Baroness Bennett of Manor Castle (GP)

My Lords, it is a great pleasure to follow the noble Baroness, Lady Kramer, on what may be the most important amendment that we will discuss in Committee, and I hope we might discuss it on Report as well. As she said, there is a huge lack of discussion of this issue in Parliament, whereas if you go to the pages of the Financial Times, for example, you will see, pretty well every day, alarming reports and strong headlines expressing concern about the issue. I am aware that we are operating under heatwave conditions, as is the rest of the nation. As with our credit system, we have all been puffed up by a lot of hot air, much of which has indeed been financed by our financial system, so I will be quite brief, but I want to pick up a couple of points that the noble Baroness made. The powerful argument about a voluntary engagement with the stress test is just laughable—with a sick kind of laugh. We know what voluntary regulation has done in so many different areas of our business sectors, and that is not the way to go forward. The noble Baroness also talked about pension funds, particularly about investing in private credit and the grave concerns that it raises. There is quite a bit of research that indicates that the people profiting from this are the managers and companies, and pension funds are getting the same or lower returns as they are from other investments. The most useful way I thought I could add to this was to go through the Financial Times private credit headlines for this month alone. I will give a representative selection of them. The first is: “Are insurers becoming dangerously addicted to private credit ratings?” It is a question-mark headline, to which the answer is clearly given as “yes” in the article. Here are some of the others: “Apollo’s flagship private credit fund hit by 17% redemption requests”, “BlackRock private credit fund honours less than 40% of redemption requests”, “Partners Group limits withdrawals at private equity fund for wealthy individuals”, and “Cliffwater’s flagship private credit fund redemption requests hit 17%”. Rather than expound at length, I refer noble Lords to a single book: This Time Is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff. There is no reason to think that what we are doing now will be different from where we have been before. Private credit is a new structure of a very familiar form, and we have seen what happens with these new financial-engineering structures. The noble Baroness is doing an important job here of at least starting a discussion on this. That discussion should be held at much greater length in the main Chamber, and its subject should worry us all.