Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022

Lord Tunnicliffe Excerpts

Tuesday 6th December 2022 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, as a supporter and fan of national insurance, I did not want these regulations to pass unnoted. I am a believer in the national insurance system—I guess there are not many of us left—where people pay contributions and that provides entitlement to national insurance benefits.

It has been understood, from the beginning, that there are people in employment and people who are self-employed. For practical reasons, different sets of rules have to apply to each group of workers. Nevertheless, the objective should always be neutrality in the financial impact, otherwise it is bound to give rise to issues of financial arbitrage regarding being employed or self-employed. That is all well understood. I will avoid going off down the IR35 track; there will be plenty of other opportunities to pursue that.

On the face of it—I would be interested in the Minister’s views—this change might be seen as a move towards reducing inequality between the employed and self-employed. However, in practice, it increases the difference. The tell is the fact that there is a cost, in a normal year, of £100 million. In the context of the figures we have seen in recent Budgets, that is not an enormous sum, but it suggests that this is a move away from neutrality and that it further increases the advantages that people perceive in being self-employed as opposed to being employed, with all the problems that flow from that. The background to this is clearly the extent of the acknowledged problem of fake self-employment for financial reasons. Perhaps the Minister would indicate, in broad terms, quite how this change fits in with what I hope is an understanding that there should not be excessive financial advantages in being self-employed.

I heard what the Minister said about the changes to entitlement to benefits. I emphasise that, in achieving neutrality between employed and self-employed contributions, there should equally be neutrality between the benefits paid to people who have paid the different types of contribution.

[Lord Tunnicliffe (Lab)]

My Lords, I welcome the Minister’s introduction of these technical amendments by His Majesty’s Revenue & Customs. As she outlined, the practical impact is to implement the self-employment element of the Government’s commitment to align the trigger points for national insurance contributions with the income tax personal allowance. The SI will also ensure that individuals with profits at or above the existing small profits threshold but below the lower profits threshold are treated as if they have paid class 2 NICs. This will ensure that those individuals continue to be eligible for the contributory benefits, which is hugely important. We will not oppose the regulations, as they provide some much-needed help for self-employed people in the face of the current inflation crisis and probable recession.

Cross-Government Cost Cutting

Lord Tunnicliffe Excerpts

Tuesday 6th December 2022 Lords Chamber

[Baroness Penn (Con)]

I always welcome helpful advice. However, I am not sure that I can take it up in this case.

[Lord Tunnicliffe (Lab)]

My Lords, even though markets have stabilised somewhat in recent weeks, our borrowing costs are extraordinarily high. Debt payments are second only to spend on health and social care. Most straightforward efficiency savings have already been implemented, meaning that the Government may have to spend now to achieve savings later. What would that mean for the Chancellor’s fiscal rules, which have already been broken 11 times in 12 years?

[Baroness Penn (Con)]

My Lords, initiatives to spend to save were included in the different departments’ spending review bids and they are welcomed by the Treasury. Increased evaluation of policy and programmes allows us to divert resources to where they can make the most difference. Another example of spending to save in SR 2021 was putting more money into the Supporting Families programme. That was informed by a strong evaluation which showed that those targeted interventions up front for families experiencing hardship delivered savings in terms of the number of children entering care and the number of adults and juveniles entering the criminal justice system. It is really hard to deliver spend-to-save measures, but where they work, they can be a really effective tool for delivering better public services for less money.

Financial Inclusion in England

Lord Tunnicliffe Excerpts

Wednesday 30th November 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, financial education in England is covered within both the citizenship and mathematics curricula. The Money and Pensions Service has also published financial education guidance for both primary and secondary schools in England to support school leaders and education decision-makers to enhance the financial education currently delivered in their schools. More broadly, after Covid and other disruptions there has been a commitment by this Government not to make any changes to the national curriculum for the remainder of the Parliament.

[Lord Tunnicliffe (Lab)]

My Lords, access to bank accounts and other financial services is vital, but so is better protecting people from financial scams and fraud. The Government currently have the economic crime Bill, the Financial Services and Markets Bill and the Online Safety Bill before Parliament; we will shortly see a data Bill too. Can the Minister assure us, perhaps in writing, that the final versions of these Bills will include clear and consistent measures to tackle the scams and other forms of fraud that blight so many people’s lives?

[Baroness Penn (Con)]

The noble Lord is right to point to the range of Bills before Parliament that will address this issue. We will not be able to address fraud and scams through financial services regulation alone. For example, many fraudsters access people through online platforms, so we need to look at that approach too. Those Bills will contain measures to tackle this, and the Government are also committed to bringing forward a fraud strategy that will bring together work from regulators, government and law enforcement to get a grip on this issue.

Autumn Statement 2022

Lord Tunnicliffe Excerpts

Tuesday 29th November 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, this has been an excellent and very interesting debate. I will refrain from commenting on individual speeches because I realise that everyone wants to listen to the Minister at this time of night, not to me.

I welcome the noble Baroness, Lady Lea of Lymm, to your Lordships’ House. She made an excellent maiden speech.

I also welcome the Chancellor managing to deliver his Autumn Statement without sending the markets into freefall. That may be a very low bar, but it is one that his predecessor spectacularly failed to clear. September’s mini-Budget had disastrous consequences for families across the country, leading to higher mortgages and rents and dwindling consumer confidence.

The economic vandalism of the last Prime Minister and Chancellor has led to the current occupant of Downing Street piling further pressure on the public. Having promised tax cuts during this summer’s Conservative leadership contest, Mr Sunak has now reverted to form. He hiked taxes to the highest level in 70 years as Chancellor, and Jeremy Hunt has ratcheted up taxes still further.

There were two tests for the Government ahead of this Autumn Statement: would they make fair choices, and would they deliver the growth that our economy so badly needs? All the analysis we have seen since 17 November suggests that the Government have failed on both counts. As more and more people find themselves paying tax, some others were spared an increase to their bills: banks will see their surcharge fall from 8% to 3%; energy producers that exploit fossil fuels will continue to benefit from an investment allowance that allows them to minimise their exposure to the windfall tax; and non-dom status remains, as does the VAT exemption for private schools. All the while, living standards are projected to fall by a whopping 7% over the next two years.

The impact is that real household disposable income will be lower at the end of this Parliament than at the beginning. Yes, we have been through the pandemic and felt the consequences of war in Ukraine, but so have other countries. If this is truly a global phenomenon, how can it be that the UK is consistently outperformed by comparable economies? Could it be that our current economic woes are the result of a series of “economic own goals”, as suggested by Paul Johnson, director of the Institute for Fiscal Studies?

The UK is forecast to have the lowest growth in the G7 over the next two years. The Office for Budget Responsibility estimates average growth of 1.4%, which is well below the 2% average annual rate under the last Labour Government. The UK economy remains below its pre-pandemic level—we are the only G7 nation where that is the case—and is likely to remain so until the end of 2024. Meanwhile, real wages in 2022 are lower than when the Conservatives came to power in 2010. This country has not seen a similar period of wage stagnation since the Crimean War.

It did not have to be like this. Yes, there are issues which need to be addressed, but the British economy is fundamentally strong and should be firing on all cylinders. Many people find themselves asking what we have to show for 12 years of Conservative Party control of our economy. The answer: lots of pain for too little gain. We lag behind other countries on virtually all metrics that matter: current GDP, predicted growth, inflation and so on. The NHS and other vital public services are on their knees, despite the highest tax burden in 70 years. The Autumn Budget has increased that burden further still to plug the black hole opened by Liz Truss and Kwasi Kwarteng. Eleven fiscal rules have been broken in 12 years and the UK’s soaring debt interest payments, caused partly by that reckless mini-Budget, mean the goalposts have been moved. Even then, they may still be missed.

Against this backdrop, can we be surprised by the lack of enthusiasm for the Autumn Statement? There can be little surprise that the British Chambers of Commerce said it was

“unlikely to boost … business confidence.”

The Confederation of British Industry clearly agreed, arguing that

“businesses will think there’s more to be done on growth.”

The Institute of Directors said business leaders were “so dismayed” by the events of September that

“it was good to see joined-up working between the OBR and the Treasury this time round.”

These are hardly the endorsements that the Chancellor would have liked.

The UK needs a serious plan for growth if it is to break free of the doom loop of Conservative mismanagement. The Government have demonstrated that they are out of ideas, but the Labour Party is not. We have a plan for growth which enjoys the support of a growing number of businesses. We will scrap business rates and replace them with a fairer system that is fit for the digital economy. We will ensure brick-and-mortar high-street businesses are no longer at a disadvantage. We will publish a modern industrial strategy to support the sectors of the future. We will work in partnership with business to create jobs and improve skills, reflecting the IoD’s concerns that

“there remains a hole in government policy around how to address adult skills shortages.”

We will fix the gaping holes in the Government’s Brexit deal. That means working collaboratively with the EU to ensure that our businesses can export more abroad, while capitalising on opportunities to do things differently in certain sectors. Our green prosperity plan will create good jobs across the country. We will upskill communities as we accelerate our transition to clean energy and low-emission economic growth.

Most importantly, we will lead rather than react. It was Labour that proposed a windfall tax on energy firms; Labour that called for it to be extended when Mr Sunak’s scheme was first introduced. It was Labour that called for millions of homes to be insulated to improve housing standards and bring energy bills down. The Government finally announced a scheme of their own, but it will not start until 2025. Why are they not supporting plumbers and builders to do it now, as Labour would do? While Conservative MPs fight about onshore wind, Labour is clear that we will make Britain a clean energy superpower by 2030. This would cut families’ household bills and, crucially, boost our energy security.

The Autumn Budget was a chance for the Government to show whose side they are on. Many people up and down the country will have heard the Statement, looked at the detail and concluded: “Not ours.” Yes, the economic situation is tough, and we might not be able to achieve everything as quickly as we would like. However, fairer choices could and should have been made. Through no fault of their own, too many people are facing too difficult a time. This Autumn Statement did little to show that the Government get it or that they are on their side. Only Labour has a plan to end the Conservatives’ doom loop and get our economy firing on all cylinders.

Bank of England: Libor System

Lord Tunnicliffe Excerpts

Thursday 17th November 2022 Grand Committee

[Lord Tunnicliffe (Lab)]

My Lords, I congratulate the noble Lord, Lord James of Blackheath, on securing this short debate and hope that he has not taken the shortness of today’s speakers’ list to heart.

As I understand it, the sterling Libor benchmark was wound up at the end of 2021. The Financial Conduct Authority continues to require the ICE Benchmark Administration to publish synthetic one-month, three-month and six-month sterling and yen rates. The yen rates will end this year, while the one-month and six-month sterling rates will likely cease at the end of March 2023. In its announcement of those dates, the FCA said it considered exposure to those sterling settings to be low. A limited number of US dollar rates will also be available until mid-2023, with those figures calculated using panel bank submissions rather than involving the IBA.

While the transition away from Libor affected a significant number of businesses, and continues to affect some, its phasing out was well trailed. Guidance was available from organisations including the Association of Corporate Treasurers, the Confederation of British Industry, the Institute of Chartered Accountants in England and Wales, and UK Finance. This helped many to prepare for the switching-off of the formal Libor rates last year. Various alternatives to Libor are now widely used, including the sterling overnight index average, SONIA, maintained by the Bank of England. SONIA is by no means a new measure, having been introduced back in 1997, but it has been subject to reform in recent years. The New York Federal Reserve maintains its own measure, the secured overnight financing rate, while several other rates are available to financial institutions and businesses. These alternatives are collectively known as risk-free rates and have been described by the Bank as “robust”.

Of course, not everyone has successfully transitioned away from Libor and some entities with so-called tough legacy contracts have found the process especially difficult. We had several debates on the Government’s approach to these contracts during the passage of the last financial services Bill. The subject was also covered by the critical benchmarks Bill, which sought to provide greater certainty around legacy contracts. However, with so much having happened in domestic and global economic terms since those Bills made it on to the statute book, can the Minister update us on any additional steps taken by the Treasury and regulators to assist those who were unable to transition on time? I am not sure how easy it is to pull all this data together, but I presume somebody has responsibility for it.

At present, unless I have missed a subsequent update from the FCA, no determination has been made on the winding-up of the three-month synthetic sterling rate. Firms’ exposure to that rate is felt to be higher than the one-month and six-month equivalents, raising the prospect that the synthetic rate may be provided beyond March 2023. This is, of course, a decision for the regulator and it will be for the IBA to follow any directions given to it. However, is the Minister able to provide any updates on the FCA’s deliberations? When is a final decision likely and how much notice will be provided? The FCA’s current advice for firms with contracts referencing the three-month measure is merely to prepare for its cessation “in due course”. Given the complexity of the challenges faced with these legacy contracts, I am not sure that is particularly useful.

The transition away from Libor appears to have been largely successful. I echo the comments of the noble Baroness, Lady Kramer; we were both somewhat pessimistic at the time of the original legislation, but it seems to have been largely successful. However, the work is not quite over. I hope the Minister can instil confidence that unresolved issues are indeed being addressed, as a risk to financial stability remains.

Financial Services (Miscellaneous Amendments) Regulations 2022

Lord Tunnicliffe Excerpts

Tuesday 15th November 2022 Lords Chamber

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I thank the Minister for the introduction. It does not matter how many times I read these kinds of explanations about what is going on, I still find them totally incomprehensible and I doubt I am alone.

I have two very short questions. First, does this mean that for a period there was a lacuna when neither EU nor UK regulators held sway and Gibraltar was doing its own thing while having access to the UK as it always had done? If that was the case, did the Gibraltarian financial services authorities know? I cannot tell whether there was such a lacuna or not.

Secondly, on the temporary permissions relating to STS—I declare an interest as an erstwhile director of Prime Collateralised Securities ASBL, which looked over such things as STS to check them out—is this how it will be for ever? Will we extend this by another two years every two years? Does this happen until the UK regulators think they need a change and do something different? It seems to me that we did an awful lot of temporary permissions. I do not like to think that we will have to do them all over again every two years, because that will take an awful lot of parliamentary time. I would like to get a handle on whether this is the way of the future or whether there will be an end to these temporary permissions.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for introducing this SI. It seems that she and I agree that it is really two SIs, covering Gibraltar and securitisation.

To take Gibraltar first, as far as I can tell, the SI simply clarifies the application of UK regulation to Gibraltar. The Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2022 set out a new list of high-risk third countries in relation to which enhanced due diligence requirements apply under the principal money laundering regulations. Gibraltar has been added and Malta removed; the changes apply from 12 July 2022. Will this SI assist Gibraltar in getting off the high-risk list? If so, how will the UK regulatory authorities be involved? I am trying to understand this; how different will the regulation of financial services firms in Gibraltar be from, for example, the regulation of a financial services firm in Birmingham?

The second part of this SI seems solely about extending the present transitional arrangements for a further two years. The clearest statement of this is in the de minimis assessment—I like the assessments, when I get round to reading them, because they tend to be written in easier language:

“This SI is required to address this misalignment of dates in order to prevent looser due diligence requirements for EU STS securitisations than UK ones. This SI will also prevent additional administrative burdens on firms which could arise from the absence of an exemption for EU STS securitisations from the clearing obligation. This instrument will help”—


I would quibble with that word—

“bridge this gap until a permanent framework for designating equivalent jurisdictions with regard to securitisation regimes is in effect and an assessment of the EU can be undertaken under it.”

Am I right in my precis? When and how will

“a permanent framework for designating equivalent jurisdictions”

be determined?

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, I thank all noble Lords for their contributions to this debate. With this SI, the Government aim to remedy technical deficiencies identified in financial services legislation arising from the UK’s withdrawal from the EU. Nevertheless, a number of pertinent questions were asked.

To give the noble Lord, Lord Jones, a better picture of Gibraltarian firms operating in the UK and their involvement in our financial services sector, data from the Government of Gibraltar highlights that approximately 95% of Gibraltar’s financial services business is with the UK. From the other end of the telescope, around 29% of motor insurance policies in the UK—some 8.5 million—are provided by Gibraltar-based insurers. According to 2022 data from the FCA, over 100 Gibraltarian firms are operating in the UK, including insurance firms, banks, asset managers and e-money firms. The number of firms that might be affected by this SI is roughly 18, but in practice we think it will be fewer. Although there is large-scale involvement of Gibraltarian firms in UK financial services, the impact of this SI would be more limited.

The noble Lord, Lord Tunnicliffe, asked whether this SI will assist Gibraltar in getting off the high-risk list from the FATF. This statutory instrument will not have a direct bearing on Gibraltar’s status in that respect. The UK is a supportive and strong member of the FATF and the Government are committed to making the UK a hostile place for illicit finance and economic crime. We are also committed to supporting Gibraltar to achieve full implementation of the FATF standards by addressing the weaknesses in its regime to tackle illicit finance.

The noble Lord also asked how different the regulation of financial services firms in Gibraltar will be compared to the regulation of financial firms in the UK—for example, in Birmingham. As members of the EU, Gibraltar and the UK implemented the same EU rules on financial services, so we start from the same place. The current temporary regime maintains market access on that basis while we implement the new regime provided for in the Financial Services Act 2021. That will require alignment with UK law and practice. In effect, firms in Gibraltar and the UK will be subject to the same rules under the new system.

[Lord Tunnicliffe (Lab)]

The same rules and the same regulators?

[Baroness Penn (Con)]

I will double-check that for the noble Lord. I believe so, but I would prefer to write and confirm it.

In the noble Lord’s precis, he asked whether this simply extends the status quo for two years. Yes, that is the correct interpretation of this SI. The noble Baroness, Lady Bowles, asked whether we are in a process of extending it in another two years, and then another two years after that. The Financial Services and Markets Bill, which has just finished Committee in the other place, has introduced a permanent equivalence regime to allow the Treasury to recognise STS-equivalent securitisations issued by firms in other countries. The temporary recognition of EU STS will help bridge the gap until we can undertake assessments under this new regime in the Bill currently going through. We have a plan and the legislation is passing; we fully expect that the extension to 2024 would be the last such extension and that we would have a new regime up and running by that point.

The noble Baroness asked about the regulation of these firms in the intervening period. I will write to her on that point to ensure that I do not get anything wrong, and I will also write to the noble Lord, Lord Teverson, on his question. To reassure the noble Baroness, looking at the data in terms of the specific regulations in this area, about five Gibraltar firms could fall within the scope of the 0.1% reporting threshold in the short selling regulation, the SSR. We are giving the regulators here the power to change that threshold to align with the EU. It is a small number. No Gibraltar PRIIPs manufacturers operate in the UK, so the power we have to change the provisions there currently would not bite. Five Gibraltar firms in the UK are using branch passports under MiFIR. I know that does not directly answer the noble Baroness’s question, so I will write to her. However, to give a sense of the scale of the gap—if there was any such gap—we believe it to have been small.

[Lord Tunnicliffe (Lab)]

Will the Minister ensure that all letters are copied to all participants?

[Baroness Penn (Con)]

I will ensure that all letters are copied to all participants in the debate and placed in the Library of the House.

Financial Markets: Stability

Lord Tunnicliffe Excerpts

Thursday 3rd November 2022 Lords Chamber

[Lord Tunnicliffe (Lab)]

My Lords, I congratulate the noble Lord, Lord Sharkey, on securing this important debate. I congratulate all noble Lords who have participated; I enjoyed their critique of various factions. I found particularly helpful the discussion on LDI. Studying it over the last few days, it finally failed a test that I have always found useful: if it looks too good to be true, it probably is, and is in many ways a charade.

I have already welcomed the noble Baroness, Lady Penn, back to her place on the Front Bench. She had no role in the recent economic turmoil, yet she shares responsibility for clearing up the mess. I wish her well—it will be a tough task—and hope her first priority will be to stress to the Chancellor the importance of fairness as he prepares his Autumn Statement. It must place the burden on those with the broadest shoulders, recognising the very serious financial struggles being faced by so many across the country.

It says a lot about the mini-Budget that it was announced less than six weeks ago yet managed to: crash the economy; lose Mr Kwarteng his job; be torn to pieces in record time, in such a public manner; and evict Liz Truss from Downing Street. As we heard during this debate, the damage done by the mini-Budget will not be undone for some time. This was an economic crisis made in Downing Street. Through instability to pension funds and significant hikes in mortgage rates and rents, ordinary people are paying the price for the Conservative Party’s reckless gamble.

On pensions, I admit to leaving the Chamber on Tuesday afternoon with more questions than answers. Responding to questions on the use of liability-driven investment strategies, the Government seemed to have four fallback positions: non-banking activity is subject to different regulation; pension funds had been stress-tested in 2018; the Financial Policy Committee does not believe funds can ensure against all extreme events; and this is an issue of international concern, meaning there is no domestic fix. Let us take each in turn.

First, we will shortly consider a hefty Financial Services and Markets Bill. What provisions, if any, are there in that Bill which may help address concerns around the risks posed by LDIs and indeed any other instruments in the future that create those dilemmas? Is the Treasury actively considering adding any provisions in response to recent events? If so, when will those new measures be introduced?

Secondly, can the Minister confirm whether any additional stress test has been carried out since the exercise in 2018? Do these occur at regular intervals, or was it a one-off exercise?

Thirdly, while it is true that funds may not be able to guard against all possible market events, that does not absolve them of the responsibility to guard against the risks they are taking on behalf of pensions beneficiaries. The FPC will, in due course, come to its own view on where the bar should be set, but does the Treasury have its own position?

Finally, on mortgages, it is true that there is an international element. That is why I used my question on Tuesday to cite the news that other countries’ regulators are expanding their surveillance of activities with links to UK pension funds. The Minister told the House that the Government are advocating for international agreements in this area. Could she outline the forum in which these talks are taking place? Do the discussions pre-date the mini-Budget, or have such talks commenced only since the events in September? Does the Minister believe that the UK has suffered material harm to its international reputation for financial stability?

While the detail and regulation of LDIs is very important, the biggest impact in the UK’s recent financial instability for many people has been the sudden increase in their housing costs. For many, the legacy of Liz Truss’s short spell in Downing Street will be higher mortgage bills or rent costs, not just for the few weeks she was in office but for years to come. The Resolution Foundation warned two weeks ago that more than 5 million households could see their annual mortgage payments rise by £5,100 by the end of 2024. Labour analysis of mortgage market data suggests that the costs may be even higher: those who borrow £200,000 will now spend almost £6,700 more a year than they would have last September.

Of course, these costs may rise further still. The Bank of England will continue to hike interest rates in the coming months as it seeks to bring inflation down. Given that economic picture, there can be little surprise that mortgage approvals for purchases were down 10% over the past month. Many first-time buyers have had their dreams dashed, with banks withdrawing mortgages for those with low deposits and drastically increasing the rates on the products that are left.

Renters are also feeling the pain, with many anecdotal reports of landlords increasing charges to offset higher costs. As the Library briefing outlines, various property firms have produced evidence that rents are spiralling. For many, this was the case even before the mini-Budget—a reflection of the Government’s poor record on housebuilding, regulation, and so on.

People’s lived experience of the last six weeks means that they simply do not believe the Conservative Party’s assertion that the recent economic crisis was driven by international events. Yes, interest rates are rising across the world, but the mortgage and rent hikes seen in the UK are simply not being replicated elsewhere. Other countries’ pension funds did not require a bailout from the national bank. These events were the result of a catastrophic failure of judgment from the former Prime Minister and Chancellor. The new Prime Minister may have acknowledged that mistakes were made, but we are yet to see any evidence that the Government know how to put this right.

The Conservative Party is out of ideas. Only Labour can deliver the stability and growth Britain needs, through strong fiscal rules, an office for value for money, our green prosperity plan, a modern industrial strategy, and our plan to scrap and replace business rates.

UK Green Taxonomy

Lord Tunnicliffe Excerpts

Thursday 3rd November 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, that commitment has not changed. On the importance of retaining our leadership position on green finance for London as a financial centre, I completely agree with the noble Baroness: that is why we have been so ambitious in this area. We have taken a number of steps to ensure that we lead the way, and we work with our international partners to bring them along with us. When we chaired the G7 last year, we got commitments on sustainability disclosure requirements, for example, from all the G7 Finance Ministers. So we are not just leading the way; we are also trying to bring other countries with us.

[Lord Tunnicliffe (Lab)]

My Lords, for the avoidance of doubt, I have already welcomed the noble Baroness back to the Front Bench. The concept of a green taxonomy is of value to investors assessing how green a company is—that is almost self-evident. It is also of value to companies because it protects them from litigation accusing them of greenwashing. A number of actions are occurring around the world in which companies are being sued for overpromising on greenwashing. To be really valuable, however, the taxonomy needs to be international. What progress is being made on gaining international consensus?

Defined Benefit Pension Funds

Lord Tunnicliffe Excerpts

Tuesday 1st November 2022 Lords Chamber

[Baroness Penn (Con)]

My noble friend is absolutely right that there can be risks to financial stability from non-banking actors in the financial system and that they are not subject to the same regulations. He is also right that addressing some of these risks cannot be just through domestic action but must also be international action, and that is something the UK is advocating for.

[Lord Tunnicliffe (Lab)]

My Lords, I welcome the noble Baroness, the Minister now, back to her seat and look forward to many one-to-ones. Financial regulators in a number of European countries have taken steps to increase surveillance of derivative-linked funds used by UK pension schemes. That is an attempt to promote international financial stability following the post mini-Budget market turmoil. Having witnessed recent events, does it remain the Government’s intention to water down UK regulators focused on stability by introducing a statutory requirement to prioritise competitiveness?

[Baroness Penn (Con)]

I thank the noble Lord, and all noble Lords for their welcome back, but I have to disagree with the noble Lord’s interpretation of the provisions in the forthcoming financial services Bill. Financial stability will remain at the core of our system, but I do not think it is wrong to also recognise the importance of competitiveness in that system.