Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Pension Schemes Bill
(1 day, 4 hours ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“Review of impact of this Act on retirement incomes(1) The Secretary of State must, within five years of the passing of this Act, carry out a review of the impact of the provisions of this Act on actual and projected retirement incomes.(2) Further reviews must be carried out at intervals of not more than five years thereafter.(3) Each review must consider—(a) the impact of the provisions of this Act on actual and projected retirement incomes, and(b) whether additional measures are required to ensure that pension scheme members receive an adequate income in retirement.(4) The Secretary of State must prepare a report of each review and lay a copy of that report before Parliament.”
Viscount Younger of Leckie (Con)
I hope noble Lords have had a restful recess. It is a pleasure to open the first debate on the final day in Committee on this Bill, and I look forward to hearing further and final contributions from noble Lords on this stage of the Bill.
Today, we continue to discuss important issues relating to pension schemes which of course ultimately matter greatly to the millions of individuals who are saving for, or who have saved for, their pensions, and who rely hugely if not wholly on these funds until the end of their lives. With that thought in mind, I turn first to Amendment 207, tabled in my name, which calls for a review of the impact of this legislation on retirement incomes.
When one reflects on the debates we have had in recent weeks, it is clear that they have been concerned not with procedure for its own sake but with the underlying architecture of the pensions system. The question before us has been whether the framework we are constructing will in practice enable schemes to deliver outcomes for their members. The provisions in this legislation are intended to change behaviour and outcomes: if they were not, there would be little purpose in legislating. The Government do not bring forward measures of this scale merely to rearrange, streamline or clarify administrative detail; they do so because they believe the system can and must function better.
So the objective, surely, should be clear: pension schemes should deliver stronger, more reliable outcomes for their members over the long term. Costs should be considered, but they must not become a proxy for value. The true measure of success is whether savers receive adequate and sustainable incomes—for example, the tax decisions by the Government of the time, or for inflation. Above all, schemes must operate with a single disciplined focus to act in the long-term interest of those whose savings they are entrusted to manage. If the Bill, on becoming an Act, succeeds in that ambition, it will deserve praise; if it falls short, as some noble Lords have cautioned it might, we must be able to say so clearly and respond accordingly. Amendment 207 would therefore simply ensure that we have the opportunity to assess whether the legislation has improved adequacy of income in retirement, and if not, to consider what further measures may be required.
I hope noble Lords will agree that this is a measured and sensible provision. It simply asks Ministers and departments to assess objectively what is working, to identify where improvement may be required, and to report their conclusions transparently to Parliament. In a policy area as long term, complex and consequential as pensions, that degree of accountability is essential.
I now turn to Amendment 211, which is more technical but no less important. It would require Ministers to undertake a full and transparent review of why employee and employer pension contributions are treated differently for the purposes of income tax and national insurance. If two forms of pension contributions are treated differently by the tax system, the Government should be able to explain why, clearly, publicly and with evidence. Tax design should be intentional, not simply the accumulated product of historical accident or, indeed, incremental drift.
The truth is that drift is not unique to any one Administration; it is often perceived as a feature or function of government itself. Complex systems evolve over decades; measures are introduced for sound reasons at the time, adjusted in response to fiscal pressure, amended again in the light of political compromise, and gradually layered one upon the other. In essence, “It seemed the right approach at the time” is a mantra, or even a cliché, which Governments in general find difficult to scrutinise as time marches on.
Reflection in government is not easy. Departments are occupied with immediate pressures, and many probably agree with me that those pressures have never been as great as they are at present. Chancellors face short-term fiscal constraints and Ministers must respond to events. In such circumstances, stepping back to ask first-principles questions can be difficult, yet it is precisely that discipline that Parliament should require.
In truth, we are all susceptible to accepting inherited structures without always interrogating whether the original rationale still holds. That is not a criticism; it is a recognition of institutional reality. But where differential tax treatment affects incentives, savings behaviour and long-term retirement outcomes, we have a responsibility to ask why the distinction exists and whether it remains justified. Amendment 211 offers a challenge to this Government: a transparent review would simply ensure that the current approach rests on deliberate policy choice.
At present, employer contributions receive more favourable treatment for national insurance purposes than employee contributions. That differential treatment shapes behaviour. It affects how remuneration is structured, how salary sacrifice operates and ultimately how pensions are accumulated. Pension saving is not a loophole; it is a public good. It reduces future dependency on the state, supports long-term investment and reflects the principle that income saved for retirement should not be taxed more heavily than income spent today. A structured review would require Ministers to demonstrate the behavioural impacts of the current system, its effect on savings rates and its interaction with automatic enrolment. It would ensure that we are not driven by short-term revenue considerations at the expense of long-term saving and fiscal sustainability.
This issue is especially relevant in light of the National Insurance Contributions (Employer Pensions Contributions) Bill, to which my noble friend Lady Neville-Rolfe, who is not in her place, and my noble friend Lord Altrincham have been responding on behalf of His Majesty’s Opposition. Many of the arguments advanced in that debate bear directly on the substance of this amendment. Recent decisions to increase the tax burden associated with pension saving, including the reduction in the availability and attractiveness of salary sacrifice arrangements, will have consequences across this space. These measures do not operate in isolation: they alter incentives, shape behaviour and affect the very architecture of workplace saving.
It is immediately apparent to pension providers, employers and practitioners that such changes do not, in practice, fall solely on the highest earners. They bear down on those in the middle of the income distribution and, in some cases, below it. Those impacted include young professionals in high-cost cities and mid-career workers seeking to close gaps in their retirement provision, typically earning between £30,000 and £60,000 a year. Given that the average salary in the United Kingdom is just over £37,000, it is difficult to describe individuals within that range as high earners. They are lower-income and middle-income earners, doing precisely what successive Governments have encouraged them to do: to save consistently and prudently for their retirement.
If we reduce the incentives for employer pension contributions through national insurance changes, we must, at the very least, understand the wider implications for pension accumulation, automatic enrolment participation and long-term adequacy of retirement incomes. We should not allow pension policy to become a vehicle for short-term fiscal expediency, nor should we undermine confidence in long-term saving through uncertainty or opacity. Stability and clarity are essential if individuals are to commit a meaningful share of their income to retirement provision over decades.
So Amendment 211 does not seek to dictate an outcome; it seeks an explanation. It asks the Government to set out clearly the rationale for differential treatment within the pensions framework and to consider whether that treatment remains justified in light of our shared objectives: retirement adequacy, fairness between different earners, and sustainable economic growth.
A natural extension of that argument is my Amendment 213, which calls for a review of employment rates and pension adequacy. With the Pensions Commission, under the chairmanship of the noble Baroness, Lady Drake, reporting in 2027, we recognise that the Government have chosen then to opine and report on the structure of the pensions market before turning to questions of pensions adequacy as a stage two exercise. That is their sequencing decision. However, adequacy cannot remain a secondary consideration indefinitely. If the commission is to revisit the long-term sustainability of the system, it must also grapple with who the system is working for and who it is not. During previous discussions in Committee, the Minister pledged to write about the timeliness of stage two and adequacy. How is she getting on with that reply, and where are we on the timeline on adequacy?
Amendment 211 would specify that the review must consider the pension adequacy of workers who are in part-time or insecure work, the pension adequacy of those who take career breaks and parental leave, and the impact of regional labour market disparities on pension outcomes. If pension policy continues to assume linear, full-time, uninterrupted employment, it will systematically underserve large sections of the population.
In conclusion, adequacy matters. I will not rehearse the statistics relating to those who are not saving enough, but the figures are stark. I have spoken at length, as have others in this Committee, about the risks of drifting into a system that is technically sound in structure but insufficient in outcome. A pension system that does not deliver adequate retirement incomes will, in time, recreate the very pressures on the state that automatic enrolment was designed to reduce.
We believe that these amendments are modest. They ask for transparency, analysis and review, not prescription. They aim to ensure that fairness and adequacy sit alongside structural reform. For these reasons, I commend these amendments to the Committee and I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, I will intervene briefly in support of my noble friend’s amendment—not on the specifics but because, having read again the 42nd report of the Delegated Powers and Regulatory Reform Committee, which refers directly to this legislation, it has become ever more obvious that this skeleton, which has taken up an enormous amount of time and is in itself highly complex, leaves an enormous number of question marks. It leaves an enormous number of doubts and concerns, most of which the Government are placing at their own disposal through secondary legislation, which is at this point equally uncertain.
Therefore, it seems absolutely essential that, when there are proposals such as those we have just heard from my noble friend—to review the commencement of the legislation, or to have reviews on a five-yearly basis, or indeed in any other ways, of some of the more complex areas—the Government should concede that that is appropriate in a Bill of this kind. I do not think I have ever read in my time here such a clear statement as that made by the Delegated Powers and Regulatory Reform Committee about the nature of legislation. It would be serious enough if it were dealing with a Bill with very few clauses and of little import, but this is of such a substantial nature. The report we have read condemning the nature of the Bill for not having the flesh around those skeletal bones is notable and important. The Government should therefore be much more amenable to the sort of sensible proposals being made in the amendments of my noble friend.
I do not wish to speak further on this, but it seems terribly important that—whether it is dealt with now or at a later stage—there be an understanding that the Bill is entirely dependent upon future secondary legislation. Standing alone is, I am afraid, an unacceptable set of provisions.
Lord Davies of Brixton (Lab)
There can be no objection in principle to having a review; all public policies should be open to review. The objections are practical, such as whether it would be a waste of time for the people who would have to undertake the review, who might have better things to do. Undertaking reviews can lead to planning blights; measures that need to be carried forward are held back because of some form of review being undertaken that is not central to the measures currently in the Bill.
Lord Davies of Brixton (Lab)
This is about impartial pensions advice. Had I heard the noble Lord’s speech, I would have said that I did not accept his arguments. What I want is a pensions system that works without people needing advice. Proper pensions advice is extremely expensive, and on the idea that everyone will get at least twice during their working life full and adequate pensions advice—no, we do not want to encourage that. I would encourage a pensions system that works properly.
Then we have the Police Pension Scheme. I have talked to those campaigning on the issue on a number of occasions and I totally agree that it is entirely unfair that the spouses of some members of the scheme, when those members retire and die, will receive a pension—until they are accused of cohabiting or decide to get married. That happens only in the public sector; virtually no private sector schemes do that sort of thing, and the only ones that do are those that have carried over those rules from the public sector. To be honest, that is nasty. People naturally resent losing the money, and then become open to tittle-tattle and intrusive investigations; that is just wrong. Clearly, there is a cost involved, because there is a carryover to other public service schemes—but it is just wrong; it is treating people badly for no good reason other than history.
I hope that the Government will be able to make a positive response on Amendment 215. I do not have a lot of hope, but I am eternally hopeful. I apologise for jumping in ahead of the noble Lord, Lord Palmer.
Lord Palmer of Childs Hill (LD)
My Lords, I say to the noble Lord, Lord Davies, that no apology is needed.
This is a wide-ranging set of review and process amendments. The noble Viscount, Lord Younger, explained what I think he described as his “modest” amendments—indeed, they are. The noble Lord, Lord Kirkhope, said that this was all set up for secondary legislation; we ought to take that point into account.
These amendments are linked by a common theme: whether the Government are willing to build a stronger evidence base for future pensions policy and to improve the basic safeguards for savers. Several of these amendments ask Ministers to review pension adequacy, contribution rules, labour market impacts and public understanding, while others seek an independent look at specific injustices or practical improvements to data accuracy.
These amendments are probing, but they raise real policy gaps. Taken together, they test whether Ministers are prepared to move beyond structural reform and address the practical foundations of trust in pensions, adequate incomes, fair treatment, accessible information and correct records. I hope that, in replying, the Minister will explain which of these issues the Government accept in principle and whether they believe that the existing powers, regulators and reviews are already sufficient. I expect that to happen. The Bill changes structures and powers, but savers also need fairness, clarity and accurate data. When Ministers resist new duties, they should set out a clear alternative route and timetable. I hope that the Minister will do so.
The noble Lord, Lord Davies of Brixton, made important points. We will disagree, but I shall pursue the amendments in my name. Amendment 214 in my name would establish a universal entitlement to free and impartial pension advice at key stages of life. It would ensure that everyone, not just the financially literate or well advised, can make informed decisions about retirement. Such advice would, I hope, be offered around the age of 40—a critical moment for mid-life planning and pension consolidation—and again within six years of expected retirement to support decisions on drawdown, annuities and retirement income options, which are a mystery to many people at that or any stage of life.
The advice would include essentials such as pension types—DB or DC schemes—investment strategies, charges and fees, consolidating multiple pension pots and retirement income choices, and would be practical, comprehensive and relevant. The advice would have to be qualified, independent and impartial. Trustees, managers and providers would have a role in facilitating access. Data sharing would be permitted, but with strong data protection safeguards.
This amendment in my name would also offer flexibility, in that responsibility could be placed with established bodies such as the Pensions Regulator, the Financial Conduct Authority and the Money and Pensions Service. It would be funded from prescribed sources to ensure sustainability. The regulations will be subject to the affirmative procedure, ensuring proper parliamentary scrutiny. Amendment 214 is designed to ensure that people have confidence in and clarity on their pensions, which, I assure noble Lords, many people do not have; to avoid poor decisions that undermine pension security, which many people make; and to make sure that everyone, not just those who can pay for private advice, gets the help they need.
The purpose of my Amendment 215 is to require the Secretary of State to commission an independent review into provisions in police pension schemes that result in the forfeiture, reduction or suspension of survivor pensions. It focuses on cases where survivor pensions are affected by remarriage—as mentioned by the noble Lord, Lord Davies—civil partnership or cohabitation.
Why is this review needed? These provisions can have significant financial, social and emotional impacts on survivors and their families. This would ensure fairness and consistency with other public sector pension schemes—the Armed Forces, the NHS and the Civil Service—and would address potential inequities or outdated rules that disproportionately affect survivors. This review would ensure an independent—that is the point—and transparent process, as well as stakeholder consultation, reporting and accountability. The review panel must publish its findings and recommendations within 12 months. The report must be laid before both Houses of Parliament, ensuring transparency and parliamentary oversight.
This amendment is designed to act to assess the fairness and impact of current survivor pension rules in police schemes and to identify practical reforms that protect survivors’ rights while maintaining scheme integrity, to ensure that the system is consistent, equitable and transparent. I look forward to hearing whether the Minister addresses my points about these amendments.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
I am grateful to all noble Lords who introduced and spoke to these varied amendments. The range of subjects covered here shows the interest across the whole pensions landscape, but at heart is the objective that we all share of putting members first.
There was a theme around adequacy in Amendments 207 and 213 from the noble Viscount, Lord Younger of Leckie. Amendment 207 seeks to introduce a statutory requirement for the Secretary of State to conduct a review of the Bill’s impact on retirement incomes five years after it is passed, and to have subsequent reviews at intervals not exceeding five years from the first assessment. Amendment 213 wants a statutory requirement for the Secretary of State to conduct a review of the relationship between employment rates, earnings patterns and pension adequacy. Although both amendments raise key issues around pension adequacy and proper monitoring, the Government’s view is that the proposals risk the duplication of work already being undertaken. I shall explain why.
There are many different strands to this Bill, which will be implemented in phases over the next several years. For example, the first small-pots consolidation will not take place before 2030, so obviously any review in the next five years will not have allowed many of the reforms any time to take effect. It is for that reason that a comprehensive impact assessment was produced, setting out not only the potential impacts but also plans to evaluate the Bill in further detail, including developing new research projects to address evidence gaps.
The Government already carry out and publish analysis of projected future retirement incomes, which provides estimates of the number and proportion of working-age individuals aged 22 to state pension age who are undersaving for their retirement. The modelling that underpins that analysis uses a number of economic factors, including employment levels based on the OBR long-term forecasts, which are regularly reviewed and updated.
Separately, the Government have revived the Pensions Commission. I say to the noble Viscount, Lord Younger, that adequacy is absolutely not a secondary issue. As I have explained repeatedly in Committee, we are doing these things in the order that is appropriate to the matters. The Bill makes sure that steps are taken so that the market works well to make sure that increased savings will get appropriate returns for the savers.
The Pensions Commission’s legacy under the last Labour Government was of course to create a system of workplace pension saving via automatic enrolment, which has transformed workplace pension saving for millions of workers. There was cross-party support for this. But the Government recognise that millions are still not saving enough for their retirement, which is exactly why we revived the Pensions Commission to finish the job we started 20 years ago.
I will respond to the noble Viscount, Lord Younger. As indicated previously in Committee, the commission will produce an interim report this spring, setting out the evidence base and strategic direction for its work on assessing the UK’s pension system. It will set a direction based on the purpose that the Government have given it to identify remedies to address pension adequacy, fairness and risk before preparing its final recommendations in early 2027 for the Government to consider.
Viscount Younger of Leckie (Con)
My Lords, I am very conscious that I spoke at some length in my opening speech, so I will be brief in closing and do not intend to question the Minister too much on the points that she made. I will say only that, as my noble friend Lord Kirkhope rightly said, pensions are complex and need to be well thought through. This is a skeleton Bill, which we have pointed out in many of the debates, but I understand that, as the Minister said, it is important to look long term.
I have only one question. I may not be the only one who is confused about the timings of the commission. I think the Minister said that an interim report is being produced by the commission this spring and leading through to early 2027 pensions adequacy will be included in that report and the commission will set out options for the Government to comment on. I am putting words into the Minister’s mouth. I wonder whether she can confirm exactly where we stand on pensions adequacy. It may be that that will be in the letter that is being written, which might come my way.
Baroness Sherlock (Lab)
A letter is being prepared and will be sent after Committee. I want to put on record the timings and to be very clear about them. The interim report will be published this spring, and the aim is for the final report to be in early 2027. I will put any further detail in the letter to the noble Viscount.
Viscount Younger of Leckie (Con)
I am sorry to labour this like a long-playing record, but will pensions adequacy be included in that report? Or are we looking for something further?
Baroness Sherlock (Lab)
The Pensions Commission is there to look at the adequacy and sustainability of the pension system; that is its job.
Viscount Younger of Leckie (Con)
I would be grateful if the Minister would let me look at the letter, anyway; it is important to see that in detail.
To conclude, I want to pick up on Amendment 214 in the name of the noble Lord, Lord Palmer, concerning a universal pension advice entitlement. The context for this amendment is certainly well understood. The structure of pension provision has altered fundamentally over recent decades, and most private sector workers are now members of defined contribution schemes rather than defined benefit schemes. As we know, defined benefit schemes provided a predictable income for life; by contrast, defined contribution schemes require individuals to determine contribution levels, investment choices, consolidation of pension pots and the manner and timing of drawing retirement income. The risks associated with investment performance and longevity now rest primarily with the saver rather than the sponsoring employer.
In that environment, the case for improved engagement is compelling. Without appropriate support, individuals might under-save, remain invested in default arrangements without appreciating the degree of risk involved or make irreversible decisions at retirement without a full understanding of the consequences. There are also wider public policy implications. Inadequate retirement provision can increase reliance on means-tested benefits, intensify pressure on the state pension and contribute to intergenerational fiscal strain. In that sense, the noble Lord, Lord Palmer, has identified a matter of genuine structural importance.
However—this chimes with the Minister and the noble Lord, Lord Davies—there are practical considerations that cannot be ignored. The amendment refers to free and impartial pension advice. In regulatory terms, advice is distinct from guidance. Regulated advice requires authorisation by the FCA, entails suitability obligations and carries legal liability. To extend personalised regulated advice as a universal entitlement would require significant capacity, funding and oversight, and it would not be a modest undertaking. I reiterate that I agree with the noble Lord, Lord Davies of Brixton, and the Minister. The complexity of the system is real but so too are the operational and financial implications of delivering such an entitlement at scale, although I appreciate the noble Lord, Lord Palmer, bringing this up; it has been a valuable debate.
With that, I will dwell on what has been said in this debate in Hansard to work out what we might bring back on Report but, for now, I beg leave to withdraw my amendment.
“Review of pension communications and financial promotion rules(1) The Secretary of State must, within 12 months of the day on which this Act is passed, conduct a review of all legislation and regulatory rules governing marketing, financial promotion and member communications in relation to occupational and personal pension schemes.(2) The review must consider whether existing rules unduly restrict pension providers from—(a) communicating risks, warnings, and comparative information to scheme members;(b) providing guidance on fund choice, consolidation, and value for money;(c) supporting informed member decision-making without constituting regulated financial advice.(3) The Secretary of State must lay a report of the review before both Houses of Parliament.”
Viscount Younger of Leckie (Con)
My Lords, I shall speak to the two amendments in this group, Amendments 208 and 210, tabled in my name. The proposed new clause in Amendment 208 would create a permissive power for Ministers to help employers to understand and navigate the different pension options available to them, including the choice between salary sacrifice and ordinary contributions.
Since the introduction of automatic enrolment, employers must provide workplace pensions as a default. This comes with an opt-out for employees, although opt-out rates are very low, happily. This reform has rightly been regarded as a success: participation has increased dramatically and millions more people are now saving for retirement. But although participation has improved, the structure through which those pensions are delivered remains complex. Employers may offer standard employee and employer contributions; operate salary sacrifice arrangements, whereby pension contributions are made before tax and national insurance; choose between different occupational schemes; use master trusts; or establish single-employer schemes. Each of those options carries different financial implications, administrative consequences and regulatory requirements.
For large firms with human resources departments and access to professional advisers, navigating these choices is manageable. However, for small and medium-sized enterprises, often it is not. This amendment simply gives Ministers the power to publish comparative guidance, provide decision-making tools, issue best practice principles and clarify regulatory compliance requirements. It does not mandate a particular scheme, it does not impose a new burden; it equips employers with information, and in short, reduces confusion.
Lord Palmer of Childs Hill (LD)
My Lords, I forgive the technicalities. This group—I will not speak at length on it—focuses on employer communications and decision-making. These are not peripheral issues. Poor communications, which there often are, and unclear boundaries between information, guidance and advice, can directly affect member outcomes. Amendment 208 asks for a review of the legislation and regulatory rules on marketing, financial promotion and member communications, while Amendment 210 would support employers through guidance and tools when choosing and operating workplace pension arrangements.
There is a legitimate policy question here around whether the current rules strike the right balance between consumer protection and practical communication that helps people make informed choices. I hope that the Minister will clarify whether the Government believe that there are avoidable barriers that prevent providers and employers from communicating useful non-advisory information to members and workers. They should be able to give that information easily and freely. Good pension outcomes depend on not only product design, on which we tend to focus, but understandable communications and workable employer support.
I hope that these amendments will try to improve the communications part of the scenario. I do not think that they are mind-bogglingly important, but they would, I believe, improve the system for pensioners, which is what we all, I hope, want to do.
Baroness Sherlock (Lab)
My Lords, I am grateful to noble Lords who have spoken. I absolutely agree with the noble Lord, Lord Palmer, that these are important issues. I hope to persuade him that the right action either has been taken or is being taken.
I appreciate the purpose behind the new clause proposed in Amendment 208 from the noble Viscount, Lord Younger. It aims to ensure that pension providers can communicate effectively with their members and provide appropriate guidance. The new clause would require the Government to review legislation and rules that might restrict pension providers from communicating with their members about a range of topics. I should say at the start that there is good reason to protect people from unsolicited marketing in many circumstances. Not only can irrelevant marketing be a nuisance but of course there are people who would exploit an increase in legitimate marketing as an opportunity for fraud or scams. In 2019, the last Government banned companies from making unwanted and unsolicited phone calls to people about their pensions.
At the same time, I recognise the need for clarity to help pension providers navigate the regulatory framework when communicating with their members. That is particularly important given the increased emphasis on pension providers supporting members directly through both guided retirement and, as raised by the noble Viscount, Lord Younger, the targeted support regime. The targeted support, as I have explained previously, could include helping people to make decisions about their pension.
The FCA and the Information Commissioner’s Office published a statement in December to provide clarity on the interaction between direct marketing rules and targeted support. That statement details how firms can promote their targeted support service to those who have opted out of direct marketing, while still complying with the relevant regulations. The statement also emphasises that financial services providers can send neutral, non-promotional and factual messages about important financial matters to all customers, even if they have opted out of marketing communications. That includes warning a pension member that they are undersaving for retirement or drawing down on their pension unsustainably.
However, in developing targeted support, the Government identified some specific issues in how the direct marketing rules in place for workplace pensions would interact with the new regime. The Government will be taking forward secondary legislation to address this, enabling these providers to deliver targeted support communications which amount to direct marketing to members who have not opted out of receiving it. This reflects that workplace pension providers have fewer opportunities to obtain consent for direct marketing, limiting the level of engagement they have with their members.
Turning to value for money communications, I am confident that the Bill already empowers us to achieve these aims. The Government have carefully considered the necessary requirements under the VFM framework. Clause 14 enables the provision of detailed requirements for member communications and interaction, including ensuring that guidance can be tailored to meet the needs of all members. The Government have already engaged in the process of reviewing the legislation and the rules identified in the amendment where appropriate and will continue to do so in a transparent manner.
Amendment 210, which is also from the noble Viscount, Lord Younger, seeks to require the Secretary of State to consider what steps are needed to help employers make the decisions they must make in relation to workplace pensions. While this is a positive aim, I do not think the proposal is necessary. Reasonably extensive guidance is already available to employers to support them to fulfil their pension duties. New statutory requirements are not needed in order to maintain or improve that information as the market evolves.
The Pensions Regulator has published guidance on workplace pension scheme selection, with supporting resources on what to look for in a scheme, including matters such as cost, tax treatment and different ways of making contributions. The FCA has also made guidance available to employers about providing support for employees, which includes pensions among other relevant areas. The DWP has guidance on default fund investment options, which sets out best practice concerning scheme design, governance and member communications. In response to the comment from the noble Viscount, Lord Younger, about smaller employers, that was developed particularly with those employers, including SMEs, which have been newly brought into the pensions world following the rollout of automatic enrolment.
Pensions UK also has its own independent guidance for employers, including its pension quality mark accreditation for high-quality schemes. These sources provide a wealth of information for employers and are regularly supplemented as the market evolves. There is not a need for new statutory requirements.
Once again, I highlight the VFM proposals in the Bill, which will enable the Secretary of State to place duties on trustees and managers to publish standardised performance information. This will help members and employers make informed decisions when choosing a scheme. It will also increase competition across different schemes on quality, not just cost, and could remove poor performing schemes from the market entirely, helping employers avoid low-quality options automatically.
The Government are committed to supporting members and employers to make the best decisions about pensions, but this amendment is not needed to allow the Government to continue to do that, and it does not in fact require the Secretary of State to take any steps if they do not consider them necessary. Overall, we believe there are some cases where more advice and support are needed for members, which is why we are introducing guided retirement and targeted support. We will always consider the interaction of new policies with a wider regulatory framework, but equally it is important to keep guardrails against unsolicited marketing and scams. We also believe that sufficient support is already available for employers in their decision-making, and powers are already available should more be needed. I hope that has reassured the noble Viscount and that he can therefore withdraw his amendment.
Viscount Younger of Leckie (Con)
My Lords, I am grateful to the noble Lord, Lord Palmer, for his remarks and support, and to the Minister for the details she provided in her response, which I appreciate. While I am of course disappointed that the Government are not able to accept these amendments today, I recognise that this is a matter of balance and practical implementation, rather than fundamental disagreement.
On Amendment 210 in particular, I appreciate that there is already a careful line between acting in members’ best interests and avoiding what might be construed as advertising or product steering. The noble Baroness made that distinction too. This is precisely why I believe that a structured review would be valuable, to ensure that we are getting that balance right as the system evolves. Picking up on an offer—I think it was an offer—from the Minister, I would be happy to work with her and the Government between now and Report to consider how this might be framed in a constructive and proportionate way, but I acknowledge what she said in her closing remarks.
More broadly, on helping employers, particularly smaller firms—the Minister also mentioned this—to navigate pension arrangements with greater clarity, I accept that work is under way through regulators and guidance bodies, but as the system grows more sophisticated, there is merit in ensuring that political focus and strategic direction remain strong. If employers are central to delivering retirement security, then supporting them effectively is surely not optional but integral to the success of the framework. However, with that, and in the spirit of continued engagement, I beg leave to withdraw the amendment.
Lord Sharkey
“Fossil fuels and climate change risk(1) The Pensions Act 1995 is amended as follows.(2) In section 41A (climate change risk), after subsection (6) insert—“(6A) Regulations under subsection (1) must, within 1 year of the Pension Schemes Act 2026 receiving Royal Assent, prohibit the trustees or managers of schemes of a prescribed description from holding relevant assets.(6B) The relevant assets in subsection (6A) are issuance by issuers which, in relation to thermal coal—(a) derive 10% or more of annual revenue from its production, transport or combustion,(b) produce annually 10 million tonnes or more, or(c) have 5GW or more of power generation capacity.(6C) Within 2 years of the Pensions Act 2026 receiving Royal Assent, and every 3 years thereafter, the Secretary of State must carry out and publish a review on whether the definition of relevant assets should be extended to include—(a) issuance by issuers which, in relation to thermal coal, derive a smaller proportion of revenue, produce a smaller amount or have a smaller amount of power generation capacity than the proportion and amounts specified in (6B),(b) some or all new issuance by issuers of a prescribed description deriving a prescribed proportion or amount of their revenue from the extraction, transport, trading or combustion of prescribed fossil fuels, or(c) some or all new or existing issuance by issuers of a prescribed description investing a prescribed proportion or amount in exploring for, or expanding the extraction of, prescribed fossil fuels. (6D) Regulations under subsection (1) may implement the conclusions of the review referred to in (6C).”(3) In subsection (8), at end insert—““thermal coal” means coal and lignite used in the generation of electricity and in providing heat for industrial or residential purposes;“issuance” means all investable assets, including equity and debt.”(4) The Financial Conduct Authority must make general rules with effects corresponding to the provisions of subsection (1) for providers of pension schemes to which Part 7A of the Financial Services and Markets Act 2000 (inserted by section 48 of this Act) applies.(5) The Secretary of State must make regulations with effects corresponding to the provisions of subsection (1) for scheme managers of the Local Government Pension Scheme.(6) The rules and regulations under subsections (4) and (5) must come into force no later than the date on which regulations pursuant to section 41A(6A) of the Pensions Act 1995 (as amended by this Act) come into force.”Member’s explanatory statement
This new clause would require Government and the FCA to make regulations and rules on climate risk grounds restricting exposure of some occupational and workplace personal schemes to thermal coal investments and to regularly review whether the restrictions should be extended to other fossil fuel investments.
Lord Sharkey (LD)
My Lords, Amendment 212 is in my name and those of the noble Baronesses, Lady Hayman, Lady Griffin of Princethorpe and Lady Bennett of Manor Castle. I thank them for their support and look forward to their contributions. I also thank the Better Pensions Coalition for its input and advice—I should probably say “guidance” rather than “advice”, since no money changed hands.
This amendment has a simple purpose: it seeks to restrict pension investments in companies that undertake certain significant levels of climate-damaging activity Specifically, it would require the Government to legislate to exclude firms with high thermal coal exposure from pension scheme portfolios within one year of Royal Assent. It would require regular reviews on whether to extend the exclusion, and would permit the Government to legislate to implement the outcomes of those reviews. The amendment sets out to do this by amending Section 41A of the Pensions Act 1995, which was inserted by Section 124 of the Pension Schemes Act 2021 under the previous Conservative Administration.
Section 41A allows the imposition of regulation on trustees of pension funds in order to secure
“effective governance of the scheme with respect to the effects of climate change”.
The location of this clause means that all exclusions must be legislated for on climate-risk grounds, not on ethical grounds or approval or disapproval of certain investments. That is why the primary focus of our amendment is the risk to savers’ retirements generated by climate change. It is the case that savers are at risk, not just from fossil fuel assets that have become stranded as the cost of low-carbon energy falls, but from their pension schemes’ investments in fossil fuels funding increased global emissions, contributing to runaway climate change, which would damage returns and the value of their other investments.
There are no safe-haven assets that will be immune from the 2.6 degrees centigrade global warming we are currently steering towards. The Institute and Faculty of Actuaries has assessed that the current suite of global climate policies could shrink the global economy to half its current size. Alltech finance research indicates that UK pension portfolios could face valuation declines of between 25% and 50% under plausible climate scenarios. Pension savers risk a much more expensive retirement and poor quality of life from continued fossil use. The cost of housing, energy and food is likely to be much higher, partly because their pensions have funded dangerous levels of climate change.
The amendment starts with thermal coal, the most damaging and least necessary fossil fuel. Here in the UK, of course, we ended the use of coal on the power grid in 2024, but despite that, UK pension funds risk undermining this progress by funding the continuous expansion of coal overseas. New research recently published by Finance Innovation Lab has found that pension schemes hold around £10 billion in thermal coal and that this could be responsible for around 17 million tonnes of greenhouse gases each year. Ironically, that is the same as the entire reduction in emissions from the UK power network under successive Conservative and Labour Administrations between 2019 and 2025. In other words, the UK’s main climate policy achievement at home, replacing coal-fired power with clean energy, may have been cancelled out by pension scheme investments in coal overseas, using contributions from savers, employers and taxpayers.
Pension schemes also continue to hold many more billions, around £88 billion at the last estimate, in fossil fuel companies as a whole, including those involved in new coal and gas and oil exploration. This has some of the characteristics of a collective action problem. The International Energy Agency has warned that there is no scope for additional fossil fuel production if the world is to stay within safe climate limits. Schemes fear missing out on short-term returns that other schemes may be generating, so each scheme staying invested and funding further oil, gas and, especially, coal investment is jeopardising long-term returns for themselves and for everybody else.
The UK pension sector is the largest in Europe. It has the potential to move markets, hasten the global exit from coal and, in due course, to do the same thing for oil and gas expansion. I make it clear that our proposed amendment does not sacrifice member returns. Any decisions to require exclusion must be made on climate risk grounds in accordance with the provisions of Section 41A of the Pensions Act 1995, not on the basis of ethical or political objections, as I said. The amendment cannot be used by the Government to mandate or forbid other types of investment because only the investments set out clearly in proposed new subsections (6B) and (6C) are in scope. Any attempt by the Government to use our amendment to exclude a wider range of investments without demonstration of the climate risk would be unlawful. I should also mention at this point that steelmaking would be unaffected by our amendment: the ban would be limited to thermal coal. Over time, we will need to phase out coking coal as well, but this can take place when it can be done without disrupting the sector.
We have seen in our discussions in Committee that the Government would like to have a reserve power to mandate pension investment into private markets for member returns and wider economic benefits. For Peers who are opposed to the principle of mandation, as I am, I reassure noble Lords that the power to exclude contained in our amendment is very tightly constrained. It would permit a direction to exclude only on climate risk grounds, in accordance with the terms of Section 41A. The Government, as we have seen, are proposing a reserve power to allow direction on almost any grounds, as long as they produce a report first. Our amendment is limited to coal and other fossil fuels. The Government’s reserve power allows the direction of investment into any sector, jurisdiction or asset class, as long as it is not listed.
The Government may claim that the consolidation proposed in the Bill will help reduce investment in fossil fuels, but that seems unlikely on the basis of current behaviour. Industry research due to be published next month by Corporate Adviser Intelligence will show that seven of the largest 19 schemes used for automatic enrolment—including household names such as Aviva, Royal London and Scottish Widows—remain invested, via their default fund, in one or more of thermal coal, tar sands and Arctic drilling.
Transition plans also do not look likely to address our concerns. Labour’s manifesto proposed that schemes should be required to produce and implement Paris Agreement-aligned transition plans but, 18 months on, there does not appear to be a decision on whether to proceed with that. As I understand it, there is slated to be a consultation on policy detail in 2026 and there may be regulations in 2027, with plans perhaps to be produced in 2028—so probably no action before the next general election. But the Government have made strong commitments, both at COP and in their own targets, with the aim of an effective 40% reduction in greenhouse gas emissions between 2020 and 2030. Transition plans will be great for the 2030s and 2040s, but those plans can be built only on the emissions reductions that we achieve in this decade.
We need faster action to be able to achieve our targets. Our amendment will deliver some of that, and I beg to move.
Baroness Hayman (CB)
My Lords, I declare my interests as a director of Peers for the Planet and a previous chair of that organisation. In this group of amendments, we address long-term systemic risks and how pension schemes both assess and manage them. All three of the amendments that we are discussing recognise that it is pension savers who will pay the heaviest price if the financially material risks to their savings and standards of living posed by climate change and biodiversity loss are not properly accounted for.
I have added my name to Amendment 212, which was just introduced so cogently by the noble Lord, Lord Sharkey. It is important because, as he said, UK pension schemes and savers remain overexposed to the risks of stranded assets from fossil fuels—in particular, coal. New research by the Finance Innovation Lab suggests that UK pension funds have at least £10.5 billion invested in companies that are extracting or burning coal, which could pose significant risks to pension savers. To date, pension schemes have not been required to take mitigating actions, so the sector has not moved quickly enough or at the scale needed to insulate savers from the emerging market and physical risks linked to those very carbon-intensive investments.
I also welcome the constructive intentions behind Amendment 218E in the name of the noble Baroness, Lady Coffey, and I look forward to hearing her speaking on it later. This amendment seeks to solve a major blind spot in the pension system by equipping trustees with the tools to understand how nature loss may affect asset values, as well as how global efforts to restore nature may reshape markets.
I now turn to my cross-party amendment, Amendment 218A. I thank the noble Lord, Lord Sharkey, and the noble Baronesses, Lady Penn and Lady Griffin of Princethorpe, for their support in adding their names. I am grateful to the Minister and her officials for a useful and interesting meeting ahead of today’s debate, although I hope that she may be a little more optimistic in her response to my amendment today. I am also grateful for the briefings I have received from UKSIF, Unison and ShareAction, and I pay tribute to the Financial Markets Law Committee for both its work on fiduciary duty and its extremely valuable 2024 report.
That report highlighted the way in which the gap left in legislation relating to fiduciary duty causes confusion and uncertainty and can result in trustees interpreting duties in overly narrow ways. I do not want to repeat my Second Reading speech, but there is now a widespread acceptance that the current lack of clarity around fiduciary duty is a real problem for pension scheme trustees—for example, in how trustees balance maximising short-term returns, potentially at the expense of considering other material factors over the longer term, which can have real-world implications for members’ interests further down the line. Even the Treasury, in its recently updated Green Book, recommends that the business case for proposals with a lifetime beyond 2040 should now be appraised against warming scenarios of both two degrees and four degrees centigrade, a possibility under which scientists say that the risks to economic growth and financial stability go up and into uncharted territory.
Baroness Griffin of Princethorpe (Lab)
First, I welcome the Bill wholeheartedly. In this group of amendments, we have cross-party political working, which I am very proud of. Every child in the world deserves to breathe clean air.
I speak first to Amendment 212,
“fossil fuels and climate change risk”.
This new clause would require government and the FCA to make rules and regulations on climate risk grounds, restricting exposure of some occupational and workplace personal schemes to thermal coal investments, and to review whether the restrictions should be extended to other fossil fuel investments. I will not repeat what my friend, the noble Lord, Lord Sharkey, has said, but as noble Lords will recognise, this amendment does something that we have heard rather a lot about recently—taking powers to direct the investment of pension schemes—but in a narrowly defined way, with parliamentary and industry scrutiny, and with safeguards to prevent the power being misused.
In reality, the Government and Parliament, as noble Lords have said, have been directing pension scheme investments for decades. When the Brown Government established the automatic enrolment scheme, Nest, they set a policy of 0.3% annual charge, which forced even a very large scheme such as Nest to choose investments which fitted within that tightly constrained charging envelope. When the coalition introduced a charge cap on all schemes used for automatic enrolment, the 0.75% ceiling drove the smallest schemes to exit, moved smaller schemes into overwhelmingly passive investments and limited asset and private market allocations for all but the largest schemes. Theresa May’s Government legislated for trustees to publicly report their investment policies in relation to environmental, social and governance considerations—quite rightly so.
Each of these policies has been explained on the basis that they are in consumers’ and the wider public’s interest, as in Amendment 212 of the noble Lord, Lord Sharkey, to which I proudly added my name. The amendment is in the consumer’s interest, because the immediate power of direction in this amendment would be limited to thermal coal. Pension schemes do not routinely publish sector-level investment data, but early analysis suggests that schemes still invest somewhere around £30 billion in companies with thermal coal interests. While noble Lords have been talking about the long-term investment profile of social housing or infrastructure and its appropriateness for pension funds, this coal, as the noble Lord, Lord Sharkey, so clearly said, is an ultimate short-term investment. Even the International Energy Agency’s most pessimistic scenario shows that coal demand is peaking. These investments will fail in due course but, in the meantime, they do harm to the returns of other investments in their portfolios, as well as everybody else’s portfolios, by contributing to local air pollution and global climate change.
That is why ending these investments is in the wider public interest. The £30 billion UK pension fund investment in thermal coal supports the equivalent of about 10 gigawatts of thermal coal-fired power overseas. This, with some basic arithmetic, means that UK pension schemes’ thermal coal investment emits more greenhouse gases than the whole of the UK power network.
In this way, UK pension schemes have been undermining the progress made by successive UK Governments in phasing out coal, by contributing to fund the expansion of coal overseas. I do not intend that to be a criticism of the funds. Governments have not nudged them away from coal specifically, but they have been willing to nudge and direct in other areas, including in this Bill, and they should be willing to do so here in respect of thermal coal. I kindly request that my noble friend the Minister agrees to accept this gentle nudge.
I was pleased to add my name in support of Amendment 218A in the name of the noble Baroness, Lady Hayman. As she said, in response to a similar amendment on Report in the House of Commons, the Pensions Minister indicated that
“guidance will encapsulate those wider factors set out in his new clause … including what we mean by systemic risks and standards of living. There is good support in the industry for providing that clarity”.—[Official Report, Commons, 3/12/25; col. 1043.]
It is really positive that the Government have accepted the principle that bringing further clarity to fiduciary duties is needed to tackle confusion and uncertainty among trustees around how they should best carry out their responsibilities to deliver for members.
I am delighted that my union, UNISON—the largest in the UK with a membership of over 1.3 million—has written in support of this amendment. The amendment recognises that there are wide-ranging benefits in giving legal backing to pension managers who wish to act in their members’ best interests by considering long-term systemic considerations such as sustainability. Moving in the direction of refining investor duties to allow these types of systemic-level risks to be properly quantified and acted on will help future-proof the pension system in the long-term interest of savers. For those of us not yet at pensionable age in the UK, that is quite attractive.
However, issuing guidance is unlikely to provide the level of assurance required by trustees. That is because, as my noble friend knows, pension funds need only have regard to guidance, which does not represent a stable enough foundation for interpreting duties; nor does it insulate pension funds should they find themselves defending decisions in the courts. Without clear timeframes, trustees will be left unsure as to whether guidance could be changed in the future and how they should prepare for it. Leaving these matters solely to guidance risks perpetuating the current status quo, where trustees feel they do not have permission to act in response to system-level risks for savers. Accepting this amendment would, I hope, bridge the gap between the Government’s commitment to date and their objective of removing obstacles for pension managers. I hope that my noble friend will accept it.
Baroness Coffey (Con)
My Lords, I have tabled Amendment 218E, which is about recognising biodiversity risk. In the previous Pension Schemes Act, we introduced additions to the 1995 Act to allow regulations to come forward regarding climate change. The significant difference between that and Amendment 212 is that it in no way mandated an approach to investment but recognised the risk that would be there. We have brought together a well-established architecture, with the TCFD, the Task Force on Climate-related Financial Disclosures, and now the TNFD, the Taskforce on Nature-related Financial Disclosures. I pay tribute to David Craig for the immense work that he has done throughout all this. I think I am right in saying that well over 700 investors around the world, with approximately £22 trillion-worth of assets, are committed to start using the TNFD once we have the proper hierarchy agreed. Being positive about it is not unique to this country; we are seeing that around the world.
One of the reasons why I decided to table this amendment now is because, while I appreciate that it has taken time to get to where we are, I do not know when next there will be a pension schemes Bill. Let us hope that there will not be one for a while, because we know that the industry needs stability.
These are serious risks, as was highlighted in the Chamber today when the noble Baroness, Lady Hayman of Ullock, answered my noble friend’s question about the TNFD and the UK’s nature security assessment. It is not just about environmental risk—it has been made very clear by the Government that we need to think about that in the long term—it is also about a balance between food security and geopolitical security. I accept that not all of those are issues that we should use our pension assets and schemes around the world to try to manage. That is not their role, but it is their role to think about the return on investment and what instability might do to pensioners’ projected payments in the future.
Baroness Penn (Con)
My Lords, I will speak in support of Amendment 218A. Before I do so, on Amendment 212, the noble Lord, Lord Sharkey, made a valiant attempt to square the circle of opposing some forms of mandation while supporting others, but it did not quite get me over the line. So I do not support that amendment.
However, I am interested in my noble friend’s Amendment 218E on the TNFD. We have spoken many times in the House about nature and climate being two sides of the same coin, and we now have a framework that enables organisations to understand nature risk properly. It therefore seems logical that it is integrated into our thinking on pensions.
Although I acknowledge my noble friend’s concerns, the reason why I support Amendment 218A is that, at its heart, its point is to clarify that pension schemes trustees can take systemic-level risks into account when carrying out their fiduciary duty. We could have debates on other aspects, such as taking members’ views into account, but the amendment is attractive because it still has fiduciary duty at its heart rather than seeking to overrule it. That is a beneficial approach because it does not put those of us in Committee, or the Government, in the position of taking those views and making those decisions for people—that remains with the trustees, which is, I think, appropriate.
The noble Baroness, Lady Hayman, eloquently made most of the points to be made in relation to Amendment 218A. The Government agree that we need to clarify that fiduciary duty can include a consideration of systemic risk; that point was accepted by the Pensions Minister in December. So the question then becomes: what form should this improved guidance take? Should it be legislative or statutory? I think that it should be legislative because so much of the understanding of fiduciary duty relies on the interpretation of case law. Therefore, we need a clearer legal underpinning of our understanding of this duty for it to be robust and for trustees to use it, which is the barrier that we are already trying to solve.
I would like to understand from the Minister why the Government have a preference for statutory guidance over legislative change. In the past, the Government have pointed to the importance of flexibility and consultation—those are allowed for through this amendment, but it would have the added benefits of proper parliamentary scrutiny and consultation with outside bodies.
I also want to ask the Minister about the scope of the Government’s proposed approach; this was touched on by the noble Baroness, Lady Hayman. Why is it limited to occupational trust-based schemes, if that is the case? We have about half of pension assets in local government pension schemes and personal pensions, so why would this not extend to those?
Finally, I wish to press the Minister on timing. We have heard about transition plans in this debate. Work on those has been under way for a long time, and we have heard about the extended timeline, which may extend even further—one never knows. We have heard about the TNFD and the time it takes to get momentum behind this. We have heard about the fact that we were debating these issues three years ago in the then Financial Services and Markets Bill. We had one of our round tables before the election was called and I think that the Government have had further round tables to try to corral their efforts to address this issue.
However, the point remains: there needs to be a legislative basis for this statutory guidance. That is my understanding. We now have a pensions Bill. Let us hope that we do not have another one. We hear the phrase, “We will bring forward proposals when parliamentary time allows”—well, this is that parliamentary time. I am sure that the Government have lots of other things they want to do with future Bills in future Sessions of Parliament. May I encourage the Minister to seize this time? If she does not agree with Amendment 218A, at least on the statutory guidance, bring forward the legislative basis so that the Government can get on with the thing they say they want to do.
Baroness Bennett of Manor Castle (GP)
My Lords, I will speak in favour of all the amendments in this group, particularly Amendment 212, to which I have attached my name. As has already been widely noted, it has broad, cross-party support. I would have attached my name to Amendment 218A had there been space and to Amendment 218E had I caught up with it; I will certainly talk to the noble Baroness, Lady Coffey, should she be thinking about bringing it back on Report, having at Second Reading praised the noble Baroness’s contributions in that direction.
Like that of the noble Baroness, Lady Hayman, my speech at Second Reading majored on the fiduciary duty issues, which this group very much gets to the heart of. I was very interested in the comments made by the noble Baroness, Lady Penn, on the TNFD. It is great to hear such broad political support for that; I hope that it is something we can take forward.
I will mostly focus on Amendment 212. Noble Lords might expect me, as the Green, to get up and talk about the climate emergency—that is standard—but what I am really getting up to talk about today is financial risk. I am talking about the carbon bubble, which is a very severe risk, among many other risks, that all pension savers face. There is a strong economic case for green pensions reform. UK pension schemes have been estimated to hold at least £88 billion in fossil fuel companies and £10 billion in thermal coal alone. Here, I will drop in statistics relating to the biodiversity point: UK pension schemes hold £300 billion in companies linked to deforestation, more than 85% of leading schemes have been found to lack credible climate action plans, and only 4% of pension assets are invested in climate solutions, the things that could be providing the long-term future.
One of the issues that this amendment brings forward is the fact that there is a lack of monitoring of this situation by both the Government and the Pensions Regulator. There were a number of Written Questions in the other place in September about the risks of stranded assets, contribution to fossil fuels expansion and investments in fossil fuels. The Government’s response was that they did not have any estimates on these matters. Subsequent Written Questions led to the understanding that the Pensions Regulator also has no estimates on these matters. There is already some data on this, which is being captured by independent organisations—but I am afraid that is really not good enough. The carbon bubble is something the Government really need to have a handle on.
As some other speakers have already said, we know that many of the largest pension schemes, including some of the biggest names, continue to be invested in thermal coal, as well as other very marginal fossil fuel extraction, which will swiftly become uneconomic as global demand tails off. That is already happening with thermal coal. The International Energy Agency’s Electricity 2026 report, out earlier this month, suggested that global demand for coal has already peaked. China and India, as well as Europe, all saw declines in 2025, yet these investments are still happening.
It is common for the idea to be floated that pension schemes should not exit these investments, despite holding them solely for short-term benefit and for the ruination of other holdings in pension savers’ portfolios, but should try to engage in the companies concerned. However, this has not had any discernible impact. After decades of so-called engagement, no coal mining firm has set strong decarbonisation targets, and it is very hard to see how they might actually do so.
Many oil and gas firms are nominally signed up to far away 2050 targets. I am sure we have all heard the phrase that having a 2050 target is the same as having no target at all. Barely any have anything like a fast enough transition to come anything close to being Paris-aligned. We saw with BP and Shell how quickly firms row back from hard-won targets when their CEOs change or a few shareholders start to grumble. What we are talking about here, I stress, is an approach to protect pension savers’ financial interests. When the UK Government’s policy is moving towards decarbonising the economy, UK pension policy should not be undermining that, particularly when it comes to thermal coal overseas.
Lord Pitt-Watson (Lab)
My Lords, in contributing here, I should say my background is in responsible investment, with Hermes Fund Managers. It still on occasion offers me an office, from time to time. Since this is about responsible investment, as you can imagine, I could not more strongly support the principles of what we are debating here if I tried. I also absolutely welcome the cross-party nature of this: my noble friend Lady Griffin speaks from a trade union representing beneficiaries of pension funds. However, I am just not sure that these three amendments get us where it is that we want to get to.
To start with the trustee issue raised by Amendment 218A, of course trustees should take into account systemic issues in their investment and stewardship, and they should do so in the interests of the economic, environmental and social interests of their beneficiaries. We make a mistake if we separate those interests because they go together. If we want evidence of the significance of that, we might look at research from Columbia University suggesting that 85% of the return you get from your pension fund will be systemic and only 15% will be from idiosyncratic things that your fund managers have done.
Lord Fuller (Con)
My Lords, in the opening remarks in this debate, somebody said that there was uncertainty in the fiduciary duty. I can tell noble Lords that there is no uncertainty in the fiduciary duty except from those trying to muddy the waters and sow confusion.
When it comes to investing money, investment managers are trying to juggle several different points. I think that the noble Lord, Lord Pitt-Watson, made that point very well—they are trying to manage long-term versus short-term risks; UK-EU versus US, the rest of the world and emerging markets; equities versus bonds; property versus private equity; and new technology versus established activities. It is hard enough to balance all those competing objectives with different timescales without then having to follow all this stuff. With regard to biodiversity, we cannot measure it as it is today, and if we cannot measure it how on earth are we going to issue the compliance notice contemplated in proposed new Section 41F?
What we have heard today is a lot of “the sky is going to fall in” whataboutery, which denies the simple truth that the people with the most expertise in decarbonisation are those most involved in energy production. They have the experience and capital, and the greatest incentive to change the way they do things. To prevent people investing in companies that are involved in energy production is denialism of the worst sort. I have been a member of the LGPS Scheme Advisory Board since its inception about 13 years ago; my term ends next month. I have seen it all: pressures for ethical investors, saying that you cannot invest in oil, arms or sugar, and you cannot invest in the supermarkets because they sell sugar.
Where does it end? There would be no data centres because they are built on a field that might have had some biodiversity or because they use energy. This overly simplistic approach leads to what the noble Lord, Lord Pitt-Watson, spoke about. It is not responsible investment but irresponsible investment. There is no confusion in my mind between fiduciary duty and risk management, yet these amendments seek to conflate those two totally separate issues into one thing. I will give an example. Through the work we have done in the Local Government Pension Scheme, a Mr Lynk lobbied very strongly on the grounds of fiduciary duty that the LGPS should disinvest from certain Middle East investments. That was wrong, and we fought it because we clarified what fiduciary duty was. I am glad that we did. We cannot afford to have those waters muddied once more.
I am a member of the Norfolk local government pension scheme—a scheme with £6 billion in assets under management and probably more than 120,000 members when you take into account actives, deferreds and pensioners. I often sit on the bus from my home in Brooke going into Norwich. If I go after 9.30 am, just about every single person on that bus is a pensioner. A great majority of those pensioners will be in receipt, simply through the demographics of Norfolk, of a Norfolk County Council pension or will be a beneficiary of one of the other admitted bodies or councils. The LGPS manages for millions of people. The pensions are not large. Those pensioners rely on that modest pension of between £3,000 and £5,000 on average. That is fiduciary duty—ensuring that their pensions are paid in full, on time, for the rest of their natural lives.
What I am seeing here today is virtue signalling. It is diverting away from the absolute need to have the beneficiary at heart. If there are risks through coal production, biodiversity or whatever, let them be taken into account in risk management. They are not fiduciary duty. It is either a wilful or an accidental misunderstanding to conflate risk management with fiduciary duty. When you are a pension trustee or an investment manager, you are working for the beneficiary. That process, that idea, is being lost by the amendments in this group. On that basis, I cannot support any of them.
Lord Thomas of Cwmgiedd (CB)
My Lords, I briefly rise in support of the aims of the amendment in the name of the noble Baroness, Lady Hayman. I urge that we get on—as the noble Baronesses, Lady Hayman and Lady Penn, have so eloquently said. Listening to the debate, I do not think that there is any dispute that trustees have a fiduciary duty. No one wants to change that, as I understand it. But the refinements and an understanding of that duty in the modern age are unclear.
In 2014 and 2017, the Law Commission tried to clarify these but did so in a way that ultimately did not help. In 2023, the Financial Markets Law Committee, which I chair—although I am speaking purely in a personal capacity—decided that we ought to look at this issue because it was of such fundamental importance to the operation of the financial markets and to make sure that people understood the implications of fiduciary duties as regards various factors that they could take into account. In a report that was produced two years and a few days ago, the Financial Markets Law Committee, which had assembled a group from right across the pensions industry and those interested, produced a report that was unanimous in the view that it was permissible, as an exercise of fiduciary duties, broadly to take into account sustainability and climate change risk. It has tried to set out in some detail the reasons why it reached that view and why it was important that this was understood.
Baroness Stedman-Scott (Con)
My Lords, I am grateful to all noble Lords who have contributed to this debate. I recognise that these amendments are brought forward in a spirit of good will and genuine concern, and I thank all noble Lords for that. I turn first to Amendment 212 in the name of the noble Lord, Lord Sharkey, and to the amendment tabled by my noble friend Lady Coffey.
It is important that we approach this discussion with clarity about the framework that already governs occupational pension schemes. From my understanding, there is already a substantial and detailed regulatory architecture in place. First, schemes are required to maintain a statement of investment principles since the reforms introduced in 2019 and 2020. That statement must explicitly address financially material considerations, including environmental, social and governance factors. It must set out how climate change is taken into account, describe stewardship policies, including voting and engagement, and explain how such risks are integrated into investment decision-making. This is no longer optional; it is embedded in the core governance documents of the scheme.
Secondly, larger schemes are required to publish an annual implementation statement. This must explain how the policies set out in the statement of investment principles have in fact been followed. In other words, schemes must not merely declare their approach to environmental, social and governance matters but demonstrate how that approach has been put into practice. This has moved the framework from being purely policy-based to being demonstrably action-based.
Thirdly, schemes with £1 billion or more in assets, together with authorised master trusts, must comply with climate risk reporting aligned with the Task Force on Climate-related Financial Disclosures framework. This includes governance of climate-related risks, strategy for transition, scenario analysis, metrics and targets, such as carbon intensity, and annual public reporting. These are not light-touch obligations; they are detailed, prescriptive and public-facing requirements. Taken together, this represents a significant body of regulation. It requires trustees to consider financially material risks, including climate-related risks. It requires them to disclose how those risks are managed and to report publicly on progress and metrics.
Against that background, we should be cautious before layering additional statutory requirements on top of what is already a comprehensive regime. Trustees have fiduciary duties to act in the best interests of members, they must take into account financially material considerations, they are accountable to the Pensions Regulator and they operate within a framework that has been progressively more demanding in recent years. Trustees should retain the ability to determine, within that framework, which investments are in the best interest of their members.
Our task in this House is to ensure there is clarity, coherence and proportionality in regulation, and that we identify genuine gaps, rather than duplicate existing obligations. My aim in engaging on these amendments is precisely that: to ensure that we debate this matter with a clear understanding of the substantial framework that already exists, and to probe carefully whether there are specific technical deficiencies that require further legislative interventions. This is an important area, but it is equally important that we legislate with precision and with full awareness of the structure that is already in place.
Baroness Sherlock (Lab)
My Lords, I am very grateful to the noble Baronesses, Lady Hayman and Lady Coffey, and the noble Lord, Lord Sharkey, for introducing their amendments, and all noble Lords for contributing to a very interesting discussion. I will start with Amendment 212 from the noble Lord, Lord Sharkey.
While I recognise the aim behind this amendment, the Government believe that decisions about whether to invest, divest or engage must rest with trustees, who are already legally required to invest in the best financial interests of their members and to consider climate-related risks as part of that duty.
Baroness Sherlock (Lab)
I cannot get two sentences in before I am interrupted.
Lord Sharkey (LD)
I am sorry, it will not happen again, but the Government are trying to do precisely what the Minister said they should not do: they are trying to mandate investments.
Baroness Sherlock (Lab)
My Lords, I am simply not going to relitigate that all over again. Okay, I will give it two minutes, since the noble Lord has raised it. If he is referring to asset allocation mandation, as I made very clear during our debates on that subject, the trustees’ fiduciary duty should guide them, were those provisions ever to come into operation. If the trustees believe that they were not in the interest of their members, we would expect their duties to guide them to make representations and seek an exemption under the savings interest exemption test. That, along with all the other safeguards around it, deals with that question. Now, let me try and focus on climate for today; I have no doubt we will have plenty of other opportunities to discuss mandation, and I look forward to those.
Under the existing regulatory framework—I think that the noble Baroness, Lady Stedman-Scott, put it very well—trustees of UK pension schemes must already set out their policies on financially material environmental, social and governance factors, including climate change, within their statement of investment principles. They then have to publish annual implementation statements showing how those policies have been applied in practice. Since the Pension Schemes Act 2021, the larger schemes also have to publish annual reports aligned with the Task Force on Climate-related Financial Disclosures framework, the TCFD. Those disclosure requirements ensure that trustees have the information they need to make informed investment or divestment decisions.
The Government are strengthening these reporting frameworks to equip businesses and investors with the tools, standards and clarity they need to plan credible transitions and seize the opportunities of a net-zero economy. For example, last year DESNZ advanced an important manifesto commitment and consulted on transition plan requirements for UK financial institutions. Alongside that, DBT consulted last year on new UK sustainability reporting standards. My own department, DWP, working with the Pensions Regulator, is currently reviewing trustees’ TCFD requirements to assess the impact of the current climate disclosure regime, including a comprehensive stakeholder survey exploring the impact of TCFD requirements on governance, strategy, scenario analysis, risk management, member outcomes, engagement, reporting costs and future reporting. To support that, the regulator will present its findings on the practicalities of introducing transition plans for pension schemes to us this spring. These future reporting reforms are intended to modernise disclosures and provide schemes with critical insights into companies’ decarbonisation plans, which is information trustees can then use to judge whether investment or divestment is the appropriate course of action.
We should acknowledge the scale of the voluntary action that is already under way. Around two-thirds of UK pension funds now have net-zero commitments, many of them ahead of 2050. Funds are backing these commitments for significant investment: the London Pensions Fund Authority has allocated £250 million to its environmental opportunities fund; Border to Coast is investing in new UK wind and solar projects; and Nest has committed almost £1.3 billion to renewable energy infrastructure.
There is no single correct approach to managing climate-related risk. Trustees can, and do, divest where appropriate—for example, the Church of England Pensions Board announced its divestment from Shell plc and other remaining oil and gas holdings in 2023, following more than a decade of engagement. However, we recognise that some pension funds could, and should, be doing more. We will continue to support and challenge the sector in rising to that task. The right levers are better governance, better data and better transparency, not hard-wired requirements to decarbonise that remove trustee judgements and risk unintended harm to savers’ long-term outcomes.
Amendment 212 would prohibit schemes holding certain fossil fuel-related investments, even where companies have credible decarbonisation plans. The Government believe that such rigid prohibitions risk rushed divestment and would undermine trustees’ ability to exercise informed judgement. For those reasons, the Government cannot support this amendment.
Baroness Bennett of Manor Castle (GP)
It is very easy to cherry-pick individual schemes that have taken action but, as I said in my initial comments, the Financial Innovation Lab says that there are still more than £10 billion in thermal coal investments. Some industry research due to be published shortly by Corporate Adviser Intelligence shows that seven of the largest 19 schemes used for automatic enrolment, including Aviva, Royal London and Scottish Widows, remain invested, via their default fund, in one or more of thermal coal, tar sands and Arctic drilling. Another, SEI, reported that it has excluded these sectors but, last summer, it still had holdings in Glencore, which mines around 100 million tonnes of coal a year.
So, although there are these nice examples, such as those just provided by the Minister, surely the Government must look at this as an overall whole and see not just some good case studies but the norm and the rule right across the industry.
Baroness Sherlock (Lab)
It is probably worth me being really clear on the Government’s position. We recognise the high financial and climate risks associated with thermal coal investment. We support strong climate risk governance and expect trustees to integrate climate considerations into decision-making. We welcome industry-led reductions in coal exposure, as well as broader alignment with net-zero goals where we see them. However, we want to see more. As I have just said, we want specifically to challenge schemes to do more; I was offering examples of where things are going. Exposure is expected to decline over time, driven by market forces, global moves towards cleaner energy and evolving investment practices, but we still think that it is essential that trustees and managers retain the flexibility to make responsible long-term investment decisions in the best financial interests of their members.
I turn to Amendment 218A from the noble Baroness, Lady Hayman. I thank her for taking the time to come and discuss these issues with me; it was a very helpful meeting. The question of whether pension trustees may take long-term factors into account in their investment decisions is manifestly not a new one. I will not rehearse the full history, but we should acknowledge the considerable body of work that already exists in this space; in case I did not want to do so myself, the noble and learned Lord, Lord Thomas, helpfully reminded us of some of that. We had major contributions from the Law Commission in both 2014 and 2017. More recently, in 2024, as the noble and learned Lord said, the Financial Markets Law Committee produced its comprehensive report. Alongside these, there have been several respected legal opinions, including Eversheds’ work on behalf of NatWest Cushon and that of Sackers for ShareAction, which relates directly to this amendment.
Across all these analyses, one central principle emerges with complete consistency: a trustee’s primary duty is, and must remain, to invest in the best interests of scheme members. However, what is equally clear is that a degree of uncertainty persists, although I take the noble and learned Lord’s point on whether or not it should. Trustees can, and do, reach different interpretations of how their duties apply when considering factors that extend beyond immediate financial returns, such as climate risk, demographic pressures and impacts on members’ future living standards. Although these matters are often long term in nature, they can be financially material and are plainly relevant to both savers and the wider economy. We recognise the need to give trustees greater confidence in this area.
However, the Government do not agree that creating a new statutory duty in primary legislation is the right or necessary approach. The current legal framework already allows trustees to consider ESG factors, systemic risks and long-term impacts where they are financially material. That position has been consistently affirmed.
Baroness Coffey (Con)
I have been listening carefully to the Minister. She will be aware that this is a replication of what happened in a previous Bill. The two issues that she raises are not identical, although there may be some interlinking in certain ways. I am slightly concerned at the suggestion earlier that more primary legislation is not needed.
Baroness Sherlock (Lab)
Let me explain. We are concerned that replicating the climate provisions of Sections 41A to 41C of the biodiversity Act 1995 on a separate statutory track risks creating overlapping or potentially inconsistent strategies, metrics, scenarios and governance. Trustees could find themselves operating parallel regimes that could cut across one another, generating unnecessary process burden without necessarily improving outcomes for savers.
Crucially, there is also a sequencing issue. Although the evidence base on nature-related financial risk is advancing rapidly, nature data remain less mature than climate data, and the international baseline is still being established. Last November, the ISSB announced the beginning of nature-related standard setting, with the intention that these will become the global baseline. More than 30 jurisdictions worldwide have already adopted, or are preparing to adopt, these sustainability standards. Introducing a UK-specific statutory duty ahead of those developments would risk locking schemes into a domestic framework that could quickly be superseded internationally.
As I noted in our earlier discussion on Amendment 212, the Government are progressing their commitment to credible transition plans, beginning with companies. We believe that it would be premature to legislate for a separate, pension-specific biodiversity regime in advance of those cross-economy frameworks and the ISSB’s nature baseline. Our approach is to sequence reforms so that pension disclosures plug into a consistent, interoperable flow of corporate information, rather than obliging trustees to build bespoke and potentially temporary architecture. As part of our forthcoming statutory guidance on trustee investment duties, we will consider including concrete, good-practice examples of how schemes can identify, assess and manage biodiversity and broader nature-related risks, including supply chain deforestation, nature dependency mapping, data sources and stewardship escalation, as well as how to treat nature-related impacts where they are financially material.
The Government’s role is to enable and accelerate this momentum with coherent, internationally aligned frameworks; it is not to create parallel statutory silos. For these reasons, although we fully share in the intent behind Amendment 218E—I acknowledge the work done by the noble Baroness, Lady Coffey—we do not believe that this approach is correct. This has been a very good debate but I hope that, in the light of my remarks, noble Lords will feel able to withdraw or not press their amendments.
Lord Sharkey (LD)
The fact is that some, though not all, pension funds are invested in climate-changing activities. We need to do something about that, and we need to do it soon.
The other point I ought to pick up is, again, to do with statutory guidance. I have frequently asked when we will see the guidance, but the only thing I know for certain is that it will not be before this Bill becomes law. Parliament seems to be being bypassed in all this—and in all the secondary legislation that will be necessary to make this mean anything at all. It is reasonable for guidance to explain how pension schemes should go about considering certain matters, but it is not reasonable for what those matters are to go unscrutinised by Parliament and to be changeable at the whim of a Minister. Parliament will be unable to hold the Government to account. Why is it that, in the face of such concerns about guidance and fiduciary duty, as well as the obvious inherent dangers to the proper exercise of fiduciary duty, the Government choose to exclude Parliament?
I beg leave to withdraw my amendment.
“Independent review into injustices in occupational pension schemes(1) The Secretary of State must, within three months of the day on which this Act is passed, commission an independent review into injustices experienced by members of occupational pension schemes as a result of the actions or omissions of employers, scheme sponsors, or scheme administrators.(2) The review must examine, in particular—(a) cases where employers or scheme sponsors failed to adequately support, inform, or protect members in relation to their pension rights or entitlements;(b) the adequacy, accuracy, and timeliness of information provided to scheme members, including information relating to—(i) scheme changes,(ii) benefit reductions or losses,(iii) transfers, mergers, or scheme restructurings, and(iv) risks to accrued pension benefits;(c) the extent to which regulatory oversight, governance arrangements, or fiduciary duties failed to prevent detriment to members;(d) the impact of such failures on affected members, including financial loss, inequality, and hardship in retirement;(e) whether particular groups of members were disproportionately affected, including—(i) lower-paid workers,(ii) women,(iii) disabled people, and(iv) those with non-standard or interrupted working patterns;(f) the effectiveness of existing routes to redress, including complaints procedures, the Pensions Ombudsman, and the courts;(g) potential options for remedy or redress, including—(i) changes to legislation or regulation,(ii) improvements to governance or communication standards, and(iii) mechanisms for compensation or restoration of benefits, together with an assessment of the likely financial implications.(3) The review must be conducted by an independent person or panel appointed by the Secretary of State with relevant expertise in—(a) pensions law and administration,(b) public policy and regulation, and(c) administrative justice and consumer protection. (4) In conducting the review, the person or panel must—(a) consult with affected scheme members and pensioner groups;(b) invite and consider written and oral evidence from stakeholders, including—(i) trade unions,(ii) employer and industry bodies,(iii) pensions experts, and(iv) relevant regulatory and advisory bodies;(c) have regard to relevant findings of Parliamentary committees and public bodies.(5) The person or panel appointed under subsection (3) must submit a report of its findings and recommendations to the Secretary of State within 12 months of the date on which the review is commissioned.(6) The Secretary of State must—(a) lay the report before both Houses of Parliament as soon as reasonably practicable after receiving it;(b) within six months of laying the report, publish a statement setting out the Government’s response to the review and any actions it proposes to take.”Member’s explanatory statement
This new clause would require the Secretary of State to commission an independent review into injustices experienced by members of occupational pension schemes where employers or scheme sponsors have failed to properly support, inform, or protect members, and to consider options for reform or redress.
Lord Palmer of Childs Hill (LD)
My Lords, this group concerns defined benefits, fairness and redress. Amendment 216 in my name asks for independent reviews into serious, alleged injustices affecting scheme members. It is broad and seeks an independent review into injustices in occupational pension schemes caused by actions or omissions of employers, sponsors or administrators, including failures of communication, governance and redress mechanisms. A number of campaigners and victims of injustices have reached out to share their stories; we hope that the Government will take this amendment forward in order to send a clear message to those campaigners that the Government will listen to them and rectify any wrongs that exist.
I turn to Amendment 218 in my name. I have had lots of information from the noble Baroness, Lady Altmann, who cannot be with us today; I will try to incorporate that into what I say, so noble Lords will get two speeches for one here. In our earlier debate in Committee on the amendment designed to assist members of the AEAT pension scheme’s closed section, who were advised to transfer all of their accrued pre-1997 pension rights into a new private sector pension scheme on the privatisation of part of the UK Atomic Energy Authority, the Minister stated in her response—she will remember this—that the case around AEAT pensions “has been fully considered”. She specified that there had been
“reviews by three relevant ombudsmen, debates in the Commons in 2015 and 2016 and a report by the NAO in 2023. This matter has also been considered by previous Governments in the period since AEAT went into the PPF, all of whom reached the same conclusion”.—[Official Report, 5/2/26; col. GC 668.]
It is clear that the Minister and the Committee were being told that thorough investigations had found that there was no case for remedying the loss of promised government protection of these pension rights. That is just not correct, I am afraid. It is important to set the record straight today; I hope to do so, guided by the noble Baroness, Lady Altmann, who has given me some notes on this as well.
There has been no ombudsman investigation of the core issue, which is the closed-section AEAT pensioners, now mainly in their 70s to 90s, who were misled on privatisation in 1996 by a GAD document to transfer the historic Treasury-backed—that is the point; they were Treasury-backed—public sector UKAEA benefits into the new privatised-company AEAT scheme. They were not informed that the new scheme did not have the same security, despite reassurances in both Houses of Parliament that their pensions were safe.
Viscount Thurso (LD)
My Lords, I rise to support my noble friend, particularly in respect of Amendment 218, to which I have added my name. I do so because I have something of an interest: for most of its existence and until quite recently, the superannuation fund of the United Kingdom Atomic Energy Authority was based in Thurso. A number of my former constituents were beneficiaries of that fund and a small number of them ended up becoming beneficiaries of the AEAT plc fund, when that came into existence. It has always struck me that something remarkably close to mis-selling went on at the beginning and that we really have a moral duty to try to correct it.
I, too, looked at the comments that the Minister made in her speech on 5 February. As my noble friend pointed out, she said that the case around AEAT pensions had “been fully considered”. What sprang to my mind when I read those words was the scene in “Independence Day”, when the President is telling everybody that there is no such thing as Area 51 and Defense Secretary Nimziki says that that is not, strictly speaking, true.
Looking at the Minister’s comments that came afterwards that there were three ombudsmen involved, as my noble friend said, the ombudsmen were all asked and all declined, because of vires, to give an answer. Looking at the parliamentary scrutiny, that was two Westminster Hall debates, one by Sir Geoffrey Clifton-Brown and one by Sir Oliver Letwin, I think. As anybody who has done a Westminster Hall debate knows, that is not proper parliamentary scrutiny. Of much more importance were the NAO and PAC reports, which came to the conclusion that there was a case to answer. Indeed, the last Pensions Minister in the previous Government, Paul Maynard, accepted that something should be done and suggested that something would be done, but the election has intervened.
The core issue is that the Government Actuary’s Department, in its publications, gave the distinct impression that the quality of the pension for those who transferred would have an equivalent security to the quality of the pension that had the Crown guarantee with UKAEA. That is clearly not the case, which is the core issue around all this.
As an aside, and in parenthesis, there have been occasions when a Crown guarantee has in these circumstances been transferred across. I was in fact responsible for one when I was chairing VisitScotland and we took the Scottish staff out of the BTA scheme and obtained a Crown guarantee to let that happen, so it is perfectly possible.
This amendment gives an elegant redress that the Government can use to look at, as my noble friend says, a very small number of remaining pensioners suffering under this. I commend it to the Government. In summary, this seems to me to be something that, were it in the private sector and sold by a bank on the high street, would be called PPI, frankly. That is the level of it, in my humble judgment. Therefore, first, there is a duty to do something about a clear mis-selling. Secondly, it has not been properly scrutinised up until the NAO and PAC reports. Consequent on those reports, a previous Government Minister indicated that they would look at doing something about it. For all those reasons, we should now take this opportunity to right a manifest wrong.
Lord Davies of Brixton (Lab)
These two amendments are grouped together. There are clear common themes between them, the most obvious one being dissatisfied scheme members: dissatisfied pensioners concerned that they have ended up worse off than they might reasonably have expected. I thank the noble Lord, Lord Palmer of Childs Hill, for his excellent description of both problems, and in broad terms I support the spirit behind these amendments. Of course, both of them call for a review, but in truth we do not really need a review; we know that wrong was done here and we are really asking for the Government to accept some responsibility for providing an element of redress.
Amendment 216 is actually about a thing called integration in pension schemes. This was a technique used widely in the 1970s, 1980s and 1990s, where the occupational pension had a target taking account of the state pension, integrating the state pension into the benefit model. Where the retirement age of the scheme was, for example, 60—we had schemes with a retirement age of 60 in those days—it was integrated by paying more money between 60 and 65. We are talking about a man here. That was when the state pension would come into payment. At that point, the scheme pension would be reduced to allow for the fact that they are now getting this pension from the state.
That is an issue of scheme design, and my view is that the rules of the scheme should be set through collective bargaining. The problem is that that sort of arrangement is much more obvious to someone like me with a lot of experience. I sometimes would claim that my superpower is understanding scheme rules. It is absolutely clear to me, but I can well understand that an ordinary member of the scheme would not immediately have that understanding. Of course, it is quite possible that they see their pension being cut when they get to state pension age. In some schemes, it is actually cut before they get to state pension age now, because the rules still refer to a reduction at 65 and the state pension is not payable until 66, so there are big problems.
Of course, it is possible to look at it the other way around: the member is actually getting a bigger pension after state pension age, and that is to their advantage. This goes to the central point, which is a lack of understanding among scheme members. Were they misled into giving more credit to the scheme? Clearly, for the particular campaigning groups we have heard from—under Amendment 216, there are a number of different groups—their case rests on the argument that the way the rules worked was not adequately explained to them, and they need compensation for how they were misled.
Baroness Stedman-Scott (Con)
My Lords, I begin by thanking the noble Lord, Lord Palmer, for bringing forward these two amendments. I hope noble Lords will forgive me if I am relatively brief. At this stage, I am not sure that there is a great deal to add beyond listening carefully to the Minister’s reply and reflecting on it.
Turning to Amendment 216, the intention behind the proposed new clause is plainly serious and honourable. It goes to the heart of many of the issues that the noble Lord explored in speaking to the more specific provisions in Amendment 218. It seeks to ensure that, where members of occupational pension schemes have suffered detriment as a result of the actions or omissions of employers, sponsors or administrators, those injustices are properly examined. That instinct is entirely understandable.
When failures occur, whether through poor governance, inadequate communication or regulatory weakness, the consequences can be profound. Members may discover losses only years later, often at or near retirement, when there is little opportunity to recover. For some, that can mean genuine hardship. It is therefore right that this House remains vigilant and does not dismiss concerns about injustice lightly. The proposed new clause is also right to emphasise information failures, governance weakness and access to redress. Transparency, fiduciary duty and effective routes to remedy are fundamental to maintaining trust in the pension system.
However, while the intention is sound, we must consider carefully whether this is the right practical solution. First, there are already several mechanisms in place to investigate and adjust injustice. The Pensions Regulator exercises oversight and enforcement powers, the Pension Ombudsman provides an independent route for complaints and can issue binding determinations and parliamentary committees have repeatedly examined systemic issues in pension governance. Before establishing a further independent review, we should ask whether there is a clearly defined gap in the existing framework.
Secondly, the proposed new clause is framed in very broad terms. It calls for a
“review into injustices experienced by members … as a result of the actions or omissions”
across the occupational pension landscape. That could encompass decades of case history, multiple regulatory regimes and a wide variety of scheme structures. There is a risk that the scope becomes so expansive that it proves difficult to deliver focused and actionable conclusions within the proposed timescale.
We must also be mindful of expectations. A statutory independent review, particularly one examining injustice and potential options for compensation, may raise hopes of large-scale financial redress. If the eventual conclusions are more limited, or if remedies carry significant financial implications, it may lead to further disappointment among those affected.
If there are clearly identifiable categories of members who have fallen through gaps in the system, or areas where regulatory architecture has demonstrably failed, those issues should indeed be examined with care and precision. In short, the intention behind the proposed new clause is principled and compassionate. It recognises that pensions are about security and dignity in later life, and that injustice in this sphere can have lasting consequences. The question for us is whether a broad, independent review, commissioned within three months and covering the full occupational landscape, is the most effective and proportionate way to achieve that objective. I look forward to the Minister’s reply.
Viscount Thurso (LD)
The noble Baroness has answered the broad point in my noble friend’s first amendment, but there is the narrow point in AEA Technology, which seems to meet exactly what she said: namely, that there is a specific gap that members have fallen through, where Ministers in this place and the other place are both giving cast-iron assurances and documentation and still there is a problem. Does she accept that this needs particular attention?
Baroness Stedman-Scott (Con)
I made it very clear we have to look at where things have fallen through a system and where people have been severely impacted, and we have to look at it compassionately. My question was whether this is the right method and vehicle to do this, not whether we should look at it.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Lord, Lord Palmer, for introducing his Amendments 216 and 218. Amendment 216 would require the Secretary of State to establish an independent review into injustices experienced by members of occupational pension schemes due to the actions or omissions of employers, scheme sponsors or scheme administrators. Amendment 218 would require the Secretary of State to establish an independent review into pension losses former employees incurred when AEAT went into administration and their scheme entered the PPF.
Speaking to both amendments, the Government recognise the importance of pensions security in retirement, and member protections for those saving into pension schemes. We understand the hardship it can cause when people do not receive what they expect to receive in retirement. We also recognise the importance of strong member protections to ensure trust and confidence in our pensions system.
Amendment 216 refers to injustices, but it does not define these, so the remit for such a review is potentially very wide and would be difficult to achieve. The Minister for Pensions has met with a number of representatives from schemes to ensure that their issues are heard. This Government have listened and are taking action. For mineworkers, the Chancellor announced in the 2025 Budget that the investment reserve fund of the British Coal Staff Superannuation Scheme will be transferred to its members.
As covered in an earlier debate, the Government are also introducing increases in compensation payments from the PPF and the FAS that relate to pensions built up before 6 April 1997. This has been a concern for members of several schemes, including AEAT. I recognise the difficult position members have found themselves in and am pleased to say that members whose former schemes provided for these increases will benefit from these changes.
We also recognise the importance of members having a route to raise concerns or complaints with their scheme when things go wrong. Where a member has a concern about a scheme that cannot be resolved through the internal dispute resolution process, they can go to the Pensions Ombudsman. Where its remit allows, the Pensions Ombudsman provides an independent, impartial service to resolve pension complaints and disputes, offering a route to settle issues fairly and ensure that members’ rights are upheld.
The Pensions Regulator was set up to ensure that pension schemes and employers fulfil their duties to occupational pension scheme members. It makes sure that employers enrol their staff into a pension scheme and pay contributions into that scheme. It also makes sure that workplace pension schemes are run properly, so that people can save safely for their later years.
Central government and regulators are working actively with industry representatives to identify scam activity and put appropriate safeguards in place to prevent scams. To avoid members becoming victims of scams, pension schemes must carry out due diligence on transfers. All sides of the House agreed the introduction of the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, introduced in November 2021. Those regulations limit a member’s statutory right to transfer if concerns are identified. In certain circumstances, the transfer will be paused, while in others, the transfer will not be able to proceed.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for her customary comprehensive reply, but I do think the Government have to think outside the box. The idea that “It’s not me, guv” is not really good enough. Yes, it is long and complex, but an elegant redress could be affordable, and virtually cost-neutral, for the Government. Precedence exists and a solution to right what I still think is a wrong must be explored by the Government.
Let us not forget that those employees were promised protection by the Government and, despite assurances, I do not think they have got it. Instead, they have found that government protection was worse than no protection at all. I had hoped that the Government today could provide sufficient assurances to the victims of what I see as an injustice, and specifically answer whether they are planning to right the wrongs outlined in the NAO and PAC reports. I have not received those assurances.
I hope, trying to further this in a positive manner, that the Minister might meet with me and representatives of AEAT, who are more on the ball than I am on this subject, to discuss the issue. I see this as quite probably coming back on Report. It is not going to die here today. On that basis, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“Review of public service pension schemes(1) The Secretary of State must, within 12 months of the day on which this Act is passed, conduct and publish a review of the long-term affordability, intergenerational fairness, fiscal sustainability, and accounting treatment of public service pension schemes.(2) In conducting the review under subsection (1), the Secretary of State must have regard to—(a) the current and projected cost to the Exchequer of such schemes,(b) their affordability in the context of long-term public finances,(c) the impact of such schemes on different generations of taxpayers and scheme members,(d) the implications of demographic change, including longevity and workforce participation, for the sustainability of such schemes, and(e) the manner in which the liabilities associated with such schemes are recorded, disclosed, and accounted for within the public sector balance sheet and related fiscal reporting frameworks.(3) In preparing the review, the Secretary of State must consult—(a) the Office for Budget Responsibility,(b) the National Audit Office,(c) His Majesty’s Treasury, and(d) such other persons or bodies as the Secretary of State considers appropriate.(4) The schemes to which subsection (1) applies are—(a) the NHS Pension Scheme,(b) the Teachers’ Pension Scheme, (c) the Civil Service Pension Scheme,(d) the Armed Forces Pension Scheme,(e) the Police Pension Scheme,(f) the Firefighters’ Pension Scheme, and(g) any other public service pension scheme designated by the Treasury by regulations as operating on an unfunded or pay-as-you-go basis.(5) The review must be laid before both Houses of Parliament.(6) Nothing in this section affects any pension entitlement accrued in respect of service.”Member’s explanatory statement
This new clause would require the Secretary of State to conduct and publish a review of the long-term affordability, intergenerational fairness, fiscal sustainability, and accounting treatment of public service pension schemes.
Baroness Neville-Rolfe (Con)
My Lords, Amendment 217 would require the Secretary of State to conduct and publish a review of public sector pensions. I am very grateful to my noble friend Lady Noakes for her support and am only sorry that she has other commitments this evening.
I have always worried about the cost and sustainability of such pensions. I am a beneficiary of a modest one myself from my years in the Civil Service, and it is generously uprated every year.
Interestingly, there is a lacuna in the work the Government are undertaking on pensions. We have the Pension Schemes Bill, which we are busy scrutinising and which addresses problems with local government pensions and value for money in private schemes; we have the Pensions Commission review, led by this House’s eminent pensions expert, the noble Baroness, Lady Drake; and we have another independent review of the state pension age in progress. I expect that that review, like the one I conducted some years ago, will recommend an increase in the pension age in due course, and ways to encourage people to stay in employment for longer—for many good reasons.
However, there is a glaring gap. As far as I can see, none of these initiatives will address the sustainability of unfunded public sector pensions, their accounting treatment, or how best to tackle the issue of intergenerational unfairness that is an almost inevitable result of the fiscal unsustainability of these schemes. They include pension provision for some of the most important public services: the NHS pension scheme, the teachers’ pension scheme, the Civil Service pension scheme, the Armed Forces’ pension scheme, the police pension scheme and the firefighters’ pension scheme.
The numbers are big. There are over 3 million active members in the NHS, teachers’, Civil Service and Armed Forces schemes, 2.2 million deferred members and 2.8 million pensioners. That is a total of 8 million individuals. As populations grow older, the proportion receiving gold-plated defined benefit pensions will grow if nothing is done.
This is a virtually forgotten area of inquiry, perhaps because all of the policymakers and public sector trade unions are beneficiaries. However, since I tabled my amendment, there has been a useful report on the subject by Policy Exchange. I have also discussed the problem with the Centre for Policy Studies and with the economist Neil Record. I am glad that my noble friend Lord Moynihan of Chelsea is speaking today, as he has addressed this subject in his book, Return to Growth. As we will no doubt hear, he is very passionate about the unfairness that this represents.
Most people are aware that Britain has a huge national debt, which already sits at £2.9 trillion—97% of GDP—and is growing. However, as Neil Record has argued, there is a second national debt, the public sector pension debt, reflecting the cost of public sector workers’ defined benefit pensions. This is kept out of the limelight but, on government figures, the past five years’ average public sector pension liability as a percentage of GDP is 74%. That is on a scale that approaches the order of magnitude of the actual national debt. At the heart of the problem is the fact that this is a very long-term issue, like the actual national debt, with reform virtually impossible to reconcile with the electoral cycle.
I need to explain some of the complexities. On the surface, things look fine. In 2025-26, according to PESA 2025, there was a total of £58.6 billion-worth of public sector pensions being paid to about 3.5 million pensioners—that is a CPS estimate. This compares to a total of employer and employee contributions of £57.3 billion, which has dramatically risen in recent years. So, apparently, all is well.
But I am afraid that is not the case. The sums paid in pension contributions by employees do not go towards their pensions but to pay the pensions of those already retired. There are no savings to pay future retirees. I know that the figures in the OBR’s Fiscal Risks and Sustainability report of July 2025 are lower than Mr Record’s, but it is partly a question of how you do the calculations. Estimates on longevity and long-term public sector salaries are particularly difficult to predict.
My main point today is that, on any credible estimate, the numbers are frighteningly large. Something must be done. Moreover, the situation is getting worse, as commitments grow over time. It is unfortunate and regrettable that the scale of the problem is not properly reflected in the national accounts, although this is very difficult to unravel, even for those who are reasonably financially literate.
It is hidden by a combination of the accounting conventions and the moves in interest and gilt rates, which have made things look temporarily much healthier than they are. One of the most important variables in pensions is the interest rate applied to notionally invested contributions. Higher interest rates result, according to standard accounting conventions, in lower pension costs, and, of course, vice versa. However, when the facts are unravelled, even if no new pension commitments are made from this point—that is, if all the current schemes were closed to new accruals—existing public sector pension payments will continue to rise until the early 2060s, which, on best estimates, will by then amount to some £130 billion a year, with no capping mechanism of any sort.
You will struggle to find any acknowledgement of this in our national accounts. The Government use a long-standing convention called SCAPE—superannuation contributions adjusted for past experience. I will not go into the detail, but it is uniquely vulnerable to manipulation and, according to informed opinion, has been manipulated with the use of artificial rather than market-based interest rates.
I have also discovered an allegation that there has been a surprising adjustment in the NHS arrangements—the largest of the public sector pension schemes. So, when employer contribution rates were raised, as they certainly needed to be, from 14.3% to 20.6%, the then Government decided to finance the gap of 6.3%—allegedly temporarily—by paying that amount directly from the Treasury rather than charging the NHS employing organisations. In 2024-25, the gap rose to 9.4%, or £6.6 billion per annum, which the Government have now decided to fund permanently. Although there is no overall impact on the public finances, this sets a poor precedent of obscurity in an already obscure system. So, can the Minister kindly let us know the justification for this decision to fund this gap permanently?
Lord Moynihan of Chelsea (Con)
My Lords, defined benefit schemes have been described as an immoral bet upon an uncertain future. Long service in the public sector can mean getting, as my noble friend stated, a pension of two-thirds of lifetime salary. That is inflation adjusted, and for as long as ye shall live. Some noble Lords in this Room will be beneficiaries of these or similar schemes, and I therefore hope that my remarks will not be received ungenerously and will not be taken amiss, because we cannot afford these schemes. The cost of them will inevitably, and soon, spiral out of control.
As long ago as 2010, the very reasonable and thoughtful noble Lord, Lord Hutton, was brought in to address this major problem. His inquiry had nine advisers; seven of them, I think, were in receipt of these public sector schemes. There was no representative of the taxpayer who pays for these schemes. The expert Neil Record was asked to be an adviser but was then disinvited. I put in two 20-plus page submissions to the Hutton commission but received zero acknowledgement. The outcome of the exercise was a few valuable tweaks but, allegedly by pre-agreement, no change in the overall money expected to be paid out.
The Hutton review’s conclusion that these schemes were a good thing was not entirely surprising. The report admitted that these schemes were costing us 1.9% of GDP but asserted that the cost would settle at 1.2%. Did it? It did not. In 2024, current costs were still 1.9% of GDP, but the OBR now says they will decline to 1.4%. Again, will it? It will not. Anyway, even 1.9% of GDP is outrageous. This is an extra pension for life, enjoyed by a privileged 20% of the population that they have awarded to themselves, and that the remaining 80% of the population who actually pay the taxes that fund this 1.9% of GDP scheme do not and will not get.
One Hutton report conclusion is that the Government must honour these promises in full, yet countries around the world have already reneged on public sector pension obligations. It is important to understand why they are having to do this and why we might have to. In the UK, current outgoings from these schemes are, as my noble friend said, £57 billion a year. Where does that money come from? There is no pot of funds accumulated to pay it. It comes from the money being paid in from currently employed public servants, assertedly to fund their future benefits. Just now, entirely coincidentally, the money paid in is also more or less £57 billion. That is right; there are two entirely separate £57 billion amounts—money paid in by one group and paid immediately out to another.
Let public servants currently employed beware that the money they are paying in, that most of them believe is to fund their future pensions, instead goes straight out to others. It does not have to fund a penny of their future pension. It is a Ponzi scheme just like Bernie Madoff, no different. While the flows currently appear to be in balance, that is just a momentary coincidence. Soon, as more public servants retire, outgoings will start getting increasingly larger than incomings. The £57 billion paid in each year will stay much the same or even decline if the number of public servants employed declines.
By 2060, as my noble friend Lady Neville-Rolfe said, the amount paid out will have risen to over £130 billion a year, which is a £37 billion gap. The £130 billion paid out in 2060 would be as low as that only if we were to stop all these schemes right now. If we do not, future money paid out will rise exponentially with the gap widening even further. That is what happens with a Ponzi scheme: it becomes unsustainable eventually. The present value of commitments to date is somewhere between £1.5 trillion and £2 trillion—not much smaller than our entire GDP. If we keep the schemes going, who knows what that number will rise to over time? It could be £4 trillion or more, a colossal sum.
What happens when people start to live even longer? When these schemes were set up, the average retiree lived just three or four years beyond retirement. Now people live to over 80—15, 20 or more years beyond retirement. That is why these schemes are now entirely unaffordable. When we start to live even longer than we do now, as we will, the cost will become astronomical. But the commitments to keep paying as long as ye shall live are being made right now, at a time when we have no idea what medical advances will be made and nor, therefore, what we will end up having to pay. That is what makes these schemes so reckless: a risky, unknowable future with undercooked analysis that passes an enormous, concealed cost to future taxpayers.
What would a moral, future-proof scheme look like? Much like what I proposed to the Hutton commission all those years ago in 2010. First, we must all be in it together, with no one law for the public sector elite and another for the rest. Secondly, therefore, the only defined benefit scheme should be for state pensions. Thirdly, accordingly, all public sector schemes should be moved instanter to defined contribution. Fourthly, all obligations—funded and unfunded—should be owned up to, not hidden as now, and published as part of the reported national debt. Fifthly, steps should be taken to fully fund existing commitments and not take them out of other pensioners’ contributions. If things get worse, perhaps let us say there should be a 75% tax rate on all public sector pensions above £30,000 a year.
Most private sector companies closed their defined benefit schemes in the 1990s and 2000s. Had they not, their companies would have gone bankrupt. The public sector has long been in precisely the same situation. As I say, a possible impediment to change is that almost all MPs, and indeed some Members of this House, are beneficiaries of similar schemes. Just one MP, Jacob Rees-Mogg, always turned the benefit down, as a matter of principle. We need both our elected and unelected legislators to show that same magnanimity of spirit in rectifying this situation.
Lord Davies of Brixton (Lab)
I am glad that we are having this debate now, but only as a taster for a proper debate at a proper time—I am quite surprised that the clerks accepted this amendment as being within the scope of the Bill. I have no objection to a debate on public service pensions; I encourage one. I feel totally comfortable with having a debate on public service pensions, because I think they are eminently defendable. I accept very little of what the noble Lord has said, and the doom and the gloom that has been expressed, and a proper opportunity to have that debate would be very welcome, but I shall focus on the need for a review.
Of course, as we have been told, my noble friend Lord Hutton of Furness undertook an independent review of public service pensions in 2010-11. That review was established by the coalition Government; they set it up, they accepted its recommendations and they gave a guarantee. In a Written Statement on 20 December 2011 about Civil Service pension arrangements, the noble Lord, Lord Maude of Horsham, who was then an MP and Minister for the Cabinet Office, gave
“a guarantee, outside of the scheme designs parameters”—
that is what the benefits were—
“of no further reform for the next 25 years”
I do not know what people think a guarantee means, but to me it means no more changes for 25 years. Of course, the Statement was repeated in your Lordships’ House and the noble Lord, Lord Wallace of Saltaire, repeating the Statement, also gave a guarantee for the next 25 years. I mentioned to both noble Lords that I would be quoting their words in this debate, and it would be worth asking them what they think the word “guarantee” means. A guarantee was given to public service workers as part of their terms and conditions of employment. It was not just a policy objective; it was part of their terms and conditions of employment. I think that to make changes without breaking the guarantee would be an extremely bad approach to the settlement.
I agree with very little of what was said criticising public service pensions, but I think there is a need specifically to understand the arrangements. First, retirement age will increase in line with state pension age. That is an adjustment mechanism. The more important adjustment mechanism is that there is a cap on employer costs, and it is members who stand the risk of having their benefits cut if the cost escalates. None of that was reflected in the remarks made so far. That cap, as has been explained, is calculated using a discount rate, and that discount rate is determined in a way that adjusts for economic changes. As mentioned, a higher discount rate reduces the cost of future benefits. At the same time, a lower discount rate increases the cost of benefits. If the cost of benefits increases, as part of the settlement that was reached, members’ benefits have to be cut or their contributions increased. That is the nature of the settlement that was reached in 2011. I think it is totally wrong to mislead the Committee about the nature of the deal that was done. Am I allowed to say “mislead”?
Lord Moynihan of Chelsea (Con)
I hope the noble Lord will withdraw that word. I do not recognise what he is saying. My noble friend was talking about the NHS. Was it NHS workers who were required to put in that extra money?
Lord Davies of Brixton (Lab)
It is interesting. I thank the noble Lord for his intervention. Okay, I withdraw the word “mislead” and I apologise for using it, but the full picture was not given to members of the Committee about the nature of the public service pension arrangements. Member contributions are adjusted and have been adjusted because of increasing costs. In fact, at the valuation before last, because of the way the economic indicators work, the cost actually fell, and the last Government had to push through urgent legislation in order to stop members’ benefits being increased. I will not use the word “fiddle”, but the terms were adjusted to protect the employer rather than giving additional benefits to members, so if anyone has a complaint about the way this system has worked, it is the members, even before we get to the problem of the 10-year guarantee that arose.
As I said, I would welcome the opportunity of a proper debate defending the way in which public service pensions are provided in accordance with the Hutton report as agreed by the coalition between the Conservatives and the Liberal Democrats. The one thing on which I agree with the noble Lord is that we need pension arrangements in which we are all together. I agree totally. Given that the underlying question is what sort of incomes we want people to have in retirement and whether we want them to be adequate, I think the objective should be to offer people in the private sector the opportunity to accrue pensions on the same terms as those provided to people in public service. I will be setting that all out in my submission to the Pensions Commission.
Viscount Thurso (LD)
My Lords, I was not going to take part in this short debate, but I am drawn into it by some of the comments that the noble Lord made. In respect of future funding, it is an absolutely valid point that we should have regard to the liability we are accruing, and we should work out how we want to fund it. That is open for debate, and I do not take issue with it in any way, shape or form. But the central point is that we employ public service workers on a contract which is in part what we pay them now and in part what they will get in the future. There is an obvious trade-off between the fact that they will be earning less during their working lifetime but probably for a better pension.
Indeed, I look to my sons, if I may. One is a police constable in Scotland. Before he became a police constable, he ran a hotel and got a degree in hotel management. He is now being paid about two-thirds of what he would have earned as a hotel manager, where he would have been funding his own pension on auto-enrolment. He is doing what he loves doing and has chosen it because he looks at what he will get in retirement as part of the package for the service he gives now. My other son is a primary school teacher in south London, who also has a degree in hospitality and ran a hotel. As somebody in the hospitality industry, I am doing my best to talk the industry down, but I do not mean to do that. The point I mean to make is that they both decided they had vocations and both have given up a considerable amount of current earnings to do something in public service that they like.
So, although I agree entirely that we should look at funding, I disagree that defined benefit schemes are inherently wrong. I am a trustee of the Parliamentary Contributory Pension Fund. MPs put in roughly 11%; the Treasury puts in 10%; it is fully funded and all the liabilities are covered. The noble Lord said—I wrote it down—that 20% of the privileged have awarded themselves a pension. I take issue with that. Tell it to the police constable being spat at in the aftermath of Covid on the streets of Aberdeen. Tell it to the primary school teacher who is there for 12 or 14 hours looking after a disabled child and getting them to where they ought to be. Tell it to a nurse who is working a second shift on A&E. If we want public service workers, we either pay them today and tomorrow with a good pension or we up the cost of the public sector by 30% today. It is one or the other.
Baroness Bowles of Berkhamsted (LD)
My Lords, I will say only a couple of things. The first is that this is asking for a review and transparency. It is necessary for us to know the liabilities that are stacked up; there is no getting away from that. My experience in this came in the financial crisis, when I was in Europe and chair of the Economic and Monetary Affairs Committee. We were doing battle with the IMF and the troika and all the cuts that were happening to pensions—for instance in Greece, where they halved all the defined benefit pensions. Over time, the courts have reinserted a lot of them, so they have come back again. That reflects the point about bargains and promises being made—although we have heard today about promises being made and then not happening for some of the erstwhile public sector that unfortunately went through a privatisation.
I see nothing wrong with a review and nothing wrong with the cost of these things being more public knowledge, and I am also for a considered look at whether they have to phase out in the future, whether we have to pay more for these jobs and whether we have to have something that is more together. Although different people might be on different sides of the argument, the fact is that if the crunch time comes—if we have to have the IMF in—I know where the finger will be pointing first, because “been there, done that”. So, let us have a review.
Baroness Stedman-Scott (Con)
My Lords, I support Amendment 217, tabled by my noble friend Lady Neville-Rolfe. This amendment does not seek to diminish the value of public service, nor to undermine the pensions of those who dedicate their careers to the NHS, our schools, the civil service, the Armed Forces, the police or the fire service. Rather, it asks for something far more modest and necessary: transparency, long-term thinking and honesty about sustainability.
The amendment would require the Secretary of State to conduct and publish a review of the long-term affordability, intergenerational fairness, fiscal sustainability and accounting treatment of our major public service pension schemes, including the NHS pension scheme, the teachers’ pension scheme, the Civil Service Pension Scheme, the Armed Forces pension scheme, the police pension scheme and the firefighters’ pension scheme. My noble friend Lady Neville-Rolfe has outlined clearly and forensically the challenges of the concerns about the sustainability of unfunded public sector schemes. These are not new, but they are becoming more pressing. In 2023-24, total employer and employee contributions amounted to £49.9 billion. Total payments to pensioners were £55 billion. That left a shortfall of £5.1 billion, met directly from general taxation. In other words, today’s taxpayers are already topping up the system.
According to the Policy Exchange, unfunded public sector pension liabilities now stand at approximately £1.4 trillion: around 45% of GDP and approaching half the size, or more, of the official national debt. These are not hypothetical sums; they are long-term promises underwritten by future taxpayers. Unlike funded private sector schemes, most public sector pension contributions are not invested to generate returns; they are returned to the Treasury while current pensions are paid from current spending. This means future liabilities depend on future taxation. The burden is simply rolled forward. That may be sustainable—but it may not be. Surely this Committee is entitled to know which it is.
My noble friend Lady Noakes in her foreword to the Policy Exchange report set out clearly that transparency and realism are essential if we are to protect both pensioners and taxpayers. A mature system does not fear review; it welcomes it. I ask the Minister: do the Government believe the current trajectory of unfunded public service pension liabilities is sustainable over the next 20 or 30 years, what assessment has been made of the intergenerational fairness of asking younger taxpayers—many without access to defined benefit pensions themselves—to underwrite these commitments, how does the Treasury account for these liabilities in long-term fiscal planning, and are they fully reflected in measures of public sector net worth? Finally, if the Government are confident in the system’s sustainability, why resist a formal review that would provide clarity and reassurance?
This amendment would not prescribe reform; it simply asks for a comprehensive review and publication of the facts. If the costs are sustainable then let us demonstrate it, and if adjustments are needed then let us confront them honestly.
Baroness Sherlock (Lab)
My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for introducing Amendment 217, which would require the Secretary of State to produce and publish a review of public service pension schemes, focusing on different aspects of the cost, affordability and accounting treatment of these schemes. I remind the Grand Committee that I am a member of the parliamentary pension scheme, and therefore of my appreciation of the work of the noble Viscount, Lord Thurso.
The noble Baroness is quite right to focus on the affordability of these schemes and what this means for intergenerational fairness, given that unfunded public service pension schemes pay out over £60 billion in pensions and lump sums each year and are often the single largest liability in the whole of government accounts.
However, as has been indicated already, and as the noble Baroness will know only too well, her party conducted a major review during the coalition Government, in the form of my noble friend Lord Hutton’s Independent Public Service Pensions Commission. That led to major reforms, including the new schemes to which all active members of the main schemes are contributing today, with a move from final salary to career average design, higher pension ages and higher member contribution rates. Due to the McCloud judgment and the resulting choice exercise for affected members, those members may have been building up only since April 2022, meaning that these major reforms are only now fully bedding in for all members. As my noble friend Lord Davies noted, the then Government committed to the 25-year guarantee, in effect committing to no further major reforms to public service pension schemes until 2040.
The proposed review would be conducted by the Secretary of State for Work and Pensions. However, I note that statutory public service pension schemes are the responsibility of the Chancellor of the Exchequer, and I know that the Treasury works closely with the OBR and the NAO on this policy area already.
The centrality of the questions that the amendment would require the review to consider means that much of this information is regularly published already. For example, the OBR publishes a forecast of the cash-flow cost of public service pensions over the coming years as part of its forecast at every fiscal event, including spending on pensions and lump sums, income from pension contributions and the net balancing payment to or from the Exchequer. The OBR also publishes long-term projections of spending on public service pension schemes as a share of GDP as part of its fiscal risk and sustainability reports. As noted, the most recent forecast from September 2024 projects that spending will decline from 1.9% of GDP to 1.4% of GDP over the next 50 years.
Demographic changes as a result of longevity or migration are taken into account in the OBR’s long-term analysis. The sensitivity of scheme liabilities to longevity is central to the four-yearly valuation reports used to set employer contribution rates across schemes. Both the valuation reports and the whole of government accounts contain detail on different accounting treatments of scheme liabilities and how to interpret the resulting headline figures. Given that all this information is regularly published already, and the reforms to public service pension schemes that have already been implemented, a government review into the affordability of these schemes would merely collate existing information in one place.
Let me address some of the specific questions that were raised, turning first to the treatment of pensions and the whole of government accounts. In recent years, liability has decreased significantly, falling from £2.6 trillion in 2021-22 to £1.4 trillion in 2022-23 and £1.3 trillion in 2023-24. The whole of government accounts report is fully transparent in explaining that these changes were driven by an increase in the applicable discount rate rather than changes in the amount of pension being accrued by scheme members. The whole of government accounts reports present this liability in accordance with the international financial reporting standards. There are no plans to change that approach and nor do we think there should be.
However, I am aware that members of the PAC have asked whether this liability could be presented on a more permanent basis, to show how it would change in the absence of changes to the discount rate, to aid user understanding. The Treasury is currently exploring options to present pension liabilities on a constant basis. To be clear, any such presentation would be purely supplementary and would not affect the underlying pension liability calculations or the way those are presented in the financial statements.
The noble Baroness, Lady Neville-Rolfe, asked why the Government are funding the gap permanently. The answer is that current contributions reflect the cost of current employment—pensions to be paid in the future. Current contributions are not intended to be and do not relate to current pensions in payment, which were earned years or indeed decades ago. So current pension costs reflect pensions earned. This is therefore not an appropriate basis to consider affordability. Traditionally, the central measure for Governments has been pensions as a proportion of GDP.
On whether it is right to be paying these kinds of pensions, I am very grateful to the noble Viscount, Lord Thurso, for his stirring defence. It is really important to recognise that, sometimes, this is discussed as though all public sector employees are calling in huge salaries and doing little for them. He defended how so many people in the public sector are driven by vocation and a calling into public service: they do things to serve and often have lower salaries than they might have elsewhere. I pay tribute to all those who are in that position.
It is true that, compared with the private sector, remuneration in the public sector is weighted towards pension. This is why public service pension schemes are so central to the Government’s fiscal forecasts. However, the noble Viscount is quite right: public sector remuneration has to be considered in the round, across pay and pensions. That is why pension provision is specifically taken into account as part of the pay review body process across the major public service workforces.
It is also important to distinguish between the generosity and cost of the schemes and their DB design. My noble friend Lord Hutton noted in his review for the coalition Government that they are a large employer capable of bearing the risks inherent in a DB design. It is thus in a different position from other employers. In a sense, cutting public service remuneration, whether from pay or pensions, would allow any Government to score savings for the Exchequer, but the fact is that reward packages for each public sector workforce have to be designed to maintain the required levels of staffing and to deliver the required public services.
Finally, it is worth remembering that the changes made following the Hutton review were significant. As I said, the scheme design changed from final salary to career average; pension ages were increased to state pension age for most schemes and to 60 for the police, firefighters and the Armed Forces; member contribution rates were increased across schemes, except for non-contributory Armed Forces schemes; and other aspects of scheme design were modernised, for example, in supporting flexible retirement. At the time, it was estimated that those reforms would save £400 billion over 50 years. Separately from the Hutton reforms, the then Government also switched the indexation of the scheme from RPI to CPI, in line with other forms of spending.
This has been a very interesting debate but, as I have said, most of the information that has been sought in the review is out there already, so such a review is not currently worth while. I hope the noble Baroness can withdraw her amendment.
Baroness Neville-Rolfe (Con)
My Lords, I am grateful for the support I have received this evening, particularly from my noble friend Lady Stedman-Scott and the noble Baroness, Lady Bowles, who, like me, cares a lot about transparency and favours a review. I listened with care to what the Minister said, and will look carefully at Hansard, but I do not think that the arrangements are very easy to understand, nor do I think that the OBR or government accounts are easy to understand or transparent.
I tabled my amendment because I wanted to air the problem of the unsustainability of public sector pension schemes as I see them. My noble friend Lord Moynihan described the current schemes as a Ponzi scheme, which was very strong, but he is right that we have a sustainability issue. That is in part caused, as has been mentioned, by the happy fact that we all now live longer. We face this issue in all our pension discussions and we cannot hide from it.
The noble Lord, Lord Davies of Brixton, helpfully agreed that a debate on these issues is needed. He and I go back, and we debate these things, which is very useful, but I was surprised to hear that a 25-year guarantee can be given by any Government. However, as has been said and is true, contributions by employers and employees in the public sector have increased as a result of Hutton, but we still have an unsustainable situation, so we need new thinking and certainly a review. I have been careful not to make any recommendations today, but to highlight the issues as I see them. It is wrong that this important Bill sidesteps the issue that is storing up problems—for our children and our grandchildren—from the pay-as-you-go schemes that we have.
Baroness Coffey
“Pensions dashboards(1) Within six months of the day on which this Act is passed, the Financial Conduct Authority must make rules to enable private sector pension dashboards to receive data and operate.(2) In the Pensions Dashboards Regulations 2022 (S.I. 2022/1220), in Regulation 4, omit paragraph (3).”Member’s explanatory statement
This probing amendment seeks to require the Financial Conduct Authority to open up data to private sector-run pension dashboards within six months. It also repeals the requirement for the Secretary of State to give notice specifying the “Dashboards Available Point” at least six months in advance of that point.
Baroness Coffey (Con)
My Lords, it is a pleasure to speak to the Committee about pensions dashboards.
I am conscious that this has been quite a long journey in terms of trying to get the pensions dashboard in the Pension Schemes Act 2021 initiated. I am aware that, at the time, the House of Lords was keen that there should not be a private dashboard, but the House of Commons gave its strong view. As a consequence, the Bill went through without specifying that DWP and MaPS had to produce a public sector pension dashboard first because we were concerned—I am still concerned—that the longer people do not know what is going on with their pensions, the shorter the time they may have to make informed choices or, at least, to consider and understand what their pension and retirement will look like in future. That is why I have tabled this amendment.
Two things come out of that. One is that, in essence, what is required is for the Financial Conduct Authority to sort out all the different bits in order to allow private sector pension dashboards to get the necessary data and to be allowed to start operating. Indeed, Pensions Dashboards Regulations that were passed a couple of years ago were amended to remove the dashboard’s available point.
Let me go on a slight journey; I do not intend to delay the Committee for very long, but I am really concerned about progress. I am aware of the reset that happened and the issues around what triggered it, which I do not think are public, but we are nevertheless in a situation where we should be making more progress than we are. It is notable that, in a Written Ministerial Statement in October 2024, the then Pensions Minister, Emma Reynolds, changed the Government’s policy from what had been the case; in effect, it had been neutral on what was happening around trying to get these dashboards going. She put in place a policy, which is still live in government today, saying that we must make sure that the DWP/MaPs dashboard comes out first and is well tested, and then we will start. We are still committed to doing the private sector-run dashboards but not to any particular date.
I am grateful to the Minister for putting on a recent briefing and to the chief executive of MaPS and the team coming to do that, but I have to say that I was somewhat alarmed that it still feels as if we are a long way off. I appreciate the connection deadline has not changed. It was great in a recent parliamentary Answer to see the progress of data provided, but it started to get me concerned about exactly the issues I considered several years ago: that once we get into MaPS and DWP starting to decide what are the best ways to do some of this communication and what user testing works well, they end up missing out on the opportunity of what the private sector does every day in terms of clear communication. That does not mean to say we are looking for a cowboy scheme—far from it as there is still the Financial Conduct Authority—but that we make more rapid progress than is happening now.
I know some of the pensions schemes people are happy to no longer have the six months. I know from the latest update from the programme board as part of the advisory group in December 2025 that despite acknowledging that the Government were clear that there would not be a private sector dashboard allowed anywhere near to the launch date of the public sector dashboard its number one issue was trying to make sure that that was available as quickly as possible.
I am conscious of things that seem to go awry. There had been amber ratings for a while, then, all of a sudden, there was a red rating on the pensions dashboard. Nevertheless, we are still making slow progress, and I feel that we should open this opportunity to make sure we have pension dashboards available as quickly as possible. With the best will in the world, MaPS is not moving quickly enough. I do not believe we will have a MaPS/DWP dashboard until some time in 2027.
The original intention when MaPS took this over— in 2023 I think—was that the connections would be completed by then. I fully understand the history on that. This is the opportunity to get on with this. We have spent a lot of time in this Bill saying we want to make sure people have better returns and better understanding of what is happening with their money in different ways. For me, the dashboards are a key part of that, and at the moment, it feels that while the Government have not deliberately decided to go slowly, we are going slowly as a consequence of their policy choices. It is vital that members of pension schemes know their situation so they can make the necessary choices.
I am sure the Government recognise that they did not communicate all the way back in 2005 and then were found to have caused maladministration in terms of the WASPI women as a consequence. We are not getting into a debate on compensation or something like that, but it is important we let people know as soon as possible, and that is why I have tabled this amendment today. I beg to move.
Lord Davies of Brixton (Lab)
I urge the Minister in her reply to stress the need for caution in this area. I am afraid I understand what the noble Baroness, Lady Coffey, is saying: we do seem to have been waiting a long time for the dashboard. However, I have always had questions about the private sector dashboard, and I think they can be answered only as and when the MaPS dashboard is up and running. The problem at heart—and it may be a caricature—is about the point of a private sector dashboard. It could all too easily be a way of getting hold of data. It is the old saying that you are not the customer, you are the product. That is the fear with the private sector dashboard, which is why we have to get the public sector dashboard up and working. We know what the issues are. It may be necessary to have private sector dashboards, but I am still not totally convinced.
Viscount Younger of Leckie (Con)
My Lords, I will speak in broad support of Amendment 218D, tabled by my noble friend Lady Coffey.
Let me start by recording my thanks to the Minister, the Pensions Dashboards Programme team and MaPS for the recent briefing session afforded to noble Lords, which was thorough; I felt that it was constructive, and, if I may say so, reassuring in so many respects. We heard that some three-quarters of workplace and personal pension memberships—that is, around 60 million people—are now connected to the ecosystem. This is no small achievement; we should acknowledge that. We were told that the October 2026 connection deadline remains on track, which is of course welcome.
Connecting schemes to the system is one stage, while ensuring that the dashboard operates effectively for consumers is another. Delivering the money helper dashboard, important though that is, is not the same as establishing a fully functioning marketplace that includes private sector dashboards. These are separate phases of the programme and ought to be treated as such.
In that context, we were taken through the money helper dashboard and its intended customer journey. It is a significant and necessary first step—no one disputes that—but it is explicitly designed to be the foundation, not the finished structure. The question that therefore arises is a straightforward one: what is the clearly defined pathway from that foundation to the wider ecosystem that Parliament was originally invited to envisage?
As my noble friend Lady Coffey said, the Government have confirmed, most recently in October 2024, that the money helper dashboard will be made available to the public before any private sector dashboards are permitted to launch. I understand this sequencing to some extent. It is sensible to test the system, assess customer behaviour and ensure that it is secure and reliable. To that extent, I understand the approach that the noble Lord, Lord Davies, has taken; he used the word “caution”. However, mine is a slightly different point—it chimes with those from the noble Baroness and my noble friend Lady Coffey—which is that there should be at least a plan and a timetable.
The Government have stated their commitment to private sector dashboards in principle. A commitment in principle must now be matched by clarity in practice, which is why I think that my noble friend’s amendment is very much necessary. When do the Government expect private dashboards to be authorised? If a firm date cannot yet be provided, can the Minister at least set out the framework within which that decision will be taken? What are the stages? What are the criteria? What is the intended sequence of regulatory approvals? Over what period do the Government expect those steps to be completed?
We are told that private dashboards will proceed only once the service is judged to be reliable, safe and secure, and once, of course, it has satisfied the FCA, the Department for Work and Pensions, the Pensions Regulator and MaPS. This is entirely proper, but does that mean that no indicative timetable can be offered until every test has been passed? Surely not. Is there no internal planning assumption or projected window? How are industry participants expected to prepare if there is no sense of when authorisation might realistically occur? Is there not a risk that the programme becomes defined solely by the October 2026 connection deadline? What sits beyond that date? What is the Government’s intended next milestone? Without a clear forward plan—this is my point—how can Parliament assess progress?
My noble friend’s amendment does not seek to override safeguards. It simply seeks clarity and discipline. The proposal that the FCA should open the gateway to private dashboard operators within six months of the public dashboard going live would establish a reasonable and clear expectation. If the Government disagree with that period, what alternative do they propose? What is their preferred timetable?
There is also a practical issue, which cannot be ignored, because the successful introduction of private dashboards will depend heavily on data quality; that has been mentioned. What is the Government’s current assessment of the accuracy and completeness of data across connected schemes? Where are the known weaknesses, and what remedial action is under way? How frequently is data quality being tested and reported?
I know that this is a familiar question that has been asked as we have been taken through the progress on the dashboards programme—I have been very grateful for the updates—but what engagement is taking place with schemes and providers to ensure that preparation extends beyond technical connection and moves towards operational readiness? Are the communications with industry focused only on meeting connection deadlines, or do they also address the standards required for a competitive, consumer-facing environment?
In conclusion, this programme has significant potential, but potential must be matched by a structured plan. Parliament is entitled to understand not only where the programme stands today but where it is going and on what timetable. My noble friend Lady Coffey is right to press for that clarity and, unapologetically, I have asked a lot of questions that chime with her. I await the Minister’s response with interest.
Baroness Sherlock (Lab)
I am grateful to the noble Baroness, Lady Coffey, for introducing her Amendment 218D and drawing attention to pensions dashboards. The Government recognise the important role pensions dashboards will play in increasing people’s engagement with their pensions, and we note the purpose behind the amendment. Obviously in practice it would require the FCA to make rules within six months of the Bill receiving Royal Assent to enable private sector pension dashboards to receive data and operate. It would also repeal the requirement for the Secretary of State to give notice specifying the dashboards’ available point at least six months in advance of that point.
I know that many noble Lords here are supporters of pensions dashboards and are keen that they are launched as soon as possible, so it has been good to be able to update noble Lords on the progress that has been made. I know some noble Lords were able to come to the presentation, but for those who were not, I just say that over 700 of the largest pension providers and schemes are now connected to the dashboards ecosystem, and over 60 million records are now integrated into dashboards. That represents around three-quarters of the records in scope. The state pension has now connected, adding tens of millions of state pension records.
My noble friend Lord Davies is right to say that we need to get this right. It is important that pension dashboards are launched only when they are safe, are secure and have been properly user tested. When noble Lords attended the demonstration, they could see that pensions dashboards provide a great opportunity for consumers. In order to realise that opportunity fully, we need to make sure that the service offers them a positive experience and meets their needs. Consumers need to be able to understand the information a pensions dashboard is showing them and the limitations of that information. They need to be supported by broader pensions guidance to help them with any potential actions after viewing their information. User testing is key to getting this right.
I am pleased to be able to advise the Committee that user testing of the MoneyHelper Pensions Dashboard is under way. Low-volume testing began last year and will ramp up during the course of this year. Only once we have confidence from this testing that the service is ready for widespread public use will the Secretary of State give six months’ notice for launch. The Government have previously confirmed that the delivery of the MoneyHelper Pensions Dashboard will be prioritised, to be followed at a later date by the launch of private sector dashboards. That will allow the launch of private sector dashboards to be informed by learning from the launch of the MoneyHelper Pensions Dashboard—for example, on volumes of users.
The noble Baroness, Lady Coffey, is more or less saying, “Why is it taking so long and what has happened?” She is right that there was a reset between March 2023 and March 2024 and the programme is currently rated amber, but the fact is that delivering pensions dashboards is a very complex task. The digital architecture will facilitate the search of millions of pension records held by thousands of pension schemes and providers, each with a different IT system and different ways of calculating values. It is important we get it right. Dashboards have to be safe and secure and must meet the need of consumers before they are launched. While the scale of the task of making dashboards a reality is huge, the fact is that delivery partners are making good progress. The pensions dashboard programme is confident that schemes and providers in scope will be able to connect by the regulatory deadline on 31 October 2026.
In terms of private sector dashboards, I can reassure the noble Baroness, Lady Coffey, that the Government are fully committed to delivering private sector dashboards and that MaPS is working closely with potential dashboard providers, the DWP and regulators on a pathway for their development and implementation. The FCA has already consulted on and finalised the rules that will apply to dashboard providers after they are authorised and connected to the live environment. MaPS is also engaging actively with the industry and launched a call for input in January this year seeking feedback on how best to support the delivery of private sector dashboards. While the Government recognise the innovation that private sector dashboards will bring to the industry, the date for the dashboards’ available point cannot be specified at this stage. The decision to launch private sector dashboards must be subject to many factors, including securing a sufficient level of coverage, being assured of the safety, security and reliability of the service and testing the user experience.
The noble Viscount asked whether we can confirm a date. It is too early to confirm a launch date because it is vital that the foundation on which dashboards are built, the whole ecosystem, is safe and secure and works for both the pensions industry and individuals.
Once the service is secure, operationally reliable and thoroughly user tested, the Secretary of State will provide six months’ notice ahead of the launch of the MoneyHelper Pensions Dashboard for public use. The requirement to provide six months’ notice in each case through the dashboards available point is intended to provide the pensions industry with notice to provide for the launch of private sector dashboards, which will help support a positive user experience.
I understand that noble Lords want to get this done quickly, but I would say two things. Pursuing speed at the expense of security and user experience would be a mistake, one that Governments have learned over the years. We need to get this right. Secondly, the noble Baroness, Lady Coffey, wants something out there as soon as possible—so do I. Prioritising the public sector dashboard is the fastest way to get something out there. We are pursuing that. We all want this to be done as soon as possible, but we can do it only when we are confident it can be secure and meet users’ needs. I hope that is enough reassurance for her to withdraw her amendment.
Baroness Coffey (Con)
Of course I will withdraw the amendment, but I do not want to give the Minister any suggestion that I have any assurance from what I saw at that briefing, in terms of user testing. I do not want to go into detail, because that is not relevant for this Committee, and I am more than happy to meet to discuss.
What I will say is that it is clearly making certain amounts of progress, technically. But I am concerned about aspects of the user testing, which were laid out to us, because that is what is taking very long. This is something that the Government and MaPS are not very good at. I have plenty of experience of that from my time running DWP, in terms of aspects of its communications, particularly on something technical such as this. That is why I am concerned, and why I brought this to the attention of the Committee today. That said, I seek leave to withdraw the amendment.
“Alignment of regulations with Technical Actuarial StandardsThe Secretary of State has a duty to ensure that regulations under this Act align with Technical Actuarial Standards issued by Financial Reporting Council, requiring trustees to compare bulk annuity, superfunds and run-on strategies for defined benefit pension schemes before making irreversible decisions about scheme assets.”Member’s explanatory statement
This amendment seeks to ensure a joint approach between Government departments and their related regulators including the PRA, FCA and TPR, to help align their respective responsibilities for solvency, consumer interest, member protection and promoting growth.
Baroness Bowles of Berkhamsted (LD)
My Lords, I am introducing Amendment 219A on behalf of the noble Baroness, Lady Altmann. She regrets that she is unable to be here, but I think she is somewhere on a plane at the moment, and I know she considers this a matter of great importance.
The amendment seeks to enhance the framework for defined benefit pension schemes by ensuring that regulations under the Bill align with the Financial Reporting Council’s technical actuarial standards. The current version of those is TAS 300, version 2.1. However, the amendment does not identify a specific technical standard but explains what the required standard covers in order to ensure that future versions of the standard which produce the prescribed calculations would also be covered by the wording of the amendment.
The wording of the particular technical actuarial standard, particularly paragraph 5, requires trustees to compare key strategies, such as bulk annuities, superfunds and run-on approaches, before making irreversible decisions about scheme assets and members’ pensions. Annuity buyouts are no longer necessarily risk-free, as official warnings regarding the lack of Treasury underpin for the Financial Services Compensation Scheme and the rise in offshore takeovers of annuity companies have highlighted. My remarks today reflect upon the thoughtful contributions from noble Lords in earlier debates on similar amendments. I will first address the points raised previously.
I appreciate the concerns expressed about avoiding unnecessary legislative intrusion into actuarial professional standards. Indeed, far from diminishing the role of actuaries, this amendment recognises their crucial expertise in guiding trustees. TAS 300 sets out robust principles for actuarial work, including requirements for clear advice on bulk transfers, risk assessments and the impact on member benefits. It covers essential areas such as whether a scheme can afford discretionary increases, how much surplus might be distributed and whether members might be better off with a run-on strategy rather than buying annuities. By embedding alignment with these standards in regulations, we would simply ensure that this high-quality actuarial insight is carefully considered by trustees to make better-informed choices without mandating outcomes.
The noble Lord, Lord Davies, rightly highlighted the FRC’s independent role in enforcing standards through disciplinary measures. The amendment does not seek to duplicate or override that. It would better align the actuarial advice with trustee decision-making. Currently, the FRC’s oversight seems weak and generally unenforced. The FRC plays a vital role in setting and enforcing standards, but its resources are too stretched across a broad remit. Only a small fraction of its annual budget, estimated at £200,000, is allocated to actuarial professional supervision, with no dedicated budget for investigations. This is at a time when we are expecting the profession to advise trustees on matters affecting the proper stewardship of £1.1 trillion of the national wealth in pension assets.
Existing trustee discretion does not seem to provide sufficient safeguards. Actuarial reports under TAS 300 are apparently not always presented to trustees unless specifically requested. Even when they are, they can sometimes become routine exercises rather than the rigorous analyses intended. This is not a criticism so much as a recognition of practical realities in a busy field. By making consideration of these reports a regulatory requirement before irreversible commitments, such as surplus payouts or buyouts, happen, trustees would gain a valuable tool to weigh options thoroughly, aligning with the Bill’s goals of better governance and better member outcomes.
The real power of this amendment lies in the potential value it could unlock for stakeholders, particularly scheme members, unions and workers. Defined benefit scheme surpluses exceed £240 billion on prudent measures. Independent financial modelling indicates that, for every £1 billion transferred to insurers via buyouts, expected excess cash flows of £150 million to £250 million accrue over 10 to 15 years—value that would bypass members and sponsors entirely. A run-on approach rather than a buyout could instead share these gains between employers and members.
The Stagecoach pension scheme offers another example. Its trustees developed and used TAS 300 reports to evaluate options for the scheme. This resulted in them seeking to run on and ultimately replacing the original sponsor, Stagecoach, with a stronger sponsor in Aberdeen Group plc. The analysis supported and enabled the use of a run-on strategy, which enhanced member benefits with an immediate 1.5% pension uplift and stronger inflation protection worth over £50 million for members, all within supported risk and investment guardrails. In addition, Aberdeen Group plc agreed that two-thirds of future surpluses will go towards further improving pensions, directly benefiting bus drivers and other workers.
This ground-breaking transaction has attracted widespread attention and support across the pension industry. It has also ignited greater expectations among many schemes that endgame considerations must properly include serious focus on improving member outcomes, shifting the narrative towards more equitable and productive use of surpluses.
This amendment would improve the Bill by embedding a proven standard into its framework, ensuring that actuarial expertise illuminates decisions that safeguard retirements and support growth. It respects the profession while empowering trustees, members and unions. The stakes, potentially billions in additional pensions for hardworking people, demand that we act. I urge the Government to support it, and I beg to move.
Baroness Stedman-Scott (Con)
My Lords, I shall speak to Amendment 219A, tabled by the noble Baroness, Lady Altmann, and moved by the noble Baroness, Lady Bowles. This amendment would ensure a more structured and joint approach between government departments and their related regulators, including the PRA, the FCA and the Pensions Regulator, so that their respective responsibilities for solvency, consumer interests, member protection and the promotion of growth are properly aligned.
I understand very clearly where the noble Baroness is coming from. Indeed, I am reminded of our earlier debate in Committee when I spoke to Amendment 206 alongside my noble friend Lady Coffey’s Amendment 180A. At that time, we touched on an issue that remains unresolved—the fact that very similar pension products could be treated differently, depending on whether they fall within the remit of the Pensions Regulator or the Financial Conduct Authority. That observation is not controversial—it is simply a reflection of how our current regulatory architecture has developed over time. Different bodies created at different moments for different purposes now oversee parts of what, to the saver, appears to be the same market. It is therefore entirely reasonable to ask whether greater alignment would improve clarity, consistency and outcomes. There may well be areas where closer co-ordination would be beneficial.
I shall not rehearse in full the arguments that I made previously, but I continue to believe that a formal co-ordination protocol offers three important virtues. First, it provides flexibility. A protocol can evolve as the regulatory landscape changes, allowing co-operation to deepen or adjust without the need for immediate structural overhaul. Secondly, it allows for escalation. If problems persist or new risks emerge, the framework for co-ordination could be tightened, strengthened or made more prescriptive. Thirdly, and perhaps most importantly, such a protocol can generate the evidence base for future reform. If, over time, it becomes clear that more fundamental consolidation of regulatory functions would better serve consumers and markets, the experience of structured co-ordination would provide the practical foundation of that decision. In that sense, this amendment is not about precipitating institutional change but about coherence; it is about ensuring that solvency, consumer protection, member outcomes and growth are pursued not in isolation but in a balanced and mutually reinforcing way.
For those reasons, I believe that the amendment from the noble Baroness, Lady Altmann, raises an important and constructive point for the Committee to consider.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness, Lady Bowles, for introducing Amendment 219A on behalf of the noble Baroness, Lady Altmann. As we have heard, it would require regulations made under the Bill to be aligned with the technical actuarial standards.
I say at the start that I share the concern that governing bodies work together to ensure that members are protected and that schemes work to secure the best outcomes. It is also important that trustees have considered the range of options available to them before making decisions on their schemes’ direction of travel and committing funds to any particular option. However, I assure the Committee that there is already a lot of collaboration between the Government and regulators on a formal and informal basis. Trustees, in line with their duties, are considering the options for their schemes in the round.
This amendment would require trustees themselves to comply with the criteria for technical actuarial standards. These are intended for actuaries to comply with, who must operate according to the standards set by the Financial Reporting Council. Actuaries will then provide advice to trustees in response to trustee requests, highlighting the risks, assumptions and options available to them.
Actuarial analysis plays an important role in informing the process. It provides a clear assessment of the risks, underlying assumptions and range of options available for a given request. But it is advisory in nature and does not, in itself, determine the final decision. Trustees will then draw on this information to inform their decisions about the effective operation and governance of the scheme. It will be considered alongside other advice that trustees may consider appropriate to obtain, including investment, legal and covenant advice. But trustees are ultimately the decision-makers, and they remain fully accountable for the choices that they make on behalf of their members.
Trustees already consider the correct endgame for their schemes. The risks and opportunities facing schemes differ according to a range of factors, including the maturity of the scheme and the strength of the employer covenant. Under the funding code, trustees are required to set out their funding and investment strategy, describing how they intend to meet members’ benefits over the long term—their long-term objective. The funding code requires trustees to assess the key risks to delivering their funding and investment strategy, to explain how these risks are monitored and to set out the steps being taken to mitigate them. Trustees must also assess the employer covenant, as the employer’s financial strength is central to supporting the scheme.
The Pensions Regulator has set out guidance for schemes to consider their long-term objective and options, including buyout, superfunds and run-on, which sets out clear expectations of trustees. It will be updating the guidance and will work with the FCA and, where appropriate, the PRA and FRC to ensure alignment across all guidance relating to considerations of alternative options. Requiring alignment between regulations and professional standards could have unintended consequences, including reducing flexibility for trustees and requiring a succession of further legislative changes to maintain alignment as these standards evolve over time. It could also result in the actuarial profession being the driver behind the content of regulations, when this should clearly be a matter for government policy.
It is crucial that trustees remain in the driving seat when making decisions for schemes, which this amendment would have the effect of removing. I am grateful to the noble Baroness, Lady Bowles, for giving us the opportunity to have this debate, on behalf of the noble Baroness, Lady Altmann, but I hope she feels able to withdraw the amendment for the reasons that I have outlined.
Baroness Bowles of Berkhamsted (LD)
I thank the Minister and other noble Lords who have spoken. I will not delay your Lordships very long because, as I said, these thoughts are from the noble Baroness, Lady Altmann. However, her key point, as I understand it, is to ensure that adequate attention to those alternatives is given. Largely due to funding circumstances, the checks to make sure that that happens are not necessarily there. I have raised and highlighted this, and I hope that more attention is given to it as a consequence.
I will withdraw the amendment, for now, but I do not know whether the noble Baroness, Lady Altmann, will wish to proceed with it again on Report, so I cannot guarantee that it will not come round again. I think this is important and my personal feeling is that not enough attention has been given to continuations instead of buyouts. The dash for a buyout has been very fashionable, but maybe the tide will begin to turn and attention to this kind of thing might help to do that. If it gives us better outcomes, that is good for everything.
House of Lords
Retirement of a Member: Lord Browne of Ladyton
The Lord Speaker (Lord Forsyth of Drumlean)
My Lords, I should like to notify the House of the retirement, with effect from today, of the noble Lord, Lord Browne of Ladyton, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the whole House, I should like to thank the noble Lord for his much-valued service to the House.
Global Biodiversity Loss and National Security
(1 day, 4 hours ago)
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Earl Russell
To ask His Majesty’s Government what assessment they have made of the findings of the Nature security assessment on global biodiversity loss, ecosystem collapse and national security, published on 20 January.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, nature underpins our security, prosperity and resilience, and understanding the threats we face from biodiversity loss is essential to address them effectively. This important assessment provides strategic analysis that is designed to help government plan for future risks that may arise. The UK is already taking comprehensive action to strengthen resilience to environmental risks, both at home and overseas. The findings in the report will support and inform that action.
Earl Russell (LD)
My Lords, a nature security assessment was initially withheld and then only partially released following an FoI request. Given the gravity of its findings for biodiversity loss, ecosystem collapse and our future national security, will the Government now publish the report in full? What policy responses are being developed as a result? Will Ministers engage in open dialogue, both at home and with allies, that recognises the interlinked climate and nature emergencies as essential to our natural security strategy and future prosperity?
Baroness Hayman of Ullock (Lab)
It is important to note that this is a strategic tool and not a prediction of future possibilities. The idea behind it is to help government plan for future shocks that are credible enough to warrant preparation. The way it has been managed reflects standard national security planning for preparedness. On policies, we are taking comprehensive action to strengthen resilience to environmental risks, both at home and aboard, through various ways. Tree planting in England is at its highest rate, and we are restoring peatlands, improving water quality and protecting pollinators. We have introduced landmark legislation to protect our oceans. We are supporting food security with new technology and farming schemes that reward sustainable production, and we are also committed to providing international climate finance—I could go on. Maybe the noble Earl and I can pick this up in more detail after the Question.
Baroness McIntosh of Pickering (Con)
Does the Minister agree that farmers are probably best placed to regard the future of nature and to safeguard our biosecurity and ecosystem? Will she carefully consider the damage that could be done, particularly to livestock farmers, from some of the proposals in the animal welfare strategy, which I would be very happy to raise with her separately?
Baroness Hayman of Ullock (Lab)
The proposals on farmed animals in the animal welfare strategy are designed not to harm farmers but to bring long-term improvements to animal welfare in relation to how our food is produced. Our intention is to work very closely with farmers and other relevant stakeholders so that the policies we introduce do not cause harm but support animal welfare.
Baroness Boycott (CB)
My Lords, on food security, as everyone in this House knows, there are severe floods across Somerset, Dorset, Northamptonshire, Oxfordshire and lots of growing areas. Compounding that, there are floods in Spain as well as Sicily. These are all areas where we get our fresh vegetables from, and these floods are damaging the crops for this year. We also know that there are going to be droughts after the wet weather. What are the Government doing to look, in the immediate future, at the food security situation, because many farmers cannot plant on land that is absolutely sodden with water?
Baroness Hayman of Ullock (Lab)
The noble Baroness is absolutely right that there has been terrible flooding. Much of the change in our weather systems is inevitably caused by climate change. We are working very hard to invest more, not just in flood defences but in natural flood management. Regarding sustainable food and food security, we are trying to better support farmers on food security in sustainable practices. The new SFI offering will look more at small farmers and sustainability in order that we prepare for the long term for exactly these kinds of outcomes.
Baroness Jones of Moulsecoomb (GP)
My Lords, the Government sound very good on all these policies, but, in fact, they are not meeting their targets. They are not meeting their targets on tree-planting, marine protected areas or flooding. It is going to be a contest between which comes first—World War III or climate collapse. Do the Government agree?
Baroness Hayman of Ullock (Lab)
At least the noble Baroness thinks I sound good. The revised environmental improvement plan is designed to deliver everything the noble Baroness talked about. We are working very hard in Defra to ensure that it does.
Lord Roborough (Con)
My Lords, the Taskforce on Nature-related Financial Disclosures aims to bring nature into the core of business and financial decision-making, recognising that the health of our natural environment is crucial to the long-term health of our economy. What are His Majesty’s Government doing to accelerate adoption of TNFD reporting to incentivise better performance and thus encourage businesses to channel investment into nature recovery?
Baroness Hayman of Ullock (Lab)
I thank the noble Lord for mentioning the TNFD, because it is very important. We are continuing to fund the Green Finance Institute to progress market capacity building and uptake through the TNFD UK consultation group. That is evolving to include a pilot programme on integrated nature transition plans. Fifteen businesses are currently already signed up to that. We are also in the process of onshoring the International Sustainability Standards Board’s general sustainability and climate disclosure standards in the UK. That will draw on the work of the TNFD. We are looking at its imminent work on nature standard-setting. Once that direction of travel is clear, it can inform our future paths on policy and regulation.
Lord Watts (Lab)
My Lords, how will the Government’s strategy deal with the problem of pollution by farmers in our rivers?
Baroness Hayman of Ullock (Lab)
We are currently looking at that. We need to reduce the amount of run-off, for example, from farms, and we are looking at how best to work with farmers to improve the situation.
Baroness Sheehan (LD)
My Lords, the assessment is explicit that nature is a foundation of national security, yet independent analysis, not least by the Government’s own watchdog, the OEP, in its recent annual report, shows that the UK is not on track to meet its own nature recovery targets, thereby increasing domestic risk. How do the Government reconcile this security assessment with current trajectories on the Environment Act targets and land use policies?
Baroness Hayman of Ullock (Lab)
We are doing a number of pieces of work right across the department that will come together to try to have the outcomes that we want. It is important that the role that Defra plays in national security and resilience planning is better implemented and recognised across government. We are working really hard to do that, whether it is the work we are doing around flooding, with farmers, within biodiversity, on tree planting, or globally. There is a huge amount of work, and once that all comes together, we should see the results and outcomes of it.
Baroness Fookes (Con)
My Lords, I regard environmental horticulture as a vital stakeholder in all this. Does the noble Baroness agree, and if so, can she put some pressure on Defra to think the same way?
Baroness Hayman of Ullock (Lab)
First, I congratulate the noble Baroness on a significant birthday this weekend. Secondly, as she knows, I am a great supporter of horticulture; I have recently been speaking to the Farming Minister about it and will continue to do so.
Lord West of Spithead (Lab)
My Lords, 40% of our food comes from abroad. Should there be a World War III, the Royal Navy would be responsible, as in the past, for ensuring that that flow of food continued. Does my noble friend the Minister agree that we really need to get some haste in building the new frigates and getting a rolling programme going to ensure that we have security of our food supply?
Baroness Hayman of Ullock (Lab)
I am starting to get a bit alarmed about the number of questions referring to World War III, but the noble Lord is right: food security is of critical importance. I am sure that right across every department we will do everything we can to ensure that, should World War III come anytime soon, we will have good food security in our country.
Lord Grayling (Con)
My Lords, the Minister is well aware of the challenge that we face around our marine biodiversity. One thing we have been able to do since we left the European Union is improve some of the protections, particularly around marine protected areas. What steps are she and Defra taking to ensure that the Government’s reset with the European Union does not end up compromising those standards and taking us back to where we were before?
Baroness Hayman of Ullock (Lab)
I am sure the noble Lord will appreciate that I cannot comment on the ongoing discussions that are taking place with the EU regarding the reset. However, we have been discussing with the EU the importance of not reducing any of our current standards.
Free Speech Complaints Scheme
(1 day, 4 hours ago)
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Lord Skidelsky
To ask His Majesty’s Government what assessment they have made of the letter to the Secretary of State for Education, signed by more than 350 academics and campaigners, calling for a free-speech complaints scheme run by the Office for Students.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, the Government are absolutely committed to freedom of speech and academic freedom. I can confirm that the Secretary of State and I have considered the letter and the concerns raised in it, and I had the opportunity to meet with and hear from many of the signatories. While I cannot comment on the future legislative programme, our commitment to the complaints scheme has been clearly set out. We will act to protect freedom of speech and academic freedom, and we are considering options.
Lord Skidelsky (CB)
I thank the Minister for her reply. Can she please explain why a complaints scheme has not yet been introduced, despite the Government’s promise set out in the Department for Education policy paper published in June 2025 to
“seek a legislative vehicle at the earliest opportunity”?
Do the Government have a timetable for legislation to amend and implement the Higher Education (Freedom of Speech) Act to achieve that purpose?
Baroness Smith of Malvern (Lab)
As I made clear in my Answer, we have committed to introducing the revised complaints process. It is normal practice not to comment on future legislative opportunities. However, I assure the noble Lord that we are making progress with this. I expect us to be able to introduce the amended complaints scheme sooner rather than later.
Lord Young of Acton (Con)
My Lords, I declare my interest as director of the Free Speech Union. The Minister has said in the past that the complaints scheme provided for in Section 8 of the Higher Education (Freedom of Speech) Act 2023 has not yet been introduced because the Secretary of State wants to amend the scheme to prevent students being able to submit complaints to the Office for Students about their speech being unlawfully interfered with, and that the only way to introduce the revised scheme, as the noble Lord said, would be via an amendment to a suitable legislative vehicle, and said vehicle has yet to hove into view. However, I have been told by a senior parliamentary official in response to a question that I submitted to the Library that the Government could, via secondary legislation, partially commence Section 8 in a way that meets the Secretary of State’s concerns. There is no constitutional reason why this has to be done by primary legislation. Why has it not been done yet?
Baroness Smith of Malvern (Lab)
Students can already express complaints through the Office of the Independent Adjudicator. The plan for the complaints scheme was that it should focus on staff, visiting speakers and members. The noble Lord has talked to me about his alternative proposal. It is one that, along with other options, we are considering.
Lord Mohammed of Tinsley (LD)
My Lords, if freedom of expression is a priority for this Government, why have they not considered short, stand-alone legislation, similar to the medical training Bill that we will debate later this afternoon, so that any issues could be resolved quickly and not leave academics in legal limbo for years to come?
Baroness Smith of Malvern (Lab)
We will not be leaving academics in legal limbo. Freedom of speech is undoubtedly a priority for this Government. It was a Labour Government who first enshrined freedom of expression in law through the Human Rights Act.
Baroness Barran (Con)
My Lords, even in the last few weeks we have seen academics required to go to court to vindicate their rights. They have been forced to bring expensive proceedings and we have seen huge payouts made by institutions to academics who have been unlawfully treated. It is my understanding that there is now authoritative legal advice that has been sought by academics, lawyers and Members of this House on how the Government could introduce the complaints scheme—which is on the statute book but not yet in force—in a way which meets the Government’s concerns about the width of the scheme while ending the otherwise unstoppable rush to the courts. Can the Minister commit to asking her officials to review those proposals as a matter of urgency?
Baroness Smith of Malvern (Lab)
I hope that the noble Baroness had a relaxing recess. As I said in response to her noble friend, a range of options has been proposed. I am not quite sure that the legal advice is as authoritative as she suggests, but I am in constant conversation with officials about the most appropriate route through which to commence the complaints scheme. We will make progress on this.
Baroness Bennett of Manor Castle (GP)
My Lords, I am sure the Minister is aware that the greatest threat to academic free speech—the ability to research, publish and teach students—is the funding situation of UK universities. Half of UK universities face a deficit in 2025-26 and as many as 50 are at risk of closure in the next year. The University and College Union tracker shows that 105 universities are facing major redundancies. Our universities are in crisis. What are the Government going to do?
Baroness Smith of Malvern (Lab)
The noble Baroness is right that the freezing of tuition fees by the previous Government put considerable financial strain on the university sector, which is why I am sure she will support this Government in our inflation-linked increases to tuition fees in order to fund universities. There is no point willing the ends if you are not willing to will the means.
Lord Bird (CB)
Can we include criticism of the actions of Israel in Gaza in the freedom of speech argument, because there are many of us who are being silenced by it?
Baroness Smith of Malvern (Lab)
I have not seen much evidence that the noble Lord is being silenced, but it remains an important part of free speech provisions to be able to protest legitimately—but not, of course, to harass or to promote antisemitism on campus. It is completely clear that that is the case, and there is a clear distinction between the two.
Lord Evans of Rainow (Con)
My Lords, I wonder if the Minister can give us an indication of when the Government will respond to your Lordships’ House’s special report into social mobility. It has been sat on the Secretary of State’s desk for a long time now.
Baroness Smith of Malvern (Lab)
I cannot quite remember when it was that I appeared in front of the committee on that report, but I enjoyed the experience. I do not think it will be very long, from memory.
LGBT Veterans Independent Review
(1 day, 4 hours ago)
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Lord Cashman
To ask His Majesty’s Government what progress they have made towards implementing the recommendations of the LGBT Veterans Independent Review, published in July 2023, with particular regard to the Financial Recognition Scheme.
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, I will start answering this Question by paying tribute to Lord Etherton—we would not be having Questions such as this were it not for him—and the noble Lords, Lord Cashman and Lord Lexden. We should remind ourselves of the work people do in this House and the progress they make.
The Government have implemented 48 of the 49 recommendations, including 14 restorative measures and the LGBT financial recognition scheme. I encourage affected veterans to visit GOV.UK for information on these schemes. The outstanding recommendation focused on the ban’s long-term consequences for female veterans and will be achieved through work starting this year, following the commitment in this Government’s veterans strategy to better understand and support women veterans.
Lord Cashman (Non-Afl)
I thank my noble friend the Minister for that statement and, equally, for his kind words. I also pay tribute to the noble Lord, Lord Lexden, and the noble and learned Lord, Lord Etherton. This is a great example of what we can do when we act cross-party in the common good. I congratulate my noble friend, the Government and the previous Government on the work done to implement the late noble and learned Lord’s recommendations. However, sadly, I must express the concern of the charity Fighting With Pride, and my own concerns, regarding the delays in implementing financial reparations, and some discharged and dismissed payments appeals which appear contrary to the letter and the spirit of the review.
It is important that the Government act swiftly. Many who were discharged or forced out, or had their service terminated, are in their later years. Sadly, many are in ill health. Therefore, I ask my noble friend the Minister: what further measures will the Government take to speed up the delivery of financial reparations, and to address the concerns raised regarding dismissed and discharged payment appeals? Now is the time to finally deliver the justice so deserved by these brave LGBT veterans who, to quote the late Lord Etherton, were so shamefully treated.
Lord Coaker (Lab)
We all associate with the remarks my noble friend just made with respect to the shameful way in which people were treated between 1967 and 2001. On the timeliness of the financial recognition scheme and the direct payments, the Government are working hard to ensure that we get to those who are the most seriously ill and the most elderly first so that they get the recognition that they deserve. On the impact part of the financial recognition scheme, the Government are going to increase the number of panels from two to three—I notice the noble Lord, Lord Paddick, in his place—which will allow three meetings of those panels each week. We are also appointing an additional chair. We think those measures, reaching out to local councils, reaching out to veterans’ charities and increasing the numbers of panels should speed up the process to ensure that we get to those veterans who need that support.
Lord Hayward (Con)
My Lords, I have enormous respect for the Minister and what he has been doing on this scheme, but there is a sense among the former service men and women that the rules are being applied far too narrowly, with no flexibility whatever. That was not the intention of the noble and learned Lord, Lord Etherton, when he drew up the scheme. Could the Minister please look at this to ensure that there is a degree of flexibility in the operation of the scheme, as was intended, and that the rules are not applied precisely as written and in no other circumstances?
Lord Coaker (Lab)
The noble Lord makes an important point. The fundamental principle of the scheme that is operating is to ensure that everybody who was affected by the ban between 1967 and 2001 receives the recognition that they deserve. For some, that will be under the financial recognition scheme, whichever part of that it may be, but part of this is about the restoration of rank, berets and those sorts of things. It is not the Government’s intention to exclude anyone who is eligible, and we will ensure that as much as we can. I heard what the noble Lord said, and we will always look at that, but we need to make sure that we get to those people who are covered by the scheme.
Baroness Burt of Solihull (LD)
My Lords, it seems that gay veterans have, in some ways, been delivered a double whammy: not only the central discrimination, which is the way they were discriminated against in the past, but, on top of that, the discrimination and delays in rectifying it. It would be good if the Government could indicate when we are likely to see this rectified.
Lord Coaker (Lab)
This gives me the opportunity to say this to the noble Baroness: I urge everybody that all applications for the scheme need to be in by midnight on 12 December this year. It is important to make that statement. The Government have no interest in trying to delay, or in not doing everything as quickly as possible. The noble Baroness urges the Government, as other noble Lords have, to do as much as we can, as quickly as we can. We will do that, because it is not in our interest not to. This is in the interest of putting right something that was wrong, and that is supported across the Chamber. It is our intention to ensure that we get to as many affected veterans as possible, to ensure that they get not only recognition under the scheme but some way of trying to put right the wrong of the past.
The Earl of Effingham (Con)
My Lords, my father hugely enjoyed working for the noble Lord, Lord West, in Washington DC and London, so I believe I have some understanding of the commitment of veterans. Many of the veterans involved in this redress scheme face excessive delays in accessing their own service records, as those applying for the financial recognition scheme are not prioritised for subject access requests. Surely that is neither fair nor reasonable.
Lord Coaker (Lab)
My Lords, there is a reverse burden of proof, so anybody applying to the scheme is believed; it is up to the MoD to show that their service records do not match what they put forward. Everybody asked for that, and everybody accepted that it was really important. It is not in anybody’s interest to delay anything. We respect veterans, as the noble Earl does, and we want as many people to receive recognition under the terms of this scheme as possible. We will do everything to ensure that happens. There is no delay on the Government’s part.
On the noble Earl’s point on the service records, should somebody be refused recognition under the scheme, they can apply for the evidence that the MoD used to refuse them that recognition and use it as part of furthering their appeal against refusal. I think the MoD is trying to do that. On subject access requests, I think that takes us into medical records and a different dataset. I reassure the noble Earl that anything used in evidence to refuse recognition under the scheme will be released to the person who made the application.
Baroness Hayter of Kentish Town (Lab)
My Lords, on the back of this scheme, I have been trying for three years to get action on the diplomats who were thrown out of the FCDO for being gay. I have raised this many times and keep being told that we will be updated on finding those who were sacked from the FCDO. Can the Minister give us a date for when that work will be done, when these people will be identified and when a similar scheme will start for them?
Lord Coaker (Lab)
Let me talk to FCDO colleagues about that and come back to the noble Baroness with a letter, rather than make something up, because I am not sure of the answer. I will go back to the FCDO, write to the noble Baroness and put a copy in the Library.
Lord Paddick (Non-Afl)
My Lords, I declare an interest as the independent chair of the panel deciding on impact payments under the LGBT financial recognition scheme. Although I acknowledge the strenuous efforts of the independent panel members, who are dealing with long, complex and harrowing cases, will the Minister ensure that the appointment of an additional chair and additional panel members is expedited to ensure that all cases are dealt with by the absolute deadline of April 2027?
Lord Coaker (Lab)
The simple answer is yes. The noble Lord makes an important point. I will ensure that the ministry takes that forward and expedites this as quickly as possible to support the excellent work that the noble Lord has been doing with the other panel members.
Lord Pannick (CB)
Will the Minister acknowledge that what he rightly described as the shameful treatment of service men and women who are LGBT prior to 2001 ended only because of a judgment of the European Court of Human Rights, and that persons who criticise the role of the European court should bear that in mind as an example of the valuable role of that institution? I declare an interest because I am very proud that I was counsel for the claimants in that case.
Lord Coaker (Lab)
Congratulations on that further string to the noble Lord’s bow. The important point is that he is to be congratulated on the work that he did to bring that change forward and right that wrong. He should be proud of that, in the way I pointed out to other noble Lords. Frankly, we can make points about the European Court of Human Rights or many other courts, but the important thing is that the noble Lord used the legal process that was available at that time to put right a wrong. He is to be congratulated on that, but so is everybody across the House in the campaign to recognise that when something is wrong, sometimes the best thing to do is to admit it and put it right.
V-levels
(1 day, 4 hours ago)
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Lord McNicol of West Kilbride
To ask His Majesty’s Government what plans they have to communicate the purpose and value of the newly introduced V-Levels to students, parents, and employers, to ensure widespread understanding and uptake of these qualifications.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, V-levels will deliver a once-in-a-generation reform to 16-19 vocational education, supporting our goal for two-thirds of young people to reach higher-level study or apprenticeships. We will work with partners, including FE providers, local government, employers, higher education providers and the Careers & Enterprise Company, to ensure that V-levels are understood and valued. We will raise awareness of V-levels through our Skills for Life and future communications campaigns. Our consultation response will be published soon.
Lord McNicol of West Kilbride (Lab)
I thank my noble friend the Minister and welcome the clarity and reassurance she has given. Given the concerning new figures on youth unemployment, what steps are being taken to ensure that businesses engage with the meaningful work placements that are envisaged for V-level students, and have His Majesty’s Government considered financial or regulatory incentives to encourage employers, especially rural SMEs, to offer these placements for V-level students?
Baroness Smith of Malvern (Lab)
My noble friend is right that work experience often plays an important role in enabling young people to experience work and to reduce the risk of them becoming NEET, as does having the right routes for further study at level 3, which is part of what the V-level reforms are about. As well as this Government’s commitment to two weeks of work experience for students throughout their school career, we already have very effective industrial placements in T-levels, of course, and we will use the additional funding for the youth guarantee to provide the opportunity for young people who are out of work to experience work experience as part of the youth guarantee gateway.
Lord Redwood (Con)
For V-levels to succeed, they need to be linked with a good opportunity to get a well-paid job. So what measures will the Government take urgently to tackle the unacceptably high levels of youth unemployment brought about by high taxes and anti-business culture, when, for these V-levels to succeed, we need a welcoming approach by business to youth employment?
Baroness Smith of Malvern (Lab)
The noble Lord is of course right that we need good jobs for young people. We also need investment in their education and training, which this Government are putting in place. The £1.5 billion that the Chancellor made available to support the youth guarantee and apprenticeships for young people will help to ensure more opportunities for apprenticeships, more opportunities to get young people who are currently out of work into work, and a backstop job guarantee for those young people.
Baroness Wheatcroft (CB)
Will the Minister tell the House just how successful T-levels have been? Take-up by employers is said to have been mixed at best. That being the case, how is she going to persuade employers to take part in V-levels?
Baroness Smith of Malvern (Lab)
Nearly 85,000 students have started a T-level since the launch in 2020, and we saw considerable growth last year in the numbers of students taking them up. We are seeing improvements in the pass rate and in retention rates. There is a challenge to ensure that high-quality industrial placements are made available to more students. To ensure that that is possible, we have made some revisions to the requirements for industrial placements to enable even more students to benefit from them.
Lord Mohammed of Tinsley (LD)
My Lords, T-levels have had very patchy coverage, particularly when it comes to the regions, so how is the Government’s communication plan going to be rigorous enough to ensure that V-levels, particularly in subject areas such as digital and engineering, reach out to areas that often do not engage with this, particularly in the north? The figures for youth unemployment and NEETs, particularly in the north, are very high.
Baroness Smith of Malvern (Lab)
I have had the chance to talk to students in colleges that are delivering successful T-level provision in the north, but I understand the point that the noble Lord is making. As I say, V-levels are an enormously important opportunity for young people who are not wholly clear what career pathway and occupation that they want to undertake but know that they learn better through applied learning and through assessment that is more practical—something that has been widely called for. The links to occupational standards that V-levels will include will also give confidence that young people will find a route through to work or to higher study as a result of V-levels. As I said in my initial Answer, we will also work hard to make sure that awareness of these opportunities is spread as far as possible.
Lord Kirkhope of Harrogate (Con)
My Lords, HND is well known as a qualification, and many employers have been delighted over many years now to employ people who have obtained that qualification. However, does the Minister not think that, with these various different qualifications, employers in many cases are still confused as to precisely what qualifications they are looking at when they are employing new people?
Baroness Smith of Malvern (Lab)
The noble Lord makes a fair point, which is why at level 3 we want to ensure that there are three clear routes—through A-levels, T-levels and V-levels—while at levels 4 and 5, which is where HNDs sit, we want to improve our current position, where insufficient numbers of young people go on to get qualified. That is why the Prime Minister set the target of two-thirds of young people achieving level 4 or above, and V-levels are an important route to that further study that the noble Lord was talking about.
Lord Watts (Lab)
Does the Minister agree that it is not the recent tax increases that have damaged the economy but the cost of Brexit, which cost £100 billion? That is another mess that has been left by the previous Government.
Baroness Smith of Malvern (Lab)
The only thing about which I disagree with my noble friend is that that is not the only mess left by the previous Government that we have had to clear up.
Baroness Barran (Con)
Perhaps I might build on the question asked by the noble Baroness, Lady Wheatcroft, about T-levels. My experience of talking to pupils who are studying T-levels is that they are almost universally incredibly enthusiastic about them, but if one goes to a school that does not deliver T-levels one finds that no one has heard of them, so the communication problem still exists for T-levels—as it will do for V-levels. I wonder whether the Minister could say what the Government are doing to address that.
Baroness Smith of Malvern (Lab)
We have seen a considerable increase in the awareness of T-levels. It is also the case that we want to ensure—through reforms that we will have more to say about in the near future—that T-levels are both accessible to more students and scalable for more students to be able to take advantage of them. In doing that, we are talking not only to colleges where T-levels are going very successfully but to sixth-form colleges and school sixth forms.
Lord Hampton (CB)
My Lords, as an ex-head of department, I can assure everybody that it is the heads of department who get to choose the exams in a school. Schools are finding it really difficult with T-levels to link up with the employers; colleges are finding it much easier. Can the Minister tell us how the Government are going to persuade heads of department and the careers departments in schools to get together to get these really meaningful employment opportunities?
Baroness Smith of Malvern (Lab)
As a former head of department, I am not sure that I completely agree with the noble Lord that all the important decisions are made by heads of department, but it is certainly the case that quite a lot of them are. That is why it is important for us to provide clarity for schools about the responsibility to provide work experience for all students and that we make industrial placements—for example, for T-levels—more deliverable on a larger scale than they are at the moment. It is why we need to continue the work in careers education to ensure that there is greater awareness and understanding of the range of options available to young people. Having clarity about the three routes for further study alongside apprenticeships for those aged 16 to 19 will help make that route for young people clearer.
Lord Addington (LD)
My Lords, the main problem with communicating exactly what these exams are and how they fit into the employability of a person can be addressed only by better careers training. Can the Minister point out now how this fits into careers advice given to children, probably as young as primary school age, and their parents, so that they will be able to start to plan?
Baroness Smith of Malvern (Lab)
The noble Lord is right that good careers advice is important. Some 96% of secondary schools and colleges are now in careers hubs, connecting them to employers and apprenticeship providers in their areas. Over 3,500 business volunteers work with schools and colleges to inspire young people about career opportunities, including the vocational and academic pathways into their sectors.
US Tariffs
(1 day, 4 hours ago)
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Lord Lamont of Lerwick
To ask His Majesty’s Government what assessment they have made of the impact on the UK economy of the announcement by President Donald Trump of increased tariffs, and what representations they plan to make to the government of the United States.
The Minister of State, Department for Business and Trade and HM Treasury (Lord Stockwood) (Lab)
My Lords, the Supreme Court ruling does not affect the majority of trade under the economic prosperity deal, including the sectoral tariffs agreed on steel, pharmaceuticals and automotives. The Business Secretary spoke to his counterpart at the weekend and underlined his concerns about uncertainty for businesses and reinforced the need to honour the UK-US trade deal. We continue to engage with the Administration at all levels. Our priority remains to secure the best possible outcome for British businesses.
Lord Lamont of Lerwick (Con)
I thank the Minister for that helpful reply. Does he agree that, following the Supreme Court judgment, the decision of the United States President to impose, even on a temporary basis, tariffs of up to 15% is deeply damaging to confidence, both in this economy and in that of the United States? Can the Minister say a little more about what now remains of the trade deal negotiated by the Government less than a year ago, which was supposed to give us a preferential advantage over other European countries, but now we all face a universal global tariff of 10%?
Has the Minister also seen the warning over the weekend from the United States trade representative that, in order to assess what tariffs are necessary for the future, “most major trading partners” of America will face accelerated investigations into trading practices, which, of course, could include things such as pharmaceutical pricing, which were excluded from the agreement before? Will the Government undertake not just to defend Britain’s actions and Britain’s interests vigorously but also to ensure that the outcome of these discussions leaves us no worse off than we were before these unfortunate announcements?
Lord Stockwood (Lab)
The noble Lord raises a number of challenging and fast-moving issues, and I will try to respond as fully as I can. It is worth stating that the UK secured that preferential deal last year, driven by the Prime Minister’s direct engagement with President Trump. That was trying to give British businesses certainty and competitive advantages. The ruling at the weekend does not affect our preferential treatment in the key sectors such as pharma, cars and steel that the noble Lord mentioned.
The Business Secretary spoke to US trade representative Jamieson Greer this weekend, making clear our concerns about uncertainty and our degree of confidence in the honouring of those agreements that we needed, and he had those reassurances. UK officials across Whitehall and Washington are engaging intensively with the US as we speak, and those discussions will continue all of this week, at which time we can update the House. It is worth stating that we have always had a cool-headed and pragmatic approach to trade deals, and while I would not comment on other Governments’ policies, we do have a competitive advantage globally in the sectors we set out in the original negotiation. The biggest beneficiaries of this weekend’s announcements are those trade barriers coming down for other countries, but we still have the best deal globally, and we continue to negotiate to retain that preferential position.
Lord Hannay of Chiswick (CB)
My Lords, would the Minister say whether the Government’s information leads them to suppose that the President’s choice of 15% and its differential impact on countries was deliberate or inadvertent?
Lord Stockwood (Lab)
As a Minister only six months into the job, I have uncertainty in my own mind sometimes; I am certainly not going to comment on the US President. What I can say is that we remain the only country that has secured a 10% tariff on auto, securing hundreds of thousands of jobs; we are the only country in the world with a 0% tariff on pharmaceuticals; and we are the only country in the world to benefit from a 25% tariff on steel, aluminium and other derivatives. We believe that we will retain those competitive positions, but our position is to control the controllables that we have today and negotiate to retain those benefits for UK businesses.
Lord Fox (LD)
My Lords, I am sure that industry is grateful for the sympathy the Minister has expressed from the Dispatch Box, and we are all encouraged by the hopes that the Government have expressed. But we all know that the opinions of trade officials often differ from those of the President. The uncertainty that is now surrounding all of British manufacturing is huge. What advice are the Government now giving to manufacturing businesses? What conversations have been had with the manufacturers, and how should they behave in the light of this huge uncertainty?
Lord Stockwood (Lab)
The question of certainty, raised by the noble Lords, Lord Lamont and Lord Fox, is critical to business. We live in a world that is changing rapidly and evolving minute by minute—I just checked my BBC feed on my way into the Chamber this afternoon. What I can say is that this Government have a plan: for the first time since the 1960s, we have an industrial strategy that focuses on our competitive advantage in automotive, technology and pharmaceuticals. It remains important to have clarity on our comparative advantage, and we remain in negotiation with all those key sectors; indeed, the pharmaceutical sector has the most preferential deal globally. I was due to have a meeting at 3 pm today with the pharmaceutical sector, and this has overridden that. These are fast-moving events. We remain cool-headed, trying to negotiate on behalf of UK businesses, and we are confident that our preferential relationship with the US will bear dividends as things develop this week.
Lord Howell of Guildford (Con)
My Lords, I know that history does not always repeat itself, but would it be a kindness at this stage to remind President Donald Trump that the American tariff protections of the 1930s by Smoot and Hawley played a major part in accelerating the onset of the Second World War?
Lord Wigley (PC)
My Lords, the Minister quite rightly referred to pharmaceuticals and their importance. Can he clarify whether the derogation regarding pharmaceuticals will include the equipment and technology used for testing the need for and application of pharmaceuticals?
Lord Stockwood (Lab)
I will have to come back to the noble Lord on that question. The pharmaceuticals deal was for medical exports to the US for at least three years.
Baroness Royall of Blaisdon (Lab)
My Lords, while we welcome the industrial strategy that was mentioned by my noble friend the Minister, does he agree that, in these deeply uncertain times when there is much instability, the reset with the European Union on which our Government have embarked grows in importance by the day?
Lord Stockwood (Lab)
As I mentioned, the cool-headed approach that the Government are taking includes many of our global trading partners. It is worth reminding the House that, while the US is a critical trading partner, with £330 billion of bilateral trade, the EU makes up 40% of our global trade and is an incredibly important partner, so those negotiations are ongoing. We have to redefine our position in the world, not just with the EU but as we have done with our trade deal with India and as we are doing with the Gulf states et al. It is undeniable that our relationship with Europe will be critical to our economic growth over the coming decades.
Lord Londesborough (CB)
My Lords, somewhat bizarrely, the trading partners of the US that are the greatest beneficiaries of President Trump’s new regime are Brazil, China and India, which are currently looking at net falls in their tariffs of 5% to 13%, while the UK, in spite of our preferential status, will see a net average tariff increase of 2.1%. That is the highest rate in Europe and compares with the eurozone’s 0.8%. I am quoting figures from Global Trade Alert, a trade monitoring service. Does the Minister recognise these figures, and what is his reaction to them?
Lord Stockwood (Lab)
I recognise the figures quoted, but they are speculation at this stage. The deals on preferential rates for farmers, automotive, et cetera were agreed terms, but that was the beginning of the negotiations, not the end. The preferential deal that was secured was brought about by direct engagement between the Prime Minister and President Trump. The EPD negotiations remain ongoing, and we will look to further protect the UK’s interests with further announcements over the coming weeks. It is worth reminding the House that the UK was the first country to see tariffs removed for civil aerospace goods, and we remain the only country to retain those secured 10% tariffs on automotive, steel and aluminium. We are prepared to fight for British businesses from here on in as well.
Lord Wallace of Saltaire (LD)
My Lords, we all know that President Trump is extremely transactional in his international relations and respects only those who bargain hard with him. Are His Majesty’s Government considering imposing a new and hard tax on foreign-owned golf courses?
Lord Stockwood (Lab)
I am not aware that that is part of the negotiations.
Lord Sikka (Lab)
My Lords, is there a role for the World Trade Organization in this tariff-led turmoil?
Lord Stockwood (Lab)
At the moment, these are bilateral conversations. We are acting in good faith and hope that they will come to a successful resolution.
Lord Hunt of Wirral (Con)
My Lords, the Government are trying to reassure the nation that they do not expect the ruling to affect the majority of trade under the economic prosperity deal, but as the noble Lord, Lord Fox, pointed out, there is huge uncertainty. Can the Minister clarify precisely what proportion of UK exports to the United States that represents and which sectors now fall outside that protection?
Lord Stockwood (Lab)
The confidence that I am trying to relay is not unfounded. As we saw from last week’s announcements, part of the macroeconomic situation that we are trying to turn around has seen inflation fall and the largest recorded government surplus since the 1990s. That is the overall message that we are trying to relay. In terms of specific industries, the negotiations are ongoing. I do not have the specific numbers to hand, but I remind the House that, globally, we have the most preferential deal with the rates that we have secured for industries, and we will continue to fight on behalf of British business.
Lord McNicol of West Kilbride (Lab)
My Lords, one way to deal with this issue is by the acceleration of the free trade agreements. Under the last Government, we had agreements with New Zealand, Australia and then the CPTPP. Under this Government, we have accelerated those agreements. The Minister mentioned the six Gulf states and the GCC free trade agreement. Is there any update on the GCC FTA negotiations and what comes next?
Lord Stockwood (Lab)
My noble friend raises a really important question about our current trading relationship based on the new world order that we find ourselves in. I do not have a specific update on the GCC deal; my noble friend knows that I was out there a couple of weeks ago, and we are incredibly close to an agreement. I should like to reassure the House that, in my travels around the globe, I find that we are still seen as a major place for investment globally. We have competitive advantage in our industrial strategy, in our rule of law and in our talent base. The trade deal that we did with India was significant, and the trade deal with the US remains the first and best trade deal that the US has negotiated. While this weekend has thrown up some bumps in the road, we remain confident. The negotiation with the Gulf states is ongoing but remains very positive, and we hope to have some good news in the coming weeks.
Lord Johnson of Lainston (Con)
My Lords, I read somewhere that the Department for International Trade is going to be reducing the number of experts in the field from 1,600 to 1,000. Is now really the time to be reducing our global staff by a third when our businesses need all the support they can get at this time of tariff turmoil?
Lord Stockwood (Lab)
I thank my noble predecessor for the question. We are trying to balance the pressure from the public world to right-size our Civil Service more broadly to make it more effective—technology and information are tools that can help us with that. We are also trying to balance the public purse to ensure that we have the right quality of people to address the significant challenges that we have as a Government. It is not a zero-sum game. We have very talented people; I addressed the team in the Gulf when I was out there a couple of weeks ago, and I remain impressed by the quality of the people that we have in this sector. But it is undeniable that we must make sure, based on the advantages that we have in technology and information flows these days, that we also have the right number of people in markets at the same time.
Lord Skidelsky (CB)
My Lords, is there anyone in the Government thinking about alternatives to trade wars or trade deals as a way of organising the economic affairs of the world? The noble Lord, Lord Howell, is quite right: historically, tariffs tend to set the ground for war. That was also true before 1914, when there was a big increase in world tariffs. Who in the Government is thinking about alternative ways of organising the trade relations of the world? I am asking this not as a matter of policy but as a matter of thinking about the world we seem to be drifting into.
Lord Stockwood (Lab)
The noble Lord raises a really important philosophical question. From my personal experience during the last six months, we are trying to readjust to both a post-Brexit world and a new world order with what we are seeing in the US, China and the EU in particular. We have to make sure that we are protecting our own economic interests. I am seeing a high regard still for our soft power in the world. We play that card particularly well, whether it is the institutional base of our universities, our talent base or our research. We are trying to make sure that we play to the assets and capabilities that we have. Trade remains important, but we also have to react to the new world order and be responsive to it in order to make sure that we are not left behind.
Medical Training (Prioritisation) Bill
(1 day, 4 hours ago)
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Lord Patel
Member’s explanatory statement
This amendment, and others in the name of Lord Patel, seeks to ensure that UK medical graduates are prioritised above other categories of eligible applicants.
Lord Patel (CB)
My Lords, I will speak to my amendments listed in group one. My amendments should be underpinned by the status of UK medical graduates. The competition to get into medical schools in the United Kingdom is one of the toughest of any country. The ratio of success is about 4:1, with the highest A-level grades obtained, including many at A*, but requirements are higher than that.
At completion, on average, a UK medical graduate has a loan of about £72,000, and it is important that we debate this Bill in that context. I have retabled my amendments from Committee for two reasons. The first is that the debate that we had in Committee concentrated—rightly, maybe—more on international medical graduates or graduates from UK university campuses and not so much on the UK medical school graduates, who seem to be losing out on getting training posts. We have all received many emails from UK graduates and international medical graduates. I, presumably because I had amendments in my name, seemed to receive many more from UK medical graduates. Some noble Lords may have seen a petition on the internet addressed to us, Members of the House of Lords, to pass this Bill unamended, from UK medical graduates. I gather that there are over 4,500 names attached to that petition now.
So why am I putting forward these amendments again? Most other countries—the USA, Canada, New Zealand, Australia, Singapore and the EU—prioritise their graduates for further training and even employment. Data from the GMC, NHS England, the royal colleges, the BMA and professional journals shows—I accept there is variation, including in how the data could be interpreted—that graduates from the UK find it difficult to get into core and specialist training programmes, for a variety of reasons. They include: increased output from medical schools, which will increase even more in future years; an increase in post-2019 visas for international medical graduates; and training slots have not increased, with the workforce plan increased to accommodate more doctors.
In the UK doctors’ pay negotiations, one of the primary reasons that they gave was that training was an issue. A second issue was working conditions and a third was pay. I have said publicly in this Chamber before, and I repeat now, that I do not subscribe to any doctor at any time withdrawing their services from patients, for no matter what reason. I therefore do not agree with junior doctors going on strike. Despite the fact that they may have a legitimate reason to complain about their training issues, it is still no reason, as far as I am concerned, to withdraw services from patients.
UK training of doctors has three stages: foundation years 1 and 2; core training; and specialty training, including GP training. The GMC informs me that foundation year one training is available to all graduates who graduate from UK universities, although sometimes they find it difficult as the slots are not available until the last minute. Usually, that ought not to be a problem. In my case, it was two weeks before I had to start the job that I secured a position to do surgery in Penzance, having qualified in St Andrews. It was not a place that I had visited before, but I got through it.
In a 2024 report, the GMC says that, in 2023, 77% of doctors completing foundation year 2 did not or could not enter core training. A lot of them, around 13%, had decided not to, I gather, and may have gone overseas. In 2017, international medical graduates whose primary medical qualification was overseas were 47% of those registered with the GMC; in 2023, this was 68%. The 2023 GMC report said that 40% of doctors entering specialty training were international medical graduates.
It is important that we have opportunities for international medical graduates to come to train in the United Kingdom and have employment status in the NHS. But UK doctors should have a fair shot at being able to compete fairly. UK doctors comment that, after foundation year 2, entering specialty training is like falling off a cliff; it is difficult for them to get into specialist training.
NHS England, in annex 3 of its briefing on the Medical Training (Prioritisation) Bill, says that the potential impact will be an application total of 21,000 for about 10,000 posts, a ratio of 2:1. In 2025 round 1, 28,000 of the 80,000 applications were deemed appointable, according to that document. On competition, annex 4 says that, despite lower competition ratios, over 2,000 appointable UK graduates did not receive an offer in round 1 of 2025.
The expectation, therefore, is that there will be 16,000 UK graduates, a slight increase from last year, applying for core and specialty training, and 26,000 international medical graduates, also a slight increase from last year. That is 42,000, although the NHS England number is 47,000. There is always a variation in the numbers, for reasons I cannot explain. Nonetheless, the ratio is 4:1 for 10,000 slots. The estimate is that 8,000 UK graduates may be forced out of the coming rotation year as they may not have appointments.
The passage of the Bill will mean that priority groups of doctors will also apply for these training slots. I could not find a number for what effect that will have, but maybe the Minister has numbers on how many more doctors will be able to enter specialist training if the priority groups in the Bill are included. So UK graduates, with the expansion of priority groups, will have further competition.
An NHS England publication, with a foreword from Dr Powis and the Chief Medical Officer, says that
“the current bottlenecks in training do not benefit anyone; while some competition has always been a necessary part of medical training and career progression … the current ratios are making sensible career planning and assessment”
for, in my words, UK doctors
“very difficult”.
That is why I put my amendment where I have. I know the later amendments will discuss graduates from other UK campuses being eligible for the priority group, but I will refer to that later. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, the noble Lord, Lord Patel, made some very interesting points, and I am interested in hearing my noble friend the Minister’s response to his amendments. I doubt I have had as many emails as the noble Lord, in view of his expertise in the whole area of medical training and development, particularly at postgraduate level, but it is hard not to feel sympathetic to both sides of the argument. I feel for those doctors trained overseas who thought they were on a pathway to being accepted for specialty training in this country and have had the rules of the game changed half way through.
Equally, though, as the noble Lord, Lord Patel, pointed out, we have the ridiculous situation of growing competition from overseas doctors while UK-trained doctors are finding it very hard to get specialist training. This goes to the wider question about this country’s overreliance on doctors from overseas, and the current recruitment from Africa gives me particular concern about the ethics of this process.
Baroness McIntosh of Pickering (Con)
My Lords, I will speak in support of the amendment in the name of the noble Lord, Lord Patel; I thank him for the background research he has done on the amendment. The Minister will be aware that I work for the Dispensing Doctors’ Association. My father and brother were GPs and my uncle was a surgeon; I could not stand the sight of blood, so for the greater good I went into the legal profession instead.
The Minister and the noble Baroness, Lady Blake, sitting beside her, know of my interest in this subject, particularly in relation to junior doctors in training. As we have heard, they do not have a sufficient number of specialty job vacancies offered to them, and they have no security of tenure. They are of an age—probably in their late 20s and early 30s—when they would hope to put down roots, form relationships and start families. It is particularly key that we look after them.
I had one point of difference from the noble Lord, Lord Patel: I thought the consultants were quite well rewarded in their pay round. I hope they will support the junior doctors in their pay round, because it is very important that the profession sticks together in that regard. I agree with the noble Lord that it is very unfortunate if they feel they have to go on strike, which obviously disadvantages patients, hospitals and other staff.
When the Minister responds to the debate, can she explain to me what there is in the Bill, if we do not adopt this amendment, to cover the specific set of circumstances that the noble Lord has identified? If there is nothing in the Bill, will she come forward at Third Reading with something that covers these points? This exercises a number of us very deeply. We have to give the right message, particularly to young, male, white doctors, who may otherwise leave the profession. In general practice, a number of partners are leaving and going to work in Australia, New Zealand and Canada after they have completed their training and possibly after five or 10 years of experience. For the future of the profession at every level, we need to take this set of circumstances very seriously.
Baroness Finlay of Llandaff (CB)
My Lords, I declare an interest as a UK graduate and as a pro-chancellor of Cardiff University, which has a very large medical school.
The ethics issues raised by the noble Lord, Lord Hunt of Kings Heath, are really important when we look at the Bill. What is our ethical role in attracting people—literally—and pulling them from places that have a terrible shortage of any medical provision whatever?
Another aspect that my noble friend Lord Patel brought out so clearly is the problem of career progression. I hope that, in summing up, the Minister will reassure us that the Bill is step one in sorting out the medical career progression for people in this country. Only this weekend, I heard of a large teaching hospital that has two consultant posts coming up, for which there were 28 appointable applicants, many of whom are already consultants. There is a real bottleneck for trainees who have gone right through their training programme and done all their exams. Broadly, there are two ways of progressing: run-through training, which provides some security, and training at a postgraduate level, where they have to reapply before they move on. The problems of geography for young people, or for parents with children who are settled, are absolutely massive.
I have been worried that the pay story hides huge problems and unhappiness, particularly in relation to the lack of teams in the way that training has been organised. I am referring not to Teams on the internet but to clinical teams where people know that they belong, where they know the person they can contact and where there is longer continuity. There has been a fault by the medical royal colleges—I hold my hand up, having been involved in some curricula in palliative medicine—in that we have overstepped different bits of experience and undervalued the importance of people coming through.
While I support these amendments from my noble friend Lord Patel, it is important to remember that some on international medical training programmes have no, or almost no, communications skills training or training in medical ethics. In fact, there are some where they have no clinical experience of any note until they pass their almost totally theoretical exams and then they have to gain all the clinical experience later. I am not passing any judgment on the quality of their medicine later on, and they may have a better scientific foundation, but we are not comparing like with like in the process.
I hope that the Minister will be able to assure us that Oriel, as an appointments and selection process, will have a much more subtle way of looking at the experience that people have and not just crude categories, because it will be important that we do not select away excellence in the name of the medical school that somebody graduated from. There is a spectrum of quality in every medical school output cohort. There are some who are superb, and there are some who, frankly, might have done better not getting into medicine in the first place—it may be a small number—but among graduates from other medical schools there will be people with superb experience and who turn out to be excellent. We see some of those in very senior positions in medicine across the UK.
The prioritisation message needs to be subtle, and it needs to look at the full employment history from graduation, including applicants’ NHS experience and the quality of their work during that. Apparently, the system can automatically calculate a lot of this, drawing on GMC data as well. There is a lot of work to be done by this system in relation to the data held by the GMC, and there is a lot of work to be done by the royal colleges.
Lord Stevens of Birmingham (CB)
My Lords, I declare my interest as chair of King’s College London. I think that there is a welcome consensus that the UK should aim for self-sufficiency in the production of new doctors through medical school, specialty training and into the NHS. In fairness, the last Government deserve credit for having taken the decision to expand medical school undergraduate intake to put us on that path. It was also not unreasonable, as a temporary measure, to make use of selective international recruitment while those new doctors came through the system, not least as the independent Migration Advisory Committee reported at the time that, in respect of doctors,
“there is sufficient and overwhelming evidence of a UK-wide shortage”.
Given that it takes perhaps 15 years for new medical students to come into independent clinical practice, telling patients to hang on for 15 years while that intake fed through the system would not have been good, certainly for patients.
However, the issue now is that, clearly, there needs to be better prioritisation during the transitional system. We spent a lot of time in Committee discussing the pros and cons of what that transitional prioritisation might look like, but one question that has not yet been completely resolved, which would aid the House in assessing the proposals that the noble Lord, Lord Patel, has put before us, is whether we could have a clear answer from the Minister as to what the increase in the pipeline and in the availability of specialty training places is going to be for the current year and over the next three years. As she pointed out to us in correspondence during recess last week, the NHS 10-year plan that the Government published last July talked about an additional 1,000 specialty training places over three years. However, the Secretary of State for Health and Social Care put on the table the proposition of not 1,000 but 4,000 additional specialty training places over three years, of which an additional 1,000 would become available in this coming year. That is what was put on the table in the discussion with the BMA on 10 December. Given that it is only a few months until these posts are filled, presumably the Minister must know the answer to the question: exactly how many additional specialty training places will we get for the year ahead so as to reduce the prioritisation problems with whichever criteria the Bill puts forth?
Baroness Gerada (CB)
My Lords, as probably the only person in this Chamber who has headed up a royal college not once but twice—the Royal College of General Practitioners—I feel the urge just to defend them and correct what is been said three times in this Chamber. The royal colleges set the standards and the curriculum; they do not oversee workforce planning, funding, or what the actual training looks like once you get into an organisation. I have to correct those speakers by saying that that is not the job of the Royal College of GPs. I do not disagree that there needs to be reform; absolutely, it is a complete mess—
Lord Hunt of Kings Heath (Lab)
My Lords, does the noble Baroness accept that the royal colleges certainly can give moral leadership? I also refer her back to the last junior doctors dispute, about 10 or 11 years ago. As she will remember, the Academy of Medical Royal Colleges, I think it was, set up a group to look at all these issues, and the outcome of that was very disappointing in terms of tangible results in improving the situation.
Baroness Gerada (CB)
I thank the noble Lord very much. I have to also tell your Lordships that for the last 20 years I have led what is called the practitioner health programme, which has looked after the mental health of the medical workforce—I no longer lead it. To date, about 40,000, mainly doctors, have passed through that service, most with mental health issues relating to burnout, depression and anxiety, and some with a new diagnosis which I call NHS-itis.
I know about the endless reviews that were done. It is not just the Academy of Medical Royal Colleges, Health Education England, the General Medical Council and the CQC; many of the individual royal colleges looked at the issues of the decline in mental health. Some of these have been raised here, around firms, loss of control, training and the intensity of the workload. Fundamentally, we do not make it easy for any of these doctors—and, by the way, we do not make it easy for the international medical graduates either, who have always fared worse. I agree with the noble Lord that there are solutions, so we do not need another review. The answer is blowing in the wind—we have the solutions—and I am very happy to discuss that at a further time.
Lord Clement-Jones (LD)
My Lords, we ought to thank the noble Lord, Lord Patel, for having stimulated such an interesting and important conversation about how terrible our workforce planning in the NHS has been to date, and we have had some very wise words around the House on that subject. It is clearly not fit for purpose, and that is why we are where we are.
On these Benches, we have consistently accepted the Government’s central premise for the Bill: that where the British taxpayer invests heavily in training a doctor at a UK medical school, there is a logic in prioritising that graduate for employment to ensure a return on that public investment. However, although we sympathise with the desire of the noble Lord, Lord Patel, to ensure that UK graduates are prioritised—indeed, a lot of that derives from the fact that our workforce planning system is not fit for purpose—we must be careful not to make the legislation so rigid that it removes any flexibility for the system to function effectively, as we will argue in later groups.
By creating strict statutory tiering that places UK graduates above all other priority categories in every instance, we risk creating a system that cannot respond to realities on the ground. We have received correspondence from many doctors, as I am sure almost every other noble Lord in this House today has done, warning that absolute exclusion or rigid tiering could leave rotas empty in hard-to-fill specialties such as psychiatry and general practice, which rely heavily on international talent.
Prioritisation is a necessary tool for workforce planning but we must ensure that it does not become a blockade that damages the wider delivery of NHS services. As the noble Lord, Lord Stevens of Birmingham, said, we need answers about the future of workforce planning. What will the numbers be for training places? The Government need to answer that as we go through this Bill.
Earl Howe (Con)
My Lords, I too am grateful to the noble Lord, Lord Patel, for leading the debate on his amendments, which seek to establish a new prioritisation hierarchy that puts UK medical graduates first, ahead of those in the priority group who are not UK medical graduates. I should have prefaced my speech by reminding the House of my interest as an honorary fellow of the Royal College of Physicians.
We debated this proposal in Committee, when other noble Lords, including my noble friend Lady Coffey, tabled amendments that sought to introduce a different prioritisation hierarchy. I understand fully the case that the noble Lord is making and I agree that UK medical graduates should have a much fairer crack of the whip in access to medical specialty training places. Fairness has been our primary concern throughout our scrutiny of this Bill. However, I agree also with the noble Lord, Lord Hunt of Kings Heath. The Government have had some hard choices to make.
In an ideal world, where the House had been given more time to consider these matters in the round, we might have been able to improve on the approach that Ministers are taking. For example, there is surely a place for guidance to make clear that the prioritisation process should incorporate considerations of medical and academic excellence, a point that the noble Baroness, Lady Finlay, has consistently made.
I am grateful to the noble Lord, Lord Stevens of Birmingham, for putting the decisions made by the last Government into their proper context. However, given where we are, we accept that Ministers have introduced this as urgent legislation with a specific purpose. In that context, having accepted that the Government’s approach will have the effect that they are seeking to achieve, we are satisfied that the Minister’s proposed method of prioritisation is acceptable.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, I am most grateful to noble Lords across the House for their considered contributions to this group of amendments and to the noble Lord, Lord Patel, for his introduction to this group. I have a third reason to be grateful—namely, for the understanding of the challenge that this Government are facing and the need to take action. I do not take that for granted. We are not able to support the amendments tabled by the noble Lord, Lord Patel, and I will go through the reasons.
In answer to the noble Baroness, Lady McIntosh, the Bill already sets clear priority groups without any further ranking within them. This is a binary system: applicants are either prioritised or they are not. It might be helpful to your Lordships House to say that the priority groups set out in the Bill have been agreed across the four Governments of the nation. They are best placed to support moving to what we all want—a sustainable workforce to meet the health needs of this population.
As I emphasised in Committee and at Second Reading, prioritisation does not mean exclusion. Non-prioritised graduates will still be able to apply, and they will be offered places if vacancies remain after prioritised applicants have received offers. For specialty training, there are likely to be opportunities in general practice, core psychiatry and internal medicine, which, historically, attract fewer applicants from the groups that we are prioritising for 2026.
Alongside UK graduates, the Bill prioritises graduates from Ireland—this reflects, as I have spoken of before in this Chamber, the special nature of our relationship with Ireland—along with graduates from Iceland, Liechtenstein, Norway and Switzerland, which reflects our obligations under international trade agreements with the European Free Trade Association countries to treat their graduates no less favourably. The amendments would mean that we would not be honouring these arrangements as we would be prioritising UK medical graduates over applicants from these countries.
The agreements with EFTA countries precede this Government. The agreement for Iceland, Norway and Liechtenstein was made in July 2021, and for Switzerland in 2019. The bottleneck issues that this Bill is designed to address were primarily driven by the removal of the resident labour market test in 2020. I know noble Lords will understand the need to uphold these international obligations, albeit we receive very low numbers of applicants from EFTA countries. As I noted in my recent letter to the noble Lord, Lord Mohammed, and to give noble Lords some idea of scale, there are a total of two applicants from EFTA countries for foundation and specialty training in 2026.
For specialty training, the amendments would mean we would be prioritising UK medical graduates over applicants with significant NHS experience. That would undermine the effective delivery of our policy intention, for which there is much sympathy in this Chamber, to prioritise applicants with significant experience working in the NHS. The Government have rightly committed to prioritising those who have made a considerable contribution to our health service because they better understand how the health service works and how to meet the needs of the UK population.
The noble Lord, Lord Patel, asked how many more students in the priority group would be able to enter specialty training. I will be pleased to write to the noble Lord on that matter.
My noble friend Lord Hunt and the noble Baroness, Lady Finlay, called for improvement of the broader approach to medical training, and that is something with which I would definitely concur. We have published phase 1 of the medical training review, which identifies the key challenges and the areas for improvement across postgraduate medical training, as noble Lords are inquiring about, and asks what is working well. Phase 2 of this work is already under way, and will focus on exploring those issues and developing options for change.
The noble Baroness, Lady Finlay, asked that I give an assurance that Oriel would, as an appointment process tool, have what she described as a more subtle way of looking at NHS experience. I can confirm that we will be engaging with stakeholders on what the best definition is and what is most appropriate for NHS experience. That will then allow us to update the system.
The noble Baroness, Lady Finlay, asked about merit-based selection and made a valid point about the quality of applicants. I assure your Lordships’ House that the Bill does not replace in any way a merit-based selection. Existing recruitment processes for foundation and specialty training already assess applicants against rigorous, merit-based criteria, including competence, performance and suitability for training, all of which I know are of concern, and rightly so, to the noble Baroness. The Bill sits alongside that process, not instead of that process.
The noble Lords, Lord Stevens and Lord Clement-Jones, asked about specialty training places. In the 10-year health plan, which the noble Lord, Lord Stevens, referred to, our commitment is to create 1,000 new specialty training posts over the next three years, focusing—importantly, in my view—on specialties where there is the greatest need. The Bill will not delay this process. There are some programmes and regions already at capacity for delivering properly supervised training posts. Expanding that training capacity will therefore need to be done gradually to ensure that placements remain of the high quality that we need and that appropriate supervision is in place to support it.
I hope that I have dealt with the main questions raised. For these reasons, I hope the noble Lord will withdraw his amendment.
Lord Patel (CB)
My Lords, I thank the Minister for her comments, and I thank the other noble Lords who spoke. I take the points that the noble Lord, Lord Hunt, made, which are quite important: there needs to be much wider review of the whole issue of medical training and workforce planning, which are linked together. I hope the review that NHS England carried out, published in October 2025, the more recent update on 18 January 2026, which was on the first “diagnostic” phase of the medical training, and the other phases to come will promote that review of medical training, and I hope the Government will back that.
I think the noble Lord, Lord Clement-Jones, made a similar comment in Committee that we should not prioritise UK medical graduates above others because the others may, and do, provide us with good service and care. I accepted that, and how could I not? In my own department, we regularly—on a yearly basis—took overseas doctors for training in United Kingdom. Some of them remained in this country, and others held high positions overseas. The fact is that 30% of core and specialty training slots go to international medical graduates; 70% go to the UK graduates. That is not a small number but quite a significant number of overall training positions. None the less, I accept that we need international medical graduates to come here and study and work here.
I thank noble Lords for the other comments made. The noble Lord, Lord Stevens of Birmingham, asked a very cogent question. I know that the Government say that there will be 1,000 new posts, but that is over three years, so it might be three years hence that we get those. In the meantime, we have a problem with UK medical graduates, and I will single that out, because I hope that the Bill will help with the process of more UK graduates getting the jobs. I thank the noble Earl, Lord Howe; he was stronger in his support last time than this time, but I can understand why.
I had no intention of putting my amendments to the vote. I had hoped that the Minister would accept them, but she has made it quite clear that she will not. I wish the Bill to be concluded speedily, because it is urgent, and I hope the prioritisation in the Bill will help UK graduates. On that basis, I beg leave to withdraw.
Lord Mohammed of Tinsley
Member’s explanatory statement
This amendment postpones the implementation of the medical specialty training prioritisation requirements by one year, moving the effective date for the mandated offer sequence from 2026 to 2027.
Lord Mohammed of Tinsley (LD)
My Lords, both amendments in this group are in my name. I start by saying that, despite the fact that we have had a short break since we discussed this previously, we have all had a lot of emails and commentary on the Bill as it has been going through your Lordships’ House. One point that people have queried, particularly around Amendment 3, is this: “Why is Lord Mohammed doing this? He must have some declarations of interest. He must have some personal gain to do what he is doing”.
For the record, I have three children. One works for Northern rail; the second, despite our best efforts, his mother’s in particular, to get him to go to medical school—we failed—went on to become a paramedic, and at the moment he is absolutely loving it. So it is highly unlikely that this Bill will affect him, and my daughter is not studying medicine or anything related. Therefore, the purpose of and the motive for me moving this amendment are around fairness and equity.
This would be a modest postponement. In rejecting this policy, we are not doing so outright. It is a necessary safeguard to ensure fairness for those who have already applied under the rules that existed when the current application cycle opened. As we heard in Committee, the core purpose of the Bill is to prioritise graduates with strong links to the UK, and NHS experience, as the noble Baroness, Lady Finlay, said earlier. It has broad support and is rooted in legitimate concerns about the balance between health, workforce supply and demand. However, the Government’s own planning documents indicate that for the 2026 recruitment, prioritisation is applied only at the offer stage because shortlisting has already occurred and the posts need to be filled by August; in other words, the legislation would apply part way through an active application cycle.
It is this timing that gives rise to the compelling fairness concerns at the heart of my amendments. Medical applicants make decisions in advance—far in advance. They invest years of study, financial cost and personal sacrifices based on published criteria. To change the criteria mid-application, with potential effects on eligibility, shortlisting, scoring or final offers, risks penalising those who complied fully with the rules as they stood when they applied. They cannot rewind their applications. They cannot be judged against a different standard. This is not theoretical. I have been contacted directly, as have many Members of your Lordships’ House, by candidates who face exactly this prospect under the current system. The core principle of procedural fairness and legitimate expectation is well established. Legislation, however well motivated, should not disadvantage applicants who acted in good faith. It should not reshuffle the deck once the cards have already been dealt.
A delay until 2027 would allow for clarity and proper stakeholder engagement and would ensure that no doctor is unfairly caught between two regimes. I emphasise that my amendment would not delay the policy indefinitely nor dilute its intention. It would simply align implementation with a natural application cycle. Therefore, I really hope that the Minister responds favourably.
Amendment 7 would replace the Government’s proposed immigration status criteria in the prioritisation framework with a test based on completion of
“at least two years of training or employment in a medical capacity within the National Health Service”.
The intent of the Bill to prioritise those who have strong links with UK medical training and the health service is not controversial, but to use indefinite leave to remain and other immigration categories as proxies for NHS experience is deeply problematic for me—and, I am sure, for many others. It risks both unfair outcomes and loss of clinical value for patients. In Committee, we heard detailed arguments about the unsuitability of immigration status as a measure of meaningful NHS experience, not least because it does not reflect who actually worked, trained or contributed here in the UK.
Under the Government’s current drafting, international medical graduates with indefinite leave to remain, settled status or citizenship would be prioritised irrespective of whether they have ever worked in the NHS—experience counts only if it fits within residency categories. Yet many doctors who arrived earlier on shorter visas have worked for years in the NHS, delivering front-line care throughout the pandemic pressures and workforce shortages. Their contribution is real, sustained and beneficial.
The British Medical Association has repeatedly emphasised that specialty training prioritisation should reflect clinical experience in the NHS, not simply legal residency status. The BMA has set out its position that international medical graduates who are GMC-registered and practising in the NHS and have at least two years’ experience should be prioritised.
This amendment aligns with that evidence-based and professionally grounded approach. Two years’ experience is clear, objective and legitimate, and a demonstrated threshold of contribution that is far more meaningful than a stamp in your passport. It would recognise those who have already invested in the UK system, who understand our clinical pathways and workforce needs, and who have delivered care for our patients. Critically, it would also avoid the injustice noted in Committee by several noble Lords about the category for either arbitrarily including or excluding applicants with negligible NHS ties. Doctors who arrive with ILR but have not delivered NHS care should not be automatically advantaged ahead of colleagues with years of service here. That simply cannot be justified on the grounds of fairness or workforce planning. Nor would the amendment prejudice the aim of prioritising UK medical graduates. It would supplement the Bill with additional criteria that would strengthen how NHS experience is recognised, supporting, not undermining, the long-term sustainability of the training pipeline.
The amendment strikes the right balance between policy ambitions and practical fairness. It would honour people’s contributions, support retention and strengthen the NHS workforce. I urge noble Lords to support it, and I hope the Minister will speak in favour of it.
Baroness Finlay of Llandaff (CB)
My Lords, I will go back to the question of Oriel and the prioritisation processes. It collects a full employment history from graduation and requires applicants to confirm whether each post was paid NHS experience. I hope the Minister will be able to recognise that some have worked in a voluntary capacity before they were able to get paid employment in the NHS, and that some people, in trying to build up their criteria for eligibility to apply, have worked in non-medical posts in order to gain the background NHS experience that they need.
I have been sent a copy of a response that was sent by the Department of Health and Social Care to a query about specified immigration status, which states:
“In 2026 the Government is using these immigration statuses as a proxy to capture applicants who it believes will be most likely to have significant experience of working in the health service in the UK”.
It goes on to state that that prioritisation
“will be applied at the offer stage because shortlisting is already underway”,
which, of course, creates a lot of problems for people. I can see that there are difficulties in postponing this, because all the applicants are already in such a state of turmoil that to have a second year of turmoil may not be helpful to them in any sense.
There was a worrying sentence at the end of the second paragraph, saying that the Government
“will be aiming to have regulations in place for the autumn 2026 application round (subject to parliamentary timetable)”.
I hope the Minister will be able to assure us, given that this has been emergency legislation, that the regulations will be treated with a similar degree of urgency to remove any uncertainty for the next round of applicants.
Lord Clement-Jones (LD)
My Lords, I offer my strongest support to Amendments 3 and 7 in the name of my noble friend Lord Mohammed of Tinsley. These amendments address the single biggest injustice in the Bill: the decision to implement major changes mid-cycle for 2026 using the blunt instrument of indefinite leave to remain as a proxy for commitment. In Committee, the Minister defended this decision by arguing that assessing actual NHS experience for 2026 was “not operationally feasible” and would require
“manual attention to thousands of applications”.—[Official Report, 12/2/26; col. 387.]
Since that debate, we have received categorical evidence from doctors currently using the system that contradicts this assertion. Multiple applicants have provided proof that the Oriel recruitment platform already captures granular data on NHS experience. The application form explicitly asks candidates to confirm whether they have more than six months’ experience in the NHS. It also captures their current visa status. The digital data field exists.
Earl Howe (Con)
My Lords, with these amendments, the noble Lord, Lord Mohammed, has reprised proposals he made, and which we debated, in Committee. In Committee, the Minister emphasised a point that I must say resonated particularly strongly with me. She pointed out that the delay proposed in Amendment 3 sets the Government back in their timetable to address the bottlenecks in medical training. Although I acknowledge all that the noble Lord said about fairness, I must accept that a delay of a year would set the Government back significantly in their plans. Given our support for the main principle underpinning the Bill, we cannot, I am afraid, support that amendment.
However, I reiterate that prioritisation is only part of the solution to the problem we have been talking about. It is a logical and sensible step, but the bottlenecks in medical training, which are having such a pernicious effect on the future opportunities of young doctors, will not be ameliorated until the number of training places is increased significantly. The Minister’s answer in the previous group to the question about training places posed by the noble Lord, Lord Stevens of Birmingham, was helpful. However, can she go any further and indicate whether the Government consider that the additional training places which have already been announced are likely to be sufficient, or is there a possibility that more may be announced in the coming months?
The noble Lord, Lord Mohammed, made a strong case for Amendment 7, and I endorse the powerful comments made not only by him but by the noble Lord, Lord Clement-Jones. Can the Minister provide us with further information on the Oriel system? There is a sort of fog surrounding this subject.
When we last debated this issue, I was surprised that the Minister was unable to give clarity on the number of individuals who have demonstrated an established commitment to the NHS but do not have leave to remain. It seems to me essential that we have clarity on the number of doctors that this amendment would affect. Has she had the opportunity to look into this in more detail between Committee and Report? If we are not able to get greater clarity on the issue today, will the Minister at least give a commitment to look at any cases where a doctor has demonstrated that commitment but does not have indefinite leave to remain, so that we can ensure that any injustices that may arise as a result of this emergency legislation are resolved swiftly at ministerial level?
Baroness Merron (Lab)
I am grateful to noble Lords on all sides of the House for their contributions today. I turn first to Amendment 3, tabled by the noble Lord, Lord Mohammed. As I explained in Committee, this is not an amendment that we are able to support. As has been emphasised, including today, a key aim of this Bill is to address the severe bottlenecks in medical training that have built up over recent years. These pressures are having real consequences, evidenced most starkly, I believe, through the most recent industrial action, where concerns about stalled career progression and training opportunities have featured and continue to feature heavily.
The noble Lord, Lord Mohammed, rightly spoke about the concerns of applicants mid-cycle, and I do recognise the concerns about this group and the impact on them, particularly where applicants did not know how prioritisation might affect them. But, although I absolutely understand the concerns, which we have discussed, these have been carefully considered and, at the end of it all, we have to make decisions about what it is we are trying to do. There will be people who are affected in ways that none of us would have chosen, but it has not been possible to make a change in legislation, particularly at this pace, without some effect on some groups. So, yes, it is a choice, and it is one that we have made. But I acknowledge of course the impact on those who are in the middle of a cycle of application.
With regard to the proposal in the amendment, I can only endorse the comments by the noble Lord Earl, Lord Howe, that another year of inaction would only deepen the frustration felt by UK-trained doctors and further destabilise the workforce. I do not think that is something that any of us want to see. So, we do believe that applying prioritisation to the 2026 intake is both necessary and justified. If we wait, as this amendment suggests, until 2027, it is projected that competition ratios will have risen even further. That would mean more UK graduates unable to progress their careers on time, with greater risk to the long-term sustainability of the NHS workforce, and protecting the long-term sustainability of the NHS workforce, protecting patients and protecting patient care and services is what this Bill is all about. That is why we are not able to accept another year’s delay, although I understand why the noble Lord put his amendment forward.
In addition, there is a difficulty in terms of the drafting in respect of this amendment, because it would create two clauses related to the prioritisation of applicants to specialty training programmes for 2027, and each would have a different approach to prioritisation. I am sure that the noble Lord would not want to create operational confusion or undermine legal certainty, but I thought it important to point that out.
I turn to Amendment 7, also tabled by the noble Lord, Lord Mohammed. First, following our conversation earlier—I am grateful for the noble Lord’s flexibility in that regard—I want to reassure him and your Lordships’ House that we are absolutely committed to recognising those who have worked in the NHS for a significant period. There is a very good reason for this: as well as it being the right thing to do, those individuals are much more likely to stay in the National Health Service for the long term, and they are much better equipped to understand how the health service works and how to meet the needs of the UK population. Again, that is a core driver in this Bill. It is our intention to prioritise those with significant NHS experience for specialty training. However, we are unable to support Amendment 7, for a number of reasons. I appreciate that the amendment was changed, but I want to refer at this stage to the points made by the noble Lord, Lord Clement-Jones; I discussed these matters with him earlier today.
While the NHS Oriel recruitment system holds some information about an applicant’s NHS experience, it cannot be used consistently or fairly for the 2026 round. The data has been collected on the basis that it would be checked by employers before appointment, not for retrospective automated assessment. It is indeed the case that applicants enter their employment history on Oriel as free text, but with no consistent format. Yes, there is a tick-box to indicate NHS experience, but I have to emphasise that it is self-declared—and that is the problem. There is no mechanism for verification to confirm that the employer listed is an NHS organisation, or any other relevant detail. That is why I spoke about this in Committee: it would require a manual review of tens of thousands of applications. That means a high risk of error, potentially delaying offers and start dates: again, nothing that any of us would wish to do. It would of course be destabilising for applicants and trusts, so it is not operationally feasible and nor would it be fair.
The noble Earl, Lord Howe, asked for more information on the Oriel system. I would welcome speaking to him at great length about it as, having looked into it in a practical sense, I can absolutely see the limitations. In my letter to the noble Lord, Lord Clement-Jones, which I have placed in the Library, more detail has been provided on the system, which may be of help to the noble Earl, Lord Howe. But if the noble Earl would like a more in-depth acquaintance with the Oriel system, he and other noble Lords are most welcome to benefit, as I have done.
The noble Baroness, Lady Finlay, spoke of voluntary experience as a possibility for being NHS-significant experience, and I understand why she raises this. On this point and also to the point about the amendment, there is currently no agreed threshold for what constitutes significant NHS experience. The fact is that views on this differ widely, as evidenced today by the noble Baroness. That is why we have committed to full engagement on this issue for future years, rather than rushing through the changes for 2026. Once we have agreed the parameters around experience, the Oriel system will be updated to ensure that data is collected in a consistent, verifiable format—that is the key—to support fair assessment in future recruitment rounds. Our aim is to have this in place in time for the next specialty training round, which will open for applications in autumn 2026.
For the current recruitment round, the Bill uses a set of carefully chosen specified immigration statuses, as this is a practical and proportionate proxy for identifying applicants most likely to have significant NHS experience. After careful consideration, we have concluded that this is the best approach for the 2026 recruitment round.
On the question from the noble Earl, Lord Howe, about the potential for additional training places and the likelihood that the ones I referred to earlier will be sufficient, we are keeping the numbers under review, as we always do. The noble Earl asked me to look at particular cases, and I am always happy to do that. We should bear in mind that it is often difficult to comment on very specific individual cases, but I am pleased to look at the broad point that he makes.
On the basis of the reasons I have outlined, I hope the noble Lord will withdraw his amendment.
Lord Mohammed of Tinsley (LD)
My Lords, I thank everyone in your Lordships’ House for their contributions on this group. I also place on record my thanks to the Minister, not only for speaking to me earlier today but for her letter, which she referred to earlier, and for speaking to us before this legislation was debated in your Lordships’ House. That has been very useful, and I appreciate the Minister giving us her time despite her busy diary.
On the amendments, I have heard the opinion and mood of the House, particularly from the noble Earl, Lord Howe. I therefore beg leave to withdraw Amendment 3. I will keep a watching brief on Amendment 7, given the discussion we had earlier outside the Chamber.
(2A) A person is within this subsection if—(a) they have been granted protection status in accordance with rules made under section 3(2) of the Immigration Act 1971,(b) they have been granted limited leave to enter or remain in the United Kingdom by virtue of Appendix Hong Kong British National (Overseas) of rules made under section 3(2) of the Immigration Act 1971, or(c) they have, as part of a safe and legal humanitarian immigration route, leave to enter or remain in the United Kingdom in accordance with rules made under section 3(2) of the Immigration Act 1971 or leave on a discretionary basis outside of rules.”Member’s explanatory statement
This amendment would add people who have been recognised as in need of international protection, who have arrived as a Hong Kong British National, or have arrived on a safe and legal humanitarian programme to the priority group.
Baroness Lister of Burtersett (Lab)
My Lords, Amendment 11 would add to the list of priority groups people who have been recognised as in need of international protection, who have arrived as a Hong Kong British national or who have arrived on a safe and legal humanitarian route. I will speak simply to this amendment, but I have some sympathy for the amendments in the name of the noble Baroness, Lady Gerada.
I apologise for popping up at this late stage of the Bill’s passage. This issue was brought to my attention by the Refugee Council, which recently spotted that, as it stands, the Bill will exclude those recognised as refugees from prioritisation for medical training posts. This will potentially make it harder for people with medical backgrounds who have been displaced and given protection in the UK to contribute fully to the NHS. This resonates with me because my father, as a young man with a medical qualification, came to the UK in the 1930s as an early refugee from Nazi Germany. He was able to requalify at Glasgow University and, after the war, eventually went on to have a long career as a medical officer in Manchester in what was then the DHSS. As such, he contributed to British society in a way that would now be difficult for medically qualified refugees.
Programmes such as the Refugee Council’s Building Bridges programme support qualified refugee doctors and other health professionals to utilise their skills and experience in the UK. These programmes are based on close collaboration between charities and the NHS. This is beneficial for the refugees themselves, as well as for the UK. That support can include helping refugees to pass the necessary language requirements and get professional registration in the UK. Some refugees will also progress to accessing medical training posts. This has included foundation programmes specifically designed to support refugee doctors into the NHS workforce.
During Second Reading in the other place, the Secretary of State said that the UK
“must break our over-reliance on international recruitment”.—[Official Report, Commons, 27/1/26; col. 803.]
This amendment does not run counter to that aim. Refugees have not come to the UK because they have been recruited. First and foremost, they have sought protection and have been given it. My amendment would simply ensure that those refugees who are also doctors would be able to put their medical backgrounds to good use and continue to develop their expertise for the benefit of the wider community, as well as for themselves.
At the same time as the Bill is progressing through Parliament, the Government are proposing significant changes to settlement for refugees as part of the earned settlement plans. Ministers have said that these changes are supposed to incentivise integration and ensure that settlement is earned. Ensuring that refugee doctors are not placed at a disadvantage because of this Bill would help the Government meet those aims.
At Second Reading, my noble friend the Minister explained:
“Internationally trained doctors with significant NHS experience will continue to be prioritised for specialty training, recognising the service that they have given. This year, immigration status will be used as a practical proxy for NHS experience in order to allow prioritisation to begin swiftly. For following years, we have taken powers in regulations to enable us to refine this approach in consultation with key partners. I have been asked by noble Lords what this means for those with refugee status. This status is not a stand-alone priority group, although refugees will be prioritised for specialty training in 2026 if they fall within another priority category, such as holding indefinite leave to remain or having completed the foundation programme. Refugees who do not fall within a prioritised group may still apply for specialty training posts and the Bill will not change their eligibility to apply for locally employed doctors’ roles”.—[Official Report, 4/2/26; col. 1648.]
The noble Lord, Lord Patel, responded positively with particular reference to Ukrainian refugees. I am not sure that my noble friend’s response was quite as reassuring as he perhaps thought, especially as Ukrainians who have arrived on the Ukrainian scheme will not be in any of the priority groups. If I understand the proposals correctly—this relates to the previous amendment—indefinite leave to remain is being used for places on specialty programmes in 2026 as a quick proxy for recognising doctors who have been trained abroad but who have been employed within the NHS for some time. It is not such a useful proxy for anyone who, like those on the Ukrainian schemes, have no route to settlement or who, under the proposed earned settlement changes, could have to wait 10 years, or even longer, to qualify for indefinite leave to remain.
My amendment also addresses the impact of the Bill on doctors who have come to the UK as part of the Hong Kong BNO visa scheme. As with other refugee doctors, they have sought safety in the UK. Indeed, the scheme is frequently described by the Government as a safe and legal route. The case for their inclusion has been put to me eloquently in an email from an anaesthetic registrar who is a BNO visa holder and is currently working in the NHS. Like many colleagues in a similar position, he migrated to the UK for political reasons before completing his training and now regards the UK as his permanent home, where he wishes to dedicate his career to the NHS. They argue that
“deprioritisation to the point of exclusion would leave us without any pathway to complete training, despite our qualifications and NHS contributions, effectively ending specialist careers for a group formally invited to settle here”.
They also point out that BNO doctors in the NHS form a small, finite cohort. Their main argument is that,
“unlike many other International Medical Graduates who can return home to complete training, those of us on the BNO scheme face unique barriers. Due to the political situation in Hong Kong, returning is not realistic nor possible for many of us. The UK is now our only place to practise medicine and pursue specialist training”.
Although their situation is not quite the same, the argument also applies to other displaced persons covered by this amendment.
At a time when the Government are making it much more difficult to achieve refugee status, should they not at the very least ensure that those who are so recognised and who are medically qualified are able to requalify and use their medical expertise to the benefit of our society? I hope my noble friend will be able to accept this amendment, but I suspect she will not. At the very least, I ask her to give a commitment to further consultation with a view to giving serious consideration to including the groups specified in the amendment, even if only in modified form, in the regulations to which she referred at Second Reading and which were mentioned earlier today. I beg to move.
Baroness Gerada (CB)
My Lords, I speak to Amendments 12, 13 and 15 in my name and that of the noble Lord, Lord Mendelsohn. I repeat my conflicts of interest: I am of Maltese heritage, I am a doctor and I am co-chair of the APPG. My amendments are narrow, they are practical and they respond directly to the concerns raised by the Minister in Committee. I respect the Minister and am grateful for the time that she has given me, for her letter and for engaging seriously with this issue.
I fully accept that we must find a solution to the difficulties faced by UK medical graduates, as so eloquently pointed out by the noble Lord, Lord Patel. In doing so, however, we must ensure that we do not unfairly disadvantage a small, specific group of students, do not strain valued relationships with an EU member state and Commonwealth partner or inadvertently undermine a long-standing transnational higher education commitment. That is the purpose of my amendments.
This is not about opening floodgates, nor is it about creating a new route for offshore medical schools. I am speaking here about just two long-established UK universities with overseas campuses: Queen Mary University of London in Malta and Newcastle University in Malaysia. They are the only two that, upon Royal Assent, will meet the criteria for delivering UK primary medical qualifications overseas—the same curriculum, the same examinations, the same degree and, until now, the same eligibility for the UK foundation programme. Historically, there was a third, City St George’s, which is now teaching its final cohort of seven students in Cyprus; that arrangement is closing. In reality, therefore, we are speaking about two mature, well-governed partnerships with capped, predictable numbers of no more than 190 students per year.
Let me address Malta, which I obviously know best. Since 2009, Queen Mary has operated a British medical school in Malta on the understanding that its graduates would be treated in the same way as its London cohort for entry into the UK foundation programme. That reassurance was reaffirmed as recently as 2024. Each year, about 90 students enrol at the university. Many of them are UK nationals, often with a clear intention of serving in the NHS. They are students such as Michael, who comes from Essex; he is a final-year medical student who worked as a nurse during the pandemic before deciding to train as a doctor at QMUL Malta. He is not a rich kid but someone who has dedicated his life to working in the NHS, and has worked, saved and borrowed money to achieve his passion of becoming a doctor. What can he hope for now? If we imply that a UK degree somehow becomes less UK because a lecture theatre is in Malta rather than Whitechapel, we send an unfortunate signal not only to those students but to a close education and historic partner.
The Minister has quite properly raised concerns about NHS exposure and it is true that most clinical placements take place in Malta, but almost all the students undertake NHS attachments. The health challenges they face are strikingly similar to ours—much more so, I would attest, than the health challenges in Iceland, Liechtenstein or Norway. Non-communicable diseases dominate: diabetes, cardiovascular disease and obesity. There is a growing burden of mental illness, especially among children and young people. Its population is ageing and its society is increasingly diverse. The weather may be warmer, but the medicine is not fundamentally different.
This is not merely an assertion. QMUL now has four completed cohorts—147 graduates who have transitioned safely into the NHS and are performing exceptionally well. Why would they not? More than half of them are UK nationals. All are fluent in English, and all have been trained to practise in the NHS. These doctors or students seek no advantage. They only ask not to be disadvantaged because the campus of the UK university is overseas. The numerical impact on domestic graduates would be negligible. The Government’s target competition ratio of two applicants per foundation place would still be met.
Baroness Finlay of Llandaff (CB)
My Lords, I speak in support of these amendments, so ably introduced by the noble Baroness, Lady Lister of Burtersett, and my noble friend Lady Gerada, who have outlined the very distinct and different problems for these groups. The Newcastle curriculum is one that I know more about than the other, but it appears to be identical. There are problems for those graduates as they feel that, because of geography, their qualification is effectively second-rate rather than of equal status. That becomes particularly important when we go back to the point I made earlier about recruiting for excellence for our NHS and for people to work here.
My other point is about asylum seeking and refugee doctors—and I am most grateful to the Minister for having had such an open door, both for face-to-face consultation and telephone conversations, which have been helpful in clarifying issues. There are currently eight schemes in the UK which are coming together to co-ordinate and meet the needs of asylum seeking and refugee doctors. This group is different to many others who have come here to train because many were working in their home countries and gained great clinical experience. Their experience in trauma, in particular, can be very useful in major accidents, as they have often managed trauma in really difficult situations. When they come here, however, they need, in effect, to retrain from the beginning, and that takes a huge commitment.
I asked about working as a care assistant deliberately because I know of a Ukrainian refugee doctor who is currently working in that role and has been almost from the time she arrived here, despite being a very senior consultant paediatrician in Ukraine. She has to work as a care assistant to be able to pass all the exams and stages she needs to get through. In her summing up, therefore, it would be very helpful if the Minister can tell us whether she knows how many such doctors there are and what level their experience is; if she cannot today, perhaps she could write to us with that.
Looking forward to future-proofing, I can see the difficulty—though I find it hard to accept—over both Newcastle and Queen Mary curricula. In Committee, we also had the point raised about Bahrain, where the curriculum is, in effect, identical to the Irish-based qualifications. Clause 4(3)(b) of the Bill states that the person within that subsection
“did not spend all or a majority of their time training for that qualification outside Ireland”.
Therefore, I hope the Minister can provide us with firm reassurance that this Bill is future-proofed. The Bahrain curriculum will not be easy to change so that students spend 51% or more of their time in Ireland. If this is not carefully monitored, however, there is a potential danger over the years ahead that another medical school could open an offshore curriculum which was 51% versus 49%, which would mean that it came in under this Bill as a prioritisation. That would then disadvantage the two medical schools we have been debating and which my noble friend Lady Gerada has spoken about and argued for so powerfully today. I therefore hope that the future-proofing aspect will also be addressed in the Minister’s summing up.
Baroness Wolf of Dulwich (CB)
My Lords, I also support Amendments 12, 13 and 15, and will echo the points made about the general implications of the issues here. I declare an interest as an employee of King’s College London. What we are talking about here are, in effect, English medical degrees: that is what they are approved as, and it is what they are seen as by the world. We should pause and think very hard before we give the impression to the world that we do not take our own legislation and regulations seriously, because this really strikes at the heart of the reputation of our higher education system, which has been long earned and is still well deserved.
We are talking about courses of study that are delivered by an overseas campus but it is a medical school of a UK-registered institution. These courses are approved as identical to those delivered within the British Isles by the GMC, and they are completely compliant with the requirements of the Higher Education and Research Act, the Education Reform Act, the Further and Higher Education (Scotland) Act and the Higher Education (Northern Ireland) Order. It is a very small number of people to whom this matters a lot, but I think it is a major step to say they do not count. Therefore, I too hope the Minister will be able to work towards a resolution of this very distressing issue.
Lord Patel (CB)
My Lords, I might end up sounding like a broken record, but I hope it is still playing well. I will declare my interests, although they are probably irrelevant. I am an emeritus professor at the University of Dundee and have previously been its chancellor. I am a fellow of the several royal medical colleges, and I am associated with several universities in the United Kingdom that have medical schools.
I congratulate the noble Baroness, Lady Gerada, on her most eloquent and powerful argument for Queen Mary, Malta to be considered a special case—and she just about succeeded in doing so. Besides that, the broken record bit about me goes back to UK medical graduates. Some 7.6% of graduates of United Kingdom universities are overseas citizens, but they are all trained in the same curriculum and with the same degree as from UK universities. There are several universities that take these students; there are too many to list them all. The overseas campuses of UK universities of course have the same curriculum because the GMC has recognised the institution and therefore its curriculum. The GMC does not give recognition to any training programmes that do not have the same curriculum for graduates. Whether it is a campus or it is associated with the university, the curriculum is what the GMC approves and, in doing so, it therefore approves the institutio;n.
There are other UK university campuses overseas. Newcastle has 107 trainee doctors in Malaysia. I am told by the GMC that Barts London has a university association in Malta that has 69 graduates—and, as we have heard, Queen Mary in London has had a total of 147 graduates from there. Southampton medical school is approved for a medical course in Germany with 23 candidates. St George’s London, as we have heard, had quite a small number; I was told it was nine, but the noble Baroness, Lady Gerada, said it was seven. There are two more schools that are seeking GMC approval: Swansea in Mauritius and Exeter in Athens. I have no doubt that other medical schools will also jump on the same bandwagon and that, after today’s debate, they will make sure that their curriculum is similar to those followed in the UK so that the degrees from their overseas campuses are also recognised.
I have no objections to any of those—as I said, the noble Baroness, Lady Gerada, made a very strong case for Queen Mary in Malta—but I do point out that, if we add these all up, we will increase the priority groups that will challenge UK medical graduates further. That is the only case I am making.
Lord Hunt of Kings Heath (Lab)
My Lords, like the noble Lord, Lord Patel, I apologise for coming back to the substance of the debate on the first group.
We should pay tribute to the noble Baroness, Lady Gerada, for how she has approached these issues. Her amendments, which I agree with, are very tightly drawn to Malta and Newcastle. She has been engaged with my noble friend the Minister and has asked for certain assurances from her; I hope my noble friend will be able to respond to them.
This identifies the madness of the situation that we have. UK universities with campuses abroad often have students coming from the UK; they go over there to study in the hope that they can then come back to the NHS and apply for specialty training places. If ever one wanted a reason for why we need a fundamental, wholesale review and reform of the gamut of medical training, this is it.
I chided the noble Baroness, Lady Gerada, about the royal colleges’ leadership in this area, because the colleges should take leadership. Through her leadership of her college, and that of the noble Lord, Lord Patel, we have examples of the kind of leadership that we desperately need now from the medical royal colleges.
Lord Clement-Jones (LD)
My Lords, it is always a pleasure to follow the thoughtful contributions of the noble Lord, Lord Hunt of Kings Heath.
I give our strong support for Amendments 12, 13 and 15, which have been so convincingly spoken to by the noble Baroness, Lady Gerada, and indeed by the noble Baronesses, Lady Finlay of Llandaff and Lady Wolf of Dulwich. Like the noble Baroness, Lady Gerada, I thank the Minister for her engagement with us on this particular issue, despite the swift passage of the Bill and the rather disappointing response during those meetings.
As I have declared at previous stages, I am the former chair of the council of Queen Mary University of London. My concern is for many of the medical students at the Queen Mary Malta Campus and Newcastle’s Malaysia campus who are affected by the Bill. That is the most pressing issue at hand: the human cost of this legislation in its current form. Over the last few weeks, we have received deeply distressed correspondence from these medical students. Many of them are British citizens who went overseas to study, precisely because of the lack of medical school places here. These students enrolled in GMC-approved courses on the explicit, documented understanding that their degrees were completely identical to those delivered in London or Newcastle, and that they would enter the UK foundation programme on equal terms. To pull the rug from under them now—changing their status to international, mid-cycle, just as they prepare to graduate—is procedurally unfair and totally unacceptable. They made irreversible life and financial decisions based on over a decade of consistent UK Government practice. We cannot treat the futures of our UK-registered university students with such disregard.
In Committee and in her subsequent letter to Peers dated 20 February, the Minister set out her reasons for resisting the inclusion of these students. On these Benches, we have listened carefully. The amendments before the House have been entirely redrafted to address and dismantle every single one of those technical concerns.
First, the Minister argued that the Government cannot control the numbers from overseas campuses, fearing a loophole that would place financial pressure on the NHS and undermine workforce planning. We can fix this. Amendment 12 would explicitly restrict eligibility to
“an overseas campus of a … UK-registered institution that is extant on the day on which this Act is passed”.
The door is firmly shut to future creep. No university can open a new campus tomorrow and exploit this route in the way that the noble Lord, Lord Patel, described.
Further, to address the Minister’s specific fear of uncontrolled numbers, Amendments 13 and 15 would grant the Secretary of State a new statutory power to explicitly cap the maximum number of eligible persons from these campuses. With roughly 50 to 70 graduates a year from Malta and around 120 from Malaysia, we are talking about fewer than 200 students in a system of over 11,000 places. They represent zero threat to workforce planning and, with this amendment, the Government would hold the lever to control the volume. From our conversations, I know that the Minister believes that this would mean opening the door to Irish university campuses and a total of 300 students because of the Windsor agreement. I hope the Minister will explain why they need to be linked when she speaks directly to Amendment 12A, in the name of the noble Lord, Lord Darzi.
Secondly, the Minister argued in her letter that these students should be excluded because they lack familiarity with local epidemiology in UK clinical placements. With the greatest respect, that argument simply does not hold water either. As the noble Baroness, Lady Gerada, with her immense medical experience, has explained, the primary conditions driving NHS demand are fundamentally the same across these nations. Crucially, these students study exactly the same curriculum, take the same UK medical licensing assessment and graduate with the identical GMC-approved primary medical qualification as their peers in the UK. We have the evidence of four graduated cohorts from Malta and those of over 10 years in Malaysia, who have transitioned seamlessly and safely into NHS practice.
As we have discussed before, if the Government truly believe that these students lack clinical familiarity, how can they justify Clause 4 of their own Bill? The Bill prioritises graduates from Switzerland, Iceland, Norway and Liechtenstein. A graduate from Liechtenstein has no UK medical degree, has not sat the UK assessments and has no training in UK epidemiology. We are told that this is due to free trade agreements requiring us to recognise comparable qualifications. It is legally and diplomatically absurd to voluntarily prioritise comparable qualifications from the EEA while rejecting identical qualifications from our own UK public universities.
Thirdly, the Minister cites the need to protect British taxpayers’ investment. The students at Queen Mary in Malta and Newcastle University in Malaysia are self-funded. They provide the NHS with fully trained, UK-aligned doctors at zero educational cost to the public purse. Turning away a pipeline of debt-free, UK-trained doctors is economically illiterate and contradicts the Government’s own value-for-money logic.
Finally, as I said at Second Reading, we risk breaking a solemn international commitment. Since 2009, the UK and Malta have operated under a unique mutual recognition agreement regarding the foundation programme, which was explicitly renewed by the Department of Health as recently as 2024. To sever this now, even in spirit, damages our bilateral relations and actively sabotages the Department for Education’s own strategy to export British higher education globally.
These amendments are safe, narrow and pragmatic, as has been described. They offer the Government exactly what they ask for—control, caps and the closure of loopholes—they protect a tiny cohort of students from unacceptable mid-term uncertainty and they honour our international agreements. I strongly urge the Minister to accept this solution.
Lord Patel (CB)
My Lords, I apologise. I should have said that the noble Lord, Lord Darzi, emailed me at noon today to apologise that he could not be here because he had a patient to look after. However, I think the noble Baroness, Lady Finlay, covered his amendment adequately.
Lord Mohammed of Tinsley (LD)
My Lords, briefly, I offer our support from these Benches to Amendment 11, in the name of the noble Baroness, Lady Lister, and to the amendments in the name of the noble Baroness, Lady Gerada.
I want to talk about the amendment in the name of the noble Baroness, Lady Lister. I am sure that other noble Lords will have had an email from a woman from Ukraine, who set out her concerns. We as a nation have proudly welcomed and given safe sanctuary to people from Ukraine, predominantly women and children. However, because of the conflict in her country she has not been able to fulfil her dream of being a doctor; she has tried to navigate the system, through working as a care worker, and would like us to be able to support her.
I plead to the Minister: can we not have some flexibility, at least when it comes to specific circumstances? We have been so generous as a nation in welcoming those people, who, if they had their way, would be in their country. They want to continue building on the education that they had in their nation. I am sure that there will be others as well. Is there some flexibility? I hope that the Minister can comment on that.
On the amendments tabled by the noble Baroness, Lady Gerada, when we had this discussion before the Recess it was clear that we were asking for those two overseas medical schools. They are the only ones that are active now. The amendments are clear that no other schools would be allowed to open up and go through the loophole that some noble Lords have talked about. We are talking about very small numbers. However, those numbers are important because we have also had emails from British nationals who have gone to study abroad with an expectation. As I said on my amendments in the previous group, we are changing the rules for them mid-cycle. There must be some level of flexibility.
We want the Bill to go through, but we would like it to be a bit fairer than it is. I talked previously about the unintended consequences of pushing this though. A lot of the funding for these two campuses comes from overseas. It is not costing the UK taxpayer money, but it is a pipeline, as my noble friend Lord Clement-Jones said. Having listened to the noble Lord, Lord Forbes, and spoken to my noble friend Lord Shipley, I know that they very strongly support the overseas campus that Newcastle University has in Malaysia. I hope that the Minister supports those two universities. There are no others in these circumstances.
Earl Howe (Con)
My Lords, the amendments in this group seek to change the definition of the priority group. We debated the principle behind the amendments tabled by the noble Baroness, Lady Gerada, and the noble Lord, Lord Darzi, in Committee. I shall come back to the amendment tabled by the noble Baroness, Lady Gerada, in a moment.
Meanwhile, the amendment tabled by the noble Baroness, Lady Lister, seeks to include a new group of people who should be prioritised for medical specialty training places. We have not, as she said, debated this precise issue before. She argued the case very powerfully. However, we need to come back to the object of the Bill, which is to resolve the specific problem of UK medical graduates having insufficient priority in accessing medical specialty training in UK workforce planning. Our prime focus should be on those young UK doctors who have put so much effort into their studies and who now want to progress further in the NHS.
I appreciate the force of everything that the noble Baroness, Lady Lister, said. I observed earlier that we are not living in an ideal world. However, for the reasons that I have given, I am not convinced that including an additional group—in this case, those who have come to the UK from Afghanistan, Ukraine, Syria or Hong Kong—will necessarily improve the Bill’s effectiveness in resolving the problem that it is designed to address. Those doctors are not, and surely cannot be, part of the NHS’s workforce planning framework.
That said, I think we can all agree that, where an individual comes to the UK through a safe and legal route as a legitimate refugee and has skills to offer our country, we should welcome them offering those skills. It would therefore be helpful to know from the Minister what support her department is giving and will give to medically trained people who have come to the UK legally and who wish to serve in the NHS.
I will say some brief but important things about the amendment from the noble Baroness, Lady Gerada, without, I hope, repeating what has been said. The merits of her case were ones which she powerfully presented in Committee, and she has done so again today.
I want to highlight three key points. First, QMUL’s campus on Malta and Newcastle University’s campus in Malaysia are not “foreign institutions”. Yes, they may be physically located abroad but, constitutionally, both are UK institutions and the qualifications they award are UK qualifications based on a UK-prescribed medical curriculum. Doctors have made career plans based on that long understanding. Therefore, badging graduates from those overseas campuses as international medical graduates, which is the implication behind the Government’s position, does them a grave injustice. In my submission, they are not international medical graduates in the sense that we normally understand the term—a point well made by the noble Baroness, Lady Finlay.
Baroness Merron (Lab)
My Lords, I am most grateful to noble Lords from across the House for their thoughtful contributions in this group. The noble Earl, Lord Howe, reminded us to come back to the prime focus in respect of Amendment 11, which I will start with. It is about supporting and being fair to UK medical graduates in whom we have invested, but that is also a group from whom we seek so much, and we are grateful to them. It is also about providing safe and appropriate care.
I appreciate the intention behind Amendment 11, tabled by my noble friend Lady Lister, but the Government are unable to support it, for the reasons I will outline. The Bill, as noble Lords will be familiar with, prioritises applicants based on certain specific immigration statuses for specialty training in 2026. These statuses have been carefully chosen for the reason that I have said a number of times: as a practical and proportionate proxy for applicants who are most likely to have significant NHS experience. I reiterate, as I have said a number of times, that the Bill is not about exclusion of any groups or individuals but about prioritisation.
Referring to the request by my noble friend Lady Lister, which was emphasised by the noble Lord, Lord Mohammed, perhaps I could make one point to remind your Lordships’ House. For 2027 onwards, those statuses will not automatically apply. Instead, there will be the power to make regulations to capture and prioritise persons with significant NHS experience based on other criteria or by reference to immigration statuses. I reassure my noble friend that we have already committed, and do so once again, to a proper engagement process—subject to the Bill’s passage, of course—to ensure that any future definition is fair, evidence-based and deliverable.
Amendment 11 would prioritise groups with different immigration statuses which are not an appropriate proxy for significant NHS experience. This is not consistent with the aims of the Bill. The amendment would also have the effect of permanently prioritising applicants on the basis of immigration status for foundation and specialty training. The applicants with the immigration statuses listed in the amendment who are not otherwise prioritised are—as I have already said, but it bears repeating—not excluded from applying for foundation or specialty training. They may still be offered a post, if there are places remaining, once all prioritised applicants have been allocated posts. They also remain eligible to apply for locally employed doctor roles. On this basis, I hope my noble friend will feel able to withdraw her amendment.
I turn now to Amendments 12, 13 and 15, tabled by the noble Baroness, Lady Gerada. I appreciate the intention behind these amendments, as many of us do, and I am most grateful to the noble Baroness for her work in bringing these amendments back in the way that she has on Report, having heard the arguments previously in Committee. I appreciate her work on them, both inside this Chamber and outside, and the way in which she made her case so clearly and powerfully, as other noble Lords have said. I know the noble Baroness is aware, as I emphasised in my letter that I sent out to Peers, that the Government are unable to support these amendments.
Let me explain to your Lordships’ House why this is the case. The Bill rightly prioritises doctors for foundation and specialty training based on where they are trained. It also prioritises internationally trained doctors with significant NHS experience for specialty training. We are doing this because these doctors are more likely to work in the NHS in the long term and to be better equipped to deliver healthcare that is tailored to the UK’s population, because they will better understand the UK’s health system and epidemiology.
On my noble friend Lord Hunt’s point, which I believe he also spoke to in the previous group, while assessments and course learning at overseas campuses may well be the same—I accept that—as in UK-based medical schools, students will not have undertaken the same number of clinical placements in the NHS in the United Kingdom.
I note that the noble Baroness, Lady Gerada, argued in her email to all Peers—or to a number of Peers, I am not quite sure which—that her amendment would not widen eligibility for prioritisation beyond the Government’s intentions. This is not the case. To reiterate, the Bill intends to prioritise home-grown doctors and put them at the front of the queue for training posts. It is unashamed, for the reasons that I have explained and noble Lords understand. Doctors who have trained here and undertaken their placements in our hospitals and health settings will have more familiarity with the NHS and the needs of the patients they serve than a doctor who has studied the same curriculum but not in the UK.
However, the Bill recognises that this experience can be gained without spending the entirety of one’s degree in the UK. However, the line has to be drawn somewhere and, where the majority of a degree has been studied outside the UK, it is right that those graduates are not prioritised equally alongside UK-trained medical graduates.
To pick up the point about future-proofing that the noble Baroness, Lady Finlay, raised, we recognise the risks of this creating a loophole in the legislation if medical schools purposefully change their curriculum to ensure that their graduates come from within the priority status. However, as we discussed earlier today, this risk would exist at whatever threshold we set. I can, however, assure the noble Baroness that we will continue to monitor the data carefully in future years, for all the important reasons that the noble Baroness said.
The Bill prioritises all graduates of UK medical schools who have studied for their degree in this country. That is the right thing to do for our health system, because we recognise that these doctors are well prepared to work in that system and are more likely to stay. It is also right and fair to do this for graduates of our medical schools. It treats all graduates as equals, regardless of where they are from.
As the noble Lord, Lord Patel, noted, prioritising graduates from overseas campuses would also undermine—these are my words, not the noble Lord’s—our aim of greater social mobility and access into medicine. We need dramatically to improve access to this profession for those from disadvantaged backgrounds across our communities in order that our medical practitioners can be more representative and serve the communities from where they come. The campuses that we are speaking of are commercial ventures and students are generally self-funded. Including these graduates in the priority group would undoubtedly undermine the efforts of the Bill to support home-grown talent.
I will make a number of points to deal with the points that the noble Lord, Lord Clement-Jones, raised. I understand that the proposed amendments seek to restrict future eligibility by prioritising only those campuses that are extant on the day the Act is passed, and also to create a power that would enable us to limit the number of eligible applications under this provision. However, the establishment and operation of these overseas campuses sit outside the UK Government’s workforce planning and commissioning decisions. We have previously set out that we expect that all eligible prioritised applicants for the foundation programme in 2026 will get a place. So, accepting these amendments, even with the suggestion of capping the numbers that could be prioritised from these campuses, would mean we would have to fund more foundation programme posts than we need.
There has been talk—not just in the Chamber, but outside—about figures. Let me clarify that current UK foundation programme applications for 2026 show almost 300 applicants from overseas campuses of UK and Ireland medical schools. This is a significant number and to prioritise all of this group would require substantial additional expenditure for these posts. A rough estimate is around £25 million over two years. This is funding which, if it went in this direction, could not be spent on other priorities, including increasing specialty training places, which I know is of great interest to noble Lords.
In addition, the proposed amendments would not have any effect on overseas campuses of Republic of Ireland medical schools, so would conflict with provisions in the rest of the Bill, which treat Ireland graduates on the same basis as UK graduates, reflecting the unique relationship between the two countries.
Baroness Lister of Burtersett (Lab)
My Lords, I am grateful to the noble Baroness, Lady Finlay of Llandaff, and the noble Lord, Lord Mohammed of Tinsley, for their support for Amendment 11. I am also grateful to the noble Earl, Lord Howe—I thought his response was very fair.
There was clearly very strong support for the noble Baroness, Lady Gerada, who made a very good case for why what she was asking for was very limited, but clearly it is not something that the Government feel able to support.
I take some comfort from what my noble friend said with regard to future engagement, particularly with regard to refugees and what she said at the very end in response to the noble Earl, Lord Howe. I emphasise that I really hope that this process of engagement will include the groups working with refugee doctors so perhaps there may be hope that—if not this year, then in future years—their needs may be recognised, and similarly that the case made today by the noble Baroness, Lady Gerada, will be taken into account when this engagement process starts.
Perhaps my noble friend could write to us and give us more of an idea about what this engagement process will involve, when it will take place, who will be engaged and so forth. But with that, I beg leave to withdraw the amendment.
Lord Mohammed of Tinsley
“(1) Regulations under this Act are subject to the affirmative procedure.”Member's explanatory statement
This amendment ensures that all regulations under this Act are subject to the affirmative resolution procedure.
Lord Mohammed of Tinsley (LD)
My Lords, Amendment 14 would ensure that all regulations under the Bill are subject to the affirmative resolution procedure—or, in simple terms, that both Houses of Parliament get to have a say in and have a vote on any changes that a future Minister or Government make. This is not a narrow technical point; it goes to the heart of parliamentary accountability and to the fair and transparent governance of medical training policy.
The Bill confers broad powers to Ministers to determine key aspects of how prioritisation will operate. These include potentially definitions for eligibility, scoring frameworks, exemptions, transitional arrangements and other detailed rules that will shape the careers of tens of thousands of doctors. In Committee, noble Lords expressed concerns about the breadth of delegated powers in the Bill and the limited parliamentary oversight of these powers. In Committee, it was evident from the debate that Members of your Lordships’ House share the view that regulatory decision-making powers are vast and open-ended, yet the Bill envisages only the negative procedure for most regulations, meaning that the regulations can come into force unless actively annulled.
This falls short of the level of scrutiny appropriate for measures of such significance. It is precisely because of the impact of this legislation on individuals’ careers and NHS workforce planning that the affirmative resolution procedure is the right standard. Ministers should be required to lay each statutory instrument before both Houses and obtain explicit parliamentary approval before they can take effect. This would give the House the opportunity not merely to debate but to approve or reject the detailed rules that give effect to the policy, ensuring that changes are made not by default or through omissions but by the conscious decisions of Parliament.
Medical training policy is not static. It will evolve in response to workforce needs, technical standards and educational practices. There is nothing wrong with working with flexibility. There is something wrong with flexibility exercised without open scrutiny. Doctors plan years ahead; they make life choices on the basis of published criteria. To allow Ministers to adjust those criteria by regulation without positive endorsement by this Parliament risks unpredictability and unfairness.
The use of the affirmative resolution procedure does not prevent Governments acting. It simply ensures that Parliament is properly informed and engaged, strengthening trust in the process and respecting this House’s role in scrutinising public policy. Given the far-reaching nature of these measures that could be set in regulation, the affirmative resolution procedure is not just desirable but necessary. For these reasons, I hope that noble Lords will back my amendment.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, I should advise the House that if this amendment is agreed to, I cannot call Amendment 15 by reason of pre-emption.
Lord Kamall (Con)
My Lords, I thank the noble Lord, Lord Mohammed of Tinsley, for opening the debate on this group—and the numerous noble Lords who spoke to it.
I redeclare my interests. I am a professor of politics and international relations at St Mary’s University, Twickenham, where I teach a module on healthcare policy and strategy, and I have been helping with its new medical school. I also work with the Vinson Centre for the Public Understanding of Economics and Entrepreneurship at the University of Buckingham, which has a medical school, although I have no direct connection with the medical school there. I hope I have touched on all potential conflicts.
Amendment 14, from the noble Lord, and Amendment 16, in my name, were debated in Committee, so I do not intend to repeat the arguments that were made then. However, I think it would be helpful if we reminded ourselves that we are dealing with emergency legislation. This is key. The Constitution Committee has warned against the Government’s overuse of emergency legislation, not least because when we legislate in this way we risk creating unintended consequences. We should be very careful and selective in using emergency legislation. In that context, it does not seem unreasonable that your Lordships’ House should be given an opportunity to scrutinise secondary legislation in more detail through the affirmative procedure. I hope the Minister will take on board the concerns about using the affirmative procedure rather than other procedure.
Turning to Amendment 16, I have retabled this amendment for debate today because I am afraid that I was not completely satisfied with the Minister’s response in Committee. I am sorry to say that but, at Second Reading, the Minister explained that the Government’s view is that commencement may not happen with Royal Assent because the changes introduced by the Bill are “a major undertaking” and
“there is a material consideration about whether it is even possible to proceed if the strikes are ongoing”.
However, in the same speech she explained that this is “emergency legislation” which is being brought forward
“as quickly as possible, rather than wait … another year to do so”.
On the one hand, this is a major undertaking that, in the words of the Minister,
“cannot be switched on overnight”.—[Official Report, 4/2/26; col. 1681.]
yet at the same time it is emergency legislation that cannot wait.
Baroness Merron (Lab)
My Lords, I am grateful to the noble Lords, Lord Kamall and Lord Mohammed, for their contributions in this group of amendments.
I turn first to Amendment 14, tabled by the noble Lord, Lord Mohammed. As I stated in Committee, we are unable to support this amendment. It might be helpful to your Lordships’ House if I am clear about our intention. As your Lordships are aware, the Bill sets out on its face the groups of people who are to be prioritised for specialty training from 2027 onwards. The delegated power about which we are speaking is limited to adding to this list by referring to the significant experience of working as a doctor in the health service or immigration status, so it is, in my view, tightly drawn.
Similarly, we have set out in the Bill the specialty training programmes excluded from the prioritisation scheme. Again, I give the reassurance that the delegated power about which we are speaking is limited to amending this list and gives necessary operational flexibility for future changes in recruitment, training and workforce needs—something that noble Lords raised in an earlier group.
As I hope noble Lords are aware, I am always supportive of parliamentary scrutiny. However, due to the very limited scope of these powers, we believe that the negative procedure is appropriate, not least as the regulations will not have the effect of excluding anyone from applying for a training post. I hope it is helpful to remind noble Lords that the Bill has been assessed by the Delegated Powers and Regulatory Reform Committee, and no suggestion was made that the negative procedure was inappropriate for such regulations. With that explanation, I therefore hope that the noble Lord will feel able to withdraw his amendment.
Turning to Amendment 16, tabled by the noble Lord, Lord Kamall, in Committee I spoke to why, as he said, we cannot support this amendment: because it removes an important element of operational flexibility. Let me say at the outset that I completely understand why the noble Lord has raised again the points he raised previously. He mentioned a tension; yes, in lots of ways there is a tension and that is what we are trying to manage.
As I stated previously, the commencement provision in the Bill is absolutely not a mechanism for delay. We want to proceed with this as soon as possible. That is the non-specific answer to the noble Lord’s very reasonable questions, but I think he will understand that not knowing the timetable on which I am commenting or the possibility of strike action means that I am not readily in a position to give exact answers; I wish I were. The main thing is that it is absolutely our intent to commence the Bill as soon as possible. That is why we are dealing with it on the planned timescale.
The commencement clause is a safeguard. It is to ensure that all the planning, capacity and systems are in place before the Act is brought into force, because it will be impossible to do it otherwise. Noble Lords will also appreciate—the noble Lord, Lord Kamall, raised this—that the question of whether it is possible to proceed if industrial action continues, given the strain that strikes put on the system, cannot be ignored.
Although preparations for the implementation of the Bill as introduced have been progressing and are undergoing quality assurance testing, should the Bill be amended it could impact on operational readiness that could delay offers and disrupt staffing preparations. We have to avoid such disruption; although we do not expect such issues to arise, it is important that we retain what we regard as a fail-safe provision.
Any Secretary of State would be right to take all the circumstances, including operational readiness, into account in deciding when the Act should come into force. I cannot restate often enough that the intention is to bring this in as soon as possible; that is what we all want to do and that is what we need to do. For the reasons I set out, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Mohammed of Tinsley (LD)
I thank noble Lords who have contributed to the debate. Given what I have heard from the Minister, both in the Chamber and in my previous conversations with her, I beg leave to withdraw my amendment.