Financial Services (Overseas Recognition Regime Designations) Regulations 2025

Lord Livermore Excerpts

Thursday 18th September 2025 Lords Chamber

Moved by

[Lord Livermore]

That the draft Regulations laid before the House on 15 July be approved.

Considered in Grand Committee on 17 September.

Road Pricing

Lord Livermore Excerpts

Thursday 18th September 2025 Lords Chamber

[Lord Young of Cookham]

To ask His Majesty’s Government what plans they have to introduce road pricing.

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

My Lords, the Government have no plans to introduce road pricing.

[Lord Young of Cookham (Con)]

That short reply will allow lots of time for questions. Three years ago, the Transport Select Committee in another place produced a unanimous report on road pricing. The committee’s chair said:

“It’s time for an honest conversation on motoring taxes”,


and the committee called on the Government to “act now” to avoid a £35 billion “fiscal black hole”—something we know the Minister disapproves of. As electric vehicles become the norm, fuel duty revenue will fall away. That can be made good by road pricing based on the distance a motorist travels, the time and the place. Modern technology makes that possible. It would reduce congestion and make better use of our railways. By the way, the Minister’s Treasury colleague, Torsten Bell, has written a publication strongly supporting road pricing, so might he have a conversation with him?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. As I said, the Government have no plans to introduce road pricing. As he will know, we need to balance several objectives: we must always ensure fiscal stability and sustainability, as he indicates; motoring must remain affordable for consumers; and we must support the decarbonisation of the transport sector. Achieving these objectives means that we need to take a balanced approach. As the noble Lord may know, electric vehicles are now in scope of vehicle excise duty, raising an additional £1.6 billion every year by the end of this Parliament. We have set the rates for company car tax to gradually normalise the taxation of electric vehicles. At the same time, in the last Budget we extended the temporary 5p fuel duty cut and cancelled the planned increase in line with inflation. Meanwhile, we are maintaining incentives for people to buy new electric vehicles, including investing £650 million in the electric car grant and £400 million to roll out charging infrastructure.

[Lord Birt (CB)]

My Lords, when I worked at No. 10, I led a team, which had Treasury representation, that looked at road-user charging alongside other transport issues. Does the Minister accept that a flexible system of road-user charging could bring many benefits, such as an allocation of free mileage for the less well-off, rates set to incentivise decarbonisation and dynamic pricing to reduce peak-time congestion?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I absolutely recognise the considerable expertise and experience that he has in this matter—experience and expertise that is probably found right across this House. I do not have specific thoughts on the specific points he raises because, as I say, we have no plans to introduce road pricing.

[Lord Spellar (Lab)]

My Lords, the last question identifies some of the key problems with road pricing. Mention was made of peak-time charging. That may be fine for civil servants and those living in London and the Home Counties, who have a high propensity to travel to work by rail, but the great majority of the rest of the country go to work by car. Those who live in rural areas have to travel long distances for facilities and for work. Those who work in industrial areas, again, quite often because of the location of the work, have to travel by car. There are huge socioeconomic issues here. Quite frankly, it needs to be taken out of the rarefied atmosphere of discussions between think tanks in Whitehall and instead have some common-sense examination involving car drivers.

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. I agree with a great deal of what he said. As I said at the outset, one of the objectives we must keep in mind is that motoring must remain affordable for consumers. As I say, that is why in the last Budget we extended the temporary 5p fuel cut and cancelled the planned increase in line with inflation, which saved drivers around £3 billion this year. It is why we are introducing a new fuel finder to increase competition between fuel stations and to help drive down prices. As my noble friend rightly says, a well-developed road network cuts transport costs, connects businesses to markets, and unlocks jobs and investment right across regions. That is why at the spending review the Chancellor announced £24 billion of capital funding over this Parliament to maintain and improve both motorways and local roads.

[Baroness Pidgeon (LD)]

My Lords, while I hear clearly the Minister say that there will not be any national scheme, what support is being provided to metro mayors across the country who may consider road pricing as a tool to reduce traffic in city centres and help improve public transport?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness, who I know has a great deal of expertise in this matter. The local schemes that she describes, such as clean air zones of the ULEZ type and so on, are the responsibility of local authorities, and it is right that the responsibility for those lies with local authorities.

[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.

[Baroness Hayman (CB)]

My Lords, I urge the Minister to be not quite so adamant in his rejection of road pricing. My first job in government was as Minister for Roads. A year in, I was due to visit South Korea to look at road pricing and the opportunities that might occur in this country, but I was moved the day before I went. It was to be my first and only trip abroad as Minister for Roads, and I do not believe that anyone went after me. The arguments that have been made by the noble Lords, Lord Young of Cookham and Lord Birt, have become only more pressing in the years that have gone by, but the opportunities for making the system fairer have also increased because of the increase in technologies. I therefore urge the Minister to think a little more broadly on this issue.

[Lord Livermore (Lab)]

As I say, there is a great deal of expertise across the House on this matter, and the noble Baroness is no exception. She knows a great deal about the topic. I think I have said what I was going to say on this matter: we have no plans to introduce road pricing.

[Earl Attlee (Con)]

My Lords, why is it sensible to tax a motorist who drives 5 miles in the middle of Lincolnshire at 6 am exactly the same as a motorist who drives 5 miles on the M25 at 8.30 am?

[Lord Livermore (Lab)]

It may or may not be sensible but, as I say, we have no plans to introduce road pricing.

[The Earl of Erroll (CB)]

Does the Minister agree that there is in fact a huge privacy issue here? If, maybe in a marriage, someone can see where their other half has been going when they are not around, it could well cause a major rise in the divorce rate and other things.

[Lord Livermore (Lab)]

That is an interesting question, but it is one that I have no view on since we have no plans to introduce road pricing.

[Lord Harper (Con)]

My Lords, this is one of those occasions on which I hope the Minister will welcome the fact that I strongly agree with him. I am very pleased that he has adopted the policy that we set out in our manifesto at the election to rule out road pricing. As the noble Lord opposite said, most people in this country go to work in a car and depend on their cars. If the cost of motoring becomes cheaper as people get more electric vehicles, protecting the environment, we should welcome that it has become cheaper, not look for opportunities to make it more expensive. I urge the Minister to maintain the policy of no road pricing, however seductively I suspect Treasury officials will try to suggest that he change it.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his support of the policy that we have set out. I have been clear that, on many of the issues that he raised in his question, we as a Government are having to balance several objectives. We must always ensure fiscal stability and sustainability, motoring must remain affordable for consumers and we must support the decarbonisation of the transport sector. We will continue to balance those objectives.

[Lord Hannan of Kingsclere (Con)]

My Lords, returning briefly to my noble friend Lord Young’s question, I noticed that the Minister has unwontedly not mentioned the £22 billion black hole. Can he tell us what the current shortfall is?

[Lord Livermore (Lab)]

I will not speculate now or give a running commentary on the next fiscal forecast. The OBR will produce a new forecast in the autumn for the annual Budget in the usual way, and the Chancellor will take decisions based on that forecast.

Financial Services (Overseas Recognition Regime Designations) Regulations 2025

Lord Livermore Excerpts

Wednesday 17th September 2025 Grand Committee

Moved by

[Lord Livermore]

That the Grand Committee do consider the Financial Services (Overseas Recognition Regime Designations) Regulations 2025.

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

My Lords, the regulations before the Committee today will help ensure the effective operation of overseas recognition regimes. Specifically, they provide the Treasury with the powers needed to ensure that designations of individual jurisdictions are assessed and implemented in a manner that is compatible with our existing regulatory regime.

I will briefly set out the context in which these regulations are being introduced. The UK’s historic strength in global financial markets is built upon its international openness and reach. Our ability to provide unilateral recognition where the regulatory framework in an overseas jurisdiction provides for similar outcomes to the UK’s is an important tool to support cross-border financial services. Recognition can provide a range of regulatory benefits. These include enabling overseas firms to provide services directly into the UK, aligning requirements on UK-authorised firms whether they are engaging with UK or overseas markets or counterparties and providing regulatory relief by removing duplicative requirements on cross-border business.

Other jurisdictions also maintain provisions that allow them to recognise overseas regulatory frameworks. For example, the European Union maintains equivalence regimes; the United States makes comparability determinations in respect of other jurisdictions; and Australia operates a system that allows it to judge foreign regulatory regimes as sufficiently equivalent. These provisions promote consistent regulatory standards, provide the foundation for long-term regulatory co-operation between jurisdictions and support financial stability.

The regulations today were first published in draft form to coincide with the Chancellor’s Mansion House speech in July, alongside a guidance document that outlines the principles and processes governing overseas recognition regimes and a memorandum of understanding signed by the financial services regulators. As noble Lords will be aware, overseas recognition regimes are a new approach through which the UK will recognise overseas jurisdictions’ financial services regulation and supervision. The regulations support the effective operation of these regimes, specifically in relation to the designation of individual jurisdictions. They will ensure that designations are assessed and implemented in a manner that is compatible with our existing regulatory regime and thereby safeguard financial stability, market integrity, consumer protection and competition.

I turn to how the regulations will work in practice. They have three main functions. The first is in relation to information and advice. The decision to designate an overseas jurisdiction is taken by Treasury Ministers on the basis of an assessment undertaken by officials with technical advice from our expert regulators and made by statutory instrument laid before Parliament. The regulations give the Treasury the power to request information and advice from the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority as part of the process of assessing and then designating an overseas jurisdiction. A memorandum of understanding is established between the Treasury and the UK financial services regulators in accordance with these regulations.

The second function relates to conditions. The regulations give the Treasury the power to impose conditions on the application of an overseas recognition regime designation. These conditions are specific changes to the effect of a designation, for example, limiting the effect to a given size of firm, so ensuring that we are able to support cross-border financial services while addressing any areas of risk. This change will help to maintain consistency with the regulatory and supervisory standards that we expect in our markets.

The third function is to make amendments to two existing overseas recognition regimes. The Government previously established two overseas recognition regimes covering insurance and short selling under the powers afforded by the Financial Services and Markets Act 2023. No new designations have been made under either of these two new regimes, meaning that, as yet, there has been no need to use the powers in the regulations we are introducing today. The amendments to these regimes are simply to make the definition of “overseas jurisdiction” consistent across all overseas recognition regimes, including those already introduced, ensuring that there is a single approach across financial services regulation that is easily understood by firms and our international partners.

These regulations are clearly defined and limited in scope. Their sole purpose is to provide the Treasury with the powers needed to ensure that designations of individual jurisdictions are assessed and implemented in a manner that is compatible with our existing regulatory regime. They will ensure that we can operate overseas recognition regimes effectively and thereby support the global competitiveness of the UK’s financial sector, facilitate cross-border financial services and provide a consistent approach across financial services legislation. I beg to move.

[Baroness Kramer (LD)]

My Lords, I fully understand that this statutory instrument updates the basis on which the UK grants equivalence to the financial law and market practice of overseas jurisdictions. The Treasury obviously needs the powers to designate, limit or revoke equivalence. I am rather bemused that the Treasury seems to need new powers to get advice and information from the relevant regulators, but so be it, if that has previously been omitted.

However, I have some sense of caution around all this. As I read the Treasury’s guidance document, it seemed very weighted to change the decision-making process away from looking at the appropriateness of rules and regulations in overseas jurisdictions through the lens of whether they could contribute to financial instability in the relationship generated in the UK and much more towards whether they are compatible with the Government’s policy outcomes.

--- Later in debate ---

[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.

Motion agreed.

Making Tax Digital

Lord Livermore Excerpts

Wednesday 17th September 2025 Lords Chamber

[Lord Pitkeathley of Camden Town]

To ask His Majesty’s Government what plans they have to use the rollout of Making Tax Digital as a strategic entry point to encourage wider adoption of digital tools among small businesses.

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

My Lords, from April 2026, Making Tax Digital for income tax will be phased in for unincorporated businesses, self-employed individuals and landlords, starting with those with income over £50,000. This will place small businesses on a more digital footing and should act as a catalyst for greater adoption of new digital technologies, unlocking the significant productivity benefits associated with digitalisation.

[Lord Pitkeathley of Camden Town (Lab)]

I thank my noble friend the Minister for the helpful Answer. Given that Making Tax Digital has significantly increased the cost of compliance for small businesses through mandatory software and subscriptions, what steps are the Government taking to mitigate those burdens? Might this rollout be the right moment to consider an accounting software switch service modelled on the banking version, and to require that such software includes prompts to highlight underused tax reliefs as a core feature, rather than an added cost?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. HMRC has taken a range of steps to ensure that the adoption costs of Making Tax Digital are kept to a minimum, including working with industry to ensure that there is free and low-cost software available where necessary. The use of Making Tax Digital should bring significant benefits by increasing accuracy, reducing the time it takes to complete tax returns, and therefore increasing productivity. The rollout of Making Tax Digital encourages taxpayers to adopt digital solutions. For example, of those businesses already using Making Tax Digital for VAT, one-third have used the software for other business processes. More broadly, the Government are actively promoting digital technology adoption for small businesses, which is key to unlocking productivity and growth, and helping firms reduce administrative burdens. In our small business plan, we accepted all 10 recommendations from the industry-led Digital Adoption Taskforce.

[Baroness Kramer (LD)]

My Lords, Making Tax Digital is not targeted at upskilling self-employed people and landlords; it is about cutting costs at HMRC. The requirements have led to a surge in calls to HMRC for guidance, but over half a million calls went unhandled in January, and the same in February, the last months for which I have numbers. How is this being handled, given that people who fail to comply face steep fines and penalties, and that when they rely on the internet they are at risk of being scammed?

[Lord Livermore (Lab)]

If I may, I disagree with the premise of the noble Baroness’s question. Making Tax Digital is about increasing productivity for businesses and helping HMRC close the tax gap, which I am sure the noble Baroness would agree should be a priority. There are clear benefits of Making Tax Digital, such as productivity gains to improve business operations, easier and faster tax returns by promoting digital record-keeping, and greater accuracy by reducing errors for tracking paper records. There is a substantial tax gap, and Making Tax Digital will reduce that by nearly £6 billion—some £4 billion for VAT and £1.95 billion for income tax. By doing that, and enabling HMRC to have the correct resources, it is able to direct resources where they are most needed, which addresses the point the noble Baroness was making.

[Lord Geddes (Con)]

My Lords, will it be mandatory?

[Lord Livermore (Lab)]

Yes.

[Lord Foulkes of Cumnock (Lab Co-op)]

That was a good answer. I know that my noble friend the Minister is very diplomatic. But in view of the fact that there is huge controversy over the tax affairs of Mr Nigel Farage in relation to his house in Clacton and the huge amount of money that he gets from various sources, including GB News, is it not about time that the Government looked at asking Members of the other House to have their tax affairs made public?

[Lord Livermore (Lab)]

It is not for me to comment on the tax affairs of any one individual.

[Lord Forsyth of Drumlean (Con)]

Does the Minister recall his time on the Economic Affairs Committee and the report which was produced—I am not sure whether he was still on the committee at that time—on Making Tax Digital? It welcomed the move but thought it was important to take account of the burdens placed on small businesses and the costs that were involved. Surely at a time when the economy is, shall we say, not exactly performing as he might hope, might it not be better to look at this again, with a view to the levels of fines and the speed with which it is being implemented? There was considerable evidence then that HMRC was simply contracting out its job of collecting taxes to people who were trying to run businesses in difficult times. Surely that is not acceptable.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I of course remember my time on the Economic Affairs Committee, and I was privileged to serve when he was the chair of that committee. We produced many high-quality reports. I do not think I was on the committee at the time of the report that the noble Lord refers to, but I fully appreciate that there are costs to business of doing this—I think the recurring cost is estimated to be, on average, £110 annually. It is important to say that HMRC has worked with industry to ensure that a range of software is available, including free and low-cost software, and of course those costs do not take into account the benefits. There are important productivity and time-saving benefits.

As regards Making Tax Digital for VAT, HMRC has carried out a detailed evaluation of the impact of that, which shows that two-thirds of businesses report time-saving benefits. Of businesses that were using digital accounting software for the first time, 80% reported significant benefits, a quarter reported improved productivity and one-third had used Making Tax Digital software for other business processes. At a time when productivity is such a challenge—an issue that we frequently discuss in this House—and when small businesses make up such a large part of the economy, if we can see two-thirds of small businesses making significant productivity gains, that is a benefit worth having.

[The Earl of Kinnoull (CB)]

My Lords, I want to go back to the question from the noble Baroness, Lady Kramer, about helplines. I have to say that, for me—I declare my interest as a small farmer with a small business that wants to do things online—the helpline is not working at the moment, and we heard the numbers that show that it is not working. The most important thing is that that is understood and actions are taking place to make the helpline work, because the digital system will work really well as long as the helpline works too.

[Lord Livermore (Lab)]

I reassure the noble Lord that I absolutely understand that. I recently answered a Written Question on this exact point, so I am more than happy to share with the noble Lord the Answer to that Question.

[Lord Watts (Lab)]

My Lords, does the Minister agree that everyone who pays PAYE has to pay their fair share of tax, but an awful lot of people do not pay their fair share of tax? Is not the use of technology one way in which we can make sure that they make their contribution?

[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.

[Lord Bellingham (Con)]

On the shadow Minister’s point about the impact assessment, the Government’s own impact assessment of the Employment Rights Bill puts the costs at £5 billion extra. How is that going to help the Government’s growth agenda?

[Lord Livermore (Lab)]

We have an extensive growth agenda, not least in the Planning and Infrastructure Bill that we talked about yesterday, and I hope all noble Lords will help that to move swiftly through the House.

Economic Growth

Lord Livermore Excerpts

Tuesday 16th September 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the growth figures for July 2025.

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

My Lords, UK GDP grew by 0.2% in the three months to July 2025, following an increase of 0.3% in the three months to June. Overall, the economy grew by 1% in the first half of this year, well above the OBR forecast of 0.6%. This means the UK was the fastest-growing economy in the G7 over this period. Of course, we want to go further, which is why economic growth remains the Government’s number one priority.

[Lord Leigh of Hurley (Con)]

Indeed it is, but the ONS said that there is zero growth in GDP. Of course, that means that GDP per capita will be negative, partly because productive people are leaving and less productive people are arriving. The markets have made their view of our economy clear, as our borrowing rates are higher than in any other country in the G7. Will the Minister agree to meet the Growth Commission, which has some excellent ideas on growth? As Treasury Minister, will he persuade his new colleagues of what every employer is saying, that the Employment Rights Bill will severely curtail growth? Now is the time to amend it.

[Lord Livermore (Lab)]

I am very grateful to the noble Lord for his question and for his thoughts on growing the economy. After his success in advocating for a Brexit deal that reduced GDP by 4%, it is always very helpful to get his advice on economic growth.

The noble Lord mentioned the monthly growth figures. I do not know whether he is an avid reader of the Office for National Statistics blog posts, but he may have seen that the ONS announced this week that it will be reverting to leading with the three-monthly growth figures, which are less volatile and provide a clearer picture of underlying economic momentum. He may therefore have seen that UK GDP increased in the three months to July. In that data released, we can see that the Government’s action to turn around the legacy of underinvestment from his Government, opposed now by the party opposite, is having an effect, and construction output increased by 0.6%, driven by 2.1% growth in new infrastructure work.

The noble Lord may also have seen that exports to the US increased in July. He may have seen that the UK economy grew by 1% in the first half of this year, and that as a result, the UK is the fastest-growing economy in the G7. He may have seen Lloyds Bank’s latest business barometer, which shows that business confidence rose for the fourth consecutive month to its highest level in 10 years.

[Lord Fox (LD)]

My Lords, 50% of the economy is small and medium-sized businesses. In its commentary on today’s rise in unemployment and fall in vacancies, the British Chambers of Commerce highlighted employment costs; in particular, it singled out the hike in employers’ national insurance. Earlier today, those noble Lords who were in Prayers prayed for the wealth and tranquillity of our nation. Rather than wait for divine intervention, can the Minister now admit that the national insurance rise was wrong, and it is contributing to neither wealth nor tranquillity in this country?

[Lord Livermore (Lab)]

It is a welcome return for the noble Lord and a pleasure to be asked a question by him again after a somewhat lengthy absence. The answer to his question is no. We heard from the Liberal Democrat Benches strong support for the investment we announced in the spending review. They supported— I think—every single piece of regional, transport, health, and education investment right across the board. Not a single piece of investment that we announced did they oppose, but they are now saying that they oppose the way in which we raise that money. That, I am afraid, is something we see on many Liberal Democrat leaflets across the country. It is also the route that led to the Liz Truss mini-Budget, wanting to support outcomes but not supporting the difficult measures to support those outcomes.

The noble Lord mentioned small business. We set out a very clear small business strategy to support small businesses in this country.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, the Minister confirmed that growth in the United Kingdom in the first half of this year was the highest of all the G7 countries. Does he agree that those opposite who question and challenge this are talking Britain down and playing into the hands of the people who were on the streets at the weekend undermining parliamentary democracy?

[Lord Livermore (Lab)]

I certainly agree with the first half of my noble friend’s question. It is important to restate that the UK is the fastest-growing economy in the G7. The economy grew by 1% in the first half of this year, well above the OBR’s forecast of 0.6%. It is also worth drawing attention, as I did, to Lloyds’ latest business barometer, which shows business confidence rising for the fourth consecutive month. It is now at the highest level since 2015. UK firms remain optimistic about their own trading prospects, and firms remain upbeat about their business activity over the next 12 months.

[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.

[Lord Sikka (Lab)]

My Lords, people’s inability to buy goods and services is a major reason for low economic growth, and 14 years of Conservative rule delivered real wage cuts, the two-child benefit cap, frozen income thresholds, and unchecked profiteering. Some 16 million people live below the poverty line. What plans do the Government have to abandon Conservative policies and deliver redistribution of income and wealth, and curbs on profiteering?

[Lord Livermore (Lab)]

My noble friend is absolutely correct to say that we need a different approach to the economy from the one we had over the past 14 years, and he will have seen how we are delivering on that. He will know that living standards are forecast to grow over four times faster than in the previous Parliament, and real wages have already grown by more in the first 10 months of this Government than in the first 10 years of the previous Conservative Government. He will know that, in answer to the question opposite, GDP per capita is forecast to rise by 5.6% over this Parliament. Under the last Labour Government, productivity growth was the second fastest in the G7. Under the Tories, it fell to the second slowest in the G7.

[Earl Russell (LD)]

My Lords, does the Minister agree with the new chair of the Climate Change Committee, who warned today that any weakening or changing of our environmental policies would spook the markets and undermine growth?

[Lord Livermore (Lab)]

The noble Lord referred to “our” policies. I am pleased that he agrees with our policies. Absolutely, we are committed to delivering net zero in the way that we have set out.

[Lord Hintze (Con)]

My Lords, what analysis has been done between tax rates and the growth rate? Ignoring that ignores the effects of the Scully curve and crowding out in the economy.

[Lord Livermore (Lab)]

The points the noble Lord makes are perfectly fair. Obviously, the Chancellor has to balance at any fiscal event the importance of fiscal responsibility and sustainability and the need to grow the economy. She will do so in the forthcoming Budget in the way that she always does.

[Lord Bethell (Con)]

I will always be grateful to the Minister for his historic observations about GDP per capita. But what is the current GDP per capita, and how is its growth developing over time? Will the Minister please acknowledge that efforts on these Benches on the planning Bill are constructive, supportive and well within the bounds of reasonable parliamentary scrutiny?

[Lord Livermore (Lab)]

I do not think the noble Lord’s comments about the planning Bill would stand up to a moment’s scrutiny in the outside world. In answer to his specific question, GDP per capita is forecast by the OBR to rise by 5.6% over the course of this Parliament.

[Baroness Bousted (Lab)]

Will my noble friend the Minister note that since the election interest rates have been cut five times? Will he also agree that this Government are not going to be lectured by an Opposition who, when in government, presided over the longest period of wage stagnation since the Napoleonic Wars, with real wages not returning to pre-2008 levels until 2025?

[Lord Livermore (Lab)]

My noble friend is absolutely right. The last Conservative Government saw historic mistakes made over austerity, the Brexit deal and the Liz Truss mini-Budget. The consequences of those for working people were very real. Living standards are forecast to grow, as I have said, over four times faster during this Parliament than they did in the previous Parliament.

Pension Funds: Use of UK-listed Investment Companies

Lord Livermore Excerpts

Tuesday 9th September 2025 Lords Chamber

To ask His Majesty’s Government what assessment they have made of the use of UK-listed investment companies by pension funds investing in non-liquid assets such as private equity, infrastructure and alternative energy.

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

My Lords, the Government recognise the considerable value that UK-listed investment companies bring to the UK, making up 30% of the FTSE 250 and providing crucial funding to high-growth sectors. The Government have not undertaken a specific assessment of the use of UK-listed investment companies by pension funds. However, in November 2024, we published a general analysis of the trends of UK pension fund investment.

[Baroness Altmann (Non-Afl)]

I thank the Minister for that Answer. As he says, UK-listed investment companies are a world-leading, well-established route to investing in illiquid assets such as infrastructure, real estate, energy and life sciences—the very investments that the Government are seeking defined contribution pension investors to invest in to boost British growth. For defined contribution pension funds especially, closed-ended investment companies, which have expert management and offer diversification and daily pricing, seem an ideal way to gain exposure. Can the Minister help me understand, or perhaps write to me to explain, why the Pension Schemes Bill, at page 41 line 26, explicitly rules out using listed closed-ended investment companies to fulfil the Mansion House intent if mandation is required? Will he meet with me and other interested Peers to discuss this apparent error and how to amend or correct it in the Bill?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. I take this opportunity to pay tribute to her expertise and the consistency of her campaigning in this area. I fully understand the points that she is raising and recognise the important role that investment companies play in providing access to private markets. She talked about the recent Mansion House accord. I hope she agrees that the industry is moving in the right direction in diversifying its investments in the Mansion House accord, with 17 of the largest workplace pension providers having voluntarily committed to investing at least 10% of their defined contribution main default funds in private markets by 2030, with at least half of that invested in UK private assets.

I understand the noble Baroness’s concern about the scope of the proposed reserve power in the Bill. The approach that we have taken quite deliberately is to ensure that the powers are suitably targeted and contain guard-rails. They are not intended to be open-ended but should be capable of serving as a backstop to the commitments that pension providers themselves have made through the Mansion House accord and will be used only if we consider that the industry has not made sufficient progress on its own. None the less, I am grateful to the noble Baroness for her constructive engagement on this issue and happy to continue to discuss it with her. As we take the Bill through Parliament, her representations and those of the wider sector will be considered alongside our broader policy objectives. Our aim remains to ensure that the reserve power is effective and proportionate, and delivers for pension savers and for the UK economy.

[Lord Davies of Brixton (Lab)]

I express my support for my noble friend on the points made by the noble Baroness. There is an issue here that needs to be resolved. There is also a broader issue that I ask my noble friend to respond on: the use of private equity funds in pension schemes. To put it mildly, private equity has a mixed record. A blanket approval for the involvement of private equity in providing pensions has all the makings of a forthcoming disaster.

[Lord Livermore (Lab)]

I am grateful to my noble friend for his thoughts on that matter. I do not necessarily agree with him about private equity’s role in pension funds. It has an extremely important role in investing in the infrastructure and fast-growing companies that we want to see so that the UK economy can unlock that kind of investment. As for its inclusion in the Mansion House accord, he will be aware that this is an industry agreement and that the Government are not participants in it.

[Baroness Kramer (LD)]

My Lords, I speak in support of the noble Baroness, Lady Altmann, on this issue. On the face of it, it looks as though the Bill is embodying discrimination against listed investment companies because they focus very much on smaller infrastructure projects—it is one of their appeals to many investors, particularly to local authorities. The language favours long-term asset funds, which focus on megaprojects and are typically owned by the large megacompanies in the pension industry which benefit from the fees that are generated. Is this not a case where the industry is persuading the Government to discriminate in favour of a route that it sees as more profitable for itself and not necessarily as the right route for the country?

[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.

[Lord Carrington (CB)]

My Lords, can the Minister clarify for me, and no doubt others, to what extent the independent trustees of pension funds, when giving a mandate to investment managers, are able to forbid that manager to invest in certain areas, whether it be private equity, defence shares or whatever?

[Lord Livermore (Lab)]

I am afraid I do not know the specific answer to the noble Lord’s question. I will happily write to him to clarify.

[Lord Leigh of Hurley (Con)]

If the Government are serious about growth, they need to encourage investment in private assets. When applying what many of us regard as retrospective inheritance tax to private defined contribution pension funds, HMRC has specifically excluded the opportunity to apply business property relief to assets. Given the exclusion of investment trusts in the pension Bill, which is regrettable, how are HM Government going to actively encourage and facilitate people to invest in private companies?

[Lord Livermore (Lab)]

Our entire agenda is built around encouraging exactly what the noble Lord states. He mentioned inheritance tax. I want to clarify that pensions, and the considerable tax reliefs on them, are designed to provide income for retirement, rather than acting as a tax-planning vehicle for transferring wealth free of inheritance tax. That is an important principle to maintain. Equally, he asks how we are going to encourage investment in private assets. That is exactly what these reforms are designed to do.

Gilt Yields

Lord Livermore Excerpts

Tuesday 2nd September 2025 Lords Chamber

[Baroness Neville-Rolfe]

To ask His Majesty’s Government what assessment they have made of the recent rise in gilt yields, and what contingency plans they have in place to manage any further rise.

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

My Lords, as is long-standing convention, the Government do not comment on specific financial market movements. Gilt yields are determined by a wide range of international and domestic factors. The Government are committed to economic stability and sound public finances. The fiscal rules are non-negotiable and economic growth is our number one priority.

[Baroness Neville-Rolfe (Con)]

The noble Lord is generally dismissive of criticism of economic policy, but the bond markets do not lie and their current verdict is crushing, with borrowing rates at a 27-year high. Sterling also slid this morning. Will the Government even now change course, adopt measures that really support growth and drop policies that destroy growth, such as the Employment Rights Bill and the destruction of the North Sea oil and gas industries?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As she will know, recent gilt yield movements have risen in line with global peers, mainly driven by global factors. The recent gilt market moves have also been orderly. As she knows, our commitment to the fiscal rules is non-negotiable and we have a clear plan in place to put the public finances on a sustainable path and prioritise investment to support long-term growth. She talks about the position of the UK economy; she knows that this is an uncertain and volatile global economy, but even so the UK remains resilient and is outperforming our peers. The UK was the fastest-growing economy in the G7 in the first half of this year and our commitment to stability is paying off, creating space for the Bank of England to cut interest rates five times since the election, with business confidence now at its highest level for 12 months.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, the Financial Secretary is right to point out that yields on German bunds have risen almost as much as yields on gilts in the UK over the last month, but does he recognise the importance of ensuring that the UK’s economic policy does not stand out from other medium-sized countries in Europe? To that end, can he reaffirm the Government’s commitment to their fiscal rules in particular and to sound money in general?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. I am happy to reconfirm that; our commitment to the fiscal rules is non-negotiable. The Government have a clear plan in place to put the public finances on a sustainable path and prioritise investment to support long-term growth. At the Spring Statement, the OBR forecast that borrowing would fall in every single year of the forecast, from 4.8% of GDP to 2.1% of GDP in 2029-30.

The noble Lord also said it is important that our economic policy does not stand out from our peers. One area in which we did stand out when this Government came to office was in historically low levels of investment in our economy, which constrained growth. We had the lowest levels of investment in the G7, which is something that our fiscal rules seek to rectify.

[Baroness Kramer (LD)]

My Lords, there is a global glut of sovereign debt as Governments across the globe keep borrowing, but among the G7 it is the UK that has had to raise its yields the most. To aggravate our situation, the wind-down of defined benefit pension schemes leaves us dependent on volatile domestic retail and overseas buyers. What is the Government’s immediate strategy to bring down yields and, more fundamentally, build a sustainable gilts market—and would sterling stablecoin contribute to this?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. As I have said, recent gilt yields have risen in line with global peers, mainly driven by global factors. Recent gilt market moves have been orderly; the gilt market is deep and liquid, with a good track record in responding smoothly to volatility in levels of gilt supply. Underlying demand for the UK’s debt remains strong, with a well-diversified investor base. It is most important that I stress that our commitment to the fiscal rules is non-negotiable and we have put the public finances on a sustainable path.

[Lord Watts (Lab)]

My Lords, can the Minister remind the House what the bond market thought of the previous Government’s economic policy, especially the Truss element of it?

[Lord Livermore (Lab)]

My noble friend is obviously right to draw attention to the previous Government’s disastrous economic policies. He knows that, as I have said, the Government do not comment on specific financial market moves, but he will also know that current conditions in gilt markets are completely different from those experienced at the time of the Liz Truss mini-Budget. Then, severe volatility in gilt yields caused instability in the pension fund sector and dysfunction in gilt markets. This led the Bank of England to have to intervene on financial stability grounds to restore market functioning. Recently, gilt yields have risen in line with global peers, mainly driven by global factors, and these market moves have been orderly.

As my noble friend draws attention to, when Liz Truss crashed the economy, long-dated bonds were most significantly impacted due to market dysfunction caused by unfunded tax cuts, unrealistic spending plans and the undermining of institutions that are crucial to economic stability, namely the Treasury, the OBR and the Bank of England. This pushed up mortgage costs by £300 a month, for which working people are still paying the price.

[Lord Howell of Guildford (Con)]

My Lords, bond markets obviously charge for their lending to certain countries, on the basis of differing judgments on the health of the borrower, on the prospects and on the signs of coherent strategy and direction. Could we interpret the movement of the Chief Secretary to the Treasury over to a new role, senior Minister inside Downing Street under the Prime Minister, as a first step—an attempt—to recreate a coherent strategy, which is so obviously lacking?

[Lord Livermore (Lab)]

I disagree with the noble Lord’s interpretation of this Government’s strategy. We have a very clear strategy to grow the economy and maintain fiscal stability. It is incredibly welcome that my right honourable friend is now working inside No. 10 and will help to drive forward the Government’s agenda.

[Lord Hunt of Kings Heath (Lab)]

My Lords, will my noble friend respond to the comment of the noble Baroness, Lady Neville-Rolfe, about North Sea oil and gas? Will he remind her of the CBI report in spring this year, which showed that in the previous year the green economy had grown by nearly 10%, as opposed to the pathetic growth figure that the last Government produced overall?

[Lord Livermore (Lab)]

My noble friend says it much better than I can. I agree wholeheartedly with what he says. Of course it is important that we grow the green economy, but we must also make sure that we grow the whole economy as well.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, can the Minister explain what the high level of bond yield means for those renewing fixed-rate mortgages, given that those are determined more by bond yields, albeit at the shorter end, than by base rates? At the moment, the disconnect is creeping towards the shorter rates too.

[Lord Livermore (Lab)]

As the noble Baroness knows, the Government do not comment on specific financial market movements, but it is very clear that we have created space for the Bank of England to cut interest rates five times since the election. That will absolutely help those people taking out a mortgage.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, in his reply to my noble friend Lady Neville-Rolfe, the Minister did not refer to the question of index-linked gilts. Will he confirm to the House that 30% of the gilts outstanding are index linked, and that therefore this country is inevitably now much more vulnerable to swings in interest rates?

[Lord Livermore (Lab)]

As I have said before, the Government do not comment on specific financial market movements.

[Lord Sikka (Lab)]

My Lords, can the Minister confirm that the yield rise does not affect the cost of servicing the debt already in place, including £2.71 trillion of debt inherited from the previous Government?

[Lord Livermore (Lab)]

I am not sure I entirely follow my noble friend’s question. What I will say is that current global market volatility underlines the centrality of our fiscal rules. We have fiscal rules specifically to give markets confidence that we have a clear path to get borrowing down, and there should be no doubt about the Government’s commitment to economic stability and sound public finances, which is why meeting the fiscal rules is non-negotiable.

[Lord Clarke of Nottingham (Con)]

My Lords, the recent rise in yields on bonds should serve as a warning that this country is much nearer to the risk of a financial crisis than the Government are even remotely acknowledging. It is not impossible to foresee a trip to the IMF eventually unless the Government can get their fiscal policy under control. They now have a very tough and difficult Budget to introduce, in which they will probably have to take some very unpopular decisions in the short term. Will the Minister assure us that the Government will stop floating various ideas to try them out in the newspapers, will look to raise revenue from the principal taxes that are usually used in these circumstances, which they foolishly ruled out as part of their election manifesto, and will curb and if possible reduce the level of borrowing they are making, and not simply define all borrowing as “investment” to say that it does not damage their fiscal policy? Only that kind of responsible action in the genuine medium and long-term national interest will stop the markets being as nervous as they have been.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. There was a lot there; let me see if I can cover some of that. He is absolutely right to draw attention to the fact that, as the previous Government found, credibility is hard won but easily lost. That is why ongoing market volatility further underlines the importance of a robust fiscal framework and non-negotiable fiscal rules. I assure him that we will continue to meet our fiscal rules. He talks about reducing borrowing, and we have set out a very clear path to reduce borrowing across this Parliament.

The noble Lord has told me many times that we should raise taxes on working people. We have clearly said that that is not our intention, and we have a manifesto commitment to that effect. I will not give a running commentary now on the fiscal forecast or speculate on the next Budget. As he draws attention to, there has been much speculation in the newspapers, as is usual ahead of a Budget. A lot of that speculation is irresponsible, but I will not comment on individual tax measures now. We will do things in the usual way: the Chancellor will ask the OBR to produce a new forecast in the autumn, 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 do so mindful of the importance of growth and investment to businesses and the economy.

Financial Services Reform

Lord Livermore Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I spent two years on the Parliamentary Commission on Banking Standards following the 2008 crash. We were all aware that the financial sector and the City would, over time, work hard to erode the protections that we recommended to prevent a repeat of financial instability, casino-type risk-taking and consumer abuse. The financial sector plays a long game. Inch by inch the erosion is well under way, while the Government are seen as eager for nominal growth and too eager to resist that erosion.

Let me give a short list on the erosion: the competitiveness and growth objective for regulators; the changing to matching adjustment in Solvency UK, increasing the illiquidity of the insurance sector; the removal of the cap on bankers’ bonuses; the permanent permission for pension funds to transact derivatives without using central counterparties and holding margin collateral; the watering down of the senior managers regime, which is key to accountability; the weakening of the Financial Ombudsman; the pressure on pension funds to invest in high-risk and illiquid assets; and the weakening of bank ring-fencing, which was absolutely at the heart of the commission’s recommendations, removing that incentive to take free deposits and roll them in the casino. That list is just what springs immediately to mind. It is far from complete.

Regulation cannot be written in stone, and adjustment and streamlining are always necessary, but will the Government now issue a compendium of all the changes, along with a proper assessment of the cumulative shift in risk? I mean changes by not just the Government but the various regulators. Parliament will then be in a position to make a proper judgment.

The financial sector has approved this move back towards what it sees as a return to the light-touch regime, a regime that made it very rich. But remember that when the inevitable crash came, leading financiers were pretty much untouched. Ordinary people bore the brunt. It is crucial that this is not repeated.

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

My Lords, I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their questions and comments. I will do my best to address all the points they raised.

The noble Baroness, Lady Neville-Rolfe, spoke about the economy in general. She will be aware that we have had to take very difficult decisions on the economy to generate the stability that we all want to see—not least to restore stability to the public finances in the Budget last October. The stability that we have restored is already delivering. We have seen four cuts in interest rates by the Bank of England since the general election, reducing the cost of mortgages and business lending. Real wages have risen more in the first 10 months of this Labour Government than in the first 10 years of the previous Conservative Government. Investment is returning to our economy. At the spending review, the Chancellor set out £120 billion of additional public investment. The IMF has long identified the insufficient amount of investment in our public sector as a barrier to growth. The UK has attracted £120 billion of private sector investment in just the last 12 months.

The noble Baroness mentioned recent growth figures. Those growth figures were disappointing, but we are determined to go ever further and faster to deliver on our growth promise. That is why we are doing all the reforms that we have embarked on—not least the spending review and increased investment. We have increased investment in better city region transport, have committed record funding for affordable homes and are backing major infrastructure projects such as Sizewell C. We are investing in the parts of the economy that genuinely will be growth generative.

The noble Baroness also talked about the importance of financial services to the economy. The financial services sector is critical to our growth ambitions for our country. It is one of the largest and most productive sectors in the UK, worth around 9% of total economic output, as she said, employing 1.2 million people in clusters right across the UK. London is the financial centre of the world, home to the deepest equity capital market in Europe and the third-biggest venture capital market globally. It is right that we support the sector as we have in the strategy that we have set out, to see the growth that we want to see and for that growth to feed through to the real economy.

I am grateful to the noble Baroness, Lady Neville-Rolfe, for welcoming what we have said about the rebalancing between risk, growth and competitiveness. The noble Baroness, Lady Kramer, struck a very different tone. I know that she has huge expertise in this. I do not for a second intend to in any way doubt her expertise. I know that she played a huge role post financial crisis in putting together much of the architecture that is in place. I disagree, though, with the way in which she characterised our reforms. She asked for a compendium of those reforms. The financial services growth and competitive strategy is the compendium of those reforms. I think that what have been called the Leeds reforms are the totality of the reforms that she identified.

We are not removing the regulatory architecture that was put in place and that she played a major role in after the global financial crisis. As the Chancellor has specifically said:

“The protections that were put in place … were the right thing to do, with better protections for consumers and more accountability injected into the system”.


The core elements of that—adherence to international standards, ensuring robust MREL, remaining committed to ring-fencing, which we do despite what the noble Baroness said, and the structure to the regulatory system—all remain in place. But we believe that the pendulum swung too far in the opposite direction. The balance of regulation has gone too far towards regulating for risk and not enough towards regulating for growth. Clearly, this is a highly competitive sector, and no other globally competitive financial services hub imposes such bureaucracy on its businesses. Neither should we if we want to be competitive.

So, absolutely, we are recalibrating. We are rebalancing the approach to risk so that it is more proportionate and so that, in the right places, consumers and industry can take informed risk and create the space for the innovation and growth in the sector that we want to see.

The noble Baroness, Lady Neville-Rolfe, mentioned the Financial Services Regulation Committee of this House and the fact that it identified many of the issues that have been addressed in this strategy. Obviously, I pay tribute to that committee and the work it has done. I look forward to debating its report in due course. That points to a degree of cross-party consensus in some of the challenges we face and want to address. She specifically mentioned financial education, for example, which was one of the key recommendations made in that report. I hope we can find consensus on the importance of that, if nothing else.

As the noble Baroness said, we need to build confidence for retail investment among the general public on a platform of greater education. As part of the Leeds reforms, we are looking to take forward a series of measures to give consumers the confidence to invest, so that they can grow their savings and access the long-term benefits that investing can bring.

There are three specific measures for that. The first is a new targeted support framework, enabling people to access the help they need to make the right financial decisions. The second is a cross-industry initiative to reframe how firms talk about investing, so that they talk about the growth benefits and not just the risk and warning people off. The third is an industry-led, multiyear advertising campaign to showcase some of the benefits of investing for the general public.

As the noble Baroness, Lady Neville-Rolfe, said, that of course has to come on the basis of greater financial education. We discussed this previously and I have looked into it. Financial education does form part of the school curriculum in all UK nations. In England, financial education forms a compulsory part of the curriculum for mathematics at key stages 1 to 4, and citizenship at key stages 3 and 4. Together, they cover personal budgeting, saving for the future, financial risk, managing credit and debt, and calculating interest. But the noble Baroness is quite right that of course we should go further. The Government have established an independent curriculum and assessment review covering ages five to 18 in England. The review is considering whether the curriculum provides sufficient coverage of key knowledge and skills, including financial education, to prepare young people for future life and to thrive in a fast-changing world. The review’s final report and recommendations will be published in the autumn with the Government’s response.

On that note, the noble Baroness also asked about the timescale for a lot of what we have announced. Many of the reviews we have announced as part of these reforms will report in the autumn. At that point, we will see a lot of the things she spoke about coming to fruition.

The noble Baroness asked about ISAs. The Government will continue to talk to industry and others about the options for ISA reform. We recognise the potential for ISA reform to improve returns for savers and access to capital for UK businesses. Although there are differing views out there among stakeholders, we are all united in wanting better outcomes for savers and the UK economy.

Finally, the noble Baroness, Lady Neville-Rolfe, asked about pensions and quite rightly paid tribute to my noble friend Lady Drake, as I do too. I cannot think of anyone better equipped to take part in that review. Many of the questions she asked will be answered in phase 2 of the pensions review, so I shall wait until that is in place before commenting on the points she raised.

[Baroness Ludford (LD)]

My Lords, I thank the Minister for the Statement. The Government want to reintroduce informed risk-taking into our financial services system to deliver prosperity for working people. As my noble friend Lady Kramer pointed out, the last time we had risk-taking in the financial services system in a context of global competitive deregulation, in 2008, it created a crisis that meant the taxes of working people bailed out the bankers. How confident are the Government that we are not going down that path again?

In that context, why is the Chancellor disagreeing with the Governor of the Bank of England, who said that

“we can’t compromise on … financial stability”

and, notably, failed to endorse the route the Chancellor is taking?

On what the Minister called “reforming the ISA system”, I certainly agree with the comments that have been made about the need for more financial education, and it may be that ISA reforms can be discussed. But I question the way in which the Chancellor went about this. She created a scare story about how cash ISAs were going to be abolished. That scare story has run for several months, which will surely discourage the normal punter who is not confident in retail investment from saving at all.

Should the Chancellor not sack the spad or speech-writer who is encouraging her to shoot from the hip, which she seems to have a bit of a tendency to do, and take the better route of launching a reasonable debate, instead of letting these issues float and scare people?

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her contribution. There was a lot there. There was a crumb of truth in the things she said, but I certainly do not accept the characterisation of any of the three points she made. She started by talking about risk-taking. Do we want informed consumers to be able to take risks in order to get better returns? Yes, we do. She talked about how just that alone would take us back to the situation at the time of the financial crisis. I have already set out that I fundamentally do not accept that point. We are not removing any of the regulatory architecture that was put in place after the global financial crisis and, as I have said, the Chancellor said very clearly:

“The protections that were put in place … were the right thing to do, with better protections for consumers and more accountability injected into the system”.


Does the noble Baroness think it is right that if a consumer has a large amount of cash sitting in their bank account, the banks that money is with cannot say to them that there might be better ways to invest their money? That is at the core of what she talked about. She started her remarks talking about better returns for consumers. That is exactly what we are talking about: getting better returns for consumers. That is why introducing a greater level of risk is important.

The noble Baroness talked about the Chancellor being at odds with the Governor of the Bank of England. Again, I do not think that is the case. I have read the comments. He is talking about the things that we are doing, so I do not think that that is true, and I do not think that they are at odds.

I think I have already addressed the question on ISA reforms. As I have said, the Government will continue to talk to industry and others about the options for ISA reforms. Again, we recognise the potential for ISA reforms to improve returns for savers and access to capital for UK businesses. At the end of the day, all these reforms are about getting better returns for savers—surely, we can all agree with that—and better returns for the UK economy and, again, I hope we can all agree with that.

[Lord Sikka (Lab)]

My Lords, history shows that infatuation with deregulation of the finance industry always ends up destabilising the economy. At the moment, shadow banks are bigger than retail banking and totally unregulated. Private equity is devouring care homes, water, veterinary services, town centres and companies all over the UK. Its gearing ratio is higher than that which brought down Lehman Brothers and Bear Stearns, but the Government have still not moved to look at that sector. Under the so-called effective or tighter regulatory regime that we have now, money laundering by HSBC was buried, and we are still waiting for a report on the 2003 HBOS fraud and no regulator even wants to look at it. It will not get any better under the Government’s proposals, because the post-2008 crash reforms are being repealed and the regulator’s consumer protection duties have been diluted. There will not be enough money to bail out banks, businesses, markets and households when the next crash inevitably comes. Effective risk management must consider the likelihood of what are often called black swan events. What assessment have the Government made of the probability of a financial crash?

[Lord Livermore (Lab)]

I am always grateful to hear from my noble friend on all these topics. I disagree with him, as always. He said that the 2008 reforms are being repealed. I cannot see anywhere in the Chancellor’s statement where that is the case. As I have said clearly and as the Chancellor has said clearly, the protections that were put in place were the right things to do with better protections for consumers and more accountability in the system. My noble friend said that there would not be enough money to bail out banks in a crisis. We have been clear that the minimum requirement for own funds and eligible liabilities regime plays a crucial role in maintaining financial stability and ensuring that taxpayers do not pick up the cost of bank failures. However, it is important that the regime is proportionate so that smaller banks can scale up, expand and support lending to UK households and businesses. As my noble friend will know, the Bank of England has announced the outcome of its MREL consultation.

[The Earl of Effingham (Con)]

My Lords, the Minister mentioned how interest rates have been cut, and other noble Lords on the Government Benches have mentioned the same thing. Does he agree that the Bank of England dictates monetary policy, not the Government, and that the reason why the Bank of England has been cutting interest rates is because of clear evidence of a slowing economy, not because the Government’s policy is working?

[Lord Livermore (Lab)]

As the noble Earl says, the Bank of England has operational independence to achieve the inflation target set by the Government. We absolutely support it in the work that it does to do that. However, it is absolutely the case that the Government’s fiscal policy has created the space for the Bank of England to cut interest rates. At the risk of repeating an old favourite of ours, if we still had a £22 billion black hole in the public finances, it would not have had the space to do that. It is obviously right that fiscal policy and monetary policy work together.

[Lord Davies of Brixton (Lab)]

I think it is worth reminding the House that I spent my entire working life in the financial services industry in one form or another, and I am afraid to say that my practical experience of the industry has made me a sceptic of much of the promotion provided by it telling us how it will do the economy a favour. Does my noble friend agree that there are potential downsides to the financialisation of the economy that seems to lie behind these proposals? We need to realise that there is a form of resource curse in overfinancialising the economy. There is also a dynamic within the industry driven in large part by the inevitable asymmetry of information. You can provide all the education and explanation that you wish, but there will still be this asymmetry of information leading to a succession of scandals. There is a dynamic in the industry—in personal pension scandals, endowment scandals and the Northern Rock scandal there was a dynamic that has to be recognised.

Finally, I am concerned that, in the Statement, the Government appear to be giving people financial advice. I am sure my noble friend will deny that that is what they are doing, but saying that the Government are going to get people better financial returns is a very dangerous path to go down. Does my noble friend the Minister accept that there is a need for robust safeguards for ordinary investors? I press him to accept that those appear to be contemplated by some of those commenting on these proposals. Significant weakening is a grave danger to the economy and individuals.

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question, and I pay tribute to his experience in the industry that he outlined. I do not agree with his view of the industry. I am incredibly proud of the financial services sector in this country: it makes a massive contribution to our economy, and it is incredibly important that we enable it to grow and that that growth feeds through to the real economy so we can see the investment in the real economy that we want to see.

My noble friend talks, perfectly correctly, about finding the right balance between risk and growth. As I say, we are not dismantling any of the architecture that was put in place in the aftermath of the financial crisis, and it is quite right that we do not do that, but we believe that the pendulum has swung too far towards regulating only for risk. It needs to regulate not just for risk but for growth, and that is the right thing to do.

I think my noble friend is wrong to say that we are in any way giving financial advice. We are trying to put in place what has been called a targeted support framework that enables people to access the help they need to make the right financial decisions for them, and that will be ready to support consumers by ISA season next year. It would enable authorised firms, not the Government, to proactively suggest appropriate products or courses of action, using limited information about a customer and their circumstances. That could include helping people to make decisions about how to access their pension, supporting people with excess cash savings to consider investing for the first time. I cannot believe that anyone would think that was anything but a good idea.

[Baroness Bennett of Manor Castle (GP)]

My Lords, my question follows on from those of the noble Lords, Lord Davies of Brixton and Lord Sikka, both of whom spoke about financialisation. Earlier this year, the head of UNCTAD—UN Trade and Development —Dr Anastasia Nesvetailova wrote a piece on a path out of the “finance curse”. It offered suggestions to global South countries—developing countries—using the UK as a case study of what to be aware of from the finance curse. She wrote that

“financialisation had progressed against the backdrop of deepening asymmetries—sectoral and regional—in incomes, wealth, employment and even access to public services”.

I think we would all have to agree with that. She went on to say that

“the system … appeared to serve the interests of global asset owners rather than those of the people of the United Kingdom”.

How are the Government going to ensure, if indeed their changes have the effect that they desire, that the benefits are going to trickle down to people outside the financial sector? How else is the rest of the economy going to benefit?

[Lord Livermore (Lab)]

I have already made it clear in previous answers that I disagree with that analysis. It is not at all how we see the financial services sector.

How are people going to benefit? I think the 1.2 million people employed in the financial services sector right across the UK will benefit from that. That is a pretty substantial benefit. The noble Baroness will know that we need to get more investment into our economy, and we are not going to get that investment unless we have a growing and thriving financial services sector. So I am very clear that I disagree with the noble Baroness’s analysis.

[Lord Tunnicliffe (Lab)]

My Lords, any system of regulation consists of rules and administration. If you have good rules and bad administration, you will get bad regulation. Is my noble friend satisfied that the quality of administration is sufficient? If not, what is he doing about it?

[Lord Livermore (Lab)]

My noble friend sums up quite nicely the balance between rules and administration. We are maintaining many of the rules that were put in place, as I have tried to make clear this evening. We are maintaining the architecture that was put in place after the global financial crisis, but the way in which those rules were administered was overly burdensome and probably disproportionate, placed too much of a burden on the sector and stifled the growth there that we want to see. As I have said, the pendulum swung too far in the opposite direction, and the balance of regulation has gone too far towards regulating for risk and not enough for also regulating for growth. As I have said before, no other globally competitive financial services hub imposes such bureaucracy on its businesses, so neither should we.

My noble friend asks what we are doing about it. What we are doing about it underpins the entirety of these reforms. We are seeking to recalibrate and rebalance the approach to risk so that it is more proportionate and that, in the right places, consumers and industry can take informed risks so that we create the space for the innovation and growth in the sector that I think we all want to see.

[Viscount Chandos (Lab)]

My Lords, I welcome the Leeds reforms that have been announced, and I thank my noble friend the Minister for his comments. I am delighted that the noble Baroness, Lady Neville-Rolfe, agreed that the balance was being successfully struck between achieving financial stability and growth objectives. If some in the financial services industry have expressed disappointment, I suggest that that came from unrealistic expectations—perhaps a reminder of the challenge that it is for the Government to communicate the striking of that balance.

I particularly welcome the commitment to review and prospectively reform bank ring-fencing. The headlines resulting from the Governor of the Bank of England’s comment to the Treasury Select Committee that it was “not sensible” to scrap ring-fencing perhaps exaggerate the difference between his views and those of the Government. Will the proposed review assess the effect of unreformed ring-fencing on the supply and cost of credit to business?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his comments. He started his remarks on the reception for these reforms. I think there is quite a consensus that they are a sensible and proportionate attempt to rebalance the system in the way that he describes. He spoke specifically about the ring-fencing regime and the Governor of the Bank of England’s comments yesterday, which were also referred to earlier. What the governor said and what we are doing are entirely consistent because the Government remain committed to retaining the ring-fencing regime, and that is what the governor was saying should be the case. I think what he said and what we are doing are the same thing.

We have announced an intention to implement material reforms to the ring-fencing regime. This will be enacted via a Treasury-led review of the regime with input, crucially, from the Bank of England and the PRA, which will consider both legislation and PRA rules. The review will be published by early 2026. It will look in detail at how reforms to the regime could relieve unnecessary burdens, strengthen the banking sector’s ability to support economic growth and deliver against our commitment to ensure that post-global financial crisis regulation is balanced and proportionate. My noble friend asked about specific details of the reforms. These will be subject to the outcome of the review, so I am unable to detail them at this stage, but we will legislate to take them forward when parliamentary time allows if that becomes necessary.

Tackling Unsustainable Debt

Lord Livermore Excerpts

Thursday 17th July 2025 Lords Chamber

[Baroness Brown of Silvertown]

To ask His Majesty’s Government what progress they have made towards tackling unsustainable debt in cooperation with partners in the global South, as set out in the Labour Party Manifesto 2024.

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

My Lords, as set out in our manifesto, tackling unsustainable debt in low-income countries is a key development priority for this Government. We are working closely with partners to strengthen and speed up the G20 common framework to enhance debt transparency for debtor and creditors. We have set up the new London Coalition on Sustainable Sovereign Debt, co-chaired by my honourable friend the Economic Secretary, to promote contractual innovations for increased resilience and to make restructurings quicker.

[Baroness Brown of Silvertown (Lab)]

My Lords, the UK High Court has ordered South Sudan, one of the world’s poorest countries, to pay $657 million in debt servicing to a for-profit bank. That is half its annual income. Surely we have the power and moral responsibility to prevent this happening. The previous Government passed Andrew Gwynne’s debt relief Act, so will this Government consider introducing an updated law to support millions of people in debt-distressed countries?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for her question and I pay tribute to her considerable expertise on these issues; I know she served as shadow Minister for Africa for several years. The Government fully agree that private creditors must play their part in debt restructurings. The Paris Club and now the G20, as part of its commitment to co-ordinate on debt treatments under the common framework, are clear on our collective expectation that private creditors must participate in restructurings on terms at least as favourable as those provided by official creditors. Overall, we have seen evidence of private creditors’ willingness to engage and provide debt treatments where needed.

While the Government appreciate the intentions of those proposing legislation in this area, we are concerned about the potential negative impacts that such legislation could have, specifically on the cost of finance for developing countries. As such, the UK is not currently pursuing legislation, given the existing lack of evidence to justify such an approach and the potentially adverse wider consequences. We will, of course, continue to keep the evidence and our position under review.

My noble friend specifically mentioned South Sudan. As I understand the complex situation with Afreximbank—an African financial institution based in Cairo—South Sudan is not undergoing a multilateral restructuring with official creditors, so it is not clear that legislation would improve that situation.

[Lord Oates (LD)]

My Lords, does the Minister recognise that the concerns he just expressed about the legislation referred to by the noble Baroness, Lady Brown, are exactly the sorts of concerns that were issued in advance of Andrew Gwynne’s Act in 2010 and that were found, on review, to be without merit? Does he recognise that, for over 3 billion people living in countries that spend more on debt servicing than on public services such as health and education, the risk of action is far less than the devastating impact of inaction?

[Lord Livermore (Lab)]

I absolutely recognise what the noble Lord says. It is important to recognise that the debt relief Act was different in scope and scale. It targeted a small, ring-fenced amount of historical debt. Current proposals for legislation would impact all future debt contracts written under English law. We have significant concerns about the impacts of that on the cost of capital at a time when global liquidity is constrained.

That is not to say—as the noble Lord rightly advises—that we are not taking action. We are absolutely taking action and we believe that multilateral action is the right way forward, predominantly through the common framework established by the G20. The Chancellor has also established the London coalition, which was launched on 23 June and provides exactly what is needed: a formal avenue to engage with private creditors to ensure long-term stable flows of capital to emerging markets.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the global South has suffered for decades, trapped under an ideology imposed from the outside of privatisation, austerity and deregulation. Will the Minister and the Government ensure that future arrangements allow an escape from that ideology towards investment in the essential systems of health, education and democratic engagement?

[Lord Livermore (Lab)]

That is exactly what our approach is designed to do. As I have said, multilateral action is the right way forward. The G20 common framework remains the best available tool for us to tackle debt vulnerabilities, bringing together traditional and newer creditors to co-ordinate on debt treatment, which is critical given the more diverse creditor landscape that we currently face.

[Lord Blunkett (Lab)]

My Lords, reinforcing the point that global co-operation and international institutions need to be not only defended but promoted in dealing with world debt and poverty, it is exactly 20 years since the Gleneagles agreement, which was reached in 2005 after the Make Poverty History campaign—one of the most successful democratic campaigns ever. Does my noble friend agree that we should celebrate that and see off those who would destroy those international conventions and institutions, and destroy how we can use our democracy to bring about change?

[Lord Livermore (Lab)]

I absolutely agree with my noble friend and thank him for what he says. He and I were part of the last Labour Government who saw such historic action on debt relief, and I agree that we should celebrate that and remind the world of it. Of course, the world is a different place now; the creditor landscape is very different. Previously, most of the debt was held by Paris Club members and multilateral institutions. Now, borrowers increasingly rely on non-Paris Club members, specifically China and the commercial sector. So the action that we need to take now is different from that which was taken before. My noble friend rightly says that multilateral institutions are important; the onus is on us to strengthen those institutions, speed them up and ensure that they work better than they do currently.

[The Lord Bishop of Leicester]

My Lords, this year marks the 25th anniversary of the Jubilee 2000 campaign—a remarkable coming together of tens of millions of people from around the world, which led to around $130 billion of debt being cancelled across 36 countries. It allowed those countries to reinvest in education, healthcare and poverty alleviation. The Pope has also declared this year a year of Jubilee and set up a commission to look at international debt relief. What are the Government doing to learn from the Jubilee 2000 campaign and to engage with faith communities and charities working in this sector?

[Lord Livermore (Lab)]

My noble friend Lady Chapman tells me that we are doing exactly as the right reverend Prelate seeks. I completely agree with him on the history of the Jubilee movement. The UK wants to see effective solutions to those debt challenges. We strongly support the IMF’s three-pillar approach to providing support to countries facing immediate liquidity pressures. Where a country needs to restructure its debt, as I have said before, the common framework remains the best available tool to do so. We are focused on ensuring that the common framework delivers more timely, orderly and co-ordinated restructuring.

[Lord Purvis of Tweed (LD)]

My Lords, further to my noble friend’s question on the scale of the debt servicing costs as related to health and education costs, we know from Center for Global Development information that, as a result of western countries cutting development partnership support—the UK is cutting this by up to 40%—many of the least developed nations are borrowing more to fill the gap for the very programmes we are cutting. What assessment are His Majesty’s Government making of the countries for which we have cut development partnership support, which are borrowing more to fill the gap that we have created?

[Lord Livermore (Lab)]

I do not know the specific answer to the noble Lord’s question, I am afraid. I am very happy to write to him to fill that in. As I have said, the action we are taking at a multilateral level is proven to be the most effective route that we can take to tackle these issues.

[Baroness Neville-Rolfe (Con)]

My Lords, does the Minister agree that many countries themselves now need to focus on tackling their debt, which can so easily become unsustainable? That obviously includes countries in the global South and, indeed, much closer to home, where a tick back up in inflation risks increasing debt servicing costs. We have a debt problem on a wide scale.

[Lord Livermore (Lab)]

The noble Baroness is correct in saying that debt sustainability is the primary responsibility of borrowing countries, but I think lending countries such as the UK also have an important role to play in supporting these efforts through providing capacity-building support, following best practice in sustainable lending and pressing for reform of internationally agreed frameworks on assessing debt sustainability. In line with the UK’s commitment to the OECD sustainable lending practices, the UK considers debt sustainability when providing financing, particularly in cases of lending to countries deemed at high risk of debt distress.

Taxes

Lord Livermore Excerpts

Tuesday 15th July 2025 Lords Chamber

[Lord Booth]

To ask His Majesty’s Government whether they have any plans to raise taxes this year.

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

My Lords, the OBR will produce a new forecast in the autumn for the annual Budget, and the Chancellor will take decisions based on that forecast. We will set out our fiscal plans at the Budget in the usual way.

[Lord Booth (Con)]

I thank the Minister for his Answer, which is much as I expected. The Government recently had their first anniversary, which was marked by a series of U-turns. Will the noble Lord use his persuasive powers to ask his Treasury colleagues to get rid of the jobs tax, making one further U-turn?

--- Later in debate ---

[Lord Livermore (Lab)]

I am not quite sure what tax the noble Lord is referring to, but absolutely not, because it is essential to stabilising the public finances and to funding our public services. The party opposite welcomed all the spending we announced in the spending review a few weeks ago, so if it wants the spending, it has to have the taxes to pay for it.

[Baroness Watkins of Tavistock (CB)]

My Lords, when the Treasury is considering how it is going to increase its revenue, will it give careful consideration to the fact that UK graduates repaying student loans are already disadvantaged, in that they are paying 9% additional tax above just over £20,000 to pay off their loans? Here is an example. A student spoke to me recently who is a young teacher with an old-fashioned loan that now stands at only £9,000, through very careful repayment, but who is paying £64.51 a month in interest on the loan. As we consider tax, I ask the Minister to encourage the Treasury to make student loan repayments, or at very least the interest on them, tax-deductible.

[Lord Livermore (Lab)]

I am grateful to the noble Baroness for her question. It was premised on a hypothetical, and I am not going to speculate on the next Budget now. I absolutely understand the issues that she is raising, and I am very happy to take those points back to my colleagues in the Treasury.

[Lord Bridges of Headley (Con)]

My Lords, the Minister has said several times in this Chamber that the Government have no present plans to introduce a tourism levy. Will he repeat the same pledge about a wealth tax?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question, and I should start by wishing him a very happy birthday. I have said what I have said on tax. I am not going to give a running commentary on the fiscal forecast, nor am I going to speculate on tax rises now. As I said, we will do things in the usual way. The Chancellor will ask the OBR to produce a new forecast in the autumn for the annual Budget and will take decisions on that based on that forecast.

[Baroness Kramer (LD)]

My Lords, we understand that today at the Mansion House, the Chancellor will avoid the word “tax” and instead focus on pumping risk-taking into financial services as the mechanism for growth. The financial crash of 2008 was entirely generated by risk-taking, all of it legal, allowed by the regulation of the time, widely admired and never called to account. I can understand some streamlining of regulation, but since on every front, safeguards are being taken away slice by slice, will the Government now issue a summary of all the safeguards that both the Government and the regulators have discarded, so that we can assess whether or not we are repeating the past?

[Lord Livermore (Lab)]

The noble Baroness is speculating on a speech that has not been delivered yet, so perhaps we should wait for the Mansion House speech this evening to see what my right honourable friend the Chancellor of Exchequer says in it. Absolutely, though, the Chancellor wants to see a greater rebalancing from risk to growth. I think that is absolutely right, but of course, we must make sure that we continue to regulate to avoid risk while we also maintain growth.

[Lord Watts (Lab)]

My Lords, the Opposition seem to be suggesting that we can cut taxes without finding a way of bridging that gap in the Budget. Does my noble friend agree that it looks as though the Truss fantasy politics and economics that we saw nearly bring the country to its knees are still there with the Opposition?

[Lord Livermore (Lab)]

I completely agree with my noble friend on that point. Every time we hear from the party opposite, it opposes every single measure we have taken to stabilise the public finances, yet at no point has it opposed the spending that that has gone to fund. That is exactly the mistake Liz Truss made in her mini-Budget, which saw mortgage payments rocket for working people. They are still paying the price of those higher mortgages, and that is something we absolutely will not do.

[Lord Dobbs (Con)]

My Lords, I understand why the Minister refuses to give hypotheticals on forthcoming tax. However, this Government made a clear commitment not to introduce taxes on working people. They have looked very much like a fish on the end of a hook over the last 12 months when trying to define what a working person is. Perhaps they should have thought about that before they made such a clear, binding commitment. Without being hypothetical, does the Minister agree with the Chancellor, who, during that election campaign, defined working people as

“people who go out to work and work for their incomes … There are people who do have savings, who have been able to save up, and those are working people as well”?

Does the Minister stand by that commitment?

[Lord Livermore (Lab)]

A working person is someone who goes out to work. The Government have pledged not to increase taxes on working people. We stand by that, which is why we are not increasing their income tax, national insurance contributions or VAT.

[Lord Whitty (Lab)]

My Lords, the concentration during this Question has been on national finance and national taxation, but the real crisis is in the finance of local authorities of all descriptions in all parts of the country, and under all political control. Do the Government intend to look at the basis of financing local authorities so that we can introduce a robust scheme before the end of this Parliament?

[Lord Livermore (Lab)]

I am grateful to my noble friend for his question. A council tax cap of 5% was introduced by the previous Government. Councils do not have to increase council tax by 5%, but under the rules they cannot increase it by more than 5% without a local referendum. That remains the position.

[Lord Clarke of Nottingham (Con)]

My Lords, when the Treasury team are preparing the Budget, will they have a look at the precedent of Sir Geoffrey Howe’s Budget of 1981, which was delivered in very similar economic circumstances to those of today? It was the most unpopular Budget of my political lifetime but also one of the most successful, because it paved the way for recovery with growth, lower inflation and rising living standards. Does the Minister think that the present Chancellor has the courage to concentrate on the public interest and the medium-term health of the economy, or will there be an obsession with rather reckless promises in the manifesto or short-term reactions in the newspapers and opinion polls?

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question and for his expertise. That Budget created the deepest recession in British history, so I do not know that we necessarily want to follow it in its entirety.

[Noble Lords]

Oh!

[Lord Livermore (Lab)]

I think that history is on my side here. On whether the Chancellor has the courage to do long-term reform and what is right for the British economy, she has shown that, absolutely she has.

[Lord Wigley (PC)]

My Lords, the Labour First Minister of Wales last week called for a wealth tax. Have the Government heard that, and will they take good notice of the Labour First Minister of Wales?

[Lord Livermore (Lab)]

We listen carefully to all Budget representations, but as I say, I will not speculate on the next Budget now.

[Baroness Neville-Rolfe (Con)]

My Lords, the fact is that we are all too close to a fiscal and economic crisis, much of which this Government have created. Debt interest is now a substantial proportion of departmental expenditure, productivity is flatlining and by 2028-29 the tax burden will be at its highest level in the country’s peacetime history. Does the Minister recognise that further tax rises are not the path to sustainable recovery? Will he affirm that he recognises that taxing people and taxing businesses ever more heavily will only undermine our productive capacity and further reduce the growth we all want?

[Lord Livermore (Lab)]

The noble Baroness has a rather selective memory: she seems to have forgotten about the last 14 years. But she is quite right that the most sustainable way to repair the public finances is through growing the economy. At the last fiscal event, the OBR scored our planning reforms as the biggest increase in growth of any non-fiscal measure, and we hope very much that it will continue to score our growth measures. As she says, that is the most sustainable way of repairing the public finances.