Lord Livermore (Lab)

The report that it produced stopped before the conclusion of the previous Government. It stopped at that Government’s last Budget and of course they had several months left to run. The OBR reported on the period it was asked to report on, yet the previous Government still had several more months to run. The OBR has absolutely concluded that that information was concealed from it, and I think that is a very serious thing for us to know. Once again, noble Lords who mentioned it in their speeches today sought to deny and downplay that black hole—exactly the behaviour that got the country into the mess the previous Government left behind. Faced with that inheritance, any responsible Government would need to act. One of the decisions we took was to increase the level of employers’ national insurance contributions to help repair the public finances, rebuild public services and restore economic stability, as mentioned by so many noble Lords in today’s debate. Contrary to what the noble Lord, Lord Bridges, said, I acknowledge, as we have always acknowledged, that there are consequences to responsibility and that the increase in employers’ national insurance would have costs to businesses and beyond, but the consequences of irresponsibility for the economy and working people would have been far greater, as we saw in the Liz Truss mini-Budget. Many noble Lords opposite mentioned the importance of small businesses, and I completely agree with them. The Government protected the smallest businesses from these changes by increasing the employment allowance from £5,000 to £10,500. This means that 865,000 employers will pay no national insurance contributions at all, and more than half of all employers will either gain or see no change. Another area highlighted in this debate by the noble Lords, Lord Elliott and Lord Bilimoria, the noble Viscount, Lord Trenchard, and the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, was the non-dom regime. It is right that everyone who makes their home in the UK pays their taxes here. The Government have therefore removed the outdated concept of domicile status from the tax system and introduced a new residence-based regime. The OBR has certified that the non-dom reforms the Government have implemented will raise £33.8 billion in total revenue, and that figure accounts for some non-doms who are ineligible for the new regime choosing to leave the UK in response to these reforms. The Government will of course continue to work with stakeholders to ensure that the new regime is internationally competitive and focused on attracting the best talent and investment into the UK. The noble Baroness, Lady Foster, and the noble Lord, Lord Bilimoria, among others, mentioned changes to agricultural property relief and business property relief. The Government made these changes better to target APR and BPR and to make them fairer. The reforms mean that, despite the tough fiscal context, we are maintaining very significant levels of relief from inheritance tax beyond what is available to others. These reforms mean that almost three-quarters of estates claiming APR, including those that also claim BPR, will not pay more inheritance tax. The economic stability provided in our first Budget is underpinned by our fiscal rules, mentioned by my noble friend Lord Eatwell and the noble Lord, Lord Young of Cookham. Those rules allow us to invest more in capital, alongside a credible plan to grow our economy and bring debt down within this Parliament. We met these fiscal rules in the Budget last year and at the Spring Statement in March, and we will meet them again at the forthcoming Budget. The second pillar of our growth strategy is to deliver whatever reforms are necessary to remove the barriers to growth faced by businesses and investors. These include planning reforms, which the OBR estimates will add 0.4% to GDP—the biggest policy-driven booster growth with no fiscal cost that it has ever scored. Our pension reforms will unlock £50 billion of investment for businesses and major infrastructure. Our skills reforms will equip firms with the skilled workforce they need to grow. We have begun a reset with the European Union, which I hope the noble Baroness, Lady Kramer, will support, despite not going as far as she argued for in her speech today. We have also reached a trade agreement with the US and signed a new trade deal with India. We have set out a new modern industrial strategy to target high-growth sectors. As mentioned by the noble Lord, Lord Risby, we are cutting the administrative costs of regulation on business by 25%, and we are delivering the Leeds reforms, the widest-ranging reforms to financial services regulation in over a decade. The final pillar of our growth strategy is investment, which stability and reform are designed to increase. The Government have an important role to play here. The IMF has long warned that a lack of public investment was a significant barrier to growth. That is why we have committed an additional £120 billion of public investment over the next five years, made possible by reform of the fiscal rules. Our fiscal rules ensure that we do not need to cut capital spending, unlike the previous Government which planned to cut it even further, as my noble friend Lord Eatwell observed, which got us into this productivity hole in the first place. We are directing our additional capital investment into growth-driving projects, including new homes, improved transport connectivity and new nuclear projects such as Wylfa, as mentioned by my noble friend Lady O’Grady of Upper Holloway and the noble Lord, Lord Bilimoria, and we are catalysing private investment through the new National Wealth Fund and British Business Bank. As so many noble Lords opposite have said today, the real prize is increased private sector investment in our economy. Whereas under the previous Government the UK had the lowest level of private investment in the G7, since the election private sector companies have committed over £325 billion-worth of investment into the UK, including during the US state visit in September and, as mentioned by my noble friend Lord Chandos, at the regional investment summit last month—the first, we hope, of many. Real progress takes time and, as my noble friend Lord Chandos said, we cannot reverse 14 years of underinvestment overnight. But real wages grew more in the first 10 months of this Government than in the first 10 years of the previous Government. Under the previous Government, we saw the worst pay growth in a century, with barely 0.3% growth between 2010 and 2024. The noble Lord, Lord Elliott, spoke about living standards in his opening speech. Living standards are up 2.1% since the election, compared to the 1.8% fall over the last Parliament. That was the only Parliament on record where living standards were worse at the end of the Parliament than at the beginning, as referred to by the noble Lord, Lord Skidelsky. Whereas the UK was ranked seventh out of seven for projected 2025 growth in the G7 under the previous Government, our growth was the fastest in the G7 in the first half of this year. But we do not expect anyone to be satisfied with growth of 1%. Today’s growth figures reinforce the fact we need to go further and faster, not repeating the previous Government’s mistakes of cutting investment but continuing to create the right conditions for growth. The first part of our planning reforms will add an additional £6.8 billion to the size of our economy in the next five years, but the next part, our planning Bill, must complete its passage through Parliament before it can make a difference. Interest rates, which rose consistently in the last Parliament, have now been cut five times since the election, but at 4% they are still a constraint on business borrowing and a burden on family finances. Inflation is clearly much lower than the double digits seen under the previous Government, but the choices we make must be focused on getting inflation falling and creating the conditions for interest-rate cuts to support economic growth and improve the cost of living. As mentioned by the noble Lord, Lord Elliott, in his opening speech, while we have taken action in the industrial strategy to reduce business energy costs by up to £420 million a year, they are still too high and we must go further. Noble Lords, including the noble Lords, Lord Elliott, Lord Harper and Lord Bilimoria, mentioned the importance of employment. The latest figures show that 138,000 jobs have been created since the election. The OBR forecasts that over this Parliament employment will rise and unemployment will fall, but the figures published this week show exactly why we must go further to get Britain working and get our economy growing. I am grateful for the support for the youth guarantee from the noble Lord, Lord Skidelsky; and the noble Lord, Lord Howard, mentioned the importance of jobcentre reform. Noble Lords, including the noble Lords, Lord Elliott, Lord Leigh of Hurley and Lord Massey of Hampstead, the noble Viscount, Lord Trenchard, my noble friend Lord Liddle and the noble Baroness, Lady Neville-Rolfe, mentioned the Employment Rights Bill. As noble Lords know, the Bill is still going through its final parliamentary stages. The Government are also supporting businesses to create jobs, innovate and grow, including by reforming our regulatory framework to reduce barriers to growth and investing in our economy. Many noble Lords, including the noble Lords, Lord Young of Cookham, Lord Petitgas, Lord Horam and Lord Bridges of Headley, and the noble Baroness, Lady Stedman-Scott, mentioned welfare. The Government are committed to reforming our welfare state. We are shifting the focus from welfare to work, skills and opportunities. We have backed that up with £1 billion a year for employment support by the end of the decade. As my noble friend Lord Liddle said, the Government have also announced an independent report into young people and work, to be led by Alan Milburn, which will examine why increasing numbers of young people are falling out of work or education. He will publish his final report by next summer. Many noble Lords, including the noble Lords, Lord Elliott, Lord Harper, Lord Petitgas, Lord Swire, Lord Wharton of Yarm, Lord Massey of Hampstead and Lord Kempsell, the noble Baronesses, Lady Stedman-Scott, Lady Fall and Lady Kramer, and my noble friend Lord Liddle, spoke about the forthcoming Budget in just under two weeks’ time. There has been much speculation about the forthcoming Budget, as mentioned by the noble Lord, Lord St John of Bletso, but, as my noble friend Lord Chandos rightly suggested, I am not going to comment on individual tax measures today. The Chancellor has asked the OBR to produce a new forecast. 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, though, make those decisions mindful of the importance of growth and investment to businesses and to the economy, and it is vital that the tax system supports our growth mission. The noble Lord, Lord Elliott, spoke of the importance of innovation and enterprise, mentioned also by the noble Lord, Lord Marks of Hale, while the noble Baroness, Lady Fall, rightly spoke about the importance of supporting scale-up businesses. The current rate of corporation tax is the lowest in the G7, and that is supplemented by generous business investment reliefs that directly support investment, including full expensing, R&D tax reliefs and the patent box regime. The noble Lord, Lord Bridges, mentioned headroom. As the Chancellor said earlier this week, we will continue to “build more resilient public finances—with the headroom to withstand global turbulence … giving business the confidence to invest and leaving government freer to act when the situation calls for it”. We have been clear about the principles that will guide the forthcoming Budget. It will protect the NHS and public services from a return to austerity, because it was austerity that choked off investment that would have put our country on a path to recovery after the financial crisis. Instead, we will protect investment in our economy and build on the progress already made to repair the public services. The Budget will support growth, enabling businesses to create jobs and innovate. It will improve the cost of living by doing what is necessary to protect families from high inflation and high interest rates, and it will keep debt under control because the less we spend on debt interest, the more we can spend on the priorities for working people, as the noble Baroness, Lady Kramer, rightly said, I am grateful to all noble Lords who have spoken in today’s debate, but we will take no lectures from the party opposite, which presided over 14 years of instability, low productivity and economic decline. Where it delivered the slowest projected growth in the G7, growth in the first half of this year was the fastest in the G7. Where it presided over the worst Parliament ever for living standards, living standards have increased by 2.1% since the election. Where it oversaw the worst pay growth in a century, real wages grew more in the first 10 months of this Government than in the first 10 years of the previous one. Where it continually cut capital spending and deterred investment, we are investing for the long term, with £120 billion over the next five years, alongside £325 billion committed by the private sector since the election. The OBR may conclude shortly that the productivity record of the previous Government was even worse than previously thought, but we will not let those past mistakes determine our country’s future. This Government will invest in the NHS, support growth and improve the cost of living. We will continue to build strong foundations for our economy because that is the only route to securing Britain’s long-term future.