House of Lords
Low-carbon Heat Networks
(1 day, 4 hours ago)
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Baroness Curran
To ask His Majesty’s Government what plans they have to support the rollout of low carbon heat networks.
Baroness Griffin of Princethorpe (Lab)
My Lords, on behalf of my noble friend Lady Curran, and with her permission, I beg leave to ask the Question standing in her name on the Order Paper.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
The warm homes plan sets a new, ambitious target for heat network growth to meet 7% of heat demand by 2035 and an even greater amount by 2050. This ensures that households and businesses in dense areas can benefit from the cheapest clean heat for them, and that we are maximising the efficiency of our energy system. Alongside our other capital schemes, this Government will invest £1 billion in low-carbon heat networks over this Parliament, including through the green heat network fund and the heat network efficiency scheme. Heat network zoning will fundamentally transform the development of new heat networks in England; it will provide the tools to ensure that they are built in the right places, and give investors and developers the certainty they need to bring forward more ambitious schemes.
Baroness Griffin of Princethorpe (Lab)
I thank my noble friend the Minister and welcome the warm homes plan, but we need ambition. Only infrastructure heats homes. Clean, low-carbon heat networks can match gas boiler costs. Instead of every house having its own gas boiler, you have one central source of heat—a big heat pump, a river, a disused coal mine or even a data centre—and you pipe that heat through insulated underground pipes to thousands of homes. I ask my noble friend: when do the Government intend to treat heat networks as essential national infrastructure?
Lord Whitehead (Lab)
My noble friend is absolutely right about the importance, cheapness and flexibility of heat networks for the future. Indeed, the Government are taking that flexibility—that essential nature—of heat networks very seriously in their ambitions for them to provide something like 20% of total heat by 2050. Among other things, the Government are doing that through the green heat network fund, to bring forward investment, and to make sure, through the heat network efficiency scheme, that existing heat networks are brought up to scratch with the newer ones that are coming on stream.
Earl Russell (LD)
My Lords, we welcome the Statement made yesterday by the Energy Secretary that the Government will be working to accelerate the £15 billion warm homes plan. We support the work that the Government are doing on heat networks but, in light of the current energy crisis, what further work will be done to accelerate the rollout of heat networks, particularly for social housing, to ensure that those in fuel poverty get the help that they need as urgently as possible?
Lord Whitehead (Lab)
The noble Earl is quite right to emphasise how important it is to accelerate the rollout of heat networks, particularly in view of the present gas volatility crisis. As has already been mentioned, heat networks can source their heat from anywhere. For many years Southampton heat network, if I dare mention it, has sourced its heat from geothermal energy. There are many other heat networks that can source heat from waste heat, mine heat and, as has also been mentioned, the future heat from data centres. So the customer greatly benefits from having access to heat that otherwise would not be accessible so far as a home is concerned. That is why we are determined to push forward with heat networks as fast as we can, and to make sure that the target—that is, 20% of heat from networks as a portion of heat overall—is achieved in very good time.
Lord Porter of Spalding (Con)
My Lords, what risk assessment did the Government undertake before they moved the regulation of social housing landlords’ heating networks from the Housing Ombudsman to Ofgem? The result is that Ofgem can launch unlimited fines based on annual turnover: this will create a push for the big social landlords to take out heat networks, not put them in. At the moment they are controlled by fines levied by the ombudsman, and these are considerably lower than those Ofgem will be able to raise against them.
Lord Whitehead (Lab)
The regulations came in on 27 January, and this move to properly regulate the heat network field was due to the fact that the system had very little overall regulation before and was dependent on some voluntary heat regulation schemes. In many instances it was not satisfactory so far as consumers were concerned. The emphasis on the regulation was a fair deal for consumers, but it also means a fair deal for those good heat network operators which want to play by the rules and make sure that their heat networks are as good as they can be.
Baroness Hayman (CB)
My Lords, I declare an interest as a director of Peers for the Planet. Like others, I welcome the publication of the Warm Homes Plan and the increased target for the initiation of low-carbon heat networks. But I ask the Minister: what plans do the Government have to ensure that we have a trained and efficient workforce able to carry through these plans? We have had many energy-efficiency and insulation plans in the past that have foundered because we have not had the workforce able to implement them.
Lord Whitehead (Lab)
The noble Baroness makes an excellent point on the need to run the expansion of facilities such as heat networks, and indeed many other green and low-carbon technologies, alongside an assurance that the skills are available to put those into place and the workforce is available to do those things. That is part of the wider government plan to make sure that training and skills are properly matched to the low-carbon future that we have in front of us, rather than training people for, dare I say, obsolete technologies that will have a relatively short life in the future and will be superseded by this widespread series of low-carbon technologies.
Lord Moynihan (Con)
My Lords, low-carbon heat networks, while commendable, face major disadvantages and risks, including financial risks, technical challenges in retrofitting, and operational challenges such as overheating and service outages. Do the Government really believe that, given local authority financing constraints, councils such as Lewisham—where my former constituency lies—can meet the targets set by government for 2035, and indeed the targets for 2030 set by Lewisham Council?
Lord Whitehead (Lab)
Yes, the Government believe that those targets can be met, and local authorities up and down the country have shown, by activities in their own areas, that they are very keen to make sure that those targets are met. Following earlier requests for expressions of interest, the applications for heat networks have shown that there is enormous interest in developing heat networks in various parts of the country—interest led not only by local authorities but by various local communities, including possible interest in the Great British Energy plan to develop 1,000 local schemes by the end of this Parliament. The will to do it is there; we need to make sure that there is the support for these new developments as they go forward, so that the schemes can come forward in the best way possible.
Lord Grantchester (Lab)
My Lords, the decarbonisation of heat remains one of the biggest challenges to achieving net zero, and heat networks are a new growth opportunity. Is it not anomalous that there are no decarbonisation requirements on non-domestic buildings? I agree with my noble friend the Minister and his confidence. Could the public sector take a lead on this, with local authorities being resourced to implement heat network zoning to encourage heat connection and supply to suitable buildings at competitive prices?
Lord Whitehead (Lab)
The heat network zoning arrangements now in place are not just for purely domestic heat networks. To refer again to a particular heat network I am familiar with, that is a heat network that includes both residential domestic housing and a number of commercial and industrial properties. Ensuring that that heat zoning takes account, as far as it can, of the opportunities for heat networks to operate for commercial and industrial buildings, as well as residential properties, is clearly a substantial part of that move and will shape how heat networks develop in future years.
Plastic Pollution Reduction
(1 day, 4 hours ago)
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Baroness Boycott
To ask His Majesty’s Government what steps they are taking to reduce plastic pollution; and what plans they have to set binding targets for that reduction.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, this Government have taken decisive action to tackle plastic pollution. We banned single-use vapes from June 2025 and will ban plastic wet wipes from spring 2027. We have introduced extended producer responsibility for packaging, implemented simpler recycling reforms, and our deposit return scheme launches in 2027. In addition, we will soon publish a circular economy growth plan for England, which will include opportunities for the chemicals and plastics sector, and we are actively pursuing an ambitious global plastic pollution treaty.
Baroness Boycott (CB)
I thank the Minister very much—a lot of that is very encouraging, but at the moment only 9% of plastic waste is ever recycled. The majority is incinerated, landfilled or exported to other countries with weak regulation. The industry treats the plastic packaging tax as a routine cost. So can the Minister explain how strong the extended producer responsibility will be, because, if we do it fully, we can get companies to change the content of plastic, making it better for society and better to recycle. For instance, in the USA, a box of Subway wrappers at the moment costs the company $50, and if the EPR were fully implemented, it would be $49. However, if it used a natural polymer, the EPR would drop to $5. So, much as with the sugar tax, we can get people to reformulate if we do it fully and hard. That, I am not sure about yet.
Baroness Hayman of Ullock (Lab)
The noble Baroness makes a really important point. If we are going to bring in such reforms, we have to make sure that they will do what we want them to do, and therefore we have to work very closely with business. The EPR for packaging is now live and, from year 2 of the scheme, packaging disposal fees will be modulated so that more readily recyclable packaging will cost less and harder-to-recycle packaging will cost more, because that is the direction we want to drive things in. We are trying to create a direct financial incentive for businesses to reduce non-recyclable plastic packaging and switch to more recyclable alternatives. As part of that, clearly, we need to monitor how well it is operating and how well we are delivering it. It is important to take into account what the noble Baroness talks about within that process.
Baroness Grender (LD)
My Lords, is the Minister aware that eight out of 10 of the top councils for recycling in England are led by the Liberal Democrats? Would it surprise her to learn that Green-led councils are not even in the top 20? Mid Suffolk, the Greens’ only majority council, comes in at 162, and when they controlled Brighton, it was one of the worst in the country.
Baroness Hayman of Ullock (Lab)
I am quite shocked to hear that the Greens are not as good as we would have expected them to be. I am sure the noble Baroness opposite may have something further to say on that.
Baroness Jones of Moulsecoomb (GP)
Actually, that is just mean and I am going to say something else. I am sure the Minister knows that there is accumulating medical evidence of the damage to human health done by microplastics—impaired immune systems, cell damage, affected metabolic systems and so on—so getting this done quite quickly is important. Will the Minister make a recommendation to No. 10 to take on the noble Baroness, Lady Boycott, as an adviser, because she seems to know what she is talking about?
Baroness Hayman of Ullock (Lab)
I certainly agree that the noble Baroness, Lady Boycott, knows what she is talking about. She has spoken authoritatively and knowledgeably on this for many years. But the noble Baroness is absolutely right to talk about microbeads and microplastics. As I said, we will publish our circular economy growth plan fairly soon. We need to ensure that we tackle the issue of microbeads and microplastics.
Baroness Brown of Cambridge (CB)
My Lords, disused fast food containers contribute significantly to litter and plastic pollution, as we know. Can the Minister review the definition of “natural polymer” used in the plastic packaging tax to accelerate the use of natural polymers beyond cellulose—the only natural polymer defined in the tax—in food packaging, to make it more fully recyclable?
Baroness Hayman of Ullock (Lab)
The noble Baroness makes a really good point. One thing that is often confusing about recycling and composting is definitions, what the material does and how it breaks down. She makes extremely good points, and I will take them back to the department.
Lord Sikka (Lab)
My Lords, an enduring legacy of the last Government is potholed roads in every city, town and street. This can be fixed by partially replacing bitumen with plastic waste, which makes roads cheaper, smoother and more durable. Can the Minister say what proportion of plastic waste is recycled for road building and what plans the Government have to encourage its greater use?
Baroness Hayman of Ullock (Lab)
I have to admit that I have absolutely no idea what proportion is used, but I think it is really exciting. There is a huge opportunity here. I know it is something that the Department for Transport has been looking at; I know it is something that certain local authorities have been looking at, and I think it is something we need to investigate further.
Lord Roborough (Con)
My Lords, our country is reliant on exporting plastic waste, yet it has been reported that 21 plastic recycling and processing factories across the UK have closed down in the past two years. What steps are the Government taking to reduce exports of plastic waste and support investment and jobs here in the UK?
Baroness Hayman of Ullock (Lab)
I am sure the noble Lord is aware that plastic waste exports are subject to pretty strict rules that are set out in existing legislation, but it is important that we continue to review this because we need to make sure that we improve the way we manage our waste and our recycling. Our focus is on ensuring that the plastic waste that we export is treated appropriately and that there is a level playing field for domestic recycling. We are consulting on potential further reforms to the PRN system and looking at measures to create that level playing field between UK domestic reprocessors and exporters and, importantly, to reduce the risk of fraud and error.
Baroness Sheehan (LD)
My Lords, what progress are the Government making in revising school uniform policy to require PFAS-free alternatives so as to allow families to buy from suppliers that are known to avoid PFAS-based finishes?
Baroness Hayman of Ullock (Lab)
I am sure the noble Baroness is aware that we published our PFAS plan in February. That sets out, for the first time ever, how government is going to minimise the harmful effects of PFAS. We need to look at how we can move to safer alternatives while continuing to monitor any detrimental effects. It is very important with clothes for children, for example, that we do not cause any harms.
Baroness Hooper (Con)
My Lords, is the Minister able to tell us whether the Government are supporting the women’s institute’s splendid initiative on microplastics, which is a campaign to ensure that special filters are fitted to all washing machines to avoid the reproduction of these microplastic elements?
Baroness Hayman of Ullock (Lab)
The noble Baroness has taught me something: I was not aware of that campaign. The women’s institute is a splendid organisation, and I am very glad that she has drawn my attention to that. We are really keen to work in this area and to look at alternative ways, as I have just said, to reduce microplastics in particular, which obviously leach into the water system through clothes in washing machines. I will look into this further and I thank her for drawing it to my attention.
Lord Cromwell (CB)
My Lords, does the Minister agree that one of the biggest practical difficulties in all this is separating plastic from general waste? Are the Government going to get involved in incentivising the earlier separation of plastic from general waste?
Baroness Hayman of Ullock (Lab)
The noble Lord is right. Of course, another issue is inconsistency across the country as to how that is done, which can confuse people when they are staying in other places. The key to resolving that issue is the work that we are doing with local authorities, because this is a local authority responsibility. The Government need to work with local authorities so that they have the resources and the powers that they need to make this work effectively.
Baroness Jones of Moulsecoomb (GP)
My Lords, further to my earlier question about microplastics and human health, this could cost the NHS a huge amount of money, so it is quite an urgent matter. Will the noble Baroness take that message back to No. 10 as well, please?
Baroness Hayman of Ullock (Lab)
One of the things we are doing is working much better across departments, including with the NHS, so I will ensure that it is aware of the noble Baroness’s concerns specifically on this issue.
Burial Provision in England and Wales
(1 day, 4 hours ago)
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Lord Mohammed of Tinsley
To ask His Majesty’s Government what assessment they have made of the adequacy of burial provision in England and Wales; and whether they consider existing statutory duties on local authorities to be sufficient to ensure long-term burial capacity.
The Parliamentary Under-Secretary of State, Ministry of Justice (Baroness Levitt) (Lab)
My Lords, we are aware of increasing localised pressure on burial spaces in some parts of the country. The Government do not have day-to-day operational responsibility for burial grounds, which are managed locally. At present, there is no statutory duty on local authorities to make provision for burial, so it is a matter for each authority to allocate local resources in line with local priorities
Lord Mohammed of Tinsley (LD)
I thank the Minister for the Answer, but, since I tabled this Question, a number of individuals and groups from Birmingham, Dewsbury and Croydon, as well as my home city of Sheffield, have been in touch with me, deeply concerned about the lack of burial provision, often provided by the council but also by individuals and organisations, often religious based. Clearly, the system at the moment is not working. Will the Minister consider looking at what else the Government can do to issue guidance? For example, when councils draw up local plans, they have space for homes, businesses et cetera. Could the Government not look at insisting that they also provide burial grounds?
Baroness Levitt (Lab)
We absolutely recognise the concerns, and I am grateful to the noble Lord for raising the matter. Local authorities’ independence from central government means that they are responsible for managing their resources in line with local priorities, which they are best placed to evaluate. That said, the Law Commission has recently issued its report on burial. As part of the Government’s response, we are keen to engage with a range of interested parties, including local authorities, because we want to understand how best to assist them with local provision and management of burial capacity for the future.
Lord Popat (Con)
My Lords, there are over a million Hindus and Sikhs living in this country who continue to face significant delays in securing a place at a crematorium, often long after their loved one has died. I have lobbied the previous Government on this issue, and I am pleased that the first ever Hindu crematorium will be opened by Anoopam Mission by the end of this year. However, this alone will not meet the demands of these communities, and we need greater provision both in London and Leicester. Can the Minister tell us what further steps the Government are taking to reduce waiting times for cremations and to ensure that families can carry out final rites within the time, as per the custom and practice?
Baroness Levitt (Lab)
Measures have been taken in recent years to update crematoria so that they better reflect and understand the needs of different cultures and faiths. To a certain extent, I must repeat my earlier Answer to the noble Lord, Lord Mohammed, that it is for local authorities to deal with this, because they decide what their priorities are, depending on the groups they represent locally. We are keen to engage closely with representatives from faith communities on all issues in relation to death management, particularly when we are considering our response to the Law Commission’s report.
Baroness Brown of Silvertown (Lab)
My Lords, one of the hardest things to do as an MP is meet with a bereaved parent. It is even worse if they tell you that they are worried about the funeral costs for their child. Can I take this opportunity to ask my noble friend the Minister whether all families under the children’s funeral fund will be exempt from fees charged for the cremation or burial of a child, and how this can be accessed?
Baroness Levitt (Lab)
My Lords, the Government believe that families who have suffered the unimaginable loss of a child should not have to worry about the cost of a funeral. The children’s funeral fund is not means-tested; it is available where the death of a child takes place in England, regardless of nationality, faith or residency status. There are similar schemes in Wales, Scotland and Northern Ireland. The cost is usually covered by the funeral provider and then the provider reclaims it from the fund. Families who wish to arrange the funeral themselves can access the fund and the details are on the GOV.UK website.
Lord Meston (CB)
My Lords, the excellent report last month from the Law Commission on burial and cremation law addresses the problems of burial grounds which are either full, closed, disused, poorly maintained or even lost. It makes specific proposals for the modernisation of complex and inconsistent laws, and it promises a draft Bill in, I think, 2028. Meanwhile, will the Government consider earlier implementation of those recommendations in the report that would not require primary legislation?
Baroness Levitt (Lab)
The Law Commission report, which we welcome, was published on 18 March this year and is the first part of a wider project that will also consider the legal framework for new funerary methods and the rights and obligations in relation to funerals and the deceased. That last sub-project is expected to conclude by the end of 2027 and, as the noble Lord rightly says, the Law Commission will publish draft legislation in mid-2028.
There is also a separate Law Commission project looking at offences against the deceased. All these things are interrelated. We will consider all the recommendations issued recently by the Law Commission and the various workstreams to see what is the most practical approach to publishing our response, including timing, to make sure that we do not do things piecemeal in a way that, in the end, makes things worse rather than better.
Lord Sandhurst (Con)
My Lords, the Law Commission has identified that an estimated 250,000 sets of ashes have not been collected from funeral directors, leaving them either unburied or unscattered. What consideration has the Minister given, or will she give, to following other countries such as Germany that mandate a final resting place for cremated ashes?
Baroness Levitt (Lab)
As with all matters relating to what happens at the end of life, these are sensitive, difficult and complicated matters. The Law Commission identifies that there can be many reasons why ashes remain uncollected, including people who simply cannot face going to pick them up. However, that does not solve the problem of them sitting on shelves, which is not an appropriate way to treat human remains. We will consider this matter carefully as part of our response to the Law Commission’s helpful and sensitive report.
Baroness Hussein-Ece (LD)
My Lords, private burial grounds in England and Wales are largely unregulated, compared with the local authority-run cemeteries and burial grounds mentioned by the Minister. Hundreds of burial grounds are subject to changes in private ownership and, as they are not regulated, there is no requirement for the standards we would expect from local authorities. I declare an interest as my family are buried in such a burial ground in north London, with totally unregulated, unscrupulous owners. They do not have to have a register of those buried there and unlawful exhumations are taking place. Will the Government try to bring private burial grounds in line with the regulations for local authority-run burial grounds to stop the scandals that are taking place?
Baroness Levitt (Lab)
I am very sorry to hear of the experience of the noble Baroness. That story draws attention to exactly why the Law Commission looked at this area in the first place. Our laws concerning how burial is governed are a patchwork; they are often inconsistent with each other, they are very difficult to understand and sometimes they do not appear to be entirely logical. That is why the Law Commission is proposing that they are all brought together. As I said earlier, it is sensitive and sometimes difficult, and there are odd anomalies. Noble Lords may be aware that people can be buried in their back garden if they want to: it is not a regulated thing. We need to look at this carefully and make sure that we get it right.
The Lord Bishop of Chichester
The Church of England has a responsibility and common-law duty to bury all members of a parish living within its boundaries in a churchyard according to the rites of the Church of England and, if it does not have a churchyard, it is dependent on municipal provision. So we have an interest in this. One of the things this says to us is the importance to all people of faith of their rites of burial. We in the Church of England want to promote that strongly. Following the Law Commission report, would the Minister be willing to speak with the Faith and Public Life department of the Church of England to look at historic churchyards under our care and how they are preserved, at what provision currently exists within our open churchyards and how that can be sustained and monitored, and at what scope there might be for opening and consecrating new churchyards?
Baroness Levitt (Lab)
I am grateful for the opportunity to reiterate the Government’s commitment to and respect for the beliefs of all our faith communities, many of whom have very strongly held views about what is appropriate at the end of life, both how it happens and the timing of it. The answer to the question of whether I would have a meeting is, “Of course”.
World Economic Outlook: UK Growth and Inflation
(1 day, 4 hours ago)
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Lord Londesborough
To ask His Majesty’s Government what assessment they have made of the estimate in the International Monetary Fund’s latest World Economic Outlook, Global Economy in the Shadow of War, published on 14 April, that the UK will have the lowest per capita growth and the joint highest inflation rate in the G7 this year.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, we did not start this war, but it affects us. The IMF’s updated forecasts build on its judgment that the UK is more exposed to energy price shocks than our counterparts—a problem this Government are tackling but which the previous Government failed to address in 14 years. The IMF has described our plan as the appropriate response and forecasts that the UK will be the fastest-growing European G7 economy this year and next.
Lord Londesborough (CB)
I salute the Minister for his stout defence and robust response, but it is not altogether shared by the gilt markets: witness our highest borrowing costs for 18 years. It is not just the IMF but the OECD—both have cut their growth forecast for the UK by a greater margin than for any other G7 country. Yes, they flag up the openness of our economy and the gas-intensive nature of our energy mix, but they also point to the UK’s zero per capita growth throughout the second half of last year. With inflation now rising, is the Chancellor not premature in making repeated claims of having built stability and resilience in our economy?
Lord Livermore (Lab)
No, I do not think she is, because the spring forecast showed precisely that: that Britain is well placed to weather this conflict. Inflation was at 3% and it was set to fall to target; borrowing was set to fall more over this Parliament than in any other G7 economy; GDP per capita was forecast to rise by 5.6% over this Parliament, compared with a fall of 0.2% in the previous Parliament; and we had increased headroom to over £23 billion. As I say, all these things mean we are well placed to weather this conflict. On the actual outturn data, last week’s figures show that the economy grew faster than expected in the three months to February, growth for the three months to January was upgraded, and yesterday’s labour market figures for February showed unemployment coming down and real wages continuing to rise.
Lord Hintze (Con)
My Lords, does the Minister agree that the only genuine way to look at the prosperity of our citizens in this country is GDP per capita? Does he also agree that one of the big detractors of growth in GDP per capita is the growing and significant welfare spend? If not, why not?
Lord Livermore (Lab)
I am very happy to agree with the noble Lord on the first part of his question: as I have said already, GDP per capita at the time of the spring forecast was forecast to rise by 5.6% over this Parliament. That compares with a fall of 0.2% in the previous Parliament—the worst Parliament on record for living standards. On welfare spending, as he knows, the previous Government increased welfare spending by £88 billion.
Baroness Kramer (LD)
My Lords, the Government keep looking in the rearview mirror. The IMF report and today’s inflation numbers are telling us that forecasts made in January essentially now go into the bin, and what we need are policies to deal with uncertainty and provide resilience. The new BICS provides energy-intensive industries with some benefits, but no money will flow for a year. When will firms know what that money will be and when they will get it so that they can plan? Is anything going to be put in place for food and agriculture? We are seeing a real rise in food prices and potential food shortages. Small businesses are, frankly, on the brink. Are there new policies to come forward that will provide the resilience we need?
Lord Livermore (Lab)
The noble Baroness is absolutely right to point to the need for economic resilience. As she knows, we must do more on economic security so that the UK does not continue to be more exposed to energy price shocks than our counterparts are. Since the election, we have invested in clean homegrown energy—renewables and nuclear. Yesterday, the Chancellor announced steps to go further, harnessing our domestic supply of oil and gas production from the North Sea, further removing barriers to new renewables investment, and reforming our energy system by further weakening link between high gas prices and electricity prices. The noble Baroness asked specifically about BICS; she will know that the consultation on scheme design and eligibility was published last week.
Lord Watts (Lab)
My Lords, is it not the case that inflation, economic growth and living standards were improving until we had the problem with Iran? Is it also not the case that, as soon as that problem has gone, the Government have the policies to drive the economy?
Lord Livermore (Lab)
My noble friend is absolutely right. The economy, at the time of the spring forecast, showed that we are well placed going into this conflict. Inflation was at 3% and is set to fall to target—a much lower starting point than when Russia illegally invaded Ukraine. Borrowing was set to fall more over this Parliament than in any other G7 economy. We had increased headroom for over £23 billion, giving us the buffer to respond to these shocks, and GDP per capita was forecast to rise. Therefore, my noble friend is absolutely right. Outturn data for February, the final month before this conflict began, showed that the economy grew faster than anyone was expecting.
Lord Macpherson of Earl’s Court (CB)
My Lords, I encourage the Financial Secretary not to become mesmerised by IMF forecasts. The British economy has proved remarkably resilient over the past 18 years in the face of a succession of shocks. Generally, the Government have got into difficulty when the Treasury and the Bank have done too much rather than too little. Can he confirm that any interventions will be targeted and that the Government will maintain their inflation target and stick to their fiscal rules?
Lord Livermore (Lab)
I absolutely confirm to the noble Lord all three of those points. As he knows, the price cap is giving households certainty on their bills until July, ahead of the winter months. As we respond to this crisis, we must absolutely learn from the mistakes of the past, some of which he mentioned. The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss, and they gave the most support to the wealthiest households. We will not repeat the mistakes of the previous Government. We are planning for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our fiscal rules, as the noble Lord said, to keep inflation and interest rates as low as possible.
Baroness Neville-Rolfe (Con)
My Lords, the economic forecasts set out by the IMF and, indeed, by the noble Lord, Lord Londesborough, are very concerning from a national standpoint. Party passions aside, I believe that we must pursue a national growth path in the national interest. That needs to include a reduction, not an increase, in regulation, especially in building and planning; a cut in welfare spending, as we have heard; support for enterprise; and full utilisation of our energy resources. Does the Minister agree with that?
Lord Livermore (Lab)
Yes, and we are doing most of that, but the noble Baroness is opposing most of it. She said that we need to pursue a growth path. She will know that one of the most important things for growth is keeping inflation and interest rates as low as possible, but her party has unfunded proposals to deal with this crisis that would stoke inflation and put up interest rates. Exactly the wrong thing to do now would be to have a knee-jerk response to this crisis that would put household finances at risk. During the last energy shock, the previous Government got the response completely wrong, which meant higher inflation, higher interest rates and higher taxes. We will not repeat those mistakes.
Lord Leigh of Hurley (Con)
As well as the OECD report, the respected EY Item Club has said that the economy will flatline in the second and third quarters, leading to a real risk of recession. Deloitte has said that business confidence is at its lowest since Covid, and unemployment is thus now expected to rise to 5.8% by 2027. One of the reasons for that is the Employment Rights Act. The Prime Minister may not respect employees’ rights but business does, and business is stopping hiring for that reason. Given the war, is it not time to soften the effects of the Employment Rights Act?
Lord Livermore (Lab)
The noble Lord pointed to some forecasts that are being made, but he then drew the wrong conclusion. I point him to the conflict going on in Iran: that is not a war that we started, but it will affect us. As I have already said, we went into this crisis with the economy well prepared to weather it, which we are doing. The outturn figures for last week showed that the economy grew faster than expected in the three months to February. When the data for January came out, the noble Lord asked me a topical Question, which I answered. That data was upgraded this week for that exact month, but he did not mention that. He keeps talking about one month, but one month comes after another—they tend to add up. The outturn figures from before the conflict began showed that the economy was growing faster than anyone expected. Of course this war will have an impact on our economy, and it is this Government’s responsibility to ensure that working people weather that in the right way.
Lord Wallace of Saltaire (LD)
My Lords, I declare an interest as a recipient of very considerable welfare payments in the form of my old-age pension and my wife’s old-age pension. The whole discussion about cutting welfare seems to leave out the very substantial chunk of welfare that goes to those of us who are retired. Does the Minister think that all the effort in cutting welfare has to be on the young, or does he think that any discussion about cutting welfare has to include the old as well?
Lord Livermore (Lab)
Clearly, we need a welfare system that works. No one believes that the system that we inherited is working. It abandoned too many people to a life on benefits, wrote off too many people as too sick to work and condemned too many children to be too poor to eat. That is why we are reforming the welfare system.
Introductions
(1 day, 4 hours ago)
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Baroness Smith of Basildon
That notwithstanding the practice of the House on introductions, a Peer who has sat in the House as an excepted hereditary peer pursuant to section 2 of the House of Lords Act 1999 may sit by virtue of a life peerage without introduction.
The Lord Privy Seal (Baroness Smith of Basildon) (Lab)
My Lords, as the House is aware, three sitting hereditary Peers have received life peerages and a further limited number will receive life peerages in a future list. The purpose of the Motion is to allow any existing hereditary Peer who has received or will receive a life peerage to take their seat to continue to sit in the House without a full introduction ceremony. This mirrors the Motion moved by Lord Williams of Mostyn in 1999. As in 1999, the change has the approval of His Majesty the King.
On the practicalities, if the Motion is agreed today, any hereditary Peer granted a life peerage will be required to take the oath and sign the roll to undertake to abide by the code, but the full ceremony of introduction, including robes, the involvement of Garter and supporters, and the reading of Letters Patent will not take place. Again, this mirrors the situation from 1999. This meets the best interests of the House as a whole and of the individual hereditary Peers concerned. I beg to move.
Crime and Policing Bill
(1 day, 4 hours ago)
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16:37 - Division on Motion A1 (as an amendment to Motion A) - Ayes: 282 / Noes: 184 - Motion A1 agreed.
16:51 - Division on Motion D1 (as an amendment to Motion D) - Ayes: 281 / Noes: 190 - Motion D1 agreed.
Lord Hanson of Flint
That this House do not insist on its Amendment 2D to Commons Amendment 2B and its Amendment 2E to Commons Amendment 2C, and do agree with the Commons in their Amendment 2F to Commons Amendment 2B and Amendment 2G to Commons Amendment 2C in lieu.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, in moving Motion A, I will speak to Motions B, C and D.
Before I begin my main remarks, today marks Stephen Lawrence Day, 33 years to the day since the loss of Stephen. My noble friend Lady Lawrence of Clarendon is in the Chamber today, and I pay tribute to her for her campaigning activity over those 33 years. I was pleased to join my noble friend earlier today for an event at the King’s Trust in Southwark to continue the campaigning work of the Stephen Lawrence Day Foundation. Today is a good opportunity for us to remember Stephen and to recommit to continue to make a stand against racism in all its forms. I wanted to place that on record on behalf of the whole House before we commenced the Crime and Policing Bill, which in itself deals with a number of issues that are important in combating racism and tackling knife crime.
As I said last week, I am grateful for the engagement that I have had with the noble Lords, Lord Davies of Gower and Lord Clement-Jones, and the noble Baroness, Lady Doocey, on these matters. There are a number of amendments to deal with and I am pleased that they are all to be considered now in one group.
As I also said last week, I understand the concern, particularly in relation to Motion A, about enforcement agencies potentially issuing fixed penalty notices for anti-social behaviour offences where there may be a financial incentive to do so. However, I remain of the view that it is not appropriate to put in place a blanket ban on the issuing of fixed penalty notices by enforcement companies and contractors. Introducing such a ban would be disproportionate and would significantly weaken enforcement capability. Contracting enforcement to third parties is a common arrangement, and it is for the local authority to ensure that the use of powers remains just and proportionate. It is for this reason that the Government last week tabled Amendments 2A to 2C in lieu, which would rightly ensure that statutory guidance addresses the very points that noble Lords are concerned about.
I recognise that the noble Lord, Lord Clement-Jones, has moved on this and tabled amendments in lieu to ensure that such guidance must, not may, address the need to ensure proportionality in the use of fixed penalty notices. I therefore hope that he is content with the further government amendments in lieu, Amendments 2F and 2G, which also seek to ensure that any guidance issued must address the issuing of fixed penalty notices by authorised persons.
In addition, in discussions with the noble Lord I have mentioned the Defra statutory guidance on litter enforcement powers. That guidance includes various entries relating to the need to exercise enforcement powers proportionately. It also addresses the use of contractors. I can give an undertaking to the noble Lord that we will adopt similar language in the guidance to be issued in respect of anti-social behaviour enforcement powers under the Bill. We commit to include a passage in the guidance which says:
“Where external contractors are used, private firms should not be able to receive greater revenue or profits just from increasing the volume of penalties”.
I will ensure that the statutory guidance reminds local authorities that contracted agencies are not expected to issue fines purely for profit, and, if they are found to do so, that local authorities may take appropriate remedial action, such as revocation, in line with the terms of their contract. I hope that provides the noble Lord with the reassurance he needs not to press Motion A1.
On Motion B, as I have said throughout the passage of this Bill, the Government fully agree with noble Lords on the need to do more to tackle fly-tipping. Our recently announced waste crime action plan, which I referred to in our last round of ping-pong and which was published over the Easter Recess, does just that.
On Amendment 11, I stress that local authorities already have powers to seize vehicles if they have reason to believe that the vehicle is being used, or is about to be used, to commit a fly-tipping offence. This is in addition to the police’s general power under the Police and Criminal Evidence Act 1984, and its associated codes, to seize items as evidence if they believe they are being used in the commission of a criminal offence.
The Government want local authorities to use their powers fully to tackle fly-tipping. To that end, I have tabled Amendments 11C to 11F in lieu, which make it clear that the statutory guidance to be issued to waste authorities in England under Clause 9 must, not may, include advice to local authorities on exercising their powers, including the seizure of vehicles. I am grateful for the gentle discussion that we have had with the noble Lord on these matters and for the pressure that he has put. I hope that reassures the noble Lord, Lord Davies of Gower, on that matter.
On Motion C, we return to the issue of “must” versus “may”. Last week, the noble Baroness, Lady Doocey, reiterated her concerns that the police are required to consult with youth offending teams only when applying for a youth diversion order. As I mentioned last week, multi-agency engagement will be crucial to the success of these orders. I want to be clear to the House that youth offending teams are already multi-agency by statute, and include representatives from health, education, social services and probation, as mandated by the Crime and Disorder Act 1998. Youth offending teams may also engage with child and adolescent mental health services, education inclusion teams, voluntary and community organisations, and local early help services.
I recognise that the noble Baroness, Lady Doocey, has raised concerns about the involvement of parents. I would like to reassure her that engagement with parents or carers is a routine and integral part of the work of youth offending teams, beginning at assessment stage and continuing through any intervention. This engagement is led by practitioners who are trained to work with families, understand family dynamics and assess what engagement is appropriate, safe and in the child’s best interests. The nature and extent of parental involvement is therefore nuanced and individualised. I hope that the noble Baroness will recognise that it would not be right to prescribe a one-size-fits-all process for what could and very often will be complex and varied cases.
Lord Clement-Jones
At end insert, “and do propose Amendment 2H as an amendment to Amendment 2F, and Amendment 2J as an amendment to Amendment 2G—
(A2) Any person found to be in breach of the guidance under subsection (A1)(b) may have their designation revoked by the relevant local authority.”
(A2) Any person found to be in breach of the guidance under subsection (A1) may have their designation revoked by the relevant local authority.””
Lord Clement-Jones (LD)
My Lords, before I speak to the Motion, I thank the Minister for reminding us of the anniversary of the tragic death of Stephen Lawrence. I join him in his tribute to the noble Baroness, Lady Lawrence, and join these Benches with his commitment to combating racism in all its forms.
While I welcome the fact that the Government have acknowledged the widespread concern over how these powers are enforced, I must express my profound disappointment that they have chosen again to strip out a robust amendment passed by this House only last Thursday that would have implemented a strict statutory ban on fining for profit. The Government’s replacement amendment under Motion A is simply too weak, offering only that the Secretary of State must issue guidance.
In recent days, the Minister—I thank him for his engagement—has sought to reassure me that this will be sufficient because the Home Office intends to draw directly on the recently published Defra statutory guidance on litter enforcement to update the anti-social behaviour guidance. Incorporating the language of the Defra guidance will not solve this problem. That Defra guidance states that
“private firms should not be able to receive greater revenue or profits just from increasing the volume of penalties”.
As Josie Appleton, the director of the Campaign for Freedom in Everyday Life—which has done so much to highlight the problems with the way in which fines are collected for PSPOs and CPNs—has rightly pointed out to me, relying on this guidance framework is fundamentally flawed. She has highlighted three crucial points that explain why primary legislation is vastly preferable. First, if the Government genuinely intend to do as they say and stop this cowboy practice, they should have absolutely nothing to fear from passing my amendment in primary legislation. Secondly, she rightly asks whether the Government are actually going to ban payment per fine and the use of tacit or explicit targets or whether they will simply fudge the issue with fine words about proportionality. The Defra guidance relies on the permissive word “should”, rather than a legally binding “must”, leaving the door wide open for these lucrative contracts to continue. Thirdly, and perhaps most importantly, what is the enforcement mechanism for this guidance? As Ms Appleton asks, would somebody be able to appeal an FPN—a fixed penalty notice—on the basis that it was issued under payment-per-fine arrangements? The answer is no. To mean something, the law needs to have teeth. Guidance is not strictly legally binding; local authorities and private agencies simply have a duty to have regard to it.
We cannot regulate a multi-million pound industry built on aggressive, incentivised ticketing by politely suggesting what it should do in non-binding guidance. The scale of this issue is immense. The surge in penalties is overwhelmingly driven by the 31 councils that employ private companies, which issued a staggering 75.7% of all PSPO penalties last year. With the Government pushing ahead to increase the maximum fine for these breaches by 400% from £100 to £500, this industry is about to be supercharged. We cannot allow a system that financially incentivises the punishment of our citizens to masquerade as justice. That is why I hope the House will fully support Motion A1 today.
Motion A1 puts the necessary teeth into the Government’s proposals. It would ensure that the guidance must explicitly set out how authorised persons
“can be disincentivised from issuing fixed penalty notices for the purpose of generating any direct or indirect financial benefit”.
Crucially, it would provide a real enforcement mechanism by stating in the Bill:
“Any person found to be in breach of this guidance … may have their designation revoked by the relevant local authority”.
If we are to rely on guidance-based frameworks, its prohibition on financial incentives must be explicit and there must be statutory consequences for breaching that. I urge the House to support Motion A1. I beg to move.
Baroness Doocey (LD)
My Lords, I will speak to Motion C1. I thank the Minister for Amendments 342C and 342D. I also thank the Minister and his officials for the time that they have spent with me during the passage of the Bill.
I am pleased that the Government have taken on board a number of the concerns that I have raised. Amendment 342C ensures that the guidance is now mandatory. The police must have due regard to it, and it must address alternative interventions. The Minister has confirmed that the police will be required to present evidence to the court on what alternatives were tried or considered and has also provided helpful clarity on the broader consultation process beyond youth offending teams. These are important technical steps towards the informed justice that I have sought.
However, it is a matter of regret that the Government did not feel able to go further. We debate these powers in the immediate wake of the Southport inquiry, where Sir Adrian Fulford identified a “fundamental failure” by agencies to take ownership of risk, and an “inappropriate merry-go-round of referrals”.
The Government argue that it would be premature to codify the inquiry’s lessons before a fuller review of its recommendations this summer. However, we have seen before how recommendations from vital inquiries, such as the Independent Inquiry into Child Sexual Abuse and the Manchester Arena Inquiry, can be accepted in principle yet delayed in practice. The families in Southport deserve more than a watching brief. They deserve the certainty of law. I also hope that these concerns will be reflected in the Home Office guidance for youth diversion orders. I welcome the Minister’s offer to share the guidance in advance and trust that it will be as clear and unambiguous as he has indicated.
In light of the concessions made, and the Minister’s assurance on parliamentary oversight via the negative procedure, I am prepared to accept the Government’s position today and will not divide the House on Motion C1. However, let me be clear: this is not the end of the matter. We will watch closely for the guidance to be laid before Parliament. The Home Secretary has already admitted that past guidance failed because it was applied inconsistently. If the new guidance is lacking, or the Government’s response to the Fulford report is diluted, I will not hesitate to table a Motion to ensure that this House can fully debate those failings. We are legislating for powers designed to prevent mass-casualty tragedies so safety must be built on the full multi-agency picture, not on administrative hope.
Baroness Fox of Buckley (Non-Afl)
My Lords, I congratulate the noble Lord, Lord Clement-Jones, on pushing Motion A1, which I will be supporting.
After the previous ping-pong debate on the issue of on-the-spot fines by private enterprises, I was inundated with complaints about egregious harassment by these very bodies, these enforcement agencies. People were outraged at what they saw as an abuse of the system. I quote one, who said, “Not only you have have to, as you walk down the high street, look out for phone-snatchers, but you also have to look out for official muggers after your money, and then find out that they are employed by the contract. They are just as illegitimate and just as anti-social”.
I emphasise that this abuse of the public’s understandable frustration and concern about anti-social behaviour—and the Government’s completely correct focus on tackling it—is made worse by an enforcement regime that is discredited. That is why enforcement matters: if the legitimacy of the enforcement response is weak, it means that we are not tackling anti-social behaviour and the public just become cynical about the whole enterprise.
Lord Marks of Henley-on-Thames (LD)
My Lords, regarding Motion A1, moved so ably by my noble friend Lord Clement-Jones, on disincentivising fining for profit and, importantly, ensuring that contractors found to be profiteering from fixed penalty notices may risk losing their contracts, I have nothing to add to what he said.
On Motions C and C1, to which my noble friend Lady Doocey spoke, it is encouraging that she has accepted the assurances the Government have given on the future guidance on youth diversion orders, but I hope to hear from the Government that they take note of her reference to possible future parliamentary action on this if the guidance does not work.
I turn to the Conservatives’ Motion D1, to be moved by the noble Lord, Lord Davies of Gower, relating to the proscription of Iran-related entities. We accept that, on some readings, the Marshalled List could be taken to suggest that the government and opposition parties are not dramatically far apart on Motions D and D1. Motion D1, the Conservative Motion which we support, calls for a review within one month of whether any organisations related to the Iranian armed forces should be proscribed, whereas the Commons Amendment in lieu, in favour of which the Minister spoke, would require only a statement about the general policies and procedures of the Secretary of State relating to proscription orders. However, those differences mask an important point of constitutional principle.
When the issue of proscribing the IRGC was considered by this House last Thursday, the Minister said, as he said again today, that the Government would not give a running commentary on proscription—as has been the position of previous Governments—and would keep the issues of proscription under review. The noble Lord’s approach was, and is, that because the noble Lord, Lord Davies of Gower, and I, and by implication everyone not privy to government intelligence briefings, have not had the intelligence that the Government have received from the intelligence services, it follows that it is the Government’s right to make these judgments, as a Government, on which organisations are proscribed and when. The Minister’s approach was largely echoed by Minister Sarah Jones in the other place on Monday of this week.
We understand the Government’s approach. In particular, we are not seeking a running commentary on ongoing consideration of the proscription of possible organisations. Nevertheless, we contend that the Government’s approach misunderstands the constitutional position. Decisions on orders proscribing organisations are subject to the affirmative resolution procedure and such orders cannot take effect unless approved by both Houses of Parliament, so they are ultimately decisions for Parliament. If these decisions were for the Executive alone, the requirement for a vote of both Houses would be meaningless and contradictory of the legislation.
Furthermore, the Government’s position would mean, inconsistently, that while parliamentary approval is required to approve a proscription recommended by the Executive, Parliament is not entitled to take a view on the proscription of any organisation that the Government do not recommend for any reason for proscription, whether that reason be good or bad. That is constitutionally unsustainable. Just as a sovereign Parliament would be entitled to legislate to require a proscription so this Parliament is quite entitled to take the far more modest step of insisting on a report—not just about the general principles of proscription to enable us to understand the procedure, as the Minister would have us accept, but on the Government’s reasoning in relation to the IRGC and other organisations related to the Iranian military.
Considerations such as those spoken to by the noble Baroness, Lady Fox, are important for Parliament and government in considering whether to proscribe organisations, just as they might be on a Motion to approve an order laid by the Government for a positive proscription. The noble Baroness referred to David Lammy’s and Yvette Cooper’s support in opposition for proscription of the IRGC, and those are relevant considerations for Parliament. We will vote solidly in support of the amendment from the noble Lord, Lord Davies, and we commend it to the House.
Lord Davies of Gower (Con)
My Lords, I thank the Minister for the Motions in his name, and I am pleased to see the government Amendments 11C to 11F to include guidance on evidence collection and the exercise of seizure powers in the Secretary of State’s statutory guidance. We are happy to accept these. But I add that it is over a year ago now that my honourable friend Matt Vickers brought these to the attention of the other place, and they were rejected at that point by the Government. It is regrettable that the Government were against our amendments here, and we have only just arrived at this point as a result of the persistence of this side of the House.
I am pleased that the noble Lord, Lord Clement-Jones, has tabled his Motion. We support this and, if he decides to divide the House, we will be with him. I tabled Motion D1 to disagree with the Commons amendments and to offer my own amendment in lieu, which is only slightly altered from the previous version. The only change I have made is to narrow the language to mention groups linked to the Iranian armed forces, as opposed to focusing on groups linked to the Iranian Government as a whole.
It is peculiar how one’s opinion can change so greatly when one enters government. As was alluded to by the noble Baroness, Lady Fox of Buckley, the Labour Party used to stand on this side of the House urging Conservative Ministers to proscribe the IRGC. In fact, on 7 March 2023, during the Report stage debate on the National Security Bill, the noble Lord, Lord Coaker, then the opposition Home Office shadow Minister, moved an amendment with the express purpose of requiring the Government to proscribe the IRGC. The noble Lord stood at this very Dispatch Box and said:
“It is in the national security interests of this country for the IRGC to be proscribed as soon as possible”.—[Official Report, 7/3/23; col. 753.]
That was the view of the Labour Party in 2023, but clearly it no longer believes that that is the case.
Instead, the Government have offered us a Statement within six months outlining the process of proscription under the Terrorism Act 2000. When speaking to the Government’s amendment in the House of Commons, the Minister, Sarah Jones MP, said that this was to
“help the Opposition and others to understand the proscription process”.—[Official Report, Commons, 20/4/26; col. 104.]
We do not need to be patronised by this Government. We can all read the conditions in Section 3 of the Terrorism Act. We know what the process is. Our contention is that the Government are not willing to use that process effectively. We can see plainly and clearly that the IRGC meets that threshold. I say to the Minister: put yourselves in our shoes. If he were standing where I am today, would he accept a Statement on the process as sufficient to prevent him pressing this to a Division? I doubt he would.
We should be in no doubt that the IRGC poses a significant threat to our country. When we have seen in 2025 alone more than 20 potentially lethal Iran-backed plots on British soil, when we have seen numerous antisemitic attacks carried out in Britain, and when we have seen the IRGC ramping up its plots and attacks across the Middle East and beyond, then we know we have a problem. The IRGC is a dangerous and lethal organisation. Just today, we have seen how it has fired at merchant vessels transiting the Strait of Hormuz. We must act against groups that pose a threat to our national security. The United States has banned the IRGC, as have Canada, New Zealand, Australia and even the European Union. If they can, why can we not? Surely it is time for the Government to listen to the British people, listen to Parliament and listen to themselves, and proscribe the IRGC as soon as possible.
Before I sit down, I align myself with the comments on the appalling events that led to the death of Stephen Lawrence, which I remember only too well.
Lord Hanson of Flint (Lab)
I am grateful to noble Lords who spoke in this short debate, and I will respond to their comments. On fixed penalty notices, I had genuinely hoped that the noble Lord, Lord Clement-Jones, would have accepted that we have moved significantly towards his position. Everybody wants to see fixed penalty notices issued fairly and proportionately, and the Government’s amendments would have helped and will help to ensure that this is the case. But we also need to accept that there is a continuing role for external contractors in the enforcement of ASB orders, and I do not believe we should close the door to that, which is what in our assessment the noble Lord’s amendment would do.
I recognise that the noble Lord, Lord Clement-Jones, is not happy. However, before we move to a potential Division on this, I recommit to what I said in my opening remarks: we commit to a passage in the guidance, which I will produce on behalf of the Home Office, that will say:
“Where external contractors are used, private firms should not be able to receive greater revenue or profits just from increasing the volume of penalties”.
I think that meets the noble Lord’s objective. If he remains unhappy, that is the way these things work, so we will have to examine that in a moment.
Baroness Butler-Sloss (CB)
I come at this from a somewhat naive point of view perhaps, but I cannot understand, having heard the Minister, why on earth the Government have not done it already.
Lord Hanson of Flint (Lab)
Again, if I answered that question, I would stray into the very issues that I do not wish to talk about, because they are issues which we have to keep under consideration. I will say to the noble and learned Baroness what I said in my opening remarks: we have sanctioned Iranian officials. We have put visa sanctions on Iranian officials. We have Iran under FIRS for registration of foreign interests. We have taken action, as is self-evident, in relation to the current crisis. I will not comment on those matters, not because I do not want to but because whatever I say on them gives an indication of what the Government might wish to do at any particular time on any particular topic, and it is not right that we give a running commentary.
I say to those noble Lords who have spoken in this debate that I welcome their support for the government amendments in lieu. I hope I have convinced the noble Lord, Lord Clement-Jones, on his amendments relating to fixed penalty notices—I suspect that I have not—and I hope that the noble Lord, Lord Davies, will not push Motion D1, for the arguments that I have put.
Lord Clement-Jones (LD)
My Lords, I thank the noble Lord, Lord Davies of Gower, and his colleagues on the Conservative Benches for their consistent and solid support on the issue of fining for profit. I also thank the noble Baroness, Lady Fox, for her consistent support throughout on the same issue. I add my thanks again to the Minister for his engagement: I do not think there has been a lack of engagement, but he is shuffling towards the finishing line; he could still do more, and more quickly, to address the concerns expressed in Motion A1. I urge him to take his department by the scruff of the neck and get this matter done with a bit more creative thinking—that is all it requires. For the reason I set out earlier, I wish to test the opinion at the House.
Lord Hanson of Flint
That this House do not insist on its Amendment 11 and do agree with the Commons in their Amendments 11C to 11F in lieu.
“(a) the collection by those authorities of evidence to support representations to the court about an order under section 33C (forfeiture of vehicles), and
(b) the exercise by authorised officers of their powers under section 34B (search and seizure of vehicles).
(1A) The Secretary of State may issue guidance to English waste collection authorities about”
Lord Hanson of Flint (Lab)
My Lords, I have already spoken to Motion B. I beg to move.
Lord Hanson of Flint
That this House do not insist on its Amendment 342 and do agree with the Commons in their Amendments 342C and 342D in lieu.
“(A1) The Secretary of State must issue guidance to chief officers of police about—
(a) matters to be taken into account by chief officers of police before making an application for a youth diversion order, including alternatives to making an application,
(b) how chief officers of police are to comply with their duties to consult under section 174, and
(c) the circumstances in which it may be appropriate for chief officers of police to consult persons other than those mentioned in section 174 before making an application for a youth diversion order or the variation or discharge of such an order.”
Lord Hanson of Flint (Lab)
My Lords, I have already spoken to Motion C. I beg to move.
Lord Hanson of Flint
That this House do not insist on its Amendments 359 and 439 and do agree with the Commons in their Amendments 439C and 439D in lieu.
“Duty to make statement about proscription regime
(1) The Secretary of State must lay before Parliament, and publish, a statement about the general policies and procedures of the Secretary of State in relation to the Secretary of State’s powers under section 3 of the Terrorism Act 2000 (power to amend list of proscribed organisations).
(2) The Secretary of State must comply with subsection (1) within six months of the day on which this Act is passed.”
“(ca) section (Duty to make statement about proscription regime);”
Lord Hanson of Flint (Lab)
My Lords, I have already spoken to Motion D. I beg to move.
Motion D1 (as an amendment to Motion D)
Lord Davies of Gower
Leave out from “439” to end and insert “, do disagree with the Commons in their Amendments 439C and 439D in lieu, and do propose Amendments 439E and 439F in lieu—
“Proscription status of Iran-related entities: review
(1) The Secretary of State must, within one month of the day on which this Act is passed, review whether any organisations related to the Iranian Armed Forces should be proscribed under section 3 of the Terrorism Act 2000 (proscription).
(2) The Secretary of State must publish the outcome of the review under subsection (1), and this must include the reasons for the Secretary of State’s decision.”
“(ca) section (Proscription status of Iran-related entities: review);””
Lord Davies of Gower (Con)
My Lords, I am very grateful to Members who have spoken in support of this Motion. I have listened carefully to the Minister, but I am afraid I do not accept his argument. I therefore beg leave to test the opinion of the House.
Clean Power 2030 Action Plan: Rural Communities
(1 day, 4 hours ago)
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Baroness McIntosh of Pickering
To ask His Majesty’s Government what assessment they have made of the impact of the Clean Power 2030 Action Plan upon rural communities.
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to have secured this debate and I look forward to hearing all contributions, particularly the maiden speech. I declare my interest as honorary president of National Energy Action and the UK Warehousing Association. I also serve on the Environment and Climate Change Committee.
The impact of clean energy on rural areas is potentially devastating, yet I would like to start off positively and look at the alternatives that would prevent this happening. The first is North Sea oil. Why are we importing oil and gas from Norway when we could produce from our own oilfields, which are entirely adjacent to theirs? Drilling for oil in the North Sea is good for UK jobs, tax income and the balance of payments. With a developed renewables sector, Denmark—I am half Danish and fairly closely follow developments there—has the largest oil and gas production in the EU. All sources of energy are joined up, which brings community benefits to residents.
Nuclear power is another alternative, and I look particularly favourably on smaller nuclear power stations, which are relatively quick to build, safe and efficient. Energy from waste would tackle two issues at once: disposing of household and light commercial waste, as well as heating homes and hot water for households and businesses. Solar panels could be built on rooftops, car parks and brownfield sites; I am very proud that the UK Warehousing Association is leading the way in this regard.
The future also could contain floating solar. Clean energy entails major concrete and other installations: it involves wind turbines and pylons, solar farms and battery storage plants, including inverters, transformers, substations and control rooms, and connection to the grid. It is often built on prime agricultural land and causes tensions between farmers and developers. A judicial review is under way, involving around 500 Welsh farmers and landowners, many of whom face losing farmland, homes and livelihoods to a proposed 200-kilometre pylon scheme stretching across several counties and into the West Midlands. These facilities amount to creeping urbanisation.
Currently, applications for North Yorkshire alone include East Cowton, Light Valley Solar in South Milford, Hillam, East Appleton, Masham and Swinton, East Rounton, and Scotton and Lingerfield. Many of these are integrated BES schemes, with a horrendous array of solar panels, integrators, battery storage and all the things referred to above. This is an unacceptable cumulative impact of various forms of clean energy.
In one instance, that of Scotton and Lingerfield, the developers acknowledge the very real risk of a fire and a need for evacuation, and a real risk of a smoke plume reaching a nursery. These facilities are inherently unsafe as they are highly combustible and flammable, with fire risks from solar panels themselves and even more so from battery storage units. In many cases, these are positioned simply too close to residential homes, schools, nurseries and other businesses.
It is staggering that fire and rescue services are not statutory consultees. They are not formally consulted on site engineering and the positioning of facilities, or the resources in terms of water, equipment and manpower required in the event of a fire. This is despite the intrinsic unsafety of such flammable sites.
In addition, these sites require wind turbines and overhead pylons criss-crossing the countryside to bring the energy generated to London and the south-east. These are highly intrusive, environmentally unfriendly and wasteful, as energy is lost in such transmission. In any event, pylons transporting energy long distance via vulnerable overhead power lines are environmentally challenging, can be damaging to birds and wildlife, and are wasteful and hideous. This is an ecological scandal in the making.
In particular, when it comes to the end of life of clean energy infrastructure, how will it be decommissioned and disposed of in an environmentally safe way? Will a bond be taken out from the applicants in each case to cover the cost of restoring the site after 40 years, or in the event of a developer failing before that time? Many environmental groups, including the CPRE—the Campaign to Protect Rural England—deeply regret the impact on the countryside, residents and livestock.
Offshore wind farms threaten the marine life that is the very lifeblood of marine areas. Many argue that, in view of the potential damage, there is a strong case for a moratorium on new applications for offshore wind farms until there is a better understanding of these issues.
One of the worst aspects of these facilities is the impact on farming, food and production. The Government have admitted that it will potentially take 10% of farmland out of food production. What assessment have the Government made of the impact on food security and food production of their clean energy proposals at this stage? We are roughly 60% self-sufficient in food, but this is challenging. We are only 18% self-sufficient in fruit and only 55% self-sufficient in vegetables. The majority of these are imported.
Moreover, current levels of debt per household are high and increasing, amounting to a total of £5.5 billion in February this year. The arrears represent around 75% of the total of all unpaid energy bills. Energy spending by households and businesses is increasing. We are paying for infrastructure use in advance before it has even been constructed. This is the only utility to do so, piling costs in the form of energy levies and high standing charges over which households have no control.
Continuing the Danish theme, in the fairy tale by HC Andersen, as we call him in Denmark, the emperor has no clothes. Everyone feared the emperor and wanted to display loyalty, so they praised his garments, but, in truth, he was wandering around in his underwear. Only a young boy was brave enough to tell the truth: that the emperor was indeed wearing no clothes. I am being very brave today in saying to the Minister and the Government that this is wrong.
The Minister will respond by saying that clean energy is safe, sustainable and reliable for our energy. I disagree. Many of the clean energy sites are intrinsically unsafe, highly flammable and combustible. They are not reliable, as when the wind does not blow and the sun does not shine we are left powerless. I urge the Government to look closely and positively at the alternatives. Renewables are, in practice, potentially wasteful, lose energy in transmission and bring no significant community benefits. They amount to the creeping urbanisation of the countryside. The proposals contained in the Clean Power 2030 Action Plan are premature, ill-thought-out and potentially devastating for rural communities and their residents, livestock and nature. The proposals are unravelling rapidly. They need to be revisited.
Lord Nagaraju (Lab) (Maiden Speech)
My Lords, it is a great honour to rise and address this House, and I am grateful for the opportunity. I thank the noble Baroness, Lady McIntosh of Pickering, for raising this important Question. I express my sincere thanks for the warm welcome from all sides of the House. I am appreciative of Black Rod, the Clerk of the Parliaments, officials and staff. I am grateful to my noble friends Lady Berger, of Barnhill, and Lord Raval, of Hertsmere, for their support during my introduction. I also thank my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark for their guidance and support.
I was born in India and came to the UK as a student. My journey was shaped by education. I pursued a master’s degree in computer science at Oxford Brookes University, leading me into a career in the technology sector. After more than two decades, I returned to study at University College London, undertaking a master’s in public administration, focusing on development, technology and innovation policy. That experience, together with my work on AI policy, reinforced my belief that technological progress must be guided by thoughtful governance and a commitment to the public good. It is for this reason that I have chosen the territorial designation of Bloomsbury, reflecting both my academic connection and its long traditional tradition of intellectual inquiry.
I declare my interests as a technology consultant, an AI policy adviser and a director of AI companies. My experience in the technology sector has given me a deep appreciation of both the opportunities and the complexities of innovation. I strongly believe that the opportunities and risks of artificial intelligence must be understood widely and that its benefits should be shared across all parts of society.
I turn briefly to the subject of today’s debate. The transition to clean power is both necessary and welcome. As the Government advance their ambitions in the Clean Power 2030 Action Plan, it is vital that the impact on rural communities is carefully considered. Technology and innovation can play an important role. AI will increase electricity demand, but it can also help a clean power system to operate more effectively by improving renewable forecasting, balancing the grid and detecting faults faster. The opportunity is to ensure that rural communities are not merely asked to host this transition but are enabled to share in its benefits through community energy, local participation and greater local resilience.
We are living through a period of profound technological change. Artificial intelligence presents both significant opportunities and important challenges. We must harness its potential to drive growth and improve lives, while ensuring that its risks are addressed responsibly and with foresight, particularly in relation to safety, security, ethics and bias. In doing so, I am guided by values long associated with the Labour movement: fairness, inclusion and the belief that progress must benefit all. This is not a challenge for the UK alone. It calls for stronger international co-operation and meaningful partnerships, including those between the United Kingdom and India, the European Union and the United States.
I take my place in this House with humility, mindful of its traditions and the wisdom and experience of its Members. I hope to contribute constructively, particularly in the areas of technology policy, innovation and global co-operation. I thank your Lordships.
Baroness Gill (Lab)
My Lords, it is a privilege to follow my noble friend Lord Nagaraju’s maiden speech. He is the first representative from the Telugu-speaking states in India. He has already introduced much of that diaspora to this House. I had the honour of meeting many of them, and his wife and daughter, at his introduction and at many events that he has organised subsequently. Through Labour Party organisations, including his founding of the Mahatma Gandhi Future Leaders programme, which was primarily about mentoring political leadership, I have known him as a person of relentless energy and commitment to work.
Moving on to his contributions to improving understanding of the AI field, my noble friend’s work reflects a clear commitment to the responsible advancement of technology and its role in society. As the founder of AI Policy Labs, he has brought together policymakers, academics and industry leaders to engage with the challenges and opportunities presented by artificial intelligence. Through initiatives such as the UK-India collaboration on AI, he has encouraged international dialogue and co-operation in an area that is increasingly debated here and shapes our global future. His emphasis on ethical, inclusive and socially beneficial applications of AI is both timely and necessary.
In public life, my noble friend Lord Nagaraju’s continues to demonstrate a thoughtful, forward-looking approach, grounded in services and a sense of responsibility to wider society. His contributions lie not only in the ideas he promotes but in the conversations he enables and the bridges he helps to build. I am sure that he will play a critical and valuable role in your Lordships’ House.
Moving on to the main topic, I thank the noble Baroness, Lady McIntosh of Pickering, for getting this on to the Order Paper. The UK Government’s Clean Power 2030 Action Plan sets out a bold and necessary ambition to deliver a cleaner, more secure energy system by the end of the decade. In today’s uncertain world, doing nothing is not a serious option, but it raises important questions: if not here, then where, and if not now, then when? Developments in the Middle East and earlier in Ukraine highlight the necessity to have independent sources of power. It is important that we all play our part in communicating that fossil fuels do not give any area of this country security of supply.
Having represented in the past five counties with numerous rural communities, I have seen just how difficult it is to strike the right balance. Rural communities are not against progress; they understand the need for clean energy, investment and energy security. But they are also being asked to change. The reality is that much of the infrastructure needed to deliver this plan will be built in rural areas. Wind farms, solar developments and new grid connections do not appear in abstract; they appear in real landscapes and near real communities. So we must ask: can we expect the benefits of clean power without being willing to host part of the solution? That is the challenge.
Rural communities often want development but not always the change that comes with it, and that tension is entirely human. But I believe this plan also brings many opportunities to rural communities in terms of investment, jobs and a chance for rural Britain to play a leading role in securing our energy future, and the Government have recognised the need for community benefit and engagement as part of the process.
The real question is not whether change will happen but whether we shape it in a way that is fair. In my experience, impact assessments can be lengthy, time-consuming exercises and will only delay the implementation, whereas engaging now with the proposals that the Government have put forward will start to show results sooner rather than later. If we get this right, rural communities will not just carry the burden of change but will share the rewards. That is how clean power 2030 will succeed, not just nationally but locally too.
Lord Howell of Guildford (Con)
My Lords, I thank my colleague, my noble friend Lady McIntosh, for securing this debate, the authorities for providing room for it, and I congratulate the noble Lord, Lord Nagaraju, on his maiden speech, which seemed full of common sense and aimed at the right issues. I am also glad to learn about his expertise on AI as applied to policy organisation; on a day when it is becoming increasingly clear that there is something rotten in the central machinery of government in this country, his contribution will be very welcome and very valuable indeed.
In my short time, I will ask just one question to the Minister, and I would value as many details as he can give in his answers if he has time. The Minister obviously is aware—not everybody is, but I am sure he is—that NESO has announced its plans for building an army of new electricity pylons, mostly of traditional design but some new ones, to march across the countryside as part of the great grid upgrade on which it is embarked. With 50 gigawatts being added to our existing clean electricity output by 2030—it varies, but on average it is about 45 gigawatts a year—and with the hope to build far more than that, there are plans for 3,000 to 5,000 new pylons, with in the range of 290 gigawatts to 300 gigawatts by 2050.
I do not know whether any of that can possibly be achieved—it does not look like it at present—and of course, even if it is, it is still far too small for meeting the demands of clean electricity of a modern nation by 2050 or, indeed, by 2030. There are 71 data centre applications roaming around; not all of them have been accepted by the National Grid, but about half of them have been accepted, and many will never be built. But they alone would swamp the sort of amounts of gigawatts we are talking about by far. So that would have to be revised upwards, and the chances of meeting it will have to be revised rapidly downwards.
My question is simply: have the Government looked at alternatives, as are being looked at in many other advanced industrial societies, and in particular at the hydrogen vector? For instance, Germany, is planning three new hydrogen-type networks around the whole country to reinforce the vast demands for clean electricity from expanding industry investment. If we could focus on that, much more than we have heard so far from the Government, then a lot of the countryside, to which my noble friend rightly referred, could be preserved.
The hydrogen vector can provide a system of transmitting electricity very different to the great wires of these vast 50-metre structures that are planned, and with much less impact on the countryside. It is much easier to store, and there is no need to pay billions to switch off wind power at night, which of course is the present problem—there is a fear of unbalancing the entire system in trying to marry intermittent and regularly generated electricity, which is proving much more difficult than some people realise. There is no need to develop a pattern which has to be interrupted, as was interrupted with dramatic effect down in Iberia the other day. Japan itself has declared that the real pattern for the future is, predominantly, through the hydrogen vector.
There are, of course, problems; I do not deny that. There are difficulties about transportation, for example. One way is by road, which is not practised in four or five other advanced industrial countries. Another way is through storage and, indeed, by shipping and various other means, but all of them mean that there will be fewer pylons, a better and happier nation and a happier countryside. I hope that this one question will get an answer in the debate this afternoon.
Lord Fuller (Con)
My Lords, as I see that I now have an extra minute, I might take it to welcome the noble Lord, Lord Nagaraju, to his place. I welcome him to this House, from one technology geek and computer enthusiast to another, and congratulate him on a wonderful maiden speech.
Last month, the Government published the Land Use Framework for England. Seldom has such a long-awaited report been found to be out of date on the day of its publication. With all the intellectual depth of a sixth-form geography project, it fails to recognise that Britain—indeed, any society—is no more than three meals away from anarchy. A Government who forget that deserve everything that is coming to them. This is a debate about clean energy and the rural economy, and I declare an interest as being involved in farming and fertilisers.
I was struck that the framework outsources much of the future land use policy in this nation not to civil servants in Defra—or, for that matter, to any other part of government—but to the Green Finance Institute and the World Wide Fund for Nature, which are namechecked. The Green Finance Institute is recorded by the Electoral Commission as being a substantial donor to the Secretary of State for DESNZ. In an astonishing twist, Companies House shows that the Green Finance Institute and the WWF share co-directors within that same web of institute companies. For the first time, we see that Labour’s donors have written, and will control, rural policy in this nation through the land use framework. The donors have ensured that rural policy has been bent and twisted by those with an axe to grind, tainted by ideology and class hatred, viewed through the lens of wishful thinking and ignorant of the reality of what it takes to feed us.
Today, I sound the alarm in this debate, because there is one table in the framework, driven by net-zero 2030 ideology, that should strike fear into anyone who is concerned for our food security, our rural economy and the resilience of our society. Labour’s lobbyists have managed to insert into the report that fully 1.7 million hectares of productive land will be entirely removed from agriculture, and then there will be additional controls on the hunting and shooting—activities that help our rural country pubs to survive the winter. The Library tells me that Defra estimates that the total area of farmed land in England is 8.9 million hectares, so 1.7 million hectares is just shy of 20% of all the land farmed in England. The report breezily asserts that there is enough land to go round to feed ourselves. That simply cannot be true.
Let us see what it means for the rural economy, with the sort of analysis that the framework should have done but did not. A farmer would hope that his farm would yield, for example, 10 tonnes per hectare of wheat. With increased food-price inflation barrelling down the tracks, that might generate gross sales of £2,000 a hectare, and the 1,000 hectare farm would generate £2 million in sales. Let us hold that number.
Against that income, he might pay a neighbour for seed and a local merchant for fertiliser. There will be some crop protection products. His farm machinery will be serviced by a local dealer. The sheds and grain storage will need repairs, and there are vermin contractors, builders, fitters, fencers, ditch diggers, plant hire suppliers and any number of ancillary businesses such as timber, builders’ merchants and so forth.
In total he will pay £1.8 million to local suppliers, including that boiler repair man who the farmer keeps going to in the summer so he is available for the villagers in the winter. All these people buy meals in the pub or support the local post office stores. That is the rural economy that Labour is destroying.
That is one farmer of 1,000 hectares, but the Government want to remove 1.7 million hectares from production—that is what the land use framework says. The net-zero ideology, by my reckoning, will cost us 15% of our national cereal production: the grains that bake our daily bread, brew our beer and create our cakes.
The Government tell us that in 2022, agriculture’s contribution to the UK economy was £13.9 billion. Based on my simple arithmetic, 1.7 million hectares removed on the altar of net zero is £3.5 billion taken from the rural economy every year. These are round numbers, but it is between 20% and 25% of agriculture’s total GDP. These zealots will not rest until our best land is given up for solar, which generates no rural income at all—so there will be no need whatever for the little doers. Solar enriches only the private equity backers and the sovereign wealth funds.
I thank my noble friend for allowing me to enumerate so clearly the economic effects of Labour’s war on the countryside and the economic damage that is to be visited on our rural communities. Their jobs and our shared social fabric are being destroyed by Labour’s paymasters, who deny the harsh reality of putting food in our belly, without which a nation can neither thrive nor survive.
Lord Berkeley (Lab)
My Lords, it gives me great pleasure to follow the noble Lord, Lord Fuller, in discussing these various means of producing energy and transmitting it and whether it is best to do it in the sea, agriculture or somewhere else. Then, of course, we have this debate about whether we should have pylons or hydrogen. Nobody has yet invented a sky-hook, which would sort out all the problems.
I congratulate my noble friend Lord Nagaraju on a really interesting maiden speech. He did not have very long for it, but I can see that in future he is going to give us some really useful tips and thoughts about how we can improve what we do on these issues, including on access to rural communities. I hope he will take it upon himself to challenge the Government, the Opposition and everyone with whom he may have an issue, because the more experience we get here, the better it will be for everyone.
We have had many debates on rural communities and the need for special fuels to fuel people’s boilers, so I will not repeat them. I really welcome the boiler upgrade scheme of £9,000 for off-grid households that the Government recently announced, but it is worth noting that there are still uncovered costs of some significance in installing heat pumps. It is not a question of just having them delivered off the back of a lorry and plugging them in. They work well, but they take a lot of time and are quite expensive. In the past we have debated some communities, especially people in Cornwall, where I live, who have got together and saved quite a lot of money and made efficiencies by working with one supplier to create the right amount of power at a reasonable cost.
I have a question or two for my noble friend, because there are some issues that may need a little more thought. There is the cost of electricity, which we can go on debating, but putting in a heat pump can mean a problem with building regulations, and it is not always possible. If something goes wrong and you have to revert to what you had before, which is probably an oil burner, and you suddenly find that the building regulations do not allow you to replace it, what are you going to do?
I am quite sure it will work most of the time, but can my noble friend the Minister tell the House—now or, if necessary, in writing—whether, if an off-grid consumer finds that heat pumps are inadequate or unaffordable, with very high running costs, there are any measures in place to give them a bit more protection? In other words, what can the rural communities who rely on oil do to help themselves?
One of the big debates we have had in the last few months concerns the balance in demand between the new fuels to be used in the air sector and the fuels to be used in our heat pumps. When my noble friend the Minister comes to respond, I hope he will confirm that government policy does not give either of those two options strong priority over the other, or suggest that it is more important for people to fly than to stay warm. That would be a very dangerous attitude to take and I do not think my noble friend is taking it, but it would offer some comfort if, when the subsidy comes, we look to do our bit for the rural communities as well as trying to fly.
Earl Russell (LD)
My Lords, I congratulate the noble Lord, Lord Nagaraju, on a fine maiden speech, and I recognise his work in the field of AI. I also thank the noble Baroness, Lady McIntosh of Pickering, for bringing this debate, and I thank her and others for their contributions.
I have listened to the concerns—there are real concerns; we are going through a real energy transition. However, there is a danger of framing clean power as somehow inherently anti-rural or of treating net zero as a threat to our countryside. The evidence and public opinion do not support either of those two stances. The DESNZ public attitudes tracker shows that 68% of people support government actions to reduce the impacts of climate change, and over 60% support our 2050 net-zero goals. The clean power action plan is the backbone of our energy transition to get 95% of our power from clean sources from 2030, and it involves major investment in flexibility and necessary grid infrastructure.
I recognise the concerns. We have heard concerns about the loss of agricultural land from the noble Lord, Lord Fuller, although I did not recognise the figures given. Concerns about food security were raised by the noble Baroness, Lady McIntosh, and about visual amenity by the noble Lord, Lord Howell. We also heard worries about possible large-scale battery fires from the noble Baroness, Lady McIntosh, and fears that infrastructure is being imposed on communities. These are legitimate concerns, and those on this side who support renewable energy need to answer them, but I want to make the other case for renewables as well. The fact that I support renewables does not mean I do not recognise that they will have impacts. It is important that we discuss what those impacts are and how we can best limit them as far as possible.
Electricity demand is expected to more than double by 2050, so major investment is not an option—it is essential. It would have been easier if we had started earlier, but this must be done with our communities and not to them, and with proper regard to the visual amenity of our landscape, proximity to people’s homes and communities, and compensation where it is necessary. We should look at the figures. At the moment, only 0.3% of the UK’s land is used for large-scale solar, and the Government’s land use framework indicates that just 1% of England’s land will be needed for renewables by 2050. This is still less than the land taken and used by golf courses, yet I have not heard them mentioned today as a threat to our future.
I support floating offshore solar. It would be good to hear something from the Minister about that. There is a lot of misinformation in this space; there was a newspaper article last week comparing solar to Chernobyl. The implication is that every solar project is a blight on the countryside, but that is simply not true. Solar can have low visual impacts, increase biodiversity gains and bring meaningful community benefit. Agrivoltaics can help farmers to transition to help to improve crop yields in the face of rising temperatures.
The real threat to our countryside is not from clean power but from the cost of inaction. It is from the rise of fossil fuel markets, escalating bills and the growing damage caused by climate change itself. Our rural communities are more susceptible because they have less well-insulated homes, they need to drive more and they are subject to the impacts of climate change, whether from declining harvests, rising temperatures or increased flooding. The UK has warmed already by 1.2 degrees Celsius since 1884. We have had the five worst harvests since 2000. Inaction on climate change threatens our food security far more than any solar panel ever could.
I want to look at the opportunities to get this right and at what more can be done. We need to use rooftop solar first. I ask the Government what more they are doing to make use of warehouses, car parks and public buildings. Planning is also crucial, so I ask the Minister about the strategic spatial energy strategy. My understanding is that it is coming by autumn 2027. I push the Minister as well on community energy, which has also been mentioned, because people in the countryside should be able to benefit from the energy that they host. I ask the Minister about the community right to generate and what more is going to happen to push onshore wind.
However, the idea that the renewables transition is inherently anti our rural communities and our way of life is simply not true.
Lord Moynihan (Con)
My Lords, I declare my interests as chairman of Amey, Acteon and Buckthorn Partners, all of which are involved with the energy transition. I also congratulate the noble Lord, Lord Nagaraju, who spoke outstandingly well. We look forward to his contributions in future debates; he will be a very welcome Member of this House. I also echo what was said about my noble friend Lady McIntosh, whom I thank very much on behalf of the House for securing this debate. Many of the comments she made, not least about North Sea gas, are exceptionally important.
From our Benches, there can be no case for not developing our reserves to the full and instead looking to increase imports of LNG from Norway and the US, neither of which reinforces our security of supply. To take the example of Norwegian gas, Norwegian gas supplies will be reduced this summer. This is presented as a planned maintenance issue rather than a political decision, but we should not be deaf to the fact that there was a major political debate in Norway on restricting exports, and that would threaten our supplies from that country. Given the high level of dependence, with Norway providing 70% of UK gas imports in some periods, any reduction—even temporary—raises concerns about UK energy security.
The argument often used about developing the North Sea is the environmental impact. We are told by the Government that to encourage new oil exploration, appraisal and production in the North Sea will be an act of “climate vandalism”. Yet the average carbon intensity in the North Sea is 24 kilograms a barrel of oil equivalent; Victory is predicted to be 12 kilograms a barrel of oil equivalent; and Jackdaw, just eight. Norwegian gas through the pipeline is eight kilograms, but imported LNG from the States is 85 kilograms a barrel of oil equivalent in terms of carbon intensity. Surely, that being a major multiple on delivering our own gas from the North Sea is a strong environmental argument to develop our own reserves.
What the Government are saying, or, to be more accurate, what the Secretary of State at DESNZ is saying, which increasingly does not reflect Treasury good sense, is that because the price is set internationally, there is no benefit in maximising our own gas and oil production. Yet the more we develop our own reserves, the more we control our own prices. We need only to look at Henry Hub prices in North America to prove that point. The issue today is whether we are making the best use of our own gas, and obviously the answer is no, we are intent on not using our own gas.
Our energy policy is sequentially driving us to shut down the reserves in the UKCS, first by stopping new licence rounds while allowing limited tie-backs; secondly, by imposing regulatory and environmental policies which deter investment; to which we add a burdensome windfall tax and create a hostile environment to new investment which seeks projects internationally in a highly competitive global market for every investment dollar. This is intellectual folly and I urge the Government to change course or to provide one well-argued reason why we should shut in future North Sea reserves.
The second point I want to raise as a result of this debate is on dependence on the grid. Delivering the Government’s ambitions for clean power would require
“rapid delivery of 80 network and enabling infrastructure projects”,
according to NESO, cited in the Clean Power 2030 Action Plan. The Government said that, by 2030, around twice as many new electricity transmission networks would be needed compared to the number built in the past decade. Installing more renewables weakens the grid. The growth in intermittent renewable generation disrupts system frequency in two ways. Intermittent renewable generation delivers an output that is highly variable in time. Wind speeds are rarely constant, changing in both intensity and direction by the second, Similarly, cloud patterns can create significant instantaneous variations in solar output. Changes in either generation or demand can lead to changes in grid frequency, so highly variable generation patterns make maintaining a stable grid frequency more difficult.
Intermittent renewable generation is increasingly displacing conventional generation in the generation mix, reducing the amount of heavy rotating turbines on the grid and therefore the amount of inertia they provide. The National Grid said:
“Operating the system with low inertia will continue to represent a key operational challenge into the future and we will need to ensure we improve our understanding of the challenges this will bring”.
Is the Minister confident, therefore, that there will be no blackouts during this period of government? If so, on what technical assumptions does he reach that decision?
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
My Lords, I am very grateful to all those who have contributed to this important debate and particularly to the noble Baroness, Lady McIntosh, for securing it in the first instance. She made a number of important points that go along, I think, with her particular view about the role of renewables but are nevertheless important points that need considering as far as this debate is concerned.
Before proceeding, I want to add my congratulations to the noble Lord, Lord Nagaraju, who made his maiden speech this afternoon. I think he will have gathered already from the acclaim around the House for his maiden speech that he will undoubtedly be a tremendous asset to our House in the future.
In her initial contribution, the noble Baroness, Lady McIntosh, listed a number of alternatives to Clean Power 2030. What was striking about the list of alternatives she put forward is that they are mostly things that the Government are doing already. They are not necessarily exactly in the context of the Clean Power 2030 Action Plan, although there are many more things in that plan than many noble Lords and others seem to think—for example, there is a substantial role to play for hydrogen in the action plan and on a longer-term basis after 2030.
The noble Baroness mentioned clean power: floating solar, energy from waste and small nuclear. The Government are actively involved in undertaking all these things at the moment. But I emphasise that they are not alternatives to the race or the journey to clean power; they are part of that journey, along with other things, such as offshore and onshore wind, solar, and various other arrangements that we can see blossoming before us.
The action plan is a requirement to get to mostly, or almost wholly, renewable power by 2030, both for reasons of carbon emissions reduction—and the move towards net zero by 2050—and to make sure that the nation has energy independence as far as is possible and that we are not dependent on fossil fuels from around the world dictating how our energy economy works for the future.
Noble Lords have drawn attention to just how hard this work will be to achieve those particular goals, and they are absolutely right: it is very ambitious to ask the energy system to translate itself into a low-carbon system with the speed that we hope will be achieved. But we ought to be clear that the means being put in place to do this are not the bogey mentioned by a number of noble Lords. This is genuinely clean power. It will, certainly for rural communities, enhance their way of life, with cleaner air and much greater community involvement in the power that will be introduced, which the noble Earl, Lord Russell, mentioned. Altogether, this will make our society a much cleaner, greener and more liveable place overall.
That does indeed involve certain changes to how we deploy our power in the future. Noble Lords have mentioned that we may use 10% of productive farmland, for example, for solar and similar activities. Reports were mentioned, and the land use framework published by Defra in March 2026, for example, states that renewables are projected to take up approximately 155,000 hectares of England’s utilised agricultural area, which is about 2%, not 10%. As the noble Earl, Lord Russell, mentioned, that is far less than the amount of land taken up by golf courses in this country for the future. So it is not the huge take that some people suggest.
Lord Fuller (Con)
The noble Lord is selectively quoting from the table, and he may indeed be right on solar, but the land use framework enumerates a whole load of other different types of use. In total, 1.7 million hectares—about a fifth of all the farmland in England—is to be taken from agriculture and applied to other uses. He cannot get away from that: those are the Government’s numbers.
Lord Whitehead (Lab)
The noble Lord says I am selectively quoting. I am sorry to disagree with him, but I am not selectively quoting; I am quoting. That is what the land use framework says on the best estimates for the land that is being taken. In addition to that, he and other noble Lords will be aware that, in the guidance and arrangements for the development of solar, there is a clear understanding that the best and most versatile land will be excluded from those solar developments and that they should go primarily on brownfield land or less-important agricultural land, so that precisely that best and most versatile land for farming and food use is preserved for that activity. That is what is happening with the solar developments coming forward at the moment.
The other thing I want to mention on rural communities is that, when we are putting forward proposals for grid coverage of the country, as other noble Lords have mentioned—the noble Lord, Lord Howell, for example—that is not just about clean power 2030. Among other things, it is about getting the grid fit for energy for the future in general. Even if clean power 2030 were not in place, it would be necessary to undertake that huge programme of grid renewal and updating, partly because of the extreme neglect of grid uprating that took place during the Conservative Government who immediately preceded this Government. We are not just undertaking a grid for the future but catching up from the past.
Baroness McIntosh of Pickering (Con)
I am not accusing the Minister in any way of misleading the House, because this is from a different department, but the actual figure that was consulted on by the Department for Environment, Food and Rural Affairs in January 2025 was that more than 10% of farmland in England was to be diverted towards helping to achieve net zero and protecting wildlife by 2050. That was in the consultation that was the prelude to the land use framework and I understand was in parallel to this net zero policy.
Lord Whitehead (Lab)
I am happy to write to the noble Baroness to clear up that exact point, but what I quoted from, as I am sure she will know, is the actual land use framework and not the precursors to it. At the final point when it was published by Defra, it came to the conclusion that I have mentioned. It is in table 1 on page 19 of that land use framework, so it can be looked at. I am very happy to write further to the noble Baroness on that particular point.
What is absolutely right, though, as indicated in the contribution from the noble Baroness, Lady Gill, is that we are basically all in this together. It cannot be the case that we can exempt parts of the country from the energy revolution taking place in front of us. But what we can do is make sure that, where it has effects on those areas, they are mitigated as far as possible: for example, as we are planning at the moment, they will have community benefits coming their way from those changes. Community investment through the discount schemes is also coming forward. A new electricity bill discount scheme will provide £2,500 over the next decade to households living within 500 metres of new and significantly upgraded transmission infrastructure, with the first payments expected in 2027.
We are also looking seriously at community benefit from upcoming changes to grid systems and various things. The SSEN’s upcoming Tealing to Aberdeenshire transmission line, for example, could mean funding of more than £23 million for local communities. There is assistance for communities that are associated with those changes, but also an understanding that, while those changes have to be made very carefully—with full consultation and appreciation of the difficulties that may stand in the way of some of those schemes—where those schemes go ahead, they have done so on the basis of our Planning and Infrastructure Act. That means full scrutiny and consultation, full arrangements for remediation and a full consideration of what, among other things, the cumulative effect on the landscape may turn out to be.
With that, I hope I have addressed the points made by most noble Lords. If I have failed to do that because of time constraints, I am happy to write, particularly to the noble Lord, Lord Howell, to go a little further on the question of hydrogen for the future. I can assure him that it plays a very substantial role in the process, along with other non-variable things such as biomethane and biogas, for the future of the energy economy.
Overall, the Government are doing a responsible job in trying to match the requirements of the clean power action plan with quality of life and the future, particularly of rural communities. We will certainly continue to take that very carefully into consideration as the plan develops and, indeed, as clean power goes beyond 2030 and into the next decades.
Arrangement of Business
(1 day, 4 hours ago)
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Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, as advertised in today’s list, we will start proceedings on the Pension Schemes Bill ping-pong once the Statement concludes. The Marshalled List and groupings are available in the Printed Paper Office.
British Industrial Competitiveness Scheme
(1 day, 4 hours ago)
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Lord Sharpe of Epsom (Con)
My Lords, the Minister will soon trumpet the British industrial competitiveness scheme as being very good for business. But, for all the rhetoric and self-congratulation, this policy will have no meaningful impact on the overwhelming majority of British businesses. By the Government’s own figures, around 99% of firms will see no benefit whatever. So while the Government speak grandly of intervention and support, the reality for most businesses—our small manufacturers, our family firms, pubs, farmers, retailers and countless others—is unchanged. They will go on facing the crippling costs that we heard about in the previous debate, with no help at all from this announcement. Even with the reliefs that have been announced, they are staggered, and the earliest will kick in only in April 2027.
What is the wider context in which this Statement must be judged? It is one not of support for enterprise but of cost, burden and damage inflicted by this Government on British industry. Employers have been hit by increased national insurance contributions. Businesses now face the additional costs of the Employment Rights Act, which, by their own admission, run into the billions, together with the further burden of expanded trade union access to workplaces. That is something many employers will regard, in practice, not as access but as a licence to raid workplaces, disrupt operations and undermine confidence. Having said that, we must acknowledge one delicious irony of the Employment Rights Act: the Prime Minister will be seeing the first high-profile victim of an uncapped unfair dismissal award, which we on these Benches warned about.
The Government will now seek to blame the war in the Middle East, but that explanation simply will not wash. Britain’s industrial electricity prices were already among the highest in Europe and around four times those in the United States—long before this latest crisis. These are not sudden or unforeseeable problems; they are the product of policy failure. They are the result of loading electricity bills with the cost of an energy system increasingly structured around subsidising intermittent renewables, managing grid constraints and paying for mechanisms such as contracts for difference. Those costs were there before the latest conflict, and industry has been warning about them for years.
In what sort of alternative reality does it make sense to have to come up with various schemes—this, the BICS, the supercharger package, the energy-intensive industries compensation scheme, the network charging compensation scheme and all the rest, all of which are of mind-bending complexity and designed to mitigate the effect of the Government’s own policies with taxpayers’ money?
Then we come to domestic energy production. At precisely the moment when Britain should have been strengthening resilience and insulating itself from geopolitical shocks, this Government have moved in the opposite direction. They have imposed a punitive 78% tax burden on North Sea oil and gas producers—a windfall tax on windfalls that, in many cases, simply do not exist. They have halted new licences at exactly the wrong moment, when domestic production is needed most to buffer Britain from volatility abroad. The Jackdaw gas field could provide 6% of Britain’s gas needs. As my noble friend Lord Moynihan noted in the previous debate, there is no case not to do this. The result is plain to see: jobs are being exported, gas is being imported, rigs are leaving, investment is frozen, and capital is fleeing to more stable and more welcoming jurisdictions. Hundreds if not thousands of skilled jobs are being lost and Britain is becoming more, not less, exposed.
The Government will soon blame the high international gas price, which is used to set the domestic electricity price two-thirds of the time. But, as any O-level student knows, increasing supply lowers prices. Will the Government therefore reverse the ban on these licences? Is not the simple truth that the Government have chosen to make this country more vulnerable to geopolitical shocks, including conflict in the Middle East, than it needed to be?
In the other place, the Secretary of State, Peter Kyle, said that this package would deliver for Britain’s manufacturing, but what have the Government done to British manufacturing? The manufacturing base has already been damaged by the Government’s disastrous steel strategy, which has raised the cost of both domestic and imported steel. That matters profoundly for sectors such as the automotive sector, where steel is not incidental but foundational. One cannot claim to back manufacturing on Monday while making core industrial inputs more expensive on Tuesday.
The Secretary of State also cited the support of the Society of Motor Manufacturers and Traders, but does the Minister accept that the motor industry is simultaneously being hit by other government policies that are doing real harm? The electric vehicle mandate is imposing enormous costs on manufacturers, and the industry itself has warned of a multi-billion-pound burden—around £6 billion by the SMMT’s own assessment.
The Government’s rhetoric is one thing, but the reality is quite another. They speak of backing British industry while, in practice, they are crushing parts of our industrial base under the combined weight of energy costs, regulation, mandates and taxation. Will the Government consider abolishing, or at least relaxing, the EV mandate to give much-needed relief to the British automotive sector?
Yes, we welcome the announcement that the carbon price support will be removed from April 2028, but if the Government now accept that this burden damages competitiveness, why on earth are they waiting until 2028? Why must British industry continue to suffer for another two years before any relief is given? British industry needs lower costs, a competitive tax regime and a Government who stop making this country harder in which to invest, to manufacture and to do business.
Baroness Kramer (LD)
My Lords, this debate picks up from the Oral Question earlier on the IMF, which warned that the global economy is losing momentum as a result of the Iran war, with the UK expected to be the hardest hit of the G7 economies. The Government need to rethink in the shadow of war, not just to watch and wait.
That brings me to BICS. We welcome plans to bring down some of the highest energy prices in the world, and we are pleased that BICS, which benefits 10,000 of the most energy-intensive businesses, will also provide a one-off payment to cover this year. However, the money will not actually come until next year, so when will those businesses, all of which have to plan ahead and need to know the details—indeed, many are negotiating a whole variety of contracts as we speak—find out exactly what they will get, including which benefits and when they will come?
Many other businesses are threatened by rising costs here and now. I am not clear that the Government have recognised the acute energy cost problems for food businesses and agribusinesses, which not only will have a huge impact on the cost of living of ordinary people but, as we are now starting to hear from some reports, might even lead in certain areas to food shortages. Surely this is a call to action, so what action can we expect?
Frankly, many SMEs, the backbone of our communities, are on the brink from many kinds of pressures, as the Government will be very much aware. SMEs are exposed to a deregulated energy market, with very little support to face it. There is widespread concern about a lack of competition, which has the effect of locking them out of good deals by which they can price energy more effectively. SMEs with more than 50 employees do not even have access to the Energy Ombudsman. The hospitality industry is an extreme case right now and, frankly, it is pretty desperate. Will the Government at the very least instruct the CMA to open an urgent investigation into the state of competition in the energy retail market for hospitality? Will they find some quick solutions for all the areas I have covered? We cannot afford for these industries to endure any more stress and potentially curtail or curb their business.
Of course SMEs need to achieve energy efficiency, but we all know that means upfront costs. Will the Government set up an energy security bank as a mechanism to provide SMEs with low-cost finance so that they can invest in energy tech? They can then repay that finance because of the savings they make, so it would be a sensible and appropriate way to generate a circle of financing. With that, we would need a real overhaul of the business rates system. At the moment, firms are penalised if they invest in productive energy saving investments made on their premises. This is surely the opposite of what the Government want. Will they take action on these fronts quickly?
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
I am grateful to the noble Baroness for bringing the topic back to the British industrial competitiveness scheme.
We are making this intervention because the party opposite left us with the highest industrial energy prices in Europe. When it entered office in 2010, electricity prices were 8.42p per kilowatt hour; when it left office in 2024, they were 25.97p per kilowatt hour. It is no surprise that, under the previous Government, output in the UK’s energy-intensive manufacturing industries fell to the lowest level in 35 years. That is why we have to take action. We are learning the lessons of other previous schemes to do so in a way that is responsible, keeps to our fiscal rules and is funded, focused and targeted. That is why the BIC scheme is targeted as it is. It will be of benefit and is aligned with those areas of the industrial strategy that will support the growth in manufacturing that we all want to see.
We have been clear that the conflict in Iran is not our war. We will do everything we can to shield businesses from its worst effects. The BICS has been designed as a long-term measure to support growth and competitiveness in our strategic manufacturing sectors. It is not a short-term response to fluctuations in oil prices. The best way we can progress in that sense is to de-escalate and learn the lessons of the past. Reliance on fossil fuels has caused some of this volatility. In the last decades, we have seen spikes in energy prices caused by fossil fuel shocks, which is why we are committed to our clean power mission. With clean, homegrown power, we will secure better energy security and more resilient energy supply.
I was asked about the position in the North Sea. We value production from the North Sea and its workforce. We will introduce new transitional energy certificates that will enable some oil and gas production in areas adjacent to already licensed fields linked via a tie-back or in areas that are already part of an existing field. Developers can also apply for these transitional energy certificates for production in areas adjacent to already licensed fields linked via a tie-back. But they will not be able to carry out new exploration because, regardless of where it comes from, the price of oil and gas in the UK is determined by international markets. We are price takers, not price makers. The only way to take back control of Britain’s energy and bring down bills for good is with clean, homegrown power.
Drilling in the North Sea is simply too marginal to make a difference to the overall supply of commodities traded in an international market. The North Sea has been in natural decline for the past 25 years. New licences to explore new fields would also take up to 10 years to be developed and would not make any difference to UK domestic energy production now.
The noble Baroness raised a question about the timing and implementation of the payments. In our consultation, we heard strong calls from the industry for the Government’s support to be felt sooner. That is one of the reasons why we have announced that there will be an additional payment for businesses that are eligible for the BICS. That payment will be delivered next year and will reflect the support that businesses would have received had the scheme gone live sooner.
I was asked about the scope of the BICS. It covers 10,000 electricity-intensive manufacturing businesses. Why are more businesses not eligible? The answer is that the BICS is targeted where it will have the greatest impact on growth. It focuses on the highest growth potential sectors identified within our industrial strategy, such as the car industry, aerospace and defence—those most exposed to high electricity prices. It is right that we implement this tailored scheme for them so that we give those businesses a fair shot at winning in the global economy.
On timing, the BICS will be delivered next year, in line with the commitment set out in our modern industrial strategy. The exemptions on bills will take effect from April next year for the renewables obligation and the feed-in tariff levies. Exemptions from the capacity market levy will then kick in from next October. In our consultation paper, we have set out the regulatory changes and the scheme delivery to make sure that the BICS works effectively.
On support for SMEs and the hospitality sector, we are closely in touch with other sectors. We are engaged in supporting the development of high streets and hospitality with sense of place. The scheme will be open to SMEs in those eligible sectors, and I encourage any businesses that are considering whether they are eligible to consult the eligibility checker, which we will make available in the summer, to see whether they qualify, and then to go through the process of applying for the BICS.
The BICS is an excellent targeted scheme that will bring down electricity prices, with an average discount of 25%. For those businesses, it will bring electricity costs in line with other economies in Europe, and it will set us up over the long term as we create the pro-business, pro-investment environment that we need for growth.
Lord Gove (Con)
I congratulate the Minister on the beautiful complexity of a scheme that picks winners and allocates taxpayers’ money to those winners so that they can avoid paying a subsidy to other winners that have been picked in the energy sector. Tony Benn would be proud.
My home city is Aberdeen. Given how competitive the energy sector is overall, can the Minister tell us: as a result of this and other government interventions, over the next five years will the number of jobs in the energy sector in Aberdeen rise or fall?
Baroness Lloyd of Effra (Lab)
On support for the transition, we have set out a lot of detail on the energy transition with the Clean Energy Jobs Plan. On the North Sea specifically, the North Sea Future Plan sets out how we will scale up our North Sea clean energy industries, such as the government-backed Acorn, Viking and East Coast carbon capture clusters, the UK’s first regional hydrogen network and our plan to host the world’s biggest offshore wind farm. We are very supportive of places and industries as they transition from fossil fuel economies to the clean power agenda.
Lord Sikka (Lab)
My Lords, all businesses and households deserve lower energy bills. This can be done by cutting the profit margins of energy companies. Since 2020, they have made £125.7 billion in profit, which is roughly £4,400 per household, and inflicted enormous pain on businesses and households. I am sure the Minister knows that countries with significant public ownership of energy have lower energy bills. When and how will the Government eliminate profiteering in the energy sector and build a resilient economy?
Baroness Lloyd of Effra (Lab)
The noble Lord raises the question of the business environment and electricity prices. One of the most important things for businesses around energy prices, business confidence and investment capability is the fiscal situation. Last week, the IMF welcomed the UK’s notable improvement in our public finances, with the economy growing by 0.5% in the three months to February. Taking long-term steps to create a stable economy will enable sound finances, lower prices and enable investment in energy over time, which will bring prices down.
Lord Lansley (Con)
My Lords, the alleviation of the high policy costs imposed on energy-intensive and internationally competitive manufacturing in this country is to be welcomed. I will ask a question about the manufacturing sectors that will benefit from the BICS. These are the industrial strategy’s eight sectors and the related foundational technologies, but that leaves out some key manufacturing sectors. The Minister will have heard what was said in the other place about ceramics, and I want to ask about food manufacturing, which is our largest manufacturing industry. It is highly internationally competitive, but exposed to a great deal of international competition. It is often energy-intensive. Given what is happening in the agritech sector, there is considerable potential for growth. I never thought that the industrial strategy’s eight would be designed to leave others behind. I hope that this Minister will give food manufacturing and ceramics the opportunity to make their case as well.
Baroness Lloyd of Effra (Lab)
The noble Lord is right that there are many thriving and growing businesses, industries and sectors in the country. Not all of those are going to be covered by the BICS. In the eligibility consultation that we put out before this confirmation, that was one of the questions that we consulted on. We expanded the scope, from the beginning to the end of the consultation, from what we thought was going to be about 7,000 businesses to 10,000 businesses. The focus of the scheme is on the strategic manufacturing sector supporting frontier industries, as the noble Lord mentioned, and foundational manufacturing industries. We are looking carefully at supply chains—for example, fertiliser availability and cost—as we monitor the impact of the current situation in the Middle East.
Earl Russell (LD)
My Lords, I thank the Minister for her response. I pick up on a point that my noble friend made as part of her formal response to the Statement in relation to the retail energy market. The Minister may need to go away and think about it, and that may well be the answer. Does the Minister admit that there is scope for further action to make sure that the retail energy market is more competitive and that SMEs are able to secure good energy deals, there is competition in that market and they have access to the ombudsman scheme?
Baroness Lloyd of Effra (Lab)
The noble Earl has raised the question again and he is right to draw my attention to the fact that I did not address it the first time round. This scheme will be subject to the Subsidy Control Act and the necessary declarations. That detail is set out in the consultation paper that we published. On his specific question about the CMA and the retail energy market, I will revert to him.
Baroness Dacres of Lewisham (Lab)
My Lords, while the scheme supports energy-intensive sectors, can my noble friend the Minister set out how it will strengthen the competitiveness of our manufacturing base while still supporting jobs and growth in our communities across the country?
Baroness Lloyd of Effra (Lab)
I thank my noble friend for her question. The BICS will bring down electricity costs in line with other economies in the EU14, cutting costs by £35 to £40 per megawatt-hour, which will enable businesses to compete. The scheme is open to businesses of all sizes in Great Britain and is aligned with all the support that is going into the industrial strategy, including investment in skills and people.
Lord Fuller (Con)
My Lords, in a survey of its members, which produce the essential chemicals that drive our manufacturing economy, the Chemical Industries Association reports that those members are suffering from increased energy costs and raw material costs, that output is down and that whole branches of the industry are at risk of closure. For food businesses, protective atmospheres are at risk. For medical businesses, vaccines are harder to produce. For defence businesses, ballistic protection, clean energy and nuclear safety are at risk. Does the Minister accept that the BICS money is spread so thinly as to be irrelevant for the largest energy users? Does she agree that these large businesses need help now, not in 12 months’ time? The 1,000 jobs a month that are being lost in my noble friend’s area, Aberdeen, in related energy businesses cannot wait for the Government’s BICS.
Baroness Lloyd of Effra (Lab)
This is a long-term support programme to support industries in line with the industrial strategy. I have heard calls to expand and deepen the scheme. We have designed the scheme to support about 10,000 businesses that are aligned with the manufacturing frontier industries and the foundational industries, such as chemicals. They will get that support. We have heard the calls to act sooner and for transitional relief. That is why there will be a payment next year, reflecting the situation had the scheme been applied this year.
Lord Johnson of Lainston (Con)
My Lords, I was extremely excited about this debate today. I saw “British Industrial Competitiveness Scheme” and raced to read the Minister’s Statement. But all I see in it is simply a series of taxes that were being levied on businesses being discounted back to them, as my noble friend Lord Gove said. Why are we engaging in such a complex progress?
To pick up on a point made by the Minister, she said that there was no point in exploiting our North Sea oil and gas assets because it would not shift the global price. That is like saying that we should not grow wheat in this country because it will not shift the global price. The tragedy is that we have everything in this country. We are a wealthy country—we are as wealthy as any country in the world in our natural fossil fuel resources. It beggars belief that we could actively decide, in this act of self-harm, to limit the opportunity for our nation to access these resources. What needs to change for the Government to change their mind and take advantage of what God has given us? That is what businesses really want.
Baroness Lloyd of Effra (Lab)
We have seen the damage that volatility and energy price spikes have caused in the past. That is why the long-term plan towards a clean energy future will bring more stability, more resilience and more homegrown power.
In respect of the North Sea, as I mentioned earlier, we will introduce new transitional energy certificates that will enable some oil and gas production in areas adjacent to already licensed fields that are licensed via a tieback or areas that are already part of an existing field. That is what we are doing. The only way to take back control of Britain’s energy and bring down bills for good is with clean, homegrown power.
Baroness McIntosh of Pickering (Con)
My Lords, I shall press the Minister on North Sea oil, as she rehearsed it this afternoon. We just had a debate on clean energy. My noble friend Lord Moynihan on the Front Bench said that 70% of gas imports to the UK are coming from Norway and that they are potentially under a challenge from the Norwegians because they are not that keen on exporting their oil to a third country. Are the Government apprised of that? That surely should be setting off alarm bells about why we need to take more oil from the North Sea.
Can I also just press the Minister on the urgent case for the phytosanitary agreement to be reached with the European Union? As my noble friend Lord Lansley said, our largest export now is food manufacturing. Salmon is part of that, and it is obviously very perishable. It is vital that we get a phytosanitary agreement with our nearest importing neighbours at the earliest opportunity.
Baroness Lloyd of Effra (Lab)
The noble Baroness is right that resetting the relationship with the EU is a priority for the Government. We are working across a number of fields to progress all the dossiers that we have set out across energy, food, SPS and so on.
In respect of the noble Baroness’s specific question around Norway, I am not aware of that, and I may have to revert to her on it. I am not aware of any issues around security of supply for fuel, oil and gas or any issues of that kind.
Pension Schemes Bill
(1 day, 4 hours ago)
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19:13 - Division on Motion A1 (as an amendment to Motion A) - Ayes: 234 / Noes: 152 - Motion A1 agreed.
Baroness Sherlock
That the Commons amendments now be considered forthwith.
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, 88C and 88E to 88P 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.
“(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 all of the assets of the scheme that are held in main default funds to be qualifying assets, or
(b) more than 5% (by value) of all 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.”
“(12A) The power to make regulations under subsection (1) may only be exercised once.”
“(16A) The following provisions are repealed at the end of 2035—
(a) in section 204A of the Financial Services and Markets Act 2000 (meaning of “relevant requirement” and “appropriate regulator”)—
(i) in subsection (2)(aza), the words “or the asset allocation requirement in section 28C”;
(ii) in subsection (6)(aza), the words “or the asset allocation requirement in section 28C”;
(b) in section 90(6)(ea) of the Pensions Act 2004, the words “or the asset allocation requirement in section 28C”;
(c) the relevant asset allocation provisions of the Pensions Act 2008.
(16B) For the purposes of subsection (16A), the “relevant asset allocation provisions” of the Pensions Act 2008 are the following—
(a) in section 20(1A) (asset allocation requirement: Master Trusts)—
(i) in the opening words, the words “and Condition 2”;
(ii) Condition 2;
(b) in section 20(1B) (exemptions), the words “or 2(b)”;
(c) in section 20(1C) (protected period)—
(i) in paragraph (a), the words “or Condition 2”;
(ii) in paragraph (c), the words “or the conditions for approval under section 28C”;
(d) in section 26 (quality requirement: UK personal pension schemes)—
(i) subsection (7B);
(ii) in subsection (7D), the words “or (7B)”;
(iii) in subsection (7E)(a), the words “or sixth”;
(iv) in subsection (7E)(c), the words “or the conditions for approval under section 28C”;
(e) in section 28 (certification that quality requirement or alternative requirement is satisfied)—
(i) in subsection (4)(a), the words “or 2”;
(ii) in subsection (4)(b), the words “and sixth”;
(iii) in subsection (4)(c), the words “or 2”;
(f) section 28C (approvals in respect of asset allocation);
(g) section 28G (suspension of asset allocation requirement: savers’ interest test);
(h) in section 28H (risk notices), in subsection (1)(b), the words “or 28C”;
(i) in section 28I (penalties)—
(i) in subsection (1)(a), the words “or 28C”;
(ii) in subsection (2)(a), the words “or (7B)”;
(j) section 30A (review of exercise of powers under section 28C);
(k) in section 143(5)(a) (orders and regulations)—
(i) the word “(7B)”;
(ii) the words “28C (other than subsection (10)(f))”;
(iii) the word “28G”.
(16C) In consequence of the repeals under subsection (16A), at the end of 2035—
(a) in section 73(2)(dza) of the Pensions Act 2004 (inspection of premises), for “28G of the Pensions Act 2008 (scale and asset allocation)” substitute “28F of the Pensions Act 2008 (scale)”;
(b) in section 28(4)(b) of the Pensions Act 2008 (certification that quality requirement or alternative requirement is satisfied), for “conditions” substitute “condition”.
(16D) The Secretary of State may by regulations make transitional or saving provision in connection with any repeal or amendment under subsection (16A) or (16C).”
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I do not get to say “forthwith” often enough. That is a great start to the day. I thank all noble Lords for their continued scrutiny of this important Bill. We are now looking today at the remaining areas of disagreement.
Let me start with the reserve power. Amendment 15 and those connected with it sought to remove the reserve power on asset allocation from the Bill. Noble Lords will be aware—indeed, we just heard—that the other place has considered this House’s amendments and has once again disagreed with the amendments that would remove the reserve power from the Bill. In doing so it has tabled further amendments in lieu, and I will come to those in a moment. However, I want first to acknowledge the level of interest in the House on this issue.
Noble Lords have engaged with these provisions with great care, and I am genuinely grateful for the quality of scrutiny that has been brought to bear at every stage from Committee through Report and to our exchanges between the two Houses. I know that many noble Lords remain concerned about the reserve power and I do not dismiss those concerns out of hand, but I must also be candid with the House about where we stand. The elected House has now considered the case for the reserve power on two occasions, and on both occasions it has concluded that the power should remain in the Bill. However, the Government have not simply dug in; they have responded to the concerns raised in this House with substantive changes to the legislation. In a moment, I will set out what those changes now amount to, because the cumulative picture is important.
I will briefly restate the case. There is a well-evidenced collective action problem in the defined contribution market. The industry itself has been clear that a key barrier to delivering on its commitments are market dynamics that continue to focus on minimising cost rather than maximising long-term value for savers. The industry wants to diversify in its savers’ interests but risks being undercut by competitors which see a commercial opportunity. The reserve power exists to address that problem, and that problem alone.
In the first round of these exchanges, the Government tabled three amendments in lieu, delivering two concessions that responded directly to arguments made in this House. The first, which had been pressed by the noble Viscount, Lord Younger of Leckie, and the noble Baronesses, Lady Stedman-Scott and Lady McIntosh of Pickering, was the statutory cap. Regulations may not require more than 10% of default fund assets to be qualifying assets or more than 5% to be of a UK-specific description. That writes the Mansion House Accord targets into primary legislation so that no future Government can use the power to go further.
The second, responding to the type of concern raised by the noble Baroness, Lady Bowles, and other noble Lords about the breadth of the power, was the asset class neutrality requirement, which ensures that regulations must cover each of the named private market categories and cannot concentrate requirements in any one class. Those amendments represent meaningful constraints on the reserve power, of a kind for which this House has previously signalled strong support. I stand by them.
Today, the Government, with the support of the other place, propose to go further, in three ways. First, we have tabled an amendment to bring forward the existing sunset date for the reserve power from 2035 to 2032. The Mansion House Accord commits the industry to reaching its targets by 2030. Bringing the sunset forward aligns the power more closely with that timeline. If the power has not been exercised by the end of 2032, it falls away entirely, and if it has been exercised, the percentage requirements set under it may not be raised after that date.
The second amendment ensures that the power to set the headline percentage may be exercised only once. Combined with the statutory caps, this means that any future Government have at most a single opportunity to set the asset allocation requirement, and only up to the levels to which the industry itself has committed under the accord.
Thirdly—I ask the House to consider carefully the significance of this step—the other place has agreed an amendment providing for the full repeal of the asset allocation regime at the end of 2035. I want to be precise about what that means, because it goes beyond the sunset of the enabling power. Even if the power has been exercised and requirements are in force, the entire framework—the approval requirements under Section 28C, the savers’ interest test, the associated penalty and review provisions and any asset allocation requirements which have been brought into effect—is repealed from the statute book at the end of 2035. I therefore hope that noble Lords who have expressed objections to this power being a permanent feature of our pensions legislation will recognise that the Government have listened to them.
I will set out what the reserve power now looks like taken in the round. It is capped at the accord targets; it cannot be used to compel investment in a single hand-picked asset class; the headline percentage can be set only once; the power lapses in 2032 if not used; and, if it were ever used, the entire regime is repealed at the end of 2035—every element of it removed from the statute book.
On top of all that, it remains subject to the savers’ interest test, statutory reporting requirements both before and after any regulations are made, and the affirmative procedure. This power has been meaningfully altered and constrained by the scrutiny of this House, and I hope noble Lords will recognise the collective significance of those safeguards. Industry has welcomed our amendments to constrain the power. By way of one example, this morning, Aviva said:
“We welcome the government’s amendments to constrain the reserve mandation power so that it can only be used to support delivery of the Mansion House Accord … We hope this is enough to build the consensus needed for the Bill to be passed in this Parliamentary session”.
I understand the position of those who believe the power should not exist at all. The noble Baroness, Lady Bowles, has made that case with clarity and rigour, and I respect it. But the Government’s view is that the risk of inaction, of allowing the collective action problem to persist to the detriment of pension savers, is the greater risk. The power as it now stands is a carefully circumscribed instrument, designed for a single purpose and limited in every dimension.
This House has done its job as a revising Chamber. The Government have engaged in good faith with the concerns raised and responded with changes to primary legislation—not undertakings, not assurances, but amendments to the Bill. I hope this demonstrates the seriousness with which we have taken this House’s scrutiny and I ask noble Lords not to insist on their amendments and to agree the amendments proposed by the other place in lieu.
I turn now to Lords Amendment 35B, which would require the Secretary of State when making regulations across the scale measures and those for default arrangements to
“have regard to the benefits of competition among providers of pension schemes”.
The Government absolutely support a competitive market; that is evident through all the scale measures. However, we believe that in designing regulations, a range of factors must be taken into account. Our focus always has to be on delivering the best outcomes for members.
Noble Lords have stressed the importance of competition as the market moves towards scale. The Government agree: we have always considered it to have a central role in the policy. The new entrant pathway is designed to drive this, as is the freedom schemes will have to open new default arrangements which will support competition. However, we have listened carefully to the arguments that have been made during debates, especially by the noble Baroness, Lady Noakes, and we recognise the desire to see that commitment feature in the Bill. We have therefore tabled amendments in lieu to set out that regulations, both those in respect of the scale measures and those relating to default arrangements, must have regard to the importance of competition and innovation.
However, under the Government’s Amendments 35C and 35D, regulations will also need to have regard to additional factors: the importance of scale, improving member outcomes and effective governance. It is clearly right that we place members at the heart of this policy—I am sure there can be no disagreement that their needs are just as important as those of the market that serves them. Members’ interests come first and this amendment recognises that.
The noble Baroness, Lady Noakes, has asked me to confirm two matters in relation to this amendment: first, how the Government will meet the new duty in relation to the different factors set out. Under our amendments, when making regulations, the Government will need to have regard not just to the need to reach an appropriate scale but to the importance of competition and innovation in the design and operation of schemes, to effective governance and to the vital objective of improving outcomes for members. This amendment captures the basic but important principle that the Government’s approach to making regulations must be holistic, taking account of many relevant factors. The Explanatory Notes will also make this clear.
Secondly, the noble Baroness asked me to confirm why new Section 28J does not appear in the list of provisions in this amendment, and I am very happy to do so. This is because new Section 28J will allow the Treasury to make regulations that switch on the FCA’s enforcement powers in relation to Chapter 3. This is primarily a question of whether these powers should be available to the FCA, so the matters listed in the amendment are therefore not applicable to that question in the same way they are to the powers that allow the Government to construct key elements of the scale framework. I hope that explains things to her satisfaction.
Lords Amendments 37B and 37C set out the ability for a regulator to exempt a scheme on the basis of an innovative offering or where consolidation may not improve member outcomes. We debated this amendment this week and I will not restate the arguments in the interests of time. The Government have long been clear about our intention to adopt reforms to ensure that workplace pension schemes take advantage of consolidation and scale to deliver better returns for UK savers, and that is what we are doing in the Bill.
While I recognise that this policy may have an effect on some schemes in the market, we must prioritise the need to deliver on this commitment to members. Our priority is to serve those who have begun to save through auto-enrolment and who work hard to save for retirement: we want to ensure that they are saving into schemes that deliver better outcomes. However, we have heard concerns expressed, in this House and in the other place, that the benefits that innovation can bring should not be lost in the process of consolidation. We agree. We have therefore tabled Amendments 37D and 37E in lieu to require the Secretary of State, in conjunction with the regulators, to publish a report about the effects of pension scheme consolidation, and the extent to which innovative product designs are adopted or maintained following consolidation activity, as well as any barriers that may exist to preserving these features. This report will be published within 12 months of the Bill becoming an Act. The timing of the report will ensure that the Government are then able to take action, as needed, in advance of the scale measures being commenced in 2030.
Baroness Bowles of Berkhamsted
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, do insist on its disagreement to Commons Amendments 88A and 88C, and do disagree with the Commons in their Amendments 88E to 88P 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, I thank the Minister for her explanation and for our meeting with her and the Pensions Minister yesterday. Small movements are better than none, but she will know from that conversation that, as regards the so-called reserve power, there is still a long way to go, and the House should be clear about the issues that remain. There are four in particular.
First is the principle of mandation, even if it is a reserve power to bring in mandation. The primacy of trustee fiduciary duty must be made clear. A structure that subordinates that duty is not acceptable, which means no mandation. Secondly, it is wholly unacceptable that the bar for trustees to decline to invest in the assets that the Government prefer is set higher than the fiduciary duty threshold, requiring trustees to prove material harm—which is a very high standard and probably impossible to do. What reward would the pension saver receive for taking that additional risk? The potential for higher returns alone is not sufficient, but that goes if mandation goes.
Thirdly, the Mansion House Accord has fiduciary duty and consumer duty embedded within it. If this clause is truly a back-up to that accord, it cannot set those duties aside and replace them with something else.
Fourthly, this whole part of the Bill, as the Minister has explained, is predicated upon an allegation of market failure. Were that not the case, I would maintain that competition law would come into play for policy co-ordination.
So what to do? The only logical conclusion is that mandation must go. That does not stop a nudge and monitoring approach—but no threatening reserve power or regulations, because that is coercive, like the debt collector who says they will break your arm, even if not right now. Supporting the Mansion House Accord should surely reference the enablers and caveats that are the fiduciary duty and consumer duty, as well as the government assistance with assets where appropriate.
As this whole project is, in effect, a competition law dispensation to permit co-ordinated policy action, it should be appropriately time limited—for example, to the end of the current Parliament, because that would also safeguard from what future Governments might do, which has been raised more than once. After that, the entire structure should fall away. If it needs replacing, that would be up to the subsequent Government.
Of course, as I have expressed all the way through, there must be no discrimination between investment vehicles, which we know is a Treasury plant, not an industry request, and an example embedded in the heart of the Bill of how highly inappropriate things can be imposed. It will come as no surprise that I will ask noble Lords once again to insist on our deletion and to disagree with the government amendment. I beg to move.
Baroness Noakes (Con)
My Lords, I will speak briefly to Motion C because that deals with Amendment 35B, which I moved in the last round of ping-pong. I am delighted with the amendments that the Government have brought forward. I felt, during the process of Committee and Report, that I was banging my head against a brick wall every time I spoke—which was often—about innovation and competition. I did not think I was getting anything other than a headache. I am absolutely delighted, and I completely accept that the broader wording that the Government have put forward in their Amendments 35C and 35D is an improvement on what I had been arguing for, so I thank them.
Baroness Altmann (Non-Afl)
My Lords, briefly, I support everything that the noble Baroness, Lady Bowles, said. I also thank the Minister: I recognise that there has been significant movement on the part of the Government on some of the other issues.
Unfortunately, although just constraining the mandatory power in the way the Government have proposed is better than it was before, it is not okay for members. Normally, if there is an expectation of market failure, we would wait until that failure is proven before we pass primary legislation, in case it were to arise. It has not been proven. Indeed, if the schemes that invest in the way the Government want—and in accordance with the voluntary accord we are trying to mimic—perform better, as the Government expect, then others are likely to follow, but forcing them to do so against their better judgment cannot be right. There is no compensation if the investment decisions go wrong. The Government have, as the noble Baroness, Lady Bowles, said, inexplicably excluded listed investment companies, which will potentially hold exactly the investments that the Government wish pension schemes to invest in. Therefore, it does not seem that the Government themselves are the best judge of how to invest.
Baroness Neville-Rolfe (Con)
My Lords, I support the noble Baroness, Lady Bowles, in insisting on the omission of mandation in Motion A1. The proposal has made the Government unpopular in the City and, as an ex-businesswoman and ex-pension trustee, I urge Ministers to think more radically and get rid of the power altogether, even in its constrained form.
Moving on, I thank the Minister and the Minister of State, Torsten Bell, for Amendments 85C, 85D and 85E in Motion D, which respond positively to my proposal for a review of public sector pensions. The work promised by the Government Actuary’s Department should provide the transparent analysis of this complex area that I have been calling for, with the support of the Centre for Policy Studies, the economist Neil Record, my noble friends Lady Noakes and Lord Moynihan of Chelsea, and the coverage in the Times and the Telegraph. It was reassuring to know from the Minister that the important complementary work responding to the Public Accounts Committee’s concerns about the whole of government accounts 2023-24 will be published within the one-year timeframe in the amendment.
I have been addressing not just a technical matter but serious problems, such as intergenerational unfairness and the long-term affordability of our important public service pensions. I trust that, as a result of the new work, we will be able to tackle the issues better and in a much more informed way.
Lord Vaux of Harrowden (CB)
My Lords, I will briefly add my support to Motion A1 from the noble Baroness, Lady Bowles, to remove the mandation reserved power. On Monday, the Minister told us:
“On the question on fiduciary duty, nothing in the Bill disapplies trustees’ existing duties of loyalty, prudence and acting in members’ best interests”.
Her argument was that
“the savers’ interest test allows a scheme to seek an exemption if it can show that compliance would cause material financial detriment to members”.—[Official Report, 20/4/26; col. 591.]
I hope that noble Lords can see the rather fundamental flaw in that argument. Not causing “material financial detriment” is very different from acting in members’ best interests. Would the Minister put her pension savings into a fund that promised only that it would not cause material financial detriment? Of course she would not, but that, as she has said, is the standard to which the mandated asset allocation will be held. So, contrary to what she keeps claiming, the power to mandate asset allocation, even with the latest proposed constraints, quite clearly undermines the fiduciary duty of trustees to act in members’ best interests, and it has no place in pension scheme regulation.
Lord Davies of Brixton (Lab)
I will make just two points. First, on the issue of mandation, we need to be clear. I am really concerned about the absolutist no mandation point. There is, of course, an issue to discuss as to how effective these measures would be and what effect they would have on trustees’ responsibilities, but it is important to remember that we are talking about tax advantage provisions, where there is a substantial cost to the Exchequer, so it is entirely reasonable, in principle, for the Government and the legislation to lay responsibilities on those tax advantage arrangements. Saying that mandation is wrong in and of itself is clearly incorrect. As a matter of public policy, it is entirely right that we should legislate to place requirements on tax-advantaged investment arrangements. People can invest their own money in any way they wish but, in return for the tax advantages, there are equal responsibilities.
The second point I want to make is that we need to be clear—it may be of some comfort to my noble friends—that Amendment 77 does not produce a review of public service pensions. It just requires important information to be published within a one-year timescale. I said in Committee that I would welcome a review of public service pensions, but this is not a review of public service pensions. It is just a requirement on the Government Actuary to produce a report.
Baroness Stedman-Scott (Con)
My Lords, since we have only one group of Motions today, I shall address our three key areas—scale and competition, public sector pensions and mandation—together.
First, on scale and competition, I am grateful to the Minister for bringing forward these amendments in lieu. The government response does two important things. First, it places a clear duty on the Secretary of State, when making regulations under key pension powers, to have regard to a set of core principles: innovation in scheme design and operation, competition between providers, the need to improve outcomes for members, the achievement of appropriate scale and effective governance. Secondly, it applies a similar discipline to the appropriate authority when making regulations under Clauses 42 and 44 requiring regard to innovation, competition, member outcomes and governance. Together, therefore, this amendment establishes a statutory framework that must guide the making of these regulations. It ensures that scale is pursued not at all costs but alongside innovation, competition and, above all, better outcomes for savers.
We also welcome the amendment in lieu from the Government, which would require the Secretary of State to publish a report into the effects of consolidation on innovation in the design and operation of relevant master trusts. These are welcome changes to the Bill following our long-fought Conservative campaign. They reflect in a meaningful way the concerns we have consistently raised about the balance between scale and innovation. On that basis, we are content to accept these amendments, and I thank the Minister for her constructive engagement in bringing this forward. This is the change in emphasis that we wanted to see, and we are glad that the Government have moved on this.
Turning to public sector pensions, I pay tribute to my noble friend Lady Neville-Rolfe for her sterling work in pressing this important issue. This is a fundamentally important matter. We are talking about vast sums of public money—indeed, one of the largest government liabilities behind gilts. I am pleased that the Government have recognised the important point that my noble friend has been making and have brought forward this amendment in lieu. We shall of course await publication by the Government to ensure that it receives full and proper scrutiny once it is released, but we thank them for their recognition of this point.
Finally, I come to mandation. We have had some small movement from the Government in their amendments in lieu, which is welcome to some extent, but the Government should not have this power at all—a view that we share with both industry and the public.
The Government want greater investment in private markets. The reason why that is not happening as fast as they would want has many causes—which could in turn have many solutions, not limited to increasing consumer visibility, strengthening employer-side incentives, addressing the role of intermediaries and promoting co-ordination through voluntary alignment. Indeed, we already have several in motion, such as the Mansion House Accord, a voluntary, industry-led framework that was agreed less than a year ago and designed to address precisely these issues through alignment, not coercion.
Yet before the approach has even had time to take root, the Government are reaching for the most extreme lever available: the power to direct private investment into assets of their choosing. That was, contrary to some claims, not in the Government’s manifesto. The noble Baroness, Lady Bowles, is right to oppose this in the strongest possible terms.
Mandation is a profound mistake. It cuts across the fundamental principle of fiduciary duty and the obligation to act in the best interests of savers, not Ministers. It sets the deeply troubling precedent that, where markets do not move quickly enough in the Government’s opinion, the Government will simply override them. The Government are trading partnership for pressure and replacing trust with the threat of intervention. This is not how you build a strong, dynamic investment market; it is precisely how you undermine it.
This power is not just unnecessary: it is dangerous and it should not stand. We entirely support the Motion from the noble Baroness, Lady Bowles, to insist on her amendment and we will support her if she chooses to test the opinion of the House on this question.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords who have spoken. I thank them for being very constructive in their engagements—possibly more so offstage than onstage, but I am always grateful for and will take whatever I can find. I thank in particular the noble Baronesses, Lady Neville-Rolfe and Lady Noakes. I am glad that the noble Baroness, Lady Noakes, knows now that I really was listening all the way through Committee and Report, even if there may have been times when—I am sorry—it looked like I was not; I shall work better on my nodding in future. I am really glad that she and the noble Baroness, Lady Neville-Rolfe, are happy with where we have got to.
I will try to pick up on a few points. We have gone over them many times in debate, so I will not hold the House back in order to redo them all over again, tempting though that is. I turn first to the noble Lord, Lord Vaux. I think the problem is that we have started in the middle of the argument. The diversification of portfolios is critical to reducing risk. There is clear international evidence that a small investment in productive finance, in the context of a diversified portfolio, brings better returns. That is demonstrable. We have to admit that most mass-market DC schemes have little or no private markets in their default funds, and that is very much in contrast to the position in many other countries. So the starting point is that it is reasonable to assume, as the evidence would suggest, that it is better for savers for that to happen.
However, we do want safeguards around this, and what the noble Lord described is one of the safeguards. If this power were ever to be used—it is a reserve power, so the Government do not expect it to be used—a report would have to be commissioned to look at the impact of doing so on savers as well as the broader economy, to establish what would happen. Then, despite all that, if trustees believed, knowing their savers and membership, that it would not be in their interests because of some reason—for example, even if it might broadly be in their interests but it would not be in their savers’ interests—not only can they make an application for an exemption under the savers’ interest test but we would expect the fiduciary duty to drive them to do so. The test is designed to be capable of being passed, not just failed. I understand the noble Lord’s position, but that is the Government’s position.
The noble Baroness, Lady Bowles, asked about the timing: why should it not stop in this Parliament? We have talked about the power stopping in 2032, but the Mansion House Accord has until 2030 to happen, and this Parliament, I am sorry to say, is due to finish before that. Would that it could continue—no, I will not go in that direction; it will get badly reported. We think, that if the power were ever used, there would have to be enough time to see its impact before bringing it to an end. The sunset date of 2032 seems a reasonable starting point and that, I hope, is something that she can appreciate.
A question was asked about collective action, which we have been around several times. The Government have set out the arguments that the view on collective action failure in the market is not just ours; the industry has made this really clear. When the Mansion House compact—the predecessor to the Mansion House Accord—published its collective assessment of progress two years into its assessment, it identified this dynamic of competitive pressure focusing the market on minimising cost as the single biggest barrier to delivering on its own commitments. We have been here before; it has been tried on a voluntary measure and failed, and industry identified this as the single biggest barrier. That is why we are addressing this and that is the reason for doing it.
I can reassure my noble friend Lord Davies that the OBR will continue to produce long-term forecasts of the economy, which will provide a context for the figures that are being made. I am grateful to him for asking about it.
Finally, to describe the changes the Government have made as small is unreasonable. I remind the House what this now is: this provision, the reserve power, is now capped at the same rate as the accord. It cannot be used to compel investment in a single, hand-picked asset class. The headline percentage can be set only once. The power lapses in 2032 if not used and, if it were ever used, the entire regime is repealed at the end of 2035—every element is taken off the statute book. Those are significant movements. The Government have listened. The Commons has twice sent this back; it wants this in the Bill, so we should give it to the Commons. I urge the House to agree.
Baroness Bowles of Berkhamsted (LD)
My Lords, I thank all those who have contributed. As the Minister said, we have been around the arguments many times, so I will be brief. This was sold as a backstop to the accord, so it is not a case for celebration when something that bit off a lot more than the accord is brought a bit more closely into alignment with it. The fact is that the reserve power is coercive—that is what it is there for and what it is meant to do. It is not without effect, yet it was not consulted on. It was sprung on us suddenly and snuck into the Bill, and we have had to deal with it.
I was interested in the tax advantage point raised by the noble Lord, Lord Davies, but these are the least well-off pensioners who are going to be asked to put more into risky assets. Should they not get an extra slice of tax relief, then? All the people who are in safe, defined benefit schemes and those kinds of things where they are not at risk get a tax advantage too. It is not a runner.
I come back to the basic point, which relates to fiduciary duty and the best interests of pensioners in what is their money. Bear in mind that the point has been raised—I am not sure whether it has ever been answered—about the human rights aspect of diverting some of the pensions. We could go on a lot longer— I hope we do not—but I regret that I must test the opinion of the House.
Baroness Sherlock
That this House do not insist on its Amendments 37B and 37C, and do agree with the Commons in their Amendments 37D and 37E in lieu.
“28K Report about effects of pension scheme consolidation
(1) The Secretary of State must prepare and publish a report about the effects of consolidation on innovation in the design and operation of relevant Master Trusts and group personal pension schemes.
(2) The report may in particular include information about—
(a) the extent to which consolidated schemes adopt or maintain innovative product designs of constituent schemes;
(b) barriers to consolidated schemes adopting or maintaining such innovative product designs.
(3) The Pensions Regulator and the FCA must provide such information and assistance as the Secretary of State may require for the purposes of the report.
(4) The report under this section must be published before the end of the period of 12 months beginning with the day on which this section comes into force.
(5) In this section “consolidation” means the consolidation of a relevant Master Trust or group personal pension scheme with one or more other schemes.”
(i) section 40, in respect of the insertion of section 28K of the Pensions Act 2008 (report about effects of pension scheme consolidation), comes into force on the day on which this Act is passed;
(ii) the remaining provisions of Chapter 3 come into force on such day as the Secretary of State may by regulations appoint;”
Baroness Sherlock (Lab)
My Lords, I have already spoken to Motions B to D. I beg to move.
Baroness Sherlock
That this House do not insist on its Amendment 35B, and do agree with the Commons in their Amendments 35C and 35D in lieu.
“28K Regulations about quality requirements
In making regulations under section 20(1A) or (1C), 26(7A), 28A, 28B, 28E or 28F, the Secretary of State must have regard to the importance of—
(a) innovation in the design and operation of relevant Master Trusts and group personal pension schemes;
(b) competition among relevant Master Trusts and group personal pension schemes;
(c) improving outcomes for members of relevant Master Trusts and group personal pension schemes;
(d) relevant Master Trusts and group personal pension schemes achieving an appropriate scale;
(e) relevant Master Trusts and group personal pension schemes having effective governance.”
“Regulations about default arrangements
In making regulations under section 42 or 44, the appropriate authority must have regard to the importance of—
(a) innovation in the design and operation of pension schemes;
(b) competition among providers of pension schemes;
(c) improving outcomes for members of pension schemes;
(d) pension schemes having effective governance.”
Baroness Sherlock
That this House do not insist on its Amendments 77 and 85, and do agree with the Commons in their Amendments 85C to 85E in lieu.
“Public service pension schemes
(1) The Government Actuary must, before the end of the period of 12 months beginning with the day on which this section comes into force—
(a) prepare and publish a document setting out cash flow projections for each of the next 50 years that cover the public service pension schemes within subsection (4);
(b) provide the document to the Treasury and the Office for Budget Responsibility.
(2) The Treasury must lay the document before Parliament.
(3) For the purposes of this section “cash flow” means—
(a) expenditure on benefits, and
(b) income from member contributions.
(4) The following public service pension schemes are within this subsection—
(a) any scheme under section 1 of the Public Service Pensions Act 2013 (schemes for persons in public service) which—
(i) is a defined benefits scheme (within the meaning of that Act), and
(ii) is not a scheme for local government workers (within the meaning of that Act);
(b) any scheme under section 1 of the Public Service Pensions Act (Northern Ireland) 2014 (schemes for persons in public service) which—
(i) is a defined benefits scheme (within the meaning of that Act), and
(ii) is not a scheme for local government workers (within the meaning of that Act).”
“(1A Section (Public service pension schemes) extends to England and Wales, Scotland and Northern Ireland.”
“(f) section (Public service pension schemes) comes into force on the day on which this Act is passed.”