taxes and instead focus her fiscal policy on bringing down the spiralling cost of government. The Institute of Directors chief economist Anna Leach, has accurately stated that business leaders are worn out from the past year's roller coaster of uncertainty and tax increases. Data provided by the IOD suggests that the Employment Rights Bill could lead to the loss of 326,000 jobs, which would mean an increase in welfare payments of £521 million, 108,000 years of lost output and an £8.3 billion hit to the economy.

The British Retail Consortium has supported the view of the Resolution Foundation that the government's continuing persistence in granting day one rights will inhibit hiring, and is also rightly concerned that guaranteed hours will make it harder for retailers to offer local, flexible and part time jobs. I welcome the government's commitment to spend more on defence. Although the target of 3% during the next parliament is too little, too late. If we were to increase defence spending to 3% by 20 2930, we would be spending some £90 billion on defence.

And it is deeply depressing that OBR forecasts now suggest that our annual debt bill will be 45% higher than that at 130 billion in that fiscal year. The last government was not successful in cutting the size of the state and abolishing unnecessary quangos. But the new government has made the position worse. I would urge the government to stop trying to blame the economic downturn on Brexit, and instead belatedly start to take more of the potential upside from our taking back control over our trade policy and our regulatory regime.

The chief executive of ASI, the Japanese pharmaceutical manufacturer whom I've known for 40 years, has told me that he was not happy at having had to duplicate his licences, be supervised by both MHRA and EMA, and increase capital investment in Europe and the UK following Brexit. But that if we can now reduce the emphasis that we place on the precautionary principle, adopt a less cumbersome regulatory regime based on common law principles and revert to behaving more like the rest of the Anglosphere, then this country will secure and retain its place as the best country in the world.

For a life sciences company like his, in which to research and develop new treatments, trial them and manufacture and distribute them. I wish the noble Lord, Lord Eastwood well, for whom I have the highest respect, could at least acknowledge the upside of Brexit. My Lords are incredibly high. Energy costs are an existential threat to our remaining industrial base. Can the Minister confirm that the government will persuade the Secretary of State for Energy Security that it really is essential to remove renewables subsidies from electricity bills now, and to make plans urgently to bring forward and commercialise more small nuclear technologies, and to provide funding to GB nuclear on the same basis as to GB energy.

Can he also confirm that he will seriously consider a belated attempt to retain some non-doms, such as the sensible proposal, the prosperity package made by the Adam Smith Institute and endorsed by his noble friend Lord Mendelsohn. So many of those who have been creating wealth and jobs have left the country or are actively considering leaving the country. They are leaving in droves. As this country is becoming an increasingly unattractive place for them to live and invest.

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My Lord, it's a great pleasure to follow on from the excellent speech of my noble friend Lord speech of my noble friend Lord Rennard. My Lords, my reported understanding is that in the understanding is that in the Cabinet there is effectively nobody who has emerged out of the private
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Lord Risby Portrait Lord Risby (Conservative)
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who has emerged out of the private business sector and one sector that feels this so strongly is small business. For many years I've been deputy chairman of the Small Business Bureau. I happily declare my interest. Surveys by the British Chamber of Commerce have indicated that 44% of UK SMEs correctly expected to be negatively impacted by combined tax and wage changes. As has become obvious, the hospitality, retail and social care sectors are facing especially high cost increases.

For the purposes of this debate, I asked for and got extensive feedback from SMEs. Nearly a third of responding small businesses have had to pull back operations due to funding shortages. 1 in 10 cannot access finance at all, with high borrowing costs squeezing growth and confidence. Family businesses struggle with inheritance tax changes and now some have staff who decline to work full time hours so that they can top up with Universal Credit between June and August 2025, UK businesses shed jobs at the fastest pace in four years and this continues remorselessly.

May I say to the Minister, especially as many of your Lordships will know this to be true. This sector, the SMEs, the seed corn of future growth are overall in trouble in every corner of the country. But government's does have does this government does have a particularly specific role to play. After nearly ten years as a government appointed director of the Horserace Betting Levy Board, I declare my interest. My role is drawing to an end. There are just 16 employees.

We distribute about £100 million for racing, prize money research and welfare. And during these ten years I have seen an immense repeat immense increase in the demand from government. For more and more detailed information as it is defined as public money, money flowing from betting. In principle, this is entirely justifiable. But in practice, in my personal view, it can be wholly disproportionate. Some months ago, I went to see the Comptroller and Auditor General of the National Audit Office, and we had a frank and productive conversation.

He is now written to some government departments advocating greater oversight proportionality. Recently, the government announced the next stage of its regulation action plan. The objectives are clear, but the arms of government itself need to apply control over excessive control by Whitehall, and I hope that the Minister can give a very clear and active assurances about this. There is one European country which has long experienced fast growth, not by massive borrowing or welfare state, that reduces the need to work the country.

Is Poland in a spirit of free enterprise. It has low corporate taxation, a clear and simplified tax code, tax relief for investing in research and development, and special focussed economic zones policies which have and are producing real growth and prosperity for working people, much of it derived from a thriving and prosperous SME sector, which, my Lords, is so regrettably so absent here.

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Yes. My Lords. I declare an interest as the incoming Director General of the incoming Director General of the Institute of Economic Affairs. My Lord, my proposition today is that we're living through a great we're living through a great refusal. But what we need, as this morning's growth figures show, is a morning's growth figures show, is a great reversal in Dante's Divine Comedy, the shade of Pope Celestine V stands on the threshold of hell. Judged for his great refusal, his rejection of the burden of the rejection of the burden of the office of Pope.

Similarly, my Lords, this country stands in a similarly precarious position, because the
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Lord Frost Portrait Lord Frost (Non-affiliated)
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precarious position, because the shade of this current government, and indeed successive governments, have refused to face up to their burdens and their duties. The difficult but necessary actions to get the economy back on the right track. They have refused to use the regulatory freedom that came with Brexit to deregulate and get markets going again, and now we are paying the price for all of this. My Lords, we know what brings prosperity to a country. Low taxation, property price, no confiscation of wealth, rewarding of effort, welfare that supports the needy but only the needy.

Well-functioning markets with minimum regulation now Lord Bradley. Since the 2008 crash, the direction of travel has been quite the opposite direction. Now, changing this is not going to be easy. And indeed, I fear instead that what we are seeing is something that is very common in human nature. When confronted with something you do not want change, you find intellectual justifications for why it doesn't need to change. And so a new conventional wisdom has emerged. The belief that those fundamental nostrums that I've just set out are somehow outdated, and that the modern way to run the economy is different.

It's believers who are heavily represented in the current government and in the public sector economic establishment. But not only there think things like the following that high tax and spending are not in themselves bad. That growth can come from more public sector, so-called investment financed by tax or borrowing, and a state run industrial policy, and that these things never squeeze out private sector activity in any way. The thing with distributional questions are the most important ones. And that dynamism in an economy is a bad thing because it increases inequality.

They think the prices and markets don't have a signalling function, but they're essentially arbitrary and can be safely manipulated for wider social goals and much more of the same sort of thing. Now, my Lords, of course, this is how the economy has actually been run, or rather run into the ground for most of this century. That's why GDP per head has gone up by a miserable half percent a year over most of this period. It's why taxes are up eight percentage points from the early years of the Blair government, now at 37% of GDP.

It's why spending has gone up 12 to 13 percentage points now 45% of GDP. And no doubt later this month, all those figures are going to be a couple of percentage points higher still. My Lords, we've reached the end of this road of the road for this economic programme. We do not need more of this. What we do now need is a great reversal. The renunciation of big state economics, the undoing and the unwinding of most economic policy measures that have been taken this century.

Labour market controls, price controls, wage setting by government and judicial fiat. The disastrous net zero policy. The pensions triple lock, heedless welfare spending and of course, tax. We need a ten year programme to get tax spending regulation safely back down to those early Blair era numbers. And if we don't do this, we'll face another great refusal, the refusal of the markets to finance us and the refusal of our people to stay in the country and be taxed to deliver them.

My Lords, there's no point in doing things that are popular but don't solve the country's problems. And I'd like to hear from the government that they understand that, and they need to face up to this as a country and change our ways soon.

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Lord Knight congratulate my noble friend Lord Elliott of Mickle Fell on securing this important Fell on securing this important debate on his penetrating criticism of the government's economic policy, echoed by so many of the speeches echoed by so many of the speeches of my noble friends. And finally, not least for having a positive alternative to put forward in this alternative to put forward in this debate, namely his book Prosperity Through Growth, which I'm looking forward to reading, but I gather promises 24 policies which would raise growth by 7% above current raise growth by 7% above current forecasts within five years and is fully costed, and I make three points in responding to him.

So first of all, my noble friend is right to argue that our economic right to argue that our economic culture since the age of Gordon Brown has been so fixated on wealth distribution as to forget the distribution as to forget the primacy of wealth creation, as I put it, in my own rather more modest publication for policy exchange, the right way. Small and medium sized firms are the forgotten heroes of the British economy, a point just made in his speech by my noble friend Lord Risby.

And I suspect there'll be nothing much for them, I'm afraid, nothing much for them, I'm afraid, in the budget now. Second, tax cuts are the easy bit, the heart of it. are the easy bit, the heart of it. And my noble friend Lord Frost just referred to this a moment ago in his speech. The heart of it is public spending control. The medium term financial strategy of the 1980s, the foundation of British economic recovery in the Thatcher era was built on reducing borrowing, as is the credit of my noble friend that his book.

Apparently, as I say, I'm looking forward to reading it, proposes some economists now. Finally, pamphlets like mine, books like My Noble Friends OBR forecast, Treasury read books. All these are important and have their place, but they must operate amidst all the roughness and unpredictability of the real world, where there are known unknowns and unknown unknowns and also known knowns. And it's to one of these that I want to turn in, closing our urban areas at the risk of balkanising, our streets are seeing open support for terrorist
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Lord Goodman of Wycombe Portrait Lord Goodman of Wycombe (Conservative)
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groups, Palestinian flags and Saint George's crosses are becoming territorial markers. Jews have been murdered simply for being Jews. Mosques as well as synagogues are Mosques as well as synagogues are targeted for violence. The driver of this unrest has been Islamist of this unrest has been Islamist extremism. The reaction is white nationalism, and in between is the mass of the population of all mass of the population of all religions and none. Now, countering this extremism requires a cross-government programme run from cross-government programme run from Downing Street that runs from monitoring out of school settings to providing more prison places to providing more prison places through prosecuting incitement in mosques and kerbing kerbing violent protests.

In other words, taking protests. In other words, taking the action that successive governments have failed to do for probably over 25 years now, this probably over 25 years now, this challenge cannot be met by public money alone. But, my Lords, it will money alone. But, my Lords, it will cost public money if we're to meet it, and that money is going to have to come from somewhere. And if I to come from somewhere. And if I hear the voices of my noble friends correctly, at least some of it should come from welfare reform.

My should come from welfare reform. My Lords, there is no such animal as economics without politics. Indeed, it's politics that shapes economics. it's politics that shapes economics. And if the political challenge of the coming decade is strengthening our internal security, as I fear it's shaping up to be, the economic challenge of the coming decade will be strengthening our security. I urge the Minister and the government to rise to it.
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Lord Horam Portrait Lord Horam (Conservative)
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Yeah.

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Recently celebrated being a centenary since the birth of centenary since the birth of Margaret Thatcher, and I think we all realise that we could do, as all realise that we could do, as many people say today with another Moffatt, Margaret Thatcher, to deal with the mess which is confronting with the mess which is confronting us. We certainly need her ability to centre centre on the economic problems of the country and secondly, to follow them up with a single minded determination which is all too often lacking in the present government.

Now, my good friend Lord Goodman and Lord Frost have just emphasised the centrality in her thinking of controlling public spending and they may not public spending and they may not realise it. But during the Labour government period where she became government period where she became the leader of the Conservative Party, the public spending became Party, the public spending became 47% of GDP, which is the highest proportion in post-war economic proportion in post-war economic history. The result, as you remember, was a trip to the IMF to bail out the Labour government.

Margaret Thatcher then became Prime Minister of this country and brought down that 47% to 35% after 11 years, and that was the figure, 35% was the figure in 1988 89. As a consequence of that, we had the five best years of economic growth. We have had post-war, a cumulative 21% growth over five years. Now. Today, we have public spending at 44% of GDP, and it's certainly a central task that we bring that now, rather than mask the problem by raising taxation up to the level of 44% or thereabouts.

And recently we've all been instructed to read, quite rightly, the book of The noes have it Lord Elliott and also the recent pamphlet brought out by Policy Exchange, where they list at least ten out parts of the things we need to do, including, I would say, in addition and importantly, welfare reform, welfare reform. Although the noble Lord opposite Lord did say, quoted Chris Giles in the Financial Times, could I recommend to him a much more thorough analysis by Sir Charlie Mayfield, the former head of John Lewis, of the real difficulties, the real fundamental difficulties and dangers of having welfare reform of the kind we have at the moment.

So will the Labour government do something on public spending of the kind we need? No, because it is not in their DNA. It is to do asking them to do the opposite of what they came into politics to do, which is to put up public spending. They are the party of the public sector, for the public sector, by the public sector. As Lord Risby pointed out, there is no single member of the Cabinet who's got extensive private sector experience. So it is a tragedy of our country at the moment.

They have a government which is peculiarly unable to tackle the real problems. It will therefore fall to a conservative government to do that, to bring down public spending in a proper control, and release the animal spirits of the private sector. I do hope we are able to do that in reasonable time. And when we do do it, do we do it?
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Lord Sikka Portrait Lord Sikka (Labour)
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The determination and practical skill that Margaret Thatcher showed skill that Margaret Thatcher showed all those years ago. Thank the. Noble Lord Elliott of Mickle Fell Noble Lord Elliott of Mickle Fell for securing this debate and often told story is that Albert Einstein set an exam paper for his graduate class. One of his colleagues noticed that the questions were the noticed that the questions were the same as in the last year's exam paper. How could the great man set the same exam again? He asked.

the same exam again? He asked. Einstein smiled and said, but the answers have changed. This parable captures the problem of the UK economy. For the last 20 to 30 economy. For the last 20 to 30 years, we have faced the problem of low economic growth, investment, productivity, rising poverty and crumbling infrastructure. But governments provide the same old governments provide the same old answers privatisation, outsourcing, unchecked profiteering, real wage and spending cuts, regressive taxation and ideology that direct taxation and ideology that direct state investment in new industries and infrastructure must be neutered.

Inevitably, the economy struggles. We now have a rentier economy where the state guarantees profits for water, energy, care, homes, private health care, internet companies, prison services and much more. Despite low rates of inflation, interests and corporation tax and generous incentives, investment in productive assets remains a disappointing in the age of deindustrialisation. UK has been at the bottom of the G7 league of investment in 24 out of 30 years to 2022, it is ranked 28th for business investment out of 31 OECD countries.

Currently, it is investing 18.2% of GDP in productive assets, compared to 26% for France, 25% for Germany, 23% is the OECD average, China spends 40.4% and India 30.5%. One lesson is that economies flourish with direct state investment in infrastructure and new industries, which also benefits the private sector. The City of London never had an appetite for long term risks. The stock market functions as a cash extraction machine. In 2024, listed companies raised at £25.3 billion in new shares, paid out 92.1 billion in dividends and another 57.1 billion in share buybacks.

Companies that sweat assets. No government has tackled short termism or power of shareholders to extract returns. Good purchasing power for the masses is essential for economic growth, but that has been eroded. Average real wages hardly changed since 2008. 16 million people live in poverty, 24 million live below socially acceptable living standards. The bottom 50% of the population owns less than 5% of wealth, and the bottom 20% has less than 0.5%. The bottom 20% pay a higher proportion of income in tax than the richest 20%.

You can't squeeze 50% of the population and expect economic growth. That does not happen anywhere. So why on earth has the last government pursued that strategy? Somebody ought to explain the UK has a wrong model for economic growth, equitable distribution of income and wealth, progressive taxation, and economic and bigger public investment are necessary prerequisites to building a sustainable economy. And I urge the government to follow that course.
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Lord Wharton of Yarm Portrait Lord Wharton of Yarm (Conservative)
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My Lord, I congratulate Lord Elliott of Mickle Fell for securing this debate. I think it's testament to both his keen insight into what is interest at the time in politics. How many noble Lords are here to contribute? But it is also sadly testament to how much worry there is out there about the direction in which our economy is headed and the the coming budget, which is often widely speculated on in the media. And little of that speculation is uplifting or positive in its nature.

I think we all rightly take an interest in this area, and many people, unfortunately, and I fear rightly, now have quite a degree of concern about what may be just around the corner. It does seem that in many areas of taxation we have long ago perhaps, or if not certainly, are about to reach the wrong end of the Laffer curve in the government's balancing of the rate of tax against the amount that it is going to be able to collect, and the uses to which it can then put that money.

We generally tax things, yes, to raise revenue and do good things, of course, but the government generally taxes things as well because they want to signal that they are bad things. They tax cigarettes, which are not very good for people, alcohol, which is not very good for people. They tax fuel because the more people drive, the worse it seems to be for the environment. And yet what we are seeing at the moment are taxes going up on a wide range of things that ought to be good things and of which we need more.

We see higher taxes on capital gains, we see higher taxes on creating jobs. We see higher taxes on businesses that are trying to drive forward our economy and doing the sort of things that the government ought indeed need to encourage if we are to be a success going forward. I spend a fair amount of time in Gibraltar, which is an interesting place, because with its approach to regulation and with much lower taxes than we have in the UK, it seems to be doing really rather well.

And we should be pleased and proud that British Travolta is doing particularly well and is a success with growth last year about 3.4%. But we should also learn from that approach, and I fear that some of the investment that I see when I go there may be being driven there because of the decisions that we are taking on. The governments in the UK are taking here and the decisions that then people are taking about their own personal circumstances. And we've heard many noble Lords talk of the flight of capital and people and talent that is being caused in some part, no small part, in my opinion, by the tax system and the way that the direction of travel in which our taxes are headed, we also have to be aware that the decisions we make in this country will affect what happened there.

So only this week, the the His Majesty's Government of Gibraltar, as Minister for justice, Trade and Industry, the Honourable Nigel MP was in the UK spelling out to all those who would listen to him the potential impact on Gibraltar of changes to gambling taxation in the UK. Standing up for the success of his low tax, low regulation country because of the impact that this direction which this government is headed, could have on their national finances. There are also rumours of the potential of people observe the flight of capital and individuals and entrepreneurs of an exit tax, and I would want to take this opportunity to warn in the strongest terms against such an idea, because an exit tax is not only immoral and unjust for people to pay tax yet again on income on which they have already paid their due taxes.

But an exit tax effectively discourages people from coming as well, so we may. I suspect it is unlikely, if we were to implement an exit tax, dissuade some people from leaving, but I fear we would certainly then dissuade many more people from coming. And at a time when we need capital investment and we need entrepreneurs and we need to grow our economy, I feel that would be

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very bad for the UK indeed. Yes. My Lords, always a pleasure to follow Lord Wharton, and I would follow Lord Wharton, and I would like to congratulate Lord Elliott on bringing this most relevant debate to the House. May I ask the
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Lord Marks of Hale Portrait Lord Marks of Hale (Conservative)
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debate to the House. May I ask the noble Lord, the Minister, how the higher business taxes increase regulatory burdens and policy uncertainty, encourage the very entrepreneurs and small firms we rely on for jobs, growth and innovation. Britain does not need more bureaucracy and taxes. It needs belief in enterprise and to allow our wealth creators, those very people who see a gap in the market and take a risk, to have confidence to invest in Britain, our small business owners, entrepreneurs and innovators who employ more than 16 million people in this country are at the whim of government policy.

And when confidence is negative, investment stalls, jobs are lost and not replaced, and growth slows to a trickle. Some of Britain's largest companies are suffering too. Recently, Dominic Paul, the CEO of Whitbread, who owned the Premier Inn chain, said you cannot just keep taxing businesses. We have got to be the beating heart of a growing economy. If taxes go up, responsible businesses will cut costs, staff and investment and you won't get growth. Never before, my Lords, has global competition been so intense.

Nations are racing to attract investment, talent and capital and technology, in energy and advanced manufacturing and in AI. We ought to be at the forefront of that race, and we are not. Instead, my Lords, businesses have been met with uncertainty, mixed signals and a tax environment that risks dulling enterprise rather than accelerating it. Let us examine some of the evidence. The autumn budget in 2024 hiked National Insurance contributions to 15%, coupled with a slashed secondary threshold, which has had the effect of piling billions of extra costs onto businesses already grappling with slim margins.

In short, rising NI is not just a tax on jobs, it is a tax on opportunity. We simply cannot expect a job led recovery if we make job creation more expensive every time the cost of hiring increases, a door closes for someone who wants to work, to train, or to make a start in life. This is not theoretical. It is happening on high streets, factory floors, building sites and across the tech sector in the North west, where I live, and involved in a number of businesses and beyond.

In the UK, I have heard from tech entrepreneurs delaying hires or automating roles because they simply cannot afford the added burden. This means denying one less apprentice and one less parent from re-entering the workforce. The cumulative effect of this is nationally is causing job losses in the thousands. As businesses rush to cut payrolls, the double whammy of a rise in capital gains tax is deterring investors and founders, hitting tech exits and prompting an exodus of skilled talent to more welcoming shores like the United States and the UAE even carried interest taxation, jumping to 32% risks starving venture capital.

That fuels our Start-Ups. On these benches, we advocate lower taxes to ignite ambition, deregulation for innovation, and targeted support for digital skills. How many more unicorns must we lose and how many more innovators need to emigrate before this government pays attention? These policies aren't economically sound and they are assault on aspiration. Wealth is not created by the state and entrepreneurs are not asking for subsidies. They are asking for stability, for clarity and for trust.

They want to know that their success will be celebrated and not penalised, and that government will provide an environment to support those with the courage to build, to hire and to create. That is the only path for lasting jobs, growth and national prosperity. As Dom Hollis, the executive director of the start up coalition lobby group, said, any action that the budget should be focussed on motivating entrepreneurs to stay here in the UK and not holding them to ransom. So I urge the noble Lord, the Minister, to restore trust in our innovators and entrepreneurs to be their ally and not their obstacle, and to secure this country's future freedom.
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Lord St John of Bletso Portrait Lord St John of Bletso (Crossbench)
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Yes.

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My Lords, I join in thanking the noble Lord Lord Elliott for moving this incredibly important and this incredibly important and topical debate and ahead of the forthcoming budget, this is a time forthcoming budget, this is a time to take stock. It's a time to scrutinise and to challenge the scrutinise and to challenge the direction of travel. As we've heard the central paradox of the government position has been to government position has been to make growth the top priority. Yet its actions and the uncertainty it is generating are in danger of throttling the very growth before it takes root.

I welcomed the government's new industrial strategy in June, which aimed to strategy in June, which aimed to provide the certainty and stability for long term investment in a for long term investment in a particular sectors. But, my Lords, what certainty is there for a what certainty is there for a business today? What stability can they plan on? The reality is that they plan on? The reality is that the positive signal sent by the industrial strategy has been completely drowned out by the noise and speculation surrounding the upcoming budget.

The prospect of upcoming budget. The prospect of looming tax rises has shattered business confidence, and business leaders have said that they are expecting the worst. My Lords, expecting the worst. That means shortening their planning horizons, cancelling hiring and putting investment on hold. The labour market is already showing signs of strain with unemployment, as we all know, at a four year high of 4.8%. And for young people, this is a deeply concerning dilemma. Prosperity, my Lords, is not built on a foundation of ever increasing tax burdens.

It's built on a dynamic economy where businesses are confident to invest and to create high quality jobs. And nowhere is the contradiction more starkly illustrated than in the government's treatment of the North Sea oil and gas industry. Here we have a sector that should be generating billions of tax revenue, supporting 200,000 jobs and strengthening our energy security. Instead, the energy secretary has imposed a ban on new licences and extended the so-called windfall tax until March 2030.

Even though prices in oil have fallen and no windfall tax is left to tax. So the consequences are devastating. Almost a thousand jobs and Britain's biggest oil producer has just announced that it is slashing its North Sea investment by half, citing government's punitive tax measures. My Lords, energy experts tell us that ending the windfall tax sooner could unlock £40 billion of investment. That means jobs. That means tax revenue, energy security, all of which we desperately need.

Now, my Lords, the narrative of tax rises are the only solution that the UK fiscal challenge is not is actually it's a false assertion. It ignores the vast potential for savings. And I say savings within the government's own spending, and it ignores the revenues that could be unlocked by sensible policy changes. So of the 1.2 trillion budget, 434 billion is spent on procurement of goods and services. Properly implemented, AI and automation could reduce, I say not shell, but could reduce much of the procurement costs by anywhere between 10 and 20%, with a 10% reduction, we could theoretically be looking at savings in the range of £40 billion or more.

So with government spending locked at 45% of GDP, we need a smaller state and lower taxes. There is evidence, no evidence, that you can sustain debt reduction by ever increasing taxes. My Lord. The government should demonstrate that it has exhausted every possible efficiency saving, starting with procurement. Before it considers tax rises. It must show that the commitment to growth

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is not is not just a slogan. My Lords. It's a problem.
15:02
Baroness Meyer Portrait Baroness Meyer (Conservative)
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It's a problem. Being number 30 on the list, as I'm bound to repeat what many noble Lords said on sitting on my benches before me. But sometimes things need to be repeated time and time again for it to sink in. And this is particularly so when you're facing an audience that does not want to hear the chorus of voices expressing their concern. And I'm not just talking to people sitting on my adventures, but also allies and friends of the Labour Party.

Take Sir Tony Blair, who has warned that the Workers Rights Bill will erode business confidence and ultimately undermine growth. Labour backer John Caldwell recently said it will make Britain less investable. Sir John, Sir Martin Sorrell and an array of major business leaders, SMEs, entrepreneurs, set ups, all Start-Ups all echoed this view and urged the government to reconsider. The government speaks of delivering growth, but despite the facts, are there. After only one year, growth has fallen to nearly 0%.

Budget deficit is up. Public debt is the second highest on record. Unemployment is up. Productivity is down, inflation is up. And what is the government answer? More taxes. No wonder confidence has leapt. Apart from trade unions and their supporters, no one seems to support the workers rights Bill. Why? Because anyone who understands economics realises that once you attack job tax jobs, you end up with fewer jobs, you tax success, you kill aspirations. Well, tax wealth and the wealth leave.

My Lords, we should reward entrepreneurs and encourage them to invest, not publish. Punish them and drive them to the welcoming arms of Italy and the Middle East. Non-doms are not freeloaders. They paid billions of taxes, invested in British businesses, created jobs and supported philanthropy. Yet they're being driven away. My Lords, redistribution of wealth may sound very virtuous, but it is ideology, not economics. They they. Sorry, the Laffer curve is not a theory.

It is a warning beyond a certain point. Higher taxes reduce revenue because people simply stop working, investing, or they simply move elsewhere. My Lords were there. Labour is draining the lively blood of our economy, taking more from a shrinking number of taxpayers to fund an ever growing number of dependent. This is not fairness. It's folly. You cannot redistribute prosperity if you are destroying it in the first place. So will the Minister consider a flat tax model on the Italian system, as laid out so clearly by Lord Eliot to attract investment and drive growth? And does the Minister accept that constant tax rises are driven away, driving away the very entrepreneurs and investors on whom the economy grows? And may I conclude by congratulating the Lord Elliott for tabling this important debate and for giving us an excellent opening speech.

And I am also surprised to see how few on the opposite benches are speaking. Maybe because they

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can't actually defend their policy. Yeah, yeah.

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Yeah, yeah. I'd like to open by congratulating. Lord Elliott on congratulating. Lord Elliott on what I thought was an extremely well-argued speech, even
15:07
Lord Liddle Portrait Lord Liddle (Labour)
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well-argued speech, even politically balanced at times, and I think it was a complete contrast to the barrage of criticism which we've had from the opposition benches throughout this debate. And it wasn't quite clear to me who the barrage of criticism was directed against. Is it against the the 17 months of Labour government, or is it against in the 17 years since the financial crisis, the 14 years in which all these people here were in power and had the opportunity to do something about the problems that they now complain about, and we know where we ended up in 2024, with public debt that had soared with share of investment in the economy one of the lowest in the OECD, a broken state.

Just look at the health service and the criminal justice system and a social problem of huge magnitude. You know, 7.1 million families going without essentials, 5.3 million skipping meals, 4.1 million going hungry. Now, I believe in welfare reform as many people on this side, on the other side have argued that I do believe it has to be also coupled with a policy of tackling child poverty. And the two things went together in the governments that I worked for in the Brown Blair years.

And we do need welfare reform. We do need labour market action to get more people back into work. That's what the Mayfield review is about. It's what the review that Alan Milburn is doing on NEETs is about. I think we should be providing in this budget incentives, National insurance holiday for people who take on unemployed people on welfare. I also think we have to look, and this is something a lot of people on my own side will be worried about, about minimum wages for young people, whether they aren't too high.

I think we should get the low pay Commission to look at that. And on the employment rights bill, I support it. But they want rights have to be coupled by a genuine probationary period in which employers are not discouraged from taking on people who have a problematic work record. Now, I believe that the government's economic strategy is, on the whole, right. Borrowing to invest, making sure the public investment happens, which it didn't happen under the previous government, but also balancing the books on current spending.

And if we have a deficit, which we have, in my view, the best way to tackle that is through a broad based taxes, through a rise in income tax and a reform of property taxation, which will help economic efficiency. The truth is, income tax in this country is low by international comparisons, and tax is the price we pay for a civilised society. We must always remember that. But at the same time we do have to have much stronger incentives for entrepreneurship and research and development, and an ability to to translate our intellectual excellence into commercial success in companies that are growing greatly.

And I would just to conclude, commend you the recent report of the Lords Science and Technology Committee, which has looked at the reasons why we are failing in this regard. But I'm an optimist and I'm looking forward to the budget.

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My Lord, can I begin by thanking the noble Lord Mickle fell for the noble Lord Mickle fell for initiating this important debate, and also to congratulate him on his and also to congratulate him on his speech and his book. This is, of course, a very problematic time for the UK economy. I think from all the UK economy. I think from all sides we recognise this and we urgently need more growth and job urgently need more growth and job creation.

And yet, while the government has these objectives in government has these objectives in mind, some of the measures taken in the last year actively undermine the stated ambition. As mentioned
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Lord Massey of Hampstead Portrait Lord Massey of Hampstead (Conservative)
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the stated ambition. As mentioned by Baroness Foster earlier, the first problem has been the decision, as has been mentioned by many colleagues, of raising GNI and the minimum wage, which creates disincentives to employ and has led to a creeping up of unemployment now to 5%, which is a four year high. The Employment Rate Bill, which has been much debated and amended in this House, would exacerbate the situation, further reducing the flexibility of the labour market and imposing more regulation on business.

This matters because it is businesses that will drive our economy forward, not transfer payments and debt fuelled capital spending by government. We have now hit the 45% level of public spending as a proportion of GDP, and that historically has been a peak, which has proved unsustainable. I believe the government recognises this, but in branding spending cuts as a return to austerity, it has boxed itself in and is now choosing to raise income tax, some might say, under pressure from the left wing of its parliamentary party, the Prime Minister has made it clear that the impact of these tax increases should fall on those.

And I quote with the broadest shoulders, he should take note that these broad shouldered citizens are the same people who already pay 30% of income taxes, create the real jobs we so desperately need, and run the businesses that can actually compete internationally. So rather than penalising this highly productive cohort, why doesn't the government look at the benefit bill and take the political risk of tackling benefits, which now account for 15% of GDP and rising as Baroness Fall and Lord Leong have both mentioned, this could be a cross-party effort to reform this whole structure.

High levels of benefits. My Lords, are actually a double whammy. They impact the borrowing requirement, but they also lead to more immigration, the jobs that the local population can't or won't take on still need to be filled, be it in the NHS, the care sector or hospitality. So the result is increased net migration with all the negative side effects on public services, rent levels and, some would argue, social cohesion. To which Lord Goodman also alluded, the government's number one priority must be to get the economically inactive back to work.

And I don't think that's controversial in this House. For the upcoming budget, I would urge the government to avoid two measures that would seriously undermine wealth creation and growth raising capital gains taxes or even worse, equalising them with marginal rates of income tax will reduce risk taking and produce no revenues for the exchequer. Investors will simply hold on to assets and invest new money into bonds. It will reduce equity investing, which we urgently need, especially in small and mid-sized UK companies.

Another tax to avoid at all costs, and this has been mentioned by several peers, is an exit tax, which would be a disaster for the UK's reputation as a business friendly country. However tempting it might be from a redistribution point of view, the idea of financially trapping people in this country will serve only to demotivate not only those who are running businesses here, but also those who would come here to build the businesses of the future. My Lord, we are at a crossroads for the economy, and the political choices I recognise are very difficult for the government.

In a sense, there is a conflict between its ambitions for growth and its political ideology, but the opportunities for growth are there for the UK to seize. We can be a leader in the AI revolution and benefit from a productivity gains which can flow from its evolving capabilities. But for the UK to benefit from this, businesses need to be incentivised to take up these opportunities, not burdened by increasing regulation, rising taxes and higher interest rates which result from excessive spending.



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My Lords, I declare my interests as the director of a number of small businesses. And can I join in thanking my noble friend Lord Eliot for convening today's debate? It has been an extremely wide ranging debate in terms of its scope on the
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Lord Kempsell Portrait Lord Kempsell (Conservative)
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debate in terms of its scope on the matter in front of your Lordships' House, and there have been many interesting and insightful contributions from all sides of your Lordships' House. How can I add, as the final speaker on the list? Well, I might just pick up on a point mentioned in passing by my noble friends Lord Risby and Lord Horam. They touched on the astonishing fact that not a single member of the Cabinet today has any really meaningful experience of running a business, and I have to say, I think this is a factor in the current predicament that the UK finds itself under this government, that not a single decision maker around the most powerful table in the land really understands what it feels like to be worried about making payroll at the end of a month, because their financial security has always been somebody else's responsibility, a Cabinet that has basically next to no commercial experience even of the most basic business activities.

A Cabinet that has never worried about paying a supplier, like so many small and medium enterprises now across the country that has never chased a late invoice or filed a company return, or dealt with the burdens of red tape like that contained in the Employment Rights Bill, never in a business setting hired, fired or managed a team, even though the Prime Minister is now getting used to having to fire people in a different context. Crucially and stunningly, this is a Cabinet that has never created a job, not one single job through entrepreneurial ism.

Now, I have no doubt that the CDA running the country at the moment were the very best think tank researchers, charity workers, academics, trade union officials and professional politicians. But I'm afraid they seem ignorant of the pressures that are currently being faced by those who are running businesses in the UK today. 0.1% growth, the highest inflation in the G7, soaring debts, rising unemployment and record high taxes. I must warn noble Ministers opposite that as we go into the next fortnight, for many millions of business people across the UK, this will be the budget of sleepless nights, a budget of genuine fear and anxiety for those who are running companies large and small, terrified by the Chancellor's next move, a government that is pushing job creators and employers to the very edge the government has blithely shredded its key election pledge not to raise taxes on working people.

That is a total and unforgivable breach of trust on the government's core fiscal commitments. And as with every Labour government, it is now the case that the Treasury is racking up debts 100 billion in annual debt, interest costs and what has been the result of these fiscal policy choices? A year into the Labour government? What do we have to show for the increase in employers NI contributions, business rates, capital gains tax? What do we have to show for hiking the costs of employing the average worker by £900 for abolishing the key elements of agricultural and business property reliefs and countless other measures? My Lords, I would contend that the headline economic achievement of the government so far has been taking 80% of workers out of income tax altogether in Mauritius, with its disastrous Chagos Bill, a deal that will cost tens of billions of pounds.

My Lord, this Labour government is delivering seismic tax cuts. It's just that it is doing it in a country more than 6000 miles away, while here at home in just two weeks, it no doubt plans to hike income tax on millions of workers in Britain. My Lords, even in the long litany of the Labour Party's history of economic failure, the Starmer and Reeves project will surely go down as one of the most

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flabbergasting chapters of all. My Lords. That the the budget is only days

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That the the budget is only days away. I do believe that Lord Liddle may be the only person who could may be the only person who could say that he's looking forward to it, that the Chancellor last week made that the Chancellor last week made a speech which makes it clear that huge tax rises are coming. Most of
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Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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us expect to see higher income tax, I don't know, but that would be no surprise. But we have none of the detail and that's where the devil lies. So this debate in some ways is only part of a prologue. Now, as I congratulate Lord Elliott on obtaining this debate, can I just say it was rather curious in his litany of causes of the current economic condition in which we find ourselves that he he overlooked mentioning Brexit probably the deepest blow.

In fact, it is the deepest blow. And by far that. And I do want to say to the governor, this is now finally having the guts to say that out loud. But what it hasn't done is to now turn towards pushing for a customs union, which is the obvious cure, and using figures from frontier economics on the GDP uptick. So that would come. And from the Commons Library on tax yield, a customs union, a rejoining the customs union could be expected to provide an additional 25 billion a year in tax revenue to the UK Treasury.

And when you look, therefore, at the economic benefit that arises from that particular change, it completely exceeds the impact of any proposal that we've heard otherwise from any bench today. And that is important and we need to recognise it now. So now, meanwhile, I don't doubt the 22 billion black hole that the Minister often talks about. It was echoed by Viscount Chandos, by Lord Davies and by others. Public services are on their knees and the need to invest in infrastructure after years of neglect is surely a given.

But perhaps most dangerous of all, people are feeling the cost of living pain, many to the point of breaking living standards matter, my Lords. Clearly we need growth and productivity, and I was glad that Baroness Fall focussed on scale up in part of her discussion. But I am expecting a horrible forecast from the OBR because although some monthly figures show productivity growth, it's off such a low base that the benefit is marginal. And in that vein, I would warn the government against looking to small businesses to fill the budget hole.

This is exactly the sector that needs to be investing to get productivity going. And I think we heard concerns from quite a number of speakers today, including Lord Alli and Lord Kempsell, that the self-employed should not be targeted either. That includes small LPs, which are often just two people and are simply a variant on self-employment with similarly precarious income, limited benefits and no employment protection. And I think it's important to recognise that, particularly in the discussion we've happened on, on levels of economic inactivity, Baroness Stedman-Scott referred to them Lord Petitgas Lord Skidelsky most extensively in today's economy, this sector, the self-employed sector and the small business sector has the most promise to get disengaged.

People of working age, either back into work or into work for the first time. And we have to look to that, that and support that group. But whatever the government chooses to do, it also needs to calm the gilts markets. We are paying a significant premium even over France, with all of its woes. According to CBRE Investment Management, a 1% reduction in gilt yields reduces the UK's borrowing levels by a cumulative 21 billion over five years. Now, part of that calming is achieved by creating credible fiscal headroom, which hasn't happened in the previous budget.

And I say that to the Minister, it's going to need to be a really important feature of the budget. So in this situation, where are the greatest emergencies? Now my party has identified two. The first is the fragile state of the hospitality industry. Lord Risby that are mentioned that as well. But it's the backbone of so many high streets and communities. And we call on the government to slash VAT by 5% for pubs, restaurants, entertainment and accommodation venues with immediate effect.

And until April 2027, ordinary folk looking for small pleasures will benefit too. And the other, and perhaps even more urgent need, is to provide relief to ordinary people by removing the main renewable levy from people's energy bills, but not discarding the funding of climate tackling climate change. But replacing that levy with Treasury funding until April 2027, by which time a new renewables obligation scheme should have been developed and in place. And this would slash a typical energy bill by £90 a year, bringing it to its lowest level since the energy crisis began in 2022.

The two measures would cost through to April 2027, a total of £12 billion and save a typical family £270 over the next 18 months. But we in my party are responsible. The government has scoffed in the past when we've argued for a windfall tax on the banks, which are still benefiting, benefiting from high interest rates. The Ippr has proposed a scheme that targets the windfall interest payments received by commercial banks as a result of the QE related reserves they hold at the Bank of England.

The tax would expire when the base rate returns to 2%, or when quantitative tightening concludes, which is anticipated to be after 2030. It could raise £30 billion in total between now and 2030. So that is less than half of what is needed for the two proposals that I have just outlined, which would cost 7.5 billion and 4.5 billion, respectively. Now, in the past, my Lords, I have proposed taxes that could raise significant money for the Exchequer in a way that is fair, increasing from 2 to 10%.

The digital tax, digital services tax on global tech companies who are frankly absolute masters of tax avoidance. That and doubling the remote gaming duty on online gambling. And those two together would raise almost £3 billion a year But I'm going to return to my opening comments because of the scale of the issues that we face. The biggest increase in tax revenue could come from rejoining, renegotiating into a customs union with the EU. And frankly, the only pain that would be experienced

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would be a pain to the pride of the Brexiteers. We would all be benefiting in our pockets. Yeah.

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Yeah. My Lords, I'd also like to start by thanking my noble friend Lord Elliott of Mickle Fell for initiating this debate so compellingly, and echo his tribute compellingly, and echo his tribute to Lord Desai. I agree with so much of what he said about the importance of growth. Dismal again today, the disastrous effect of high energy prices, the need to high energy prices, the need to remove regulatory obstacles to employment, and the devastating employment, and the devastating effect of high taxation on enterprise culture and competitiveness.

As the noble Lord, Lord riddle said, it was a balanced speech and it was good to hear of speech and it was good to hear of his support for welfare reform and indeed for sorting out the nonsense indeed for sorting out the nonsense of the day one rights in the Employers Rights Bill. Let us hope that happens. I believe it's that happens. I believe it's helpful to look at the broad picture first. The debate is touched on, sometimes implicitly, touched on, sometimes implicitly, to linked economic hypotheses, both of them relevant to how we run the of them relevant to how we run the economy and the level of tax.

The first, touched on by my noble friend Lord Massey of Hampstead, reflected in my noble friend Lords Fox's request for reversal is that there is a level of overall taxation in terms of a percentage of GDP, beyond which extra tax becomes ever more injurious and disincentivizing, and hence economically undesirable. Economists note that the current level of taxation in the UK is very high by historic standards, and many conclude that the UK has reached the stage where this hypothesis is becoming increasingly true.

The second hypothesis,
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Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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touched on by noble friends Lord Petitgas and Baroness Meyer, state that high levels of national debt, that high levels of national debt, judged as a percentage of GDP, is a bad thing. Unfortunately, UK debt bad thing. Unfortunately, UK debt now stands at around 100% of GDP, a very high level for peacetime. It holds that the responsible thing holds that the responsible thing for the government to do when faced with high levels of debt is to with high levels of debt is to reduce it, not least since high levels of debt reduce the effectiveness of responses to effectiveness of responses to outside shocks like Covid.

Under this government, we have a very high level of national debt and a high level of national debt and a high level of taxation, both of which ought to be decreased, but on present, plans will increase. And present, plans will increase. And the only way to square this circle is to reduce national expenditure. is to reduce national expenditure. Yet, as my noble friend Baroness Stedman-Scott and Lord Leong of Cookham have said, the government's Cookham have said, the government's own review of Pip is looking to no savings at all.

And so, and we need savings at all. And so, and we need welfare reform and indeed a single minded determination to get minded determination to get expenditure down. In the words of my noble friend Lord Horam, who recalled a former conservative recalled a former conservative Prime Minister, Harper said raising income tax to pay for welfare was not a wise way forward. If they were responsible, the government would be planning to reduce expenditure to improve the fiscal position. But alas, all the signs are that this is likely as finding a man on the moon.

Britain is living beyond its means, locked in a doom loop of high spend and high debt and higher taxes. There were some interesting new thoughts in the debate. My noble friend Lord Howard of Lympne emphasised the importance of microeconomics and the fascinating lessons of direct special measures and improving our job centres. My noble friend Lord Howell of Guildford talked about how Germany has been dealing with the fiscal challenges. It was also a pleasure to hear again the creative thinking of my noble friend Lord Saatchi and to hear, I think, from my noble friend Lord Kempsell, that no one in the Cabinet has run a business as.

Of course, many of those people in this House have done. And so I turn to taxation so eloquently addressed by one such person, the noble Lady. Lady Noakes, in the International Index, published last month by the Tax Foundation, the UK now ranks 32nd out of 38 in OECD countries for tax competitive, and it's only ahead of Italy and France in the G7. This is not a good place to be, and as another former businesswoman, I can confirm that experience that the high rates of corporation tax affect investment decisions and that investors go where such taxes are low.

I mean, just look at Ireland's success. My Lords, the government is keen to paint a picture where the state of the economy is everyone else's fault. But business leaders in the public know that the situation we are in is substantially a consequence of the government's own decisions. They started by claiming that growth was their overriding priority, which I which I supported but quickly lost credibility with last year's budget decisions, notably on NICs on IHT. As we heard from the noble Baroness Foster about its devastating effect on the rural communities, and of course, the Employment Rights Bill.

And my Lords, it's obvious that if professionals and innovators see a large share of each additional pound going to the taxman, their incentive to expand businesses or move to Britain diminishes. We can look at international examples as a cautionary tale. France's experiment with a tax on top earners a decade ago led to an exodus of talent and embarrassment for the government, and we have ourselves seen a huge exit of the wealthy since the election. As a noble, Lord Petitgas has said.

Some of those are younger people leaving, including members of my own family. We need to find a way of reversing the incentives to move to Dubai, to Singapore, to the US, indeed to Gibraltar. We were hearing about from Lord Wharton. We are, however, I think on these benches all agreed that taxes on exit would be a disaster and lead to further problems. In addition to the fiscal damage done to our economy, it is clear from the debate that the regulatory changes being introduced in the form of legislation like the Employment Rights Bill are set to harm working people even further and to discourage hiring.

The government themselves estimate that the bill alone would add almost 5 billion a year in costs to businesses, killing growth in the SME sector, which bears the highest burden. As my noble friend Lord Lee has said, and indeed the noble Baroness, Lady Kramer is also very sound on this point about SMEs, and we very much agree that that is a vital consideration. Many, including my noble friend Baroness Fall, have spoken about the problems of the labour market and the recent rise to 5% in the unemployment rate, so Her Majesty's Opposition is clear that the Employment Rights Bill should be rewritten.

Unfortunately, this comes on top of other increases like business rates. Obviously, next, £25 billion new environmental charges of various kinds, large increases in the national living wage at the same time, and energy costs, which Lord Elliott emphasised, which are four times as high as the US and seven times as high as China. The noble Lord Lord Rennard talked of the impact of this sort of growing pattern of regulation on investors like Japan, and my noble friend Lord Risby made a compelling case for the devastating effect on SMEs, which I've already touched on.

My Lords, we on this side of the House are clear that economic prosperity comes from productivity and growth, not from ever higher taxes. Increased productivity is the foundation of raising wages and living standards. And Lord Elliot's excellent book is worth reading for the number of policies that he sets out. Another problem we have with productivity is the sheer size of the civil service less productive than the private sector, and employing 384,000 before the pandemic and 516,000 today.

The shadow Chancellor set out a menu of £47 billion in savings last month without hitting most of the capital investment that the Minister so often cites. And that includes indeed the SMEs in North Wales announced today, which I also welcome. But Mel Strides menu is the path to faster growth and higher productivity. My noble friend Lord Bridges rightly registered our disappointment that the promise of the Chancellor's May's election election lecture, a fundamental course correction for the British economy, has not been delivered and said that the Chancellor has lost control of spending.

And to respond to the noble Lord. Lord Eatwell, we are clear that fiscal responsibility means honesty, consistency and transparency. But we have had none of this from the Chancellor. My Lords, I look forward to the Minister's answers to some of these challenging questions. But the evidence is clear. Since the election of July 2024, the Directory of Economic Policy has tilted towards higher taxes and greater regulatory burdens, and it is clear that we're going to have more of both.

This path is fraught with dangers for jobs and growth and prosperity. In Britain, the record high tax burden is squeezing businesses and households and risking a downturn in economic activity. A budget that prioritises growth and productivity and reduces regulation would set Britain back on the path to rising incomes and expanding opportunity. My Lords, that is what is needed.

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My Lords, may I congratulate the noble Lord Lord Elliott of Mickle
15:40
Lord Livermore Portrait Lord Livermore, The Financial Secretary to the Treasury (Labour)
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Fell for securing this debate today and on his thoughtful, interesting and wide ranging opening speech. I very much look forward to reading his book once I receive the free copy that I was promised. I also joined the noble Lord in his heartfelt tribute to the late noble Lord, Lord Desai, whom it has been most enjoyable today to listen to the contributions from so many distinguished noble Lords. And it is a pleasure to respond to this debate. It has been a particular pleasure to hear from noble Lords, from the party opposite about how to grow the economy.

It is perhaps a pity they did not take their own advice. Over the past 14 years, we've heard in this debate from members of the previous government about how to grow the economy and increase prosperity, despite growth in living standards being some of their greatest failures. We've heard from some of the most prominent supporters of Brexit about how to grow the economy despite their own disastrous Brexit deal, permanently reducing GDP by four percentage points. As mentioned by my noble friend Lord Eatwell.

And we have heard from some of the most enthusiastic acolytes of Liz Truss about how to grow the economy.

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She said. GDP being reduced by four percentage points. I assume he's referring to the Obr's original projection, which was over original projection, which was over the next 15 years. Well, so far we haven't had the 15 years. And he's

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haven't had the 15 years. And he's thoroughly misrepresenting the situation. If he's implying this has already happened. Yeah.

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I don't think I have misrepresented the situation in any way, shape or form. The OBR forecast that around 2/5 of the 4% impact had already occurred by the time the Eu-uk Trade and Cooperation Agreement came into force, that GDP will be 2.7% lower by 2025, with the remaining by 2025, with the remaining reduction occurring by 2030, meaning the economy will be over £100 billion smaller than it £100 billion smaller than it otherwise would have been. As I was saying, we have also heard from some of the most enthusiastic some of the most enthusiastic acolytes of Liz Truss about how to grow the economy.

Despite the Liz Truss mini budget crashing the Truss mini budget crashing the economy and sending mortgage rates spiralling. I think we have, my Lords, long since abandoned any Lords, long since abandoned any hope of an apology to the British people from the party opposite for for their record on the economy for their record on the economy over 14 years. But what is still shocking is their inability to show even the slightest hint of self-awareness, the damage they did to the British economy over the past 14 years, or any awareness that that damage continues to scar our economy today.

As my noble friend Lord Davies of Brixton clearly set out, the reality of that record over 14 years is stark. As my noble friend Lord Liddle said, first there was austerity mentioned by my noble friend Baroness O'Grady of Upper Holloway, which took demand out of the economy at exactly the wrong moment and cut investment, undermining the economy's ability to grow, and left us ill prepared for the future. Then a disastrous and tragically misjudged Brexit deal, interestingly not mentioned by the noble Lord Lord Elliott in his opening speech, imposed new trade barriers equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services, reducing total trade intensity by 15%.

As a result, as I've said, the economy will be over £100 billion smaller by 2030. My Lords, the combined effect of these costly mistakes was devastating. Had the UK economy grown by the average of other OECD countries over those 14 years, it would be more than £150 billion larger today. The previous parliament was the worst ever for living standards. Inflation hit 11.1% and was above target for 33 months in a row. The noble Lady, Baroness Noakes, mentioned business investment.

She may recall that under her government, the UK had the lowest private investment levels in the whole of the G7. Productivity growth entirely stalled and output per worker grew more slowly than nearly every other G7 country. These policy errors, chronic instability and low levels of investment have left deep scars on the British economy. As my noble friend Lord Eatwell set out, as mentioned by the noble Lord Lord Harper. Alongside the forthcoming budget, the Office of Budget Responsibility will set out the conclusions of their review into the supply side of the UK economy.

I won't pre-empt those conclusions today, but the OBR may downgrade the historic assessment of the UK's productivity and they may conclude the productivity performance we inherited from the previous government was even weaker than previously thought. The political question?

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Can I just clarify, is he saying that his argument is that the government has made no policy errors as regards the its economic

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errors as regards the its economic management over the last year. Only five minutes into my speech.

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Only five minutes into my speech. So let's let's hear the whole speech before we we conclude on that. But my Lords, this that. But my Lords, this productivity assessment by the OBR will be a look in the rear view mirror. And the past mistakes of the previous government don't need to determine our country's future, or the record of the past 14 years or the record of the past 14 years may be even worse than previously realised. It underlines the importance of delivering higher and more sustainable economic growth, which has been the defining mission of this government since we entered of this government since we entered office.

Noble Lords Lord Elliott, Lord Harper, Lord Bridges and noble Ladies Baroness Noakes and Baroness Neville-Rolfe mentioned today's growth figures. Well, they are, of course, lower than any one of any one of us would want to see. They do confirm the UK was the fastest growing economy in the G7 in the first half of this year, and they do, of course, show just how much more there is to do. We will move more there is to do. We will move further and faster with our growth strategy set out clearly many times, and built on the three pillars of and built on the three pillars of ensuring economic and fiscal stability, reforming the economy and increasing investment.

It is welcome that the IMF have said that this strategy focuses on the right areas to increase productivity. This strategy recognises that growth comes not from government but from businesses and investors, but that there is a role for a strategic state not to step back and let businesses fend for themselves, but to act in partnership with business by systematically removing the barriers to growth that they face. The first pillar, stability, is the foundation all else is built on. That began with the government's first budget last October.

Noble Lords Lord Harper Lord Swire Lord Leigh of Hurley couldn't help themselves to mention the £22 billion black hole in the public finances we inherited and which the previous government sought to conceal from the OBR. But once again.

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Can you just confirm that at no point would the OBR, either in interviews or in its documents, confirm the existence of a £22

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confirm the existence of a £22 billion black hole because they absolutely did not. Yeah. Well, the report that they did

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Well, the report that they did stopped before the conclusion of the previous government that stopped at the previous budget, their last budget. And of course their last budget. And of course they had several months left to run. So the OBR reported on that time period they were asked to report on. period they were asked to report on. And yet the previous government still had, as they several more months to run. What the OBR have months to run. What the OBR have absolutely concluded is that the information was concealed from them.

information was concealed from them. And I think that is a very serious thing for us to know. As I say, once again, the noble Lords who mentioned it in their speeches mentioned it in their speeches today sought to deny and to downplay that black hole exactly the behaviour that got the country the behaviour that got the country into the mess that the previous government left behind. Faced with that inheritance, any responsible government would need to act. One of the decisions we took was to increase the level of employers National insurance contributions to help repair the public finances, rebuild public services and restore economic stability.

As mentioned by so many noble Lords in today's debate. Contrary to what noble Lord Lord Bridges said, I do acknowledge, as we have always acknowledged, that there are consequences to responsibility and that the increase in employers national insurance would have costs to businesses and beyond. But the consequences of irresponsibility for the economy and for working people would have been far greater when we saw that in the Liz Truss mini budget, many noble Lords opposite mentioned the importance of small businesses. I completely agree with them.

The government did protect the smallest businesses from these changes by increasing the employment allowance from £5000 to £10,500. This means that 865,000 employers will pay no National Insurance all, and more than half of all employers will either gain or see no change. Another area highlighted in this debate by noble Lords Lord Elliott, Lord Bilimoria, Viscount Trenchard and noble Ladies Baroness Noakes and Baroness Noakes Neville-rolfe, was the non-dom regime. It is right that everyone who makes their home in the UK pays their taxes here.

The government has therefore removed the outdated concept of domicile status from the tax system and introduced a new residence based regime. The OBR has certified that the non-dom reforms the government has implemented will raise £33.8 billion in total revenue and that figure does account for some non-doms who are ineligible for the new regime. Choosing to leave the UK in response to these reforms. The government will though, of course, continue to work with stakeholders to ensure that the new regime is internationally competitive and focus on attracting the best talent and investment into the UK.

The noble Lady Baroness Foster and the noble Lord, Lord Bilimoria, amongst others, mentioned changes to agricultural property relief and business property relief. The government made these changes to better target Apr and BPR and to make them fairer. The reforms mean that despite the tough fiscal context, we are maintaining very significant levels of relief from inheritance tax beyond what is available to others. These reforms mean that almost three quarters of estates claiming Apr, including those that also claim BPR, will not pay more inheritance tax.

My Lords, the economic stability provided in our first budget is underpinned by our fiscal rules mentioned by my noble friend Lord Eatwell and the noble Lord, Lord Young of Cookham. Those rules allow us to invest more in capital, alongside a credible plan to grow our economy and bring debt down within this Parliament. We met these fiscal rules in the budget last year. We met them at the spring statement in March, and we will meet them again at the forthcoming budget. My Lords, the second pillar of our growth strategy is to deliver whatever reforms are necessary to remove the barriers to growth faced by businesses and investors.

These include planning reforms, which the OBR estimate will add 0.4% to GDP, the biggest policy driven boost to growth with no fiscal cost that they have ever scored. Our pension reforms will unlock £50 billion of investment for businesses and major infrastructure. Our skills reforms will equip firms with the skilled workforce they need to grow. We have begun a reset with the European Union, which I hope the noble Lady Baroness Kramer will support, despite not being, as far as she argued for in her speech today.

We have also reached a trade agreement with the US and signed a new trade deal with India. We have set out a new modern industrial strategy to target high growth sectors, as mentioned by Lord Risby, who are cutting the administration administrative costs of regulation on business by 25%. And we are delivering the reforms, the widest ranging reforms to financial services regulation in over a decade. The final pillar of our growth strategy is investment, which stability and reform are designed to increase.

The government has an important role to play here. The IMF have long warned that a lack of public investment was a significant barrier to growth. That is why we have committed an additional £120 billion of public investment over the next five years, made possible by a reform of the fiscal rules. Our fiscal rules ensure that we do not need to cut capital spending. Unlike the previous government, who planned to cut it even further, as my noble friend Lord Eatwell observed, which got us into this productivity hole in the first place, we are directing our additional capital investment into growth driving projects, including new homes, improved transport connectivity and new nuclear projects such as Wylfa.

As mentioned by my noble friend Baroness O'Grady of Upper Holloway and the noble Lord Lord Bilimoria, and we are catalysing private investment through the new National Wealth Fund and British Business Bank. But of course there are so many noble Lords opposite have said today the real prize is increased private sector investment in our economy. Whereas under the previous government, the UK had the lowest level of private investment in the G7 since the election, private sector companies have committed over £325 billion worth of investment into the UK, including during the US state visit in September.

And as mentioned by my noble friend Viscount Chandos at the Regional Investment Summit last month, the first we hope of many. My Lords, real progress does take time. And as my noble friend Viscount Chandos said, we cannot reverse 14 years of underinvestment overnight. But real wages grew more in the first ten months of this government than in the first ten years of the previous government. Under the previous government, we saw the worst pay growth in a century, with barely 0.3% growth between 2010 and 2024.

The noble Lord Lord Elliott spoke about living standards in his opening speech. Living standards are up 2.1% since the election, compared to the 1.8% fall over the last parliament. That was the only parliament on record where living standards were worse at the end of the Parliament than at the beginning. As the noble Lord Lord Skidelsky referred to, whereas the UK was ranked seventh out of seven for projected 2025 growth in the G7 under the previous government, our growth was the fastest, fastest in the G7 in the first half of this year.

But of course, we do not expect anyone to be satisfied with growth of 1%. Today's growth figures reinforce the fact we need to go further and faster. Not repeating the previous governments mistakes of cutting investment, but continuing to create the right conditions for growth. The first part of our planning reforms will add an additional £6.8 billion to the size of our economy in the next five years, but the next part, our planning bill, must complete its passage through Parliament before it can make a difference.

Interest rates, which rose consistently in the last Parliament, have now been cut five times since the election. But at 4% they are still a constraint on business borrowing and a burden on family finances. Inflation is clearly much lower than the double digits seen under the previous government, but the choices we make must be focussed on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living. And as mentioned by the noble Lord Elliott in his opening speech, while we have taken action in the industrial strategy to reduce business energy costs by up to £420 million a year, they are still too high and we must go further.

Noble Lords, including Lord Elliott Lord Harper Lord Bilimoria, mentioned the importance of employment. Latest figures show that 138,000 jobs have been created since the election. Over the course of this Parliament, the OBR forecast that employment will rise and unemployment will fall. But the figures published this week do show exactly why we must go further to get Britain working and to get our economy growing. I am grateful for the support for the Youth guarantee from the noble Lord Lord Skidelsky and the noble Lord.

Lord Howard mentioned the importance of Jobcentre reform. Noble Lords, including Lord Elliott, Lord Leigh of Hurley, Viscount Trenchard, Lord Massey of Hampstead and my noble friend Lord Liddle and the noble Lady Baroness Neville-Rolfe, mentioned the Employment Rights Bill. As noble Lords know, this bill is currently still going through its final parliamentary stages. The government is also supporting businesses to create jobs, innovate and grow, including by reforming our regulatory framework to reduce barriers to growth and investing in our economy. Many noble Lords mention the issue of welfare, including the noble Lord Lord Young of Cookham Lord Petitgas, Lord Horam Lord Bridges of Headley and the noble Lady Baroness Stedman-Scott.

The government is committed to reforming our welfare state. We are shifting the focus from welfare to work skills and opportunities. We have backed that up with a £1 billion a year employment support by the end of the decade. And as my noble friend Lord Liddle said, the government has also announced an independent report into young people and work to be led by Alan Milburn, which will examine why increasing numbers of young people are falling out of work or education. He will publish his final report by next summer.

My Lords, many noble Lords today spoke about the forthcoming budget in just under two weeks time, including the noble Lord Lord Elliott Lord Harper Lord Petitgas Lord Swire Lord Wharton of Yarm Lord Massey of Hampstead Lord Kempsell noble Ladies Baroness Stedman-Scott Baroness Fall Baroness Kramer and my noble friend Lord Liddle. There has been much speculation about the forthcoming budget. As mentioned by the noble Lord, Lord Saint John of Bletso. But as my noble friend Lord Viscount Chandos rightly suggested, I am not going to comment on individual tax measures today.

The Chancellor has asked the OBR to produce a new forecast. She will take decisions based on that forecast, and we will set out our fiscal plans at the budget in the usual way. The Chancellor will, though, make those decisions mindful of the importance of growth and investment to businesses and to the economy. And it is vital that the tax system supports our growth mission. The noble Lord Lord Elliott, in his opening speech, spoke of the importance of innovation and enterprise mentioned also by the noble Lord, Lord notes of hail and the noble Lady.

Baroness four rightly spoke about the importance of supporting scale up businesses. The current rate of corporation tax is the lowest in the G7, and this is supplemented by generous business investment reliefs which directly support investment, including full expensing, R&D tax reliefs and the patent box regime. The noble Lord Lord Bridges mentioned headroom. As the Chancellor said earlier this week we will continue to build more resilient public finances with the headroom necessary to withstand global turbulence. This will give businesses the confidence to invest and leave the government freer to act when the situation calls for it.

We have been very clear about the principles that will guide the forthcoming budget. It will protect the NHS and public services from a return to austerity. But it was the because it was the austerity that choked off investment that will put our country on a path to recovery after the financial crisis. Instead, we will protect investment in our economy and we will build on the progress already made to repair the public services. The budget will also support growth, enabling businesses to create jobs and innovate.

It will improve the cost of living by doing what is necessary to protect families from high inflation and high interest rates, and it will keep debt under control. Because the less we spend on debt interest, the more we can spend on the priorities for working people. As Baroness Kramer rightly said, My Lords, I am grateful to all noble Lords who have spoken in today's debate. But we will take no lectures from the party opposite, who presided over 14 years of instability, low productivity and economic decline, where they delivered the slowest projected growth in the G7.

Growth in the first half of this year was the fastest in the G7, where they presided over the worst parliament ever for living standards. Living standards have increased by 2.1% since the election, where they oversaw the worst pay growth in a century. Real wages grew more in the first ten months of this government than in the first ten years of the previous government, and where they continually cut capital spending and deterred investment. We are investing for the long term with £120 billion over the next five years, alongside £325 billion committed by the private sector since the election.

My Lords, the OBR may shortly conclude that the productivity record of the previous government was even worse than previously thought. But we will not let those past mistakes determine our country's future. This government will invest in the NHS, support growth and improve the cost of living. We will continue to build strong foundations for our economy, because that is the only route to securing Britain's long term future. Yeah, my Lords. term future. Yeah, my Lords.
16:00
Lord Elliott of Mickle Fell Portrait Lord Elliott of Mickle Fell (Conservative)
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I'll be brief. I'd like to begin by thanking the library for their excellent briefing note, and also thanking all noble Lords for their thoughtful contributions. I think it's been a superb and stimulating debate, and we should consider making it an annual fixture in the Lords calendar. And there are lots of points I'd love to pick up on, not least on welfare. On the notion of an exit tax, even capital controls. But I get the sense from the House, the one they'd like to hear from me most on is perhaps on Brexit, mentioned by the noble Lord, the Minister, the noble Lord Lord Eatwell and the noble Baroness Baroness Kramer.

A lot of this talk about the OBR report, I've read that report and it's based on projections brought together before the referendum, before we actually knew what sort of deal there would be from the EU. So it's actually a very old report. And since 2016, it's worth noting that UK economic growth, although less than expected, has been higher than most Western European countries and UK trade UK trade. I give way.

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It's just worth noting that the OBR have updated those forecasts in 24 and 25, and have maintained their view that it will reduce GDP by four percentage points. Will not. Now.

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Now. Since 2016 as well. It's worth noting that UK trade with the EU is noting that UK trade with the EU is now higher than it was in 2019, and UK trade with the rest of the world UK trade with the rest of the world is now higher than it was in 2019, and the referendum was over nine and a half years ago. We left the EU five and a half years ago. I think it's time to take responsibility for what's going on now with economic growth, and the government should be commended for some measures, which of course have increased economic growth, such as the post-Brexit, post-Brexit trade deals.

Not possible without Brexit, deals. Not possible without Brexit, with the US, with the Gulf states, with India. I liked the intellectual honesty of saying that intellectual honesty of saying that we should rejoin the customs union, and I think the government should and I think the government should be more intellectually honest if they talk about Brexit. It's worth noting, though, that were we to rejoin the EU, what would the annual membership fee now be for

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annual membership fee now be for being in the EU? Five. 6. Billion, £22 billion a year, another £22 billion to think about? I hope the government considers some of the proposals put forward

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in the budget, and I beg to move. To order. My Lords, the question is that this motion be agreed to. is that this motion be agreed to. As many as of that opinion will say content, content, content, content, the contents have it, my Lords, it the contents have it, my Lords, it may be for the convenience of the House that I allow a moment for individuals to leave the chamber individuals to leave the chamber before I call the next business.
16:04
16:04
Lord Alton of Liverpool Portrait Lord Alton of Liverpool (Crossbench)
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acknowledgement, long overdue, that the British state failed the families and victims of Hillsborough at an almost inhuman level. Echoing Barbara may's description of burning injustices, he powerfully described the closing of ranks, institutional lies, cover ups, smears and betrayal by the very people who should have been protecting families, victims who became trapped in a cycle of profound grief and wicked vilification, with the public purse used to bankroll misconduct and malfeasance, and to camouflage the truth, truth, expeditious justice and consequences.

They are the three themes I want to address today. Hansard records that 36 years ago, as a Liverpool Member of Parliament, I sent correspondents to the government of the day questioning the suitability of Hillsborough for the April 15th, 1989 semi-final, enclosing a statement from the chief executive of Liverpool Football Club, who said this there was no way I could support the choice of Hillsborough this year with the same ticket allocation applying. But of course, my Lords, the match was played with disastrous consequences.

Despite repeated suggestions that the fans had brought the calamity on themselves, Lord Justice Taylor accurately identified the role of South Yorkshire Police and criticised their attempts to shift responsibility from themselves to the spectators. Four days after the disaster, I wrote to Sir Cecil Clothier, then the chairman of the Police Complaints Authority, enclosing a first hand account from a constituent. I asked him to open an independent inquiry into attempts by the police spokesman to blame the fans for their own deaths, which I said was, quote, part of a smokescreen of propaganda aimed at diverting attention from the truth.

Despite repeated requests that he investigate the conduct of the police, he declined to do so. Years later, I was shown a letter from Sir Cecil to the Chief Constable of South Yorkshire saying he'd done his best to his word. Deflect my complaint successfully signs the letter spike, a word journalists use when an editor has decided to withhold a story from publication, with the truth being spiked, victims had to watch a system circle its wagons around its own.

In 2012, the independent Hillsborough panel found 164 statements had been altered significantly. 116 amended to remove content that was unfavourable to the police. It was only when the original 1990 to 91 inquest verdicts of accidental death were rerun, using the obligations of the 1998 Human Rights Act and Article two of the ECA, that verdicts of unlawful killing were finally reached. 27 years had now passed as the truth gradually began to emerge, the 2016 jury vindicated the fans and established gross negligence defects at the stadium, errors in the safety certification and much more besides.

My Lords, instead of consequences for those at fault, we've seen early retirements and enhanced pensions. Parliament will want to be convinced that the Hillsborough law will tip the balance away from the behemoth against whom the small battalions are pitted. We must finally lay to rest what the 2017 independent report into Hillsborough, chaired by Bishop James Jones, described in its title as the patronising disposition of unaccountable power. Five years after the publication of that report, and now, 28 years after the disaster, I protested that there still hadn't been a government response to that report's recommendations, that a the duty of candour be equality of arms at inquest.

C the appointment of an independent public advocate, and d a charter for families bereaved through public tragedy should be enacted. Following this up in 2023, I participated in a meeting here of an all party group looking at public accountability and where we discussed a range of public tragedies, including primodos, atomic test victims, infected blood Hillsborough. Other examples might have included Windrush, Chinook, Grenfell, Manchester Arena, Covid grooming gangs and horizon. After that 2023 meeting, I suggested to Ian Byrne, Member of Parliament, who'd been a young spectator at Hillsborough, that he should write to the Joint Committee on Human Rights, of which I was a member, and which I now have the privilege to chair and ask us to examine the Hillsborough Law.

We did. Our witnesses included Bishop Jones and Andy Burnham. The hearing led to a unanimous report in May 2024 calling for a Hillsborough law, and on March the 3rd, the government responded positively. Its indicative, my Lords, that during our hearing, the Joint Committee was told that a Hillsborough law could have made a difference when inaccurate evidence was given to the late Lord Kerslake. Inquiry. The aftermath of the Manchester Arena bombing. But in addition to the duty of candour, the new law must build on the admirable work begun in 2014 by the noble Lord, Lord Wills and by Maria Eagle, Member of Parliament, in promoting a bill for an independent public advocate, which I strongly endorsed and which was established in 2024.

A post held now by Cindy Butts. While the JCHR has not yet decided what its approach will be on the new bill, I hope it will consider seeking further information on whether she has adequate powers and resources to support victims of major incidents, to guide them through the obstacle course, and to ensure a response from government. I would like to hear the Minister's view about strengthening the role of the advocate and tell us why the government say that this might not be the right place in which to do it.

Also, about the creation of a national oversight mechanism to ensure that when recommendations are actually made, they are implemented. And the House, I think, will also want to hear about the practicalities of ensuring that victims of disasters of state related deaths receive parity of legal representation during inquests and inquiries about the resources that the government are going to set aside for this, and above all, how confident the Minister is that the new legal duty of candour on public authorities and officials will bring to an end the depressingly familiar pattern of cover ups and concealment, whether penalties will be exemplary and adequate to punish outrageous conduct in Baroness Levitt who will steer the bill through this House? We have a Minister whose entire working life has revolved around justice, and she is particularly well placed to turn bitter experiences and unfulfilled promises into a workable reality.

And I am grateful to her for the constructive discussion that we had last week. 36 years ago, I visited the families of constituents who had loved ones, including teenage children. Among the fatalities and the injured. Among those was Andrew Devine, who suffered life changing injuries after being deprived of oxygen. His remarkable parents, Hilary and Stanley, lovingly cared for Andrew with exemplary humanity and courage. Andrew emerged from his coma in 1994. On his death in 2021, the coroner ruled that Andrew had been unlawfully killed, becoming the 97th Hillsborough victim.

Let me conclude my Lords, Andrew's family are grateful to the Minister for agreeing to meet them privately, without media intrusion to discuss their hope, which they have asked me to relay to the House that there will be one enforceable code of conduct for all public officials with significant sanctions, including financial penalties for non-compliance in the quest for truth, for expeditious justice and consequences. Andrew, his family and all those who 36
16:13
Lord Wills Portrait Lord Wills (Labour)
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years ago paid such a terrible price must now be our guiding light. I thank all noble Lords who are taking part in the question today. Lords, I thank the noble Lord Alton Lords, I thank the noble Lord Alton for initiating this debate and for initiating in such a magisterial way. And I would like to take this opportunity to thank him and pay tribute for all his decades, tribute for all his decades, decades of work on behalf of the Hillsborough families. This bill, my Lords, is important because as my Lords, is important because as my noble and learned friend, the Prime Minister said at Second Reading of the bill, in the other place, the experience of the place, the experience of the Hillsborough families and so many others shows, and I quote how the others shows, and I quote how the culture of the state has to change.

And this bill is intended to do just that, as the bill makes its just that, as the bill makes its way through Parliament, I think it is vital that the interests of the victims and the bereaved in these victims and the bereaved in these great public disasters are kept front and centre of our deliberations, and I would like to deliberations, and I would like to suggest that they can be summarised as this as finding the truth about as this as finding the truth about what happened and why, to find it quickly and for accountability to quickly and for accountability to follow without delay.

All of which was denied for so very long to the Hillsborough families and so many other victims of public disasters. So I'd like to ask my noble and learned friend, the Minister, to clarify a few important details about the bill that bear on those objectives are quite understand if she's not in a position to answer them today, but I would be grateful if she could agree to meet me at some point to discuss them before the Bill arrives in your Lordships' House.

My first point is about the duty of candour. This crucial part of the bill aims to transform the culture of cover up, which has characterised the aftermath of public disasters such as Hillsborough, but transforming the culture of public sector organisations is notoriously difficult, and this is particularly the case when those in such organisations might feel they were in the frame for allowing the disaster to happen, rendering them liable to be charged, for example, with gross negligence manslaughter. Now this was the charge brought eventually against Detective Superintendent Chief Superintendent Duckenfield over the Hillsborough disaster.

The minimum the maximum penalty for gross negligence manslaughter is life imprisonment. The maximum penalty for breaching the statutory duty of candour in this bill is two years imprisonment. In these circumstances, it is possible to imagine how someone who felt they might end up with a sentence of life imprisonment, might prefer to take their chances with breaching the duty of candour now to lessen the chances of such calculations taking place, and to accelerate the cultural change. The duty of candour is designed to engineer.

There needs to be greater protections for whistleblowers, I would argue. Imagine if there had been a whistleblower who felt sufficiently empowered and protected to challenge the poisonous culture in South Yorkshire Police following the Hillsborough disaster. There must have been some in that force who hated what was happening. If there had been such a whistleblower, the Hillsborough families would have been spared decades of struggle and grief now the detriment suffered by whistleblowers in the public service. They can deliver a well known and I won't rehearse them here today.

But this government has repeatedly acknowledged that existing protections are inadequate, and yet it has done nothing about it. And really, the time has come to stop this prevarication, which is so damaging in so many ways. And this bill offers a rare legislative opportunity to do so. And I really would be grateful if the Minister in due course, would consider all the proposals that I and many others in this House will propose in due course for doing so. Now. Secondly, I turn to the so-called parity of arms sections of the bill, which aims to stop what the Prime Minister has described as bereaved individuals being confronted.

And I quote, by armies of state funded lawyers at inquest, I think the whole House will support. I hope the whole House will support that principle. However, there are some important questions of detail which are unanswered in this bill as drafted. Importantly, it seems to leave open the question of who exactly will qualify for legal aid at inquest. Now, as I understand it, which may not be perfect, the definition will derive from the Legal Aid, Sentencing and Punishment of Offenders Act of two 2012, where relatives, whether of the full blood or half blood, or by marriage or civil partnership cohabitants, or whether where one has parental responsibility for the other.

But what would happen, for example, in the case of a divorced couple whose adult child was killed in a public disaster, do they each get legal aid? And if not, how would the allocation be decided? And there are many more such problems of definition. Now. Theoretically, this could lead to a situation after a public disaster such as Hillsborough, where there are over a hundred lawyers on legal aid acting on behalf of the bereaved. This could prolong an inquest for years and that in turn, crucially, would prolong the trauma and grief of all those who had suffered in such a public disaster.

Now, the Minister might point out to me that the coroner has powers to prevent such prolongation, but I would ask her to consider the response from victims and the bereaved, not to mention the media and the general public. If a coroner was to try to shut down in any way an advocate speaking on behalf of any one of those victims and bereaved. So I'd like to be very grateful for any light the Minister could shed on how the government proposes to tackle this issue.

Now, finally, I'd like to be grateful if the Minister could explain exactly why, exactly why the government refused to use the opportunity of this bill to increase the powers of the independent public Advocate to support those bereaved by public disasters. She will be aware the establishment of this position arose out of my private member's experience working with the Hillsborough families. Now, the Minister will also be aware that this position was significantly watered down, as I had originally envisaged it by the previous government and, crucially, the ability to set up the equivalent of a Hillsborough Independent panel which the noble Lord, Lord Alton, has already referred to its importance was got to the truth quickly.

That panel, which I devised when I was a Minister, was the way in which the Hillsborough families finally got the truth. After all the legal efforts and everything else, and incidentally got it in two years and cost under £5 million, compared, for example, with the Grenfell inquiry, £170 million seven years and still going. So why isn't there provision in this bill for such an independent panel, not to mention other measures to increase the powers of the independent Public Advocate, right Honourable Maria Eagle made a compelling speech at Second Reading in the other place for not relying solely on lawyers.

With all respect to my noble and learned friend on the front bench, but not relying on lawyers solely to secure justice for victims and the bereaved in public disasters. Measures to improve the powers of the independent public advocate would not be alternative to the measures in this bill. They would on in they would actually strengthen support for the bereaved. Now, I believe something like that would command cross-party support in your Lordships' House. And I await the Minister's response to my suggestion with great interest.

suggestion with great interest.
16:21
Baroness Sanderson of Welton Portrait Baroness Sanderson of Welton (Conservative)
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My Lords, it's a real pleasure to follow the noble Lord Lord Wills, and I think he raises many salient points. And it's I'd also like to thank the Lord Alton of Liverpool for tabling the debate and for his, as ever, eloquent and very moving introduction to it. So in terms of the development of the Hillsborough Law, it's clearly well advanced. And we have the introduction of the Public Office Accountability Bill. And I think that is good news. The duty of candour and the proposed new offences are a good step forward.

And I think we all hope that they will bring about the change in culture that is so desperately needed. And as has been mentioned, campaigners have really fought long and hard for this bill. And what that means is expectations around it are riding extremely high. If you're from Hillsborough or Grenfell, if you're one of those infected or affected by infected blood, if you're one of the subpostmasters you understand only too well the barriers, the frustrations and the failures along the way.

And when you have faced, at best, a never ending barrage of obfuscation, then the duty of candour is a very appealing thing, even if it is the least you should expect from those in a position of responsibility. However, I do think we need to sound a note of caution. The duty of candour does provide part of the answer. But as noble Lord Lord Wills has has highlighted, it's not a cure all. And if we place too much emphasis on what it can realistically achieve, then we risk creating further disappointments for people who have already endured enough setbacks to last a lifetime.

As we all know, a duty of candour has existed in the NHS for over a decade. But we haven't seen the desired culture change there. Now the new bill provides a more robust framework. The reach is wider and there's a requirement for codes of ethical conduct. But if we are to truly transform the response to those who have been failed by the state in all its various forms, then there are other things that we should pay equal attention to. And I think the noble Baroness Minister might see some themes emerging from from this, because I would also like to talk about the independent public advocate.

And so this was created in the last government's Victims and Prisoners Act, and that was in no small part due to the work of the noble Lord Lord Wills, the Right Honourable Marie Eagle, and also my noble friend, the Baroness May of Maidenhead, and one of the most appalling features of all the scandals that we have mentioned and continue to mention in this House, is the way in which those affected butt up against a system that seems to work against them, and so inflicting further harm.

And the independent public advocate is the only part of this intimidating wall of bureaucracy that people face that speaks solely for the victims and survivors that they know will be entirely on their side. Now, the new bill has provision for a parity of arms in terms of legal aid, but this is about more than legal representation. It's about the relationship between the public and the state, and it's about building trust. When trust in the system has been smashed to pieces.

And I just don't think the value of this can be underestimated. And so I completely agree with the noble Lord Lord Wills to say that I think many of us would have preferred to see a much stronger role for the IPA than that which we ended up with. And as it was originally conceived, the IPA would have had the power to compel evidence which could potentially solve problems earlier down the line, and could also, in some instances, avoid the need for costly public inquiries.

As it stands, the IPA has not been given the remit or the resources to do this. The last government did agree to a review. Once we have seen how the role is evolving, so could I ask the noble Baroness, the Minister, if her government will champion the first IPA, but giving her the necessary support to develop the role and allow it to reach its full potential? And an example that I've mentioned previously, it's the subpostmasters. And when they asked if anyone else was experiencing problems with horizon, they were told no, they were the only ones.

Now, had we had a duty of candour back then, you would hope that maybe it might have prevented that. But then I think also, if you look back, had had that group of subpostmasters also had the backing and importantly, the clout of the IPA. Well, the situation might have been very different and those lives might not have been ruined and we might not have ended up with another costly public inquiry. So if we could get the duty of candour and the IPA working in tandem and to full effect, it is just possible that in the future, where an inquiry is necessary, it may not need to be statutory.

So in the current climate, the calls for an inquiry to be statutory are absolutely unavoidable from victims campaigners, because it is only a statutory inquiry that can compel evidence. And then the moment that this happens, under the terms of the 2005 Inquiries Act, it is inevitable that the process will be long and it will be expensive. However, as Lord Wills has mentioned, there are other options such as independent panels which can be more agile and sometimes more effective depending on the circumstances.

And the recent select Committee, which was established to look into the Inquiries Act, which I was on, also recommended that other models of inquiry be considered if possible. And I think we do need to look at ways of achieving this, because as the number of statutory inquiries has proliferated, we now have this enormous backlog of recommendations, all of which tend to be accepted by the government of the day, any government, and many of which are not then delivered. And I work with many of the groups involved in a number of recent public inquiries, and they are all, without exception, deeply frustrated.

And they have all asked, what is the point if the recommendations aren't going to be delivered and inquiries are there? Partly to rebuild trust. And I'm afraid in that sense they are no longer doing their job. And in fact, as I speak, the group act on Ipsa is holding an event right now to highlight the fact that so many of the recommendations of the Independent Inquiry into Child Sexual Abuse have not been implemented. And just to demonstrate how ridiculous it has all become, we are now heading into another related inquiry on grooming gangs.

On the back of a report by Baroness Casey, which repeated many of the recommendations made by Professor Alexis Jay in her original report. And this is the situation we increasingly find ourselves in, and it's not helped by the fact that there's no formal monitoring for inquiries or or inquests. And I'm going just as long as everybody else did. And I've got one more paragraph. And so and one important question, so could the noble Baroness, the Minister, say whether the government is actively looking at this issue? And does she agree that the Hillsborough Law needs to sit in a wider suite of initiatives if

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we're going to deliver that long lasting change? Yeah. My Lord, I don't wish to be insensitive or difficult, but this
16:29
Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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insensitive or difficult, but this is a time limited debate, and the time limit for speeches is seven minutes, and the effect will be that it will curtail the time available to the Minister. I think we do owe a debt of gratitude to the noble Lord, Lord Dalton, for placing this item for us to discuss. I have to admit a certain inaccuracy. I thought, when I put my name down that there would be many other speakers, and I wish to raise a particular narrow point.

But of course, the debate in a way, has had the wind taken out of its sails by the fact that we now have the bill, and we've had the Second Reading in the House of Commons. And I would urge all members to read the whole of the transcript, because the extent of the problems and the issues that need to be dealt with are brought home very strongly when we do so. Now, of course, this is popularly known as the Hillsborough law.

I think I'm struck by what the parliamentary Under-Secretary of state for justice said in winding up the debate. He said that this legislation and and he was echoing the words the Prime Minister. This legislation was not born here in Westminster. It was born out of heartbreak, out of unimaginable loss, out of the tireless courage of those who refused to be silenced. And I think we need to recognise that in the debate. And it was brought home to me by reading all the different cases in Hansard which were raised, and where action is required.

Of course we have to pay. I have to pay testimony to to my noble friend Ian Byrne MP, who was, I think we can fairly say, led this campaign. But of course, as part of a coalition with. What were described as the the Scouse MPs and of course MPs from across the country. But of course, it was the campaigners who really deserve the credit for what is being achieved here. Now. Two things struck me in the debate. I'm going to get on to my specific point shortly, but I think this is worth saying that what came out of the debate was the range of issues, and it's been touched on by my by my noble friend Lord Wills and by the noble Lady, Baroness Sanderson of Welton, that there are closely it's not just about the duty of candour, I think is the point.

And what struck me is in trying to achieve the target of a rebalance of power between the state and working people. There's also legal aid. There's the issue of whistleblowers, there's the issue of press regulation. And leave some to the question of inquiry, follow through and of some locusts. Clear, specific locus for national oversight of these issues. The second point, and it brings me to the specific question I wish to ask my noble friend, the Minister, is the range of the issues that have raised concern.

We obviously Hillsborough is the centre of this. People also mention Grenfell people who have mentioned Windrush. I went through underlining all the different problems which MPs raised, which clearly are of crucial importance to them, and they vary greatly. Windrush was a very specific and tragic and destroyed families. But the big my big question is what range of issues is going to be covered by this legislation? And here I have to declare my interest as an officer of All-Party parliamentary Group on Investment, Fraud and Fairer Financial Services.

Now, I am widely concerned and in fact I've been during the previous debate when I had to nip up to Committee room 14, where there was a meeting of the All-Party parliamentary Group Committee. Room 14 was packed with people who have suffered financial harm and are looking for some form of better. Support than they have received so far from the apparatus of the state. Now, the harm you receive from being defrauded. Well, there's a straightforward that the psychological harm, and in some cases it does lead to people's deaths.

Now, I'm not specifically suggesting here that the that the law should be expanded to cover all circumstances, but I think it is an issue that we do need to consider. Financial harm can be as severe on people as these other problems that we've discussed or were discussed in the House of Commons. So I hope we will be able to have a full discussion about the scope of what's covered by this legislation and the what the state needs to do, as has been omitted to rebalance power from the state as regulators

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of the financial sector and individual people. I don't.
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Lord Evans of Weardale Portrait Lord Evans of Weardale (Crossbench)
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I don't. Like others. I'm grateful to the noble Lord Lord Alton for the opportunity to debate this opportunity to debate this important matter, and I shall be brief. The long and painful process of inquiry into the Hillsborough tragedy demonstrated atrocious behaviour by a number of organisations and individuals who failed in their duty to act with integrity. It also revealed determined attack attempts to avoid accountability, and similar concerns arose in the context of the Post Office scandal and the infected blood inquiry, to which I gave evidence.

They also form part of the background to the Orgreave Inquiry, which is about to begin under the able chairmanship of the right reverend Prelate, the Bishop of Sheffield. I therefore welcome the fact that after a number of false starts, the government has introduced the Public Office Accountability Bill. Accountability is, of course, one of the seven principles of public life, initially articulated by Lord Nolan nearly 30 years ago and endorsed by all subsequent prime Ministers and without accountability, checks on the abuse of power are lost, and we also lose the ability to learn from errors and mistakes.

And that is very clear in the in the inquiries that have taken place that we have failed to learn from, the errors that have taken place over many years. I've also, therefore encouraged that the bill goes a step further and requires all public authorities to promote and actively maintain high standards of ethical conduct. And one might expect that most departments and agencies and other parts of the public sector would do this as part of normal business. That is not the case.

When I was chair of the Committee on Standards in Public Life, we undertook an inquiry into the ways in which departments, agencies and other public bodies encourage their staff in inducted their staff into the ethical requirements of their roles. In many cases, the system was almost entirely absent. In fact, in one occasion I had a discussion with a senior official in one department who said that he didn't believe that his department faced any ethical challenges or issues, which struck me as an extraordinary blind spot for somebody in such a senior role.

I will not be naming names. It is so important that all those in public service should understand what is expected, should experience the ability, opportunity to learn, and should then be expected to live up to those standards, and that there is a system to help and encourage and require them to do so. And there is no such system today. I also wonder whether this duty should be widened to include Parliament, where our current induction into ethical expectations and conduct is often sketchy, to say the least, but that's perhaps a discussion for another day.

I further welcome the inclusion of the intelligence agencies within the scope of the bill. Accountability may, of necessity, operate differently for the agencies, but it is no less important. And the Bill proposes a workable model to ensure accountability without prejudicing sensitive information, the publication of which would damage the ability of the agencies to protect us all from threats such as terrorism and from increasingly aggressive hostile states. But of course, the test of the new arrangements will be the extent to which they prevent, or at least help to uncover, the abuses of the sort surrounding the Hillsborough disaster and the other scandals to which a number of noble Lords and ladies have drawn attention.

So we need to keep an eye on the cultural aspects of this, as well as the legal aspects and the education and the encouragement of all those in public service to live up to the high ethical standards which we all proclaim, but which, sadly, we have found are, in a number of cases sadly lacking. Lord Wood.
16:40
Lord Rennard Portrait Lord Rennard (Liberal Democrat)
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In the television documentary about Kenny Dalglish, the man known in my home city as King, Kenny reveals how he was contacted by Mr. Kelvin Mackenzie, the former editor of The Sun, seeking advice on how to end the widespread boycott in Liverpool. Of his product. He was told firmly that he needed to print a new front page that simply read we lied. Four days after the disaster, The Sun's front page had been headlined The Truth as it published false and deeply damaging claims, making vile accusations against the victims.

It took many decades for the truth to be revealed. For that, we must thank those who overcame the barriers created by officialdom as outlined by my former candidate in Liverpool and my friend, the noble Lord, Lord Alton of Liverpool. We must thank the heroic campaigners and families whose unwavering strength and courage eventually dragged this necessary legislation before Parliament. Their fight to expose institutional defensiveness, lies and deceit over three decades demands our utmost respect.

The bill seeks to correct a monstrous injustice done to the 97 who died, and to avoid similar injustices involving institutional cover ups. It's taken 36 years since Hillsborough was to set about establishing a statutory duty. Duty of candour. To provide for transparency and frankness on the part of public officials and authorities with consequential criminal penalties for wilful deception. Calls for such measures were resisted by almost everyone in authority until the 20th anniversary memorial of the disaster took place at Anfield.

The speech, given by the then Secretary of State for culture, Media and Sport was loudly interrupted by booing and jeering and chants of justice for the 96. That was the number of fans who had then died, later to be followed by Andy Devine, who was in a coma and died from his injuries 32 years after he was crushed. A previously reluctant government was then persuaded to look again at Hillsborough by setting up the independent panel. With the legislation that is now proposed.

We must also change the culture which allowed the cover ups, falsehoods and denial of justice over the decades. As the noble Lord, Lord Alton, repeated, the warning from Bishop James Jones was about the danger posed by the patronising disposition of unaccountable power. And this, of course, extends well beyond those involved in the Hillsborough deceit. To dismantle that power and ensure that the Bill is effective, I believe we need to focus on three critical areas that demand strengthening as the legislation proceeds through Parliament.

First, we must achieve the genuine equality of arms in our justice system. This means correcting the grotesque inequality of families having to scrape together every last penny they can for representation. For what has been described in this debate as an army of well-funded state lawyers. Secondly, we must ensure robust accountability with no hiding places. It's welcome that the bill's intention is to apply the duty of candour to private bodies and contractors delivering public functions, but we must ensure this measure is not weakened, and that includes all subcontractors.

Whilst the bill includes complex provisions for the security and intelligence services, the principle must remain absolute. The duty to tell the truth must apply to everyone without carve ups, the risk becoming new cover ups. We must also ensure that accountability goes right to the top. Resting personally with chief officers and executives, not merely the corporate body, to act as a true deterrent against the culture of defensiveness. Thirdly, effectiveness depends on embedding mechanisms for disclosure and learning.

As the noble Lord Lord Wills argued persuasively, we need to strengthen whistleblowing protections to help the facts come to light. We need that independent office of the whistleblower to ensure statutory protection for those who exercise candour. These measures would provide critical frontline defences against institutional misconduct. Finally, the integrity of the bill requires an accompanying commitment to a national oversight mechanism. Without a body responsible for monitoring and ensuring that recommendations from inquests and inquiries are acted upon, we face the problems described by the noble Baroness Baroness Sanderson.

Hard won lessons risk being left on a shelf, gathering dust, compounding the original injustices. Our goal must be to pass a strong law and watered down and which guarantees genuine transparency and accountability.

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My Lords, please let me thank all noble Lords for their valuable all noble Lords for their valuable contributions. It would be wrong not to pay particular thanks to the noble Lord, Lord Alton, for his advocacy concerning the Hillsborough families and for public accountability. public accountability. Accountability. More widely, the government's Public Office Accountability Bill, widely Accountability Bill, widely referred to as the Hillsborough Law, represents a significant step towards placing a legal duty of towards placing a legal duty of candour on public authorities and officials and strengthens the inquest representation for bereaved families and victims.

Noble Lords who have followed the Hillsborough who have followed the Hillsborough campaign know that this is not simply an exercise in drafting. It simply an exercise in drafting. It is an attempt to learn the hard lessons of decades of anguish and lessons of decades of anguish and pain. It is our duty to ensure that no families ever again have to go no families ever again have to go through the prolonged fight for truth that the Hillsborough families have had to endure.

The government's stated aim to ensure that the truth cannot be concealed that the truth cannot be concealed by the state, and to extend legal aid for bereaved families at inquests where the state is an interested party is therefore to be much welcomed as and when noble Lords scrutinised the Bill in your Lordships' House. Legitimate concerns that have been raised by campaigners and practitioners about the bill's scope and drafting must be considered, as was flagged by the noble Baroness, Lady Sanderson. It is crucial that the duty of candour is framed so as to be effective in practice, and not merely declaratory in form.

The new criminal offences must be targeted so as to deter serious wrongdoing without producing unintended consequences that discourage necessary co-operation by public servants in good faith, as was mentioned by the noble Lord, Lord Evans. We must also be clear about the Bill's application across different parts of the state, including how it interacts with national security, defence and policing functions. Thoughtful, precise drafting and careful parliamentary scrutiny, which are hallmarks of your Lordships' House, will be essential.

As was highlighted also by the noble Lord, Lord Alton and the noble Lord Lord Wills. On practical points, the commitment to broaden legal aid inquests is welcome, but it must be matched by clarity over funding and timeliness, and it must also provide the support that families require to participate fully in investigations and hearings. If the Bill is to fulfil its promise, the culture and the practical machinery of state accountability both need to change not only the letter of the law.

Finally, my Lords, as the Government and Parliament proceeds, His Majesty's Loyal Opposition would like to thank those across both the other place, your Lordships' House and most notably outside the Palace of Westminster, who have worked tirelessly over decades to ensure that this grave issue remains on the radar and is ultimately fixed for good. The former Attorney General, the Right Honourable Dominic Grieve, persisted with constructive engagement over many years with questions of public accountability and the rule of law.

His contributions, both in public office and subsequently have helped advance, turning the wider public concerns into enforceable statute. There are many, many families whose perseverance has made this measure possible. Their cause deserves the highest of care and best efforts in scrutinising and improving the bill. When it comes to your Lordships' House, His Majesty's loyal Opposition looks forward to further discussion and working collaboratively. Cross-party with all noble Lords, to ensure that this Bill is effective, fair and delivers the justice that families of relatives and friends caught up in the Hillsborough disaster both seek and deserve.



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My Lords, it is, of course, customary to begin by thanking the
16:51
Baroness Levitt Portrait Baroness Levitt, The Parliamentary Under-Secretary of State for Justice (Labour)
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noble Lord, Lord Alton, for securing this debate, but I'm sure he'll agree with me when I say that. I think, in fact, I should open my reply on behalf of His Majesty's Government by paying tribute to the victims of of the Hillsborough disaster and their families. In doing this, I want to make it clear that I entirely agree with my noble friend Lord Wills, that the victims and the bereaved must always be front and centre of the government's mind, as this bill makes its long overdue way through Parliament.

I hope that all noble Lords will understand what I mean when I say that this bill is not just about justice for Hillsborough victims and families and those of the other disasters which, for reasons of time, I won't name individually, but many of which have been listed by the noble Lord Lord Evans of Weardale and my noble friend Lord Davies of Brixton. It's more than just about that. It determines what kind of a society we are and we want to be. Do we protect vested interests, or do we believe in the importance of, the rights of, and protections for our fellow citizens as individuals? So at this point, I thank the noble Lord Lord Alton not just for securing this debate, but for his tireless work to see justice done for the Hillsborough families.

In his powerful and moving opening remarks, the noble Lord referred to wanting to be convinced that the Hillsborough law will tip the balance away from the behemoth against whom the small battalions have pitted. My Lords, I suggest nothing speaks more powerfully to this government's commitment to this than the fact that not only did my right hon. Friend the Prime Minister make a personal promise that he would bring forward a Hillsborough law, but that he delivered the opening speech himself in the Second Reading debate.

In the other place, the noble Lord of Dalton has said some kind words about me and my life in the law for which I thank him. I can honestly say that my proudest moments as a lawyer, and latterly as a judge, have been when I have been able to make a decision which puts the individual citizens rights first, and it is my profound wish to continue to do so. I shall do my best to respond to all points made by noble Lords.

But if time doesn't permit today, I'll write to those I was unable to answer here. May I also say a few words of thanks to my noble friend Lord Wills for the important role he has played in bringing us to where we are today. He and I tried to meet before today's debate, but time pressures did not allow it. I've already made arrangements to meet him as soon as possible after this debate. I would be delighted to meet other noble Lords, if they wish to do so before Second Reading in your Lordships' House.

We need to get this right. So I now turn to matters raised by noble Lords. First of all, and perhaps most obviously, the duty of candour raised by the noble Earl Earl of Effingham, Lord Alton, and my noble friend Lord Wilson, amongst others. I agree with Lord, my noble friend Lord Davis of Brixton, when he says that it is not just about the duty of candour. All the elements of this bill are intended to work together as a catalyst for change, reflecting on the experiences of local government, we intend to bring forward an amendment in the other place to extend this duty to local authority investigations in England, capturing the local grooming gang inquiries and the Kerslake Review into the Manchester Arena attack.

And can I reassure noble Lords that although this duty primarily focuses on the public sector, some private bodies will be captured. Private bodies who deliver public functions have a relevant health and safety responsibility or a relevant public sector. Contractors will be subject to the duty. My noble friend, Lord Lord Davies of Brixton raised an important point about the scope of it. Financial consequences really matter too, and it will cover, for example, the horizon inquiry or. Events similar to that, my noble friend Lord Wills brought up the discrepancy in the maximum sentence available for the breach of the duty of candour, as opposed to for substantive offences like gross negligence manslaughter, and whether that might in fact have the unintended consequence of creating a perverse incentive to cover up, rather than to be frank.

It's an interesting point, and it's one that I would like to reflect on and would welcome a discussion with him about. May I turn briefly to whistleblowing raised by many noble Lords, including my noble friend Lord Wills and the noble Lord Lord Rennard, the new mandatory ethical codes of conduct must set out a process through which employees can raise concerns internally, and to ensure that their whistleblowing procedures are clear and accessible. I know that almost certainly noble Lords will not think that that goes far enough.

Again, this is a matter that can be discussed as we move through the passage of the bill. The government at present believes that any significant reform to whistleblowing needs to be considered as part of a broader assessment of the framework, that it is a matter that we are happy to discuss. Turning to the question of legal aid, supporting inquests and parity raised by many noble Lords under this Bill, people bereaved as a result of a public tragedy will never again have to face the inquest process unsupported, or have the grotesque spectacle of having to raise money from friends and family to ensure that their voices are heard.

It's going to be funded by the individual public authorities. In effect, the legal aid will be clawed back from the public authorities when they are an interested person. My noble friend Lord Wills asked why only for one member of a family? This is considered to be a reasonable and proportionate use of public funds. But where there are exceptional circumstances, individuals can apply to the exceptional case funding scheme and be considered on a case by case basis. We intend for this help to foster proportionate participation and spending behaviour amongst interested public authorities, including in relation to the use of their own legal representation at inquests, and we do understand the concern about this, allowing inquests to turn into the battle of the lawyers, not only enriching them, which offends many people, but also extending the time taken.

So we are requiring public authorities to use legal representation only where it is necessary and proportionate to do so. And we are going to crack down on any poor conduct by public authorities and their legal teams. At inquests, we want to ensure that they are solely focussed on supporting the fact finding nature of these investigations. The independent public advocate at the forefront of my noble friend Lord Wills speech, but also mentioned by the noble Lady Baroness Sanderson of Welton as your Lordships' House is of course aware, Cindy Butts has now started as the first independent Public Advocate.

She is an excellent appointment who has recently been deployed to support the victims of the horrific attack at Heaton Park Synagogue. The victims Minister met with Miss Butts last week to discuss her early experiences in post, and we are going to continue to engage with her on the nature and the delivery of her role and to understand better the experiences of the victims. We are keeping an eye on this. The government will update the House if we if we feel there is further to go in these respects and reports written by the independent Public Advocate about their functions will be laid before Parliament as per the Victims and Prisoners Act.

Turning to the national oversight mechanism raised by noble Lord Lord Alton, noble Lady Baroness Sanderson of Welton and noble Lord Lord Rennard, we agree that too often, after inquiries have concluded, lessons are not learned whatever anybody says and mistakes are repeated. This government has already taken steps to improve the transparency of government responses to inquiry recommendations through a new online database, and we are considering how we can improve the scrutiny and accountability to ensure that inquiries lead to lasting change and this work will continue.

Alongside this bill, inquiries reform raised by the noble Lord Lord Rennard public inquiries can effectively investigate serious concerns, address past injustices, give voices to victims and help to implement change. But they do often last a very, very long time, meaning that victims, their families and the public are waiting too long for answers. Therefore, governments are exploring ways for public inquiries to deliver findings more quickly and in a way that facilitates public trust. It is a substantial piece of work, led by the Cabinet Office, that will aim to improve how we identify wrongs and get to the truth in its early stages.

But we will continue to keep Parliament updated on this important policy work. Turning briefly to the application of the duty of candour to the security services raised both by the noble Earl and by the noble Lord Lord Evans of Weardale, of course, who has great experience in this area. And we're grateful to him for saying that he thinks that it's a workable model. We believe we've got the balance right, but we would be interested in what is said during the passage of the bill by others.

It may be the government that is bringing forward the Hillsborough law, but the credit is not ours. That belongs to the campaigners who devoted their lives to the pursuit of justice. We've worked closely with those campaigners to develop legislation, and we will continue to do so throughout the bill passage, and I look forward to meeting all victims, survivors and their families. I repeat, we're in listening mode. We're determined to get this right

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here. My Lords, before. I call the next business, I will allow a moment for those noble Lords who are not taking part to
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Lord Grayling Portrait Lord Grayling (Conservative)
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farms on our most productive agricultural land, and it cannot make sense to have so much uncertainty for farmers around just how much support they will get for nature friendly agriculture or, frankly, question marks about the budgets available. This matters because if farmers no longer have financially viable routes to invest in wildlife friendly habitat, in hedgerows, in wildflower margins, in wetland creations, then biodiversity loss will simply accelerate the uncertainty over SFI and the grant structure for farmers looking to do the right thing for nature has to stop now.

We're clearly where we are on the planning and infrastructure bill, but this is by no means the end of the debate this House had made has made, in my view, some pretty sensible amendments to the legislation. I'd love to think Ministers will accept them, though I fear the Treasury may have a different view on that. And the risk is we end up still with a measure that has few friends in the environmental world. And I have to say to Minister, the jury remains firmly out on the plans, environmental development plans and also, crucially, on the ability of Natural England to deliver the kind of promises that actions are, Ministers are saying will happen.

So beyond the debates on that piece of legislation, we on this side of the House will be watching very carefully what comes in secondary legislation and whether promises made in this House and the other House turn into reality. And then, of course, on the horizon, there's also reports of a further bill that may emerge from the Treasury to try to drive growth. And of course, the worry with that is that will happen with scant regard for the impact on nature. That is something that must not be allowed to happen.

But beyond this, most immediately in the minister's department, I'm particularly concerned about the proposed changes to biodiversity net gain. It is certainly the case that some aspects of the way BNG is working make no sense. I had the case close to where I live, the local tennis club, having to get BNG processes literally to cover the the merging of two tennis courts through about a metre apart. That of course makes no sense at all. But the problem is, if you get rid of BNG for small sites altogether, it removes one of its key benefits.

And too often I saw as a member of Parliament occasions when a developer would take a site, knock down a house, bulldoze everything was there, kill all the nature before they even applied for planning consent. So BNG on small sites does have a role to play. And I think the office for Environmental Protection is right to have expressed real concerns about what is proposed. So I do urge the Minister to make sure the outcome of the consultations on BNG don't remove its key benefits and leave small site developers free to do whatever they want on the sites they plan to develop.

And Ministers also need to be clear, in my view going forward, about how they expect BNG to operate alongside environmental development plans and the planned Nature Restoration Fund, because I would assure the Minister, it's really not clear yet how that's going to work. And then, of course, next on her department's list to bring forward is its land use strategy. Now, in some respects, I've got misgivings about how such a strategy is applied. And the danger, of course, is it becomes a series of stalinistic diktats about how a landowner can use his or her land.

But if it does provide a broad framework and I stress a broad framework towards the target of 2030 for biodiversity in the UK, how we accommodate housing and infrastructure needs alongside meeting those targets, then it does have a role to play, but it's about getting that balance right. There certainly do need to be some clear guidelines for planning authorities and government departments, which are taking over some of the local authority decision making. So we don't take daft decisions in this country, like, for example, building on our most important and most productive agricultural land, which really we have to ensure does not happen.

I welcome the fact that the government has taken on board most of the environmental and biodiversity targets set in place by the last government. That's good, but there's a big difference between accepting targets and delivering a strategy that will achieve them. And so far, the jury is firmly out on whether this government can actually deliver for nature in our countryside. And whilst I note that the Minister shares many of our aspirations in this area, but what has to happen now is tangible action that takes real steps towards 2030, takes real steps towards restoring the loss in biodiversity that we've experienced.

Turning around the issue of endangered species. And so what happens in terms of the growth agenda, the development agenda, the energy agenda has got to be a proper balance between the interests of the economy and taking this country forward, and also ensuring that we don't do further damage to our natural world. At the same time, there's got to be an equal priority between the two. But let me turn to my other big biodiversity concern in this country. The Minister knows that I have for years been seeking to persuade this government and its predecessor to speed up the process of banning bottom trawling in marine protected areas around our coasts.

It's a practice which is disastrous for our marine biodiversity. Huge industrial trawlers dragging massive nets scour the bottom of the ocean, doing untold damage to all kinds of marine life. And they do so over vast areas. These are enormous vessels with enormous nets. The idea that this practice is allowed in marine protected areas. To my mind, makes a complete nonsense of the concept of marine protected areas at all. If they are protected, we should not be allowing this kind of damaging practice.

And I have to say that we can now do things about it. But when people ask me about the the Brexit benefits for the UK, I put pretty high on my list, a practice which would have been impossible to ban under the Common Fisheries Policy. We are now free to do something about it, and I was really pleased that the last government made a start in the Dogger Bank. In the face of huge hostility from many EU countries who want to scour up the sand eels to turn into fish food.

It's an important area for biodiversity, and this country has done absolutely the right thing to provide extra protections. Sometimes the environment really does have to come first, but I didn't think that my own party moved fast enough in government on this. And I'm also now increasingly disappointed by the steps taken by this administration. When last June, they announced a consultation on banning bottom trawling in another 41 marine protected areas. I thought that was a good step forward. But for me, that positivity was completely reversed by the subsequent policy statements that Ministers do not intend to go further and to ban the practice across all MPAs in UK offshore waters.

I know apparently with the changes to the 41 they're consulting on happen quickly either. Now, the fact is that decision does not command support in Parliament. In my view, it was very noticeable that that decision was criticised by the Environmental Audit Committee, which I was part of in the last parliament, which is chaired by the party in power at the moment. Now, of course, there is an argument that says a blanket ban on each MPA doesn't work because each MPA is different and has different conservation needs.

And I can understand you may have some variations. I always argued that some freedom should be left for local fishing fleets still to operate there, but we're not talking about local fishing fleets coming out of small ports in the United Kingdom. We're talking about giant industrial trawlers coming from other countries and tearing up the seabed. And surely the scale of that is so vast that it has to be time for MPAs to do what they're supposed to do and provide blanket protection.

So I would ask the Minister to revisit the MPA policy and consider going much further and much faster to provide those wide protection, wide ranging protections in MPAs. But also and this is clearly not something that lies at her desk, but I'd be grateful for her reassurance that the government is not taking its decision to avoid a blanket ban because of the New Deal on fisheries with the European Union. That really would be a complete travesty to give away something we have gained from Brexit as part of something else, even though it will deliver genuine environmental benefits in our coastal waters.

So my Lords are very grateful to those who stayed to participate in this debate late on a Thursday. It is a really important area. There's issues for us to address around farming, around biodiversity in the countryside, around water, around issues in our coastal waters, and the Minister and I and a number of people here today have exchanged views on this before, and we will do so again, because I see part of my job as somebody who feels passionately about this, to keep asking the government these questions.

And I reiterate, we all want to see growth in this country. We want to see government policies that deliver prosperity, but it can't be at the expense of what I thought were very good policies put in place by the last government, in which I hope this one will build on that look after biodiversity, that accept what we've done wrong as a country and accepts we need to turn the tide back the other way. So I've got three very specific requests for the Minister today.

Firstly, it's about progress towards that 2030 commitment. The 30% commitment. We need credible, time bound proposals, transparent monitoring and adequate funding. We can't have any more of the classic distraction that governments of all persuasions come up with. We'll have another consultation while the destruction carries on. In the meantime, we've got now it's 2025. We're early in 2026, four years away from that 2030 target. It's time to see some real changes that make a real difference. Secondly, Nature recovery must be on an equal footing with housing, infrastructure and food production.

The land use frameworks. If nature is a secondary concern, biodiversity will be the loser. And I think budgets for nature must match the government's stated intention and in particular the support provided to farmers must enable them, landowners and rural communities to deliver for wildlife. And finally, marine protected areas must be real marine protected areas where habitats are fragile and vulnerable. Whole site prohibitions on destructive fishing gear on enormous fishing gear must be adopted without delay. We can't claim as a country leadership on biodiversity if 90% of our marine protected areas are still today open to bottom trawling.

Now, I don't doubt the minister's personal commitment in this area, but she also knows there are powerful forces in government pulling in operation direction in different directions. And so my message to her is please fight the good fight. This house will be behind you. We feel passionate about this agenda.

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Please deliver for us. The question is that this motion be agreed to.

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be agreed to. My Lords, can I declare my environmental interests as listed in the register? I'm sure we all in the register? I'm sure we all know that nature in this country is really in serious decline, with species and habitats declining,
17:14
Baroness Young of Old Scone Portrait Baroness Young of Old Scone (Labour)
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species and habitats declining, only 33% of Essex's in favourable condition. And they're the very jewels in our nature conservation crown. Our rivers and seas are mostly in poor ecological condition, and we're one of the most nature depleted countries in the world. And this is the inheritance of 70 years of undervaluation, of nature. Now, since the in the Environment Act in 2021, successive governments have had legally binding targets to halt the decline of species abundance in England by 2030.

And the UK has also committed under the Global Biodiversity Framework, to manage 30% of the land and sea for nature by 2030 as well. And there are other targets. But the office for Environmental Protection has assessed that we're largely off track to achieving these targets, but there's an awful lot happening and I'm sure my noble friend, the Minister, will give a very full picture of measures being taken by this government. For example, increased targeting of agricultural support payments to ensure public goods for public money, increased funding for environmental land management schemes, a commitment and plans to cease bottom trawling in MPAs where appropriate.

Plans for new national forests, improvements to the biodiversity net gain scheme. Huge, huge strides forward in reducing pollution and carbon through clean energy measures, clamping down on on river and waterbody pollution, banning neonicotinoids, pushing forward local nature recovery strategies. All of those things are happening, but the turn around of decades of harm is going to take longer than 16 months. But we only have five years to meet the 2030 targets. It's not going to be easy since it often involves join up across government departments for whom biodiversity is something that they buy in the supermarket and they think is a washing powder.

It's never going to be an easy thing, and so it's going to need extra special effort. I want to focus today on three areas where we all need to put our shoulder to the wheel now, to make the progress that we so desperately need. And I'm very pleased to say that I'm very much in agreement with many of the things the noble Lord Colgrain said, because this is not the time for scoring political points. This is the time for getting on with the job first.

My first point is that government's reviewing and resetting the environmental improvement plan and resetting its targets. Can I ask my noble friend, the Minister, to assure the House that where we are not on track for targets, the targets will not just be reduced? It is a time for efforts up, not targets down. An example, for example, the tree planting targets are insufficient. They aren't even being met. They can be met. There is no problem with meeting them. If we make sufficient of the right efforts.

And so to reduce the targets would be a travesty of ambition. Second point is that if we leave to one side the problem where I sees much of our terrestrial biodiversity loss comes from the way that land is managed. It's managed for all sorts of purposes for food and farming, for climate, for flood risk management, for water quality, for sustainable soils, for human health and wellbeing, for development, for growth, for jobs. I very much welcome the recent update that has been circulated from Minister Qurei on the Land Use Framework, a framework to encourage rational decision making about land that national, regional and local level.

Now, I hate to introduce a note of political dissent, but the conservative government did promise the framework by Christmas. Christmas 21, then again for Christmas 22, and then again for Christmas 23. Now I'm aware of a huge amount of progress having been made behind the scenes, but it would be really good to get from my noble friend, the Minister. Her best estimate of the publication date and the process of implementing the land use framework, because it's very urgent. Already, spatial plans are being developed by regional authorities, by government departments, by local authorities on issues like housing, on infrastructure, on transport, on energy.

And the individual landowners are making day to day decisions and choices which will last for many years. Now in the post-war settlement, the Labour government magnificently addressed capital, labour and land as the three pillars of economic recovery. In my view, it would be a fine thing for a new Labour government to reset the economic importance of land at this stage, so I hope the Minister can assure us that 2026 means January or February, not December. My third point is again, and I've been sitting weeping gently as I eat my lunch, watching what's happening in the Commons this afternoon on the Planning and Infrastructure bill, because it's shown how distressingly easy it is to fall into the thinking that we can either have growth or we can have nature.

But we're smarter than that. We can do both. And the polarising statements about newts and bats and lizards. I bet you there's not a single member of this house here present today who's actually seen a British lizard. And if you have come and see me later, no Lord Waldegrave and claims to have. Very good, sir, but polarising statements about these species being a block to development are simply not borne out by the data. For example, over five years, data across more than 50 local authorities under the current district district licensing scheme for newts, less than 1% of planning applications had any newt issues at all, and all that had newt issues were resolved within ten days.

All the evidence available shows that newts, as in this example, do not slow down or impede development, and this is borne out by information I extracted with difficulty from the Home Builders Federation recently, which put down their perception of the blockages and problems impeding development, and their biggest problems were viability, affordability, the absence of support for first time buyers, local planning authority delays and construction skills as barriers to development was only a small range of biodiversity issues in their list.

So can the noble Lady persuade others and government not to resort to nature bashing and polarising headlines? I can see my whip out of the corner of my eye. I see him telling me I have gone over time, but I have a commitment to the noble Bishop of Norfolk, who asked me, since he could not be with us today to achieve, to to talk about his amendment to achieve protection for chalk streams. It was supported at Report stage and will no doubt figure at ping pong.

But he has asked me to ask the Minister very nicely if she would just include it in the bill. Can I give a big applause to my noble friend Baroness Hayman for her knowledge, willingness to listen and commitment to reaching agreements? It is refreshing to work with her.
17:21
Baroness Willis of Summertown Portrait Baroness Willis of Summertown (Crossbench)
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So, my Lords.

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I'm delighted. To join in this debate. It's always wonderful to follow on from Baroness Young. It's on from Baroness Young. It's something close to my own research expertise. But before I must talk to join with this debate, I must to join with this debate, I must declare my interests. As noted in the Register, specifically my role as a non-executive director and founder of Nightcap Research. I first want to start with the baseline facts. So according to baseline facts.

So according to DEFRA, in 2024, only around 7% of England's land meets the the England's land meets the the protected status that we need in order to achieve 30 by 30. And as reported by the House of Lords Climate and Environment Committee in 2023, England therefore needs to in 2023, England therefore needs to find an additional 3.4 million hectares of land to meet this target. So I want to approach this target. So I want to approach this debate from perhaps a slightly different angle to ask, first of all, who owns the land on which all, who owns the land on which we're looking for nature to recover? And secondly, how much land are we discussing? And lastly, is the discussing? And lastly, is the scale and scope of government legislation and incentives sufficient to persuade land sufficient to persuade land managers and other affected parties to make the necessary changes? So in terms of who owns the land? Despite rumours that the vast majority is owned by the Crown or the public sector or the Forestry Commission, actually those are tiny percentages.

The largest amount of land is individually owned by private landowners and by companies and trusts. That accounts for 70% of England's land. So what are what are the government policies? What government policies do we currently have to persuade these land managers to do the right thing for nature? So first of all, there are the builders and the land managers who manage the builders and developers. We've heard before, we've got biodiversity net gain to improve both on and off site biodiversity and increased biodiversity by about 10% in biodiverse habitats.

And this is very much in line with the 1.5 million houses to be built by 2030. But even if we include that and all the debates we've been having, that still accounts for a really small percentage of the land. Secondly, there's the land managers tasked with offsetting the CO2 emissions through tree planting and peatlands. Again, a really small amount of land, if even if it reached 100%. And then third, there are the farmers and land managers who have recently been until recently been incentivised by Elms and the like.

And this does represent the largest percentage of land that could be converted, or could be the land that is surplus to to food production. But if you add all this up on the back of an envelope, as I did, that comes everything was reached by 100%. This comes to around 1.4 million hectares, which means we're still 2 million hectares short. And there are many caveats in that. The first one being there's double counting, many, many of these commitments to talk about BNG Elms and others are overlapping.

But in addition, particularly BNG, we're finding that actually developers are doing on site enhancement rather than offsetting. So this is a really, really big undershoot in terms of the amount of land we need. So we've got this very large shortfall. So what should we do about this? Well, I think we now need to move beyond who owns the land and instead ask, who are the big actors that are determining how the land is managed in England, and what incentives and structures are there to improve impact on nature? And this isn't something we normally or really consider, but I believe we must, because if you look the top five supermarkets and their food supply chains are linked to 4 to 7 million hectares of land in the UK, in England.

And compare that to something we debate at length in this House, which is the water utility companies. They only account for 140,000 hectares. So we're comparing, you know, massive amounts of 4 to 7 million hectares. But what changes do we need to do then to persuade these actors, particularly the large supermarkets? Well, for these large companies, it is not the incentives associated with Elms BNG carbon offsets needed. Instead, we need to demonstrate to them why nature is important to the company's balance sheet and risk register, and ultimately the board and shareholders.

And this is indeed what some of our supermarkets are now doing. Tescos, Unilever and Waitrose are already starting to look at the land they manage in England through this lens, for example, adopting regenerative agricultural practices. And they're doing so not because they want to be seen to be doing the right thing. They're doing so because what they're finding is by adopting these approaches, the reducing the risk of soil erosion, they're improving soil quality. They're enhancing biodiversity and carbon sequestration.

And at the same time, they're achieving similar, if not higher yields in their crops. So it's a win win situation for nature and agriculture. Now, if regenerative agriculture were to become widespread for all farmland in the UK, we could and I believe would start to see widespread recovery for nature and get 30 by 30. But and there's always a but to do so we need to see proper incentives and support for the transition and for the government to set the right level of audit, to adopt and to ensure that there is a level playing field for all people working in this space.

Now, such a framework does exist. It's called the taskforce for Nature disclosures TNF d, which identifies both economic risks and opportunities. And last week, the International Sustainability Standards Board announced it will begin standard setting on nature related risks and opportunities, drawing on the TNF disclosure framework. And it highlighted its value. Now, many countries have made TNF d mandatory, but it's still voluntary in the UK, so perhaps the noble Lord the Minister, could address this in her response. Are there plans to mandate this in the UK? So to sum up, I realise I'm at six minutes.

If we really want to see a rapid change in land use and have any chance of reaching 30 by 30 and reversing species decline, we now need to think about who owns the land, but who are the people who really manage this land, and how do we give them the incentives and structures that are needed to

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ensure outcome that we all desire is achieved? My Lords, I.

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My Lords, I. Congratulate my noble friend Lord Grayling for opening this Lord Grayling for opening this debate in such a very balanced and wide ranging way. It is also a tremendous pleasure to follow my
17:28
Baroness Shephard of Northwold Portrait Baroness Shephard of Northwold (Conservative)
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tremendous pleasure to follow my noble friend, the noble Baroness Willis of Summertown, and I was extremely interested in the far reaching questions that she put to the noble Baroness, the Minister, but in fact to the whole House. At 2024. DEFRA report said that recent years have seen some of the most extreme weather conditions on record impacting soil health. Our countryside, its communities, our landscape, plant and animal health and obviously our food security. There are views in the farming industry that rising temperatures might present opportunities for growing new crops and for longer growing seasons.

But of course, the very unpredictability of the changes presents very difficult problems. And this matters because 70% of UK land is farmed, regardless of the ownership, as put by my noble friend, it is obvious, therefore, that the role of the farming industry is vital in restoring nature, cutting greenhouse gases and in managing and protecting our landscapes and countryside. Our biodiversity and food security. My Lords, none of these things could be done if it were not for the farming industry.

Farmers deliver not only our food but also our environment aspirations. They are the key. So key that the Labour Party promised in their election manifesto to champion British farming. Sadly, this has not proved to be the case. Labour's first budget crippled farming and rural investment by its inheritance tax proposals and National Insurance rises, and another blow was inflicted by the very sudden closure of the Sustainable Farming Initiative. Paused, we are told, but I think with no clear future plan as yet, the De-linked payment amount is to be reduced by 76%.

No payments above total of £30,000. And what is really important? No transition, no transition period. That is so important because of course, farmers have to plan. And the result of all of this is quite simply, simply that our key farming industry and communities have lost confidence and trust in the government. And that confidence and trust is now at its lowest ever level. The recent announcement in the farming press by Delcourt, the well-known farming management company of a proposed 20% cut in its operations, exemplifies the current lack of confidence in this government within the industry.

I do accept the noble Baroness, the Minister from the Minister. The comments I'm about to make, but I have to say, the widespread view in the farming industry is that the government doesn't understand that in order to protect our food security and environment, farmers need reliable support from government and it needs to be reliable because the industry has, by definition, to plan ahead, often with a year, two years or further still. I would also make this point that farmers should not be penalised by taxation, or criticised for possessing the land, the machinery and the investment that they need in order to feed and protect us all.

Things about a recent report highlights the lack of trust in government within rural communities. The CLA president, Victoria Vivian, said Labour's attacks on business are damaging the economy in rural areas. When local businesses fold, they don't just take jobs with them, they take prosperity, identity and quiet bonds that hold a place together. That is true. And my Lords, I say again that 70% of land in the UK is farmed. I believe that the noble Baroness, the Minister, knows that in order to protect our biodiversity, our environment of food security, in short of future, that the nation needs a confident and vibrant farming industry.

And I do hope that she will be able to persuade her government colleagues fact.

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Here, here, here, here. My Lords, I'm also very grateful

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My Lords, I'm also very grateful for the opportunity to speak in this debate. I must also say that I this debate. I must also say that I am the second barrel to Baroness Shephard gun, as the subject is Shephard gun, as the subject is almost completely dependent on a strong and stable farming industry.
17:34
Lord Carrington Portrait Lord Carrington (Crossbench)
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strong and stable farming industry. I will direct my remarks to the state and prospects of that industry. I declare my farming interests in Buckinghamshire and Lincolnshire, together with membership of the NFU, CLA and the Chilterns farming Cluster. My Lords, those who read Farmers Weekly will have seen last week the shocking headline that the McCain Farm report had reported that 51% of farmers have considered leaving the industry over the last 12 months, and 61% say that work affects their mental health.

Is this a surprise? We have seen seven Secretaries of State at Defra over six years. This gives farmers little confidence in the commitment or the long term planning of the industry. We had the the budget bombshell of the inadequately thought through inheritance tax proposal, which will shortly come into force, destroying both confidence and investment in the industry. We have had the abrupt ending of the 2024 Sustainable Farm Incentive and of the old Basic Payment scheme.

We have had a national food strategy published in July, which refers heavily to a promised but undelivered land use framework, a 25 year farming roadmap and a profitability review by Baroness Batters. At the same time, in the real world of farming, arable farmers have suffered reduced yields for the 2024 and 2025 harvest and very low prices because of the strength of sterling and good harvests. Elsewhere. Potato farmers have had a disastrous 24 crop poor demand and are now sending off quality potatoes for animal feed and anaerobic digesters.

The 2025 crop is good, but due to favourable harvests elsewhere, the market has collapsed for sugar beet. Farmers are handing back contracts to British Sugar, as it's often being grown at a loss and chemicals to control virus yellows are restricted. Similarly with rape, chemicals are restricted and success or failure is a lottery. For some livestock farmers, the situation is more stable, but profitability remains a struggle due to the lack of pricing power. Animal diseases like bluetongue and avian flu are a growing threat.

Meanwhile, dairy farmers are struggling to cover the costs of production as the price of milk falls. The result of all of this is that some farmers are selling up, investment has stalled, and contract farmers, as we've heard, like Valcourt, are reducing their acreage as they cannot make a decent return on capital employed. My Lords, ultimately, the business of farming is producing food profitably and sustainably for a growing population. Environmental work can only be driven by profitability. It therefore comes as no surprise that farmers and landowners are looking at other uses of their land, like solar farms that will provide a secure and decent return.

Please. Therefore, let's stop criticising farmers for the loss of good agricultural land in the absence of policies that enable them to farm profitably. My Lords, the way forward is for government to cease prevaricating and make its decisions on future farm support. May I ask the noble Baroness, the Minister, when we'll see the 2026 SFI the land use strategies, as already mentioned, and when will the farm profit profitability review be published? Happily, it's not all doom and gloom on the farming front.

The all party parliamentary Group on Science and Technology in Agriculture has released its report, Feeding Britain's Sustainable Sustainably in 2050. The report calls for more locally grown food, lower inputs and emissions and a smaller environmental footprint and the need for policies to support rather than hinder, farmers like tax hikes and to relieve pressure on farmland through a land use framework. Current policies undermine productivity and innovation, promoting environmental goals at the expense of food production. We require coordination of policies across government, and there needs to be a complete rethink on the support for domestic food production.

The report pointed to the strong scientific evidence, which indicates that a land sparing approach, which involves harnessing farming innovations to optimise high yield production on a small area of land as possible, would leave would leave core land intact for nature and carbon sequestration. This offers a more efficient and cost effective basis for farm policy to deliver on food, climate and biodiversity goals. Is the government considering this approach? Finally, my Lords, I'd be grateful if the noble Baroness, the Minister, could clarify what is meant by the government's frequently quoted phrase food security is national security.

Is this producing more of our own food

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or tying into more food imports? Good. Very good. Could I join in the

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chorus of gratitude to Lord before. The house? Never too many.

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Never too many. Occasions when we can raise this, and I think the level of expertise and passion and dedication shown and passion and dedication shown should come as no certainly comes as no surprise to me. But nor does
17:40
Lord Hart of Tenby Portrait Lord Hart of Tenby (Conservative)
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as no surprise to me. But nor does the the two themes which seems to be emerging from the discussion, that is, relationships and respect. That is the relationship between central government and the people on the ground who have to deliver these policies or certainly live with these policies and respect for those very same people, too. I'm just about old enough to remember my family farm in Wiltshire. I was pretty tiny at the time, but I do remember that biodiversity. It probably came by another name back in those days and food production were not seen seen as an either or.

They were seen as an essential combination. They were seen as nothing surprising. It was our obligation, not just our pleasure. It was our obligation to deliver biodiversity in the most interesting and diverse way we could. Because in doing that, that ensured that we were able to produce food. In our case, this was a dairy farm. But to produce food to the highest standards to. And I know that buying patterns, food production, the political landscape, the larger political landscape has changed since then, but the fundamentals haven't changed.

And I remember very clearly back in those days the fact that we did all of that because we wanted to do it, not because we were obliged to do it or forced to do it, or even paid to do it by whoever was the government of the day. Noble Lords would have received yesterday. Moving on a briefing, an interesting briefing from the RSPB, quite solid in parts, as you would expect, but I wanted to highlight two aspects of that briefing, which concerned me a bit because I thought what started as a solid document drifted into some usual sort of lazy stereotyping and part of it.

And to do that, I wanted to highlight two case studies, one fairly close to my heart these days in Lake Vyrnwy in North Wales, a 5000 hectare substantial area of land owned and managed by the RSPB since 1996. You would think, therefore, the epitome of biodiversity success. And yet in that time the number of hen harriers, the number of merlin, the number of black and red grouse, the number of curlews, breeding curlews and the number of peregrine falcons have all fallen.

Every single one of those crucial species iconic species has declined in the 30 odd years that one of Britain's leading conservation and biodiversity charities has been in charge of that site. Contrast that, my Lords, with case study. Two Bolton Abbey, Wensleydale in Yorkshire, a Site of Special Scientific Interest, a Special Protection area, a Special Site of Conservation. In 2024, they boasted 250 pairs of breeding nesting curlew. There are only 450 pairs in the whole of the south of England, and that's not to mention ouzels, dunlin, stonechat and a range of other upland birds, which for many of us are a very rare sight indeed.

And my message which emerges from this is that success story isn't despite the shooting interests of that estate in Yorkshire, it's not despite the work of the incredible work, dedicated work of gamekeepers and land managers and farmers on that, on that estate. It's because of them. That's why it is such a success. We could say it was despite government, if we wanted to be, if we wanted to be cynical. And this is an area commended by the British Trust for ornithology, the BTO, it commended even by Mary Caldwell, the chair I think of curlew, an important charity looking after the interests of one particular species.

And you could multiply this incredible success story many, many times across the UK, but particularly across upland areas of the UK. And so what does all of this mean? It's a message I hope to the government frontbench and to stakeholders and to other people with an interest in this particular agenda, that all of these ambitions will only succeed if we show the necessary degree of cooperation and respect to those who will have to deliver it, those who want to deliver it, and those people who will have to live with the consequences of government policy around food production, farming, and particular and in particular conservation.

And there were some comments made by my noble friend Lord Grayling at the beginning about growth. It is perfectly possible to have growth at the same time as an enhanced and improving biodiversity landscape, but we need to be careful that there are agencies and quangos out there. And I hate to pick on Natural England, but it is probably the most powerful agency in this particular field who have the ability to put their foot on the brake of growth, apparently in the interests of conservation.

But that is not always the case, because biodiversity includes the human population that is just as much as it does the animal, bird and wider biodiversity ambitions that we have. Without the communities of these fantastic parts of the British Isles, these schemes will find it very difficult to get off the ground. So my message, I hope, is let's not repeat the mistakes of the past. Let's involve the people who matter, the people who know, the people who care.

Let's cooperate in a collegiate way. Let's not fall into the trap of some of the divisions which always seem to accompany decisions of of Parliament when it comes to our dealings with rural issues and conservation in particular.
17:46
Lord Bilimoria Portrait Lord Bilimoria (Crossbench)
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Yeah, here, here. the most nature depleted countries on earth, and my friend, Professor Sir Partha Dasgupta wrote his famous economics of biodiversity, The Dasgupta Review, in February 2021, and he starts a review with this. We are facing a global crisis. We are totally dependent on the natural world. It supplies us with every oxygen laden breath we take and every mouthful of food we eat. But we're currently damaging it so profoundly that many of its natural systems are now on the verge of breakdown.

And I thank the noble Lord Lord Grayling for initiating this debate. A fellow alumnus of Sidney Sussex College, Cambridge, thank you for your opening speech. And I go back to Professor Dasgupta, who's just written a book this year, his new book on On Natural Capital The Value of the World Around Us Today. And he says that the demands we make of nature's goods and services far exceed our ability to supply them on a sustainable basis. The difference between the two is a measure of the human ecological overreach.

And since 1950, the global economy has grown 15 fold. Absolute poverty has declined from 60% of the world at that time to 10% today. And the world population. This has happened in spite of it going up from 2.5 billion people to 8.1 billion people on this planet. So in many ways, he says, humanity has never had it so good. But and this is the but our global success has come with an increasing impoverished biosphere, including extinction of species. Currently, there are 100 to 1000 times the average extinction rates.

At the moment that the world has seen for several million years. And in endorsing his new book, David Attenborough A natural, A National Treasure, says Partha Dasgupta, provides the compass we urgently need by bringing economics and ecology together, we can help save the natural world at what may be the last minute and in doing so, save ourselves. And my Lord. When it comes to countryside policies, the reality is urban authorities receive 41% more government funded spending per capita, while rural residents pay more 20% more council tax per head.

Would the noble Lady, the Minister acknowledge this? And evidence from the Dasgupta Review in 2021 highlights that biodiversity underpins rural productivity, food security and long term economic stability. And the UK Food Security Report 2024 found that biodiversity decline and climate shocks account for around 40% of food price inflation, demonstrating the economic stakes of countryside environmental management. And when it comes to taxation, we've heard this. I think Lord Carrington mentioned it, that the change in law where the government has now with inheritance tax relief, doubled it basically for family businesses and for farmers.

I think this will be a huge burden on family farm transfers and rural business succession, and the countryside and biodiversity policy agendas are increasingly interdependent. My Lords, the rural economy, productivity, if you think about it, predominantly rural areas account for 21% of England's population, but only 15% of economic output. And when it comes to environmental land management schemes, the ELMs, they remain the UK's primary mechanism for biodiversity recovery. But the SFI closure, funding uncertainty and limited landscape recovery scale threaten progress towards the Environment Act 2021.

Targets and wood, the noble Lady, the Minister, agree with that and there are more ambitious, stable and better funded higher tier and LR programme is essential. And when it comes to BNG Lord Brennan mentioned in his opening speech, it's one of the most important policy tools for reversing biodiversity decline while maintaining development and growth. Yet without stronger local authority capacity, coherent land use planning and robust enforcement, BNG risks falling short of its ecological potential. So strengthening, monitoring, supporting councils, integrating BNG with broader elms and landscape recovery schemes will be essential.

Would the noble Lady, the Minister, agree with that? And when it comes to protected sites in the Nature Recovery Network and essential pillars of biodiversity, weak site condition, limited enforcement, fragmented landscapes, insufficient local delivery capacity, threatened progress. So we need to strengthen these areas. And my Lords, when it comes to the UK's species abundance targets, they're ambitious, but they are at risk as well. And with the critical point, biodiversity recovery policies exist, but delivery remains slow due to funding gaps, workforce shortages and uncertainty around long term land use planning.

My Lords, when it comes to the soil, I took part as president of the CBI in Cop26 in Glasgow. I've spoken about 40 different events. Not one person mentioned the soil and the Indian spiritual leader Sadhguru, a few years ago set off from Parliament Square to raise awareness for the soil with its Save Soil campaign, so that 3 to 6% organic content should be in soil. My Lords, I conclude with this biodiversity hit to economies estimated at up to $25 trillion a year just now.

Report in the Ft last year by the Intergovernmental Panel on Climate Change equivalent the Intergovernmental Science-policy Platform on Biodiversity and Economic Ecosystem Services. This tackling biodiversity loss, climate change, water scarcity, food insecurity and health risks in isolation is not only compounding those issues, but driving spiral economic costs. And I conclude with this, my Lords, Sir Partha Dasgupta, who I started with, he says in his report we are part of nature, not separate from it. We rely on nature to sustain us, yet we are degrading it faster than it can regenerate.



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Nature is our most precious asset. Lord Mott. It's a it's a

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Lord Mott. It's a it's a pleasure to follow the noble Lord, Lord Bilimoria and I declare my farming and land management farming and land management interests in Wales as set out in the register. And add my congratulations to my noble friend congratulations to my noble friend Lord Grayling for securing this important debate before the budget. Let me begin with the policy area
17:53
Lord Harlech Portrait Lord Harlech (Conservative)
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Let me begin with the policy area that should have been the cornerstone of recovery land management. The government's handling of environmental land management schemes, SFI countryside stewardship and landscape recovery has created deep uncertainty amongst farmers and land managers. Pauses, reviews and shifting signals have left farmers unsure whether they can commit to habitat restoration, soil recovery or long term stewardship. As we've heard this evening, these schemes cover 70% of England's land, so where they falter, our biodiversity targets falter with them.

As we've heard from nearly all noble Lords this evening, that same instability now extends to inheritance tax. Farmers who want to invest in nature recovery are being actively discouraged by the government's proposed changes to agricultural property relief and business property relief. The NFU has warned that that the reforms could force farmers to sell part of their farms simply to meet their future tax liabilities, and the CLA has cautioned that they risk making some farms economically unviable precisely when we need them to deliver environmental benefits.

My Lords, if a farmer intensively cultivates every inch of land, relief is available. But if they rewet peatland, create wetlands, plant woodland or commit to long term ecological recovery, they may lose it. This is a perverse incentive. It rewards environmental degradation, degradation and penalises stewardship. Nature recovery depends on generational continuity and these policies undermine it. Compounding this is the government's Planning and Infrastructure Bill, which conservation organisations from CPR to the Wildlife Trusts warn will weaken environmental safeguards in order to accelerate growth.

While biodiversity does not benefit from speed, it benefits from scrutiny, from local accountability and from protections that prevent short term economic pressures from overriding long term ecological health. Yet the bill risks increased habitat loss, reduced oversight and fast tracked development across landscapes already under strain. The same problem appears in a in an area which has not yet been mentioned. The government's energy strategy. Ministers insist that accelerated renewable deployment is is inherently good for nature, but that is not how it's playing out on the ground.

As Professor Dieter Helm has argued forcefully in The Times, the government's claim that renewables are nine times cheaper than gas relies on ignoring the enormous system costs. New pylons, substations, storage cabling and lots and lots and lots of backup gas needed to stabilise an intermittent system. We now require 120GW of installed capacity to meet the same demand. Once met by 60GW, meaning more infrastructure, more land and more environmental pressure. Professor helm warns that the government is digging an ever deeper energy policy hole, and that this dash for infrastructure is not climate leadership, but but an ecological burden being loaded onto rural Britain.

Climate policy is not automatically nature policy. Net zero will not succeed politically, economically or ecologically if it is pursued at the expense of landscapes and communities it affects most. The countryside is not merely a backdrop for targets. It is a living system of farms, hedgerows, rivers and habitats already stretched to breaking point, weakening environmental protections, destabilising nature friendly farming schemes and penalising ecological land management through the tax system. These are not the actions of a government that has grasped the scale of the biodiversity crisis.

Given the deep uncertainty facing farmers who wish to commit to long term environmental environmental management, can the noble Baroness, the Minister, tell the House when the government will announce the next round of countryside stewardship agreements, and whether farmers can expect continuity of funding in time for the coming planting and restoration seasons? My Lords, we cannot rebuild nature on the back of contradictory policy signals or wishful economics. We need coherence, honesty and a willingness to listen to those who

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live and work on the land. My Lords, I am.

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My Lords, I am. Grateful to the noble. Lord Grayling for securing this. Opposition day. Debate and for

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Opposition day. Debate and for take. Stock on how. Government policies are shaping biodiversity in the health of our biodiversity in the health of our countryside. And it's been an absolute privilege to hear the
17:58
Baroness Grender Portrait Baroness Grender (Liberal Democrat)
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absolute privilege to hear the speeches that we've had this afternoon on this issue. This debate touches on all our shared national identity and environmental stewardship for future generations. Everyone in this debate has spoken with determination and passion on the need to halt the decline and work to preserve our precious heritage, from our ancient woodlands to our unique and fragile chalk streams, we've heard so many times about the nature depletion levels in the UK, and it is the abundance of species in England that has fallen by 32% since the 1970s, with 1 in 7 species at risk of extinction.

And I thank the Wildlife and Countryside link for their briefing and the analysis that they shared with us, which confirms that, according to them, only 3% of England's land area can count currently towards the 30 by 30 target. And I would ask the noble Lady, the Minister, if her own department's research shows the same or a different percentage, and if so, what it is, and if she doesn't have it with her, she can, right? We have made some progress on this issue.

And when it comes to the Planning and Infrastructure bill, which is obsessing many of us in this House, the amendment from the excellent lobbyist and right reverend Prelate the Bishop of Norwich during the Report stage, drew attention to the unique and irreplaceable value of our chalk streams. These rare ecosystems, found in only a handful of places worldwide, are one of the jewels in the crown of our natural heritage. His amendment, supported across the House, was a reminder that care for the environment is not peripheral, but a duty central to any credible planning policy, and we hope that it survives the bumpy ride in the Commons right now, and that it comes back and survives in some way.

I also would like to pay tribute to my noble friend, Lady Parminter, whose persistence and expertise ensured that the government accepted the inclusion of the mitigation hierarchy written into the Bill. And I thank the noble Lady, the Minister, for including that as well. That hierarchy, a clear sequence requiring avoidance of harm before mitigation or compensation, is a small but vital safeguard against the steady erosion of biodiversity that has for far too long been the by product of unbalanced development. It means that when decisions are made about where we build, we do so with nature in mind, not as an afterthought, but as a founding principle and a starting point.

It will not come as a shock, therefore, to hear that we believe there are other improvements that can be made to this bill, even at this late stage, to ensure that biodiversity has the urgency attached to it. That is so vital, and I am in particular support of Baroness Willis and Young and the noble Lord Roborough, as we continue to believe that it could be improved by ensuring that EDP are not used inappropriately when it comes to harming wildlife. And I genuinely know and trust that the noble Lady, the Minister, will ensure we continue this dialogue on this between now and ping pong, whilst others elsewhere have been a bit obsessed about spin from number ten over the last 48 hours, I know that all of us in these benches do not share the sentiments behind some of the spin that might have come from next door, I don't know, suggesting that newts and bats are standing in front of and in the way of bulldozers and building.

And I know, I certainly know, that that is not a sentiment shared by the noble Lady for the Minister. And indeed, as the noble Lady young pointed out, all the statistical information suggests that planning and development is not constrained in this way. Again, I wonder if the noble Lady, the Minister, can share what her department's analysis shows. For example, what percentage of development since plucking a month and a year out of the air July 24th have been and constrained by species.

And if so, how many? As the briefing from the RSPB makes clear, progress on biodiversity recovery remains hesitant and fragmented. The government's own environmental improvement plan has admirable ambitions, but the gap between aspiration and delivery is the frightening issue. From all the briefings that we received, the Office of Environmental Protection warned in their latest annual progress report that unless things change materially, key targets such as the 30 by 30 for land and sea will not be met, citing lack of strategy, guidance and action.

We're told that record sums are being allocated to environmental programmes, but too little of that funding seems to find its way to those at the front line, to farmers, to local authorities struggling to maintain conservation staff or to community groups restoring habitats destroyed by neglect. So vision is great, but it is quite another to sustain the structures and commitments and the action, the decline of biodiversity cannot be reversed through these aims alone. And the the most important thing is the coherence between the departments of Defra, MHCLG and above all, the Treasury moving in the same direction.

Yet time and again we see competing priorities, particularly in planning, undermining this unity. We should also remember that the biodiversity crisis is not confined to designated habitats. Nature does not recognise the boundary at the edge of a national park, or the character of the countryside depends as much on the health of its working land, its farms, its rivers, its rural communities as it does on protected zones. That's why we've long argued for integrated, locally driven environmental policy, one that trusts local partnerships to steward the land they know best.

We should also recognise, as set out by Baroness Shephard and the noble Lord Carrington, the central role that farmers play in safeguarding biodiversity across the countryside. It's not. Farmers are not only fundamental to our food security, but pivotal in shaping the health of our soils, wetlands and wildlife habitats. Government policies must support and reward those farmers who adopt nature friendly practices, such as maintaining hedgerows, planting wildflower margins, reducing pesticide use and restoring wetlands. And I join with other noble peers in asking, firstly, what is the update on the SFI and other subsidies? I'm keeping my fingers crossed about the budget and threshold with regard to inheritance tax, and I know that the noble Baroness, the Minister, will not be able to comment on that.

But that is a very defining thing. And the recommendations from the EFRA Committee in the Commons are extremely helpful in that regard. And also, I would like any information that she may have, given that we're nearly at the end of 2025 to the farming roadmap, if at all possible. In that spirit, I hope the government will take seriously not only the criticism raised in the debate, but also the spirit of collaboration expressed in it. When this House works together, it is possible that we can deliver 30 by 30, but we will can deliver 30 by 30, but we will all need to work as a team.
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Lord Roborough Portrait Lord Roborough (Conservative)
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Here. Here. friend Lord Grayling for securing this important debate on the impact of this government's policies on biodiversity in the countryside. The scorecard is looking pretty grim, as many noble Lords have pointed out in this, in this fascinating debate. And I would like to address further some of those points. But before I do so, I would refer your Lordships' House to my register of interests as a quasi regenerative farmer with countryside stewardship, landscape scale recovery and sustainable farming incentive schemes.

As an owner of woodland and developer of new forests under the Woodland Carbon Code, as a peatland restorer under the Peatland Carbon Code, and as an investor in natural capital related businesses. My Lords, most of us in this debate are bearing the scars of the Planning and Infrastructure Bill, creating a new system via the environmental delivery plans to protect and compensate for damage to nature in development simply confuses the issue. When we in government put in place protections and market structures that ensure that nature overall should benefit from development through our Landmark Environment Act 2021.

My noble friend Lord Grayling and others mentioned the biodiversity net gain markets created in this Environment Act and underpinned by the mitigation hierarchy. The BNG industry report from July this year highlights 21,000 acres now dedicated to biodiversity net gain after only 15 months of operation, and forecasts a £3 billion market size by 2035. Should the government accept our amendment as as mentioned by the noble Baroness, Lady Grender, to the Planning and Infrastructure Bill, this would allow those BNG markets to continue to develop with greater experience building amongst those buying these units as well as selling them, proving that nature does not need to get in the way of growth.

Earlier this year, the government conducted a consultation into its functioning. Could the noble Baroness, the Minister, tell us when the government will respond? We would welcome any changes that make the system easier to use for smaller developers, and that allows the market to function more effectively for nature and growth. But I do agree with my noble friends that this need not mean exempting small developments. My Lords, what nature needs as much as our rural community is consistency. Habitats need to be left alone in order to thrive.

Farmers need to be able to plan ahead, to make good decisions for their businesses and the right decisions for land use. This government has halved inheritance tax reliefs under April and BPR, destabilising that long term planning. It smashed direct payments, brought SFI applications to an end and forced the farming community to wait until a date, which we hope will here shortly in 2026, before any information or payments will be available for new schemes. While the one year extension to Countryside Stewardship mid-tier schemes due to end this year is most welcome.

It was late. The net result is anecdotal evidence that many farmers have ploughed up or cultivated land that had been managed under these environmental schemes, in order to have some confidence that their businesses would survive. Could the noble Baroness, the Minister, confirm that the beneficiaries of this extension will be able to apply for the new SFI to be launched next year, rather than having to wait another year and potentially being closed out again? This government, and indeed previous governments, are not providing the answers that biodiversity and countryside need.

The government must incentivise private investment in nature, recovery and other natural capital markets. Farms are businesses, not just producing food, but also sequestering carbon, protecting and enhancing nature and looking after our landscapes. The noble Baroness, the Minister, accepted the importance of water companies investing in nature based solutions in the Water Special Measures Bill act. I'm sorry, and at Third Reading of the Planning and Infrastructure Bill, the noble Baroness colleague made helpful and clear commitments about the role of private land managers in delivering environmental goods in these edp's.

I hope that this is part of a progression towards functioning natural capital markets that will replace the burden on taxpayers with investment by the private sector. That could be the underpinning of a more prosperous future for the countryside, delivering even more biodiversity and nature restoration that we are debating today. The £3 billion forecast for BNG alone is larger than Defra's farming budget. Businesses. As the noble Baroness, Lady Willis of Summertown mentioned, are also good citizens that see the value in protecting all of our future.

That is why many are already buying voluntary carbon units and investing in carbon offsetting in their supply chains to reduce their overall carbon footprint, and they are also evaluating what they can do under the task Force for nature related financial disclosure recommendations to improve the natural environment and their reporting. And while I agree with the noble Baroness, Lady Willis, that it would be welcome to see this become in some ways more widely used in the UK, I would also be cautious about the reporting obligations and costs that this might might place on smaller and medium sized businesses.

Could the noble Baroness to Minister inform your noble lordships what has been the result of the consultation on including woodland carbon units in the UK Emissions Trading Scheme? The consultation closed 15 months ago. This could be a valuable step towards incentivising much more tree planting, a healthier rural economy and greater biodiversity. The noble Baroness, Lady Young has already mentioned the disappointing performance of tree planting in the UK versus frankly unambitious tree planting targets. Steps such as this could incentivise much larger scale planting.

My noble friend Lord Grayling made important points about the restrictions we still operate under in our coastal waters. The government chose to allow our European friends to continue to have access to 40% of our fishing rights unnecessarily, when we could have recovered them all in June next year. The one off Coastal Recovery fund of £360 million is a pretty disappointing attempt to buy off our coastal communities, when the full value of our fishing rights would have delivered an extra £600 million a year of revenue In addition to my noble friend's questions, could the noble barrister Minister, in replying, also be clear that the government has the power to revisit the policy on marine protected areas without consulting and deferring to our European friends? Lastly, I agree with my noble friend Lord Harlech, my noble friend Baroness Shephard and the noble Lord Lord Carrington that farmers need to be allowed to make return on their land and to help prevent security, food security from being undermined by by the loss of best and most versatile land to energy production.

And I look forward to the noble Baroness. The Minister's response to this debate.
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Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock, The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Labour)
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Lord Roborough. Grayling for tabling today's debate? And it has been a very interesting debate and I thank everyone for their contributions. And I want to reassure noble Lords that the government is committed to restoring.

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And protecting nature. But we do recognise the challenges that we face. But I do want to talk about the progress that we're. Making and some of the actions that we are currently actions that we are currently taking to deliver change in England. taking to deliver change in England. We are committed to working to deliver the environmental targets which have been mentioned during which have been mentioned during the debate, to improve species abundance, reduce species extinction risk and restore or extinction risk and restore or create more than 500,000 hectares of wildlife rich habitat.

And of wildlife rich habitat. And alongside this, we are also determined to deliver on our international commitment to protect international commitment to protect 30% of the UK's land and sea by 2030. But clearly this is a 2030. But clearly this is a challenge. The programme is adaptive so we can update it, we

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can make changes as we get more information and evidence. As to. On the progress that we're

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On the progress that we're making, because we simply can't be. The generation that lets nature slip away. We need we need to allow our children to inherit a wild and beautiful Britain that's rich in beautiful Britain that's rich in nature than it has been before. The 2025 Spending Review announced the largest investment into nature in history, with over £7 billion directed towards nature's recovery. This includes 5.9 billion for environmental farming schemes, £816 million for tree planting and £86 million for peatland restoration.

And these investments are designed to improve water and air quality and also create spaces where biodiversity can thrive. The environmental improvement plan was mentioned by noble Lords, and I'm very much looking forward to its publication, and this will be our long term plan for improving the natural environment and people's enjoyment of it. Obviously, farming has been mentioned a lot in the debate. The noble Lord Grayling talked about the importance of nature friendly farming, for example, and so farming is central to our ambitions for nature.

The sustainable Farming incentive, Countryside Stewardship have been mentioned. We are looking to evolve those schemes so that they will work for both farmers and for nature. The noble Lord Lord Harlech and others have asked about the the next round of Countryside Stewardship. Applications are going to be by invitation. That will be by Natural England and or the for the Forestry Commission. And at the moment, we're working with farmers and land managers to develop the application. And this will also include some farmers and land managers who are in the existing agreements, as well as those who can have new agreements.

The noble Lady Baroness Shephard was was very clear about the importance of certainty in farming. You know, farmers need to know how to plan for the future. And I fully understand that. And it's something I do talk about in the department. And as noble Lords have mentioned, we have announced the one year extension for over 5000 Countryside Stewardship agreements. And that's that's to help farmers deliver vital environmental work, including managing hedgerows and Overlord. Lord Roborough talked about that. The noble Lord Dear Lord Carrington asked about Baroness Batters review, and when we're likely to see that.

The Secretary of State for Defra confirmed this week that that will be published before Christmas. So look out for that review. Our Landscape Recovery programme is one of the most ambitious parts of our farming programme, and that's aiming to deliver a large scale nature restoration. We have two landscape recovery projects, both be in Lincolnshire and Upper Duddon in Cumbria, which are now restoring habitat and boosting species abundance. The noble Lord Grayling are specifically about action and delivery that we are taking on on habitats, targets.

We are starting to see encouraging signs of progress in recovery. Since January 2023, actions have been taken to create or restore over 38,000 hectares of wildlife rich habitat. For example, the noble Lord, the noble Lady, my my noble friend Baroness Young asked about tree planting. It's now at its highest recorded rate in over 20 years, and we are delivering our manifesto commitment to create three new national forests. The Western Forest that we announced in March was the first new national forest in 30 years.

And we've also confirmed last week the second National forest from will be between Oxford and Cambridge. And early next year we're going to launch a competition to decide the location of the Third Forest, and they will see millions of trees planted in the years ahead as part of our wider commitment to allocate over £1 billion, this Parliament to tree planting, and also to support forestry section sector. We're also taking action to protect and restore peatland. We've invested £85 million in peatland restoration and lowland peat management.

That will take us through to 2030, and we're also supporting the recovery of threatened and declining species. The noble Lord Lord Hart Attenborough talked about declining species. He talked about the curlew. We recognised the importance of stopping those species further declining. And actually we need to to look at how we best restore that. We do have a species recovery programme, which works in partnerships with organisations right across the country, and it's absolutely right to respect those who are already working to, to to re-establish species and support that those that that recovery, because we think that such partnership working is essential, we should need to work with farmers.

As Lord Low said, the private sector, again, really important investor, civil society and landowners. And we have then established the National Estate for nature, which is a group of major public, private and third sector landowners who collectively manage the noble Lady. Baroness Willis might interested in this. They collected around 10% of England's land, and the local Nature recovery strategies are also supporting local partnerships to identify the priority places for nature recovery and last November, the first ever Local Nature Recovery strategy was published.

We've now got 16 more and the remaining 31 are expected soon over the coming months. And the idea is they will cover the whole of England. A number of noble Lords talked about the land use framework. Lord Bird Lord Grayling talked about the the competing, you know, the pressures on land, on land use, which is what it's designed to do to deliver for nature recovery alongside housing, infrastructure, food security. All of these have been discussed in the debate, and we recognise that that England's land is limited and the demands on it are are growing.

The land use framework for England, my noble friend Baroness Young and others have asked about the timing on that. We are currently looking at the consultation that ran last that ran earlier in this year and are working across government to see how best we can. Use the the responses from that to develop the appropriate proposals through that. So I can't give an exact date, but it is something we are actively working on at the moment. The planning infrastructure bill was obviously mentioned by quite a few noble Lords.

There's been a lot of interest in that. I think it's important to remind noble Lords that we did bring in a number of amendments into your Lordships' House to to better protect nature and in the environment, and for it to work better with development. And as the noble Lady Baroness Grender asked, we are still actively in discussions around further concerns that noble Lords have on on that. And can I also just say I absolutely agree with my noble friend Baroness Young, that development in the environment do not have to be in conflict, and I am certainly not a fan of nature bashing.

We also, I just want to remind noble Lords, we also have a clear role for green finance, which is why we're working to strengthen private finance for nature recovery and that we have a natural Environment investment readiness fund that is actively works in that space. I have got a few minutes to go through some of the specific questions. The noble Lady Baroness Willis did ask some pretty detailed questions that are important questions to be asked, and you know how land is managed.

Who owns it, incentives, support, recovery. I would suggest that these are matters that really do need to be dug into more deeply. I'd be very happy to sit down and go through with this, with the noble Lady, because she's far more experienced on this. My maths is dreadful. It would be really good to have a bit of time with her if she's happy to do to do that. On biodiversity net gain the noble Lord Lord Grayling asked about that. We do recognise that BNG is working as is intended, but also recognise that its implementation can be challenging for SMEs and we have had a consultation to explore options for improving BNG for minor, medium and brownfield development, which is also an important part of this.

And the feedback that we've gathered is we want to balance environmental outcomes with actual, you know, deliverability of them, and officials are currently looking at that at the moment on bottom trawling, also raised by the noble Lord Lord Grayling a really important subject and mentioned by the noble Lord Lord Harlech. It's clearly a damaging activity. I mean, I don't think there's any any doubt that anyone who saw David Attenborough's programme will be very clear about what the damage is, and our approach is to restrict fishing, which is assessed as damaging to the specific protected features in each marine protected area.

Based on advice from the statutory nature conservation bodies. And I'm sure the noble Lords are aware of consultation on the latest round of proposed fisheries byelaws, which proposes further restrictions on bottom trawling closed at the end of September, and the MMO, the Marine Management Organisation, is now carefully looking at all those responses that were received. But it may be that we need to pick this up together because I know his specific interest in this in this area. The noble Lord Lord Carrington asked about our little slogan food security is national security.

My understanding that this means this is about our ability to feed our population, and that that's a fundamental pillar of our stability and our and our safety and security, food production and its supply chains should be considered to be part of our critical infrastructure. That's my understanding. The noble Lord, Lord Bilimoria, talked about a number of things, but I just want to specifically comment on his that the important things he said about rural communities and the economy and the fact that that there are challenges in the rural community around around that.

And we are committed to improving the quality of life for people living and working in rural areas, because thriving rural communities and a prosperous rural economy, it makes such a difference to the overall economy of the country. And what we need to do is we need to underpin that through improvements in rural connectivity. And I'm not just talking about digital, I'm also talking about transport, which is often a big issue. We need to ensure that there is affordable housing available, that energy supply is secure and affordable, and also that community services are also available to rural communities.

So we have set up a rural task force that was set up earlier this year to gather evidence on those potential opportunities and challenges in rural areas in order to look at how we can both deliver growth but also support sustainable rural communities, and may be interested to look at that. That task force, the noble Lord Harlech, talked about our energy policy, and I'm sure he's aware that planning for renewable energy projects is for any project, requires extensive upfront surveying. There are important checks and balances that need to take place because decision makers need to ensure statutory, environmental and habitats assessments are conducted as part of the planning determination, and those assessments consider the likely impact on the environment and protected species and habitats.

And if there is significant adverse impacts likely, then developers have to put in places to avoid, preferably avoid or reduce, mitigate or compensate for those impacts. I hope that's helpful. The noble Lady Baroness Grender asked about some quite specific questions and on on the the whether the cla's assessment that 3% of England's land counts towards 30 by 30. Do we agree? Answer to that is no. The government analysis is actually higher. We've identified 7.1% of England's land that already meets the 30 by 30 criteria and counts towards the target.

But on the other specifics, I'll, I'll I'll write to her, I think I hope I've covered most of the questions that have been asked. If I haven't, I will, I will check, but can I thank noble Lords once again? I do think it's it's very important that we consider these these debates in the

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round. And I think, I think we have done today. So thank you. Well, it's it's been a very good

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Well, it's it's been a very good debate. And I would say again, I'm very grateful to noble Lords who very grateful to noble Lords who have remained here late on Thursday because we all view this as such an important issue then there are not many issues that can command pretty much unanimity across a chamber of much unanimity across a chamber of Parliament. This is clearly one of them. And that unanimity in reality, I know, extends to the Minister I know, extends to the Minister that I have to say, I share the concerns voiced on this side about the way the government more broadly the way the government more broadly has treated the farming community.

That really does have to change. Two, two final points for me. One, Two, two final points for me. One, I would add my particular support to what Baroness Willis said about regenerative farming. If we are regenerative farming. If we are going to achieve the 2030 target, then regenerative farming has got then regenerative farming has got to be at the heart of that and what the government does has got to support it. And the other point is support it. And the other point is that, you know, we all know government moves slowly and that is
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