Statutory Instruments (Amendment) Bill [HL]
Friday 13th June 2025
(3 days, 10 hours ago)
Lords ChamberStatutory Instruments (Amendment) Bill [HL] 2024-26 View all Statutory Instruments (Amendment) Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 14-I Marshalled list for Committee - (12 Mar 2025)
Baroness Finn (Con)
My Lords, it is a pleasure to speak to this Bill from the noble Lord, Lord Thomas of Gresford. I will not detain your Lordships with a lengthy restatement of our concerns about the Bill, because we made them clear in Committee. I simply say that we have issues with the way it seeks to grant powers to the House of Lords that are arguably greater than the powers afforded to the elected House. Having put those concerns on the record, we did not seek to amend the Bill on Report and will not seek to delay its progress, but we cannot support it.
I close by thanking the Minister for her work on this Bill and, especially, the noble Lord, Lord Thomas of Gresford, for his engagement with me throughout its passage. He graciously and generously took time to meet to discuss the details before Committee, which was greatly appreciated.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I thank the noble Lord, Lord Thomas of Gresford, for bringing forward this Bill. It has been an excellent opportunity to highlight the importance of secondary legislation. This Government place great importance on Parliament having the information it needs to scrutinise. From the introduction of the delegated powers toolkit to an enhanced training offer for civil servants at all levels, the Government are taking steps to demonstrate how seriously they take secondary legislation.
I also thank the clerks and advisers of the Joint Committee on Statutory Instruments, as well as the Secondary Legislation Scrutiny Committee and the Delegated Powers and Regulatory Reform Committee, for their diligent work in scrutinising the secondary legislation the Government lay before Parliament. I remind the House that my husband is a member of the JCSI.
I take this opportunity to thank the National Archives for maintaining legislation.gov.uk, which is a valuable resource for all Members of your Lordships’ House, as well as the general public, and for its work in administering the correction slip process, which the Bill would place on a statutory footing. With the greatest respect to the noble Lord, Lord Thomas of Gresford, the Government disagree that this is a necessary service for the correction of insubstantial errors. We remain of the view that there has always been a need to strike the balance between providing the Government with the flexibility they need to deliver for the country and ensuring that the information they provide is clear and explains why legislation is necessary.
Lord Forsyth of Drumlean (Con)
Will the noble Baroness take this opportunity to reassert the principle that secondary legislation should never seek to move away from the intention of primary legislation?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord makes an excellent point. As the Attorney-General has made clear in several speeches, that is absolutely the intention and objective of this Government’s legislative programme.
I do not wish to repeat the reasons why the Government cannot support the Bill. We will continue our efforts to improve the secondary legislation that is laid before Parliament, including the documents that accompany it, but we do not agree that further legislation is the way. I am grateful to all noble Lords who have participated at all stages of this Private Member’s Bill and for the opportunity to discuss the importance of secondary legislation. As ever, your Lordships’ House’s ability to scrutinise is second to none.
Lord Thomas of Gresford (LD)
I am most grateful to the Minister and those who have spoken for the kind words that have been said.
AI and Creative Technologies (Communications and Digital Committee Report)
(3 days, 10 hours ago)
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Baroness Stowell of Beeston
That this House takes note of the Report from the Communications and Digital Committee AI and creative technology scaleups: less talk, more action (2nd Report, HL Paper 71).
Baroness Stowell of Beeston (Con)
My Lords, this is the Communications and Digital Committee’s final report from my time as chair, so I not only thank the committee staff and my fellow committee members for all their work and contributions to this inquiry but extend my sincere thanks to all colleagues with whom I worked over the past three years for everything they have done so that, collectively, we have been able to produce some high-quality work that has had impact. Likewise, I am hugely grateful to the witnesses who appeared before us and submitted written evidence to all our inquiries. That is particularly relevant to this report on scaling up AI and creative tech, because we drew so much on the work we did in preceding inquiries, especially those on large language models, the creative industries and digital markets.
This debate comes at the end of London Tech Week, where so many of the UK’s fantastic tech founders have spoken or been in attendance. We have so much tech and entrepreneurial talent to celebrate in this country. From the off, I emphasise how proud I am of the innovators and risk-takers who set up on their own to establish a business and go on to thrive and achieve great success, even if they have had to experience more than one failure along the way, because if there is one message that landed powerfully with me during this inquiry it is that we do not say or do enough as political leaders to celebrate and support our risk-takers and wealth generators. They do not just generate wealth for themselves; they help our economy grow, create jobs and provide products and services that are valued by consumers and other businesses alike.
I cannot speak for Oxford Ionics, which was just this week acquired by a US rival—I offer my sincere congratulations to its founders on their success and all they have achieved—but I am genuinely sorry about its loss to the UK as a British business, even if, under new ownership, it continues to operate here. As I shall come on to explain, what we have seen this week is another example of a worrying trend. Our report described the UK as an “incubator economy”: a great place to begin, but too often it is other countries that get to cash in. If we are serious about growth and retaining our position as a global leader in the tech sector, this situation has to change.
Our inquiry on scaling up looked at the causes of this problem and what steps the Government must take to support innovative technology companies to grow into thriving British businesses that want to stay here in the UK. We focused on AI and creative tech because these are two areas in which the UK has strong foundations and significant potential, but many of our findings apply to innovative tech scale-ups more broadly.
This failure to scale is not a static problem. It is a dynamic and damaging cycle. When our most promising firms exit early or scale overseas, we do not simply lose their immediate economic value; we also hamper the formation of the kind of ecosystem that drives sustainable innovation. In the United States, successful founders reinvest their capital and experience into the next generation of start-ups. This creates a powerful flywheel of talent, mentorship and capital. In the UK, existing gaps in funding, expertise and confidence will only widen if we do not retain and champion our top entrepreneurial talent.
This is playing out already. London, I am sad to report, is no longer Europe’s leading technology hub, according to Dealroom’s latest Global Tech Ecosystem Index. A recent survey of founders by Tech Nation found that 43% were actively considering leaving Britain. We are also struggling to hold on to the few British tech companies that have scaled domestically. This week’s unicorn is not the only one galloping overseas. Alphawave, Wise and Deliveroo have departed to the US by way of acquisition or relisting this year. Unless we act decisively, we will continue to erode the foundations required for long-term global competitiveness. As much as the Minister will not welcome me saying so, the day-one rights and other measures in the Employment Rights Bill will only deter further UK tech firms from scaling and staying here.
We received the Government’s response to our report in April. While it was supportive of our findings, it was thin, pointing to a series of policy announcements due in the spring. It is now summer, and while the Government have shed light on some issues through their announcements this week, we are still in the dark on several others. I will address each of these in turn, and I have several questions for the Minister.
I start with funding. The UK’s lack of scale-up capital is the most important barrier that needs to be tackled. The Council for Science and Technology has highlighted improvements in early-stage investment, such as seed funding and start-up investment, but it has stressed that UK companies have been “starved” by a lack of scale-up funding. The Capital Markets Industry Taskforce identified a $30 billion gap between the UK and Silicon Valley for funding rounds of more than $100 million.
A lack of domestic institutional investment is part of the problem. Just 10% of Britain’s venture capital pool comes from pension funds. In the US it is more than 70%, and Canadian pension funds invest 15 times what UK pension funds invest in private equity and VC. The Government acknowledged this funding gap for scale-ups and pointed to ongoing pension reforms, such as the new Mansion House accord. That is welcome in principle. However, the push-back from pension funds against a mandate to invest in UK-based assets suggests that these reforms may not be a silver bullet. Personally, I am very nervous about mandating, but I also know that we cannot afford to wait years for pension reforms to trickle through. We must actively crowd in capital now. When will the Government’s initiatives result in tangible improvements in capital access for our most innovative firms? How are the Government making sure that voluntary commitments translate into real action from institutional investors?
The committee heard that another source of confusion for businesses looking to scale is the plethora of disconnected programmes and government grants available to them. This has arisen over many years and is not a new problem, but I have described it in the past as a kind of bowl of spaghetti drowned in alphabet soup. In our report, we recommended that the Government evaluate the impact and join-up of initiatives administered by UKRI and the British Business Bank in particular. I was therefore pleased to hear Tom Adeyoola, Innovate UK’s new chair, acknowledge that the current system is a hindrance rather than an enabler, and I welcome his ambition to bring greater focus to the agency because it is really needed. I was also relieved to discover, since our report, that the British Business Bank has retired its various sub-brands. This is a step in the right direction towards simplifying the schemes that were previously on offer, but the Chancellor’s welcome decision this week to increase the BBB’s financing capacity makes the need for a clearer strategy and a more coherent offer for scale-ups even more important. Can the Minister provide an update on UKRI’s review of its portfolio of funding and support to SMEs, which was due this spring? Can she offer examples of how the memorandum of understanding between UKRI and the BBB is creating a clearer pathway of support for scale-ups?
The Government promised us that their new business growth service will
“ensure a joined-up, coherent approach to the government’s suite of business support programmes”.
That would indeed be welcome, but I have concerns that this will instead become yet another thread in an already tangled web, and that is before we take account of the new sovereign AI unit announced this week. Can the Minister clarify how the business growth service will streamline the journey for innovative firms? Can she reassure me that the partnership between the BBB and the sovereign AI unit will truly put boosters on our emerging AI champions?
Our evidence was clear about the strategic importance of AI in driving innovation and growth across multiple sectors. The AI Opportunities Action Plan, which the Government published in January, was a good start. It set out ambitious proposals that match the scale of AI’s transformative potential, which have now been backed up by funding for delivery in this week’s spending review.
However, a plan is only the start. The Government must be laser-focused on removing obstacles to growth for home-grown AI companies. For example, access to compute was consistently raised in our evidence as a critical enabler for AI scale-ups. We heard that the Government’s decision last August to cancel investment in the Edinburgh exascale supercomputer left the entrepreneurial community deeply unimpressed. It was therefore good to hear this week that it will now receive £750 million of government funding, but the Government’s hokey-cokey on this issue has been damaging and means that we have lost valuable time. The Government promised in their action plan to expand public compute infrastructure 20-fold by 2030, with a long-term strategy published by the spring, but that strategy has yet to materialise. Can the Minister confirm whether it will be published before the Summer Recess?
Our report also emphasised that effective and agile regulation is crucial if we are to support innovation. However, we heard widespread concerns about confusion in the current regulatory landscape, particularly in relation to AI. We need proportionate oversight that gives confidence without stifling innovation or creating new barriers to entry. It is home-grown AI companies, not big tech incumbents, that will drive the innovation needed to realise the UK’s AI potential.
Open markets and open competition are essential to ensure that they have a fighting chance, which is why successful implementation of the Digital Markets, Competition and Consumers Act is vital. We welcomed the creation of the Regulatory Innovation Office, which has been nicknamed RIO, but we emphasised the importance of clarifying its remit and its interrelationship with other regulatory bodies. Unfortunately, those concerns have not yet been addressed, and the extent of its powers over other regulators remains unclear. I am pleased that the Government were wise enough to appoint my noble friend Lord Willetts as the chair of RIO, and I am delighted that he is speaking in today’s debate. None the less, as the person accountable to Parliament, can the Minister provide detail on how she expects RIO to drive behavioural change to boost innovation across sectors?
I turn to the createch sector, where two UK strengths—creativity and technological innovation—meet. For those not familiar with createch, it covers gaming but also visual effects and that sort of thing. The think-tank Erskine Analysis estimates that createch companies could generate up to £18 billion in additional gross value added over the next decade, with the right support. We found that the wider issues of funding and co-ordination are particularly acute for createch firms. The creative sector has suffered from poor investor understanding and a lack of specialised investment vehicles. In addition, various schemes administered across DCMS and UKRI have paused and restarted, leading to confusion and duplication. As I said before, that is not a new problem; it has been the case over a period of time. It is worth noting that, while the Government tout the creative industries as one of their eight key sectors, it was not mentioned once in the Chancellor’s spending review speech on Wednesday.
Let me add that I would never criticise Ministers, or indeed the Prime Minister, for meeting tech founders. That is good; it is when Ministers do not pay regard to other important sectors that trouble is caused.
In their response to us, the Government promised that all would be revealed in an industrial strategy sector plan for the creative industries and told us that UKRI would develop a new strategy for the creative sector. So when will either of those be published?
I cannot not mention the issue of AI and copyright. Unfortunately, despite admirable efforts by many noble Lords—I am pleased to see that the noble Baroness, Lady Kidron, will be speaking shortly—progress remains elusive. Now that Parliament has dispatched the Data (Use and Access) Bill, focus turns to the Government’s commitment to host industry roundtables. Clearly, these must be successful, but, for me, when they were announced, they elicited a horrible sense of déjà vu. I worry that the Government’s mishandling will have made the prospect of negotiations even harder. I hope I am wrong, because our inquiry made it clear, as did every inquiry through which the committee examined the issue of copyright in an AI world over the last three years, that innovation and creativity must go hand in hand, not toe to toe. The one thing all parties can agree on is that resolution of this issue is urgent.
In conclusion, the Government’s tone on many of the issues covered in our report is encouraging, but warm words do not scale companies and time is not on our side. While the Government consult and reorganise, the global market races ahead. Other countries are acting boldly, and we must do the same. We are doing a disservice to our strong start-up ecosystem and our brightest AI and createch companies if we do not support them to achieve their full potential and become world leaders on a global stage. And, my God, do we have the talent: GBx, a group that brings together Brits in Silicon Valley, is calling the British talent that dominates so much of the big tech based over there “power Brits”. We need those power Brits to want to be here in the UK.
The committee’s message was clear: we have many of the ingredients needed to make the UK a home for scale-up success stories. What we lack is action, and if we do not act soon we will be left only to dream of unicorns, never mind bemoan the ones that gallop away. I look forward to the contributions of all noble Lords during this debate. Some illustrious speakers are going to follow me, and I wish both maiden speakers all the very best.
Lord Hamilton of Epsom (Con)
Before my noble friend sits down, the problem with AI is that it uses astronomical amounts of electricity, and we have some of the highest electricity prices in the developed world. Does she think electricity prices are going to inhibit the growth of AI in this country?
Baroness Stowell of Beeston (Con)
My noble friend is right that the cost of energy in the UK is very much a deterrent to a lot of inward investment. It is not deterring them completely, but I was talking only yesterday to a very senior figure at Amazon and, as you would expect, he was drawing comparisons between us and France. I said earlier that London is no longer the leading tech hub, and according to one of these analysts the country that is really champing at our heels is France.
I beg to move.
Lord McNally (LD)
My Lords, I hope we will see the noble Lord, Lord Hamilton, here for the wind-up, because there is a wicked old habit in the House of Commons of intervening very early in a debate to which you have not put your name, so you are in Hansard but you can then be on the train home.
My thanks go to the noble Baroness, Lady Stowell, not only for her introduction today but for her chairmanship of this committee, of which I have been proud to be a member. It is the third such report that the committee has brought about under her stewardship, and it is a good example of how Select Committees can carry out programmes of work that are essential in working through legislation.
I am pleased to see the noble Baroness, Lady Kidron, in her place, and I look forward to her speech. This last week, which is coming to an end, has been a bit bruising. I have never been a fan of ping-pong; I do not think it is the best way of getting a resolution. We thought some 20 or 30 years ago—but you must not rush things in the Lords—that we should adopt the approach of the American Congress: when they get stuck on a piece of legislation, they appoint a joint committee with the task of bringing forward a solution.
I also share the wish of good luck given by the noble Baroness, Lady Stowell, to the noble Lords, Lord Evans and Lord Massey. My only caveat is that I see that the noble Lord, Lord Evans, has chosen a Yorkshire designation for his title, when he was born in Lancashire. Such apostasy is noted.
The noble Baroness, Lady Stowell, has given us a good start by looking forward and not brooding over the past. I am afraid that I have now reached the stage in my career where I do brood over the past. It is about 60 years since I first came to be interviewed for a job in the Fabian Society by the late Arthur Skeffington. I have worked in and around this place ever since. What struck me in preparing for this debate was that I was much inspired in my late teens and early 20s by two speeches. The first was John F Kennedy’s inaugural speech. He announced that
“we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty”.
The second was Harold Wilson’s on 1 October 1963, when he called for a new Britain “forged in the white heat” of a technology revolution. I call attention to them today to draw a comparison between the upbeat optimism of a period when a US President could call on the best instincts of an outward-looking and generous-spirited country and the narrow self-interest of today’s incumbent. In the 1960s, we were still living in a post-war settlement made by that “never again” generation, but the very title of the report we are debating today, Less Talk, More Action, suggests a judgment on the Government’s strategy very far from the vision and sense of urgency contained in Wilson’s white heat of technology speech. The whole thrust of the report, and the dissection of it today by the noble Baroness, Lady Stowell, is to urge on the Government clear objectives and urgent decisions.
The challenge is clear. The changes now in train brought about by AI are as great and fundamental as those brought about by the first industrial revolution 400 years ago. Yet there is a worrying one-sidedness about the Government’s AI strategy, as they navigate a path between the tech firms’ freedom to exploit their technology regardless of any harm inflicted on the creative sector and creatives who fear for their livelihoods if the fruit of their hard labour is freely available for commercial exploitation.
Those fears are well founded, as the noble Baroness, Lady Stowell, reminded us. In the case of the creative industries, AI presents a real dilemma which needs a considered and rational response from the Government to a difficult question: how do we protect the intellectual property rights of creators while encouraging responsible innovation and investment in the development of AI? In this House during the passage of the Data (Use and Access) Bill, we tried very hard to offer constructive and workable solutions, but the Government have repeatedly demurred, and ping-pong, as I have said, is not the most efficient way of making progress on complex legislation. It does not help that the Government have during these debates increasingly given the impression that their main objective with that Bill is to convince not the House of Commons or the House of Lords but another house altogether—the White House.
In fact, the Government’s approach during ping-pong brought to mind the great Tommy Cooper in pulling various rabbits out of the legislative hat—none of which remotely resembled a rabbit that could reassure the creative sector. Nevertheless, one of these rabbits may yet have some life in it if, and only if, the Government demonstrate a genuine determination to arrive at a solution that is in in the interests of the creative industries as well as of the tech companies. I refer to the proposed parliamentary working group. One of the most constructive periods in a long parliamentary career was my time on the Puttnam committee leading up to the Communications Act 2003 and the creation of Ofcom. That too was also under a Labour Government with a large majority, but that Government showed their willingness to listen to a knowledgeable, cross-party committee making constructive recommendations, with an independent chair trusted by all sides. The committee must not be a fig leaf which the Government exploit to force through their own proposals in the face of opposition from the creative industries.
As I suspect we will hear later, this is not just about the creative industries. My full title is Lord McNally of Blackpool, and this morning I received a very persuasive brief from the mayor’s office in Blackpool on Blackpool and the Fylde coast’s bid for an AI growth zone. As well as the specifics of AI in terms of culture and creative industries, there is a real possibility of AI being used as an engine for growth. As the noble Baroness, Lady Stowell, warned us, it is an opportunity that if we do not take we will pay for it at our peril.
We need an imaginative regulatory intervention which satisfies both rights holders and big tech companies. I believe the Select Committee has played important part in informing this debate and this report sits well with its predecessors. It has been right in reminding us that AI is not a sector but a technology and that it must find its place in a coherent, cross-government vision that can drive innovation across all eight of the Government’s key growth sectors.
Baroness Wheatcroft (CB)
My Lords, we are here to discuss a really important issue. I am delighted that the noble Baroness, Lady Stowell, was able to secure the debate. As a member of the committee that worked on the report, I am indebted to her for her tireless efforts as chair of that committee—not just for all the behind-the-scenes work but for pulling together such a disparate group of people, often with disparate views, and bringing together something that I hope will be seen as really worth while. I also thank the staff who served us so well and made a positive contribution to our efforts.
If the country is to stand a chance of securing the growth it seeks, then the sector we are discussing today will be a crucial engine to get us there. The Chancellor of the Exchequer was absolutely right to say
“we want nothing less than to make the UK the technology centre of Europe. This is the path we need to take to create new jobs, new growth and new prosperity in every corner of our country”.
No one would argue with that. However, it was not Rachel Reeves who said this; those were the words of George Osborne, quoted in a 2014 report of what became the ScaleUp Institute. Ten years later, the ambition remains intact, but so do many of the problems that UK companies spotted then which prevented them fulfilling their potential and scaling up. Many of those obstacles apply to all sectors. There are some, however, that particularly afflict AI and the creative tech industries.
Writing 10 years after George Osborne, the noble Lord, Lord O’Neill of Gatley, referred to the “valley of death” that continued to lie in wait for too many of the companies which successfully start in the UK. We are still a wonderful country in which to start a business and our rate of entrepreneurship is second to none, but those companies come to an early end far too often. The noble Lord, Lord O’Neill, was penning the foreword to the latest report from the ScaleUp Institute. Although that report is positive about the achievements of the past 10 years, it acknowledges that many of the issues addressed in 2014 remain problematic now. The UK is an innovative developer in AI as well as the creative tech sectors—indeed, we are a leader in creative tech in many ways—but, as our report stressed, unless we can provide, quickly, the environment necessary to enable those companies to scale up, and with them many other businesses, they will leave.
As the noble Baroness, Lady Stowell, wrote and says now, we are in danger of becoming an “incubator” country for other economies that will happily take our talent and help them scale up. We took evidence from a wide base, including some really exciting and enthusiastic entrepreneurs. They were by no means unanimously critical of the environment they found themselves in, and their asks were not greedy. The loudest call, echoing that of a decade earlier, was the one that the noble Baroness, Lady Stowell, referred to: the spaghetti of different grants and apparent help that would be on offer if they could access it. Some of them told us that in fact they had to pay consultants to help them find a way through the morass of stuff that was on offer and, by the time that they had done the sums, it was just easier and more cost effective to manage without.
That does not sound like much progress on 10 years earlier. We are assured that the British Business Bank is on the case. I am not a cynic; I like to believe it is. But—I think like most of us—I would like to see the evidence. So I will withhold my judgment until I can see the road map that will enable an ambitious AI company or a creative tech company to know just where it should go to access, at one step, the help that it needs to become a growing business. The unicorns, as we have heard, are escaping the country, and we cannot afford to lose them.
To help along that journey, I think that specialist hubs are the answer. We have heard about this in the past. I hope that the Minister will be able to tell us a little more about how these hubs are taking shape. At their best, they should be the answer, providing not just information, mentorships and the sort of mutually supportive ecology that we need but the compute that is required. It may not be on the scale that we have heard in the past, because some of the AI companies are capable of being very efficient in their use of AI. If we look at what is going on in China now, we see that the compute required is a fraction of what we used to think was essential. Nevertheless, putting things together in specialist hubs around the country will not only spread the gains but spread the pain.
I hope we will be able to hear more about that. We are waiting for the latest incarnation of the Government's industrial strategy. As ever, more detail would be much appreciated—as much as the Minister can give us today. Specifically, AI needs to be assured that the Government will not go backwards and forwards, as it did on the Edinburgh scheme. Without wishing to venture too much into territory that has caused such pain, as the noble Lord, Lord McNally, referred to in some detail, the issue of copyright hangs over the AI sector. If our specialist AI companies are to thrive, they need to know exactly what environment they are working in and what they are going to be using.
Any uncertainty is a deterrent to investment, and so it is with uncertainty over the future for fundraising and the exact proposals on pension funds. Personally, I share the qualms of the noble Baroness, Lady Stowell, about dictating where pension funds should invest my money, but the idea of putting funds together to give them more clout and therefore spread the risk means that they should be capable of investing a little more in UK companies and more risk-taking ventures.
Creative tech has different issues, however. There needs to be a broader understanding of what a large industry this is and how highly the UK is regarded in it internationally. A deeper appreciation of the value of special effects in theatre and movies, for instance, would have a very special effect on investment in that sector, where we are still a leader. The difficulty in keeping talent is a common refrain among tech companies. Higher salaries are part of the draw, but not everything. An appreciation of the value of wealth creation needs to be filtered through from an early age in this country. This is Money Education Week, and I would like to think that one of the spin-offs will be an understanding that wealth creation spreads among the population; it does not just create people who are going to spend an awful lot on handbags and so on.
Another reason why enabling companies to scale up in the UK is so crucial is to spread the wealth. Making employee share schemes generous and deep is another way that can help to do that. I would like to hear more from the Government about how they propose to make everyone a shareholder, or at least an investor, in the company in which they work. It has long been a discussed ambition in this country, but it does change attitudes. So I hope that we will hear something positive from the Minister today. I am not downhearted. We have the talent; we just need to channel it a little more effectively.
Lord Massey of Hampstead (Con) (Maiden Speech)
My Lords, it is an honour and a privilege to be making my maiden speech in this House on this important issue affecting our country and, indeed, the growth agenda of the Government. I begin by extending my thanks to Black Rod, the Clerk of the Parliaments and the doorkeepers, who have eased my entry into this House with a combination of helpfulness, friendliness and great professionalism. I also thank my two supporters, my noble friend Lord Harrington, who was at university with me and has been a great friend ever since, and my noble friend Lord Polak, with whom I have enjoyed two decades of happy collaboration at CFI.
As a Hampstead-born lad, I have always remembered that my grandparents fled Odesa and found refuge in this great country. I met my Venetian wife, Fiorella, at 15 years of age at school here in London. We have been happily married for over 40 years and have three wonderful children, Lucie, Edward and Eloise. I arrive in this House as a lifelong Conservative, having started my political journey in the summer of 1978 as a research assistant to Peter Walker, later Lord Walker of Worcester, who many in this House I am sure will remember. Some 44 years later, I had the privilege of serving as the chief executive of the Conservative Party under the leadership of Rishi Sunak and Kemi Badenoch. I am honoured now to become a parliamentarian amongst you and look forward to making my contribution and serving the vital work of this House.
In parallel to my political interests, I have been involved in the financial services sector for over four decades, working in fund management and capital markets. I worked at a large global financial institution for 20 years, but subsequently founded a smaller financial firm, so—unusually perhaps—I have led businesses at both ends of the scale in terms of the size of the companies. My experience as a business owner and entrepreneur has taught me to recognise the importance of smaller companies, and I am keenly aware of the challenges that they face. I declare my interest as a director and shareholder in financial services companies, as stated in the register.
The current debate on how to scale AI and other creative British technology firms is indeed critical to the future of this country, as other noble Lords have said. As the study says, if we do not play to win, we risk becoming also-rans, which could damage our long-term growth prospects. The committee, under the chairmanship of my noble friend Lady Stowell, has done an excellent job in collating all the evidence and articulating a clear set of recommendations. Given my current roles as chairman of a small capitalisation asset manager—an asset manager of small companies—and chairman of a capital markets firm specialising in AIM, the junior market of the London Stock Exchange, I want to focus on two of the recommendations: accelerating financial reforms and championing entrepreneurial success, as my noble friend mentioned.
Tech firms in the UK are experiencing real difficulties in accessing capital from our public markets. The first issue, I am afraid to say, is one of increasing regulation that has beset our industry since the crisis of 2008. The FCA, like the rest of the Civil Service, has grown extensively since then, and its rulebook now extends to over 10,000 pages. Since 2022, the number of employees has expanded by over 30%, from 3,800 to 5,000, a growth rate which greatly exceeds the growth of the industry it regulates. Leaving aside the huge costs of regulation, the role of the regulator, while well intentioned, has had a suffocating effect on the industry, particularly on smaller companies, which constitute the engine room for AI and creative tech.
An example of this suffocation is the story of the decline of equity research over the last decade. One of the many legitimate complaints of the tech sector is that there are now few analysts covering small cap companies on AIM. They are right, as the evidence shows that for companies of under £500 million, there are four analysts covering a single company in the US but only one in the UK. This lack of research has a direct bearing on private and institutional demand for these equities and is the result of an EU rule brought in in 2014, as some noble Lords may recall, called MiFID II. This was designed to protect retail clients and provide transparency for institutions, but it has instead rendered much equity research uneconomic. This leaves the private sector less informed on public companies and reliant on the internet or non-independent research. The irony here is that the intention was to protect private investors from research that they might not understand, but in practice the result is a dearth of research and consequently less investment in the sector.
This needs a total rethink. The chief executive of the London Stock Exchange, Dame Julia Hoggett, put the situation very well:
“We also need to rebuild our risk culture in the UK. Since the financial crisis, UK markets have become known for their focus on managing downside risks—often for good reason. But taking an appropriate amount of informed and rewarded risk is an inherent part of well-functioning and liquid capital markets”.
Somehow, we need to reintroduce this culture into our country.
One of the side-effects of this risk-averse culture is, of course, that as a country we fail to eat our own cooking. While US pension funds invest 40% of their assets in domestic equities, the comparable figure for the UK is only 4%. The argument that the UK constitutes only 3% of the world’s index simply does not wash. Australia, for example, invests 24% of its pension assets in its domestic markets, yet it represents only 1.5% of the world index. In order to restore the vibrancy of our markets, another vital step must be to actually invest in our own companies, both listed and unlisted, and the Government have been across this. They have followed up the Mansion House compact introduced by Jeremy Hunt with the Mansion House accord, and I welcome the announcement this week of the British Business Bank investing a further £2.5 billion a year in start-ups and scale-ups. This is indeed welcome news and will potentially get the ball rolling again, although clearly a huge gap still remains.
Another way of stimulating domestic demand for UK equities is to use the tax system to create incentives for investors and founders to deploy capital and stay the course in the medium to long run. The Government raise funds from private investors very successfully in the gilt market. One reason for this is that gilts and other sterling corporate bonds are exempt from capital gains tax. This has been highly effective and leads UK investors to prefer sterling bonds over other countries and other currencies. Why do we not do the same with AIM stocks?
My suggestion would be to introduce this after a holding period of, say, five years. This would incentivise entrepreneurs and investors to take a medium view and look to scale up in the UK. If the cost of this is too great, then tapering should be considered where the rate of CGT falls in line with extended holding periods. This measure would echo the capital gains tax regime introduced in 1998 by the Labour Government, where, after a holding period of only two years, capital gains fell to 10%. Indeed, this was the incentive that, in part, led me to leave my well-paid corporate job to found my boutique in 2004.
The other measure that has been mentioned is stamp duty at 0.5% charged on buying UK shares. It costs 0.5% to buy British Telecom, but not for Deutsche Telekom. Does this make sense when we want to promote UK equity ownership? It is time to act decisively and boldly if we are to arrest our relative decline. The opportunity is substantial and we are indeed getting on the front foot, but I urge the Government to focus on countering risk aversion among regulators and pension funds and to create incentives for entrepreneurs to start businesses that can be scaled and become significant in the UK.
Lord Willetts (Con)
My Lords, I congratulate my noble friend Lord Massey on an excellent maiden speech. The maiden speech in this House is an opportunity to introduce oneself to many Peers, though I have to say that, looking around, several of us have known my noble friend for almost 50 years. I remember that he was involved in university politics, as I was. He, of course, was much better at it than I was: the stars were my noble friend Lord Massey and, if I may say so, my noble friend Lord Moylan. After that, we worked together as parliamentary researchers. He was researching with great skill for Peter Walker, and I was researching for Nigel Lawson—a reminder of the wide range of political opinions that the Conservative Party embraces at its best. After that, he made his career in the City, joining as a trainee and becoming the CEO of a major City company. All of us in this House look forward to the benefit of his expertise and understanding of financial services, as we have heard already this morning.
I also congratulate the noble Baroness, Lady Stowell, on an excellent introduction to a very important report, and I should declare my interest as chair of GenIP, a company applying AI, and as chair of the Regulatory Innovation Office. This report that we are considering is in many ways one report in a trilogy. It follows on from an excellent report by the Science and Technology Committee on engineering biology and it will be followed by a further report from the Science and Technology Committee specifically on the scale-up challenge. I think those three reports together are likely to contain a single very important shared message about the scale-up challenge facing the UK. It is absolutely right that we are very good at those early-stage start-ups but not so good at funding companies as they grow. That is the challenge.
The analysis in the report is striking, and I will draw attention to some features. Sometimes, we have a soft spot for SMEs and small businesses as a group. What the report focuses on is not the SMEs which—for perfectly legitimate reasons—are stable and operating at a certain scale with no great plans to grow; it is the gazelles, the rapidly growing companies, that really matter, and they can be counted in the low tens of thousands. In other words, this is a manageable challenge. We are not talking about 5 million SMEs; we are talking about 10,000—perhaps 20,000—high-performing, high-growth companies. It should not be beyond us to construct policies that support that crucial sector of the British economy.
There are also very trenchant observations about the City and financial services. We have already heard some observations on that from my noble friend Lord Massey. Having worked on trying to get investment into technology start-ups in different ways, I think it was best summarised for me by someone who said, “If you are trying to raise money for your technology start-up in London, take your chief finance officer; if you are trying to raise the money in New York, take your chief technology officer”. The Americans wanted to understand the technology, and that is what excited them. For the Brits, it was all too often a matter of wanting to know about the cash flow forecasts three years out—which are invented figures when you are at the cutting edge of new technologies.
That is where the culture change is needed. It is a very significant challenge because early specialisation in our education system is one reason this happens. There are lots of people taking powerful, commercial investment decisions in the City of London who stopped studying sciences at the age of 16. They are less comfortable with these sorts of decisions than American investors, who have often, in the course of a far longer American higher education—we have the western world’s youngest graduates—studied sciences alongside an MBA or finance. That equips them for these decisions far better than us.
The fundamental challenge is how we can grow the start-ups to scale up and beyond. Here, of course, the VC community functions very differently in the US and the UK. The VC community in the US is a mechanism for putting more money into these companies so they grow to be very substantial. All too often, the VC community in the UK is putting in sufficient money to get a good sale price when they are sold to a far larger US company. As one American investor said to me, “The great advantage of the British system is that you grow the world’s best corporate veal”. They will turn it into beef, but we grow the veal. What can we do about that?
For me, the worst two missed opportunities were Solexa and DeepMind. Solexa was the world’s leading genetic sequencing technology company, which was sold to Illumina. DeepMind was a world leader in machine learning and was sold to Google. It is easy to stand back and criticise the investor. If you ask Demis Hassabis why he sold DeepMind to Google, however, he would say that to carry out the functions of DeepMind, he needed about $1 billion a year worth of compute capacity. There was no way that the UK—either in the public or in the private sector—was going to have the resources to deliver that amount of compute power. The report is absolutely right on the importance of investing in more powerful computing, and from the public spending Statement earlier this week, it sounds as though that is finally happening.
I have concluded from stories like Solexa and DeepMind that the minimal, most modest and reasonable objective for public policy should be to support these companies effectively for a sufficiently long time. That way, even if they are eventually sold to the Americans, their roots in the UK would be deep enough that it would be a rational decision from an American corporate owner not to shift all the activities to the west coast but to keep them functioning in the UK. It is at least good news that we still have a world-class centre of genetic sequencing in Cambridge and that DeepMind is key to the Knowledge Quarter in King’s Cross. That is the minimum we should aim for, and that itself requires public support for these companies going on for far longer than we have often been able to maintain.
We sometimes think that America has a better risk culture than us, but often, if you look behind the Jeffersonian rhetoric, you find a Hamiltonian state which, through federal agencies and state support, funds their technology start-ups for far longer and far closer to commercialisation than we purists in the UK who stop the public support too soon.
As chair of RIO, I should briefly comment on the report’s section on RIO. I have been chairing the Regulatory Innovation Office for three months and I report to Ministers, who are accountable to Parliament for our work. The aim of RIO is quite simply to tackle the obstacles that stand in the way of the successful development of new technologies and innovation. We have been set some priority areas which are not permanently fixed, and we can move on and add new priorities. At the moment, our four priority areas we are working on are: drones and other autonomous systems; space, particularly but not solely space launch; synthetic biology, or engineering biology as it is sometimes called; and, most revenant to this debate, AI. We are not trying to cover all of AI; we are particularly focusing on AI in medicine and healthcare.
We are trying to make progress, but often you find that, because these are general-purpose technologies, there is no single regulator involved. When you are dealing with a general-purpose technology, it is quite a sensible approach to say that a regulator will focus on a particular use, rather than having a single regulator for all the different ways in which a technology might be applied. Then, however, it is important that we try to bring the different regulators together; provide help for innovators and start-ups with a road map for how to find a way through; speed things up by regulatory clearance being simultaneous, not sequential, whenever possible; providing information about who does what; and perhaps have a lead regulator. There are lots of practical things we can do to help start-ups through this complicated regulatory environment.
While we are talking about complexity, perhaps I can finally, very briefly, comment on the concern about the complexity of the system, to which the noble Baroness, Lady Wheatcroft, has already referred. I fully realise there are so many different instruments and programmes involved. Behind it, there is a kind of logic, and I pay tribute to the Science Minister, the noble Lord, Lord Vallance, who is trying to bring this out and make a more coherent system out of it. There are research councils for upstream funding and small amounts of money for a whole range of research, including curiosity-driven research. Innovate UK is the next stage—I am sorry I am describing this sequentially, but it is a useful framework—providing grants for practical applied innovation closer to market. Then, you would hope that the British Business Bank can step in, and we need closer relationships between Innovate UK and the British Business Bank. After that, the National Wealth Fund comes into play. Those should be in a seamless route of support, from the earliest stage in the lab, right through to full-scale companies. I believe that the noble Lord, Lord Vallance, is actively trying to achieve that; I am sure his work will be informed by the excellent report from the committee.
Baroness Kidron (CB)
My Lords, I add my welcome to the noble Lord, Lord Massey. I also look forward to hearing from the noble Lord, Lord Evans. I thank the committee for its very valuable report, and for the determination of the noble Baroness, Lady Stowell, and her colleagues, not to split the interests of the creative, creative tech and AI communities but to try and see them as a unified whole. I really appreciated that.
It is hugely important, and the committee was right, to highlight the serious risk of the UK becoming an incubator only for foreign economies. Most importantly, the committee’s assertion that AI is not a sector but a technology is profound and so often overlooked. It is a technology whose impact on specific domains is hugely different. By failing to consider it domain by domain, we are failing to create opportunity for homegrown AI companies to dominate in specialist areas. We are also perhaps failing to consider its impact overall over the whole of society. I really did appreciate that.
My remarks are going to be about data. The report recognises that data will be central to the AI revolution. It usefully highlights both the lack of data for training and the view that more is not always more. Given that my views on the data owned by the creative industries are so liberally distributed across Hansard, I want to talk about two other datasets and make the case that it is not only cash and compute but valuing data that will support the committee’s objective of ensuring that the tech revolution is a success in the UK.
This week I received a message from someone privy to discussions about the plans for the national data library—a project that enjoys a great deal of support from Members of your Lordships’ House and that the Minister, in Committee on the Data (Use and Access) Bill, suggested made redundant the idea of designating certain valuable or sensitive datasets as sovereign data assets. I want to be clear: I believe the Minister at the time was hopeful that the issues of privacy, value to the public purse and democratic values that were integral to our concept of a sovereign data asset would be covered by the national data library scheme—same idea, different name. But my correspondent, who himself works in tech and is a serial entrepreneur, explained that currently the tech companies are heavily lobbying government to share NHS patient data in that context, on the promise of streamlining NHS bureaucracy. Sharing the entire UK population’s NHS data is an enormous decision and has privacy and cost implications, but possibly the key point for today’s debate is that it has profound implications for who, how and on what basis—and, importantly, in which jurisdiction—the benefits accrue from innovations, commercial products and services that may never have been created without the help of that dataset. This is a serious issue if patient records are shared with a UK company, but even more so if they are to be shared with a company headquartered overseas.
This bears similarities to an argument we have had for so many weeks: a concern that the Government are being primed to share something of deep personal importance to their citizens, which in this case is paid for by the public purse and in the other case belongs to other private owners, with the corresponding economic concern that British people may see little gain or, indeed, may have to meet the cost of accessing the fruits of their own data. My correspondent worried out loud that the Government were going to be hoodwinked out of a true national resource.
A similar debate is going on around the UK’s CCTV footage, which is also of enormous interest to AI companies. This trove—among the largest in the world—has many applications, one of which is the ability to model simulations on the management of large groups of people. It is undoubtedly of interest to the UK police, but once created as a product owned by a private offshore company, what is to stop it being sold to regimes across the globe? How would conflicts play out—whether in Los Angeles, Ballymena, Gaza or Congo—if those in charge had infinite scenarios from which to kettle protesters, arrest them or worse? Is that what we want to do with our precious data? If so, are there terms of engagement or is it, like the copyright debate, going to have no regulation, no powers and no upholding of UK values and laws?
More broadly, CCTV footage is some of the most valuable in the world because it shows people’s movement at vast scale. That is what is needed to train the model. If we think about it as what YouTube data is for Google, it is almost incalculably valuable. I was fascinated by the contribution from the noble Lord, Lord Willetts, and I wonder whether our data, as well as our funding, might be used to keep companies in the UK for longer.
Last week the Prime Minister confirmed that the Government have accepted all 50 of Matt Clifford’s recommendations in the AI Opportunities Action Plan. From copyright law to the data library and security issues, and even sovereign AI, discussions—in private—appear to be dominated by overseas interests. I hear constant cries from UK AI companies that they struggle to be heard, and I recall that long before the consultation on copyright was published, when I asked for a meeting with the Minister responsible for data, the Lords Minister said that he had nothing to tell me yet.
My second point is that rather than the excruciating process of missteps and ping-pong—which has not served people, Parliament or government well—if the Government had heard from a broader group of voices, or if parliamentarians had seen the draft consultation, they could have raised questions at a time that might have been more useful to all. How we share data has profound implications for our economy, our security, our national identity and even our political independence. During the passage of the data Bill, many of these issues were raised by noble Lords across the House, but the Government refused to consider them—so now we have a data Bill that looks over its shoulder rather than to the future, and the oft-promised AI Bill has been pushed away by another year. I ask the Minister in true earnestness: does she understand why parliamentarians are frustrated? We want to discuss AI in health, AI in education, AI in security and so on. Can she find a way for those in government to be more open to accepting the expertise across both Houses?
We need our data policy to benefit UK people and businesses. We need transparency from government about the deals it is making, because they all shape our economy, democracy and national identity. All the Government’s moves to improve skills, infrastructure and energy prices so that the UK AI community can thrive are extremely welcome, but on the issue of data we must have a bigger vision than offshoring the value of our data to overseas.
Lord Evans of Guisborough (Con) (Maiden Speech)
My Lords, it is a great pleasure to deliver my maiden speech this morning, and it is a particular pleasure and privilege to follow immediately the contribution from the noble Baroness, Lady Kidron. I have sat here in recent weeks and watched her make her points repeatedly, and they lose none of their strength for repetition. I hope that the Government are listening and that we will see some movement from them.
I congratulate my noble friend Lord Massey on delivering his maiden speech. There was a great deal of knowledge and detail there, and I am sure that he will make a good contribution to the House in future, as indeed I hope I will.
As it is my maiden speech, I would like to thank Black Rod, the Clerk of the Parliaments, the Garter King of Arms and the House staff who helped me through my introduction ceremony back in February. It is an experience I will remember for the rest of my life. My guests loved it and I can tell your Lordships that when you wear ermine, nobody can see you tremble.
I also congratulate my noble friend Lady Stowell of Beeston on bringing this report before the House today. We have known each other for over a decade, and the report is presented with all the care and attention to detail that I would have expected from her.
I continue to be grateful to the doorkeepers and the security staff here. I do not think a day passes without me consulting them on some questions, and they deal with them courteously and knowledgeably all the time. They always go out of their way to provide help. I have made it my business to wander the Palace, opening doors to find out what is behind them. On one occasion a couple of months ago, I encountered a security guard in the Committee Corridor upstairs. Instead of admonishing me for what I was doing, he offered me a quiz about the House and the location of various things here. I am disappointed to say that I scored one out of five, but it was one more than I would have scored back in January, and I hope that if I had that quiz now I would do considerably better.
Two Peers—two of my noble friends—gave up their time to introduce me and, although they are not here, I thank them now. My noble friend Lady Jenkin of Kennington has made a remarkable contribution to improving the representation of women in Parliament. I met her in 2005, when she founded the organisation Women2Win, which is dedicated to bringing more Conservative women into Parliament. I have given her some help with it over the years and I am very proud to have played a modest part in its great success.
I first met my noble friend Lord Jackson of Peterborough even earlier: back in 1990, when we were both contesting the London elections for different London councils. That was a tough year, but I am pleased to say that we both won our seats, and we have been exchanging notes and advice ever since, so it was a pleasure to be introduced by him in February.
That was not my campaigning debut, I have to admit. Back in 1981, I contested an election for the council of my sixth-form college. It was a relatively easy introduction, as there were six places on the council and only seven of us standing for election. However, I contrived to come seventh and was the only person to leave the count with nothing at the end of the process. The guy who won, in addition to having 100 votes more than any of us, also had a campaign slogan: “Vote for Rips and He’ll Kiss Your Lips”. He obviously understood the old saw that you campaign in poetry and govern in prose. He also understood that, sometimes, you make election promises without having any intention of keeping them at all.
I also thank my noble friend Lord Younger, my mentor. Any errors I make are my fault and not his; he has been very helpful for the last three months. I thank my Whip, my noble friend Lady Stedman-Scott, who has been hugely helpful; I think I have missed only one vote so far, so I hope I have been helpful back.
I also thank the Lib Dem Peer, the noble Lord, Lord McNally, for outing my origins in his speech earlier. I was born in Rochdale, Lancashire, in a suburb called Balderstone. It had been suggested by helpful people that I take the title Lord Balderstone, which, I suppose, would at least make me memorable. However, I have chosen to take Guisborough because that is the town where I grew up, went to school—and did not get to be a member of the sixth-form council. If it helps the noble Lord, Lord McNally, to feel better about it, Guisborough is not necessarily in Yorkshire. It has been, over the years, in Teesside and in county Cleveland, but I could see the boundary of Yorkshire from my window—a bit like Sarah Palin—and I hope that that is enough to qualify me.
My mother was a teacher. She inspired so many people when in that job and made a great difference. My father worked hard for local government; he worked in the environment department and in housing. For a while, he was the abattoir inspector. Fortunately, we did not have “Take Your Children to Work Day” at that time, although it might have been a character-building experience.
In 1987, I arrived in London to work. I worked for Royal Mail for 10 years, but it did not feel like enough for me. In fact, when I was in my car one day, I heard a politician on the radio speaking to a conference and people were applauding him; I believe it was my noble friend Lord Heseltine. I thought, “I could do that”, which was possibly a bit precocious at the age of 24. I volunteered for political service and served three terms at Waltham Forest Council, where I had the pleasure of working with the noble Baroness, Lady Brown of Silvertown, who I see here today. We were on opposite sides, and, occasionally, we had differences of opinion, but I had differences of opinion with quite a lot of people at that time.
One of the people I argued with was the council’s solicitor. He said to me one day, “I think you’d make a very good lawyer”. On the basis of this entirely unsupported statement with no evidence, I left my job and went back to full-time education. I was called to the Bar as a member of the Middle Temple in November 1997.
Something else happened in 1997 that was ground-breaking: the Blair Government arrived and created the Greater London Authority. Some of your Lordships may remember that the Government of London Act was the largest piece of legislation to go through here since the Government of India Act, and Members of this House all worked very hard on it. I spent four terms at the Greater London Authority, and over the years it has been a cornucopia of talent for Westminster to draw upon. I always see former members of the assembly here. I note the presence today of former members of our administration at City Hall: my noble friends Lord Ranger and Lord Moylan. Indeed, the noble Baroness, Lady Wheatcroft, made some contributions to our deliberations as well.
I am supposed to say something about the report before us today, so I point out that the growth of new technology is a key driver for the success of London and the wider UK. That is why it is vital that we respond to the challenges and opportunities in ways that maximise the benefits we can reap. Artificial intelligence, as the report correctly says, is a technology, not a sector. It has the capacity to affect every aspect of our lives. It has real potential to revolutionise the delivery of public services.
However, regulation needs to recognise the risks and the opportunities too. We love, as lawmakers, to design detail into regulation, but, after speaking to people such as the App Association and smaller providers of IT services, I argue that we should try to avoid regulating for products and regulate for outcomes instead. I recall from my time at City Hall a debate after Uber arrived in London. We found ourselves in the High Court trying to argue that a taxi meter and a mobile phone were the same thing, because that was the way the legislation was phrased. We should try not to do that, because the way things are moving now, we can get outflanked very quickly by the movement of technology. That is a problem we face throughout government in so many different ways.
It has been a wonderful journey to get off the train at King’s Cross in 1987 and, 40 years later, find myself standing here delivering this speech. Yet there is nothing unusual in that journey. I promise the House that every day—today, yesterday, tomorrow—people will be getting off the trains at London’s stations and off the planes at Heathrow, coming to our city with small suitcases and big ideas, and we want to continue to encourage that. They come here because London is a city of opportunities; it is a city of dreams. Technology is going to be at the core of the city’s success in future. We have a responsibility to promote technology and to build the economy for London, because a prosperous London will support a prosperous Britain. I commend the committee’s report to the House.
Lord Ranger of Northwood (Con)
My Lords, I congratulate the noble Lord, Lord Massey of Hampstead, on his maiden speech: it was very well researched. I am sure he will make a huge contribution to this House with his knowledge and detail.
I also welcome and congratulate my noble friend Lord Evans of Guisborough. The noble Lord, Lord McNally, outed him in terms of his place of birth and where he has chosen, but, obviously, after his speech, I would say that London should have been a designation, if not Havering and Redbridge. I have known my noble friend Lord Evans for the best part of the last 20 years. As he mentioned, a number of us—maybe a golden generation of politicians and administrators across parties—have taken that well-worn path from City Hall to this place. He is very welcome to have taken that path.
I do remember my time there, because it was intense. I had a transport brief, an environmental brief and then the digital brief: there were plenty of briefs from my former boss. When it came to looking for good guidance, a bit of political compassion and camaraderie, you did look to assembly members on your side for support.
There were various kinds on the assembly. We would sit around the mayor’s table and say, “Who can we talk to? Who can we get some sage guidance from? Who will give us that calm, measured warmth, and a sense of direction?” We were quite inexperienced and new to the role. The name of my noble friend Lord Evans would invariably be at or near the top of that list. He provided me with much guidance, time and patience. I look forward to him being in this House and providing that to us and many more through his measured, emotional and intelligent approach, as he has done throughout his career. I welcome him.
I acknowledge yet again the excellent work of the House of Lords Communications and Digital Committee, which was chaired with great dedication by my noble friend Lady Stowell. My only regret is that I was not part of this committee through her tenure in producing this report on AI and creative technology scale-ups.
I acknowledge my registered interests, especially my roles in the technology sector, specifically with UK AI businesses. I have spent the best part of the last 25 years working in the technology industry and consider myself to be still in the industry. I am vice-chair of the APPG for AI, and an angel investor in tech businesses.
We cannot help but be aware of the pace of both development and investment in the world that is awakening to the endless possibilities of AI. I will speak today through the lens of not just the creative technology sector, because, as the report recognises, the challenge of evolving our numerous innovative and successful scale-ups to full-blown global businesses is consistent across many industries.
As most of us recognise, the report states that we in the UK have many of the essential ingredients for scale-up success. I am acutely aware of this because it was the emergence of the start-up scene in London in the late 2000s that led me to persuade the then mayor to establish the first digital office for London. Working with the then Government, we set out to support the emerging creativity and innovation in east London with policies and interventions to attract talent and investment by ensuring that risk takers—the entrepreneurs and investors—felt the city was on their side, wanting them to succeed and wanting them to stay in London and the UK to drive both opportunities and economic growth.
The result was Tech City, as the ecosystem became known, which significantly transformed London’s economy and global tech standing. By 2013, Tech City had grown from 85 start-ups in 2010 to approximately 200 firms. Around 5,000 companies were located in the wider area, contributing to economic growth and high-value jobs by four years after that.
Since 2010, London-based tech companies have raised $5.2 billion in VC funding. By 2021, London’s tech ecosystem was valued at $142.7 billion, with 76,660 digital technology firms employing 590,000 people, representing 14% of the UK’s total tech firms. Tech City helped position London as the digital capital of Europe, with more than a third of Europe’s tech giants based in the city, contributing over £56 billion to the economy.
Tech City also fostered a vibrant start-up scene, producing 23 unicorns—tech companies valued at over $1 billion or more—by 2019, and with a combined value of $132 billion. Community initiatives such as Digital Shoreditch, Independent Shoreditch and Silicon Roundabout meet-ups, along with events such as, as we have seen this week, the still-growing London Tech Week, created a collaborative ecosystem for networking and innovation. The UK Government’s £15.5 million funding package from the Technology Strategy Board and the UK digital services index, launched in 2013, supported innovative businesses and benchmarked digital sector performance.
But these policies were then, and this is now. The successful foundations from the last decade need to be built on as we enter the AI age, because now we are in a global economic race, not just to utilise AI technology in all its forms but to own the innovations and host the businesses and associated support ecosystems of businesses and jobs that will reshape the economy and the jobs environment. As the report states, the risk we take by being uncompetitive in this race is that the UK will become an incubator economy for other nations, as foreign companies and investors acquire and hoover up our emerging talents.
Where would this siphoning off of business talent leave us? Apart from being an incubator, we would become an AI-receiver economy. Yes, we would utilise more innovative services. We will still embed long-term solutions and costly platforms across our industries and public sector, which will enable transformative change and efficiencies. But we will be getting only a small fraction of the value from the AI economic cake, for it will be those owners and nations where the businesses reside that will take the lion’s share of the jobs, investment and vast revenues and tax receipts. In effect, we will receive the services; they will get the revenue. That is not all bad, noble Lords may say. We may be able to live with that. But it is like saying we would be happy for nearly all our future energy supplies to come from other nations. Let us just mull over the geopolitical risks we have seen materialise in recent years and the impact on our energy prices.
In the age of AI, the large-language models, the datasets that feed those models, and the AI services that are developed using the datasets will have huge influence and power over nations, their people and even our culture and traditions. If cultural artefacts—the UK’s museums, history and libraries—are not available online to non-UK companies and LLMs, will that history, literature and culture still exist in a future digital world where the answer to your prompt is provided by an American-based model that does not know, does not have access or just does not prioritise its response based on sovereign accuracy?
This debate is about how we can encourage more scale-ups to succeed, but it is also about the future of our economy and much more. It is about the future sovereignty of businesses, LLMs, datasets and the online world that will influence and fundamentally create our future society. This is an issue of our sovereignty.
In case noble Lords feel I may be somewhat overdramatising the scale of the issue, let me share some of the numbers that demonstrate the state of play in the global AI market. According to research by Silicon Valley Bank, the UK remains a dominant AI hub in Europe, securing nearly $6 billion in AI funding last year, more than France and Germany combined. However, France is rapidly catching up, with Mistral AI emerging as the region’s leading LLM provider, having raised over $1 billion within one year of its founding. Meanwhile, Germany’s AI sector remains deeply tied to its industrial roots, where advanced automation is transforming its automotive and manufacturing industries. Further good news for us is that, since September last year, the UK AI landscape has experienced robust expansion. There has been broader enterprise adoption, the daily influx of approximately £200 million in private investment and a rise of 17% in the number, 34% in the economic output and 29% in the jobs among AI firms. That might sound impressive, and I am supportive of the Government’s approach and initiatives taken to push and support the sector, but let us gaze across the pond.
In early 2025, the US unveiled the Stargate project, a $500 billion AI infrastructure initiative in partnership with Oracle, OpenAI, SoftBank, Microsoft and NVIDIA, to name a few, aiming to create thousands of jobs and reinforce the US’s determination to maintain its leadership in the AI race. To date, according to PitchBook, US-based AI companies have attracted nearly $100 billion in funding, more than the rest of the world combined. The US has first-mover advantage in AI, driven by a combination of world-beating private sector companies, chip makers, hyper-scalers, cloud providers and dataset providers. Combined, all these companies provide the infrastructure that enables AI training and deployment at scale.
The race to lead in AI has become a defining part of global business competition. So, are we really in this race? Are we doing enough with our action plan, investment in compute and our growth zones to really compete? Will we be able to keep the scale-ups that will give us a chance to have a real stake in the global AI field economy? We can, but we must be bolder and more ambitious in how we attract and lock in the critical element that drives growth—private sector investment. Yes, the Government must do their bit, as the report suggests, to remove barriers to necessary infrastructure and resources, and must maintain their proportionate approach to AI regulation. But none of this will work without the investors, the risk-takers, the VCs, the capital markets, and the time is now. I appreciate that the Government responded to the report by stating that for some technology and creative companies, accessing the
“capital required to scale a business can be a challenge”.
This is the challenge.
I welcome the report and what the Government have done so far. But I strongly suggest that it is now time for the Government to get creative with a laser-like focus and do all they can to unlock domestic growth capital and increase the incentives for investment in the UK. They need to make our investment landscape and policies more competitive so that strategies such as the Delaware flip, whereby UK businesses restructure and relocate to meet the requirements of an attractive investment proposition put forward by a funding partner in the US, are not the best options for British entrepreneurs.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I would be ever so grateful if the noble Lord could bring his contribution to a conclusion.
Lord Ranger of Northwood (Con)
We need to build a competitive, sovereign-based, British-made, British-owned AI economy for the future.
Lord Tarassenko (CB)
My Lords, I draw the House’s attention to my registered interests as the founder director of Oxehealth, a University of Oxford spin-out which uses AI for healthcare applications and which will be looking for scale-up capital in the near future. I congratulate the noble Baroness, Lady Stowell, on her excellent report, which identifies the key issues with clinical precision and puts forward some possible solutions. I also congratulate the noble Lords, Lord Massey and Lord Evans, on their excellent yet contrasting maiden speeches.
I entirely agree with a sentence in the very first page of the report:
“It is homegrown AI companies, not big tech incumbents, that will drive the innovation needed to realise the UK’s AI potential”.
So I want to focus on the following question: do we now have the right conditions for the UK to develop its own sovereign AI capability, which I will define as having at least two homegrown AI companies, each worth £100 billion?
DeepMind has already been mentioned by the noble Lord, Lord Willetts. If DeepMind—generally reckoned to be worth $100 billion today—had not been sold to Google for somewhere between $400 million and $650 million in 2014, and if ARM, which is currently valued at around $150 billion, had not been sold to SoftBank in 2016, that sovereign AI capability would exist today. So the question can be reframed as follows: how can we, today, help successful UK AI companies scale up rather than be acquired by internationally owned companies such as Google and SoftBank?
All the evidence in the report points to the fact that there is no problem with the early stages of the pipeline. Nearly two-thirds of Europe’s unicorns are headquartered in the UK. As the report informs us, the UK has produced 20 AI unicorns to date, including four in 2023-24 alone. Just this week, however, as the noble Baroness, Lady Stowell, mentioned, three new deep-tech unicorns have been sold to US investors or companies, including Oxford University’s quantum computing spin-out, Oxford Ionics: three more to add to the list of those companies which will not scale up as UK companies.
As the report highlights, without significant scale-up capital from domestic sources, the UK risks being just an “incubator economy” for other nations. At the start of the scale-up journey—series B and C—the British Business Bank should be able to invest, and we heard from the Chancellor this week that its funding capacity is to rise by two-thirds to £2.5 billion per year. This is welcome news, but, as others have noted, the report highlighted that companies found it difficult to keep track of the bank’s 21 different programmes, and the restructuring of its offering cannot come soon enough.
At the other end of the scale-up journey—series D and beyond—raising rounds of £100 million or more cannot be done without institutional capital. UK pension funds manage more than £3 trillion yet invest barely 1% of this in growing domestic companies. US endowments typically allocate 5% to 15% to venture and growth equity and Canadian models between 10% and 20%. Given this evidence, I cannot see why the Government’s proposed reserve power to enable them to force pension funds to increase their investments in British companies and infrastructure should be seen as controversial.
Finance is not the only issue which impacts the ability of UK AI companies to grow; talent, regulation, data and compute also matter. I shall speak only very briefly about talent and focus on data and compute. I am all for expanding the global talent visa to attract highly skilled AI researchers to our shores, but I worry about the decreasing pool of home postgraduate talent. Further evidence emerged this week: UK students accounted for just 43% of the 25,000 enrolments for full-time postgraduate research degrees at British universities this academic year, compared to 51% in 2017-18.
The AI Opportunities Action Plan also called on the Government to
“identify at least 5 high-impact public datasets”
to be made available to AI researchers and innovators. However, the Government committed only to explore how to take forward this recommendation as part of DSIT’s work to develop the national data library. We have heard nothing about the national data library—apart from in the intervention of the noble Baroness, Lady Kidron, earlier—from the Government for the past few months, although the announcement of £600 million funding for the health data research service in April was very welcome. Delivering on the aims of that investment—a single, secure entry point to access aggregated, anonymised patient data—will not be a trivial matter.
The stakeholder map drawn up by Health Data Research UK shows 40—I stress 40—stakeholders on the map, and it says that it is a non-exclusive attempt to draw this map. Nevertheless, building on the existing guidelines for sharing patient data in secondary and primary care, a minimum viable product should be deliverable within a matter of months, not years. Does the Minister intend to discuss with her DHSC colleagues giving preferential access to this sovereign data asset to UK companies, with higher rates charged to any international competitors?
Turning to sovereign compute now, recent news is positive: investment into data centres and into exascale compute in Edinburgh, and the twentyfold expansion of the UK’s high-performance compute capacity by 2030. The report of the noble Baroness, Lady Stowell, recommended that UK AI scale-ups should be granted access to these facilities to catalyse commercial opportunities. Will the Minister confirm that it is indeed the Government’s intention to do so?
However, there is also a key lesson from DeepSeek: it has demonstrated the power of distillation. Training high-performance distilled large language models is now possible with just one or two GPUs. The ingenuity of DeepSeek has paradoxically led to several data-centre buildings in China lying empty. We do not have to copy the data-centre and hardware compute frenzy generated by US big tech companies. They are only part of the compute solution.
I chose my definition of sovereign AI capability arbitrarily, based on where we would be today if both DeepMind and Arm were still UK companies. Today, the UK AI ecosystem is thriving, even at the unicorn level. For example, we are world-leaders in the use of machine learning to navigate the complexities of British streets: not the straight and perpendicular roads of US cities navigated by Waymo and others. We are also world-leaders in low-cost hardware for machine learning, and in AI-generated video for enterprise use. If we implement the right measures on scale-up finance, enable privileged access to sovereign data and deliver the promised sovereign compute on time and on budget, I believe that at least two UK AI companies will reach £100 billion valuation within the next five years.
In our relationship with the big tech companies from the US, we will only ever be AI-takers. If we want to be AI-makers, the development of a sovereign AI capability should be the UK’s top priority.
Baroness Fall (Con)
My Lords, I echo others in welcoming the noble Lords, Lord Massey and Lord Evans, to the House and congratulate them both on their excellent maiden speeches this morning. I declare my interest as a senior adviser at Brunswick Group.
We meet today at the end of a week which, although it was BuildTech week, was really all about the spending review, but at least we get to revert to a discussion of tech scale-ups at the end. I congratulate the noble Baroness, Lady Stowell, and all the members of her committee on this very good report. Against a tough fiscal outlook at home and uncertainty abroad, I know that this group does not need to be persuaded that the question of how we scale up is not a niche issue, but core to the economic prospects of our country: for jobs, prosperity and the very growth which seems to elude us.
We are not alone in facing tricky economic headwinds. The geopolitical and geoeconomic context in which business operates is highly challenging and changeable. The only certainty is uncertainty: the worst possible investment environment. Just take President Trump’s tariff policy as one example. From its inception to so-called Liberation Day, we have seen a range of global tariffs first imposed, then partially suspended; a virtual boycott on China followed by a reprieve; and sectoral tariffs bobbing up and down. We in the UK cling on to our 10% as if it is a life raft. The US strategy remains unclear even to those in the White House. Is it a sort of global trade punishment or a vehicle to drive domestic policy? Is it to pay for tax reductions or to project a new industrial policy? Whatever the aim, the result is chaos; the only resistance, for now, is the bond markets; and business has to seek alternative supply chains and form new global relationships and alliances.
The fundamental dynamic for us is that we seek growth against an uncertain global outlook in an age of growing economic nationalism. The question for us, as nations turn inward, is that we need to focus on what our competitive advantage is. We are not a nation rich in raw materials; we are a nation of entrepreneurs and innovators. In other words, we live by our wits, not by our wealth. Just look at our record on start-ups, which others have mentioned this morning. London ranks as the second-best place for start-up companies, tied with New York city. As the committee’s report points out, the UK has emerged as one of the top three places in the world to invest in innovation. So it is to our wits that we must concentrate our attention, nurturing our unique talents, not allowing them to falter or, worse, get picked off by foreign investors. Many noble Lords have mentioned this this morning.
Yet, more often than not, that is exactly what happens. As the committee says so powerfully in its report, we are in danger of being an incubator nation or, as the noble Baroness, Lady Stowell, says, of bolting unicorns. From this week alone, the acquisition of Oxford Ionics by US quantum computing group IonQ and Qualcomm’s deal for chip designer Alphawave are examples of missed opportunities for the UK. Another example is that of Reaction Engines. This brilliant start-up, which emerged from some of the best tech engineers in the country, focused on revolutionary aerospace engines and was a thriving business for three decades, until it was forced to fold last year through a simple liquidity problem. We seem unable to leverage our home-grown creations into formidable businesses. Put simply, we find it hard to scale up. Just 1% of UK companies have reached scale-up status since 2012.
This point comes through loud and clear in the very good paper published this week by the Tony Blair Institute. From Startup to Scaleup examines in forensic detail the weaknesses across the cycle of a start-up journey and seeks solutions. I recommend it to noble Lords.
What can we do about it? First: talent. Attracting and growing talent is key. Trump’s America is pushing away foreign talent, and we should make the most of this opportunity to attract talent to the UK, looking at immigration policies and the global talent visa. At the same time, we must work hard to continue fostering talent at home. Secondly, universities really matter. Just look at the start-ups coming out of our great universities, such as Oxford Science Enterprises. We should focus on making sure that this excellent research can be commercialised, and we should take a closer look at our spin-out system, including IP rights. Thirdly: risk. We need to change our attitude towards risk—others have mentioned this—both as a society, in the way we view entrepreneurs and their inevitable early failures. and on a national level. We should be unashamedly focused on backing national winners, taking on more risk with our investments and giving higher rewards.
Fourthly, in the case of Reaction Engines we see how public money was needed at a critical moment, which could have paid dividends. The good news for our present Chancellor is that this is less about how much money and more about when we spend it—more wisely and at what time in the cycle. Fifthly, the Government have already made significant progress in modernising UK public markets, with reforms outlined in the listing review of the noble Lord, Lord Hill, but there is more to do and more to implement in that review. Sixthly, driving change across silos in Whitehall is notoriously difficult, as many in this House know, and requires political will and a powerful engine such as the Cabinet Office, the Treasury or even the No. 10 team to drive it.
Finally, do not be afraid to think big, a point that comes through loud and clear in the report. In response to the times in which we live, we must consider the importance of generating a global winning tech company. Just one of these tech companies would be a game-changer, not just in encouraging investment in other start-ups, but for our national prosperity, jobs and, ultimately, the projection of our nation’s power.
Baroness Lane-Fox of Soho (CB)
My Lords, I, too, start by welcoming the noble Lords, Lord Massey and Lord Evans, to this Chamber and congratulating them on their maiden speeches, and by congratulating the noble Baroness, Lady Stowell, on her masterful chairmanship of the committee and raising the profile of these vital issues at a vital time.
In the noble Baroness’s incredibly comprehensive introduction, she mentioned that it has been London Tech Week, as did others, and I feel as though this debate has chased me around the panels and interviews I have done over the course of the week. In fact, this issue has chased me over the last 30 years of working in the technology sector and building my own businesses. I am grateful for the opportunity to contribute now to what is such an important topic, on the back of such an important piece of work by the committee.
I agree that we risk falling into becoming an incubator economy, but the risk is worse than that, because it is broader and deeper. By not scaling our AI and tech businesses, we are not only not building the sector of the future; we also risk those businesses failing to impact on the other sectors of our economy and the wider economy in which they operate. I would like to dwell on that issue for just a moment.
We have had two decades of becoming a nation of start-ups. I think back to the late 1990s, when we would go to an entrepreneurial meet-up and be the only entrepreneurs in the room. People would move away from me at parties when I said that I was going to start my own business, thinking that I was truly bonkers for wanting to do so. Now, the culture has fundamentally shifted. As we know, many young people have one or two businesses alongside their own jobs, perhaps both as a necessity of these economic times and because of a sense of entrepreneurship’s excitement and vibrancy.
We know that many companies hit a ceiling. It is a problem for not just them but the wider economy. It is vital to recognise that these challenges are not confined to the tech sector. The struggle to scale is a persistent thread that runs through the entire economy. I see this as president of the British Chambers of Commerce, as well as from the multiple boards that I am lucky enough to sit on. I was also a founding trustee of the ScaleUp Institute a decade ago.
Despite record numbers of entrepreneurs, only 2% of UK firms reach more than £1 million in turnover over three years—just 2%. The scale-up rate among businesses has slowed dramatically over the past decade, with the proportion of firms expanding their workforce falling by 40% between 2012 and 2022. Obviously, this has profound implications for employment and the wider economy. It does not just reflect the barriers faced by individual companies; it also reflects that the wider business environment is not adopting innovation and technology at the pace required.
At the British Chambers of Commerce, we did a report on the digital revolution. Although the pace of change is accelerating, especially in high-growth sectors—as everyone in this Chamber knows—many firms outside those high-growth sectors are struggling to keep up with the pace of change. Poor digital infrastructure, patchy broadband and a lack of digital skills mean that too many businesses are missing out on productivity gains and a competitive edge. When tech and AI scale-ups fail to thrive, it is a warning not only about them but about our whole economy falling behind, not just in tech but in manufacturing services and beyond.
The committee’s recommendations are impressively comprehensive: consolidate government support; unlock capital; and foster a culture that champions ambition and risk-taking. I agree wholeheartedly. I would like, to use terrible tech speak, to double-click on three levers that I think demand even more attention: government procurement; international expansion; and business culture.
First, on government procurement, public procurement is a £400-billion lever—one-tenth of our economy. The new Procurement Act is a real opportunity to open up contracts to scale-ups and SMEs by cutting red tape, mandating prompt payment and letting local authorities reserve contracts for local suppliers. I have seen this at first hand from businesses I have been involved in, most recently as a board member of Multiverse. Government contracts are a hell of bureaucracy and difficulty; they just cannot be given priority while you are also trying to scale your business across multiple other planes. So, I deeply welcome this new legislation, but I would appreciate an update from the Minister on how the implementation is going and what the redress will be for companies if they feel as though the Act is not working in their favour.
We must make sure that we set ambitious targets to include UK scale-ups in procurement participation so that we are really driving UK innovation and British jobs. Just yesterday, at a London Tech Week event, as I was thinking about what remarks I was going to make, as if by magic, a UK entrepreneur with a medical technology business appeared in front of me to berate me for 10 minutes—quite rightly—about how a recent procurement process in the NHS had led to a US company being procured. I do not know the details of this—I am not naming the company—but it is, I think, indicative. A US company had been procured at a vastly increased cost because it was already a supplier within the system. Despite our British company being a star success, it was unable to compete; this really was a missed opportunity and unacceptable from so many angles.
Secondly, on international expansion, scale-ups are more likely than any other SMEs to export and to innovate—and to grow quickly when they do—but, as the British Chambers of Commerce has taught me, only 10% of British businesses export, and they are over 60% of our members. That is an interesting fact in itself. We need to encourage more businesses full stop to scale through innovation in trade, through trade itself and through expansion into other markets. We cannot ignore the elephant in the room: Brexit. Although businesses recognise the improvement in relations with the EU, we have taken ourselves out of the capacity to work in a digital single market, which has had a fundamental impact on our technologies’ ability to scale.
I remember, as a young whippersnapper, going into the French company that we were building at lastminute.com and being met with derision, pretty much. The French entrepreneurs thought—quite rightly, probably—“How can it possibly be that these two whippersnappers are coming in to take over our country?” However, it is so important that we encourage companies to scale through Europe and do not scare them with the complexity of bureaucracy that we are creating in front of them. We can expand in our own market, of course, but, to become truly global, we need to expand way beyond our own shores and to make that as easy and attractive as possible.
Finally, culture is one area that I really do feel I have lived over the past two decades. It is not mentioned in this report, but I hope that members of the committee will find it interesting to know that the Bank of England did research showing that 77% of British businesses would rather not grow than take on new financing to expand. What a missed opportunity. Although this report rightly goes hard on the capital sources and unlocking more from the Mansion House accord, as well as on many other issues that we have heard about in the contributions made today, we still have in our culture the issue of how we grow and expand.
This comes from multiple reasons. I do not have time to unpick them all now, but it is vital that we celebrate the successes we have and do not denigrate them. Success does not have to mean just creating more money for the individual; it can mean creating more prosperity for communities, for us all and for the wider society in which businesses operate. When I am travelling around for the British Chambers of Commerce, I meet all the time businesses that are pushing back into their community, building relationships with charities and, often, delivering things where services cannot. This is fundamental if we want to make sure that we have not just a prosperous economy but a prosperous society; we must celebrate this and not denigrate it or view it with scepticism.
I end by saying that, as noble Lords may know, I find myself in hospital frequently. I have the most extraordinary hip surgeon, who could not resist badgering me when I was recently in hospital again by telling me that he was trying to raise money for his incredible robotics innovation. He really is a world leader in this area—I will be quiet in one second—and he had to go to Florida to raise the £100 million that he needed. He did so in two meetings; here, 20 meetings had led to a commitment of just £100,000.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in this debate. I declare my technology interests as set out in the register. It is also a pleasure to follow my friend, the noble Baroness, Lady Lane-Fox, who has done as much as anybody in this country over the past two decades for all the technology industries in her work both as an entrepreneur and as a visionary for what technologies can do—not least, public good.
I congratulate my noble friend Lady Stowell—and, indeed, all members of the committee—on this excellent report. I can also comment positively on the approach that she took when doing this report in having it not just as an isolated moment in time but as a series of reports, one building on another, during her time chairing the Communications and Digital Select Committee.
In my final initial thank you, let me say that I am grateful to our two maiden speakers. Both of them, not least my noble friend Lord Massey, gave us excellent perspectives and a number of excellent ideas for not just this current Minister but all HMT Ministers to consider; all were excellent suggestions that would really make a difference.
My comments on the Select Committee’s report could be quite short. I agree with pretty much everything in it and all the recommendations. It goes to the heart of the issue, which we have discussed certainly in my time here, over the past 12 years, and previous to that. We have a stunning start-up scene in the UK, with fabulous universities, great spin-outs and a very good seed funding model, but it all gets tricky when you get to the scale-ups. This report highlights the issues, puts the recommendations and, I hope, gives the Minister much to think on.
As my noble friend Lord Willetts put it, when it comes to Silicon Valley, nobody should be beguiled to believe that this is a great success of the free market. It is birthed very much from state intervention—intervention in the right way, to enable and to empower the crowding-in of private capital. I cannot improve on his perfect construction—Hamiltonian, not Jeffersonian.
This debate, like so many that we have had on artificial intelligence and other technologies, goes to the heart of an issue. Government and wider society often struggle, because it can be seen as “a part of” or as “sector specific”. As has been noted in this debate, AI is a technology. I go beyond that. It is a series, a set, a constellation of technologies, some yet to be brought into being. I gently suggest that part of the problem with the current narrative and with the Government’s approach is that AI is not seen as this constellation of technologies but, reductively, as just gen AI. Although important, that is but one part of this constellation. Time will tell, but I do not believe that gen AI will be either the most interesting element of AI or the one most likely to deliver anything that we would recognise as a return on investment.
How much does it cost to do an AI model—£500 billion, £5 million, or somewhere in between? The answer is complex. However, getting to grips with smart funding in the UK AI ecosystem and context gives us the best chance of solving this scale-up challenge. I suggest there are three elements we may want to consider in the overarching approach to solving this issue. The first is to consider principles rather than prescription. We give ourselves the best opportunity if we take a principles-based, outcomes-focused, input-understood approach to everything that we do in this space, with trust and transparency—the technologies are nothing without those—inclusion and innovation, interoperability of both the technologies and the regulatory frameworks around the world, accountability, accessibility and assurance. These are good principles for all approaches, certainly regarding AI. Perhaps the Government will consider putting such principles on a statutory basis. They are largely set out in the 2023 White Paper. Giving them statutory effect would only be positive in this mission, which we all need to focus so clearly on.
Secondly, we need a right-sized, agile, adaptive and flexible AI authority. Do not think “big, behemothic, do-it-all AI regulator”. It could be just a development of the role of RIO, so ably chaired by my noble friend Lord Willetts. It could be a coming together of RIO and the DRCF. Maybe it could be a new entity in toto. Although it is right to take a domain-specific approach—that is where the domain expertise lies—we need to assure those three core elements that any of us need when we come across AI, or indeed anything: clarity, certainty and consistency. Without a guiding mind or an agile regulator, how can we have that clarity, certainty and consistency of application? Whether we come across AI in health, education or defence, how can we be assured that we will be having a similar experience? The AI authority could be that champion of the principles, the custodian and a centre of experts, giving an efficient and effective solution to the current situation of various regulators competing for a scarce talent pool. How does the nation benefit if Ofgem, for example, gains a particular data scientist and Ofcom does not? We do not benefit as a nation, and nor does our AI ecosystem.
Thirdly, we need to thoroughly and finally smash the myth, the false dichotomy that recurs with tedious inevitability, that you can have either innovation or regulation but never the twain shall meet. All history—not least, recent history—tells me that right-sized regulation is enabling and empowering of innovation. Take the regulatory sandbox in fintech. A measure of its success is that it has been replicated in just under 100 nations around the world—a UK creation by a UK regulator. It was great to see the announcement earlier this week from that regulator, the FCA, in combination bringing forth the supercharged AI sandbox.
We know how to do this, yet we are not doing enough of it. We all know bad regulation. In no sense does that mean that regulation is, of itself, bad. Right-sized regulation is good for investor, for innovator, for citizen, for creative, for consumer and for our country. Right-sized regulation, structured in an agile way, can be our path to the future and those future technologies, however they may be and in whatever form they come into being. The Government rightly talk of growth. These sectors, deploying these technologies, are most likely to bring this growth to bear.
How are we to move from being an incubator economy, an incubator country, when it comes to these technologies, to putting the right support in place, having the right skills, putting the right funding and expertise in place, at start-up and certainly at scale-up, and at the right level to shoot at nothing short of the “unicornification” of the UK economy? That is because of not only the economic benefit that will flow from having unicorns but the role-modelling that having those companies in our country can do, and how that brings forward all levels of the developmental pyramid. We know how to do this. We can do it at pace and we must. We are talking of our data, our decisions and, if we get this right, together, our human-led, AI-enabled, AI-empowered futures.
The Earl of Erroll (CB)
My Lords, paragraph 154 made me think about what on earth I could usefully add to this comprehensive and very pertinent report. We were consistently reminded that the creative industries sector is made up almost entirely of SMEs, of which a high proportion are micro-businesses. I have spent most of my life working in SMEs and building them up. On the technology side, I used to write software and things like that. I was always involved in computing IT, trying to produce solutions for business, looking at practical applications of things and trying to develop solutions quite quickly. It is this application of technology that most interests me.
I agree with the noble Lord, Lord Holmes, that the most useful applications of AI will not be for writing nice shareholder reports, business presentations or applications for jobs. It will be for managing real-world, complex situations and applying huge amounts of data and information to get out what needs to be done and what reactions. You could use this for managing difficult things. It can also be used for analysing huge volumes of research if you do not have time to read it all and trying to make the links between the different bits of it. Here, the LLM stuff will help considerably.
I did a lot of work looking at IoT—the internet of things—a few years back. In fact, we produced a British Standard on data interchange for it, because the use from it came from when you combined information from different sources and sensors around the place to produce something useful for people. That has grown into an interest in digital twins, where you can mirror a real-world thing out there in a computer system and then use it to analyse what would happen if this happened, or what is happening right now and how you might respond to it.
I am about to have an involvement with the Connected Places Catapult, which is mentioned in the report. I think it is very important that we continue to support these places, because these are sources of innovation where lots of other people are putting in lots of ideas and things, and out of those have come some very useful things. The great thing about them is they have been consistent—they are still there.
One of the big problems that I have noticed—I will jump to it—is that there is always a plethora of grants, but they are there for a year or two and then disappear. There is no consistency, so you cannot plan for it, and things collapse as a result. The creative industries clusters programme is a typical example of that: just when it is working, I think the report said that it is being knocked on the head. What is the point of that? At government level, we always seem to ditch things just when they are showing success, and that needs to be changed. Sometimes, people have unrealistic expectations of what will come and how quickly. That is one of the big problems, because Governments, Civil Service priorities and departments change.
I have also got very interested in causal AI, because I realised we have large language models just chasing down word chains and putting them together, with no idea what they are looking at. There is no actual innate intelligence in artificial intelligence: it is just a very large neural network of transistors, and it does not work the way our brains do. It does not have any sense of empathy or history. It has no background, unless you have trained it, but there comes a limit to how much we are going to train it and whose learning we are going to train it on. I know that most of us think we are always right, and that is always the trouble, because we do not agree with how someone else thinks. That is part of being human. I am going slightly off on a tangent, but there are some limitations in AI there, and people need to be aware of them.
The point about causal AI is that a lot of this information coming from the big ones—Copilot, Gemini, ChatGPT and all that—may be drawn from anywhere. You just do not know what they have looked at. There are lots of things that are false, and that self-reinforce, out there on the internet, so it might come up with things in reports—particularly if you are relying on it for something—that would completely mislead. You need to be able to distinguish that. I have been involved with a company, Kaimai, as well as FIDO, which have been used on curated databases to try to extract data. We need to grow that using causal AI, because things change as well. You may have a good database, but stuff that went into it 10 or 15 years ago may be inaccurate by now—the world has changed. There are a lot of issues in there that people are not thinking of when it comes to these things.
On encouraging people to stay here and grow their businesses, why do we drive all our very successful people offshore with very high tax rates? At the moment, Dubai is doing very good business, and apparently quite a lot have gone to Italy since the great non-dom thing was re-echoed. People want to spend their money when they make it, and that keeps the economy going, because it keeps all sorts of other things going, such as expensive restaurants, people who make expensive goods and people who cater for all sorts of things like that. It also makes the place more interesting to live in: people want to be in the UK, or around London, because it is full of entertainment. There are all sorts of side benefits to keeping your people who are successful and not driving them away. This is quite apart from the fact that I get furious when I see our great successes swallowed up by large American corporations and watching them go offshore.
Sorry about this, but, typically, my device has gone to sleep—like me.
Another thing I think about is suggesting that we can get the pension funds to invest a certain amount of money and push them into doing it. Yes, that is a source of funds, but are the pension funds the best people to decide what is a good or bad investment? Their job is to try to make sure that—if pensions are not overtaxed yet again—you have some money to retire on, and to make sure that the money is there for you when you retire. I am not sure they are the right people to judge what to put money into. I am sure that someone will think of a good way around this, but we have to be very careful about horses for courses.
The noble Lord, Lord Evans, made a very good point about regulation stifling investment and research. That can happen a lot. Funnily enough, another thing that can stifle some of this co-operative approach, which we hit a bit back, is that some academics in universities really do not feel that commercial applications of their knowledge and learning is the right thing for academics to be involved in, and they would not co-operate because there might be a commercial outcome from it. I think that attitude is changing—I have not had anything to with universities—but I bet it is still alive and well in some places. Those sorts of attitudes need to be overcome.
Here is another thing we hit: although we were being funded by the Welsh Government for an innovative programme, we needed a good native foreign language speaker. It was in the early days, before these were called AI and LLMs. It was to do with formatted reporting and stuff. Could we get the work permit for them? Well, we eventually got permission to employ one person from abroad—they were an ex-student from the university, but we needed to get the ongoing work permit—but were not given the permission to apply for a visa. That was going to be another application, and more money. These sorts of bureaucratic things kill SMEs. We just do not have the time, energy or knowledge to get around them. We need to start thinking about that.
The noble Baroness, Lady Kidron, made a comment that data sharing is essential to get the best use out of it all, but there are huge dangers, as I have just been saying, about where that data has come from and what happens to it. If it is being used by some abroad to do all sorts of things, it can be hugely dangerous, even to our national security and other things like that. You never know—even the best people have something to hide and, if that comes up, you are opening people up to maybe a bit of blackmail or pressure. That is why I have been very cautious about government data sharing in the past. It is difficult: it is impossible to pseudonymise properly.
Anyway, with that, I think it is a brilliant report.
Viscount Stansgate (Lab)
My Lords, I am grateful to be able to make a short contribution in the gap. I congratulate the noble Baroness, Lady Stowell, and the members and staff of her committee on producing such an excellent report. I thought her opening remarks well encapsulated the issue we face. I also congratulate the two maiden speakers. They were of contrasting kinds, but they will make great contributions to the House in future, and I am sure that they both feel much better for having made them.
In some ways, this is a well-timed debate, with the comprehensive spending review on Wednesday; it would have been more helpful to have had it in the context of the industrial strategy that we are expecting, but that will come soon. I thought the report’s main thrust and conclusions have targeted something absolutely fundamental to the UK economy. There have been so many excellent speeches in today’s debate that I will recommend today’s copy of Hansard, because I think we should keep it to hand.
I came to make one point in this debate, and that is to connect it with others that are going on in the same way elsewhere in the House. I find that the noble Lord, Lord Willetts, who is not in his place at the moment, made exactly the point that I came here to make—that is part of the trouble of speaking at the end. I should add that we work together on the Foundation for Science and Technology, and in the declaration of interests I declare mine as president of the Parliamentary and Scientific Committee.
The point I want to make is that other debates are going on that directly bear on today’s. Take the House of Commons Select Committee on Science and Technology’s report earlier this year on engineering biology. That is an amazingly exciting area, which might in the future, for example, enable us to grow sustainable aircraft fuel and so on. We were world leaders in what was called synthetic biology a decade ago, and we are now losing our lead. When our Science and Technology Committee produced a report earlier this year, our title was Don’t Fail to Scale, which is very much in line with one of the themes of today’s debate.
My second example is about space. We now have a space committee looking at aspects of the space economy, which will be extremely important to the UK in future. There are many different ways in which space is vital to the operation of the UK economy. Some of the things already being talked about for the future include, for example, growing antibodies in space, which, because of microgravity, are of such pure quality that they could be immensely more effective when brought back to earth and used in medical applications. Companies of the future may develop along those lines and we will be making a terrible mistake if we do not support them and scale them up.
The opportunities that emerge are now being looked at by the Science and Technology Committee, which is my final example. We are looking at what prevents this country being able to take a stage further forward the wonderful start-ups, incubators and other things we have heard about today. That will be the subject of a debate when we publish our report. We have taken fascinating evidence from venture capitalists and, only on Wednesday, a high-ranking scientist from DARPA.
We need to understand what leads companies such as Oxford Ionics to take the decision it has and be a loss to some extent a loss to this country. The Government’s Mansion House reforms will be very important, and I was interested in what the noble Lord, Lord Massey, said about rebuilding our risk culture.
In conclusion, I hope that when we come to discuss the current report of the Science and Technology Committee, Members here today will come to that as well, because no matter what subtitle you pick—Less Talk, More Action or Don’t Fail to Scale—this is the central issue to the future of the UK economy.
Lord Clement-Jones (LD)
My Lords, it is a pleasure to follow the noble Viscount, Lord Stansgate, not only because of his enthusiasm but because of his concision. To pack all that into four minutes is quite a quite an achievement.
I declare my interests as an adviser to DLA Piper on AI policy and regulation, and as founder and co-chair of the All-Party Group on Artificial Intelligence. I congratulate not only the Communications and Digital Committee on the report but the noble Baroness, Lady Stowell, on her excellent introduction today and all the service she has given as chair of the Select Committee. She hit all the points.
The noble Baroness, Lady Kidron, mentioned the holistic nature of the report—the fact that it was both AI and creative tech. That is really powerful and has enabled us to have an excellent debate today. I agree that this debate should be required reading. We have covered a huge amount of ground.
I thank our two maiden speakers. I am pleased that they chose to add their expertise to today’s proceedings. Sometimes there are maiden speeches in debates and you wonder why on earth they have been chosen as the vehicle for a maiden speech; I do not think that any of us are in any doubt that the noble Lords, Lord Evans and Lord Massey, made very interesting contributions to today’s proceedings.
It was also a great privilege to speak on the same Benches as my noble friend Lord McNally. To hear his wisdom on these occasions is a great pleasure for me personally.
The phrase “incubator economy” really has stuck. It has helped to guide us through today’s debate and made the contributions that much sharper and more relevant. We are great at hatching ideas but also at watching them fly away to mature elsewhere. We can illustrate this with a number of examples, as noble Lords have done. When Arm chose to list in New York rather than London, we lost what would now be Britain’s fifth-biggest company. When companies such as Wise follow the same path, which it recently has done, the pattern becomes clear. This was epitomised by a City AM headline on Tuesday:
“Ouch: Three tech firms bail out of the UK in a single day”.
Many noble Lords have of course mentioned Alphawave, Spectris and Oxford Ionics—at the beginning of London Tech Week too; what an appalling time to have that news. The noble Lord, Lord Willetts, reminded us that this is of long standing, in terms of DeepMind and Selector as well. The consequences of this failure are significant: decreased global competitiveness, weaker economic prospects and a potential brain drain of talent, as the noble Baroness reminded us at the very beginning of the debate and the noble Baroness, Lady Lane-Fox, emphasised too.
The Government are putting great faith into AI adoption with the AI opportunities action plan and an industrial strategy with plans for eight growth-driving sectors, but, at the same time, we must break down a number of barriers that are holding us back. First, as we have heard from across the House, we have a significant funding gap for later-stage rounds compared to the US, which was called, very graphically, the “valley of death” by the noble Baroness, Lady Wheatcroft. As we have heard, UK pension funds manage over £3 trillion of assets yet invest barely a fraction of that in growing domestic companies.
We do have initiatives, such as the Long-term Investment for Technology and Science programme, and the British Business Bank has supported many UK unicorns. UKI2S, a public/private seed fund, has a proven track record, but the size of the funding gap remains immense. There is also, as the noble Lord, Lord Willetts, rightly mentioned, a recognised lack of technology expertise among institutional investors and, probably, as was mentioned by the noble Earl, Lord Erroll, among pension funds as well.
As the noble Lord, Lord Ranger, said, we are in a global technology race. Some 62% of UK AI firms identify skills shortages as a growth barrier. We are in fierce global competition for AI talent and our visa system is slow, laborious and costly. SMEs often cannot match big tech salaries and, although the scale-up visa exists, industry leaders say that it is not yet fast or cheap enough to meet the needs of rapidly growing businesses, especially in highly competitive fields like AI.
We have infrastructure issues too. As we heard from the committee, the withdrawal by this Government at the outset of £1.3 billion for AI infrastructure, including the Edinburgh supercomputer, sent exactly the wrong signal. As one witness to the committee put it, we have
“some really big gaps in infrastructure, compute and power”.
We also have the issue of regulation and procurement. The noble Baroness, Lady Lane-Fox, mentioned the government procurement rules that prevent smaller companies competing for government contracts despite government procurement being a potential driver of innovation. The committee heard that the Competition and Markets Authority is alleged to be harsh on internal roll-ups, where one British company proposes acquiring another British company.
What needs to happen now? Again, I thought the phrase “a manageable challenge” from the noble Lord, Lord Willetts, was very useful. Like the noble Lord, Lord Holmes, I also rather liked the Hamiltonian versus Jeffersonian approach. On capital, the National Wealth Fund’s £7.3 billion commitment is a start, but we need those resources deployed quickly and strategically. The Government are, it seems, taking action to unlock £75 billion through the Mansion House accord and have introduced pension fund reforms, but these will take several years to have meaningful impact.
I know that the Government listen to the Tony Blair Institute, which was also mentioned by the noble Baroness, Lady Fall. Its recent report recommends giving the British Business Bank and the National Wealth Fund
“clear, complementary mandates to deliver on the … government’s industrial strategy”.
Specifically, it says that the British Business Bank should focus on crowding in capital for the scale-up phase—series B to C—with its maximum investment cap raised to £25 million. Meanwhile, the NWF should act as a more capital-intensive direct investor, with a minimum investment of £25 million for late-stage—series D+—strategic assets. Can the Minister comment on the progress being made in defining the roles of those two institutions? The discussion from the noble Lord, Lord Massey, about capital gains tax in terms of AIM stocks was a very interesting suggestion.
The AI Opportunities Action Plan also stresses investment in talent. It explicitly recommends that the Government explore how best to address wider barriers, such as the cost and complexity of visas, which create obstacles for start-ups and deter overseas talent from relocating to the UK. We need a fast-track visa system for scale-ups now, not after another consultation. However, I accept the concerns of the noble Lord, Lord Tarassenko, that there is a falling number of UK entrants to courses.
On infrastructure, I welcome the £2 billion commitment in the spending review, and the Government’s promise to immediately double AI research capacity and launch AI growth zones for data centres. The compute strategy, promised for spring 2025, is already overdue and must deliver accessible resources to our universities, start-ups and scale-ups as soon as possible. However, I also accept the reservations of the noble Lord, Lord Tarassenko: we do not want to find ourselves investing in infrastructure when we can deliver what we need without the extent of that infrastructure, as DeepSeek demonstrated.
AI growth zones are being launched to accelerate data centre construction and infrastructure, with formal selection processes opening this spring, we understand. However, we need to tackle the environmental issues around them too. The noble Lord, Lord Hamilton—who is in his place, I notice—was absolutely right to raise that issue.
In order to scale up, start-ups need to overcome the diffusion problem, which refers to the challenge of achieving widespread adoption and market penetration for their innovations. This is impacted by a lack of access to digital platforms, which have quasi-monopoly positions. I am glad to say that Google and Apple are now under investigation by the CMA, and the outcome will be the acid test for whether the new digital markets regime results in access remedies that allow our start-ups to scale more easily.
On regulation, the Regulatory Innovation Office, under its very welcome new chair, the noble Lord, Lord Willetts, is promising, as part of its mission, to reduce red tape and help companies bring new products to market faster, but it must have teeth. Given that the AI Opportunities Action Plan aims to accelerate the adoption of safe and trustworthy AI across the economy, clarity, certainty and consistency of AI regulation for business is crucial. The Government have kicked a future AI Bill into longer, if not wholly long, grass. They talk of a sector-led, outcomes-based approach to AI regulation, but many of us have seen no detail of any proposals and believe that the minimalist approach being adopted is simply inadequate in the face of AI risks and the need for public trust. I entirely agree with the noble Lord, Lord Holmes, that good, outcome-based regulation is not the enemy of innovation. In fact, it can be the creator of interoperability and the driver of innovation.
We have discussed constantly, for what seems like several months, a significant issue for creatives: the use of copyright content for training AI models. I do not intend to say too much about this, but the Minister is only too well aware of the arguments being made. Given the Government’s recent failure to deliver clarity to the creative industries, the consultation on AI and copyright, the associated economic impact assessment and the technology report must provide clarity quickly, as must the working party. Our creative industries must have the transparency they need to ensure that they can thrive alongside the tech industries without being their victim. Where is the creative industries sector plan? Everything seems to be promised for late spring—I think we have a traffic jam somewhere in Whitehall. It will identify growth barriers, we understand, and outline commitments from the Government and industry to overcome them.
I have little time left. I share the reservations about the National Data Library, but also the promise associated with it, expressed by the noble Lord, Lord Tarassenko, and the noble Baroness, Lady Kidron. It could be a good sovereign asset vehicle, if it takes the right shape.
The committee’s report is entitled AI and Creative Technology Scaleups: Less Talk, More Action. It is not just a good title; it is an urgent instruction. Are the Government ready to match ambition with action? I very much look forward to the Minister’s reply but, as the noble Lord, Lord Holmes, said, she has been given much to think about.
Viscount Camrose (Con)
My Lords, I declare my interests in early-stage technology ventures as set out in the register. I thank my noble friend Lady Stowell of Beeston for securing and leading this important and timely debate. I felt genuinely sad to be reminded that she will no longer be chairing this important and effective committee. I also congratulate warmly my newer noble friends Lord Evans and Lord Massey on their maiden speeches. I thought they were interesting, well argued and wholly well constructed for this debate that has been uniformly outstanding.
The noble Lord, Lord McNally, rightly quoted the “white heat of progress”, but I feel that AI is putting even that white heat into the shade. Whatever we are going to do, be it as organisations, as parliamentarians or as government, we are going to have to do it considerably faster than we are doing now. That raises important questions about how we can accelerate our pace and agility for coping with fast-moving new technologies. Needless to say, I agree with my noble friend Lady Stowell that the UK has the potential to be the powerhouse for growth for AI and tech companies. That is why it is essential for the Government to consider the recommendations made by this report.
There is no doubt that the UK has a deservedly strong reputation for start-ups. I am proud that the UK continues to lead in Europe on having the greatest number of unicorns. I share other noble Lords’ concerns about our competitors, particularly France, catching up with us, and we must be on our mettle. We must be acutely aware of the well-argued, well-founded concerns expressed by the committee that the UK is at risk of becoming an incubator economy. UK fintech unicorn Monzo is a prime example of this. Monzo was born and raised in London, but recent announcements indicate that it may choose to list in the US rather than on the UK stock market. It is a sad reflection that it does not feel confident that our markets are fit to support these scale-ups, and we must recognise that the UK is at grave risk of losing out to other nations.
Across the sector, we continue to see this issue highlighted. Oxford Science Enterprises—I echo the points raised by the noble Lord, Lord Tarassenko—has argued that without urgent action the US will benefit from the unicorns that we are building in the UK. The CEO of the video games industry body Ukie, Nick Poole, describes the UK as
“one of the worst places in the G7 to scale a games business”.
The CEO of Cleo AI, Barney Hussey-Yeo, has reported that the UK is
“a terrible place to scale and list a business”.
It is vital that we restore the appeal of London’s capital markets and remove the unnecessary barriers to growth. The recommendations put forward by the committee address some of the key challenges raised by industry. First, streamline innovation funds to provide a more clear, more comprehensive pathway of support for companies along their growth journey and remove some of the complexity that was referred to earlier. Secondly, accelerate financial reforms to ensure that they keep up with the whiter-than-white-heat rate of technological development. Thirdly, champion entrepreneurial success to celebrate and recognise the national contribution and achievement of successful British entrepreneurs; the wise words of the noble Baroness, Lady Lane-Fox, really resonated in that respect. Fourthly, the industrial strategy itself must provide a coherent, cross-sector vision for how tech scale-ups will be supported to drive economic growth. Fifthly, the Government must commit to AI delivery by removing obstacles to growth and supporting AI’s potential in government strategies. The AI Opportunities Action Plan is clearly a very important step—but a first step—on that journey. Finally, the Government should review their R&D tax credit schemes to include more support for the creative industries, which receive limited investment compared with other key growth sectors.
As noble Lords across the House are aware, when my party was in government we took steps to examine and try to grapple with the problem of addressing barriers to scaling up, through the 2014 Coutu report, the 2017 patient capital review and the 2021 Kalifa review of the UK’s fintech sector. Scaling up start-ups and creating an environment in which enterprises can flourish was a priority for the previous Government, as no doubt it is for this one. That was demonstrated through a range of business support programmes and government-backed financial support to encourage and boost start-ups through Help to Grow. I list these things not because I am claiming they were successful—obviously, if they had been as successful as we wanted, we would not need to be having this debate today—but there is an important step here: we must constantly learn from these programmes what went well, what we need to build on and how we can adapt as we go forward in future.
In government we took the view that AI regulation should be principles and outcome based due to the fast-moving nature of technology, and I was pleased to hear my noble friend Lord Holmes echo that point. I am also pleased that the Government have retained this view, and I am supportive of the approach that they have taken and adopted in this respect towards AI. I welcome the fact that the Government are keen to continue fostering innovation, scaling businesses and supporting emerging technologies. I welcome the Government’s expressed view, building on the foundation of the previous Government, that pensions reforms can channel investment into innovation-driven industries. The Government have committed to ensuring that the British Business Bank will effectively support companies to scale up in the industrial strategy, and I thank my noble friend Lord Willetts for his helpful account of how the various elements of that ending up in the British Business Bank might fit together.
We have heard a great deal recently in this Chamber about AI and copyright, but I will make one point here: we need to move faster towards a trusted marketplace for copyright licensing by AI. The perception—whatever one’s views of it—that AI labs can steal private property with impunity poisons people’s willingness to trust our tech sector and therefore limits growth. The Government’s planned timeline to address that, as I have said many times in these debates, is far too slow and needs to become more agile; it needs to move more quickly.
I close with a few questions for the Minister. As has been pointed out, there have been plenty of different points raised, so if the Minister prefers to respond to some of these in writing, she is very welcome to do so. First, the Government have rightly recognised the pivotal role of the creative technology sector and the challenges it faces. However, there has been no commitment thus far to reform the current definition of R&D tax reliefs to include more of the creative sector. What plans do the Government have to change that?
Secondly, before the election the Labour Party manifesto pledged to create an AI regulation Bill, a commitment that was repeated in the King’s Speech. However, I read in the Guardian that this Bill will not be introduced until the next Session of Parliament. Can the Minister confirm that the Bill has indeed been delayed and, if so, what were the factors behind that decision? Has the Bill’s scope broadened or otherwise changed? Does she share my concerns about the continued uncertainty that this creates, not just for the tech sector but for everyone who is a stakeholder of this tech sector—which, in practice, means everyone?
Thirdly and finally, does the Minister, agree that crypto—or, as I feel they should be called, digital—assets and tokenisation have very serious potential to remove market frictions and cut transaction costs? If so, how can we encourage their use, particularly to help scale-ups? In recent days we have seen the United States make very significant moves in this area. What do the Government make of those moves, and how do we plan to respond?
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I thank the Communications and Digital Committee for its very thoughtful and timely report. I pay particular thanks to the noble Baroness, Lady Stowell, for her long and very effective contribution as chair of the committee, as well as for being instrumental in delivering this valuable inquiry. I also thank all noble Lords who have contributed to this discussion with such insight and urgency. As noble Lords’ interventions have shown, we are grappling with some very complex issues.
Before I begin, I take a moment to thank the noble Lords, Lord Evans of Guisborough and Lord Massey of Hampstead, for their engaging maiden speeches. It is a pleasure to welcome them both to the House. The noble Lord, Lord Evans, brings with him a wealth of insight from his time as a barrister and deputy mayor of London and his many years in public service. The noble Lord, Lord Massey, with his experience in political leadership and financial services, adds a valuable voice to our discussions. We are fortunate to have them both contributing to our work.
The title of this report, “less talk, more action”, is a challenge that we take seriously. The Government share the committee’s ambition to unlock the full potential of the UK’s AI and creative technology scale-ups. We understand that there are challenges in scaling these businesses and we are determined to ensure that they scale and stay in the UK. Before I respond to the many questions and interventions, I want to recognise the strength and importance of the UK technology and creative sectors at the current time.
The UK tech sector is an incredible UK success story, and I agree with the noble Baroness, Lady Stowell, that we do not do enough to celebrate the innovators and the risk-takers in the tech sector. Despite her quote, the UK continues to boast the largest tech ecosystem in Europe and ranks among the top five globally, driven by world-class talent, strong R&D and innovative, friendly regulation. It remains Europe’s top destination for tech investment, with a tech sector valued at £1.2 trillion in 2024. As the noble Baroness, Lady Fall, and the noble Lord, Lord Holmes, rightly point out, we have a wonderful university research sector, with four of the top 10 universities in the global index. This is a fantastic basis on which we can grow.
But we know that starting strong is not good enough. Too many of our promising companies struggle to scale. Too often, as we have heard, they grow elsewhere. I agree with the noble Baroness, Lady Wheatcroft, and others that urgent action is needed to avoid the “valley of death”. I also agree with the noble Lord, Lord Willetts, that we need ways to make the scale-ups’ route in the UK so compelling that it makes no sense for them to leave. We want them to stay, and we have to find ways to do that. I agree with the noble Baroness, Lady Lane-Fox, that we need to address the cultural issues that are holding back some of that ambition and expansion. I agree as well with the noble Viscount, Lord Camrose, that we need to find better ways of championing the entrepreneurs and holding them up as role models. We are indeed focused on building an environment where high-growth firms can start, scale and stay in the UK.
Like the noble Lord, Lord Willetts, I pay tribute to my noble friend Lord Vallance, who has a huge project ongoing to streamline funding throughout the start-up and scale-up funding stream in order to tackle, as we have heard, the plethora of government grants, many of which are not long term. We absolutely understand the need for long-term certainty for British businesses.
This work is already beginning to pay off. As of January 2025, 185 companies across the tech sector have reached unicorn status that were either founded or headquartered in the UK. That is more than France, Germany and Sweden put together. We want to see more tech businesses join UK success stories like Wave and Quantexa and scale in this manner.
As both the Prime Minister and the DSIT Secretary of State have made clear, the Government are going to have to keep this momentum going. We are already taking steps. This week we have announced a new £86 billion R&D settlement to fund everything from new drug treatments and longer lasting batteries to new AI breakthroughs to generate billions for the UK economy and drive our plan for change.
We have also announced TechFirst, a comprehensive talent initiative which will give young people across the UK unprecedented access to tech skills and careers, boosting our domestic supply of top tech talent. Our local innovation partnership fund will be investing up to £500 million to help our economic growth spread throughout every region and nation of the country. Yesterday I chaired a round table of regional cluster representatives who are driving forward that local enterprise. They very much welcomed our new funding announcements.
I thank the noble Baroness, Lady Kidron, for her contribution on the value of data. I can assure her that the points she made throughout the Data (Use and Access) Bill about data being a sovereign asset have been taken on board, and they were very well made. I assure her and the noble Lord, Lord Tarassenko, that the principle of it being sovereign data will underpin the national data library. I can also assure noble Lords that the NHS allows access to health data only when it benefits health and care, and we never sell data.
Our creative industries are a national treasure, contributing £124 billion in GVA and supporting 2.4 million jobs. More than that, they are the windows through which the UK presents itself and our values to the world. I can assure the noble Baroness, Lady Stowell, and other noble Lords that the Prime Minister and the Chancellor have hosted a number of events for the creative sector at No. 10 and No. 11 Downing Street to celebrate their success.
In 2025, DCMS-funded research found that 13,800 creative businesses are using emerging technologies, supporting 350,000 jobs. They are also a source of innovation, and where these sectors come together, they produce great things. Createch—the fusion of creativity and technology—is a major growth opportunity. With the right support, createch scale-ups could generate £18 billion in additional GVA and 160,000 jobs over the next decade. We are committed to removing the barriers these businesses face, from access to finance to regulatory complexity. Our upcoming creative industry sector plan, which is indeed due shortly, will set out how we will do just that.
At this week’s spending review, the creative industries received a transformational boost. The settlement announced for DCMS included increased funding, demonstrating the Government’s commitment to fuelling the creative industries. It will help drive regional growth and innovation and develop creative places, ensuring that the UK’s creative industries remain renowned throughout the world.
The opportunity was particularly clear to me this week as I attended London Tech Week. I saw the University of the Arts London bring Future Play from its Creative Computing Institute to the heart of London Tech Week, demonstrating just how engaging creative technology can be for users, as well as many fantastic speakers representing createch companies appearing on panels throughout the week, such as Anna Burke of Animated Technologies and Daniel Verten of Synthesia. We want to ensure that the creative and technology sectors continue to thrive. We want to leverage the strength of the UK in both sectors to ensure that, as both grow, they continue to strengthen one another.
I also want to recognise the strength of our AI sector. It generated £14.2 billion in revenue last year, employs over 64,000 people and is home to more than 3,700 companies, up 17% on the year before. The Prime Minister launched the AI Opportunities Action Plan in January, setting out 50 far-reaching actions needed to drive the development and deployment of AI. The Government will take all these recommendations forward.
In response to the noble Baroness, Lady Stowell, and the noble Lord, Lord Tarassenko, I am pleased to say that just this week we announced an extra £1 billion of funding to scale up our computer power by a factor of 20. This will include making Scotland home to the UK’s most powerful supercomputer, with up to £750 million for that project. We will also train 7.5 million workers in AI by 2030 through partnering with 11 major companies.
The Government are not unaware of the complexities that arise out of AI. I agree with the noble Lord, Lord Holmes, that the challenge is to ensure that our AI deployment is human-led and human-focused. In particular, we recognise the importance of getting the regulatory framework right, especially around copyright and intellectual property. As noble Lords know, we held a detailed consultation on future copyright reform, receiving over 11,000 responses, and no decision has yet been taken on the final policy. We recognise that this is a complex and rapidly developing area and will continue to welcome all views and evidence to help shape our thinking. We will act in the round and on the basis of a careful analysis.
Transparency and other issues raised during debates are of course crucial, but they must be developed as part of a balanced package, to avoid making the UK uncompetitive in AI development. I agree with the noble Baroness, Lady Stowell, that it is unfortunate that the arguments have become a divisive thing between the creative and tech sectors, when in fact they should go hand in hand. We want to ensure that these exciting createch companies are able to continue to innovate and scale, while also supporting our world-leading creative industries—a sector the Government have committed to support as one of the eight priority strands of our industrial strategy.
To show the Government’s ambition for balance in this space, we are convening working groups which will include representatives of all relevant sectors, including the creative and AI sectors. I can assure the noble Lord, Lord McNally, that we will of course also be working with parliamentary colleagues to help shape that report. I hope that that reiterates our commitment to developing policy that is effective, meaningful, proportional and practical in all sectors. Our commitment to supporting our tech sectors is evident in our industrial strategy. Invest 2035, a 10-year plan to support high-growth sectors and create a pro-business environment, will be published this month. The industrial strategy will deliver the certainty and stability that businesses need to invest, create a pro-business environment and support high-potential clusters across the country.
The industrial strategy will channel support to the eight growth-driving sectors, those in which the UK excels today and that will propel us forward tomorrow. Two of these sectors, the digital and technology and the life sciences sectors, are led by DSIT, and another, the creative industries, is led by DCMS. The digital and technology sector plan will build on the UK’s strengths in the six technologies with the greatest potential for growth, including AI, as well as advanced connectivity, cybersecurity, engineering biology, semiconductors and quantum. The plan will give every part of the country a stake in the technologies that are fundamentally reshaping our world, and which are critical to our national security and to growing our economy and improving the lives of citizens across the UK. We will also consider overlap and interdependencies across the growth-driving sectors.
Similarly for the creative industries, our sector plan will set out policies and interventions that will boost creative industries’ growth throughout the country, recognising that they are an economic and cultural success story. The sector plan will set out how the Government will work in partnership with industry to support access to finance, skills and education, innovation and exports. The Government have engaged with various stakeholders throughout the production of the industrial strategy—including through industrial strategy mission groups—to develop those solutions.
As we have heard, ensuring access to finance is absolutely central to our ambitions. The UK had the world’s third-largest venture capital market between 2021 and 2023, raising £72 billion, but we know there is more to do—particularly in unlocking domestic institutional capital. That is why we launched the Mansion House reforms, with the potential to unlock £50 billion for high-growth businesses. The Mansion House compact and the investment compact, now with more than 100 signatories and £100 billion in assets under management, are already shifting the dial.
We have also launched a landmark pension investment review and introduced the Pension Schemes Bill, aiming to increase investment in productive assets. This confirms our intention to change the pensions landscape, with a government-reserved power to ensure that providers sufficiently diversify investments. Today, just 0.5% of UK defined contribution pensions are invested in unlisted UK equities. In Australia that figure is closer to 5% or 6%. We must close that gap, and we have plans to do so.
We are reforming the British Business Bank, marking a major step change in financing companies to start and scale in the UK, and increasing its total financial capacity to £25.6 billion. This expansion will take British Business Bank investments to around £2.5 billion each year. We are also launching the British growth fund and the British growth partnership and remodelled the UK Infrastructure Bank into the National Wealth Fund, with £7.3 billion in new funding to crowd in private investment.
For the creative industries, to date the Government have offered substantial support, with the DCMS Secretary of State announcing £40 million of funding for the creative industries in January, supporting British start-up video game studios, music and film exports and creative businesses outside London. We also announced that the British Business Bank would increase its support for the creative industries to help creative businesses realise their full potential growth. Our soon-to-be-published creative industries sector plan will set out our approach to improving access to finance for creative businesses, developing business investment readiness and crowding in private finance.
We are proud of the work of Innovate UK, which now supports more than 450,000 innovators. Every £1 invested in business innovation returns over £3.60 in direct benefit and over £6 in total economic return. Through programmes such as Innovate UK Business Growth, we supported more than 10,000 innovation-focused SMEs last year, helping them raise £483 million in investment and create more than 2,600 jobs. Under the new executive chair of Innovate UK and the new UKRI CEO, we will refocus Innovate UK’s objectives to maximise its impact to the UK economy.
In addition, our investor partnerships programme has supported 360 SMEs with £144 million in grants and £393 million in aligned investment, unlocking over £1.2 billion in total. More than 3,000 creative businesses have applied for Innovate UK’s Creative Catalyst programme since 2021. We are also supporting late-stage R&D through innovation loans, with £229 million committed to 251 companies.
I agree with the noble Lords, Lord Ranger and Lord Clement-Jones, that skills pose a particular challenge. We currently have around 100,000 vacancies that cannot be filled in the digital sector in the UK. We are acutely aware of this, and we will address it through a reformed programme from Skills England.
To support innovation, we must also modernise regulation. That is why we established the Regulatory Innovation Office in October 2024. I am very grateful for all the work that the noble Lord, Lord Willetts, is doing in chairing the committee and tackling barriers to growth. RIO is already delivering results, from enabling beyond visual line of sight drone operations to launching the second year of the AI Airlock for healthcare and accelerating regulatory sandboxes for engineering, biology and space. RIO will help position Britain as the best place to innovate by ensuring safety, speeding up regulatory decisions and providing clear direction.
We have also commenced the digital markets regime, giving new powers to the Competition and Markets Authority to tackle the dominance of a few large firms. As the noble Lord, Lord Clement-Jones, pointed out, the CMA is investigating Google and Apple’s positions in search and mobile ecosystems. These steps are vital to ensure fair competition and open markets.
The noble Baroness, Lady Lane-Fox, rightly mentioned the challenge and opportunities of procurement. As she says, we are taking action on this. She asked for a progress report and I will write to her, giving an update on that information.
This Government are not just talking; we are acting. We are unlocking capital, reforming regulation, supporting innovation and backing our creative and digital industries. But as we close another fantastic London Tech Week, we recognise that there is more to do. We welcome the committee’s scrutiny and share its sense of urgency.
If I have not answered all the points that have been raised, I will of course write to noble Lords. We are committed to working with Parliament, industry and academia to ensure that the UK is not just a great place to start a business but the best place in the world to scale one. That is our ambition and we look forward to working with noble Lords to deliver it.
Baroness Stowell of Beeston (Con)
My Lords, this has been an excellent debate. I thank the Minister for her comprehensive response. I know this debate comes at the end of yet another busy week for her—handling the data Bill and the Employment Rights Bill, and she has just referred to being at London Tech Week too. She talked about a lot of activity coming from the Government, and I hope she can carve out enough time in her schedule over the next few months to make sure the activity leads to the outcomes and results that are much needed in this area. Speaking as a former Minister, I know what it is like to think that it is all happening because we have said it is happening, but it needs a lot of concentrated supervision.
I thank all noble Lords who have contributed. It has been fascinating and heartening to hear noble Lords cover topics that I did not and that are so important to this debate. My noble friend Lord Hamilton raised energy right at the start, but we have also heard about skills, the importance of data and government procurement. Government procurement is particularly important to emphasise, because not only does procurement—rather than grants—more often help the success of these companies but it is an important aspect to the deployment and adoption of the new technology. It is an area where even more focus is needed from the Government, to make sure that companies can get the access to contracts that they deserve.
I congratulate my noble friends Lord Massey and Lord Evans on their maiden speeches. Both have played significant roles in the Conservative Party and have demonstrated today their strong credentials as contributors to this House. My noble friend Lord Evans was modest in his mention of the work he does to support Women2Win. He plays a big part in helping women who are novice politicians in their preparation for the daunting task of facing selection meetings.
My noble friend Lord Massey gave an impressive set of recommendations to unlock more investment capital, and his analysis of the barriers that deter risk-taking was very powerful. He referenced the FCA and financial regulation as problems in this area. Although he is not in his place, it is worth me giving a plug to the report published today by the Financial Services Regulation Committee, which my noble friend Lord Forsyth chairs; it is very much about regulation in the financial sector and what it needs to do.
My noble friend Lord Willetts, the noble Viscount, Lord Stansgate, and the noble Lord, Lord Clement-Jones, referred to the trio of Select Committee reports on the challenge of scale-ups. My noble friend Lady Fall referred to a report this week from the Tony Blair Institute on the topic of scale-ups. All of this shows that the challenge of scaling up in AI and creative tech—and, indeed, the tech sector more broadly—is not going away. We have enough understanding now of the obstacles and how to deal with them. As my noble friend Lord Willetts said, if we focus on the companies that have the potential to scale rapidly, the challenge should be manageable. Even if we have grappled with it now for more than 10 years, there is just too much at stake for us not to succeed.
To finish, I know it is a bit of a cliché but it is true that it has been a privilege to chair the Communications and Digital Select Committee. I thank noble Lords for their very kind words about me today. I also thank again the colleagues I have worked with, and particularly the committee staff, both the current team and their predecessors—they really are superb. I wish my esteemed successor, the noble Baroness, Lady Keeley, great success; I am sure that the committee will thrive under her chairmanship.
Finally, I thank all the people I have met from the tech, media, creative and telecom sectors over the last three years. I am full of admiration for them and all they do to advance their businesses and contribute to the economy and our society, and I wish them continued success.
Environmental Targets (Public Authorities) Bill [HL]
Friday 13th June 2025
(3 days, 10 hours ago)
Lords ChamberEnvironmental Targets (Public Authorities) Bill [HL] 2024-26 View all Environmental Targets (Public Authorities) Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 15(Rev)-I Marshalled list for Committee - (11 Jun 2025)
Lord Hamilton of Epsom
Lord Hamilton of Epsom (Con)
My Lords, I start by thanking the noble Lord, Lord Clement-Jones, for pointing out that I am actually here. I intervened on my noble friend Lady Stowell to make the point that we all support the introduction of AI, but AI is going to be tremendously consumptive of electricity. Electricity prices are actually very high in this country, and I attribute that to the targets we have set for reaching net zero, which I think we should be ignoring. We should not ignore net zero, but we should ignore the targets, which are too short and are damaging the British economy. That is the reason for my amendment.
The noble Lord, Lord McNally, suggested my intervention was motivated by some tradition in the other House of intervening very early on in the debate and then catching the next train to the country. So I am grateful to the noble Lord, Lord Clement-Jones, for pointing out that I am still here.
Things have changed tremendously since I first tabled this amendment. Initially, the noble Lord, Lord Krebs, was rather hoping that I might withdraw my amendment. I think he hoped the Bill would go through without any debate and on the nod. That should not happen. The whole world of energy is now changing quite substantially, and we have got to be very wary of setting extremely arbitrary targets for reaching net zero, which have been damaging our economy and have led to extraordinarily high energy prices.
Since I tabled the amendment, we have had the report from the Tony Blair Institute, which is interesting because one the main things it pointed is that there is absolutely no way we are going to reach these global targets, for the simple reason that a very large number of developing countries are producing their own energy and want to produce it as cheaply as they possibly can. They are going to go on using fossil fuels for the indefinite future. Therefore, is it sensible for us, producing less than 1% of the world’s emissions, to set ourselves a net-zero target, when China, for instance, is producing 60% of its electricity from coal-fired power stations? Not only are the Chinese using probably the most efficient fossil fuel for producing electricity, they are also massively polluting the atmosphere in which their people have to live.
At the same time, we have stopped producing any form of electricity through coal. We have no more coal-burning power stations. When this started, the great theory was that somehow we were going to be leaders in the world; we would set an example and others would follow. Quite clearly, the Chinese are not following our example: they are merely taking massive advantage of the fact they can produce manufactures much more cheaply than we can here. The drain of manufacturing industry continues from this country, and that is driven, among other things, by the fact that our electricity prices are so much higher than those in the rest of the world. I admire the Government for having the ambition to reindustrialise this country, but it is not going to happen if our electricity prices are so much higher than everybody else’s in the world. This is one of the problems we are living with today: we are not competitive, and many other countries are taking advantage of us in this way.
I know the noble Lord, Lord Krebs, has had association with the Drax power station. I have the most enormous reservations about a so-called green power station, which is supposed to be fulfilling all the requirements of net zero but is polluting the atmosphere through every conceivable stage of its process of feeding fuel into that power station.
It is supposed to be dealing with wooden pellets that come from North America. There is a suggestion that quite a lot of trees have been cut down in North America as well to produce these wooden pellets. When the wooden pellets are eventually burned, they must be almost as contaminating as a coal-fired power station, if not quite. At the end of the day, we should not be contributing to CO2 emissions through generating power, even if it is under the auspices that somehow this is a renewable source, because I do not think that it makes any sense at all.
Baroness Young of Old Scone (Lab)
My Lords, first, I apologise that I was unable to be present for the Second Reading of this valuable Bill.
I am a bit confused by the amendment in the name of the noble Lord, Lord Hamilton, because it seems that he leaves intact in the Bill the very targets that he is against. In fact, the amendment appears to focus on something equally important, however, which is that it would remove the requirement for the listed public bodies to contribute to the
“delivery of the programme for adaptation to climate change under section 58 of the Climate Change Act 2008”.
The Government have a statutory responsibility to deliver the adaptation programme, and the Adaptation Committee of the Climate Change Committee in its successive assessments has reviewed whether we as a nation are doing what is required to make sure that nationally, including with regard to infrastructure, we are more resilient to climate-related floods, droughts, intense weather events, heatwaves and increased storminess, and all the things that we are increasingly seeing.
We are seeing households go through horrors of floods and rocketing insurance costs. We are seeing the Government having to pay out £60 million in recovery payments to farmers for the excessive rainfall in summer 2024 having a huge impact on their livelihoods. Farmers, of course, also suffer from not having enough water on occasion, and that again hits their bottom line in irrigation costs or loss of crops.
There are more frequent and extreme heatwaves which cause excess deaths, particularly in elderly people. According to the Office for National Statistics, in the 2022 heatwave excess deaths associated with five heat episodes alone were up by 6.2%. Climate change-related insurance claims are steadily rising, and all the impacts that we have just heard about are serious for people and for the economy.
If the noble Lord, Lord Hamilton, feels we are moving too fast because our electricity prices are high, I say that we are rapidly approaching a point when the real downstream costs of not doing enough to combat climate change are going to start hitting the economy, if they have not already done so. The Adaptation Committee has been clear that we are not making enough progress. Its progress report on the third national adaptation programme was very blunt:
“The UK’s preparations for climate change are inadequate ... The Government has yet to change the UK’s inadequate approach to tackling climate risks … The Government must”—
among other actions—
“Improve coordination across government … Integrate adaptation into all relevant policies … strategies and plans. Implement monitoring, evaluation and learning across all sectors”.
Clause 1(1)(c) is fundamental to that to ensure that public assets and critical public services are resilient to climate impacts now, avoiding the costs of coping with emergency events and costly retrofitting. We must not lose this adaptation clause from the Bill. I cannot recall off the top of my head the exact figure calculated for the cost of taking action on the climate targets, but if my memory serves me well, it was less than 1% of GDP lost and certainly less than the impact of the term in office of Liz Truss.
I shall briefly take this opportunity to stress the importance of this Bill as whole. The Government have statutory climate change and environmental targets that they urgently need to meet. A range of public bodies needs to act in support of the Government if the Government are to have any hope of meeting the targets.
We have experience in this House of laying such requirements on public bodies. During the debates on the Great British Energy Bill and the Crown Estate Bill, the noble Baroness, Lady Hayman, attempted to get a similar obligation about environmental and climate change targets laid on those bodies to help achieve that government strategy commitment. That took up considerable time of the House, and of Ministers outside the Chamber, and although we did not get agreement at that point to amend the Bills, we got valuable assurances from the Dispatch Box that those bodies would be expected to meet sustainable development objectives and, by analogy, climate and environment objectives as outlined in the two pieces of legislation that laid those requirements on government.
We could theoretically carry on trying to insert those obligations into public bodies one by one as suitable legislation comes past that would provide opportunities. Indeed, during 2000s, I proposed a sustainable development duty for every relevant public body as an opportune Bill came through your Lordships’ House, and I won the day on several public bodies that still have their sustainable development duties, but I can tell the Committee one thing: Ministers came to hate me. It would be much more efficient to get the Government to recognise that they will need all the help they can get to deliver the targets and to adopt the approach suggested by the noble Lord, Lord Krebs, of a single Bill doing all relevant public bodies in a job lot. Can the Minister delight us by telling us that he is seriously considering this or, at the very least, could he tell us how much progress has been made since commitment made at Second Reading by the Minister, the other noble Baroness, Lady Hayman, that the imminent revision of the environment improvement plan provides the best vehicle to consider the principles that this Bill is promoting and their practical implementation?
We are due to get the environment improvement plan revision before the summer—late spring is the technical term, I think. Can the Minister confirm that it will include specific measures to align public bodies’ action with delivery of the statutory climate change and environment targets, including the adaptation programme, despite the wish of the noble Lord, Lord Hamilton, to remove it?
Baroness Coffey (Con)
My Lords, I express my concern about this amendment. I completely understand where my noble friend Lord Hamilton is coming from with his wider concerns about some of these policies. I echo the comments of the noble Baroness, Lady Young of Old Scone, about adaptation for climate change in particular. Although it was criticised by the sub-committee of the Climate Change Committee—I was actually responsible for publishing it—and there may be disagreement about how far it would go and the connectivity, it was still important to make sure that we got it in place so that government departments knew what they should be doing. We had made that commitment to do so.
In particular, Clause 1(2) is a concern, as it says:
“The environmental recovery objective is a principal objective for the public bodies”.
I say to my noble friend that these bodies, which are by and large but not solely Defra bodies, are either Ministers or bodies that are accountable to Parliament, to Ministers or, indeed, to the electorate more widely when we get into local government. I realise I should have tabled an amendment here to consider mayoral authorities and mayors. It is vital that we recognise that there is already in law an enhanced biodiversity duty on all the public authorities.
I am also conscious that the noble Baroness, Lady Parminter, pointed out to me, I think in a different meeting, that when the Environment Bill went through this House the Government at the time resisted directly linking the local nature recovery strategies into this. I was not a Minister in Defra at that time so I must admit I was not aware of that detail, but I genuinely believe that the local nature recovery strategies are critical to making sure we achieve these targets, which is why I broadly support this Bill.
I have tabled a fresh Question for Written Answer, bearing in mind what the Minister, Mary Creagh, said, I think last November in response to somebody in the House of Commons, that she expected all the local nature recovery strategies to be published by the end of the first half of June. Clearly, that has not happened, but incentives are supposed to be given towards that, so I have tabled a Question for Written Answer to see what the progress has been on that.
I know that my noble friend adores our countryside, but our country will be very different if we do not protect our natural environment. On the targets referred to in Clauses 1(1)(a) and (b), for too long nature has been the Cinderella in thinking about climate change. The climate adaptation element is also key when it starts to come together in real action and not just saying, “We’re pleading with you to look after nature”. It can be difficult to explain why it matters to keep alive a species of bat in Colombia, but it starts to come together when we think about adaptation.
I am conscious that it is important that we continue to do whatever we can to honour our obligations. It was a Conservative Government who did the negotiations for the global biodiversity framework. I believe that it is vital that every sinew of government is working towards achieving that. It matters not just because we led the way in the negotiations and it took a lot of courage—I paid a lot of tribute at the time to our brilliant civil servants who were leading the day-to-day negotiations and working with Ministers to make them happen—but because we matter and nature matters. That is why I encourage my noble friend to consider whether he wants to press this again on Report, because, if he did, I am afraid that I would find myself in a different Lobby from him.
Baroness Parminter (LD)
My Lords, I agree with what the noble Baronesses said about the amendment from the noble Lord, Lord Hamilton. This Bill is incredibly important and it needs to stand in its entirety.
I will make two points. First, local authorities are critical if we are to get to net zero. Sectors that are either directly influenced or shaped by decisions from local authorities account for one-third of our emissions. We cannot get to net zero without them. This Bill rightly says that it is fine to have national targets to achieve net zero, but unless we actually will the means, it will not happen. Therefore, we need local authorities to use their planning, transport and housing functions to deliver net-zero policy on the ground.
Equally, following up from the noble Baroness, Lady Coffey, the natural environment is incredibly dependent on local authorities. As she rightly mentioned, local nature recovery strategies are a critical tool that local authorities can use to shape and support nature going forward, with their development processes and amenity space. We cannot get to nature recovery, for which we now have government targets, without them. Local authorities are critical. That is why the Bill needs to go ahead in its entirety.
I will pick up on a point made by the noble Baroness, Lady Young. At every opportunity in this Chamber and in the other place, Members are finding legislative vehicles to give these duties to public bodies to take forward the responsibility for climate and nature. She mentioned some of them, but there are others, including the Planning and Infrastructure Bill, which has just finished in the Commons. My honourable friend Gideon Amos MP attempted to insert into that Bill a new clause setting out that local authorities, in taking forward their planning and development functions, should take account of the climate and nature targets. As the noble Baroness rightly said, because this House and the other House know that local authorities and public bodies are the vehicles to deliver the nature and climate goals that we want, we will just end up with every Bill being bogged down with attempts to amend it accordingly, unless the Government take forward this incredibly well-measured and timely Bill—and I salute the noble Lord, Lord Krebs, for introducing it.
I hope the Minister will support the Bill, but like the noble Baroness, Lady Young, I will ask him one question. She mentioned that the Minister said at Second Reading that the EIP was the proper vehicle for taking this forward. However, that deals with the nature aspect; instead, I want to address the issue of the climate goals. Even if this Government do not take forward this timely Bill, they committed in December to introduce a public participation strategy this year. That would set out how businesses, civic groups and individuals would work on this; the Government would bring them together and show them how we can all, as a nation, move towards a just and fair transition to net zero. Critical to that is the role of local authorities—with their respective functions between housing, development and transport—in helping those businesses and individuals get there. Can the Minister assure the House today that, when the public participation strategy comes out—before the end of this year, I hope—it will make crystal clear the role of local authorities and public bodies in helping businesses and citizens help us get to net zero.
Lord Jamieson (Con)
My Lords, I was not planning to speak in this debate, but I have heard so much comment about local authorities that I felt I had to. I declare my interests as a councillor, an ex-leader of a council and chairman of the LGA. I find in those roles that local authorities are constantly emasculated by regulation, red tape, targets and being asked to do more than they could ever possibly achieve. We end up, therefore, always trying to compromise between various targets on which we could not deliver. We were being asked to do too much.
I do not know of a council that does not want better biodiversity and to address the issues of climate change, and that does not care about net zero. The problem is that the more targets, red tape and emasculation there is, the harder you make it for councils to do their jobs, whether that is caring for vulnerable children and adults, or hitting net-zero and climate change targets.
I ask noble Lords to consider whether this actually makes the job of councils and local authorities easier in delivering the things we all want, or whether it just adds another layer of bureaucracy. I cannot answer that for noble Lords, but I do know, having operated underneath all that red tape, that regulations, red tape and targets made my life more difficult in achieving stuff that every council I know wants to achieve anyway.
Earl Russell (LD)
My Lords, I rise to speak in support of this Bill, as I did at Second Reading. I too will oppose the amendment put forward by the noble Lord, Lord Hamilton of Epsom, because it removes crucial provisions relating to climate adaptation and environmental recovery objectives.
The truth is that, despite having really good environmental legislation, the Government are largely off track to meet their legal obligations, particularly on nature recovery, as we heard from the noble Baroness, Lady Coffey. The Office for Environmental Protection has concluded that the Government are largely off track to meet their nature goals; the Climate Change Committee has stated that the UK is not on track to meet its 2030 emissions targets; and in the recent report of the Adaptation Sub-Committee of the Climate Change Committee, not a single delivery plan for adaptation was rated as good. This is an alarming situation, and this Bill will help to resolve some of those problems.
The trouble is that nothing is joined up. I thought the noble Lord, Lord Krebs, put it really well at Second Reading when he said that the Government have all the levers, but they are not actually attached to anything. The Government are like a general in a military campaign who fails to tell the troops what the strategy is. Government needs to be interconnected, and these targets and ambitions need to go to the bodies, local authorities and people on the ground who are taking these decisions daily, to help make sure that government policy is joined up from top to bottom and united in its purpose and aims. That is what this Bill seeks to do.
As others have said, we sought to amend the Crown Estate Act, and we succeeded; we also succeeded in amending the Water (Special Measures) Act, but it wastes a lot of parliamentary time having to do this. I will be tabling an amendment to the Planning and Infrastructure Bill to put such a duty on the Forestry Commission as well. The Government need to do these things.
On Amendment 1 in the name of the noble Lord, Lord Hamilton, I too was a little bit confused by it; there was a disconnect between the wording of the amendment and the speech he gave. It would remove the requirement for public bodies to deliver the adaptation programme. Just yesterday evening, we had a debate in Grand Committee on the impact of wildfires, and the threat is ever-growing. If we do not adapt, people will suffer and we will face increased costs and damages. We need to prepare: the reality of climate change is here, and it is going to be disastrous for people and our economy. We need to do something about it.
Amendment 1 would also remove the nature recovery duty. However, we have to do this. Climate change and biodiversity losses are interconnected and interdependent. Government public bodies own 6% of the land in the UK, so why would we not seek to improve our biodiversity by making use of those bodies and the land under their control?
Councils, as we have heard, also have an important role. I will challenge some of the remarks made because, in Scotland, councils do have a duty to make climate-related improvements. In fact, where they do so, they are making real improvements. Lots of councils want a greater ability to do these things. I therefore reject the amendment because, if passed, it would rip the heart out of the Bill. I will however address some of the points the noble Lord, Lord Hamilton, has made.
I do not think it appropriate to talk about our climate targets as being arbitrary. They are set by scientists and are reviewed by the Climate Change Committee; they are real targets with real purpose. I agree with the noble Lord about the cost of energy bills. More must absolutely be done to bring down the cost of energy, but we need to remember that it is the cost of gas that sets the electricity price in the UK 98% of the time. I know that the Government are looking at energy market reform, but more needs to be done on that. The green economy grew by 10.3% last year, according to the CBI. In fact, it is one of the very few parts of the UK economy that is showing real growth.
I therefore have to say that I do not think the amendment is useful. I am not able to support it, but we do support the Bill.
The Earl of Effingham (Con)
My Lords, I thank the noble Lord, Lord Krebs, for his commitment to environmental issues and, as a result, bringing forward this Private Member’s Bill. The noble Lord’s expertise and dedication have long contributed to the strength of debate in your Lordship’s House, and we thank him for his continued leadership on this front.
I turn to Amendment 1 in the name of my noble friend Lord Hamilton of Epsom, and acknowledge the concerns that he has raised in putting forward this amendment. While we recognise the intention behind this Bill—to ensure that public bodies play their part in meeting our ambitious environmental targets—we need to offer some words of caution, particularly on the issue of overreach. I am sure that all noble Lords agree that our most cherished landscapes—our national parks and areas of outstanding natural beauty, now called national landscapes—must do everything they can to aid in the recovery of wildlife and biodiversity. That ambition is shared across your Lordships’ House and, indeed, the country as a whole.
Recognising that, Defra has already put in place the Farming in Protected Landscapes programme. This grant scheme allows farmers to receive support where they actively contribute to climate resilience, nature recovery and the protection of the character and cultural heritage of our landscapes. This is a targeted and thoughtful policy, which encourages both practical and local delivery. We therefore caution against laying on additional statutory duties that might potentially cut across these already established aims. The public bodies listed in the Bill are not environmental regulators, nor are they designed to be. Asking them, for example, to assist in meeting targets for particulate matter or broader air quality may stretch them beyond both their remit and their expertise.
Turning to local authorities, I remind your Lordships’ House of the substantial steps already taken through the Environment Act 2021, which amended the Natural Environment and Rural Communities Act 2006 to create a duty not just to conserve but to enhance biodiversity. Public authorities must now actively consider what action they can properly take, consistent with the proper exercise of their functions, to further that aim. This is a significant evolution in environmental governance. The key question, we believe, is whether we should be adding yet more duties on these authorities. We must consider not just what is desirable but what is feasible. Many public bodies, particularly the smaller local authorities, lack the resources and technical know-how to contribute meaningfully to the targets set out in the Bill. There is a risk that we distract those authorities from their essential services and dilute the impact of the environmental work already under way, as was so eloquently illustrated by my noble friend Lord Jamieson.
To take one example, Great British Nuclear, which I will speak to further in group 2, was established to help deliver nuclear energy projects in support of government policy. Its objectives are clear and technical. Of course, it goes without saying that it must adhere to the rules and regulations already set for environmental safety, but expecting it or other bodies to contribute to these environmental targets risks undermining their principal duties and weakening delivery across the board.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I congratulate the noble Lord, Lord Krebs, on his Private Member’s Bill, and thank him and all noble Lords who took part in the debate on Amendment 1. I look forward to hearing the noble Lord’s remarks shortly. He rightly highlights through his Bill, and his contributions so far during its passage through your Lordships’ House, the intertwined issues of environmental decline and climate change, on which this House must continue to engage.
As my noble friend Lady Hayman of Ullock has noted, the intention of the Bill to drive and strengthen public authority action towards meeting national, environmental and climate targets and objectives is important. Of this the Government are in no doubt. Encouraging nature’s recovery is a key priority, fundamental to the Government’s approach to economic growth. However, at the risk of repeating my noble friend’s comments at Second Reading, there are already measures in place seeking to realise this Bill’s ambition.
For example, we expect that the Natural Environment and Rural Communities Act’s biodiversity duty, strengthened through the Environment Act, will ensure public authorities make conservation and enhancement of biodiversity a core part of the delivery of their functions. Local nature recovery strategies will set the strategic priorities for nature recovery in an area and identify the best locations for land management actions to deliver those priorities. These are progressing well, and we expect most or all to be published this year or shortly after, covering the length and breadth of England.
On climate adaptations, England’s third national adaptation programme, NAP3, summarises the collective actions the Government are taking to address risks and opportunities from climate change and to ensure that adaptation is incorporated into government programmes. Recently, through the Water (Special Measures) Act, this Government introduced a requirement on Ofwat to have regard to the need to contribute to achieving targets in the Environment Act 2021 and the Climate Change Act 2008 when carrying out its functions. We intend to strengthen the statutory purposes of protected landscapes, our most iconic and inspiring places, to give them a clear mandate to recover nature and to widen the public’s access to it.
This Government are firmly committed to working collaboratively to improve the natural environment. As we have already heard in noble Lords’ contributions this afternoon, the Secretary of State for Environment, Food and Rural Affairs wasted no time in announcing a rapid review of the statutory environmental improvement plan, and we will publish a revised EIP this year. This revised plan will focus on cleaning up our waterways, reducing waste across the economy, planting millions more trees, improving air quality and halting the decline in species by 2030. To answer the question posed by my noble friend Lady Young of Old Scone on wider alignment, there are already measures in place to realise the Bill’s ambitions through this collection of actions.
Further, on net zero, the Government will deliver an updated plan that sets out the policy package to the end of carbon budget 6 in 2037 for all sectors by October 2025. This will outline the policies and proposals needed to deliver carbon budgets 4 to 6 and our nationally determined contribution commitments on a pathway to net zero.
The amendment in the name of the noble Lord, Lord Hamilton, effectively proposes the removal of climate adaptation from the remit of this Bill. I agree with my noble friend Lady Young of Old Scone and the noble Earl, Lord Russell, that the noble Lord’s speech seemed more focused on net-zero targets than climate adaptation, which is the focus of his amendment.
Climate adaptation is essential for supporting our natural environment and biodiversity, as the Bill from the noble Lord, Lord Krebs, recognises, as well as protecting our communities and economy. Climate change is now an inevitable part of our present and future, posing many challenges with severe impacts on our lives, health and prosperity. It is therefore essential that we continue to adapt to climate change, not only for the environment’s sake but to reduce its significant economic and growth impacts. As my noble friend Lady Hayman of Ullock made clear at Second Reading, this Government are fully committed to addressing net zero and the role that climate change plays, as summarised in NAP3.
I will briefly address the points the noble Lord, Lord Hamilton, made about net zero. The British people deserve lower-cost, clean and secure power—we are all in agreement on that—and the good jobs that will come along with that. Certainly, it is the role of all Governments to protect us from the long-term threats we face in energy security. The economic case, the national security case and the environmental case all point in the same direction, which is our clean green energy mission that will protect the country from exposure to unstable international markets and give greater security and stability to both family and national finances in terms of energy costs. We will achieve this through delivering clean power by 2030 and accelerating to net zero. Our mission will bring energy security, protect bill payers, create good jobs and help protect future generations from the costs of climate breakdown.
The noble Baroness, Lady Parminter, spoke with passion and knowledge about the importance of engaging every level of society—local authorities, businesses, individuals and other stakeholder groups—in our mission to tackle climate adaptation and pursue net zero. Defra and DESNZ are working on a public participation strategy. The noble Baroness made some well-observed comments about the importance of engagement at all levels of society and I will take that back to colleagues in both departments.
In conclusion, I thank the noble Lord, Lord Krebs, for bringing this Bill to the House and enabling this debate, and I look forward to hearing his comments.
Lord Krebs (CB)
My Lords, I declare my interests as set out in the register—in particular, as the noble Lord, Lord Hamilton of Epsom, has already mentioned, that I chair the independent advisory group on sustainability for the Drax Group.
I thank the noble Baroness, Lady Hayman of Ullock, for meeting me to discuss the Bill and the noble Lord, Lord Katz, for discussing it with me just a couple of days ago. I thank all noble Lords for their contributions to this debate. It was heartening to hear support for the Bill from all sides of the House, although there were some voices of scepticism. It is important to recognise that the environment and climate are not partisan issues; they are things that affect future generations. We are concerned about it for the future of our children, grandchildren and future generations in general. I thank the noble Earl, Lord Effingham, for his kind words about me personally.
When I read Amendment 1 in the name of the noble Lord, Lord Hamilton of Epsom, its purpose was not clear to me. As others have said, including the noble Baroness, Lady Young of Old Scone and Lady Coffey, the noble Earl, Lord Russell, and the Minister, it removes the adaptation element of the environmental recovery objective by deleting lines seven and eight of Clause 1. It also removes the environmental recovery objective itself by deleting lines nine to 11. As others have pointed out, without this objective, the rest of the Bill would make no sense, as it is all about how the listed public authorities deliver the environmental recovery objective. I was therefore tempted to conclude that the noble Lord intended it as a wrecking amendment. However, I now understand that the amendment is based on scepticism about achieving the targets in the Environment Act and, particularly, the net-zero target of the Climate Change Act.
In other words, the amendment is not directed at my Bill, but at these two Acts of Parliament. I could rebut in detail the arguments made about net zero by the noble Lord, Lord Hamilton, but because I believe the amendment is out of scope, I prefer not to engage in the detail. I suggest that if the noble Lord objects to the net-zero target passed by the previous Conservative Government, it would be more appropriate to try to change that Act rather than this Bill.
It is therefore perhaps worth restating what this Bill is about, and some of these points have already been made. It introduces an objective for the many public authorities, regulators, land managers, infrastructure providers, planning authorities and so on to contribute to the specific targets in the Environment Act and the Climate Change Act. As the noble Earl, Lord Russell, said, these public authorities are the bodies that make the daily decisions that affect the state of our environment, our resilience to climate change and our greenhouse gas footprint. In fact, the truth is that, without the contributions of these public authorities, there is no hope of meeting the targets—a point made by a number of noble Lords.
I will briefly allude to local authorities, since they were mentioned by the noble Baroness, Lady Parminter, and the noble Lord, Lord Jamieson, among others. It is worth noting that, in spite of what has been said, on Wednesday this week the LGA published its position on my Bill, in which it said it is in principle in favour of a statutory climate duty. There you have it: the LGA, which represents local authorities, supports the intention of this Bill.
The Minister has said that the Government are not going accept the Bill, although they agree with the principles in it. However, I point out that the Government have recently said that they will
“clarify how the environmental improvement plan will be delivered, including the role of government departments and bodies, environmental NGOs, businesses, farmers, landowners/managers, local government and the public”.
This Bill should be a godsend. It provides the clarity that the Government is seeking on how to deliver the environmental improvement plan.
Furthermore, two recent reports, commissioned by Defra, also point in the same direction as my Bill. The interim Cunliffe report, on the water sector, concludes that
“the sector needs a clearer and more consistent long-term direction—one that aligns environmental ambition, the provision of water supply and wastewater removal, and the expectations of customers … We believe the legislative framework that underpins the sector must be revisited”,
which is what this Bill is in part doing. The report goes on to mention resilience and adaptation.
The Corry review of the regulatory system in Defra states that the system is now
“inefficient and difficult for customers to navigate. It needs to work in a fundamentally different way, to become a system focused on delivering positive outcomes for nature and the environment and to be an aid not an impediment to sustainable growth”.
So there you have it. The Government’s own plans for the environmental improvement plan and the two reviews that Defra, commissioned by Cunliffe and Corry, all point in the same direction as my Bill: make the regulatory regime simpler, clearer and more effective. At the same time, ensure that public authorities are helping to deliver the specific legally binding targets for nature and climate.
During the debate, the Minister and other noble Lords referred to a number of existing initiatives: for example, the biodiversity duty that the noble Baroness, Lady Coffey, mentioned; the local nature recovery strategies that a number of noble Lords referred to; the devolution framework, which has been implicit, although not specifically referred to; and the protected landscapes targets and outcomes framework, referred to by the noble Earl, Lord Effingham, among others. These initiatives are, without doubt, important, but they could be enhanced by specific guidance on timelines for meeting the targets in the two Acts. The biodiversity duty, for instance, has the rather weak guidance:
“Consider what you can do to conserve and enhance biodiversity. Agree policies and specific objectives based on your consideration. Act to deliver your policies and achieve your objectives”.
There is no link to the Environment Act or the Climate Change Act, so we could strengthen the guidance for those duties.
To summarise, my three asks of the Government in the future, would be—
Baroness Coffey (Con)
I understand what the noble Lord says on that, recognising that this was covering every single bit of government. The guidance that was attached to the production of local nature recovery strategies was actually very much stronger and more specific.
Lord Krebs (CB)
I thank the noble Baroness for pointing that out, and I accept her comment.
To summarise, my three asks of the Government are: first, to tighten the guidance where appropriate, following the interjection of the noble Baroness, Lady Coffey, on the existing initiatives aimed at protecting nature and tackling climate change; secondly, to ensure that the environmental improvement plan includes the role of public authorities in meeting the specific time-bound targets in the Environment Act and the Climate Change Act, a point made by the noble Baroness, Lady Young of Old Scone; and, thirdly, in line with Corry and Cunliffe, to modernise and simplify the legislation, as proposed by my Bill. In the meantime, I very much hope that the noble Lord, Lord Hamilton of Epsom, having had a good debate about his amendment, will agree to withdraw it.
Lord Hamilton of Epsom (Con)
My Lords, I started this debate by saying that my real concern about all these green initiatives is that they are adding to costs and are one of the reasons why our electricity prices are some of the highest in the G7 and make this country very uncompetitive, particularly when it comes to manufacturing industry, which continues to leach from this country to other countries in the world. The chances of restoring our manufacturing sector seem to me to be pretty faint as long as we have these astronomically high prices. I noticed during the debate that a lot of people have gone on about the duties of all the authorities listed here to adapt to green initiatives, but on the other hand, nobody talks about the cost of doing that. That is really my concern, right across the board.
The green initiatives that we have under net-zero legislation are actually leading to customers paying more for services. I am surprised that the Local Government Association says that it approves of the Bill, because it will mean that community charge payers will be paying more money to enact all of this stuff. But I think we have had an interesting debate and I am more than happy to withdraw my amendment.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, it might be helpful if I inform your Lordships’ House that we will be finishing all the business on today’s Order Paper, so Members may want to consider the length of their contributions.
Lord Jamieson (Con)
Perhaps I might clarify that that has not been agreed by the usual channels and the convention is that we finish at 3 pm. We have already had two very late sittings this week, if not three.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I did just put it in the Teams chat. I did try to talk to the noble Lord about it this afternoon. I am happy to continue such conversations, but having this conversation is also eating into our time. It may be helpful, given that noble Lords are here waiting for their business to commence, that we commence with the business.
Clause 2: Duty on public bodies to take steps to achieve environmental targets
Amendment 2
Viscount Trenchard
Viscount Trenchard (Con)
My Lords, I declare my interest as a member of the advisory board of Penultimate Power UK Ltd and as a consultant to Japan Bank for International Cooperation.
I congratulate the noble Lord, Lord Krebs, on obtaining a Committee stage debate for his Bill. I recognise his consistent efforts in raising environmental and climate issues in this House, although I may not always wholly agree with him and sometimes question whether his approach is proportionate. I regret that the obsessive determination of both the last Government and this one to eliminate fossil fuels too quickly, particularly gas, has ensured that the cost of providing electricity to industrial users is now the highest in the world. For example, household electricity in the UK is 42% more expensive than in France and 169% more expensive than in the United States. As for industrial electricity, UK prices are two and a half times as much as the equivalents in both France and the US.
The comparisons with France are important because French electricity is generated 70% or more from nuclear and the UK grid depends for around 15% of its supply on imports, much of that from France. I did not speak at Second Reading on 18 October but the contribution to that debate by my noble friend Lord Blencathra is relevant to my amendment. My noble friend said:
“Take Great British Nuclear, which was created in 2023, not 100 years ago. It has as its objects ‘to facilitate the design, construction, commissioning and operation of nuclear energy generation projects for the purpose of furthering any policies published by His Majesty’s government’. I do not think you can make a better contribution to net zero than that”.—”.—[Official Report, 18/10/24; col. 397.]
My Amendment 2 seeks to exempt Great British Nuclear—weirdly and misleadingly renamed on Tuesday as Great British Energy-Nuclear, or GBE-N—from the duty to adhere to the environmental targets laid out in the Bill. I have argued before that to establish GBE as a separate publicly owned company from what is now GBE-N was a mistake and that it would have been much more sensible to have integrated GBE-N into GBE at the time of GBE’s establishment. I say that the renaming is misleading because it gives the impression that GBE-N is being brought under GBE’s umbrella. Perhaps the Minister can tell your Lordships what corporate or structural changes have taken place in either company as a result of the renaming.
Noble Lords will remember that when we debated the GBE Bill many of us lamented the fact that GBE has been given £8 billion to invest in energy projects, principally wind and solar, whereas GBE-N does not have any committed funding to invest in nuclear projects. I move this amendment not out of disregard for the environment but from a desire to see our environmental goals achieved through pragmatic, economically responsible policy. The Bill sets ambitious and admirable goals but, in its current form, it risks entangling Great British Energy-Nuclear, a vital strategic body, in layers of environmental regulation that could unintentionally undermine our path to both net zero and energy independence.
Nuclear energy is not merely an option; it is an economic and environmental necessity for this country. However, as many noble Lords will appreciate, the economics of nuclear are finely balanced. The upfront capital costs are at present extraordinarily high. Each new gigawatt-scale power station costs billions of pounds. We acknowledge that investors, both domestic and international, will certainly scrutinise every risk and additional burden before making a decision to invest.
I welcome the Government’s decision to invest in Sizewell C, as such huge projects are always going to need public sector support. To subject Great British Energy-Nuclear to further regulatory obligations under the Bill beyond what it already faces from the Office for Nuclear Regulation, the Environment Agency and planning authorities would be to risk unnecessary cost inflation. It would create bureaucratic drag and, worse, it would signal to markets that the UK remains a difficult environment for major infrastructure investment.
Let us be clear: nuclear energy is not on a level playing field with other low-carbon technologies. Wind and solar have enjoyed significant subsidy support over the past decade through contracts for difference, feed-in tariffs and other mechanisms. Nuclear, by contrast, is expected to finance itself under far more stringent conditions and is simultaneously capable of delivering baseload power that intermittent renewables cannot. Why is the consumer required to subsidise only intermittent energy sources but not nuclear projects?
The result of that is that UK-developed new nuclear schemes suffer a massive disadvantage compared with UK renewable schemes but also compared with nuclear schemes developed overseas, which, fortified with massive subsidies from foreign Governments, particularly the US, are coming over here and driving out UK-originated nuclear schemes which cannot compete financially.
Furthermore, nuclear is already held to the highest environmental and safety standards. From construction to decommissioning, the nuclear industry is subject to extensive regulation, scrutinised by multiple agencies and underpinned by rigorous science. It is misleading to suggest that this sector operates without accountability; to the contrary, it is perhaps the most tightly governed of all.
I say this not out of a lack of concern for the environment but because we must think strategically. Nuclear energy is, after all, one of the cleanest forms of energy over the long term. Its carbon footprint is negligible and it plays a critical role in achieving a stable low-carbon grid. The Government have rightly committed to ramping up nuclear capacity, both through small modular reactors and new gigawatt-scale stations. But these ambitions must be matched by policy consistency. If Great British Nuclear is to fulfil its remit, it must not be hobbled by duplicative environmental targets that add cost without adding value.
Furthermore, I remind the House that GBN is not a typical public body. It is a strategic delivery vehicle. Its success is measured not in reports or audits but in gigawatts connected to the grid. I propose, therefore, that we either exempt Great British nuclear entirely or create a more tailored framework, recognising the unique challenges and contributions of nuclear infrastructure.
Our duty is to make Britain cleaner, safer and more secure. We must avoid binding the hands of the very institutions we have created to do precisely that. I urge the House to support this measured, targeted amendment and to ensure that economic realism and environmental ambition go hand in hand. I beg to move.
Earl Russell (LD)
My Lords, very briefly, I thank the noble Viscount, Lord Trenchard, for bringing his amendment, which seeks to remove Great British Nuclear from the Bill. I just remind noble Lords that the Bill of the noble Lord, Lord Krebs, seeks to install an environmental recovery obligation and adaptation for public bodies to help meet our targets under the Environment Act and the Climate Change Act.
The purpose of this amendment is to remove Great British Nuclear and make an exception for that particular body which does not apply to any of the other 29 listed public bodies that are named in the Bill. For the noble Viscount’s argument to be successful, an argument needs to be put forward that Great British Nuclear is in a particular situation that is separate to all the other bodies named in the Bill, such that it has a specific, cast-iron case to be removed from the provisions in the Private Member’s Bill before us today.
I have not heard that argument, so, in short, I do not support this amendment—rather the opposite. I remind noble Lords that only the other week the Public Accounts Committee published a report on Sellafield talking about the intolerable risks there. There is a £136 billion cost and a projected timeframe of 100 years for dealing with the nuclear waste legacy in this country. This Government have no long-term geological store for nuclear waste and are unlikely to have one before the 2050s at the earliest. That is in sharp contrast with the announcement of a nuclear renaissance.
The Earl of Effingham (Con)
My Lords, Amendment 2, tabled by my noble friend Lord Trenchard, seeks to remove Great British Nuclear, now re-named Great British Energy-Nuclear, from the scope of this Bill. In adding this amendment, my noble friend recognises the unique role of nuclear energy in our national energy strategy. He cautions against implementing duplicative regulatory burdens that could hinder the progress of a key part of the nation’s energy infrastructure.
Nuclear power is already one of the most tightly regulated industries in the UK, subject to the most stringent environmental and safety standards. The existing framework ensures that nuclear development aligns with our broader environmental goals without the need for additional oversight. Imposing further targets through this Bill may simply add another layer of unnecessary obligations, delaying projects that are critical to our energy security and His Majesty’s Government’s net-zero ambitions.
We must confront the reality that nuclear energy is different from other forms of power generation. The upfront costs are substantial, the lead times are long, investors and operators need stability and clarity, not shifting regulatory sands that might deter investment. If we are serious about expanding nuclear capacity, as His Majesty’s Government say they are, we must avoid measures that might make those projects even more challenging to deliver.
We do not believe that this amendment weakens our commitment to the environment. On the contrary, it recognises that nuclear energy is already a low-carbon, reliable baseload power source that will be indispensable as we transition from fossil fuels. By exempting Great British Nuclear from the Bill, we are not rolling back environmental safeguards but ensuring that nuclear can fulfil its vital role to society without the risk of being impacted by well-intentioned but ultimately unnecessary additional regulation.
We urge your Lordships’ House to carefully consider the amendment. A laser focus on delivering clean, secure and affordable energy, which is already highly regulated by experts, will pay dividends for future generations of this country.
Lord Katz (Lab)
My Lords, I thank the noble Viscount, Lord Trenchard, for his amendment. He made some points about the new formation of Great British Energy-Nuclear. I am afraid that some of the detail that he asked for regarding the corporate structure of that body is a little beyond my bailiwick, so I undertake to write to him with more detail.
However, let me reassure the noble Viscount that Great British Energy-Nuclear, as it is now called, will continue to drive forward the UK small modular reactor programme as part of this Government’s commitment to net zero and mission to make the UK a clean energy superpower. I agree with the comments made by the noble Earl, Lord Russell, in relation to the amendment and its contribution to the Bill, and I have already spoken at some length in my comments on the previous amendment about the Government’s commitment to making the UK a clean energy superpower.
After the spending review this week and the commitments that we have made not just to the SMR programme but to Sizewell C, we can be in no doubt that this is the biggest nuclear rollout for a generation, and we see nuclear as very much a part of creating that clean energy superpower. For the sake of brevity, I will leave my comments at that.
Lord Krebs (CB)
My Lords, I thank the noble Viscount, Lord Trenchard, for bringing forward this amendment and all noble Lords who have taken part in this very short debate. I will not speak at length, because I can make my point very briefly.
At Second Reading, I pointed out that there are two classic objections to the proposals in my Bill: on the one hand, they are unnecessary; on the other, they are too burdensome. Both cannot be true at the same time. Yet it seemed to me that in the debate we have just had, the point was made that the nuclear industry, of which I am in full support, is very tightly regulated, therefore, this additional layer of regulation is unnecessary. On the other hand, we heard that this additional layer of regulation would be too burdensome and impose duties on the nuclear industry that would discourage investment. Both simply cannot be true. If it is doing it anyway, it cannot be burdensome; if it is not doing it anyway, maybe it needs a bit of extra burden.
In truth, when we look at what the Government’s website says about GBE-N, we see that it says that it will deliver the Government’s long-term nuclear energy programme and support the UK’s energy security and contribute to our net-zero targets—so tick the box, job done. It is already contributing to net zero.
One of the other tasks that GBE-N will have, alongside the competition to build up to three SMRs, is, along with Rolls-Royce, to choose the sites where the SMRs are to be built. Those choices will have environmental implications. It seems to me perfectly reasonable, when those choices are made, that they should reflect the targets in the Environment Act. If they were clearly going to be detrimental to the target of reversing the decline in species diversity by 2030, it would be reasonable for GBE-N and Rolls-Royce to be asked to think again.
So, although I have heard an argument for removing GBE-N from the list of public authorities, I am not convinced by it—although I will take it away and think about it further. In the meantime, I very much hope that the noble Viscount, Lord Trenchard, will withdraw his amendment.
Viscount Trenchard (Con)
My Lords, I am grateful to noble Lords who have contributed to this short debate, and I thank the House for the thoughtful and considered attention that it has given to my amendment.
Let me conclude by returning to the core principle that underpins this amendment. We simply cannot deliver a cheap, reliable and secure energy future without nuclear power generation. It is therefore essential that we increase Britain’s nuclear capacity. Unlike the intermittent technologies so generously backed by the Secretary of State, nuclear provides what no other low-carbon technology currently can: reliable baseload power. It offers inertia to stabilise our grid and consistency to underpin our economy and long-term energy security that does not depend on the weather or foreign imports. It does all this while requiring substantially less new grid infrastructure than widely dispersed solar and wind installations. The more new nuclear we have, the less we need to erect ugly pylons in our beautiful countryside.
Yet we are not on track. As things stand, Britain will not have small modular reactors connected to the grid until the 2030s. That is not a criticism of the technology but a reflection of government hesitation—hesitation that stands in stark contrast to the headlong rush to achieve clean power by 2030, relying almost entirely on intermittent renewables and simultaneously dismantling our domestic oil and gas capacity in the North Sea.
We also need to explore the urgent need to accelerate the commercial development of so-called AMR technologies, some of which—such as the Japanese high-temperature gas-cooled reactor technology, whose prototype was developed at Winfrith in Dorset in 1965 as the Dragon reactor—are proven to be inherently safe. Like the noble Earl, Lord Russell, I regret the reduction in the funds committed to GBE; it makes it all the more unlikely that Great British Energy will have any funding available for nuclear projects. I thank my noble friend Lord Effingham for his strong support and the noble Lord, Lord Katz, for agreeing to write to me about changes to the corporate structures of both GBE and GBE-N.
It is true that nuclear projects are strictly regulated from a safety point of view. I say that in response to the point made by the noble Lord, Lord Krebs, who said that it could not be true both that nuclear was overregulated, so it should be easy to comply with these additional regulations, and that it was underregulated, meaning that increasing the regulation would make the UK seem a less attractive destination for investment. I think that both are true. It is true that, from a safety point of view, nuclear projects and nuclear power stations are regulated extremely strictly, but the environmental regulations are a different type of regulation. The environmental and planning-related regulations are an additional burden with which GBE-N is not, at present, expecting to have to comply; they would represent an additional burden to investment in nuclear projects.
With my gratitude to the Minister and other noble Lords, I beg leave to withdraw my amendment.
Lord Evans of Rainow
“(z5) The Canal and River Trust.”
Lord Evans of Rainow (Con)
My Lords, this amendment seeks to add the Canal & River Trust to the list of public authorities that are subject to the provisions of the Bill, which would in turn make it subject to the provisions of the Environment Act 2021—a landmark Conservative legislative achievement. Our canal tow-paths, once the proud arteries of industrialised Britain, are now too often strewn with litter, fly-tipped waste and the detritus of neglect. My amendment would place additional duties on the Canal & River Trust, sending a message to the trust that those who use canals regularly demand cleaner canals.
When Britain largely deindustrialised and other modes of freight transportation became preferable, we were left with a question mark over the future of canals. If noble Lords who travel on the west coast main line look at the railway line, they will see that it follows the link of the Trent and Mersey Canal—as it weaves its way from the north-west down to London, you can see those former industrial and logistic communities of the past—but, today, millions of people want to use our canals as pleasant urban green spaces. They are a space for leisure and exercise. Many people live on our canals, and they have become an important space for wildlife in city centres.
Sadly, the state of many of these routes, particularly in urban areas, has deteriorated to an intolerable point because of increasing quantities of litter on our tow-paths. This is a creeping pattern of degradation, whose harms are civic as much as they are environmental. It was reported in the Islington Tribune on 23 May this year that local campaigners had founded the cleaner canals campaign, bringing renewed attention to this issue and underscoring the impact of litter on residents and wildlife alike. The campaign speaks for many who feel that the trust’s decision to remove garbage bins from the urban tow-paths two years ago was fundamentally wrong. One of the campaign’s leading voices, Oliver Mosley, expressed this plainly. Commenting in the article, he said:
“Despite receiving £50 million of taxpayers’ money annually, the Canal and River Trust have decided to remove bins from our canals in Islington, resulting in appalling levels of waste which are an eyesore and a threat to the wildlife”.
Viscount Trenchard (Con)
My Lords, I support my noble friend Lord Evans of Rainow’s amendment, which is not inconsistent with my previous amendment seeking to exempt a particular public body from the list affected by the Bill brought forward by the noble Lord, Lord Krebs. I also support my noble friend’s desire to include another public body. But the conditions of the two public bodies are inherently different. Great British Energy-Nuclear is in a hugely different and uniquely difficult position, whereas I agree entirely with my noble friend that it is regrettable that the Canal & River Trust has removed bins.
Our towpaths, river communities and waterways are an essential part of our community. Think of a family who are out for a walk along a canal with three or four children eating bags of crisps and ice creams. Where can they put all the litter? It is not realistic to expect all of them to carry it all home in huge bags. The removal of the litterbins by the Canal & River Trust is hugely regrettable. For that reason and the others put forward by my noble friend, I support his amendment.
Baroness Young of Old Scone (Lab)
My Lords, I hesitate to speak because I am very conscious that the next debate is waiting to begin. I thank the noble Lord, Lord Evans, for his amendment, and mainly for the degree of clarity it gave me on the status of the Canal & River Trust. According to the ONS, it is a public non-financial corporation as well as a charity, an interesting status that I have never come across before.
There is huge scope for debate about what goes on and comes off the list, although I would prefer it to be mostly about what goes on it. I will give another example to that of the noble Baroness, Lady Coffey, who rightly pointed out that mayoral authorities should be on the list. I will make the case for one particularly important body, for which I should have tabled an amendment. If the Bill proceeds further, I will table an amendment to bring the newly created National Infrastructure and Service Transformation Authority—NISTA—on to the list. It has been set up to implement the 10-year national infrastructure strategy. It will have a key influence on land use and development, and their impact on climate and environment targets.
Under its memorandum of understanding, I believe that it has inherited—although it is very difficult to track this down—the climate change duties from one of its predecessor bodies, but it is not clear whether it has any duties towards the environmental and biodiversity targets. It is very important that this hugely impactful infrastructure role be brought on to the list. I do not believe that the Government can achieve both the climate change and the biodiversity and other environmental targets if bodies such as NISTA are not tasked with pulling their weight on this when exercising their powers and delivering their primary objectives. I believe that bodies can walk, talk and chew gum and that the future of this planet, this nation and this economy depends on all public bodies learning to do that. It is possible.
Viscount Eccles (Con)
My Lords, I apologise; I am very conscious of the time. I support my noble friend’s amendment.
In making another suggestion for the list, I declare my interests: I was the chairman of Kew Gardens and I am involved in the Millennium Seed Bank and all it does. The most important sentence in the Bill says,
“take all reasonable steps to meet the environmental recovery objective”.
Kew is right in the middle of doing things to recover the environmental objective, and I very strongly believe that it should be added to the list. Indeed, I am quite surprised that it has not been included already.
Earl Russell (LD)
My Lords, I will speak very briefly. I thank the noble Lord, Lord Evans of Rainow, for his amendment proposing to add the Canal & River Trust to the list of public bodies in Clause 2 of the Bill of the noble Lord, Lord Krebs.
While I have every sympathy for his case, the truth is that the Canal & River Trust is a charity that was set up in 2012. My understanding is that, as a charity, it is not a public body, and it is therefore simply not possible to add it to the list of bodies covered by provisions in the Bill.
The Earl of Effingham (Con)
My Lords, I will speak to Amendment 3 in the name of the noble Lord, Lord Evans of Rainow, on the inclusion of the Canal & River Trust in the list of public bodies subject to duties under the Bill.
I thank the noble Lord for his scrutiny and diligence in drawing attention to what is undeniably an important point of principle and practice, as was referenced by the noble Baroness, Lady Young of Old Scone. The Canal & River Trust, as the noble Lord rightly noted, is responsible for an extensive and significant network of inland waterways. These assets contribute not only to heritage and recreation but to the health of our natural environment.
There is no question but that the trust plays a role in environmental outcomes. Its custodianship of over 2,000 miles of canals and rivers and the biodiversity that supports is of considerable public interest. It is worth emphasising, as the noble Lord, Lord Evans, has, the persistent and ever-increasing problem of littering in our canals. Litter not only blights these beautiful and historic waterways, diminishing the enjoyment of walkers, boaters and anglers: crucially, it also harms wildlife and contributes to the broader degradation of aquatic ecosystems.
Lord Katz (Lab)
My Lords, I thank the noble Lord, Lord Evans, for his amendment to include the Canal & River Trust in the list of authorities in Clause 2(2). I also pay some tribute to his creative way of raising concerns about the stewardship of the Canal & River Trust, such as the removal of litter bins and other associated issues relating to its environmental responsibilities. I will certainly bring his comments to the attention of my colleague, Minister Hardy, who has responsibility for the Canal & River Trust in the department.
The Canal & River Trust is an invaluable organisation with which Defra and other government departments work closely. The Government will continue to collaborate with the trust to ensure that its efforts are best directed and realised, to improve and protect the natural environment for the public. For the sake of brevity and the progress of business, I will leave it at that.
Lord Krebs (CB)
My Lords, I thank the noble Lord, Lord Evans of Rainow, for raising this question and all those who took part in this short debate. I have the good fortune to live in central Oxford, very close to the Oxford Canal. Indeed, when I set off this morning, I did my usual 10-minute walk down the canal towpath from my house to Oxford station. The canal in Oxford, together with its canal banks, forms a wonderful corridor for wildlife, leading right into the city centre. I often see a heron fishing on one of the weirs and occasionally glimpse the iridescent blue of a kingfisher flying past. In the winter, I see groups of goosander that have migrated south for the winter from Scotland or Scandinavia.
I am lucky. Unlike in the examples cited by the noble Lord, Lord Evans of Rainow, in my neighbourhood the canal towpath is well maintained and litter free. I very much wish that were true of the rest of the canal network. In fact, my only complaint about the canal in Oxford is a rather different one: a number of residential canal boats—already referred to by the noble Lord, Lord Evans—are allowed to burn dirty solid fuel, which would not be allowed in other residences. I wish the Government would do something about this. After all, one of the six key targets in the Environment Act is to cut exposure to the most harmful air pollutant to human health, PM2.5. The canal boats could be a good starting point for reducing that pollution exposure.
In principle, I think it would be very good to add the Canal & River Trust to the list. However, this is now above my pay grade because I do not fully understand the position of the CRT. As the noble Earl, Lord Russell, said, and I looked it up myself, it is a registered charity and therefore governed by the Charity Commission and not subject to the same regulations as public authorities. I assume it would have to change its charitable objects in order to comply with the intention of this Bill, so I would like to take it away and understand it. In the meantime, I very much hope that the noble Lord, Lord Evans of Rainow, will see fit to withdraw his amendment, recognising that it has had a very sympathetic hearing from all around the House.
Before I sit down, I once again thank all noble Lords who have contributed to the debate this afternoon. I have not mentioned the Wildlife and Countryside Link and Green Alliance, which were very helpful in preparing the material for this Bill. I particularly thank the noble Baroness, Lady Hayman of Ullock, for agreeing to continue the discussion of how the ideas in the Bill can be taken forward.
The noble Baronesses, Lady Young of Old Scone and Lady Parminter, have already mentioned that there are two routes ahead of us. We all agree with the intention of the Bill, plus or minus some points. I take the points made by the noble Lord, Lord Hamilton of Epsom, and the noble Viscount, Lord Trenchard, and we all agree in general with the principle of improving our environment. The two routes that the Government have are either to accept that there will be piecemeal chipping away as Bills come forward and people try to achieve amendments, which is inefficient and time-consuming, or they could do it at one fell swoop very simply by accepting the Bill that I have proposed.
Lord Evans of Rainow (Con)
My Lords, I thank the noble Lord, Lord Krebs. I am quite unfamiliar with being treated sympathetically, but I do accept that in this case, the noble Lord has certainly done so. I thank my noble friends Lord Eccles, Lord Trenchard and Lord Effingham for their support. The noble Baroness, Lady Young of Old Scone, raised a very important point about the ambiguity of this trust because, as the Front-Bench spokesman for the Liberal Democrats said, it is a charity. Well, it is a charity, but it is in receipt of £50 million of hard-working taxpayers’ money. Any organisation that is in receipt of taxpayers’ money from central government is aware that the Government might need to have a wee word with it if it is felt that it is not providing the public service that it should be doing. I am disappointed that, over 13 years, the trust did not work out the business model so that it did not need the £50 million of taxpayers’ money. The whole point was that, over time, it would remove that subsidy. It failed to do that and also failed to supply simple things such as rubbish bins on canals in urban areas. It does a good job in the countryside, but it is urban areas in particular that I am thinking of. I am most grateful to noble Lords and I beg leave to withdraw the amendment.
Asylum Support (Prescribed Period) Bill [HL]
Friday 13th June 2025
(3 days, 10 hours ago)
Lords ChamberAsylum Support (Prescribed Period) Bill [HL] 2024-26 View all Asylum Support (Prescribed Period) Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 25-I Marshalled list for Committee - (11 Jun 2025)
Lord Jamieson (Con)
My Lords, I rise to quote from the Companion:
“It is a firm convention that the House normally rises by about 10pm on Mondays to Wednesdays, by about 7pm on Thursdays, and by about 3pm on Fridays”,
unless agreed otherwise through the normal channels. I thank the noble Lord, Lord Katz, who reminded the House on Tuesday evening of this convention. Yet this week we finished at 11.15 pm on Monday, 11.57 pm on Tuesday and 1.17 am on Wednesday. Now His Majesty’s Government, as I understand it, are seeking that we extend yet again, on a Friday, beyond 3 pm without agreement and, in fact, without even a request, flouting convention, and, if I may say so, showing a lack of consideration for the House authorities.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, the noble Lord is absolutely right. It is the normal convention that we rise at the hours that he set out, but we also have a problem in this House at the moment: we are struggling to work to these conventions. I have struggled to get agreement with the Opposition on a number of Bills. He mentioned the late sittings this week. Sadly, we have had degroupings and Second Reading speeches on amendments and, frankly, the time has been wasted—and it is not this side of the House doing that. I want to get back to the days when we respected our conventions and could have dinner breaks, QSDs and stuff.
We timetabled today’s business to finish at around 3 pm, but, sadly, we have not got there. I also know that my noble friend Lady Lister has prepared for this Bill today and that the right reverend Prelate has come in especially to speak on this, and I am not prepared to have them come in and be wasted. I want us to carry on. If the noble Lord wants to divide the House, then may he please do so? There is no problem with that at all—but I think we need to carry on, and quickly. If we all work together, we will be able to go home very soon and deal with these important Bills.
Lord Jamieson (Con)
My Lords, I pick up on one comment on wasted time. I hope that the noble Lord is not suggesting that spending just over an hour and a half on a very important Bill with many issues in it was wasting time. I thought it was important, needed examination and has significant impact, as I said in the debate on local authorities.
Lord Evans of Rainow (Con)
My Lords, before the noble Lord goes to the Dispatch Box, he knows that I was not aware of what has gone on in the background with the usual channels, and I agree with him about brevity, but, as my noble friend has just pointed out, the debates that have just gone on have been within the rules, the speeches have not gone over time and have been done with good humour. Talking personally, I stayed late into this House until 1.15 am to support the Government Front Bench—the noble Lord’s noble friends—on a very important issue. I have spent a lot of time into the early hours this week, and my understanding was that business would end at 3 pm. I understand and agree with the noble Lord, but this noble Lord has supported the Government this week until the very early hours of the morning.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I am not suggesting that about today at all. No one should think that about today. I heard only part of the debate and thought it was very good. I have huge respect for the noble Lord, as he knows, and I say it again. I know he is doing it very sincerely, but my point was about this week. We all need to respect the conventions and courtesies. As I said, my noble friend has prepared for this Bill and come in, and the right reverend Prelate has turned up here today; I am not prepared to say that we should ignore that and go home. If the noble Lord wants to divide the House, will he please do so? Then, we will decide. If not, let us get on with the Bill, and we will go home very soon.
Lord Davies of Gower (Con)
My Lords, I add just a couple of sentences to what the Chief Whip has just said. Some of us have a five-hour journey ahead of us this evening, into more rural parts of the United Kingdom. Perhaps he would like to bear that in mind.
Lord Kennedy of Southwark (Lab Co-op)
I do bear that in mind, absolutely. I fully understand that. To that, I say that we either divide the House now or get on with the Bill.
Lord Jamieson (Con)
My Lords, I oppose the clauses in this group standing part, and have tabled the amendment in this group, to challenge the noble Baroness, Lady Lister, on the substance of her Bill, which it flies in the face of the work we did in Government to disincentivise illegal migrants from coming to this country. The Bill seeks to blur the principles of an effective immigration system. It takes an already generous and carefully balanced settlement, which provides support during the asylum process and a 28-day window for transition, and seeks to stretch it beyond what is reasonable, affordable or justifiable. It does so at a time when public services are straining, our housing system is under pressure and public confidence in immigration is fragile.
We have been told that this is about compassion. However, I respectfully suggest that true compassion is not measured in the number of weeks that we allow people to remain on support—I hasten to add, after their claim has failed—but lies in a rules-based system that commands public trust and operates fairly and firmly for all. Only with a system like that can we ensure that taxpayer money is responsibly spent and ensure that those with a legitimate asylum claim are not disadvantaged—punished for doing the right thing.
Extending support from 28 days to 56 is not a neutral act. It has real costs, financial, systemic and social. Logically, it doubles the burden on the taxpayer, it undermines deterrence, it creates further incentives for people to make dangerous illegal crossings, and it risks encouraging delay and non-compliance at a time when clarity and enforcement are needed more than ever.
The new clause proposed by the noble Baroness, Lady Lister, would link the end of the asylum support to the issuance of biometric residence documentation. Let us be clear: that would tie public spending not to legal decisions but to administrative processes, it would shift the burden of bureaucracy onto the taxpayer and it would create a perverse incentive to delay, further muddying the boundaries of legal status and responsibility.
The message that we send with the Bill and its accompanying amendments is not one of fairness or order; it is a message that, even after your claim has been rejected, you may continue to receive taxpayer support indefinitely so long as the paperwork is pending. That is not sustainable, enforceable or fair.
Beyond the principle, we need to be clear in our deliberations today about what this proposal would do in practice. The Bill would increase the costs of a system already stretched to its limits, reward failed claims and give new arguments to those who seek to undermine our efforts to deter illegal and unsafe migration—the very journeys that have already claimed far too many lives. We support a compassionate, efficient and credible asylum system, but credibility requires that decisions mean something. When a claim is rejected, particularly after legal challenge and appeal, support must begin to taper off. It should not increase or be deferred; it should conclude as part of an orderly, lawful process. This is not a question of rejecting compassion; it is a matter of applying responsibility to the taxpayer, to the rule of law and to those who play by the rules.
For all those reasons, I urge the House to oppose the Bill and, in doing so, affirm our shared commitment to a fair but firm immigration system where the rights of refugees are respected but so, too, are the rights and responsibilities of the British public.
Baroness Lister of Burtersett (Lab)
My Lords, I am sorry it proved impossible to deal with all the amendments in a single group because that would have saved us time. I have to say that I do not recognise my Bill in the remarks of the noble Lord, Lord Jamieson. We are not talking about illegal migration; we are talking about people who have been given refugee status. They are not illegal migrants. Please can we get that clear at the outset?
I will try to avoid repetition when I speak to my own amendments. At this point I voice my thanks to the assistance I received from the Refugee Council and from Heather Staff at RAMP, of which I am an associate, and to colleagues who have given up their time to support the Bill on this lovely afternoon.
I shall start with a couple of drafting points. First, I am bemused by the attempt to strike out Clause 3, which has nothing to do with the extension of the move-on period to 56 days, as suggested in the explanatory statement. The clause simply seeks to ensure that the notice to quit asylum accommodation is aligned with the move-on period, be it 28 days or 56 days. At present the requirement is simply a minimum of seven days, and we saw the chaos and destitution that that can cause when refugees were evicted with only seven days’ notice in late 2023.
Secondly, I am not sure that the amendment to Clause 4 does what it purports to, which is to prevent the Bill’s measures coming into force. Erskine May says that the date of Royal Assent is the date of commencement when no other date is enacted. Likewise, Section 4 of the Interpretation Act 1978 says that an Act commences
“where no provision is made for its coming into force, at the beginning of the day on which the Act receives the Royal Assent”.
I do not think that is what the noble Lords opposite intended, whereas, as I will point out in the next grouping, my amendment puts the commencement date in the hands of the Secretary of State and makes it dependent on the outcome of the pilot. I am puzzled as to why noble Lords would not want to know the outcome of the pilot before trying to stop the Bill. Surely, they believe in evidence-based policy-making—though I must admit, having listened to the noble Lord, Lord Jamieson, I suspect not.
Before I turn to the evidence that I have gathered, I shall deal with the question of costs raised by the noble Lord. As I said at Second Reading, research conducted at the LSE indicates that a longer move-on period could in fact produce a modest saving. The enthusiastic response of local authorities and voluntary organisations, which argue that the 56-day pilot is allowing more preventative work, supports that, because in the long run prevention is more cost-effective than firefighting. But we must ask: who should bear the burden of any cost—the Government, local authorities, the voluntary sector or individual refugees in exceptionally vulnerable circumstances?
It is worth noting that the Local Government Association—of which I believe the noble Lord, Lord Jamieson, is a former chair—conducted a survey of its members prior to the announcement of the pilot. The extension to 56 days, in line with the Homelessness Reduction Act, was seen as the single most effective change that could be made to the move on process. Did the noble Lord seek the views of the LGA before tabling these amendments?
I do not propose to repeat the arguments I made at Second Reading, which were based on the years of evidence we have of the immense problems caused by the 28-day move-on period. At that point, I could only surmise what doubling it to 56 days might achieve. Now, in the absence of an official interim report on the pilot—and I will talk more about that in the second group—I would like to share with colleagues some findings from a Refugee Council survey and my own unscientific gathering of information from a local authority and from refugee and homelessness organisations which supported the original Bill. I am indebted to all of them for the trouble they took in providing this information, and I am only sorry I cannot do justice to the wealth of responses they sent us. I apologise that this will make my speech on the long side, especially given the time, but the upside for colleagues is that my speech on the second group will be much shorter.
Overall, there has been a uniformly positive response, which is not to say that there have not been teething problems—partly due, according to local authorities in my home region of the East Midlands, to the short implementation time and partly due to delays in receiving necessary documentation. There have, inevitably, been variations in how well local authorities have responded to the longer move on period. Nevertheless, in the words of NACCOM—the UK-wide No Accommodation Network which works to prevent destitution among refugees, among others—the extension
“has proven overwhelmingly beneficial for new refugees and the organisations that support them”.
One of the organisations in the north-east noted:
“I think the main lesson is the 56-day period is a much more humane and smoother transition process for everyone”.
Similarly, London Councils has called it “a vital support”, and it suggests that the impact is likely to increase because the 56-day period came into effect later in some boroughs. Feedback from the East Midlands is that it has made a huge difference, and Crisis has also referred to “the overwhelming response” from its services that it should be retained.
The pilot has helped to reduce homelessness and rough sleeping, particularly among single people. Although some refugees have still ended up rough sleeping, it has tended to be for shorter periods, and Crisis staff felt that the 56 days at least “make it possible” to find accommodation. The Glass Door Homeless Charity recorded a significant drop in the number of winter night shelter guests who have Home Office accommodation departure as the reason for their homelessness.
Moreover, the pilot has enabled local authorities and other services to take a more preventative approach to the housing needs of refugees, rather than having to pick up the pieces once they are homeless—this responds directly to some of the points made by the noble Lord. What NACCOM called a
“realistic timeframe to plan and take meaningful steps towards independence”
has been important for the mental health and well-being of refugees because they are less stressed.
London Councils reports feedback from SMPs outside London showing that it has enabled more time for people with mental health difficulties or disabilities to get letters of confirmation from GPs to prove a housing need. It has also helped refugees be more of aware of their housing options and given them more time to plan, thereby enhancing their autonomy, and it enhances their chances of long-term integration.
In turn, this has reduced the pressure on services. According to NACCOM, it has increased service capacity and reduced burnout among staff and volunteers. Local authority staff are better able to do their jobs and respond to the needs of refugees. However, it is already noted that there is still wide variation in how the policy is implemented, particularly regarding what documentation triggers the homelessness application.
One point made by a number of respondents was that it has meant that more people are now in receipt of universal credit in their bank accounts when they are evicted, which helps the individual, the local authority and homelessness services. London Councils has spelled out the positive implications of this. The need for emergency financial support is reduced. Individuals are less vulnerable and stressed when they are evicted, and they are in a better place to look for work upon moving into independent accommodation. To quote Islington Council:
“previously the mismatch between move on and universal credit timescales was almost insurmountable. It’s really important that we keep this move-on period so that we don’t go back to a situation of bureaucratically enforced destitution”.
Nevertheless, there are some problems, which I do not have time to go into, other than to note that some of them stem from e-visas, which my Amendment 1, together with Clauses 2 and 3 of the Bill, would help to address. Unsurprisingly, a longer move-on period is not a silver bullet that can address more systemic problems, such as lack of affordability, aggravated by not being allowed to do paid work.
I hope this has given colleagues a flavour of the informal responses to the pilot in the absence of any formal evaluation so far. I hope these responses will be helpful to the Home Office. It is fair to say that every organisation that responded to me called for the pilot to be made permanent. I believe they would be horrified if they read the proposals in this group. Therefore, I hope that the noble Lord does not press them and will be willing to wait for the outcome of the formal pilot before reaching any conclusion as to the future of the 56 days move-on period.
Baroness Hamwee (LD)
My Lords, I spoke at the Second Reading of this Bill, and I am happy to support the noble Baroness again today.
The Second Reading was not opposed. One Member of the Conservative Benches—the only member of the Conservative Benches who spoke—raised a lot of questions. I think he opposed the principle of the Bill—though without saying so in terms, but by raising points about cost. Today, we have what are, frankly, wrecking amendments, and the noble Lord who spoke first to oppose the question that Clause 1 stand part of the Bill said so. He is urging noble Lords to oppose the Bill. I hope I have quoted him correctly; I did write it down.
The objections in December were about cost and things being pretty much okay. We know that things are not okay. The noble Baroness has made that very clear, both then and now. I do not want to repeat my Second Reading speech, but her reminder that we are talking about people who have been accepted as refugees is absolutely to the point.
I am baffled that, administratively, so many problems seem to have been thrown up by the arrangements that are in place, subject to the pilot, because to the world, the Home Office is the Home Office, as an entity. Frankly, it should be able to co-ordinate with itself, local authorities, the DWP and so on. There are many reasons why one would want to see the whole process working smoothly. It is hard to imagine that moving to 56 days would not lead to savings, as the noble Baroness said, including planning for future accommodation rather than homelessness, concurrence of universal credit and so on.
The Lord Bishop of Chelmsford
My Lords, I am pleased to support the Private Member’s Bill of the noble Baroness, Lady Lister, on asylum support and her Amendments 1 and 2, which would enable the Government to extend the move-on period according to their plans and timetable. The Bill is extraordinarily well timed, with the move-on period pilot coming to a close and the Government having recently published their White Paper entitled Restoring Control over the Immigration System. As the Government reduce the backlog of asylum applications and speed up the process times of applications, I suggest that this Bill does not impede but rather supports the Government as they seek to build a well-managed asylum system with integration back at its heart.
At Second Reading, I spoke of why 28 days was simply not enough time for an individual with newly granted refugee status to locate new accommodation, try to find employment and navigate a welfare system. This should now be regarded as indisputable, given that an individual cannot even access universal credit before five weeks have passed, that the majority of landlords will not even let a property before a first payment has come in and that setting up a bank account is proving difficult with an e-visa alone. On this latter point, I hope that the Government will consider issuing guidance to banking services.
I do not want to anticipate the findings of the Government’s NatCen evaluation, but local authorities and other groups supporting refugees who have kindly been in touch with me have provided overwhelmingly positive feedback, as we have heard, about the extension of the move-on period. We have to take that seriously. They tell me that it gives council officers a much more realistic timeframe in which to do their jobs well—namely, to find a suitable housing solution for refugees, decreasing the likelihood of homelessness and the need for temporary accommodation. London Councils reported that one region experienced a 24% increase in homelessness prevention outcomes. The Helen Bamber Foundation said that, of the individuals it has supported since the move-on period was extended, all had received their first universal credit payment before the date of their eviction. This not only prevents refugees falling into destitution just as they are taking their first steps to build a life outside Home Office-provided accommodation, but avoids the need for local authorities to provide emergency financial support. This will lead to savings at a time when we all know that budgets are under pressure.
I was also struck by comments that the longer period has enabled local services to build trust with families, as housing teams have been able to start moving away from an emergency response towards a more preventive and strategic approach. There has been time to assess individuals’ physical and mental health needs, as well as to consider their existing support networks so that they can work together towards housing solutions. I hope that the Minister can confirm that the final evaluation will be published. Will it include detail on the impact that the longer move-on extension has had on family stability and child poverty? Incidentally, I am sure that this will support their work ahead of the child poverty strategy.
We will hear more, I am sure, in the next grouping about the sensible provisions in Amendment 1 regarding documentation. However, making the move-on period extension a permanent feature of our asylum system will enable steps such as this to take place, which will streamline the timely delivery of key information so that the entire 56-day period can be fully utilised to support a family’s next steps.
I believe that Ministers have recognised the benefits of a longer move-on period for refugees, as well as for local authorities and the wider community, through the commencement of the pilot. I thank them for that and congratulate them on it. I now urge them to make it permanent as soon as is practical after the conclusion and full assessment of the pilot, to capitalise on the positive developments that are already taking place. Let us not forget that asylum seekers who have been granted refugee status here are unable to build a life back in their home country—however much they might want to—because it is too unsafe. The gift of more time will support refugees who have a legally established right to live here to start living well in the country that has granted them sanctuary.
I may not have agreed with the words the Prime Minister used recently to frame the Government’s White Paper, but I trust the intention is there to see neighbours from all backgrounds build a stronger and more cohesive society together. Extending the move-on period permanently would be a step towards that goal.
Lord Davies of Brixton (Lab)
I came into the House today to support this Bill, and I am glad we have found the time for it. The context is that this country has a long and honourable history of welcoming refugees. That is something that we can feel proud of and from which we have benefited over many centuries. That is the background to this.
Whatever you think of the individuals who apply to live in this country and their motives, they are all entitled to due process in that application. We must not as a state put ourselves in the position of pre-empting that proper inquiry. That is why dealing with the applications swiftly is so important. I am glad the Government are pressing that issue.
The noble Lord, Lord Jamieson, called what is proposed here “generous”. I think that is a difficult word to apply in any circumstances, but I would use “humane” and “practical” to describe the proposal. What people need to do after the decision has been made takes time. The issue is not one of being generous; it is of giving them enough time to sort out their affairs. That is true whether the application has been agreed or not. I do not think it makes any difference to the period of time that is required to sort out your affairs.
It is quite clear from the work undertaken in the pilot study that 56 days works so much better than 28. That is as much a benefit to society as a whole as it is to the individuals. That is the point: giving 56 days works for society. That is why London Councils is so much in favour of this and wants to see the pilot extended.
The situation would be much easier if applicants were able to undertake paid work, perhaps after an initial short waiting period, and I hope my noble friends on the Front Bench will take this as a further representation on the issue. Action on this would just make the situation as a whole better, as permitting them to adjust to life in their new country or make arrangements to go elsewhere is so important.
Baroness Ludford (LD)
My Lords, I very much agree with the closing words of the noble Lord, Lord Davies of Brixton, and everything he said. Unlike him, I had not come today with the intention of taking part in the proceedings on the Bill, and I apologise to the noble Baroness, Lady Lister, for that. Actually, after three Tory Bills in three years, I vowed that I would never again take part in an asylum and immigration Bill, but one somehow gets into things, and I will be taking part in the debates on the border security Bill.
I just say to the noble Lord, Lord Jamieson, that I remember on one occasion sitting until 4.15 in the morning—
Baroness Ludford (LD)
It was 4.16 —I cannot remember which Bill it was; it is all a bit of a haze. Was it the Rwanda one? Being turfed out and then trying to find your way home at 4.16 in the morning, particularly as a woman, is not great. But that was that Administration.
The noble Baroness, Lady Lister, has confirmed in her opening words that we are talking about people who have had a positive asylum decision; they have refugee status or a decision on humanitarian protection. I very much agree with the right reverend Prelate the Bishop of Chelmsford, who I think used the term “realistic”. Other noble colleagues have talked about it being pragmatic and practical. I think that is the point.
I apologise that I did not take part in Second Reading, but I understand that there is this trial going on, and I can imagine that, far from costing money, it could end up saving money, because it is an investment in the slightly longer term for people to get on their own two feet and find a job and other accommodation. They are expected to do that in 28 days and if they do not, someone has to pick up the pieces if they are destitute, under various other provisions. It really cannot be a good thing for them or for wider society if, understandably, after 28 days they have not managed to sort everything out. So I completely understand why local authorities and other bodies would be keen supporters of the noble Baroness’s Private Member’s Bill. I very much hope to hear from the Minister that the Government are also keen supporters of the Bill, as well as, it has to be said, of the right of asylum seekers to work, as here we are talking about those who have been granted asylum.
This is all in the interests of having an asylum system that is much more efficient and costs as little as possible, which was not, I am afraid, the purpose of the last Government, who created chaos and a legacy of administrative confusion in the asylum system. This Bill goes a small way on a limited issue to try to help make things more realistic and practical, and to give people a start in integrating into and contributing to our society, which is surely what we all want.
Lord Davies of Gower (Con)
My Lords, I thank my noble friend Lord Jamieson for this group. These clause stand part notices and the amendment seek fundamentally to oppose the purpose of this Bill. The Bill seeks to provide an extension to the period in which those who have failed to secure an asylum claim can continue to receive support for housing and subsistence at the expense of the taxpayer.
Baroness Lister of Burtersett (Lab)
My Lords, there is a fundamental misunderstanding here. This Bill is about people who have succeeded in their claim for refugee status, so can the noble Lord’s remarks please be put on a premise that is true to the facts?
Lord Davies of Gower (Con)
My Lords, I shall continue and maybe it will become clear to the noble Baroness.
Once a claim for asylum has been determined and found to be without merit, the presumption must shift. At that point, the focus should be on compliance with our immigration system, not on prolonging support mechanisms that are intended for those still within the asylum process. This Bill would do precisely the opposite. By this stage, the decision has been reached. The current system balances support for the person in question while recognising that the person has, according to the determination reached, no reason to remain in the United Kingdom.
We have a duty to the person in question, but we also have a fundamental duty to the taxpayer who, at the end of the day, foots the bill. By extending the support period from 28 to 56 days, all we do is risk creating a further incentive for delay and non-compliance. It sends entirely the wrong message, not just to those currently in the system, but to those considering making unfounded claims in the future.
The Lord Bishop of Chelmsford
I am sorry, but I am really confused, because what the noble Lord has said conflates two issues: those who have not been given leave to remain and those who have and for whom therefore the extension period is in order to give them a little bit longer to sort themselves out. They have been given their permission. Perhaps the noble Lord could either explain what I am failing to understand or clarify whether his point is about those who have been given leave to remain or who have not.
Baroness Lister of Burtersett (Lab)
As it is Committee, I am allowed to speak more than once. This Bill is not about people who have not been given leave to remain; it is about people who have received refugee status. The reason why I brought forward the Bill originally—I have been campaigning on this for years—is the heartache felt by refugees who finally reach the promised land, in a sense, by being recognised as having refugee status and then find themselves destitute. This is who we are talking about. We are not talking about people who have no right to be here; we are talking about those whose right is recognised. That is the whole point.
Lord Davies of Gower (Con)
I hear what the noble Baroness says, but I am not quite sure whether the Bill is therefore clear enough in what it states. I will continue, and perhaps the noble Baroness will bear with me.
When British citizens are suffering from a stagnated economy, sky-high taxes, spiralling unemployment and failing public services, to ask them to pay more for those who have had their asylum claims rejected is unacceptable. Recent analysis has shown that the entire annual tax bills of 582,000 people—equal to the population of Manchester—go on housing migrants. In our submission, the tax bills of British citizens should go on supporting the services that British citizens use. We should not be diverting such a volume of taxpayer resources to housing those who do not contribute to the system themselves. I certainly would not want to see any additional cost to local authorities.
This comes on top of the £54.2 million that last year went to legal teams seeking to thwart deportations or argue that asylum seekers should remain. The asylum seekers we are talking about already benefit from millions of pounds of taxpayers’ money. As I said earlier, the crisis is worsening and the costs are spiralling—and this is all before the proposals put forth by the noble Baroness are considered. Extending the period of support from 28 to 56 days would have an immediate effect on the current cost that we are footing.
We must also take into account the incentive effect that this would have on those seeking to come to the UK. The numbers are already up 30% on last year and if people-smuggling gangs were able to tell their clients that the period for which they could subsist at the expense of the UK taxpayer had doubled, this would surely make the surge of people coming here illegally and dangerously even more extreme. It is absolutely vital that we do not create further incentives for people to make illegal and dangerous crossings into the country.
This is the compassionate position to take. Small boat crossings have spiralled in the last year and, very sadly, so have the numbers of those who have died trying to cross the channel illegally. Being in favour of changes that sustain and risk augmenting such scenarios is to support a system that is dangerous, exploitive and deeply unfair on those who do use safe and legal routes.
We need to deter people from making this perilous journey, not encourage them with the promise of extended financial support at the taxpayer’s expense—which would be the direct consequence of this. Moreover, this extended support is not cost neutral; it comes at a time when the pressures on our public services, local authorities and housing system are already acute. The taxpayer should not be expected to fund an extra month of housing and financial assistance for individuals who have no legal right to remain in this country. Every additional day of support after a failed claim represents not just a cost but a delay in the fair and orderly functioning of our immigration system.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, this has been an interesting and, at two points in particular, a confusing debate from my perspective. Before I go into some of the detail of my noble friend Lady Lister’s Asylum Support (Prescribed Period) Bill, I want to respond to the intention to oppose Clause 1 and the comments from the noble Lord, Lord Davies of Gower, from the Front Bench opposite. It was—if I would not say reckless—an irresponsible approach to a debate that needs more light and far less heat regarding how we, as responsible politicians, talk about immigration and asylum seeking.
To my mind, it is very clear. We are talking about what happens when, through a process that we are doing our damnedest as a Government to speed up, an individual’s asylum claim is granted and how they are then moved on and integrated into the community, as we all wish to be. This is not about deterring small boats per se; it is not about smashing the boats and the fact that too many migrants are taking away resources and undercutting British workers, or any of the rhetoric that we might have heard from the Benches opposite.
Let me clear: the Government are committed to reforming the asylum and immigration system so that we deter dangerous crossings and provide safe and legal routes where applicable and that, when people make an asylum claim, that claim is adjudicated and determined as quickly as possible. If that claim is found to be wanting and is rejected, that person should be deported. If it is not, they should be moved on—a phrase that I am not keen on—and integrated into the community. This is what the Bill is about. I am sorry that the Benches opposite, particularly the Opposition Front Bench, did not recognise that and address their remarks accordingly.
I want to reiterate the comments made by the Minister, my noble friend Lord Hanson, at Second Reading, though noble Lords will be glad that I will not speak at as much length. The Government fully recognise the need for a smooth transition between asylum accommodation and other accommodation for those who are recognised as refugees and granted leave to remain. I reiterate what has previously been acknowledged. We have huge pressures in the asylum system. The Government are working to ensure that individuals have the support that they need following an asylum decision.
There has, understandably, been some focus today on the 56-day pilot scheme that is in place, which I will spend a little time talking to. In December, the Home Office operationalised—again, a word that I am not keen on—a pilot to extend the move-on period so that individuals have 56 days to make move-on arrangements from the point at which they are notified of their leave to remain. The pilot is due to conclude shortly. The Government have put this pilot in place to support local authorities during a period where we expect an increased volume of asylum decisions to be made because we are speeding up the system, as well as it coinciding with the recent transition to e-visas for newly recognised refugees. I suspect that we will go on to that subject in the next group of amendments.
The Government firmly believe that this is a sensible and pragmatic approach to take while we bring the system back into balance. It is important that we take our time to evaluate the impact of these interim measures because, although there may be clear benefits to the proposal, careful analysis needs to be done to consider the full impacts, including those on the taxpayer, before any permanent changes are made. A wide range of stakeholders have been invited to take part in the evaluation, including local authorities—the noble Lord, Lord Jamieson, will be pleased to hear that—voluntary and community sector organisations and individuals with lived experience. The final evaluations are due later this year and a report will be published, subject to peer review and ministerial clearance.
To answer the first of the questions posed by the right reverend Prelate the Bishop of Chelmsford, our intention is that the final evaluation findings will be available to Parliament by the end of the year. To answer her second question, the target outcomes are being explored. They might touch on, and raise responses related to, stability and child poverty, the improved service user experience as part of the move-on journey and how successful the improved early integration outcomes for newly recognised refugees have been in terms of access to universal credit, employment, housing, et cetera.
On that note, I mention briefly the move-on support, including the introduction of move-on liaison officers, which is being evaluated alongside the pilot. It is worth saying that support is available to all individuals through Migrant Help. This includes providing advice on accessing the labour market and applying for universal credit, as well as signposting to local authorities for assistance with housing. We have also improved our communications, including making our letters to individuals clearer and providing information earlier in the process.
As I said, we have recruited 72 asylum move-on liaison officers, who offer face-to-face support to individuals newly granted refugee status so that they understand the steps they need to take once their asylum decision is issued. This assistance includes, as I mentioned, removing e-visa barriers and supporting with universal credit, housing applications and refugee integration loans. These officers work alongside Migrant Help and local authorities to identify and resolve issues. They are spread across the country in eight regions, covering more than 40 local authority areas, and are deployed where there is the most pressure and need in the system.
I will say more about the e-visa system in our debate on the next group of amendments, as I said. For the sake of brevity, I will conclude my remarks there, but I hope that our debate on the next group of amendments can be conducted on the basis of what the Bill and the amendments actually talk to, rather than what we might like them to talk to.
Lord Jamieson (Con)
My Lords, I thank all noble Lords for speaking on this matter. I thank the noble Baroness, Lady Lister of Burtersett, for clarifying—it is an important clarification—that the aim is that the clause should apply only to people where there has been a determination that they have leave to remain, not to those where the determination is that they have been rejected. That is my understanding of what the noble Baroness said. Our concern on this side is that, with the way in which the Bill is written, this measure could potentially apply both to those who have leave to remain and those who have been rejected. Obviously, I do not want to withdraw this, because that is not the process. However, we wish to leave open the fact that we want clarity—and want there to be no confusion—that this measure would not apply to those who have had their case determined and rejected.
This is a critical point on which we would like some assurance and to which we will come back in terms of the drafting of the Bill. The points that we have made about those who have had their application rejected are perfectly valid. I have not heard anyone here say that, for those who have been rejected, they have an objection to our comments. This measure is for those cases where people have had their application accepted, so to speak. I completely understand the comments that have been made in this Chamber—if I am entirely honest, when I was the chairman of the LGA, I pushed for something not entirely dissimilar—but I would definitely say that this is not what we should be doing for those who have been rejected.
We are looking at the drafting to make sure that this is absolutely clear and cannot be misinterpreted by some eagle-eyed lawyer. Obviously, I am not going to withdraw my clause stand part notice, because that is not the process here; I just wanted to be very clear about where our concern is, which is in the drafting. We want to make absolutely certain that this measure does not apply to those who have been rejected.
Baroness Ludford (LD)
The noble Lord is making some helpful remarks. I am not an expert on the Bill’s drafting but, to extend his remarks and in particular with his local government experience, if he gets the clarification he seeks, would that mean that he and even the Opposition Front Bench would feel able to support the purpose of the Bill, even if they slightly disagree with its drafting?
Lord Jamieson (Con)
I am trying to remember a great quote from the noble Baroness, Lady Anderson: the noble Baroness is tempting me to go to places I would rather not go.
“Issuing of biometric residence document(1) Section 94 of the Immigration and Asylum Act 1999 (Interpretation of Part VI) is amended as follows.(2) At the end of subsection (3), insert “, subject to subsection (3A)”.(3) After subsection (3) insert—“(3A) Where—(a) the Secretary of State notifies the claimant that his decision is to accept the asylum claim,(b) the Secretary of State notifies the claimant that his decision is to reject the asylum claim but at the same time notifies the claimant that he is giving the claimant limited leave to enter or remain in the United Kingdom, or (c) an appeal by the claimant against the Secretary of State’s decision has been disposed of by being allowed,then the period prescribed under subsection (3) may not begin until the claimant has access to a relevant biometric immigration document.(3B) for the purposes of subsection (3A), a relevant biometric immigration document is a document that—(a) records biometric information (as defined in section 15(1A) of the UK Borders Act 2007); and(b) is evidence of leave to remain in the United Kingdom.””Member’s explanatory statement
This new clause would require a newly recognised refugee to have access to a biometric residence document that can be used as proof of immigration status and identity before the start of the prescribed period between a refugee being granted refugee status and the ending of their eligibility for accommodation and financial support provided by the Home Office.
Baroness Lister of Burtersett (Lab)
My Lords, in moving this amendment, I will also speak to Amendment 3. Amendment 4 is simply consequential.
To go back slightly, I thank the noble Lord, Lord Jamieson, for that clarification. I do not know whether he has looked at the legislation that would be amended by this Bill. That would probably make it clear who we are talking about, but I will of course talk to the person who drafted it—who I have to admit is not me—to make sure that there is no possible loophole there. I am pretty confident that there is not. It is rather unfortunate that the Front Bench spoke as if it were purely about illegal migrants. I do not think that they would be covered. Anyway, we will look at it and I thank the noble Lord for that helpful clarification.
Colleagues might be surprised that I am trying to amend my own Bill. I can assure them that it is not a cunning plot to keep them, including my noble friend the Minister and now my noble friend the Chief Whip, here on a sunny Friday afternoon, but there is a reason for it. As we have already heard, just a few days before Second Reading, the Home Office made the very welcome announcement of a pilot extension to 56 days, which is due to conclude in June. It seems sensible that the Bill should take account of that, hence Amendment 3 would give the Secretary of State the power to determine when Clause 1, which extends the move-on period, should come into force. This would follow the completion of any trial period, such as the one that is currently under way. Thus, the Bill puts the introduction of its main clause in the hands of the Secretary of State. I hope that my noble friend the Minister might look kindly on that.
Amending the Bill in this way would also provide an opportunity to take account of the rollout of biometric residence documents, or eVisas, which can be used as proof of immigration status and identity. Thus, Amendment 1, in conjunction with Clauses 2 and 3, would ensure that a refugee received this document, along with other documents required to access services, before the move-on period started. At present, different documents are sent at different times from different parts of the Home Office, some once a move-on period has already started. The aim is to simplify the process by ensuring that refugees have all the necessary documentation before the move-on period starts ticking. If they have not been given refugee status, they will not get these documents, so the Bill will not apply to the people the noble Lords opposite are afraid it might apply to.
At Second Reading, the Minister, my noble friend Lord Hanson of Flint, raised an objection to Clauses 2 and 3, which, as I have said, would ensure that refugees receive all the necessary documents and information prior to the start of the move-on period. He said:
“The only way to implement that approach would be to delay the service of the asylum decision; we do not really want to do that”.—[Official Report, 13/12/24; col. 2012.]
But I am advised by the Refugee Council that this would make little difference, given the period that asylum seekers have had to wait already, and better that the delay occurs before the move-on period than during it, given that failure to receive all the correct documentation at the outset could, in effect, eat into the move-on period. Of course, the answer is to speed up sending all the documentation.
As it stands, the Refugee Council survey I mentioned earlier and the experience of HIAS+JCORE, the UK Jewish voice on refugees and racial justice, indicate that, in London at least, delays in receiving documentation mean that the 56-day move-on period is, in practice, quite a bit shorter in some cases.
My noble friend the Minister has answered some of the questions I was going to ask about the pilot, which is great. He said it would be ending “shortly”, but that is one of those Civil Service words that means different things to different people, so it would be helpful if he could be a bit more precise. Can he also tell us what allowance is being made in the pilot for the fact that e-visas are being rolled out during this period, which could complicate things, and that a high number of asylum decisions are being taken?
I finish by citing the response of two organisations from the housing and refugee sectors. First, the Chartered Institute of Housing warmly welcomes the Bill—after it has been amended by these amendments, as I hope it will be eventually—and urges the Home Secretary either to facilitate its passage or to otherwise legislate to make the 56-day move-on period permanent. Clearly, the facilitation of the Bill’s passage would be much simpler than new legislation. As I have said, the implementation of the move-on period would be in the hands of the Home Secretary following the pilot. Without legislation, it would be too easy for a future Government to revert to 28 days without parliamentary scrutiny, and the first group of amendments we debated testifies to that. Given the enthusiastic response of all sectors to the pilot, including of course local authorities, I really think there is no going back.
Secondly, I give the last word to NACCOM, which says that
“the extension has already proved cost-effective, humane and legally coherent. Making it permanent is a pragmatic step towards stability for those granted safety in the UK”.
I beg to move.
Baroness Hamwee (LD)
My Lords, we were told, I think, that the pilot will be until June, which gives a few more days. I agree with the noble Baroness, Lady Lister, that, in parliamentary terms, “shortly” is a rather expansive term.
I will ask the Minister about the evaluation. He will obviously not be able to tell me about any of its outcomes, but I hope that it will be a relatively speedy process. In preparing for today, I saw a request somewhere that organisations working in the sector to support refugees should be included in any consultation—and there should be consultation on what the evaluation shows, how the proposal can be taken forward and whether any tweaks should be made. I do not expect the Minister to respond to that today—he will not be in a position to do so—but I add my voice to that request, which seems to be, to quote, “entirely humane and practical”.
Lord Davies of Gower (Con)
My Lords, I will speak to the amendments that the noble Baroness, Lady Lister of Burtersett, has tabled to her Bill.
I will address my remarks primarily to her Amendment 1. While the intention behind the amendment may be to ensure a smoother transition for asylum seekers, it introduces significant practical, legal and policy problems that risk undermining the efficient functioning of the asylum system. First, from my understanding of it, the amendment, in effect, makes the issuance of a biometric residence document a precondition for starting the clock on the post-decision support period: that is, it ties the end of taxpayer-funded asylum support not to the legal decision on status, as is currently the case, but to the administrative completion of documentation.
The Government’s decision on an asylum claim is, rightly, a legal milestone. At that point, the person is no longer an asylum seeker; they have either secured leave to remain or not. The prescribed support period is meant to bridge the gap between that decision and the individual transitioning either into mainstream services or departing the country.
This amendment proposes an administrative burden and legal uncertainty and would require the Home Office to verify the delivery of a specific document to each individual before initiating the countdown to the end of support. This tracking and compliance exercise would be bureaucratic, costly and ripe for legal challenge.
Let us not forget the wider context: it is about taxpayer-funded support being an already generous and necessary safety net during the asylum process. Once the claim is accepted or otherwise determined, the individual is expected to move into mainstream provision or make arrangements for return. Delinking that transition from the legal decision itself and instead tying it to the issuance of paperwork is not only unworkable but unfair to the taxpayer and is an unwise policy.
Lord Katz (Lab)
I thank noble Lords for this short but interesting debate on this group of amendments. I will try to be brief, given the time.
My noble friend Lady Lister’s amendment effectively requires that the grace period not begin until an individual has received their e-visa. A newly granted refugee has digital status at the point when a positive decision is made. Therefore, they are able to commence the move-on process and access some key services prior to their e-visa account being created. For example, some government departments have systems and services that allow them to access information about the person directly, avoiding the need for the person to prove disuse of their e-visa. We have revised our communications to individuals prior to decision and within the grant letter to make this clear.
However, we recognise the importance of individuals having access to their e-visa before their asylum support is discontinued. That is why we currently have a safeguard in our process whereby support will not be discontinued for at least 28 days after an individual has been given access to their e-visa. Where there is an error on the e-visa which is reported to the Home Office and confirmed as an error that needs correcting, we will generally extend support until that error is corrected. Support in accessing an e-visa is available via our assisted digital service for those with limited digital skills, and charities and voluntary organisations across the UK are being funded to provide free help and information to vulnerable people who need support.
There was also some discussion of the notification process following a decision and interaction with the move-on period. While individuals are notified in the grant letter that support will end in 56 days, operational and safeguarding checks prevent us outlining an exact date at this point. Despite this, every effort is made to ensure that these notices are provided as early as possible. The only way to implement such an approach would be to delay serving the asylum decision, as my noble friend Lord Hanson of Flint said at the Second Reading. I am sure that all Members would agree that every effort should be made to serve an asylum decision as soon as we possibly can.
On the timing of the pilot, I am afraid I will not be able to provide much greater comfort to my noble friend Lady Lister and the noble Baroness, Lady Hamwee. We are considering the exact date when the pilot will end. We will write up a suitable notice to confirm this date, and all individuals will continue to receive 56 days’ notice until this point.
The noble Baroness, Lady Hamwee, asked about involving refugee organisations. I use this opportunity, given that my noble friend Lady Lister mentioned it, to commend the work of HIAS+JCORE, an organisation I have some familiarity with, particularly under the leadership of my friend Rabbi David Mason. I am not in a position to give the detail at this point, but it is something we can reflect on.
I conclude by thanking my noble friend Lady Lister and all who have participated in today’s Committee. It is important not to see the extension of the move-on period of 56 days as a simple and straightforward solution to a complex problem. That is why an array of wider support measures and initiatives are in place. We remain committed to working with partners so that we can continue improving the processes, communications and services that support a smooth transition from Home Office support for newly granted refugees.
Baroness Lister of Burtersett (Lab)
My Lords, I thank everyone who has spoken, both now and earlier—at least those who have spoken in support of the amendments and the Bill. I will need to look at the details of what both the noble Lord, Lord Davies, and my noble friend the Minister said. I addressed the point that the noble Lord, Lord Hanson, made at Second Reading about delay, because actually better delay before rather than after the move-on period starts, and that may be something that the department could reflect on.
One thought struck me as the noble Lord was speaking: when the pilot ends, we do not want to go from the 56 days back to 28 days, then the evaluation may shows that actually it was very successful and the Home Office thinks “Yes, actually we should stick with 56 days”. I am not asking for an answer now, but I suggest that the Home Office consider that the 56 days should last. It could stop being evaluated at a certain point, but, until a decision is made about the future, it should carry on at 56 days, because it will confuse everybody if we go back to 28 days and then forward to 56 days. I will leave it at that.
I thank people very much for engaging. Again, I apologise that people have been kept so late, but that is largely beyond my control. I beg leave to withdraw the amendment.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I beg to move the House do now adjourn, and, in doing so, I wish everyone a good weekend, although not as long as normal. I particularly thank all the members of the staff of the House for their, as always, excellent service this week.