Think Work First: The Transition from Education to Work for Young Disabled People (Public Services Committee Report)
(1 day, 11 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Morris of Yardley
That the Grand Committee takes note of the Report from the Public Services Committee Think Work First: The Transition from Education to Work for Young Disabled People (1st Report, HL Paper 12).
Baroness Morris of Yardley (Lab)
My Lords, I am pleased to speak to this report from the Public Services Committee. In doing so, I will offer some thanks—first, to the team of officials who supported us. I do not want people to think that we have more officials than anyone else, but I have a particularly long list, because it was Sam Kenny’s last inquiry as clerk, it was Dan Hepworth’s first inquiry as our new clerk, and we had Nick Boorer in the interregnum. We also had Tom Burke, Claire Coast-Smith and Clayton Gurney, as well as a special adviser, Professor Charlotte Pearson. In a difficult time, with a general election in between and a new Parliament, that team of officials served us very well, and I am grateful for their expertise.
I thank the officials of the many departments that contributed to this, but I have to say to the Minister— I realise that this was not due to her or her department—that we waited 10 months for a reply to our committee’s report. It was particularly annoying that this was during a period when this issue was at the top of the Government’s agenda. An excuse that, “We can’t reply to your report because we’re discussing the policy” did not go well with us. Could the Minister therefore kindly pass back that 10 months is too long, when the expectation is two months? Apart from that, we are very grateful to the officials who gave of their expertise.
I thank my committee members who, as ever, worked hard to bring their knowledge and skills. They helped to make it a happy committee that has brought about a good report. Most of all, I thank our witnesses—there were many over the year or more that we took evidence. I do not want to single them out, but I will single out two groups. One is the young people with disabilities who, in round-table discussions, talked to us about their lives. We probably learned more from them than from anybody else.
This is really—to use a football phrase—a report of two parts. The statistics paint a story of things not going right: of failure and of us not being successful in this area. It is still the case that, at 19, 43% of students with disabilities get level 2 in English and maths, compared to 84% of students overall. Look at the university drop-out rate and the drop-out rate from apprenticeships: you are more likely to drop out if you are a young person with disabilities than if you are not. The employment gap of 30% has barely moved in decades, and the pay gap shows that people with disabilities do not get paid as much as those who do not have disabilities. All that is true, and it is all one picture or view of how we are doing in this area, but it is not the only picture we found. There were many evidence sessions where we finished listening to examples of good practice that left us inspired, encouraged and knowing that we could get this right if only we made the best available to everybody. Overall, the system is not a success story, but overall there is hope and expectation that it could be.
I looked at presenting this in two ways. There is the universal provision—the institutions and the bits of the system that are designed to meet the needs of all people, whatever their background or ability—but, too often, this does not meet the needs of people with disabilities. These things affect every single one of us, whether you are talking about schools, colleges or workplaces; about how we assess the qualifications we give; about careers education and guidance; or about vocational pathways, apprenticeships or recruitment practices. They are part of the universal provision in this society, and they work less well on the whole for people with disabilities than they do for anyone else.
When you look at the specialist provision specifically designed to support young people with disabilities transitioning from education to work, you find some excellent examples, and we have lots of them in our report. But, on the whole, the summary is that they lack the continuity, with Governments of all parties changing names, changing focus, scrapping one thing and introducing another, and they lack the consistent funding at the necessary rate that is absolutely essential if they are to succeed. We often get isolated examples or pilot schemes at risk of being scrapped. That was one of the most frustrating things. When you sat and listened to somebody giving evidence about something that worked, you just wondered why, as a Government and as a society, we did not seem to have the capacity to roll that out to everybody else.
If this problem is to be solved, the transition from education to work has three elements that need to work. First, what goes on in our educational institutions needs to work; secondly, that process of moving from one to the other needs to work; and thirdly, it needs to work when people get into employment. We all know that, whatever our background or ability, those transitions from one set of institutions or one set of support services to the other is the place where you most often fall off the bus; that is where it most often goes wrong. That is even more so if you are a young person with a disability. I just want to look at each of those areas and examine some of the evidence we took.
On the educational institutions, we made a number of SEND recommendations. I shall not touch on those, because I know that the Government are producing a report that I hope will be launched shortly. I just hope that the Minister and the Government have looked at our recommendations. It would be great to see them reflected in the recommendations in the SEND review to be published in the new year, but I do not think it is particularly a priority for me to go over that now. When we look at these institutions, there are no doubt lots of individual lecturers, teachers, tutors and classroom assistants who do a great job. There are lots of people who make a successful transition from school to work and can name particular individuals without whom that would not have been possible. But we also heard that there are individuals who still have low expectations of what might be possible for somebody who has a disability. Both those things are true, which means that how well you get on is as likely to depend on who happens to teach you as anything else.
However, I really wanted to talk about the system in those educational institutions. I know that the Minister is particularly interested in this and I want to spend a bit of time on it in the hope that we might get somewhere with it. I know that the Government have produced a White Paper on 16-plus qualifications and vocational routes and I know that it is a priority. I also understand well that we are a high-skilled nation and that we have to push people to levels 3, 4, 5, 6 and wherever you want to go. What we heard was missing was anything substantial at levels 1 and 2. We are not saying for a minute that all young people with disabilities are at level 1 and 2; they are all levels, including master’s and PhD—the highest levels in the land. But some are at level 1 and 2 and working towards level 3 but may never get there.
We heard from a particularly impressive principal of a college in the East Midlands,
“we find ourselves scrimping around for qualifications”.
He is working with young people who are learning skills and working towards targets, but they are not recognised by any formal qualification because they never reach level 3 or anything like that. What was lacking was a robust qualification at levels 1 and 2 that can be used, first, to record the achievement and, secondly, as a stepping stone, perhaps over a number of years, to something at a higher level. Young people may be learning skills and working towards targets, but they may never be recognised in any formal qualification because we have not incorporated that in our schools framework.
One of the things that rang a bell with me, because it was familiar from when I taught all those years ago—it was sad to think it had not improved—was young people with disabilities, who were not at level 3, being put on one college course after another. These claimed to prepare them for employment and a job, but they did not. It was six weeks on this and six weeks on that—“Take another course. You’ve finished a year; sign up for something else”—but none of these were vocational pathways. When that young person started that course, they and their parents believed: they had the same enthusiasm, aspiration and hope as somebody starting a university degree or a professional qualification. It is no different; it is where they are at. They are as ambitious as anyone else, but there are too many courses that do not lead to a meaningful qualification and a route into employment.
So I ask the Minister to reflect, in the work she is doing on post-16 qualifications, to check what the vocational route is for young people with disabilities. As I say all the time, I am not putting all young people with disabilities into the level 1 or level 2 qualification framework as I know that is not true, but it is where we found a lot of work still to be done. The same is true for apprenticeships. It must be possible for somebody to go on an apprenticeship scheme below level 3. They have a role to play and a contribution to make. Some of the most heartening things we heard were from young people in work in level 1 or level 2 jobs feeling as proud as possible. When you spoke to their employer, they said they were useful members of that company. If we do not get that right, we are all losers.
The last thing that I want to mention about these education institutions is that this group does not get work experience. It is difficult to sort it out and they are not a priority. Can the Government make sure—especially when they are rolling out the work experience entitlement in years 10 and 11—that this group does not get left behind?
Then there is the transition into work. Low expectations in school move into low expectations in the workplace. I want to mention a few things we found problems with. First, careers advisers are great, but we heard time and again from young people with disabilities that the advisers had no specialist training and there was no continuity. That is not a criticism of careers advisers; it is a criticism of the system. Every young person, whether they have a EHCP or not, should have careers advice from a careers officer who has some sort of specialism in their needs.
Secondly, we had good reports about disability employment advisers, but there are only just over 700 of them, which means one or two for each Jobcentre Plus. That does not work. There are good schemes, such as Access to Work. When it works at its best, it really helps, but the shortest waiting time to get it in place is 90 days. By that time, we would all have lost enthusiasm, let alone somebody who has probably had to fight hard right the way through the education system to get to that point.
We spent a lot of time hearing about things that work, so what does work? Supported internships work. I know from chatting to the Minister that she has a historic connection with Whipps Cross Hospital. We left our day there absolutely enthused, chattering all the way back about what we had seen. It was out of this world. It should be recognised far and wide because it works.
Supported employment schemes, such as Connect to Work, work. We met young people on supported employment schemes. They told us different stories from the people whose opportunities I described previously.
I met employers and people who run vocational profiling projects in Essex and Kent and they explained how they were an integral part of careers guidance. Vocational profiling works and makes a difference.
What all those things have in common is that they manage to join the joins. They are not disjointed; they have some continuity. They are examples of schemes where work takes place between a young person and a specialist to identify the young person’s strengths, skills and aspirations and then match them to an appropriate job or career.
It took me some time to grasp what the difference was. What we usually do is give someone a job and then, once they are in employment, try to fit them in or find something they can do—or compromise, or spend six months preparing for what they can do. What this does, in conjunction with the employer, is work out with the young person what their strengths are, so that, when they do go into work, a job match has taken place, the employer understands the young person’s need, and there is continuity.
Those are the underpinning things that happen: supported internships, supported employment and vocational pathways. That is why 60% to 70% of children on supported internships that are part of the education system go into full-time work, and those who are on supported employment are more likely to go into full-time work than if they have not been in a supported-employment system. So what we found there was a successful route into work. The frustration is that that is taking place at the same time as this merry- go-round of college courses, six months at a time, which are not a vocational route into work.
I will say just one thing here. Some of those courses are available only to people with EHCPs. So I say to the Minister that, when the Government are looking at the SEND review in general, if they decide to have a more inclusive framework, it would be awful if access to EHCPs was lost: I would like to see that access go to anybody who has a need, not anybody who has managed to fight to get an EHCP.
I will finish by looking at the employment bit. It is the same story. We heard stories about where it works. I think the difference here was in culture and aspiration. Changing culture is more difficult than changing policy. But, where it has been changed, it is a success story. We found a lot of employers who were honestly nervous about taking on people with disabilities. They worried that they would say the wrong thing and it would not go down well with their employees, and they worried that there would be an economic cost. We also heard from the Chambers of Commerce, the Humber Learning Consortium, the Federation of Small Businesses and the Business Disability Forum that it can work. So, again, it is an example of people paddling like mad below the water to get some bits of it working, and they can give us evidence about what works.
I will finish by referring to the title of our report. The first bit—the strapline Think Work First—was something one of our witnesses said to us. She was running a very successful project getting young people with disabilities into work. She said that, so often, when you are working with young people with disabilities, you do not “think work first”; you think of lots of other things. She said, “It’s tough. If you want to get people into work, you think work first. That’s what the young people want”. I believe that is what we all want, and we have to have it higher up the agenda than we do at the moment. I beg to move.
Lord Shinkwin (Con)
My Lords, it is a pleasure to follow the noble Baroness, Lady Morris of Yardley, and I commend her and her committee members on producing such an important and well-considered report. I will pick up on the point that the noble Baroness ended on, which is the title of the report. For me, it implicitly recognises that, for too long, work has been the very last thing that policymakers and politicians have instinctively associated with disabled people. The preconception that disabled people cannot contribute or realise their potential at work and, on merit, reach the top of their professions goes to the heart of our professional psyche. Indeed, its roots go deep in our societal culture. It is a culture which spawned the term “invalid”, a term still experienced today, in practice, in so many aspects of their life by disabled people.
So I thank the committee not only for recognising the scale of the challenge and for proposing a joined-up package of solutions, but for the title of its report, Think Work First. It is not just absolutely appropriate; it is instructive of the scale of the change in mindset that is required. For that is exactly the change we must make, and quickly—not just as policymakers but, as the noble Baroness, Lady Morris of Yardley, implied, all of us.
I will give two figures. The UK’s £2.9 trillion national debt and the £100 billion that we spent in the last year servicing that debt surely underline the fact that we are all paying the consequences and the costs of the 30% disability pay gap highlighted in the report and the unsustainable disability benefits bill for those who are out of work. It is therefore in all our interests to think work first. I am glad that, as the noble Baroness said, in several respects the Government have indicated that they intend to do so and to think work first, whether on vocational profiling, supported internships, in-principle support in education, including through EHCPs, and mandatory reporting of the disability pay gap, the efficacy of which, I argue, depends on disability employment reporting as well—this is a theme to which I will return. The fact that the Government are engaging with some of the committee report’s recommendations is surely a fitting tribute to its deliberations and its 36 common-sense recommendations.
I shall highlight the recommendations that I particularly welcome as a disabled Member of the House. These include increasing the number of supported internships; developing a transition information hub, co-produced with disabled people, as in Scotland; improving the support that young disabled people receive in the education system; the collection and publication of data on the number of careers advisers, especially those who have received specialist training relating to pupils with SEN; increasing work experience opportunities, including through supporting and incentivising local bodies, such as chambers of commerce, which I think is an excellent idea; improving the quality of accessibility information provided to students by universities; ensuring that work coaches and disability employment advisers fully understand the specific barriers that young disabled people face, including in the commissioning and use of assistive technologies; crucially, coming back to the committee and updating it on government action to reduce the access to work application backlog and delays; and the introduction of a four-week deadline by when employers must respond to an employee’s request for reasonable adjustments.
I could go on but I shall just highlight one other recommendation, which is making the Disability Confident scheme fit for purpose and credible by introducing rigour and transparency, so that employers are no longer marking their own homework and are instead subject to external, independent audit of the evidence as to whether they are hitting the thresholds for the percentage of their workforce that is disabled.
There is one other recommendation that I particularly highlight because, as a disabled person, I believe that it is crucial to the transition, indeed to the transformation, that we must all make to our cultural attitudes if we are truly to benefit, as a society, from extending equality of opportunity to disabled people and enabling them to realise, on merit, their potential at work. The recommendation that I am referring to is that the Government should ensure disability pay gap reporting, to which I would add disability employment reporting—that is, the percentage of an employer’s workforce that is disabled—being made mandatory for employers with 250 employees or more and for all Disability Confident leaders.
Page 43 of the report refers to the Disability Employment Charter, the brainchild of Professor Kim Hoque, who gave evidence to the committee and with whom I have been privileged to work for a number of years. Disability employment and pay gap reporting is the number one demand of the charter, which in practice has already been adopted, as the report comments, by employers such as EY, Capita and Clifford Chance. Mandatory reporting has also been supported as a recommendation by two commissions that I have chaired: first, the Centre for Social Justice’s Disability Commission, in its “Now Is The Time” report of March 2021; and, secondly, in the report produced in October 2022 by the Institute of Directors’ commission, “The Future of Business: Harnessing Diverse Talent for Success”. I pay tribute to Jon Geldart, the IoD’s director general, for his continuing commitment, and to Alexandra Hall-Chen, its principal policy adviser for employment, skills and sustainability, for building earlier this year on the commission’s work through the publication, in partnership with Disability@Work, of “Progress through Transparency: the Case for Mandatory Disability Employment and Pay Gap Reporting”.
As Professor Hoque made clear in his submission to the committee, mandatory pay gap reporting would be relatively straightforward if introduced in tandem with disability employment reporting. Establishing which employees are disabled will depend on the creation of a supportive work environment, using the Labour Force Survey definition of disability, so that disabled employees feel confident that they will not be penalised for their disability and that the data that they provide on their disability status will be treated as confidential. This is surely to the mutual benefit of any decent employer, keen to get the best from its workforce. Professor Hoque has also proposed a hybrid metric that accounts for both the employer’s disability employment levels and its disability pay gap in a way that does not unfairly represent those employers that, to their credit, are taking positive steps to hire more disabled people. I would be grateful if the Minister could update us on when we might expect the Government to respond to the consultation on mandatory reporting in line with the Labour Party manifesto and the Government’s King’s Speech commitments.
I finish on a rather despondent note, but one which underlines the urgency of moving ahead on the report’s recommendations. The CBI submitted what, to my mind, was a deeply discriminatory response to the consultation that I have just mentioned. I have told it so and I have asked that the response be withdrawn. It is completely unacceptable for an organisation like the CBI, or indeed any member organisation with a vested interest in the status quo, to perpetuate prejudice. I ask the Minister to confirm that the Government will treat responses that are based on outdated and costly attitudes, whereby disabled people are only ever regarded as a burden, with the contempt that they deserve.
In conclusion, the truth is that prejudice against disabled people is rife in Britain in 2025. In fact, I have never known it to be worse. The extent to which we have gone backwards since the demise of the Disability Rights Commission is disturbing, soul-destroying and, above all, disorienting. I never thought that we could be back in this place. That is why this report and its recommendations are so important. I urge the Government to show that they are responding to those recommendations with the urgency that they deserve.
Lord Willis of Knaresborough (LD)
My Lords, as ever, I feel quite embarrassed to follow that particular contribution. I begin my contribution by thanking the noble Baroness, Lady Morris of Yardley, for leading this inquiry so effectively, as indeed she has led every other inquiry since we worked together in the House of Commons 15 years ago, or whenever it was.
Lord Willis of Knaresborough (LD)
Was it longer? I am sorry; I try to think I am younger than I am.
This was a very challenging report. As ever, I thank the committee clerks for their excellent preparation of material and witnesses, particularly young people and their parents. Sometimes, when you do an inquiry of this sort and you meet real people who are involved with their youngsters in an issue that is really life-threatening, you go away thinking that you have to write reports that are fundamental to government support. That is really what has happened.
For me, this was an extremely moving inquiry, as it reflected quite dramatically my own involvement in the education of young people with highly complex educational and physical challenges during the whole of my career. In 1978—I am not going to do it year by year—I was given my first headship, of Ormesby School in Cleveland, at the same time that the late Baroness Warnock produced her ground-breaking report on the future education of children with special educational needs and physical impairments. For a variety of reasons, partly due to an on-site specialist primary school for children with complex physical challenges, the local authority and the governors agreed to adopt the Warnock recommendations and include, at secondary level, all pupils in south Cleveland with severe physical difficulties, including a key number of pupils who were severely disabled due to thalidomide. With the support of the Department for Education, we became the first state school in the UK to make such a fundamental decision.
The teaching challenge was significant but highly rewarding. However, post-16 education and employment were even more challenging, and I constantly receive letters from my former pupils and their parents who, despite their excellent educational skills, could not get appropriate employment. That challenge remained with me for the rest of my career. When I moved to Leeds, with the support of the former Labour MP, George Mudie, who I think all your Lordships will know, we expanded the inclusion of pupils with special educational needs and physical needs to include pupils with impaired sight and hearing, and Down syndrome. However, the task of moving pupils on to skill training or employment, even in a highly progressive city such as Leeds, became even more challenging, despite our attempts to include external and internal career staff.
Of course, there have been a number of initiatives by successive Governments to address these issues since: the Education Act 1981, the Children and Families Act 2014 and the Commons Select Committee report of 2019 all sought changes to the landscape and tried to address the issue of education and skills for employment training. Indeed, the current EHC plans and access to work are positive initiatives to address the issues, but so much more needs to be done.
The Government’s response to the committee’s report is, frankly, outstanding. Nineteen of the 36 recommendations have been accepted in full; a further 12 have been partially accepted; four have been noted for action; and only one has been partially rejected.
Incidentally, I say to the committee that, two years after the production of the Warnock report in 1978, the then Prime Minister, Margaret Thatcher, said, “On all the main conclusions and recommendations, we were in complete agreement”. I would like the Minister to agree with Baroness Thatcher that that is the case here as well.
The current legislation is not sufficiently strong or appropriate to reduce the 30% disability employment gap that has existed for the past 50 years. Further legislation, which will require action, is probably necessary. There may be criticism, or indeed ridicule, by some that the current Government’s mission, expressed in response to our report, saying that
“economic growth is at the heart of the policy to improve access to work”,
is unrealistic. But the recommendations in this report provide, time after time, opportunities to carry out the promised mission and I fully support them.
The title Think Work First: the Transition from Education to Work for Young Disabled People is the philosophy that needs to be in line from nursery to employment. But, frankly, that is not and never has been the case. I understand just how challenging it is to link employers in both the public and private sectors with appropriate levels of support for SEN and disabled students. But that must be the Government’s objective because, if it does not happen, changes to the education system to improve links to employers will quite frankly be very difficult. How the agreed recommendations will be initiated and, crucially, how they will be financed and when they will be introduced are what we need to hear in the Minister’s response today.
For me, the following are priorities. Too often in the past, SEN was regarded as the sole area for guiding pupils from education to employment. Thankfully, the committee, and indeed the Government, embraced as the key challenge that the Government must include in future policies all young people with disabilities, long-term health conditions and special educational needs, and their families. I say “their families” because what is constantly missing from successive Governments in support of young disabled students moving to employment or further education is including parents or carers in research and decision-making. We heard that from our witnesses and it is something we should emphasise.
Committee members were deeply moved by the description by both parents and students of the mediocre level of support that often exists in schools. Two fundamental challenges emerged, as they have over many years: the need for better careers education and the need for more appropriate internships. The previous Government’s commitment to double the number of supported internships should be continued and indeed combined with the proposal to develop an English version of Scotland’s Compass tool, to assist the transfer from education to employment. This would certainly help the transfer and support system, but schools will need to radically increase their existing careers education system, which frankly has rarely been successful, particularly for pupils with SEN and disabilities. Education, health and care plans are extremely useful, but the continued failure to adequately fund them must be addressed to prevent the constant delays that simply undermine support and lead to people leaving their employment.
Crucially, too, the Government must totally review the careers service in schools. To be honest, it hardly exists in many schools. This affects most students but can be devastating for SEN and disabled students. The committee wanted to see this issue seriously reviewed, with an analysis of the number of existing careers advisers, their training and their qualifications. It would be useful if the Minister could say whether this has happened or will happen and whether the introduction of improved qualifications is being considered.
The final points that I wish to make concern employment opportunities for young disabled people. Unless there is a change to current policy, which will be radically affected by the use of artificial intelligence, et cetera, the situation examined by Baroness Warnock, which has not really changed in 50 years, will simply continue for decades to come.
We can radically increase the quality of education and skills in our schools, colleges and universities for disabled and SEN young people, but unless as a nation we can increase the level of employment for young people—and, indeed, more mature people—in both public and private environments, little will change. The committee discussed how this would be possible, but without a bold recruitment policy to include a wider range of employers, it simply will not happen. I was disappointed when the Minister did not fully accept the committee’s proposal to seriously improve the availability of ready-to-work programmes such as that provided by Think Forward, which would have engaged local authorities with employers much more readily. I hope that the Minister agrees that without a legal framework to expand links between schools, colleges and universities, as well as local authorities, the increased links will not happen.
Interestingly, France, Germany, Italy, Spain, Austria and Denmark all have legal employment requirements, which benefit companies as well as individuals, while Luxembourg is recognised as having one of the most successful arrangements for engaging employers with disabled young and elderly people, not only in Europe but throughout the world. There, companies with 25 employees or more are required by law to include a quota of disabled young people, and are compensated by removing social security payments and receiving benefits for an excess of basic requirements. Frankly, we have to give something to employers that will encourage them to do it, rather than simply saying that they must do it ad hoc.
Surely if, as the Minister stated in reply to the committee’s report, the Government
“was elected to deliver change”
and, crucially,
“is committed to tackling economic inactivity, particularly where it is driven by ill health”
which I totally agree with, taking a bold set of actions, including legislation, before the next general election, will help silence the critics and reward the significant population of disabled and SEN young people.
Lord Laming (CB)
My Lords, at the outset, I once again emphasise how greatly the committee was helped by hearing from children with a disability and their parents. They very generously helped us to have an insight and to understand something of their experiences. That was so valuable.
It is worth while constantly reminding ourselves that childhood is a time of very great change and individual growth. It is the foundation of personal development. That being so, I am sure we all agree that, as a society, our aim should be for each and every child to have every opportunity to reach their full potential. Of course, change brings with it uncertainty, so it is not possible to predict what the outcome for each child may be. That said, sadly, there is often the temptation in some areas to make an assumption about the future prospects of each child. This especially applies to a child with a disability. Indeed, for children with a disability, sad to say, it is not unusual for a catalogue to be created from a very early age of things that they will never be able to do or skills that they will never possess. That is tragic.
This is why we should put in place, at a very early stage in a child’s life, both a personal development plan and a programme of support, for the child and their parents. The parents of a child with a disability often face very real challenges, so they deserve our support and encouragement. Alas, the evidence from the committee shows that, at best, the services provided for children with a disability and their parents are, to put it mildly, very patchy. Indeed, it is right to record that in some places, the services offered to children with a disability and their parents were seriously inadequate.
The movement from education to employment is a milestone in the life of every child. In the case of a child with a disability, it is a key stage in their development. In too many places, however, the arrangements are unpredictable, unreliable and negative. The good news, though, is that the committee heard of some heartwarming and outstanding work with children with a disability at this important stage in their lives. In each case, the good work was based on a vision and the determination to ensure that each child matters. In some areas, there was a well-developed plan of preparation for the transition from school to work in place for each child. In other areas, there was nothing.
Sadly, in other places, parents described the transition when their child left school as being like facing a frightening cliff edge. Too often, no preparation had been made, no plan had been created and no discussions with the adult services had taken place, as if they occupied a different place in the world. Due to this, parents described it as being like starting from scratch all over again. Although children’s services and adult services are provided by the same local authority, incredibly, that did not mean that these services were interested in communicating with each other or able to do so.
Children with a disability and their parents deserve better, especially at this critical time of transition. It seemed that in some places it was assumed that a child with a disability would simply be regarded as unemployable for the rest of their life on leaving school. This approach must be unacceptable, and I hope the Minister will take this point very seriously. The reality is that across the country, the number of children with a disability who are helped into employment is remarkably small. That being so, we should all set ourselves a challenge to demonstrate that there is an increase in the number of these children with a disability moving into employment each year. I am afraid this is a rather neglected field.
We need to be altogether much more ambitious. However, we can take encouragement because, despite all I have said, there is good news. The committee heard some evidence that was both inspiring and instructive of what can be done. I will refer to just one example, which is simple but telling. We heard that in one local authority area, the children’s services and the adult services worked together to organise a hub meeting, in which local employers and young people soon to leave school could meet in semi-social circumstances. The employers described their work and the employment possibilities, and then the children set out their skills and hopes for the future.
In one such meeting, an employer described the work of his recently created business. In doing so, he acknowledged that, because he was mainly concentrating on securing more customers and making the organisation grow, he sometimes failed to carefully manage the details of things such as ordering stock, cost control, staff hours worked et cetera. A pupil responded by saying that, despite his limitations because of his disability, he loved working on spreadsheets. The employer indicated that he had no experience in designing or working with spreadsheets and did not know how to engage in that area of work. The employer invited the young man to visit the workplace and explore together what might be possible. It was good to hear that the young man was offered a job but even better to hear that it completely transformed the lives of both the employer and the young man. The lesson from this and from a great deal of what we heard is that it can be done because it is being done in some places. The challenge, and the challenge for the Minister, is that each of us should do all we can to make sure that this is working everywhere in our society. As a nation we must rise to the challenge for the good of everyone.
I commend the important messages in this report—sadly, some are negative and things need to be rectified, but some are very hopeful. We can do it because it is being done. Let us just get on and do it. I hope that the Minister and others will take from this meeting that there is, with great ambition, great hope ahead.
As I will shortly be stepping down from the Public Services Committee, so ably chaired by the noble Baroness, Lady Morris, I pay special tribute to the work of the administrative staff who are so competent and conscientious and such a pleasure to work with. I offer them my warmest thanks.
Lord Mott (Con)
My Lords, it is a pleasure to follow the noble Lord, who has been incredibly kind and generous to me since I first joined the Public Services Select Committee. I am sorry that he will be leaving us very shortly. I also pay tribute to and thank the noble Baroness, Lady Morris of Yardley, for excellently chairing the committee, leading to the report today. I echo the comments of many noble Lords in thanking the excellent team who provide the support that we require.
The gap in employment between disabled and non-disabled people had been narrowing for a number of years, at least until the Covid-19 pandemic. But since then, progress has stalled. According to the latest estimates, just over half of working-age disabled people are employed, compared to more than four in five non-disabled people. Tackling this gap is, of course, important from a financial standpoint, not least given the significant increase in the costs of working-age welfare and the broad consensus across the political divide of the need to reduce this. Crucially, tackling this gap for those who can work and want to work is far more important on a human level.
There will always be some people unable to work due to disability and they must get the full support that they require. As disabled people transition from education, we must do everything we can to help them find suitable and fulfilling jobs. Making use of all the talent we have in this country means more people with the security of work and with the independence, improved well-being and social inclusion that it brings.
It is timely for the Public Services Committee, of which I am a member, to have undertaken this inquiry: Think Work First: the Transition from Education to Work for Young Disabled People. The committee’s extensive report makes over 30 recommendations, ranging from education and employment services to workplace rights and support to employers. I hope that these will provide much food for thought for the department.
In my contribution today, I want to focus on how we can improve the bridge that links education and employment. This is where there are clear examples of things working well and where progress should be sustained. Getting real, hands-on experience is vital for anyone getting into the workplace, disabled or not. I saw this not only as an apprentice myself but during my time as chief executive of the Conservative Party, where I was delighted to help establish a paid internship scheme with the Patchwork Foundation, for which I remain a mentor, to help young people from disadvantaged and minority communities get experience working in politics.
We know that this type of experience is particularly valuable for disabled people moving into the workplace. If a young disabled person can get a supported internship, an accessible apprenticeship or quality work experience, they are more likely to go on to fulfilling work. Supported internships provide a structured, work-based study programme for 16 to 24 year-olds with special educational needs and disabilities who have an education, health and care plan.
I was delighted that the previous Government made a commitment to double the number of supported internships. We saw evidence of their particular success in the NHS, with 68 hospitals hosting supported internships and strong evidence that these often end with the NHS employer offering the interns full-time, permanent contracts. I urge the Minister to commit today to building on the previous Government’s commitments here and to take the committee’s recommendation to
“increase the number of supported internships, and … introduce ambitious, time-bound rolling targets for this”.
I agree that there are many opportunities in the public sector for such an increase, but the Government should also seek suitable and willing private sector partners.
Moving on, I support the efforts being made to help more disabled young people into suitable apprenticeships and I would be keen to hear from the Minister what plans the Government have to communicate the new criteria, promote apprenticeships to employers and training providers and incentivise employers to take on disabled apprentices, in line with the committee’s recommendations.
Finally, the committee is right to highlight the value of supported employment. The universal support programme, announced by the last Conservative Government, was allocated an initial £53 million to help 25,000 out of work, long-term sick and disabled people who face barriers to employment, with an ambition to go much further, with larger numbers of people helped, by providing sustained, wraparound help for up to 12 months for both the participant and their employer to help them stay in work.
The programme was welcomed and praised. Scope called it “good news” and said that it was something that it had been “calling for over many years”. But, as the report notes, there have been concerns within the sector that the current Government are not committed to the programme. Will the Minister today take the opportunity to allay these concerns and confirm that the Government remain fully committed to rolling out the programme? Specifically, I hope they will take forward the recommendations to
“set out clear timelines and targets for improving the regional and national availability of Universal Support, as well as metrics focused on employment outcomes for the disabled people who participate in supported employment programmes”.
Will more be done to link the universal support offer to the supported internships that I spoke to earlier?
Helping more people to find the security and fulfilment of work has always been at the heart of my politics. This should apply to everyone but, sadly, too many disabled people are still written off. We need to build on the progress already made, reverse the post-pandemic decline in progress and, in doing so, remember the sentiment of this report: Think Work First.
Baroness Lane-Fox of Soho (CB)
My Lords, I am very pleased to contribute to this debate on an important and extremely thoughtful report from the House of Lords Public Services Committee. I thank the committee members and their chair for this great publication.
I read it through both a personal and professional lens. After my accident nearly 30 years ago, I was lucky: I had access to resources, mental and physical support, and people in business who believed I could still contribute. Many young disabled people do not have that combination today. That is what this report challenges us to change.
The scale of the issue is sobering, as we have already heard today: the figures have barely moved in a decade. If we halve that gap, the Government estimate an economic benefit of £50 billion a year through higher tax receipts and reduced welfare spending. This is not just a social challenge—it is a national economic priority, particularly at this time of growth focus.
The committee identifies several structural problems: low expectations in schools, careers advice that is too generic, weak co-ordination between education, employment and health, and employers who want to help but do not know how. It also spotlights what works: internships, vocational profiling and integrated services. I agree wholeheartedly with all these points; the evidence base is strong. But I want to go further in three areas where we can act faster or think differently: co-design, partnership through business networks and entrepreneurship.
Too often, systems are built for young disabled people, not with them. One in four told the committee that they received no careers advice relevant to their disability. Too many described leaving education as “falling off a cliff.” That is a design failure, not a resource one. Co-design means embedding lived experience from the start: shaping programmes, testing ideas and feeding back on what works.
I want to expand the report’s framing. The committee highlights physical and learning disabilities, but we must also confront the mental health dimension. Around 60% of young disabled people experience a diagnosable mental health condition. Support too often ends when they leave school, and there is a well-documented cliff edge between CAMHS and adult services.
If you are trying to find work while managing anxiety or depression as a result of disability, you need joined-up help, not fragmented systems that treat “health” and “work” separately. Expanding individual placement and support models, which integrate mental health and employment services, is right; these programmes deliver employment rates up to 30% higher than conventional job search. I would go one step further: embed mental health co-design panels within local employment and skills partnerships so that young people help shape the services meant for them.
Sara Weller, a disabled entrepreneur and one of the very few disabled FTSE non-execs, who runs ActionAble, shows that co-design is not a “nice to have”—it is the biggest predictor of sustained success in changing services. Evaluations of co-produced programmes show 25% to 30% higher sustained-employment outcomes than standard models.
The committee is also right that local co-ordination is often missing. It calls for stronger partnerships between education, employers and local authorities. We already have a ready-made structure that could deliver this alignment—here I declare an interest as the president of the British Chambers of Commerce; its local skills improvement plans have already been touched on today. There is now one in every region, bringing together employers, FE colleges and local authorities to match training with job demand. Yet few LSIPs currently address disability inclusion, and that is a missed opportunity. Imagine if every LSIP identified inclusive employers ready to host supported internships, mapped FE colleges and linked SMEs to the Access to Work scheme. The infrastructure exists: 400,000 businesses have engaged through the chambers and more than 200 FE colleges are involved in LSIPs.
Research for the DWP shows that when local business networks engage, young disabled employment rates rise by around nine percentage points within three years. Making disability inclusion a mandatory strand in every LSIP, with measurable targets, would turn a general skills plan into a genuine inclusion plan—owned by business, informed by evidence, and aligned with “Think work first”.
The committee focuses on employment and supported internships. I fully endorse that but I want to add, perhaps unsurprisingly, entrepreneurship. For many disabled people, self-employment is not a fallback but a natural path. According to the Global Entrepreneurship Monitor, 19% of working-age disabled adults in the UK are engaged in early-stage entrepreneurial activity, compared with 11% of non-disabled adults. Disabled people are nearly twice as likely to start a business, yet the system does not even meet them half way.
Only 3% of government start-up loans go to disabled founders, fewer than one in 20 accelerator or incubator programmes have accessibility designed in, and only 5% per cent of venture capital firms report collecting any data at all on disabled young founders. The barriers are practical and structural: inaccessible workspaces, inflexible benefit rules, opaque funding routes and low representation in networks.
Yet the potential is extraordinary. The Disabled Entrepreneurs Network found that 72% of disabled founders say their experience directly informed the product or service they created. They saw the problem and they tried to fix it. You can see it in adaptive technology, accessible fashion, inclusive design and health innovation, sectors where experience drives commercial and social value. Scope’s Future Innovators pilot, for example, supported 60 disabled founders and generated £3 million in revenue and 120 jobs in just two years.
We are seeing a new wave of organisations also backing entrepreneurs in disability. CREO, launched by Founders Forum, is building a national ecosystem to support disabled and neurodiverse entrepreneurs, connecting them with investors, mentors and accessible resources. It is a brilliant example of private-sector energy being matched with societal change. CREO’s early work shows that when disabled founders have access to mainstream networks and capital, their ventures grow 30% faster. Alongside CREO, initiatives such as the Disabled Entrepreneurs Network, the Disability Rights UK’s Leadership Academy, and UnLtd are proving that targeted mentoring, modest seed funding and inclusive design can unlock extraordinary innovation.
These efforts need to be scaled and connected, joined up with national policy and local delivery—with the LSIPs perhaps—linking local business networks with inclusive investment and mentorship. Let us make entrepreneurship a formal third route in every education-to-work strategy; that means embedding enterprise education in further education across the board, supporting internship and growth hubs and prompting the British Business Bank to report annually on participation rates. We could even pilot regional inclusive innovation funds—small-scale capital pots designed with disabled entrepreneurs to test what works. That is not just an inclusion policy, it is an innovation policy. If we removed half the barriers facing disabled founders, the Federation of Small Businesses estimates that up to 250,000 new disabled-owned businesses, which would add billions to GDP and transform representation in the UK’s innovation ecosystem. This is not charity—it is economic sense.
I am patron of Day One Trauma, a charity helping people at the point when they face massive physical trauma. It works in hospitals providing invaluable support to patients and families. One of the first and most requested pieces of advice is always about work: “What will happen now that I am disabled? How will I go back to work? What future will I have?” When I became disabled, I had resources: I had networks and opportunities, which meant that I could dare to believe that I would be able to embark on one of my crazy ideas for a new business—most of them terrible. I thought “work first” because, before it was clear that I was even going to leave hospital, I knew that was what would help me to carry on. But the combination of factors that enabled that mindset for me should not be luck—it should be policy. I urge the Government to turn Think Work First from a report into reality.
Lord Addington (LD)
My Lords, report was, for me, slightly depressing but also reassuring. It was slightly depressing because I have either said or agreed with everything said in this report over the past 20 or 30 years. A series of themes here have dominated government ever since it has looked at this area, particularly in the education field. It comes down to the fact that you have X number of people who do not fit the education system that well who are still going through it.
Then we come to a series of roadblocks, such as level 2 English language. The president of the British Dyslexia Association, who is dyslexic, of course would say this, would he not? But you suddenly bump into things that get in the way. The one battle that I won partially was thanks to the noble Lord, Lord Nash— I give him eternal credit for taking on his own department—who turned round and said that a recognised dyslexic should not be made to pass functional skills English at GCSE level with a C, as it was at the time, to get their apprenticeship. It was inspired by meeting people like carpenters and hairdressers, who could not get a job that would allow them to be employed properly because they had a disability that meant they could not do something. That took a long time—and that degree of rigidity in standards is something that we must resist. To go through all the dys’s, a dyspraxic just will not fill out the form in time. For a dyscalculic, it is often even worse. I recently met somebody who had failed maths 14 times in trying to get an apprenticeship. The degree of black humour builds, does it not? We get around it; we do not address it. The Government have to interject here, to remove the traps on the way through.
I hope we are about to hear—the Minister is being threatened by a piece of paper from her officials—that we will try to remove this with a little common sense. It is just one of the things I think we have to do. We have to adapt the education and training programme to get through. I hope this will come forward. I was ignorant before I started this that Scotland has the Compass tool; apparently it works. I hope the Government will tell us how they will integrate this, or something very like it, into our own system, guiding people through.
Then it goes on about the fact that, as anyone who has dealt with the system knows, you are in education, then you are employed, then you are an adult and then you fall off the cliff. The one thing the Children and Families Act got right was that if you are identified as needing an EHCP it goes on until 25. That is the best thing about it. Maybe it should go on for longer, and maybe there should be more structural change. If you think about it for two seconds, it is obvious that you will need support and guidance to get through in a system where you do not fit. It has been designed for the 75% of the population that it does fit so you will have to make some adaptations or some ways through to make it relevant to everybody else. It is no-brainer, really. But you hit bureaucratic walls, structures and stereotypes all the time and you are hitting them damned hard. You have to try and make a place where the Government take action and actively overcome.
It is time for another declaration of interest that is relevant under the rules. I am chairman of Microlink PC which puts together packages for people going into employment. Assistive technology is usually part of this but sometimes it is just organisation. We find when dealing with employers, often big employers, that they just want to get the best out of their people. Big employers sometimes feel confident and structured. They need PR. They decide, “Yes, we’ll do this. We’ll get in early and deal with the problem. We don’t need a definition”—and it makes sense. The problem is that most small employers, as this report makes quite clear, do not know this. They think they can avoid it. Someone has a condition: if they cannot do this, what happens?
There can be small changes and small structures. In my case, I have to talk to a computer as opposed to tapping a keyboard. I have never met anybody who objected to me word processing by talking to a computer—if someone did, I think they probably have bigger psychological problems than the person talking to the computer. How are you going to encourage not only the support systems but the knowledge that these things are easily dealt with if you have the willingness to go forward?
When the Minister comes to reply to this debate, I am sure she will agree in principle with all these points. It is about driving things forward and saying that you have to do things slightly differently. As has been pointed out by virtually everybody here, the employment gap and the economic benefits are self-evident. If you are employed, then you are not claiming benefits and are an economic benefit to everybody else, so pure selfishness comes into it. Dyslexics have a stereotype that we are all entrepreneurs. I think quite a lot of us are but often that is through necessity and not through choice. You have to do something different or you will sit and rot. We have to embrace these things, and if we do not start to address the basic thrust of this report we will simply carry on as we are at the moment.
Also, I would hope that the Minister will say what the Government thought was good about the work done by the previous Government. What has worked and how will they carry it on? We all know what has not worked because we talked about it for a long time. But how are we going to continue the good work and get that drive? How will we say, “This has worked”? Where is the continuity?
If people need support and structure, how will that work? Access to Work is often talked about, but it is slow and linked to certain jobs. How do we take that through if we decide that we need that support and structure? Let us face it, people do not usually radically change the type of jobs they do; they are usually in a pattern, at least for long periods of time. How are we going to make sure the support is always there? It would be a very good thing if the employer did not have to go through the hassle of saying an employee must wait to get their new support system. It is about support, structure and information. I go back to the beginning of this, in schools. If a school’s careers adviser does not know that people from various disability groups can have careers in X number of lines, they cannot help. Where is the expertise coming in?
As the noble Baroness will undoubtedly be finding out when she deals with the special educational needs report, these are not easy things to do. We all look forward to that report; only one delay in that report will be quite good by governmental standards, but I hope it is just the one delay.
Extra knowledge is needed across a variety of structures. There are three disabled people in this room—that I can recognise, although I am probably missing someone—and they all have different problems. How will the Government make sure that people can get that expertise? Are we making sure that the professional involved can go and ask for help? They need to know that if they need to ask for extra help, it is not a negative but a positive. If we are doing this in teaching, we should be doing it for careers advice—it should be the same thing. If you have not met a certain condition before, you need to have knowledge. Having a central pool of support, having access to it, and saying that it is okay to get something through—and doing it reasonably fast—would make life immeasurably easier for everyone involved in the system.
What we really need is a change of tone; we need to say, “We are supportive and we will inform you”. The employer’s fear about employing somebody who works differently in their office must be overcome. That is very important, and the report is wise to draw attention to it. The fact that people are frightened about extra costs and the structures will always be there until we get a hold of it, shake somebody pretty hard and tell them not to worry. After that, we can show them how it is done. The Government need to say that they are taking these steps and that they will work on the other stages.
On getting special educational needs right, unless we are getting to another cliff edge—I think the noble Lord, Lord Laming, was the first one to say this—the Government are still just pushing the cliff edge slightly further down the road. They have got to go out there and say how they will address the whole problem. It is a big challenge, and the Government will not get it right in one Session. But, if they embrace it and get the tone right, future Governments of whatever colour will probably find it easier to go forward. It is a big challenge. I wish the Government well, and I look forward to what the Minister has to say.
The Earl of Effingham (Con)
My Lords, I thank all noble Lords who have made such valuable contributions to this discussion. At a time when provisions for disabled students are further stretched and needed more than ever, this debate is incredibly important.
His Majesty’s loyal Opposition welcome that the Government appear to be following the committee’s advice and that they have prioritised vocational qualifications in their recent reforms. The previous Government understood the importance of a vocational pathway that aimed to provide opportunities to every schoolchild in this country and, as such, were committed to achieving parity between vocational and academic qualifications. The devil is always in the detail, so we await further clarification on the Government’s newly announced V-levels but, if they prove to be a continuation of the previous Government’s commitment, they would be a welcome step in the right direction.
However, simply offering a more streamlined qualifications system is not enough: particularly with young disabled people, it is incredibly important that sufficient guidance is offered. The committee’s recommendation of vocational profiling would provide this and we hope that, when the Government lay out their V-level plans in detail, they will follow the advice and wise counsel of the committee that was so ably chaired by the former Secretary of State for Education, the noble Baroness, Lady Morris.
His Majesty’s loyal Opposition are also grateful for the Government’s honouring of our commitment to double the number of supported internships. Allow me to repeat the words of the noble Baroness, Lady Morris: “supported internships work”—and work and work. My noble friend Lord Mott highlighted his personal experience as chief executive of the Conservative Party. It remains our firm belief that supported internships are one of the best pathways into work for the people furthest away from the job market. It follows that continuing to scale them up should be a priority for any Government, regardless of their political persuasion, whose aim is to get young disabled people into work, give them the opportunities that they both need and deserve and watch them flourish in an inclusive and team-orientated environment. I hope that the Minister will assure noble Lords that the Government will continue to proactively update your Lordships’ House on this issue.
A key element of providing these very opportunities, however, is the successful co-ordination between the Government and local authorities. We understand that the Minister for School Standards in the other place confirmed that the Connect to Work programme has begun in a quarter of areas, but please let us not have a postcode lottery. If initiatives are not rolled out countrywide, we risk perpetuating inequalities based purely on peoples’ addresses. Capacity for delivery varies dramatically across local authorities and it must be the Government’s responsibility to ensure that different needs are equally met. We trust that the Connect to Work programme will continue to be rolled out, but it must be done regularly and equitably. We would welcome a watertight guarantee from the Minister that this Government are committed to ensuring that that will be the case.
The more worrying issue is the co-ordination of education, health and care plans. The noble Lord, Lord Laming, highlighted a cliff edge or the need to start again after leaving school, as did the noble Lord, Lord Addington. The completion rate of EHCPs ranges from below 10% in some authorities to over 90% in others. The changes introduced by the Children and Families Act 2014, coupled with a surge in applications post Covid, mean that there are now over 600,000 children on plans. That is one in 20 pupils, with a further 150,000 awaiting assessment. With such a disparity in delivery already evident, a potential 25% increase in that number could mark a tipping point that is, indeed, a serious cliff edge.
Reflecting on this critical issue, the committee was clear that reforms are urgently needed to reduce application and delivery times and improve the provision of EHCPs. We understand that these are within the scope of the wider reforms to be announced in the department’s upcoming White Paper and, therefore, it may not be possible to comment on any changes right now. But, despite this, perhaps a reflection on another recommendation of clear timelines would provide much-needed clarity to both students and teachers.
We have been told that the White Paper is to be delayed, but, in the meantime, local authorities and schools are left guessing about what the future of EHCP provision will look like. The Secretary of State for Health and Social Care is entirely correct when he says that prevention is better than cure. We know that early intervention is among the most effective ways of assisting disabled children into the workforce, but drastic changes will need to be made to ensure that this is available to all schoolchildren, regardless of where they live, and we look forward to hearing the Government’s proposed solutions.
This should be a non-partisan subject—a common goal, echoed by many noble Lords, to do everything possible for those who have found, and may still find, themselves in challenging circumstances. The Government appear to be taking many of the committee’s recommendations on board, but regular updates on reasonable adjustments, vocational schemes and equal provisions are most welcome. An evidence-based approach is being taken and the successes of the previous Government are being built upon. We very much hope that the pathway from education to work for young disabled people will remain on an upward trajectory into the future. As the noble Baroness, Lady Morris, so eloquently put it, if we do not get this right, we all lose out.
The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
My Lords, I thank the noble Baroness, Lady Morris of Yardley, for securing this important debate on this report. We are grateful to the committee for its work and its report, which found that young disabled people, as we have heard during a good debate today, face systemic barriers that prevent progress.
I am sorry about the delay that the committee experienced before the Government’s response. I will not identify a particular department because this is a cross-government responsibility, and it is a cross-government responsibility to respond to the committee in a timely manner. The tardiness of that response does not reflect the work that the Government are doing, and I will say something about that in responding to the debate.
We know that the SEND system in this country is broken, which is why we are taking time to review the system and to get our reforms right. We agree that there needs to be a cultural shift in how we support young disabled people, and that success is dependent upon raising aspirations, challenging discrimination and ensuring co-ordinated support from school through to sustained employment.
The recently published Post-16 Education and Skills White Paper sets out our vision for a world-leading skills system that breaks down barriers to opportunity for all; meets learners’ and employers’ needs; widens access to high-quality education and training; supports innovation, research and development; and improves people’s lives. The Government are committed to helping young disabled people to access and stay in work when they leave education, with a focus on early support and intervention. The Government have considered the committee’s recommendations and changes are already taking place.
The report made valuable recommendations regarding education and careers support, including improving careers adviser training, which we have done, first by embedding vocational profiling for young people with SEND into the careers leader and online training modules aimed at special educational needs co-ordinators and the wider education workforce to support careers conversations. This will help individuals identify their skills, interests, aspirations and support needs for employment.
On the important point about careers advice being appropriate and supportive for young people with disabilities, the government-funded careers support for young people is inclusive, with an emphasis on working with our delivery partner, the Careers and Enterprise Company, and with key partners, including special educational needs organisations and local government, to ensure that careers provision is tailored to the needs of young people. Careers hubs across the country receive SEND training as standard, which informs their work with schools and colleges. There are now SEND-specific co-ordinators in the network. All new enterprise co-ordinators have SEND induction training by default through CEC’s strategic partnership with Talentino. Among them, there are 38 SEND-specific enterprise co-ordinators across the hub network. Training is also available for employers, to make sure that their outreach programmes are as inclusive as possible, because those programmes, and of course work experience, need to be available for all young people, particularly for the young people we are talking about today.
CEC’s employer standards framework embeds inclusion as a key measure of quality in business outreach work. We are aligning adult skills provision and careers advice with the Jobcentre Plus network, building a new unified public jobs and careers service. We will review the vital role that adult essential skills provision plays in supporting people with learning difficulties and disabilities into work. Recognising the report’s recommendation to improve the post-16 qualifications framework, which my noble friend Lady Morris focused on at the beginning of her contribution, we will simplify and strengthen vocational pathways, introducing new rigorous qualifications so that all learners, including those with special educational needs and disabilities, will have access to high-quality study pathways and a clear line of sight to employment or further study.
My noble friend makes an important point about the focus at level 1 and level 2, not just at level 3. That is why our reforms will include two new pathways at level 2, including a further study pathway for students aiming to progress to level 3 but needing a period of time for extra preparation, and of course new English and maths qualifications at level 1, which will provide a gradual route for learners, helping them build knowledge and confidence before resitting full GCSEs where appropriate. My noble friend also makes an important point about broader consideration of qualifications at entry level and at level 1. I accept her challenge that more work needs to be done there.
On vocational courses, I think there is now a clearer route for students. On the point about apprenticeships, the Government’s introduction of foundation apprenticeships in August this year provides another route into apprenticeships that is more inclusive and available.
The soon to be published curriculum and assessment review led by Professor Becky Francis will set out plans to ensure that every learner, including those with SEND, receives a high-quality education supported by a curriculum that gives them the knowledge and skills they need to thrive. Improving inclusivity and expertise in mainstream education settings is a key part of the Government’s ambition to ensure that all children and young people receive the support they need. The noble Lord, Lord Willis, emphasised this and talked about his important experience, during his time in education, in developing that. We know that good schools are already able to develop that type of inclusive education. We need, as the challenge has rightly been put, to make sure that that happens everywhere.
On our reforms, we are working closely with experts, including appointing a strategic adviser for SEND who is playing a key role in convening and engaging with the sector, including leaders, practitioners, children and families, as we consider the next steps for the future of SEND reform. The proposals that result from this co-production will be set out as part of a schools White Paper early next year and aim to restore confidence in the SEND system and deliver improvement so that every child can achieve.
However, we are not sitting and waiting for that to happen. We have already taken important steps, including the creation of 10,000 new school places for children with SEND as part of a £740 million capital investment to expand specialist units and adapt mainstream settings. Multimillion-pound programmes, such as the partnership for inclusion of neurodiversity in schools and early language support for every child, are being delivered in collaboration with central and local government schools and parents to test and learn new approaches, and inspection frameworks have also been updated to ensure that Ofsted holds school leaders to account for inclusion, with a new explicit focus on inclusion embedded in the framework.
The report also rightly called for more work experience opportunities and activities which prepare young people for employment. It identified the fantastic experience offered by supported internships and work placements and recommended that these are expanded to a larger non-EHCP cohort. At this point, perhaps I can go back 15 months to the point at which I chaired Barts Health, where the committee was able to go and see the fantastic work being done by Project SEARCH. It always inspired me when I was able to see that in the hospitals and across the trust, and the young people who then became important and productive members of the NHS staff in that trust.
The Department for Education is continuing to invest in building the capacity and quality of supported internships by providing up to £12 million to March 2026. Through this funding, the department is also expanding our pilot—to take up the point that my noble friend made—that is testing supported internships with young people who have SEND but do not have education, health and care plans, and who are furthest from the labour market, to support hundreds more young people with SEND to transition into sustained paid employment.
Through the youth guarantee, we are addressing the issue of young people not in employment, education or training by bringing together adult skills training, support to find work, and apprenticeships. The youth guarantee trailblazers are still in their first year of delivery, but already interesting examples are emerging of local approaches, focused specifically on young people with SEND. The trailblazer in the west of England, for example, has designed a programme to support young people with SEND to move into paid employment through tailored eight-week placements and structured support. By focusing on individual strengths, career coaching and inclusive employer engagement, the programme aims to build confidence, support transitions and enable sustained progression into the workplace.
The report also focused, as did the debate today, on the workplace, recommending steps which would promote workplace rights and inclusion, including measures to improve transparency, provide guidance and build awareness of disabled employees’ rights and employers’ obligations. At this point, I want to strongly support the case made by the noble Lord, Lord Shinkwin, about the contribution that disabled people make to the workforce and therefore to the economy, and to agree with him that, where people are short-sighted enough to see disabled people as a burden, they are doing not only disabled people but themselves and their businesses a disservice as well. The noble Lord, Lord Laming, through his excellent example, made that very clear.
There is an enormous win-win here for employers who are able to provide the working environment for young people with disabilities to shine in the way in which the noble Lord outlined. As the noble Baroness, Lady Lane-Fox, also made clear, to have opportunities for entrepreneurship and innovation is a further opportunity. Her points were important, and I will undertake to make sure that they are shared with my colleagues in the Department for Business and more broadly in relation to the points about entrepreneurship.
The Government agree that it is vital for both employers and employees to understand their rights and responsibilities under the Equality Act 2010, particularly around disability and reasonable adjustments. Existing measures already support this goal. The Equality Act 2006 established the Equality and Human Rights Commission and gave it the responsibility to promote and encourage awareness and understanding of equality and human rights across society. The commission also provides guidance and publishes the employment statutory code of practice, which serves as a key resource for employers and employees alike.
On the particular point made by the noble Lord, Lord Shinkwin, about the disability confident scheme, which is a UK Government-backed voluntary initiative designed to help employers to recruit, retain and develop disabled people and those with health conditions by aiming to challenge negative attitudes, promote inclusive practices and close the disability employment gap by providing free guidance, resources and a structured framework for organisations, we are exploring how to make the scheme more robust, as the noble Lord argued for. We are working with employers, disabled people and disabled people’s organisations to realise the full potential of the scheme.
However, the Government are not complacent. We are taking steps to strengthen equality in the workplace through initiatives such as the Employment Rights Bill, which will require employers to produce equality action plans outlining actions on equality. We are also committed to build on the success of gender pay gap reporting and legislate to make it mandatory that all large employers publish their disability pay gap.
As the noble Lord, Lord Shinkwin, outlined, the disability pay gap has remained stubbornly high for many years and shows that disabled people too often face additional barriers to getting into work and thriving in the workplace. This pay gap sits in the context of disabled people in general earning less than non-disabled people and being twice as likely to be unemployed. That is why the Government are taking action to improve employment support for disabled people and supporting British businesses to make workplaces more inclusive of disabled people. We are committed to building on the success of gender pay gap reporting and legislate to make it mandatory that all large employers publish their disability pay gap.
I understand that reasons for the disability pay gap can be complex, and I am grateful to the many disabled people, representative organisations and businesses that shared their views in our recent consultation on the topic. I do not suggest that publishing pay gap data alone will resolve this gap, but it will provide large employers with a clear and measurable indicator to help to identify where issues might sit and take action accordingly. These measures will help to create a fairer and more inclusive workforce.
In response to the point raised by the noble Lord, Lord Mott, about the universal support scheme, this Government’s £1 billion connect to work programme uses the funding originally planned for universal support and keeps the same important principles of high-fidelity supported employment provision for around 300,000 disabled people, people with health conditions and those with complex barriers to support by the end of the decade. Importantly, we worked with local authorities and mayors to increase flexibility in how this can be delivered. It is being rolled out across England and Wales and is already seeing people being supported into work, being as it is the largest supported employment programme in Europe.
I repeat my gratitude to the committee for bringing forward this debate, which has highlighted how essential it is that we provide the right support and training for young disabled people. Whether through high-quality apprenticeships, colleges or universities, skills give people the power to seize opportunity and gain the work that will make such a difference to them, our economy and our society. By working together across government, education settings and employers, we will provide a system whereby all young people will be able to follow the pathway that is right for them. As I suggested earlier—it has been a key theme for today’s debate—that will be good for those disabled young people, but it will also be good for our economy and society.
Baroness Morris of Yardley (Lab)
My Lords, I will briefly reply to the debate and thank the speakers for their contributions. There has been a lot of unanimity and there is no need to go over the points again, but there was a good balance between optimism and concern. I think that, for somebody listening in, the optimism won out. This is a moment, because the opportunity for really fundamental change does not come around often. If you miss it when it is there, you sometimes do not get another chance for a decade or longer. With the SEND review, with the vocational qualifications framework being changed, with further education becoming a priority for government, with the skills White Paper and with the evidence of what works, quite honestly if we do not grasp this now, we should not be in the job. It is that important.
I particularly thank the noble Lord, Lord Shinkwin, and the noble Baroness, Lady Lane-Fox, who were not members of our committee. They brought different perspectives, and we had not looked at the angles that certainly the noble Baroness, Lady Lane-Fox, guided us to, in terms of entrepreneurship. If there is another iteration of that, I would be pleased to hear the Minister say that she would take that back. The noble Lord, Lord Shinkwin, always brings, with his connections, a lot of information that we miss. If we can gather that information and add it to what we have done, we will have something helpful for the Government.
I thank the Minister for her positive, thorough, thoughtful and optimistic reply to our debate. I am encouraged by some of the things she said, particularly on supported internships, where there has been a degree of concern in the sector. That can build and build unless something is said, so I very much welcome the comments made on that. I finish by saying that the wish of our committee would be to see our recommendations embedded in the documents and policy frameworks to be published by the Government in the weeks and months to come. Then it really will have been a report that was worth its while.
Power Struggle: Delivering Great Britain’s Electricity Grid Infrastructure (Industry and Regulators Committee Report)
Baroness Taylor of Bolton
To move that the Grand Committee takes note of the Report from the Industry and Regulators Committee Power Struggle: Delivering Great Britain’s Electricity Grid Infrastructure (1st Report, HL Paper 132).
Baroness Taylor of Bolton (Lab)
I am very pleased to move that the committee takes note of our report and thank all those who have been involved in the writing of it, especially committee members—and especially those who have done a double shift today, because we had a very significant committee meeting this morning. I also thank our researchers and the whole committee team, who have worked hard on this, as well as our witnesses and those who wrote in with evidence, because it is a complex subject.
I think we can all agree that energy and energy policy is a fast-moving area. Our report was concluded five months ago, and I know that is a normal time it can take for a debate of this kind, but a lot has happened in the interim. Some of it is relevant to our report, and other parts are bigger parts of the Government’s overall policy. The report is very specific, however; it is about the electricity grid and its role in meeting government targets. That is a large enough topic, but it does not take on board energy policy as a whole.
The obvious starting point is to say that the electricity grid is obviously an essential part of modern life. During our inquiry, there were outages in Spain, in Portugal and at Heathrow, which showed just how central the grid is to modern life, how dependent we are on it and the levels of disruption that can be caused when things go wrong. The Government’s growth agenda, which is very clear, focuses on building more infrastructure and supporting energy-intensive industries, such as AI. That will only deepen our reliance on the grid.
We can all agree that the Government have set very ambitious clean power targets; the aim to decarbonise 95% of our electricity system by 2030 is certainly ambitious. The grid will play a crucial part in meeting that target by connecting more new low carbon sources of power to the grid and transporting that power around the country. Meeting the target will involve building new electricity generation and network capacity at a much faster pace than we have managed in recent years. Therefore, our inquiry set out to discover the main barriers to delivering the grid expansion that will be needed to meet that target.
Ofgem, which is the energy regulator, plays a central role in determining the future of the grid to prevent network companies from abusing their monopoly position. Ofgem controls the projects networks can build, the investments they make and the costs they can charge consumers through its price control. In doing this, Ofgem must balance its responsibilities to ensure that affordable energy bills, secure energy supplies and a decarbonised energy system—which can be in conflict—are decided in a proper way. Ofgem also decides how costs are spread between current and future generations, and how they are recouped through energy bills.
These are fundamentally political and distributional choices. For instance, Ofgem is currently trying to wrestle with whether those who are struggling to pay should receive greater support, potentially paid for by other customers. It can be legitimate for regulators to implement these political choices; it happens with a whole range of regulators and their responsibilities. However, there needs to be clear political direction on what the priorities should be. Ofgem’s statutory objectives provide no such sense of priority.
The Government have the ability to provide Ofgem with guidance on these matters, through the strategic policy statement for energy, which was published last February. But it is often the case that the Government give regulators extra instructions without providing the full level of priority that is often needed. We have found with many regulators that Governments give instructions but there is not always transparency on what exactly the instructions mean, and some regulators across the board are concerned about that.
The current Government have indicated that they will provide clearer priorities as part of their review of Ofgem. Can the Minister commit that, as part of the implementation of this review, the Government will provide clarity on how Ofgem should balance the affordability of energy bills with the need for greater investment in the grid? Will the Government change the statutory objectives for Ofgem and provide more detail on what should be the priority? Will the Government provide their own view on how those struggling with energy bills should be supported and how the costs should be met, rather than leaving it to Ofgem to resolve?
I want to say a word about zonal pricing, which the committee spent quite some time discussing. As part of building any new grid infrastructure, it will cost consumers and we believe therefore that there needs to be greater price incentive for major sources of energy generation and a demand for them to locate closer to one another, thus reducing the need for additional grid as far as possible. On balance, after taking considerable evidence on this, the committee decided that it was supportive of the idea to move towards zonal pricing of electricity, which we thought could have enabled better use of existing grid capacity.
One of our members, the noble Viscount, Lord Thurso, who unfortunately cannot be here today, illustrated this to us very clearly by pointing out what could happen in his former constituency of Caithness, where there is abundant power, abundant land and a workforce. If there was zonal pricing, because of the potential for cheap electricity there, that might be a very good place for data centres.
On zonal pricing, though, we recognised and acknowledged that such a move had the potential to impact on investor certainty. We felt that that could be managed but clearly the Government felt otherwise and have decided to retain the existing national pricing system. I understand that the Government and Ofgem plan changes to network charges to try to improve those incentives, but we were doubtful about whether that would have the same impact as zonal pricing. I hope the Minister will consider what the impact will be of retaining national pricing and whether it will limit our ability to make our existing grid more efficient and decrease the amount of grid that would have to be extended going forward.
On connections—another area where we took a great deal of evidence—we heard repeated complaints during our inquiry that new energy-generation projects and businesses seeking connections to the grid face a slow, opaque and unpredictable service from the networks, with many being quoted connection dates of over a decade away. This was because the queue to connect to the grid previously made no judgments at all on whether projects were ready or necessary and simply went on a first-come, first-served basis. This led to enormous queues that theoretically contain more energy generation than we would need even to reach the clean power target. It is generally agreed that many of those applications were, in fact, speculative and very early-stage applications.
Since we were taking that evidence the Government, Ofgem and the National Energy System Operator—NESO—decided to take action to reorder the queue. Networks will be required to offer connections only to projects that have planning permission and are judged to be necessary based on the new projections from the Government and NESO on the types of generation we will need to meet these targets.
These changes are to be welcomed. They are necessary and should enable generation to be conducted to the grid more quickly. NESO and the networks must act quickly to provide these updated connection offers to those hoping to connect to the grid, but we are hearing—even yesterday—from those involved in the sector that this is not happening quickly enough and there is insufficient consultation to make sure that we get the fast-tracking of the connections that are pretty vital to what we need in order to go forward quickly.
Our inquiry also heard some concerns, particularly from the solar and battery sectors, that the current criteria for prioritisation in this queue could cause problems for those who want to have projects that will be needed and will be key to what we do going forward after 2030. We can understand the need to push things forward quickly but I think we need to think of the medium to long term as well as the short term. So before publishing, next year, the strategic spatial energy plan, which will guide these decisions, we believe that NESO must make sure that it is consulting very closely with all forms of generation suppliers to ensure that we get the kind of future investment that we really need.
The reordering of the queue should allow networks to provide a better, clearer and more consistent service to connection customers. We have heard that networks have sometimes provided unsatisfactory levels of service, including significant delays and charges for connections, so we welcome that Ofgem is reviewing the regulatory framework there for connections, and we support its proposals to strengthen the incentives and penalties networks face for their performance. But this does happen. These connection changes have to happen at speed, and they have to happen with a proper amount of consultation with those involved in the sector.
On planning, as in any area of infrastructure delivery it is a key challenge. Certainly it is in terms of delivering new grid projects in the planning system. We support the Government’s plans in the Planning and Infrastructure Bill to allow local authorities to recover the full costs of planning processes and to ring-fence these important pressures on local authorities at the moment. That will be one way of making sure that we get the kind of service that is needed. But we are very concerned that planning authorities do not have the skills and resources—but particularly the skills—that are needed to process these at the speed that is necessary. Skills shortages are a problem not just for planning authorities but across the whole of this area, and it is probably one of the major challenges facing the country as a whole at the moment.
The Government, Ofgem and NESO are all doing very many positive and necessary things—or have committed to do so in the future. But all these elements need to be decided and implemented at pace. It is important that we get the momentum for getting these changes if we are going to meet our clean power target. We believe it is still unclear whether the energy system is capable of moving at the huge scale and pace that is necessary to do so many things in such a short time. We were told repeatedly by many witnesses that the Government’s target for 2030 was possible, but everybody agreed it was very difficult. We were told repeatedly that it is possible, but the key is that failure in any one element of these issues could cause real difficulties in terms of the Government meeting their target.
We have called on the Government to make sure that we are all informed of what is going on. The Government are saying that they are publishing various key indicators, but very often these are hidden in government figures that not only the public but certainly parliamentarians do not always follow with great care. Things on the website are not always the way to find out what is going on. So we would like the Government to commit to clear public statements to Parliament—a drumbeat of information coming forward—so that every six months or so we can just assess how clear it is that the Government and the industry are going in the right direction, and we are moving towards hitting our targets.
The objectives that the Government have set are clear, but so are the potential pitfalls. Time is running out and we cannot have any complacency. It really is time for everybody involved in this industry and in government to pull out all the stops to make sure we can go forward, and it is important that the Government make information available to Parliament and to the public.
Baroness Coffey (Con)
My Lords, I congratulate the Select Committee on picking this topic: it is vital for the country. It is important to local communities, which is a theme of part of what I want to explore today. I am conscious that the committee identified a number of issues. As an aside, when one looks towards the end of the summary, all of a sudden the paragraph numbers go out of sync, which makes me wonder what the committee removed from the report. However, there is enough in here for us to consider in detail.
One of the first things would be that so much relies on the strategic spatial strategy, although Nick Winser was right to point out that we did not have one before, so how much change will it make? A lot of eggs are in the basket of having this strategic strategy and I want to get clarity from the Government that it will definitely be ready next year. If there is an opportunity, will the Government say whether we are talking about quarter one or quarter two, or are we talking 31 December 2026? I am conscious that clean power 2030 is a specific choice by this Government to accelerate and decarbonise the electricity network to zero, which is one reason a lot of communities around the country are somewhat frustrated right now, because a lot of the planning and the work being done on this will not make much difference to the projects being considered.
The noble Baroness, Lady Taylor of Bolton, mentioned something that I found very interesting. I had not picked this up, but I am glad she raised the fact that, in terms of the prioritising of connections, one of the criteria is now that they have to have planning consent. That is not what is happening right now, certainly not in the east of England. There is no doubt that there are current live planning applications—connections are being given, and indeed ASTI money has been granted by Ofgem. I raised this on the Planning and Infrastructure Bill, suggesting that this sort of ASTI framework funding should not be available until planning consent has been given, because the underlying concern of a lot of communities around this country is that, for everything else, it does not matter what the planning process really does; the decision has already been made, in effect, by the Minister, by the actions of Ofgem or by the other organisations, such as NESO and others involved in this.
One reason I am grateful to the noble Baroness who chaired the committee so well is that I went on 4 March 2025 deliberately to question Nick Winser. The noble Baroness was gracious enough to let me ask a question, and it was about this transparency—this frustration that exists that we are almost going through the Emperor’s new clothes on some of these things.
I was struck by what the noble Baroness just said and I will be very interested to hear how that impacts on current planning applications. By the way, I do not expect the Minister to refer to this, but I will be attending various hearings in the next few days regarding Sea Link, and I encourage her to think carefully about transparency. I believe that Nick Winser talked about complete transparency being important for confidence, but when I asked the Government a while ago about the estimated cost of the Sea Link project, I was told it would probably be around £1.1 billion. When I asked that question again more recently, I was told we were not allowed to know the answer to that because of commercial considerations.
To come back to what the committee talked about, it is vital to get this openness and this publication. Actually, the very first recommendation that the committee made is about publishing key metrics on meeting the target every six months. That is why I was disappointed by the Government’s response, which talked about intending to publish statistics regularly. That is not the same. One thing that often happens with statistics—as I know as a Minister, frustratingly, but also as a Back Bencher trying to get information—is that quite often the statistics are from the previous calendar year and are published about 10 months later. You would probably not get the information for 2024-25 until sometime in March 2026, and so it goes on.
I think it does matter to recognise the amount of levies and carbon taxes and the amount of cost on consumer bills both for households but also for businesses. It is right and important, with these changes that the Government are continuing, from a process initiated by the previous Administration, that we can see more regularly how progress is happening and to hold to account both the Government and the different parts of the architecture that are critical in trying to make sure that we get on with aspects of this connection right around the country.
One thing about which I had a minor frustration was that I never really accepted the then National Grid’s assertion that it had to offer a connection to everybody, regardless. When it was asked about who those connections were, it said that it could not reveal that either, so we are in this forever black box situation. Again, transparency would help—it would help communities to understand what is happening in their area, especially when we see the connections now starting to involve much bigger substations. I appreciate that the National Infrastructure Commission seems to be in favour of this, but this is at the same time that there is no trust in whether a particular construction is needed, or whether it is just a case of lots of this infrastructure being dumped in certain parts of the country.
A lot is happening in East Suffolk. I have no doubt that the whole issue of energy projects is one of the reasons I lost my election last year and have ended up here, much to the chagrin of some people in this Chamber, I am sure, rather than perhaps the other. Nevertheless, it is still something that is deeply concerning to people, that lack of transparency, and I fear we are not getting any further with the new set-up.
As to why there is no confidence, some of it goes back about a decade to when a developer said that they would do a direct connection—a DC link—from its offshore wind farm right through to the substation at Bramford. At the time, with regard to the local council, I appreciate that the committee is suggesting that lack of resources may be one of the barriers, but that has not been my experience locally. My experience has been that the council has been very willing to work with developers to try to minimise the impact on local communities and come up with innovative solutions on how to do that. But by doing that, and expanding the tunnel that would be used for the trenches, all of a sudden, on a commercial basis, the developer decided to reduce the amount of electricity that it was going to generate in that way, and it was going to do it through AC, not DC. One key thing about the transmission of electricity is that it dissipates over time and distance and, as a consequence, if you have AC instead of DC, in a way you are underusing the substation, but you are generating a lot more infrastructure and having an impact on lots of agricultural fields, nature reserves and ancient woodlands right around the country. That lack of density, in effect, is problematic in terms of what we are trying to do on other aspects of government policy and improving our natural environment.
So it continues: by refusing to consider brownfield sites for connection and insisting on greenfield sites, we are seeing what local communities often perceive to be attacks on their green spaces and their pleasant natural environment. That, again, is frustrating. By the way, this has nothing to do with pylons. Not a single extra pylon would have been erected in East Suffolk in all this time, so I am not getting dragged down in that particular debate.
Nevertheless, one thing I think Ofgem should do in terms of prioritisation is be very clear and public about which connections it has given and which it is considering, and there should be healthy competition in getting what is a valuable resource. But, at the same time, what I would prefer to see from the Government and the various bodies involved, instead of creating many more links unnecessarily, is doing more to enhance, for example, the existing connections, from the Isle of Grain into Tilbury. There has already been some expansion of that; why not do more? We are talking about connecting two significant brownfield sites, not two areas where there are already significant environmental protections, although thanks to the Planning and Infrastructure Bill—it has not passed yet—all that will be, frankly, set aside and disregarded anyway. But that is not an ideal outcome given where we should have been.
On the recommendations in paragraph 5 of the report, the Government have basically said that the transmission networks already publish that. But actually it is the second half that really matters in order to hold the Government to account. The progress on the transmission network projects that NESO has identified as necessary is vital. The Government providing a clear steer on how Ofgem should balance the competing effects of energy bills is key. We need to continue to try to make sure that bills are affordable, rather than have some of the challenges that industry and householders face. I will not get into energy bills, as that is a completely separate debate and we have had some of that debate already when discussing things like the warm home discount.
On paragraph 18, I raised this on the Planning and Infrastructure Bill, so I will not do so again. Paragraph 24 talks about the connections that are prioritised, and it would be useful to know which ones have been dropped. Who has already been dropped from this list, and when will Ofgem, NESO or indeed the Government publish that?
On the 10-year infrastructure strategy, it is good that the committee has focused on making sure we get the electricity to where it is needed. One of the main issues with a variety of developments affecting interconnectors is that a lot of this is focused on getting energy to London and parts of the south-east. But, candidly, significant other parts of the country desperately need electricity connections, and it feels to me that that is not being properly considered. But I am sure the Minister will explain how they are prioritising the different aspects of connections.
There is one aspect where it is also difficult to hold Ofgem and ESO to account: the application of its duty on the consideration of biodiversity. It is impossible to get a proper answer on that. I can see that I have reached 13 minutes, and I have come to the end, so all I will say is that I will continue to fight the fight for transparency and openness. It is what our communities in this country deserve, and it is what Parliament deserves too.
Lord Teverson (LD)
My Lords, I declare my interests: I chair a battery storage company called Aldustria Ltd and I am a trustee of Regen, a not for profit that promotes renewable energy. I will concentrate on grid connections within this report, and I will not go into the other areas much.
I want to go through a bit of history. In the area of grid connections, the previous Government absolutely sleepwalked into a crisis—and Parliament as a whole did, as well. Parliamentarians became aware of it a bit before the Government did. In terms of Ofgem being driven by keeping costs low for consumers, as opposed to investment in the future, that really stayed there until ASTI—I had to look up again what it was: accelerated strategic transmission investment—came in in December 2022, not very long ago. Even then, it took time to implement.
Then we had the Energy Act 2023, which tried to solve a lot of those other things to do with connections, and wider things as well. That piece of legislation was introduced in July 2022 and did not come out at the other end—I was Front-Bench spokesperson at the time for the Lib Dems—until October 2023. It was seen as an important and urgent strategic bit of business, yet it took one and a quarter years to get through Parliament after a long pause in the middle.
The irony is, of course, that, although we had many years of Ofgem promoting low bills, as opposed to investment for the future, we still ended up with lousy grid connections, a grid that is not fit for purpose and the highest energy prices in Europe. So something is certainly wrong.
There is one thing I would like the Minister to explain to me, because nobody has ever managed to explain it to me. Why do we need to pay extra money to transmission networks for investing in their own business? I do not understand. If any other private sector business invests, it does not charge for that investment in terms of pricing. In fact, we expect it to take advantage of economies of scale, with rising demand, as we have with electricity, and efficiencies. Take something like EasyJet. If, with rising demand, it invests in new planes, does that mean we see on its website that it is going to raise prices by 10% for its new aeroplanes? Of course not. It is around efficiency and economies of scale: the price goes down, not up. If the Minister can explain that to me in five seconds, that would be great, because there is something fundamentally wrong here in the way that Ofgem works.
It is not just grid connections to generators. I remember very much one of the pieces of witness that we had. I asked, “Isn’t there a problem? Housebuilding in west London has come partly to a halt because of lack of connections”. The witness actually denied that, but I have spoken to the sector since, and if you google it or whatever, you will find that it is the case. This is an issue not just around generation but also in terms of housebuilding targets.
So grid reform is absolutely needed and is being done quickly at the moment. As our chair rightly said, we have moved on from first come, first served, with a hugely long list of projects, some of which have been identified as “zombie projects” that did not exist and that we want to take out. What we are moving to is those that are shovel-ready and conform with CP30. I did actually check what CP30 was. I was sure it was clean power 2030, but I googled it to make sure and it came up with C-3PO or whatever it was from “Star Wars”. Anyway, it was around the future. But that is to the side.
Anyway, we have changed that, and that is absolutely right. The difficulty has not been the fault of NESO at all: it was only established almost exactly a year ago, in October last year, and it immediately had, among its other responsibilities, re-queueing this huge tail in terms of grid connections. Quite frankly, it strained in that task, and I will come back later to a number of questions for the Minister to see how we can get round that.
There is no doubt that NESO has been working hard and wants to do this. There were problems over the portal that put back its programme by a couple of months, but the timetable has been extended and there is genuinely a lack of investor confidence in the way that that is now rolling out and a lot of uncertainty in terms of those timetables. So that lack of confidence is a crisis there at the moment, and that will affect the investment that makes it so important, as our chair said, to be able to reach those CP30 targets. So, at the moment, those delays in connections with regard to the reform process are leading to a slowdown in clean energy projects being developed.
I have some specific questions to the Minister about that, around the future of making it work. They are not detailed but are substrategic, so I will be very happy if he wants to come back later on. My questions are: how will the Government, together with Ofgem and NESO, give enough confidence to the developers’ projects that are due to connect in 2026-27, so that they can actually place firm orders with their supply chains and start building those projects out? That is the only way they can meet their connection deadlines, because, if you miss deadlines, you go back to start again, which means a loss of time and more uncertainty. It is absolutely right to put those gateways down there in terms of planning permission, your supply chain and land acquisition or whatever, but if you do not meet them, you go back to the beginning.
Will the Government ensure that developers have the opportunity to agree viable gate 2 milestones with networks pre offer to take account of the impact of delay on project timetables in the connections reform process? Lastly—this is key in terms of the future, exactly as our chair said, looking forward not just to the next couple of years but to 2030—when will the next gate 2 connections application window be opened? This is really important, so that there is a path for projects that do not meet gate 2 in this first window. We seriously risk developers having no development route and just walking away. So it is all around making that really important reform that is being made work—dare I say work at pace—but making sure that we know, for those that have not got to gateway 2 now, that they are able to do that for the future, so that we can achieve the net-zero grid that is so important.
Viscount Chandos (Lab)
My Lords, I am delighted to be able to speak in this debate and have been privileged to be a member of the Industry and Regulators Committee that produced the report. My noble friend Lady Taylor of Bolton has introduced this afternoon’s debate with the same incisiveness and wisdom as she showed in chairing the committee and leading the consideration of this vitally important subject. I join her in thanking the committee team for their indefatigable work in the inquiry and those who gave generously of their time in providing both oral and written evidence.
I declare my interests as disclosed in the register, in particular as a shareholder in Greencoat UK Wind plc, and, since the publication of the report, a director of Digbeth Loc. Studios, a film and television studio in Birmingham whose operations require significant and increasing amounts of electricity.
As the committee considered at the turn of the year possible topics for the next inquiry, a theme emerged of the cost of energy and the implications for the competitiveness of UK business in particular, all in the context of what had been at that point a cross-party commitment to a fully decarbonised electricity system by 2035 at the latest. The Labour Government have advanced the target to 2030. We could identify on the one hand new and growing sources of electricity—wind, solar and a revived nuclear programme—and on the other hand, new or hugely increased users of electricity such as power-hungry, AI-focused data centres, which are so important for achieving faster economic growth.
The new users of electricity may account for only a proportion of future demand, albeit a large part of future growth, with domestic and traditional business still dominant. In contrast, however, renewable energy is essential to achieving the decarbonised target and, ultimately, net zero, and will represent the majority of future supply.
We realise that what linked, both physically and metaphorically, the new sources and both the old and new demand was the network infrastructure and that the changes in train presented immense challenges to the system. I believe that the report which has resulted is a powerful but fair analysis of these challenges— 1,000 kilometres of new onshore infrastructure and over 4,500 kilometres of offshore infrastructure needed with a price tag of at least £60 billion. This will need to be built over the next five years, as my noble friend Lady Taylor said, at four times the annual rate achieved in the previous 10 years.
Our witnesses were uniformly confident that these targets could be met but it was hard, without disrespect to the capable and committed people responsible for delivering this, not to hear echoes of an EFL League One football manager’s bravado when drawn to play a top Premier League club in the FA Cup. My noble friend is better placed than me to say what the odds are in those circumstances.
The committee identified a number of key changes which would help these targets to be met and made recommendations accordingly—reform of the connections queue, changes to the planning system which, as has already been said, is vital to other areas of investment and growth such as housing and transport infrastructure, and an increased role for the National Infrastructure Commission. The Government’s response would indicate that they have identified and/or accepted these points even if they are not immediately able to find the silver bullet which would ensure that the necessary changes are made.
As I have just said, the committee was generally impressed with the witnesses at the centre of delivering these targets; in particular, the National Energy System Operator, NESO, seemed to have hit the ground running. Without being churlish though, it would have been disappointing if that had not been the case given that it is based around ESO, the Electricity System Operator, acquired in September last year from National Grid Group for a reported £630 million. Although the noble Lord, Lord Teverson, referred to it as an organisation that had started last October, it had long roots.
Negotiations for this transaction had commenced under the previous Government but were completed only in the early months of the new Labour Government. I ask my noble friend the Minister: what was the basis of the valuation for the acquisition? Is the funding of NESO essentially the same as that which applied to ESO, a levy paid ultimately by consumers? What is the surplus expected to be in NESO’s first 12 months, which have now ended?
I will use my remaining time to probe the Government on what was generally seen as the single biggest policy issue for the electricity market: zonal pricing, to which my noble friend Lady Taylor has already spoken so cogently. The committee recognised the complexity of, and the issues raised by, zonal pricing but, as my noble friend said, concluded that, on balance, it should be introduced.
The scale of building and investment needed to meet the network requirement is massive and it is not just a matter of cost—with network costs being over 20% of prices ultimately paid—but more importantly the risk that the grid becomes the weak link in the chain. We could achieve all the targets for building new wind, solar and nuclear power plants, but if the network does not have the necessary capacity and connectivity, much of this investment—as is already the case with some wind farms in Scotland—may deliver poor returns economically and in service delivery.
Coal was bulky and heavy to transport and required road or rail infrastructure that made it totally logical, from the Victorian era onwards, for the steel industry, for instance, to be located close to the coal fields and mines. Electricity may be lighter than coal to transport, but it still requires increased network infrastructure that carries not just a high cost but imposes massive logistical challenges in building it to the necessary timetable. If zonal pricing could reduce even marginally the amount of additional infrastructure that is needed, it could have a disproportionate impact on the likelihood of the network having the capacity for the needs of the late 2020s and into the 2030s.
I was therefore disappointed that the Government announced in July that they would not introduce zonal pricing but rather have
“concluded that reforming the system while retaining a single national wholesale price is the right way to deliver a fair, affordable, secure, and efficient electricity system”.
As I have already said, I recognise that this is not an easy judgment to make. Professor Sir Dieter Helm, my go-to guru on energy regulation, published a penetrating and nuanced analysis soon after the publication of our report, which was sceptical about the practical effectiveness of zonal pricing. Could my noble friend the Minister give any more details of the reforms the Government have in mind to the existing wholesale price system to enhance the security and efficiency of the network, equivalent to what might have been achieved by zonal pricing?
I recognise the importance of stability and predictability in fostering investor confidence, which is critical to mobilising the levels of investment needed. I therefore reluctantly accept that zonal pricing should probably now be off the table. However, this places all the more responsibility on the Government to introduce effective reforms to the national pricing system instead.
Lord Liddle (Lab)
My Lords, I rise to speak briefly in this debate without having the benefit of being on the committee or without any of the great expertise that others have shown. However, I congratulate the noble Baroness, Lady Taylor, on her committee’s work; it is a very granular analysis of the problems we face. I also hope the questions that my noble friend Lord Chandos asked of the Minister will be given a satisfactory answer. It seems to me that these issues are of fundamental importance to Britain’s future.
One of the reasons I wanted to listen to this debate was that it is of fundamental importance to whether we can achieve our climate change objectives, but it is also of fundamental importance if we are to be competitive in the industries of the future. That is a very vital concern. I was looking, for instance, at Mario Draghi’s report on European competitiveness. Item one on his list is electricity grids and the cost of energy. We are in a similar position to Europe in that it is absolutely fundamental to our future. That is point one.
I also reflect on the question of the electricity grid. Fifty years ago, I have to confess, I worked in the electricity industry. I was in the industrial relations department, literally trying to keep the lights on as there was always the risk of serious industrial action. Actually, there was not much risk when you had people like Les Cannon around, but it was a vital role. One of the things about the electricity industry in the 1970s was that it had been through the kind of radical transformation that it has to go through again now. When generation first came, it was all very localised. It was not really until the post-war era and nationalisation under Walter Citrine that the grid was put in place—one of the little remarked achievements of the post-war Labour Government—and then the whole thing had to be completely modernised in the 1960s and 1970s because of technological change that allowed these vast mainly coal-fired power stations to be built in Yorkshire and Nottinghamshire, which were transformative then of our electricity system. That meant the whole grid was designed on the basis of meeting the requirements of a coal-based electricity supply, and that now has to be changed completely to deal with what will be primarily a nuclear and renewables-based electricity supply, so it is a huge challenge.
In the 1970s—here I am going to sound very old-fashioned—the reason this great transformation occurred was because there was a body called the Central Electricity Generating Board, a dominant body, very dominant, which managed to drive this transformation through its important position and its powers. We went through privatisation in the 1980s. I thought at the time that privatisation, properly regulated, was not a bad idea, and there is no doubt that operating efficiencies were achieved, but the trouble with it was that it led to a business culture of sweating assets and not of building them. This culture is completely unsuited to the challenge we face now, which is of how we reconfigure our grid and our electricity system, and we have to do that in short order, as people have said—by 2030 or 2035.
It seems to me, as an outsider in this debate, that when we look at what is going on, the fundamental problem is that unlike the CEGB in the 1970s, there is no one clearly in charge. There are far too many people with fingers in the pie who have the ability to obstruct but not to make happen. What is particularly important is the triangle between the Government and Ed Miliband’s department on one hand, the regulator and the system operator. I congratulate the last Conservative Government: taking the system operator into public ownership was a very important move if we are going to carry out this job of modernising the grid properly. But it is in its infancy. Yes, there was an organisation before, but the organisation before was run in the commercial interests of the National Grid not the public interests of how this transformation should happen.
The fundamental problem is sorting out who is in charge and how we get drive and efficiency into the modernisation we face. At the moment, it seems to me that we have a target but we completely lack a plan. The plan is absolutely crucial, and it is very costly— £60 billion, as my noble friend Lord Chandos said. There was an interesting article in last week’s Economist about what is happening on the continent. In other countries, the amount of money being spent is vast. In France, the estimate is €100 billion. In the Netherlands and Germany, it is €200 billion. It is estimated by the EU that, within Europe, €800 billion will have to be spent by 2050 for the energy transformation and the grid that changes that go with it. So these are huge investments—huge things that have to be got right. The fundamental problem that our Government have to face up to is that we need a proper plan, and it needs a guiding mind.
Lord Howell of Guildford (Con)
My Lords, I apologise for delaying the Committee for another four minutes, but my own Select Committee was cancelled at short notice at 4 pm, so I was able to come here and listen to the considerable wisdom on an issue with enormous implications for the future. In the four minutes, I have time to comment on only one factor—one omission, if I may call it that—in the otherwise excellent and very thorough report.
The omission relates to the transmission and grid system. We have all read in the newspapers about the long queues of would-be applicants to transform from fossil fuels to electricity, and maybe the intention of getting them reduced will be achieved. But there is one obstacle. Although we can get the electricity to switching stations on the coast—from the growth of sea pylons in great numbers, where most of our electricity will come from on fine days—we know that the problem is then the transmission: getting it from the switching stations to the city gates and the markets where it is needed. We know that the problem there is the pylons, which the noble Baroness, the noble Lord, Lord Teverson, and others mentioned. Obviously, this is a huge difficulty and problem. Why? It is expensive and there are all sorts of planning problems and delay in getting these pylons built, because there is a general hostility from environmentalists to this sort of thing.
Therefore, one needs to ask: are we on the right track at all in thinking about the pylon problem? Are there alternatives? Yes, there are: hydrogen tanks, tankers and other vehicles can of course transmit hydrogen just as they transmit petrol now. We do not need pylons to get petrol and diesel to every garage in the United Kingdom. People say, “That’s all very well, but it’s much too costly”. But I wonder. Think about the alternative cost: the £1 billion or more that we pay each year not to produce electricity, despite the increased demand for electricity and the shortage of it—an absurd situation. Think about the enormous delays that will result from trying to put up 1,000 kilometres of new pylons, mentioned by the noble Lord, Lord Chandos, and others. Think of the years of planning that lie ahead while every single pylon is disputed. Think that the likelihood is that hydrogen technology costs will come down and we will be able to transmit hydrogen by pipeline or tanker easily, and a great deal of these pylons will be completely redundant in five to 10 years’ time. Are we on the right track at all?
That is all I have to ask in my four minutes. I fear that we are not on the right track. I fear that the costs of alternatives—the electrolysis for transforming north Atlantic electricity, clean, to the vast new demands of the electric economy that lies ahead—have not been calculated or set against the enormous cost of trying to build 1,000 kilometres of new pylons, which is said to be £60 billion; I will believe it when I see it. This is really a great gap in the whole argument and strategy which NESO has not addressed properly. Previous Governments probably have not, and the present Government do not seem to be doing so. Therefore we have a case, as the noble Viscount, Lord Chandos, said, for another report to look at the real facts of the overall transmission situation in the coming decades. That is all I have to add to an otherwise excellent document and much wisdom around on the enormous problems of trying to get adequate clean electricity 24/7, not intermittent, to our industry in the future. Unless we do, we will fall even further behind in competition in world markets.
Baroness Miller of Chilthorne Domer (LD)
My Lords, I am very grateful to have the opportunity to speak in the gap. I declare an interest as a member of Energy Local Totnes. I wanted to speak because of an electricity market regulatory change called P441, currently out for consultation, which would make local energy supply schemes considerably more viable across the UK, with many of the advantages that I believe the committee is seeking.
Currently, setting up local energy schemes involves navigating unclear regulations and exceptions, but P441 would create a standardised process, making it much easier for communities to buy and sell locally generated renewable electricity. It would also give licensed energy suppliers the confidence to support community schemes, knowing that the rules are clear and consistent. This really would be a very welcome change, which would also be much better at attracting investment because of the certainty.
Why are local energy schemes very important? I belong to one, and in the short time available to me I will give your Lordships some of the win-win wins—I counted at least eight of them. They reduce fuel poverty by selling energy affordably, at considerably lower prices than otherwise. They allow locally owned generators more control over pricing. They keep profits in the local economy, reduce reliance on fossil fuels and enhance local reliance by providing protection from fluctuating energy prices—that is particularly important when talking about fuel poverty. They balance local supply with demand, which helps the national grid reduce the need for costly network upgrades, which noble Lords have mentioned this afternoon—and, as was also mentioned this afternoon, less electricity is wasted through transmission losses, as the distance from the supplier to the customer is much shorter. So there are many wins, and I hope that the Government will encourage this change with P441. Can the Minister also say whether the Government are encouraging Ofgem to do all it can to support local energy schemes?
Earl Russell (LD)
My Lords, it is a pleasure to speak in this debate, and I thank the members of the committee for the quality of their report. This is indeed a very important and timely work, and I thank the noble Baroness, Lady Taylor, for her very good introduction. As the noble Baroness stated herself, this is a very fast-moving field, and the world has moved quite a lot since the publication of the report itself. I thought that the noble Lord, Lord Liddle, put it very well in combining the important granular nature of the report with the fundamental importance of Britain’s future, related to our grid development in these areas.
Against this report, we have to understand the background of decarbonising our electricity system by 95% by 2030—clean power. This is a key foundation of our energy and climate commitments. In the report, the committee found this to be a significant challenge, but achievable, and it talked about a once-in-a-generation upgrade to our grid to make this happen. The committee really looked at this huge challenge before us and what can be done to make sure that we deliver on these targets.
I have said this before, but in energy terms I think this is the biggest energy change since the industrial revolution—and it all needs to be delivered in the next five years. This is a vast, co-ordinated and complex dance between systems, regulators, government and big infrastructure projects. It is all immensely complicated stuff, and I am very grateful that this report has been done. As the noble Viscount, Lord Chandos, said, this is mobilising £60 billion into the network, 1,000 kilometres onshore and more than 4,500 kilometres offshore. It is a six-fold increase in wind development and a three-fold increase in solar. The grid is not just the backbone. I like to think of it as the central nervous system: if it is not working, the country does not work, and we do not go to work—we have no transport, and the country makes no money. So the grid is absolutely essential to what we do.
We have this massive scale, pace and challenge ahead of us. The committee was really concerned about that trajectory, whether the targets can be met, what the blockages are ahead and what more can be done between government, the regulators and investors to make sure that we can all work together. The one thing that is clear from this report today is that everybody wants us to be able to get towards these targets and recognises how fundamentally important they are to the energy transition.
I want to turn to planning. We have had the Planning and Infrastructure Bill and the Government have brought forward changes. The noble Baroness, Lady Coffey, talked a lot about the need to bring communities with us through that transition, and I welcome that. There is more to do on that front; there is more to do in planning change terms. The report recommended hypothecating funds to planning officers and making sure that the granular nature of the planning system worked, so there is more to do on that. I tabled some amendments to the planning Bill in relation to the low-voltage grid, which is equally important. Small blockages in the system all add up and will cause considerable problems over time—so I think that there is a need for further planning reforms.
The committee also looked at the grid connection queues and the problems there. I recognise the work that the Government have done already to move to the system needed for 2030. That is welcome—but there is more to do around it, and the noble Baroness, Lady Taylor, in particular, asked questions about post 2030. There are some questions for government about not getting too hung up on a hard target, because some of the real challenges that lie ahead for government and our grid transition actually sit in the 2030-35 timeframe. There is a need to get to clean power, and we welcome that —but there is a need to be not absolutely rigid and to look further afield to make sure that we are not taking decisions that fundamentally cause greater problems down the road, as we continue that transition post 2030 —because 2030 is the start, not the end. We need to get to 2050 and beyond. That is concern for me as well.
There were some concerns about the Government’s position on the role of Ofgem, the energy regulator, and the duties that it has to protect consumers and ensure affordability—and the need to balance that against ramping up investment in infrastructure. These tensions can have impacts, and there is a need for the Government to take political leadership in this field and move things forward.
Obviously, the committee came out in favour, on balance, of regional zonal pricing. Since the report was published in July, the Energy Secretary came out and took a decision not to support that as a way forward and to keep the national pricing strategy. Personally, I welcome that commitment. The trouble with zonal pricing was that, while it had upsides, it seemed to have equal downsides for every upside it presented. Fundamentally, the challenge was putting that much change into a system that was already under so much strain and needed so much investment. Ultimately, the worry with it was that it would fundamentally undermine investor confidence just at the period of transition.
I am not against that decision. The question for the Government now is: they ruled out zonal pricing in July, so how will they use price structures and mechanisms to help with the energy transition, outside zonal pricing? What comes next in terms of the reformed national pricing system? Are the Government still on track to report by the end of the year, as they said they want to do? Can the Minister say anything about what that will look like? We all need to move this stuff forward. Those are the kinds of questions I have around that. We need to provide investor certainty, to review network charges and to provide stronger locational signals. Is there still the opportunity to take up some bits of that work?
The committee also talked about the Government taking a clearer political strategy and guiding Ofgem in its work, making sure that there are clear political decisions and pathways and that they are not leaving too many of these issues to the regulator. That is an issue that I think is important, going forward.
The committee was concerned about the proliferation and number of new strategic plans. This is a complicated space. We have the strategic spatial energy plan and all sorts of other plans. Could the Minister say a word about the conflicts between them, when they are being delivered, how the Government will make sure they work together and co-ordinate across different bodies, and assure us that the proliferating plans will not get in the way of the key thing we want to do, which is delivering this change?
The committee also called for the Government to publish key matrices every six months, in terms of 80 critical transmission network projects identified by NESO. The Government in their response committed to publishing statistics on the clean power share, but not to give that real detail. Could I push the Minister and ask the Government to reconsider that? The committee argued quite strongly that that detail is fundamental and important. That level of scrutiny of this period of rapid change is really important. This is about Parliament and parliamentarians trying to work with and support the Government. It is about trying to co-operate and work together on these issues. So I call on the Government to consider that again. This transparency is really open and important in these matters.
Can I also ask the Minister about connections and connection queues? What work is NESO doing with AI and AI tools to help with that? I understand that there is some work around that. These really complicated problems could benefit more from AI and AI tools, and I understand that there is some use of them.
Finally, I will ask the Minister about the update to the energy code, which has not been mentioned to date but which was a key recommendation in the report. I know that work is going on with this and, again, it is a very complicated area. I am concerned that the date for updating the energy code is smack up against the 2030 deadline and I am worried about the Government’s ability to deliver this transition.
To conclude, I had a lot more I could have said. We really welcome this report. I think it is an important and fundamental look at where we are in this transition. A very complicated dance needs to happen between investment, government and the regulators and needs to happen at pace and at scale. The Government need to be a bit more open. There is a need to fill the policy vacuum left after zonal pricing has been ruled out. The Government need to bring forward ideas, be open and give clarity about the direction of travel—where they are going and what their thinking is—so that we as politicians and the general public know where we are going. I think this a timely and important report and I am very grateful to the members of the committee.
Lord Offord of Garvel (Con)
My Lords, I thank the members of the committee for taking part in today’s debate and pay tribute to the committee for its report. As noble Lords across the committee know, the Government’s unilateral clean power 2030 target is putting extreme pressure on the electricity system. Let us remind ourselves that it currently draws two-thirds from hydrocarbons and one-third from renewables. The objective within five years is to make that 95% renewables and 5% hydrocarbons. That is a very ambitious target and will require huge investment, as we have heard today, and will inevitably result in higher energy prices for consumers and businesses.
The Government admitted in a Written Statement published yesterday in relation to the network charging compensation scheme that they were requiring to put an uplift through because:
“Some of these businesses currently pay the highest industrial electricity prices in the G7, making it harder to stay competitive on the international stage”.
Those are the Government’s own words. That is the challenge we face and a source of the imperative for the cheap energy we urgently need to deliver policies that cut energy prices in the UK.
Cheap energy, as the Government rightly say, is essential to competitiveness and ultimately the key to growth. What households and businesses need from this Government is a commitment to bring down the cost of energy. Yet, despite that need, the sector has been clear that energy bills are likely to rise by 20% in the next four years. Typical household energy prices under the price cap are now £1,755 a year for the average dual-fuel consumer.
Turning to the committee’s report, it is right to highlight that the Government’s current approach will require a huge investment in our grid capacity. Quite simply, can the Minister please clarify what the Government’s forecast is of what these costs will be? How will this impact consumer bills? What impact will this investment have on the cost of doing business in the UK? Can the Minister please confirm what assessment the Government have made of other approaches which could deliver plainer, cheaper and more reliable energy where we need it, without it needing to be transported long distances across the country?
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
I thank noble Lords for their participation in this debate, which is obviously a very important one. We are dealing with issues here that are going to transform the way we deliver energy for this country. I thank the noble Baroness, Lady Taylor of Bolton, for tabling a debate that recognises the urgency of our transformation of the GB electricity network. I thank noble Lords for their welcome contributions to the debate, which touches so many salient issues. I think it is fair to say that we are more or less in the same space. We have questions, we wonder how we will get to where we need to be, but, on the whole, we are more or less on the same path.
The noble Lord, Lord Liddle, was on about the energy industry back in the 1970s. I grew up in the great northern coalfield and represented a constituency there. It was that coalfield which basically powered the industrial revolution. When I think back to the research I did when I was an MP, I remember that 3,500 miners were killed in accidents in my constituency over the decades. Thousands were injured, including thousands who got compensation for pneumoconiosis, for example. Although it was exciting in one way for the Industrial Revolution to drive growth, I think we can be really proud of the fact that we are going to achieve what we need to do, not just to decarbonise the grid in this country but to help save the planet as well, by moving away from that and looking at industries that are not going to bring in the problems in the human way we had to suffer back in those years.
The electricity grid we have today has suffered from decades of underinvestment. That legacy means that it is outdated, constrained and unable to meet the demands of a clean energy system. Because of this, upgrading and expanding the electricity network has never been more critical. Our current network, largely built in the 1960s, was not designed to handle the scale of home-grown, low-carbon energy generation we are now deploying. Upgrading our network infrastructure not only enables the Government’s clean energy superpower mission but brings forward significant opportunities for investment in our economy.
As outlined in the Government’s response to the committee’s recommendations, the clean power 2030 action plan sets a clear path towards delivering a modernised electricity system. These reforms will transform the GB electricity system, and actions by industry, government, Ofgem and the National Energy System Operator, or NESO, are already delivering results. Chief among these is the Planning and Infrastructure Bill, currently progressing through Parliament. The Bill aims to accelerate the delivery of clean energy projects by reforming planning processes. The reform of the grid connection process will address the long delays that projects currently face to connect and ensure that strategically important ready-to-go projects can connect quickly. This will enable clean power 2030 and put in place a process that is fit for purpose in the long term.
We are also going further and are making major improvements to better support strategically important demand-side connections to boost growth and unlock investment. We will launch a connections accelerator service later this year to prioritise support for projects that guarantee high-quality jobs and bring the greatest economic value. We plan to use new powers in the Planning and Infrastructure Bill to create measures that will allow network companies to prioritise capacity for government-designated strategic demand projects. Through the National Energy System Operator, we are taking a strategic approach to planning the electricity network. The centralised strategic network plan, due in 2027, will build on the strategic spatial energy plan, expected in 2026, and guide the future siting of infra- structure, balancing energy needs with environmental and community considerations.
The transformation of our electricity network must, as colleagues have made clear, ensure that communities have a say. I assure noble Lords that this remains fundamental to the approach we are taking. The independent planning process will ensure that communities continue to have a say, through statutory consultations and often through additional voluntary consultations by network companies.
We recognise that the communities most affected must benefit directly from this nationally beneficial infrastructure. The Government have announced a scheme of bill discounts and published guidance for local community funds which will be received by communities and individuals living near new transmission network infrastructure. Delivering energy bill savings is a priority for this Government and the actions to transform our electricity network are a major contributor to ensuring that the cost of living is brought down. Delivering an expanded and transformed electricity network for 2030 will prevent an escalation in the constraints caused when grid capacity is insufficient to transport renewable generation. In the longer term, the decarbonised energy system will deliver lower energy costs to consumers, as we remove ourselves from the risk of the volatile price of fossil fuels. If gas prices today were at pre-crisis levels, bills for families would be £200 a year lower than they are at the moment.
I now want to answer some of the questions I was asked. If I do not answer them all, I will make sure that we scour Hansard and get back to noble Lords. The noble Lord, Lord Teverson, said that if I could answer his question in five seconds, that would be great. I am afraid that I am not going to be able to do that, but if I do not answer the questions, we will get back to noble Lords with the answers in writing. I shall just go through the questions noble Lords asked, one by one.
To respond to some of the points made in the debate, starting with those raised by the noble Baroness, Lady Taylor, network infrastructure is not very expensive but brings a lot of value. Network infrastructure costs have historically been 12% of the average bill. To pay for this current transformation, network costs are currently 13% of the bill. Reducing delays in construction and reforming connections could bring forward £90 billion of wider investment over the next 10 years and avoid between £4 billion and £5 billion of constrained costs in 2030. Investment in networks and the generation it connects could amount to £200 billion by 2030.
On zonal pricing, first, there is a fairness principal. We looked hard at whether a zonal system could be introduced without passing the impact on to consumers. The conclusion was that it could be possible to protect domestic consumers, although it would be very difficult, but some businesses would be left exposed to unfair energy prices. Secondly, we looked at affordability. The transition into zonal pricing would have created at least seven years of uncertainty, putting a risk premium on new investment that could have caused bills to rise in the short term. The Government recognise the pressures facing local planning authorities and are investing £46 million in 2025-26 to strengthen their capacity and capability to deliver planning reform.
The noble Baroness, Lady Coffey, raised the strategic spatial energy plan and its publication date. The plan is expected in 2026 and will be published independent of government by the National Energy Systems Operator. On the point raised by the noble Baroness about the wider network, the Government do not plan to develop the electricity network; this is undertaken by network companies based on the strategic planning of the National Energy Systems Operator. The Government set the rules for a robust and independent planning process, and all projects are required to progress through a thorough consultation which communities can participate in.
The noble Baroness, Lady Coffey, also raised a point about projects dropped in the process. Those that are not initially offered a confirmed connection date will be able to reapply when they are ready and may benefit from capacity freed up through these reforms. Viable generation projects above the 2030 capacity ranges may still be able to connect in 2030 if there is spare capacity after pre-2030 projects have been assessed. If no capacity is available before 2030, these projects will be offered connection dates in the 2031 to 2035 period. If a viable project extends the 2035 capacity range, they will receive an indicative offer with opportunities to join the queue in future through twice yearly application windows where gaps emerge.
The noble Lord, Lord Teverson, made a point about grid connections, gate 2 connection processes, and asked specific questions about providing confidence to projects to enable them to engage with the supply chain. I will write to him in detail on the issues he raised.
On the wider point about cost, the vast majority of the bill is for the wholesale cost of energy. Network companies are closely regulated to ensure that their rate of return delivers value for money to bill payers. The scale and pace of this transformation is unprecedented in terms of investment.
To the noble Viscount, Lord Chandos, I add my appreciation for the work of the National Energy Systems Operator. On his questions about zonal pricing, as I said earlier in response to the noble Baroness, Lady Taylor, the Government looked closely at zonal pricing and felt there were principles around fairness and affordability that made us decide to not go down that route.
Reforming the national market will combine the collaboration of appropriate planning and pricing to support the building of new energy sources in the best locations. The power grid can grow to provide the energy we need. The noble Lord, Lord Liddle, made an insightful point about the history of the electrification of the UK. The network was last transformed in the 1960s and has been underinvested in since privatisation. Now, as new generation sources are increasingly far from centres of demand, the network is being expanded and upgraded to meet our changing generation profile and the anticipated increase in electricity demand. We are changing our entire energy system to benefit the whole country: some change will be inevitable.
The last energy system, dominated by coal, changed certain parts of the country and communities enormously in ways still felt today. In this transition, we are working with communities in recognising the impact on network infrastructure through community benefits and bill discount funds. Across the entire transition, the department’s clean energy jobs plan outlined efforts to double the number of jobs in clean energy by 2030 from 400,000 to 800,000 jobs. The point made by the noble Lord, Lord Liddle, draws an interesting line between the Central Electricity Board and what we are now asking of NESO. We once again have a strong, central, single-minded and independently operated system, as the noble Lord mentioned.
The National Energy System Operator in its new role, following our acquisition of it from National Grid plc, will be and already is an indispensable asset, in our drive not only to ensure the planning, operation and rollout of the network but to be critical, as seen through the complex work of connections reform, to the whole clean power 2030 target, ensuring value for bill payers. This can be done only though the establishment of an independent expert system operator, which, as my noble friend Lord Chandos noted, has already made a significant impact in the short number of months that it has had its new, wide-ranging brief. We will write with further details of the specifications of its acquisitions.
The noble Lord, Lord Howell, made a point about pylons. System design is and will remain based on raw carbon-generated electricity. Hydrogen may well have a role in the wider energy transmission. However, the demands of the economy require a clean, efficient and fast network for electricity transmission to ensure that homes and businesses and therefore growth have the power that they need at all times. It is clear that electricity is the system that can enable this. Not all projects being built on the network are pylons; many are upgrades to existing infrastructure, while several enormous projects will run offshore.
The noble Baroness, Lady Miller, raises an important point on local energy. The Government recognise that local energy will be of great importance to this work. Great British Energy is already looking at how it can be more closely supportive of local schemes, including the recent work to install solar panels on the estates of schools and hospitals. We will look to take forward its local energy schemes.
The noble Earl, Lord Russell, raised planning—grid connections and the need for forward looking—which the Government are doing in partnership with the National Energy System Operator and Ofgem. On his views on zonal pricing, I welcome his support for the decision and the reformed national pricing system, which will look to strike the right balance for the country, with the delivery plan on the reformed national pricing due before the new year. The noble Earl also asked about AI tools as well as the energy code in this space, and I shall write to him on those issues.
The noble Lord, Lord Offord, pointed out the assessment of other approaches driving net-zero ambition. I would point to the cost of not doing this. We need to get off wholesale prices and volatile fossil fuels to protect consumers, but also future generations. This transformed grid and energy system will let us connect and transport our own homegrown clean energy and get us off the rollercoaster of global gas prices, create good jobs, support economic growth and bring down bills, tackling the climate crisis.
The Government are determined to increase the share of renewables on the system so that the electricity price is set by cheaper clean power sources, rather than gas. Every wind turbine that we switch on and solar panel that we deploy helps to push gas off as the price setter. Government support, such as the contracts for difference scheme, has been highly successful in driving investment and renewable electricity, and our clean power 2030 mission is focusing on accelerating the transition to a renewable power system. This will help to reduce reliance on gas and protect consumers from volatile fossil fuel prices.
The Government are determined to increase the share of renewables on the system, so that the electricity price is set by cheaper clean power sources rather than by gas. Every wind turbine we switch on is well worth it to help to keep down bills. Government support, such as the contracts for difference scheme, has also been very successful.
In conclusion, this Government are committed to the biggest transformation of our electricity infrastructure in a generation. We must confront the tough and responsible decisions that need to be taken without delay. While the challenges are significant, we are already meeting them. We can secure clean power, protect households from price shocks and harness these opportunities to deliver growth. I wish to thank committee members for their thorough and dedicated attention to this most critical matter and reiterate the Government’s dedication to transforming this country’s electricity network.
Baroness Taylor of Bolton (Lab)
My Lords, I start by thanking everyone for their contributions, and for the fact that the report has had a generally very good reception. The debate has been quite wide-ranging, and we have gone into very granular detail on some occasions, but we have not lost sight of the big picture, which is extremely important. The electricity grid is of fundamental importance to so much of what the Government want to achieve in future, and to so much of what this country actually needs.
As the Minister said, there have been decades of underinvestment, and we need to give urgent attention to this, partly for the resilience of what we have at the moment, because we know we could be vulnerable to outages. We need to meet our net-zero target, and we know that the growth agenda is very much dependent on getting this right, so far as the grid and energy supply is concerned. The grid, the connections and the investment that is needed really have to go right before we can meet all the objectives of resilience, net zero and growth. Part of that, as we have touched on today, is giving confidence to the industry and investors that they can have clarity and stability in the guidance that is coming out from government. That is one reason why we pressed for the Government to be clear about the guidance that they are giving to Ofgem.
I think we are all agreed that the direction of travel is the correct one. I know that the Minister welcomed much that was in our report, apart from zonal pricing. I understand why the Government are reluctant to have change upon change, because there are many moving factors here, all at work at the same time. But we will have to look forward to what Ministers are going to say on pricing and reforming the system, because that is going to be quite important. Mention was made of the Statement yesterday, and I think it is important that we get a comprehensive approach, rather than one where the Government come along every so often and bail out industries that have particular problems with energy. I know that my noble friend Lady Anderson very much appreciates what was done for the Potteries, but I do not think we can go from one lurch of bailing people out to another: we need a comprehensive change.
We have talked about big changes, but actually there have been some small changes that have been very significant, such as having deemed consent when a substation wants to increase capacity. There are many minor things like that, which could be done to help the situation. In fact, we are saying that all these things—connections, planning, skills—are important, but we have to maintain the pace of this change and we have to make sure that we keep industry consulted and on board to have everybody working in the same direction and at the necessary speed. I thank all noble Lords for their contributions and commend the report.