King’s Speech

Baroness Neville-Rolfe Excerpts

Thursday 14th May 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I thank everyone who has taken part in today’s debate. I thank the Minister, the noble Baroness, Lady Anderson, for her crisp and helpful summary of the new legislative programme at the beginning of the day.

The most important economic aim for the UK is to achieve increased growth rates, as the Government initially—long ago in 2024—insisted was their priority. There is nothing in the gracious Speech which suggests that this is still the major objective. Two per cent growth, which we achieved over the 200 years or so to 2008, would make all the difference to our prospects. It is unfortunate, indeed depressing, that the Government have, in reality, given up on any real attempt to achieve such results. The Government have made much of this morning’s better news about the first three months of 2026. Let us see if this is sustained, given the political turmoil of the last few weeks, sadly continuing today. As my noble friend Lady Penn said, the half measures and lack of vision are representative of this Government’s unpopular incremental approach.

We have set out in detail what needs to be done in our Alternative King’s Speech, a much more exciting policy programme than the Government’s. In particular, we must ease the pressures that are holding back ambition, enterprise and small businesses, and which are costing jobs: extra national insurance contributions and business rates are two of the clearest examples. We must stop sending the message that success, investment and wealth creation are things to be punished. Lower tax thresholds, VAT on school fees, the extension of inheritance tax, higher stamp duty—all introduced by the present Government—and repeated talk of a wealth tax all risk driving away the very people, capital and confidence that our economy needs.

We have a Government who are not facing up to what needs to be done, and the bond markets are reflecting that. The UK rate has hit 5.1%, which is above that in Greece at 3.6%, and indeed that in all major economies. This is a higher level and a bigger premium than during the time of Liz Truss, to which Ministers are prone to refer so scornfully. In the trade, this is known as a moron premium. That might seem an unkind description of the Government Front Bench, who are ultimately responsible for these matters, but the facts stand out clearly.

The Government have been going in the wrong direction from the start by imposing higher taxes on business and individuals alike, and more and more regulation on everyone, while making no sustained effort to deal with welfare reform, as we have heard, and allowing a welfare bill which has increased by £18 billion this year to £333 billion, with overall welfare spending projected to reach £409.6 billion in 2030-31. They will not do what is needed because they are frightened of their own Back-Benchers. I fear we did not get enough done on welfare when we were in government, but the need for economies is much clearer now. Yet nothing has been done, and there is nothing in the King’s Speech.

This failure is behind Kemi Badenoch’s proposal in the Alternative King’s Speech for a welfare reform Bill. This would restrict eligibility for PIP, provide face-to-face—not online—assessment, reform sick notes, reinstate the two-child benefit limit under universal credit and prevent those who are not British citizens accessing so much welfare. These are the strong, necessary reforms that the present Administration are, sadly, incapable of making.

I turn now to the debate on the specific proposals in the King’s Speech. Although it has been the major focus of the debate, I do not plan to go into detail on the European partnership Bill, as my noble friend Lady Finn dealt with that well in her powerful and lively introduction. We have had important interventions from a number of my noble friends. My noble friends Lord Redwood and Lord Lilley analysed the pattern of growth and the balance of trade with the EU, especially in goods. From his perspective as a member of our respected European Affairs Committee, my noble friend Lord Jackson of Peterborough pointed out that, to gain privileges in the EU, the UK will have to pay and be subject in part to the fiat of the ECJ. He and my noble friend Lord Kirkhope emphasised the vital importance of ongoing—I stress that word—parliamentary scrutiny, and my noble friend Lady McIntosh of Pickering rightly asked about the future of the border target operating model.

I add that the cost of the EU reset will be greater than the benefits, especially with the negotiations being led by the Prime Minister. He does not seem able to engage with the EU without giving things away—12 years with the French and the Spanish plundering our waters rather than the originally envisaged five years, and free access for young people, more of whom will want to come here than the reverse. The EU should be paying us. Even our growth in AI and gene-editing could be at risk from dynamic alignment, as the noble Lord, Lord Frost, and my noble friend Lord Moynihan of Chelsea pointed out in two precautionary speeches. Moreover, our vital trade agreements with Australia, Japan, India and Canada, the CPTPP, and with the US, especially on pharmaceuticals where good work has been done, could come under pressure as dynamic alignment pushes into new parts of the acquis. Noble Lords can see that we on these Benches do not share the starry-eyed optimism of some speakers on the EU reset.

There is still no progress on the overdue defence investment plan. In a decisive contribution, the noble Lord, Lord Robertson of Port Ellen, pointed out that there seemed to be a passage missing from the King’s Speech on the additional funds needed to acquire the hard power we need to deter current and future threats. Indeed, my noble friend Lord Bridges of Headley pointed out in an excellent speech that security comes with growth and fragile public services are a real security issue. You cannot spend more on defence if your debt-servicing costs are soaring.

I now focus on three other areas: employment, regulation and productivity, and the high price of energy and its industrial impact. The prospects for employment are disturbing. Unemployment is at 4.9%, and a terrifying 15.8% among 19 to 24 year-olds. As we heard from my noble friend Lord Kempsell, that is above the rates in Spain and Greece. Moreover, the ITEM Club reports this week that it forecasts 163,000 further lay-offs this year. The truth is that the incentive to work has weakened as benefits have risen, and the combination of the Employment Rights Act, NICs and hefty minimum wage increases has made hiring risky and expensive for employers, especially in the vital entry-level jobs for our young people, as my noble friend Lord Kempsell said. AI is changing the marketplace at record speed, which means that flexibility is more important than ever, yet we are moving away from that.

This is also an example of the growing blight of regulation, an area of concern for many noble Lords today, including my noble friends Lord Johnson of Lainston and Lord Fuller. There is increasing evidence that excessive regulation acts as a drag on productivity, deterring investment, slowing decision-making and making it harder for businesses to grow. It is particularly difficult for SMEs, as we have heard from the right reverend Prelate the Bishop with Newcastle and the noble Baroness, Lady Kramer—we often agree on issues relating to small business. I know the Minister shares, at least in part, my concern about this regulatory area. I note the Government’s announcement of an enhancing financial services Bill, a competition reform Bill, and a regulating for growth Bill. It appears that the Government might finally have begun to recognise the scale of the problem. However, like my noble friend Lord Johnson, we are not convinced and we will examine the proposals very carefully as they come forward.

The Civil Service has expanded significantly, with costs in pay, unfunded pensions, and support costs. The shift to the public sector reduces productivity, as output per head is lower than in the private sector. It is government’s job to get a grip of this. Unfortunately, there is little sign of that grip in the gracious Speech. There is no sign of tackling the size of the Civil Service or productivity-sapping practices such as working from home. The gracious Speech promised proposals to strengthen its delivery, accountability, innovation and productivity. Perhaps the Minister will kindly explain what that will mean and whether there will be legislation on any of this.

Above all, as many have said, we have a severe problem with energy prices and energy regulation, which is set to get worse with the proposed EU reset. Cheap, reliable energy is essential to competitiveness. We cannot be ideological about something so fundamental to living standards and to the capacity for economic growth. We need to open up the North Sea, rather than leave it to Norway to take advantage of it. The Government’s energy independence Bill is going in completely the wrong direction, ruling out licences for new oil and gas fields. If the Government want to make energy more affordable and accessible, why do they continue to refuse to utilise the energy resources that we have at home?

State intervention to subsidise bills is not the answer to this problem when we have the resources to increase domestic supply in the North Sea. As my noble friend Lord Lilley pointed out, we have crushed our major goods exporting sectors and we cannot export what we cannot produce. The Government make much of their net-zero policies, but I put it to them that, if you end up with the highest energy prices in the developed world, their policy will not be the object of admiration that the Government so often claim but an example of self-harm.

My noble friend Lord Hunt of Wirral reminded us of the lack of a credible plan for making British Steel competitive, which he rightly described as a daily call on the taxpayer for a business that Ministers cannot guarantee will be viable. This, the electric vehicle mandate and high energy prices are together having a devastating effect on the cost of goods, especially vehicles.

My noble friend Lord Sharpe of Epsom highlighted how little the gracious Speech does for SMEs, which are already facing an exceptionally difficult environment. Not least there is the new holiday tax on top of higher NICs and business rates, the compliance burden, energy costs, planning restrictions and, I would add, horrific delays in the tribunals that will police the mistaken Employment Rights Act, costing business at least £5 billion. As my noble friend Lord Horam said, so many of the Government’s measures are anti-growth and anti-business—once the backbone of Britain.

In conclusion, the central question before us is whether this legislative programme meets the scale of the economic challenge facing our country. I am afraid that it does not. Britain does not need more reviews, more strategies, more consultations, more regulation or more ministerial powers. It needs growth. It needs a Government prepared to take the difficult decisions that growth requires: to reduce the burden of tax, to cut back needless regulation, to make work pay, to restore incentives, to bring welfare spending under control and to ensure that British industry has access to energy that is affordable, reliable and secure.

That is why the Official Opposition will scrutinise this programme relentlessly. Where the Government bring forward measures that genuinely improve competitiveness, simplify regulation, support business and increase growth, we will engage constructively. But, where they add new burdens, duck difficult choices, weaken our competitiveness or pretend that process is a substitute for reform, we will oppose them. We are in a mess, and this programme will not solve our problems.