Public and Private Sector Productivity Trends
Baroness Neville-Rolfe Excerpts(1 week, 1 day ago)
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Lord Livermore (Lab)
I am grateful to the noble Baroness for her question. I agree. Fundamental skills are vital to improving our productivity. Labour quality is a key driver of productivity. The skills agenda is vital to that. That is why we recently set out measures to tackle that in the skills White Paper. I hope the measures she speaks about will also be looked at carefully.
Baroness Neville-Rolfe (Con)
My Lords, I very much agree on skills, but a large part of the productivity problem in the UK has been in the public sector. This is hardly surprising, since the Government awarded huge public sector pay rises last year without a direct productivity link. Civil service numbers have also increased. Low productivity and growing headcount are not a happy state of affairs. How does the Minister plan to improve that rather dispiriting situation?
Lord Livermore (Lab)
The noble Baroness is correct to say that public sector productivity is a major issue. I know that it is something she cares about deeply. Obviously, she will be aware that the Government inherited a situation where public sector productivity was 7.2% below pre-pandemic levels; that is obviously and clearly unacceptable. She said that pay rises were awarded without any link to productivity. That is factually incorrect. At the spending review, the Government established a programme of public sector service reform to drive greater productivity. Every department has committed to at least 5% savings and efficiencies over the spending review period, with the Office for Value for Money working closely with departments to agree bespoke targets. This will result in savings and efficiencies equivalent to nearly £14 billion a year by 2028-29, and public sector productivity has already risen by 1.5% since the election.
Rules on Duty-Free Goods
Baroness Neville-Rolfe Excerpts(2 weeks, 2 days ago)
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Lord Livermore (Lab)
I am sure my noble friend and I agree on many things, but Brexit is not one of them. I hope that when he talks about our experience in the European Union he will acknowledge the OBR’s calculations that, had we remained in the European Union, by the end of this Parliament the economy would be £100 billion larger than it will be otherwise. That is a significant disbenefit of Brexit. As my noble friend knows, the manifesto stands.
Baroness Neville-Rolfe (Con)
My Lords, returning to the Question, we on these Benches fully recognise the importance of the agreements reached between the previous Administration and the European Union. However, there is a legitimate question about whether practical solutions could now be explored to address the specific anomaly. Will the Minister consider supporting a joint UK-EU technical group to examine practical options for restoring duty-free parity for Northern Ireland travellers, which could overcome the difficulties the Minister outlined? That process could be undertaken without undermining the Windsor Framework.
Lord Livermore (Lab)
Let me be absolutely clear, again. If you have duty-free, you have to have allowances. If you have allowances, you have to have checks and enforcement. If you have checks, you have to have border infrastructure, and if you have border infrastructure, that will be contrary to the Windsor Framework and the Good Friday agreement.
GDP Per Capita
Baroness Neville-Rolfe Excerpts(2 weeks, 4 days ago)
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Lord Livermore (Lab)
The noble Lord is absolutely correct. That is currently a significant issue. As I understand it, the ONS is reviewing that data, and that review is ongoing.
Baroness Neville-Rolfe (Con)
My Lords, per capita GDP is, of course, a proxy for productivity in the longer run, and I am very concerned that productivity has become an increasing problem for the UK economy. What do the Government plan to do about it, in both the public sector and the private sector?
Lord Livermore (Lab)
The noble Baroness is absolutely correct to say that productivity is a long-standing problem in the economy. As I understand it, productivity fell to the lowest in the G7 under the previous Government, so clearly it is important that we have prioritised that. One of the most important things we are doing for productivity is increasing investment in our economy. We have revised the fiscal rules to enable us to increase investment in the economy, and I regret very much that the party opposite opposed those changes to the fiscal rules.
Stablecoin Ownership
Baroness Neville-Rolfe Excerpts(3 weeks, 1 day ago)
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Lord Livermore (Lab)
I wish my noble friend a very happy birthday— his question allows me to give him a good present. It is fair to say that, right now, he cannot receive his state pension in stablecoin, but the fact that there is potential for that to evolve highlights the importance of the issues raised in this Question and of having exactly the right regulatory regime going forward.
Baroness Neville-Rolfe (Con)
My Lords, I also want to thank the Lord Speaker for all he has done for this House.
Although popular with some young people and tech entrepreneurs, most of us have little idea of what cryptocurrencies entail, their benefits or disadvantages—despite this week’s speech by Sarah Breeden, the Bank of England Deputy Governor. To return to my recent theme of financial education, will the Government take steps—perhaps by issuing a discussion paper—to ensure that all of us, from schoolchildren to pensioners such as the noble Lord, Lord Brennan, are better informed about them?
Lord Livermore (Lab)
There is definitely something worth considering in that. I have learnt a lot in preparation for this Question. I know very little about the subject, but much more than I did when I started. The noble Baroness raises an important question, in terms not only of financial education—obviously we should look at what she proposes—but of keeping consumers safe. The FCA financial promotion rules require promotions to be clear, fair and not misleading, with risk warnings displayed prominently, especially for high-risk investments. Firms must ensure promotions accurately reflect benefits and risks and consider the target audience, to help consumers make well-informed decisions. The FCA has also been cracking down on unlawful financial promotions by influencers as part of the regulatory regime being developed. The Treasury is working closely with the FCA to set conduct standards for firms.
School Fees: VAT
Baroness Neville-Rolfe Excerpts(3 weeks, 4 days ago)
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Lord Livermore (Lab)
I am grateful to my noble friend for the points that he makes, and I agree very much with what he is saying. As he knows, we are increasing per-pupil funding to record amounts. It is absolutely correct that we have heard many scare stories about this policy—that schools would close. Since VAT was applied on 1 January, private schools have continued to open and close in line with historic trends. As I have said already, 49 private schools have closed but 70 private schools have so far opened.
Baroness Neville-Rolfe (Con)
I start by echoing the tributes to Lord Campbell. It seems only yesterday that he was with us. I believe that taxing education is a shabby policy, and we have seen some 50 schools close since the VAT on private schools was introduced. This is another example of Labour attacking the sectors of Britain that are most successful: in this case, our private schools. They are very well regarded internationally and key to our country’s academic successes. Has the Minister learned anything from this regrettable episode about how and where we tax?
Lord Livermore (Lab)
I am grateful to the noble Baroness for her question. What I have learned from this episode is not to listen to scare stories from the party opposite. She talks about school closures; I am sorry that she did not listen to the figures that I gave. Yes, 49 private schools have closed but 70 private schools have opened, so obviously there is a net increase in the number of private schools in our country. There has historically been a significant turnover in this sector, with around 75 private schools in the UK opening and closing each year and the overall number of private schools remaining broadly stable.
Road Pricing
Baroness Neville-Rolfe Excerpts(1 month, 2 weeks ago)
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Baroness Neville-Rolfe (Con)
My Lords, much revenue is raised from motorists through vehicle licensing, fuel duty and indeed congestion charges. If there was a move towards raising more from road pricing, can the Minister confirm that it would be coherent and reasonable and not just a policy of soaking the motorist? I have in mind the Government’s decision to scrap our planned Conservative restrictions on low-traffic neighbourhoods, which create congestion and encourage overzealous enforcement, and the overuse of 20 mph limits that hit working people—who are rightly a concern of the noble Lord, Lord Spellar—across the country.
Lord Livermore (Lab)
The noble Baroness asks a hypothetical question that I have already dealt with. The Government have no plans to introduce road pricing. She mentions low-traffic neighbourhoods. We want to support local authorities to deliver streets that work for all road users and enable integrated journeys. Decisions on which neighbourhoods should be low traffic lie with local authorities.
Making Tax Digital
Baroness Neville-Rolfe Excerpts(1 month, 3 weeks ago)
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Lord Livermore (Lab)
My noble friend makes an important point; the tax gap is a significant issue. Small businesses account for some 60% of that tax gap, much of which comes from unintended errors. One of the big advantages of Making Tax Digital is having more frequent reporting, and therefore there are far fewer errors. There is also the pre-population of end-of-year tax returns, which again reduces errors. If we can reduce some of those errors, we can reduce quite a significant part of the tax gap.
Baroness Neville-Rolfe (Con)
My Lords, in the Government’s plan for SMEs, Backing Your Business, they claim that they are prioritising growth and productivity potential—good news. However, in a Written Answer last week to the noble Baroness, Lady Maclean of Redditch, the Government revealed that they have no idea of the level of cumulative administrative costs of regulation for small business. Does the Minister agree that before his Government impose yet more onerous regulations on small businesses, such as through the Employment Rights Bill, they should find out the existing costs of their regulatory onslaughts and do something about them?
Lord Livermore (Lab)
It may surprise the noble Baroness to hear that I absolutely agree. As part of our regulation action plan, we committed to reducing the regulatory burden on businesses by 25%. We must have a benchmark from which we reduce that burden. We are engaged in doing that, and, as I said, I completely agree with the noble Baroness.
Financial Services (Overseas Recognition Regime Designations) Regulations 2025
Baroness Neville-Rolfe Excerpts(1 month, 3 weeks ago)
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Baroness Neville-Rolfe (Con)
My Lords, I am grateful to the Minister for introducing the statutory instrument crisply and clearly. I am also grateful to the noble Baroness, Lady Kramer, for her usual well-informed comments, including those on the digital aspects of this proposal. I think that I am, however, more in favour of growth and competition than she is.
I start by saying how important secondary legislation of this nature is. The topic of debate today is the modified reinstatement of legislation that we as a Parliament passed during the process of exiting the European Union. Now that we are able to table such legislation on our own terms, we can bring it fully in line with domestic regulations, to the benefit of British services.
Cross-border financial services must be both secure and effective. This is why having similar regulatory frameworks to collaborative countries is so important. It is all well and good having an efficient domestic system, but if that system is not aligned with foreign trading partners, markets are likely to be boxed in and limited. Some form of alignment criteria must therefore be established to allow cross-border services to function. The outline measures aims to define the parameters within which an overseas jurisdiction may be recognised as equivalent to that of the United Kingdom.
It is also welcome that His Majesty’s Treasury, in addition to the described powers of imposition or limitation of conditions on an overseas recognition regime, will now have the powers to require regulators to provide relevant information to support equivalence decisions, and will be required to co-ordinate with the relevant bodies when processing overseas recognition regime designation cases. This will help speed up and standardise the decision-making of such cases.
Although the Minister said that these powers may not be used very often, I have two questions. First, the Treasury requires either information or advice from a regulator. If it needs that, it must, by notice,
“specify a reasonable period within which the information or advice must be provided”.
What would be considered “a reasonable period”? Perhaps the Minister could clarify the timescales. We want to see efficiency in the interests of stakeholders, and we sometimes seem to be rather slow in the financial services sector. That is one of the reasons I have four Questions for Written Answer tabled today about the progress of the post-Brexit changes in financial regulation, which we initiated and would like to see the Government complete. I would be very happy to hear today how the Treasury is getting on.
Secondly, the Explanatory Memorandum states that the
“advice that the Financial Services Regulators will be asked to provide”
by the Treasury
“will be agreed on a case-by-case basis”.
The scope for this seems too wide. I am aware that it is specified in the legislation that advice may be given only in relation to an overseas recognition regime designation, or a proposal for one, but the breadth of these designations seems wide. Will the Minister consider issuing some further guidance on the extent of the information that the Treasury is able to ask for in the name of ORR designations?
I look forward to the Minister’s response. In closing, I say that the Official Opposition support the statutory instrument and the measures to encourage a growing, healthy, open—in the Minister’s words—and competitive UK financial sector.
Lord Livermore (Lab)
My Lords, I am grateful to both noble Baronesses for their detailed comments and scrutiny, as well as for their support for this secondary legislation.
The noble Baroness, Lady Kramer, asked a number of questions, which I will seek to address. First, she initially expressed her surprise that the Treasury required these new powers. I am told that this instrument replaces a similar instrument: the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, which gave the Treasury the power to request information from the regulators when considering decisions under assimilated equivalence regimes. The Treasury has exercised the powers contained in the 2019 regulations in support of equivalence decisions made since our EU exit. To date, no new decisions have been taken under any ORR, meaning that the powers in this instrument being introduced today have not yet been required.
The noble Baroness, Lady Kramer, also spoke about her concerns—we have discussed them before in the main Chamber—around the Government’s overall agenda of rebalancing from risk towards growth and competitiveness. As the noble Baroness knows, the Chancellor has expressed her clear view that she wants to see greater emphasis on growth and competitiveness, but she has absolutely discussed how central the financial services sector is to the Government’s modern industrial strategy and the key role that it plays in financing growth across the economy. She remains committed to the highest standards of regulation and does not see those things as being in tension—the noble Baroness knows that; we have discussed it before. I do not necessarily agree with the noble Baroness’s concerns, in that there is absolutely no question of a race to the bottom on regulation. The UK will remain a global leader in promoting the highest standards that deliver for businesses and consumers across the UK.
The noble Baroness, Lady Kramer, asked a specific question about how the process will work and whether it is becoming too politicised. I do not think that that is the case. Many other countries have similar regimes; for example, the US makes comparability assessments. As I said in my opening remarks, the EU has equivalence, and our recognition process is consistent with international norms. Our guidance document sets out our approach. We have been clear that robust standards, safeguarding outcomes and technical advice from our expert regulators are all key factors in decisions on whether to designate another jurisdiction.
The noble Baroness, Lady Kramer, also asked about publishing regulator advice. The Treasury will always, as part of its designation process, summarise the evidence that it has received and considered in relation to the other jurisdictions’ regulatory frameworks.
I am grateful to the noble Baroness, Lady Neville-Rolfe, for her support for this statutory instrument. The drive towards growth and competitiveness, and the importance of this sector in doing that, is one of the rare areas on which we agree. I am also grateful for the noble Baroness’s support for the Mansion House announcements that the Chancellor made, building, as all Chancellors do, on the previous Chancellor’s work in this area.
The noble Baroness, Lady Neville-Rolfe, she asked two questions: one about timescales and another about speed. Unfortunately, I cannot read the answer that has been given to me. I will ask my team whether we have an answer on the scope of the designations. I will write to the noble Baroness on the two points that she made, if she does not mind.
Economic Growth
Baroness Neville-Rolfe Excerpts(1 month, 3 weeks ago)
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Baroness Neville-Rolfe (Con)
My Lords, this is a different world. Given that the economy is actually struggling to gain momentum, as every serious economic commentator is saying, thanks to the Government’s disastrous tax and regulatory policies, will the Minister answer my noble friend Lord Leigh’s questions? Will the Minister think again on the Employment Rights Bill, conveniently now coming back to the House? Will he answer my noble friend’s very good question on per capita growth, which, as the Minister and I have often agreed, is the key to success?
Lord Livermore (Lab)
The answer to the first of the noble Baroness’s questions is no. As for the second question, she says she is interested in growth but let us look at just one measure that we are taking. Our planning reforms have the largest impact on growth of any non-fiscal measure the OBR has ever scored. Yet her party, evening after evening in this place, is doing every single thing it possibly can to hold up and obstruct our planning Bill in your Lordships’ House. Is that the action of a party that wants to grow the economy? Our capital spending increases economic growth. In this month’s GDP figures, we can see the effect it is having on driving new infrastructure work. Yet her party opposes the changes to the fiscal rules that make that possible. She says she wants growth but at every single turn, she opposes the measures this Government are taking to get that growth.
Pension Funds: Use of UK-listed Investment Companies
Baroness Neville-Rolfe Excerpts(1 month, 4 weeks ago)
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Lord Livermore (Lab)
I am grateful to the noble Baroness and pay tribute to her for her expertise in this matter and her continued campaigning. As I have said before, the Mansion House accord is an industry-led agreement. The Government are not participants in it. The proposed backstop powers in the legislation that she refers to are not intended to be open-ended but are designed to be capable of being a backstop to the commitments that pension companies themselves have made through the Mansion House accord. It makes sense for those powers to align with the commitments that have been included by the companies and the industry itself. Nevertheless, as I have said already, I am grateful for constructive engagement on this issue. As we take the Bill through Parliament, representations like the ones the noble Baroness has just made, and those of the wider sector, will be considered alongside our broader policy objectives.
Baroness Neville-Rolfe (Con)
My Lords, we the Official Opposition understand the attraction of strengthening the economy and strengthening pension funds by investment in infrastructure. However, the Pensions Management Institute said last week that it believes the reserve—that is the mandation power in the Pension Schemes Bill—sets a “dangerous precedent” for political interference with trustees’ fiduciary duties. It warned that the Government’s proposals would deliver poor outcomes for savers. Does this not concern the Minister?
Lord Livermore (Lab)
I am grateful to the noble Baroness for her question and her broad support for the Government’s agenda. This is an area where, aside from the specific issue that she raises in her question, we are in agreement that we want to see greater investment in UK infrastructure in this way. I do not agree with the specific point about savers. The measures contained within the Bill will see far greater returns for savers. That is incredibly important and lies behind a lot of the measures that we are taking.
On the specific reserve power, obviously we are very encouraged by the Mansion House accord. It builds on the existing Mansion House compact, set up by the previous Chancellor in the previous Government. In the light of this progress, the pensions review concluded it was not necessary currently to mandate investment. Instead, the Bill includes a reserve power, which will, only if necessary, enable the Government to set quantitative baseline targets for pension schemes to invest in a broader range of assets, including in the UK, for the benefit of savers and for the benefit of the economy. The Government do not anticipate exercising the power unless they consider that the industry has not delivered the necessary change on its own.