Arrangement of Business
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Medical Nuclear Radioisotopes
(1 day, 4 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Bloomfield of Hinton Waldrist
To ask His Majesty’s Government what steps they are taking to enable the domestic manufacture of medical nuclear radioisotopes.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, it is always a privilege to be allocated a slot in the ballot for Questions for Short Debate. While I am disappointed with the small number of speakers, I feel sure that had more noble Lords been aware of the challenges facing the supply of these clever little chemical elements, this debate might have generated a bit more interest. My contribution seeks to address this issue of both national and personal significance. I declare my interest as a trustee of the Royal Marsden Cancer Charity.
Radioisotopes have transformed science, medicine and industry. Their ability to emit radiation makes them both powerful and, when handled safely, invaluable to modern society. In medicine, they are the backbone of modern diagnostics, innovative therapies and clinical trials. They are vital for the early detection and treatment of cancer, heart disease and many neurological disorders. Every year, more than 700,000 NHS procedures rely on medical isotopes and yet, despite their critical importance to world-class patient care, we face an acute and growing crisis in their supply. Currently, around 60% of our medical radioisotopes are imported. For the isotopes that we use in therapeutic treatment, almost 100% comes from overseas. The UK produces radioisotopes domestically only for PET-CT scans, and even that capacity is very limited.
Recent disruptions, triggered by overseas reactor shutdowns and global manufacturing shortfalls, have already led to the delay and cancellation of critical diagnostic tests. Delays can cost lives. Molybdenum-99, a critical isotope for cancer testing, was acutely limited in late 2024, forcing health leaders to ration supplies and to prioritise only the most urgent cases. Between January and May this year, dozens of cancer patients in the Nottinghamshire and east Midlands trusts experienced delays in PET-CT scans due to radioisotope shortages.
This fragility of supply has a very human cost. The root causes are clear: our dependence on ageing foreign reactors, transport hurdles and Brexit-related trade barriers all converge to create a precarious, expensive pipeline for these life-saving elements. The majority of them are produced by an ageing global network: 64% of current production capacity, in 11 reactors, is expected to be decommissioned by 2030. Shutdowns, such as that of the Belgian BR2 reactor, are more likely to occur as global demand increases, reactors age and more research reactors come offline.
The situation is unsustainable but, luckily, neither inevitable nor unfixable. However, it requires the Government and the scientific community to explore and pursue long-term solutions—not an easy ask in times of serious budget constraints—where cross-departmental co-operation is key. I note that it is the noble Baroness, Lady Merron, responding as Minister for Health, but it could as appropriately have been a Minister from the Department for Science, Innovation and Technology, the Department for Business and Trade or indeed the Department for Energy Security and Net Zero.
Any long-term solution must have at its core a vision for a secure, sovereign supply chain anchored in world-leading research, agile infrastructure and a skilled workforce. As well as direct benefits, research reactors have been demonstrated to create technological clusters that attract investment as industry benefits from proximity, which reduces the loss of radioactivity due to decay, and highly skilled expertise is built up in a local workforce. But the supply chain challenges for molecular radiotherapy stem from the fact that the radioactive component—the radionuclides—are short lived, so must be made continuously and cannot be stockpiled.
Where could we build a reactor where there is already a suitable nuclear site, owned by the Nuclear Decommissioning Authority, with a highly skilled local workforce in the relevant nuclear and medical sciences, a welcoming population well educated in the advantages of living in close proximity to a nuclear site, and an airfield almost adjacent to export the radionuclides with short half-lives—more likely to be counted in hours, not days—to the UK and beyond? Extensive research by the Snowdonia Enterprise Zone, backed by the Welsh Government, assessed long-term economic uses for the Trawsfynydd site in south Gwynedd. Given the site’s heritage, it concluded that it is most suited for nuclear development. Following detailed assessments of a number of different options, two projects were confirmed as having the greatest potential to deliver socioeconomic benefits, namely SMRs and a medical research reactor to produce radioisotopes for cancer diagnostics treatment and research.
The proposed ARTHUR—advanced radioisotope technology for health utility reactor—initiative envisages a dedicated medical reactor capable of producing a steady flow of radioisotopes for NHS use and research, and for export. The recommended reactor design for the ARTHUR project would use proven technology and is modelled on the ANSTO OPAL reactor, the world’s leading example for secure and efficient medical isotope production. The plan is supported by leading academic voices. Professor Simon Middleburgh of Bangor University’s Nuclear Futures Institute has stated that
“such a facility is not simply a Welsh inspiration—it is a UK wide imperative. Without it we remain at the mercy of foreign reactors, rising costs and global shocks”.
In 2022 the Government took a step in the right direction by announcing a £6 million medical radionuclide innovation programme. The commissioned report, issued by TÜV SÜD, warned of a supply vulnerable to technological failures, infrastructure delays and geopolitical upheaval, underscoring the conclusion that our current system is not future-proof. The recent review of molecular radiotherapy services produced by the Royal College of Radiologists, the Royal College of Physicians, the Institute of Physics and Engineering in Medicine and the British Nuclear Medicine Society made one key recommendation: that every devolved Government and every radiotherapy operational delivery network in England appoint a molecular radiotherapy champion, someone with the mandate and vision to drive the change we need. By investing in infrastructure using the existing workforce, as well as training the workforce of tomorrow, we can become self-reliant and once again lead the world in nuclear medicine innovation.
One in two UK citizens will be diagnosed with cancer in their lifetime. Many will see their quality of life and the efficacy of their treatments enhanced as a result of nuclear medicine. Every hospital in the UK uses it to help patients on a daily basis—700,000 patients a year and counting. We must act now. Let us not wait for another global shortage, another shutdown or another delayed shipment to force us into crisis mode. Let us choose instead to build a secure, resilient, sovereign supply of medical isotopes for the UK and, of course, I hope that will be in Wales.
Lord Patel (CB)
My Lords, I am pleased to take part in this short debate. All the important issues were covered by the noble Baroness, Lady Bloomfield, in her brilliant, comprehensive speech—but not by me, as they say, so I will repeat them.
The noble Baroness is right that it is time urgently to address this issue. The point has already been made that we increasingly need these radioisotopes as medical advances occur, particularly in molecular radiotherapy, which the noble Baroness did not mention. Molecular radiotherapy is used as internal therapy for diseased organs, as opposed to external radiation, which is what we are all familiar with.
We all know that one in two people are going to get cancer. The monitoring of cancers—for example, prostate cancers—requires a particular kind of radioisotope tracer to identify whether there are any metastases. This is now in short supply because we rely on a supply chain that comes from overseas.
Basically, there are two nuclear imaging modalities: SPECT, single-photon emission computed tomography, and PET, positron emission tomography. SPECT imaging relies primarily on reactor-produced isotopes, and we have to completely import them because we do not have a reactor. PET relies on cyclotron-produced images. While we have that facility, we do not have it extensively, so we often have to rely on overseas supply chains.
I will put it in the context of a patient. The overall problem is that they are waiting for a diagnosis, but cannot have it made because the supply chain for radioisotopes is in short supply or has been held up, and their appointment is cancelled. They wait another few weeks before that appointment is made again, during which time the patient’s cancer grows. Alternatively, they are relying on finding out how the cancer is progressing following diagnosis, particularly to see whether the cancer is responding if treatment is being given, and imaging facilities are needed, but the tracer or isotope is not available.
There is a further issue: if we have our own reactor that can be used for research, we will innovate for newer radioisotopes for both diagnosis and treatment. Our scientists are good enough; in fact, they are world leading. Furthermore, most tissues in the body are specific to certain chemical agents. For instance, iodine is used for the thyroid. If we want to diagnose or treat thyroid cancer using internal therapy, we would have a tracer with iodine to target thyroid tumours. Glucose is similarly used for brain tumours, and for identifying cancers that an MRI sometimes will not see. With a particular kind of tracer, PET-CT scans will see them, and therefore diagnosis and treatment happen earlier.
I could say this in one sentence or half an hour of speech, but the message would be the same. We urgently need UK-based radioisotope reactor facilities that produce tracers using radioisotopes, and also a cyclotron facility, so that the whole UK can then rely on our own supply. It also enables our researchers to further innovate for new tracers, and therefore end up leading the world. I say to the Minister that the time is now. Can we have the plan, please? Whether it is in Wales or not—I might have been tempted to say Scotland—the ARTHUR project has already made a good business case and worked this out. The cost is not enormous, particularly in the context of the NHS budget and the benefits that the NHS will derive. I plead for the same as the noble Baroness, Lady Bloomfield.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, I congratulate the noble Baroness, Lady Bloomfield, on securing this valuable debate. I think we should judge its value not by the number of people here but rather by the quality of the contributions. This is an important issue and, as the noble Lord, Lord Patel, said, the noble Baroness introduced this in a very comprehensive way, which was extremely welcome.
The Government are committed to delivering critical services that depend on the reliable supply of medical radioisotopes, to which both noble Lords referred. I agree with the noble Baroness and her reflections on the positive health outcomes, also supported by the noble Lord, Lord Patel. These isotopes support positive health outcomes, both for diagnostics and for therapeutics. I was looking at the figures: in England alone, some 700,000 procedures are carried out using radioisotopes every single year. This figure is expected to increase, not least because of their value in the process.
There are three main uses for medical radioisotopes; each relies on different manufacture to get the desired result. PET-CT scans, primarily used for cancer and cardiovascular diagnostics, use isotopes from a comprehensive network of UK-based cyclotrons. SPECT scanners are mainly used to confirm the cancer stage, to identify blood clots and to assess organ functions. These scanners use isotopes manufactured abroad in reactors; the noble Lord, Lord Patel, drew our attention to this. This is also the case for radioisotopes that are used for therapeutics.
As the noble Lord pointed out when he expressed concerns about delays to treatment and the impact on patients—the point was well made—the UK does not currently manufacture medical radioisotopes in reactors. Instead, we have in place a supply chain with isotope sources from multiple countries to aid resilience. I will come on to the point that the noble Baroness made about when that supply chain is disrupted. This gives us access to a global network of expertise and high-quality medical radioisotopes.
The noble Baroness made a strong case in advocating for the Welsh project ARTHUR, a reactor specifically designed for the purpose of medical radioisotope manufacture. The Minister for Medical Technology and Innovation, Zubir Ahmed MP, recently met Liz Saville Roberts MP to discuss this matter, and I can assure the Committee that the Government are in active discussions about this project. I note the points made about the suitability of the area and the potential benefits of this project. The UK Government have not made a formal assessment of the project at this time but are supportive of any manufacturing capacity that can improve reliable access to medical radioisotopes, as has been called for. A domestic reactor would certainly be a welcome addition to the overall supply.
The noble Baroness understandably highlighted the severe shortage of a specific medical radioisotope in 2024. I agree that this was caused by a global disruption to its manufacture. The underlying issue was that several nuclear reactors used for its manufacture were undergoing critical repair work. As noble Lords can imagine, these repairs are normally planned ahead and co-ordinated to ensure that there is always enough capacity to deliver critical isotopes. However, the safe running of reactors will always determine whether they will be taken offline for repairs. In this instance, critical repair work was identified and meant that multiple reactors were closed down at the same time.
Due to a diligent response from the Department of Health and Social Care, NHS England, industry and the NHS services impacted, I am glad to say that the patient impact from this severe shortage was limited. I am grateful to all those who worked to ensure this. However, it underscores the need for multiple available sources of medical radioisotopes. A Welsh reactor—or perhaps a Scottish one, although I would rather not dwell on the argument around the devolved Governments and locations—could be an important addition to this supplier base.
Also raised were the issues with the supplies for PET-CT scanners earlier this year. I can give an assurance that, when there are specific supply issues, such as the one the noble Baroness referred to that impacted north England and the Midlands, the department works with suppliers to recover supplies and services. We are aware of the difficulties and issues that both noble Lords have raised. I hope that response is of some assistance.
We are working to support services and improve outcomes for patients. The noble Baroness said that the Government should explore long-term solutions, so let me outline some of these actions. First, we are committed to a thriving life sciences sector and the development of high-skilled jobs in that sector. The Government have made up to £520 million available through the life sciences innovative manufacturing fund; that is available for any private manufacturing proposal, including for medical radioisotopes in the UK.
Medical radioisotopes support life-saving services, including for diagnostic tests; this Government are committed to supporting the improvement of these services. Therefore, we have announced £6 billion of additional capital investment over five years across new diagnostic, elective and urgent care capacity. This includes funding to increase capacity for both testing and reporting across community diagnostic centres and hospitals.
In early 2026, which is nearly upon us, the Government will publish their national cancer plan. This will set out how we will improve diagnosis, treatment and waiting times in order to improve outcomes for cancer patients and increase survival rates. UKRI, the UK’s national funding agency for science and research, also supports the overall service delivery and has recently invested £32 million for novel total-body PET-CT scanners. All these interventions will, as I say, improve the situation for patients and improve services.
In conclusion, as the noble Lord and the noble Baroness have called for, this Government are committed to ensuring robust and reliable supplies of medical radioisotopes to deliver critical services. We are supporting the development of manufacturing and delivery capabilities in the UK, where this is appropriate, alongside working closely with international partners and suppliers. We are also committed to the economic and industrial development of the UK science sector. That is why we have made available investment funds that are open for applicants who are looking to expand or improve UK manufacture of medicine and medical technology products. This includes UK-based manufacture of medical radioisotopes or their adaption for diagnostic or therapeutic applications.
Lord Patel (CB)
I know that intervening on the Minister is unusual in a short debate, but we are not exactly short of time. I think the Minister said that if we had a reactor, it would be a useful addition. It would not be a useful addition; it is a necessity. She did not define any solid plans—unless I missed them—where the Government have a clear intention to establish a nuclear reactor for producing radioisotopes. There is a promise that we will have good contractual agreements with the supply chain lines that the Minister mentioned—I cannot make the Minister’s speech, but I am asking the question—but those cannot be guaranteed because there are only six reactors in the world and they are more than 50 years old. Maybe the Minister could comment on that.
Baroness Merron (Lab)
I understand the noble Lord’s point. The point I am trying to make is that a supply chain is important. I was indeed careful in my choice of words, not least because, as I mentioned elsewhere in my speech, the Government have not made a formal assessment of, in this case, the ARTHUR project. So I am limited in how far I can go on the most obvious presentation before us today, but I understand the point made by the noble Lord.
I thank the noble Lord, Lord Patel, and the noble Baroness, Lady Bloomfield, for raising this important matter, which is important for the whole of the Government.
Private Equity
Lord Monks
To ask His Majesty’s Government what assessment they have made of the role of private equity in the UK economy.
Lord Monks (Lab)
My Lords, I am grateful for this opportunity to revisit one of the darker corners of the financial services sector and to see what has altered since noble Lords last debated the issue in 2022. The excellent Library brief defines private equity as “a managed fund”, aiming to secure “a controlling share” of established companies, then, after a few years, to sell the companies on at a profit. The funds typically aim to sweat the assets as one of the ways of increasing profits. By sweat I mean sales of property, reductions in staff and sometimes their pay, cutting back on investment in new products and services, sometimes reducing maintenance and using the high debt involved to reduce tax. Growing the business is a stated aim but often turns out to be a second-order objective.
In addition, fund managers secure their remuneration by aiming for a share of the profits—often around 20%—and by interest payments and dividends. These are taxed at a lower rate than the higher rate of top income tax. Compensation arrangements are complex, but PE takes full advantage of what is known in the City as the carried interest loophole and sometimes as Wall Street’s favourite tax break. The rewards at the top often contrast with the meagre rewards for the staff in PE companies.
In the union world, we became aware in the mid-2000s of hostile buyouts fuelled by PE. They were associated with job losses, depressed wage growth and union derecognition in some cases. We learned that company managers we dealt with no longer had the same authority and decision-making power. The PE fund was the boss, and the employees were often demoralised.
The British Private Equity and Venture Capital Association responded to concerns by setting up a standards-setting exercise involving Sir David Walker and later established a PE reporting group on which my noble friend Lady Drake serves. This was welcome, but concerns remain. I confess that when the banking crisis broke in 2008-09, my first thought was that highly leveraged private equity and its cousin hedge funds were major factors in it. I was wrong. The explosion was triggered on subprime mortgage markets. The question still in my mind is that private equity and its high leveraging could cause a massive problem with instability and company failure.
Things have moved on since the mid-2000s, but there are signs of a revival in PE. According to the FT just 10 days ago, there is developing in Germany in particular an impetus for major household-name companies—I will point out just one: Volkswagen—to sell off non-core divisions to PE, which would do the dirty work of asset sales including job reduction. The tax deductibility of interest payments on debt creates an incentive for PE funds and others to borrow to buy, even though the Finance Act 2017 restricted some activities in this area. One of the criticisms made of Unilever in the context of a takeover bid by Kraft was that its balance sheet was insufficiently leveraged. Unilever is over 90 years old. Will any PE-fuelled companies endure and prosper like that?
Anyone who has looked at the history of PE will have seen some of the horror stories. My noble friend Lord Sikka mentioned some of these in the debate in 2022. I just pick out one: Toys R Us was a well-known retailer in the US and the UK. It was taken over by Bain Capital and Kohlberg Kravis Roberts, stellar names in the PE world. Staff and benefits were cut, and interest expenses consumed 97% of the company’s operating profits. The company was still paying interest on loans to KKR and Bain until 2016; it is small wonder that it collapsed.
Currently, I am particularly concerned about PE operations in the social care sector. According to the Guardian on 12 November:
“Private companies operating … in … three regions of England have taken more than £250m in profits in three years”
from their social care activities,
“with more than a third going to … private equity firms or companies based in tax havens”.
This is a lot of public money going astray. I think that PE should not be allowed anywhere near social care.
I could go on with other examples of poor behaviour, but it would be more interesting to hear advocates of PE listing positive examples where, as a result of the actions of PE, companies have been transformed from laggards to dynamic and sturdy firms. Do any such examples exist? Where are the successful poster boys for private equity?
I recognise that private equity is a substantial part of the UK economy. It is too big to ignore. The Governor of the Bank of England, Andew Bailey, has recently announced that the Bank is planning to run a series of tests of private equity and credit firms. This follows some problems in the United States. The governor is seeking to discover whether these are isolated examples or, as he put it, a “canary in the coalmine” indicating wider systemic problems. This is important work by the Bank.
I appreciate that the Government are desperate to boost growth and seek new investment, especially on necessary infrastructure improvements. They are always looking for new sources of capital, but is private equity contributing or is it undermining traditional ways of investing in business, such as issuing new equity?
Do the Government have any current concerns about the role of private equity? Do they see any need for further regulation for PE or, more widely, the shadow banking sector? Are there plans to remove the tax advantages of debt relative to equity? Where are we on the Government’s aims to tackle the injustices of carried interest? This is an area that needs considerable scrutiny, and I hope that this short debate can help stimulate that further scrutiny.
Baroness Stedman-Scott (Con)
My Lords, I will speak on the role of private equity within the modern pensions landscape and, in particular, the implications of the Government’s Mansion House reforms for the Local Government Pension Scheme and long-term investment in the United Kingdom. The reforms announced in 2024 mark an important moment. They aim to consolidate our fragmented defined contribution sector and strengthen the investment management of the Local Government Pension Scheme. Taken together, they represent an attempt to align pension outcomes with the broader goal of promoting productive investment across the country.
The challenges of the next half-century are considerable: climate transition, energy security, technological change, demographic pressures and geopolitical instability will all shape the environment in which pension assets must be managed. In that context, private capital, including private equity, has a role to play not only in delivering returns but in addressing some of the systemic issues that confront the country.
It is important to acknowledge that private equity is not a uniform asset class. When approached with discipline and proper governance, it can generate significant value. Over the past two decades, it has produced sustained double-digit returns, considerably outperforming public equity indices. For many defined contribution schemes, which seek long-term growth and diversification, such returns are both attractive and aligned with members’ interests.
Private equity also provides access to parts of the economy that public markets do not easily reach: smaller companies, specialised sectors and innovative enterprises. It enables long-term investment in businesses without the short-term pressures that arise in listed markets, and it brings with it an attractive investment approach, drawing on skills that help transform businesses and support growth. Other jurisdictions demonstrate what can be achieved at scale. Canada’s major pension funds, for example, have used their size to deepen allocations to private equity infrastructure and real estate, generating stronger returns and reducing costs. The United Kingdom should be ambitious in seeking similar outcomes.
This brings me on to the Local Government Pension Scheme. With nearly £400 billion in assets—that figure is projected to reach £1 trillion by 2040—the LGPS is uniquely positioned to contribute in order to improve member outcomes and to increase productive investment across our regions. Encouragingly, we are already seeing progress. The Greater Manchester Pension Fund has committed more than £500 million to SME investment, supporting more than 160 business and creating more than 16,000 jobs. Funds in the West Midlands, South Yorkshire, Avon, Clwyd and Devon are showing similar leadership.
Noble Lords are, I am sure, quite surprised that I should be speaking in this debate on private equity, but I absolutely pay tribute to the Private Equity Foundation. When it makes money, which is a good thing, it actually puts that money into a good cause. The charity that I ran a few years ago was a beneficiary: it invested in the work that we did with children in schools. We reduced truancy, increased academic achievement and got young people into work who would never have done so otherwise. It deserves credit for that.
There are jobs for young people in the areas that need them most. There are opportunities and hope. As of 31 December 2024, £203 million had been invested directly into the West Midlands Combined Authority area. This includes funding for housing, infrastructure, commercial property and small businesses, creating jobs, building homes and improving services. More than 22,000 jobs have been supported, with nearly 5,000 homes delivered and significant investment directed into hospitals, schools and digital infrastructure. Such examples show that institutional rigour can sit comfortably alongside place-sensitive investment strategies. They demonstrate that pension funds can achieve strong financial returns while also contributing to local economic development.
However, context matters. Many LGPS funds are currently well funded. The scheme as a whole was estimated to be 107% funded in March 2022, and early indications suggest a further strengthening by 2025. For some funds, that may reduce their immediate appetite for additional private market exposure. The Government’s proposed allocation target of 10% for private equity may, therefore, appear ambitious. Yet, if the consolidation envisaged by the Mansion House reforms proceeds, the LGPS will inevitably become a larger and more sophisticated investor in private markets.
As this occurs, the secondary market, which is all too often overlooked, will play an increasingly important role. It will provide liquidity, support portfolio rebalancing, and enable the effective recycling of capital. The UK must ensure that this market is deep, transparent and trusted. If we are to meet the challenges of the coming decades and seize the opportunities that accompany them, we must treat our pension system as a cornerstone of national economic strength.
Baroness Moyo (Non-Afl)
My Lords, as I have disclosed in the register of interests, I serve on Oxford University’s endowment investment committee, which allocates capital to private equity. There is always a risk that a debate on the role of private equity will be based on dated views of the industry, characterised by asset stripping, financial engineering and cutting jobs. However, compared with 20 years ago, today’s private equity is largely focused on creating growth through productivity gains driven by operational improvements and technological innovation.
I will make three points about private equity as it relates to the United Kingdom’s prosperity. First, private equity is an engine in the British economy. The British Private Equity & Venture Capital Association estimates that, in 2025, private equity-backed companies employ approximately 2.5 million workers—that is one in 14 of Britain’s working population. The association also estimates that these companies generate nearly £200 billion, or 7% of GDP, for the economy. More widely, when suppliers and related consumers are included, 2023 estimates put private equity’s economic impact at roughly £300 billion, or about 11% of the UK’s GDP.
Secondly, private equity plays an important role in boosting the country’s productivity. The Productivity Institute found that private equity-backed companies benefit from productivity gains that are higher than those in the wider economy. Specifically, the institute notes an increase in total factor productivity of greater than 4%, and an increase in labour productivity as large as 5%. Crucially, the report notes that these gains are unlikely to be the result of cutting jobs. This revelation about productivity alone is key; it should not be overlooked amid concerns around the UK’s persistent productivity puzzle.
Thirdly, private equity must continue to play a vital role in driving innovation. Private equity is not just helping to turn around older, established companies; it is also providing growth capital to help companies scale up, and venture capital to support start-ups. The noble Lord asked for specific examples. I give him the magnificent seven, which are currently powering 200 to 300 basis points of economic growth as we live and breathe.
More specifically, both artificial intelligence and climate efforts, which are critical for future economic success, require large-scale capital investment, which private equity can help to provide. The era of AI in particular promises to drive down costs in public goods and increase efficiency of delivery in things such as the National Health Service. The IEA estimates that the energy transition and climate initiatives are going to require $5 trillion per year globally. Essentially, these efforts need all the capital that we can get, private equity included.
Yet today, in the UK context, private equity faces challenges, including finding a route to sell companies it has invested in and nurtured. This is, in part, due to the UK’s capital markets having weakened and investor interest in IPOs and public markets falling away. Worryingly, this year the United Kingdom has fallen out of the world’s top 20 IPO markets. Additionally, private equity investors are struggling to find promising new UK companies to invest in, highlighting burdensome regulation that ultimately holds back growth and puts the UK at a distinct disadvantage in the global competition for investment capital.
Britain needs more good jobs, more innovation and greater productivity. It also needs more infrastructure and improvements in public services. All of these require vast quantities of large-scale investment. At a time when this country’s growth is slowing—it recorded growth worth just 0.1% of GDP in the last quarter and is registering a 5% unemployment rate—this backdrop is a stark reminder that we must not deter major sources of capital and job creation such as private equity.
To be balanced, there are notable criticisms—some of which have already been mentioned—from local authorities experiencing escalating costs in both child and adult care provision from the private sector, and, in some cases, private equity-owned businesses. Business and the Government must, of course, come together and co-operate to address these urgent concerns. But more generally, government action, be it through legislation or regulation, should aim to create a much more engaging environment for private equity investment opportunity.
Lord Davies of Brixton (Lab)
My Lords, I thank my noble friend Lord Monks for introducing this debate on an important subject and the noble Baronesses, Lady Stedman-Scott and Lady Moyo, for their interesting contributions. They presented a powerful case in favour of private equity, but there is another side to the story. My noble friend Lord Monks explained, as I am sure my noble friend Lord Sikka will, some of the problems created by private equity. I am afraid that I am not as sanguine as the noble Baroness, Lady Moyo, that the bad old days are over. The potential is still there—it has not gone away. It is about the way that this tool is operated. You cannot deny the problems of the past. What guarantee is there that they will not return in the future?
My particular interest in private equity is in the way it has become embroiled in current debates about pension schemes. The Mansion House accord, mentioned by the noble Baroness, Lady Stedman-Scott, seeks to commit pension schemes to invest significant amounts in private equity. In the House of Lords, we will shortly receive the Pension Schemes Bill, which explicitly refers to the need for large pension funds to be able to invest in private equity. It is a very topical issue.
The promise is attractive. We are told that it will lead to higher returns; in introducing the Mansion House accord, the Treasury specifically referred to the higher potential net returns for savers. I suspect there is a significant element of survivor bias in these figures. None the less, the higher returns are not a free lunch; they come with the downside of failure. Private equity investments are not by their nature successful; they require the hard work and knowledge of experienced investors.
We need to identify the problems with private equity in its own terms. My noble friends will point out some of the other problems that have been faced, but one is illiquidity. As pension funds are operated at the moment, any member is entitled to move their money out and take it somewhere else, or to use it to buy an annuity when they get to retirement. Illiquidity, which is inherent in private equity funds, is a problem for pension funds.
Another problem is valuation uncertainty. Pension funds are required to tell their members what the fund is worth. The funds held in private equity are calculated in a way that, at best, we could describe as opaque. Members will be given a figure as to what it is worth, but it is not the same sort of figure as in market investments, where there is a market and you know what the investment would actually raise if you sold it tomorrow. You do not know what your private equity investment will raise if you have to sell it tomorrow.
Then there is the inevitability of higher costs and fees being charged. In some way, that is the point of private equity—so that advisers can charge higher fees, which are inevitable. Finding these splendid investment opportunities, as previous speakers have identified, does not fall into people’s laps. It requires hard work and skill, which comes at a significant cost. Talking about private equity without recognising the costs involved is wrong.
Of course, there is the overall problem of really knowing what these funds are doing. There have been well-attested cases reported in the Financial Times of private equity funds selling their investments to a self-owned subsidiary. This is not uncommon; the sort of financial structures which are developed in order to hold private equities are, at best, obscure, as I said earlier. Then there is the alpha problem, with the Government as a fiduciary in pension funds; it is the trustees who should be taking the decision and not the Government.
Lord Leigh of Hurley (Con)
My Lords, I congratulate the noble Lord, Lord Monks, on securing this very timely and important debate. I declare all sorts of interests. I am a founder and current senior partner of the advisory firm, Cavendish Corporate Finance—I am grateful to the noble Lord, Lord Davies, for his comments on the skill and hard work needed in that area. I personally invest in several venture capital and private equity funds, directly and indirectly, and I often negotiate against, and sometimes for, private equity as a professional M&A adviser.
When I started Cavendish in 1988, PE was a new and unknown phenomenon. A most important breakthrough happened when the Treasury agreed that carried interest should be taxed as capital not income, and there were other legislative changes in the 1980s and 1990s that enabled the industry to flourish. Noble Lords may recall the Chancellor at the time who facilitated this—it was not Lawson or Major; it was, to his credit, Gordon Brown. Those who think this is all a terrible, Thatcher-inspired “Greed is good”-era event are wrong. To be fair, there were lots of other hidden benefits at the time for the PE industry, which successive Governments allowed: an unlimited write-off of interest against profit—which is now capped—with that interest going to tax-free funds; base cost shifting, which has now stopped; very advantageous LLP structures, which the forthcoming hokey-cokey Budget may or may not stop; and offshore benefits, which have now been stopped.
However, at that time, the culmination occurred when an unfortunate PE individual boasted, at a House of Commons Select Committee, that he paid less tax than his cleaner. It was all the above, together with some very aggressive behaviour by some operators, which left PE with a very negative reputation. I recall a meeting of a PE-backed company that was behind budget, and the PE executive demanded that someone was fired as a result. They said they did not care who was fired, they just wanted to see someone fired immediately—and they were. As noble Lords will have gathered, I do not have rose-tinted spectacles when looking at PE. I have seen some bad behaviour and some enormous—I mean: enormous—fortunes made by some who really did not contribute much to our economy.
However, that being said, I make the point that, originally, PE was solving a major issue, as typified by RJR Nabisco, when the barbarians at the gate took over a company run by grossly inefficient management, who treated their corporation as a cash cow for their own private excesses. The point is that the capitalist system is the most successful ever created to enhance all our welfare, and it works on the constant need for greater efficiencies to maximise the return to shareholders for their investment. This is what really matters, not the ESG policy or the mission statement—or its purpose or self-declared interest to do good—or all the other fluffy stuff put up to deflect us. A company needs to be measured and assessed overwhelmingly by its return to shareholders on their investment—that is all. If management need to be sacked, they should be, unlike in other sectors. Of course, exploitative behaviour, modern slavery and cartel-like behaviour all have to be banned, but the overwhelming focus needs to be the efficient return to shareholders on their capital.
That matters to many of us in this Room. It matters not to those on the state pension or state benefits, which they enjoy because of state employment, but to those who, like me, have saved and invested in funds which, in turn, have been allocated to PE investments. We need them to succeed, and they are doing so at a time when public markets are sadly struggling because the Government keep failing to stimulate them—I hope the Minister will say more about that. Private capital is needed more than ever.
PE has helped some 13,000 firms in the UK and this Government, who claim to be focused on growth, have done nothing to encourage it. Indeed, they have brought on the disastrous Employment Rights Bill which every trade representative body and pretty much every private business realises will kill growth.
I turn briefly and more importantly, to venture capital, which the noble Baroness, Lady Moyo, touched on. It does an outstanding job in taking a risk that no one else will. As a result, 40% of the UK’s fastest growing 100 companies in the UK have VC money, with £14 billion in tech companies last year.
Since some of the other horror stories I mentioned earlier, the Walker guidelines, which was briefly mentioned, have been implemented successfully and seem to have changed behaviour, so let us try to ensure that PE companies play by all the rules, that investors feel welcomed in the UK and that we celebrate the sharp and necessary focus PE brings to the UK, ensuring that profitability is maximised for all our benefit.
Baroness Bennett of Manor Castle (GP)
My Lords, in following the noble Lord, Lord Leigh, I have to note that capitalism focused on shareholder returns is dependent entirely on the natural world and a functioning society. There are no shareholder returns on a dead planet or in a collapsed society.
I thank the noble Lord, Lord Monks, for providing this opportunity to assess the enormous and wide-spread damage that private equity has done to the UK and the world, with some $13 trillion now held across 50,000 companies worldwide. Their tentacles spread, particularly for the relatively poor, into every aspect of their lives, being their landlords, their electricity and water providers, their providers of travel to work, their employers, their doctors, their debt collectors and even caring, very expensively, for their pets. It is, as has been described in virological terms, a financial pandemic.
The author Megan Greenwell in her book Bad Company focuses on the US and, as she identifies, the death of the American dream which is associated with private equity. If noble Lords have not read it, I recommend it. She tellingly contrasts venture capital, which seeks to invest money mostly in start-ups to support the development of something new, with private equity, which typically buys company outright—often mature and established companies. The private equity aim is to get money out of the company without really caring whether the company makes any money. They are parasitic.
We all know the ways in which they do this, as the noble Lord, Lord Monks outlined: selling the company’s land and buildings, which are frequently bought through high-interest loans from related companies, then charging the company rent to continue to occupy its own premises. Money not already being drained by the interest payments is pumped out in dividends. Those are the returns that the noble Baroness, Lady Stedman-Scott, referred to. Then we see the buyer slashing the workforce, cutting the quality of services and products and it all crashes and burns in a couple of years, as it has in so many cases. Then the private equity firm moves on to the next victim.
As evidence given recently to our own Public Accounts Committee shows, some of the most vulnerable people in our society are suffering the worst as individuals from this model. The Public Accounts Committee inquiry, launched in July 2025, was prompted by National Audit Office research showing that the cost of children’s residential care placements has risen 96% since 2019. It heard from the Children’s Homes Association, which has removed tax-haven based private equity providers from its membership and called them out, pointing out that there are now large national providers with several hundred placements earning windfall profits from the coffers of local authorities that are then shipped straight off to tax havens.
The chief executive of the Children’s Homes Association told the Public Accounts Committee that measures in the Children’s Wellbeing and Schools Bill will not deal with this situation. He asked,
“is there political will to tackle tax haven-based private equity providers?”
I ask the Minister that question directly and non-rhetorically. Will the Government get private equity out of children’s care, out of aged care and disabled homes, where it has been doing similar damage for decades? These were issues raised by the noble Baroness, Lady Moyo.
My second question to the Minister is about the welfare of us all. We continue to see the enormous price paid by the young, the poor and the disabled after the financial crash of 2007-08, caused by the greed and fraud of the bankers. We are now hearing increasing warnings about the risk of it all happening again from multiple quarters: from the AI-fantasy bubble to the crypto mania, but also from the risk of collapse of the private equity model. There are only so many juicy targets from which money can be sucked, and they are drying up as our economies are hollowed out and financialised, with few sectors not already left victim. As the Bank of England’s Financial Stability Report said last year:
“Vulnerabilities from high leverage, opacity around valuations, variable risk management practices and strong interconnections with riskier credit markets mean the sector has the potential to generate losses for banks and institutional investors”.
Natacha Postel-Vinay, an assistant professor at the London School of Economics, said in commentary:
“I think a lot of people do not know exactly what is going on”.
Another question for the Minister is whether the Government can say, hand on heart, that they are confident that the regulators, and they themselves, know what is going on in terms of the financial risks being presented by private equity, particularly in light of the obscurity as outlined by the noble Lord, Lord Davies?
I finish on a message of hope, because I am always looking for hope. One of the reasons I recommend Greenwell’s book is that she talks about the people who are fighting back against the damage done by private equity; the workers and communities who are fighting back. My final question to the Minister is what the Government are going to do to fight back and tackle some of the tax issues that have already been raised by other noble Lords. They are, after all, the Government. Surely, the state of the country and the economy is their ultimate responsibility.
Lord Sikka (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett, and I also thank my noble friend Lord Monks for securing this debate. Private equity’s trail of destruction includes Debenhams, Homebase, LloydsPharmacy, Maplin, Poundworld, Silentnight, Toys R Us, The Body Shop, Southern Cross Healthcare and more. High streets have become economic deserts, thousands of SMEs have been strangled and Governments just wring their hands. Private equity is part of shadow banking and remains unregulated. There are no effective rules about leverage or capital adequacy. Governments are playing with fire, as the next crash will surely come from this sector.
Tax abuse, profiteering, asset stripping and cutting staff and wages are the standard private equity tools. The controlling entity is usually in some opaque offshore tax haven: no tax is paid on dividends extracted from UK operations. Instead of share capital, private equity loads companies with secure debt; this enables it to eliminate a downside risk of shareholding as, in the event of liquidation, it is paid first. Unsecured creditors get little or nothing.
Some years ago, I was asked by the Work and Pensions Committee to look at the liquidation of Bernard Matthews, a well-known poultry company. It was deliberately gutted by private-equity owners: the directors sold the assets and jettisoned all the liabilities, including deficit on the employee pension scheme, to maximise profit. Suppliers, SMEs, employees, local communities and HMRC were harmed. Governments did absolutely nothing. Can the Minister say how many SMEs have been damaged by private equity, and will the Government investigate liquidations concocted by private equity?
The crisis at Thames Water has been deepened by private equity’s cash extraction. Northumbrian Water, Southern Water, Wessex Water and Yorkshire Water are partly or wholly owned by private equity. All have hundreds of criminal convictions and are still allowed to fleece customers. Private equity is devouring ASDA and Morrisons: staffing and wages have been cut to boost profits and investment has been neglected. Large corporations, many controlled by private equity, have 60% of the veterinary market. Vets’ fees have increased at double the rate of inflation. Vets are under pressure to meet financial targets and sell unnecessary appointments to pet owners—that is what vets have told me.
Profit margins range between 16% and 20%. Social care is mainly under the control of companies increasingly backed by private equity. They are extracting £1.5 billion a year for their investors. Private equity-backed fostering agencies provide almost one-quarter of all child fostering places in England. In 2023, the parent company of the UK’s biggest provider, the National Fostering Group, made an underlying profit of £104 million with a profit margin of 21%. That is unacceptable. Profiteering from vulnerable children is what private equity does. Despite the glossy statement, it has no notion of ethics or social responsibility. On 18 November 2024, the Government issued a press release entitled Biggest Overhaul in a Generation to Children’s Social Care. It stated:
“We will crack down on care providers making excessive profit”
and
“put a limit on the profit providers can make”.
A year later, nothing has been heard. Can the Minister tell the Committee when this legislation will be brought to Parliament?
Too many dental practices are taken over by private equity as it seeks to build local monopolies. My dentists—PortmanDentex and Rodericks—are leading players and are controlled by opaque entities from Luxembourg and the Cayman Islands. They are not there for the sunshine. The typical cost of dental treatment at these dental surgeries is three and a half times what NHS dentists charge.
Too many GP surgeries are controlled by private equity. There are pressures on them to increase profit by cutting staff and using unqualified staff. The NHS is increasingly a shell doling out contracts to private operators backed by private equity. Just five firms received thousands of cataract surgery contracts. They have a profit margin of between 32% and 43%. In 2023-24, they received £536 million from the NHS and made a profit of £169 million. It is a matter of great concern that under their 10-year plan, the Government plan to hand more of the NHS to private equity.
Finally, can the Minister explain what the Government are going to do to curb abuses by private equity?
Lord Altrincham (Con)
My Lords, I declare my interest as a director of South Molton Street Capital. I congratulate the noble Lord, Lord Monks, on securing this important debate about private equity and on his membership of the important French Légion d’honneur alongside Stephen Schwarzman, who is the founder of the largest private equity investment firm in the world: Blackstone.
Private equity and venture capital-backed businesses directly supported approximately 7% of UK GDP, 8% of employment and 9% of gross earnings in 2025; those numbers were, I think, referenced by the noble Lord, Lord Monks. The British Private Equity & Venture Capital Association reports that private capital-backed companies now generate around £200 billion annually in GDP for this country and support 2.5 million jobs. As the noble Baroness, Lady Moyo, pointed out, that is one in 14 jobs in the UK.
It is important for me to frame my remarks with a clear eye to both the benefits and the risks that come with private equity funds. Private equity remains well placed to deliver solid, diversified returns. Over the past two decades, it has outperformed listed equities by between 4% and 6% a year after fees, supported by both the value creation role of active ownership and the illiquidity premium.
For DC schemes supporting UK retirees, those advantages are particularly attractive, as my noble friend Lady Stedman-Scott mentioned. Local government pension pools have already saved £380 million through consolidated private equity investment, and 17 major workplace pension providers have pledged to double their private market exposure to 10% by 2030. The UK’s traditionally cautious pension landscape is clearly opening up, with an estimated £50 billion to £75 billion in new private equity commitments expected over the next five years.
Studies have found that, on average, private equity-backed firms achieve higher productivity growth, as noted by the noble Baroness, Lady Moyo, than comparable companies and often outperform on operational metrics after investment. Long-run analysis of UK portfolio companies suggests that, on average, private equity-backed firms have achieved faster growth in productivity and greater growth in organic employment than comparable private sector benchmarks. When Nat Benjamin from the Bank of England spoke to the House of Lords Financial Services Regulation Committee on 5 November, he commented on the role of private equity in supporting business:
“There have been research and studies on precisely that question—academic research. They tend to show that on average the performance of the businesses, of the corporates that are financed by private equity, tends to improve”.
Private equity and private credit providers create important professional services jobs and income and prosperity for our country and our tax base. It is in the national interest that the Government should work to preserve and strengthen this position because it delivers real, tangible benefits to people across the UK.
However, I appreciate that private equity is not without its risks. We have heard reference to the problems that have arisen in social care from the noble Lords, Lord Monks and Lord Davies, and the noble Baroness, Lady Bennett. The debt burden can become unsustainable if the business hits a downturn and debt repayments and interest eat into cash flow. The noble Lord, Lord Sikka, referenced a long list of private equity calamities in this country and the US and touched on the debacle at Thames Water, which remains a cautionary example. Successive private infrastructure investors, including Germany’s RWE and Australia’s Macquarie, left the company unmodernised and heavily leveraged while continuing to extract substantial dividends when interest rates were very low. When interest rates returned to more normal levels, Thames Water was exposed. It was clear that funding that ought to have been directed towards upgrading the Victorian sewer network, which serves 16 million people around London, was instead diverted to servicing debt.
However, it is important that we do not let these risks deter us from supporting private equity. The question is not whether these funds are wholly good or wholly bad, but how we can manage and engage with them as parliamentarians and Ministers—and, in the noble Lord’s case, as a Government—in a way that minimises risk and maximises benefits for the British public. I welcome that it seems to be in this spirit that the FCA proposes to alter and develop the regulatory regime surrounding alternative investment funds to allow more flexibility for smaller funds, saying that it believes that,
“clearer rules, better tailored to firms, could create efficiencies in how firms do business and further support economic growth and competition”.
Private equity funds have the capacity and potential greatly to benefit our economy. We need to make sure that any changes to the regulatory environment support growth and embed efficiency. We on these Benches will look at this closely as the FCA’s consultation concludes and steps are taken in this direction.
We need to appreciate that the success or failure of these funds is also determined in part by the macroeconomic environment, which the Government have a substantial hand in creating. I appreciate that the Minister cannot comment on specific measures in the Budget, but can he assure us that the Government are forming their plan with a mind to enabling private equity funds and alternative investment funds to continue to contribute to the economy? Does he also recognise that, however they are presented, tax changes can have a real effect on market actors, such as private equity funds, which play an important role in investment, employment and growth? What steps is the Treasury taking to assess and mitigate any unintended consequences so that tax policy does not inadvertently undermine the Government’s growth objectives? I look forward to hearing from the Minister on these points and his response to the other questions raised by noble Lords.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
I thank my noble friend Lord Monks for securing this debate and all noble Lords for their contributions this afternoon. It has been an energetic debate that has covered all bases in the discussion around private equity. The role of private equity is a salient issue for the UK economy, and it is important for us to recognise the role that private equity investment plays. I thank noble Lords for their constructive contributions to this thoughtful debate.
Growth is the central mission of this Government, but we recognise that government alone cannot deliver growth. That is why investment is a cornerstone of the economic strategy. The UK’s Modern Industrial Strategy set out the Government’s commitment to enable investment and growth in city regions and clusters across the country.
The growth of private markets has enhanced the types of capital available to the real economy, providing increased competition and diversification. Private equity companies provide capital from investors with a broad range of risk appetites. This has increased the availability of finance for businesses, providing long-term capital and support for business plans that enable those businesses, especially smaller or high-potential firms, to scale and innovate.
For many companies, private equity plays an essential role, from supporting firms to scale up from the venture capital stage to listing on a public market. By offering diverse sources of finance and allocating risk to where it can best be managed, private equity can reduce pressure on the banking system and support broader economic resilience. Capturing the benefits of this global growth in private markets is essential to increasing growth and investment in the UK.
The Government remain committed to ensuring that private market investment is sensible and sustainable, and we are working closely with the Bank of England and Financial Conduct Authority as we pursue reforms to support growth. Some noble Lords will have seen the Economic Secretary to the Treasury making just that point yesterday to this House’s Financial Services Regulation Committee.
As noble Lords will have heard, the Economic Secretary welcomed the work of the regulators to monitor and understand these risks and welcomed the Bank of England’s proposals for a system-wide exploratory scenario exercise focused on private markets. She noted that the Chancellor will ensure that the Financial Policy Committee continues its work on these risks through her annual remit letter to the committee.
I reassure noble Lords that the Government are committed to maintaining high regulatory standards for private markets, including private equity firms. Private equity companies in the UK must comply with the necessary requirements, including the Alternative Investment Fund Managers Regulations and the Companies Act. These regulations help to ensure that fund managers and private companies act responsibly, balancing the interests of investors with those of the wider economy and society. The Government’s ongoing review of the Alternative Investment Fund Managers Regulations seeks to maintain this balance, strengthening protections where necessary while ensuring that regulation remains proportionate and targeted.
The noble Lord, Lord Monks, asked where we are on the Government’s plans to appropriately tax carried interest, and other tax issues. While the Government do not comment on speculation about tax policy outside of fiscal events, I remind the noble Lord that, at the Budget in 2024, the Government announced their proposals to introduce a revised tax regime for carried interest from April 2026, which will put the tax treatment of carried interest on a fairer and more stable footing for the long term while safeguarding the strength of the UK as an asset management hub.
The reforms will increase tax on carried interest, ensuring that fund managers pay their fair share. At the same time, the effective tax rate for qualifying carried interest will be at the top end of international competitors, reflecting the Government’s commitment to fairness while maintaining the UK’s position as a leading asset management hub.
I will now try to answer all your Lordships’ questions; if I miss any, I will write to the noble Baroness or noble Lord concerned. The noble Baroness, Lady Stedman-Scott, and the noble Lord, Lord Davies of Brixton, mentioned the issues around pension investment reform. The Government’s reforms to pensions are designed to improve outcomes for savers and support UK economic growth. Larger consolidated pension schemes can access a broader range of investments, including private markets, which offer the potential for higher long-term returns.
The Mansion House accord is a voluntary industry-led commitment to invest in these assets, and the Government have taken forward a reserve power in the pensions Bill to act as a backstop. Of course, this does not mean we are complacent. The reserve power includes robust safeguards, including a financial detriment test, a sunset clause and a requirement to consult and publish an impact report before use.
The noble Baroness, Lady Moyo, mentioned the capital markets issues. Britain’s capital markets are deep and liquid, with more capital raised in the year to date than the next three European exchanges combined. The Government are not complacent and have taken forward an ambitious programme of reforms to reinvigorate our capital markets, including a once-in-a-generation rewrite of the listings rules.
The noble Lord, Lord Davies of Brixton, mentioned private market valuations. Alongside the Treasury, the FPC and regulators are working to improve transparency in valuation practices and understand leverage and counterparty exposures. Internationally, the Bank, the FCA and the Treasury are collaborating with the Financial Stability Board better to understand cross-border risks in private markets.
The noble Lords, Lord Davies and Lord Leigh, talked about reassurance on regulations. The Government are reviewing and reforming the regulatory framework underpinning the sector, recognising the key role that it plays in growth for the UK. This exercise is not about cutting back regulations at any cost but about tailoring the requirements to the UK market to boost competitiveness and encourage growth. Existing regulations help to ensure that private companies act responsibly, balancing the interests of investors with those of the wider economy, society and the environment. There are a number of requirements imposed through regulations, including the Companies Act, ensuring that private market firms act in a responsible manner.
The noble Baroness, Lady Bennett, asked several questions and raised issues around, for example, social care. The noble Baroness was right to point out that private equity investment has increased in adult social care, with many services now provided by private companies. Under the Care Act 2014, local authorities must shape local care markets to meet community needs, while the Care Quality Commission oversees care standards and operates a market oversight scheme to mitigate risks from provider failures. The Government plan to build a national care service and have commissioned the noble Baroness, Lady Casey, to recommend reforms, including how services should be organised and funded to ensure fair, affordable and high-quality adult social care for current and future needs.
The Government are committed to delivering children’s social care reform in addition to providing over £500 million to refurbish and expand children’s homes and foster care placements. The Children’s Wellbeing and Schools Bill will improve the safeguarding of children.
The noble Lord, Lord Sikka, mentioned asset-stripping and other issues. Private equity can play a constructive role in supporting businesses, but it remains important that such investment is carried out with transparency and responsible ownership. Incidents of value extraction can of course occur, which can be detrimental to creditors, employees and wider stakeholders. That is why there is regulation in place to address this issue. For example, under the Companies Act, directors of all companies are required to have regard in their decision-making to the long term and to impact of the companies’ operations on the community, and they are required to report against these requirements.
We welcome the CMA’s provisional decision report on veterinary services and continue to engage with the CMA ahead of the publication of the final report, which is expected in the spring of next year. As for the water companies, the Government are fixing the water sector’s broken regulatory system. Sir Jon Cunliffe published his recommendations for water sector reform in the summer and the Government have already responded to a number of them.
Private equity is a vital sector for the economy. There is a lot of good in it and probably some other not-so-good issues with it as well, but the Government are looking at all that and remain committed to fostering a dynamic investment environment that supports sustainable growth, innovation and job creation across the UK. We will continue to monitor developments in private markets and ensure that our regulatory framework evolves to meet emerging challenges while maintaining investor confidence and public trust. I again thank all noble Lords who have taken part.
Plastic Recycling Targets
Baroness Bakewell of Hardington Mandeville
To ask His Majesty’s Government what progress they have made in achieving plastic recycling targets.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, since the resources and waste strategy of 2018 and the 25-year environment plan of January 2019, plastic recycling has moved up the political and public agenda—but not as quickly as it might, despite the sterling efforts of David Attenborough. I am grateful to the Green Alliance for its briefing.
Over the intervening years, the banning of some plastic-containing products has helped. However, this is a small piece of the problem. Previous television coverage of UK plastic export strategy showed waste being sent abroad on barges to Turkey, with children playing among toxic waste. This created public outcry, but the practice is ongoing. Earlier this year, an investigation found that 200 young people had died in Turkey’s recycling industry. The EU is introducing a total ban on exporting waste to non-OECD countries up to 2029 and strict limits on plastic exports to other OECD countries. Meanwhile, the UK gaily continues to export waste plastics.
Figures from July show that plastic packaging had decreased from 2.6 million tonnes in 2012 to 2.3 million tonnes in 2024—a small reduction. Figures achieved for recycling increased from 25.2% in 2012 to 51% in 2025—a better, but misleading, figure. In April 2024, a survey conducted by Greenpeace and Everyday Plastic estimated that UK households discard approximately 1.7 billion pieces of plastic weekly, which is around 60 pieces per household. We are up to our necks in plastic. Snack packaging and fruit and vegetable packaging are the items most responsible. Some 58% of plastic packaging thrown away was being incinerated, an increase from 46% in 2022.
This is nothing to be proud of. Raising awareness with the public is crucial to future success in reducing discarded plastic in our environment. Analysis published in October 2023 by WRAP, a brilliant organisation dedicated to reducing plastic waste, noted that local authority collection rates for plastic were improving, with 6.1 million tonnes of plastic packaging collected for recycling in 2021, a 4% increase on the previous year. I stress that local authority plastic waste collection is not the same as plastic waste recycling; they are two very different things.
Figures from 2019 indicate that 16.6% of the material that sorting facilities dealt with was contaminated. This means it was unsuitable for recycling. Local authorities up and down the country have diverse ways of tackling their responsibilities towards recycling. Having come from Somerset, where there was a combined waste strategy between the county and district—now a unitary council—with separated waste collections covering all recyclable products, I am aware of what is achievable. I now live in Hampshire, where all recyclable products except glass are collected together. This leads to contamination and poor recycling rates.
Throughout the country, there is a series of large and small recycling and processing plants to deal with waste, especially plastic. These recycling plants transform waste plastic into PET for future use in the soft drinks industry. However, partly due to the inferior quality of the recycling materials available to the plants, the import of cheaper virgin plastic and rising electricity costs, 21 of these reprocessing plants have shut down over the past two years. Some of these plants might have stayed open if the recyclable plastic collected had not been contaminated.
I referred earlier to the export of plastics for other countries to deal with. The UK remains reliant on exporting its plastic recycling waste, with 47% of accredited UK recycled plastic packaging reported as being exported; Turkey was the largest destination for these exports. This loophole in the legislation allows the export of waste to be included in recycling figures. This is a smoke and mirrors exercise. Neither the Government nor local authorities have recycled their plastics if all they have done is bundle them up and send them abroad. This is outrageous. We have no way of knowing precisely what is happening to it. Is it being discarded close to waterways or coastlines, where it will damage the environment of aquatic animals and fish? Can the Minister say whether the Government have a strategy to move towards preventing the export of recyclable plastic waste? If not, why not? Exporting plastic waste for recycling when we have adequate recycling plants in the UK that could process this waste is extraordinary, to say the least.
The cost of virgin plastic needs to be comparable with or higher than that of recycled plastic. Without this, our recycling is not competitive. Cheap virgin plastic imports undercut demand. Sadly, the UK market is currently flooded with cheap imports of virgin plastic from China, Africa and the Middle East. For recycling plants to thrive, they need two things: first, a supply of high-quality used plastic to recycle; and, secondly, electricity to be affordable. The Government could do more by placing tariffs on imported cheap virgin plastic, making UK recycled plastic affordable. The plastic packaging tax, currently set at £223.69 per tonne, has increased demand for recycled plastic. However, it takes no account of the origin of the plastic and offers our domestic recyclers only weak support. It reduces the price gap between virgin and recycled plastic but does not close the gap altogether; the system needs to be geared towards the home market.
I turn briefly to the deposit return scheme for recycled plastic bottles. It was first mooted in 2017 but we are now told that it will be rolled out in 2027; that is 10 years to implement, which is unacceptable. Can the Minister reassure us that the target of 2027 for a DRS will be met? To sort the problems of plastic waste, we need a strategy to include, but not be limited to, increasing the plastic packaging tax; banning the export of plastic waste; and swift implementation of a deposit return scheme.
I look forward to a positive response from the Minister on dealing with waste and reducing plastic pollution. This is not a “nice to do”; it is absolutely essential if we are to reduce plastic pollution.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bakewell of Hardington Mandeville. I thank her for securing this debate and setting out many important points.
As the noble Baroness said, we are up to our necks in plastic. In 2020 the previous Government banned plastic straws, stirrers, spoons and cotton buds, but that is nothing to be proud of—it is like trying to use a toothbrush to clean up the planet. It is easy to hold the previous Government at fault for the failure to progress plastic recycling, whether on the slow progress on reducing the use of plastic packaging, on optimising the design of packaging for recycling, on domestic collection, on domestic recycling provision or on the failure to regulate the Wild West of exporting materials for so-called recycling. Indeed, I do hold the previous Government responsible. I meet so many people who ask, “What happened to the bottle deposit scheme?”. Quite a few still remember the £20,000 donation from the Wine and Spirit Trade Association to the Conservative Party just before it used the internal market Act to kill Scotland’s well-advanced scheme.
While this is a long story of regulatory failure—not to mention the underfunding of the local authorities that have to deal with the mess created by giant multinational companies profiting from the use of dangerously toxic, polluting materials—there is a more fundamental problem on which I want to focus. Plastics are a material that simply do not fit within the model of a circular economy, which is of course an absolute necessity if we are to live within the boundaries of this terribly fragile, terribly poisoned, planet.
Glass can be recycled indefinitely, steel can be recycled indefinitely, aluminium can be recycled indefinitely and even paper can be recycled five to seven times. Plastic, however, can effectively only be downcycled. Even to get to that, plastics have to be sorted by colour and type, washed and shredded up. These processes burn large amounts of fossil fuel, produce waste—including large quantities of the microplastics and nanoplastics that are now polluting all our bodies—and contaminate water. Then they are most often turned into items of lesser value and quality; for example, plastic water bottles go to fleece jackets or carpet fibre. Why is that? It is because newly made plastic can have some 16,000 different chemicals added to it. Used plastic can have residues of pesticide, biocides, pharmaceuticals and other toxic chemicals, so when it is used for food purposes, it is usually mixed with virgin plastics to dilute the toxicity.
I point noble Lords to a study in the Journal of Hazardous Materials in 2022, which showed how antimony and well-known endocrine-disrupting chemicals, notably bisphenol A, migrate out of particularly recycled PET drink bottles into the products that they contain. We might want to think about how long even those downcycling possibilities will be around. As our understanding of the human and environmental health threat posed by microplastics and nanoplastics grows, who will want to wear a jacket shedding plastics into the air around their nose and mouth? Who will want to have their baby crawling over a plastic carpet, breathing in all the toxins and fibres that it is producing?
That is on the individual scale; to go back to the planetary scale, we have choked the planet with more than 10 billion tonnes of toxic plastic. About 460 million tonnes of plastic are being produced annually, and the fossil fuel merchants are aiming to treble that by 2050, as the market for their products as a fuel fast fades away. I therefore ask the Minister: what are the Government going to do, domestically and diplomatically, to stop this taking of carbon out of the very long-term storage in which nature put it and eventually, inevitably, pumping it into our already overheated air? This is something that has only been magnified by the new wheeze of so-called “advanced recycling”—sometimes called chemical recycling. There is nothing advanced about using heat or chemicals to melt down plastic to downcycle it into petrochemical products that are very likely to be burned as more dirty fossil fuel energy.
It is time to focus on the producers of this toxic material, and I would ask the Government to do so. The noble Baroness, Lady Bakewell, spoke about educating consumers but, very often, consumers have no escape but to buy items in plastic—and that is the responsibility of the producers and retailers, not the consumers. I note a report from the Center for Climate Integrity from 2024, which lists the number of lies from plastic companies over decades, claiming that their products are recyclable and not harmful.
I finish by looking at both ends of the plastic journey. Two years ago, a train derailment in East Palestine, Ohio, highlighted the damage done by just one of the many toxic materials that go into making plastics—generally in poorer communities. At the other end, as the noble Baroness, Lady Bakewell, said, it is going to global South countries where people are being poisoned.
When we look at the waste pyramid, recycling is a very poor solution. It is the third choice; it should be used only when reducing the use of material or reusing products has proved absolutely impossible, not when it is slightly less convenient or slightly less profitable—when it is simply not possible. That means that the vast majority of the plastic products on our retail shelves today should not be there. We should not be looking to recycle them; we should be looking to get rid of them. What are the Government going to do to get us to that crucial goal?
Baroness Miller of Chilthorne Domer (LD)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett of Manor Castle. I congratulate my noble friend Lady Bakewell of Hardington Mandeville for securing this debate and for highlighting in her very powerful speech the incredibly detrimental effects of plastic in the environment. As she says, successive UK Governments have failed to grasp the plastics issue with the urgency it actually needs.
However, I will start my intervention today with encouragement to the Government, and some congratulations at least for their ongoing efforts as regards the UN global plastics treaty. The Minister will know that the UN global plastics treaty has been in negotiations since 2022, and that it would be a game-changer. It is the first ever attempt to create a dedicated, legally binding plastics treaty.
In March 2022, the UN Environment Assembly agreed to develop the legally binding global agreement on plastics, covering the full life cycle, from production to disposal. The problem is that the negotiations are ongoing. The treaty is expected to include targets on ocean plastic pollution, microplastics, product standards and the reduction of single-use plastics, but whether it is adopted depends on overcoming the major sticking points. I would be very grateful if the Minister could say where he understands the negotiations are now.
The Minister in the other place, Emma Hardy, said:
“I’m hugely disappointed that an agreement wasn’t reached, but am extremely proud of the way the UK has worked tirelessly until the end”,
of that round of negotiations,
“to seek an ambitious and effective treaty”.
My question to the Minister is: what efforts is the UK making now to ensure those negotiations are still continuing? Would he agree that it is actually the fossil fuel producers that did not want to see that treaty succeed? This is for the very reasons that the noble Baroness, Lady Bennett, alluded to—as fuel is phased out for transport use, they are finding other markets for their product. Until we can overcome that, the plastics treaty, which is so crucial, is not going to move forward.
Given this opportunity today, I must mention a plastics problem closer to our shores that really requires the Government’s urgent attention and some decisions from Ministers: the problem highlighted by the recent bio-beads spill at Camber Sands. However, that is by no means is the first disaster of this nature; I recall an incident near Truro, in Cornwall, some years ago. I declare an interest as someone who uses the beaches in the south-west a great deal, as do my family, and we enjoy them.
The bio-beads in question facilitate sewage treatment. It is perhaps ironic that the very things that treat sewage have ended up polluting the sea and the beaches to such a terrible degree. Surfers Against Sewage, to whom I pay tribute for their ongoing campaigning on all sorts of issues, explained the bio-beads issue. Once released, bio-beads behaved like any other microplastic and can be ingested by fish, seabirds and shellfish. They enter the food chain, carry harmful pollutants on their surface and pose health risks to humans.
There are modern alternatives, such as activated sludge systems. I am not going to go into those now, but the fact is that those systems have not been universally adopted. I understand that there are big costs implications. For example, South West Water still has eight plants that use bio-beads. Understandably, the Government have encouraged the water companies to focus on sewage overflows, which have been polluting our rivers and seas so harmfully, but the issue of how that sewage is treated simply has not been addressed. It is about not just the capacity of the sewage system but the sort of system that it is. That needs to be given more government attention.
In April 2025, the European Parliament, the European Council and the European Commission reached agreement on a long-awaited EU regulation to prevent plastic pellet losses into the environment, because, of course, they are a major source of microplastics pollution. That would address not only bio-beads but nurdles, which are the building blocks of plastic. That is how plastic gets shipped around before it gets made into whatever it is going to be made into. There have been some horrendous spills of nurdles at sea.
The EU has passed this regulation but, post-Brexit, we in the UK will not benefit from it. My question to the Minister is: what plans do the Government have to address nurdles and bio-beads? Will they introduce some similar regulation here so that these plastics are no longer wreaking havoc in our oceans?
Lord Blencathra (Con)
My Lords, I am grateful to the noble Baronesses who have taken part in today’s debate. It is important that we reflect on both the importance of the recycling targets and the current situation we find ourselves in. Only if we reflect on both will we be able to reach our targets sustainably.
This debate was founded on Conservative principles and initiatives—principally, recycling targets, waste reduction, and our pragmatic and conservatist goals. Practically, the Conservatives have a good track record of creating and supporting recycling initiatives. In 2018, the Government of my noble friend Lady May of Maidenhead began funding the UK Plastics Pact, which was created with the aim of eliminating problematic or unnecessary single-use plastic packaging. UK Plastics Pact members now cover the entire UK plastics value chain and are part of an initiative being continued by the current Government. I congratulate them on that.
In 2020, we implemented a single-use plastic ban. The result of that is that our beaches have seen significant reductions in littering, plastic stemmed cotton buds dropped out of the UK’s top 10 most littered items, and we reached our lowest littering level in 28 years. That is tangible evidence of progress being made in achieving recycling targets. I say to the noble Baroness, Lady Bennett, that I would not scoff at these little things—they had a big impact. Getting rid of millions of those little plastic buds was a rather good success.
Last year, the Government set a statutory target to ensure that the total mass of residual waste does not exceed 287 kilograms per person by 2042—residual waste that contains plastic and is sent to landfill or incinerators. This was accompanied by a plastic-specific residual municipal waste target for 2027. If achieved, this would mark a 50% decrease from 2019.
In addition, we introduced the simpler recycling scheme in May last year, requiring firms to separate different types of recycling. The current Government saw the advantages of our approach and have continued and even extended the proposal to microfirms.
The previous Conservative Government were committed to reducing plastic waste within the bounds of our capabilities. We set target upon target; we matched them with regulations and produced guidance to make sure they were achievable. I am glad that the current Government have continued to build on Conservative targets and initiative. I am less glad, however, that they have not based their approach on the same Conservative principles of acting within our means. At the end of the previous Government, unemployment was below 5%. Inflation was at the target of 2%. The fact that the economy was relatively prosperous, compared with the current day, enabled us to take the pragmatic approach that the Government now attempt to copy.
Unfortunately, the Government do not have the luxury of a Conservative-run economy. Regulations such as the simpler recycling scheme work when businesses are doing well. They work when margins are wide enough for businesses to afford the extra costs that come with government intervention. They do not work when the number of payrolled employees is falling by 20,000 a month, as is currently happening, and when businesses—especially small businesses—are hammered with tax increases that they inevitably must pass on to employees or consumers to stay afloat.
I regret to say that it is therefore not the time to implement a host of new regulations that burden businesses with new costs. Extending our simpler recycling scheme is welcome in theory but should be opposed in practice. Not only will it impose an extra administrative burden on microfirms at a time when they can least afford it, but it is overly cumbersome. One misplaced bit of waste and an entire batch of recycling is ruined. That is not efficient enough for a system that aims to eliminate unnecessary plastics. In fact, the Confederation of Paper Industries says that it takes only one dirty pizza box in a whole bin to ruin a whole binload of paper recycling. We have already heard from the noble Baronesses that similarly contaminated plastic bottles can ruin a whole consignment of plastic.
The noble Baroness, Lady Bakewell of Hardington Mandeville, voiced concerns about the speed of implementation. She wants it to go faster. My concern is that the Government are seeking to implement things too quickly. UKHospitality and the British Soft Drinks Association have voiced their concerns about the scale and speed of implementation. They are worried it will be another anti-growth measure brought in by the Government.
It has taken Germany 30 years to slowly build up its deposit return scheme. It was only two years ago, after being at it for 28 years, that Germany introduced glass to it. The current Government are trying to do in three years what it took Germany 30 years to do. I have no criticism of the Government if they must go past their 2027 deadline, because they are trying to do too much too quickly, which will be damaging to industry.
We know that those who create growth and the conditions to implement these green initiatives are those who create jobs and enterprise. They need the right regulations around them—those that do not overburden them and allow them to comply with the plastic regulations that we all want to implement. Individual regulations seem to have merit, but simpler recycling, deposit return and EPR responsibilities, if collectively implemented at the same time, will impose too many regulations at too high a cost. Individually, they are all good things but introducing them all together could be damaging.
The UN treaty and a question about the Government’s position on it have been raised. I am afraid that we will never get a unanimous United Nations treaty on this, and it is not necessary. It will be blocked by the oil-producing countries. I understand that about 130 user countries, including us and others, are looking to reduce plastic waste. The Government should continue to ignore attempts to create a United Nations treaty signed by all and instead work with those 130 countries that want to reduce plastic waste. It is in our power to do so. This is rather like the United States complaining, “Could South America please stop sending all the drugs to the States that our people are using?”, instead of saying to Americans, “Stop using drugs and there’ll be no market for South America to send them to”. If we, the user countries of plastic, use less plastic products, then so what if Saudi Arabia and others want to pump out more oil? They will have no one to sell it to—or they will not be able to sell as much. There is certain logic in what I suggest.
Keeping within our plastic targets is a noble goal and should be adhered to as much as we can, but it must not come at the expense of business and enterprise. I am grateful that the Government intend to continue this goal, but I hope they do so prudently and carefully. I look forward to hearing what reforms and adjustments the Government intend to make to reflect the current economic landscape.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I am grateful for the opportunity to address this important question on the progress that His Majesty’s Government have made towards achieving our plastic recycling targets. I am also grateful to all those who have contributed to the debate, particularly the noble Baroness, Lady Bakewell of Hardington Mandeville, for bringing the debate in the first place.
The Government inherited a situation, as was reflected in the noble Baroness’s contribution, whereby the waste from household recycling rates had stagnated at around 43% to 45% since 2015. We are fully committed to reversing this trend, and building a sustainable future where resources are valued, waste is minimised, and our economy thrives. I am pleased to report significant strides forward through a comprehensive programme of reform. It is worth noting that in 2023 UK plastic recycling rates were 52.5%, which is a good 10.5% above the EU average. We should criticise, therefore, where there are grounds for criticism, but we should also praise our efforts. Collectively, we have made progress.
From January this year, the extended producer responsibility for packaging, or pEPR, came into force. This is a landmark reform, and shifts responsibility for managing packaging waste from local taxpayers to the businesses that produce and use packaging. Producers will now fund the full net cost, approximately £1.4 billion annually across the UK, creating powerful incentives to design packaging that is recyclable and reusable. To improve recycling outcomes across the UK, pEPR will bring in over a billion pounds per year in revenue. That is something that we should celebrate. From the second year of the scheme, we are introducing fee modulation to reward producers using recyclable packaging with lower fees, while charging more for hard-to-recycle packaging. This “red, amber, green” system will drive innovation in packaging design and materials selection, and will drive better behaviour as well.
We have set ambitious material-specific recycling targets through to 2030. For plastic packaging, we aim to achieve 59% recycling by 2027, rising to 65% by 2030: this is a substantial increase from the 43.8% achieved in 2018, and significantly beyond the 55% target that the EU has set for 2030: we expect to meet or exceed that this year.
On 31 March this year, Simpler Recycling came into effect for workplaces with 10 or more employees across England, ensuring consistency in what can be recycled. From 31 March next year, local authorities will collect the same core recyclable waste streams from all households, including glass, metal, plastic, paper and card, and food waste.
By standardising collections, we will reduce contamination—mentioned by the noble Baroness, Lady Bakewell, in her contribution—as well as improve material quality, and provide the recycling industry with confidence to invest. This represents a transformative step forward. The noble Baroness talked about the export of plastic waste, and we recognise that there are a number of factors that have caused issues in the UK recycling sector. We feel that the shift to pEPR will help transform this, as I have already set out. The noble Baroness blamed contamination, but probably the cheap price of virgin plastic is a greater factor in that move away than contamination alone.
On export of plastic waste specifically—following the noble Baroness’s question—I hope that I can provide reassurance that waste exports from the UK are tightly regulated, and businesses must take all necessary steps to ensure that waste exported from the UK is managed in an environmentally sound way. The Environment Agency, as the enforcement body in England, works with our international partners to enforce compliance.
Recognising the particular challenge of flexible plastics, currently collected by fewer than 15% of English local authorities, we are requiring kerbside plastic-film collections from all households and workplaces by 31 March 2027. We have also provided financial support for the multimillion-pound FlexCollect project, which funded local authorities to roll out kerbside plastic film collection trials. This is an ambitious target, but no doubt we must meet it, if we are going to make progress on plastic recycling.
We have also worked with the Food Standards Agency to confirm that it will act as the competent authority for England, Wales and Northern Ireland—working with Food Standards Scotland—to establish an auditing programme for recycled plastic materials in contact with food, further upholding high-quality UK-recycled plastics.
In January 2025, we brought forward legislation to introduce a deposit return scheme for drinks containers in October 2027. The noble Baroness, Lady Bakewell of Hardington Mandeville, asked whether the scheme is on track; it will come into fruition on that date. A new organisation called UK Deposit Management Organisation Ltd will run the scheme. Once the DRS is introduced, UK DMO will be required to collect at least 90% by year 3 of the scheme. International deposit return schemes have seen recycling rates increase to over 95%; this will transform the recycling of plastic bottles while reducing litter.
I recognise what the noble Lord, Lord Blencathra, said about the ambition of the scheme and the length of time to make the progress we expect—I think he cited Germany. There is greater awareness of the need to recycle plastic bottles, and younger generations are more responsible on this. We are learning from the experience of Germany and others to ensure that we can meet the ambitious targets of this scheme in time—so watch this space.
These reforms are already stimulating investment. In February, the Environmental Services Association wrote to the Exchequer Secretary to the Treasury outlining the certainty that pEPR has provided. As a result, its members plan to invest over £10 billion to improve recycling infrastructure over the next decade, creating over 25,000 jobs across the country. This is good news for that industry and for the economy more generally; these are homegrown, green jobs that will provide investment in communities and our environment.
The plastic packaging tax, set at £210.82 per tonne for packaging containing less than 30% recycled content, creates strong incentives for using recycled materials. At last year’s Budget, we announced support for a mass balance approach for chemically recycled plastic, recognising emerging technologies that can recycle a wider range of plastics. These measures form part of our broader vision for a circular economy. Our forthcoming plan for delivering a circular economy in England represents a fundamental reimagining of how we design, produce, use and recover materials right across the economy, including in the plastics and chemicals sector. I note the tremendous progress achieved through the UK Plastics Pact, supported by the Government and led by WRAP, which the noble Baroness, Lady Bakewell, mentioned. Since 2018, member organisations have increased average recycled content in packaging from 8.5% to 22% while reducing problematic single-use items by 55% by weight.
The noble Baroness, Lady Bennett of Manor Castle, spent some time on the subject of reuse. We are committed to transitioning to a circular economy, in which reusable packaging plays a vital part. There is already a strong incentive for reusable packaging through pEPR, as producers pay the disposal cost fees only the first time that reusable packaging is placed on the market. Each reuse cycle avoids additional charges, which creates a strong incentive for businesses to adopt reusable systems. At the end of life, reusable packaging can be offset against fees if collected and sent for recycling by the producer, which further reduces pEPR fees.
Baroness Bennett of Manor Castle (GP)
Before the noble Lord moves on, I would understand if he wanted to write to me on this, but can he indicate what progress is being made at scale on reusables?
Lord Katz (Lab)
I was going to give some examples of schemes for reusables, although I might have to write on the details of the metrics. A good example of a reusable plastic cups scheme already operating in a closed environment setting is the one launched in 2023 at Blenheim Palace in Oxfordshire, operated by Re-universe. Noble Lords may be familiar with it. A customer pays a deposit of £2 per cup for takeaway drinks and, when the cups are returned to designated bins—it is a vending machine-style facility—the deposit is refunded to the customer. The scheme has saved 400,000 single-use coffee cups from disposal since it was launched in 2023. Using these cups just three times renders them carbon negative compared to single-use alternatives. It has saved Blenheim Palace £45,000 annually by eliminating the need to purchase single-use cups.
More anecdotally, when I went to visit my club—Tottenham Hotspur—a couple of weekends ago, it was using a reusable cup scheme. Drinks are given out in plastic cups which are returned and can be washed and reused. It saves money and is good for the planet.
I have run over a little, but I shall endeavour to answer a couple of outstanding questions from the noble Baroness, Lady Miller, and the noble Lord, Lord Blencathra, on the global plastics treaty. Although the meeting to discuss the treaty did not result in agreement on a treaty, the UK joined more than 80 countries in making clear the weight of support for an ambitious and effective treaty. The UK was one of 100 countries to support the global target to reduce the production of primary plastic polymers to sustainable numbers. Of course, the UK will continue to work with its partners in the High Ambition Coalition and other countries to reach an ambitious agreement at the next negotiating session.
Lord Blencathra (Con)
I neglected to say that I should congratulate the Defra officials—that is, the British team, under both the previous Government and this Government—on the superb job they have been doing on the UN treaty. We are regarded as one of the finest advocates for reducing plastic use, and that needs to be put on the record. We did a good job. The fact that we do not have a treaty is not the fault of any British Government or Defra officials.
Lord Katz (Lab)
I am grateful to the noble Lord for that; he has pre-empted my vote of thanks to the negotiating teams. I am glad about, and welcome, his recognition of our intent, the quality of the people involved and the thought we put into the negotiation process.
The noble Baroness, Lady Miller, touched on the issue of Camber Sands and bio-bead spills. This was obviously an awful event. As somebody who enjoys the natural environment of the south coast’s beaches as much as anyone, I thought it terrible to see the impact of this spill. The Government have supported industry-led initiatives such as Operation Clean Sweep to promote good practice in pellet loss prevention.
I cannot speak in more detail about the different kinds of sewage processing that the noble Baroness mentioned. If I recall correctly, a record level of investment from the water companies—around £100 billion—has been secured by Ofwat for the next period. That is exactly the sort of investment, in not just pipes but processing sewage, that will lead to the transition we want to see away from bio-beads and towards sludge.
We inherited years of underinvestment in recycling infrastructure, but the foundations are now firmly in place. Through simpler recycling, extending producer responsibility for packaging, the deposit return scheme and the plastic packaging tax, we have created a comprehensive framework that will drive substantial increases in plastic recycling rates while stimulating investment, creating jobs and supporting our transition to a circular economy. We are committed to ending the throwaway society, delivering on our plan for change and ensuring that Britain leads the world in sustainable resource management.
Litter on Canal Towpaths
Lord Evans of Rainow
To ask His Majesty’s Government what assessment they have made of the impact that litter on canal towpaths owned and maintained by the Canal and River Trust is having on urban communities.
Lord Evans of Rainow (Con)
My Lords, it is a pleasure to open this important debate on an issue that has caused concern for canal users up and down the country. Outdoor recreation is essential for people’s well-being and health. We want more people to get out and about and the tow-paths are fantastic open spaces. Sadly, this summer, many of our tow-paths looked like Birmingham during the bin strike, discouraging people from using them for outdoor recreation. We need to change.
Earlier this year, campaigners began to speak out about the appalling amount of litter on our canal tow-paths. The Cleaner Canals Campaign has been documenting this growing problem on social media. Thanks to its efforts, the media has reported on the problem, with stories appearing on BBC News and in the Sunday Times, the Islington Tribute and the Prime Minister’s own local newspaper, the Camden New Journal. The photographic evidence shows that coffee cups, pizza boxes, Deliveroo takeaway packaging and beer cans have been piling up on the tow-path all summer. This is because people living in the centre of our cities are using our canal tow-paths as recreational spaces and there are no bins.
Residents in Stockton-on-Tees, Hayes, Islington, Manchester and even the Prime Minister’s own constituency of Camden have all raised litter as a huge problem. This is clearly a national issue. I live in Macclesfield. The principal engineer for the canal in my own area, built in 1831, was Thomas Telford. The canal is a great resource for walkers, runners and boaters, located on the edge of the Peak District. Historically, it transported coal, raw cotton, silk and finished goods into Manchester and down to the Midlands along the Grand Union Canal. What has connected Macclesfield to the world is now a vital outdoor space for local people. I use it regularly for marathon training. It is an idyllic and beautiful part of the country.
Until two years ago, the Canal & River Trust, which manages a number of our navigable canal tow-paths in England and Wales, provided bins all along our tow-paths, so that canal users could dispose of their litter responsibly. This is a question of personal responsibility, but it is also incumbent on the taxpayer-funded Canal & River Trust to maintain bins so that people can do the right thing and responsibly dispose of their litter. The trust, which has just welcomed Campbell Robb as its new chairman, says that it has saved £500,000 annually by removing the bins. Additionally, it has claimed that removing the bins has not caused an increase in litter. The evidence gathered by campaigners is clear: litter is a huge problem on urban tow-paths. In urban areas, the Canal & River Trust lets business premises to cafés that operate on the tow-path. Much of the litter that we see is an externality of business activities that directly benefit the trust.
It is important to remember that the trust has a statutory responsibility to manage litter on the tow-paths, as Ministers have confirmed in previous Answers to Written Questions. The background to the trust’s decision to cut bin services is its claim that it does not have the finances to maintain the bins. It is not only cutting bin services but campaigning for additional taxpayer funding from government. However, the £500,000 that the trust says that it has saved is just 1% of the £50 million that it receives from the taxpayer. The amount that it saved from removing the bins across London and the south-east was £250,000. At the same time, the Canal & River Trust’s latest annual report revealed that pay for its executive team has increased by £300,000 since the bins were removed. The CEO’s pay is now over £200,000 a year.
This is the reality. The Canal & River Trust is cutting vital public services while increasing pay for the top team. We must not forget that this is a taxpayer-funded body that receives over £15 million a year. Many people would be shocked by those numbers. What can the Canal & River Trust do? It can bring back our bins. It can start engaging properly with the many volunteers who take time out of their day to do what the trust is legally responsible for—tackling litter. It can also reassess its priorities, putting public services and not executive pay at the top of the list.
Noble Lords may be asking what this has to do with the Government. The Canal & River Trust is not an arm of government, but it does have statutory duties and Ministers should hold it to account for its actions. Can the Minister say what conversations they have had with the new CEO of the Canal & River Trust, Campbell Robb? Has the department raised with him the issue of litter on tow-paths, and what powers does it have to monitor the trust’s performance against any statutory duties? I invite the Minister to tackle this head-on in discussions with the trust to see what can be done to bring back the bins.
In closing, I quote Elena Horcajo who, before going to work, volunteers to pick up litter on our tow-paths to make canals cleaner. In Charlotte Ivers’s excellent article in the Sunday Times, Elena said:
“I’ve spoken to absolutely everybody to find a way to fix this issue … I see the Canal & River Trust doing absolutely nothing … Your whole job is to take care of the canal, so show that you care for the canal”.
We all, especially the Canal & River Trust, have a duty to care for our canals. I hope the Minister will help campaigners like Elena to get this issue resolved.
Viscount Trenchard (Con)
My Lords, I congratulate my noble friend Lord Evans of Rainow on his steadfast support of this important issue and for obtaining this debate today. I first became aware of the growing concern about the amount of litter on canal tow-paths when my noble friend tabled his amendment to the Private Member’s Bill from the noble Lord, Lord Krebs, earlier this year. I agreed with him then, and I share his view that the removal of the litter bins by the Canal & River Trust is hugely regrettable.
We have over 2,000 miles of navigable canals in England and Wales, many of which have tow-paths that allow people to enjoy our beautiful countryside and admire our fascinating canal infrastructure heritage. In urban areas, the tow-path is an even more vital open space as an area where people can get a breath of fresh air in heavily built-up areas. The level of concern among the campaigners who are fighting for bins to be reinstated on canal tow-paths is testament to how much people value their local canal tow-paths.
My noble friend explained the problem clearly in his speech. It really is appalling that the Canal & River Trust is not listening to the concerned campaigners across the country who want the bins put back. I simply cannot understand why the trust is refusing to do the right thing and reverse its decision on this. The fact that campaigners have managed to get the media’s attention, as they have over the past year, shows that this a genuine problem.
My noble friend has spoken about our canals being an eyesore and that piles of litter will discourage people from using our tow-paths. I will focus on the impact that litter on canal tow-paths has on the environment and wildlife. Beside every tow-path is a canal or river, and they are home to a whole host of wildlife, including coots, moorhens, ducks, cormorants and others. All these are negatively affected by litter. When people leave their food waste and plastic rubbish on the tow-path, the wildlife on our canals is bound to be at risk. Whether it is from getting entangled in plastic packaging or consuming dangerous items, litter is a threat to wildlife. The excellent House of Lords Library briefing for this debate, citing the Canal & River Trust itself, confirmed that,
“Plastic and other waste can be ingested by or entangle wildlife and contribute to habitat degradation. Accumulated litter can also reduce water quality and impact bank and reedbed conditions”.
What I cannot understand is, if the Canal & River Trust is aware of the harm that litter and plastic waste does, why has it removed the bins that enable canal users to dispose of their litter responsibly? It makes no sense. Will the Minister please take that point to the Canal & River Trust at the next meeting between Defra and the trust?
In the trust’s annual report for the year ending 31 March 2025 its chair, David Orr, highlighted the contribution of the past chief executive, who stepped down in July. He said:
“Richard’s contribution to the Canal & River Trust becoming an established and admired national charity has been phenomenal”.
In reality, it seems to me that the new chief executive, Campbell Robb, has quite a task ahead of him to restore the trust’s reputation, so damaged is it by its obstinate refusal to reverse its misguided decision to scrap the bins.
The annual report acknowledges that:
“As the nation’s largest canal charity, we benefited from just under three-quarters of a million volunteer hours, with volunteers playing an essential role in repairing and maintaining canals and helping us across nearly all aspects of its work”.
The report proudly boasts:
“In December 2024 we submitted our first Climate Adaptation Report, putting us amongst the major infrastructure providers reporting to government about managing climate risk”.
It also informs the reader:
“We commissioned the Energy Saving Trust to help develop a plan to transition our 400 work vehicles to electric power. The first 25 electrically powered vehicles will be purchased in 2025/26 when we’ll also start installing charging points”.
Does the Minister know how much the trust’s electric vehicles transition plan is going to cost? What is the average age of the vehicles being replaced?
Surely, if the trust is so rich that it can afford to purchase 25 new electric vehicles just to show how good it is at managing climate risk, it must have enough money to continue to provide bins on tow-paths—otherwise it seems to me that its management has a warped sense of priorities. Besides, the trust’s accounts reveal that it derives 23% of its revenues—that is, £52.6 million—from its Defra grant, and a further quarter from its boat licensing fees, which increased by 7.3% to £55 million in the year just ended.
I think I speak for all noble Lords in this debate in saying that we want to see clean canals and clean tow-paths on their banks, with healthy wildlife. That should be a shared ambition. Can the Minister say what consideration the Government have given to this issue? Have they considered taking a more direct approach to the trust to resolve it? Now that the trust has a new chief executive, the Government have a fresh opportunity to put pressure on it to crack down on litter, as its supporters and the wider public all expect it must do. We cannot allow this to go on year after year, with litter piling up on our tow-paths, especially in the summer months. Can the Minister please commit to taking some proper action, so that we do not have to come back again next year to discuss the same problem?
Lord Murray of Blidworth (Con)
My Lords, I shall not repeat at length the points so eloquently made by my noble friends Lord Evans and Lord Trenchard. I will, however, make one or two slightly different points.
As my noble friend Lord Trenchard has identified, litter by canals can have three principal impacts. The first are environmental—the plastic and other waste, as referred to by my noble friend. Secondly, there are the public health and safety risks that arise from the presence of waste, particularly biological waste, dog waste in particular, and those posed by debris building up in channels and drains, which can obstruct water flow and, in turn, damage canal infrastructure, which will probably cost a good deal to correct.
Thirdly, there are the further economic costs in relation to the disposal of litter, particularly litter that has got into the waterway itself. The Canal & River Trust estimates that the costs of dredging are £100 to £200 per cubic metre, depending on certain variables. It is undoubtedly true that the trust has removed a lot of bins, and it would probably say that it is not going to fit any new ones unless the local councils or others are going to pay to collect them. The trust would probably say that that is part of the funding squeeze it says it is experiencing. Avoiding new bins has been its practice for many years, although the policy of removing them is undoubtedly new. Trust staff rarely pick litter but, as has been observed, there is a ready body of willing volunteers who are vital to the administration of the canal network who help in many ways, including through picking litter, as has been identified by my noble friends.
I know that the Canal & River Trust is seeking to rationalise its estate and in particular to sell property that is not core to the waterways, to try to plug what it perceives to be a spending gap. The property that was transferred to the trust included a number of buildings that were some distance from the network. The obvious targets have already been sold, but there are still some more to be sold in relation to the canal network that may raise further money. It must be said that some of these properties are probably better cared for in private hands, because there is not money in the trust to maintain those properties.
So far, it is certainly the case that the trust has not sold any of the family silver of the canal network. However, the trust seems to have an effective investment team that is reinvesting the money for a return, and I suggest that funding should go towards the types of maintenance that we have heard about in the debate. It would certainly be a great shame if the trust felt it was necessary to mothball parts of the network in order to sustain those parts that run through urban areas.
Canals are a vital part of our national heritage and a much-loved outdoor recreational resource. Clean water, clean banks and clean tow-paths are a legitimate and reasonable expectation. Section 89 of the Environmental Protection Act 1990 places a statutory duty on relevant bodies to keep the land they are responsible for clear of litter and refuse. For canals in England and Wales, that duty falls primarily on the Canal & River Trust, and the Government should ensure that it is complying with those statutory obligations.
The Minister may be suffering from déjà vu because he made that very point himself in a debate on 13 June in Committee on the Environmental Targets (Public Authorities) Bill, and he was reminded in that debate of the same point having been made by his fellow Minister, the Parliamentary Under-Secretary at Defra, the noble Baroness, Lady Hayman, who also drew attention to the statutory obligation in relation to the clearing of litter. Can the Minister update us on what has gone on since 13 June in relation to communicating with the trust on actioning its statutory obligations? I suspect that the trust may say that the bins are being cut to save money, but that does not excuse its statutory obligation. Clearly, it should take steps to address this issue and ensure that the litter that we see, particularly in urban areas, is dealt with as swiftly as possible.
Lord Macpherson of Earl’s Court (CB)
My Lords, I will speak very briefly in the gap. First, I should mention that I, too, make regular use of canal tow-paths: I often walk along the Grand Union Canal, either through Camden and Islington or, mainly, from Boston Manor, through Osterley and down to the Thames in Brentford. My experience may be unusual, in the sense that I do not detect a huge amount of rubbish; certainly, in London, the trust seems to be doing rather a good job. I do worry about restoring bins. I think a lot of London boroughs have found that, the more bins you set out, the more people will put rubbish in and around them and thus create a real problem. I therefore have some sympathy for the trust in its endeavours.
Like others, though, I worry about funding. My recollection is that the last Labour Government had already decided to bring the British Waterways Board into co-operative ownership, and it was then the Conservative Government that introduced the trust. But—I speak as a former Treasury official—they did endow the trust with a reasonable amount of money, and it is still open to it to earn fees through effective management of marinas and so on. So, unusually for someone speaking in the House of Lords, I do not believe that throwing more money at the issue is the solution.
I do think that volunteers, as other noble Lords have mentioned, have a critical role to play. Is there anything the Government can do to encourage volunteering? Doing voluntary work around the canals is very rewarding; they are an amazing part of our country’s heritage. So, when the Minister replies, I hope to hear of his commitment to encourage volunteering in this space.
Lord Addington (LD)
My Lords, this is a debate where I think most people will have some input, because they have walked beside a waterway. We all know that, if you are going to walk beside a waterway as a leisure activity and then face piles of rubbish and, let us face it, dog excrement sitting in its lovely little plastic containers draped around the place, along with crisp packets and drink cans, that is not a pleasant experience. We have the Canal & River Trust, which is supposed to make us use the waterways, and, if they are not pleasant, you will not use them—so why is it there? Case closed.
However, is the primary duty to make sure these are navigable waterways or something we can access along the side? I hope the Minister will be able to clarify this. It seems to me that the only argument about this would be that we know we need it to keep the waterways open. Let us face it: bins are not as expensive as lock gates. They do not have the same implications for water management and flood prevention. You name it—there is a whole structure there that we have to manage properly and that the Canal & River Trust will have responsibility for, at least in part. So, to get the best out of this, we have to maintain the paths as something not only accessible but pleasant.
We then come to what the Government should do about this. They could try—I would not recommend it—to say, “Well, this just isn’t our job”. Well, it clearly is, or at least they have some influence there. What are we doing to make sure that access to this is maintained in a usable format for these purposes of recreation, so that it is safe and pleasant? Bins will be used and will occasionally overflow, and it will depend on the time of year you are out there, and on the structure and the access going around it—so there will be no “one size fits all”.
If the noble Lord has found a nice stretch of waterway, possibly we should all get the address. But I have been down once when it was a warm day, and a few people had sat down there, possibly with one of those barbecues or something—the bane of many people’s lives—and a few beer cans. “Is there a bin around here? Sod it, they can clear it up afterwards”. That happens. It will always happen. Any planning structure that does not take account of it is guaranteed to fail.
Can the Minister say what advice the Government are giving or what structure they are putting in place to try to counter this? If volunteers are needed, we know that people like volunteering for nice, big, positive tasks; an incredibly repetitious task tends to get less enthusiasm. What structure should there be for volunteers, and what will be their impact? Clearing a canal, taking out the water, is a big task. You can sit down and have a big celebration at the end. Emptying a bin every third day in the summer, when it is hot and you would rather not be there, is something that you can guarantee will not attract quite the same enthusiasm. What are we doing to make sure that this happens?
I shudder to say—many of my colleagues on my Benches would probably lynch me if I did—that local government should take charge, because it is a very stretched commodity at the moment. What is the interaction with local government to make sure that there is some support for activity taken by the Canal & River Trust? It is basically very simple: if you maintain these products, you will get something good out of it—something environmentally positive and a recreational facility. If you do not, you will have something that may become, if not totally clogged up with weeds with some water running through it, environmentally unpleasant and more difficult to maintain.
Can the Minister give us some idea of the conversations being had within government on how the various bits of government can make sure that this is addressed? If we have commercial activity beside the canal benefiting from it, what share of the heavy lifting on this mundane and irritating but persistent task are they required to do? What encouragement, and indeed use of the law, is there to make sure that they will do it? The is lots of law about collecting and not dumping litter, but it tends to be unenforced. Thus, it is ignored and the problem carries on. Do the Government have any strategies to make sure that this does not happen in the case of our canals and rivers?
I look forward to the Minister’s reply. I probably do not terribly envy this job, but the Government have a series of levers to make the various groups here take some action. It will be interesting to hear just how hard they are being pulled by the Government.
Lord Blencathra (Con)
My Lords, this has been an important and enjoyable debate. I congratulate my noble friend Lord Evans of Rainow on securing it. The fact that concerns have been raised in so many towns and cities across the country is demonstrative proof that there is a problem here that the Canal & River Trust must grasp. I pay tribute to my noble friend’s commitment in raising this issue. He has already tabled a significant number of Written Questions, raised this problem in Committee on the Private Member’s Bill from the noble Lord, Lord Krebs, and asked Oral Questions. His tenacity is to be applauded. I also congratulate my noble friends who have spoken strongly on this issue, and the noble Lord, Lord Addington, on his contribution—he was also spot on in this debate. This is rather a frightening week for me. On Monday and Wednesday, on the crime Bill, the noble Lord, Lord Clement-Jones, and I found ourselves in complete agreement on a number of issues, which we both found rather scary—and perhaps likely to be expelled from our parties for being in complete agreement. I am, however, also in complete agreement with what the noble Lord said today.
The Conservative Party has consistently taken a firm view on litter. In government, we launched the litter strategy for England and increased the maximum on-the-spot fines from £80 to £150 in 2018. Even before that—I think way back in 1992—I was appointed to a joint ministerial working group on litter. I do not think we achieved very much, as every Minister from every different department said, “It’s nothing to do with me; it’s their job to sort out the litter”. Nevertheless, we tried to tackle it way back in 1992.
Littering is, first and foremost, an issue of personal responsibility. It is utterly unacceptable that people feel that it is for someone else to clear up after them. Anyone who litters creates a problem that someone else has to come along and fix. It is a breach of the social contract. That is why we have tough laws, and we need punitive fines for this selfish and anti-social behaviour. That said, we all know that public bins are useful and essential. They provide ordinary people with the opportunity to do the right thing and dispose of their litter responsibly.
That is where I disagree with the noble Lord, Lord Macpherson of Earl’s Court. It is rather naive for organisations to say, “If we put out bins, people will use them. They will fill them up and they might overflow”. The whole point of having litter bins is that they will be used. There is a naive belief that if we do not have bins, people will take their litter home. People will say, “Oh my God, there’s no bin, I must take it all home with me”. That simply does not happen. In most cases, they will leave it behind. I am not sure whether it was the highways department or county councils—certainly in my own patch in Cumbria—that removed litter bins from laybys on A roads in the naive belief that, if we have no litter bins, lorry drivers and others will not dump their rubbish. That is absolute nonsense; laybys are stuffed full of litter.
I am a board member of a community interest company, CleanStreets, and we work hand in glove with Keep Britain Tidy, tackling cigarette litter on pavements. Over the past three years, we have had some considerable success, getting litter down by 18%. We spend a lot on research, and that shows that, in an area where there are smokers and no bins, the pavements are covered in cigarette litter. Believe it or not, if you provide bins, most cigarette users will use them. We also discovered that people do not like those posh bins, where you stub out your cigarette then poke it through the hole, because they feel that their hands will get dirty. They love a bucket full of sand where they chuck the litter. The point I am making is that if you provide bins, people generally will use them. If you do not provide bins, you will get excess litter.
On our pavements, we pay for the public service of having litter bins, but our tow-paths are different. They are a different story, but the principle remains the same. As my noble friend Lord Evans of Rainow told us, the Canal & River Trust receives more than £50 million of taxpayers’ money every year, so the public do pay for the services they receive from the trust. Does the Minister agree that taxpayers should not have those services cut, given that they are paying for them? I agree with my noble friend that many will be shocked to hear that executive pay at the Canal & River Trust is at hundreds of thousands of pounds since the bins were removed. That feels like a misalignment of priorities. Will the Minister tell the Committee his view of that statistic?
I read in a recent article in the Sunday Times that the Canal & River Trust spent £6.7 million on fundraising costs, while raising just £6.7 million in donations. It is probably the only charitable organisation with a net-zero fundraising policy. Have Ministers looked into the financial management of the Canal & River Trust?
As part of our Litter Strategy for England, we established the National Fly-Tipping Prevention Group, of which the Canal & River Trust is a member. Can the Minister please confirm when the group last met and what discussions Ministers in his department have had with the Canal & River Trust in connection with its membership of the group? Does he agree that it is incongruous that an organisation that is a member of the National Fly-Tipping Prevention Group has removed all the litter bins on their tow-paths? For complete transparency, I need to admit that, speaking three days ago on the Crime and Policing Bill, I condemned the terminology “fly-tipping” as too nice a term that diminishes the evil of what is currently happening with massive fly-tipping around the country.
Some of the facts we have heard over the course of this debate, from noble friends and the noble Lords, Lord Macpherson and Lord Addington, have highlighted the seriousness of the problem and the fact that the Canal & River Trust does not appear to be taking the action needed to fulfil its existing statutory duties. Again, I ask the Minister whether he feels that Ministers have sufficient powers to hold the Canal & River Trust to account for its actions. What steps can Ministers take to encourage or require the Canal & River Trust to restore bin provision on urban canal footpaths? If the Minister does not feel that Ministers have the powers necessary to ensure that bins are restored to canal tow-paths, can he commit to reviewing the status of the Canal & River Trust itself so that publicly elected officials can have some control over how the money is spent?
Outdoor space is a much-prized commodity in our ever-growing cities. We need outdoor spaces to be cared for properly so that everyone can enjoy them and rely on them, not least as excellent places to exercise and keep fit. I hope the Minister will listen carefully to everything my noble friend Lord Evans of Rainow has said and all the other comments from my noble friends and the noble Lord, Lord Addington, about the necessity of restoring these bins and keeping our tow-paths in clean and pristine condition.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I am pleased to respond to this Question for Short Debate. I am grateful to all who spoke, particularly the noble Lord, Lord Evans of Rainow, and I join the noble Lord, Lord Blencathra, in paying tribute to his tenacity in pursuing this subject. As the noble Viscount, Lord Trenchard, noted, we all took part in the debate on the Private Member’s Bill on environmental targets. His passion for keeping the canal tow-paths as clean and litter-free as possible was clear then, and I am glad to see that it is as strong now as it was in June. It feels much longer ago than that.
Litter is, unfortunately, a perennial problem across our country. As we have heard clearly today, it has an adverse impact on people’s everyday lives. It spoils our urban space, our rural spaces and the beauty of our countryside, as well as bringing serious risks to our wildlife and, indeed, to public health. Although it is an ongoing problem, the Government are not standing still when it comes to addressing the root causes of litter. As I was saying in the previous debate, we are committed to reducing waste by transitioning towards a circular economy. We have convened a Circular Economy Taskforce of experts to help develop an action plan for England. To combat behaviours driving litter, we will be bringing forward statutory enforcement guidance on both littering and fly-tipping. Or, rather, I join the noble Lord, Lord Blencathra, in calling it—I have forgotten what he said—
Lord Blencathra (Con)
I have forgotten what terms I used on Monday or Wednesday this week. I did not call it fly-tipping. I honestly cannot remember; I could not find it when I was searching for it. It was “criminal waste disposal”, or something like that.
Lord Katz (Lab)
I am happy to join him in that sort of terminology or to call it environmental vandalism, which is a phrase I certainly used when responding to the noble Lord in that debate in the Chamber.
We are modernising the code of practice on litter and refuse in England, and refreshing best practice guidance on the powers available to local authorities, to force landowners and building owners to clear up their premises. That address in part the point from the noble Lord, Lord Addington, about involving local authorities.
The noble Lord, Lord Evans, has focused on the problem of litter on canal tow-paths, particularly those belonging to the Canal & River Trust. He gave examples of complaints, particularly from parts of London where littering has increased noticeably since the trust removed bins from its tow-paths in 2023. I am pleased that he cited my own local paper, the inestimable Camden New Journal. Like the noble Lord, Lord Macpherson, I walk stretches of Regent’s Canal in and around Camden. While I am not trying to evade the point of the debate that the noble Lord, Lord Evans, has brought, I also find that some stretches are no worse than they used to be in terms of litter, and some stretches under the Westway, around the Paddington area, have always been bestrewn with lots of fly-tipping. It is a problem. I observe hotspots, anecdotally, but I will say no more about that.
I challenge the argument that reducing government funding for the trust is to blame for the removal of litter bins. As the noble Lord, Lord Evans, said, the Canal & River Trust is publicly funded, but it is not only publicly funded. The current annual grant provided to the trust—£52.6 million—constituted 22.6% of the trust’s total annual income of £232.6 million last year. The grant is but a contribution towards the trust’s total waterway maintenance costs of around £100 million a year. We have some agency, but not exclusive agency. I will come on to talk about this in a bit, but we are not the only funder of the organisation.
However, as we were saying, the trust is an independent charity, and the Government do not direct its management or operational decisions. Similarly, the annual grant does not stipulate how much is spent on any activity eligible for the funding, including litter management. That is a decision for the trust to make based on operational need at any point.
Having said that, there is close contact between Defra and the Canal & River Trust at all levels. To respond to the noble Lords, Lord Evans and Lord Blencathra, and the noble Viscount, Lord Trenchard, Defra officials meet the trust’s senior management formally three times a year to discuss issues around the use of the grant funding; that may well include litter management arrangements, as appropriate. There is regular contact between the CRT’s chief executive and senior Defra officials. I can also confirm that Minister Hardy is due to meet Campbell Robb, the new chief executive; I do not think that a date has been set for that meeting yet, but it is certainly in train. Moreover, I can commit here that Defra officials plan to raise the issue of litter management with the CRT at their next meeting; indeed, it has commissioned a paper from the CRT on the issue.
It is fair to point out that the trust’s decision to remove litter bins from tow-paths was not taken in a vacuum. In fact, I can tell noble Lords that the trust carried out an assessment of the likely impact of this move prior to making the decision; the results indicated that it would be broadly neutral. A key consideration was that, where the bins are in place—I cite the contribution from the noble Lord, Lord Macpherson, and agree with what he said—they attracted the dumping of litter or fly-tipping around them. The trust noted that, before removal, the cost of servicing the tow-path bins was some £400,000 a year. Since their removal, the cost of dealing with litter on tow-paths has more than halved; the resulting savings are being reinvested in the upkeep of the network infrastructure.
The trust is very aware of its statutory duty, under Section 89 of the Environmental Protection Act 1990, to keep the land for which it is responsible clear of litter and refuse. It is for the trust to work out how best to comply with that, taking account of the standards in the statutory code of practice on litter and refuse. The annual grant provided by the Government to the CRT is a contribution to support its network and infrastructure management, including via a range of eligible activities that are enumerated in the grant agreement; litter management is included in that list of activities. However, the grant agreement does not specify how funding should be allocated. I stress that that is a decision for the trust to make, based on operational need at any given point.
I contend that it is evident that the trust continues to take littering seriously, with its staff and volunteer teams—I assure the noble Lord, Lord Murray, it is both staff and volunteers—regularly engaging in clean-ups. The trust has some 5,500 volunteers across the country who carry out a range of activities, with 2,800 of them in waterside and conservation tasks that include litter picking. In respect of the question asked by the noble Lord, Lord Addington, on the impact of volunteers and volunteering activity in the CRT, it is worth noting that those numbers have increased by some 20% in 2024-25, as compared to 2023-24: the figure for 2023-24 was 4,566 but, in 2024-25, it is 5,473. It is an active target for the CRT to increase the number of volunteers and the range of volunteer activity in which it engages; that is part of its work as a charitable organisation.
These activities are carried out in work parties on a weekly or monthly basis. They are, as I have said, very much in line with the trust’s charitable objectives and its original policy intent: creating greater community involvement in the running and care of local canals, as part of the transfer from the old British Waterways Board to the CRT more than a decade ago. Last year, 300 trust volunteers gave more than 34,000 hours of their time in London. A litter sweep of the nine-mile Regent’s Canal takes place at least once a week; I say in response to the noble Lord, Lord Macpherson, that that may explain why, in our experience, it is in a good state. This is a full day’s work for four operatives and generally fills a workboat to capacity with seven-tonne bags of litter and larger items. The trust’s contractor also undertakes around 60 fly-tipping clearance tasks each month in this area alone.
The noble Lord, Lord Blencathra, and others have discussed the status of the funding of the CRT. It was taken out of public ownership by the former Prime Minister David Cameron as part of the big society experiment, and I want to stress that the Government’s funding is but a part of its total income. It is on a journey to self-sufficiency. We are limited in our time, so we cannot go into the detail of that decision, but we have to accept that that means the CRT receives money from a range of sources, so it is not simply for the Government to tell it what to do. I say to the noble Lord that government cannot take more powers without taking more control, and I am not entirely sure that that is what this Government want. I would certainly be surprised if the Benches opposite were calling for nationalisation of the CRT, but perhaps we can all be surprised.
The trust has increased its fundraising income by nearly 20% over the last two years. It generates annual income through its boat licence fees and mooring charges of around £55 million; commercial arrangements with utility and water companies generate around £45 million, and returns on its investments and property holdings amount to around £52 million.
We are running out of time, so I will conclude. Fully addressing littering and dumping rubbish involves changing people’s behaviours. Improving awareness of the impacts and consequences of littering through educating and encouraging behavioural change is something that we can all play a part in, along with local authorities and, in this case, the trust. I hope that I have provided assurances that the CRT continues to take seriously its responsibilities for tackling littering on its tow-paths, notwithstanding the removal of litter bins. The Government are also taking forward a number of initiatives to strengthen nationwide action on littering so that we can all better enjoy our surroundings, be they in the city, in the countryside or on canal tow-paths.