Arrangement of Business
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I am obliged to remind the Committee that, if there were to be a Division in the Chamber, we will adjourn for 10 minutes. It seems highly unlikely.
Pension Schemes Bill
(1 day, 7 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Noakes
“(c) able to demonstrate that they deliver investment performance which exceeds that achieved by the average of all Master Trusts which hold an approval under section 28A in respect of a main scale default arrangement.”Member’s explanatory statement
This amendment allows Master Trusts which deliver good investment performance to be excluded from the scale requirements.
Baroness Noakes (Con)
My Lords, I will speak to my Amendments 91 and 95. I thank my noble friend Lady Neville-Rolfe for adding her name to them. Having had a little detour into asset mandation in the last group, we now return to scale. My Amendments 91 and 95 relate to master trusts and group personal pension plans, respectively, returning to the theme of size not being everything. They are intended to exempt from the scale requirements those schemes that deliver investment performance which exceeds that achieved by the average of all master trusts or all group personal pension plans.
We debated the general theme of size not being everything on the last day of Committee. I firmly believe that we should not let an obsession with size squeeze good performers out of the market. The Minister’s arguments on that day, despite protestations to the contrary, show that the Government have an obsession with size that overrides their professed desire for better outcomes for savers. If they really care about outcomes for savers, they should not be fixated on structural issues such as the size of assets under management, because good investment returns are not the exclusive preserve of schemes that reach the magic £25 billion of assets. The evidence for the Government’s policy cited by the Minister last week merely indicates that there is a correlation between size and returns achieved. That evidence, however, categorically does not demonstrate that good returns are obtained only by those which pass a size threshold.
At the heart of this debate is the problem that the Government are trying to use this Bill to force pension schemes to divert investment resources into things that the Government think will improve the UK economy, while at the same time claiming the objective of good outcomes for savers. I remind the Minister of Tinbergen’s rule: if policymakers wish to have multiple policy targets, they must have an equal number of policy instruments under their control. One instrument—mandating the size of pension provider—will not achieve the separate targets of improving savers’ outcomes and increasing UK productive investment without risking policy effectiveness and reduced transparency and accountability. By ignoring Tinbergen’s rule, the Government are actively inviting policy failure in this area.
I also strongly support Amendment 98 in the names of my noble friends Lord Younger and Lady Stedman-Scott. Innovation will not thrive in the pension sector if it has to pass arbitrary size tests. We should do everything that we can in this Bill to promote innovation. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I, too, have a number of amendments in this group and I will address my remarks mainly to them. Amendments 99 and 106 recommend removing the specific figure of £25 billion from the Bill and replacing it with a figure to be determined by the Government nearer the time, I hope, after detailed consultation.
On the last day in Committee, when we debated Amendment 88 on small pots, in the name of the noble Baroness, Lady Noakes, which proposed a monetary limit of £10,000, the Minister rejected the amendment on the grounds that
“the Government are not persuaded that it is sensible to hardwire the cap in primary legislation”.—[Official Report, 22/1/26; col. GC 188.]
Quite right. The same applies here: my amendment follows exactly that principle. I am concerned about the risks involved in tying primary legislation to a fixed monetary sum.
First, a change in market conditions could render it inappropriate. Secondly, such a large sum risks stymieing the development of newer companies and gives an exceptional competitive advantage to those providers already of the required scale. There is no evidence—I have been searching—to suggest that big is always best and there is certainly no academic proof that £25 billion, £10 billion or any other number is the right dividing line between successful funds and failing funds.
Newer entrants with an interesting approach to member service, digital engagement or innovative investment may well take time to break into the market, but just because they have not reached what the Bill determines is the magic number should not mean that they are forced to close, which is what the Bill would do, in effect.
The Minister said that consolidation and scale will mean
“better outcomes for members … lower investment fees, increased returns and access to diversified investments, as well as better governance and expertise in running schemes”.—[Official Report, 22/1/26; col. GC 202.]
That may well be the case for many, but deliberately disadvantaging innovation and putting up barriers that damage recent or newer entrants, regardless of their merits, runs counter to those intended outcomes over the longer term. Using collective vehicles, for example, run by already established experts such as closed-ended investment companies, can replace the need for in-house expertise at each of the big pension funds. Indeed, that option is already available but is being discouraged by the Bill.
As the noble Baroness, Lady Noakes, said, a correlation is not the same as a causative impact. Putting £25 billion into the Bill creates a big issue with some of the newer companies that will fall into the vacuum between the new entrant pathway, which does not start until a scheme is established after 2030, and the transitional pathway, which requires this fixed £10 billion—I could have tabled amendments on that, but £25 billion is the same principle—if they have not reached that level.
What is worse—I tried to indicate this last week—is that, although I know that the Government want to inject certainty by including these numerical figures, unfortunately they are also blocking the progress and potentially forcing the closure of a number of schemes that have digital-first methodologies right now but have not been established long enough to reach the required scale and to which the market to raise growth capital is currently shut. Who would lend money to a newer company that may or may not reach the scale required by the particular date?
The Government need to think again about the merits of using a fixed number, as the Minister mentioned last week. I would be happy to meet officials or Ministers to go through the rationale that has had this damaging effect in the market. I hope that we will not give a hostage to fortune by specifying a particular number in the Bill that may or may not prove to be right, wrong or damaging. I hope that the Minister will help the Committee to understand whether the Government might consider this principle.
Baroness Neville-Rolfe (Con)
My Lords, I support Amendments 91 and 95 in the name of my noble friend Lady Noakes, to which I have added my name. I apologise for not being able to contribute to the Committee’s discussions on Thursday because of competing business on the Floor of the House. I have read Hansard and I should record that I share the reservations expressed about mandation, a subject on which I have received many well-argued requests and emails. I commend the arguments that have been well put by my noble friend Lord Younger of Leckie on the amendment from the noble Baroness, Lady Bowles. I particularly dislike powers delayed into the future. If the Government decide that they need to legislate later, they can bring in another Bill that the House can scrutinise in the light of contemporary evidence.
I turn to the amendments in this group, so well argued by my noble friend Lady Noakes. I am uneasy, as others are, about the overemphasis on creating size and scale in the Bill: £25 billion is a big fund and, as my noble friend Lady Altmann said, it does not seem to be well evidenced. It is a Labour trend that needs to be treated with some scepticism. We see it in local government reorganisation, in rail nationalisation and now in the proposals for the police. I know from my business experience, which noble Lords know I always come from, that mergers of any kind always have substantial costs and that you need smaller, pushy innovators to keep sectors competitive. This might be contentious, but Aldi was good for Tesco because it kept us on our toes—and even better for the consumer, the equivalent of the saver in this case. The point is that reorganisations of any kind always have costs and only sometimes have benefits.
We have seen the growth in recent years of money purchase funds that are almost entirely digital, and they have brought beneficial competition to the market. We risk eliminating the next generation of innovation, real value creation and indeed British unicorn funds, generated by competition, if we leave the Bill as it is.
We must not allow good performers to be snuffed out by the movement to bigger schemes. That is why we are asking the Minister to look at excluding master trusts and group pension plans that deliver good investment performance from the scale and size requirements. Performance is, after all, what matters to those saving for a pension. Size, scale and growth are not everything, popular though they tend to be with the fund managers who benefit. Returns matter more, but the Bill at present rather underplays them in favour of scale. My noble friend Lady Noakes’s amendments are just what is needed, and I look forward to hearing how the Minister is going to solve the problem that she has identified.
Lord Fuller (Con)
My Lords, I will speak to Amendment 99 in particular but I generally associate myself with all the amendments in this group, including Amendments 95 and 98 in the names of my noble friends.
As we have heard, there is no conclusive evidence that bigger is best when it comes to investment management. Of course there are some large funds that do rather well, but, as I explained on a previous day in Committee, within the Local Government Pension Scheme it is the smallest fund in the Orkneys that has outranked the performance of all the 88 other schemes in the LGPS, and there is something to be said for that. It has never changed its investment manager, and there is a lesson there.
In my experience, the best returns are to be made in investing in companies where you either buy the product or know the management—not so that you can tap them for inside information, of course, but because it hardly ever pays to invest in bad people. I also like to buy when prices fall because, let us face it, buying high and selling cheap is never a good investment strategy. But there is no evidence at all that scale in and of itself is good. There is plenty of evidence that it is worse. As they say, the larger they are the harder they fall, and small ones are more juicy.
Viscount Trenchard (Con)
My Lords, I will not go into too much detail. I should, because I was not here last week, declare an interest, in that I am a director of a Guernsey-based, open-ended protected cell company and a London-listed, closed-ended investment company. Neither of them begins to approach the necessary size to qualify under the scale criteria that this Bill introduces.
I agree entirely with the points made by my noble friends Lady Noakes, Lady Neville-Rolfe and Lord Fuller and the noble Baroness, Lady Altmann. Scale is nothing to do with this. I find it quite extraordinary that the Government assume that big is good and small is bad. All big funds were once small: they started with nothing and built up. There is also some evidence that, if you get really big, you become a big complacent and do not have to be quite as sharp as you do when you are making a small fund bigger and more successful and establishing its reputation.
Interfering with the fiduciary duties of pension fund trustees in this way is risky, bad, potentially dangerous and unlikely to be in the interests of the pension beneficiaries, so I strongly support all the amendments in this group. I do not think that the minimum size of a master trust should be specified in the Bill. Trustees will have their own criteria for the maximum proportion of funds that they may own in any one fund, and for the maximum percentage of their funds’ assets that may be invested in any one fund. I think these are better ways to achieve the obvious need to reduce risk, and pension fund trustees are the right people to deliver them.
Lord Ashcombe (Con)
My Lords, I remind the Committee of my interest as an employee of Marsh, which owns Mercer, a pension and investment advisory management company.
I did not intend to speak on this group but I do not believe that financial size is the be-all and end-all. In my world, working for a very large insurance broker, we think we have advantages in the marketplace. However, it would be remiss of me to ignore not only the smaller operations but the many small boutique entities that are experts in a very narrow and small field. It is very unlikely that they will ever become one of the large operations. Although size can be useful, the smaller experts are essential to the marketplace and, you might argue, keep the larger operations honest.
I do not believe this picture is anything different from that of the pensions industry. These amendments address the benefits of the new and smaller entities being a necessary part of the market, and should be welcomed.
Lord Palmer of Childs Hill (LD)
My Lords, I thank all noble Lords who have contributed to this debate. As we know, this group addresses the use of scale, as measured by assets under management or monetary value, as a determinant of scheme quality.
The noble Lord, Lord Fuller, gave the example of the Orkney trust. I ask myself: what is the reason? Is it size? Personally, I think it is the calibre of the single malt whisky. Then we go to the other end of the country, to Guernsey. Is it because trusts are at the extremes of the country that causes the good benefits, or is it something else? You can always look for a reason: it could be size, location or anything else—or, indeed, the quality of the whisky.
We accept that scale can bring efficiencies, but there is a strong question over whether size alone is a reliable proxy for value. Amendments 91 and 95 recognise that some master trusts and group personal pension schemes deliver strong investment performance despite being below prescribed thresholds. Amendment 98 similarly acknowledges that innovation and specialism do not always depend on scale, location or whatever else.
We are also concerned about the rigidity of fixed monetary thresholds in the Bill. Amendments 99, 101, 106 and 108 in the name of the noble Baroness, Lady Altmann, are concerned about the rigidity of fixed monetary thresholds in the Bill. These amendments probe whether the figures chosen are evidence-based and future-proofed, or whether they risk being outdated—that is the point—as the market evolves. It is not cast in stone, and we should not try to see it as such.
Amendments 101, 104 and 108 in the names of the noble Baroness, Lady Altmann, and others, raise an additional concern: the risk of mandating common investment strategies. Diversity of approach is a strength of a pension system. Forcing schemes into uniform strategies risks herding behaviour and systemic vulnerability. My question to the Minister is this: is the Government’s objective genuinely better member outcomes—which I believe we all want—or prioritising administrative simplicity at the expense of innovation, competition and resilience? All the amendments in this group tackle this problem, and those in the name of the noble Baroness, Lady Altmann, particularly stress that. I hope we will continue to push these through to the next stage of the debate on this Bill.
Baroness Stedman-Scott (Con)
My Lords, today’s groups build directly on the issues explored in last Thursday’s debate. That discussion was both stimulating and constructive, and the contributions made, particularly on mandation, highlight the value of the scrutiny that this Bill continues to receive in Grand Committee. On this group, in the interests of brevity—I am sure that will please the whole Committee—I shall keep my remarks focused on the amendments in my name and that of my noble friend Lord Younger of Leckie. A number of significant and related issues have been raised by other noble Lords, and we will wish to return to these later today. We will listen carefully to the Minister’s response to the points made on this group.
Amendment 98 would introduce a clear and proportionate innovation exemption for relevant master trusts under Clause 40, so that schemes delivering genuinely specialist or innovative services are not automatically required to meet the scale threshold simply because of their size. We have been challenged today not to be obsessed with size. We recognise the policy aim of improving outcomes through scale. However, as I said, size is not always a reliable proxy for quality or value: there are master trusts that are smaller by design yet deliver strong member outcomes through innovation, whether in investment approach, governance or engagement with particular workforces. As the Bill is currently drafted, such schemes risk being forced to consolidate or exit, not because they are failing members but because they do not meet a blunt asset size test.
Amendment 98 provides a sensible alternative route, recognising that innovation and specialisation can also deliver high-quality outcomes. This amendment simply ensures that size alone is not determinative. I hope the Minister will see this as a constructive amendment that supports innovation and choice while remaining fully aligned with the Bill’s objective of improving outcomes for savers.
Amendment 102 is, again, a probing amendment. Clause 40 gives the Secretary of State the power to determine by regulations the method for calculating a master trust’s total assets for the purposes of this provision. That is a potentially significant power, because the way that total assets are defined and measured will determine which schemes fall within scope and which may benefit from exemptions.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
I am grateful to noble Lords who have introduced and spoken to amendments. Clause 40 delivers the Government’s commitment to ensure that DC workplace pension savers benefit from the advantages that flow from scale and consolidation. It establishes a clear, measurable threshold and a framework centred on a single main scale default arrangement—MSDA—so that governance and investment decisions can be applied consistently across large pools of assets. This approach is integral to securing better member outcomes, improved access to productive investment and stronger in-house capability.
We had a preliminary conversation about all this on Thursday, but I know that not all noble Lords were there so, before I dive into specific points on the amendments, I will pick up a couple of the headlines. In response to the noble Lords, Lord Ashcombe and Lord Palmer, the UK’s workplace pension industry accounts for more than £2 trillion in assets, serving more than 16 million savers who have been automatically enrolled and are not engaged in pension savings. It is particularly important that these assets are working as hard as possible to provide better saver returns and security in retirement and, to do that, scale and provision really matter.
Evidence suggests that there are direct benefits derived from scale; they include better governance and economies of scale, whereby greater size reduces average cost per member and creates the ability to move investment in-house, which reduces investment costs in turn. It also enables access to a wider range of assets, including diversification and the ability to invest directly in assets rather than having to be part of a pooled fund. With improved bargaining power, schemes can negotiate lower investment fees, improving net returns.
There is a lot more that I could say, but I have said quite a lot of this before. I will say just a word just about the level of scale and why it is £25 billion. As I explained last week, our evidence shows that, across a range of domestic and international studies, a greater number of benefits can arise from a scale of around £25 billion to £50 billion of assets under management, including investment expertise, improved governance and access to a wider range of assets.
That is supported by industry analysis, showing that schemes of this size find it easier to invest in productive finance. International evidence shows that funds in the region of £25 billion invest nearly double the level of private market investment compared to a £1 billion pound fund. We selected the lower band, but there is further evidence that demonstrates that the greater the scale, the greater the benefits.
I can point to a range of studies. Analysis from Australia’s pensions regulator found that funds with around £25 billion were able to spread costs over their membership, keeping fees lower. Pensions UK reported that schemes with £25 billion to £50 billion of assets have considerable governance capability and find it easier to invest directly. The Conexus Institute again found in favour of funds of £25 billion to £50 billion. We have been transparently reporting the evidence via the impact assessment and the previous publication of Pension Fund Investment and the UK Economy, which outlined the evidence.
The noble Lord, Lord Fuller, will have to forgive me; I am not going back to LGPS. We spent two entire days in Committee on the first 10 pages of the Bill and I am not going back there. We can do it on Report. He is not going to stand up; I have not responded to a word he has said yet. Give me a moment. The noble Lord’s point is about scale. The evidence shows that larger schemes are better placed to invest—
Lord Fuller (Con)
The Minister invites me to stand up. The only reason I mentioned the LGPS is because the LGPS funds have been put into pools of £25 billion to £50 billion. We have a real economy experiment of what might happen if these provisions are enacted on the rest of it. The noble Baroness said that there are lower costs of investment. Then she went on to say, just now, that it is transferred with in-house teams. You will therefore have to substitute an externalised team for an in-house team at a scale of £25 billion. You are trying to compete with Fidelity, which has £900 billion in its team. You are setting these people up to fail; you have got the wrong scheme. You need the ability to go to the largest fund managers with the hugest assets under management, not try to recreate the City in aspic on footprints of £25 billion by duplicating all the procedures, staffing, HR and everything else. You have the B team and, guess what, they are always away on holiday in the first two weeks of August when the last three market crashes have happened and there is no one to answer the phone. That is the problem. You are saving one risk and applying the other.
Baroness Sherlock (Lab)
My Lords, I made these arguments at some length on Thursday. I have made them again now. The noble Lord disagrees with them; I can tell from his tone. He can read Hansard and pick up the relevant bits with me if he would like to.
Let me come back to the amendments. I will start with Amendments 91 and 95 from the noble Baroness, Lady Noakes. I thank her for introducing them with her customary clarity and brevity. These would create an exemption from the scale of requirements for master trusts and GPPs that can demonstrate investment performance exceeding the average of schemes that meet the scale conditions. I recognise the intent to reward strong performance, but obviously I am concerned the proposal would undermine the Government’s objective, which is a market of fewer, larger, better-run schemes, where economies of scale deliver sustained benefits to savers.
I should clarify the point about objectives. The Government’s primary objective is saver outcomes. I want to be clear about that. While I am here, I say to the noble Lord, Lord Palmer, that this is not about administrative simplicity but about member outcomes. At the centre of our policy is the drive for better membership outcomes. That does not mean a simple scheme, but one that has strong governance and is well run, including strong administration, because scale supports the scheme to have the resources and the expertise to do this.
To respond to the noble Baroness, Lady Noakes, in considering scale in the pensions landscape today, we have all shapes and sizes of schemes, in which value for members is important. We know that performance can be delivered across different sizes of scheme, but scale changes the landscape. Schemes that have scale will have the tools to deliver on value and performance in a way that a small scheme will not be able to in this future landscape. That is because scale enables greater expertise, efficiencies and buying power than a small scheme. That is the landscape we need to deliver for members because we want better outcomes for them. In considering the issue, it is therefore important to focus on the future landscape, the market at scale, and not the current landscape. In our view, there is not sufficient evidence that other approaches can deliver the same benefits for members and the economy.
On the specifics of the noble Baroness’s amendment, there are also some concerns around the impact; it could create an unstable landscape if we were to focus on the performance at any point in time. Of course, the intention for any exemption is that it is a permanent feature of the scheme and is not subject to regular assessment. As we all know, past investment performance is not a guarantee of future success. If we went down this road, there would be times when exempted sub-scale schemes found that they were no longer delivering investment performance that exceeds the average of those at scale. That is not stable for members or employers, and does not support their interests.
Amendment 98 proposes an innovation-based exemption from the scale requirement for master trust schemes offering specialist or innovative services. I agree with the noble Baroness, Lady Stedman-Scott, that innovation really matters; that is precisely why the Bill provides for a new entrant pathway so that novel propositions can enter the market and scale responsibly. But creating a parallel innovation pathway as an alternative to scale would dilute the fundamental objective of consolidation and risk maintaining a long tail of small schemes, with fragmented governance and limited access to productive investment.
I should say a few words on competition. Actually, I might come back to that.
Amendments 99 and 106 from the noble Baroness, Lady Altmann, would remove the £25 billion threshold from the Bill. We believe the threshold is a central pillar of the policy architecture. It has been set following consultation with industry and government analysis of the emerging evidence, to which I referred earlier, on the point at which the benefits of scale are realised. We believe that this is a key policy decision that should be in the Bill. We also believe, as the noble Baroness indicated, that it is very important that there is certainty for industry on this threshold at the earliest possible point. Putting the £25 billion on the face of the Bill assures industry that it cannot be changed without full parliamentary engagement.
I know the noble Baroness wants me to reassure her that this matter is open for further discussion. I regret that I will have to disappoint her. The Government are committed to this and have put it in the Bill for the reasons I just explained.
Baroness Altmann (Non-Afl)
If the intention is to maintain these specific limits in the Bill, I hope that consideration will be given to an existing new entrant pathway—rather than only a new entrant pathway from 2030 onwards—and some kind of innovation pathway, as suggested by my noble friends Lord Younger and Lady Stedman-Scott, so that schemes that either are already in existence or will come through over the next few years, if they are able to do so, will not be forced out of business or prevented even beginning.
Baroness Sherlock (Lab)
The noble Baroness makes an important point about innovation. We recognise the importance of a proportionate approach to scale, which is why we created the transition pathway. I know that the noble Baroness thinks the number or scale is not right, but that is the purpose of the transition pathway: to give schemes that can reach scale within a reasonable time the chance to do so.
On innovation, although we want to see a market of fewer, larger pension schemes, the policy still encourages competition through allowing innovative schemes, such as CDCs, to develop and by enabling brand new innovative schemes to enter the market via the new entrant pathway. I know the noble Baroness is not satisfied with that, but that is our answer to her question: the new entrant pathway.
Amendment 102 from the noble Baroness, Lady Stedman-Scott, would delete the regulation-making power on what values can be counted towards the scale threshold in order to probe how assets will be calculated. The market contains varied and complex arrangements. It is both prudent and necessary that affirmative regulations, consulted on with industry, set out the assets that may be included or adjusted when calculating the total value in the MSDA, with a focus on assets where members have not made an active choice.
Let me be clear on that point: the choices that will be made here are the ones that will create the big fat wallet, if you like, which will in turn drive the benefits of scale. The intent is that the regulations will focus on the default arrangement that the vast majority of members will be in. We want to see members of the same age who join the scheme at the same time get the same outcome, but the regulation-making power enables practical realities of how the market operates now—especially at the margins. We know that there is a variety in practice in the market, so engagement and consultation are crucial.
Amendment 104 from the noble Baroness, Lady Stedman-Scott, would remove the regulation-making power to define “common investment strategy” and to set evidentiary requirements for the scale condition. I understand that the aim here is both to probe this power and to require the Government to define “common investment strategy” prior to Royal Assent. A common investment strategy will help to deliver a single approach to maximise the buying power of a scheme in terms of fees and the diversification of its investments. We think that is crucial because allowing, for example, multiple potentially divergent strategies within the MSDA would maintain fragmentation and drive away from the consolidation that we want members to benefit from.
Baroness Noakes (Con)
My Lords, I thank all noble Lords who took part in this debate, which has demonstrated that there is unanimity on this side of the Committee on scale not being the most important thing—in direct contrast to the Government’s dogged attachment to scale.
We will probably return to innovation next week, so the Minister will not escape it, but I do not think the Government yet understand how innovation works and what it takes to scale a business: the timescales involved, the way you need to raise finance during the growth of a business, and the impact that what they have put in the Bill will have on those processes. We will need to explore that in much more detail. The noble Baroness, Lady Altmann, who wished to do so, is absolutely right, because I do not think the Government really understand what is involved in this area.
On “big is best”, which we on this side of the Committee certainly do not subscribe to, the Government said that the primary objective was savers’ outcomes, but a couple of minutes later the Minister said that the objective was consolidation. Is there a hierarchy of objectives in this Bill? It is not clear to me that there is. A few sentences away, she talked about the benefits that derive from scale, but the Government seem to have closed their mind to this: if you can get equivalent benefits without scale, why should you not?
That was immediately followed by the Minister saying that when you are in a £25 billion-plus fund, you put double the money into productive finance. There we are into the real objective of this Bill: to funnel savers’ money into productive investment. I refer the Minister to my comments on each policy objective needing a policy instrument and getting into terrible trouble when you try to get one policy instrument to meet more than one objective. I was reminded of this by one of her Back-Benchers, who kindly pointed out that clear rule, which is well evidenced. I will not disclose his identity, and he is not going to get up and say it, but I really think the Government should look again at how they are using the instruments in this Bill to achieve what are clearly multiple objectives, not disclosed in a hierarchy and not even acknowledged as being potentially in conflict. We will clearly not progress any further in Committee, but the Minister should be in no doubt that this will be a feature of our discussions on Report. I beg leave to withdraw.
Baroness Altmann
Member’s explanatory statement
This probing amendment seeks to ensure that this legislation does not exclude Master Trusts or other pension funds from offering members the chance to invest in default pension arrangements which are more suited to their own circumstances, including age, retirement intentions, health conditions, plans for future retirement income options etc.
Baroness Altmann (Non-Afl)
My Lords, I will speak to all the amendments in this group, which are basically on exactly the same topic. I hope that the Minister understands the spirit in which they are all intended. I also hope that the Committee will be minded to support them. In a way, they follow from my Amendment 108 in the previous group, which sought to get away from the idea that one size fits all in pensions and that a common investment strategy is a recipe for success for either a group of members or all members.
My concern is that the approach to auto-enrolment pensions hitherto was to assume that there is a standard fund that is suitable for all classes of members, which can then be safely invested in by everybody. Of course, it is easiest for providers to have a common investment strategy or a common investment approach in the default fund, but enforced uniformity does not mean that all groups of members are served well.
These amendments seek to anticipate the possibility that some of the large pension providers, either existing ones or, I hope, new ones, will follow an approach in which they have a number of default funds that can be suited to different classes of member on the basis of three or four basic questions that might be relevant to their circumstances. I hope that we get to a position—I know some of the new providers intend to do this—where the pension provider does not look just at your chronological age, for example, and make an assumption about what investments suit you, but asks you whether you intend to stop working at a particular date, whether you have other pension funds and what your state of health is. Just those three basic questions can be critical to the success of an investment strategy for that group of members, but they are all lumped together at the moment.
In addition, it would be helpful to use the Bill not to close down the option of a scheme offering a number of default funds. At the moment, the danger is that everybody thinks that we have to get to £25 billion, even if it is by a range of different approaches. I know that there is an option potentially to aggregate assets, but my amendments seek to ensure that, if the £25 billion number stays in the Bill—the noble Baroness unfortunately seems intent on that being so—the Bill directly allows for a number of default funds to be added up.
I say that because we have seen in recent years the “lifestyling” approach, for example, in which all members are put into one default fund with a lifestyle approach, or a target date fund approach. This has let members down significantly. Although it is not widely reported, I am sure that many other noble Lords have had emails or letters from people coming up to retirement in 2022, who had a pension fund statement that told them they were in a safe fund and the size of the pension they could expect to receive in a few months’ time. By the time they came to, let us say, later in 2022, however, their so-called safe fund had lost up to 30% of its value. Suddenly, they were unable to stop work because they had been put in an approach that was not suitable in the end or did not do exactly what it said on the tin in its results.
If the current approach is that, just because you are 50 or 55, no other questions are asked and you are in a big default fund that says you will be stopping work within the next five to 10 years, and therefore you should not be invested in high-risk assets, which is another name for higher expected return assets, but should be moved into low-risk assets, which is another name for low expected return assets, you are not necessarily being provided with a suitable option. One size fits all does not work if, for example, the member is 55 or even 60, has no intention of stopping work in the foreseeable future, perhaps has a guaranteed defined benefit pension somewhere else that they can rely on, or, at the other end of the scale, is in very poor health and may have to stop work soon, so should be in a different pool. I hope that the Minister will understand that the intention is to anticipate innovation in that regard. I feel that, at the moment, pension companies are not even asking members what their intentions or circumstances are, or even the basic three or four questions.
I declare an interest as an adviser to Cushon, which is looking to introduce an approach of that nature. Other innovative companies also intend to improve member engagement by reaching out to members and trying to put them in segregated pools, rather than just one big pool. The Bill, using just one default fund, or a standard fund, as I prefer to call it, will preclude that kind of development, which could be in members’ interests, could have avoided the catastrophes that we saw with the current one-size-fits-all approach and could encourage providers to explain more clearly what exactly is happening to the members’ money in the investment pools that they are in, which currently does not take place—low risk is not explained, nor is high risk. Therefore, I hope that this principle can be put in the Bill. It is a very minor change, to talk about more than one default fund for a provider, rather than saying “the” default fund. I beg to move.
Lord Fuller (Con)
My Lords, I will speak only briefly, because the noble Baroness, Lady Altmann, has put her finger on it. There is a choice here—the choice of the members. If we believe that the members have a say in their own retirement, having saved for it, so that they are stakeholders in that respect, they have a choice, or they are forced into groupthink. It is masterfully explained. The nonsense that gilts are low risk is a fantasy. We heard how the move into gilts resulted because the markets moved into a 22% loss in the underlying asset value.
But the groupthink in the pensions industry is that you have to go to gilts as you approach retirement. As you approach retirement nowadays, you have 30 years to go—30 years of growth. Yes, I do not deny that you need something in gilts and bonds, but there is still a long way to go. Especially in an inflationary period, as we have been through, cash, cash-like and bond/gilt-like investments will not be enough.
Lord Palmer of Childs Hill (LD)
My Lords, I congratulate the noble Baroness, Lady Altmann, on having a group of nine amendments all on her own. We normally share groups rather than have them all on our own. This group considers how scale requirements interact with default pension arrangements where most savers remain invested. I have listened to the debate and, having spent a large part of my career in accountancy and advising clients, I know that the trouble is that the majority of clients are not expert enough to know what they should do with their pension. They seek advice from various organisations on what they should do. We should make sure that the quality of the advice they get suits their position in life. As other noble Lords have said, we are concerned about the overly rigid scale test, which could unintentionally narrow choice within defaults and push schemes towards one-size-fits-all designs.
Amendment 97 highlights the importance of allowing defaults that reflect members’ differing ages, health conditions, retirement plans and risk profiles. Amendments 97A to 101B probe—this is the point—whether the authority can take account of the combined value of assets across multiple default arrangements, rather than assessing each in isolation. Without this flexibility, schemes that offer well-designed cohort-based defaults could be penalised simply for tailoring provision.
Amendments 168A and 170A reinforce this point, seeking to ensure that schemes are not excluded from the market for moving beyond crude uniform defaults. Our concern is that defaults should be designed around member needs, not regulatory convenience. I hope the Minister will explain how the Bill avoids pushing schemes towards uniformity at the expense of suitability and long-term outcomes.
I hope the Minister does not regard the series of amendments in this group as combative. They are meant to try to help pensioners or future pensioners. It is wrong if the Government look for a simple process but do not look at the benefit for the people concerned. I think it was the noble Lord, Lord Fuller, who talked about what happens in gilts and the like. I come from a period in the chartered accountant profession when you always went into gilts in what you thought were the last few years of your working life. Now, things have changed. We have to look at what you do and when you do it, and those things depend on the people involved.
I hope the Minister will see that these amendments are trying to say that things should not be too prescriptive. They are not against what the Government are trying to do, which is look after people. But are doing it on a one-size-fits-all basis, which does not work in the real world that we are in. I hope the Government go back and think about this a little more so that, when we come to Report, we can be a little more innovative.
Baroness Stedman-Scott (Con)
My Lords, I wish to speak briefly in support of this group of amendments in the name of my noble friend Lady Altmann. She has once again demonstrated her expertise and the value that she brings to our scrutiny of these important issues. Most importantly, she explained the spirit in which these amendments were tabled.
Throughout our proceedings on this Bill, a consistent theme across the Committee has been the need for proportionality in the steps we are taking on scale and value for money, and for definitions that are sufficiently comprehensive to reflect how the market actually operates in practice. I do not intend to repeat the points already made by the noble Baroness or ask the questions she has posed, but we will listen carefully to the Minister’s response on these issues.
Clause 40, as drafted, risks applying the scale test in an overly narrow and mechanical way by requiring the regulator to assess each default arrangement in isolation without regard to the wider context in which it is offered. That approach is not necessarily proportionate; nor does it reflect the economic reality of how master trust providers operate. This amendment would allow the regulator to take into account the combined assets of several non-scale default arrangements offered by the same provider. In doing so, it would not dilute the principle of scale; rather, it would ensure that scale is assessed in a comprehensive and realistic way, focusing on the resilience, governance and efficiency of the provider as a whole.
That matters because, without this flexibility, we risk forcing consolidation for its own sake and potentially requiring well-run, well-performing defaults to be wound up simply because they fall on the wrong side of an arbitrary threshold—even where the provider clearly operates at scale overall. This amendment therefore speaks directly to the principles that we have already raised in Committee: that regulations should be outcome-focused rather than box-ticking, and that they should avoid unintended consequences that could undermine member confidence rather than enhancing it. For those reasons, I believe this is a sensible and proportionate refinement of Clause 40, and I hope the Minister will give it serious consideration.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness, Lady Altmann, for the clarity of the exposition of her amendments, and I thank all noble Lords who have spoken. I will try to explain what the Government are trying to do here and then pick up the specific points that the noble Baroness raised.
To maintain the policy on scale and secure its benefits for pension scheme members, there will need to be centralised decision-making over a large pool of assets. The Bill sets out that this will be delivered by the main scale default arrangement, which is subject to a common investment strategy. I recognise that the noble Baroness has raised concerns about the common investment strategy being able to accommodate different factors, but I will tell the Committee why it is there. A key purpose of the policy is to minimise fragmentation in schemes and to have a single default arrangement at the centre of schemes’ proposition. Fragmentation is an issue, not because it is a piece of government dogmatism but because it is in the interests of members that those who run their schemes have a big wallet at the centre to give the scheme the buying power and expertise they need, because that enables them to deliver on the benefits of scale.
When we consulted, the responses told us that there were schemes with hundreds of default arrangements that have been created over a long period of time and that this is a problem. Members in these arrangements get lower returns and pay higher charges, which some consultation responses also told us. It is important that we deal with that fragmentation and that we improve member outcomes.
However, the Government also recognise that there are circumstances where a different default arrangement is needed to serve specific member needs only—for example, for religious or ethical regions. These will be possible through Chapter 4 but they will not count towards the main scale default arrangement. If the scale measure encompassed multiple default arrangements or combined assets, as these amendments would allow, it would not drive the desired changes or support member outcomes derived from the benefits of scale. Following consultation, there was clear consensus that scale should be set at the arrangement level as that is where key decisions about investments are made. Simply put, centralised scale is the best way to realise benefits across the market for savers.
The pensions industry has told us there are too many default arrangements in some schemes, and that fragmentation—
Baroness Sherlock (Lab)
I am going to answer the point and then come back, if that is okay. Just give me another two minutes.
That fragmentation does not benefit savers but can lead to increased charges and lack of access to newer, higher-performing investments. The Government are committed to addressing this fragmentation, which exists predominantly in DC workplace contract-based schemes.
To prevent further market fragmentation, Clause 42 allows for regulations to be made to restrict the creation of new non-scale default arrangements. To be clear, this is not a ban nor a cap on new default arrangements. There will be circumstances where they will be in saver interests and meet the needs of a cohort of members. As the noble Baroness says, this is not a one-size-fits-all approach.
On the point about choice, auto-enrolment has moved many members to save for the first time. The vast majority enter the default fund and do not engage in their schemes. Those who do can choose their own funds, and these measures do not interfere with that, but they are a minority, and these measures aim to support the millions who do not engage.
The noble Baroness is right that one size of default arrangement does not fit all, but the Bill requires a review to consider the existing fragmentation and why multiple default arrangements exist. That will inform us of which default arrangements should continue and the characteristics they possess that deliver better member outcomes or meet a specific need.
Baroness Altmann (Non-Afl)
The Minister has raised many points that I would like to ask further about, if that is okay. The fragmentation applies to legacy schemes: the contract-based schemes, as she says. These are the old personal pension-type arrangements—SIPPs, GPPs and so on—which were developed a long time ago. Typically, the more modern schemes have just one default, with one investment approach that is meant to suit all members. It is that approach that I hope and expect to be refined as we move forward so that there can be different types of default fund for different types of member. I do not anticipate that they will be people choosing their own. It will be on the basis of information that the provider seeks from its members, using that to send them down a slightly more appropriate investment route for their money. That does not stop the providers having large pools of money that they allocate members to, but it would not be in just the one central fund, as I say. Of course that is easier for the provider, but I think the providers owe members a different duty, which is to try to tailor a little more for those who do not choose, based on wider circumstances than just their chronological age, what is best for their investment and pension outcomes.
Baroness Sherlock (Lab)
I have heard the noble Baroness’s explanation and understand the point she is making. The point about choice was not actually directed at her; it was directed at a colleague who mentioned choice and I was trying to explain that this is not about choice. I accept the point the noble Baroness is making that this is for those who do not engage.
If having a single default fund were simpler for the pension schemes, and that is what drove this, we would not have the number of defaults we have at the moment. We have huge numbers of defaults. I accept that many of those are the product of history, but the key is that we have to consolidate. To be clear, as I have said, we are not banning or capping the new default arrangements, but we want to ensure that any new arrangements meet the needs of members, so any new non-scale default arrangements will have to obtain regulatory approval before they can accept moneys into them. We have said that we are going to consult and we need evidence to look at whether anything else should be included, and that will come up when we consult.
I understand the point that the noble Baroness is making and I am happy to reflect on it, but we need consolidation and we need to consult to make sure that we have allowed for the right things. With that reassurance, I hope she feels able to withdraw her amendment.
Baroness Altmann (Non-Afl)
I thank the Minister for her constructive engagement on these issues. There is something slightly missing here because, if one consults before this approach enters the market, one will not know that that might be the appropriate approach. Indeed, the providers that one would consult will not necessarily recommend more than one approach, because that does not necessarily suit their business interests, and members will not know what it is because by definition they are not particularly engaged.
I am trying to address this issue and I very much appreciate that the Minister is engaging constructively and has listened carefully. Perhaps we can continue this at some point. This would be a very small change to the Bill; it would not stop the unsuitable dispersion of numerous different legacy funds from being consolidated, but it would potentially stop these new approaches entering the market. That is the concern. I beg leave to withdraw my amendment.
Baroness Sherlock
Member’s explanatory statement
This amendment corrects an error.
Member’s explanatory statement
This amendment seeks to align provisions in the Bill with the Mansion House Accord definition used for UK private markets to mean the underlying assets.
Baroness Bowles of Berkhamsted (LD)
My Lords, Amendment 111A would add the words
“as determined by the underlying assets in any structure or fund”
after “qualifying assets” in new Section 28C(1). Its purpose is simple: to ensure that when measuring investment in private markets via collective investment vehicles, we look at the underlying assets, not the wrapper in which they are held; we look at where the money goes, not the route it takes.
In debates on the Bill, I have been tracing the consequences of the Government’s approach to private markets. On the first day, I set out the competition concerns inherent in the Mansion House Accord as transposed in the Bill. Last Monday, I explained the role that listed investment companies play in transparency and valuation of private equity, as recognised by the Bank of England and the ICAEW. On Thursday, I explained the range of infrastructure that they fund and the regulatory changes that are designed to make investment easier but that have not been given time to work.
Today, I turn to the policy history of how long-term asset funds, LTAFs, were developed as an open-ended alternative to the closed-ended listed investment company and what was and was not agreed. The LTAF was developed through the productive finance working group, co-chaired by the Governor of the Bank of England, the chief executive of the FCA and the Economic Secretary to the Treasury. It was supported by senior representatives of the PRA, pension schemes and investment managers. It was an unusually high-level and accelerated process, driven in part by the then Chancellor’s public commitment to have the first LTAF launched within a year.
Precisely because of that elevated framework and compressed procedure, it is all the more important that we adhere to what the working group actually agreed. The record is remarkably consistent. Across almost every meeting of the working group, the minutes recognise that there were two established routes for accessing long-term illiquid assets: the new LTAF and the long-standing listed investment company. From the very first steering committee meeting on 26 January 2021, the minutes record that
“closed-ended funds facilitate investment in productive finance assets … Some members believed existing fund structures, such as investment trusts, were sufficient … several members suggested … adapting existing vehicles, such as investment trusts, rather than developing a new open-ended fund structure”.
At the first technical expert group meeting on 12 February 2021, the Investment Association stated explicitly:
“The proposal does not intend to replace existing structures”.
At the technical working group on 20 April 2021, it was confirmed that the LTAF was to
“complement, rather than replace, existing structures”.
Later in the process, on 4 May 2021, the steering committee agreed:
“The LTAF is not the only structure for investment in less liquid assets”.
The final road map, published in September 2021, reinforces this, stating:
“There are a range of ways to invest in less liquid assets, and all of them play important roles”.
In practice, for DC schemes and retail investors, those routes are the LTAF and listed investment company. Nothing in this policy process—not the minutes, road map, FCA contributions or the IEA’s own presentation—ever suggested that Parliament should legislate a single wrapper preference or exclude the listed wrapper route to private assets. On the contrary, the working group recognised two parallel structures capable of holding productive finance assets. It was explicit that the LTAF was to complement not replace the existing one.
When the public policy process is this clear, it is difficult to see why a private agreement should be allowed to override it. Yet the Bill does that, and the Minister says it is because of the Mansion House Accord. The effect of the Bill is therefore threefold. It is anti-competitive because it removes a functioning structure from the market and mandates a single route for accessing the same underlying assets. It is anti-policy, because it contradicts the working group’s own record—a record developed by the Bank of England, the PRA, the FCA and the Treasury, all of which recognise that listed investment companies already perform this role and were never intended to be displaced. It is anti-transparency, because it excludes the only structure where private assets are accessed, with all the benefits of public market transparency, daily market valuations, regular auditor disclosure and shareholder engagement, including AGMs and independent boards to hold managers to account.
The consequences do not stop at the DC default funds. Last night, one of the most senior asset management figures emailed me to say that this is not just a matter for pension schemes. Excluding listed investment companies will widen discounts to net asset value, with direct detriment to retail investors.
Next, let us examine the evidence of the origin of this exclusion. At Second Reading, the Minister said,
“we have aimed to stick closely to the scope of the Mansion House Accord, which itself is limited to investments made by unlisted funds”.—[Official Report, 18/12/25; col. 938.]
That is at best an approximation and, in substance, not true. There is no such definition in the accord. It points to underlying assets, explicitly defining that:
“UK private markets means where the underlying assets are based in the UK”.
It knows the difference between an asset and a wrapper.
The Minister’s letter after Second Reading says that the exclusion is to support the Mansion House agreement. That is even more approximate and perhaps an admission that it is not in the accord after all, but something done afterwards and now being justified in its name.
Treasury officials have said in meetings that the pension funds want it, but there is no public record of any such request. If the accord itself does not say it, the Government are doing it on the basis of something else. I must ask again: who asked for this exclusion? Where is the written evidence? It is not in the accord, any consultation or any published policy. It is not in the working group minutes, the road map or any regulatory framework on LTAFs or listed investment companies by the FCA. I have elaborated publicly available evidence showing that the policy process recognised two parallel structures. What written evidence can the Minister show the Committee that supports the exclusion of one of them? If the Government are relying on private representations, Parliament is entitled to know what they were and who made them.
I have written evidence from DC default pension providers and Mansion House Accord signatories, representing a substantial majority share of the auto-enrolment market. They say that the exclusion of listed invested companies was not something they agreed to or understood to be part of the accord. Some have been going back through their meeting records to check. Others have said that they had not realised that this was a provision in the Bill; that they are neutral on the wrapper; and that they thought that the exclusion meant only listed equities, not investments within a wider listed investment company wrapper, and would be against that exclusion. Others said that they use listed investment companies and would not want this.
I have my evidence and more is still coming. Where is the Government’s? This exclusion was devised within government without a proper evidential basis, or it is being done to please interests that have not been put on the public record, or Ministers have simply not appreciated the implications of what is being proposed. None of those possibilities is a sound basis for legislating away a long-standing structure with a clear history of positive economic outcomes.
It is explained as suitably targeted guard-rails. These are the kind of guard-rails over which you are thrown to the lions. We are being asked to legislate a single-wrapper mandate on the basis of assertions not supported by the public record. If the Government wish to exclude a structure that the Bank of England, the PRA, the FCA and the Treasury itself recognised as valid, they must show the evidence.
My amendment would restore the position that the working group adopted: what matters are the underlying assets, not the wrapper in which they are held. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I support every word that the noble Baroness, Lady Bowles, has said. I hope the Minister understands that this series of amendments is designed, once again, to help the Government.
The policy of excluding the very asset classes that the Government want to promote and want pension funds to invest in, just because they are held in a particular form, seems irrational. The process used to introduce it, as the noble Baroness, Lady Bowles, outlined, was materially flawed. There was a lack of consultation and the policy is directly contrary to some previous ministerial Statements and to the stated policy intention. I cannot see how any reasonable person could argue that excluding these companies is a legitimate means of achieving the stated policy objective. The decision goes against common sense and defies economic logic. It opens pension scheme members up to less choice, higher long-term costs and, potentially, new risks such as gating or frozen investments.
Amendments 122 and 123 are designed specifically to ensure that, if a closed-ended investment company holds the assets in which the Government want pension funds to invest as a result of the Mansion House Accord, they can do so. Amendment 123 includes these as qualifying assets under the Bill and Amendment 122 talks about ensuring that, if securities are
“listed under Chapter 11 of the UK Listing Rules or the Specialist Fund Segment that provide exposure to the qualifying assets”,
they too can be included.
These amendments would not change the intentions of the Bill or the Government’s policy; they would reinforce them. If schemes cannot invest in listed securities, we will exclude the closed-ended funds that hold such assets, for no obvious reason other than, perhaps, the fact that the pension funds or asset managers that are launching the long-term asset funds will obviously prefer to have their own captive vehicle under their direct control, rather than those quoted freely on the market.
I would argue that, by excluding investment trusts and REITs as qualifying assets, we will fetter trustees’ discretion as to what assets they can invest in and how they can do so. I do not believe that the Government want to do this. I think this is an unintended consequence of wanting not to allow schemes just to say, “Well, I invest in Sainsbury’s and it has a lot of property in the UK, so that’s fine”. But this is a very different argument. I hope that the time spent by this Committee on these funds will prove worth while and that this dangerous, damaging exclusion can be removed from the Bill.
If the Government want—as they say they do—pension schemes to invest in UK property, the amendments on this topic would allow them to choose to hold shares in Tritax Big Box, for example, which is a listed closed-ended fund. It is a collective investment REIT, not a trading company, and UK regulators, the stock market and tax regulation recognise its functions as a fund. It is just like a long-term asset fund, but it is closed-ended instead of open-ended. Under the Bill, pension funds would not be able to invest in it, even though it holds precisely the type of private assets targeted by this section of the Bill.
The amendments would maximise schemes’ choice of investable assets within the target sectors. This would widen competition, which should bring downward pressure on asset management costs; it would reduce the risks of inflating asset prices, by channelling demand into fewer investment pathways; and it would enhance potential risk-adjusted returns. There is simply no reason why master trusts and other pension schemes should object to being given additional freedom to make investments to meet the requirements of these reserve powers. Why are we discriminating against a particularly successful British financial sector offering a proven route to holding the assets in which the Government want pension funds to invest? I have not seen any argument to say that, if we include these amendments, pension funds would have to invest in these companies, but they could use them if it suited their needs.
I look forward to the Minister’s answer. I know and accept that she is in a difficult position, but I have not heard a coherent answer as to why we are going down the route that we are. Tritax Big Box is just one example. It owns and develops assets worth £8 billion and controls the UK’s largest logistics-focused land platform, including data centres, which the Government designated as critical national infrastructure in 2024. Tritax Big Box announced that its data centre development strategy will be partnering with EDF Energy, which manages the UK’s nuclear power, to develop such infrastructure. It is remarkable that such a homegrown success story should be excluded from the opportunities available to pension schemes.
This sector has reinvented itself over the past few decades, from being a holder of diversified quoted equities to managing real illiquid assets. It is generally recognised that it is an ideal structure for holding illiquid assets—it has renewable assets, wind farms, solar farms and National Health Service GP surgeries. All these elements of the economy need significant investment and pension funds could be using their assets to support them. Surely that should be part of the Government’s intention for the Bill. I hope that this possible error in the Bill can be recognised and corrected so that we can move forward without further discussion on this topic.
Lord Davies of Brixton (Lab)
The noble Baroness, Lady Altmann, called on the support of reasonable people. I think of myself as a reasonable person, and I support her. I find the Government’s position on this totally inexplicable. I say in all honesty to my noble friend the Minister that the reasons given so far for these provisions do not in any way explain their position. It is inexplicable.
In my view, it is possible to make an argument that closed-end funds of this sort are more suitable than some other sorts of investments for pension investment because of the possibility of there being additional liquidity. That makes it even more inexplicable. A further problem is that pension funds could invest in an investment company that is not a closed-end fund but holds these investments. However, if it decided to float on the stock exchange, it could not do so because it would lose all the pension fund investments. So there is not logic at all to the Government’s position. There may be some logic, but we have yet to hear it.
Lord Remnant (Con)
My Lords, I very much support the amendments in this group, tabled variously in the names of the noble Baronesses, Lady Altmann and Lady Bowles of Berkhamsted. They all seek to ensure that closed-ended funds, in the form of UK-listed investment companies, are not disqualified from being eligible to invest in the private market assets targeted by the Bill, alongside open-ended funds. I say this not only as a private investor in both types of funds but as one who has sat on and chaired boards responsible for managing both types of investment.
They each have their relative advantages and disadvantages, which I will not enumerate here, but it is in fact investment companies that, over the long term, tend to have lower fees and better performance records, to the advantage of their investors. It seems perverse to exclude them from the Bill, seemingly solely on the grounds that they have listed status, when the nature of their underlying investments is identical to those held by open-ended vehicles. Indeed, investment trusts are particularly suited to the type of investments envisaged by this Bill and the Mansion House Accord—namely, assets that are essentially illiquid. Investment companies hold well over £100 billion-worth in private assets, and unlisted infrastructure and renewables have been among the fastest growing segments in recent years.
As the noble Lord, Lord Davies of Brixton, indicated, it is this ability more effectively to offer liquidity in illiquid assets that particularly distinguishes closed-ended vehicles from their open-ended cousins. It is in times of stress, whether within the investment vehicle itself or more broadly due to general economic or financial conditions, that some of the more unfortunate investment failings occur. They tend to relate to liquidity or lack thereof, they have happened in the recent past and they have occurred in open-ended structures.
Noble Lords will need little reminding of the demise of the Woodford Equity Income Fund. Suffice to say that, in two years, it lost two-thirds of its value; it became increasingly and disproportionately reliant on unlisted investments, which could not be sold to meet investor redemptions; and it was suspended in June 2019, leaving investors unable to access their money.
Noble Lords may be less familiar with the travails afflicting open-ended property funds. Property is an asset class specifically targeted by the Mansion House Accord. The writing was on the wall for them ever since they suspended in the depths of the Covid crisis. That triggered funds in the sector to begin to close down, given the evident problems with liquidity that resulted in a fundamental mismatch in the demands of investors against the liquidity of the underlying asset. These investors are mainly not faceless institutions but retail investors—the same individuals who save for their pensions. The only way in which the managers of the fund can mitigate these liquidity issues is by holding substantial cash holdings, which cuts across its investment objectives and dilutes returns. Once an announcement to close is announced, properties are likely to be sold at fire sale prices into difficult markets, and investors may have no access to their money for well over 12 months.
Institutions running open-ended funds attempted to address these liquidity problems by establishing the long-term asset funds referred to earlier, but their structure is still such that they cannot solve the problem but only rather crudely mitigate it through having more restricted dealing windows than the daily dealing offered by more traditional open-ended funds. They have been authorised by the FCA only since 2023 and are unproven. They are described by one prominent investment platform as high-risk investments recommended for experienced investors who have already accessed the more traditional investment options, yet they qualify under this Bill to the exclusion of investment companies which have proved their worth for over 150 years. I do not understand the rationale for this.
Lord Fuller (Con)
My Lords, the noble Lord, Lord Davies, found the Government’s position inexplicable such that these amendments have become necessary. I can understand that. The point is that the Government do not—they do not understand finance. Perhaps they should have had a few more prawn cocktails before the election; they might have got some learning inside them. This group demonstrates that there is ignorance in this Bill about investment, asset classes and asset allocations.
New Section 28C(5) treats private equity as if it is just one class, but it is not. That is why I welcome Amendment 121, specifically proposed new paragraphs (f) and (g), which would lay out the appropriateness of scale-up capital and quoted and unlisted companies.
There is no doubt that you can make a lot of money in private equity. High risk leads to high rewards; the big hitters can and do make money. The early backers of Revolut turned a million into a billion, as the FT reported last week. On that basis, everybody should be having a go. What could go wrong? We all know that, in many cases, companies get loaded with debt and dividends are extracted; we have ended up with serial bankruptcies in the casual dining sector, for example, and Claire’s has gone bust twice in the last four months. I am not exactly sure the Government should be mandating this sort of thing by statute.
Putting that to one side, I have some experience through my membership of the Norfolk Pension Fund in private equity investment. I have been a board member since 2007. There are some big firms in this space; HarbourVest might be a name familiar to noble Lords but others are available, as it says in the adverts.
To participate in this space, you typically enter a 10-year commitment for quite a lot of money as a fund. You provide the fund manager cash certainty. He can go ahead and acquire smaller firms within the fund. You do not pony the money up front necessarily; it just needs to be available when the fund manager calls you to chip in. By and large, the fund manager finds the firms and invests that money, typically over the first four years of the indicative 10-year period. They then grow and nurture those firms until they can be sold for a profit—unless they go bust in the meantime, which many do.
At some point, 10 to a dozen years later, after all the surviving companies have passed on and the fund closes, all the money is returned to the pension fund. It is a well-trodden path and a proper asset class. This is why proposed new paragraph (g) in Amendment 121 is so important. These opportunities should be available to pension funds, but the Bill as currently constructed excludes them. It is madness. This is not what we need as a nation.
We need to go further. We need to be able to step in and help those founder-owned companies, together with local business angels, their families and friends, to get to the stage where HarbourVest can have a nibble. We need to make the small nibbles into larger fish. It is the scale-up issue. The exam question here is to identify good founder-led businesses locally and grow them. I declare an interest; I have been a director of New Anglia Capital Ltd, which was public sector, 100% owned by councils in Norfolk and Suffolk for the purposes of investing in early stage companies, taking them from a glint in the eye to the stage at which private equity might get involved. My goodness, it is hard. We have invested in bright prospects in life sciences, engineering, medical technology and clean energy. It is high risk, and I am told it carries the opportunities to make big returns—not that we have found them yet. But at least it carries that opportunity. As a nation we need to turn those cygnets into swans and those small acorns into mighty oak trees. The Bill should aim to do that, but it does not.
The conflict is with the press release that accompanied the Mansion House announcement. The Government’s own presser boasted:
“More than 50 scale-up businesses have signed a joint letter to the Chancellor welcoming the reforms as a ‘significant milestone in ensuring British institutions back British businesses at the scale required to generate growth, employment and wealth’”.
I feel sorry for the people who signed up that letter, because they were suckered. The Bill does little to scale up businesses and it has taken the noble Baroness, Lady Altmann, to put proposed new paragraph (f) into the amendment so that the Government’s own press release can form part of the law.
Forcing everything to be large, as we have heard, makes it harder to get the boost for start-ups. Amendment 121 would remedy this. We need it not just for those start-up businesses: the founders, their families and friends and all those angels—important though they are. We need it for our provincial cities and market towns. These are the places with the gems that need to grow in pursuance of
“UK growth assets rather than wider overseas assets”,
as it says in the Member’s explanatory statement.
Without this amendment, Mansion House is a mirage. By this Bill the Government have done a confidence trick on those who believed there would be a flow of capital to these businesses. It is not too late to change course. I echo strongly the comments of the noble Baronesses, Lady Bowles and Lady Altmann, and note that we are in Committee. I think this Committee is doing valuable work, because it has set up the conversations we all need to have between now and Report. The Government can reflect on what they are trying to achieve and recognise that it will not be achieved by the Bill as currently constructed. We may then need to have a compromise that will actually do the thing we are here to do, which is to invest in Britain and have better, more secure futures for people who want to invest in pensions, not Lego sets or Star Wars characters.
Baroness Noakes (Con)
My Lords, I am grateful to the noble Baroness, Lady Bowles of Berkhamsted, for her forensic analysis of both the Mansion House Accord and the ways in which there is a significant mismatch between what is in that accord and what is in this Bill. I confess that I was not aware of the extent of that, so that analysis is really important; I look forward to hearing what the Minister has to say.
I would like to comment on whether investments in listed securities should be excluded; here, I will part company with many of my colleagues on this side of the Committee. I understand why they are excluded. It is because buying and selling shares in listed companies is just buying and selling a financial asset. The buying and selling of shares in UK-listed assets does nothing to put money into the UK economy.
However, the way in which this measure is drafted probably goes too far, because it is possible that companies could raise new capital—for the purpose of investing in some of the things where the Government wish to encourage new investors—and that those vehicles could be listed. The way in which the Government have approached this is possibly too extensive, but I certainly do not think that the simple buying and selling of financial assets aligns with getting productive investment into the economy. As the noble Baroness, Lady Altmann, knows, I do not think that is a valid objective for this Bill—certainly not one that should override the need to get good returns for savers.
Baroness Altmann (Non-Afl)
I apologise, but I think that the noble Baroness’s characterisation of the impact of buying and selling, as she said, on listed companies—whether that puts money into the economy, to use her words—does not necessarily apply in the way she believes, particularly with closed-ended investment companies.
One of the problems with which they have had to deal, because of the regulatory constraints that we have been trying to help the Government address over the past two or three years, is that if people are selling these closed-ended investment companies but no one is buying them, they sink to a discount to their net asset value. At that point, they cannot invest in new opportunities; they cannot IPO or raise new capital. That has had a dramatic impact on the economy because these closed-ended companies, which were investing significantly in infrastructure across the country, have been unable to raise new money to invest in new opportunities.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
If this is an intervention, it is quite a long one. I ask that interventions be kept brief; they should just be questions, really.
Baroness Noakes (Con)
The noble Baroness knows that she and I disagree on this subject. I hold to my view that the buying and selling of shares is simply the exchanging of financial assets.
Baroness Bowles of Berkhamsted (LD)
May I intervene so that I do not have to take up time later? I cannot see the difference between the follow-on funding that you get with a listed investment company, if you have an IPO, and the subsequent follow-on funding rounds. With an LTAF, you have initial fundraising and subscriptions. With a listed investment company, you buy and sell on the market. With the open-ended LTAFs, you have redemptions, purchases and flow matching. If you are watching the money, those are equivalent processes.
Baroness Noakes (Con)
If the noble Baroness, Lady Bowles, had listened, she would know that I said I thought what the Government were doing had gone too far, because there were instances where there was a necessary flow between the raising of funds and that flowing into new investment.
A number of noble Lords on this side of the Room have been talking as though this Bill stops pension schemes investing in listed assets or investment companies. It certainly does not; it merely says that they do not qualify if asset mandation is introduced. We ought to be concentrating on whether this is a valid policy objective—the Minister knows that I do not subscribe to that—to get money out of pension funds and into the real economy. We then ought to concentrate on which flows achieve that; certainly not all flows of buying investment trusts or other listed vehicles will achieve that.
Viscount Younger of Leckie (Con)
My Lords, I rise to speak in strong support of a number of carefully drafted amendments tabled by the noble Baroness, Lady Bowles, and once again ably supported by the noble Baroness, Lady Altmann. I will also speak to my Amendment 127.
Baroness Sherlock (Lab)
That was fun. I will have a go at explaining the Government’s narrative on this, which is an alternative to the narrative that has been established so far. I will then try to go through and answer as many of the questions as I can.
Let me start by stating the obvious. The amendments relate largely to the part of Clause 40 that determines which types of investment are deemed as qualifying assets for the purpose of meeting any asset allocation requirements were we to use the power. I stated in my opening reply to the noble Viscount, Lord Younger, that he said “when” mandation comes in, but it is very much “if”; we do not anticipate using this power but, if it were used, we would need to be clear about what happens next.
The most relevant provisions are found in new Section 28C(5). This broadly limits qualifying assets to private assets. The subsection provides by way of example that qualifying assets may include private equity, private debt, venture capital or interests in land—that is, property investments. It also clarifies that qualifying assets may include investments and shares quoted on SME growth markets, such as AIM and Aquis.
In contrast, according to this subsection, qualifying assets may not generally include listed securities, defined as securities listed on a recognised investment exchange. That approach reflects the aim of the power to work as a limited backstop to the commitments that the DC pensions industry has made, which relate to private assets only.
That brings me to the subjects of the amendments from the noble Baronesses, Lady Bowles and Lady Altmann. I start by reminding the Committee of the rationale for this approach, because it stems from the Mansion House Accord. The accord was developed to address a clear structural issue in our pensions market. DC schemes, particularly in their default funds, are heavily concentrated in listed, liquid assets and have very low allocations to private markets. That is in contrast to a number of other leading pension systems internationally, which allocate materially more to unlisted private equity, infrastructure, venture capital and similar assets.
The reason the Government are so supportive of the accord is that it will help to correct that imbalance and bring the UK into line with international practice. A modest but meaningful allocation to private markets can, within a diversified portfolio, improve long-term outcomes for savers and support productive investment in the real economy, including here in the UK.
The reserve power in Clause 40 is designed as a narrow backstop to those voluntary commitments. For that reason, any definition of “qualifying assets” must be clear, tightly focused on the assets we actually want to target and operationally workable for schemes, regulators and government. That is the context on the question of listed investment trusts and other listed investment companies.
I recognise the important role that investment trusts play in UK capital markets and in financing the real economy. Pension schemes—as the noble Baroness, Lady Noakes, pointed out—are, and will remain, free to invest in wherever trustees consider that to be in members’ best interests.
However, the clear intention of this policy has been to focus on unlisted private assets. This is reflected in industry documentation underpinning the accord, which defines private markets as unlisted asset classes, including equities, property, infrastructure and debt, and refers to investments held directly or through unlisted funds. That definition was reached following a number of iterative discussions led by industry, as part of which the Government supported the definition being drawn in this way.
Bringing listed investment funds within the qualifying asset definition would be out of step with the deliberate approach of the accord and its focus on addressing the specific imbalance regarding allocation to private assets. It would also raise implementation challenges, requiring distinctions to be made between the different types of listed companies that make or hold private investments or assets. It would introduce uncertainty about what we expect from DC providers. We might justly be accused of moving the goalposts, having already welcomed the accord, with its current scope, in no uncertain terms.
But the line has to be drawn somewhere. This is not a judgment on the intrinsic qualities or importance of listed investment vehicles, nor does it limit schemes’ ability to invest in them. It is simply about structuring a narrow, targeted power so that it does what it is intended to do: underpin a voluntary agreement aimed at increasing exposure to unlisted private markets in as simple a way as possible and without cutting across schemes’ broader investment freedoms.
The legislation draws a general distinction between listed securities and private assets; it does not single out investment trusts. Any listed security, whether a gilt, main market equity or listed investment company, is treated in the same way for the purposes of this narrow definition.
Crucially, this concerns only a small proportion of portfolios. Under the accord, the remaining 90% of default fund assets can continue to be invested in any listed instrument, including investment trusts, where trustees and scheme managers judge that that would benefit their members.
I am just coming to the answers, but please ask some more questions.
Baroness Altmann (Non-Afl)
I am very grateful to the noble Baroness for giving way. In a situation where trustees do not wish to put more than the prescribed amount in the qualifying assets, and they want to hold those through a listed closed-ended company because they are concerned about the structure of an open-ended fund and do not have the ability to invest directly, why would the Government want to fetter their choice in that way? I thank the Association of Investment Companies, which has helped me to understand some of the things that these companies do.
Baroness Sherlock (Lab)
My Lords, trustees will have to make their own decisions on that. I understand that, were mandation to come in, there would be constraints on this, but let me see whether I will pick up some answers to help with that as we go.
The noble Baroness, Lady Altmann, and, I think, the noble Viscount, Lord Younger, suggested that the Bill explicitly discriminates against listed investment funds. The noble Baroness, Lady Bowles, made this point previously. That concern is perhaps reflected in Amendment 124, which would remove the language that in general serves to exclude listed securities. Nothing in this language refers directly to investment funds or should be construed as a signal of discrimination, but I have listened carefully to the arguments made and I recognise that some people clearly feel otherwise. I am happy to take that away and consider further the arguments about signalling.
A number of noble Lords, starting with the noble Baroness, Lady Bowles, emphasised the issue of underlying investments, pointing out that the Mansion House Accord includes specific language on this. It defines UK private markets as meaning
“where the underlying assets are based in the UK”.
Accordingly, new Section 28C(6) provides the mechanism to reflect this aspect of the accord. Amendment 127 relates to this point, and I will say more when I return to it. I have already recognised that DC funds may invest directly or through funds. That means that, if we ever came to exercise these powers, we would need to implement the regulations under new Section 28C in a way that suitably reflects this. However, we do not consider it necessary to amend the clause to achieve this, since there is sufficient flexibility in new Section 28C to prescribe descriptions of qualifying assets in a way that reflects this, subject to the constraints in new Section 28C(5).
On the matter of competition, the noble Baroness, Lady Bowles, made a more constrained speech than she did last week, and I commend her for that. The question of competition law was raised. For the record, there has been no breach of competition law by the Government, nor are we encouraging a breach of competition law. We strongly welcome the Mansion House Accord; I make that clear for the record.
I turn back to Amendment 127 in the name of the noble Viscount, Lord Younger, because it picks up some of these points. This amendment would remove the provision that allows the Government, if exercising these powers, to specify that a proportion of assets subject to an asset allocation requirement should be invested in the UK. This aspect of the clause was developed with the Mansion House Accord firmly in mind. Under the accord, half of the 10% of default fund assets committed to private markets is intended to be invested in the UK. This provision simply ensures that the powers can operate as a backstop to that commitment. What constitutes a UK investment will vary by asset and will be set out in due course, with new Section 28C(6)(b) making it clear that this can be done through regulations.
Amendment 121, tabled by the noble Baroness, Lady Altmann, also relates to the definition of qualifying assets. Its effect would be to add to the list of examples of private asset classes that may be prescribed as qualifying assets in regulations made under new Section 28C(4). As the noble Baroness is aware, the Government have designed these provisions to mirror closely the asset classes covered by the Mansion House Accord. The clause does not perfectly correspond, word for word, with the drafting of the accord, but the effect is the same. To be clear, I can confirm that UK infrastructure assets, UK scale up capital and UK SME growth market shares, which I assume is what the noble Baroness meant when she referred to quoted companies, are all capable of being designated as qualifying assets, provided that they are not listed on a recognised investment exchange. They are very good examples of the sorts of assets in which these reforms should encourage investment; none the less, it is not necessary to list them individually in the Bill.
I have listened carefully to the many considered points and arguments that have been made in relation to qualifying assets. I recognise that there is not unanimity in the Committee, although it is always interesting when my noble friend Lord Davies agrees with the noble Baroness, Lady Altmann, and, at least in part, the noble Baroness, Lady Noakes, agrees with me; all things are possible, we discover, in Committee in the House of Lords. Given that, and given the arguments that have been made both here and previously, I hope that noble Lords will feel able to withdraw or not press their amendments.
Baroness Bowles of Berkhamsted (LD)
My Lords, I thank all noble Lords who have participated in this debate; I also thank the Minister for, from my perspective, attempting to defend the indefensible.
The Minister mentioned the industry documentation underlying the accord. I would be grateful if that could be forwarded to me, made a matter of public record and, perhaps, placed in the Library. As I said in my opening speech, if noble Lords want to know, I have had some 70% of the people representing the default funds—if you take their turnover—say that they did not think that they have agreed to the exclusion of listed investment companies. So something is going wrong here.
Baroness Sherlock (Lab)
I should have quoted what I was referring to; I meant to do so but forgot, so I apologise. I was referring to the question and answer materials that accompany the accord on the ABI’s pensions website, which I am sure the noble Baroness has read. They say:
“The definitions of both global and UK private markets assets include directly held, or via investment through unlisted funds in property, infrastructure, private credit, private equity and venture capital”.
The Government understand that this reflects the intention of the accord to exclude investment in listed investment funds. I would be happy to send these materials round to noble Lords.
Baroness Bowles of Berkhamsted (LD)
I am not sure that “directly held” applies to an LTAF either. The fact is that you have wrappers and underlying assets. It is discriminatory, and that should be tested. I still do not see how, when you have the public policy laid out by the high-level working group set up to create LTAFs, you can then say, “A private negotiation overrides that”. I stand by that.
I know that the Pensions Minister received a letter from a past lord mayor, Alastair King, who is one of the architects of the Mansion House initiatives, on 22 October last year. He relayed that he had encountered both support for the investment trust market and concerns that the Bill did not acknowledge the potential of the investment company structure. That evidence—one of the architects asking, “What’s going on here?”—also seems to have been ignored.
I come to the same basic point: for me, the Government have not provided a clear, public or specific rationale for this exclusion. I would say that neither has the ABI, but I did not know that it runs the country. All of the evidence points the opposite way to what the Government have done. Officials have confirmed in meetings that no assessment of using listed investment companies has been carried out, despite the clear steer of the policy in the working group to do so. It seems that this Q&A from the ABI overrides a Bank of England/FCA/government working group. That cannot be so. The only explanation ever offered is that there are “suitably targeted guardrails”—a phrase that has never been defined, evidenced or justified. What do you have to guard from in a listed investment company? Competition? Transparency? That is a very strange thing to say; it is an instrument of division and discrimination, protecting secrets.
Let us remind ourselves of what we are dealing with: two collective investment vehicles, each of which is a wrapper holding protected assets of net asset value for the pension scheme. That is where they differ from an ordinary equity. An ordinary equity does not have any protection for the assets; if the company goes bust, it is bust. If the listed investment company goes back to the net asset value, the assets are still there for the pension fund. That is the difference, which is why a collective investment vehicle such as a listed investment company belongs with the LTAF; it does not belong with an equity.
I still do not see why they stick so closely to some Q&A but, whether by design or by accident, they have produced a proposal that I still say is without foundation, without evidence and, frankly, without integrity. It is irrational and procedurally unfair, and it fails to take account of relevant and public considerations, relying instead on things that have not been consulted on and that have been presented through private industry discussions. I have never seen anything like this before. There are simple ways to make it fair in various proposed amendments in the rest of this group, spoken to by the noble Baroness, Lady Altmann—
Lord Katz (Lab)
The noble Baroness has spoken for five and a half minutes now. Whether she is pressing or withdrawing her amendment, this should be brief.
Baroness Bowles of Berkhamsted (LD)
I have only two more lines. I will just remind noble Lords that there are simple ways to make this fair and reasonable, as spoken to by the noble Baroness, Lady Altmann. These give a free choice of instrument, with no compulsion—and yet there is still resistance, with no rational explanation. This is, of course, not the end, unless the Government see their error, but for now I beg leave to withdraw my amendment.
Baroness Altmann
Member’s explanatory statement
This amendment and others to Clause 40 in the name of Baroness Coffey seek to cap the prescribed/mandated asset allocation to 10% and limits the time for this power till the end of 2032.
Baroness Altmann (Non-Afl)
On behalf of the noble Baroness, Lady Coffey, who is unable to be here today, I am happy to move her Amendment 112 and speak to the others in this group. My remarks on Amendment 112 also apply to the noble Baroness’s Amendment 117 and Amendment 114 tabled by the noble Baroness, Lady McIntosh.
The aim of this amendment is merely to ensure that, in new Section 28C, which says that master trusts or GPPs will require regulatory approval of their asset allocation—and that that will require that at least the prescribed percentage by value of the assets held in the default funds of the scheme are qualifying assets—the maximum value should be no greater than the Government’s expressed aim of 10%. As far as Amendment 114 is concerned, the UK element of that should not be more than 5%. The aim is to avoid policy creep. If there is mandation and it prescribes a percentage in particular assets, this should not then be used as the basis for perhaps increasing the element of mandation, given that there is no figure in this instance in the Bill.
My Amendment 113 is on a slightly different aspect. In the case of regulatory approval being required for asset allocation and a prescribed amount of qualifying assets being required, I would like to add the possibility—this is a “may” not a “must”—of the minimum amount in prescribed assets being part of the flow rather than the stock. My concern—it has been mentioned on other groups, and I am sure we will come back to it—is that, by prescribing a percentage of assets in a very illiquid range of assets as the proportion of the already-existing stock of funds in a default fund, there is a danger that all the new contribution flows will need to be directed to that particular type of asset to end up with an overall percentage of the whole fund in the required prescribed assets. My suggestion is that the Government might want to have the option of just mandating—if they do so, which they may or may not—a proportion of the new contributions, which will perhaps be less disruptive to the market in the underlying assets.
I support all of the amendments in this group. I am also supportive of the idea that the noble Viscount, Lord Younger, and the noble Baroness, Lady Stedman-Scott, are recommending and which the noble Lords, Lord Vaux and Lord Palmer, are suggesting, of moving away from the idea of mandating just private equity—or, indeed, just private equity and private debt—and having a wider range of options for meeting the Government’s intention, which I support, of bolstering pension fund support for new companies and growth assets in the UK that can help support and boost both the long-term growth of this country and the returns of the UK’s pension funds over the long term. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, this is the first time I have been able to speak on the Bill. I am delighted to follow my noble friend, who I still consider the pension tsar and who is so knowledgeable in this field. I apologise for being absent when Amendments 132 and 133 were reached; unfortunately, with all the business in the House, there are inevitable clashes, and we cannot be in two places at one time.
I thank the ABI and others who have briefed me in advance of the Bill proceedings. I have to say, I agree with their conclusions. I believe that they are right when they say that the Government are right that it is not necessary to mandate asset allocation by pension funds.
This amendment is intended as a probing amendment for debating purposes; I am sure that the debate will represent the broad consideration of views in Committee this afternoon. The aim, really, is to provide reassurance to pension providers by capping the mandatory asset allocation at a total of, say, 10%, which is a figure that my noble friend Lady Coffey and I independently happened upon; I also added 5% for geographical locations, such as the UK, as a proportion either of total assets or of a subset of assets.
It is true to say that the industry is generally opposed to mandating asset allocation at all. This amendment would provide some reassurance, which is what I shall seek from the Minister when she comes to respond to this debate, to pension providers of that by capping the mandatory asset allocation to a total of these two figures—10% and 5%—as a proportion either of total assets or of a subset of assets.
There has been much talk of the Mansion House Accord this afternoon. I would like to chip in also and say that this power would align with the accord, which had widespread support across the industry—as well as from government, as it was supported by the Chancellor. I understand that the accord was led jointly by the ABI, Pensions UK and the City of London Corporation. It followed extensive discussion between the industry and the Pensions Minister and had a 17 signatories, who committed
“to the ambition of allocating at least 10% to private markets across all main DC default funds by 2030; and … within that, at least 5%”—
and I have now lost my briefing, so I am completely at sea.
I hope that I have given a little taste of where we are. I am not saying that these are the definitive figures; I am just throwing into the wash that this afternoon would be a good opportunity to give some reassurance to the pension providers in the way I and my noble friend Lady Coffey have sought to do.
Baroness Penn (Con)
My Lords, I will speak briefly in support of Amendments 112, 114 and 117 in the names of my noble friends Lady Coffey and Lady McIntosh of Pickering, which aim to set a cap on asset allocation.
In response to our debate on the previous group, the Minister consistently described the mandation power as seeking to achieve a “modest but meaningful” investment in private assets; and said, importantly, that it was designed as a “narrow backstop” to delivering the Mansion House Accord. If that is the case, why is the proportion of assets that can be mandated under this power not capped in line with that accord? Indeed, as I read it, it could be up to 100% of assets. Why is that? The Minister may point to consultation and other measures that will constrain the use of the power but, for something so controversial and which the Government say they do not want to use, I cannot understand why they are not constraining it in primary legislation.
I will touch on timescales in our debate on the next group, but the Minister says that this Government do not want to use this power. However, as things currently stand, it would be open to the next Government to use the power, and the one after that—as well as a couple of Governments in between if we do not go to full Parliaments, as we have not always done in recent years. In those circumstances, it would also be sensible to limit the power to delivering what the Government say they want it to do.
Why do the Government not want a maximum limit in primary legislation? What is their objection to it? The cynic in me wonders whether the power is so widely drawn that, when we remove mandation on Report—I might be getting ahead of myself but that is on the cards—the Government could bring forward a series of concessions at ping-pong to limit the use of the power to what they say they want it to do. I am sure that that is not the case, but it might be better than the position in which the Government think that this power, as it appears in the legislation, has been drawn appropriately. I am really interested in the Minister’s response on this.
Lord Palmer of Childs Hill (LD)
My Lords, I will come in at this moment because I wish to speak in favour of the amendment from the noble Lord, Lord Vaux, which I have co-signed, because he is unable to be with us today. These words are both mine and the noble Lord’s, more or less.
I am not in favour of the asset allocation mandation clauses generally. Amendment 119, however, seeks to probe the reasons why the Government have chosen a particular asset class for mandation: private equity. I have no problem with pension schemes choosing to invest in private equity; historically, it has generated good returns, in large part because of the use of debt to leverage those returns. Private equity may be a good investment for pensions schemes, and this amendment would not prevent that.
However, my understanding is that the principal motive of the Government for mandating asset allocation is to drive greater economic growth. I agree that venture capital and private debt—two other asset types listed in the Bill—may indeed create growth, but I do not understand why the Government believe that private equity is a growth driver. I have to assume that this is because the Government have fallen for the story that the private equity industry often tells about how much investment it makes, how many people it employs, what great returns it generates, and so on. What private equity actually does is buy existing companies or assets, allowing the previous owners to cash out.
Very rarely, I believe, does a private equity company provide new equity into a company. Rather, it typically does the opposite: it funds the acquisition with a very high proportion of debt. The leveraged buy-out is the basic model of most private equity activity. That debt is not borrowed by the private equity itself; rather, it is pushed down into the underlying company, and the interest and any debt repayments are made from that company’s profits.
One effect of this is to reduce the taxable profits—in other words, the debt interest is tax deductible—and therefore the tax is payable by the company. The debt itself is often located in offshore low-tax locations, so tax is not paid on the interest by the private equity or the lender, which may well be related. This is a direct loss to the Exchequer. I hope the Minister can reply to that.
The high leverage also has the effect of reducing investment by the company in its products or services. Instead of investing in its future growth, the company now has to use much of its cash flow to pay the interest. What often happens is that the private equity undertakes a cost-rationalising exercise so that the profits are improved in the short term with a view to selling the business again as soon as possible. The leveraged effect of the debt means that private equity can make a substantial gain even if the underlying business grows only in line with inflation.
The cost rationalisation often invokes workforce reductions. Studies indicate that private equity-owned companies typically have lower levels of employment even five years after the original buy-out. This certainly tallies with my experience, although I have not had the benefit of the experience of the noble Lord, Lord Vaux, who worked for private equity-owned companies during his career.
In the meantime, if there are any profits left, rather than being invested in growth they are usually paid out as dividends. In fact, it is not uncommon, if a company has managed to reduce its debt ratio, for a PE to recapitalise the company to put in more debt in order to allow the payment of a dividend. Of course there are exceptions, but, as many examples show, such as Thames Water—indeed, much of the water industry—Debenhams, Southern Cross and Silentnight, private equity cannot legitimately claim to be a force for growth. Are there good returns for its investors, and particularly its partners? Yes—but is it a force for growth? It is not really. It is said that £29.4 billion was invested in UK firms by private equity in 2024. Yes, but that investment was almost entirely in buying out existing businesses, which is very different from providing capital for growth.
So the noble Lord, Lord Vaux, and I are baffled as to why the Government think that mandating pension funds to invest in private equity will be good for the country. It may be good for someone but not necessarily for the country. I repeat that I have no problem with a pension fund investing in private equity if the trustees believe it is right for the fund and its members, but I see no benefit, and probably a downside, for the country as a whole. If we must mandate allocation, let us at least target it to asset types that generate growth, such as venture capital or infrastructure. If the Government’s primary motive for mandation is to drive UK growth, we should exclude private equity from the list. I hope the Minister and her colleagues will give thought to this, because we are on the same wavelength and we want the same answer, but not in the way that the Bill proposes at the moment.
Lord Davies of Brixton (Lab)
I wanted to speak after the noble Lord, Lord Palmer of Childs Hill, because, while I agree with what he said, I slightly disagreed when he talked about the favourable returns achieved by private equity. There is a massive problem with survivorship bias in those figures because the ones you never hear of again do not enter the figures.
I have a question for my noble friend the Minister. It seems an odd bit of drafting to say: “may for example”. Is “for example” doing anything in that sentence? Clearly it is not intended to be all encompassing, so others must be possible; it suggests that the person doing the drafting was not really sure that they liked what they were doing. It is pussyfooting about a bit. Secondly, what do these terms actually mean? I have an idea about “private equity”, but what about “private debt”, “venture capital” and “interests in land”? Goodness knows what the last one means. Are these terms defined anywhere? Can we get a clear definition of these things before we confirm this part of the Bill?
Lord Remnant (Con)
My Lords, I will comment briefly on the amendments in this group, tabled by several noble Lords, relating to the suitability of private markets and a potential cap on the allocation of funds to those markets. Equity and debt markets often now tend to be positively correlated; in other words, they move in the same direction. That was not normally the case in the past, when negative correlation brought better balance to a portfolio and to its risk and reward characteristics. So-called alternative investments—of which private markets form a part—that fall outside the traditional investments of stocks, bonds and cash can offer a sensible diversification.
The Mansion House Accord refers to the higher potential net returns that can arise from investment in private markets, but that comes with higher risks, less liquidity and, typically, less regulation. Given the disadvantages of the open-ended nature of the vehicle that would deliver such investments, to which I referred on an earlier group—and given that private markets, however defined, should be part only of a portfolio’s allocation to the alternatives class—I would certainly be in favour, as a matter of principle and practice, of a cap not exceeding the 10% mooted by my noble friends Lady Coffey and Lady McIntosh of Pickering. I cannot envisage any well-run, prudently managed and appropriately diversified pension fund wishing to exceed such a percentage in normal circumstances.
Viscount Trenchard (Con)
My Lords, briefly, it is not appropriate for legislation to tell the trustees of pension funds, in any case, that they can make investments in some types of structure but not in others. It should be entirely up to the trustees, in exercising their fiduciary duties, to determine what investments they make and the structures through which they make them to deliver a maximum level of risk that they are happy to accept.
The Government will succeed in realising their target of increasing pension fund investment in UK infrastructure by adopting fiscal and economic policies that encourage growth. We will then see a natural return to the much higher levels of UK equity investment by pension funds that used to obtain many years ago. If the Government require, nevertheless, some potential or possible mandation, it is right that there should be a cap. But, as my noble friend Lord Remnant said, it is inconceivable that any pension fund manager would be likely to invest more than 10%—I would say considerably less than that—in asset classes traditionally defined as alternative assets.
Viscount Younger of Leckie (Con)
My Lords, briefly, this group again underlines a central point that we have been making: mandation should not be in the Bill. Time and again, we have heard concerns about the risks of picking winners and the unintended consequences that inevitably follow. I raised these issues on the previous group, and the noble Baronesses, Lady Bowles and Lady Altmann, have today and previously put those concerns firmly on record.
However, I am grateful to noble Lords for their thoughtful efforts to limit or mitigate the impact of the mandation power. I thank my friend, the noble Baroness, Lady Altmann, supported by my noble friends Lady McIntosh of Pickering and Lady Penn in particular, for their remarks on these issues. However, our view remains unchanged and, for reasons already rehearsed at length, asset allocation mandates have no place in this legislation. There is no compelling evidence that they are either necessary or effective in increasing productive investment in the UK.
If we are serious about addressing the barriers to UK investment, we must be honest about where those barriers lie. They include governance and regulatory burdens; risk-weighting and capital requirements; liquidity constraints and scheme-specific funding; and maturity considerations. None of these challenges is addressed, let alone solved, by mandation. If, notwithstanding these concerns, the reserve power is to be retained, significantly stronger safeguards are essential: a clear cap on the proportion of assets that may be mandated; more robust reporting and evidential requirements before regulations are made; explicit conditions for access to any transition pathway relief; a strengthened savers’ interest test; and rigorous post-implementation review. The question of when and on what basis the power should be sunsetted is one that we will return to on the next group, but the fundamental point must be clear: mandation is the wrong tool and the Bill risks embedding unjustified and anti-competitive discrimination between equivalent investment vehicles, driven not by evidence or public interest but by a narrow and self-interested approach. I will address those issues in more detail in a later group but, for now, I look forward to hearing the Minister’s response to the specific amendments raised.
However—before she gets up—I wish to turn to Amendment 118 in my name. It probes the power that allows regulations made under new Section 28C to include assets of various classes under the broad heading of private assets and to permit the future inclusion of additional asset classes. I appreciate the support of the noble Baroness, Lady Altmann, on this part.
I touched on this matter in some detail in the previous groups, so I will not repeat those arguments here. However, this amendment once again draws attention to our concern about the specific types of asset that the Government have chosen to list on page 46 of the Bill. It remains an issue about which we are deeply concerned, and one on which we will continue to work closely with other noble Lords though to Report.
Baroness Sherlock (Lab)
My Lords, I apologise to the noble Viscount for jumping up prematurely. These amendments relate to the level of any asset allocation requirements and the potential treatment of investments in private equity and private debt as qualifying assets for the purpose of any asset allocation requirement.
I will start with the with the level of any asset allocation requirement, a question raised by the noble Baroness, Lady McIntosh in her Amendment 114 and the noble Baroness, Lady Altmann, on behalf of the noble Baroness, Lady Coffey, in Amendment 112. Both would cap the percentage of default fund assets that could be required to be invested in qualifying assets. I understand why noble Lords were keen to table these amendments and to look for a cap. I have to say to the noble Baroness, Lady Penn, that I am shocked by such cynicism in one so young. I will explain the—perfectly rational—reason the Government have not done this; I hope that she will find it very satisfying and feel suitably chastened at that point. We do not expect to need to exercise the power, but to do so would be a significant step and, as noble Lords may have picked up by now, the Government’s general approach has been to design the power so that it can be used as a backstop to the commitments used in the Mansion House Accord. I underscore that point.
The aim has been to create a backstop to that rather than to fix a numerical cap in primary legislation. That is what it is designed to do. The accord is not a legal document, and its terms and definitions are not of a kind that could simply be lifted into statute. If the Government were ever to exercise these powers, we would need to define key terms precisely, and it is at least possible that those definitions might have some bearing on the precise percentage levels that are appropriate. We have therefore not taken the step of hard-wiring a fixed cap, although I underline that we have included various other safeguards, which I have repeated more than once, so will not repeat again in the interests of time.
In relation to Amendment 113 in the name of the noble Baroness, Lady Altmann, the Mansion House Accord commitment has informed the design of these powers, including the ability for government to require a proportion of assets to be invested in specified qualifying assets. I understand the point that she was making, but our approach has been deliberately limited, going no further than necessary to support the commitments already made. That caution is important, given that this is a novel—and, I discern, a not entirely uncontroversial—part of the Bill. Although we are aligned on the objectives, I would not want to suggest a change in policy direction where none is intended. Our aim is to give the DC pensions industry reasonable clarity about our expectations.
Amendment 119, tabled by the noble Lord, Lord Vaux, and spoken to by the noble Lord, Lord Palmer, interrogates the inclusion of private equity as an example of a qualifying asset. Its effect would be to remove private equity from the illustrative list in new Section 28C(5). Amendment 120 from my noble friend Lord Sikka would do the same, as well as removing private debt.
Baroness Altmann (Non-Afl)
I thank the Minister and all noble Lords who have spoken in this debate. We have had a good rehearsal of the views and concerns about mandation and the need for a specific limit. I understand that the Minister is not keen on having a specific limit, but I hope that we can meet ahead of Report to go through some of these issues, which are keenly felt by many noble Lords in Committee.
The same is true of the concern about private equity or private debt and the dangers of being invested in them. It strikes me as rather strange that the Government think that the risk-return opportunities in private equity are suitable for mandation but that that would not extend to quoted listed investment companies, which have long proven their track record without the disasters that we have often seen with private equity. With that, I beg leave to withdraw the amendment.
Member’s explanatory statement
This amendment probes the reasons behind the provision allowing the Secretary of State until 2035 to exercise the mandation power.
Viscount Younger of Leckie (Con)
My Lords, it is a pleasure to open what I hope and assume will be another interesting debate. Once again, I hope it will shine a light on the flaws of mandation from new and specific angles that merit discussion.
Amendment 115 in my name is a probing amendment, which goes to the architecture of the power itself. The Bill allows the Secretary of State to exercise the mandation power up until 2035. Why has 2035 been chosen for sunset? Why is it that particular year? Was that date chosen because it aligns with some evidenced policy rationale, a defined market transition or a known obstacle that is expected to have fallen away by then? A sunset date sets the constitutional balance between Parliament, Ministers and the pensions industry. A sunset clause extending to 2035 runs beyond the life of this Parliament and would allow very broad discretion for a Secretary of State, not merely to encourage investment but to direct it, in effect, by setting targets and conditions. That is an extraordinary proposition when we are dealing with the retirement savings of millions of people.
I put a simple set of questions to the Minister. What analysis underpins the choice of 2035? Was it recommended by the department’s own evidence base? If the concern is a temporary set of barriers, for instance, a collective action problem, why is the power not time-limited to a shorter period, with a requirement for Parliament to renew it if, and only if, the evidence remains compelling? If the Government believe the power is genuinely a reserved power, why does it need such a long reserve? If the Minister cannot explain the logic of the date, it becomes harder to accept that the scope of the power has been calibrated with care.
Amendment 152 relates to the review process following the exercise of powers under Section 28C—the mandation power. This is another probing amendment intended to test why the Government consider a five-year period an appropriate timeline for regulations to be reviewed and why an earlier review has not been proposed. Five years is a long time in pensions and financial markets. It is a very long time in the life of a saver, because compounding does not wait politely while Whitehall decides whether its intervention has worked. If an allocation has been distorted, returns have been impaired, costs have risen or liquidity has been compromised, five years is long enough for the damage to become embedded in outcomes. It is also long enough for market conditions to have changed so significantly that any review risks becoming a rear-view mirror exercise rather than a real safeguard.
I ask the Minister directly, why five years? What is the justification? Is there evidence that a shorter review period will be impractical? Why are the Government not willing to commit to a more immediate post-implementation assessment, perhaps—let me be helpful to the Minister—within 12 months or two years, to ensure that any harm to savers is identified early? If Ministers believe the power is low risk, surely a quicker review should not trouble them.
There is a further point. The Bill speaks of not only assessing the effect on the financial interests of members of master trusts and savers in group personal pension schemes, but of such other matters as the Secretary of State may consider appropriate. What precisely do the Government envisage falling within those other matters? Does it include costs to schemes, liquidity, operational complexity, market impact and whether compliance has forced schemes away from diversified strategies that would otherwise have been in members’ best interests? Does it include, as many fear, political metrics dressed up as economic analysis, such as whether a mandated allocation has supported a preferred sector or class of domestic asset?
Most importantly, what happens if the review reveals that the financial interests of members have been harmed? What is the mechanism for redress and the practical remedy? Do the Government anticipate compensating schemes or savers? As the Committee will appreciate, we will return to the question of redress later in our proceedings.
I now return to the subject of market risk through Amendment 115, which is intended to ensure that any review explicitly considers two linked dangers. The first is that mandated investment requirements may become misaligned with economic conditions. The second is that directing multiple schemes into the same assets could cause market distortion or asset price inflation.
Mandation can distort markets in ways that are entirely foreseeable. If multiple large schemes are required, either explicitly or implicitly, to invest in the same asset class, the demand shock can inflate prices. If market participants interpret government direction as a signal of future price support, price movements can be amplified further; these arguments have been rehearsed not only in Committee but at Second Reading. Artificial price inflation then risks reducing long-term returns for pension savers because you are requiring schemes to buy after prices have been driven up, rather than allowing them to invest on value and fundamentals. It is picking winners and losers, not through the discipline of markets but through the blunt force of regulation.
So I have further questions for the Minister, I am afraid. Has the department modelled the potential for asset price inflation in any asset class that might be subject to a mandated allocation? Has the department assessed the risk of crowded trades in which schemes find themselves paying more for the same exposure because the Government have forced them to compete with one another? Has the department consulted the Bank of England or the FPC on the risk that mandated flows could contribute to procyclicality or instability, particularly in less liquid markets? What is the Government’s plan if mandated allocations coincide with an already elevated valuation environment?
There is a second risk: that of regulation falling behind economic reality. Mandated asset allocations risk becoming misaligned with economic conditions because compliance takes time. Requirements to hold a specified percentage in a particular UK asset class within a fixed timeframe may no longer be appropriate by the time schemes comply. Economic conditions, market valuations and government priorities can change far more quickly than regulatory mandates. This creates a real risk of locking savers into allocations that are no longer in their best financial interests.
So, again, what mechanism will ensure that mandated requirements remain compatible with changing economic conditions? Will there be a duty to pause or suspend requirements when market conditions deteriorate? Will there be an explicit test that requires Ministers to show why a mandated allocation is consistent with the fiduciary duty at the point when it is imposed, not merely when it is first conceived? If Ministers insist that their fiduciary duties remain paramount, how do they reconcile that with a policy that, by design, substitutes government preference for trustee judgment? I am reverting back to that argument.
Amendment 209 would require the Government to review the barriers that may prevent pension and investment funds investing in the UK, including regulatory, tax and fiduciary constraints; and to report their findings to Parliament. Instead of beginning with mandation then asking later whether it has caused harm, the Government should have started here. If Ministers genuinely wish to increase productive investment in the UK, their first duty is to diagnose the barriers properly. Stakeholders have emphasised repeatedly to us that limited UK investment by pension schemes is not a failure of willingness but reflects real constraints: government and regulatory burdens; risk weighting and capital requirements; liquidity constraints; scheme-specific funding and maturity considerations; fixed fees; and the economics of administering more complex, perhaps even less liquid, investments at scale. Many of those may be solvable issues but they require the hard work of reform, not the easy headline of compulsion. Addressing these barriers is far more likely to increase investment sustainably than imposing mandation, and care should be taken to avoid adding further unintended obstacles through legislation.
Baroness Penn (Con)
My Lords, my noble friend Lord Younger has asked many of the questions that my Amendments 116A and 130A seek to probe on the rationale for the Government’s timescales in the Bill. They are also intended to shorten those timescales and implement an absolute sunset; I want to be clear to the Minister that I do not think that a deadline by which the maximum asset allocation cannot be raised further is a sunset.
I heard what the Minister said in our debate on the previous group about introducing a maximum allocation cap. I am not sure that I really buy into that argument but, if that is the rationale, are the Government really saying that it might take 10 years to work out what the definite figures agreed under the Mansion House Accord are and that that is why they have their timescales in place? Are the Government really saying to those who signed up to the Mansion House Accord—or, indeed, to those who did not—that the figures that could be mandated under this power could go above 10% and 5%? That would make it an even harder power for people to swallow. Further, this could be over by an unlimited amount—not even a variance of maybe up to 15%, but up to any level.
The Government have used the argument for the mandation power that it creates certainty for those pension funds but, the more we discuss it, the more uncertainty there seems to be. The figures of 10% and 5% do not seem to be the figures of 10% or 5% any more. Under the Government’s approach, we will get a cap, but maybe in 10 years’ time, while the assets required to be invested under that cap can still change in perpetuity. I used the example at Second Reading of one Government wishing to mandate investment in net zero and the other wishing to mandate investment in defence assets; both are conceivable things that we might see happen in the longer term. The point is that, the longer this power is in place, the greater the risk that it is used not for this Government’s intention but for something else.
On the guardrails outside of the primary legislation, which the Minister referred to but rightly did not go into in our debate on the other group, I have a question about one: the requirement to consult. At Second Reading, the Minister said that the Government would be required to consult before using these powers for the first time. I want to check whether this means that they will not be required to consult when amending them subsequently or they will be required to consult each time they bring forward regulations under this power. I had thought that it was the former—consulting each time they used the powers—but, if it is not, and it is only the first time when they are used, I would be grateful if the Minister could clarify that point.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful to my noble friend Lord Younger of Leckie for introducing this group and setting the scene so eloquently, and to my noble friend Lady Penn for speaking to her amendment. I shall speak to the amendments in my name and I thank the noble Baroness, Lady Altmann, for lending her support to Amendments 129, 153 and 156. They follow on neatly from the other amendments about which we have heard. The Bill requires the Government to publish a report before the introductory regulations are brought into force to bring in the reserve powers, but it covers only how the financial interests of savers will be affected and the effect of the regulations on economic growth.
The purpose of my Amendment 129 is to set out additional items to be covered in the report, to ensure that the Government properly and comprehensively assess the impacts of any future regulations, such as, for example, the functioning of workplace pensions markets and impacts on the market of assets to be mandated and other requirements. What I am proposing in Amendment 129 is to test whether the Government have done enough to justify using such a drastic power. I am also suggesting, taking up the point of my noble friend Lord Younger, that the first report should be in less than five years: the first report should be after two years, because a lot of damage could be done in the first two years and even more damage could be done if there is no report for five years.
Amendment 156 continues on this theme, looking at a different part of Clause 40 for these purposes. Amendment 153 says that there should be a review, as I have mentioned, which should take place within at least two years, in addition to a review within at least five years. While the review in the Bill allows for mandation to be in place for five years before the Secretary of State must review its impact, I believe that that is too long and that it could potentially allow for negative effects to set in under the regulations under the Bill for affected default schemes. Taken together, Amendments 153 and 156 bring forward the review of regulations to take place within two years after those regulations have been in force, as well as after another three years to stop any further damage being done. We set out here what those reviews should look at
“the functioning of the market for Master Trusts … what effects the measures have had on that market … what effects the measures have had on the markets for qualifying assets”,
and so on, as set out in these amendments.
I hope the Minister will look favourably on these amendments, particularly since there is a mood on this side to coalesce around a review within the first two years.
Baroness Noakes (Con)
My Lords, all the amendments in this group raise important issues. I hope that none of them will be necessary, because I hope that we will have got rid of the power from the Bill, so these will become irrelevant details. I have Amendment 130 in this group, which would modify the mandation power by removing new Section 28C(15). This subsection “overrides any provision” of a trustee or scheme rules that conflicts with the mandation power. Thus, if the scheme had been set up with investment parameters that, for example, ruled out investing in private equity, and the Government then specified private equity, the wishes of the employer expressed in the scheme’s governing documents would be completely overwritten. Since there is no requirement in the Bill, as I understand it, for the Government to specify more than one asset class, it is quite possible that the Government could specify a required asset class that conflicted with things that had been deliberately set up when the scheme was set up.
I can understand, of course, why the Government want to encourage pension schemes to consider investing in alternative asset classes. I do not think you will find much resistance to the concept of investing in alternative asset classes. But I simply cannot understand why the Government think they should have a power to force schemes to invest in a particular way, if a conscious decision has already been made not to invest in that asset class. The Government might not agree with that decision, but I hope we do not live in a world where the Government can simply ignore the clearly expressed wishes of those they govern. I hope that we still live in a free society. Subsection (15) seems to me to extend the powers of the state too far, and we ought not to go along with it.
Baroness Bowles of Berkhamsted (LD)
My Lords, I have several amendments in this group: Amendments 154, 157, 158 and 159, which I will not say much about because I am fishing in the same pond as everybody else. If there is this mandation, we are anxious to know how it works, and we think the review should come earlier—I have put in some of the things that I think it should look at. I will spend more time on my Amendment 131, which is about prior steps that would have to be taken before there was any exercise of the mandation and regulations were made. It is about the prior steps that must be taken before the Secretary of State can exercise the regulation-making power in new Section 28C—what I termed the devil’s clause once before, although we now know that it is the ABI clause.
It is probably worth pausing here to remind ourselves whom the ABI represent: it is the Association of British Insurers and it represents the insurance companies, which are the manufacturers of the LTAFs, as was indicated earlier. It had a meeting in which, as usual, it displayed the slide that says, “We’re not colluding and breaking competition law, but we’re just going to agree that we won’t be investing in the other vehicle that has protected net asset value, and we’ll do a Q&A that says that’s not happening”. Interestingly, the insurers present at that meeting seem to have either forgotten about it or are telling me that they did not agree to anything. However, I leave that hanging.
If the Government wish to enforce a power of this potential scope, which, as has been explained, is much wider than the example in the Bill—a power that could reshape asset allocation across the pension sector—it must be subject to proper safeguards. These prior steps are not obstacles but constructive checks that should support the Government’s own objectives.
Proposed new paragraph (a) would require the Secretary of State to
“review the effect of any voluntary agreements or coordinated commitments relating to asset allocation”.
We have had a lot of policy alignment, pledges and so forth, and we all want the voluntary method to succeed. But if the point comes that regulations are contemplated, it is essential to understand what the voluntary route has already achieved, where the evidence points and why it did not happen.
Proposed new paragraph (b) would require an assessment of
“the impact of any such agreements on asset allocation, pricing and valuations”.
If the Government are concerned about market functioning, they should be equally concerned about how co-ordinated commitments affect pricing signals and valuation discipline. This is simply good policy hygiene because it ultimately affects workers’ pensions.
Proposed new paragraph (c) would require a review of
“the likely effect on returns to pensions savers”.
We all hope for the double benefit: better long-term returns for savers and productive investment that supports the UK economy. But we must analyse whether that is happening in practice, and if not, why not, before moving to a regulatory footing.
Proposed new paragraph (d) would require the Secretary of State to “obtain clearance” from the Competition and Markets Authority, and that is entirely consistent with the CMA’s pro-competition remit and with the competitiveness and growth objectives embedded in FSMA. Any use of this power must reinforce the UK’s competition framework, not bypass it, and where co-ordinated commitments already exist in the market, the Government must be certain that any regulations they bring forward meet a clear public interest justification.
Lord Ashcombe (Con)
My Lords, it is a privilege to follow the noble Baroness, Lady Bowles, after that. I support Amendments 115 and 152, in the names of my noble friends Viscount Younger of Leckie and Lady Stedman-Scott, concerning the Government’s draft powers to mandate. The matter before us is not, in essence, a question of technical refinement but one that touches directly upon the principles of parliamentary sovereignty and the standards of scrutiny that this House has long upheld.
As has been evident during the deliberations of this Committee, we are all acutely aware that the pensions industry forms the very foundation of the long-term financial security of millions of people across the United Kingdom. It is therefore essential that any mandates imposed upon this sector are framed with clarity, certainty and due consideration for the practical realities—of which we have heard a lot this afternoon—faced by industry participants and savers alike. The sector quite reasonably seeks early and unambiguous direction so that businesses and individuals may plan prudently and with confidence. Ambiguity serves only to sow uncertainty and to heighten risk; it also almost always reduces the probability of the desired outcome.
Clarity alone, however, is insufficient. The process by which such mandates may be introduced or amended must itself be transparent, accountable and subject to full and proper parliamentary oversight. Under the current provisions, potentially substantial changes to the scope of mandation powers could be affected through negative secondary instruments. Such a mechanism falls short of the constitutional rigour expected in matters of this significance. These instruments, as the Committee well knows, may pass with limited visibility and without the robust debate and testing that both Houses are uniquely equipped to provide.
The amendments before us seek to remedy that shortfall by requiring that any future changes to mandation rules receive the express consent of Parliament, rather than proceeding without a vote. This proposition is not, I emphasise, a question of party-political alignment but a question of sound governance, institutional responsibility and public trust.
We must not lose sight of what is fundamentally at stake. Effective parliamentary scrutiny protects not only the interests of the industry and the Government but, most importantly, the millions of individuals, including myself, who have saved faithfully into the pension system and rely on its long-term stability. I therefore urge the Committee to lend its support to these amendments. In doing so, we would strengthen the clarity and certainty required by the pensions and lifetime savings sector; uphold the enduring principle of parliamentary consent; and ensure that the governance of our pension system reflects the transparency, diligence and integrity that the public rightly expects and deserves.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Viscount, Lord Younger, for his introduction to his amendments in this group and all noble Lords who have spoken.
I will start with the sunset provisions. Amendment 115, from the noble Viscount, Lord Younger, would remove one element of these, but I understand that it is obviously tabled for probing purposes. There are two distinct elements to the sunset provision. The first is the element identified in the amendment: the provision in new Section 28C(3), which means that if percentage asset allocation requirements have been brought into effect by the end of 2035, they cannot be increased beyond that date. The second is what I call the “main” sunset provisions, in Clause 122(6), which automatically removes the power from the statute book altogether if it has not been used by the end of 2035. I fully recognise that there is a legitimate debate about where to set those sunset dates. Through her Amendment 116, the Baroness, Lady, Coffey, would prefer it to be shorter. The noble Baroness, Lady Penn, proposes bringing forward to 2030 the date beyond which the requirements cannot be raised. Her Amendment 130A would ensure that not only the enabling powers but any requirements in effect would expire in 2035. This is a significant power that would potentially be at the disposal of different Governments and such restrictions would seek to ensure that it is not on the statute book any longer than required.
The noble Viscount made the point about this being in a subsequent Parliament. In a sense, that is inevitable, because the Mansion House commitments are only to make those commitments by 2030 and, because this is meant as a backstop to the Mansion House Accord, the timeframe is shaped by the timescale within the Mansion House agreement and the Government’s own reform plans. We obviously do not want it on the statute book for longer than it is needed but, on the other hand, the Government do not want—nobody would—to create a situation in which a future Secretary of State felt compelled to use the power prematurely just to avoid it lapsing. It was therefore a genuine judgment about where to land it. In my view, it would not be logical to have the ability to implement a requirement, only for it to expire very shortly afterwards, as Amendment 130A might permit. The Government had to make a judgment between those competing considerations and we came down on 2035. I accept that it is matter of judgment and the Government’s may differ from that of noble Lords, but I hope that explains the competing pressures that made us land in that space.
The Committee has also focused, through a series of amendments, on the requirements for reviewing any asset allocations before and after they are implemented. The Government are acutely aware of the need to both design any regulations with great care and ensure that, if they are every introduced, they work as intended. That is why we have embedded not one but two statutory reporting requirements in Clause 40. The first is the ex ante report, which must be published under new Section 28C(12) before the power is exercised for the first time. In response to the noble Baroness, Lady Penn, her first understanding was correct. The requirement to consult is on first use. This requirement arises from a combination of new Section 28C(12) and (14), but the approach was designed so that the compulsory report and the critical first use of the power are informed by the consultation, and that is why it was put up front.
The second is the post-implementation review, which must be carried out and published under new Section 30A no later than five years after the first regulations come into force. Amendment 154 tabled by noble Baroness, Lady Bowles, would bring forward the mandatory post-implementation review of any asset allocation requirements from five years to three. The noble Baroness, Lady McIntosh, would require an additional review within two years as well as the existing five-year review. The amendment tabled by the noble Viscount, Lord Younger, would remove the time limit altogether.
I understand why noble Lords would want a shorter deadline for the post-implementation review, especially as many have strong reservations about the power in general. Again, the five-year deadline is a matter of judgment, and I accept that we may land at different points, but our concern is to allow enough time for the arrangements to bed in, so that their effects can be properly understood. Markets can take time to adjust. It is possible, for example, that some providers might seek an exemption under the savers’ interest test. Those applications might be granted on a time-limited basis or be subject to an appeal process. That all means that the full impacts of the measure might not be visible after only a short period. On the other hand, by choosing 2035, we have deliberately kept the deadline short enough that it serves as a meaningful check.
I turn now to the content of the pre-implementation and the post-implementation reports. A number of amendments, in the names of the noble Baronesses, Lady McIntosh and Lady Bowles, and others, seek to specify additional matters that the Government should be obliged to review. In the main, I do not demur from the importance of any of the topics that noble Lords have identified; they cover many of the kinds of issues that any responsible Government would want to consider either before or after using a power of this kind. Indeed, it is worth recalling that the Government have already conducted a wide-ranging review of pensions investment that considers many of these topics. The review reported last year and, as noble Lords know, led to many of the measures in the Bill.
However, the Bill already places clear duties on the Secretary of State to look at the key overarching questions: how many measures are expected to affect, and then have actually affected, the financial interests of members in the relevant schemes, and how they affect economic growth in the UK? Both the ex ante and post-implementation reports must cover those core matters, and both are expressly permitted to cover “any other matters” the Secretary of State considers appropriate. That formulation is designed precisely to allow the Government to take account of the kinds of issues included in many of these amendments, but to do so in a way which can be adapted to circumstances at the time, rather than being hard-wired into primary legislation.
I stress that these reporting requirements are not the only safeguards built into the framework. The savers’ interest test provides a route by which providers can apply to the regulator for an exemption, where they consider that complying with the asset allocation requirements would cause material financial detriment to their members. If, for example, the kinds of market distortions or misalignments described in Amendment 155, from the noble Viscount, Lord Younger, were to arise in such a way as to raise material concerns about the impact on savers of meeting the targets, providers might well choose to apply for an exemption.
The issue of transparency was raised by the noble Baroness, Lady Bowles, and implicitly by the noble Viscount, Lord Younger. I absolutely agree that it is good practice to be clear about the evidence and submissions that have informed policy decisions in this area. That has been the Government’s practice to date. In taking forward the pensions investment review, from which these measures have arisen, the Government consulted extensively and then published a 47 page response, including a full list of the 107 organisations that responded. If further formal consultations are carried out to inform the work required under the Bill, they will be conducted in the same spirit of openness. However, I do not think that we need detailed prescriptive publication requirements in primary legislation to achieve that.
Amendment 131 from the noble Baroness, Lady Bowles, would impose a further list of “prior steps” that the Secretary of State must take before using the power. One is a requirement that the Government must obtain clearance from the Competition and Markets Authority prior to exercising the powers. I will not rehearse the debate on investment trusts; we have done that already today. However, I stress again that this mandation clause is neither the work of the devil nor the work of the ABI; it is the work of the Government acting as a backstop to a voluntary Mansion House Accord, which is an industry-led initiative by 17 pension providers, aimed at securing better financial outcomes for DC savers and boosting investment in the UK. It is for the participants of the Mansion House Accord to ensure that they comply with competition law, and I have no reason to believe that they are not doing so. For our part, the Government will of course continue to comply fully with competition law in relation to any actions taken under these powers. I do not think a statutory requirement to seek specific CMA clearance is necessary or justified.
Amendment 130 from the noble Baroness, Lady Noakes, is a probing amendment to understand why we need to override any contrary provisions in scheme trust deeds. New Section 28C(15) simply clarifies that, where there is a conflict between the statutory asset allocation requirements and restrictive provisions in a trust deed, the statutory requirements take precedence. It is designed to give trustees legal certainty, not to dilute their general duties. As I have said, we do not expect to have to use this power but, were it to be exercised, we would want to ensure that there is certainty for trustees that these requirements may be met without inadvertently causing a conflict with a provision in a trust deed or rules.
Obviously, we do not have sight of every set of deeds or rules that schemes operate under, and it may well be that no relevant conflicting provisions exist. The provision is essentially a precaution. It means that it is not necessary for trustees or providers to spend time or money to scrutinise the interaction between the asset allocation provisions and their deeds. It also addresses the risk that a scheme might find itself at risk of closure to new auto-enrolment business due to a trust deed provision that prevents it from complying with the asset allocation requirements, which it may well want to do.
However, I want to draw a clear distinction between any specific provisions within the trust deed and the broader responsibility of trustees to select investments that operate in the best interests of members. That does not change, and trustees would continue to be subject to a duty to invest in savers’ best interests in line with the law.
Viscount Younger of Leckie (Con)
My Lords, I will be brief in closing this debate; I am conscious that I spoke at some length when opening this group.
First, the point raised by my noble friend Lady Noakes was a sound one. Amendment 130 probes the extent to which it is appropriate for regulations to override the trust deed or rules of a pension scheme. I listened carefully to the response from the Minister but I think—my noble friend may agree with me—that this is a fundamental issue that goes to the heart of scheme governance and trustee responsibility. I know it is an issue that she feels strongly about, and we do too, because it is vital that trustees retain clear and accountable responsibility for investment decisions made in members’ best interests. I will reflect on Hansard, as I am sure my noble friend will too.
I also just touch briefly on Amendment 153, tabled by my noble friend Lady McIntosh. As she highlighted, this amendment seeks to ensure that a review of the asset allocation mandation powers takes place within at least two years, as well as within five, and of course it reflects the same concern that I raised. I also listened when the Minister said that it was a matter of judgment by the Government. I take note of what she said—I will not give a view on that but, again, we will reflect carefully on it. Despite the best efforts of the Minister, I remain with the feeling that there is not a clear rationale or sufficient assurance, but we will reflect.
The noble Baroness, Lady Bowles, raised a number of technical and specific points. Taken together, this group once again demonstrates the complexity of this particular area, the necessary safeguards and the prior steps required, and the degree of intervention that the Government risk embarking upon through this mandation power. Once mandation is introduced, it inevitably draws policymakers into ever more detailed interventions, and with that comes a cascade of unintended consequences, as I said before. We will therefore reflect on the Minister’s responses but, in the meantime, I beg leave to withdraw my amendment.
Member's explanatory statement
This amendment seeks to remove the time limit for savers’ interest exemptions to the asset allocation requirements that would be set by the Authority.
Baroness McIntosh of Pickering (Con)
My Lords, I hope that this little group is fairly self-explanatory.
In Amendment 141, I am again seeking to provide more certainty in relation to the savers’ interest test for exemptions to the asset allocation requirements and ensure that providers are not required to alter their asset allocation until the authority has made its determination or they have received the outcome of the referral to the Upper Tribunal. This is a probing amendment for debating purposes. I hope that we will get further light from the Minister when she replies.
My noble friend Lady Noakes has just reminded me that I would also like to speak to Amendment 140, the “starter for 10” in this group. Here I am seeking to remove the time limit for savers’ interest exemptions to the asset allocation requirements that would be set by the authority. I thank the Committee for its forbearance in allowing me to speak to Amendment 141 as well.
Baroness Bowles of Berkhamsted (LD)
My Lords, I will speak to Amendments 146 to 150. This group of amendments is all about trustees. Although I submit that nothing in this Bill should unsettle the basic foundation of our trustee law, there remains extensive debate in the courts and academic literature, and among trustees, on how far wider policy objectives and emerging risks can be taken into account. I am trying to address some of those.
Amendment 146 would simply reinforce the obvious: fiduciary duty remains the overriding principle of pension governance and trustees must act in the best financial interests of members. That is the cornerstone of trust law. The courts have been clear for decades that trustees must prioritise members’ financial interests above all else. Yet the combination of the Mansion House rhetoric, promotional language in the Bill and the possibility of future regulations has created real anxiety among trustees about whether they are expected to prioritise government preferences over member outcomes. This amendment aims to remove that ambiguity. It would restate the law, reassuring trustees that their primary duty has not changed.
Amendment 147 follows on from that in seeking to introduce a safe harbour. Trustees are increasingly worried about being second-guessed, not for misconduct but for failing to meet expectations that are not clearly defined. Many are lay trustees. They act in good faith, take professional advice and follow their fiduciary duties. They should not face penalties or adverse consequences because they did not meet a quota or chose a different route to the same underlying assets. A safe harbour is a standard legal mechanism used in other regulatory regimes. It protects trustees who do the right thing, prevents retrospective reinterpretation of policy signals and ensures that trustees can make decisions based on evidence, not fear.
Amendment 148, also tabled by the noble Baroness, Lady Altmann, addresses systemic risk. Trustees already consider systemic risks: climate change, economic resilience, supply chain fragility and other long-term factors that materially affect pension outcomes. The Pensions Regulator already expects trustees to consider these issues, but the statutory framework is uneven and expectations are not always clear, so this amendment would codify best practice. It would ensure that trustees consider systemic risks as part of their fiduciary duties, while making it explicit that this does not mandate investment in any particular vehicle. It is about risk management, not direction of capital. Trustees are careful and sensible people and will observe the policy direction, including on private assets. As I said last week, before we had the devil’s clause, there was broad agreement that it would be far better to trust the trustees.
Amendment 149, again from the noble Baroness, Lady Altmann, addresses structural discrimination. I have already dealt extensively with how the Bill risks creating unequal treatment between different collective investment structures. Trustees should be free to choose the most appropriate structure for their scheme, whether listed or unlisted, based on liquidity, valuation, discipline, governance or member outcomes. The amendment would simply ensure a level playing field. It would prevent distortions, protect competition and ensure that trustees are not nudged away from structures that have served savers well for over a century.
Finally, Amendment 150 deals with herding risk. Regulatory herding is a known danger, which we have seen most recently and dramatically with LDI, where regulation, guidance or professional advice pushes everyone in the same direction at the same time and systemic risk increases, not decreases. The Mansion House agenda, if interpreted too narrowly, risks creating precisely that kind of clustering. This amendment would require the Secretary of State to avoid mandating or promoting investment in a way that induces herding and ensure that any guidance emphasises diversification and risk management. It is a simple “Do no harm” provision which learns from recent history. It is also embedded in the terms of the Mansion House Accord, as spoken to last Thursday by my noble friend Lord Sharkey. Trustees must not be forced to purchase assets that do not exist, do not exist safely or do not exist at a fair price.
None of these amendments would obstruct the Government’s objective. None would prevent investment in productive finance. None would limit trustee discretion. What they would do is ensure that trustees remain protected, that their duties remain clear and that the Bill does not inadvertently distort markets, undermine competition or create new systemic risks. These amendments are modest, sensible and protective. They would strengthen the Bill, support trustees and safeguard the long-term interests of pension savers. It is what we should all be thinking about.
Lord Davies of Brixton (Lab)
I support mandation. I am in favour of the Government introducing the measures in this Bill, in principle. All Governments have a duty, not just a right, to deal with market failure. If the current investment advice and structures that we have are failing to deliver investments in the growth that we need in our economy, then the Government have a duty to act. I am not yet convinced that they have all the mechanics of mandation right, but that is the process we are going through at the moment in investigating how it will be achieved.
I am not so sure—I ask my noble friend the Minister to guide the Committee on this—about a question raised at Second Reading to which there was no answer, which applies to this part of Bill. Do the Government understand that the inevitable corollary of mandation is responsibility for the outcome? Outcomes may be better. We are told at length that this will improve things; the aim is to grow the economy to achieve good investments.
The Government may not have a legal responsibility to make sure that happens, but they certainly have a moral responsibility when they are saying how members’ money should be invested and they also, inevitably, have a political responsibility to ensure that they produce a system that enjoys broad public trust. A failure to achieve the Government’s objective will break that trust. Do the Government appreciate and understand the implications of what they are doing?
Lord Sharkey (LD)
My Lords, I will speak briefly under the auspices of Amendments 146 and 147 when we resume some of the discussions the Minister promised last week to continue, notably on mandation and statutory guidance. In our debate last week, I tried to establish the evidence base for the Minister’s assertion that
“the Government would not be proposing these powers”—
mandation—
“if there were not strong evidence that savers’ interests lie in greater investment diversification than we see today in the market”.—[Official Report, 22/1/26; col. GC 218.]
The key words here are “strong” and “evidence”. There are certainly those whose opinions would align with the Minister’s assertion, but opinion is not the same as evidence and not nearly the same as strong evidence.
As I said last week, the DWP recently commissioned the Government Actuary’s Department to model four variations of pension scheme strategies. I will not list them again, but the study concluded that across a range of economic scenarios the model portfolios deliver very similar projected pension pot sizes. But it also showed that if the current underperformance of the UK versus global equities persists, UK-heavy allocations will underperform the baseline. The Government Actuary’s Department said in a post on GOV.UK on 15 November 2024:
“Our analysis showed that a greater level of exposure to private markets may deliver slightly improved outcomes to members. However, there is considerable uncertainty, particularly with the assumptions for projected future investment returns”.
That does not sound like strong evidence for anything.
The Institute and Faculty of Actuaries makes the same point. It says that, based on the Government’s own impact assessment, “We do not think there is strong, clear evidence that in most foreseeable scenarios savers’ interests lie in greater investment in private markets and infrastructure”. It believes that there exists a very uncertain central estimate of an extra two percentage points over 30 years, equivalent to 0.066% a year compounded. It goes on to say: “Given the inherent uncertainty in such estimates, this is almost negligible and could easily turn out to be negative over the next 30 years or indeed much higher”. The IFoA goes on to say: “The point is that it is far from clear that there would be a material benefit”. That does not sound like strong evidence commendation either, yet this is the basis on which the Government seek to mandate investment, which raises as a consequence significant concerns about the operation of fiduciary duty.
The proposals in this Bill, for there is a power to mandate investment, cause uncertainty about trustees’ duties to their members. That uncertainty is understandable, especially because the case for mandation is weakly evidenced, if evidenced at all. The uncertainty is also unnecessary in many ways because of the existence of the Mansion House Accord for which, as others have said, 17 leading pension providers have already signed up. How will the anticipated statutory guidance, for example, contribute to the model of co-operation embedded in the Mansion House Accord? Is it no more than a useful threat? What role will the statutory guidance play in modifying the application of fiduciary duty? In fact, can the Minister confirm that the promised statutory guidance will have something to say about the possible clashes between mandated action and fiduciary duty, if only to confirm the primacy of fiduciary duty?
Minister Bell responded on 22 January to a Written Question from my honourable friend the Member for Stratford-upon-Avon about the scope of the coverage of the upcoming guidance on fiduciary duties. His reply did not refer to the mandation powers at all. Will the Minister confirm that the guidance will be non-binding and have the same have force as many other “have regards” that exist in the financial services sector? If the guidance has, or could plausibly be read as having, detectable, real-world influence, it should come before Parliament for scrutiny, and it should come before us when we can recommend changes.
Minister Bell’s Written Answer, as I mentioned a moment ago, says of the guidance that:
“Work will commence shortly beginning with an industry roundtable to gather views and technical expertise to ensure the guidance meets the identified need”.
I suppress my astonishment at this rather late start for thinking about statutory guidance. I notice that, in the reply, there was no mention of Parliament and the role it might play or of timescale in all this, except we now know that it has either just started or is about to start. In other words, as things stand, the likelihood of effective parliamentary scrutiny of anything to do with statutory guidance is unlikely. This is entirely unsatisfactory for the reasons that the noble Lord, Lord Ashcombe, has argued so forcefully.
There is no compelling evidence that mandation will work. If the Mansion House Accord is to be taken seriously and the Government play their part, mandation will be unnecessary. Mandation would interfere with or complicate the principal of fiduciary duty. It is also opposed by major stakeholders including, as I mentioned previously, the Governor of the Bank of England.
The Institute and Faculty of Actuaries ends its latest assessment of the situation by saying that trustees should not be leaned on to invest in ways that conflict with their own best judgment. Instead, those investments and markets that the Government wish to promote should continue to be made more attractive through initiatives such as LTAFs and so on. The pension schemes will freely choose to follow in a way that is right for them and their members. We agree with that and will continue to try to convince the Government that the reserve power is not necessary or desirable—activated or not—and that there is no sound basis for using it.
Baroness Stedman-Scott (Con)
My Lords, I will speak briefly on the other amendments in this group before turning to Amendment 145 in my name and that of my noble friend Lord Younger of Leckie. As noble Lords have already set out, Clause 40 represents a significant extension of regulatory influence over asset allocation in defined contribution default arrangements. Given the scale of that change, it is both reasonable and necessary that we consider carefully how risk, responsibility and accountability are apportioned within the framework the Bill creates.
The amendments in the name of my noble friend Lady McIntosh of Pickering, and the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, seek to introduce greater certainty and procedural fairness into the operation of the savers’ interest test. Removing an automatic time limit on exemptions, ensuring that schemes are not compelled to alter asset allocations while determinations or appeals are ongoing and requiring the authority to give reasons for its decisions are all, in my submission, entirely sensible propositions. They make the framework that the Bill creates more robust, transparent and defensible.
In a similar vein, allowing schemes to apply for the savers’ interest test over a limited number of consecutive years, while demonstrating a credible pathway to compliance, reflects a realistic understanding of how long-term investment strategies are developed and implemented. It recognises that good outcomes for savers are not always delivered by abrupt or mechanically imposed changes.
Several of the amendments in this group speak directly to the core point of fiduciary responsibility, which, as was powerfully reinforced during our debate on the final group last Thursday, is an absolutely central point to the approach being adopted by noble Lords across the Committee. The amendments reinforcing fiduciary duty and proposing a safe harbour for trustees acting in good faith on professional advice and in accordance with their duties are an attempt to clarify that nothing in this Bill should place trustees in an impossible position, caught between regulatory direction on the one hand and their fundamental obligation to act in the best financial interests of members on the other.
Related to this, the probing amendment from the noble Lords, Lord Vaux of Harrowden and Lord Palmer of Childs Hill, asks an important and unresolved question: where investment decisions are mandated by the state, in effect, where does liability sit if those investments underperform? Even if the Government do not accept the mechanism proposed, the question itself cannot simply be wished away; I hope that the Minister will address it directly.
I also wish to touch on the amendments that deal with systemic risk, structural neutrality and herding behaviour. Requiring trustees to have regard to long-term systemic risks, including economic resilience and climate change, is entirely consistent with existing best practice and does not mandate investment in any particular asset or vehicle. Ensuring that listed investment funds are not structurally disadvantaged helps preserve choice and diversification. The amendment on regulatory herding speaks to a well-understood risk: overly prescriptive frameworks can drive homogeneity of behaviour, amplifying systemic risk rather than mitigating it.
I hope, therefore, that the Minister will engage seriously with the questions these amendments ask around process, liability, fiduciary duty and risk. Even where the Government may not be minded to accept the amendments, as drafted, they highlight issues that, given the provisions in the Bill, deserve clear and careful answers.
As has been our consistent approach throughout these days in Committee, my own amendment seeks to probe the Government on a key question: why have they provided for a maximum civil penalty of £100,000 for failure to comply with the mandation requirements set out in this chapter? Given the nature of those requirements and the breadth of discretion that they confer on the authority, it is not at all clear in the Bill how the Government have arrived at that figure or why it is considered proportionate. We are dealing here with decisions around long-term asset allocation in pension default arrangements—areas where reasonable, professional judgment may legitimately differ and where the consequences of regulatory direction may not be apparent for many years. In that context, a six-figure penalty is not a trivial matter.
This amendment is designed to invite the Government to explain the rationale for the level of the penalty; how it is expected to be applied in practice; and whether sufficient regard has been had to scheme size, intent and the nature of any alleged breach. I hope that the Minister can set out clearly why £100,000 is the appropriate ceiling; how proportionality will be ensured; and what safeguards will exist to prevent penalties being applied in a blunt or mechanistic way.
Lord Katz (Lab)
We have to have a hard stop at 8 pm, I am afraid, so I move that the Committee do now adjourn.
Introduction: Lord Barber of Chittlehampton
Grass-roots Music Venues
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Bassam of Brighton
To ask His Majesty’s Government what assessment they have made of the impact of the 2025 Budget on grassroots music venues.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, we are introducing permanently lower tax rates for eligible retail, hospitality and leisure properties, including grass-roots music venues, worth nearly £1 billion a year. As part of the changes to business rates, we announced a £4.3 billion support package to protect those facing higher bills after revaluation. We have also more than doubled funding to support independent artists and grass-roots music venues as part of the music growth package, building on the UK’s strength as a world-leading creative industries destination.
Lord Bassam of Brighton (Lab)
My Lord, that is a very welcome response from the Minister, but I wonder what assessment His Majesty’s Government have made of forecasts that increased business rate valuations could result in a closure of between 80 to 120 grass-roots music venues and place a further 120-plus at risk. How do the Government square this with their welcome commitment to high street regeneration, creative sector growth, the night-time economy and protecting cultural infrastructure? Will the Minister agree to meet representatives from the sector to discuss the issue further?
Lord Livermore (Lab)
I am grateful to my noble friend for the question. I am very happy to meet the groups that he mentioned. He is absolutely right to say that the creative sector is extremely important to the UK economy. It is a major employer and a significant part of our economy. It has been included as a priority sector in our industrial strategy, recognising its high growth potential, particularly through the development and adoption of new technologies.
On business rates, which my noble friend raised, as I have said before in your Lordships’ House, I acknowledge that the revaluation means that sectors such as pubs and music venues will struggle in relation to the business rates applicable to them. That is why we are working with the sectors involved to ensure they get the support they need. Noble Lords will have heard what the Prime Minister and Chancellor said on this in recent days. I will not add to that or comment on any speculation, but where there are further comments to be made I will of course come back to your Lordships’ House to discuss them.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, there is plenty of time. We will hear from the Lib Dems next, then the Conservative Benches.
Lord Clement-Jones (LD)
My Lords, given that the Music Producers Guild reports that 50% of recording studios are considering closure within the year, with rateable value increases of up to 100%, will the Minister commit to urgently reviewing their exclusion from the retail, hospitality and leisure multiplier, and their misclassification as office space by the Valuation Office Agency, particularly given that film studios, which are similarly not public-facing, already benefit from 40% targeted relief?
Lord Livermore (Lab)
The Government have been very clear that the lower multipliers will broadly reflect the scope of the current retail, hospitality and leisure business rates relief, which is centred around retail, hospitality and leisure properties that are reasonably accessible to visiting members of the public. If a recording studio forms part of a single property with a qualifying hospitality or retail business, and the hospitality or retail aspect is the main purpose of the property, it will qualify for the lower multipliers.
Lord Vaizey of Didcot (Con)
My Lords, the whole House will agree that music venues are a vital part of our cultural ecosystem. Music venues are now benefiting from a voluntary grass-roots levy levied on concert tickets, which I understand the Government are keeping under review with a view to introducing a statutory levy. The Government are also talking about a tourist tax. I suspect I know what the Minister’s answer will be, but would it make sense to roll up consultation on a tourist tax and a ticket levy into one single tax?
Lord Livermore (Lab)
I do not think so. I shall repeat what my right honourable friend Ian Murray, the Culture Minister, said on the industry levy:
“My ambition is to see the voluntary levy in place for as many concerts as possible and, as a milestone in that progress, for at least 50% of tickets on sale for stadium and arena shows in 2026”
to have adopted the levy by 31 December.
“Following this, I would like to see this target brought as close to 100% as possible”.
The Earl of Clancarty (CB)
My Lords, further to the question asked by the noble Lord, Lord Clement-Jones, is the Minister aware that as well as the possibility of closures, there is the danger that our recording studios may up sticks and move abroad? With the continuing effect of Brexit on the music industry, unfortunately, they will not need a great deal of encouragement.
Lord Livermore (Lab)
As noble Lords will know, I am very happy to agree with the noble Earl on the last point he raises: the incredibly damaging effect of Brexit on that sector in particular. He will like to know that, along with the EU, we have jointly recognised the value of travel and cultural artistic exchanges, including the activities of touring artists, and we will continue our efforts to support travel and cultural exchange. We will explore how best to improve arrangements for touring across the European continent with the EU and other EU member states.
Lord Brennan of Canton (Lab)
My Lords, the Minister will be aware that I am leading a fan-led review of live music as commissioned by the Culture Committee in the House of Commons. One of the things that comes clearly from fans’ voices is that they are happy to pay a levy if they know it is going to grass-roots music venues in order to support them, unlike the obscure levies they sometimes have to pay, or other service charges on top of ticket prices. With that in mind, will the Government commit in the forthcoming ticketing legislation to include taking powers for a statutory levy just in case the voluntary levy does not work out?
Lord Livermore (Lab)
I am very grateful to my noble friend for the work he is doing in the review he mentions. I do not think it is for me to commit the Government to that specific point, but I will of course take it back and discuss it with colleagues in other departments as well.
The Lord Bishop of Hereford
My Lords, I thank the Minister for his answers. Across the country, churches provide the largest network of performance spaces available to professional and amateur groups for music making and other artistic endeavours, so I thank him for the recent announcement regarding the new places of worship renewal fund. But I am sure he will be aware that there are thousands of churches and other faith communities across the country waiting to know how that scheme will operate. Will the Minister let us know when the details of the scheme will be published and whether the Government will work with us to ensure the scheme is workable, consistent and fair, especially in the levying of VAT?
Lord Livermore (Lab)
I am grateful for the support that the right reverend Prelate set out in his question. I assure him that that will be responded to very shortly.
Baroness McIntosh of Pickering (Con)
The Minister will be aware that music venues contribute hugely to growth, particularly in market towns and cities, and that the night-time economy suffered greatly during Covid. Will he discuss with his colleagues the impact that the agent of change principle is having, especially when it is not followed to the letter, where poorly soundproofed residential developments are built in close proximity to an existing music venue? It can force a music venue to close down, despite it being very popular.
Lord Livermore (Lab)
I will absolutely do what the noble Baroness asks. The Government have heard exactly what she said: that the existing policy to mitigate the impact of development on existing activities, including live music, is not always applied effectively. The creative industries sector plan committed to improving the implementation of the agent of change principle. MHCLG’s current consultation on the National Planning Policy Framework proposes that the policy be more explicit about the matters to be considered, such as both the current and permitted levels of activity within existing uses, which includes licensing for music and cultural venues. This will enable decision-makers to consider the right information early on, addressing the conflict between new and existing development.
Lord Parkinson of Whitley Bay (Con)
My Lords, live music venues are the R&D incubators for our creative industries. Some 53% of venues made no profit last year, and the Government’s choices on national insurance contributions and business rates have given them an additional tax bill of £7 million. At a recent helpful meeting with the noble Baroness, Lady Twycross, a number of noble Lords met representatives of music venues who said that one of the difficulties is hearing different things from the Treasury and from the Valuation Office Agency. So regarding the meeting the Minister’s kindly agreed to on behalf of the noble Lord, Lord Bassam, may I encourage him to bring along somebody from the Valuation Office Agency to help clarify the situation for these vital parts of our grass-roots music sector?
Lord Livermore (Lab)
I am not in a position to promise who specifically will attend the meeting, but I will absolutely take that representation back to the department to see if it is possible. I agree with the noble Lord on the importance of music venues; as he says, they are the R&D incubator for the rest of the sector. As part of the industrial strategy, the Government have recognised music and performing and visual arts as a priority sub-sector, and we have recognised the potential for growth. The UK is the third biggest music market globally. As you all know, as part of the music growth package, we are backing the next generation of British talent by doubling funding to support independent artists and grass-root music venues.
Lord Spellar (Lab)
My Lords, can the Minister take back to Whitehall the very clear message on the importance of the music industry, including for Britain’s place in the world, that he has identified? No one starts their career playing the O2; they learn their trade—particularly how to relate to an audience—by playing the small venues, night after night. This is hugely important for our soft power but also for a significant part of our economy. Is that understood in Whitehall?
Lord Livermore (Lab)
I hope it is understood. I agree with much of what my noble friend says. He will know that we have provided £2.5 million of funding this year for Arts Council England’s Supporting Grassroots Music Fund, enabling grass-roots music venues, recording studios, promoters and festivals to apply for grants to develop new revenue streams, make repairs and improvements, and enhance live music experiences.
ILO Convention 190
Baroness Smith of Llanfaes
To ask His Majesty’s Government what assessment they have made of the UK’s implementation of ILO Convention 190, which recognises the right to be free from violence and harassment in the workplace.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, the UK ratified ILO Convention 190 in March 2022, demonstrating its commitment to preventing and addressing violence and harassment in the workplace. We have a robust legislative framework in place, consisting of strong health and safety at work and discrimination laws. We are confident that these meet the convention’s requirements. These protections will be further strengthened through the Employment Rights Act 2025, which includes a requirement for employers to take all reasonable steps to prevent sexual harassment and harassment by third parties.
Baroness Smith of Llanfaes (PC)
My Lords, I thank the Minister for his Answer. However, if one in five workers reports feeling at risk of violence at work, on what basis are His Majesty’s Government confident that existing legislation is sufficient to result in prevention, rather than simply to respond to the harm once it has occurred?
Lord Katz (Lab)
The noble Baroness is obviously right and correct that we need to be concerned about prevention and building a culture of positive employers’ attitudes towards tackling harassment and victimisation in the workplace, rather than simply relying on tackling harm when it is caught.
However, we have very strong laws and regulations in place right now. As I said, harassment is covered under the Equality Act 2010, which was recently strengthened in October 2024 to place a specific duty on employers to take reasonable steps to prevent sexual harassment in the workplace. The noble Baroness will remember well the debates we had in Committee on the then Employment Rights Bill, now Act, where we changed the law to toughen it up further so that employers must take all reasonable steps to stop sexual harassment before it starts and create and maintain workplaces free from harassment.
Lord Addington (LD)
My Lords, does the Minister agree that the rise in the number of reported harassment cases—certainly of women—means either that we have got a great rise in the number of incidents or that people are more prepared to report it? If so, can we make sure that there is an easier way of getting resolution of any complaint? Something that is merely reported and talked about will mean nothing unless there is an effective enforcement regime in place.
Lord Katz (Lab)
The noble Lord is right that enforcement is as much a part of tackling the issue as is creating solutions to the nature of workplace culture. The Employment Rights Act does a number of things in this regard. As well as what I have already mentioned, it voids non-disclosure agreements between employers and workers that prevent a woman speaking out about relevant harassment and discrimination. It also strengthens protection for whistleblowers, making it explicit that sexual harassment can be the basis for protected disclosure. On top of all else, it creates the Fair Work Agency, which will monitor all these new workplace rights.
Baroness Prosser (Lab)
My Lords, an awful lot of these incidents occur because many people, in various kinds of workplace, either think the issue is a non-issue or that it is funny, or they just do not get it. How about, with companies that have been found guilty of not facing up to these problems properly and not dealing with them efficiently, taking some further action unless the company agrees and carries out proper training of its managers to ensure that they do understand what is wrong and spot things before they get out of hand?
Lord Katz (Lab)
My noble friend makes a very good point that enforcement has to be driven somewhat by example. It is important that we do not trivialise this issue, as some seek to do. I would widen that out past workplaces to the very issue of discrimination, harassment and violence against women and girls. That is why everybody in your Lordships’ House should be welcoming the Government’s violence against women and girls strategy that was published just before Christmas. We have a landmark mission to halve violence against women and girls over the next decade. That is the way that we place women’s equality at the heart of the Government’s missions.
Lord Young of Acton (Con)
My Lords, I declare my interest as a director of the Free Speech Union. Can the Minister help define what third-party non-sexual harassment employers will have a duty under Section 21 of the Employment Rights Act to take all reasonable steps to protect their employees from? In the past, when I have raised the spectre of that duty being extended to indirect harassment—for example, overheard conversations, jokes, remarks or witticisms—I have been pooh-poohed. Can the Minister assure us that I was just being alarmist and that, when the Government do produce their guidance on this issue, which I understand they are about to do, it will specifically say that business owners are not responsible for protecting their employees from overheard conversations, remarks, witticisms and jokes?
Lord Katz (Lab)
Well, I congratulate the noble Lord on getting through that question without mentioning the phrase “banter ban”. I am going to be absolutely clear: employers will not be penalised for failing to anticipate the unforeseeable or take other impractical steps. Employers cannot and are not expected to police or control every action of third parties. The measure does not change Article 10 of the European Convention on Human Rights, which applies in terms of interfering with the right to freedom of expression. It is clear that it is not about banning banter in a pub; it is about taking action against real hate, homophobia, racism and misogyny, which other customers or other workers should not have to face in this day and age.
Lord Hamilton of Epsom (Con)
Does the Minister agree that those in Downing Street should accept that the ILO convention applies to them as well when it comes to meting out violence and harassment on Labour colleagues whose only crime is that they think they could run the country better than the Prime Minister?
Lord Katz (Lab)
To answer the noble Lord’s question, yes, of course it applies in all workplaces, but I am not going to tell the NEC how to do its business.
Baroness O'Grady of Upper Holloway (Lab)
My Lords, alongside many other people across this House, I welcome this Government’s focus on reducing violence, and in particular the introduction of those new measures on non-disclosure agreements that silenced thousands and thousands, particularly women, who were facing harassment. That is serious when you are at work trying to earn a living, so we should congratulate the Government on listening.
On the duty to prevent harassment, will my noble friend the Minister also listen to concerns that, at the moment, Health and Safety Executive workplace inspectors do not have a specific role to enforce that duty? If there are other ideas, I think people would be happy to listen to them, but can he reassure us that there will be a comprehensive enforcement regime for that duty to prevent harassment?
Lord Katz (Lab)
My noble friend is right to recognise the important step this Government have taken to avoid NDAs when it comes to prevention or speaking out about harassment and discrimination. Our Benches are very proud of that landmark piece of legislation in the Employment Rights Act. In terms of enforcement, as I have already said, one of the other things that the Employment Rights Act does is create the Fair Work Agency, which will be relevant in terms of enforcing all the new rights at work that the Act creates. Having said that, health and safety at work legislation still covers people at work in terms of work-related violence and other risks arising from work activities, and that will certainly still be in place enforcing those aspects.
Lord Hunt of Wirral (Con)
Might I share with the Minister my concern that backlogs in employment tribunals have now reached record levels? He referred to the Employment Rights Act. That statute and the related work reforms will generate, on the Government’s own analysis, at least a 17% increase in claims before employment tribunals, so will he give a clear assurance that those involved with claims of violence and harassment at work will not face delayed justice because of employment tribunal backlogs and that the Government will provide the additional judges, staff and resources required to meet that expected rise in claims?
Lord Katz (Lab)
When it comes to talking about backlogs and underfunding in our criminal justice system, in fact our whole justice system, it takes a certain amount of chutzpah from those on the Benches opposite, who spent 14 years underfunding all aspects of our justice system, to then say, “Isn’t this going to be a problem?” We are investing in our criminal justice system, we have legislation going through your Lordships’ House to do just that, and I do not resile from my criticism of the Benches opposite for their failure to invest in our justice system.
Uniformed youth groups: Promoting Skills and Resilience in Young People
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Baroness Morgan of Drefelin
To ask His Majesty’s Government what assessment they have made of the impact of uniformed youth groups on promoting skills and resilience in young people.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
We recognise the excellent contribution and impact of uniformed youth organisations. The Government have directly funded their work since 2022. There is a range of existing research that shows the positive impact of uniformed youth organisations on young people and their lives. Ipsos independently evaluated the DCMS-funded uniformed youth fund from 2022 to 2025. The evaluation found evidence supporting the positive impact of uniformed youth organisation membership on young people’s well-being, social and emotional development, skills and community connectedness.
Baroness Morgan of Drefelin (Lab)
I thank my noble friend the Minister for that fabulous reply. I could not agree with her more. We know that uniformed youth groups will play a vital role in delivering the Government’s new youth strategy. Groups such as the Scouts, the Girl Guides, all our cadets, the Jewish Lads’ and Girls’ Brigade and of course the Girls Brigade and Boys’ Brigade do an amazing job. Will the Minister encourage her department to look again at the funding arrangements so that these groups can retain staff during the transition from the uniformed youth fund, which is coming to an end in March, to the new funding arrangements that will come into place with the new youth strategy? It is great to put the contribution of these groups on the record here today.
Baroness Twycross (Lab)
I pay tribute to all those supporting uniformed youth organisations, including my noble friend. Our new national youth strategy has been co-designed with young people. We are engaging further with young people in youth groups, including uniformed youth organisations, to ensure that their perspectives, needs and proven outcomes are incorporated. As for transitional funding and funding arrangements, I will take my noble friend’s points back to the department ahead of her meeting with Minister Peacock, which I understand is taking place early next month.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
It is definitely the turn of the Conservative Benches. Can we make our mind up?
Lord Bailey of Paddington (Con)
My Lords, I declare my interest as the chair of the cadet health check team. The value of the uniformed services to our young people throughout the country is beyond doubt, particularly in the poorest communities in the country. The real challenge now is adult volunteers. The entire service is based on adult volunteers, so what work are the Government doing to improve recruitment and retention of those very valuable volunteers?
Baroness Twycross (Lab)
I agree with the points the noble Lord raised around the value of uniformed youth groups. One of the things our new funding arrangements will do is support the development of volunteers. I will be very happy to share some examples and discuss that further with him.
Lord Mohammed of Tinsley (LD)
My Lords, I echo comments made earlier in your Lordships’ Chamber about the invaluable service that uniformed youth services provide, particularly when it comes to life skills and experiences. How can the Government change policies to get more young people involved in these organisations so that more young people benefit from this and stand a better chance in the world of employment?
Baroness Twycross (Lab)
The new national youth strategy has been developed with young people precisely to make sure that the Government are directing funding towards areas that young people themselves have identified. One of the most difficult findings from some of the work done in the run-up to the launch of the national youth strategy was around the isolation and loneliness faced by so many young people. The strategy is a 10-year plan to make sure that every young person across the country has somewhere to go, somewhere that cares for them and a community they feel part of.
Lord Mountevans (CB)
My Lords, I draw attention to my interests as a vice-president of the Sea Cadets and president of the successful City of London Sea Cadets. The Minister kindly discussed the new arrangements of DCMS, but the strategic defence review just six or seven months ago called for a 30% increase in the offer of the cadet organisations. What additional funding, if any, can the Minister point to that is going to facilitate this growth?
Baroness Twycross (Lab)
This is Ministry of Defence funding. My understanding is that the Government plan to have increased military cadet forces by 30% by 2030; this is an investment of over £70 million of new funding, as set out in the strategic defence review, which the noble Lord rightly points out was published last year.
Lord West of Spithead (Lab)
My Lords, I declare an interest as president of the Bollington and Macclesfield Sea Cadets—there is a northern aspect to me, as you can see. Whenever I have been involved with the uniformed cadet forces, I have been amazed how they have changed the lives of many of our young people. Can the Minister confirm that sea cadets will now carry rifles when members of a guard and that they will do range-firing practices like the other cadet units?
Baroness Twycross (Lab)
I have absolutely no idea. I am not going to come up with a fudged answer, but I will write to my noble friend to outline whether or not that is the case.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, as a former Brownie, Guide and Guide leader, I absolutely agree with all that has been said about the worth of belonging to uniformed organisations, particularly in relation to self-esteem for our young people and the resilience that is built up. I visited my local Guide unit two weeks ago during Parliament Week, and I was very concerned to learn that a number of units have closed recently because of the lack of volunteers. Is there more that the Government can do to help with the lack of volunteers? I am working with the devolved Administrations to help highlight that.
Baroness Twycross (Lab)
The noble Baroness makes a valuable point, as previous speakers have done, in relation to the vital role of volunteers. You cannot have these uniformed youth groups without volunteers. Most of the funding that is outlined within the national youth strategy is focused on England, but I will take back the noble Baroness’s points, because it is a national organisation. I thank her and everyone else in your Lordships’ House who have contributed through volunteering for these groups.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interest as chair of the National Preparedness Commission. In 1908, Scouting for Boys—and, in 1912, the companion edition called How Girls Can Help to Build Up the Empire—was very explicit about the importance of being prepared. That remains very much at the heart of the work that those two uniformed organisations, and all the others that have been mentioned, do. This is going to be increasingly important for the nation, given all the threats and hazards that we face. Can my noble friend indicate whether or not that philosophy is going to be supported in relation to those organisations, other youth organisations and, more generally, in schools, to ensure that young people are equipped with the personal resilience skills and the skills that may be necessary to support the country in terms of the threats and hazards that we face?
Baroness Twycross (Lab)
I think “Be prepared” could usefully be used as a motto for Ministers standing at the Dispatch Box in your Lordships’ House as well. There is clearly a role played by cadet forces and other uniformed youth organisations in the broader resilience piece. However, a thread that goes through all our policies on youth is around that resilience that young people so desperately need. All noble Lords from across the House will be aware of the crisis that so many people are feeling, and we want to make sure they feel equipped for the challenges they may face in the future.
Lord Parkinson of Whitley Bay (Con)
The Minister said in her initial Answer that the last Conservative Government set up the uniformed youth fund to give young people these life-changing skills and opportunities, and I was glad to hear about the evaluation she mentioned. It is sad, therefore, that the fund is ending in March. In the transition to the new funding arrangements, can she guarantee—as she said in response to her noble friend—that all of the organisations, including the Sea Cadets, St John Ambulance, the Guides, the Scouts and others, will continue to receive funding support so that young people can continue to have these life-changing opportunities?
Baroness Twycross (Lab)
I have committed to my noble friend to take the point about transitional funding back to the department. However, as the noble Lord will be aware, the uniformed youth fund was announced in the immediate aftermath of Covid and was intended to allow the groups to set up additional units. It was only ever intended to run until 2025. Therefore, the additional year has been while we have been setting up the programmes and funds under the new national youth strategy, which we are proud to say we have co-produced with young people. That is why the focus has shifted to a different way of rolling out funds.
Superintelligent AI
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Lord Hunt of Kings Heath
To ask His Majesty’s Government what plans they have to regulate the development of superintelligent AI.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
AI’s superintelligence is the subject of ongoing debate regarding its definition and whether it is achievable. Advanced transformative AI presents both significant opportunities, such as improvements in healthcare and climate action, and risks. As frontier AI evolves, the AI Security Institute helps the Government assess and identify potential emerging risks, which would include pathways towards any kind of superintelligence. The Government will remain vigilant and prepare for new AI risks, including rapid advancements that could affect society and national security. AI regulated by existing expert regulators will be informed by the AISI findings.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to my noble friend for that considered Answer. Clearly, AI has great potential; the UK is third in the global league of AI investment. I understand the Government’s response, which is essentially a nuanced approach to encourage both proper regulation and investment.
However, superintelligent AI undoubtedly does present risks. The Minister will know that the director-general of MI5 has warned of the
“potential future risks from non-human, autonomous AI systems which may evade human oversight and control”.
Meanwhile, the UK’s AI Security Institute has warned:
“In a worst-case scenario, this … could lead to catastrophic, irreversible loss of control over advanced Al systems”.
The problem is that the companies developing superintelligence do not know the outcome and there are currently no barriers to the development. I urge the Government to take this really seriously and to start talking to other countries about putting some safety controls in.
Baroness Lloyd of Effra (Lab)
My noble friend is right to mention the research of the AI Security Institute, which is advice the Government listen to and take very seriously. AI is a general-purpose technology with a wide range of applications, which is why the UK believes that the vast majority of AI should be regulated at the point of use. My noble friend is also right that collaboration with other countries is critical, and the UK’s approach is to engage with many other countries, and through the AI Security Institute with developers so that it has good insight into what is happening in development today.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
Let us have the Lib Dem Bench next and then the Conservative Benches.
Lord Clement-Jones (LD)
My Lords, I declare an interest as a consultant to DLA Piper on AI regulation and policy. In their manifesto, the Government promised
“binding regulation on … companies developing the most powerful AI models”,
yet, 18 months later, even in light of the harmful activities of stand-alone AI bots, we have seen neither the promised consultation nor any draft legislation. How can the Government credibly claim to be taking superintelligence seriously when they cannot get round even to publishing a consultation, let alone legislating?
Baroness Lloyd of Effra (Lab)
As I mentioned earlier, most AI systems are regulated by our existing expert regulators, and they are already acting. The ICO has released guidance on AI and data protection and the MHRA is taking action to allow a sandbox for AI as a medical device product. We are working with regulators to boost their capabilities as part of the AI opportunities action plan, and where we need to take action—for example, as we have under the Online Safety Act—we will do so. We do not speculate on legislation ahead of future parliamentary Sessions, but we will keep noble Lords updated should and when we bring forward a consultation ahead of any potential legislation.
Baroness Harding of Winscombe (Con)
My Lords, in 1982, the then Government commissioned a philosopher, Dame Mary Warnock, to explore the moral and ethical frameworks around human embryology and fertilisation, long before many of the developments were really possible. I worry that the AI Security Institute is just trying to work out what it does, rather than what it should do. Will the Government consider a similar commission to establish the ethical frameworks for superintelligence?
Baroness Lloyd of Effra (Lab)
The AI Security Institute looks at the science and the implications of AI, and collaborates with many other research institutes to examine some of the implications for our society and economy. That approach is bearing great fruit. The institute publishes findings so that we can all take account of them.
Lord St John of Bletso (CB)
Can the Minister elaborate on what economic and labour market risks are associated with superintelligent AI, as distinct from generative AI?
Baroness Lloyd of Effra (Lab)
As I mentioned at the start, there is a lot of debate about the pathway that AI development will take and the pace at which it is developing. The AI Security Institute has reported a sharp rise in AI capabilities over the past 18 months, with continued growth almost certain, and it is looking at the implications of this. For example, one of its research focuses is tracking the development of AI capabilities that would test the limits of human control, which is one of the most pertinent questions for anybody thinking about the implications of superintelligence.
Viscount Camrose (Con)
My Lords, I want to build on the very important point raised by the noble Lord, Lord Hunt. Given that AI research and development can be conducted, in effect, anywhere, regulation of the development of superintelligent AI is going to have to be global. Does the Minister feel that the UK is genuinely taking full advantage of our considerable convening power in this space to drive forward the global AI safety agenda? Further, might there be grounds for concern that our convening power may be diminished over time by the emerging political uncertainty that came to the fore over the weekend?
Baroness Lloyd of Effra (Lab)
The Government have forged many extremely successful relationships; as evidenced, for example, by the number of trade deals secured over the past 18 months or so. These relationships with the EU, the US, India, France and many other countries include discussions on AI. In addition, the UK is the co-ordinator on related questions for the International Network for Advanced AI Measurement, Evaluation and Science, which aims to shape and advance the science of AI evaluations globally. Our engagement is on all levels, and specifically on the technical level. The noble Viscount makes an extremely important point. This is an effort of global development, so it is important that we engage with developers globally and with other countries.
Lord Browne of Ladyton (Lab)
My Lords, I am and always have been a faithful. With tighter regulation in the future confidently anticipated, is it not often the case that its absence in the present can impede innovation rather than foster it? Given that many of those responsible for the development of AI—and, in some cases, the development of AI superintelligence—have repeatedly requested tighter controls on their activities, can my noble friend the Minister assure your Lordships’ House that the existing regulatory structures are adequate? Can she describe the mechanisms through which their salience and strength are kept under constant review?
Baroness Lloyd of Effra (Lab)
My noble friend makes a very good point: our regulators need to be equipped and to have the capabilities, capacity and expertise to regulate a fast-advancing technology. We have put in place many actions and convening powers as part of the AI action plan, to make sure that our regulators have that capacity and capability. Through the AI Security Institute, we are making sure that they have the information they need to regulate. Many departments are thinking about this in concert with their regulators, to ensure that we are taking advantage of the opportunities and preparing for the risks that AI will undoubtedly bring.
Local Government (Exclusion of Non-commercial Considerations) (England) Order 2026
(1 day, 7 hours ago)
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Baroness Taylor of Stevenage
That the draft Order laid before the House on 2 December 2025 be approved.
Relevant document: 46th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 21 January.
Holocaust Memorial Day
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Baroness Taylor of Stevenage
That this House takes note of Holocaust Memorial Day.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, it is with great respect and solemn reflection that I move the Motion standing in my name on the Order Paper. As I rise today, I do so with a heavy heart and a deep sense of responsibility.
As noble Lords will be aware, gradually, as time moves on, we lose many of the first-hand survivors of the Holocaust who were so engaged in the education of our young people and the rest of us. With the permission of the House, I would like to read the names of some of those whom we have lost during this year. Eva Schloss, MBE, who died on 3 January 2026, was a co-founder and honorary president of the Anne Frank Trust UK and stepsister of Anne Frank. Manfred Goldberg, MBE, who died aged 95 on 6 November 2025, was a Holocaust survivor and educator. Manfred’s story is part of the Holocaust Educational Trust’s virtual reality Testimony 360 education programme. Harry Olmer, who died on 15 January 2026, was a Holocaust survivor and Holocaust educator. Vera Schaufeld died in January 2026, aged 95. Vera came to the UK on the Kindertransport and shared her story up and down the country, including with our staff at the Ministry of Housing, Communities and Local Government. Eve Kugler, BEM, was a Holocaust survivor who witnessed Kristallnacht and shared her story, again including with the staff in my department. Suzanne Rappaport Ripton died in June 2025. She was the founder member of the Holocaust Survivors’ Friendship Association, now Holocaust Centre North. Ruth Posner died in September 2025. She was an extraordinary woman who survived the Radom ghetto, slave labour and life in hiding under a false identity. By the end of the war, Ruth and her aunt were the only surviving members of their family. After a dazzling career in theatre and dance, Ruth decided to begin sharing her testimony as a response to rising levels of antisemitism in the UK. I thank all of those who share their testimony and help us remember, and who will continue to make their mark on our remembrance of the Holocaust and its victims.
Tomorrow’s Holocaust Memorial Day is not only a date in the diary for me; it is a moment I return to each year with humility and resolve: a day that makes me pause and reflect on the stories I grew up hearing, and the lessons my parents impressed on me about the horrors of hatred. Tomorrow, we remember the 6 million Jewish men, women and children murdered in the Holocaust, and the Roma and Sinti, disabled people, Jehovah’s Witnesses, gay men and political opponents who were also persecuted and killed. Each one had a name, each had a story and each was loved. Behind every number was a human being whose life was cut short by hatred and a machinery of persecution that sought to erase entire communities.
We also remember those who, against all the odds, survived. Many rebuilt their lives in the UK and dedicated themselves to sharing their testimony, ensuring that future generations understood both the horrors they endured and the hope they managed to hold on to. Many of us in this room have been privileged to hear these survivors speak with honesty, courage and an often extraordinary generosity of spirit.
My own family roots are in the East End of London, once home to a vibrant and close-knit Jewish community. Even those of us whose families were not directly targeted felt the shock waves as news of the camps emerged. In homes such as my parents’ and grandparents’, the stories of what had happened were spoken about with a kind of hushed reverence: an understanding that something beyond comprehension had taken place. They taught us that, while we could never fully feel that depth of pain, we had an absolute duty to learn about it, remember it and pass the lessons on.
This year’s Holocaust Memorial Day theme, Bridging Generations, feels especially poignant as we move into a time when survivors’ voices are fading. Many have now fallen silent. Yet it is our responsibility to ensure that their legacy does not fade with them. Bridging generations is not an abstract concept: it is the quiet question from a child trying to understand why people were hated for who they were. It is the moment in a school assembly when a survivor’s words change the entire mood of the room. It is the recognition that truth, when spoken plainly, has the power to transform hearts.
The Holocaust did not begin with camps and crematoria. It began with words: with prejudice that became normalised, then embedded in policy and then allowed to flourish unchecked. It moved from insult to exclusion, from exclusion to persecution, and from persecution to genocide.
Memory is our safeguard. Forgetting is the first step towards repeating history. I feel a profound personal responsibility to ensure that these stories are never lost. That is why I am proud that, in 2024, the Prime Minister pledged that every student in the country should have the opportunity to hear recorded survivor testimony. By enabling every young person to access first-person accounts, we build resilience against distortion and denial.
The Holocaust Educational Trust’s Testimony360 programme will allow students to virtually meet survivors and explore historical sites using virtual reality. Long after survivors can no longer be with us, young people will still be able to hear their voices, ask questions and engage with history in a way that feels deeply personal and immediate.
The Holocaust Testimony portal, created by the Association of Jewish Refugees and supported by the Government, is another vital initiative. The portal brings together thousands of interviews with survivors, refugees, rescuers and liberators, providing user-friendly access to decades of testimony. Generations to come will be able to learn from those accounts. Initiatives such as Generation 2 Generation ensure that descendants of survivors continue sharing family histories, preserving the human threads that connect past and present.
When I was a council leader, I set up a Holocaust memorial event in Stevenage—it was over 15 years ago—and I have been privileged to listen to family and first-hand testimony at that event each year. A couple of years ago, I listened to Anita Peleg speak about her mother, the sculptor Naomi Blake. I remember the hush in the room as Anita played a recording of her mother’s own words. It was the kind of silence that falls when truth settles on the heart: heavy yet somehow illuminating. Naomi Blake, who survived Auschwitz and went on to create art filled with hope and renewal, embodied the extraordinary resilience of the human spirit. Hearing her voice reminded me that testimony is not merely information: it is a gift—of courage, of memory and of humanity.
Lord Lieutenant Robert Voss, whose parents escaped Nazi Germany, came to our meeting and gave an account of his paternal grandparents, who were murdered in the gas chambers of Sobibor in June 1942. That moment touched me deeply, and strengthened my resolve to ensure that these stories are never allowed to fade.
Other projects, such as Ordinary Objects, Extraordinary Journeys, a collaboration between the Holocaust Memorial Day Trust, the National Holocaust Centre and Museum, and the Jewish Museum of Greece, show how even everyday belongings can bear witness. A pair of glasses, a letter, a suitcase: these objects speak when words fall short. They provide a tangible link to lives interrupted and remind us of the profound human cost of antisemitism and hatred.
Restoring names to victims is another sacred responsibility. Yad Vashem’s project to identify the 6 million murdered Jews is a monumental effort grounded in the belief that every person deserves to be remembered. A name is the most personal thing we have: chosen with love and often carried through generations. For the Nazis, names became tools of persecution. For us, restoring them is an act of dignity, remembrance and defiance of those who sought to erase an entire people.
Yet today, all too sadly, Holocaust denial and distortion persist. We still see antisemitic slogans and graffiti on our streets and the trivialisation of the Holocaust in public discourse, online spaces and even protests. Antisemitism is not new to Britain; we know that it stretches back to medieval times and, tragically, that it has never disappeared. The Community Security Trust recorded more than 1,500 antisemitic incidents in just the first half of 2025. This rise demands a clear and courageous response. I pay tribute to the CST for all the work it does in supporting our Jewish community.
Education remains our strongest defence. Young people are bombarded daily with information, some unreliable and some deliberately misleading. We must ensure they have the tools to distinguish truth from manipulation and history from distortion. Teaching about the Holocaust is not simply about understanding the past; it is about shaping a future where hatred cannot take root so easily. That is why I believe that having the national Holocaust memorial and learning centre at the heart of our capital, beside Parliament, matters so deeply. It will stand as a daily reminder to decision-makers, visitors and future generations that this country takes its responsibility to remember seriously. There are differing views, and it is right that Parliament has debated them so fully, but I feel the duty my parents and grandparents felt to ensure that the lessons of the Holocaust are carried forward with honesty and integrity.
We cannot change the history behind us but we can shape the history ahead, and so I make this commitment: I will listen, I will learn, I will speak, and I will help those who come after us to do the same. I look forward to the debate ahead of us this afternoon.
Lord Pickles (Con)
My Lords, I draw attention to the fact that I am the co-chairman of the UK Holocaust Memorial Foundation. It is a great pleasure to follow the Minister. I thought reminding us of the survivors we have lost this year was a wonderful way to start a speech. Many of them were friends and people we knew, people we shared a joke or a meal with, and people we worked together with for Holocaust remembrance. I mourn them all, but I particularly mourn Manfred, who did such outstanding work. May all of their memories be a blessing.
Whatever the circumstances, we have a whole day’s debate here. I hope the Government will think long and hard next year and ensure that, if not in the precise circumstances under which this debate has occurred, we get a whole day’s debate. I agreed with the Minister’s sentiments and with her speech—as someone once said, I even agreed with the punctuation.
Holocaust Memorial Day challenges us to confront one of the darkest chapters in human history, but remembrance requires more than ritual. It is not enough simply to speak solemnly in Parliament, to stand in silence, or to light a candle once a year. Ceremony without action becomes ceremony without meaning. True remembrance demands leadership—moral, civic and institutional—that is willing to resist hatred in all its modern forms.
In 2025, Britain received a series of wake-up calls that showed how fragile our complacency had become: a violent attack on Jews in Manchester; the conviction of terrorists who planned the mass murder of Jewish people; the shocking murders at Bondi Beach; a pop star calling for the killing of Jews, broadcast on the nation’s media; and the disturbing failure of West Midlands Police, which chose ideology over evidence in describing an antisemitic attack. Each incident triggered brief outrage, followed by national amnesia—shock, condemnation, and then forgetting, and then the cycle begins again. But the danger has not passed. Britain, like much of the world, is sleepwalking into disaster.
We hear the word “genocide” thrown around casually, stripped of its precise and grave legal meaning. This trivialisation obscures the real genocidal ideologies—including those openly embraced by Hamas, whose intent is clear from both its words and its actions. Jew hatred has returned: violently in Israel, genteelly on British streets, and through silence in response to atrocities against Jews elsewhere.
The events of 7 October marked a turning point. The massacre that day was driven by a murderous ideology with deep historical roots. It reveals itself in acts of brutality that defy language: murder, mutilation, rape, and the kidnapping of children and the elderly. Yet almost immediately, the world saw denial, distortion, and the inversion of victims and perpetrators. Those are ancient patterns. Together with modern disinformation, they threaten not only Jewish communities but the principles of liberal democracy.
That is why we must confront the reality of antisemitism today: measurable, documented and rising. The data speaks with clarity. More than 1,500 antisemitic incidents were recorded in the first half of 2025, as the Minister said—the second-highest total ever for that period. There are more than 200 incidents every month. We saw sharp spikes following high-profile provocations, including the chants at Glastonbury, proving how cultural platforms can amplify extremism. University campuses show a slight reduction from the recorded highs of 2024, but a drop from crisis levels is still not normal. A campus where Jewish students hide their identity, avoid events, or face intimidation is not a safe campus, and it does not respect academic freedoms. Antisemitism is not a metropolitan phenomenon. The numbers in Manchester have been described as sickening, but incidents occur in cities, towns and rural communities across the country. This is a national problem.
Institutional responses remain inconsistent: policing varies dramatically from place to place; public bodies hesitate; cultural institutions falter under political pressures; and inconsistency creates space in which extremism grows. We can legislate against crime but we cannot legislate away hatred. The long-term defence is education, yet this is where new challenges have emerged. The number of schools marking Holocaust Memorial Day has fallen sharply, from 2,000 in 2023 to 1,200 in 2024, and only 850 in 2025. Teachers express uncertainty about discussing modern conflicts. Some refuse to mark Holocaust Memorial Day unless it is reframed. This is not just a moment to reflect; it is a warning, and there is a duty to deal with it. We are at a crossroads and we must address this. We need to ensure that leadership is there. We cannot educate children about the Holocaust unless those children are prepared to be in classrooms. We must recognise that this will affect all of us.
I conclude by dealing with a question that we have grappled with before. We have been worried about the nature of the Holocaust, whether it will be diluted by subsequent holocausts and whether we are going to do “Holocaust-lite”. The debate that we had the other day made it clear that this is not our intention. However, we must not forget the Roma genocide.
It was Danny Danon who reminded me most forcefully that the characteristics of the Holocaust applied also—almost exclusively—to the Roma genocide. People were selected not on the basis of who they were, what they did or where they lived but on the basis of the Nazis’ views on race. He reminded me that Adolf Eichmann, at his trial in Israel in the 1960s, faced charges against him for the Roma genocide. I sincerely hope that the Roma can commemorate their genocide at the new national memorial when it is built. I am pleased to announce that the USC Shoah Foundation in the United States is in negotiations to ensure that we host one of the main servers of that institution’s enormous records of Holocaust testimony. This will ensure that the United Kingdom can bring with it many of its methods of remembrance of the Holocaust.
There are many photographs that bring the Holocaust to mind, but for me two main photographs always bring it back to me. The first I suspect will be familiar to Members around the House: the young boy at the Warsaw uprising who has been arrested, with his hands in the air, surrendering to large German soldiers. I am pleased to say that there is good evidence that the young man survived. The second is of a frightened young girl in a scarf peering out of a cattle truck. She is Roma, she is on the way to Auschwitz and she will not survive. Those two young people show what we lost. They show the possibilities that we did not have. We must confront. We must do more than light candles. We must ensure that our children, our grandchildren and those who survive in a multicultural Britain remember the Holocaust and remember what happens when government goes bad. We will ensure that their memory will always be kept.
Baroness Ludford (LD)
My Lords, I thank the Minister and the noble Lord, Lord Pickles, for their impressive speeches. I very much agree with the noble Lord, Lord Pickles, that we must do more than light candles. I too look forward to the maiden speech of the right reverend Prelate the Bishop of Coventry.
I want to talk about the need, based on the experience of the Holocaust, for not only constant vigilance against antisemitism but the perception and courage to swim against a tide and stand up to the mob. That vigilance and resolve must, of course, extend to all prejudice and hate based on race, religion, ethnicity or any other characteristic. But there is something unique and specific about the 2,000-year history of demonisation of Jews and the depths of antisemitism which led to the Shoah, which must not be overlooked or forgotten.
How can we forget, in fact, when we are holding this debate not only two and a half years after the massacres of 7 October 2023 but shortly after the terrorist atrocities at Heaton Park synagogue in Manchester and in Sydney, the dishonourable conduct of West Midlands Police towards Israeli football fans, and numerous antisemitic incidents?
I attended the event this morning to mark this year’s International Holocaust Memorial Day, hosted by the FCDO and the embassy of Israel, and I will come back to some of the words spoken at that event. I fell to wondering how many of those attending marches and demos supposedly in favour of Palestinians in Gaza and who chanted “From the river to the sea, Palestinians will be free”, which implies the destruction of the State of Israel, and “Globalise the intifada”, which implies worldwide violence against Jews, actually felt uneasy about one or both of those chants but suppressed their doubts to be in the in-crowd.
I have watched three films about the Holocaust within the last 10 days. I belatedly caught “Nuremberg” at the cinema; “Schindler’s List” and “The Zone of Interest” have both been on the television, and I watched them again. In my speech on this day two years ago, I quoted Dov Forman, great-grandson of the late, great Holocaust survivor, Lily Ebert, and I do so again. He said that
“this dark chapter in history wasn’t only about mass murder. It was the destruction of a rich Jewish culture and civilisation that had thrived for thousands of years. To remember the Holocaust is to acknowledge both the Jewish lives and the Jewish life that was lost”.
I noticed to my surprise that “Schindler’s List” was not only broadcast pretty late, finishing at nearly 2 am as it had to wait for the live snooker to finish, but classified 15, along with “Nuremberg”, by the British Board of Film Classification. The justification for a minimum age of 15 for “Nuremberg” included that it contained
“images of real dead bodies”,
while for “Schindler’s List” it was that
“based on a true story, younger viewers may find the film’s depictions of persecution and the Holocaust emotionally upsetting”.
Well, yes, that is the point of Holocaust education: to teach people what happened in terms of dead bodies and physical and emotional horror. If they are not, in consequence, upset, distressed, outraged, and despairing at what inhuman persecution, murder and destruction people are capable of perpetrating against their fellow human beings, the basis for action to stop indifference is not laid. I think at least all secondary school-age children should watch these films at school, as well as at home, as the basis for a discussion about the horror of the Holocaust and other genocides.
I was six years old when I watched a serial on the TV called “The Silver Sword” from 1958 about child refugees from the Nazis. This is the synopsis I found online:
“On a cold, dark night in Warsaw in 1942, the Balicki children watch in horror as Nazi stormtroopers arrest their mother. Now they are alone. With the war raging around them, food and shelter are hard to come by. They live in constant fear. Finally, they get word that their father is alive. He has made it to Switzerland. Edek and Ruth are determined to find him, though they know how dangerous the long trip from Warsaw will be. But they also know that if they don’t make it, they may never see their parents again”.
I do not remember much of the plot, with only snatches remaining imprinted on my memory; and, unlike so many histories of the period, this fictional story had a happy ending. Notwithstanding that, what has persisted with me is the sense of fear and desperation, or, in the words of one online comment:
“Just an image—an image of devastation and loss—and a knowledge that this was something powerful and important”.
This is, of course, nothing compared to the ghastly memories of those who endured the Holocaust or the real and terrible losses of those whose families perished in it, but it is important that those deep feelings of fear, devastation and desperation continue to strike a chord with people of all kinds, both within and beyond the Jewish community, if the pledge of “never again” is to have any meaning. Hence the essential need for Holocaust education. I am grieved and disappointed to hear that fewer schools are delivering that.
I have always believed that Nazism, fascism and their like, with the combination of obedience to authoritarian rule and callousness towards human suffering, are viruses that can be caught anywhere, in any country. Canadian Prime Minister Mark Carney last week quoted in his speech to the World Economic Forum in Davos from Václav Havel’s 1978 essay, The Power of the Powerless, which was about how the communist system sustained itself. He said:
“And his answer began with a greengrocer. Every morning, this shopkeeper places a sign in his window: ‘Workers of the world, unite!’ He doesn’t believe it. No one does. But he places the sign anyway to avoid trouble, to signal compliance, to get along. And because every shopkeeper on every street does the same, the system persists. Not through violence alone, but through the participation of ordinary people in rituals they privately know to be false. Havel called this ‘living within a lie’. The system’s power comes not from its truth but from everyone’s willingness to perform as if it were true”.
Rudolf Hoess, the commandant of Auschwitz, apparently saw himself as
“a cog in the wheel of the great extermination machine created by the Third Reich”.
American military psychologist Gustave Gilbert wrote of his discussions with Hoess during the Nuremberg trials, at which Hoess testified, that:
“In all of the discussions, Höss is quite matter-of-fact and apathetic, shows some belated interest in the enormity of his crime, but gives the impression that it never would have occurred to him if somebody hadn’t asked him”.
In a remark this morning at the Holocaust Memorial Day event at the Foreign Office, Meg Davis, a Holocaust Educational Trust young ambassador, struck a similar note, when she talked of how “compliance is the enabler”.
To my mind, Holocaust education needs to encompass not only the terrible history of antisemitism and where it led but the importance of an instinct and resolve against compliance and conformity. People who refuse to go with the flow, who have the guts to say, “This is not right”, and who are difficult and even objectionable to some minds are essential grit in our pledge of “never again”.
The warning signs tend to come long before the atrocities. The grandfather of the present noble Lord, Lord Russell of Liverpool, was the second Lord Russell of Liverpool. He was a deputy Judge Advocate-General to the British Army of the Rhine and one of the chief legal advisers during the war crimes trials in Nuremberg, and he wrote a book, The Scourge of the Swastika, on his experiences.
With the kind agreement of the current noble Lord, I would like to quote some passages from that book. First, the author noted that, a few months before the outbreak of war, a
“menacing German Foreign Office circular must have clearly pointed out the course of future events to all but those who did not wish to see it”.
That circular read:
“‘It is certainly no coincidence that the fateful year of 1938 has brought nearer the solution of the Jewish question simultaneously with the realization of the idea of Greater Germany … The advance made by Jewish influence and the destructive Jewish spirit in politics, economy and culture; paralysed the power and the will of the German people to rise again. The healing of this sickness among the people was therefore certainly one of the most important requirements for exerting the force which, in the year 1938, resulted in the joining together of Greater Germany in defiance of the world’”.
We were warned. The second Lord Russell of Liverpool thus observed quite rightly that:
“Persecution of the Jews in the countries which the Nazis invaded and occupied”
between 1939 and 1945
“was indeed on a stupendous scale, but it cannot have taken by surprise anyone who had followed the rise of the Nazis to power in 1933 or their Party program. Point Four of that programne declared: ‘Only a member of the race can be a citizen. A member of the race can only be one who is of German blood, without consideration of creed. Consequently, no Jew can be a member of the race’”.
That was six years before the outbreak of the war.
These reflections strike a deep chord in me after the period since 7 October intensified the fears about how an attitude explained as anti-Zionism and opposition to Israel—the blood libel of our times—transforms so easily into raw antisemitism and the dehumanisation of Jews. An interview in today’s Telegraph with Professor Sir Simon Schama notes that his TV programme about the Holocaust, “The Road to Auschwitz”, was rigorous in its examination of how the Nazis found willing accomplices in mass murder while others looked away. The journalist notes how Marian Turski, one of the last survivors of Auschwitz, said:
“Auschwitz did not fall from the sky. Evil comes step by step”.
Professor Sir Simon Schama says:
“There has been a qualitative shift towards the sense that the Jews are kind of enemies among us. I think there’s been a shift from the fury about what Israel’s said to have done in Gaza, to essentially dehumanising Jews generally”.
Holocaust survivor Mala Tribich told us this morning of her experience at Ravensbrück:
“We were stripped of our identifiers and totally dehumanised”.
Let us react this time before we know precisely how bad it can get.
Baroness Deech (CB)
My Lords, for some of us, every day is Holocaust remembrance day. It is a pain we carry within our bodies, like a physical pain. It would be alleviated if only my parents had lived to see me in the House of Lords at an event like today, marking the grievous effect that the Holocaust had on them and, of course, their relatives, parents and wider family. We are grateful for national efforts to commemorate the Holocaust, but we remain troubled by the way the story of our lost families and the destruction of much of central European Jewish life is often presented.
I begin by paying tribute to the more than 1,200 victims of the atrocities of 7 October and the more than 200 people who were taken hostage—the worst massacre of Jews since the Second World War. Those killings were carried out with genocidal intent. Hamas has pledged to repeat them, if able, and its charter explicitly calls for the killing of Jews, not merely Israelis. As with the Holocaust, there are those who deny that the killings of 7 October occurred, or who falsely attribute them to Israel. That denial can be countered, among other sources, by the meticulous report on each victim authored by the noble Lord, Lord Roberts of Belgravia.
I hope the national commemorations this week will include reference to 7 October. That is important because antisemitism is a continuum. It did not begin in Germany in the 1930s and it did not end in 1945. It has existed for at least two millennia and arguably longer. The Holocaust was not a historical aberration but an eruption of a hatred that had long been embedded across societies. Today, antisemitism is again re-emerging, using the Gaza war as a pretext. Those who blame Israel for rising antisemitism ignore the historical reality that mass killings, pogroms and expulsions occurred long before Israel existed and would persist even if it did not.
So what should we truly be remembering? Condemning the Nazi regime alone is both too narrow and too superficial. Research by University College London’s Centre for Holocaust Education shows that Holocaust education, while essential, does not reliably reduce antisemitism. The UK has invested heavily in museums, memorials, archives, survivor testimony and learning centres, but these efforts have not demonstrably shifted attitudes.
One reason is that Holocaust education often treats the subject as distant history. Students learn about it as a unique past atrocity with little connection to their own world. Antisemitism is framed as a Nazi phenomenon rather than a persistent, long-standing prejudice that still operates today. This fosters the mistaken belief that the problem ended in 1945. Students frequently come away believing that Hitler alone or a small group of Nazi leaders were responsible. This obscures the widespread collaboration across Europe from officials to ordinary citizens and the deep-rooted antisemitism that existed for centuries in many countries. Many students also believe that German soldiers would have been executed had they refused to participate, reinforcing the false idea that ordinary people had no moral agency.
At the same time, young people increasingly encounter Holocaust misinformation and conspiracy theories on social media platforms, such as YouTube and TikTok, often with more impact on them than their formal schooling. Some are influenced by historically misleading fictional portrayals such as “The Boy in the Striped Pyjamas”. More historically grounded films such as those the noble Baroness, Lady Ludford, mentioned, such as “Survivor”, “The Commandant’s Shadow” and “1945”, would provide far better educational value.
Crucially, many students learn about the Holocaust without learning about antisemitism itself. They do not understand its history, its ideological roots or the social and religious narratives that sustain it. They do no learn that antisemitism is rising sharply today, especially since 7 October. Nor do they grasp how far-right extremism, far-left hostility and Islamist ideology—perhaps I should have said theology—increasingly intersect. Young people who march calling for Israel’s elimination, who persecute Jewish students or who call for violence against Zionists have often already received Holocaust education, yet they frequently refuse to distinguish between Israel and Jews. The fact that similar hostility is not directed at, for example, Chinese, Iranian or Russian students for their Governments’ actions exposes the underlying antisemitism.
The recent report on antisemitism by the noble Lord, Lord Mann, and Penny Mordaunt, to whom we should be grateful, also warns that some religious teaching in schools may perpetuate anti-Jewish beliefs. Initiatives such as the Winchester diocese’s work with Jewish communities to eliminate medieval stereotypes from religious education are welcome, and it would be encouraging to see similar programmes expanded nationwide. It is fortunate for us that the right reverend Prelate the Bishop of Coventry will make her maiden speech today. We look forward to her many contributions to come, but today’s will be especially pertinent.
Another flaw in Holocaust remembrance is that it has become overwhelmingly a narrative of Jewish death rather than Jewish life. Jews are presented primarily as victims with little attention to the vibrant culture, traditions, faith and resilience that sustained Jewish communities for thousands of years up to today. Even more problematic is the failure to link Holocaust remembrance to contemporary antisemitism. If “never again” is to have meaning, students must be taught how antisemitic tropes persist today in activism, conspiracy theories and some religious or political discourse. They must understand how the term Zionism is often used as a proxy for hostility towards Jews. As the late Lord Sacks observed, antisemitism has evolved from religious prejudice to racial ideology to hostility towards the only Jewish state and the right of Jews to self-determination. This is politically uncomfortable, but it lies at the heart of the modern problem.
Nevertheless, many Holocaust remembrance events avoid mentioning Israel or 7 October altogether. Some councils and politicians even avoid using the word “Jew” when discussing Holocaust victims. This erasure weakens historical accuracy and undermines the credibility of remembrance.
Another difficulty lies in the insistence, by successive Governments over many years, that Holocaust remembrance must always be merged with other genocides. Rwanda, Bosnia and Darfur were appalling tragedies and deserve their own memorialisation. However, collapsing them all into a single narrative prevents meaningful understanding of why Jews were targeted, how antisemitism developed and how it persists. It also risks relativising genocide and enabling distorted claims, including those weaponised today against Jews themselves, as referred to by the noble Lord, Lord Pickles.
Students are supposed to learn lessons from Holocaust education, but lessons have become overly moralised and insufficiently historical. In an effort to put the education to use, students are taught general lessons about tolerance and being bystanders but are not given the historical knowledge or intellectual tools needed to recognise and challenge antisemitism in its modern forms. As survivor Anita Lasker-Wallfisch, the cellist of Auschwitz, observed when giving evidence to the Commons Select Committee, a new learning centre here would not achieve anything that has not already been learned in the 80 years since the Holocaust. Lasker-Wallfisch labelled the plan to build it next to Parliament “a completely idiotic idea” and “dangerous”. She said:
“A Jew, unlike a Rwandan, is not safe anywhere now”.
What is needed is serious historical education and a clear understanding of antisemitism across time.
Young people, and society more broadly, should also learn about contemporary Jewish communities—their culture, contributions and place in national life. Jews should not be portrayed only as historical victims but as the active participants in civic, intellectual and cultural life that we are. This is why Holocaust education requires a fundamental overhaul. Teaching a narrow, Nazi-centric narrative of historical murder has not succeeded in changing attitudes or countering modern antisemitism. That is also why plans for yet another Holocaust memorial in Victoria Tower Gardens represent a missed opportunity. Its proposed learning centre appears to literally set in concrete many of the shortcomings already identified. It does not meaningfully address contemporary antisemitism nor the central role of Israel in Jewish identity. If it presents a primarily British perspective on the Holocaust, it risks appearing evasive.
Britain itself has a complex history in relation to its Jewish community. The massacre of 1190, the expulsion of 1290, the slow and relatively recent restoration of full civil rights, the restrictive refugee policies of the 1930s and 1940s, Britain’s failure to admit large numbers of Jewish refugees, its restrictions on immigration to Mandatory Palestine and its post-war treatment of displaced persons remain difficult chapters. Even the Kindertransport and the Winton rescues were privately, not nationally, funded, and the children admitted were separated from their parents because they were more readily assimilable and not a threat to job seekers. If only Israel had existed in 1938, courtesy of Britain, rather than in 1948, how many thousands or millions of lives might have been saved?
Against that backdrop, many in the Jewish community feel that contemporary antisemitism has been allowed to grow. Hate marches, biased policing, hostility on campuses, conspiracy theories spread by doctors, lecturers, teachers and students, vandalism and open calls for violence are increasingly common. Anti-Zionism has become a socially acceptable mask for antisemitism, even as Israel’s role in Jewish safety and continuity becomes ever clearer.
The Jewish community sees Governments tolerating extremist rhetoric, hesitating to challenge hate preachers, imposing restrictions on Israel’s self-defence, cutting themselves off from security and defence exchanges, and giving credence to Hamas-derived narratives. It is therefore unsurprising that some Jews feel sceptical about official declarations of “never again” and announcements of yet another Holocaust memorial while present-day antisemitism goes insufficiently challenged. It looks like an attempt to deflect justified criticism.
We expect more than platitudes. Will the Government call upon Christian and Muslim leaders to take responsibility for addressing religious teachings that perpetuate anti-Jewish ideas? Will they act decisively against extremist preaching? Will they commit to a serious reform of Holocaust education, one that drops vague moral messaging and treats the Holocaust as a uniquely Jewish genocide, and equips students to recognise antisemitism in all its historical and modern forms? The task of remembering has been accomplished, with the recording of testimonies, the collection of data, many memorials and 21 learning centres already existing in the UK, including the National Holocaust Centre in Newark and the Imperial War Museum galleries, but nobody has ever looked into what effect, if any, they have on those who visit, or into who does not visit. It is just assumed that they combat antisemitism. Finally, if Holocaust remembrance is to mean anything, it must affirm not only the memory of those murdered but the legitimacy, dignity and security of Jewish life today, including the central role of the State of Israel as a symbol of Jewish continuity and self-determination.
The Lord Bishop of Coventry (Maiden Speech)
My Lords, it is my privilege to make my maiden speech in this debate on the eve of Holocaust Memorial Day. First, I express my gratitude for the kindness that I have received from your Lordships on entering this House, and especially for the support, patience and care of the staff across the departments since my appointment to Coventry.
Being of Jewish heritage myself, I cannot recall a time when I was not aware of the Holocaust. I am grateful that this was a part of our family history that was never kept from me but held as a marker of an inhumane world, from which I was charged to do all I could to make the world a better place. Since then, I have served in Yorkshire, Uganda, Surrey, Sussex, Durham and now Coventry. I have a deep love of singing, especially the high notes, and running, unimpressively, and a nice glass of Sauvignon. Coming to Christian faith through youth ministry, I think I am now qualified to say, at the risk of current cliché, that I am and have pretty much always been a faithful.
I will focus my contribution on the importance of educating our children and young people in their religious understanding of the world, as I was, having been among the first cohort of children to journey through the GCSE curriculum, with an outstanding religious studies teacher whose support remarkably continues to this day. He ensured our introduction as teenagers to Judaism, Christianity and Islam without prejudice or favour. From this firm foundation I was privileged to have the opportunity to study Judaism as part of my first degree, with a special interest in the literature generated by the Holocaust.
I am now honoured to serve the diocese of Coventry, covering Warwickshire and part of the West Midlands, with Coventry city at its heart—a city that has always welcomed the refugee and the stranger, and which has benefited greatly from the rich culture, skills and contributions they have brought. Coventry knows that we cannot take for granted the understanding which builds relationships between communities, the tolerance which enriches communities through diversity, and the peace which overcomes. We know that we have to act in order to make a difference. Coventry is a city of peace and reconciliation, with a strong multicultural community and interfaith network, supporting each other’s festivals, celebrations and challenges. This has a long history, including the welcome of 50 Kindertransport children on the eve of the Holocaust. In the decades before and after, Coventry has continued to welcome those who have faced genocide and destruction from countries around the world.
The Jewish community of Coventry was founded by immigrant watchmaking families, who produced the best watches in the world and contributed so much to the life and well-being of the city. They had faced hardship, persecution, oppression and pogroms, only then to face antisemitism in their adopted land while serving the city. The German-born Jewish mayor, Siegfried Bettmann, faced not only antisemitism but extreme xenophobic, nationalist, anti-German sentiment, forcing him to retire from office and public life as World War I approached, despite his devotion to his adopted country.
In this debate, we recognise that the families of every member of the Jewish community are impacted for generations by the horrors and carry the burden of antisemitism today, as the noble Baroness, Lady Deech, has rightly reminded us. As a bishop, while recognising the deep sensitivities of the present moment, I was proud to discover that there are Anglican clergy who are taking some responsibility for addressing this impact in their communities, rather than remaining silent.
Tomorrow, in the town of Bedworth, Nuneaton, renowned for its pride in holding the longest-held Armistice Day event, unbroken since 1921 and attracting up to 10,000 people, in which schoolchildren line the streets, All Saints Bedworth is holding a special event to mark Holocaust Memorial Day for the first time. Though many schools across the nation have chosen not to mark Holocaust Memorial Day in recent years, as the noble Lord reminded us, recognising the deep sensitivities around the terrible and humane suffering of the people of Palestine in Gaza, Reverend Dave Poultney has taken the decision to offer a space in his community to remember the Holocaust, to educate the children of the three schools in his parish, and to lament, as the Psalms encourage us, but to remember, so that they are invited to build a world in which this will not and cannot ever happen again. This is especially important, as the Minister reminded us, at a time when survivors of the Holocaust who can testify as eyewitnesses reach the end of their lives, and in a culture where truth is contested and must be defended.
I pay tribute to those among the Jewish community here in the UK and other parts of the world who have faced dreadful persecution and attacks that can never be justified. It is a source of sorrow to my soul that the antisemitism that caused such fear in our family continues, such that communities are having to be on constant alert, afraid for their children and for themselves. This cannot be right.
As this House will know, Coventry Cathedral has a worldwide ministry of peace and reconciliation, founded the very day after the destruction of the old cathedral in World War II. These relationships continue and are deeply precious to us. Just last month, we stood side by side with the President of the Federal Republic of Germany, who laid a wreath for peace in the ruins of Coventry’s old cathedral. Representatives of all walks of life, including the Armed Forces, and of all ages, shared together in gathering to mark our mutual challenges in peacebuilding and social cohesion to inspire a new generation to work together for peace in each of our countries.
Every day at noon, the cathedral prays the Coventry litany. This is used across the world by the Cross of Nails community that flows out of the cathedral and stands to heal the wounds of history, live well with difference and celebrate diversity, and work for communities of justice and peace. The litany begins:
“All have sinned and fallen short of the glory of God”.
It goes on to pray for:
“The hatred which divides nation from nation, race from race, class from class”,
inviting the response,
“Father, forgive”.
Interestingly, it does not say, “Father, forgive them”, for in 1940, the then provost Dick Howard recognised that the hatred that had caused the destruction of his cathedral church lay not simply out there among the perceived enemy, but within us all.
It is of great concern that, despite all the deeply significant efforts towards peacemaking and reconciliation, our times are more divided, not less, in these days. We know that the study of human behaviour which led to the evil of the Holocaust begins by using words—words that separate us through the language of othering, words intent on harming rather than healing. Words are our currency in this House, as they are in the wider world. Our words matter, and we can use words towards hostility or towards peace.
May this House and His Majesty’s Government stand for justice and kindness for all, so that every community of this nation may meet in understanding and respect, united by love of goodness, keeping far from violence and strife. May our children and the generations that follow be educated to live in peace, and may this nation find its honour and greatness in the work of peacebuilding and reconciliation today and for all our days to come.
Lord Shinkwin (Con)
My Lords, it is a pleasure and a privilege to follow the right reverend Prelate, and I congratulate her on her excellent and poignant maiden speech. As we have heard, she joins us with a wealth of pastoral experience, both in her current role, since 2025, as the 10th Bishop of Coventry, and in a variety of positions before that, ranging from Burgess Hill to Bradford, and Guildford to Uganda.
As a severely disabled Member of the House, I particularly welcome the right reverend Prelate’s interest in and commitment to supporting disabled people, including by running the London marathon for Mencap in 2022. I cannot think of a better preparation for life in your Lordships’ House, where I am afraid she will find that the glacial speed with which any Government move makes having plenty of stamina a prerequisite for getting anything done. She may find that she has an advantage because, as she will know, the Spirit can move far more quickly than us mere humans.
That reminds me, as someone who joined the Movement for the Ordination of Women when I was at university in the early 1990s, of a beautiful verse from chapter 9 of the Book of Wisdom, with which the right reverend Prelate may well be familiar. It is addressed to God, and it reads:
“With you is wisdom, who knows your works, and was present when you made the world, and who understands what is pleasing in your sight and what is right according to your commandments. Send her forth from the holy heavens and from the throne of your glory send her that she may be with me and toil … for she knows and understands all things, and she will guide me wisely in my actions”.
Quite apart from exposing the absurdity of viewing God purely as male, I cannot think of a more powerful affirmation of the multidimensional nature of God, embodying spiritually all that is beautiful in his creation of humanity, including she as much as he. I cannot promise the right reverend Prelate that your Lordships’ House will always do as she advises, but we look forward to benefiting from her wisdom.
There is something else that strikes me as absurd, and which I find completely counterintuitive: our implicit construction, as a society, of a hierarchy of racism. Hitler could not have been clearer: his fanatical hatred of the Jews informed the 1935 Nuremberg laws, which classified Jews as
“enemies of the race-based state”.
That racist hatred, in turn, informed the genocidal logic of the Shoah, or Holocaust. In other words, everything revolved around race. Yet, here we are, 81 years on from the Soviet Army’s liberation of Auschwitz, still mouthing with sincerity the mantra of “Never again”, but not calling out the attack of 7 October 2023, the banning of the Maccabi Tel Aviv fans, the attack on Heaton Park synagogue, the Bondi Beach shooting or the prevention of Damien Egan, in the other place, from addressing pupils of a school in his own constituency. We are not calling out these events for what they are: racist.
If Hitler knew what it was about—and as my noble friend Lord Pickles reminded us, it was about race—why do we not? After all, within 20 years of the liberation of Auschwitz, your Lordships’ House had passed the Race Relations Act 1965, which, as noble Lords will know, made the promotion of hatred on the grounds of race, colour, and ethnic or national origins an offence. The toxic abuse and now murderous violence being visited on our Jewish communities, such as in Manchester, clearly violates the Act. Unless we are saying that the Act applies only to skin colour—which would be factually incorrect—this is racism, pure and simple, so why does society seem to pretend that it is not?
What sort of message are we sending to our beloved Holocaust survivors when, instead of the theory of “Never again”, they see only the beginnings of “Yet again”? What about impressionable young people who get most of their news, as we heard earlier, from social media? The theme of this year’s Holocaust Memorial Day is bridging generations. What sort of bridge are we building when we fail to call out racism and our police imply, as happened on camera, “Well, it depends on the context”. Really? So it is okay to be racist if it is not about skin colour, or it involves abusing Jewish people or Israel.
I fear we are in danger of legitimising racist prejudice by default. As the Minister said in her powerful opening remarks, the Holocaust had its roots in prejudice that began with words. Deborah Lipstadt tells us:
“Anyone who thinks this only impacts Jews is ignoring reality. This is an attack on Western liberalism, democracy, and international security and stability”.
We can be sure that, even as we speak in this debate, there are those who are determined that the answer to the question posed by the Daily Telegraph, “Should Jews feel safe in Britain?”, should be a resounding “No”. These racists must not be allowed to achieve their goal, for the cost of surrendering to such a racist creed is far greater than the millions spent on policing the demonstrations that have paralysed our capital city weekend after weekend.
In conclusion, my childhood Jewish refugee surgeon, Hanuš Weisl, fled for his life as a teenager from racism: a racism that would kill all the relatives who came to see him depart on the last train out of Prague before the Nazis closed the border. Surely, we owe it to him today to take stronger action to ensure that racism, in all its forms, is confronted with the full force of the law, so that “Never again” never becomes “Yet again”.
Baroness Ramsey of Wall Heath (Lab)
My Lords, it is an honour to follow the noble Lord, Lord Shinkwin, and to have heard the brilliant speech from the right reverend Prelate the Bishop of Coventry—I am pleased to welcome another sort-of West Midlander—and so many powerful speeches from all noble Lords. I look forward to listening to the rest of the debate and, if I may be allowed to say, particularly to my fellow West Midlander, the noble Lord, Lord Austin, whose father was my inspirational head teacher at secondary school.
My father, Jim Ramsey, was a soldier during the Second World War, in a flail tank in the Westminster Dragoons and he was part of the liberation of Bergen-Belsen in April 1945. Sadly, he died in 1990 but, while I was growing up, he told me what he had seen there. He was deeply shocked and appalled, and told us, his children, about it during the 1970s and 1980s because he wanted us to know, and for us to then tell others what he had told us, making a reality of Bridging Generations, the theme of this year’s Holocaust Memorial Day.
Survivors of the camps are now dwindling to tiny numbers and their stories must live on through their families and fantastic organisations such as the Holocaust Educational Trust and the Holocaust Memorial Day Trust, to which I pay tribute. I share my father’s conviction of the importance of bearing witness by continuing to repeat accounts by the men and women who saw what had happened in the camps. This extract was kindly given to me by the Westminster Dragoons Regimental Association; it is taken from a report on the concentration camp at Belsen, Germany, by a fellow member of my father’s regiment:
“Belsen is a small village 11 miles from Celle, which is in the province of Hanover. About a mile south of Belsen there is a concentration camp … The conditions at Belsen camp were ghastly. Obviously it was used as a place where the prisoners could be exterminated slowly and with least trouble to the Reich. This extermination took place in the form of slow starvation; the rations were a bowl of swede or turnip soup per person every day and a loaf of rye bread between 12 persons every week. Thus the bare minimum was given; a minimum which would not allow anyone to die quickly of starvation, but which would make him or her gradually waste away into a living skeleton. When this happened death either followed by typhus or mere collapse. It was reckoned that at least 400 persons died every day.
When the camp was first entered by British troops, they were met by a sight which we in England would think impossible of a ‘civilised’ nation such as Germany. All over the grounds of the camp lay the bodies of what had once … been men and women. It was impossible to miss seeing bodies. Two over there—nine in front of the barbed wire, a large pile of 40 outside one of the huts—it was hard to walk without stepping on them as they lay on the ground. They were there because to begin with the prisoners were too weak to move their comrades away to bury them, and secondly because the SS guards were either too lazy to move them or because there were too many to move, and as they were buried more died. In one part of the camp there was a large pit. It was 80 feet deep, and in the bottom there was a mass of corpses, half buried with earth. It was said that the pit had been 20 feet deeper, but that the last consignment of bodies had filled up that 20 feet. At this moment Hungarian guards are digging another pit for those prisoners whom our doctors know will die shortly from typhus.
Today is the 25th of April 1945. The British have been at the camp for almost a week. They buried 1,200 people yesterday and 1,700 the day before, and there will be more to bury tomorrow. But things will gradually become better as the food we are giving them builds them up.
It is quite probable that many of the people in England who read accounts of this concentration camp, despite the fact that there are photographs to prove it, will think that the whole thing is vastly exaggerated and that it is just a move in the effort to foster the feeling of hate against the Germans—a feeling which admittedly the average Englishman does not like to show. He believes in sport and fair play … and anyhow, how in the world could another country do such terrible things when we don’t do them? Also we haven’t seen with our own eyes so we don’t believe, and it’s better forgotten anyhow”.
I have read only extracts from the report; I apologise to Members for how upsetting it is, but, bearing in mind the words of the noble Baroness, Lady Ludford, it seems appropriate to read them today. The final line written by that solider is:
“Do you think it’s better forgotten?”
I do not know who he was addressing that to, but I think he agreed with my father.
That anxiety that the testimony of returning soldiers would either not be believed or not be passed on to future generations was shared by my father, as well as the utter horror of what he had witnessed. How dismaying it was therefore to learn, from the Equality and Human Rights Commission’s October 2020 report, that the Labour Party had been dealing so inadequately with antisemitism under its previous leadership, and that complaints of individual members sharing Holocaust denial on social media had not even been investigated.
When Keir Starmer became leader, he was determined to root out antisemitism in the party. As part of this vital endeavour, I was asked to lead the work needed to address the recommendations made in the commission’s damning report. It was terrible that such work was necessary, but what a fitting opportunity it was for me to honour my father. The EHRC had identified political interference in the handling of antisemitism complaints, so I had the task of developing an independent complaints system from scratch. I also established a proper process to engage with Jewish community stakeholders, and I oversaw the devising and delivery of a programme of antisemitism awareness training for use across the party for all staff and parliamentarians.
I worked closely with the Jewish Labour Movement, which was led so effectively at that time by my now noble friends Lord Katz and Lady Anderson of Stoke-on-Trent, as well as Dame Louise Ellman, Rebecca Filer, Peter Mason and Adam Langleben. I worked with Danny Stone of the Antisemitism Policy Trust and Adrian Cohen of the Jewish Leadership Council, as well as Marie van der Zyl, the then president of the Board of Deputies of British Jews, and her successor, Phil Rosenberg. I also came to hugely respect Dave Rich and all those at the Community Security Trust; obviously, that work is ongoing, for reasons that other noble Lords have mentioned today.
Under Keir’s leadership, and with the support and challenge of all those wonderful people, the Labour Party succeeded in turning things round. The EHRC lifted its legal enforcement action against the party, and no longer did the Chief Rabbi find himself needing to intervene publicly in the general election, as he had done in 2019. But, of course, antisemitism is still very much with us today, as we all saw last October with the horrific attack on worshippers at the Heaton Park synagogue in Manchester on Yom Kippur. Therefore, Holocaust Memorial Day retains its vital role in ensuring that we all remember and—more than this—that we all do whatever we can to tackle antisemitism wherever we see it.
Lord Massey of Hampstead (Con)
My Lords, it is a pleasure to follow the noble Baroness, Lady Ramsey of Wall Heath. I thank her for all the work that she has done to combat antisemitism. I also thank the Minister, the noble Baroness, Lady Taylor of Stevenage, for arranging this debate and for commemorating so kindly those who witnessed the events we speak of who passed away this year. I congratulate the right reverend Prelate the Bishop of Coventry on her excellent maiden speech and thank her for her recognition of the multigenerational trauma experienced by those of us of Jewish heritage. That is a very significant thing, in my view.
Memorialising the Holocaust has never been more important. We know that this grotesque event was based on an ancient hatred, and yet the events since 7 October have produced a level of antisemitism in this country that few of us could really have imagined. Jews in the UK, as has been mentioned by the noble Baroness, Lady Ludford, and my noble friend Lord Shinkwin, can no longer attend school or synagogue without security protection. Israeli football fans have been banned from watching their team play. Members of the other House have been stopped from attending schools in their constituencies, and there have been deadly antisemitic terrorist attacks on our streets. The open statements about killing Jews and the demonisation and vilification of Israel have been normalised to a rather terrifying extent.
I will focus my brief remarks on the term “genocide”, which was the basis of the Holocaust and is now a term, as my noble friend Lord Pickles mentioned, that has been deliberately weaponised in some quarters to inflame a new version of hatred against Jews and Israel. For Jews to be falsely accused of this crime has been one of the most painful aspects of this war of words.
Let us look at the origins of the term “genocide”. It was invented by the Polish lawyer Raphael Lemkin during World War II and entered public discourse for the first time when it was included in the indictments against the Nazi defendants at Nuremberg.
What is genocide? Lemkin’s definition was that it was the extermination of racial and religious groups in order to destroy particular races and classes of people. The genocide convention of 1948 defines the term more broadly, but the key is the intent to destroy a racial or religious group. As we know, the Nazis devised their final solution in 1942 in a state-sponsored, institutionalised programme to exterminate the entire Jewish population of occupied Europe, which totalled 9 million people at that time. They managed to kill 6 million of them.
Let us contrast this with the alleged genocide in Gaza, which was a war of self-defence—Israel’s sovereign right—following the atrocity of 7 October and the kidnapping of 251 hostages, the worst pogrom since World War II, as mentioned by the noble Baroness, Lady Deech. Whether you agree or disagree with Israel’s conduct of the war, there was never an intent to exterminate or eliminate any group or race. Israel’s war is against a terrorist group pledged to destroy it. It has nothing to do with the idea of genocide. Furthermore, Hamas bears responsibility for casualties in Gaza by refusing to release hostages and embedding itself and its weaponry within the civilian infrastructure. It is therefore vital that the Holocaust is remembered for its unique evil. The public need to be reminded of what constitutes a genocide. Understanding the term might prevent its misuse for political ends.
We are in dangerous waters now in terms of Holocaust denial and distortion, as opponents of Israel seek to undermine the unprecedented character of this event with false equivalence. This must begin in schools. As we lose living witnesses to this darkest history, we cannot afford a growing vacuum of knowledge in schools about the Holocaust, or, worse still, for it to be replaced with an ideology that questions it. So I urge the Minister to devote even more resource to ensure that the public understand the Holocaust, what constitutes a genocide, and how fragile societies can become in the face of antisemitism and racism. By doing so, we can make sure that it never happens again.
Lord Austin of Dudley (Non-Afl)
My Lords, it is a great pleasure to follow that brilliant speech by the noble Lord, Lord Massey. It was a privilege to listen to the fantastic maiden speech by the right reverend Prelate the Bishop of Coventry.
In March 1939, a 10 year-old Jewish boy in a town called Ostrava, in what was then Czechoslovakia, was woken up in the middle of the night; he got out of bed, looked out of the window and saw German troops marching into the town square. It was the day that Hitler had invaded. A few days later he was put on a train by his mum and teenage sisters. It was the last time he would see them, because they were eventually rounded up, sent first to a ghetto and then to Theresienstadt, before being murdered in Treblinka in October 1942.
That boy came to the UK—he was able to speak only three words of English, which were “hot”, “cross” and “bun”—but he grew up to become the youngest grammar school head teacher in the country and educated tens of thousands of people, including my friend, the noble Baroness, Lady Ramsey of Wall Heath. But, much more importantly from my point of view, he brought up four kids, of whom I am the second. In later life, he worked with black and Asian communities in Dudley to establish the racial equality council, raised funds for the Holocaust Educational Trust and spoke at its events. I pay tribute to it and its work.
We have heard in this debate references to statistics about Holocaust education. These are worrying figures, it is true, but HET, which engages with schools all year round, reports that across its programmes, it is working with hundreds more schools than in 2023, before the barbaric attacks on Israel by Hamas, and that this will increase still further with its new Testimony360 programme.
Last week I went to listen, as did a number of Members of your Lordships’ House present here, to the brilliant historian Simon Sebag Montefiore deliver an absolutely riveting lecture at HET’s annual parliamentary event. He said that teaching about the Holocaust and antisemitism is “more vital than ever” as:
“The last witnesses are passing away, while Holocaust denial, distortion, inversion, and what I would call perversion—now joined by eliminationist antisemitism—have made an alarming comeback”.
Those are the points I want to focus on today, but first I pay tribute, as others have done, to the survivors who have died this year; in particular, Manfred Goldberg, Eve Kugler—with whom I travelled to Poland for March of the Living in 2018, along with the noble Lords, Lord Pickles and Lord Shinkwin, and got to know well subsequently—and Harry Olmer, who died last week.
Many Members of your Lordships’ House will have known Manfred Goldberg; I thought he was a great man and a real hero. He survived the death camps, came to the UK after the war, got married, brought up three sons and made a huge contribution to our country in so many ways. He was absolutely appalled by the increase in antisemitism we have seen since Israel was attacked on 7 October.
I pay tribute too to the Community Security Trust and the brilliant work it does, led by Sir Gerald Ronson and Mark Gardner. We saw how important its work is on Yom Kippur last year, when two Jewish men, Adrian Daulby and Melvin Cravitz, were killed when an Islamist extremist terrorist attacked Heaton Park synagogue in Manchester. This was not a random attack on a shopping centre or in the street; Jewish people were attacked, at a synagogue, because they were Jews. It was murderous, brutal racism.
Then we saw a court case in which Islamist extremists were convicted of planning to murder Jewish people at schools, businesses, synagogues and even a march against racism, in what the police said would have been,
“the deadliest terror attack in UK history”.
These attacks do not happen in isolation. A recent YouGov survey suggests that more than one in five British people now hold entrenched antisemitic views—twice the level of four years ago. The CST’s research shows that antisemitic incidents are running at record levels, and Home Office statistics show that Jewish people are 10 times more likely to be the victims of religious hate crime than any other group.
On 7 October, at the same time as terrorists were murdering and kidnapping civilians and committing the greatest massacre of Jewish people since the Holocaust, people here in the UK celebrated on the streets. Weekly marches then made central London and other city centres no-go areas for Jewish people. I went to watch some of these marches. I did not see any banners calling for peace, for hostages to be released or for a two-state solution but—and this is the distortion Simon Sebag Montefiore was talking about—plenty comparing Israel to Nazi Germany, its leaders to Hitler and Gaza to the Holocaust. They say the victims have become the oppressors and that Jews are doing what the Nazis did. Even before the conflict, Gaza was called a “new Warsaw Ghetto”.
What could more offensive than routinely accusing a country built by Holocaust survivors—the only democracy and equal free society in the whole of the Middle East—of genocide, crimes against humanity or committing another Holocaust? These disgusting comparisons are designed to demonise and delegitimise Israel and undermine the very reason for its existence as a safe haven for the Jewish people.
Protesters demand that Palestine stretch
“from the river to the sea”,
which would mean the destruction of Israel and the murder of its citizens. They chant for Israel’s destruction, for “death to the IDF”—even on the stage at Glastonbury and broadcast by the BBC—or to “globalise the intifada”.
Last month, unbelievably, extremists in Birmingham paraded behind a banner saying “One Solution, Intifada Revolution” with the Hamas symbol—the symbol of a proscribed, banned terrorist group—yet the police did nothing about it. The intifadas were terror attacks with suicide bombings, ramming people with cars and attacking them with knives—exactly what happened in Manchester.
It is good that the Met and Greater Manchester Police have finally said that they will start prosecuting people who make these statements, but this has been happening since 7 October. We need assurances that other forces will be required to do the same and that people who do this will be prosecuted with the same speed and determination as those who incite other forms of racism, as we saw, for example, after the Southport attack.
Over the last few years, we have seen Jewish kids attacked on the way to school, students targeted at university, Jewish patients hiding their identity when going to hospital, synagogues smeared with faeces and homes daubed with swastikas, and businesses attacked just because their owners are Jewish. As the Chief Rabbi said, this is a tidal wave of “Jew hatred”.
In Bristol, a Jewish MP was banned from visiting a school in his constituency. It turned out, extraordinarily, that the inclusion and diversity co-ordinator at the trust running the school had praised Hamas’s 7 October massacre as “heroes fighting for justice”. In Birmingham, Jewish people were banned by the police from going to a football match. Here in London, a mob gathers each week to scream abuse at the staff and customers of a restaurant owned by Jewish people. Of course, people have the right to protest in a democracy but not the right to harass Jewish people outside restaurants or synagogues. These people should be arrested and prosecuted. These incidents should be dealt with much more seriously in future.
What is the context in which all this is taking place? Parliament debates Israel more than any other issue—not just more than any international issue but more than any other issue. During the conflict, Parliament debated Israel and Gaza three times more than the NHS, crime, poverty or immigration. How can it be that MPs spend more time on a conflict thousands of miles away—which, if we are honest, though I am not pretending to be an expert on this, many of them know probably not very much about and can do even less to solve it—than the schools or the hospitals in their constituencies that they are responsible for? In Sudan, famine has killed 500,000 children, 10 million people are starving, and tens of thousands of civilians were murdered in just a few days. The UK is the UN Security Council penholder, yet we hardly ever discuss it.
Two weeks ago, on the very first day back after the new year, there was a Statement which was supposed to be on the Middle East and north Africa, but many MPs queued up to speak only about Israel and Gaza. MPs falsely accuse Israel of the worst crimes possible, but the Government concluded that Israel is not committing a genocide—so I would like to hear Ministers start to push back when Back-Bench MPs or others claim that it is.
We see the same obsession, bias and inaccuracies at the BBC, too. For example, when the Government concluded that Israel was not committing a genocide, the BBC pretty much buried the news. When the UN said it might be, it dominated every bulletin for days. The IHRA definition of antisemitism, the official definition that the Government subscribe to, says that demonising Israel, singling it out for criticism, holding it to standards never applied to other countries—which is clearly what is happening—are examples of antisemitism. All this matters because the obsessive demonisation of the world’s only Jewish state obviously drives hostility towards people who are identified with it, which is the vast majority of Jewish people. This is a large part of what drives antisemitism in the UK.
People cannot really promise to oppose antisemitism but then support boycotts, sanctions or embargoes that would prevent Israel from defending its Jewish citizens. People say that there is no place for antisemitism, but this has become meaningless when it is running at record levels, when Parliament and the BBC are fuelling it and when the authorities are not doing nearly enough to deal with it.
We need to be much more robust in standing up for our values. Migration is now a permanent feature of global life: in just four years, 3.5 million people came to live in Britain. Some will have come from places where antisemitism is more common than in the UK—places where the Holocaust is rarely taught, not understood or by many, probably not even believed. So, it is crucial that Holocaust education is increased, expanded and improved.
We have to be clear and say that, if people hate Jews or think Israel should not be allowed to exist, they should be prevented from coming to Britain or staying here to live. The Government and the police must clamp down much harder on extremist preachers making hate speeches in mosques. NHS staff or university lecturers responsible for racism should be sacked. Hate marches cannot be allowed any longer to take over our streets every week; the Government should change the law to curb them, if necessary.
No more empty promises or meaningless platitudes—taking antisemitism much more seriously and dealing with it much more robustly is not just a matter of standing up for the Jewish community, vital though that is; it is fundamentally about what it means to be British. Living in the UK means believing in democracy, equality, freedom, fairness and tolerance. That is what our country stands for. That is exactly what heroes like the late father of the noble Baroness, Lady Ramsey, and his comrades were fighting for in the war. Those values define what it means to be British.
Of course, Holocaust Memorial Day is an opportunity to learn about history’s greatest crimes and pay our respects to its victims, like my dad’s mum and sisters. But expressing our sympathy for people murdered 80 years ago is not enough. Holocaust Memorial Day is the opportunity to dedicate ourselves, especially those of us in positions of leadership and responsibility, not to stand silently by or to mouth empty promises or meaningless platitudes, but to do all we can to fight hatred and prejudice and stand up for the victims of racism today.
Baroness Harding of Winscombe (Con)
My Lords, it is a somewhat daunting privilege to follow another passionate and erudite speech from the noble Lord, Lord Austin. I too congratulate the right reverend Prelate the Bishop of Coventry on an outstanding maiden speech—the huge impact that she will make in this House is clear. I thank the Minister for leading this debate so candidly and emotionally. I declare my interest as a member of the UK Holocaust Memorial Foundation. I did not get a chance last week in ping-pong on the Holocaust Memorial Bill to pay tribute to my noble friend Lord Pickles for the huge amount of work that he is putting into the Holocaust memorial. He and his co-chair, Ed Balls, are extraordinary to watch at work together. We are incredibly grateful for the work that my noble friend does.
It is an honour to speak in this debate after such emotional, personal, erudite speeches. I always feel a fraud when I talk about the Holocaust because I am not Jewish. I did not come to Holocaust education and commemoration because of family and community links; my journey to this debate was far more prosaic. In 2015, the then Prime Minister, my noble friend Lord Cameron, asked me to serve on the UK Holocaust Memorial Foundation to bring my digital experience to the project’s objective not only of being a physical memorial and learning centre but of bringing the content and the experience to everyone in the country.
On the premise that when your Prime Minister asks you to serve you should say yes, I did, without really understanding what I was committing to, and so my personal Holocaust education journey began. I did not learn about the Holocaust at school. I went to a Catholic convent where the religious education consisted of rote learning the Bible. There was no Holocaust Memorial Day when I was growing up. I began to learn the true horror of the murder of over 6 million Jewish men, women and children only through my involvement with the Holocaust Memorial Foundation.
I too had the privilege of my life in meeting Manfred Goldberg and watching and experiencing his testimony on Testimony 360. If noble Lords have not had a chance to experience it yet, I recommend it, because he is there in front of you as if he was in front of you physically. We are so lucky that Manfred and the other survivors were so brave to give their testimony.
My journey has involved visiting various museums and learning centres around the world, but it has also involved deep personal introspection. First, I needed to learn the facts; as the noble Baroness, Lady Deech, has pointed out, it is hugely important that we understand the overall historical context. We need to feel empathy for the heartbreak that this most atrocious of human acts has brought. However, as many have said this afternoon, I know that I cannot possibly fully comprehend what that multigenerational trauma must feel like. I know enough to know that I simply do not know.
My learning journey has taken me to looking inwards and asking myself some very uncomfortable questions that others have alluded to this afternoon. Would I have turned a blind eye to antisemitism as it set in again in Germany in the 1920s and 1930s? Would I have put up the equivalent of the greengrocer’s notice, as Václav Havel sets out? Would I have opted for a quiet life or, worse still, would I have joined in?
Sadly, that learning journey continues, because today, as we bridge the generations, as Holocaust Memorial Day tomorrow asks us to think about, we cannot ask those questions in the hypothetical; I am afraid that we have to ask them in the present tense. Holocaust Memorial Day and Holocaust education in the round forced me to ask myself, “Am I turning a blind eye?”—as the noble Lord, Lord Austin, has just challenged us. Am I standing up for my Jewish friends as they question whether the UK is safe for them to live in today? Am I going with the populist flow, or am I fighting antisemitism as only a small minority of people did in the run-up to the Second World War in Germany?
Holocaust Memorial Day calls on all of us never to forget, but as many have said today, that is only the beginning of the journey of learning. To truly bridge the generations, to learn from and not repeat the Holocaust, we have to learn to act, not just learn.
I fear, as many have said, that we are living in a time when people are scared. The world order is shifting. Mark Carney encapsulated it completely brilliantly last week. He set out eloquently how the rules-based world order that I have been lucky enough to grow up in is shattering. People across the world are scared; they are angry; they are looking for easy solutions. History teaches us that that is very fertile ground for antisemitism.
My involvement in the Holocaust Memorial Foundation has taught me, as others have said, that you win and lose this battle day in and day out. It requires all of us, in whatever role we play, in public and in private, to recognise how easy it is for populist rhetoric to turn into antisemitic actions. To prevent history repeating itself yet again, we all need to stand up and be counted today, on Holocaust Memorial Day tomorrow and, I am afraid, every day.
Lord Morse (CB)
I am very honoured to follow that excellent speech; and I take the chance to acknowledge the very brilliant maiden speech that we heard earlier as well.
I am intending to speak quite briefly on this subject, because it has been very fully covered already, and I am sure nobody will mind that. First, I should declare an interest. I am a member of the APPG on British Jews, although I am not Jewish. I believe that it is really important for all British citizens to show their support for each other in the face of antisemitism.
This needs to be offered with humility and a sense of how little—certainly for me—we know. I have not experienced the emotions that my Jewish friends have experienced or the loss that they have experienced. I have read about the Holocaust. I understand it to that extent, but I do not have the deep empathy that so many noble Lords in this Room have.
What I do have is a feeling of absolute fury when I think about children not being able to go to their schools, or going in while concealing their identity; or schools having to look like fortified camps because of fear that something may happen to the children or that they may be attacked; or indeed, Jewish friends I know who are beginning to have discussions about whether this is much of a country to live in any more and whether it is a safe country for Jewish people to live in. I was absolutely horrified to hear some of those discussions, but this is where it seems to be going.
Our country—my country—is surely much better than this. Our Jewish people and fellow citizens, who have contributed so much to this country and who continue to do so, are entitled to expect much better of the whole country and to expect our vigorous and committed support.
Religious hate crime, I am afraid, is growing significantly. We might try to believe otherwise, but it is not true. It is directed not just at Jewish people—a significant number of hate crimes are directed at the Muslim community as well, and it is important to remember that—but when you come down to the intensity of number of hate crimes per 10,000 people, the Jewish population suffers three or four times more than the Muslim community. So, although others do suffer from hate crimes, it is the Jewish community that is the most heavily struck.
When HM Government take a clear stance against hate crime and antisemitism, we have to acknowledge that, but, equally, we have to say when it is not working very well.
Antisemitism is advancing, and our Jewish fellow citizens feel that they are subject to pervasive threat and that their life, in many cases, is being made miserable as a result of these threats and antisemitism. Notwithstanding what HM Government are already doing, I believe they could and should go much further and start by setting hard, measurable targets to reduce and stamp out hate crime by specific target dates, and be willing to be held to account against them. What is measured generally gets done; that is my experience in life.
Even in this very serious matter, I think we need to be tough with ourselves—not sanctimonious, but tough—about what can be done. The best tribute we can offer, in my mind, to the horrors of the Holocaust is to act vigorously now, to fight against antisemitism and to keep on fighting until we win.
Lord Young of Norwood Green (Lab)
My Lords, I was born a Jew and I am proud to be a Jew, albeit a non-practising one. This has been an amazing debate, and I want to pay tribute the right reverend Prelate—I did not think I would be paying tribute to a a Jewish one—for an amazing speech. There have been some amazing speeches during this debate.
I want to give some experience of my life. We were Dutch Jews on one side of our family. My father changed the name because he wanted to sell more insurance, and he was good at that, so I suppose it was a good move.
Where we lived in the East End, I never experienced any antisemitism. It was a mixed street, mainly Jews. The synagogue was round the corner, and the rabbi was round the other side. I think we had a good upbringing.
When I was 15 years old, I was a precocious reader and I came across a book—
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, the noble Lord’s name is not on the list to speak, but if he would like to keep his remarks short, that would be okay.
Lord Young of Norwood Green (Lab)
I am sorry. I will endeavour to keep my remarks short. I did not realise that I had to put my name down.
Anyway, when I was 15 years old, I came across a book, The Scourge of the Swastika, which, ironically, was written by the grandfather of the noble Lord, Lord Russell of Liverpool. That taught me a lot about what goes on.
Bearing the mind the strictures that I have to keep my remarks limited, I will do. I think this is a really important debate. I thank the people who have made contributions about needing to do more to ensure that antisemitism remains something that we fight against. I will leave it at that.
Lord Evans of Rainow (Con)
My Lords, it is a pleasure to follow the noble Lord. I wish to welcome the right reverend Prelate the Bishop of Coventry. I did take the opportunity to visit Coventry cathedral—both the old, original one and the new one—and I believe she will make a fantastic contribution to your Lordships’ House. Also, I say to the noble Baroness, Lady Taylor of Stevenage, as many noble Lords already have, that that was an excellent introduction to this debate.
The noble Baroness, Lady Ludford, mentioned a couple of films, “Schindler’s List” and “Nuremberg”, and made a very valid point about their certification. “Nuremberg” is worth going to see, not least to see Britain’s Attorney-General, Sir Hartley Shawcross, skewering Goering at the dispatch box. I can recommend one film for your Lordships to see that really gives an indication of what actually happened in the Holocaust. It is called “The Grey Zone”, from 2001, and it tells the story of the 12th Sonderkommando uprising in Auschwitz in October 1944. It is certificated 18 because it is a little bit more graphic.
There is a large Jewish community in Manchester. As noble Lords can probably tell from my accent, my family comes from Manchester. I come from a council estate just south of Manchester. I remember that, growing up in the 1970s, we had a lot of veterans from the Second World War and the First World War. My mother remembered the Manchester blitz and hiding away in the garden in very dark Anderson shelters. She remembered the sound of German Daimler-Benz engines as they went over to bomb Manchester and the docks.
My mother also told me about the propaganda the Germans used to send out: “Germany calling, Germany calling, Lord Haw-Haw”. The Germans knew where the Jewish community in Manchester was. For those of your Lordships who do not know Manchester, just in the suburbs, in south Manchester, in a place called Didsbury, there is a large Jewish community and a synagogue—you could call it the south Manchester synagogue, as opposed to Heaton Park in north Manchester. William Joyce—Lord Haw-Haw—used to say exactly where the Jewish community was, because there was a tram terminus. He said, “We’ve got you marked out. We know where you are”.
As a coincidence, my mother worked for a company called Granada Television. This is where I pay tribute to the noble Baroness, Lady Ramsey of Wall Heath, and the story of her father, the Second World War and the liberation of Belsen. Sidney Bernstein was a Member of your Lordships’ House. He set up Granada Studios in Manchester, but his wartime service was documenting exactly what happened in Belsen. He became a fellow of the British Film Institute. I remember my mother telling me what a good man he was. I never met him, but I have read up on him.
The films Lord Bernstein produced were made specifically so that future generations could say that this happened and could not be denied. Noble Lords can look this up on YouTube, but I remember seeing a member of the Cheshire Regiment, a sergeant. He was being filmed and was asked, “Where are you, who are you and what is happening?” In the background, there was a mass pit. SS prisoners were putting the bodies into a pit, as he described, in an accent not dissimilar from mine, that he was Sergeant Smith from Cheshire, and that he was in Belsen concentration camp. What he witnessed there was unbelievable. Those were his words.
Last year, I had the privilege of meeting Mervyn Kersh, a Jewish soldier who fought in the British Army. Although he was not there on the exact day of the liberation of Belsen, he came in about a week later. He witnessed the clear-up. He saw how the medical services saved as many lives as possible. It was wonderful to meet Mervyn. In the same room was a Holocaust survivor who was liberated by the British Army in Belsen. She subsequently married a British soldier. She thought that the British Army was the best army in the world, and who can argue with that?
I remember speaking to Mervyn last year. His family had escaped from Germany into Holland and then to the safety of Britain. He had volunteered for the British Army and ended up going to liberate Europe. He said to me that his father knew, in the 1930s, what was coming with the Holocaust. He said to Mervyn, as a very young man, “If they land on the south coast of England, we need to head to Wales, we need to head to Anglesey, and we’ll get ourselves to America”. Standing there, in the third decade of the 21st century, and hearing that memory of a very young man reminds us of where we are; I am afraid to say, “Here we are again”.
I turn to the future. Noble Lords have mentioned the fantastic work that the Holocaust Educational Trust has done, with Karen Pollock and her colleagues reaching over 100,000 people each year, ensuring that the lessons of the Holocaust are never forgotten. Each year, tens of thousands of young people hear the powerful testimony of Holocaust survivors and their descendants. Survivors travel across the country to talk to many schools. Through the Lessons from Auschwitz project, tens of thousands of young people have stood on the site where around 1 million Jewish men, women and children were murdered. They return as Holocaust Educational Trust ambassadors, committed to sharing what they have witnessed.
More than a thousand teachers are trained each year in how best to teach this challenging and sensitive subject. Testimony360 is a digital project that is transforming how the Holocaust is taught and understood. Using AI-powered search technology, thousands of students have already come face to face with survivors, engaging in natural language conversations as if they were in the room together. Paired with virtual reality headsets, students can also explore key sites connected to each survivor’s testimony, all without leaving the classroom.
Remembrance is no longer enough, though. Action must be taken to counter antisemitism here today. This year, we mark Holocaust Memorial Day with increasingly heavy hearts, just months after the deadly attack at Heaton Park synagogue and weeks after the barbaric attack on Bondi Beach. Since 7 October 2023, antisemitic hatred has intensified, rhetoric has spilled into violence, and what was once whispered is now said openly and proudly. We have seen it in protests outside a Jewish-owned restaurant, a Jewish Member of Parliament being barred from visiting a local school, and visitors to a London synagogue being forced to walk through a gauntlet of hate. It is no longer enough to remember the past or to say that antisemitism is not acceptable. Action must be taken to tackle antisemitism and to foster social cohesion.
Holocaust education faces significant challenges, but the Holocaust Educational Trust is reaching more young people now than ever before. Today, young people arrive in classrooms with views shaped by social media trends rather than by evidence. Some teachers are anxious about how their communities will respond when a Holocaust survivor shares their testimony, fearing a backlash from parents. Survivors themselves are being asked to navigate questions about contemporary conflict just because they are Jewish.
In response, the Holocaust Educational Trust is expanding its work in classrooms across the country and is now working with hundreds more schools than in 2023, before the barbaric terrorist attack on Israel by Hamas. Its reach will continue to grow and new programmes are being rolled out. The Holocaust Educational Trust knows that the Holocaust cannot and must not be taught in isolation. The antisemitism that culminated in the Holocaust was not invented by the Nazis; it was rooted in 2,000 years of anti-Jewish hatred. Likewise, we know that antisemitism did not end in 1945; it has continued to evolve and to adapt right up to the present day. It is up to us all to make a stand against antisemitism.
Lord Sahota (Lab)
My Lords, I congratulate the right reverend Prelate the Bishop of Coventry on her moving and illuminating maiden speech.
I rise with a profound sense of solemnity and responsibility. Holocaust Memorial Day is not merely a day of remembrance but a day of moral reckoning—one that calls on us all year after year to confront the darkest capacities of humanity and reaffirm our shared commitment to ensuring that such horrors are never repeated.
The Holocaust was a heinous crime—an atrocity of the worst kind in human history. Six million Jewish men, women and children were systematically murdered, alongside millions of others, including Roma, disabled people, political dissidents, and members of the LGBT community. This was not an accident of war but a deliberate and industrialised attempt to eradicate an entire people. We must continue to remind the world that such inhumanity to humanity must never be allowed to happen again.
We also remember that many of those responsible were ultimately brought to justice. That matters. Accountability matters. It reaffirms our fundamental principle that no state, no Government and no individual are beyond moral or legal judgment.
However, Holocaust Memorial Day also invites us to reflect broadly on the lessons of history. It asks us not only to remember one atrocity but to recognise and remember others committed across different times, different continents and different cultures, so that memory itself may serve as a safeguard against repetition. In that spirit, we must acknowledge other grave injustices that occurred that scar our collective past.
One such example is the Amritsar massacre of 13 April 1919, when hundreds of unarmed men, women and children were brutally killed at Jallianwala Bagh. They had gathered there peacefully, yet they were met with indiscriminate and lethal force. This was a profound moral failure and a tragedy that continues to resonate, particularly for British Indians and the wider Commonwealth. There have been other atrocities across the world as well, such as Rwanda, Srebrenica, Cambodia, My Lai and many more. Each reminds us that the promise of “never again” must be renewed continually, not spoken once and then just forgotten.
Remembrance without reflection is hollow. Reflection without responsibility is incomplete. Acknowledging historical wrongs does not diminish a nation. Rather, it strengthens its moral standing and demonstrates the courage to confront uncomfortable truths. In reflecting on the lessons of the Holocaust, we are also invited to look with honesty and humility at our history.
Amritsar remains a source of deep sadness, particularly for those whose families were directly affected. In that context, I respectfully ask my noble friend the Minister whether His Majesty’s Government have any plan to offer a formal apology for the Amritsar massacre, in recognition of the hundreds of innocent men, women and children who were mowed down on that tragic day. Such an apology would not undo the past, but it would carry a profound symbolic weight and reaffirm our enduring commitment to justice, humanity and historical truth.
Lord Howard of Lympne (Con)
My Lords, I am grateful for the opportunity to say a few words in the gap and to pay tribute to the many excellent speeches that we have heard in this debate, including, particularly, the admirable maiden speech of the right reverend Prelate.
As I have mentioned before, my grandmother was killed in Auschwitz, and I was partly brought up by an aunt who not only survived Auschwitz but, as she told me, survived being put into the gas chamber when that evil and macabre operation was aborted because on that occasion the system malfunctioned, so this subject is very real for me.
Last week, in the debate on the Holocaust memorial, my friend the noble Baroness, Lady Deech, for whom I have great respect, said that the Nazis intended to kill 6 million men, women and children. As I told her afterwards, I almost intervened during her speech because she was wrong. The Nazis intended, as my noble friend Lord Massey said, to kill many, many more. One of the most chilling documents of the Holocaust, which I am sure many of your Lordships have seen, is the map that was in front of the participants of the infamous conference at Wannsee in 1942 that planned the details of the final solution. That map showed every country in Europe and the number of Jews that those at the conference estimated that country contained. It showed not only the countries that the Nazis then occupied or planned to occupy, but the neutral countries in Europe and this country.
Those of us who are familiar with the events of the first three weeks of Churchill’s premiership know that an argument raged as to whether terms should be sought from Hitler. An argument raged in the War Cabinet itself for 10 days, and there is no doubt at all that, had it not been for Winston Churchill, such terms would have been sought, and much the same deal would have been done as the deal that Marshal Pétain and the French did at that time. If that had happened, even if by some miracle your Lordships’ House had survived or had been revived in the intervening years, I would be very unlikely to have been here to contribute to this debate today. Therefore, I am at the forefront of those who insist that the Holocaust must be remembered, even if the antisemitism that brought it about was just a matter of history, but, of course, we know that it is not.
A few months ago, I attended the funeral of Adrian Daulby, one of the victims of the Heaton Park attack. It was, as your Lordships would expect, a very moving event. It was an event of a kind that I never expected to attend and that I hope never to attend again, but unless the efforts of our Government and our society are increased and stepped up, I fear that I may.
Not long after 7 October, I was invited to give a talk at a synagogue in central London, and then I was told by the organisers that they had been advised that it would not be safe for that event to take place. Rather meekly, I accepted that advice, and the event was postponed, although it did take place at a later date. Looking back on it, I think I was wrong. I should have insisted that that event went ahead on the original date. It is the duty of government to ensure that its citizens can go about their lawful business in safety. The police have the responsibility of discharging that duty, and, alas, they have not always distinguished themselves in discharging it in recent months. More needs to be done, and I hope that this memorial day, this debate and the debate that is to take place in the other place help to get that message across.
At the annual memorial service that used to take place in Hyde Park and now takes place at other venues, which I have attended for many years, a rather beautiful song is sung. Its title and refrain are the words “Never Again”. It is our duty to ensure that those words are given their full meaning.
Baroness Walmsley (LD)
My Lords, I congratulate the right reverend Prelate the Bishop of Coventry on her excellent maiden speech and welcome her to this House. Since she tells us that she enjoys singing, I invite her to accompany me after the debate to the crypt chapel for a rehearsal of the Parliament Choir, which has often sung in her cathedral. I hope that she feels at home in your Lordships’ House.
When I get up in the morning and dress to come to your Lordships’ House, I remember my mother as I put on the little ring that I am wearing, which belonged to her. When I think of her, I also think of my father, who had such ambitions for me. When I walk into this Chamber, I often look up and wish that they had both lived to sit in the balcony and see me admitted to your Lordships’ House 25 years ago. I have always tried to make them proud, because I am one of the lucky ones who grew up with my own parents and grandparents around me.
Although my father served in the British Army to fight the Nazis, he survived the war. However, millions of the survivors of the events in the terrible time of the Holocaust, especially the children, either have little memory of their parents or nightmarish memories of family members who died. I often think of what it took for Jewish parents to say goodbye to their children, who left on the Kindertransport or by other means, knowing that they would probably never see them again. To us human beings, as to many other species, our children’s lives are even more precious than our own.
We often use things—places, photos and situations—to trigger memories of those who went before. That is why we want physical memorials, events and activities to help us remember what we will never want to forget and ensure that future generations will not either. Art can often do that for us. A wonderful example is the collection of ceramic replica shoes made by Jenny Stolzenberg, now displayed in the atrium of Portcullis House. It reminds us that the Shoah, and the other Holocaust mass murders of human beings, was not about mathematical numbers, such as 6 million; it was about 6 million individual people with 12 million feet that took them to their terrible fate.
We should ask ourselves the question: why did it happen? I have my own theory. I have always felt that there are many different ways of being human and that we should treat all with kindness and respect. Indeed, that is a fundamental part of my political philosophy and the way I try to live my life. The fact is that the Jews were persecuted by the Nazis because they were seen as “other”, as they had been for centuries. That expression, which was also mentioned by the right reverend Prelate the Bishop of Coventry, is now used to indicate people who are different from the majority—people with a different skin colour, gender identity, religion, nationality, language or culture, or different traditions, values or ways of life. That othering can lead to discrimination, inequality of opportunity and even hatred and violence. That othering of other human beings is the danger that we should all fear most in today’s world.
It is not just about slavery, which we all thought was stamped out years ago but know is still happening; othering is happening in many different ways today: racial discrimination of all kinds, antisemitism, the bombing of Ukrainian people by the Russians because they do not want to be Russian, the repression of women in Iran who do not conform to the way that men want them to live, the persecution of people suspected of being “other” by ICE on behalf of the state in the United States. How ironic that indigenous people—yes, indigenous people—are having to carry their tribal ID with them on the streets of Minnesota.
All these things, if allowed to take hold in a society, can lead to disaster and inhumanity. We need to be very afraid if we see signs of it happening in our own country, and we need to stop it before it can take hold. After all, we have all heard the warning of Pastor Martin Niemöller from his own sad experience. Here is part of it:
“First they came for the Communists
And I did not speak out
Because I was not a Communist”.
It then goes on, ending with:
“Then they came for the Jews
And I did not speak out
Because I was not a Jew
Then they came for me”.
We should speak out and speak up loud and clear for the kind of country that we are and should be.
That is why the theme chosen for this year’s Holocaust Memorial Day is so right. Bridging generations is vital if we are to alert our children to the danger to our country of every kind of othering, because, although we are reminded that the Holocaust was about the slaughter of 6 million Jews and the suffering of millions of others who survived, it was also a slaughter of other groups who were regarded as “other”, and therefore a danger to those in power. Power is so dangerous when it is linked to ignorance, greed and inhumanity. That is why I am glad that Holocaust Memorial Day is not just a big concert in a big concert hall and memorial services around physical memorial installations but small community events all over the country—in towns, villages, schools and homes, with their candles in their windows.
Tomorrow evening, when we look up at our public buildings lit up in purple, let us remember those who died in the Shoah and other Holocaust events, and let us celebrate and protect those who live on. Let us also vow that we will do everything we can to bring up our children in full knowledge of the Holocaust, and always to treat others with kindness and respect, no matter how different they are from ourselves.
Baroness Scott of Bybrook (Con)
My Lords, first, I thank the Minister for bringing forward this take-note debate on Holocaust Memorial Day, which falls tomorrow, and for her very thought-provoking speech. It was passionate, and I could feel that she felt it very deeply. I am also grateful to all noble Lords for their thought-provoking, passionate and moving contributions to commemorate all those 6 million Jewish men, women and children who were murdered in the Holocaust by the Nazi regime and its collaborators. I also congratulate the right reverend prelate the Bishop of Coventry on her excellent maiden speech. I look forward to hearing more such speeches in the years to come.
Having spoken in and brought forward this debate in previous years, it is a privilege to speak in this debate once again. This year’s theme, “Bridging Generations”, is not only an invitation to remembrance but a call to action. With each year that passes, we are left with fewer and fewer survivors and eyewitnesses to the Holocaust; it is increasingly up to us to pass on their memory.
The Minister read out the names of the heroic Holocaust survivors who have died this year. To their families and friends may their memory be blessed. It was this month that, sadly, Harry Olmer MBE died aged 98. Harry was born in Poland. His family was subjected to forced labour following the German invasion. In 1942, Harry, his brother and their father were sent to Plaszów labour camp in Kraków. After a year, when he was just 16, Harry was moved again to work in the chemical factories where many thousands died from poisoning, epidemics, starvation and exhaustion. Weakened prisoners were simply shot by the SS. In July 1944, shortly before the German retreat, a selection of those prisoners resulted in Harry being sent to Schlieben in Germany, a subcamp of Buchenwald concentration camp. As one of the surviving prisoners there, he was transported yet again, this time to Terezín ghetto in Czechoslovakia, and it was from here that he was finally liberated on 8 May 1945.
Harry came to the UK with a group of child survivors known as the Boys. Recalling his arrival, he said, “It was freedom”. The suffering he experienced clearly did not hold him back. He qualified as a dentist and became a British citizen in 1950 in order to serve in the British Army. He retired reluctantly at 86, and his commitment to educating the next generation continued all those years. We are lucky to have called Harry a fellow countryman. His memoir was titled My Revenge on Hitler is My Family, and I take this opportunity to offer, on behalf of your Lordships’ House, our sincere condolences to Harry’s children, his grandchildren and his great-grandchildren. It is an understatement to say that his story is an inspiration. It is a profound loss that he is no longer here to tell his story himself. Let his memory be a blessing.
“Bridging Generations” reminds us that memory is not passive. It is something we must actively carry and pass on. It is particularly alarming, therefore, that the number of UK schools commemorating the Holocaust has dropped by nearly 60% since the 7 October pogrom carried out by Hamas and the massacre of over 1,200 Jewish people. This is shocking in this country. I commend, and indeed recommend as a matter of urgency, the work of the Holocaust Educational Trust and the Holocaust Memorial Day Trust, as well as all the other organisations, museums, teachers and volunteers who commit to educating the next generation about the Holocaust.
Now more than ever, at a time when social media spreads misinformation to children, and when antisemitism is on the rise, as we have heard said so passionately today, they need to be taught about the horrors that took place and how it is that they came about. These horrors occurred not just because of a few monsters at the top, but because of ordinary people and the monster that we all know humans are capable of becoming. Moreover, children need to be instilled with, and we ourselves need reminding of, the values that prompted people to think critically, to be courageous, and to stand up to evil in daily life. What lessons could be more valuable or more important? Those educators who are denying our pupils the chance to participate in Holocaust Memorial Day are doing our children a disservice, and I dare say in some cases doing so out of moral cowardice.
Furthermore, the work of organisations such as the Holocaust Memorial Day Trust should not be confined to the classroom. It was not schoolchildren who committed the terrorist attacks in Sydney, Australia, or on the Heaton Park synagogue in Manchester. We on these Benches welcome the Government’s interventions in education, but also in security and taking action within our institutions. It is a source of shame that these measures have become necessary, but it is also a wake-up call that we all need to do more to uphold the dignity of every human life and to cultivate cohesion in our country.
In this vein, I give thanks for the work of His Majesty the King and all the Royal Family who, in the last year, have led the way in marking the 80th anniversary of the liberation of Auschwitz-Birkenau and indeed of Europe. I also note that today in 1482 the first printed edition of the Torah in Hebrew was completed in Bologna in Italy. This set the model for the page format still in use. The contribution of our Judaeo-Christian heritage to our civilisation today is undeniable and Jewish communities continue in this country to contribute to our society in most extraordinary ways. I end by saying that my thoughts and prayers are with those victims of the Holocaust, their families, and all those who continue to be affected by antisemitism on British soil and abroad to this day.
Baroness Taylor of Stevenage (Lab)
My Lords, as ever on these occasions I am struck by the depth, dignity and sincerity of the contributions we have heard. I am not sure I can do justice to every powerful point made today, but I will do my best. I start by congratulating the right reverend Prelate the Bishop of Coventry on her excellent maiden speech and welcome her to the House. She reminded us of the way Coventry is linking its devastation in the Second World War and the hatred that led to that with the importance of speaking to our young people about peacebuilding and reconciliation. I am grateful to her for her words and hope she enjoys her time here in this House.
This debate is one that year after year brings out the very best in our House. It reminds us not only of the weight of our shared responsibility but of the compassion and the urge for moral clarity that unites us. We come together in remembrance of 6 million Jewish men, women and children murdered in the Holocaust—as well as thousands of Roma, Sinti, disabled people, gay men, political opponents, Jehovah’s Witnesses and the victims of genocides in Cambodia, Rwanda and Srebrenica. Their memories guide us, challenge us and call us to account. I particularly thank those noble Lords who have given their own personal testimony from themselves or their families today—the noble Lords, Lord Austin, Lord Evans and Lord Shinkwin, the noble Baroness, Lady Ramsey, and the noble Lord, Lord Howard—and I am particularly grateful to the noble Baroness, Lady Scott, for her tribute to Harry Olmer. The noble Baroness, Lady Ramsey, asked us in a quote, “Do you think all this is better forgotten”? I hope the fact that we are debating this today means that none of us thinks that at all.
At this point I pay tribute to Stevenage Liberal Synagogue, particularly to Terry and Gillian Wolfe and Rabbi Danny Rich, who have supported me in my attempts to continue to educate myself about the Jewish faith and the life of Jews in Britain today. The noble Baroness, Lady Scott, spoke about the Torah. It was an absolute marvel to me to watch Danny Rich pick up the Torah, which, in case people have not seen it, is the scroll that is unrolled in a synagogue. There is no punctuation and there are no spaces in it, and he explained to me how he navigates his way around that Torah. It has been a real education to me, and I am grateful to them for all of that.
A number of noble Lords, starting with the noble Lord, Lord Pickles, spoke very powerfully about the continuing scourge of antisemitism. The noble Lord, Lord Massey, reminded us of what an ancient hatred that is, but, of course, with a current and very present shadow that hangs over us all. Antisemitism is completely abhorrent and has no place in our society, which is why we must all take a strong lead on tackling it in all its forms.
Sadly, we have seen how events in the Middle East are used as an excuse to stir up hatred against British Jewish communities. The horrific terrorist attack on Manchester synagogue on Yom Kippur, the holiest day in the Jewish calendar, mentioned by many noble Lords this afternoon, was an attack on the British values that unite us all. We stand together with British Jews and with all Jewish people. We condemn unequivocally the hatred and poisonous extremism that has led to these attacks. As we think about that attack and the dreadful massacre at Bondi beach, the noble Baroness, Lady Deech, raised powerful issues around 7 October and how we think of those and made a powerful plea that, as we face today’s antisemitism, we continue to keep alive the work that is being done to link the antisemitism we think of in terms of the Holocaust with what is going on today all around us.
I am grateful for the mention of the report from the noble Lord, Lord Mann, and Penny Mordaunt: I am very grateful for their work in this respect. The noble Baroness, Lady Ramsey, spoke powerfully about how we must confront failings in the organisations we are close to, even when it is painful—what the noble Baroness, Lady Harding, referred to as the very uncomfortable introspection that we need to undergo through our thinking about this. The noble Baroness, Lady Ludford, is right: speaking out is a duty for all of us, and the noble Baroness, Lady Walmsley, reminded us of the powerful words of Martin Niemöller.
Much of this antisemitism is feeding into some of the awful words we hear about Holocaust denial and distortion. The noble Lord, Lord Massey, spoke powerfully about denial, and the Government condemn any organisation or individual that attempts to deny the Holocaust. We are implacably opposed to people such as the revisionist historian David Irving and have spoken out recently against the Iranian Government, who are attempting to cast doubt on the facts of the Holocaust. The Government deplore attempts to deny the Holocaust, including those views expressed in a pseudo-intellectual manner. It is of course the case that if Holocaust denial is expressed in a way that is threatening, abusive or insulting and incites racial hatred, or is likely to do so, it is unlawful under the Public Order Act 1986. The noble Lord, Lord Howard, and others, said how important it is that these laws are upheld: they are there for a purpose and we must all make sure that they are taken seriously.
The noble Lords, Lord Massey and Lord Austin, and the noble Baroness, Lady Deech, referred to the impact of the current conflict in Israel and Palestine. We profoundly welcome the ceasefire agreement, of course, and are working intensively to support the 20-point plan for peace. It is vital that both parties uphold the agreement as we implement phase 2 on governance, stabilisation and construction. We continue to mourn the devastating loss of life on 7 October and afterwards and the ongoing desperate humanitarian situation in Gaza. We are deeply relieved that all living hostages have now been released and we continue to insist that the body of the last remaining hostage is returned. Even with the hostages released, we recognise that the trauma and terror Hamas’s actions have inflicted on hostages and their families endures, and we continue to work with partners to maintain the ceasefire and ensure the provision of urgent humanitarian assistance for the people of Gaza. Diplomacy, not more bloodshed, is how we will get security for Israelis and Palestinians, and that requires a political process and a political horizon towards a two-state solution. Over time, only that will ensure long-term peace and security for Israelis and Palestinians.
Much of the debate this afternoon has focused on issues around education and it is right that it has done so, particularly in view of the theme of Holocaust Memorial Day this year. The noble Baroness, Lady Ludford, mentioned Dov Forman and Lily Ebert. I remember very well listening to Dov and to Lily. The noble Baroness, Lady Deech, mentioned the distortion of social media for young people and how it is almost as if they are trying to educate themselves but they are getting a distorted picture because of what they are picking up from social media. The Department for Education actively supports schools to provide high-quality teaching on the Holocaust through the funding of two core programmes and we are also funding a two-year programme, the Supporting Holocaust Survivor Testimony in Teaching programme. Lessons from Auschwitz gives students aged 16 to 18 the opportunity to visit Auschwitz-Birkenau and funding for 2025-26 is £2,300,000. The Centre for Holocaust Education’s CPD programme supports teachers in their professional development, with the Pears Foundation and UCL contributing match and in-kind support of the same amount as the Government, which is £500,000. The Supporting Holocaust Survivor Testimony in Teaching programme will support schools in using recorded Holocaust survivor testimony in their teaching. Funding is being provided for that and being delivered by the Holocaust Education Trust.
The right reverend Prelate the Bishop of Coventry referred to what is I think is the most important thing in this education, which is when you get an outstanding teacher who can inspire and educate you on these topics. Then there is the much wider programme of support for tackling antisemitism in schools, colleges and universities. Some £500,000 of this money has been awarded to the University Jewish Chaplaincy for student welfare on university campuses, where we know there has been particular difficulty. Training for university support staff delivered by the Union of Jewish Students began in November, with 600 sessions planned over three years, and the scholarship programme will provide in-depth training and a learning network, with delivery commencing from this month.
A tackling antisemitism in education innovation fund is launching shortly to promote tolerant debate, and successful projects will commence from April. The Department for Education’s Educate Against Hate website provides schools and parents with free quality-assured teaching resources, helping to navigate discussions over sensitive topics and aiding our efforts to end hate and prejudice in our schools. On 5 November, we published the final report of the independent Curriculum and Assessment Review, alongside the Government’s response. The report’s recommendations for curriculum reform will help tackle hatred and prejudice by ensuring that, in areas such as citizenship and religious education, the refreshed national curriculum and its supporting resources reflect our modern society. There will be a renewed focus on improving young people’s media literacy, helping them think more critically about the content they consume.
There have also been incidents of antisemitism on university campuses, as we all know. There were 35 incidents reported to the CST in the first six months of 2025 in which the victims or offenders were students or academics, or which involved student union societies or other bodies. Of these, 16 took place on campus or university property and 13 occurred online. That is a drop of 64% from 98 higher education incidents reported in the first half of 2024, but each one of those incidents affects somebody deeply and for a long time. The total is twice the 17 incidents that were logged across January to June in 2023, which was not impacted by a trigger event in the Middle East. The Secretary of State wrote to university vice-chancellors in October, urging them to take steps to protect Jewish students from harassment. Where lawful protest crosses the line into harassment, intimidation and the glorification of terrorism, we expect universities to use the full extent of their disciplinary processes to take swift and decisive action to tackle it.
Turning to the commemoration on Holocaust Memorial Day, our national event, and education and community activities, the noble Lord, Lord Pickles, spoke of the reduction in the number of events taking place in education establishments. According to the Holocaust Memorial Day Trust, in 2023, more than 2,000 secondary schools held commemorative events, but on 7 October that year, things changed. In January 2024, just a few months after the deadliest attack on Jewish people since the Holocaust, the number fell dramatically to fewer than 1,200, and in 2025, the figure, which I think the noble Lord gave, was just 854 schools choosing to hold an event, so we must redouble our efforts in terms of commemoration here.
On our Holocaust memorial and learning centre, mentioned by the noble Baronesses, Lady Deech and Lady Harding, and the noble Lord, Lord Pickles, I agree that we must face our past. The Government are determined to deliver on the long-standing commitment to build a new national memorial to the Holocaust. I join the noble Baroness, Lady Harding, in thanking the noble Lord, Lord Pickles, for all the work he has done on this.
The memorial will stand as a reminder to all in Parliament, and the whole nation, of our responsibility to remain vigilant against intolerance and bigotry. The new Holocaust memorial will honour the 6 million Jewish people murdered in the Holocaust and all other victims of the Nazi persecution. There can be no more powerful a symbol of our commitment to remembering those men, women and children murdered by the Nazis and their collaborators than placing the memorial in Victoria Tower Gardens, prominent among the buildings and memorials that symbolise our nation and its values.
I want to reflect for a moment on the comments made by the right reverend Prelate the Bishop of Coventry on faith and belief in the UK. For millions of people in this country, their faith and belief identity is a crucial part of their lives, and our nation is enriched by a diverse tapestry of faiths and beliefs. The Government are committed to harnessing the power of faith for national renewal, helping us to make progress against our missions and improving social cohesion.
The noble Baroness, Lady Deech, spoke about the importance of leaders of faiths other than Judaism speaking out against antisemitism; that is a really important point. I say to my noble friend Lord Sahota on the Amritsar massacre—a tragic event and one quite separate to today’s debate—that previous Prime Ministers have called the massacre deeply shameful, and the incident is a shameful scar on British Indian history. I understand the pain that it still causes in our Sikh community, and I am happy to discuss it with my noble friend outside of this debate.
I express my deep gratitude to the remarkable organisations in the UK that work tirelessly to ensure that the Holocaust is remembered and, crucially, understood. Their work goes far beyond commemoration; it shapes minds, builds empathy and confronts ignorance. Along with the noble Baroness, Lady Scott, and the noble Lord, Lord Evans, I pay special tribute to Karen Pollock CBE, chief executive of the Holocaust Educational Trust, and Olivia Marks-Woldman OBE, chief executive of the Holocaust Memorial Day Trust. Their leadership has ensured that survivors’ voices continue to reach new generations.
It remains profoundly important that the Holocaust is the only historic event that is compulsory within the national curriculum for history at key stage 3. This Government have made a firm commitment that it will remain a compulsory topic in the reformed national curriculum, including in academy schools when the reforms are implemented.
Our Department for Education continues its active support for high-quality Holocaust education through University College London’s Centre for Holocaust Education and its continuous professional development programmes and through the Holocaust Educational Trust’s transformative programme for 16 to 18 year-olds—which I mentioned earlier—and the survivor testimony in teaching programme.
As many noble Lords have touched on today, we are approaching a moment in history when no Holocaust survivors will remain to share their testimony in person. This is a profound and sobering reality. The survivors who have spent their lives retelling the most painful chapters of their past so that we might build a better future will not always be with us. That is why the responsibility now falls to all of us to redouble our efforts, to preserve their stories, to speak the truth when others distort it and to ensure that the lessons of the Holocaust are never diminished, never denied and never forgotten.
I thank noble Lords for the dignity, compassion and commitment they have brought to today’s debate. It has been a privilege to listen and take part in it. As we face a world where the comfortable world order so many of us have grown up with is disintegrating around us, it is even more important that we continue to remember these things. In this debate, we put aside our party politics for our compassion, our determination to remember and our common humanity.
I want to close with the words from the noble Lord, Lord Austin, that we must pledge ourselves not to platitudes but to action. Listening to the debate today, I think that we are all determined to do that to make sure that this is not just about memories but about creating hope for the future that this will never happen again.
Diego Garcia Military Base and British Indian Ocean Territory Bill
The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Minister of State for Europe, North America and Overseas Territories to an Urgent Question in another place on the Diego Garcia Military Base and British Indian Ocean Territory Bill. The Statement is as follows:
“On 22 May, the Diego Garcia treaty was signed and laid before the House. As the Defence Secretary told the House on the day of signature, the treaty secures the strategically important UK-US military base on the island of Diego Garcia. The Diego Garcia military base is essential to the security of the UK and our key allies, including the United States. It is essential to keeping British people safe. It is also one of our most significant contributions to the transatlantic defence and security partnership, because it enables rapid deployment of operations and forces across the Middle East, east Africa and south Asia, helping to combat some of the most challenging threats, including threats from terrorism and hostile states. Its unique strategic location creates real military advantage across the Indo-Pacific. The facility has also helped the collection of data used to support counterterrorism operations, including against high-value Islamic State targets in recent years.
As we have made clear many times, the UK will never compromise on our national security. As we have repeatedly made clear, the agreement that we have struck is vital for protecting our national security, guaranteeing the long-term future of a vital base for both the UK and the United States, which had been under threat, as the Opposition fully understood and on which they were briefed. The deal secures the operations of the joint UK-US base on Diego Garcia for generations. It was publicly welcomed by the US, Australia and all other Five Eyes partners, as well as key international partners, including India, Japan and South Korea.
Just last week, the House spent two hours debating the Lords amendments to the Bill. The Opposition will know, of course, that programming of business in the other place is a matter for them and not for us. However, the Lords consideration of Commons amendments has been delayed because the Opposition tabled a wrecking amendment hours before the other place rose and on a day before a scheduled debate. This is irresponsible and reckless behaviour from the Official Opposition in the second House, using programming tactics to frustrate the implementation of a treaty on a critical national security matter.
I have to say that it stands in stark contrast to the reasoned and constructive criticisms, questions and suggestions from Members in other parties, and indeed from Cross-Benchers, which we have engaged with in good faith at every stage, and we will continue to do so. This is on the Opposition, because their amendment is not only unnecessary; it is toying with our national security. It is only right that we take some time to consider next steps on programming, because we remain confident that this treaty is the best way forward.
The Lords will consider the Commons amendments in due course, and that will be announced in the usual way. The Government are committed to the deal that protects the joint UK-US base on Diego Garcia. Some have sought to sabotage the process through procedural Motions and parliamentary stunts. We are instead focused on delivering this Bill to protect our national security”.
Lord Callanan (Con)
My Lords, I thank the noble Baroness for repeating that Answer. In repeating it, she has accused my amendment of being “wrecking”. That is simply not true, and I have it in writing from our excellent clerks that the amendment is dilatory and not fatal. It is not wrecking. I hope the noble Baroness will take the opportunity to apologise when she answers those questions.
Instead of answering many of the serious concerns raised from all opposition parties about Chagossian rights and many other serious flaws in this agreement, all we heard in the other place from the Minister was bluster and an accusation that those of us asking those questions are somehow playing parliamentary games. This is a serious issue, so let me ask a couple of serious questions to the noble Baroness.
First, in her letter, sent to me, somewhat bizarrely, at 11.30 pm on Friday—she is lucky to have such dedicated private office staff—she referred to international arrangements needing to be in place before they can ratify the Mauritius treaty. For the benefit of the House, can she confirm that what she means by that is that the US Government must formally agree to amend the 1966 treaty and that, by failing to do this before they concluded the treaty, the Prime Minister has, in effect, given Trump a veto on this deal?
Secondly, if the Government do persuade President Trump to update that treaty—which looks unlikely—can she confirm that the amended 1966 treaty would then need to go through the full CRaG process in this Parliament before they can ratify their new deal?
Baroness Chapman of Darlington (Lab)
I am glad that the noble Lord opposite has finally reread my contributions in this place from, I think, November, when I talked about an exchange of notes that would be needed with the United States in relation to the 1966 treaty. I am glad he has internalised what I said then as a fact. There would need to be an exchange of letters, and that is in hand. He asked whether that would then necessitate a CRaG process, and we will look at that when we get the detail of the letters. If it does then we will do that, but it may well not.
On whether or not the noble Lord’s amendment is a wrecking amendment, it is wrecking in its effect. As I understand it, the only wording in it that would be binding on the Government is the date, which he put as 23 March. This would breach the agreement we have with Mauritius. It may be a self-imposed deadline, but that is the deadline we have set ourselves as part of this agreement.
Lord Purvis of Tweed (LD)
My Lords, with regard to the 1966 treaty, it is worth acknowledging that Article 2 is the basis upon which, under the euphemism of what the treaty calls an administrative measure, the expulsion of a population from that archipelago, and its forced depopulation, took place. That treaty is the basis on which this Government, and, I hope, every subsequent Government, will feel shame.
However, that treaty is the basis of the relationship with the United States. Therefore, it is quite extraordinary that the terms under Article 11, which stated that the treaty would expire in 2017 and then have an automatic extension for 20 years, were not chosen to be extended by the previous Conservative Government. This treaty—which we should now all depend upon for our long-term security relationship with the United States—would, under the previous Government, run out in 2037. Article 1 of the treaty, however, states that
“The Territory shall remain under United Kingdom sovereignty”.
Can the Minister confirm whether, when the previous Government opened negotiations with Mauritius on the basis of ceding sovereignty, there were any diplomatic messages to our ally the United States that Article 1 needed to be reviewed and updated?
Baroness Chapman of Darlington (Lab)
It is my understanding that the situation with regard to the 1966 treaty has certainly been understood by my Government, and, I am assuming—I cannot see that it would not have been—by the previous Government. That makes this rather late-in-the-day pseudo-alarm seem rather strange—but here we are. I agree with the noble Lord about the shame we should feel at the forced displacement of the population. He is right to bring that up and I feel that way.
Lord Beamish (Lab)
My Lords, my noble friend the Minister suggested that this agreement was supported by our Five Eyes partners, including the United States—the Secretary of State to the US made a statement to that effect. I know from briefings we have had in the ISC the important nature of this base for us, the United States and our Five Eyes partners. They were looking for stability, which this agreement gives. In the other place today, it was suggested by some that the National Security Adviser has misled the United States in this agreement. Can the Minister tell the House that that is completely and utterly untrue?
Baroness Chapman of Darlington (Lab)
I thank my noble friend, the chair of the ISC, for drawing that to our attention. I was not aware that that accusation had been made, but of course it is completely untrue and unfounded. I can only think that these things get bandied around in the heat of debate, but whoever said it might want to consider their words.
Baroness Goldie (Con)
My Lords, when challenged about the defence and security implications of the UK-Mauritius treaty, the Government have prayed in aid the United States, Five Eyes and AUKUS. Last week, the President of the United States called the treaty an “act of great stupidity”, Five Eyes is not a military operation alliance, and that leaves only AUKUS. What recent engagement have the Government had with the Australian Department of Defence and what was the response?
Baroness Chapman of Darlington (Lab)
We talk with our allies and partners on this constantly, and we continue to talk to our friends in the United States because they are integral to this agreement.
Baroness Hoey (Non-Afl)
My Lords, the Minister in the other place called the House of Lords irresponsible, not just the Opposition. I find that very offensive. Many of us have spent a long time trying to get this issue debated properly. I have a simple and straightforward question and I hope I will get a straight answer. Can the 1966 treaty be rewritten unilaterally?
Baroness Chapman of Darlington (Lab)
I do not know of any treaty that can be rewritten unilaterally. As for the words of my honourable friend Stephen Doughty, I will let him know that this House considers its role as a revising Chamber to be very serious. I know that the vast majority of Members of this House, on all sides, see that as their job. We will continue to do that to a very high standard, in the way that this House has always done.
Lord Bellingham (Con)
My Lords, the Minister appears to be in a parallel universe. Can she comment on what the President of the United States, Scott Bessent and Marco Rubio said last week? Is it not perfectly obvious that they are not going to agree to amend the 1966 treaty?
Baroness Chapman of Darlington (Lab)
I do not know about it being perfectly obvious. There were many things said last week that it is probably best we do not treat as emblematic or representative of the nature of the relationship between the United Kingdom and the United States. We continue to have detailed conversations about this particular treaty and many other issues, as we can all remember talking about recently.
Lord Murray of Blidworth (Con)
My Lords, we are told by the media that four-star generals and admirals have written to President Trump saying:
“A base held under lease, subject to international arbitration, political pressure, or third party treaty obligations, is inherently less secure than one held under sovereign authority”.
Are they wrong?
Baroness Chapman of Darlington (Lab)
I do not think they are wrong. The problem, however, is that that option was unlikely to be available to us indefinitely. We needed to find a solution that was legally secure and that could not be challenged. Had we waited, as noble Lords opposite have encouraged the Government to do, for a binding judgment, then what kind of deal would we have been able to seek? The price was only ever going to go up. It was much better to seek a solution before a binding judgment could be reached, following the advisory opinion. I am assuming it is for James Cleverly, the noble Lord, Lord Cameron, and others to explain what on earth they were doing negotiating, on repeat, for the same deal that we achieved. Why were they doing that if they had no intention of ever securing the base?
Chinese Embassy
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Finn (Con)
My Lords, the Government’s decision to approve planning permission for a new Chinese embassy at the Royal Mint Court site is profoundly troubling. We should be clear about the nature of the regime with which we are dealing. This is a state that our own security services have warned is actively seeking to undermine our democracy, has placed bounties on the heads of Hong Kong democracy campaigners living here in the United Kingdom, has spied directly on Members of Parliament, supports Vladimir Putin’s illegal invasion of Ukraine and systematically infiltrates our universities and businesses to acquire, and often steal, sensitive intellectual property.
Yet the Government’s response to this mounting threat has been characterised by confusion, equivocation and weakness. Ministers have shrunk from calling China what it is: a national security threat. They show a singular lack of transparency by refusing to publish their China audit. They have failed to place China in the enhanced tier of the foreign influence registration scheme and properly support the prosecution of two men accused of spying on MPs in the other place. Now, astonishingly, they have waved through the creation of a Chinese super-embassy in the heart of our capital.
On the eve of the Prime Minister’s visit, one thing remains strikingly absent: any clarity whatsoever about this Government’s approach to China. From these Benches, we have been clear about what a serious and responsible policy on China must look like. It requires relentless scrutiny of the national security threat China poses and firmness in the defence of sovereignty. It requires the courage to call out, clearly, plainly and without equivocation, the systematic human rights abuses inflicted on millions of people in China and across its sphere of influence.
We are equally clear-eyed about the realities of the global economy. China is the world’s second-largest economy, and engagement is unavoidable. But engagement must never mean acquiescence, pragmatism cannot become passivity and economic interaction must be matched by strategic resilience, moral clarity and a willingness to confront wrongdoing wherever it occurs. This Government have failed that test. What they have offered is not balance but capitulation. Their failure of clarity, resolve and principle leaves this country weaker, not stronger, on the world stage.
On the question of the embassy, let us be clear about what has just been approved. This will be the largest embassy in Europe, not for one of our closest allies but for a state that spies on us, represses people on our soil and backs an aggressor waging war on our allies in Ukraine. It will be an embassy so vast that it includes a 208-room underground complex, with a basement running just metres from cables carrying some of the most sensitive financial data in the world and linking Canary Wharf and the City of London. The question for the Minister is simply: what is the purpose of such a large embassy? What is it for? Why have the Government approved such a facility for a country described by our intelligence agencies as a national security threat? Why does the Chinese embassy need to be on such a scale?
Perhaps most alarming of all is the fact that the Secretary of State who approved this development has admitted that he did so without seeing the unredacted plans. How can a Government that claim to put national security first possibly maintain that the risks were properly assessed when the decision was taken on the basis of redacted documents? I ask the Minister directly: how is that compatible with any serious conception of responsible national security? It has been reported, furthermore, that the Chinese authorities could legally refuse access to UK inspectors during or after construction. If that is true, we will not know what is being built beneath our feet. Does the Minister dispute these reports, and has China said that it will allow access?
This decision cannot be divorced from the wider pattern of behaviour we are witnessing. China is spying on us. It is subverting our democracy by attacking our democratic institutions, the Government and the custodians of our electoral system. It is engaging in transnational repression on British soil, intimidating dissidents, targeting Hong Kongers who have sought refuge here and attempting to coerce British citizens themselves. The Secretary of State’s permission letter made out that, so long as China undertook
“lawful embassy use of the site”,
everything would be fine. I ask the Minister: is it lawful to assault Hong Kong activists on our streets? Is it lawful to operate so-called “police stations” on British soil? Is it lawful to place bounties on the heads of people living under the protection of UK law? Is it lawful to pressure neighbours of Hong Kongers to lure them into embassies so that those bounties can be collected? The answer to every one of those questions is no, and yet we are now proposing dramatically to expand China’s diplomatic footprint here, adding hundreds of additional staff, despite clear evidence that, wherever China expands its embassy presence, transnational repression increases. Does the Minister seriously dispute that pattern?
The truth is simple: China poses a security threat on multiple fronts. That means that, yes, we need to engage, but with our eyes wide open. We must remain vigilant and call out national security threats. It is the first job of government. Giving China exactly what it wants is a damaging capitulation. The Prime Minister might benefit from easier small talk during his imminent visit to China, but it is the British people who will pay the price and the impact of this decision will be felt for years to come. This House should be deeply ashamed that such a decision has been allowed to stand, and the Government should think again, before they discover, too late, that the risks they waved through so casually are risks that the country will be left to bear.
In closing, I emphasise that all this plays into a wider narrative of neglect and disregard for our national security. At the same time the Government are greenlighting the Chinese Government to build their mega-embassy, they are also paying millions of pounds to surrender the Chagos Islands to Mauritius, which is itself in a long-standing friendship with China and has committed to supporting China’s core interests and major concerns so as to further deepen their mutual strategic partnership. As my noble friend Lord Callanan and other noble Lords have tirelessly pointed out, it is not our allies who welcome the Chagos deal but those who seek to harm us. It is Russia and China who have been fully supportive of the UK giving up its sovereignty of a key strategic asset.
I briefly touch on the Hillsborough Bill, on which the Government have been forced into yet another unedifying U-turn. When we debated this matter last week, the Minister was unable to answer the questions on national security that I raised, and this episode only reinforces the wider concern that the Government do not grasp what national security means in practice and instead treat it as something that can be traded away or manipulated for political convenience. The Government are fond of reminding the House that the first duty of any Government is the defence of national security. On that test, I regret to say, they have fallen at the first hurdle.
Lord Fox (LD)
My Lords, listening to the noble Baroness, Lady Finn, I was reminded that it was only in 2015 that the then Chancellor George Osborne declared the creation of a “golden decade”. I wonder how long it lasted.
At the very least, this decision will relocate China’s comprehensive security and surveillance efforts on to one huge 21st-century site. We believe it will amplify the threat and potentially endanger the security of vital financial data. It seems a clear indication of political weakness that the Government have taken this decision in the hope of furthering our relationship with China. This concession, along with issues such as the Government’s consistent failure to place China in the enhanced tier of the foreign influence registration scheme and their total failure to invoke sufficient legal protection against transnational repression of Hong Kongers, reinforced this message of weakness.
The Statement talks about the Government’s desire for a relationship with China and it says that the Government do not trade security for economic access. I agree, because given the scale of the trade deficit we have with China, we are actually increasing our security risks while continuing to give China virtually unfettered economic access. It is a win-win situation for China. There seems very little on the plus side of this relationship for us, except perhaps allowing Chinese Government-controlled firms to take large financial stakes in our critical national infrastructure.
Having made this announcement, what, if anything, does the Prime Minister hope to bring back from his visit? It is a transactional world. If the Prime Minister was to negotiate the freedom of Jimmy Lai, secure the removal of the bounties from the heads of Hong Kongers and close the university-based Chinese police operations then perhaps the extra risk that our security services describe flowing from this super-embassy might be worth taking. However, if all he gets is a handshake with President Xi, then he will have conceded—we will have conceded—a lot for absolutely nothing.
I will say a final word on the scale of this embassy. The plans for the super-embassy include the provision of 232 flats. I believe there are currently 146 embassy employees, which means that there will be accommodation for nearly 90 extra people—an expansion of at least 60% in the number of embassy staff. So what realistically does the Minister expect all those extra people to be doing?
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I thank the noble Lord and the noble Baroness for their points and questions on this matter, which rightly concerns us all.
To reiterate, this was a quasi-judicial decision taken independently by the Secretary of State for Housing. I also remind noble Lords of the premise of the Statement made by the Security Minister in the other place, which focused on the national security considerations of China’s proposal to build a new embassy at the Royal Mint Court. This concludes a process that began in 2018, when the then Foreign Secretary, Boris Johnson—who I believe may have been a Conservative—gave formal diplomatic consent for China to use the Royal Mint site for its new embassy, subject to planning permission, and welcomed it as China’s largest overseas investment. I think we have seen how much has changed in a few short years on the Opposition Benches. Nevertheless, I am aware of the significant interest that this issue has provoked in your Lordships’ House, and as such I am grateful for the opportunity to provide an assurance of the work that the Government have undertaken to ensure that UK national security is protected.
I am very fond of the noble Baroness, but her comments about the Government’s prioritisation of national security were outrageous. National security is our number one priority. The Home Office and the Foreign Office both provided views during the planning process on potential security issues around the build and confirmed in writing when these were resolved. We have engaged with key allies throughout, and our security and intelligence agencies have been integral to the process. As the director of GCHQ and the director-general of MI5 wrote in their letter,
“as with any foreign embassy on UK soil, it is not realistic to expect to be able wholly to eliminate each and every potential risk … However, the collective work across UK intelligence agencies and HMG departments to formulate a package of national security mitigations for the site has been, in our view, expert, professional and proportionate”.
They also judged that
“the package of mitigations deals acceptably with a wide range of sensitive national security issues, including cabling”.
Indeed, they noted that there were “clear security advantages” from consolidating China’s diplomatic estates in London.
I am also grateful for the close consideration and scrutiny that my noble friend Lord Beamish and the Intelligence and Security Committee have given this matter. His committee concluded:
“On the basis of the evidence we have received, and having carefully reviewed the nuanced national security considerations, the Committee has concluded that, taken as a whole, the national security concerns that arise can be satisfactorily mitigated”.
National security concerns that have been raised in media reports again in recent days are not new to the Government or the intelligence community, and an extensive range of measures has been developed to protect national security. We have acted to increase the resilience of cables in the area through an extensive series of measures to protect sensitive data. The Government have seen unredacted plans for the embassy and have agreed with China that the publicly accessible forecourt on the embassy grounds will not have diplomatic immunity, thereby managing the risk to the public. Based on all that and our extensive work on this matter, we are content that any risks are being appropriately managed.
On our approach to China, I note that it is a fundamental and normal part of international relations that countries agree to establish embassies in each other’s capitals. The Government are engaging with China confidently and pragmatically, recognising the complexity of the world as it is and challenging China where we need to. Of course, we recognise that China poses a series of threats to UK national security, from cyber attacks, foreign interference and espionage targeting our diplomatic institutions, to transnational repression of Hong Kongers and China’s support for Russia’s invasion of Ukraine. The Government have responded and will continue to respond to these challenges.
However, taking a robust approach to our national security also includes engaging with China. Indeed, it is only through engagement that we can directly challenge China on its malicious activity. By taking tough steps to keep us secure, we enable ourselves to co-operate in other areas, including in pursuit of safe economic opportunities that are in the UK’s national interest and in areas such as organised immigration crime, narcotics trafficking and serious organised crime. That is what allies do and what we are doing: delivering for the public, putting more money in their pockets and keeping them safe through hard-headed, risk-based engagement with the world’s most consequential power.
I would like to clarify some specific points raised by the noble Baroness and the noble Lord. The noble Baroness asked what this is for. She knows what this is for: as a result of a quasi-judicial process and a planning application, this is the consolidation of seven different sites into one. There are significant security benefits that come from that.
On the planning and building processes, I reiterate that this is a British planning application that has gone through a quasi-judicial process. The normal building inspections will apply as the building is developed.
As I said, national security is the first responsibility of any Government, and especially this Government. Any other suggestion is frankly appalling.
In response to the noble Lord, Lord Fox, I say that we will see the results of the PM’s visit when he returns and I look forward to discussing it in your Lordships’ House at that point.
On FIRS, we are looking carefully at whether other countries should be added to the enhanced tier. Any decision will be brought before Parliament in the usual way. Countries are considered separately for specification, and decisions are made on the evidence. The Government have a range of capabilities to manage and mitigate threats emanating from foreign states. FIRS is one of many tools that we use.
I will touch on the number of diplomats who will be present at the embassy. Under the Vienna convention, having an embassy is not a reward for like-minded partners but a necessity for any country with which we have diplomatic relations. On the issue of pragmatism, I say that we are talking about a permanent member of the UN Security Council, the second-largest economy in the world and our third-largest trading partner, so a level of diplomatic relations would be wise. It is also a fundamental and normal part of international relations that countries mutually consent to other nations having embassy premises. However, as the Vienna convention states, the UK has control over the number of diplomats in the UK on diplomatic relations. Any diplomatic position at the Chinese embassy must be approved on a case-by-case basis by the FCDO’s protocol department. The FCDO will work with allies on any additional extensions of that. As I have said, the Government have seen the unredacted plans. It is based on this and our extensive work on this topic that I am content that any risks are being appropriately managed.
The noble Lord raised a very important point about transnational repression. Noble Lords may be aware that I ran Index on Censorship until the general election and spent a great deal of time campaigning on these specific issues. The Government condemn the Hong Kong police’s efforts to coerce, intimidate, harass and harm those living in the UK and overseas; these acts of repression will never be tolerated in this country. We have raised these concerns directly with Chinese authorities, reaffirming that the extraterritorial application of Hong Kong’s national security law is unacceptable and will not be tolerated in the UK. The safety and security of Hong Kongers in the UK, including those on the British National Overseas visa, is of the utmost importance. The UK will always stand up for the rights of the people of Hong Kong. This is demonstrated through the bespoke immigration route for BNO status holders and their eligible family members.
The UK’s response to tackling state-directed threats is world leading. Appropriate tools and system-wide safeguards are in place to robustly counter transnational aggression. Following the Defending Democracy Taskforce’s TNR review, we have strengthened our response by implementing the National Security Act 2023, which provides a comprehensive suite of powers to counter the threat of TNR. We have rolled out training across 45 territorial police forces, including the upskilling of 999 call handlers to improve front-line identification of and responses to state-directed threats. We have published practical guidance on GOV.UK for individuals who believe they may be at risk, with advice to help them protect themselves physically and online. We have deployed tailored support and security assistance for individual victims, where we have become aware of them, that are proportionate to the threat and varied in scope and approach.
This Government will always welcome the knowledge and experience of noble Lords and Baronesses in your Lordships’ House, particularly when they pertain to matters of national security. So let me again reassure your Lordships that upholding national security is the first duty of government and we will continue to take all measures necessary to disrupt these threats. Based on the extensive work on this topic, the Government are content that any risks to the UK’s national security are being appropriately managed.
Lord Alton of Liverpool (CB)
My Lords, I am grateful to the Minister for repeating the Statement. She made a great deal in her remarks of the quasi-judicial process that has been used. No reference, though, has been made to the Royal Mint Court Residents Association’s decision to open a judicial case challenging the mega-embassy on the Royal Mint site. Has the Minister considered imposing a moratorium while that legal process continues?
She also made a great deal about transnational repression, and I salute the work that she has done in a previous incarnation on that important issue. I thank the Government for providing time on 26 February for a full-scale debate in your Lordships’ House on the report from the Joint Committee on Human Rights on transnational repression. May I appeal to the noble Baroness to make available a copy of that report and a copy of the committee’s report on the use of slave labour in our supply chains, which touches on a point made by the noble Baroness, Lady Finn, and the noble Lord, Lord Fox, about how we cannot compete with a country that uses slave labour? Will she ensure that those two reports are in the hands of the Prime Minister before he travels to Beijing?
I have two questions for the noble Baroness. It has been claimed publicly by Richard Holmes of the i paper and Caroline Wheeler of the Sunday Times that, during 2025, while both journalists were working to uncover the risks associated with the sensitive cabling below the mega-CCP embassy, government media officials sought to discredit both journalists and denied that there were any such cables. Is it true that government officials denied the presence of sensitive cables? Is it true that these two good journalists were smeared by officials, who well knew that they were working on a true story, which the Government have themselves now admitted? If the noble Baroness does not have the answers to those questions immediately, I would be grateful if she would agree to write to me.
Baroness Anderson of Stoke-on-Trent (Lab)
I think I am agreeing to write to him. I genuinely do not recognise, nor have I been aware of, that report regarding the journalists. I cannot comment on specific mitigations or on some of the issues. The noble Lord will have heard, both during my comments and those of the Security Minister, that we have discussed the cables. So I would find that concerning, but I will write to the noble Lord.
With regard to getting things into the hands of the Prime Minister, I will give it a go, but I assure the noble Lord that I will get the reports into the hands of someone in No. 10, in the hope that they will get to him before he leaves.
On the potential judicial review, the noble Lord will be aware that the Government are completely adamant that our actions are lawful and, on that basis, we will continue to proceed with the appropriate processes.
Lord Beamish (Lab)
My Lords, my noble friend, in her answer, referred to the ISC. The ISC has looked at this very closely. We were given access to all the confidential and sensitive documentation, and we took evidence from our security services and Ministers; I thank them for that. We came to the conclusion that Ministers, in making their security assessment, had been given all the information available, and also that the mitigations that could have been put in place on some of the issues that did concern the embassy were satisfactory and could be put in place.
In saying that, in 2023, we published our China report, in which we were very clear about the threat that China poses to the UK in terms of security. It also, as was referred to by the noble Lord, Lord Fox, laid out the golden era that opened up many aspects of our society, business and academia to the Chinese state under the leadership of the noble Lord, Lord Cameron. Does my noble friend agree that this Government will take a very strong and robust approach to our national security when it comes to China, while recognising, as she said, that China is one of our main economic trading partners, but what they will not do is put that in the place of our security, which the last Government did?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank my noble friend for the work that he and his committee have done, both in terms of ensuring appropriate scrutiny of the Government and more broadly. He raises a really important point, which I should have done earlier on. As ever, we need to thank the intelligence services, which work every day to keep us safe. One of the things that is so important in this space is that MI5 has 100 years of experience in keeping us safe and managing risk. It is at the forefront of our national security, especially in this space, and we are grateful for it.
My noble friend is absolutely right that there is a clear threat posed by China. We fully recognise that China poses a series of threats to UK national security, from cyber security attacks and foreign interference and espionage targeting our democratic institutions to transnational repression of dissidents in the UK. That is why, since we came into government, we have done the following: we have launched the new cross-government state threats unit; we have done the training models, as I spoke about earlier; we have invested £600 million in our intelligence services; we have strengthened support for political parties in the Elections Bill; we have provided £170 million for a new sovereign encrypted technology and £130 million for integrated security funds, and we have removed surveillance equipment that would be subject to the National Security Law companies. We are acting because there is nothing more important than national security. That is the first responsibility of this Government and that is what we are acting upon.
Baroness Foster of Oxton (Con)
My Lords, in 2015, if I recall, we were in coalition with the Liberal Democrats and I think that Nick Clegg clearly agreed with George Osborne’s position on China. But I did agree with the noble Lord, Lord Fox, when he highlighted the numbers of staff who will be allocated to this embassy. I wonder whether there is ever a limit on the number of people who can come here when an embassy is either created or expanded.
I turn to the point. The reality is that the regime in China is up to its neck in committing heinous crimes against its own citizens. It is up to its neck in supporting Russia and its invasion of Ukraine. It is up to its neck in the attacks that took place in Israel, and now in the Islamic Republic of Iran, where thousands of unarmed civilians are being slaughtered as we speak by the Ayatollah and the IRGC. Cyber attacks here in the UK are on the rise and are becoming much more frequent. So how can the Minister and this Government be so naive as to justify permitting the approval of this site?
Baroness Anderson of Stoke-on-Trent (Lab)
I would like to clarify a couple of points. First, unless I missed something, the coalition ended in 2015. It was 2010 to 2015, so that was a matter for the noble Baroness’s party, not for the Liberal Democrats at that point. Secondly, on the number of diplomats, as I said earlier, that is subject to the Vienna convention. The Protocol Minister decides on a case-by-case basis on any additional applications for diplomats.
I have been very clear on the range of threats that China poses, but there are 370,000 British jobs that are dependent on our relationship with China. We need to have a level of pragmatism and a sensible relationship with the second-largest economy in the world and our third-largest trading partner. We just need to remember what we are doing and why we are doing it. The idea that this Government or any British Government are naive in their approach to foreign policy is frankly insulting.
On the specific matter that the noble Baroness raised about our relationship with China and where they have sat, the Prime Minister said, when he met President Xi at the G20 in 2024, that he also wanted to engage honestly and frankly in those areas where we have different perspectives, including on Hong Kong, human rights and Russia’s war in Ukraine.
We have genuine debate, we make our position clear, as we have on the national security law and on a range of issues, including Jimmy Lai’s status and the ongoing trials. You can have those conversations with allies only if you talk to them. While the world is as volatile as it is, I suggest that more words rather than fewer are important, which requires more people to have those conversations
Baroness Alexander of Cleveden (Lab)
My Lords, the events of last week and this week demonstrate to us the difficulties of managing superpowers and the challenges they present, as well as the opportunities. So, while the noble Baroness, Lady Finn, is right to suggest that China presents areas where we must oppose, there must also be areas where we seek to co-operate when we can. Does my noble friend the Minister recognise the need for expert advice to guide embassy location decisions, and is that the way to avoid the sort of ricocheting we have seen from the golden age that has already been referenced tonight to the ice age that we have also been presented with?
Can my noble friend the Minister also just confirm that the heads of MI5 and GCHQ stated that
“this consolidation should bring clear security advantages”?
Did she have the opportunity, exactly a week ago today, to hear this point reinforced by the director-general of MI5, speaking in this place, when he reiterated and dwelled on the fact that the greater threats surrounding espionage come not from within an embassy building but often from activities beyond an embassy that dominate much of the work of our security agencies? Finally, does my noble friend agree that, as we go forward on the question of embassy locations, we should be led by the UK’s most senior intelligence officers in our decision-making?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank my noble friend for her questions. One thing that is really clear, given that this Statement is about our national security, is about being led by our national security experts, who, as she rightly said, have been clear in their opinions about the mitigations that are required but also about the nature of this. With regard to the location of embassies, this is a piece of land that was bought in 2018 and was granted the diplomatic permission to move forward as an embassy, subject to planning permission, under the last Government—or, in fact, as I said, under Boris Johnson. But what is clear is that a quasi-judicial process has since followed. There is a 240-page document which outlines why that decision was made and how it was made, and it is all available to all Members of your Lordships’ House online. But she is absolutely right: my honourable friend the Security Minister in the other place and the directors-general of MI5 and GCHQ, have all made it clear that there are also clear security benefits to the amalgamation of seven sites into one.
Baroness Bennett of Manor Castle (GP)
My Lords, the Minister acknowledged earlier the concern among Chinese dissidents in the UK about the embassy. She may have heard the comments from Chloe Cheung, a British resident and former Hong Konger—a young woman who has a bounty on her head from China. She has said she feels betrayed by the agreement to this embassy: it looks like a Chinese castle, and it sends a message about overweening Chinese power. Can the Minister sympathise with and understand the fear felt by those dissidents—and more widely than just those who are explicitly identified as dissidents?
I note that the Statement refers to a closed meeting with vice-chancellors that is going to be held next month. We of course have huge numbers of Hong Kong and Chinese students at British universities, and we have had experience of them being intimidated and subject to physical violence. What can the Government do to ensure that universities can protect those students? If we think about a Chinese student who has always followed the line and come here and just starts to ask some questions, what are we going to do to make sure that that student is safe here in the UK?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I have met many Chinese dissidents who live in the UK and did significant work with them in my former iteration. It is really important that we make sure that their voices are heard and that on British soil they have the protections afforded to everybody here.
On academic interference, any attempt by a foreign state to intimidate and coerce universities to limit free speech and academic freedoms in the UK will not be tolerated. The new Office for Students’ guidance makes it explicitly clear that universities should not tolerate attempts by foreign states to suppress academic freedom.
With regard to the closed meeting with the Security Minister, which will be held shortly, there is a reason why that meeting is closed: to make sure that the advice received by people is for them as regards how they manage and mitigate their risks. It would be inappropriate for me to go further on that.
Lord Empey (UUP)
My Lords, I would be grateful if the noble Baroness, if she does not have the figures available right now, could send me a letter and put it in the Library as to how many diplomats from the People’s Republic of China are accredited to the United Kingdom and how many United Kingdom diplomats are accredited to the People’s Republic of China. It would be very interesting to see what the figures are. She mentioned a quasi-judicial process. I suspect that the head of the planning department in Beijing would have very little say in whether we built a super-embassy there. It would be dealt with by other people. Only we could come up with that kind of process.
As regards Hong Kong, since the crackdown started, we have done virtually nothing and, in my opinion, we are going to do virtually nothing, because that is what we do well. I fear that the universities have laid themselves wide open to interference and pressure—money talks. The Minister has just pointed out that we have to be pragmatic because 370,000 jobs are at stake with regard to Chinese companies. But as long as we have a trade deficit of the scale that we have, and as long as we cannot invest in China under the same terms as the Chinese can invest here, that is the major letdown in the security of our country, because we are making ourselves, in effect, at their disposal. Will the Minister bear those points in mind and, if she will be kind enough, make the figures available to the House?
Baroness Anderson of Stoke-on-Trent (Lab)
I find it very wise always to listen to the noble Lord and to bear his comments in mind. On the number of diplomats, I will have to write to the noble Lord as I do not have the figures to hand. As my noble friend who is the Minister for MHCLG in your Lordships’ House is here, I will leave her to ponder the noble Lord’s suggestions about revisions to the planning regime.
Lord Bellingham (Con)
My Lords, I certainly support the noble Baroness our Front-Bench spokesperson and the noble Lord the Lib Dem spokesman. This is a regrettable decision but we now have to move on. I am being pragmatic; I accept that it is going to happen, and we have to make the best of it. China wanted this embassy very badly, the Chinese will be delighted at this decision, and it will undoubtedly create a lot of good will. Just to build on what the Minister said about trade and investment, when the Prime Minister comes back from China, can we have a full audit of all the deals that have been agreed and the investment decisions that have been discussed, so that we can get a very clear picture of exactly how that bilateral trade relationship will move forward?
I will ask the Minister another question. I have visited getting on for 60 UK missions abroad, and one thing that has struck me is that we have always been very strong at employing locally engaged staff. Normally, it is a ratio of probably 2.5:1 or maybe even 3:1. My impression of China is that it employs very few locally engaged staff. We heard about the increase in accommodation that is going to be required in the new embassy. Can the Minister say something about the representations that she and the Government are going to make to the Chinese about employing more local British people in what is going to be a huge operation and a massive project?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, there are several things to unpack there. First, I highlight the fact that while the Prime Minister is going tomorrow, the UK has been an outlier since 2018 in terms of our engagement with China. President Trump met President Xi in October and will visit China in the spring. Since 2018, President Macron has visited China three times, German leaders have visited four times, and Chancellor Merz is soon to travel to Beijing. Prime Minister Albanese went in July last year and Prime Minister Carney was there this month. There has not been a prime ministerial-level visit to China—the second-largest economy—since 2018, when the noble Baroness, Lady May, travelled when she was Prime Minister. There is a challenge here about how we chose going from one extreme to the other: a golden age to a golden ice age.
With regards to the trade agreements that will come out of the Prime Minister’s imminent visit to China, noble Lords will have the opportunity to discuss that in due course. What I would say is that this Prime Minister is going to China to deliver for the UK, and I look forward to discussing the details of what comes from that meeting in your Lordships’ House. With regards to the employment of local British people, I think that everyone should always want to employ local British people, but I will leave it for my colleagues in the relevant department to make that case.
Water White Paper
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
The Earl of Courtown (Con)
My Lords, we welcome the progress made by the Government on the recommendations of the Independent Water Commission. In particular, we welcome the proposed integrated regulator to replace Ofwat and combine functions of the Environment Agency, Natural England and the Drinking Water Inspectorate.
However, I would first like to respond to some of the criticism levelled by the Minister at the Conservative record on the water system. In 2010, the previous Labour Government left us in a position where only 7% of storm outflows were monitored; now it is 100%. The Water (Special Measures) Act last year also took on Conservative regulatory proposals, which we welcomed. We also established the water restoration fund to ensure that the money received from fines imposed on water companies would be ring-fenced to pay for water restoration efforts. Can the Minister therefore recommit to the water restoration fund and, if not, explain how the money received is being spent?
We on these Benches are supportive of improving water security and streamlining the regulatory framework. We welcome the White Paper’s commitment to reform the 2013 specified infrastructure project regulations, as suggested previously by my noble friend Lady Coffey during the passage of the Planning and Infrastructure Act.
With regard to the new regulator, we have pushed the Government to ensure it will be accountable to the Secretary of State and, by extension, to Parliament. Can the Minister outline exactly how ministerial oversight of the new regulator will function in practice? Will the new regulator take responsibility for the initial nutrient neutrality environment development plans debated at length in the Planning and Infrastructure Bill’s passage and the sites acquired currently in the remit of Natural England? How will that impact the intention to use that learning experience and the intention to extend these EDPs to species and features that will presumably still come under Natural England?
We welcome the longer-term planning horizons but ask that the funding strategies are made transparent. In addition, will the new regulator be established in time to oversee the next price review scheduled for 2029?
We also propose leverage limits on water companies to avoid some of the mistakes made in the past with debt levels. The White Paper says the new regulator will work with companies to ensure that they do not accumulate unmanageable levels of debt. Should the Government not go further and put up stronger guardrails to prevent financial risk becoming such a major issue for the industry in future, as we proposed in the Water (Special Measures) Act?
Moreover, the White Paper promises new customer panels. Can the Minister explain how many panels will be created and what the estimated cost will be? If the Government are serious about wanting to streamline, we cannot end up with yet more arm’s-length bodies than before.
We are also concerned about the pace and apparent lack of urgency from the Government. Not only was the White Paper expected to have been published last year, but it has not accompanied by a full transition plan. When can we expect this, and when can we expect the water reform Bill to be brought before Parliament?
Farmers need financial support and clear advice and guidance to make their contributions to cleaning up our water. Simply relying on increased regulation and environmental inspections to force compliance will not work with an industry that is both critical to our national security and struggling financially, with low grain prices, high costs and destabilising government measures around inheritance tax and SFIs, in particular. Enforcing these regulations on our farmers in the way described in the White Paper will place them at even more of a competitive disadvantage versus those overseas, as they will be forced to comply with higher environmental and welfare standards and costs.
We understand the department is considering extending environmental permitting to cattle farming, which would add further administration and financial burdens on businesses. As has been flagged by my noble friend in other debates, farmers have already raised concerns that they might not be able to afford the changes necessary to remain compliant. In terms of supporting farmers to adapt to new regulations, the Government have promised to increase the number of Environment Agency inspections to 6,000 by 2029, but will they consider introducing new financial incentives to offer a carrot rather than simply a stick?
We, of course, support water reform and wish it was progressing more quickly, but it also must be coherent and considerate towards the agricultural businesses on which our food security relies. I look forward to hearing the Minister’s response.
Baroness Grender (LD)
My Lords, I thank the Minister for the Statement repeat this evening. Some proposals in this White paper are indeed most welcome, including the scrapping of Ofwat—something we have long called for—but it falls short of the fundamental reforms water customers are so desperately in need of. True reform demands root-and-branch change within the water companies themselves, because until profit is no longer their driving force, shareholder payouts will continue to be prioritised over investment and the urgent need to end the scandal of sewage in our rivers and seas. We therefore advocate a move towards mutuality, not the costly nationalisation that others propose but a shift to public benefit companies, a model that has proved so successful elsewhere, particularly in the United States.
I have a few questions. How can the Government claim there will be nowhere to hide when the White Paper rules out structural reform, including changes to ownership and profit extraction? What action is being taken to stop water companies evading the bonus ban, given evidence to the Public Accounts Committee only recently that they have reclassified such payments as “retention incentives”, even in the past year?
If this is truly the biggest overhaul since privatisation, why does it fail to confront the broken ownership model which has enabled pollution, underinvestment and profiteering for decades? Did the Government consider alternative models, such as mutuality, and, if not, why not at this stage, when the current funding system so clearly prioritises shareholders over customers, in turn using huge debts to fund dividends?
What guarantees can Ministers give that a new regulator, potentially more than a year from being operational, will be able to deliver immediate improvements, rather than the risk of extended regulatory failure? What assessment has been made of the cumulative impact of historic underinvestment and excessive dividends in today’s water bills, and how will this White Paper address that inequity? How will the Government work with farmers to tackle agricultural pollution in genuine partnership with them, rather than the slight blame culture that currently exists? Will Ministers commit to ending the sewage cover-up by requiring full publication of sewage volume data, not just the spill duration, as is the current system and the one we had under the last Government? Given record sewage dumping and rising bills, what measurable standards will define this White Paper as a success if river and coastal water quality, for instance, continues to decline?
Finally, and no great surprise from me, when will we see the necessary legislation on our precious chalk streams, which have a very welcome inclusion in this White Paper but which were promised urgent action when we were discussing the Planning and Infrastructure Bill? There continues to be a danger that it will be too late for the chalk streams.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, I thank noble Lords for their interest and their questions on the water White Paper, which we published and laid in Parliament on 20 January. The White Paper outlines how we will work together with water companies, investors, communities and the environment to transform our water system for good, because we need to ensure a sustainable water system for future generations.
The noble Earl, Lord Courtown, asked why it had taken so long and when we were going to see change. As noble Lords know, we have already taken action. We brought in the Water (Special Measures) Act and took action to ring-fence water company investment. The transition plan will be published later this year, which will provide a road map for implementing the changes. We will bring forward a new water reform Bill during this Parliament, alongside which we will make progress with reforms that do not require primary legislation. That will include a shift to a supervisory approach to regulation, with dedicated teams with an understanding of how each company operates. There will be the piloting of regional planning approaches across the country. The water reform Bill will be a priority for the department going forward.
The noble Earl, Lord Courtown, mentioned the extension of environmental permitting to cattle. As the White Paper sets out, we are considering extending environmental permitting beyond pig and poultry to cattle, because cattle are a significant source of water pollution. However, we are working closely with the NFU and others, because we need to take a balanced approach to that issue.
The noble Baroness, Lady Grender, and the noble Earl, Lord Courtown, mentioned Ofwat and regulation. We have already done something on this, with the Water (Special Measures) Act, which shifted the burden of proof from the regulators to the water companies in order to enable automatic fines. The new regulator that will be set up will require us to change legislation. We feel it is really important to make sure that we get this right. The existing regulators will in the interim retain the powers they have until we have the new regulator in place.
The Environment Agency is carrying out record levels of funding and inspections, and is currently on track to deliver 10,000 inspections in the year 2025-26. We are going to issue interim strategic policy statements to the regulator as part of the transition plan, which will provide legally binding instructions on what the regulator’s priorities should be and how they should act during the transition period. We will reform the approach to the strategic policy statements and issue wider strategic guidance to provide long-term direction to the entire water system, alongside specific, measurable directions to the new water regulator.
The noble Earl asked when we are going to make appointments to the regulator and when it will be set up. We intend to make formal appointments to the board of the new water regulator at the earliest opportunity. We believe that providing early leadership will help the new regulator begin to develop its internal strategy, to build a new culture, which is very important, and to deliver the industry-wide approach from the start. As I said, during that transition the existing regulators will retain their full powers and responsibilities. We are considering the funding arrangements that will be needed. The new regulator will have the power to deliver its responsibilities in full and will balance the interests of customers, investors and the environment.
The noble Earl asked about accountability. Clear oversight and accountability will be an important design principle of the new regulator, and we anticipate that the regulator will be accountable to Ministers, and by extension to Parliament, in the way that it carries out its functions. We will consider how parliamentary accountability is handled through the legislation, any sponsorship arrangements and the framework agreement. We recognise the importance of appropriate independence, particularly for economic regulation, in supporting the credibility of the new regime and investor confidence, so we will ensure that there are mechanisms in place, including within the legislation itself, to protect regulatory independence. We will look at other relevant public bodies as we draw that up.
The noble Earl asked specifically about the water restoration fund. We are doubling our funding for catchment partnerships in order to bring together farmers and stakeholders to tackle agricultural problems. I am not in a position yet to say whether we will be continuing with the water restoration fund.
The noble Baroness, Lady Grender, asked about bonuses, which I think everyone feels strongly about, particularly in the light of what has been happening recently with South East Water. We introduced criminality for water bosses who cover up illegal sewage spills and the power to ban unfair bonuses. Some £4 million in bonuses for 10 water bosses was blocked last summer. We absolutely expect water companies to follow both the letter and the spirit of the law, and Ofwat is considering what further action can be taken to ensure that companies are held to account. The water White Paper goes further in order to ensure that water companies have nowhere to hide on poor performance. That includes a new supervisory scheme, which will ensure that the regulator has a stronger grip on exactly what is going on in each company.
The noble Baroness, Lady Grender, asked about mutuality and models of ownership. Mutual or co-operative ownership is not something that we are opposed to in principle. The White Paper says that, if a company’s owners propose changes to the ownership model, the new regulator will assess any proposals carefully against transparent criteria. But to take a company into mutual or co-operative ownership, either the current owners would need to propose this or the company would need to be bought first. We would therefore need to think carefully about how that transition would actually take place. We are not opposed to it in principle, but any mandatory changes in ownership would be costly and complicated, and would not deliver the material benefit. That is why it is important that it is the company’s owners who are proposing any such changes.
The noble Baroness also asked how the White Paper was addressing pollution; we talked about a number of issues there. As we have set out in the White Paper, there are several measures that we are taking to tackle pollution. Importantly, we are looking to strengthen collaboration in planning at catchment and regional level. This will help to identify lower-cost, higher-impact solutions to tackle pollution and include opportunities for farmers—which the noble Earl, Lord Courtown, was asking about—water companies and other stakeholders to work in partnership to ensure that the action taken is effective. We are also developing a new and strengthened approach to monitoring, because we do not want companies marking their own homework, as they have been doing for years. We are looking at how we can strengthen that.
We are shifting the emphasis towards tackling the root causes of sewage pollution by reducing the volume of rainwater and pollutants that enter the sewerage system in the first place and freeing up sewerage capacity for development and growth. I will give some examples of how we are doing that. We are building on the ban on wet wipes, which contain plastic, to stop sewers from getting clogged up so much. We have introduced a national standard for sustainable drainage systems which will help to improve drainage quality. That will be a requirement for all new developments and will have drainage implications beyond that through the National Planning Policy Framework. We are also committed to ensuring that funding looks at how to improve nature and the environment more broadly. This was mentioned when we talked about the PIB.
Overall, we need to improve transparency and ensure that the public can see what is happening in their local waters. That is important if we are to get back consumer confidence and boost protection for customers. We want people to see that this is serious action that we are taking to improve the water systems.
The Duke of Wellington (CB)
My Lords, I very much welcome the Statement and the White Paper, as the Minister knows, and I am particularly pleased that the Statement refers in its opening paragraph to
“putting consumers and the environment first”.
We had a discussion in this House at the time of the Water (Special Measures) Bill on whether the environment was given a voice equal to that of consumers. I was always in favour of giving more voice to the environment, so I am pleased that the Secretary of State has recognised that.
I have mentioned many times in your Lordships’ House the necessity of a single, strong regulator, and I welcome this. That involves abolishing Ofwat and taking over parts of the work of the Environment Agency and other regulators. We must recognise that Ofwat over many years allowed the balance sheets of the water companies to be transformed by private equity-increased leverage. That was agreed by Ofwat without any regard to the consequences for the environment. Despite the Environment Agency always claiming that it does not have enough resources, it has considerable resources. The problem is that it never gave sufficient priority to controlling pollution in rivers and on beaches.
I have some questions for the Minister. Of course, we are all anxious to see all this put into effect. The White Paper was delayed. The Minister said that there should be some guidance later this year. I hope that there will be a new water Bill in the next Session of Parliament. Can she confirm that? Fundamentally, when can we expect to see the new regulator in operation? That is what we are all looking forward to and what the public now expect.
The Whip is making a face at me, but I think that I am allowed to ask a second question. Will the new regulator have sufficient budget to fulfil its very considerable responsibilities? We all want to see a favourable outcome to this policy in development.
Baroness Hayman of Ullock (Lab)
I thank the noble Duke for his broad support for the White Paper. He has been a champion of improving the situation with our water systems.
He asked about the new regulator. We intend to make formal appointments to the board of the new water regulator at the earliest opportunity. We want to get cracking with this. I am not in a position to say whether the Bill will be in the next Session or when it will come, but I reassure the noble Duke that this is a top priority for Defra. We are working very hard to bring this forward as soon as we can.
We are considering the funding arrangements that we will need, but I assure the noble Duke that the new regulator will have the power to deliver its responsibilities in full. We want to make sure that any new regulator is able to do the job and do it well.
Lord Liddle (Lab)
My Lords, I congratulate the Government on producing this White Paper and on putting into effect the excellent work that Sir Jon Cunliffe did in his review.
The water industry has been an example of the worst of the capitalist system—not value creation but value extraction in a major way. Obviously, a major concern of any Government is keeping down the cost of living. My fear is that we will create a situation where the Government and the regulator are under pressure from the companies to allow environmental standards to be further weakened to make the finances add up and to save them from bankruptcy. Can my noble friend assure me that we will not tolerate any of that nonsense?
Baroness Hayman of Ullock (Lab)
Absolutely; water companies have done an extremely good job of trashing the environment and causing pollution. This White Paper and the water Bill that we will be bringing forward are designed to stop that, to have a water system that people can trust and to have water companies that behave as we would expect them to behave. They have a responsibility for the environment. They should take that responsibility much more seriously.
Lord Teverson (LD)
My Lords, one of the areas that the White Paper does not even mention is the voluntary sector, particularly citizen science, which has been fundamental in calling water companies to account—in the Wye valley and other areas. As well as not mentioning citizen science, the White Paper does not mention either science or citizens, which is perhaps more worrying. What are the plans of the Government to keep this whole area of citizen science, which has been so positive in putting pressure on the water companies regarding water pollution and in motivating them to continue their work, and to somehow include this in the future? It is a resource that is wide, large, educated, willing and desperate to make sure that we have a better future.
Also, why is artesian water not mentioned in the report? In terms of long-term assets, it is one of the most important that we have. Although it is okay at the moment, it will be severely challenged in the future.
Baroness Hayman of Ullock (Lab)
I think that much of what the noble Lord has talked about is what I need to feed back to the department. Obviously, this is a White Paper; it is not the final version of what any Bill must look like. The noble Lord makes some very important points, particularly on citizen science. I have a personal interest in this because before I ever came to this place, I was part of the Consultation Institute, which has worked in citizen science, so I appreciate what he is saying.
We have talked about working regionally. We have talked about working with stakeholders. We have talked about the importance of that local connection if we are to succeed in making the changes that we want. Citizen science—the noble Lord is absolutely right—can play a role in that.
Baroness Bennett of Manor Castle (GP)
My Lords, in responding to the Front-Bench questions, the Minister said the Government are not opposed “in principle” to mutual or co-operative ownership. I am sure that will be delightful news to the Co-operative Party, which of course has been in an electoral partnership with the Labour Party since 1927.
That question of ownership is one we keep coming back to. The Minister also said that we will get a regulator with a tighter grip. But will that grip not be resisted and see coming against it the force of the damage of private ownership that the noble Lord opposite just referred to? The legal responsibility for the managers of private companies is to maximise returns to shareholders. That is going to come up against, as the Statement says, this reform being for customers and the environment, but those are set in opposition to the profit motive. Surely the only way we are going to get a water system that does indeed work for customers and the environment is if we have a public organisation managed for the public good.
Baroness Hayman of Ullock (Lab)
The noble Lord, Lord Teverson, talked about science and there not being a lot of it. One thing we are going to do is bring in a new chief engineer to bring more technical scientific expertise to the new regulator, which, just to come back on his point, is important.
On the modelling, the difficulty in moving away is how you are going to do it, because any new model needs to work. The evidence has shown that where there have been problems around the globe, the model has not been the problem; it has been the way that the owners have managed and dealt with the company and any problems that arise from that. I do not think we can just blame the model. We can blame the behaviour of the companies, the fact that there was not enough done to stop that behaviour sooner, and the way that the regulator has been set up—these are the problems we now want to tackle. Rather than just focusing on the model, we should focus on how we can restore confidence to consumers, how we can improve the environment and how we can set up a new system that makes sure this kind of behaviour can never happen again.
Lord Inglewood (CB)
My Lords, I am sure there is agreement around the whole House that the state of the water industry in this country at present is very far from satisfactory. In her remarks about the White Paper, the Minister referred to a whole number of possible initiatives and changes and regulations. Does she agree that, at the last resort, we as a society have to generate enough resources focused on these specific problems to actually bring about change? Is she confident that society will be able to generate those resources, because if not, various things are simply not going to happen?
Baroness Hayman of Ullock (Lab)
I thank the noble Lord for his comments. It would be useful for me to perhaps have a cup of tea with him and understand specifically which resources he is referring to, because it could be very wide-ranging.
As I have said, we want to ensure that the new regulator is set up with the sufficient funding and resources to ensure that the water companies deliver what they are supposed to be delivering—what their contracts expect them to deliver.
As the noble Duke, the Duke of Wellington, pointed out, this is about a balance between proper consumer support, decent water and the environment, because consumers have been treated very badly by water companies over the years, as has the environment. We need to get that that right, and if those are the resources the noble Lord is talking about, that is absolutely what we are fixed on delivering.
Baroness Bennett of Manor Castle (GP)
My Lords, since there is time, following on from the question from the noble Lord, Lord Teverson, about science and citizen science, one thing that some of that sampling is starting to expose is the level of contamination from new areas of concern, such as PFAS, pesticide contamination and microplastics and nanoplastics. My reading of this report is that it does not seem to focus on the way in which new science is uncovering new concerns for public health and environmental health from those kinds of contamination. Is that something the Government are going to look at as they go forward with the new plans?
Baroness Hayman of Ullock (Lab)
I can completely assure the noble Baroness that these issues are being looked at outwith these proposals. These are concerns that we are taking very seriously in the department.
The Duke of Wellington (CB)
My Lords, as there is still time, I will ask one further question, if the Whip will allow me. The White Paper mentions cutting leakage. The previous Government had a target of reducing leaks by 50% by 2050. It seemed to me—I asked a question in the House of the then Minister, the noble Lord, Lord Benyon—that surely that was not ambitious enough. Do this Government have an intention to change the target to something more ambitious than a 50% reduction by 2050?
Baroness Hayman of Ullock (Lab)
The problem with targets is that half the time they are not met. With the water White Paper, we are looking at ways in which we can improve the infrastructure and get proper funding into it that is also for the long term, because there is no point in putting a plaster on it if it explodes later on, which is what has been happening all the time. We need proper investment to ensure that we do not have continued leakage. That is why we are bringing the new MoT checks on water infrastructure; that is, health checks on assets such as pipes, pumps and treatment works to stop them just being left to crumble. It is about getting ahead of problems before they come into place. That is the way we resolve issues such as leaks. Up to now, water companies have mended them as cheaply as possible by just doing a mend. We had it where we live in our village; they mended it, and then it started leaking somewhere else, and so it continued—you do not resolve the problem. It is really important that we are bringing in these MoT checks and a new performance improvement regime, so that if the water companies do not do what they have agreed to do, we can really crack down on them, because this is the way we need to move forward.
Local Government Reorganisation
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Scott of Bybrook (Con)
My Lords, we are considering today a Statement of real constitutional significance. It concerns the decision to cancel scheduled local elections, and in doing so, raises fundamental questions about where responsibility lies, how accountability is exercised, and how seriously we take the rights of the citizen to choose who governs them.
The Secretary of State has made no secret of his views. He has spoken of a system he regards as wasteful, of the need for greater focus and capacity, and of elections which he has described, in his own words, as “pointless”. If that reflects a settled judgment, noble Lords in this House are entitled to ask why it has not been stated with equal clarity here, and why Ministers have appeared reluctant to accept openly the consequences of that position.
At the centre of this lies a more troubling question. Are elections now to be treated as an optional feature of local democracy, to be set aside when they become inconvenient or administratively awkward? Elections are not a discretionary exercise. They are the means by which consent is renewed and authority sustained. They are an integral part of our democracy.
That leads, inevitably, to the issue of responsibility. By asking councils to make the request, Ministers avoid coming to the Dispatch Box to say plainly that they have chosen to deny more than 3.7 million people their vote. Is this not, in effect, a means of shifting a difficult and politically uncomfortable decision away from those who have in fact taken it?
This sits uneasily alongside the broader story of reorganisation itself. A year on from its announcement, there remains little clarity about boundaries, structures or timetables—by timetables, I mean for the whole project across the country. Councils are being asked to manage disruption and cost while certainty moves ever further out of reach. When it will happen seems still unknown by the Government, or, if it is not unknown, it is unannounced.
From our consideration of the English Devolution and Community Empowerment Bill, we know that this legislation centralises powers, risks increasing costs for working people and leaves communities with a diminished voice.
Elections have been postponed before, but never on this scale and never in this manner. In the past, elections have always been postponed in a planned way, with plenty of time for councils to organise themselves and, particularly, plenty of time for them to talk to their communities who are affected and give them a voice and some clarity.
Democracy is not strengthened by avoidance nor protected by the quiet displacement of responsibility. If Ministers believe that elections should not take place, they should say so plainly, take responsibility for that choice and defend it openly. Surely the Government have learned from their mistakes at last year’s elections.
The Electoral Commission has been clear that scheduled elections should proceed as planned and that capacity constraints are not a legitimate justification for delay. I ask the Minister: why was the independent guardian of our electoral system not consulted before a Labour Government took the decision to cancel local elections, and what does that say about how lightly this decision was made?
Finally, will the same thing happen again next year?
Lord Pack (LD)
My Lords, the Government are presenting this latest round of election cancellations as an unexceptional administrative move that is justified by precedent, but I think that is fundamentally wrong. Cancelling elections should be a matter of last resort, triggered by global war or a domestic catastrophe. We should take pride in our commitment to democracy. We should have a pride that crosses party boundaries and enthuses Ministers about the value and preciousness of democracy. Instead, unfortunately, the Government seem to be treating elections as an administrative inconvenience, something to be brushed aside rather than cherished.
I could get all fire and brimstone and dust off grand quotes from Churchill, Gandhi, Lincoln or Fawcett, but, really, I am just disappointed by how lightly the Government seem to be treating this matter. Exhibit A is the comments of the Secretary of State, who said that fixing potholes was more important than running scheduled elections—no regrets, no apologies and no reluctance about cancelling but, instead, that poverty of low expectations, as if fixing potholes and running polling days are just too much and just not possible.
The Government claim that there is precedent for all that they are doing, but I have listened and read very carefully what has been said: all the peacetime examples that have been cited extended the time in office of councillors only by up to an extra year. But rather than one or two extra years, the Government’s plans will mean that many councillors, elected for a four-year term of office, will end up being in power for a full seven years—three years on top, in a completely unprecedented way.
This is not what the Government said they were going to do. The Minister said last March, when we were debating a previous round of election cancellations:
“We have no plans to postpone district council elections in 2026”. —[Official Report, 24/3/25; col. 1516.]
Likewise, the Minister also said that it was a
“postponement for 12 months only”.—[Official Report, 24/3/25; col. 1514.]
We are, of course, now in a rather different situation. That U-turn has not been justified by precedent, and certainly not by the need to fight the scourge of potholes; it is a U-turn, as the noble Baroness, Lady Scott, said, that flies directly in the face of the Electoral Commission’s very specific advice that
“we do not think that capacity constraints are a legitimate reason for delaying long planned elections”.
It also strikes me as being an unwisely short-term perspective to cultivate a culture in which elections are so often cancelled and in which terms of office that are meant to be four years get extended up to seven. Is that really a wise legacy to leave for a future Government of who knows what political complexion?
As the Government seem set on this course, let me ask three specific questions of the Minister. First, will the Government reimburse councils for the cost of preparing for elections that are now being cancelled? Secondly, given how much the Government have talked up the benefits of their plans to introduce elected mayors, which are part of the wider picture of election delays, will the Government publish estimates of the cost to economic growth of those delays in bringing in the elected mayors? Thirdly, given the importance of protecting our democracy—even in the face of potholes—will the Government commit to giving the Electoral Commission proper independence and removing the Government’s power to give it instructions over policy and strategy? That would show a real commitment to protecting and valuing democracy.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, in 2024, councils were on the financial edge and sat as part of a patchwork map that did not make any sense to anybody—it did not to me, and I have been involved in local government for 30 years. The consequences of that and 14 years of funding cuts were the crisis in social care, the decline of our high streets, and councils not feeling empowered to build homes or grow their economies. Inevitably, this contributed to a decline in trust, and division on our streets, as people felt they had no say in the area they see every day when they walk out of their front door. This is important because, in the past, it had always been true that people had more faith and trust in their local council than in the Government, and that was starting to slip away.
I do not think anyone can dispute that, in July 2024, local government faced a crisis. Across this House, we may have differing views on how local government got to this point, but we cannot just snap our fingers and reverse the last 14 years. We can commit to a better future and to doing something different for that, with local councils empowered to make the right decisions for their communities and with communities really feeling empowered because they have councils that look after the full range of services that support them.
Let me be absolutely clear: this Government do not take lightly the postponement of elections. Democratic accountability is fundamental and of course elections are not optional. The vast majority of elections will be going ahead, but we are undertaking the most fundamental reform of local government for generations, and I think it is important that we are doing so.
These temporary postponements, where they have been requested, are intended to help us move to unitary councils quicker and strengthen local democracy, not weaken it. They apply only where the councils themselves have demonstrated a clear case, where reorganisation is already under way and where holding elections now would risk the transition to new councils by introducing confusion and duplication, and by wasting money.
Governments of all political colours have postponed local elections during periods of structural reform, including under the previous Conservative Government, and there is clearly statutory precedent for doing so. What would be truly irresponsible would be to press ahead with elections for authorities that may shortly cease to exist, and when councils party to those elections have told us they could put at risk services being ready for the transition to new councils.
Some have argued that the Government are acting out of political convenience. That argument does not withstand scrutiny. The postponements are driven by local views and circumstances, not partisan interest. Indeed, Liberal Democrat, Conservative and Labour councils have all come forward with concerns, on which we have acted. We have had that as formal feedback, but I have also had many conversations with local council leaders.
Those of us who have worked in local government know both the direct demands of running elections and the wider organisational impacts, including the diversion of critical senior officer time and focus during the pre-election period. Freeing up that capacity allows councils to prioritise service delivery and manage the reorganisation effectively. Running elections for short-lived authorities while simultaneously preparing for new unitary councils would impose avoidable expense while councils are focused on setting up new authorities and protecting front-line services.
Reorganisation, done properly, offers the opportunity to reduce duplication, clarify accountability and redirect resources to essential public services that have suffered years of neglect. Councillors’ terms are being extended for a clearly defined period, and fresh elections for the new unitary authorities will take place in 2027, once reorganisation proposals are agreed. Residents will have their say on stronger, more coherent councils, with one set of councillors with clearer responsibilities. This is a pragmatic decision, taken in partnership with local government, grounded in precedent and evidence, and focused on delivering better public services for the communities we serve.
I turn to the specific questions that the noble Baroness and the noble Lord asked me. The noble Baroness, Lady Scott, has mentioned the lack of a timetable several times, both here and during debates on the English devolution Bill. There is a very clear timetable. Something is clearly causing confusion here, but I will briefly set out the timetable again. For Surrey, there will be elections to the new unitaries in May 2026. In April 2027, the new unitaries will come into force. For the six devolution priority areas, the consultation is now closed. Decisions for them will be taken by March 2026. In May 2027, there will be elections to the new unitaries. In April 2028, the new unitaries will come into force. In May 2028, mayors will be elected to Sussex, Norfolk and Suffolk, Hampshire, and Essex mayoral combined authorities. For the remaining 14 areas, in February 2026, we will launch our consultation. By May 2026, the consultation will close. Decisions will then be announced around the time of the Summer Recess in 2026. In May 2027, there will be elections to the new unitaries and the new unitaries will come into force in April 2028.
We do not believe in imposing these things on local authorities, which is why we have done it in consultation, rather than sitting in MHCLG, drawing a map and saying, “That’s what it’s going to look like”. We have been working very hard with our local authorities. That is why we did not set the boundaries ourselves. We have asked local authorities to work together on geographies that made sense to them, which was absolutely the right way to go.
The noble Lord, Lord Pack, asked about the delaying of elections and this not being a new phenomenon. I have set out before in the House that this has been done by previous Governments when they were doing reorganisation. We have always set and maintained a high threshold for postponements. As we have done before, we are responding to serious concerns raised by councils in the reorganisation areas that the 2026 elections were putting at risk their ability to deliver on local government reorganisation.
The noble Lord asked me about the funding for elections. Spend on elections is, of course, a matter for local authorities. Our announcement was in response to representations received from councils in local government. Postponement, of course, also avoids the cost of holding elections to councils that are proposed to be abolished.
The noble Lord asked me about the cost to economic growth. We need to take a clear view on this: where councils cover all the services in their area and are empowered to take on economic growth, the delivery of housing, transport powers and all the things that drive the economic growth of their area, the aim is to have councils that are able to deliver that for their communities.
The noble Lord asked me about the Electoral Commission, as did the noble Baroness, Lady Scott. I have had two meetings with the Electoral Commission in the last 10 days or so. We have had discussions. I spoke to the Electoral Commission only last week when the announcement came out about the postponement of elections. I have spoken to the commission extensively about the elections Bill, which is coming forward shortly, and we will work very closely together on that Bill. We have also had some very positive discussions around the capacity issues, because the commission had a view that the capacity issues we were raising were around the capacity of election teams; election teams in local authorities, particularly in district councils, are quite small. It is not that capacity that I think councils and councillors were worried about; it is the wider capacity of local authorities to manage such a significant, once-in-a-generation reorganisation alongside these sets of elections.
I hope that has answered all the questions, but I am happy to take any more.
Baroness Bennett of Manor Castle (GP)
My Lords, the noble Lord, Lord Pack, referred to the some 250 councillors who could face seven-year terms under the Government’s plans. Four of the county councils are majority-Tory led, and they last held elections in May 2021. Noble Lords will have to cast their minds right back: Boris Johnson was Prime Minister; since then, we have had two Tory Prime Ministers and, thus far, one Labour Prime Minister; Suella Braverman had only recently been sacked as the Tory Attorney-General—for the first time. Politics is changing fast, and sometimes the Government are asking electoral officials to act fast also. The Gorton and Denton by-election is going to be held on 26 February, on the fastest possible timetable. As a measure of the degree of change in that, I note that, at the last election, the Labour Party got more than 50% of the vote, and a notional calculation for 2019 gives the Labour Party 67% of the vote in that seat, but the bookmakers today have the Green Party as favourite to win that by-election. With politics moving so fast, is this not a particularly dangerous time to be postponing elections and not giving voters a democratic say? Is this not damaging and dangerous, threating the whole concept of democracy by taking it away from people when there is so obviously a desperate desire for change?
Baroness Taylor of Stevenage (Lab)
I am certainly not calling the result of the Denton by-election at this stage. I do not think we even have a candidate yet, so I think it would be unwise.
In response to the noble Baroness’s question on timing, we have been clear throughout that elections should go ahead unless there is strong justification otherwise. Many of the local elections that are due to take place in May will take place. We were very clear that if councils said they had no reason for postponement then we would listen to them, but that where a council voiced genuine concerns—we had significant evidence from those councils whose elections have been postponed—we would take it seriously. To make sure that everyone knows that this was not a rubber-stamp exercise, where anyone who asked for a postponement got it, there were two councils where we did not think the evidence was sufficient, Nuneaton and Bedworth and Pendle, and their elections are going ahead. We do not do this lightly. However, with an unprecedented reorganisation going on in local government, it is right that we took account of what local government was saying to us.
Lord Jamieson (Con)
Like my noble friend Lady Scott of Bybrook, as a councillor in central Bedfordshire I have already been through unitisation. That did not involve cancelling elections; in fact, we had an additional election after two years. We were able to do that because we had a proper plan that was locally developed and supported by residents. Is not the reason that elections are being cancelled that the Government do not have plan, do not know what is happening, and have not been communicating to councils and leaders what they should do or when they should do it? It is taking too long, and we end up in the difficult situation faced by council leaders of not knowing. Can the Minister commit that the Government will provide a clear timetable, as asked for by my noble friend, for local government reorganisation and for when elections will be held? Democracy matters; it is from where local government derives its authority.
Baroness Taylor of Stevenage (Lab)
I am afraid it was the failure to bite the bullet and get on with this kind of radical reorganisation for decades that has meant that we have decided that we cannot go on any longer with a broken system. Services in local government are not sustainable, the finance system is not working, and we now need to make sure that we get local government on the firm footing it deserves, that we are distributing funding more fairly, and that councils are the right size and shape to be effective to deliver efficiently key public services, as the public that we serve deserve, and drive forward our economy, housing and transport in the way that we all want to see, right across the country. The current system results in confusion and waste. We have got to get on with the job. We have had to take this unprecedented step to make sure that we are taking account of what local government tells us about its need for resources.
On the timetable, I have just set it out again. I do not understand the confusion about the timetable. We have been very clear about it and we will move ahead with that. Local authorities are working, and have worked, very well within the timetable we have set out. We work closely with them on that, as on all the other matters related to the reorganisation.
Baroness Scott of Bybrook (Con)
I too have been through this process. We are 15 months out from the next lot of elections and the new authorities, but these authorities do not yet know on what geography they are going to be based. To take Essex, it could be five or three, and the same is true with Norfolk and Suffolk, which could be three, four or five. Once you know that geography, I know, and I think leaders who went through what I went through will know, that one year is not a long time to deliver that change, particularly if you do not know what it is going to be at this time.
Baroness Taylor of Stevenage (Lab)
As I stated earlier, decisions on the six devolution priority areas will be made by March 2026. Their geographies will be decided by then. We are going out to consultation on the remaining 14 areas, and it is important that we do that. The local authorities have come forward with their proposals. We want to find out what the local views on them are, so they have gone out to consultation. That consultation closes in May 2026, and we will make decisions on the geography of those remaining authorities before the Summer Recess.
Baroness Bennett of Manor Castle (GP)
The Minister said, and I very much agree, that the officers, staff and structures of the councils that have asked for extensions are extremely stretched—I declare my position as a vice-president of the Local Government Association. One of the alternatives would have been for the Government to provide the resources to ensure that those councils were able both to hold elections and to continue with the plans for reorganisation. Can the Minister say whether the Government made any calculation for what allocation of funds from the Government here in Westminster would have been necessary to allow those elections to go ahead? What would the cost have been if those resources had been provided?
Baroness Taylor of Stevenage (Lab)
With respect to the noble Baroness, putting in new resources at this stage would not really help matters. Councils have their programmes of work under way. They are all working very hard on the reorganisation programme, as they are on the transition. They have an enormous job to do on working out the transition for key public services and on how they are going to drive growth and housing programmes going forward and put new resources into that. When you have new councillors and council officers coming in, it takes quite some time for them to get up to speed and be able to deliver at pace. Councils have considered that very carefully and will have made their own decisions. That is why we had 29 of them submit requests to postpone their elections.
Lord Jamieson (Con)
As there is still time, I will come back on a couple of things that the Minister said. The Minister spoke of the need for fundamental reform. Can the Minister answer the following questions that I have asked previously? What real additional powers, and what funding, will come to local government from the Government? Secondly, the Minister said that local government funding was not sustainable, so why, through the Government’s unfair funding proposals, will many councils suffer some of the sharpest cuts that they have seen?
Baroness Taylor of Stevenage (Lab)
The fair funding formula that we announced this year has given local government a significant increase in funding. Having spent the 17 years that I was a council leader cutting budgets every year, I know that has been a welcome change for some of our councils.
On the new powers that local councils will get, I know that we are in the process of considering the English devolution Bill and that we will debate it tomorrow afternoon. The seven areas of competence that are included in that are just the starting point for devolution. We want to see a widespread devolution of things that are currently decided in Whitehall; we want to see them being decided in local areas by local people. Once those combined authorities are established, the mayors will be able to apply for further powers that they see as necessary for their areas. It is important that those are driven by mayors. We have seen that existing mayoral areas have different needs. Some areas have a much greater need for powers on skills, for example, while others have greater need for powers on health and transport, and it can be all three. It is very important that that is driven at a local level. The very wide-ranging competences that we have set out in the English devolution Bill will enable local governments to take the powers that they need to drive their local areas forward. That is a huge move forward, and I welcome it.