House of Lords

Monday 20th April 2026 Lords Chamber

Monday 20 April 2026

14:30

Prayers—read by the Lord Bishop of Manchester.

Death of a Member: Lord Skidelsky

Monday 20th April 2026 Lords Chamber

Announcement

14:36

[The Lord Speaker (Lord Forsyth of Drumlean)]

My Lords, I regret to inform the House of the death of the noble Lord, Lord Skidelsky, on Wednesday 15 April. On behalf of the House, I extend our condolences to his family and friends.

Retirements of Members

Monday 20th April 2026 Lords Chamber

Announcement

14:36

[The Lord Speaker (Lord Forsyth of Drumlean)]

My Lords, I should like to notify the House of the retirement, with effect from 17 April, of the noble Lord, Lord Clarke of Hampstead, and the noble Earl, Lord Liverpool, and, with effect from 20 April, of the noble Lord, Lord Cunningham of Felling, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I thank the noble Lords for their much-valued service to the House.

Schoolchildren: Swimming

Monday 20th April 2026 Lords Chamber

Question

14:37

Asked by

[Lord Cryer]

To ask His Majesty’s Government what assessment they have made of the levels of swimming attainment among school children.

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, swimming and water safety are vital life skills, and every child should have the opportunity to learn how to swim and how to keep themself safe around water before they leave primary school. The latest figures indicate that 73% of children can swim 25 metres by the time they leave primary school. We are focused on improving that figure through our forthcoming changes to the curriculum and the support for schools to deliver PE and sport.

[Lord Cryer (Lab)]

I am grateful to my noble friend, but I have a slightly different figure for 11 year-olds. According to Swim England, only one in four 11 year-olds leaving primary school can swim 25 metres. That is not entirely unrelated to the fact that we have lost 500 pools in the last 16 years. That is not the gross figure; that is the net figure.

Will my noble friend undertake to publish all information and statistics relating to school swimming attainment? Will she also undertake to work with Ministers at the DCMS, among others, to drive up the number of pools, so that the number of operating pools at the end of this Parliament is greater than at the beginning? Will she also undertake to work with Swim England, among others, to reverse this downward trend and make sure that we have more children able to swim when they finish primary school? The bottom line is that swimming is the one sport that can make the difference between life and death.

[Baroness Smith of Malvern (Lab)]

Starting with the last point first, we are already working with Swim England, among others, to improve both the resource and the curriculum when it comes to swimming and water safety. My noble friend is right about the big fall in pools between 2010 and 2026. In fact, I have a slightly higher figure than 500: my figure is 591 fewer pools. Of course, that is a challenge not only for schools but for local government. I know it is something that colleagues at the DCMS are not only concerned about but have also included in the additional investment they are providing for community facilities.

[Baroness Davies of Devonport (Con)]

I thank the noble Lord, Lord Cryer, for bringing up this subject. He mentioned the loss of pools. I add that 1,200 pools are now more than 40 years old and are coming to the end of their maintenance life. We are losing 25 pools a year at the moment, which are not being replaced. Obviously, wages are up, energy bills are now twice what they were before Covid and those facilities are very expensive to maintain. The loss of that water space means that children are risking swimming in dangerous places instead of in swimming pools, which is where they should swim.

In the 1980s, I gave evidence to the Select Committee that helped to get swimming on the national curriculum. We are not getting our kids swimming. As mentioned, 25% are not learning. At Easter, I went to see a school where they brought a pool in and managed to get 150 classes in instead of its normal 10 because it costs £250 to bus their children to the local swimming pool. Can the Government please tell me that they will think outside the box about how we make sure that our children are taught to swim, because it is a vital skill, not a luxury?

[Baroness Smith of Malvern (Lab)]

We agree that it is a vital skill, not a luxury, which is why it and water safety are key parts of the national curriculum at key stages 1 and 2. We are also aware that factors including pressures around energy costs and ageing facilities may impact the future provision of sports facilities, including swimming pools. That is why, in June last year, the Government committed £400 million to transform sports facilities, including public leisure, across the whole of the UK over the next four years.

[Lord Mohammed of Tinsley (LD)]

My Lords, I return to the data and, in particular, swimming attainment by region and socio-economic background. I think many in your Lordships’ House fear that there is a huge disparity. If there is, what plans do His Majesty’s Government have to close that gap in regional variances? If the Minister has the data, it would be really useful. If she does not, will she write to us?

[Baroness Smith of Malvern (Lab)]

The noble Lord is right that there is a disparity between ethnic groups, in particular, and between more and less disadvantaged children, which is why this is a national entitlement through the national curriculum. Clearly, we need to do more to ensure that every child is getting opportunities, such as, for example, the £300,000 per year to a consortium led by the Youth Sports Trust to deliver Inclusion 2028, which is a programme that upskills teachers to deliver high-quality, inclusive PE school sport and physical activity, including swimming, to pupils with SEND.

[Lord Watts (Lab)]

My Lords, is it not the case that these pools did not just disappear? They were part of the austerity model that was pursued by the last Tory Government. Have they learned that lesson or are they going to pursue similar policies which starve public resources?

[Baroness Smith of Malvern (Lab)]

My noble friend has put rather more clearly what I slightly pussy-footed around in drawing a comparison between 2010 and 2026. He is right. Those 591 pools did not just disappear by virtue of planning. They disappeared because of a failure of the last Government to invest in not just swimming but local government and public facilities for activity.

[Lord Kirkhope of Harrogate (Con)]

My Lords, it is not just a question of young people, although that is terribly important. A very high proportion of adults in this country cannot swim. They may have had opportunities, or they may not, but can we also encourage adults, older people, to learn to swim? They are never too old to learn, and they can act as guardians to help others who may get into difficulties. Can we please encourage older people also to learn?

[Baroness Smith of Malvern (Lab)]

My ministerial responsibilities do not quite stretch to adults and swimming. However, it is a very fair point and, as we have discussed in response to this Question, I will continue working with my ministerial colleagues in DCMS and in MHCLG to ensure that there is provision for adults as well as children to be able to engage in sporting activity, including swimming.

[Lord Storey (LD)]

Swimming is an important part of water safety, and we welcome the fact that the Government have included classroom-based water safety education in the curriculum from September. Bystander rescue, including members of the public safely rescuing a person in distress, remains a weak link in the chain of survival for drowning. In the review of the PE curriculum, will the Minister consider including safe water rescue such as line throwing, using public life-saving equipment and participation in life-saving sport?

[Baroness Smith of Malvern (Lab)]

The noble Lord is right that it is already the case that in the strengthened RSHE guidance we have increased the focus on water safety. We have the opportunity, in the review that we are doing post the curriculum and assessment review, to redraft the national PE curriculum. In doing so, I am sure that some of the points made by the noble Lord about essential life-saving competencies will be borne in mind.

[Baroness Barran (Con)]

My Lords, I am not sure whether I have to declare my interest, but I try to swim every day. Sadly, I am not quite as fast as my noble friend, but I keep trying.

Could the Minister update the House? The Prime Minister made an announcement in June 2025 about school sports partnerships. What steps are the Government taking to ensure that partnerships are happening with national governing bodies and local clubs in relation to swimming, including for top-up classes?

[Baroness Smith of Malvern (Lab)]

Well done to the noble Baroness: I am rather more a floater than a swimmer, it would be fair to say. She is right that last June the Prime Minister announced a new national approach to PE and school sport in the PE and School Sport Network, which will bring together the department and schools, along with national governing bodies and local clubs. We are in the process of procuring a national delivery partner for that, and we expect that partner to be in place from autumn 2026.

[Lord West of Spithead (Lab)]

My Lords, my noble friend the Minister will be aware that in the Navy we are all taught to swim. Does she agree with me that it is rather important that we enhance our swimming ability, because the reduced number of ships we have do not now have the weapons they require to defend themselves, and unfortunately that may mean that people have to swim more than they should?

[Baroness Smith of Malvern (Lab)]

My noble friend is always clever at turning a question to his advantage. I will simply say that I absolutely know, as I think he does, the significance that this Government place on increased investment in our defence capacity, which is why we have seen the largest increase in defence spending pledged since the end of the Cold War, and why I know this is being actively considered not only by my right honourable friend the Secretary of State for Defence but by the Chancellor.

Charity Giving

Monday 20th April 2026 Lords Chamber

Question

14:48

Asked by

[Baroness Pitkeathley]

To ask His Majesty’s Government what assessment they have made of the finding in the Charities Aid Foundation’s UK Giving Report 2026, published in March, that the total amount donated to charity by the British public has fallen for the first time in five years; and whether they have any plans to promote a renewed culture of giving in the UK.

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

This Government are proud of our incredible culture of giving in the UK and are committed to doing what we can to promote and foster it. While the CAF research shows a fall in overall donations, charitable giving has broadly kept up with inflation over the last decade and the proportion of those who give is the same as the previous year. Published last week, the Government’s plan for growing place-based philanthropy, Our Place to Give, will create stronger enabling conditions to strengthen links between donors and places, build better partnerships, and unlock further philanthropy and giving.

[Baroness Pitkeathley (Lab)]

I thank my noble friend for that response. The road map that she mentions is indeed an excellent and most welcome initiative to boost place-based philanthropy, and it is much appreciated by the voluntary and community sector. However, the fall in the amount donated is of great concern to charities, which are under increasing pressure to meet growing demands while their incomes are falling. Will His Majesty’s Government consider introducing policies that promote giving, both from corporates and individuals? Examples might be simplifying gift aid, encouraging payroll giving, or indeed anything that might renew the culture of giving, which, as my noble friend said, has always been so central to life in the United Kingdom.

[Baroness Twycross (Lab)]

It is important that we focus on how we can support an already incredibly generous public, without playing down the reasons why people might be reluctant to give. We are putting in place measures to tackle the cost of living issues affecting people currently. As for some of the ways that my noble friend mentions, HMRC is providing over £2.5 billion of relief through gift aid and higher rate relief, and reviewing current gift aid claiming processes to try to help charities gain as much as they can through that route. I know my noble friend is interested in payroll giving, which 4,000 UK businesses offer. We are actively supporting ways to encourage more people to give. We will continue to work with the sector to ensure that we maximise funding through personal, public and corporate giving.

[Baroness Sater (Con)]

My Lords, according to the Charities Aid Foundation report, nearly one in three non-donors indicated that they were not engaged with or interested in charities, with an even higher figure for young people. Initiatives such as the Family Volunteering Club show how young people can engage in building relationships with charities through volunteering. Does the Minister agree that more needs to be done, particularly in our schools, to encourage and support a culture of engagement with charities among young people?

[Baroness Twycross (Lab)]

The first time I was asked to volunteer was through school, so I know that the noble Baroness makes a valuable point. Volunteers are critical to civil society. We are committed to enabling more people to get involved in working with the voluntary sector and to modernising volunteering through the civil society covenant, which will promote flexible working for modern work-life commitments. The noble Baroness focused on children and young people, and I thought the CAF report made an interesting point. Through our youth strategy, which intersects with this and, helpfully, is led by the same Minister, we are looking at ways to get more young people involved.

[Baroness Bull (CB)]

My Lords, I am sure the Minister will recognise the role of trustees, not just in helping to raise funds but in undertaking the statutory and regulatory functions within charities—all unpaid and in the spirit of public service. An NCVO report found that 85% of charities are struggling to recruit high-quality trustees. Can the Minister say what the Government can do to support charities in recruiting, training and retaining high-quality trustees? Will she join me in acknowledging the important role of trustees in running charities? I declare an interest as, like many of us, I am a trustee of charities.

[Baroness Twycross (Lab)]

Unfortunately, when those of us on the Front Bench took up our roles, we had to give up our trustee roles. I know that noble Lords across the House are committed to working directly with charities and giving their expertise. One of the first things that the Government committed to was the civil society covenant. The civil society council, to be chaired by the NCVO’s chief executive, will meet quarterly in Downing Street to drive forward the covenant’s implementation. I have no doubt that this will be one of the big issues it discusses, but, like everyone in your Lordships’ House, I encourage more people to get involved where they can.

[Lord Addington (LD)]

My Lords, to turn to the micro level of this, we do not carry change in our pockets now so many charity collections are not going to work. What are the Government doing to make sure people can feel confident about using a card to make payments and making sure with the banks that we are secure when we give spontaneously?

[Baroness Twycross (Lab)]

A huge number of charities now use card readers, and it is shifting quite rapidly. The noble Lord is correct that a lot of people would not necessarily have change. I am not clear, but I will go back and check whether the department has seen a corelation between people not carrying cash and the reported fall in personal donations. It is an interesting point and one made well.

[The Lord Bishop of Manchester]

My Lords, I particularly welcome the Minister’s earlier response referring to place-based donations. Many local charities are quite small, and small charities are the most vulnerable. Can the Minister give us more of an indication as to how small charities can be supported? They are the ones which are most in touch with their local communities and most likely to go to the wall if donations are falling.

[Baroness Twycross (Lab)]

There are two things to say in relation to smaller charities. Some of the measures put in place last year mean that smaller organisations pay less employer contributions. That was done to support smaller organisations. I am happy to arrange a briefing for the right reverend Prelate on the place-based approach to philanthropy, which is around making sure that you can leverage large amounts of money. It is entirely intended to make sure that smaller organisations, as well as larger ones, can benefit from the huge generosity and opportunities that philanthropy offers.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, as the report makes clear, this is the first reduction in giving for five years. If the British public were still giving at the level they were a decade ago, another £12.5 billion would be available to charities across the country. The Minister is right that the British people are a generous lot. However, does she agree that part of the problem is that they balk at paying the extra tax bills that charities are facing through additional employment costs and national insurance contributions? For the National Trust alone, this costs £10 million per year.

[Baroness Twycross (Lab)]

The noble Lord will be entirely aware of the difficult decisions this Government had to make on winning the election in 2024. My noble friend Lord Livermore is not here, but I think he would probably refer that back to the Benches opposite. If the noble Lord has not read the report—it is a really interesting read—that was not one of the specific things I recall coming up in it. We would prefer to look at it in a much more positive way and to make the case for people giving. We will continue to do that as a government.

[Baroness Nargund (Lab)]

My Lords, the new Queen Elizabeth Trust has been established to regenerate shared community spaces, reflecting Her late Majesty’s commitment to public service. These spaces could be of enormous benefit to young people, who, according to the Charities Aid Foundation, have the lowest level of charitable engagement of any age group at the moment. Do the Government have any plans to promote youth volunteering, particularly as a means of skills development? If so, does my noble friend the Minister agree that organisations such as the Queen Elizabeth Trust, as well as the King’s Trust, could help mobilise that youth involvement?

[Baroness Twycross (Lab)]

Like other noble Lords and my noble friend, I was very pleased to see the announcement of the launch of the Queen Elizabeth Trust over the weekend. Her late Majesty, whose 100th birthday it would have been tomorrow, was exceptional at bringing people together. In response to my noble friend’s question around youth engagement and social action, we recognise that participation in youth social action, including volunteering, builds young people’s skills and increases their confidence. We are supporting the #iwill movement, which aims to increase the scale, sustainability and impact of youth social action and volunteering. I have already referenced the national youth strategy, and this is part of what we are trying to encourage through that.

Trains: Punctuality

Monday 20th April 2026 Lords Chamber

Question

14:59

Asked by

[Lord Barber of Chittlehampton]

To ask His Majesty’s Government what plans train operators have to improve the punctuality of passenger train services in every season of the year.

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, performance is already improving, as the Passenger Railway Services (Public Ownership) Act enables management of operations and infrastructure together, progressively, for each route and operating company. Harmonising performance measurement, reducing driver shortages and improving industrial relations are already making a difference. Passing the Railways Bill will enable Great British Railways to drive further systemic action, share good practice and encourage innovation, technology and investment, including on climate change, further improving performance, whatever the season.

[Lord Barber of Chittlehampton (Lab)]

I thank my noble friend for his very comprehensive Answer and the very important work that he is doing to improve the quality of our railway. When I was responsible for delivery in No. 10 years ago, I asked DfT officials why performance was so much worse in the autumn than in the rest of the year. They rolled their eyes and said, “Leaves on the line. The leaves fall off the trees in the autumn”. I said, “Oh yes, I realise that—what I want to know is why that takes you by surprise every year. Where’s the plan for autumn?” The result was that there was a plan for autumn and, if we look at the data from 2003 to 2013, we see that autumn performance improved every year. Why do people who run the railways so often leap for improving excuses rather than focusing on grinding out improvements in performance?

[Lord Hendy of Richmond Hill (Lab)]

The prevailing culture on the British railway system for the past 30 years is to blame somebody else when things go wrong. That is why the Government have come forward with the proposition to create Great British Railways. As I know from my own experience of running Transport for London, you want somebody in charge who has nowhere to go who fixes problems. Autumn is regular—it happens every year—and so does winter and so does summer. The railway has plans that are altered according to the weather, and the weather is getting worse because of climate change. I am confident that the structure that we are going to put in will drive better performance in all those seasons.

[Baroness Pidgeon (LD)]

My Lords, what are the Government planning to do to put a stop to the current situation where Northern services in the north-west have had their timetable cut by half on Sundays, because Sundays fall outside of conductors’ regular working week? When will that be resolved so that passengers can travel by train whatever the season and whatever the day of the week?

[Lord Hendy of Richmond Hill (Lab)]

The noble Baroness is completely right—the Northern conductors’ dispute started in 2019—actually, before 2019—but there was no obvious movement on it for many years prior to the accession to power of this Government. I am hopeful that there will be a resolution very shortly; it is a complex issue, but we are on the case. She is right that people in the north deserve better on Sundays and, indeed, on every other day of the week.

[Baroness McIntosh of Pickering (Con)]

My Lords, does the Minister share my concern that, in future, when a train is cancelled or severely delayed for over 30 minutes, it is the public purse that will reimburse people for those delays and cancellations? How is the department intending to budget for this, and from which budget does he intend to take that money?

[Lord Hendy of Richmond Hill (Lab)]

I think that the noble Baroness will find that the public purse is recompensing that delay replay now. It is a good scheme to compensate people properly for significant delays, but the object, which I have been talking about in this Question, is to reduce the delays by better management of the railways. That is what is important here. It is not compensation that should count but running the railway properly.

[Lord Birt (CB)]

My Lords, in the last year, just under 10% of British train journeys were either cancelled, truncated or arrived more than 10 minutes late. The prime causes identified were unavailability of crew or fleet and signal and points failures. Recently, my wife and I holidayed in Japan for almost three weeks, travelling on national, regional and local trains. Every single train, without exception, arrived to the very minute on time and delivered us to our destination to the very minute on time. Will we ever attain that level of reliability?

[Lord Hendy of Richmond Hill (Lab)]

Virtually the whole of the world, in countries that run railways, is incredulous that this country managed to separate the infrastructure from the operations for more than 30 years. That is the primary reason why people have spent so much time in the railways discussing not how you fix delays but whose fault it was and who pays the compensation for them. The Japanese railways are renowned for their reliability, but one thing that the Japanese have never done is to contemplate splitting the infrastructure from the operations. That is what Great British Railways will solve.

[Lord Moylan (Con)]

My Lords, we will not get improvements in performance on the railways unless we also get improvements in productivity and efficiency of staff. In January this year, the RMT put out a press release boasting that it had secured a 3.8% pay rise for its Network Rail staff, with no productivity or efficiency conditions attached. Can the noble Lord say whether Ministers will be insisting that future pay settlements will be directly linked to productivity?

[Lord Hendy of Richmond Hill (Lab)]

The previous Network Rail pay settlement, which was carried out but curiously not much publicised by the Government, produced not only a one-off productivity improvement by a substantial amount but continuing productivity, so the staff involved in the pay deal for Network Rail this year are delivering increased productivity compared with that agreed at the time of the previous pay rise. This Government have been able to do that. We have settled over 50 pay deals in the last 12 months with virtually no industrial action, which is entirely contrary to the record of the previous Government.

[Lord Berkeley (Lab)]

My Lords, can my noble friend explain whether, in addition to making the trains run on time, he has any plans with Great British Railways to offer some food on the trains? My journey from Cornwall took five hours and we were offered sandwiches, but they had not arrived. It was the same last week: we were offered sandwiches, but they did not arrive. The staff are doing their best to serve customers, but if they cannot supply sandwiches, maybe that should be put out to the private sector.

[Lord Hendy of Richmond Hill (Lab)]

Of course, the irony of my noble friend’s journey to Fowey last week is that it was the private sector train company that failed to supply the sandwiches to him. It is a serious point and his complaint has been well aired, because he wrote to me, he wrote to the managing director of the train company, I think he wrote to the Secretary of State and he has now raised in the House of Lords that the trolley did not have any sandwiches on it. It is a valid point that the customer offer which is made to people should be reliable, and a five-hour journey without anything to eat is not much fun. I hope he got a drink though.

[Lord Morse (CB)]

I have a very brief question, because I know we are supposed to be brief. Does the Minister think that the quality of our transport services is helping us to deal with the problem of underemployment in this country, or is the idea of having to use the transport system a further disincentive to go into work?

[Lord Hendy of Richmond Hill (Lab)]

It is a very reasonable point. People should be able to rely on public transport, particularly those who do not have access to a car of their own. One reason why I am so passionate, and the Government are passionate, about good performance on the railway, and indeed on the rest of the public transport system, is so that people can rely on it to go to work and create economic growth in this country.

[Lord Redwood (Con)]

When will we be able to catch an HS2 train to Birmingham? This is a fully integrated, nationalised railway with enormous financial resource, but it never goes anywhere.

[Lord Hendy of Richmond Hill (Lab)]

The noble Lord needs to get up to speed with the history of HS2, because it has been comprehensively mismanaged by every Government who have had anything to do with it, and by the board and, sadly, by the management of the company that is building it. This Government have faced the most enormous task of sorting it out. I know that Mark Wild, who successfully managed to open the Elizabeth line after many delays from the people who were constructing it, and Mike Brown, who is the chair of HS2, are working as hard as they can to get HS2 open as soon as they can, having first established how much it will cost and how long it will take to deliver—which are two facts that were unavailable at the time this Government took office.

Business Improvement District Ballots: Digital Voting

Monday 20th April 2026 Lords Chamber

Question

15:09

Asked by

[Lord Pitkeathley of Camden Town]

To ask His Majesty’s Government what assessment they have made of the potential for piloting digital voting in Business Improvement District ballots in order to improve participation and test secure digital voting systems.

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)]

My Lords, the Government recognise the very important role that BIDs can play in regenerating their local areas and I thank my noble friend for his work across BIDs in London. In the Pride in Place Strategy published on 25 September, we committed to strengthening the BID model by expanding property owner BIDs, raising standards and consulting on improvements to voting procedures in BID ballots, which will include introducing an option for digital voting. Further details will be published in due course.

[Lord Pitkeathley of Camden Town (Lab)]

My Lords, I thank my noble friend the Minister for that Answer, which leads to my further question. Business improvement district ballots involve a clearly defined electorate of registered voters. They are overseen by local authority returning officers, and they determine real financial commitments through the bid levy. Yet participation is constrained by the continued reliance on postal-only voting, which can be administratively cumbersome for businesses and local authorities. If the Government recognise that potential, will they now move beyond assessment and commit to enabling a small number of pilot schemes for secure digital voting in BID ballots and bring forward the necessary legislative power to do so, subject to appropriate safeguards?

[Baroness Taylor of Stevenage (Lab)]

We have heard that the postal voting system does not always work as effectively as it should for BID ballots and we want to make sure that BID ballots are as efficient and as accessible as possible, which is why we have committed to consulting on those improvements to BID voting procedures. We will consult on the introduction of digital voting for BID ballots as part of this, including how it will work in practical terms. Of course, we need to make absolutely sure that it can be done safely as well. Subject to the outcome of the consultation, we will then decide how the proposal should be implemented.

[Lord Wallace of Saltaire (LD)]

My Lords, a quick look at international comparisons for introducing digital voting suggests that experiments in other advanced democratic countries have shown that it is okay at the local level, where the likelihood of cyber attack is low, but at the national level it is open to too many risks to try it out. Is that also the Government’s view?

[Baroness Taylor of Stevenage (Lab)]

We absolutely understand the interest in online voting but, when it comes to electing representatives, the integrity and security of the process must come first. At present, serious concerns are shared internationally about the risks of online voting, including cyber threats, fraud and the challenge of ensuring a fully secure and anonymous ballot. That is why we currently have no plans to introduce online voting for statutory elections in the UK, but we are focused on strengthening the current systems for absent voting, such as postal and proxy voting, so that they remain secure, reliable and accessible for everyone.

[Lord Hayward (Con)]

My Lords, the noble Lord, Lord Pitkeathley, is right about the importance of generating interests in BIDs wherever they may happen to be across the country, and there is inadequate participation in voting in general when it comes to BIDs. Can the Minister please indicate the timetable that she is talking about for the process of consultation, in relation to both trialling digital voting and other elements of the process of introducing BIDs?

[Baroness Taylor of Stevenage (Lab)]

I agree with the noble Lord that BIDs bring very significant investment in the areas they operate in. There are now more than 340 BIDs in the UK; cumulatively, they invest more than £169 million each year in local areas. We need to ensure that we are doing our very best to ensure that those BIDs operate in a way that works for the people who are engaged in them. We want to get this consultation and its analysis done as quickly as possible so that, if we consider it possible and safe to introduce digital voting for them, we can get on with that and do it as quickly as we can.

[Baroness Winterton of Doncaster (Lab)]

My Lords, as a member of the OSCE Parliamentary Assembly, I have recently been involved in election monitoring programmes, for example in Moldova, so I am very aware of the threat of cyber attacks that the noble Lord raised. When the Minister looks at the security of digital voting systems, can she draw on the experience of organisations such as the OSCE, so that—even though she says we may not be use them at the moment—we can make sure that our systems are watertight and safe from cyber attacks in the future?

[Baroness Taylor of Stevenage (Lab)]

I am grateful to my noble friend, particularly as she reminds me of the days when I was doing election monitoring in Moldova and Georgia, which was a fascinating experience. I very much appreciated then the work of the OSCE, and still do. She is quite right that we have to do all we can to make sure that voting is safe. I believe that the Representation of the People Bill is completing its Commons stages today and will come to our House in due course. Where good practice is developed and promoted by the OSCE and others, we will look at that with great interest.

[Lord Jamieson (Con)]

My Lords, BIDs do much good work for our town centres, but this is being blown away by the massive damage caused to our town centres by higher national insurance contributions, higher business rates, increased minimum wages and employment regulation. For example, UKHospitality figures show over 100,000 job losses since this Government came to power. Will the Government recognise the impact of these damaging policies on our town centres and reverse course?

[Baroness Taylor of Stevenage (Lab)]

The decline in our town centres—I speak from personal experience—started long before this Government came to power. Our Government are delivering on their manifesto commitment to protect the high street and rebalance the business rates system by introducing permanently lower tax rates for eligible retail, hospitality and leisure properties. We will bring forward our high streets strategy later this year.

[Baroness O’Grady of Upper Holloway (Lab)]

Is my noble friend aware of research showing that low-paid workers are much more likely to spend their wages on the local high street and in the local economy? Will she join me in encouraging noble Lords to talk to workers on the national minimum wage so that they realise what a difference that rise will make to their lives and those of their families?

[Baroness Taylor of Stevenage (Lab)]

I agree with my noble friend that everybody should be paid a proper wage for the job they do. She is quite right that money earned in local areas is often spent locally by those on lower wages, so it is very important that we do that. One thing that really affected our high streets was the legislation that made shop theft of below £200 a summary-only offence. That has now been removed by this Government so that we can make our town centres not only vibrant and viable but safe.

Building Safety (Responsible Actors Scheme and Prohibitions) (Amendment) Regulations 2026

Monday 20th April 2026 Lords Chamber

Warwickshire County Council (Adult Education Functions) Regulations 2026

Surrey County Council (Adult Education Functions) Regulations 2026

Buckinghamshire Council (Adult Education Functions) Regulations 2026

Motions to Approve

15:17

Moved by

[Baroness Taylor of Stevenage]

That the draft Regulations laid before the House on 10 and 25 February be approved.

Relevant document: 54th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 15 April.

Motions agreed.

Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026

Monday 20th April 2026 Lords Chamber

Capital Requirements Regulation (Market Risk Transitional Provision) Regulations 2026

Motions to Approve

15:18

Moved by

[Lord Livermore]

That the draft Regulations laid before the House on 4 March be approved.

Considered in Grand Committee on 15 April.

Motions agreed.

Aviation Safety (Amendment) Regulations 2026

Monday 20th April 2026 Lords Chamber

Motion to Approve

15:18

Moved by

[Lord Hendy of Richmond Hill]

That the draft Regulations laid before the House on 24 February be approved.

Relevant document: 54th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 15 April.

Motion agreed.

Tobacco and Vapes Bill

Monday 20th April 2026 Lords Chamber

Commons Amendments

15:20

Motion A

Moved by

[Baroness Merron]

That this House do agree with the Commons in their Amendments 28A, 28B, 28C, 29A, 29B and 29C.

28A: Clause 43, page 22, line 9, leave out “Section 37 has” and insert “Sections 37 and (Fixed penalty notices: Wales) have”

28B: Clause 43, page 22, line 10, leave out “that section” and insert “each of those sections”

28C: Clause 44, page 22, line 20, leave out “and 37(1)” and insert “, 37(1) and (Fixed penalty notices: Wales)(1)”

29A: Clause 43, page 22, line 15, leave out “Section 38 has” and insert “Sections 38 and (Fixed penalties in Wales: use of proceeds) have”

29B: Clause 43, page 22, line 15, leave out “it” and insert “they”

29C: Clause 44, page 22, line 36, leave out “section 38 has effect as if it” and insert “sections 38 and (Fixed penalties in Wales: use of proceeds) have effect as if they each”

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)]

My Lords, Amendments 28A, 28B, 28C, 29B and 29C were tabled by the Government in the other place to correct an error arising from amendments made in your Lordships’ House on Report. Without these amendments, trading standards officers in Wales would lose the ability to issue certain fixed penalty notices for the existing offence of proxy purchasing for a short period of time. The error would also have prevented trading standards in Wales from being able to issue fixed penalty notices for the sale of tobacco to those under the age of 18 before the smoke-free generation policy takes effect on 1 January 2027. This is in contrast to England where trading standards will be able to issue fixed penalty notices for these offences. This was obviously an unintended error and, if left unresolved, would have created a difference between the enforcement regimes in England and Wales. I am pleased therefore that we have been able to resolve the issue with these six narrow amendments, and I hope noble Lords will be supportive in their considerations. I beg to move.

[Lord Naseby (Con)]

My Lords, I understand the background, having been involved in the early stages of the Bill. Nevertheless, it upsets a great many people in that industry that the Government have not listened to the strong representations of the retailers and those who have knowledge of the industry. We have a situation now where we have a £200 penalty, which is huge by any yardstick, for the revised incidences. We are expecting a new Welsh Government fairly soon, and they may not be too happy with what has now been amended. However, I will say no more than that I think the time will come when the present Government and—I am sorry to say—those on my own side who believe in this idea as a whole will accept that it is totally out of date in relation to what is happening in the world. What we really need is a proper understanding of how we educate people not to take up smoking.

[Lord Kamall (Con)]

My Lords, I should be clear that, given this Motion brings forward an amendment that corrects a technical error and the Government have explained their rationale, we will not oppose it.

[Baroness Merron (Lab)]

My Lords, I again thank your Lordships’ House for its attentive scrutiny throughout the passage of the Bill. I pay tribute to the Front Benches and to noble Lords on all sides of the House.

I say to the noble Lord, Lord Naseby, that, as I have explained and his own Front Bench has confirmed, these are purely technical amendments to make this area of the Bill workable. It is a matter that had much debate. I assure the noble Lord, as I have done on a number of occasions, that we have worked closely with retailers and will continue to do so. I appreciate that he is not a supporter of the Bill, and it is on that point that I differ with him.

I urge all noble Lords to accept these amendments and note that this afternoon marks the end of the Bill’s journey through Parliament. This is a landmark Bill that will create a smoke-free generation, and it will be the biggest public health intervention in a generation. I assure all noble Lords that it will save lives. I commend it to the House.

Motion A agreed.

Children’s Wellbeing and Schools Bill

Monday 20th April 2026 Lords Chamber

Commons Reason and Amendments

15:25

Motion A

Moved by

[Baroness Smith of Malvern]

That this House do not insist on its Amendment 38 in respect of which the Commons have insisted on their disagreement, and do agree with the Commons in their Amendments 38J to 38P.

38J: Page 122, line 38, at end insert the following new Clause—
“Power to require internet service providers to prevent or restrict access by children to internet services
(1) The Online Safety Act 2023 is amended as follows.
(2) After section 214 insert—
“Power to require internet service providers to prevent or restrict access by children to internet services
214A Power to require internet service providers to prevent or restrict access by children to internet services
(1) The Secretary of State may, for the purpose of protecting relevant children from a risk of harm (including harm presented by content), make provision by regulations requiring providers of specified internet services—
(a) to prevent access by relevant children to specified internet services which they provide, or to specified features or functionalities of such services;
(b) to restrict access by relevant children to specified internet services which they provide, or to specified features or functionalities of such services.
(2) “Relevant child” means a child who is of, or under, a specified age (and different ages may be specified for the purposes of paragraphs (a) and (b) of subsection (1)).
(3) The provision that may be made by regulations under this section includes provision—
(a) about the steps that must or may be taken by a provider for the purposes of complying with a requirement imposed by the regulations;
(b) about the monitoring of compliance with a requirement imposed by the regulations;
(c) about the enforcement of a requirement imposed by the regulations.
(4) The provision that may be made by virtue of subsection (1)(b) includes, for example, provision requiring a provider of an internet service to—
(a) limit the amount of time per day, or over the course of a specified period, for which relevant children may access the service or a specified feature or functionality of the service;
(b) limit the times of day at which relevant children may access the service or a specified feature or functionality of the service;
(c) restrict access by relevant children to a service or to a feature or functionality of a service by virtue of which—
(i) a user of the service could receive unsolicited contact from a person who is not known to the user;
(ii) a user of the service could encounter live oral communications or live video generated directly on the service, or uploaded to or shared on the service, by a person who is not known to the user;
(iii) a person who is not known to a user of the service could encounter live oral communications or live video generated directly on the service, or uploaded to or shared on the service, by the user;
(iv) a person who is not known to a user of the service could identify the actual or approximate location of the user.
(5) The provision that may be made by virtue of subsection (3)(c) includes provision for a requirement to be an enforceable requirement for the purposes of Chapter 6 of Part 7.
(6) In making regulations under this section, the Secretary of State must have regard to the fact that children of different ages may be affected by an internet service, or a feature or functionality of an internet service, in different ways.
(7) Regulations under this section may—
(a) make provision applying any provision of this Act (with or without modifications);
(b) make provision for exceptions to requirements imposed by the regulations;
(c) make provision about the time by which, or period within which, a thing must be done;
(d) make provision by reference to standards, arrangements, specifications or technical requirements as published from time to time;
(e) confer functions on a person, including functions involving the exercise of a discretion, and make provision in connection with the procedure for exercising the functions;
(f) make consequential provision.
(8) Regulations made by virtue of subsection (7)(f) may amend or repeal primary legislation.
(9) OFCOM must, so far as reasonably practicable—
(a) carry out such research or provide such advice as the Secretary of State may request for the purposes of making regulations under this section, and
(b) do so by such time, or within such period, as the Secretary of State may specify in the request.
(10) As soon as reasonably practicable after providing advice under subsection (9), OFCOM must publish the advice.
(11) In this section—
“primary legislation” means—
(a) an Act of Parliament,
(b) an Act of the Scottish Parliament,
(c) an Act or Measure of Senedd Cymru, or
(d) Northern Ireland legislation;
“specified” means specified, or of a description specified, in regulations under this section.”
(3) In section 225 (parliamentary procedure for regulations), in subsection (1), after paragraph (e) insert—
“(ea) regulations under section 214A(1),”.”

38K: Page 122, line 38, at end insert the following new Clause—
“Progress statement
(1) The Secretary of State must, before the end of the period of six months beginning with the day on which this Act is passed, lay before Parliament a statement setting out—
(a) what progress has been made towards making the first regulations under section 214A(1) of the Online Safety Act 2023 (inserted by section (Power to require internet service providers to prevent or restrict access by children to internet services) of this Act) (“the first regulations”), and
(b) a timeline for making the first regulations.
(2) The duty in subsection (1) does not apply where the first regulations have been made before the end of the period mentioned in subsection (1).”

38L: Page 122, line 38, at end insert the following new Clause—
“Age of consent in relation to processing of a child’s personal data: information society services
(1) Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data is amended as follows.
(2) In Article 8 (child's consent in relation to information society services), after paragraph 2 insert—
“2A. The Secretary of State may by regulations—
(a) amend paragraph 1 so as to change the age for the time being specified in that paragraph (but not to an age lower than 13 years or higher than 16 years);
(b) make provision in relation to services specified, or of a description specified, in the regulations for a different age to apply for the purposes of paragraph 1 (but not lower than 13 years or higher than 16 years).
2B. Regulations under paragraph 2A are subject to the affirmative resolution procedure.”
(3) After Article 8 insert—
“Article 8ZA
Child’s consent in relation to information society services: age verification
1. The Secretary of State may by regulations make provision about verifying—
(a) that a data subject who has given consent to the processing of his or her personal data in relation to the offer of information society services is at least the age for the time being specified in Article 8(1);
(b) in the case of a service specified, or of a description specified, in regulations under Article 8(2A)(b), that a data subject who has given consent to the processing of his or her personal data in relation to the offer of information society services is at least the age for the time being applicable by virtue of those regulations in relation to that service or description of service.
2. The provision that may be made by regulations under paragraph 1 includes—
(a) provision imposing requirements on persons specified, or of a description specified, in the regulations;
(b) provision about the steps that must or may be taken by such persons for the purposes of complying with a requirement imposed by the regulations;
(c) provision about the monitoring of compliance with a requirement imposed by the regulations;
(d) provision about the enforcement of a requirement imposed by the regulations.
3. Regulations under paragraph 1 may—
(a) make provision amending, repealing, revoking or applying (with or without modifications) any provision of the data protection legislation (within the meaning given by section 3(9) of the Data Protection Act 2018);
(b) make provision for exceptions to requirements imposed by the regulations;
(c) make provision about the time by which, or period within which, a thing must be done;
(d) make provision by reference to standards, arrangements, specifications or technical requirements as published from time to time;
(e) confer functions on a person, including functions involving the exercise of a discretion, and make provision in connection with the procedure for exercising the functions.
4. Regulations under this Article are subject to the affirmative resolution procedure.
5. In paragraph 1, the reference to information society services does not include preventive or counselling services.””

38M: Clause 65, page 123, line 36, leave out “This Part extends” and insert “Section (Progress statement) and this Part extend”

38N: Clause 66, page 124, line 4, at end insert—
“(aa) section (Power to require internet service providers to prevent or restrict access by children to internet services);
(ab) section (Progress statement);
(ac) section (Age of consent in relation to processing of a child’s personal data: information society services);”

38P: Title, line 9, after “schools;” insert “about preventing or restricting access by children to internet services; about the age of consent in relation to processing of a child’s personal data in relation to information society services;”

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, in moving Motion A, I shall also speak to Motions A1, A2, D and D1. In this group, we will debate amendments on restricting social media for under-16s, digital literacy in the school curriculum and mobile phones.

I turn first to Motion A1, tabled by the noble Lord, Lord Mohammed, which disagrees with Amendments 38J and 38P and proposes new Amendments 38Q and 38U. I will also speak to Motion A2, tabled by the noble Lord, Lord Nash. Amendment 38Q would require social media services to set their own minimum age of access based on their children’s risk assessment under the Online Safety Act. Amendment 38R would amend UK GDPR, so that the digital age of consent is raised from 13 to 16 for some social networking services. Motion A2 seeks to amend government Amendments 38A to 38C, requiring the Secretary of State to restrict under-16s from accessing user-to-user services or to restrict specific features or functionalities when making these regulations.

I thank the noble Lords, Lord Mohammed of Tinsley and Lord Nash, and other noble Lords for their sustained commitment on these vital issues. Let me be clear that it is a commitment that the Government share; protecting children online is as much a priority for this Government as it is for noble Lords. The question is not whether but how and what action will be taken and who is involved in making sure that that action is right. It is to facilitate this that the Government launched their consultation in March.

I am pleased to see that the noble Lord’s revised amendment considers the variety of measures on which we are seeking views through the consultation. It acknowledges that there are numerous approaches to securing the safety and well-being of our children: a blanket ban for under-16s to access social media; restricting specific “addictive” features or functionalities and risky features; and raising the digital age of consent under the UK GDPR. This is what our consultation is focused on. This shows that the noble Lord agrees with the Government that it is important that we take not only swift action but the correct action. Let me be clear that the government consultation, and the legislative means in the Government’s amendment, is the most responsible way to get this right, ensuring effective outcomes that will last.

The Government’s amendment allows for clear and decisive action. Amendment 38Q, while well intentioned, may give too much discretion to services in setting age restrictions without considering the evidence from the Government’s consultation. Amendment 38R would change the age of digital consent in the UK GDPR only for social networking services, whereas the Government’s consultation asks whether this change should also apply to other online services.

15:30

In thinking about how we go about this and who is involved, this is a good opportunity to remind the House that our consultation seeks views from those affected most by the issues we are discussing today: parents and children themselves. We have already received over 50,000 responses, with over 30,000 from parents and more than 7,000 from children. From the organisations that have responded, nearly half are educational organisations. That level of engagement demonstrates that this consultation is, above all, about putting children first and is engaging a broad range of people and organisations in getting it right.

However, we have listened carefully to the strength of feeling expressed in both Houses and have reflected seriously on the concerns raised about pace, scope and scrutiny. That is why the Government have strengthened their approach since coming to this House and made clear changes to the proposed legislative powers.

First, on timing, we are determined to move at pace. That is why we have tabled legislative powers to ensure that we can act quickly, grounded on the evidence of the consultation. We have now also placed a firm commitment in the Bill to report to Parliament within six months. This progress report will set out both our intended course of action and a clear implementation timeline.

Secondly, we have strengthened the scope and clarity of the power. We have been explicit about the purposes for which it can be used, stipulating that it can only be exercised for protecting children from online harms. In addition, we recognise that children of different ages experience the online world in different ways. That is why we have also made an amendment that makes clear that any future regulation must take that into account, ensuring that protections are properly targeted and proportionate.

Finally, to strengthen scrutiny, we have committed to share any future draft regulations with relevant Select Committees and Opposition spokespeople, prior to them being laid before the House.

Regarding the part of Amendment 38X from the noble Lord, Lord Nash, on supporting children’s understanding of user-to-user services, proposed new Clause 214C, the Government’s response to the curriculum and assessment review sets out how the revised curriculum will take forward recommendations to strengthen media literacy to enable young people to critically engage with the messages that they encounter through different media channels and ensure that they can identify and challenge misinformation and disinformation. Media literacy will be embedded in the new primary citizenship curriculum and strengthened across relevant subjects. Following recent updates to relationships, sex and health education guidance, it now includes content on AI and deepfakes. It explains how social media works and provides guidance on countering sexual health misinformation. The updated guidance will be used in schools from this September.

We have listened and acted, and we believe that these amendments respond directly to the concerns raised. They strike the right balance between urgency and effectiveness and set out a clear and deliverable route to stronger protections for children online. We have been clear that it is not if we act but how.

I move on to Motion D, relating to Amendment 106, and Motion D1 tabled in the name of the noble Baroness, Lady Barran, which insists on the amendment. The amendment is unnecessary. Our guidance is clear that all schools should be mobile phone-free by default. In making that clear, I acknowledge that we share the same policy intent as the noble Baroness as well as many other Peers in the House today to make sure that schools are mobile phone-free environments. That is why we have published strengthened guidance. We have asked our network of attendance and behaviour hubs to provide support to schools and, from this month, Ofsted will inspect schools’ mobile phone policies. We all want to protect children from the disruption and distraction caused by mobile phones throughout the school day and to create calm, focused school environments that support learning, behaviour and well-being. We are all in agreement on this.

We have listened carefully to Parliament, and we recognise the strong and widespread feeling across the House on this issue. That is why the Government commit to putting forward an amendment in lieu in the other place, which will place this guidance on a statutory footing. In doing that, we will create a clear, legal requirement that the guidance must be followed unless there is a legally justifiable reason for schools not to do so. That amendment in lieu will respond directly to concerns raised by noble Lords, including directly in discussions with me, by placing that guidance on a statutory footing and providing clarity and consistency for schools across the country. In doing that, we will reduce unnecessary burdens on head teachers and send a strong message to parents, giving head teachers clear backing to create and maintain the mobile phone-free school environments that our revised guidance makes clear should exist.

This reflects the intentions of the noble Baroness’s amendments, the concerns that have been expressed directly to me by the noble Lord, Lord Mohammed, and the Government’s concerns. It will allow us to support schools in creating the calm, focused and safe learning environments that we all want to see. I beg to move.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

My Lords, in calling Motion A1, I must inform the House that, if it is agreed to, I will not be able to call Motion A2 by reason of pre-emption.

Motion A1 (as an amendment to Motion A)

Moved by

[Lord Mohammed of Tinsley]

Leave out from “disagreement,” to end and insert “do disagree with the Commons in their Amendments 38J to 38P, and do propose Amendments 38Q to 38U in lieu—

38Q: After Clause 62, insert the following new Clause—
“Protection of children from harmful social media services and features
(1) The Secretary of State must, within 12 months of the day on which this Act is passed, by regulations made by statutory instrument, make provision for the purpose of protecting the wellbeing of children in relation to regulated user-to-user services likely to be accessed by children in the United Kingdom.
(2) Regulations under this section must, in particular, make provision requiring providers of such services—
(a) to assess and specify a minimum age of access for the service, or for specified features or functionalities of the service, as part of a children’s risk assessment carried out in accordance with provisions of the Online Safety Act 2023, with the expected minimum age of access for social networking services being 16 years;
(b) to use highly-effective age assurance measures to prevent access by children below the applicable minimum age;
(c) where a user is identified as being under the age of 16, to apply proportionate measures designed to—
(i) limit the supply of addictive design features and design features that are inappropriate for children, and
(ii) prevent access to content that is harmful to children;
(d) to display to users under the age of 16 clear, accessible and age-appropriate health and wellbeing warnings about the risks associated with prolonged or excessive use of the service;
(e) to keep under review the impact of the service’s design, functionalities, algorithms and business practices on the mental health and psychological wellbeing of children.
(3) For the purposes of subsection (2)(c), “addictive design features and design features that are inappropriate for children” include, in particular—
(a) infinite scrolling content feeds,
(b) auto-play of sequential video or audio content,
(c) algorithmic recommendation systems designed to maximise continuous user engagement,
(d) sycophantic or manipulative features, or features that are likely to make a child understand the technology as human,
(e) push notifications and alerts, including at night and during the school day,
(f) the demand for unnecessary data in exchange for services.
(4) Regulations under this section must require OFCOM to publish guidance about—
(a) the criteria for determining an appropriate minimum age of access;
(b) the evidential requirements for children’s risk assessments relating to minimum age determinations;
(c) the identification and regulation of addictive design features in relation to children; and
(d) the form and content of health and wellbeing warnings.
(5) In making regulations under this section the Secretary of State must consult—
(a) the Chief Medical Officers of the United Kingdom,
(b) OFCOM,
(c) the Information Commissioner, and
(d) such other persons as the Secretary of State considers appropriate.
(6) Regulations under this section shall be treated as imposing enforceable requirements for the purposes of Part 7 of the Online Safety Act 2023.
(7) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(8) In this section—
“child” means a person under the age of 16;
“content that is harmful to children” has the same meaning as in the Online Safety Act 2023;
“regulated user-to-user service” has the same meaning as in that Act; “social networking service” means an online service that—
(a) allows users to create profiles and interact publicly or privately with other users, and
(b) facilitates the sharing of user-generated content, including text, images or videos, with a wider audience.”

38R: After Clause 62, insert the following new Clause—
“Child consent for harmful social networking services
After paragraph 1 of Article 8 (child’s consent in relation to information society services) of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data insert—
“1A. In the case of a social networking service processing personal data for the purpose of delivering personalised content, targeted advertising or algorithmically curated recommendations, references in paragraph 1 to 13 years old are to be read as 16 years old where OFCOM has determined that the service, or a description of service into which it falls, presents a material risk of harm to the wellbeing of children.
1B. For the purposes of paragraph 1A, a “social networking service” means an online service that—
(a) allows users to create profiles and interact publicly or privately with other users, and
(b) facilitates the sharing of user-generated content, including text, images or videos, with a wider audience.
1C. Paragraph 1A does not apply to—
(a) educational platforms and learning management systems provided in recognised educational settings where personal data processing is solely for educational purposes, or
(b) health and wellbeing services where personal data processing is necessary for the provision of care, counselling or support.””

38S: Clause 65, page 123, line 36, leave out “This Part extends” and insert “Sections (Protection of children from harmful social media services and features) and (Child consent for harmful social networking services) and this Part extend”

38T: Clause 66, page 124, line 4, at end insert—
“(aa) section (Protection of children from harmful social media services and features);
(ab) section (Child consent for harmful social networking services);”

38U: Title, line 9, after “schools;” insert “about protecting children from harmful social media services and features; about the age of consent in relation to processing of a child’s personal data in relation to social networking services;””

[Lord Mohammed of Tinsley (LD)]

My Lords, I personally welcome the noble Baroness back to her place after a short period of illness and thank her for taking the time last week to engage with us to better understand where we are coming from and give us the opportunity to understand where she is coming from. I also thank the noble Baroness, Lady Lloyd, for her engagement over the Easter period. Both engagements have been very helpful for us.

My reason for tabling this group of amendments is that we have some concerns around the Henry VIII powers that the Government are seeking. The noble Lord, Lord Nash, may not hold as strong a view as I do on the Henry VIII powers, but noble Lords across this House have issues whenever a Government want to take on lots of powers, and I note that the noble Lord proposes a sunset clause. I have concerns about how the Government intend to make changes once the consultation happens. My view is always that, if these are powers that are required for a set period, so be it; however, I still have concerns around what may happen in future if another Government come in and want to use them. I am sympathetic to what the noble Lord, Lord Nash, has proposed but, through my amendments, we hope that the Government may take the opportunity to support our quest and bring in their own primary legislation.

There is also the issue of whether we have a ban or regulate addictive features. We have always been clear in the amendments we have proposed previously that we did not favour an outright ban for under-16s, but wanted an age rating so that the duty fell upon the social media providers to deal with those features that young people get addicted to, such as constantly scrolling and so on. That is where we stand, and I am sure many Members of your Lordships’ House, if they were able to vote on our amendment, might well be there as well. That is what we need, rather than an outright ban.

I get that your Lordships’ House has previously voted for the amendments from the noble Lord, Lord Nash, to make sure that this issue stays live. It will be interesting to see what happens later today when some of those amendments will no doubt be proposed.

Secondly, as the Minister mentioned, we have issues around the collection of data and GDPR, particularly around the age of consent. Currently it is 13 and we want it to be 16. I hope the Government address that.

On enforcement and additional harms, while empowering Ofcom on the issue of guidance on addictive features, it will also introduce specific requirements for platforms used to access services to mitigate the risks of them being used to create and distribute child sexual abuse materials. This includes mandating human moderators and co-operating for law enforcement. In all our efforts, we have tried to do the best for our young people. We have tried to help and assist the Government and nudge them in the right direction, and that is what we will endeavour to do today.

Ultimately, from speaking to the noble Baroness, Lady Smith, the noble Lord, Lord Nash, and others in your Lordships’ House, I do not think we are too far away from where we should be. It is just a matter of the speed and pace of implementation. I note that the Government keep saying, “It will come out after our consultation”, but we have been debating this since last year. I will put on record again—I have said it in meetings before—that the noble Lord, Lord Nash, was the first to have flagged this, to his credit. To be honest, I do not care which political party someone belongs to if they are here to safeguard our young people: credit where credit is due. We have tried to work across parties, with the noble Lord, Lord Nash, and with the Cross Benches to ensure that we get to where we are.

I will briefly move to smartphones in schools, rather than mobile phones, as the noble Baroness, Lady Smith, said, because we have always been clear that it is with smartphones that we have a problem. At the meetings that the noble Baroness, Lady Barran, and others have been to, parents and head teachers have said that the issue of concern is with smartphones, social media, WhatsApp groups and others.

We have noted some parents’ concerns around being able to access or get in touch with their children and young people, particularly in rural areas. That is why we often talk about being able to have the more old-fashioned phones that many of us had 20 years ago, which basically allowed you to make phone calls and not much else. Therefore, we have been clear that it is smartphones that are the issue for us.

I know that my noble friend Lord Addington was very clear about supporting what he often refers to as the “devices” that enable people who need extra support in school and how to deal with that, but that issue clearly fell in your Lordships’ House when we tried to propose it. I take reassurance from the Minister’s commitment about enhancing that guidance, because head teachers have been looking for that. They have been saying that there is a small but very vocal group of parents who, whenever we bring in a policy like this, stop them managing those schools and supporting the teaching of young people, as they constantly have to fend off those parents.

In that sense, the Government are heading in the right direction. They might not be quite where some of us want them to be, but I thank the Minister for that and look forward to hearing other contributions from your Lordships’ House.

[Lord Nash (Con)]

My Lords, I too welcome the Minister back to her place, and I thank the noble Lord, Lord Mohammed, for his remarks. I will speak to my Motion A2. For anyone who has studied them, the verdicts in the two US cases are clearly game-changers. The evidence from the social media companies themselves is damning. I have a treasure-trove of these documents, if any noble Lord would like them.

Immediately following these cases, the Prime Minister made some very strong statements about protecting children from the harm of social media, and the right honourable Liz Kendall spoke only yesterday about the importance of highly effective age verification to ensure that children cannot access the harmful features of social media. This is exactly what my proposal does. I listened very carefully to what she said yesterday and, if you can get a fag paper between us, it is a pretty thin one indeed—so I have decided to take the Prime Minister at his word and, instead of batting my amendment back again, to lay an amendment to the Government’s amendments to the effect that they must, rather than just may, raise the age for access to those harmful social media sites to 16 within 12 months. Those sites would be chosen very selectively and, I am sure, would be very few in number—definitely not an outright or blanket ban—and this would be stated in the Bill. I have also proposed in the amendment a sunset clause of two years on the Henry VIII element of the powers that the Government are proposing to take.

15:45

At the heart of my amendment are safety-by-design principles, with the responsibility resting firmly with the companies themselves. Noble Lords may be interested to know that I and my team have agreed a statement of principles with more than 40 charities and other organisations including the NSPCC, 5Rights, the Anti-Bullying Alliance, the Centre for Protecting Women Online, the Children and Young People’s Mental Health Coalition, the National Children’s Bureau, Coram, the Internet Watch Foundation, the Mental Health Foundation, Mumsnet, Parentkind, the NEU, NASUWT, the Centre for Young Lives and many others. Central to these principles is safety by design, with responsibility resting firmly on the services themselves. My amendment also contains a disapplication of the Online Safety Act safe harbour, which would make enforcement easier for Ofcom; the involvement of Ofcom, the Children’s Commissioner and the medical royal colleges as expert advisers; a requirement for digital literacy provision for children; and a transparency provision.

I will say a few words about Australia and whether age verification can work. The Australian eSafety Commissioner said a couple of weeks ago that the reason a number of children still have accounts there is simply because the social media companies are not doing their jobs properly, and it is now moving to enforcement. As the right honourable Liz Kendall said yesterday, in this country we would propose highly effective age verification, as is working for pornography, as opposed to the weaker Australian reasonable steps. Many countries are also moving to a similar approach to this, and the social media companies have admitted that this can be done if they put their minds to it, so this concern is unfounded.

It is essential that we play catch-up with the pace of change online much faster than we are. It would be such a small step for the Government to now accept the principles of my amendment—not to have what some have called a blanket ban but for this merely to be used highly selectively and definitely not to apply to apps for particular vulnerable groups. The consultation can then be about how to effect this and learning over the next 12 months from Australia and the many other countries effecting similar measures. The rest of the consultation can then be about the equally urgent matters of AI companions and chatbots, VPNs and the other matters it covers. The Government have acted swiftly on pornography, nudification, intimate image abuse, cyber flashing, content that promotes self-harm and suicide, the preservation of data after the death of a child, and other areas. But on this, the Government have merely said in their amendment that they will make a statement about progress within six months. This commits them to nothing.

Over a six-month period, the LLMs that drive products such as ChatGPT and Claude will become twice as powerful, have access to twice as much data and run at half the cost. We have to play catch-up much faster. It was clear from the shocking evidence discovered in the American trials that there are people of conscience in social media companies, but they were suppressed. It would be morally irresponsible of us to allow this to happen in this country and I urge noble Lords to vote for my Motion.

[Baroness Benjamin (LD)]

My Lords, during the short time we have been debating a ban on social media for under-16s, several countries have brought in or are discussing such a ban. Even China is due to bring in restrictions on the use of mobile phones and social media. Those who argue that our children will be at a disadvantage for not accessing social media should realise, that most children will be in the same boat: they will not be at a disadvantage. That is why I am supporting the Motion from the noble Lord, Lord Nash.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I think we have all agreed that there are troubling aspects of social media usage among young people, which are taken very seriously. It is very appropriate for parents, teachers and policymakers to be concerned and to discuss how best to help children navigate the digital world. From previous contributions, people will know that I am not sympathetic to the banning approach. I am not going to rehearse that, but I want to make a couple of points.

First, I am still very concerned about the Government’s proposed Henry VIII powers. I appreciate the sunset clause from the noble Lord, Lord Nash, but I tend to go along with the way that the noble Lord, Lord Mohammed of Tinsley, has explained it, because we cannot just keep handing over power to the Executive and saying, “We trust you to get on with it”. I am not convinced that that trust is merited.

In general, however, I appreciate that the Government have been more open about consulting on this difficult issue. I hope that continues and I encourage the Minister, and the Government in general, to consider new evidence as it comes in. The experiment in Australia shows things not just about social media or the big tech companies, but about the way that children have got around the ban and are now using unregulated sites, with some danger to themselves. If the Government are still open, that is very important, because there are enough experts—scientists and other people working in this field—who really are concerned that the pressure for a drastic policy such as this, with social media harms becoming a go-to explanation and bans becoming a go-to solution for a wide range of the cultural and political challenges facing young people, is something we need to be careful of. Oxford psychologist Lucy Foulkes describes it as a “neat explanation”. She says that

“social media makes a nice bogeyman, but the claim is just not backed up by the data”.

Can the Minister clarify, in terms of the consultation and the gathering of information to inform policy, whether there will also be discussions about weighing up the pros and cons of bans and so on, with the unintended consequences for vital democratic freedoms? Could age-gating, for example, lead to a form of digital verification for adults, which would be illiberal? There is also the impact on socialising the young. I know we have heard that, if everyone is banning it, that is okay; I am not convinced that China banning anything is something I want to be excited about, personally. We have to weigh up whether putting an emphasis on safetyism outweighs the potential benefits of teaching young people how to negotiate the digital world, rather than just taking them off it.

On the Motion from the noble Lord, Lord Nash, there are a couple of things that I am not sure about and need clarification on. In the phrasing

“are likely to cause, encourage or facilitate compulsive, obsessive, addictive or other unhealthy behaviours”,

“are likely to cause” seems to me to be the opposite of evidence-based. How does that decision get taken on board?

On the use of “addictive” and the allegation that these are addictive apps and so on, should we just uncritically accept that? I know that it is being used in the law courts in America, but accepting the “addiction” label medicalises bad habits and relieves the young of any responsibility for their own behaviour. Is there a danger here of teaching the young that they have no control and peddling a myth of powerlessness in relation to technology and young people’s own desire in just wanting to do things? You can imagine that, “It’s not my fault; it’s the algorithm what done it”—always blaming someone else—is a danger that undermines the lessons that young people should learn about self-discipline in order to grow up as independent moral agents.

Finally, on teaching lessons—maybe I misunderstood this—in Motion A2, under the heading,

“Supporting children’s understanding of user-to-user services”,


which sounds very educational, and obviously we are discussing a schools Bill, it seems to me that there is a danger in the curriculum of overintervention. It is one thing teaching business models and implications of online collection of children’s data. The Minister explained the issues around digital literacy well and I am all for that; it is a positive thing. But adding to primary legislation such centralised, specific demands, as they seem to be, that the national curriculum

“should contain age-appropriate material to explain the reasons for children under the age of 16 being prevented from accessing different kinds of regulated user-to-user services”

just feels to me like PR for the Bill. I am not entirely sure that it is helpful for children. It sounds far too much like politicising the agenda rather than making it open-minded.

I am involved in a schools sixth-form debating competition called Debating Matters. We have a motion that is for or against the ban on social media for under-16s. There are two sides to this debate and, even if there is law change, I would not want the curriculum to teach only one side of the debate as though it is the truth and the final word, because that would be manipulative and not right.

[Lord Hacking (Lab)]

My Lords, when the noble Lord, Lord Nash, tabled his amendment at the first stage, when we were battling with the House of Commons on the drafting of the Bill, I gave him my support and voted against the Government. I voted against the Government not because I was against them but because, as I told my noble friend the Minister, I wanted them to have another thought about this issue. They have now had another thought about this issue and proposed legislation that is considerably stronger than the legislation we last looked at. Therefore, I welcome the position that the noble Lord has now taken.

A few years ago, in professional circumstances, I had the duty to look at some of the pornography that is available, and I have to tell your Lordships that it is quite vile. I have no reason to think that it is any better now: it is probably more vile.

The other thing that we should take strongly into account is the access that is required to get into and view the pornography that is available on the internet. It is a much bigger problem than we might perceive.

So, my present position is that I again support the noble Lord, Lord Nash, but in his more sophisticated approach of accepting the government amendments but suggesting that there could be some improvements. I hope my noble friend the Minister will accept the proposed improvements that the noble Lord, Lord Nash, has moved.

16:00

[Baroness Kidron (CB)]

My Lords, I say at the outset that I shall support the noble Baroness, Lady Barran, should she choose to test the opinion of the House, and the noble Lord, Lord Nash. What I have already said at great length is recorded in Hansard, so I will just say that the scope, the timing, the lack of scrutiny, the consultation itself and now the idea that a report to Parliament is an effective form of scrutiny are all problematic. I would prefer banning unfit companies’ access to children rather than banning children.

However, even if the amendments in front of us were perfect in all those ways, they still would not be effective. I met Ministers last week, and they freely admitted that neither their plans nor the amendments address the fundamental problem of enforcement. If we pass any one of the amendments in their current form we will simply give Ofcom more duties but no powers, and parents will still have absolutely nowhere to go when their child is in danger. Over the past six weeks, I have put forward measures on an individual redress mechanism, injunctive powers for parents when their child is at immediate risk of harm, individual liability to concentrate the minds of senior executives, and a review of Ofcom’s wider enforcement powers, including its ability effectively to issue a business disruption notice. Each is essential to making this regime work, and each has been rejected by the Government. None is included in the amendments, none is included in the consultation and none, I am told, will be in the King’s Speech.

The Prime Minister said last week that this cannot go on. I agree. It is staggering that, two years into his Government, every promise made to parents has been kicked down the road. The Government are building on top of a regime that they know does not work. In the best-case scenario, we will get regulations with more unenforceable duties that have not been scrutinised in 2027, maybe in 2028—indeed, if we do not pass the Motion tabled by the noble Lord, Lord Nash, maybe not at all.

I too heard the Secretary of State yesterday. She announced that she would extend her newly acquired powers over chatbots—put into the Bill only last Thursday—to child online harms, having rejected the very possibility that the House put forward on Thursday. This is not a serious approach. The Government should come back with an amendment that offers a proper prospect of immediate and meaningful change and proper enforcement to tackle this so that our children are safe online.

[Baroness Harding of Winscombe (Con)]

My Lords, I shall briefly add to the eloquent contribution made by the noble Baroness, Lady Kidron. I recognise that all parties have moved and that the groups of amendments are much closer than they were when we last debated this topic. However, I worry that the pressure is still on the child, not on the tech companies.

I too will support my noble friend Lord Nash should he choose to divide the House, but I ask the Government to think carefully, when they bring back the next group of amendments—as I suspect they will need to—about what the noble Baroness, Lady Kidron, just said about setting up a regime that, in technical economist-speak, internalises the risks within the company so that the company has to bear the cost to work out how its products are safe enough for our children to use. That is what we do in the physical world. We do not ban children using toys; we enforce health and safety legislation so that toys cannot be sold to children unless they are safe. Unfortunately, I fear too much of this is banning children and not enough is holding executives and businesses to account to make their products suitable for children.

[Lord Russell of Liverpool (CB)]

My Lords, I largely agree with the noble Baroness, Lady Harding, who brings all the rigour that you would expect from an MBA from Harvard Business School to the analysis of this problem. Ultimately, it is a business issue. These companies are making a vast amount of money from, basically, monetising the time that these children are spending on what are designed to be addictive products. That is the simple truth. Until and unless we find a way of disrupting the business models of the companies behind those platforms in such a way that it hurts them—the point at which individual directors and senior executives know they will be held personally accountable and may well go to jail, as well as the companies being fined vast amounts of money—there will really not be a tipping point. This often feels like pushing water uphill.

I want to make a point about educational technology. We are focusing very much on smartphones and the terrible effects they are having on so many young people. Simultaneously, the Government have been promoting, quietly but overtly over many years, the increased use of technology in schools, from primary schools onwards, partly as an understandable result of Covid, when your Lordships’ House even managed to embrace technology to a degree that many of us would have thought completely unthinkable. Schools have indeed been embracing technology, and in many cases the effects on the young people in those schools that have done so are not good.

Many countries of the world have recognised this and are doing a complete U-turn on their previous eagerness to get children in front of touchscreens and computer programs. They are trying to reverse the effects because they have been doing it for long enough that they have seen the evidence produced of the effect that it has on children: reduced attention spans and reduced vocabulary. In Scandinavia—surprise, surprise—libraries are doing the unthinkable: they are bringing back books, having largely decided to no longer invest in them five or six years ago.

I appeal to the Government, and particularly to the Department for Education, to look carefully at what is going on in schools. Schools need advice from the Government about how to deal with this issue. The blandishments of these companies, which are large, sophisticated and profitable in selling their products to schools, have all the smoothness of a tobacco or asbestos salesman, but in many cases their terms and conditions mean they are monetising those children and their details, along with the schools’ details, and the educational product they are producing is substandard.

[Lord Hampton (CB)]

My Lords, I shall speak to Motion D on the phone ban. The Minister talked about strengthening guidance and Ofsted being able to inspect schools’ mobile phone policies, but I speak as a parent as well as a teacher when I say that parents do not understand statutory footing; they understand a legal ban. If the Government want to reduce unnecessary burdens on head teachers then, from what we have seen over and again, that has to mean an outright ban in the Bill.

[Lord Clement-Jones (LD)]

My Lords, I support my noble friend Lord Mohammed of Tinsley in his Motion A1. We are united across this House and, indeed, across Parliament in our desire to protect children from the significant harms of the online world, but, as we consider these amendments in lieu, we are presented with three rather different legislative strategies.

The Government’s proposal in Motion A asks this House to grant sweeping, enduring Henry VIII powers to the Secretary of State, allowing them to amend or repeal primary legislation via secondary regulations. The Government’s amendments remain completely silent on the predatory nature of addictive design. By ignoring the psychological triggers engineered to hijack a child’s attention, the Government are fighting big tech with one arm tied behind their back, regulating, as we have heard today, the user rather than fixing the product.

I have great respect for the noble Lord, Lord Nash, and his tireless and principled campaigning in this area, and I welcome the fact that his Motion A2 attempts to rein in the Government’s executive overreach by applying a two-year sunset clause to these Henry VIII powers. I recognise that his amendments are no longer a blanket ban, but his core proposal remains a blunt instrument. Although well-intentioned, this approach is built entirely on exclusion. It risks creating a dangerous cliff edge for young people: rather than helping children to safely develop digital resilience, it would potentially suddenly expose them to the unfiltered internet the moment they turned 16.

Motion A1, by contrast, offers a far more precise, workable and future-proof alternative. Instead of handing unchecked powers to Ministers or trying to build an impossible wall around the internet, it places direct statutory duties on tech companies to clean up their platforms. As we have heard, that is essential. Under our Amendment 38Q, where any user is identified as being under 16, the platform must apply proportionate measures to limit the supply of addictive design features and prevent access to harmful content. As my honourable friend, Munira Wilson MP, stated in the Commons:

“This needs to be big tech’s seatbelt moment”.—[Official Report, Commons, 15/4/26; col. 920.]


Recent US court cases, which the noble Lord, Lord Nash, mentioned, have exposed internal documents showing that tech executives deliberately designed these platforms to keep children hooked. Motion A1 would dismantle this addictive architecture, preserve parliamentary sovereignty and spark a race to the top for safe, enriching online spaces. I urge the House to support that approach.

[Baroness Barran (Con)]

My Lords, I will speak briefly to my noble friend’s Motion A2 and my Motion D1. My noble friend has once again laid out the arguments in favour of his Motion A2 most eloquently and elegantly and the Minister in her opening remarks talked about it being

“not whether but how and what action will be taken”

by the Government. Her right honourable friend the Prime Minister, the Secretary of State and all Ministers sitting on the Front Bench today have at different times made a commitment to act. But that is not what we have in the Government’s amendment. Their amendment is not a commitment to act; my noble friend’s amendment is. I hope that the Ministers opposite will forgive me for pointing out that the only charities they ever quote are those which have caution about the approach that my noble friend is advocating. As he said, over 40 charities have signed the principles document that has been developed with them. Of course, that gives those of us on this side of the House reason for real concern as to why no other charities are ever quoted in interviews by the Government.

My noble friend’s amendment has several material advantages over the Government’s current approach. First is the simplicity in that the commitment to act is in the Bill. Your Lordships are very familiar with the risks posed by putting everything in secondary legislation, particularly secondary legislation with an enormous Henry VIII-shaped power. Secondly, it puts into effect the Prime Minister’s commitment but also allows the Government to use the consultation to shape the “how”—including on enforcement, as the noble Baroness, Lady Kidron, rightly pointed out, and in relation to breadth and scope—but it sets out very clearly at proposed subsection (4)(a)(i) to (iv) the principles that would be followed in relation to addictive behaviour, serious harm and exploitation, illegal content and loss of privacy; your Lordships, I know, will have read the amendment. Thirdly, with great simplicity, it also sunsets the Henry VIII powers, which I think we can welcome across the House.

16:15

As my noble friend said, the US court cases have changed the evidence and the conversation. There is a simple way forward for the Government to resolve this impasse, which is to accept the principles that underpin my noble friend’s amendment. They may choose to use different words, but the principles should remain. The Minister talked about action that is not just swift but appropriate. However, the government amendment still allows for inaction; it would still allow the Government to do nothing at the end of this. My noble friend’s amendment does not leave that option. That is not an option that Ministers say they want. I think they should close that loophole when, as I hope, we come back to this at a future point.

I turn to my Motion D1 in relation to smartphones and mobile phones in schools. Before I speak to that, I would like to put on record my agreement with the noble Lord, Lord Russell, on edtech. He will remember the amendments that we had at an earlier stage of the Bill, and I think that is a serious issue for the House to come back to. Unfortunately, I was unaware until the noble Baroness announced it that there was going to be a change in the Government’s position, which I find at the least curious since the amendment has been in my name throughout. Obviously, who they choose to speak to and take advice from is the Government’s prerogative, but, as the Minister knows, I wrote to her office asking for clarification last week by email and I have received absolutely no reply, so I find that unfortunate to say the least.

Even with the statutory guidance announcement that the noble Baroness just made, the current guidance the Government have published, which they now propose to put on a statutory footing, still allows schools to have a “not seen, not heard” policy—the noble Baroness is shaking her head. I asked for confirmation from the department and got none, so in that silence I went to a number of school and trust leaders and asked them. The answer I got was that there is, at best, confusion and, at worst, an assumption, including from schools which currently have a “not seen, not heard” policy, that that can continue unchanged and “will continue to be the norm in schools”.

If the Government agree that that is not what children and teachers need, they need to put it clearly in their guidance that it is unacceptable. I appreciate they have taken out the example of using bags and jackets—whatever it is—to put a phone in. They just need to say, in words of one syllable so that schools understand it, that this is not an acceptable policy. There is much evidence that the presence of a smartphone in one’s bag or pocket is a distraction. The temptation to turn it on when going to the lavatory, when out of sight or when in the playground is almost irresistible—indeed, it happens to adults too. Given that that is the case, putting flawed guidance on a statutory footing achieves nothing.

As the noble Lord, Lord Mohammed of Tinsley, said, there is no distinction in the Government’s approach between smartphones and brick phones or dumb phones. The Government talk about how keen they are to give headteachers discretion in this area —not something they were very keen on in every other amendment to this Bill—but the distinction is really important, because it has a bearing on when children first get a smartphone. Parents want to be able to contact their children on the journey to and from school, but they do not need a smartphone for that, so there needs to be distinction in the guidance as well. The Government are obviously very resistant to accepting an opposition amendment, even when headteachers are calling for them to do so. I do not know why headteachers, parents and children would not thank them if they saw sense and accepted this amendment.

[Baroness Smith of Malvern (Lab)]

My Lords, on Motions A, A1 and A2, the Government, as I think I made clear in opening this debate, recognise the concerns raised in this House and the strength of feeling among parents about protecting children online. As I and other Ministers have said, we share that commitment. This is a complex issue, with a range of views, expressed once again today during this debate, about how it is best approached.

Points were made by noble Lords about enforcement, the development of the online safety regime, and other issues that my noble friend Lady Lloyd and others in DSIT will continue to think carefully about. The noble Lord, Lord Russell, slightly took us back to discussions that we had earlier on the issue of edtech. I am happy to provide him with further information, expanding on the information that I gave in Committee, about the approach that the Government are taking, particularly to develop the evidence around what is and is not appropriate use of technology in the classroom. Given the strength of feeling, we have been clear in government that it is important that we act not only quickly but in the right way.

The cases in the US, as commented on by noble Lords, have rightly and understandably raised interest. While we do not comment on foreign court judgments, we welcome international efforts to strengthen online safety and will want to learn from what is happening around the world. However, I note that the UK has the most robust online safety framework in the world, with a regulator empowered to issue fines of the same order of magnitude or larger. That is why the Government have announced that we are going to take further action to protect children’s well-being online through our consultation.

As the noble Baroness, Lady Benjamin, and others have identified, there is a range of action in different countries; I agree that it is not the same action in different countries. I was fortunate, before I was confined to my bed before recess, to go to New York, to the Commission on the Status of Women, where I attended a useful session with a focus on the action taken by different countries to protect children online. What I thought was notable was the wide range of different approaches being taken in different countries—different ages, different scope and different speeds at which it was happening. We cannot simply look abroad to find a consistent approach. That is why, while watching very closely what other countries are doing, we want to be confident that what we introduce here works and works for all children, including the most vulnerable. That is why testing options now, taking evidence from families themselves and putting in place the legislative powers to act quickly once the consultation closes is the right thing to do. It means that we can move in months, not years.

As has been said on numerous occasions, the Government’s consultation looks beyond a simple social media ban to a wider range of harms, from addictive design to time spent online, allowing for a more comprehensive and effective response with long-lasting outcomes. It considers at least some of the issues raised by the noble Baroness, Lady Fox. In other developments, as I outlined in my opening speech, the Government are taking action through the curriculum, supporting schools to enable children and young people to be much clearer about media literacy and the nature of what they will encounter online at some point, whenever that may be in their lives, when they have access to it. This is clearly an important development, both in the curriculum and in the way in which our schools are teaching.

We have listened to concerns about pace, which was another important theme of the debate today. The argument is that the amendment from the noble Lord, Lord Nash, would enable faster movement, because we would not need to consult. The Government have laid the groundwork to act swiftly on the outcome of our current consultation without the need for lengthy primary legislation. It is a short, sharp consultation, which we believe is the right thing to do to make sure that we take the right approach. I reiterate that we have been clear that it is not a question of if but how we act. In addition, the government amendment would allow any subsequent regulations to capture a wider range of harmful features and functionalities and to tailor measures to where harms are actually occurring. We are committed to working as quickly as possible to deliver additional protections. We will not wait years, as with the Online Safety Act. We are determined to get it right and we will not compromise on what is best for our children’s future.

There is concern about scope—I think I have responded to some of that concern—and scrutiny. That is why we have tabled legislative powers to act swiftly on the basis of evidence, alongside a clear commitment in the Bill to report to Parliament within six months. We have made it clear that these powers can be used only for the purposes of protecting children. I hear the concerns raised by the noble Lords, Lord Mohammed and Lord Clement-Jones, about Henry VIII powers. To be clear, the power permits the Secretary of State to apply only existing parts of the Online Safety Act, with modification if needed, to ensure that the new regulations are effectively incorporated into the legal framework. The power would not allow this Government, or any future Government, to amend the existing online safety duties. We have been clear that the powers must have due regard to the effects on children of different ages and we have provided, as I outlined in my opening comments, for meaningful scrutiny, through engagement with relevant Select Committees, before any regulations are laid. We have been clear throughout, as demonstrated through these new legislative powers, how we will do this both quickly and effectively.

Moving on to the issue of mobile phones, it is important to reiterate that there has already been progress in the ways in which schools deal with mobile phones. We know that the majority of schools have policies that prohibit mobile phones, which is why we believe that Amendment 106 is unnecessary. The noble Baroness, Lady Barran, slightly understated the changes that we have made to the guidance and the range of other measures that we have put in place around the guidance to support head teachers and to enable it to be implemented more quickly.

On the specific issue of whether “not seen, not heard” as an approach is appropriate, she is right—we have now taken that out of the guidance, and we would be willing to consider whether we should be stronger on that. The question that the noble Baroness asked was whether the use of guidance would make this impossible. She knows that the point of guidance, whether statutory or non-statutory, is to provide clarity in the broadest context about how we expect schools to operate in this area. It is a complex area where different schools and different head teachers might have different ways of achieving the outcome—we are all clear that there should not be access to mobile phones for children at any point in the school day—but it is not possible for me to say that it would be impossible, as she knows.

16:30

However, as I have said, we have moved on this. We recognise the strength of feeling on this issue, both in this House and beyond. That is why today, to recognise that—notwithstanding the fact that we think the guidance already in place provides head teachers and schools with a range of approaches to be able to deliver the objective that we all share—we are committing to tabling an amendment in lieu, which will place the existing guidance on a statutory footing in the Bill, creating a clear legal requirement for schools.

The noble Lord, Lord Hampton, knows from his experience in schools that having guidance which is statutory is a clear statement to head teachers, parents and others that what is included in that guidance will be expected to be happening in schools, and it provides the ability for schools, as I have suggested, to be able to deliver that in the way that is most appropriate. It is an important message for head teachers, if they feel they need it, to be able to say, “Look, this guidance and what it expects from schools is statutory”. In doing that, we have listened to concerns about how we support head teachers in delivering on this policy, and we have listened to Parliament.

This approach is robust, proportionate and effective. It ensures clarity and certainty going forward so that all schools can become mobile free. Given those assurances and the progress that the Government have made in both areas of this group, I hope that noble Lords will feel able as soon as possible to bring these issues to a conclusion as part of this Bill.

[Baroness Barran (Con)]

Before the Minister sits down, both the noble Lord, Lord Mohammed, and I raised the issue of smartphones as distinct from mobile phones. I understood the Minister to say that she would consider improving the guidance to make it clear that “not seen, not heard” was not in line with the spirit of the guidance. Will she also undertake to look at whether there is any refinement that could be considered in relation to smartphones?

[Baroness Smith of Malvern (Lab)]

Yes, I will undertake to do that. I think it is interesting that that type of question is exactly the reason why the use of what will become statutory guidance is a more appropriate way of dealing with the nuances of this issue than the type of legislative ban on the face of the Bill that some people are arguing for. Because of that flexibility, I will undertake to do that.

[Lord Mohammed of Tinsley (LD)]

I thank the Minister for her comments and response to the points raised. I thank all noble Lords, in particular my noble friend Lord Clement-Jones, for setting out clearly, alongside myself, our position on social media. I welcome the comments on having better clarity on the smartphones issue. I am not minded to test the opinion of the House on this occasion.

Motion A1 (as an amendment to Motion A) withdrawn.

Motion A2 (as an amendment to Motion A)

Moved by

[Lord Nash]

At end insert “, and do propose Amendments 38V, 38W and 38X as amendments to Commons Amendment 38J—

38V: In subsection (2), in inserted subsection (7)(a), after “modifications” insert “, subject to subsection (8A)”

38W: In subsection (2), at the end of inserted subsection (8) insert “, subject to subsection (8A).
(8A) Regulations made more than two years after the day on which the Children’s Wellbeing and Schools Act 2026 is passed may not amend or repeal primary legislation or apply any provision of this Act with modification.”

38X: At the end of subsection (2) insert—
“214B Use of section 214A powers in relation to regulated user-to-user services
(1) The Secretary of State must make regulations under section 214A(1)(a) requiring providers of specified regulated user-to-user services to use highly-effective age assurance measures and reasonable anti-circumvention measures to prevent access by children in the United Kingdom under the age of 16 to those services which they provide, or to specified features or functionalities of such services.
(2) A draft of the first such regulations must be laid before each House of Parliament within eight months of the day on which the Children’s Wellbeing and Schools Act 2026 is passed.
(3) Subject to approval by a resolution of each House of Parliament, the first such regulations must be brought into effect within one year of the day on which the Children’s Wellbeing and Schools Act 2026 is passed.
(4) When making the regulations described at subsection (1), the Secretary of State must—
(a) seek to protect children under the age of 16 from any general or specific characteristics of those services, features or functionalities which it is reasonable to believe, having regard to any advice provided for that purpose by relevant experts—
(i) are likely to cause, encourage or facilitate compulsive, obsessive, addictive or other unhealthy behaviours among children,
(ii) could expose children to risks of serious harm, manipulation or exploitation,
(iii) could expose children to illegal content or primary priority content, or
(iv) could expose children to serious loss of privacy or to contact from strangers;
(b) have regard to the desirability of facilitating studies by charities and independent researchers of the safety and appropriateness for children of the characteristics of regulated user-to-user services;
(c) make any necessary provisions or consequential amendments to ensure that—
(i) the duties on the providers of regulated user-to-user services under those regulations are enforceable requirements for the purposes of section 131 and Part 7 of this Act, and
(ii) section 49 (relationship between duties and codes of practice) of this Act does not apply to those duties.
(5) In this section, a “relevant expert” means OFCOM, the Children’s Commissioner, any of the Chief Medical Officers of the United Kingdom, the Medical Royal Colleges, and any other persons from whom the Secretary of State considers it appropriate to seek relevant expert advice or input.
214C Supporting children’s understanding of user-to-user services
The Secretary of State must take action to ensure that, effective for the academic year commencing in September 2027, the national curriculum contains age-appropriate material to explain the reasons for children under the age of 16 being prevented from accessing different kinds of regulated user-to-user services, or features or functionalities of such services, including—
(a) the implications for children’s wellbeing of their use of or exposure to services with characteristics of the kind described in subsection 214B(4)(a), and
(b) the range of business models, methods and motivations for and the implications of the online collection and processing of children’s data.””

[Lord Nash (Con)]

My Lords, I wish to test the temperature of the House.

16:35

Division 1

Motion A2 agreed.

Ayes: 284

Noes: 158

16:46

Motion B

Moved by

[Baroness Smith of Malvern]

That this House do not insist on its Amendment 41B, to which the Commons have disagreed for their Reason 41C.

41C: Because the Commons do not consider the Amendment to be necessary in light of periodic reviews to the statutory guidance about the cost of school uniform and because the Department for Education will continue to monitor the cost of school uniform and review the impact of the provisions about school uniform in the Bill.

[Baroness Smith of Malvern (Lab)]

My Lords, in moving Motion B, I shall speak also to Motions B1, C and C1. In this group, we will debate amendments relating to school uniforms and admissions.

Motion B relates to Amendment 41B. Motion B1, tabled by the noble Lord, Lord Mohammed of Tinsley, seeks to review the effectiveness of a numeric limit on branded uniform within 12 months, alongside consideration of a monetary cap. His subsequent Motion would require a review of the effectiveness of measures to control branded item costs within 12 months.

I thank the noble Lord again for his championing of this issue. I know from our conversations how dear this issue is to him and how determined he is to make a difference for the children and families in his home town and up and down the country. I admire his commitment to thinking about the various ways in which we can achieve that. I make it clear that we share the aim of bringing down costs for parents, in particular for those who find it most difficult to afford school uniforms. This Government of course want to understand the impact that our manifesto commitment has made and whether it is meeting our shared objectives. As required with legislation, we will conduct a post-implementation review to capture the actual impact of the policy and consider any modifications that may be recommended.

Furthermore, the DfE has engaged with parents and school leaders extensively, over many years, on school uniform policies, including conducting detailed cost surveys. We will continue to monitor the impact of this measure, informed by the latest available evidence. For this reason, legislation on this is unnecessary.

The priority now is to provide certainty for schools and parents about the Government’s intent. We fear that these amendments might risk some uncertainty at a time when schools will be focused on implementing a numeric limit, which was not only a government manifesto commitment but was backed by both parents and the British public. A numeric limit is simple, transparent and enforceable, and we have committed to further strengthening existing statutory guidance to be clear that high-cost compulsory items should be avoided.

Motion C relates to Amendment 102, and Motion C1, tabled in the name of the noble Baroness, Lady Barran, insists on this amendment. Amendment 102 seeks to limit the circumstances in which the independent adjudicator can specify a lower published admission number—PAN—following an upheld objection. The Government are committed to ensuring that quality and parental choice are central to PAN decisions. Our amendment in lieu, introduced in the other place, makes this clear by ensuring that regulations will require the adjudicator to have regard to the impact on school quality and parental preference when specifying a school’s PAN following an upheld objection.

However, the noble Baroness’s amendment would create a blanket exemption for a significant proportion of schools, with no allowance for local circumstances such as the scale of demographic change. It would hinder sensible, community-focused decision-making. For example, in areas such as London, where most schools are performing well, significantly falling pupil numbers are impacting even good schools. Local authorities and schools are already taking tough decisions about closures, amalgamations and PAN reductions. This measure can and should be part of the solution to ensure that all pupils continue to have a choice of high-quality school places close to home.

Our amendment in lieu will be reinforced through new statutory principles that we intend to apply through secondary legislation, as set out in the policy paper we distributed before the recess. These will inform adjudicator decisions and help ensure that the reduction of good school places will only ever occur as a last resort.

As I emphasised, we are committed to ensuring that school quality and parental choice are central to any decisions on PAN, as set out in the published policy paper and reflected in the amendment passed in the other place, which we are considering today. That is why I can confirm that, should this House desire it, the Government will bring forward an amendment in the other place. This will reflect our commitment that school quality and parental choice must be at the heart of decisions on PAN by placing in the Bill a requirement on adjudicators to take account of school quality and parental preference before deciding a PAN following an upheld objective.

I also commit that we will require the adjudicator, through a mix of primary and secondary legislation, to consult key parties, including the admissions authority, the local authority and the relevant DfE regional director, on their views on alternatives to reducing the PAN before making a determination.

Collectively, this will ensure that reducing places at great schools is only ever a last resort and deliver a choice of good local school places for communities. We will continue to engage with stakeholders, including the Confederation of School Trusts, on this measure, including proposed changes to secondary legislation and the School Admissions Code. We will ensure that a robust decision-making framework is in place to protect high-quality education. The CST has welcomed the amendment made in the other place to the Bill as a step towards achieving that. I beg to move.

Motion B1 (as an amendment to Motion B)

Moved by

[Lord Mohammed of Tinsley]

At end insert “, and do propose Amendment 41D in lieu of Amendment 41B—

41D: Clause 29, page 50, line 21, at end insert—
“551ZB School uniforms: review of limits on branded items
(1) The Secretary of State must review the effectiveness of measures intended to limit the cost to parents of branded items of school uniform required by the appropriate authority of a relevant school in England for use during a school year.
(2) The Secretary of State must, within 12 months of the coming into force of section 551ZA, lay the review under subsection (1) before Parliament.””

[Lord Mohammed of Tinsley (LD)]

My Lords, I thank the Minister for the time she gave last week. It enabled me to better understand where she and the Government are coming from and gave me the opportunity to highlight why I think school uniforms and their cost are important, hence my amendment. As your Lordships may recall, I benefited from a policy that David Blunkett—the noble Lord, Lord Blunkett—brought in. When my father lost his job in the steel industry in Sheffield, I was on free school meals. We were able to go to the local education authority and get some clothing for school. That lived experience is driving me to try to do the best for young people in Sheffield and across the country.

I absolutely do not doubt that the Government want to reduce the cost of school uniforms. Their measure is to reduce the number of items required, while mine asked for a cap on the cost. As noble Lords may have seen from the amendments we have now tabled, I have stopped asking for that, but I am saying to the Government that, at some point, 12 months from implementation, when they have that review, I hope they will be willing to at least re-look at the possibilities of a cap.

More important for me, going back to that lived experience, I want to keep pushing the Government to say how they will provide help and support. They are going to limit the cost of school uniforms by potentially limiting the numbers, but there is still a cost involved. I want the Government, as and when they can—once the economy picks up, I hope—to support every child who is on free school meals. I hope the Minister can comment on that when she gets up to respond.

On the amendments on the PAN, I will read out information I got this morning from the Confederation of School Trusts. It said: “We are grateful to the Government for the work they have done to bring forward this amendment, which goes some way towards addressing our concerns about the potential impact of this policy on the quality of educational provision in the area. We think the amendments need to go further. Specifically, we believe that schools adjudicators should be under a legal duty to consider”—and this is in bold—“other ways of achieving effective and efficient provision in the area if the local authority is seeking to reduce the PAN for high-performing schools. In order to make a good decision, the school adjudicator should therefore be required in law to consult the relevant DfE regional directors”.

Therefore, we still have concerns, given that the CST has been in touch with us and our colleagues down the Corridor to ask the Government to go further. I hope that, when the Minister gets up, she can give us the confidence that the CST wants.

[Baroness Barran (Con)]

My Lords, I acknowledge the work of the noble Lord, Lord Mohammed, in relation to school uniform and the focus that he has brought to this in the later stages of the Bill.

I will speak to my Motion C1. I recognise that the Government have moved on prioritising quality and parental preference—and it sounds as though they are going to move a bit further, if I followed what the Minister just said. However, we do not believe that the amendment as drafted resolves the issue at the heart of this. On this side of the House, we of course recognise the pressure on schools and local authorities from falling rolls in certain parts of the country. Our concern is that there is a fundamental conflict of interest for local authorities. The easiest thing for them to do is cut the published admission numbers of the larger and more popular schools, particularly if those schools are academies, as a way of addressing that problem.

The Minister described my amendment as a blanket exemption. There are an awful lot of blankets in the Chamber this afternoon, and I do not see how one could interpret it as such. My amendment covers both academies and maintained schools, and its starting point is that consideration must be given to effective and efficient provision in an area. I am not entirely clear why that is a blanket exemption. It would require the school adjudicator to consider the shape of local provision and to explicitly consider mergers and closures.

17:00

The presumption is that we must prioritise what is best for children. That often translates into the most popular schools and how well they support children with special educational needs and disabilities—something that the Government do not want to damage. The principles of prioritising the quality of education and protecting parental choice need more than the Government have set out, given the conflict of interest that local authorities face.

[Lord Agnew of Oulton (Con)]

My Lords, I support Motion C1 from the noble Baroness, Lady Barran. I emphasise to the Minister that schools with falling rolls receive enormous support at the moment through lagged funding. They receive payment for pupils whom they no longer have, for at least a year.

On the other side of the coin, for those of us who are trying to improve previously failing schools, the opposite applies. We are part of something called estimated funding. Under the current Government—I respect the difficult financial position—estimated funding is zero funding. To add to that, they are proposing a new system, with an adjudicator who can make the decision to go to an improving school—as happened to us before this legislation was proposed—to reduce the size of the PAN. It was administratively convenient for the local authority to do that, because it would have suffered no financial harm itself.

The noble Baroness’s Motion strengthens the protection. We are still left with uncertainty in how the adjudicator process would work and how long it would take, and whether we should budget for increasing roles or not, pending some decision which will take I have no idea how long. I urge your Lordships to support the noble Baroness’s Motion to bring some common sense to this.

[Lord Gove (Con)]

My Lords, I support the points made by my noble friends Lady Barran and Lord Agnew. We are approaching the end of our consideration of this legislation, which comes as we all reflect on the huge gains that have been made by English schools in the last two decades. Improvements in schools in England have not been matched by schools in Scotland or Wales. This is not because students in Scotland and Wales are less intelligent or teachers less motivated but because the reforms that were introduced under Tony Blair and sustained during the coalition years and thereafter had two principles at their heart: greater autonomy for the front line and support for good schools to expand, so that their practice could be adopted by schools that were performing less well and so more students could benefit.

Of the two final elements that we are considering here, a government cap on the number of labelled items of school uniform that a school can require of its students is a preposterous piece of micromanagement, driven by the worst sort of virtue signalling. It is designed to convey that the Government are on the side of the poor, even as the measures on planned pupil admission numbers restrict the access of poor students to the very best schools.

When it comes to school uniform, we know from the voices of head teachers on the front line the benefits that an effective school uniform policy can have in contributing to ethos, discipline and a sense of inclusivity when our society is increasingly tribalised and polarised. Rather than listen to the testimony of head teachers—including the country’s very best head teacher, Katharine Birbalsingh, who has pointed out the folly of this policy—the Government insist that the best way of helping the poor is price capping and telling head teachers that they know better. All the evidence of history flies in the face of the course that the Government are setting. The fact that we have an absurd question about whether or not there should be an overall price cap or a price cap on particular items just shows the folly of going down this micro-interventionist line.

The second element that we are debating is pupil admissions numbers. I am grateful to the Minister for acknowledging that there are reasons why we should take account of quality and of the wishes of pupils and parents, but the most effective way of doing so is by not capping the growth of good schools. This legislation allows the Government and their agencies to cap the growth of those good schools to keep less-good schools open and provide a less-good education in the name of bureaucratic and local government convenience.

The purpose of school reform is to give pupils a better education, not to make life easier for bureaucrats or head teachers who are not performing their responsibility. Once again, I wonder what the point of the last two decades of education reform was if the current Government are going to look at those two decades, when politicians across parties were united in increasing autonomy at the front line and helping good schools to expand, and diminish the force of both those changes. It is not too late for the Minister, who played a very distinguished role in the Governments of Tony Blair and Gordon Brown, to say to the current Prime Minister and the current Education Secretary that it is time to learn the lesson from those who went before, rather than repeating the mistakes of a socialist and interventionist past.

[Baroness Smith of Malvern (Lab)]

My Lords, several noble Lords have spoken in this small debate. I particularly welcome the noble Lord, Lord Gove, to the consideration of the Bill. I am not sure that he contributed in the very many sessions we have had up until this point, but better late than never. As always, he had something interesting to say, even if I think he is wrong and disagree with him.

Let us focus, as this group does, on Motion B and Motion B1 on Lords Amendment 41D, which seeks to require a review of the effectiveness of the limit on branded items of school uniform, with particular reference to introducing a monetary cap. As I said in my opening speech, we believe that these amendments are necessary, and I commit to the noble Lord that we will monitor the impact as we implement the limit. That does not need to be in legislation, and the amendment risks creating some uncertainty for schools and parents at a time when schools will be implementing the limit.

For noble Lords’ information, the limit was included in the Government’s manifesto, is widely welcomed by parents and others, and is focused on what we believe is the simplest way to deliver this, which is a limit on branded items in school uniforms. We have been clear about our concerns with a cost cap, which is not the proposal here, and do not believe it would be the most effective way to reduce costs for parents. Our proposal for a numeric limit is clearer and simpler, will deliver savings more quickly and is overwhelmingly backed by parents.

On the discussion about admissions, several noble Lords have spoken to Motion C, relating to Amendment 102, and Motion C1, which insists on it. Amendment 102 seeks to limit the circumstances in which the adjudicator can specify a lower published admissions number. This proposition in this legislation is very much a function of the time, in terms of demography, that we find ourselves in. If we were in a position where the number of children in our schools was growing then all of us—as was the case with the previous Labour Government—would be very relaxed about allowing good schools to expand with no control or very little limitation, but that is not the situation we find ourselves in.

As I suggested in my opening speech, the fall in the number of children coming through the system will create difficult decisions to be made in some areas. They will make the local authority responsibility to ensure a sufficiency of places more complex and risk a situation where good schools are forced to close because of a failure to be able to consider the impact of falling numbers across a range of schools. That is the context in which we are introducing this measure.

This Government support good schools expanding where that is right for the local area. In fact, this measure may help to secure more places in high-performing schools in areas where they are needed, but the noble Baroness’s Motion does not allow sufficient nuance to ensure that local circumstances can be taken into account, especially in this time of changing demographics. Our amendments in lieu will ensure that an independent decision can be taken by the adjudicator, in the local context, and with school quality and parental preference at its heart.

I will respond to a few of the charges made by noble Lords opposite. The noble Baroness, Lady Barran, is understandably concerned that local authorities might misuse this power to reduce the number of places at academies. To be clear, and I know that the noble Baroness knows this, local authorities will not be able to set an academy’s PAN. The schools adjudicator, not the local authority, will be the final decision-maker. The adjudicator is independent and impartial, and will come to their own independent conclusion on whether to uphold an objection to the PAN.

The noble Lord, Lord Agnew, suggested—given his experience, including his ministerial experience, I am not sure that he meant this—that we were inventing a new set of bureaucrats, in his and others’ words. That is not true. The school adjudicator system has existed and played a very similar role throughout the whole period of the previous Government and the period of the previous Labour Government. This is not something new. What is more, of course, the statutory School Admissions Code and the new regulations that we have committed to will set out what the adjudicator must consider where they uphold an objection and subsequently set the PAN for the school.

As reflected in our amendment, school quality and parental choice will be central considerations and ensure that this power is not used to prop up failing schools. School adjudicators, as I have said, have existed for some time and are independent. They have significant experience of considering objection cases and already consider both objections to PAN reductions and requests by maintained schools to vary their PAN downwards, in the light of a major change in circumstances. They possess considerable, extensive and comprehensive knowledge of the education system and they include MAT CEOs, head teachers, education lawyers and local authority directors, so the characterisation of them as bureaucrats is both factually inaccurate and unfair.

Our amendments would ensure, as I have said, that the independent, expert adjudicator—the system which has existed for very many years throughout several Governments—will be required, in making this decision, to have regard to the impact on school quality and parental preference. They also enable the Government to make regulations on other matters which the adjudicator must or must not take account of when deciding on a PAN.

I just reiterate the point that I made in opening. We recognise the point made by the Confederation of School Trusts about the requirement for the adjudicator to consider, in addition to quality and parental preference, the effectiveness and efficiency of the provision in an area and to consult key parties, including the relevant DfE regional director, on their views on alternatives to reducing a PAN before making a determination. It is clear that alternatives must have been considered as part of that process.

17:15

As I reiterated in my opening comments, collectively, this will ensure that reducing places is only ever a last resort and will be done only to deliver a choice of good local school places for communities and, in some cases, to protect good schools in the light of the demographic challenges with which we are currently grappling and which will only become more severe in the coming years. We will continue to engage with stakeholders on this, but I hope that noble Lords are reassured about our commitment to quality and parental preference and to safeguarding those things at a time of change and challenge, given the demographic position.

[Lord Mohammed of Tinsley (LD)]

I thank the Minister for her response to the issue of the cost of school uniforms in particular. I am partly reassured by her commitment. I wish her and her Government well in trying to help with dealing with the cost of school uniforms. She can rest assured that it is not a topic that I will let go of in the next 12 months. I will be constantly snapping at her heels to make sure that the commitments she has given from the Dispatch Box are fulfilled. With that, I am not minded to test the opinion of the House.

Motion B1 (as an amendment to Motion B) withdrawn.

Motion B agreed.

Motion C

Moved by

[Baroness Smith of Malvern]

That this House do not insist on its Amendment 102 in respect of which the Commons have insisted on their disagreement, and do agree with the Commons in their Amendments 102C to 102G.

102C: Clause 56, page 118, line 33, leave out “may make provision”

102D: Clause 56, page 118, line 34, at beginning insert “must make provision”

102E: Clause 56, page 118, line 37, at beginning insert “may make provision”

102F: Clause 56, page 118, line 38, at end insert—
“(6A) The provision made by virtue of subsection (6)(a) must include provision requiring the adjudicator to have regard to the potential impact of the determination on—
(a) the quality of education provided at—
(i) the school in question, and
(ii) other schools within the relevant area, and
(b) the ability to give effect to parental preference for—
(i) the school in question, and
(ii) other schools within the relevant area.”

102G: Clause 56, page 118, line 41, at end insert—
““relevant area”, in relation to a school, has the same meaning as in section 88F (see subsection (4) of that section).”

[Baroness Smith of Malvern (Lab)]

My Lords, I have already spoken to Motion C. I beg to move.

Motion C1 (as an amendment to Motion C)

Moved by

[Baroness Barran]

Leave out from “House” to end and insert “do insist on its Amendment 102 and do disagree with the Commons in their Amendments 102C to 102G.”

[Baroness Barran (Con)]

They should have known better. What we have heard this afternoon is that, at the 11th hour, the Government are focusing on trying to get an amendment right on published admission numbers. We have not seen that work yet and it is the 11th hour. As a result, I would like to test the opinion of the House.

17:18

Division 2

Motion C1 agreed.

Ayes: 259

Noes: 180

17:30

Motion D

Moved by

[Baroness Smith of Malvern]

That this House do not insist on its Amendment 106 in respect of which the Commons have insisted on their disagreement, and do agree with the Commons in their Amendments 106C to 106E.

106C: Page 50, line 25, at end insert the following new Clause—
“Guidance on use of mobile phones etc in schools in England
In Part 10 of the Education Act 1996, after Chapter 2 insert—
“CHAPTER 2A
GUIDANCE ON MOBILE PHONES ETC: SCHOOLS IN ENGLAND
550C Guidance on use of mobile phones etc in schools in England
(1) The Secretary of State may by regulations require the appropriate person for a school in England to have regard to guidance described in subsection (2) in exercising functions relating to the conduct of the school.
(2) The guidance referred to in subsection (1) is guidance issued from time to time by the Secretary of State about registered pupils at schools having mobile phones and other personal interactive communication devices with them, and using them—
(a) during school hours, and
(b) on school premises.
(3) Subsections (4) to (6) apply for the purposes of this section.
(4) The “appropriate person” is—
(a) for the following kinds of school, the head teacher—
(i) a community, foundation or voluntary school;
(ii) a community or foundation special school;
(iii) a maintained nursery school;
(iv) a pupil referral unit;
(v) a school approved by the Secretary of State under section 342 (approval of non-maintained special schools);
(b) for any other kind of school, the proprietor.
(5) “School hours”, in relation to a school, means any time between the start of the first school session on a school day and the end of the last school session on the same day.

106D: Clause 66, page 124, line 4, at end insert—
“(aa) section (Guidance on use of mobile phones etc in schools in England);”

106E: Title, line 5, after “uniform;” insert “about guidance relating to use of mobile phones and other interactive communication devices in schools;”

[Baroness Smith of Malvern (Lab)]

My Lords, I have already spoken to Motion D, and I beg to move.

Motion D1 (as an amendment to Motion D)

Moved by

[Baroness Barran]

Leave out from “House” to end and insert “do insist on its Amendment 106 and do disagree with the Commons in their Amendments 106C to 106E.”

[Baroness Barran (Con)]

I would like to test the opinion of the House.

17:31

Division 3

Motion D1 agreed.

Ayes: 276

Noes: 169

Security Vetting

Monday 20th April 2026 Lords Chamber

Statement

17:43

[The Lord Privy Seal (Baroness Smith of Basildon) (Lab)]

My Lords, I will repeat the Statement the Prime Minister made earlier today:

“With permission, I would like to provide the House with information that I now have about the appointment of Peter Mandelson as our ambassador to the United States.

Before I go into the details, I want to be very clear with the House that while this Statement will focus on the process surrounding Peter Mandelson’s vetting and appointment, at the heart of this there is also a judgment I made that was wrong. I should not have appointed Peter Mandelson. I take responsibility for that decision, and I apologise again to the victims of the paedophile Jeffrey Epstein, who were clearly failed by my decision.

Last Tuesday evening, 14 April, I found out for the first time that on 29 January 2025, before Peter Mandelson took up his position as ambassador, Foreign Office officials granted him developed vetting clearance, against the specific recommendation of the United Kingdom Security Vetting that developed vetting clearance should be denied. Not only that, but the Foreign Office officials who made that decision did not pass this information to me, to the Foreign Secretary, to her predecessor, now the Deputy Prime Minister, to any other Minister, or even to the former Cabinet Secretary, Sir Chris Wormald.

I found this staggering. Therefore, last Tuesday I immediately instructed officials in Downing Street and the Cabinet Office to urgently establish the facts on my authority. I wanted to know who made the decision, on what basis, and who knew. I wanted that information for the precise and explicit purpose of updating the House, because this is information I should have had a long time ago, and that the House should have had a long time ago. It is information that I and the House had a right to know.

I will now set out a full timeline of the events in the Peter Mandelson process, including from the fact-finding exercise that I instructed last Tuesday. Before doing so, I want to remind and reassure the House that the Government will comply fully with the humble Address Motion of 4 February.

In December 2024, I was in the process of appointing a new ambassador for Washington. A due diligence exercise was conducted by the Cabinet Office into Peter Mandelson’s suitability, including questions put to him by my staff in No. 10. Peter Mandelson answered those questions on 10 December, and I received final advice on the due diligence process on 11 December. I made the decision to appoint him on 18 December. The appointment was announced on 20 December. The security vetting process began on 23 December 2024.

I want to make it clear to the House that, for a direct ministerial appointment, it was usual for security vetting to happen after the appointment but before the individual starting in post. That was the process in place at the time. This was confirmed by the former Cabinet Secretary, Sir Chris Wormald, at the Foreign Affairs Committee on 3 November 2025. Sir Chris made it clear that

‘when we are making appointments from outside the civil service … the normal thing is for the security clearance to happen after appointment but before the person signs a contract and takes up post’.

At the same hearing of the same Select Committee, the former Permanent Secretary to the Foreign Office, Sir Olly Robbins, said that Peter Mandelson

‘did not hold national security vetting when he was appointed, but, as is normally the case with external appointments to my Department and the wider civil service, the appointment was made subject to obtaining security clearance’.

After I sacked Peter Mandelson, I changed that process so that now an appointment cannot be announced until after security vetting is passed.

The security vetting was carried out by UK Security Vetting—UKSV—between 23 December 2024 and 28 January 2025. UKSV conducted vetting in the normal way, collecting relevant information, as well as interviewing the applicant, in this case on two occasions. Then, on 28 January, UKSV recommended to the Foreign Office that developed vetting clearance should be denied to Peter Mandelson. The following day, 29 January, notwithstanding the UKSV recommendation that developed vetting clearance should be denied, Foreign Office officials made the decision to grant developed vetting clearance for Peter Mandelson.

To be clear, for many departments a decision from UKSV is binding, but for the Foreign Office the final decision on developed vetting clearance is made by Foreign Office officials, not UKSV. However, once the decision in this case came to light, the Foreign Office’s power to make the final decision on developed vetting clearance was immediately suspended by my Chief Secretary last week.

I accept that the sensitive personal information provided by an individual being vetted must be protected from disclosure. If that were not the case, the integrity of the whole process would be compromised. What I do not accept is that the appointing Minister cannot be told of the recommendation by UKSV. Indeed, given the seriousness of these issues and the significance of the appointment, I simply do not accept that Foreign Office officials could not have informed me of UKSV’s recommendation while maintaining the necessary confidentiality that vetting requires.

There is no law that stops civil servants sensibly flagging UKSV recommendations while protecting detailed, sensitive vetting information, to allow Ministers to make judgments on appointments or on explaining matters to Parliament. Let me be very clear: the recommendation in the Peter Mandelson case could and should have been shared with me before he took up his post. Let me make a second point: if I had known before he took up his post that the UKSV’s recommendation was that developed vetting clearance should be denied, I would not have gone ahead with the appointment.

Let me now move to September 2025, because events then, and subsequently, show with even starker clarity the opportunities missed by Foreign Office officials to make the position clear. On 10 September, Bloomberg reported fresh details of Peter Mandelson’s history with Epstein. It was then clear to me that Peter Mandelson’s answers to my staff in the due diligence exercise were not truthful, and I sacked him. I also changed the direct ministerial appointments process so that full due diligence is now required as standard. Where risks are identified, an interview must be taken pre-appointment to discuss any risks and conflicts of interest. A summary of that should be provided to the appointing Minister. I also made it clear that public announcements should not now be made until security vetting has been completed.

In the light of the revelations in September last year, I also agreed with the then Cabinet Secretary, Sir Chris Wormald, that he would carry out a review of the appointment process in the Peter Mandelson case, including the vetting. He set out his findings and conclusions in a letter to me on 16 September. In that letter, he advised me:

‘The evidence I have reviewed leads me to conclude that appropriate processes were followed in both the appointment and withdrawal of the former HMA Washington’.


When the then Cabinet Secretary was asked about this last week, he was clear that when he carried out his review, the Foreign Office did not tell him about the UKSV recommendation that developed vetting clearance should be denied for Peter Mandelson. I find that astonishing. As I set out earlier, I do not accept that I could not have been told about the recommendation before Peter Mandelson took up his post. I absolutely do not accept that the then Cabinet Secretary—an official, not a politician—when carrying out his review could not have been told that UKSV recommended that Peter Mandelson should be denied developed vetting clearance. It was a vital part of the process that I had asked him to review. Clearly, he could have been told, and he should have been told.

On the same day that the then Cabinet Secretary wrote to me, 16 September 2025, the Foreign Secretary and the then Permanent Secretary at the Foreign Office, Sir Olly Robbins, provided a signed statement to the Foreign Affairs Committee. The statement says:

‘The vetting process was undertaken by UK Security Vetting on behalf of the FCDO and concluded with DV clearance being granted by the FCDO in advance of Lord Mandelson taking up post in February’.


It went on to say:

‘Peter Mandelson’s security vetting was conducted to the usual standard set for Developed Vetting in line with established Cabinet Office policy’.


Let me be very clear to the House. This was in response to questions that included whether concerns were raised, what the Foreign Office’s response was and whether they were dismissed. That the Foreign Secretary was advised on, and allowed to sign, this statement by Foreign Office officials without being told that UKSV had recommended Peter Mandelson be denied developed vetting clearance is absolutely unforgivable. This is a senior Cabinet Member giving evidence to Parliament on the very issues in question.

In the light of further revelations about Peter Mandelson in February this year, I was very concerned about the fact that developed vetting clearance had been granted to him. Not knowing that, in fact, UKSV had recommended denial of developed vetting clearance, I instructed my officials to carry out a review of the national security vetting process. As I have set out, I do not accept that I could not have been told about UKSV’s denial of security vetting before Peter Mandelson took up his post in January 2025. I do not accept that the then Cabinet Secretary could not have been told in September 2025 when he carried out his review of the process, and I do not accept that the Foreign Secretary could not have been told when making a statement to the Select Committee, again in 2025.

On top of that, the fact that I was not told, even when I ordered a review of the UKSV process, is frankly staggering. I can tell the House that I have now updated the terms of reference for the review into security vetting to make sure it covers the means by which all decisions are made in relation to national security vetting. I have appointed Sir Adrian Fulford to lead that review. Separately, I have asked the Government Security Group in the Cabinet Office to look at any security concerns raised during Peter Mandelson’s tenure.

I know that many Members across this House will find these facts to be incredible. To that, I can only say that they are right. It beggars belief that throughout this whole timeline of events, officials in the Foreign Office saw fit to withhold this information from the most senior Ministers in our system of government. That is not how the vast majority of people in this country expect politics, government or accountability to work, and I do not think it is how most public servants think it should work either.

I work with hundreds of civil servants—thousands, even—all of whom act with the utmost integrity, dedication and pride to serve this country, including officials from the Foreign Office who, as we speak, are doing a phenomenal job representing our national interest in a dangerous world: in Ukraine, the Middle East and all around the world. This is not about them, yet it is surely beyond doubt that the recommendation from UKSV that Peter Mandelson should be denied developed vetting clearance was information that could and should have been shared with me on repeated occasions and, therefore, should have been available to this House and ultimately to the British people. I commend this Statement to the House”.

17:55

[Lord True (Con)]

My Lords, this is a tortuous and, frankly, somewhat embarrassing Statement—stable door after stable door pushed shut long after the obvious national security risk had bolted through them. The Prime Minister is still answering questions on the Statement in the other place; it would surely have been better if it had been repeated here in prime time, at a time when your Lordships had had a chance to digest the Prime Minister’s words, the reactions to them, and the response of Sir Olly Robbins tomorrow. We made that reasonable request, and the Government rejected it. Will the noble Baroness, our Leader, give an assurance that, if asked, she will come back to this House tomorrow to answer questions on Sir Olly Robbins’s response to today’s account of events?

The noble Baroness must know what everybody knew—apart from, it seems, the Prime Minister—that Peter Mandelson was totally unsuitable to be our ambassador to the USA. The Statement’s repeated defence, as we have just heard, is that the Prime Minister would not have appointed Mandelson if he had known his vetting had failed. But you did not need vetting to see that Mandelson was a proven liar. You did not need vetting to see that he was twice forced to resign in disgrace from government. You did not need vetting to hear that he revelled in the company of what he called the “filthy rich”, from whatever dubious nation that might be. You did not need vetting to know that he was a known associate and defender of the convicted paedophile, Epstein. You did not need vetting or process—you needed gumption, judgment and common sense, and you cannot subcontract those things to a Whitehall committee. Was there no one at any stage in this who asked the simple question, “Is this wise?”

The Prime Minister says that Mandelson lied in the course of his vetting. Should we be surprised? Well, no, though it seems the Prime Minister was. That is the crux of the matter. What is absolutely staggering is the truly spectacular scale of the failure of judgment of the Prime Minister in appointing such a man. It embarrasses the Labour movement, which does not deserve to be embarrassed in such a way. No amount of casuistical argument, such as we have just heard, can efface that personal responsibility. One man picked Mandelson, one man pushed him, and the issue is not the “who knew what when” about Mandelson’s vetting, but what everybody knew about Mandelson before he was appointed, all of which the Prime Minister ignored.

This is a Prime Minister on his third Cabinet Secretary—three in under two years. A legion of advisers has been selected, then shoved out of No. 10 as scapegoats for some panic or crisis of confidence. Is not the truth that it is always someone else to blame? I valued the old conventions that Ministers took responsibility. Civil servants were rarely named in this place and never blamed. Whatever happened to those conventions? Why was an outstanding ambassador shoved out of Washington to make way for the likes of Mandelson? It is because the Prime Minister wanted it, and wanted it quick. Why was the Permanent Secretary at the Foreign Office, Sir Olly Robbins, sacked? It is because the Prime Minister wanted a scapegoat, and wanted it quick. Is not the fact of the matter that the Prime Minister wanted his man Mandelson, come hell or high water, and the Civil Service sought to accommodate his instructions?

Can the noble Baroness tell the House this: did Sir Olly Robbins act against the law, against the Civil Service Code or outside proper process in any way in enabling Mandelson to go forward, despite vetting advice? If so, will she tell the House his specific offences? If not, can she say on what grounds Sir Olly has been fairly dismissed?

The Prime Minister has admitted that he was aware that vetting had not been done on Mandelson when he named him. We know that the then Cabinet Secretary, the noble Lord, Lord Case, advised him to wait for that to be done. Why did the Prime Minister ignore that advice? Can the noble Baroness say whether the Prime Minister or No. 10 at any stage asked about the vetting and Mandelson’s links to China or Russia? Is it true that the National Security Adviser warned that the process was “weirdly rushed”? Is it true, as the Deputy Prime Minister said just this weekend, that there were “time pressures” to get Mandelson cleared? Is it true, as the Foreign Secretary said at the weekend, that officials were instructed to give “priority clearance” to Mandelson?

It looks as if, on the Prime Minister’s wishes, the process for Mandelson’s clearance was put in what was called—how was it in the Covid era?—the VIP lane, and we all know what became of that. Due process was followed by Sir Olly; that has not been challenged. All the problems arose from the undue haste of the Prime Minister to force through his man and glad-hand it with him in No. 10.

The Statement reveals a world beyond “Yes, Prime Minister”—a bureaucracy of bizarre complexity, in which you cannot see the wood for the legalese, where people have to seek legal advice before they talk to each other, where there are inquiries into inquiries into inquiries, where the Prime Minister sits staggered, unbelieving and unknowing the heart of a system over which he has presided for two years, processing and reprocessing process, for all the world like Sir Humphrey Appleby.

We have not had time to assess in detail the minutiae of this Statement. We have not been permitted to hear Sir Olly’s side of the case before being asked to consider it. We will come back to those things, but what must be clear to all is the astonishing lack of judgment by the Prime Minister in making this appointment, the dire consequences of his undue haste, and the rank smell of the blame game and dumping on senior civil servants—things which should have no place in the conduct of good government.

[Lord Purvis of Tweed (LD)]

My Lords, one thing I agree with in this Statement is the recognition of the victims of the crime of Jeffrey Epstein. We are able to know what we know about an appointment which should never have been made only because of the patience and the persistence of the victims, and they should be at the forefront of all our minds.

At the start of this, on 11 November 2024, the then Cabinet Secretary, Simon Case—now the noble Lord, Lord Case—gave very clear and appointment-specific advice to the Prime Minister if he chose to make a political appointment for the ambassador in Washington. I quote from the advice published in the first release of documents on 11 March this year:

“If this is the route that you wish to take you should give us the name of the person you would like to appoint and we will develop a plan for them to acquire the necessary security clearances and do due diligence on any potential Conflicts of Interest or issues of which you should be aware before confirming your choice”.


This advice was specific. It was not about seeking clearance after the appointment; it was about seeking security clearances before confirming the choice.

In the House of Commons, Ed Davey asked the Prime Minister why this advice was disregarded and Peter Mandelson’s appointment was confirmed, approved by the King and announced prior to necessary security clearances being acquired. The Prime Minister replied that the subsequent review of the process had confirmed that it was followed. This was a non-answer, because the process was the Cabinet Secretary providing advice, which he did, that the Prime Minister chose to disregard. In the bundle of papers released in March, there was missing a minute between this advice and a reference on 12 December, a month later, to Peter Mandelson being referred to as the lead candidate. Can the Leader confirm that Parliament has been presented with all the information between the advice from the Cabinet Secretary in November and 12 December, when it was indicated that Peter Mandelson was now the lead candidate? Why is there no record of what the Prime Minister did with the advice issued on 11 November?

Just a few days later, on 18 December, the Palace was informed of the decision to appoint Mandelson, contrary to the advice that necessary security clearances should be acquired. What is all the more concerning is that we were told that the Prime Minister subsequently regretted making the appointment as a result of Mandelson’s lies in the due diligence process. But that an appointment was made in the first place, when the Prime Minister had been given the advice on 11 November on due diligence in respect of Peter Mandelson, is staggering. I remind the House of what that advice on the due diligence process was, and I remind the House that this was the lead candidate for appointment. It stated:

“After Epstein was first convicted of procuring an underage girl in 2008, their relationship continued across 2009-2011, beginning when Lord Mandelson was Business Minister and continuing after the end of the Labour government. Mandelson reportedly stayed in Epstein's House while he was in jail in June 2009 … In 2014 Mandelson also agreed to be a ‘founding citizen’ of an ocean conservation group founded by Ghislaine Maxwell, and funded by Epstein”.


Surely this information alone should have been the basis on which, prior to any announcement, the Prime Minister should have decided that the reputational risk was too high, given the ongoing legal and congressional actions in the US at the time. He did not. The Prime Minister made a decision to set aside advice on acquiring vetting approval prior to making the announcement on 20 December and to set aside the reputational risk linked with Epstein’s crimes. Can the Leader confirm that the Foreign Secretary had seen the due diligence checklist report, as on business conflicts and the Epstein links, when he said in the government press release on 20 December:

“It is wonderful to welcome Peter back to the team”?


The Statement today puts all the blame on FCDO officials and none on accountability of Ministers. The Prime Minister stated today that

“given the seriousness of these issues and the significance of the appointment, I simply do not accept that Foreign Office officials could not have informed me of UKSV’s recommendations”

after Mandelson had been announced and his name had gone to the Palace two days before the press release. Given the seriousness and significance of the appointment, I simply do not accept the Prime Minister’s rationale for disregarding the advice given to him on 11 November that vetting should be acquired before the appointment, not before taking post. But quite astonishingly, the Prime Minister says

“if I had known before Peter Mandelson took up his post that the UKSV recommendation was that developed vetting clearance should be denied, I would not have gone ahead with the appointment”.

But the appointment had already been made. Now, we must assume that there are questions on the accountability to Parliament.

The Prime Minister’s Statement today refers to the letter that the Foreign Secretary, alongside the Permanent Secretary, Sir Olly Robbins, provided to the Foreign Affairs Select Committee, which said that vetting

“concluded with the DV clearance being granted by the FCDO in advance of Lord Mandelson taking up the post”.

This misled Parliament, and the Government are saying that those who are accountable for that should not be the Ministers but officials—dismissed. We will hear from the sacked official, but the Prime Minister’s Statement alludes to other officials prior to Sir Olly taking up his post, and we are left with the uncomfortable position where only people who cannot answer to Parliament will be blamed, and no Ministers who are accountable to Parliament will be held to account. We await the work of parliamentary committees and the ISC, and I suspect we will also await the ministerial adviser report. Other Ministers have been held to account for what they have told Parliament; surely it must be the case that the Prime Minister and Ministers in this Government are held to account also.

[Baroness Smith of Basildon (Lab)]

My Lords, I will do my best to answer the questions in the time available. First, in response to the noble Lord, Lord True, who complained about the timing of the Statement, he usually asks me to repeat Statements made by the Prime Minister as soon as possible. It was my judgment, given the seriousness of the issue, that we should do it as soon as possible. He said about doing it in prime time; I think the House is pretty full to hear the Statement, and it is right that it is so, given the seriousness of it. He asked if I will come back tomorrow. I will always repeat the Prime Minister’s Statements in this House and take questions from your Lordships on any issue raised by the Prime Minister in the normal way and take questions in the normal way.

I think the noble Lord has got slightly confused between vetting and due diligence. There is no evidence that Peter Mandelson lied during the vetting process because we do not know what the vetting process had said. The Prime Minister said that he feels that he was not given accurate answers during the due diligence process, and he said that appointing Peter Mandelson was the wrong decision, for which he has apologised.

I am grateful to the noble Lord, Lord Purvis, for raising the issue of victims, because too often we have just political debates. This started when the Epstein files were released, and I do not think, had those Epstein files not been released, we would have known the extent of the relationship between Peter Mandelson and Jeffrey Epstein. Certainly on the issues around the information he was sending to him and the depth of the contact, we were not aware.

What we are talking about here is a failure of government, and it is extraordinary—

[Noble Lords]

Oh!

[Baroness Smith of Basildon (Lab)]

It is a failure of good governance, in that there should be information made available to Ministers who are taking decisions. The fact that it was not made available is, as the Prime Minister said, extraordinary. Sir Chris Wormald has reviewed the process that was taken and it was correct. I will correct the noble Lord, Lord Purvis, who said that Peter Mandelson did not getting vetting approval. The whole point is that he was given vetting approval; that is why people are quite astounded by this. The UK Security Vetting form—which is on the Government website for people to see—has two blocks; there is green, amber and red; and it has what the issues are and then what the recommendation is. The recommendation on that was not to give vetting, but the Foreign Office made the decision that it could pass the vetting.

It is one of those things that is a recommendation, but the vetting was then granted by the Foreign Office, so he was granted that vetting. No one could imagine that, with that information—when the Prime Minister and other Ministers are being asked and they are given the information that he has had the vetting—somebody did not flag that concerns were raised and that the recommendation was not to grant that vetting. The Prime Minister apologised for the appointment of Peter Mandelson, but in this case I think he is quite right to be angry and concerned that he was not informed of the red flags that were raised.

I was asked about what Olly Robbins did wrong. It may be that he lost the confidence of Ministers by quite clearly not giving the information. In terms of the process that was available, I think most of us think that there is an issue of judgment in how Ministers and officials would deal with information they are given. He had lost the confidence of the Prime Minister and the Foreign Secretary. But I find it hard to believe that anybody in this House who had had that information would have considered it appropriate not to provide that information to the Prime Minister and other Ministers who were making the decisions.

This has been difficult. It is a difficult way forward for the Government, but the Prime Minister’s decisions on changing the process so that we do not have such a process in future—it should be absolutely clear that due diligence and vetting have been passed before any appointment is announced—would be a more sensible way forward. The review that Sir Adrian Fulford is taking forward should shine a light on this and look for a better way forward.

[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

My Lords, we now move on to up to 20 minutes of Back-Bench questions. This is set out in the Companion, in chapter 6, pages 86 and 87—paragraphs 6.7 and 6.8. The first question will come from the Conservative Benches.

18:15

[Lord Garnier (Con)]

My Lords, I am grateful to the Leader of the House for her repetition of the Statement made by the Prime Minister earlier. I went to the other place to listen to the Prime Minister, and I have listened again to what the noble Baroness has had to say this afternoon. I find it impossible to work out, from both the original Statement and the repetition, why on earth the Prime Minister wanted this man to be the ambassador in the United States in the first place. Every dog and cat in the street knew that Lord Mandelson was a wrong ’un. What went wrong?

[Baroness Smith of Basildon (Lab)]

The Prime Minister said that he made a wrong decision, but I have to say to the noble and learned Lord that the number of people who praised the decision at the time and then criticised it later is quite surprising. Yes, all evidence shows now that this was the wrong candidate for the job, but part of that would have been exposed had this process been more open and transparent for Ministers. If they had had more information, we may have seen a different outcome.

[Lord Clarke of Nottingham (Con)]

My Lords, the totally new twist to this long-running saga is the discovery that the Foreign Office officials failed to give any information about this failed vetting to their ministerial masters, the Prime Minister and the Foreign Secretary. So far, I find this as mystifying as everybody else. Surely by this afternoon, Olly Robbins and other officials have been asked to give their explanation for this incredible behaviour. We cannot do anything or know where we go next on this extraordinary feature of this multifaceted case until we know what on earth induced these senior and responsible civil servants to do anything as irresponsible as to withhold this from the Prime Minister. As the noble Baroness the Leader and the Prime Minister are giving Statements today, can we be told—because they must have asked this question and had an answer—what the answers are and tell us what explanation and what reason Olly Robbins and the FCDO have been giving for completely withholding this information?

[Baroness Smith of Basildon (Lab)]

I am grateful to the noble Lord. He is right. When you see the multiple opportunities to inform the Prime Minister or the Foreign Secretary that the recommendation from UKSV was that the vetting would not be granted, it is extraordinary that it was not passed on to Ministers. The reason for the Statement today is that the Prime Minister said he wanted, as soon as he had more information, to present it to the House at the earliest opportunity, and he has done that.

I understand that Olly Robbins is giving evidence to the Foreign Affairs Select Committee tomorrow and there will be information available after that. I do not want to paraphrase—like the noble Lord, I am looking at the papers and reading it—but I think he thought he was doing the right thing. I have concerns that his interpretation of the law may not have been right, because it seems extraordinary that he could withhold information of this seriousness from Ministers.

The very reason and the purpose for such a process of vetting is that those making the decisions have the information they need on which to make those decisions, and if they are not given that information, I think most people will just find it extraordinary. There would be, I think, a natural assumption that when you go through this process, those who are making the decisions have access and information provided to them. If any red flags were raised by the vetting process, they should have been provided to Ministers. But there will be the opportunity; there is a Select Committee tomorrow, and we may hear more about this.

[Lord Beamish (Lab)]

My Lords, the humble Address that Parliament passed gave the Intelligence and Security Committee, which I chair, the responsibility to consider those documents that, if released, would affect national security or international relations. This February, we asked the Cabinet Office to prioritise all the documentation relating to the appointment of Peter Mandelson as ambassador to the United States. When we received that information, there was no documentation concerning his vetting. We raised this with the Cabinet Office, only to be told that it did not exist. Last Thursday, the Guardian indicated that the document did exist. We have now received it and will consider it this week at one of our meetings. Now we have the vetting documentation to consider, but I have asked the Cabinet Office about the decision-making process in the Foreign Office to reject the recommendation in the vetting of Peter Mandelson. Again, the Cabinet Office has told me that nothing exists. If it does exist, could my noble friend somehow expedite that information and ensure that it gets to the ISC as quickly as possible?

[Baroness Smith of Basildon (Lab)]

I am grateful to my noble friend and his committee for their work on this. He underlines our concerns; the humble Address was very clear that all information should be provided. In terms of information that is missing or was not available at the time—the noble Lord, Lord Purvis, made this point, and I apologise for not answering it before—the Prime Minister has made an absolute commitment that all available information should be made public under the humble Address. National security information will be referred to the committee and anything that the police consider could be essential for a prosecution, and, if disclosed, would damage a potential one, may be delayed. The Foreign Office has gone back to the FCDO and is very keen to get all available information. It may be that some documents that were not available in the first tranche should be available in the second tranche or later. I think it is clear to everybody—the Prime Minister was extremely clear on this today—that all information should be available and the humble Address should be complied with in full.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I am sure the noble Baroness will join me in paying tribute to our many diplomats around the world who do a sterling job in representing our country. I have a very simple question. She talked about the judgment of the then permanent under-secretary at the Foreign Office, Sir Olly Robbins. Surely there was an onus on the Prime Minister not just to listen but to ask. Why did he not?

[Baroness Smith of Basildon (Lab)]

I agree that our diplomats around the world do an amazing job in difficult circumstances. Anyone who has had to contact our embassies at a time of trouble or difficulty abroad will know how professional and excellent they are. The noble Lord is right that this all comes down to judgment. The Prime Minister has apologised for his judgment in making the appointment, but others must stand by the judgments they made, be questioned on them and account for them. That is what is happening as we get more information. Those of us sitting on this side of the House trust the Prime Minister’s judgment. It takes a big character to stand up and say sorry when they have made a mistake. That does not always happen. It has not always happened in the past. On the big judgments, we look at the international situation, where the Prime Minister refused just to follow in the wake of President Trump and acted in the national interest. That shows true judgment. That is why we on this side of the House trust the Prime Minister’s judgment.

[Lord Vaux of Harrowden (CB)]

My Lords, we have had a lot of discussions in this House over the last year about employment rights and particularly about unfair dismissal. To be fair, a dismissal must have a valid reason—we cannot make a rigid judgment on the dismissal of Olly Robbins at this stage—but it must also follow fair procedure. That typically means investigating the issue, informing the employee in writing, holding a disciplinary hearing and offering an appeal. According to the press, Olly Robbins was dismissed in a phone call on Thursday night. Can the Minister confirm that due, fair procedure was followed? If not, can she explain why the Government are so strong on insisting that all other employers should follow it, but it does not apply to them?

[Baroness Smith of Basildon (Lab)]

My Lords, there have been times when the Prime Minister has said that he has had to act quickly, as when he sacked Peter Mandelson. I do not think any Member of this House raised due process when he was called and told that he would lose his position. I will look further into this, but I expect the Prime Minister would have been given advice on how to proceed. It is a serious matter when a Prime Minister and a Foreign Secretary say they do not have confidence in an official, but I expect due procedure to be followed as this goes forward.

[Lord Roe of West Wickham (Lab)]

My Lords, I thank my noble friend the Leader of the House for her clarity and for repeating the Statement, as others have echoed. My question is about risk in the wider system. I speak as someone who has been through this system, understands how intensive the questioning was, and is aware that thousands and thousands of these clearances are processed every year for the security of the nation. Will the scope of the review include whether there have been other breaches or lapses in judgment in questions of clearance at the most senior level because of the volume of people who pass through the system, and where there might be other risks?

[Baroness Smith of Basildon (Lab)]

I am grateful to my noble friend and I think we are all relieved to know that he has been through the process. It is a very intrusive and robust process, which is why it is right that the details are not conveyed to anybody outside those undertaking it. However, the results and conclusions should be. My understanding is that Sir Adrian Fulford’s investigation will look at the process in the round. My noble friend makes an important point, because there are many positions that need this degree of developed vetting. It is robust and intrusive, but if information is not passed on in a timely and accurate way then the value of that process is not fair, including on those who go through it. I will double-check this, but my understanding is that it will be a full investigation into whether the process is fit for purpose or whether changes need to be made.

[Lord McLoughlin (Con)]

Can the Leader of the House tell us why the Prime Minister ignored the advice of the then Cabinet Secretary, the noble Lord, Lord Case, to do the vetting before the appointment was announced?

[Baroness Smith of Basildon (Lab)]

My Lords, I think the Prime Minister received a number of items of advice. He receives advice every day on different issues. That has been investigated since and the then Cabinet Secretary said that the appropriate, right process had been followed.

[Lord Harris of Haringey (Lab)]

My Lords, like my noble friend Lord Roe, I have been through the developed vetting process. It is intrusive and extremely thorough, going line by line through your bank statements, with detailed and intensive questions about personal relationships and everything else. I was doing so for a ministerial appointment. It was made quite clear in writing that if I failed the vetting process, I could not be appointed or continue in that role. I have also chaired a public body where one of our committee failed the vetting process and was removed from office. Are ambassadors in some way separate from that process? I think that is the question that noble Lords would like answered.

[Baroness Smith of Basildon (Lab)]

Yes, there is a difference, although the process undertaken by UKSV may be very similar. A summary is provided, but it is not a pass or fail. It will look at concerns, whether low, moderate or high. On the overall decision, it can approve clearance, it can approve it with risk management, or it can be denied. The difference here is that the Foreign Office, on getting that recommendation, did not have to follow it. It did, and was able to, override it. The concern is that it did not inform Ministers of the outcome of the vetting. What has caused Ministers most concern is that, at the various opportunities there were to inform them that, although vetting was granted, it was against the recommendation of UKSV, the information was never passed on.

[Lord Pannick (CB)]

My Lords, is it possible that the reason the Foreign Office did not inform the Prime Minister that it had overruled the security advice—which it is perfectly entitled to do—was that it knew very well that the Prime Minister was so wedded to the appointment of Mandelson and had appointed him, as we have heard, prior to the vetting process taking place?

[Baroness Smith of Basildon (Lab)]

It is hard to say what is in somebody’s mind when they make a judgment call. However, the Prime Minister has been very clear that he would not have made the appointment against the vetting recommendation. I do not think it should be the case that officials could make that judgment and not let the Prime Minister or other Ministers know that they are making that judgment. They might think they know what is in the Prime Minister’s mind, but they have to give the Prime Minister the information.

It is also the case that the Prime Minister was clear that, had he known this—and I think this also goes for other Ministers—there would have been a different outcome. What is the point of such a system if those who actually make the decisions on appointments are not given the outcome of the process?

[Lord Harper (Con)]

My Lords, the Prime Minister made it clear that he would have not made the appointment if he had the information from UK Security Vetting. At any point, did the Prime Minister or those working for him ask what the result of the UK security vetting process was? If not, why not?

[Baroness Smith of Basildon (Lab)]

My understanding is that the Foreign Office was asked to provide this to No. 10 and the Prime Minister. I could not tell the noble Lord who asked who, but the information was requested as it had been raised. However, they were never informed that there had been a recommendation; they were told that the appointment had been passed by the Foreign Office, but were not told that it was against the recommendation of UKSV.

[Baroness Foster of Oxton (Con)]

My Lords, I first echo the comments made by my noble friend Lord True, who had some very searching questions. I thank the noble Baroness the Leader of the House for the Statement today. My question is one that I have raised twice before. There will be long and thorough discussions concerning the vetting process. However, we know that, despite the vetting process taking place following the Prime Minister’s decision to appoint Lord Mandelson as our ambassador to the United States of America, at the time of the appointment, the Prime Minister knew that Lord Mandelson had remained friendly with a convicted paedophile. These are two separate issues. When we look at judgment, therefore, does the noble Baroness the Leader of the House really consider that the Prime Minister showed any judgment at all?

[Baroness Smith of Basildon (Lab)]

I have already been clear to the House that I trust the Prime Minister’s judgment. The noble Baroness is raising two quite separate things. On the first, the Prime Minister is clear that, when the due diligence process was undertaken, he was not given accurate information by Peter Mandelson. He has said that he would have made a different decision based on that information.

The issue of vetting is different and covers issues such as national security. It is inconceivable that, when the recommendation from UK Security Vetting was that clearance should not be granted, it was not accepted by the Foreign Office, and that the Prime Minister and other Ministers were not told. I come back to the point that I made to the noble Lord, Lord Pannick: what is the point of having this intrusive and robust process if the information is not given to those who make the decisions?

[Baroness Hoey (Non-Afl)]

My Lords, is the noble Baroness aware of whether the Foreign Office has turned down red flag security briefings on ambassadors before? How many times has this happened before? If it has, what is the point of spending money on security services if nobody listens to them?

[Baroness Smith of Basildon (Lab)]

It is not just ambassadors; a number of public appointments are made under this process, and this is something that must be looked at. I do not know the answer to the noble Baroness’s question; I do not know whether others know, but we need that answer as to whether recommendations have been ignored in other cases.

[Lord Pickles (Con)]

My Lords, the Prime Minister used his considerable communication skills to make it clear that he wanted to appoint Lord Mandelson to the post of ambassador. Why did he not use the same skills to make clear to officials that this would be only on the condition that Lord Mandelson passed the vetting process? If that had happened, the noble Baroness would not be at the Dispatch Box now and the Government would not be in this mess.

[Baroness Smith of Basildon (Lab)]

I think it is reasonable that the Prime Minister should be given information. If you make an appointment to such an important position, the expectation is—as we all know—that it is subject to security clearance. The Prime Minister was told only that Peter Mandelson had passed the security clearance; he was never told that it was against the recommendation of UKSV. The fault-line is between the recommendation of UKSV and the decision that was taken to grant developed vetting. That line is what has caused the most concern. We will have to investigate it, look at the process in future and, as the noble Baroness, Lady Hoey, said, learn whether it has happened in any other cases.

Pension Schemes Bill

Monday 20th April 2026 Lords Chamber

Commons Reasons and Amendments

18:36

Motion A

Moved by

[Lord Katz]

That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

1A: Because the Commons consider that it is not necessary to include the asset and location provisions mentioned in the amendment.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, in moving Motion A, I will also speak to Motions B, B1 and C. The Commons have disagreed with Amendment 1 on the grounds that it could introduce, rather than mitigate, risks that the provision in Clause 2 could be used in unintended ways. Amendment 1 would place an explicit prohibition on regulations made under Clause 2, including any provision requiring investment in particular assets or asset classes, or in particular locations.

I acknowledge the concern that lies behind this amendment, and I wish to reiterate the Government’s position clearly for the benefit of the House. The Government have no intention of using the powers in Clause 2 to require asset pool companies to invest in specific assets, asset classes or locations. The Bill, as drafted, does not provide a legal basis for the Government to tell asset pool companies what investments should be made or where those investments should be located. Indeed, by expressly setting out particular matters that regulations may not address, the amendment risks introducing ambiguity about the scope of the regulatory making power. It could invite the inference that matters not explicitly excluded are in fact permissible; such an approach could therefore weaken the clarity of the legislative framework and increase the risk of misinterpretation or challenge.

I note that, in 2020, the Supreme Court ruled that the powers to make LGPS regulations had to be interpreted in line with Parliament’s intention, which was that LGPS investment decisions should be made in a way consistent with funds’ fiduciary duties. Although the Bill provides for asset pool companies to take investment decisions rather than funds, there is nothing in the Bill that overrides this broader intention, meaning there is nothing in the Bill that allows Government to tell asset pool companies to invest in specific assets, asset classes or locations. For these reasons, the Commons were of the view that Amendment 1 is both unnecessary and potentially counterproductive. The Government agree with that assessment.

Motion B sets out that this House do not insist on its Amendment 5 because the Commons consider that it is not appropriate to impose the publication requirements mentioned in the amendment, and that any additional requirements should be considered after the next report under Section 13 of the Public Service Pensions Act 2013 has been prepared. I thank the noble Viscount, Lord Younger, for his amendment in lieu in Motion B1, the intent of which, I believe, is already substantively met by the Government Actuary’s statutory Section 13 review of the LGPS valuations and the consultation on Regulation 64A, which relates to interim valuations, that MHCLG has already committed to running later this year.

The 2025 LGPS valuation has recently concluded. I am pleased to note that, taken across the whole scheme, the average employer contribution rate reported at the 2025 valuations of the LGPS in England and Wales has reduced by slightly less than 5% of pensionable pay, relative to the equivalent amount quoted for the 2022 valuations. This figure has been confirmed by the GAD’s analysis of the published valuation reports. There is of course variation to this across the country, and I understand the concern with ensuring that valuations are balancing stability for the scheme with value for money for the taxpayer.

As I have referred to both in Committee and on Report, under Section 13 of the Public Service Pension Schemes Act 2013, MHCLG appoints the Government Actuary to undertake a review of the valuation. As part of this review, I have already committed that the department will ask the Government Actuary for a consideration of the issue of prudence. Specifically, the Government Actuary’s Department will look at the levels of prudence inherent in the contribution rates set by funds, to ensure that a balanced view of liabilities is being taken in the context of an open scheme. This will include any prudence margins used within the discount rates, as well as other sources of prudence, such as the stability buffers and stabilisation mechanisms used by funds. While the Government Actuary’s Department does not believe that any of the actuarial firms would characterise their valuation methods as being gilts-based, they recognise that some of the rates used by funds in the 2025 valuation are similar to prevailing gilt yields at the valuation date. Discount rates have therefore been set by reference to the long-term investment horizon and characteristics of the actual assets backing funds’ liabilities, but are then reduced by some funds to gilt-rate levels by the inclusion of prudence and stability margins.

I further commit that the department will ask the Government Actuary to consider the methods being adopted by fund actuaries for managing risk and reflecting the long-term funding objectives of the scheme. It will ask whether there would be benefit to including additional illustrative valuations in valuation reports, and, if so, what they should be based on. It will also ask whether pension funds and their actuaries are engaging effectively with employers on the setting of contribution rates, including whether the information is being provided in a way that is comprehensible to the lay reader. The Government Actuary has already committed to publishing its Section 13 report next spring, an acceleration of previous timetables.

In addition, the department committed to consulting on interim contribution rates later this year. This consultation will consider how and when it might be appropriate for an employer to use this review mechanism, including significant shifts in financial pressures on local authorities and other employers. It will also consider whether there should be a link to the Section 13 review of the valuation.

I trust these points give reassurance that the Government take noble Lords’ concerns seriously and that the Section 13 review will address them. I respectfully ask that the noble Viscount does not press his amendment.

Finally, I turn to Motion C. Amendment 6 seeks to update the current regulation that allows employers to seek an interim review of contributions within the three-yearly cycle of valuations. As I said previously, on the question of access to interim reviews of contribution rates, the department has already committed to consulting on interim contribution rate reviews later this year. This consultation will consider how and when it might be appropriate for an employer to use this review mechanism, including whether there should be a link to the Section 13 review of the valuation, and the relative balance of responsibility between the fund actuary and the administering authority. Any such changes would then be brought forward by the Government in regulations, having followed the proper process and met the statutory requirement to consult.

Noble Lords will be pleased to hear that departmental officials have already made clear to administering authorities that, should they receive requests for an interim review of their valuations, they need to engage with their substance, communicating clearly and transparently the process, and that any review must be in line with the policies set out in the funding strategy statement.

I urge all noble Lords to support Motions A, B and C, and that the amendment in lieu in Motion B1 is not pressed. I beg to move.

18:45

[Viscount Younger of Leckie (Con)]

My Lords, in speaking to Motion B1, I welcome that the Government have committed to a review of Regulation 64A of the Local Government Pension Scheme Regulations 2013. That is an important and necessary step, and their further commitments today are most welcome.

However, if the GAD review is to be meaningful, it must first focus on the factors that directly drive employer contribution rates. In particular, it should examine the effectiveness of consultation between fund actuaries, administering authorities and scheme employers.

Secondly, the GAD review must examine outliers in valuations. There is increasing evidence that some funds are applying discount rates that are significantly more prudent than those implied by gilt yields or insurer pricing, despite the Local Government Pension Scheme being an open, funded and asset-backed scheme.

Thirdly, Section 151 officers are rightly expected to scrutinise expenditure rigorously, including pension contributions, just as they would any other area of spending. When budgets are tight and local taxpayers are under strain, those responsible must be able to understand the methodologies being used, weigh the trade-offs and, where necessary, challenge the conclusions reached by fund actuaries.

It was with these concerns in mind that amendments were tabled in Committee, as the Minister is aware. Where such issues arise of the kind that I have outlined there is currently little recourse. Employers may be forced to wait up to three years for the next valuation cycle before any action can be taken. That is a considerable period to carry contribution rates that may be excessive or difficult to justify. The principle in our amendment is simple: the review identifies the problem and the interim review under Regulation 64A provides the remedy.

On these points, I am glad that the Government have broadly recognised the concerns I have raised in my amendment. I shall listen to the remainder of the debate on this group, but I am more reassured now that this is a priority for the Government and that they are aware of the concerns that we have been outlining. I thank the Minister for his movement on this.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for explaining things in great detail from the Government’s perspective.

I will speak to Motion B1, which the Minister said has already been met. The Local Government Pension Scheme already has mechanisms to review and amend employer pension contributions and funding practices; for instance, under Regulation 64A of the Local Government Pension Scheme Regulations 2013. There is even an existing GAD reporting mechanism under the Public Service Pensions Act 2013, which reports on compliance, consistency, solvency and long-term cost efficiency, with such reports having been carried out in 2018, 2019 and 2024. Therefore, we on these Benches think that the Government’s efforts should be focused—as they are, I think—more on implementing the recommendations of those reports, rather than duplicating efforts. We will probably abstain on Motion B1; we recognise its importance but think it is already being met.

Motion C is a government Motion, so I come to Motion D. Amendment 13 would extend the period before a pension pot is classified as dormant, increasing the threshold from one year to three years. We supported this increase earlier in the passage of the Bill, as it would provide greater flexibility for savers such as mothers, those on sabbatical or mature students. Motion D1, from the noble Baroness, Lady Altmann—

[Lord Katz (Lab)]

Motions D and D1 are the opening Motions of the next group.

[Lord Palmer of Childs Hill (LD)]

Have they been moved?

[Lord Katz (Lab)]

Not yet.

[Lord Palmer of Childs Hill (LD)]

It says “D1” on the Order Paper.

[Lord Katz (Lab)]

It is in the second group.

[Lord Palmer of Childs Hill (LD)]

I see. I am sorry. Forgive me, I was going on to the next group.

On Motion B1, we will abstain rather than vote against it, because we think that these things are already in process, if dealt with properly.

[Lord Katz (Lab)]

I am glad that, for once, our debate on the LGPS has been short and sweet. I thank both opposition Front Benches for their engagement on this issue. I am glad that the noble Viscount, Lord Younger, recognised that there has been movement. We understand the importance attached to the nature of the reviews. I hope that what I said has met his need for us to demonstrate that we are taking it seriously, which, of course, we are.

In response to the noble Lord, Lord Palmer, I hope that he will be in a position where his abstinence will not be needed because the noble Viscount will not be testing the opinion of the House, but we shall see. I beg to move.

Motion A agreed.

Motion B

Moved by

[Lord Katz]

That this House do not insist on its Amendment 5, to which the Commons have disagreed for their Reason 5A.

5A: Because the Commons consider that it is not appropriate to impose the publication requirements mentioned in the amendment; given that the next report under section 13 of the Public Service Pensions Act 2013 will be prepared in the near future.

[Lord Katz (Lab)]

I have already spoken to Motion B. I beg to move.

Motion B1 (as an amendment to Motion B) not moved.

Motion B agreed.

Motion C

Moved by

[Lord Katz]

That this House do not insist on its Amendment 6, to which the Commons have disagreed for their Reason 6A.

6A: Because the Commons consider that it is not necessary to include the interim review provisions mentioned in the amendment; and the Government has committed to carrying out a consultation on this topic.

Motion C agreed.

Motion D

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendment 13, to which the Commons have disagreed for their Reason 13A.

13A: Because the Commons consider that it is not appropriate to increase the length of the dormancy period as this would be detrimental to members of pension schemes.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I shall speak also to Motions J, J1, K, K1 and L.

As I have previously outlined, we cannot accept Lords Amendment 13 on small pots or Amendment 13B within Motion D1, tabled by the noble Baroness, Lady Altmann, which would extend the dormancy period for automatic consolidation from 12 months to 36 months or 24 months respectively. Extending the threshold would materially lengthen the period for which a pot remained dormant. This would be detrimental both to individual members, who would incur multiple sets of charges for longer, and to the wider scheme membership, which, in effect, subsidises the small deferred pots, which are uneconomic for schemes to administer. We estimate that extending the dormancy period from 12 to 24 months would generate additional industry costs of around £25 million a year, which would most likely simply be passed on to members.

The Government did not invent this scheme. The 12-month timeframe formed part of the proposal that was consulted on in 2023 with stakeholders across the pension industry and consumer representative bodies, and it reflects a supported middle ground. The previous Government concluded that a period of 12 months struck the appropriate balance, allowing eligible pots to be identified for consolidation while seeking to avoid certain situations; for example, where individuals who, for a range of reasons, may have temporarily ceased pension contributions but remain with their existing employer and are likely to return to pension saving. The 12-month figure was not plucked out of thin air; it was a judgment underpinned by consultation and evidence, not speculation. It is supported by a strong set of safeguards, most notably the individual’s right to opt out of consolidation.

Throughout the development of this policy, my department has engaged with a range of stakeholders, including consumer representative bodies. For example, Which? was part of our small pots delivery group, and it welcomed the safeguards that we have put in place, which it agrees are sufficient.

I understand from previous debates that noble Lords, including the noble Baroness, Lady Altmann, have concerns that 12 months might be too short for certain individuals, particularly those who take career breaks, say, for maternity leave or caring responsibilities, and experience fluctuating earnings. But the 12 month dormancy period is triggered only where no contributions have been made for a full year. Periods of paid maternity leave, for example, would see contributions continue, and a pot would become dormant only after 12 months of unpaid leave.

Currently, only pots worth £1,000 or less will be eligible for consolidation. For context, a full-time worker on the national living wage would typically exceed that threshold after nine months of saving. That means that individuals with longer periods of continuous employment are unlikely to have pots that fall into scope. It cannot be a common occurrence that someone who has saved less than £1,000 and then had no contributions for at least 12 months would recommence saving with the same employer once it had entered dormancy. Nevertheless, we recognise that such circumstances could occur. That is why we have built strong safeguards into the policy. Most importantly, every member will receive a transfer notice ahead of any consolidation, giving them a clear opportunity to opt out if they judge that consolidation is not in their best interests.

Finally and crucially, the Bill already requires regulations to set a minimum 12 month period for a pot to be classified as dormant. That threshold could be set at a longer period or extended in future through secondary legislation if the evidence justified such a change.

I think we all agree on the need to consolidate small pots to protect savers and all other members from multiple years of charges on multiple pots eating away at their savings. I hope that the noble Baroness, Lady Altmann, can see that extending the dormancy period would harm the vast majority of members in a known and avoidable way to add further protection for a very small number of hypothetical cases. The best way to protect those cases is through building full and proper safeguards into the policy, which is what this Bill does. After that compelling argument, I hope that she will be willing not to press her amendment, when we come to that point.

Lords Amendment 77 would require the Secretary of State for Work and Pensions to conduct and publish a review of the long-term affordability of public service pension schemes. The Government cannot accept the amendment as it is unnecessary and technically defective. It is unnecessary, as detailed information about the cost of the unfunded public service pension schemes is already publicly available. The OBR undertakes analysis of both the near-term and long-term cost of the schemes, including the Treasury’s central measure of affordability: 50-year projections of pension payments as a proportion of GDP. Contrary to suggestions made in Committee and on Report, the cost of the schemes is forecasted to fall under this measure, from 1.9% to 1.4% of GDP.

On Report, we heard suggestions that savings arising from the Hutton reforms had not and would not materialise. That is simply incorrect. The coalition Government forecasted savings of around £400 billion by 2065 as a result of the substantial reforms made to the schemes in 2014-15, but implementation of the reforms was, in effect, set back because the courts found that the way in which the coalition Government had introduced them was discriminatory on grounds of age. That incurred costs of around £17 billion, but crucially, it will not impact the savings going forward. Those are the key drivers behind the fall in costs over the long-term.

Every four years, detailed actuarial valuations of each of the schemes are undertaken and published. They set out the cost of providing benefits to current staff and the cost of meeting all accrued liabilities. The valuations test the cost of the schemes against the cost control mechanism, introduced by the coalition Government as part of the Hutton reforms, and they provide for benefits to be adjusted if those have deviated from target levels. Pension costs are also set out in the financial accounts for each of the schemes and collectively in the whole of government accounts. This information is produced in accordance with international accounting standards.

The amendment is not necessary because the risks arising from changes to longevity are already managed in the design of the schemes. This came up on Report. The retirement age in the schemes, except those for police, firefighters and the Armed Forces, is the state pension age. In any case, the cost control mechanism would be triggered if costs rose due to longevity improvements that were not managed by changes to state pension age.

The suggestion made on Report was that the fact that some of the public service schemes are operated on a pay-as-you-go basis means that they must be unaffordable, but “unfunded” does not mean “unaffordable”. In general, the Government do not pre-fund future liabilities by holding assets at all. Details of the Government’s policy on whether to hold assets in relation to specific liabilities is set out clearly in Annex 4.16 of Managing Public Money, should anyone want to look it up.

There is clearly an opportunity cost to holding assets in a fund, which are invested with the sole objective of having enough returns to meet future liabilities. Holding funds can create technically allocative inefficiencies across the public sector. The liability can clearly be more efficiently managed in the round with other unfunded liabilities, met out of general taxation as they fall due.

The amendment would not work, because it would require the Secretary of State for Work and Pensions to undertake a review on a matter that does not fall within their responsibilities and for which statutory responsibility sits elsewhere, including with the devolved Administrations.

Comprehensive information is already available, published and regularly updated on the cost of public service pensions. There is demonstrably already transparency on all the points raised by noble Lords during the debates, and the amendment is, in the Government’s view, therefore unnecessary. We will continue to ensure that public service pensions are properly costed, transparently reported and kept under review through existing mechanisms. So, I hope that the noble Baroness will not press her amendment.

I turn to Amendments 78 and 86. These amendments engage Commons financial privilege. The House of Commons has therefore disagreed with the amendment and has not offered any further reason. As noble Lords will know, it is a long-standing convention that this House does not insist on amendments which the other place has rejected on grounds of financial privilege. But I will briefly explain why the Government do not agree with the policy intent. These amendments would not do what I suspect the movers hoped they would, which is to enable the PPF to pay lump sum payments to its members on top of the periodic compensation it provides.

19:00

Amendment 78 would simply commence Section 169(2)(d) of the 2004 Pensions Act without requiring regulations to be made outlining the actual circumstances in which the power would be used. If regulations were made, they could not require the payment of retrospective pre-1997 lump sums because Section 169 applies to the discharge of liabilities to provide compensation, and there is no requirement for the PPF to pay compensation in respect of retrospective pre-1997 increases. Therefore, Section 169 cannot be used to increase the amount of compensation a PPF member would receive.

Amendments 86B and 86C would require the Secretary of State to conduct a review of the impact of commencing the provisions in Section 169(2)(d) of the Pensions Act 2004 within three months of the Bill receiving Royal Assent. I think I understand the intention behind these amendments from the noble Viscount, Lord Thurso, because he has shared his concerns with us at previous stages of the Bill. I know he is particularly concerned about the position of members of certain schemes, especially those members of the Atomic Energy Authority Technology pension scheme, whose scheme transferred into the PPF; and AEAT members now receive compensation from the PPF.

We have discussed previously that these complaints that have been about the circumstances of the transfer have been looked at by different bodies, and they have been debated in Parliament. I sympathise with affected AEAT pension scheme members. No one wants to see an employer become insolvent, the scheme subsequently transfer to the PPF and its members have to adjust to benefits lower than those that they would have expected from their former scheme.

I know, from having heard him throughout our debates, that the noble Viscount, Lord Thurso, has looked into this matter carefully. He has looked at the concerns of affected members, and he has even been through scheme documentation. My colleague the Minister for Pensions would be happy to meet with the noble Viscount, Lord Thurso, to discuss the AEAT case and his concerns, and I hope that will be enough to satisfy him.

Finally on this point, at earlier stages of the Bill, noble Lords have also reflected on the impact that the absence of pre-1997 increases has had on PPF members over the years. As I have set out in previous debates, I recognise that prospective increases do not go as far as some people would want. But let us not lose sight of the fact that the Government’s reforms will make a meaningful difference to over 250,000 affected members, while balancing the impact on levy payers, taxpayers, affordability for government and the ability for the PPF to manage future risk. Given all of that, I hope that the noble Viscount feels able not to press his amendment.

Finally, I turn to Lords Amendment 79, which would require the Secretary of State, within 18 months of Royal Assent, to

“conduct a review of all legislation, regulation and guidance governing marketing, financial promotion and member communications”,

which might restrict the ability of pension schemes to communicate with their members. The Government share the interests of noble Lords in ensuring pension schemes can provide high-quality support to their members. But a formal review as set out in the proposed amendment would not be an effective or timely approach. The Government are acting to improve the support available for pension members, reducing complexity and strengthening support through a combination of the guided retirement provisions in the Bill and the rollout of targeted support. A formal review as proposed by this amendment is not necessary and would duplicate work done across government on pensions communications, so I hope that amendment will not be pressed for those reasons. I beg to move.

Motion D1 (as an amendment to Motion D)

Moved by

[Baroness Altmann]

At end insert “and do propose Amendment 13B in lieu—

13B: Clause 22, page 24, line 19, leave out “12” and insert “24””

[Baroness Altmann (Non-Afl)]

My Lords, I thank the Minister for her introduction and her helpful remarks relating to Motion D, which is mostly what I will speak to in my remarks.

The Government say that allowing small pots to be moved without member consent after just 12 months is essential because, otherwise, any longer period would be detrimental to scheme members. I do not think that would stand up to market scrutiny. This is about providers not wanting to have to administer small pots, the economics of which they find rather challenging. As to the idea that if people with small pots move somewhere else or are moved somewhere else, that will lead to lower fees being charged by the pension providers, I think the providers simply making higher profits is the far more likely outcome.

It will not particularly be detrimental to most members, but for those whose money is moved, without their consent and potentially without their knowledge, I have concerns that allowing just 12 months and then shipping the money off elsewhere to another scheme, which could be worse and could perform worse but just happens to be an approved scheme under the regulator’s supervision, would be a rather dangerous thing to approve after such a short space of time. Members may have paused their contributions temporarily, and I point out to the Minister that members who have decided to opt out of auto-enrolment, who will then be re-enrolled after three years, may decide not to opt out but the money that they previously put into the scheme will have gone somewhere else. This to me suggests that the policy needs to be reconsidered.

Yes, of course, we need to look at the economics of auto-enrolment but we have to also balance fairness to members who have paused temporarily, whether it is for unpaid carers’ leave—perhaps a relative who is terminally ill and it has gone on for slightly over the one year, but their money may have been moved before they get back to their employer—with the costs to providers of administering small pots. I do not believe 12 months is the right balance. It is too short.

I just ask noble Lords whether they feel we should allow a bank to move somebody’s money in their account to a different bank because they have not got a lot in there and the bank cannot make any profit on keeping that current account. I do not think we would feel the same—that after just 12 months, without member consent, their money could be shipped off to another bank.

I agree that we have to find some way of administering small pots. I hope that, when the noble Baroness points out that there is a minimum of 12 months being provided for in the Bill and that regulations will set the required time period, after further consultation there is a chance that we will perhaps have a longer period than the current 12 months. On that basis, I hope that the situation for small pots will turn out to be better after regulations than it currently would seem. I will not press my amendment tonight.

Very briefly on Motion K1 in the name of noble Viscount, Lord Thurso, I too am extremely concerned about the problem of the AEAT pension scheme members. I feel that there is an obligation in some way on government to look more carefully and to take careful consideration of the findings of the various inquiries that have happened more recently. I hope that, when the meeting takes place, those of us who are particularly interested in the AEAT situation will be able to have a proper discussion with the Ministers on that issue. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, Motion J1 reintroduces my proposal for a review of the long-term affordability, intergenerational unfairness, fiscal sustainability and accounting treatment of public service pension schemes. I am trying to help the Government to fill a lacuna in their important work on pensions, so I was taken aback by the Commons’ reason for rejecting it—namely,

“that it is not necessary to duplicate existing information regarding public sector pension schemes”.

The presentation of the liability represented by public sector pensions is widely seen as inadequate, and the PAC itself has expressed concerns—in particular that pension liabilities are not being presented in a way that allows Parliament properly to understand their real costs in the long term.

I will highlight four reasons why a review is needed. First, the cost is huge. As we have heard repeatedly, unfunded pension liabilities represent the second-largest government liability after gilts. Currently, we commit future taxpayers to about £60 billion of new expenditure every year, in the form of a stream of index-linked new expenditure. According to the OBR, the long-term liability is £1.4 trillion, but it may be more as a lot depends on the assumptions made.

Secondly, it is an unfunded pay-as-you-go scheme. The problem with that is that the current generation of older and former public sector workers are taking money from younger generations of workers already weighed down by trying to finance housing, young families and, in some cases, repaying student loans. This is unfair, and it is why I put intergenerational unfairness at the heart of the review.

Thirdly, the coalition did well to reform some public sector pensions following the Hutton review, as the Minister acknowledged, but the new arrangements have turned out to be more costly than expected. Sadly, growth, which helps to ease things, has been modest. Moreover, substantial increases in the pay and size of the public sector make things look better in the short term, as employer and employee contributions increase. However, this is a mirage, as it stores up even more trouble for the future, as greater payouts on higher salaries will be needed as those people in the system retire.

Fourthly, there are serious accounting issues, as we know from the PAC. The scale of liabilities is not clearly visible from the public accounts. Moreover, as I have learned from my unique experience as a civil servant and a Cabinet Office Minister, the costs of future pensions are not properly taken into account in decision-making across the public sector—for example, on restructuring or adding to the workforce. In conclusion, there is a real need to establish whether the system is fair and sustainable, and whether anything could be done to improve things.

I emphasise that I support the work of public sector workers and that I am not making any recommendations. That is for the experts, who would look at the whole area objectively, and it is for the Government to decide what, if anything, needs to be done.

[Lord Vaux of Harrowden (CB)]

My Lords, I want very quickly to ask the Minister a question on Motions D and D1. I say at the outset that I agree with almost every word that the noble Baroness, Lady Altmann, said. I entirely agree that one year is too short. I have at least two pensions that have not been touched for that long, which would fall into the dormant category; I would not consider them dormant, but there we go.

My concern is that if we start moving people’s small pots around, potentially without their knowledge, we increase the problem of lost pots. The answer to that is the pension dashboard. So my question to the Minister is: will we have the pension dashboard in place, as a method of being able to retrace a lost pot, before we start moving people’s pots around?

[Viscount Thurso (LD)]

My Lords, I will speak on Motion K and my Motion K1. I have rehearsed the arguments around this question fully both in Committee and on Report, so will therefore not do so again. I listened very carefully to what the Minister said and I am extremely grateful to her for the engagement that I have had with her on several occasions, when her sympathy was obvious, even if her ability to do something about it was clearly limited.

When the time comes I will not move that amendment, but I will certainly take up the offer of a meeting. I hope I can move from the tea and sympathy that have been so evident to having a little power of persuasion over the Minister and demonstrating that this is a particularly exceptional case that needs to be dealt with. I thank the Minister and her team for their engagement, and I will not be moving my Motion when the time comes.

19:15

[Lord Davies of Brixton (Lab)]

I note that my noble friend the Minister went out of her way to mention pre-1997 increases, even though they do not come up in any of these amendments. The House will welcome future increases being paid, but the failure to do anything about lost increases is still a big topic that is not going away.

I share many of the concerns about small pots expressed by the noble Baroness, Lady Altmann, on Motion D1. However, I was reassured by the comments that my noble friend the Minister made in introducing this group about the flexibility inherent in the proposals in the Bill. I hope she will reassure us that the issue will be kept under review and that, if the problems that some of us worry about arise, the necessary action can be taken without the need for primary legislation.

I also support the concerns of the noble Viscount, Lord Thurso. I am glad to hear that the issue is being taken forward—more power to his elbow.

I could speak at great length on the issue of Motion J1, picking up the points raised by the noble Baroness, Lady Neville-Rolfe, in her speech introducing it. However, I very much welcome what my noble friend said in introducing this group. I fully agree with all the arguments she made, so I will leave it there.

[Lord Palmer of Childs Hill (LD)]

My Lords, prior to this debate we had a Statement showing what can be done in haste, when you should stop and think, in the appointment of Lord Mandelson as the ambassador to the United States of America. I use that analogy here, because one year to move pots is a miniscule amount of time.

The noble Baroness, Lady Altmann, said that two years would also be short but would be more appropriate. I hear that she has decided not to press this Motion. If she had, we on these Benches would have supported it because one year is not enough, just as a flick of the Prime Minister’s eye was not enough to appoint Lord Mandelson as the ambassador to the United States. We need two years. I understand that it is not going to happen here today but, before the Bill is finalised, I ask the Minister and her colleagues in the House of Commons to consider tweaking it to make one year two years. It would please a lot of people and would be a safeguard for people with small pots, who are the least interested in how their pensions work until they find that they are not what they thought they were, they cannot find them or whatever it is. The point about the pensions dashboard was well made.

I welcome the consultations that we have had with Government Ministers. In many ways, we have worked together on this Bill, and we have managed to make some of the points about which we feel strongly. On the pots, I hope that one year could be two years. It does not have to be done now; it could be done quietly, with no fuss at all.

Motion J1, the Conservative Motion, would insist on Amendments 77 and 85. We on these Benches supported these amendments on Report, because we agreed that it would be important for the Government to comment on this issue. However—and I think this shows what I was saying before—we have been convinced by the arguments made by the Government on the content of these amendments overlapping with existing reporting mechanisms. We are happy that that has happened.

I hope that the Government Ministers will take cognisance of the fact that we are not making problems just for the sake of debate in this Chamber. We think that, for small pots, it should be one year, not two. We will be talking in the next lot of amendments on mandation and we hope to convince the Government on that and on the size and range of pension funds.

We will not be voting on the Motion by the noble Baroness, Lady Altmann. If the Conservative Benches call a Division on Motion J1, we will probably quietly abstain.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baroness, Lady Altmann, my noble friend Lady Neville-Rolfe and the noble Viscount, Lord Thurso, for their Motions in this group. In the interest of brevity, I shall focus my remarks only on Motion J1.

My noble friend Lady Neville-Rolfe is fundamentally asking the important question of whether we are being sufficiently clear about the long-term sustainability and transparency of the system as it currently stands. The central concern is this: unlike funded schemes, these pensions are not backed by accumulated assets. They are paid out of current taxation, and that means that the cost is not contained within a fund but passed forward, year by year, to future taxpayers. As the number of public sector employees grows, and as people live longer, those obligations grow with them.

There is also a question of incentives. Decisions about expanding the public sector workforce or adjusting pay inevitably carry pension implications that stretch decades into the future, yet those costs are often diffuse, uncertain and ultimately borne by the Exchequer. Without a clear and accessible understanding of the long-term consequences, it is difficult, if not impossible, for decision-makers to weigh those trade-offs properly. A review would allow us to bring together the evidence, to test the assumptions and to ensure that policy is being made on the basis of a clear and realistic understanding of the facts.

For those reasons, including the four key reasons outlined by my noble friend, I believe that there is a strong case for the review proposed, and I am very pleased to support this Motion.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their questions and comments. I spoke at some length at the start, and I think I answered most of the questions pre-emptively—or tried to—so I will not dwell on them.

On a couple of specifics, and to reassure the noble Baroness, Lady Altmann, and the noble Lord, Lord Palmer, as I stressed, the Bill says a minimum of 12 months simply because we want to be able to respond to any changes. If there is evidence that we need to make it longer, we can; if there is evidence we need to extend it later, we can do so in secondary legislation. It is set up to do that, and I can give her that assurance.

I am not going to get into America. For me, as parallels go, whether we have one or two years’ opt-out and who is the ambassador to the United States are probably slightly separate categories of decisions. Noble Lords will forgive me if I do not go there.

In response to the noble Lord, Lord Vaux, the two policies operate independently but the intention is that dashboards will be available before the small pot consolidation. I reassure the noble Lord, with the small pots he has scattered around, that he will be written to and given the opportunity to opt out, so that they will not be consolidated without his knowledge or against his will. I hope he will look out for that in due course and can then make appropriate decisions.

The noble Baroness, Lady Neville-Rolfe, asked about the presentation of information. The Treasury is exploring options to present pension liabilities on a constant basis. It is important to be clear that any such presentation would be supplementary. It would not affect the underlying liability, as the noble Baroness knows well, or the way they are presented in financial statements, but it would help to add an extra level of clarity to those who are reading them. I think I have made all the arguments around affordability and the nature of them.

I have one final word for the noble Viscount, Lord Younger, who feels there is no way for decision-makers to make appropriate judgments about the affordability of pension schemes without a review such as this. I think he should have more confidence. The coalition Government, of which his party was the leading member, reformed almost all the public service pension schemes and created a new system, and that is what we now have. A lot of work was done then and is being done now. The measures of affordability that I have described are such that the schemes have that corrective factor straight in them. The fact that the information is out there and published will, I hope, be enough. I therefore urge noble Lords not to press their Motions.

[Baroness Altmann (Non-Afl)]

My Lords, I thank all noble Lords who have spoken. As I said, I will not press Motion D1 to a Division. I beg leave to withdraw the Motion.

Motion D1 (as an amendment to Motion D) withdrawn.

Motion D agreed.

Motion E

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88, and do agree with the Commons in their Amendments 88A to 88C to the words restored to the Bill by the Commons disagreement to Lords Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88.

88A: Clause 40, page 46, line 16, at end insert—
“(5A) Regulations under subsection (4) must secure that a description of asset is prescribed under that subsection in respect of each example mentioned in subsection (5)(a) to (d).”

88B: Clause 40, page 46, line 22, at end insert—
“(6A) Regulations under this section may not have the effect of requiring, as a condition of a scheme’s approval under subsection (1)—
(a) more than 10% (by value) of the assets held in default funds of the scheme as a whole to be qualifying assets, or
(b) more than 5% (by value) of the assets so held to be of a UK-specific description.
(6B) In subsection (6A)(b) “UK-specific description” means a description framed by reference to whether an asset is located in the United Kingdom or meets any other condition linked to economic activity in the United Kingdom.”

88C: Clause 40, page 46, leave out lines 31 and 32

[Baroness Sherlock (Lab)]

My Lords, in moving Motion E, that this House do not insist on its Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88 and do agree with the Commons in its Amendments 88A to 88C, I will speak also to Motions F, F1, G, G1 and H.

Motion E deals with Amendment 15 and those connected with it, which sought to remove the reserve power on asset allocation from the Bill. The case for removing the power was pressed firmly in Committee and on Report, led by the noble Baroness, Lady Bowles, and supported by a number of other noble Lords. The Government have always taken those arguments seriously, and I hope our response demonstrates that. However, the Government continue to believe that the reserve power is necessary.

The collective action problem in the defined contribution market, where competitive pressure on costs discourages providers from diversifying even when they recognise it would benefit their members, is well-evidenced and has been acknowledged by the industry itself. The Mansion House Accord represents a welcome voluntary commitment, but the risk is real that individual providers defer action until others move first. The reserve power exists to underpin those commitments, giving each provider confidence that the rest of the market will move too.

This collective action problem is not simply a theoretical concern or a government preoccupation. Last autumn, signatories to the Mansion House compact—a predecessor agreement on private markets investment, negotiated under the previous Government—published their own progress update. What was the single biggest barrier to delivering on their commitments? In their words,

“market dynamics continue to focus on minimising cost instead of maximising long-term value”,

and that without intervention to shift that culture,

“‘too much focus on cost’ remains the key barrier”.

That is the collective action problem in a nutshell: providers recognise that greater diversification can benefit their members but competitive dynamics hold them back from acting on it.

However, I gave undertakings during the passage of the Bill to reflect on the concerns raised by noble Lords, and I have done so. The amendments in lieu before the House today respond directly to those concerns in two important respects. First, the Government have placed a cap in the Bill so that regulations may require not more than 10% of default fund assets to be held in qualifying assets overall or more than 5% to be of a UK-specific description. This is a significant step. The Government have always been clear that the power is a backstop to the Mansion House Accord, which applies those specific targets to DC providers’ main default funds and no more.

I heard the argument—pressed particularly by the noble Viscount, Lord Younger of Leckie, and the noble Baroness, Lady Stedman-Scott, in amendments that they tabled, with the support of others—that that commitment should be written into primary legislation rather than resting on ministerial assurance alone. This amendment does exactly that. It gives the industry and savers alike the confidence that no Government can use these powers to go beyond the accord’s percentage commitments.

Secondly, the Government have established a principle of neutrality between asset classes. These amendments remove the ability for regulations, should they try to do so, to weight the requirement towards any single category of private asset, and require that qualifying asset descriptions are prescribed across each of the private market categories set out in the Bill—so the Government could not, for example, concentrate the entire requirement in infrastructure, still less direct it into a particular sector or company. This responds to a type of concern expressed by noble Lords during the Bill’s passage about the breadth of the power and the risk that a future Government might use it for purposes unrelated to the accord. The neutrality requirement, taken together with the established principles of public law to which any secondary legislation must conform, provides a robust constraint against such misuse.

19:30

Those amendments sit alongside the safeguards already in the Bill: the time limit, the savers’ interest test, the statutory reporting requirements and the affirmative procedure. Taken together, they ensure that this is a carefully bounded power, designed for a specific and limited purpose. I hope the House will accept that the Government have listened, reflected and responded with significant changes.

I turn to the issue of scale and Motion F on Lords Amendments 26 and 37. These amendments, together, would grant powers to the Government to make regulations that would allow regulators to exempt a master trust or a group personal pension—GPP—from meeting the scale requirement where the relevant regulator is satisfied there is no reasonable evidence that consolidation would be in members’ interests. Although I understand the intent of Amendment 26, and the consequential Amendment 37, they are likely to undermine the policy intent for scale, which is a market of fewer, bigger and better-run schemes which, crucially, can deliver better outcomes for members. That is because they risk an unstable landscape for members and employers, as well as creating significant difficulties for regulators.

The likely effect of Amendment 26 would be to allow some small schemes, and potentially any scheme in scope, to avoid reaching scale altogether. That would undermine the intended reform which I hope we broadly agree, across the House, would benefit members. We want scale not for the sake of it but to improve the outcomes for those who save into schemes. I should also alert the House to the fact that both regulators have expressed their strong concerns to the department about this amendment. Put simply, they think it is inoperable and exposes them to risk. Working out exactly what the standard is that a regulator is supposed to apply could ultimately be a matter for the courts, adding years to the process and, ultimately, leading to increased costs for members while not delivering the benefits of scale.

I turn to Amendments 37B and 37C, tabled in lieu by the noble Viscount, Lord Younger. During earlier debates, we heard concerns being raised about existing, smaller schemes potentially not having the opportunity to get to scale where they otherwise might have expected their business to grow with more time in the market. I understand the reasons behind this amendment for exemptions from the scale requirement, but I think the House has broadly agreed that scale really matters. The Government have provided and published evidence of the benefits that larger schemes can bring: their ability to diversify their assets through a wider range of investment strategies, reduce costs and keep fees lower. This is all to ensure better outcomes for members.

The Government’s firm view is that any exemptions to the scale requirement should be limited to enduring scheme design and purpose. We believe they should be tightly drawn to deliver the policy intent, but Amendment 37B would enable a regulator to exempt any size of scheme for an undefined period from the scale requirement, where there is no reasonable prospect of improved outcomes through consolidation or that innovation delivers good member outcomes. I recognise that this amendment appears to have more focus on members. Unfortunately, the nebulous nature and number of the tests may mean that it could, in practice, still open the floodgates to all schemes in scope and deny members better outcomes. The amendment risks delivery of the policy intent because it seems to offer wide and ill-defined exemptions to any scheme within scope of the scale measures.

In Committee, some noble Lords sought reassurance that any exemptions would be narrow and transparent, while not undermining the policy intent. That is the Government’s position and the reason why we cannot accept this amendment. It is so wide-ranging that it is not clear where the primary concerns lie. I think we broadly agree on the principles and benefits of scale, and the underpinning evidence base and impact assessment support this. It would not be in the interests of members and their retirement outcomes to prevent its delivery now. The regulators also continue to express concerns about the operability of this clause and the fact that it exposes them to risk of legal challenge. We do not want to end up in a situation where challenges are brought in court and take years to resolve. That is not an abstract risk and it will benefit no one, least of all members, who will be stuck in underperforming schemes.

Let me raise a few specific points on this amendment. Looking at the innovation condition, what would robust evidence be that a scheme is delivering good outcomes because of innovation? Would an app for members suffice? Would members using that app to log on and view their benefits be enough, or would they need to take action or do something different? To be clear, the Government’s position is that simply offering an app will not deliver the benefits for members that evidence shows will follow from scale. These are difficult questions but, before we legislate to require regulators to make these major decisions, we need to be clear what we expect innovation to deliver for member outcomes if a scheme is to be exempt. That is what matters: innovation delivering for members.

I am also curious about the apparent difference in the innovation needed for a master trust and a group personal pension plan. Subsection (3) of proposed new Section 28BA says that trustees will need to demonstrate that innovation leads to “good outcomes for members”, but the managers of a GPP would have to demonstrate only that it provides “specialist or innovative services”. Why should a GPP not also have to deliver good member outcomes? The Government’s position is clear: all schemes need to deliver good member outcomes, and the evidence tells us that scale is key to that. It would not be appropriate to hold trust-based schemes and contract-based schemes to different standards.

I turn to the proposed matters to which regulators must have regard in considering an exemption. These are wide-ranging and do not seem to be relevant to why a scheme should be exempted from being at scale. They also seem to suggest that a scheme could be exempt if it uses the scale of another scheme. Why would an employer choose this smaller scheme if the benefits of scale all derive from a different scheme? What is the smaller scheme adding in member outcomes? It will have no real control over the investment strategy of the pooled vehicle; it will not benefit from the economies of scale that come from having a large asset base. Critically, members will not benefit from their scheme paying for the privilege of being a passenger in another larger scheme’s strategy.

These are matters of principle. The intent is to deliver a market of schemes that can all deliver better outcomes for members. We all agree that there are limited circumstances where the purpose and delivery of a scheme mean that it should have an exemption, but this amendment offers a wide range of factors that could lead to an exemption with no clear rationale.

I turn to Motions G and H on Amendments 35 and 43. Amendment 35 would require the Secretary of State, when making regulations across the scale measures, to have regard to “the encouragement of innovation” and “the benefits of competition”. Amendment 43 would insert a new clause into the default arrangements chapter and require regulations dealing with non-scale default arrangements to have regard to innovation and competition.

The Government support an innovative and competitive market, but these amendments are not needed to achieve this once the scale measures commence. We are already creating space in the market for innovation through the new entrant pathway, and schemes in the market will still need to be competitive to retain and grow their market share, leading to innovation. I said on Report and say again: we will look at innovation and competition as part of the scale measures and the review of non-scale default arrangements. The outcomes of that review must be taken into account when making regulations about consolidation of non-scale default arrangements.

I turn to Motion G1 and Amendment 35B in lieu from the noble Baroness, Lady Noakes. That would require the Secretary of State, when making regulations across the scale measures and the review of default arrangements, to

“have regard to the benefits of competition”.

The Government’s focus in bringing forward the measures in the Bill on scale and default arrangements is firmly on improving outcomes for members. The Government will need to consider a range of factors when making regulations in relation to measures on scale and default arrangements to ensure we deliver on that aim.

Although I agree that maintaining a competitive market is part of that, we must also have regard to the policy intent and desired outcomes, including improving member outcomes. If we were to accept this amendment, it may have the effect of elevating competition above other, equally important matters in the design of those regulations. We do not believe that would be desirable. It would not be appropriate to elevate the needs of the market over those of the members it serves. What we all want is to deliver the best outcomes for members.

However, we do not disagree with the principle and we share the desire of the noble Baroness, Lady Noakes, to maintain a competitive market. I assure her that the Government will consider the benefits of competition when designing regulations, but we do not believe her amendment is necessary and, for this reason, I must reject it.

In closing, I urge noble Lords to support Motions E, F and G and not to press Motions E1, F1 and G1. I beg to move.

Motion E1 (as an amendment to Motion E)

[Baroness Bowles of Berkhamsted]

Moved by

As an amendment to Motion E, leave out from “House” to end and insert “do insist on its Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88, and do disagree with the Commons in their Amendments 88A to 88C to the words restored to the Bill by the Commons disagreement to Lords Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88.”

[Baroness Bowles of Berkhamsted (LD)]

My Lords, the Commons has asked us to accept a clause that reintroduces strict mandation of pension scheme asset allocation, traducing trustee fiduciary duty. There are two problems with the clause: the mandation itself and the discriminatory definition of investment vehicles that excludes listed investment companies—one of the two vehicles explicitly endorsed by the productive finance working group, composed of regulators, HMT and the wider investment industry.

Both defects are fundamental. Until this clause appeared, there was broad political and industry alignment on the direction of travel, supporting trustees to consider a wider range of assets and ensuring that the Government play their part through the enablers set out in the Mansion House Accord. Nothing in that shared approach required coercion.

Further, the Government’s own consultation evidence contradicts the justification for mandation. Ministers say that employers choose schemes based on cost and that private asset investment is too expensive. But the DWP’s own data, quoted in the consultation document, shows that investment charges are not in the “top three factors” for employer decisions. The top factors are convenience, professional advice and employer fees.

Most schemes are already priced well below the charge cap and only 5% of employees ever switch schemes at all. The consultation stated that investment charges are not likely to feature heavily in employers’ decision-making. If that is so, the rationale for strict mandation simply does not stand, although I can see how the allegation helps to escape competition policy concerns about strategy co-ordination. But do not forget that value for money is meant to solve the focus on cost.

There can be perfectly good reasons why a scheme has not invested in a particular asset or asset class—reasons recognised explicitly in the Mansion House Accord itself. Ministers say that this clause is just a back-up to the accord, but it does not reflect the accord’s own terms: its dependence on government actions and the critical enablers. Instead, the clause is a doubling down, not a codification. The Government admit that it is intended to be and will be coercive merely as a reserve power.

Ministers have also spoken often about crowding in investment and using pension capital to give confidence to the wider market, but coercion does the opposite. If investment has to be compelled, the signal to the wider market is not confidence but doubt—crowding out, not in. Wider market effects have consistently been overlooked in the drafting of this clause, but it is not something that this House should ignore.

The overriding principle is that government must not undermine fiduciary duty, whether by mandation or coercion. Therefore, we should continue to insist on our amendment and disagree with the Commons. I intend to test the opinion of the House at the appropriate time. I beg to move.

[Baroness Stedman-Scott (Con)]

My Lords, it is beyond doubt that mandation is, rightly, the most serious and contentious issue in the Bill. We have made our views on this very clear, as have many other noble Lords. The state should not be directing the investment of assets held by private funds. The power that the Government are setting out in the Bill directly undermines the principle of fiduciary duty on which the entire pensions system relies. It must by now be plainly obvious to the Government and the Minister that any investment that has to be forced by the Government is not in the interest of savers.

We are absolutely opposed to this power, in principle and in practice. We have met with many representatives from industry, including signatories to the Mansion House Accord, to which the Minister claims this power is designed to be a backstop. They have been crystal clear that this power crosses a line and must not proceed. We will support the noble Baroness, Lady Bowles, if she seeks the opinion of the House on this Motion.

On Motion F1, the argument for scale exemptions is now well rehearsed and I will not repeat it today. Our amendment would preserve the policy intent and provide two clear and targeted routes through which a scheme may qualify—both tightly drawn and firmly anchored in member outcomes—that introduces a rigorous evidential threshold and places the responsibility firmly with the regulator, who must be satisfied not only that the conditions are met but that any claimed benefits are material and demonstrably in the interest of members. The Government committed through the Mansion House Accord to taking a pragmatic approach to scale. This amendment gives effect to that commitment. I put on notice that I will seek to test the opinion of the House on this Motion when it is called.

19:45

Finally, Motion G1 contains a welcome amendment in lieu from my noble friend Lady Noakes that rightly raises the importance of competition. We are dealing with private markets, where one of the most fundamental principles is the benefit of competition. It is competition that drives choice, sharpens incentives and, ultimately, delivers better outcomes for members. That point also goes directly to the argument that we on these Benches have made on scale. As the Government bring forward significant changes to the structure of this market, competition and innovation must be treated as central considerations, not afterthoughts. The Government must not sacrifice these principles in pursuit of scale alone. Competition and innovation translate directly into better performance, better service and better value for those saving for retirement. We will support my noble friend if she seeks to test the opinion of the House.

[Baroness Noakes (Con)]

My Lords, I tabled Motion G1 in this group. The Bill will consolidate today’s pensions market into a small number of large firms. It may well bring benefits, but it also carries the risk that the market will ossify around those large firms. Healthy markets need to be open to the challenge of new entrants, which can provide healthy competition to the incumbents. In turn, that has the potential to deliver for pension savers in the long run. At the end of the day, the only thing that matters is what is good for savers. I agree with the Minister on that.

In rejecting my Amendments 35 and 43, the other place said that

“it is not necessary to impose further requirements relating to innovation and competition”.

The Bill does not mention competition at all. It talks about restricting new entrants, and it mentions innovation only once. Innovation and competition are absolutely central to markets that work for consumers. My noble friend Lady Stedman-Scott’s Amendment 37B in lieu now incorporates innovation, so I have confined my Amendment 35B in lieu to the broader concept of competition. My amendment would require only that regulations have regard to competition among providers of pension schemes; it is no more onerous than that. It would apply to the several regulation-making powers of the Secretary of State attached to Clause 40 and to the powers of the regulators to make regulations under Clauses 42 and 44.

Regulations can create barriers to entry, which is why large firms love them. I believe that the Secretary of State and the regulators should use their powers to foster competition so that barriers to entry are not erected and new entrants are given a proper chance to flourish. If those making the regulations do not secure this for the benefit of pension savers, no one else will. My amendment in lieu would help to ensure that the scale provisions in the Bill deliver long-term benefits for pension savers.

[Lord Vaux of Harrowden (CB)]

My Lords, I offer Motion E1, in the name of the noble Baroness, Lady Bowles, my wholehearted support. I also say in passing that I wholeheartedly support Motion G1 in the name of the noble Baroness, Lady Noakes.

The Minister has once again explained that the mandation powers are intended to backstop the voluntary Mansion House agreement. She has tabled an amendment that simply limits the amount of assets the allocation of which may be mandated to no more than 10% by value and 5% in the UK, with the UK to be defined later. The Mansion House agreement is a voluntary agreement. If the Government have a mandation power, they are basically saying, “If you do not do this, we will force you”, which would mean that it is not, in reality, voluntary. The trustees would be forced to act against what they believe is in the best interests of scheme members. Why else would they not want to invest in these apparently fantastic assets?

Under the Bill—and the Minister’s amendment in lieu does not change this—the only exemption to that would be if the trustees could prove that the mandated asset allocation would cause,

“material financial detriment to members of the scheme”,

not just that it would not be in their best interests, but would cause material financial detriment. It cannot be right to force trustees to invest in a way that they would feel would cause any financial detriment, let alone material financial detriment, even if limited to just 10% by value.

The Minister’s amendment still does not put any restrictions around the type of assets or, indeed, specific assets that can be mandated. Here I very much disagree with what she said earlier. It does not limit it to the assets in the Mansion House agreement. Despite the proposed new subsection (5A), which requires the regulations to describe the examples that are listed in subsection (4), these remain just examples. Subsection (5) remains very clear that a qualifying asset does not have to be one of the examples. The Minister’s amendment does not change that in any way. I do not agree that the deletion of subsection (8) has any such effect. The Bill will now just be silent on the allocation of assets within the 10%. There is nothing here that stops mandation in a single asset type or class.

There is nothing here to prevent any future Government mandating any assets they please. While the Minister might point to the report that the Secretary of State must publish under subsection (12), which, among other things, sets out how the financial interests of members would be affected, it is important to note that that applies to only the first set of such regulations under this subsection. Any further future mandation, perhaps under a different Government, is subject to no such safeguard, just the negative process. Such assets could be mandated for any reason they wish to give. As an example, what if Nigel Farage were to find himself in a position of influence? He is a well-known enthusiast for and investor in cryptocurrencies. There is nothing in this Bill that would stop him mandating that the relevant funds should have 10% invested in cryptocurrency. Any Government could use this power to mandate whatever pet project they wanted. Let us be clear that the definition of assets in the Bill is sufficiently wide that it could be mandation into specific assets, specific projects, rather than a class, if that is what they wanted to do.

Even if it is to be used only as a backstop to the Mansion House agreement, is that such a good thing? Let us look at the example assets set out in the Bill. One is private debt. You do not have to be an avid reader of the financial pages to know that there are growing concerns about whether private debt may be the cause of the next big financial crisis. Many investors are trying to get out, which is why many large funds are now restricting redemptions. When someone like Jamie Dimon starts talking about cockroaches, we should take notice. Any sensible pension fund would be treating private credit with huge caution at the moment, but this is specifically one of the asset classes that the Government want to encourage and mandate. Government mandation of asset allocation has no place in the regulation of pensions. The fiduciary duty should remain sacrosanct. I urge all noble Lords to support the noble Baroness, Lady Bowles, in her amendment.

[Baroness Altmann (Non-Afl)]

My Lords, I agree with every word that the noble Lord, Lord Vaux, has just said. I declare my interests as a non-executive director of a pension administration company and a board adviser to a master trust. I support all the amendments in this group, but I shall speak particularly to Motion E1 so ably moved by the noble Baroness, Lady Bowles.

A fiduciary obligation is one of the highest standards of duty in common law, yet this Bill would override the best judgment of trustees. Although the 5% and 10% amendment laid by the Government is welcome, it does not deal with issues such as those outlined by the noble Baroness, Lady Bowles, and the noble Lord, Lord Vaux. If trustees do not believe that the case for, for example, private assets is strong enough, they will still have to buy them or they will not be able to participate in auto-enrolment. This is not incentivisation. Incentivising financially, perhaps via tax reliefs, would change the calculation of the potential outcomes, but mandation does not do that.

The dangers of mistiming are clear. A McKinsey study published in February shows that, for example, private equity is under structural strain with constrained liquidity, valuation uncertainty and returns that have been weaker. As the noble Lord, Lord Vaux, outlined, the same applies to private credit, particularly that held in open-ended fund structures. In infrastructure, we have recently seen the returns offered for solar power degraded from in line with RPI to in line with CPI, which has put international investors off some of the infrastructure opportunities in the UK.

If the Government persist in their idea that closed-end funds, which are much more appropriate and have their own diversified, expertly managed portfolios of qualifying assets cannot qualify, that simply further reinforces the idea that the Government does not know best and that it is not safe for this House to authorise the Government to mandate these investments. Not all pension funds have the in-house capability to manage alternative or illiquid assets. Just being large does not give them instant expertise. Australian and Canadian funds have taken decades to build up this kind of ability. A strict time limit simply does not and cannot fit with the requirements that the Government seek to impose on pension schemes. I hope that noble Lords will stand firm in the resolve to send this back to the other place.

[Lord Remnant (Con)]

My Lords, this is probably the final time that noble Lords will have the dubious pleasure of hearing from me, and I assure the House that I will be brief. I wholeheartedly support Motion E1 in the name of the noble Baroness, Lady Bowles, and all the remarks that have been very supportive of that that noble Lords have made to date for the reason that she has so eloquently expressed. I also very much support her remarks about the unwarranted discrimination in this Bill against investment companies. Suffice it to say that a provision that is wrong in principle is not rectified or remedied by restricting the width of its application in the Government’s amendment.

I would like to venture just one additional observation. As we have heard, the Mansion House Accord is a voluntary agreement specifically targeted at UK assets to drive growth and improve returns. It aims to improve financial outcomes for savers while supporting UK economic growth, one of the Government’s core objectives. It is necessarily a voluntary initiative expressly subject to fiduciary duty and consumer duty, and it is dependent on implementation by the Government and regulators of critical enablers. Yet here is the rub: had the industry’s best intentions towards investing in private markets not been formalised in this way, there would be nothing for us to discuss here today. There would be nothing for this reserve power to backstop, so it would be redundant. Given the Government’s expressed intention never to use a reserve power, they would hardly be putting forward a primary power to compel institutions to invest moneys in ways in which they—the Government—see fit. At the time of the signing of the Mansion House Accord, there was no indication that the agreement would be anything other than voluntary and that the Government were proposing to take the powers of compulsion now proposed. I believe that the signatories entered into this accord with the best of intentions and with every expectation of meeting their commitments, and I believe that they will do so, but there is no certainty that they will not be blown off course, whether through scarcity of available opportunities or otherwise.

Should that happen, this or any future Government could undoubtedly consider the use of the reserve power that the Bill grants them. There is every reason to believe that the industry’s perhaps justifiable reasons for falling short would not find favour with the Government, and that the interpretation of the caveats built into a voluntary accord in terms of fiduciary duty, consumer duty and regulatory and governmental enablers would be disputed and the caveats overridden. All in all, it would be a mess, and City institutions would rue the day they had tried to be helpful towards the Government in playing their part in meeting their growth objectives.

20:00

My wider question to the Minister is this: if the Government take this reserve power, how can she expect anyone or any group of people in future to enter into voluntary agreements designed to be supportive of government policy if, subsequently and unexpectedly, the Government can unilaterally render such voluntary commitments mandatory, with all the angst, uncertainties and disputes that that will likely entail?

[Lord Lucas (Con)]

My Lords, it is utterly ridiculous that only 5% of UK pension funds are invested in the UK. The figure was 50% when I was a pension fund manager. The difference is entirely down to us as politicians. The solution is not to compel financial managers to do things; it is to understand what we did to make this happen and undo at least some of it. If the Government want quick access to priorities, they should turn to the members. The members believe in this country. Their interest is in it being a prosperous country, with lots of investment coming into it. Give them more influence over what pension funds do. They should not go for this government mandation; it is a dead end and, at its heart, poisonous.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their comments. Having spoken at some length at the start, I will not respond at length. I shall just pick up a few points.

On the question on fiduciary duty, nothing in the Bill disapplies trustees’ existing duties of loyalty, prudence and acting in members’ best interests. Those continue to apply in full. Were this power ever to be used—I repeat, the Government do not expect to use it—and the asset allocation requirements were in place, the savers’ interest test allows a scheme to seek an exemption if it can show that compliance would cause material financial detriment to members. Not only would they be enabled to do that but we would expect the fiduciary duty to require the trustees to make such an application to the regulator. Trustees are not directed to invest in any specific asset or project, and if they believe that the requirements are not in the members’ best interests, again, they should apply for an exemption.

The neutrality amendments provide a meaningful constraint. The Government must prescribe qualifying asset descriptions across each of the private market categories in the Bill, so they could not load an entire requirement into a single asset class, let alone a pet project or specific investment. Any future Government who attempted to define qualifying assets in a way designed to serve their own policies or a pet project, rather than savers’ interests, would clearly be vulnerable to legal challenge on rationality grounds.

I am not going to debate this at length since the noble Lords have made clear their intention to test the opinion of the House irrespective of whatever I say. I have just two other comments, on scale. I take the point made by the noble Baroness, Lady Stedman-Scott, that the Government should be pragmatic. I completely agree. My problem with her amendment is that it is not practical, so I cannot be pragmatic in trying to apply an amendment that is really clear in the matter of scale but would simply be too difficult to apply, because it is not clear what the nature of the test would be and it would end up getting bogged down in the courts for years, giving the regulator an impossible job. That simply does not work.

I have made the point about competition in our previous, long debate, and I do not doubt we will return to it again should the Bill not all disappear tonight. In the light of that, I hope that noble Lords feel able not to press their amendments.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, we have heard continued disagreement with mandation and coercion from across the House. As the Minister has said, we do not need to re-rehearse all the things that we have already said, but something that stuck in my mind from a previous stage was when the Minister said that if we did not have mandation, it would rest on good faith alone. That is the whole point: I think there is good faith in the City to deliver on this, and not to trust it, exactly as the noble Lord, Lord Remnant, has said, damages relationships and any good faith and trust in government. This is therefore doubly, trebly and quadruply a bad thing for the Government to have suggested, and I hope they will have a change of mind. I wish to test the opinion of the House.

20:05

Division 4

Motion E1 agreed.

Ayes: 219

Noes: 144

20:16

Motion F

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendments 26 and 37, to which the Commons have disagreed for their Reason 37A.

37A: Because the Commons consider that there are significant benefits to members of pension schemes from the existing scale requirements in the Bill.

Motion F1 (as an amendment to Motion F)

Moved by

[Viscount Younger of Leckie]

As an amendment to Motion F, at end insert “and do propose Amendments 37B and 37C in lieu—

37B: Clause 40, page 45, line 31, at end insert—
“28BA Exemptions from scale requirement
(1) The Secretary of State may by regulations provide that the Regulator may determine that a relevant Master Trust or a group personal pension scheme is to be treated as meeting the scale requirement in section 28A or 28B only if the Regulator is satisfied that the condition in subsection (2) or (3) is met.
(2) The Regulator may make a determination under subsection (1) where the trustees or managers of the scheme have demonstrated, on the basis of robust and independently verifiable evidence, that there is no reasonable prospect that consolidation of the scheme into another arrangement would be likely to improve outcomes for members.
(3) The Regulator may make a determination under subsection (1) where the trustees or managers of the scheme have demonstrated, on the basis of robust and independently verifiable evidence, that they are delivering good outcomes for members as a result of innovation.
(4) For the purposes of subsection (3), a relevant group personal pension scheme is to be treated as meeting the innovation condition if the managers of the scheme can demonstrate that it provides specialist or innovative services.
(5) The Secretary of State may by regulations make provision for the definition of “specialist or innovative services” for the purposes of this section.
(6) In determining whether the condition in subsection (2) is met, the Regulator must have regard to evidence demonstrating that the scheme delivers outcomes for members that are at least equivalent to, or better than, those reasonably expected from consolidation into a scheme meeting the scale requirement, including—
(a) net risk-adjusted investment performance;
(b) independently assessed governance quality and operational capability, including compliance history, trustee expertise, and administrative performance;
(c) whether the scheme derives material and demonstrable benefits for members from integrated, pooled or cross-scheme investment arrangements not reflected solely in the total value of assets counted under section 28A(4) or 28B(4), and whether those arrangements are likely to result in outcomes for members that would not be materially improved through consolidation;
(d) whether the scheme invests wholly or substantially in a default arrangement operated by another scheme or manager meeting the scale requirement and that arrangement demonstrably determines the majority of member investment outcomes;
(e) whether participation in a wider asset management group of substantial scale provides direct and measurable benefits to members, including reduced costs, improved diversification, or enhanced access to investment opportunities.
(7) In making a determination under subsection (1), the Regulator must be satisfied that any benefits identified under subsection (3) are material and demonstrably in the interests of members.
(8) Regulations under this section may make provision about—
(a) reasonable evidential requirements and assessment processes for applications under subsection (1);
(b) the duration, renewal and withdrawal of a determination under subsection (1);
(c) reporting and disclosure requirements.””

37C: Clause 40, page 54, line 18, after “28B,” insert “28BA,””

20:17

Division 5

Motion F1 agreed.

Ayes: 216

Noes: 148

20:27

Motion G

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendment 35, to which the Commons have disagreed for their Reason 35A.

35A: Because the Commons consider that it is not necessary to impose further requirements relating to innovation and competition.

[Baroness Sherlock (Lab)]

I beg to move Motion G.

Motion G1 (as an amendment to Motion G)

Moved by

[Baroness Noakes]

At end insert “and do propose the following amendment in lieu—

35B: After Clause 57, insert the following new Clause—
“Sections 40, 42 and 44: regulations and competition among providers of pension schemes
(1) In section 143 of the Pensions Act 2008, after subsection (1), insert—
“(1A) In making regulations under section 20(1A), 20(1C), 26(7A), 28A, 28B, 28E, 28F and 28J the Secretary of State must have regard to the benefits of competition among providers of pension schemes.”.
(2) In making regulations under sections 42 and 44 the appropriate authority must have regard to the benefits of competition among providers of pension schemes.””

[Baroness Noakes (Con)]

I beg to move and wish to test the opinion of the House.

20:28

Division 6

Motion G1 agreed.

Ayes: 211

Noes: 150

20:39

Motion H

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendment 43, to which the Commons have disagreed for their Reason 43A.

43A: Because the Commons consider that it is not necessary to impose further requirements relating to innovation and competition.

[Baroness Sherlock (Lab)]

My Lords, I have already spoken to Motion H. I beg to move.

Motion H agreed.

Motion J

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendments 77 and 85, to which the Commons have disagreed for their Reason 85A.

85A: Because the Commons consider that it is not necessary to duplicate existing information regarding public sector pension schemes.

[Baroness Sherlock (Lab)]

My Lords, I have already spoken to Motion J. I beg to move.

Motion J1 (as an amendment to Motion J)

Moved by

[Baroness Neville-Rolfe]

Leave out from “House” to end and insert “do insist on its Amendments 77 and 85 to which the Commons have disagreed for their Reason 85A.”

[Baroness Neville-Rolfe (Con)]

My Lords, I beg to move Motion J1.

20:40

Division 7

Motion J1 agreed.

Ayes: 162

Noes: 151

20:50

Motion K

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendments 78 and 86, to which the Commons have disagreed for their Reason 86A.

86A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further reason, trusting that this Reason may be deemed sufficient.

[Baroness Sherlock (Lab)]

My Lords, I have already spoken to Motion K. I beg to move.

Motion K1 (as an amendment to Motion K) not moved.

Motion K agreed.

Motion L

Moved by

[Baroness Sherlock]

That this House do not insist on its Amendments 79 and 87, to which the Commons have disagreed for their Reason 87A.

87A: Because the Commons consider that it is not necessary to carry out a review of existing legislation relating to pension communications and financial promotion rules.

[Baroness Sherlock (Lab)]

My Lords, I have already spoken to Motion L. I beg to move.

Motion L agreed.

House adjourned at 8.51 pm.