House of Lords
Introduction: Lord Bishop of Durham
Defence Sector Banking Services: Environmental, Social and Governance Rules
(2 days, 22 hours ago)
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Lord Sharpe of Epsom
To ask His Majesty’s Government what progress they have made in reforming environmental, social and governance rules to ensure that they are not used by financial institutions to deny banking services, including loans, to the UK defence sector.
The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for his interest in this issue. It is timely because, in response to his and other work, today the FCA has confirmed there should be no sustainability requirements and no FCA regulatory barrier preventing banks and other financial institutions supporting the defence sector. I have the publication with me; it requires good practice from financial firms. I hope that goes some way to addressing the concerns the noble Lord has been raising.
Lord Sharpe of Epsom (Con)
I thank the Minister for that Answer, and I am very grateful to him for it, because it is encouraging. The reason I am asking this Question again—the second time in 18 months—is that I was recently contacted by two ex-Army officers who have developed a novel counter-drone technology. They had secured a £700,000 grant from Innovate UK but were in danger of losing that grant because they had nowhere to put it. The banks said that they could not open an account on the ex-Army officers’ behalf “because of the nature” of their business. Can the Minister press home the importance of this new FCA report directly to the banks? Perhaps he could invite them to the Treasury and explain that defending the nation is not only profoundly ethical but a moral imperative.
Lord Pitt-Watson (Lab)
I am in entire agreement with the noble Lord, Lord Sharpe, on this. To be clear, no legitimate company should be excluded from financial services solely because it operates in the defence sector. I can confirm that, as a first step, the FCA will be writing to all financial firms today to make that expectation absolutely clear. Again, I thank him and the many other people from all political parties who have been campaigning on this important issue for some time.
Baroness Hayter of Kentish Town (Lab)
My Lords, I chair the Industry and Regulators Committee. We are looking at defence at the moment, and we have heard from small defence companies with this problem. I ask two things. The first is to make sure that the FCA enforce the guidance, which it does not do in the other area I deal with, as noble Lords know, of politically exposed persons. The second is that financial services be sympathetic to the sort of cases referred to. These are often new companies, so they will not have a long trading arm, and therefore help must be flexible.
Lord Pitt-Watson (Lab)
Again, I am in total agreement on this. The FCA did this, and we encouraged it to do so, for precisely for that reason. In particular, we want to make sure that new start-up companies and small and medium-sized enterprises in the defence sector have access to the financial services they need to carry out their business and help protect the nation. I thoroughly agree with the comments made by the noble Baroness.
Baroness Kramer (LD)
My Lords, I asked that this action be taken in an amendment to the financial services Bill, so I am very pleased that we are going to get more vigour from the FCA. I join others in insisting that that vigour be sustained. There was a second, equally important issue: the public procurement process for small defence businesses, including the Government’s failure to protect SMEs’ intellectual property. Given that these small businesses are vital for innovation in the defence sector, as other noble Lords have said, will the Government look seriously at this issue, which is also undermining development in this area?
Lord Pitt-Watson (Lab)
The Government are sympathetic and are putting their money where their mouth is. For example, the British Business Bank’s growth guarantee scheme, which is specifically focused on defence and other SMEs, provides £3.5 billion a year. One example is Kraken Technology, in marine defence, which aims not to be the sole lender but to crowd in private finance as well. The national security strategic investment fund, for start-up companies like the one we were talking about earlier, will invest £100 million by 2029-30. So, again, we have a full consensus and considerable action is taking place on the issues being raised by this Question today.
Lord Robertson of Port Ellen (Lab)
My Lords, I refer to my entry in the register of interests. There are still financial institutions in this country which are resistant to the idea of investing in defence. I ask the Minister to encourage them to read last year’s strategic defence review, in which they will see the good reasons we have for investing in defence, especially given the danger this country faces. I also point out that the word “defence” refers to the defence of this country. This country is in danger, and a lot of these companies need the money for investment for the future.
Lord Pitt-Watson (Lab)
Again, I am in desperate agreement with the noble Lord. The first communication they are going to receive is from their regulator, the Financial Conduct Authority—I have it here—which is going to be clear that there are no sustainability requirements that prevent companies serving defence firms. When they serve defence firms, they should consider the risks associated with them, but they should do that proportionately and consistently across all the companies they are funding. If this FCA action does not work, I am sure I will have another round of Questions in a few months’ time.
Baroness Neville-Rolfe (Con)
My Lords, like others, I have been appalled by this long-standing problem with finding bank accounts, especially for the small and innovative defence companies that we really need at the current time. On 8 June, the FCA said:
“Our sustainability rules do not prevent investment in or finance for defence companies”.
I am not sure what today’s welcome announcement changes, because banks continue to have their own ESG-style exclusions—and I know ESG is an area in which the Minister is an expert. So, can he undertake to sort that out as well?
Lord Pitt-Watson (Lab)
I think that is also covered in the FCA letter. One can overdo how significant ESG disclosures and regimes have been in preventing investment in defence. At one time, that was an issue, and there has been some concern among supporters of allowing ESG investment, along with some reform. My co-author, Stephen Davis, of Harvard Law School, is among those who has campaigned on this. I note that RUSI agrees that ESG disclosure regimes generally do not prevent investment in defence, and the push now being given by the FCA is the right next step for us to take to ensure that defence companies are treated in exactly the same way as any other companies seeking finance.
Baroness Deech (CB)
Will the Minister confirm that the sentiments he has expressed apply equally to any anti-Israel prejudice that is preventing proper investment in defence, and that the Government should lead the way by not putting any obstacles in the way of the supply of and co-operation with Israeli intelligence in our defence mechanisms?
Lord Pitt-Watson (Lab)
The FCA is saying—and I agree with it—that there are no rules that exclude financial services from a company solely because it operates in the defence sector. If an individual company wishes to take that into account, it should do so proportionately and consistently, and those rules should be clear to those who are approaching it. If any noble Lords would like me to send them a copy of what the FCA is asking to be done, drop me an email and I will make sure my office sends it to them. This is a significant step forward on what has been an important issue, and I again thank the Members of this House who have been raising it. This is the right response, and a solid one.
Lord Fox (LD)
My Lords, I am glad the Minister mentioned the RUSI report, because I attended the discussion on it. He is exactly right that it found that ESG constraints in banks was not a specific issue, but it is also suggested that perceived public affairs and public relations issues in the management of those banks was driving these behaviours. There is more than simply a regulatory issue here; there is a cultural one. Can the Minister explain how we might go about addressing that?
Lord Pitt-Watson (Lab)
Please ask for a copy of the FCA report, because it specifically addresses the issue that banks must be responsible for making sure that they are consistent and proportionate and that defence is not a reason, ipso facto, for refusing funding for companies. I would be happy to send the noble Lord that report.
Artificial Intelligence Tools: Schools
(2 days, 22 hours ago)
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Baroness Berger
To ask His Majesty’s Government whether they intend to publish a single, government-approved list of artificial intelligence tools that meet minimum safeguarding and data protection standards for use in schools.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, the Government are focused on ensuring that technology used in education is safe and trustworthy, through generative AI product safety standards, updated guidance and a planned consultation on introducing safety certification for higher-risk products. Such certification would lead to a published list of child-facing generative AI tools which have been certified as meeting safety criteria, including data protection and safeguarding, for use in education settings.
Baroness Berger (Lab)
My Lords, edtech is largely untested and we do not yet know the full impact of it on our children in schools. A school choosing an AI tool can struggle to judge whether it meets those safeguarding and data protection standards. A recent ICO audit of 28 edtech providers found that around 70% of their agreements with schools lacked the legally required detail. The edtech businesses could not provide evidence that the schools using their platforms had authorised reuse of student data for their own purposes. Can my noble friend the Minister, in light of her reply, say what additional practical support the Government can provide today to schools to ensure that children’s safety is not harmed by these tools?
Baroness Smith of Malvern (Lab)
We have already updated the standards that apply to those tools, but my noble friend makes the important point that a fast-moving market, as that for edtech is, needs more than that. That is precisely why we want to consult on certificating products, so that it can be much clearer to schools, at any given time, which products are certificated. That certification would also take into consideration both data protection and safeguarding issues.
Baroness Barran (Con)
My Lords, the Minister mentioned that the Government plan to consult on the certification of edtech and generative AI products. Can she give us a timetable for that consultation? Similarly, the Government announced that there would be sovereign education benchmarks, but no timetable that I am aware of has been announced. Can she confirm that AI products used in education will be independently assessed against those benchmarks?
Baroness Smith of Malvern (Lab)
We intend to launch the consultation and certification framework very soon—this autumn. I will come back to the noble Baroness about the AI sovereign benchmarks. I understand that they are already operationalised, but I will respond specifically respond to that point.
Lord Clement-Jones (LD)
My Lords, I declare an interest as an adviser to DLA Piper on AI regulation and policy. A list of safe tools can tell us what to avoid. What is the Government’s vision for what AI in schools can achieve for children? Will they adopt a human flourishing test for AI in schools? That would mean asking not just whether a tool avoids harm but whether it independently improves children’s learning, curiosity, critical thinking and agency.
Baroness Smith of Malvern (Lab)
I wish the noble Lord a very happy birthday. Of course, he is right. That is why we need different elements of protection and, as he rightly said, promotion. The certification would enable schools more quickly and easily to see the edtech products that met the standards. In January, we strengthened our product safety standards both to reflect emerging risks and developments in AI technologies and to ensure that AI supports genuine learning and does not undermine children’s ability to think, learn and develop independently. The certification scheme enables the development by legitimate edtech companies of the type of technology which will help to support children’s learning.
The Lord Bishop of Hereford
My Lords, a number of noble Lords have already asked questions about the regulation of AI in schools. Would it be Ofsted that inspected schools and how they govern their use of artificial intelligence, including the safeguards they have in place to protect pupils and manage the use of personal data? If so, what steps are the Government taking to ensure that Ofsted inspectors have the expertise and guidance necessary to make such assessments effectively?
Baroness Smith of Malvern (Lab)
Of course, Ofsted will have an important role to play in ensuring the safeguarding responsibility of schools with respect to AI as well as its appropriate use in the classroom. There is also a role for the Information Commissioner’s Office in the protection of data. As I have already identified, it would not be appropriate for Ofsted, for example, to be the organisation that holds the certification process. That is another area where there will be support for ensuring that what happens is right, safe and effective, and a way of ensuring that schools are following the certification and the guidance that already exist.
The Earl of Effingham (Con)
My Lords, we had a brilliant debate on this very subject on Thursday, and the PISA data is clear: it shows that pupils using the most technology throughout their school day suffer worse results, with those who used computers for over six hours in a day scoring 66 points lower than their peers who did not use the technology. Will the Government act on this to ensure that children in our schools do not suffer through overuse of this educational technology?
Baroness Smith of Malvern (Lab)
Yes, of course it is the case, but we need to ensure that we harness the positive opportunities that come from AI and educational technology and avoid the risks—which certainly need to be managed very carefully—in our schools. That is the reason for the breadth of initiatives being taken by the Government. It is the reason for the update of the generative AI product safety standards, which have specific protections relating to cognitive development, emotional and social development, mental health and manipulative design, reflecting areas where children may be particularly vulnerable. I do not believe that there is anybody in this House who does not believe that there are opportunities that AI can bring into our schools for teachers and learners. The Government are working hard to get that balance right.
Baroness Bull (CB)
My Lords, alongside their positive role within the education system, many parents and children will choose online and AI tools to support their learning outside of the classroom. My noble friend Lord Tarassenko has pointed out that it is a bit of a minefield. It is difficult for parents to assess which of those tools are likely to be the most efficacious. Are there any plans for the Department for Education to help parents by perhaps rating those tools on their effectiveness in supporting children who have particular educational needs?
Baroness Smith of Malvern (Lab)
Once the certification is in place, I suspect that will be broadly available for parents to see. We are already starting the process of developing screen use guidance for five to 18 year-olds, which will gather evidence from experts on how screen use affects children and young people. That will make new, practical evidence-based guidance available for parents in the coming months.
Baroness Penn (Con)
My Lords, what response has the Department for Education given to the 130 early years experts and educators who wrote to the Secretary of State in September raising concerns about the digital reception baseline assessment, including that it is inconsistent with the guidance on early years screen time, which the Government have already developed and are building on with their work for over-fives now?
Baroness Smith of Malvern (Lab)
The reception baseline assessment does not contradict the department’s screen use guidance. It is a short, one-off assessment during which a pupil may use the screen for around 12 minutes, which is significantly less than the maximum one hour per day recommended. The content is slow-paced and safe. It was tested under the previous Government, with experts in early years, SEN and inclusion involved in its development, and there were extensive trials with thousands of reception-age pupils. It is not something that a young child would use on their own; it is administered by a teacher, and the pupil will never be alone with the device. It provides a more effective, well-tested way of getting that baseline assessment of where a child is when they come into school, which is so important to enable them to make progress while they are in school.
British Steel Business Plan
(2 days, 22 hours ago)
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Lord Redwood
To ask His Majesty’s Government when they will publish a business plan for British Steel.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, on 16 July the Government took decisive action to nationalise British Steel, safeguarding our sovereign steel-making capability and skilled jobs. In September, we appointed Alan Lovell, an experienced business turnaround specialist, as chair. He and a new board are developing a credible transformation plan to secure British Steel’s long-term competitiveness and commercial sustainability. Key decisions are expected in the coming months and we anticipate publishing the plan once it has been agreed.
Lord Redwood (Con)
I am grateful to the Minister. When will the two ageing blast furnaces need to shut down for deep maintenance? What progress has been made with the development of plans for an electric arc furnace?
Lord Leong (Lab)
My Lords, maintaining safe and reliable blast furnace operations is an immediate priority. However, decisions on major maintenance and necessary shutdowns will be guided by detailed engineering assessments and operational requirements. The new board is also assessing future steel-making technologies, including electric arc furnaces, as part of its transformation plan. No final investment decision has been announced. Our priority is to preserve sovereign steel-making capability while securing a commercially viable, competitive and sustainable future for British Steel.
Lord Fox (LD)
My Lords, the noble Lord is right to ask this Question because a huge amount of public money is going out to British Steel every day. It does not take a report or a plan to improve what the business is doing. Things can be done day to day. It is important for your Lordships to understand what is happening now and how it is happening. It would behove the Minister to put a detailed report before your Lordships’ House so that we can assess the progress and the thinking behind British Steel.
Lord Leong (Lab)
My Lords, the Government stepped in to preserve this strategic steel-making capacity, but taxpayer support cannot substitute for commercial viability indefinitely. Britain needs its own steel industry to support defence, manufacturing, infrastructure, economic security and skilled jobs. As I said previously, the new board under Alan Lovell must set out a credible plan to profitability, with clear investment priorities, operational improvements and measurable milestones, and we will publish his plan in due course.
Baroness O'Grady of Upper Holloway (Lab)
My Lords, after years of uncertainty, underinvestment and unfair competition, steelworkers and their communities will welcome this Government’s strategy and action. However, will my noble friend consider strengthening the procurement framework to include private companies that receive government support—in the form of government grants, subsidies or loans—so that every penny of taxpayers’ money, where possible, is used to protect jobs?
Lord Leong (Lab)
My noble friend is absolutely right. I will support her point in ensuring that our businesses have a fair chance in procuring anything that is up for procurement by British Steel. We must ensure that our businesses up and down the country have a fair chance of securing those contracts.
Lord Lamont of Lerwick (Con)
My Lords, we all understand the wish and the need to protect jobs at Scunthorpe, but given that there are many more people employed in steel-using industries than in the steel production industry, was it wise for the Government to try to boost British Steel by introducing protectionist measures, reducing quotas and increasing tariffs on products that are widely used by the wider economy in this country? Is it not extraordinary, as the Public Accounts Committee pointed out, that some of the tariffs apply to goods that are not and could not be manufactured in this country and, of necessity, have to be imported? How does that help jobs?
Lord Leong (Lab)
My Lords, I say again that we must support British steel-making while protecting the thousands of businesses that rely on competitively priced steel. Tariffs, CBAM and emissions policies should be proportionate, carefully calibrated and mindful of downstream manufacturers. Equally, taxpayer investment must ensure commercial sustainability and not permanent subsidy.
Lord Cryer (Lab)
My Lords, contrary to what has just been said, could my noble friend say something more about how the Government can strengthen British Steel’s position with regard to the flood of very cheap imports coming into the country at the moment that are threatening British jobs?
Lord Leong (Lab)
My noble friend is absolutely right. British steel-makers must compete on a fair and level playing field, but we must recognise the serious challenges created by global overcapacity, unfair subsidies and artificially cheap imports. The Government will use all appropriate trade remedies in line with our international obligations to protect British industry from unfair competition. Strengthening domestic demand through infrastructure, investment and procurement opportunities is equally important. Our ambition is therefore very clear. British Steel should have every opportunity to compete, invest and succeed.
Lord Watts (Lab)
My Lords, is it not the case that we had 14 years of no action by the last Tory Government, while it has taken this Government a few months to get a credible plan together? Is it not a bit ironic that a party that did nothing for 14 years should criticise us?
Lord Leong (Lab)
I thank my noble friend for that. Again, a strong steel sector is essential for our economic growth, national security and supporting highly skilled jobs right across the country. In March, we published the UK’s first ever steel strategy, a long-term plan to stabilise and rebuild the sector, attract new investment and position the UK as a world leader in clean, modern steel production.
Lord Hunt of Wirral (Con)
My Lords, our national debt has now exceeded £3 trillion. While this is happening, as the noble Lord, Lord Fox, pointed out, the Government have spent, on the Minister’s own admission, £671 million of taxpayers’ money on British Steel, yet there is still no credible published plan to make the company financially sustainable. Will he please answer my noble friend Lord Lamont’s question? The Government have imposed a 50% tariff above sharply reduced steel quotas, putting jobs in our downstream steel-using industries at risk. My question is simple: when will the Government finally produce a serious, costed plan for British Steel that protects both the taxpayer and jobs across the whole steel supply chain?
Lord Leong (Lab)
First, to correct the noble Lord, the Government have provided £751 million since April 2025 in working capital to support British Steel. That funding has allowed British Steel to continue its operation right across its sites and to maintain steel production and supplies to customers. As I said earlier, we have appointed Alan Lovell as chair. I am sure the noble Lord will agree that he and his board of directors, who are known for their turnaround specialism, will produce a plan in due course, which, hopefully, will address the noble Lord’s question.
Baroness Bennett of Manor Castle (GP)
My Lords, the UK exports 8 million tonnes of scrap steel every year, which is about 75% of the scrap steel generated in the country. Most of that goes to countries with far lower environmental standards than ours. Does the Minister agree that that figure should be reduced to zero as far as possible—for many reasons, such as jobs, environment and ensuring that we have the steel we need?
Lord Leong (Lab)
Let me address the point head-on. We have to reconcile the need to maintain primary steel-making with maintaining our net-zero commitment. The move to cleaner steel-making presents a significant opportunity for British industry, but it must be commercially realistic and protect our strategic capabilities. We want Britain to remain a steel-making nation, producing the steel needed for infrastructure, manufacturing and clean energy in the future.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I want to correct the record for the noble Lord opposite, who suggested that the Conservative Party did very little to help the steel industry. In fact, we put £500 million into the Port Talbot steelworks, enabling it to transition to an electric arc furnace. I would also like to correct the noble Baroness, Lady Bennett of Manor Castle, because that electric arc furnace will reuse second-hand steel in order to preserve the steel industry for this country.
Lord Leong (Lab)
I do not think that I said that the Conservatives did not support British Steel. I said that we have published our first-ever steel strategy, providing a long-term plan to stabilise and rebuild the sector so that we can attract inward investment and position the UK as a world leader in clean, modern steel production.
Tax-Free Shopping: Economic Impact
(2 days, 22 hours ago)
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Baroness Meyer
To ask His Majesty’s Government what assessment they have made of the impact of tax-free shopping on the economy.
The Parliamentary Secretary, HM Treasury (Lord Pitt-Watson) (Lab)
My Lords, the VAT retail export scheme known as tax-free shopping was withdrawn in 2021. The announcement of that withdrawal was made by Kemi Badenoch. The OBR estimated that the 2021 withdrawal, which was from non-EU citizens, would save the taxpayer £540 million. However, a policy that was compliant with World Trade Organization rules would apply to EU citizens as well and be much more expensive. It therefore seems extraordinary that Mrs Badenoch has confirmed that she would reintroduce this policy but has not told us how it would be funded. Should any Member of the party opposite know the answer to that question, I would be most interested.
Baroness Meyer (Con)
I thank the Minister for his Answer. I should note that it was actually Rishi Sunak who scrapped the scheme. The OBR estimate of £500 million a year is not agreed by many of the organisations and businesses that would benefit from it. Will the Minister review the evidence, since many do not agree with the numbers, and consider a digital retail export scheme modelled on Germany and Italy, in which private operators refund and thus reduce administration costs to the Government? That was one reason why the scheme was scrapped, because the Government estimated that it was too expensive bureaucratically. Before the noble Lord, Lord Watts, says anything—yes, it was the Conservative Party that scrapped the scheme, but, on the other hand, I think to myself, “Isn’t this an irresistible opportunity for the Labour Government to reverse something to create jobs and growth in this country?”
Lord Pitt-Watson (Lab)
I thank the noble Baroness, Lady Meyer. In fact, the Conservative Party did reintroduce this scheme in the Liz Truss mini-Budget. It was withdrawn six weeks later by Jeremy Hunt when he became Chancellor and, when he withdrew it, he suggested that that would save the taxpayer £2 billion per year. Again, I ask if anyone on the Benches opposite can tell me where that £2 billion would come from? As to the evidence that this would be tax raising, there are some reports—I accept that point from the noble Baroness—but the Oxford Economics report was, of course, commissioned by the Association of International Retail and the Centre for Economics and Business research by Global Blue, which is a company that provides VAT refund services. If we are going to have evidence-based policy, I think the numbers that I have been citing to your Lordships are rather better than ones that might be in danger of being policy-based evidence.
The Earl of Clancarty (CB)
My Lords, it is worth pointing out that the VAT retail export scheme is the norm in the EU, and it was withdrawn here in the wake of Brexit. That loss has particularly affected the creative industries, including craft and fashion, as the British Fashion Council points out. To take the wider view, will the creative industries be under particular discussion at the EU-UK summit on 20 November?
Lord Pitt-Watson (Lab)
I am absolutely sure they will. But, to be clear about the evidence here, if we look at the difference in spend by foreign visitors from 2019 to 2024 in the major EU countries and in the UK, we see no evidence that the withdrawal of this scheme has been negative. Britain is actually a little above the average. It is not statistically significant, because it is comparing only five countries, but I really do not think that there is evidence that the withdrawal of this scheme has done great damage, and the scheme comes at some cost.
Baroness Kramer (LD)
My Lords, the Minister is someone who understands calculation. My understanding is that the Treasury and the OBR have not calculated the lost revenue from the higher visitor activity in the UK that would have resulted had this scheme not been withdrawn, have not calculated the potential revenue from the spend of those additional visitors to the Treasury, and that that number, according to the industry, is roughly £2 billion a year. Will he go back and try to understand why the OBR and Treasury do not include those calculations when they assert that they are saving money by scrapping the scheme, because it looks to everybody that, at the worst, it would be a wash, and, if the industry is even vaguely correct, the Treasury is actually losing money in this way?
Lord Pitt-Watson (Lab)
Let me reassure the noble Baroness that the £540 million figure that I gave, which is a Treasury figure, fully includes all the knock-on effects of the introduction of the tax-free shopping scheme for non-EU citizens. The £2 billion quote was from Jeremy Hunt after Liz Truss’s disastrous mini-Budget. I cannot tell noble Lords how that number was calculated, because in the Liz Trust Budget the OBR was not consulted.
Baroness Royall of Blaisdon (Lab)
My Lords, I hear what my noble friend says and certainly do not have any answers. I remind noble Lords of my registered interests. However, I know that many visitors from far away overseas who used to come and spend five or six days in this country, visit lots of wonderful attractions, do a lot of shopping and then go home now come here for three days, visit some attractions and then go to Paris, Milan and other places to do their shopping. Therefore, can my noble friend perhaps look again at this at some stage?
Lord Pitt-Watson (Lab)
I can come back on that. I think we all understand that visitors can still reclaim VAT on purchases; they just need to have them shipped directly. If they are shipped directly, they are then caught by customs in the country to which they are shipped. The statistics are the 2019 to 2024 statistics. UK tourism receipts recovered to 111% of their 2019 levels after adjusting for inflation. In France, they recovered to 107%, in Italy to 103% and in Germany to 83%. We were beaten only by Spain with 117%. The notion that loads of people who were coming here who are now not coming here is difficult to stand up on the evidence.
Lord Harlech (Con)
My Lords, I declare an interest in that my wife works for a British fashion house.
Lost sales equals lost jobs. One of the areas hit hardest in the rising NEETs situation is retail and hospitality. What are the Government doing to improve sales in these areas and get young people back into retail jobs?
Lord Pitt-Watson (Lab)
There are a number of things for the broader retail industry. In particular, I note the new deal on business rates support, with retail and hospitality saving nearly £1 billion a year, covering 750,000 properties. The Government continue to review the wider business rates system. However, if there is to be any change to that, we need to wait for the Budget.
Russian Shadow Fleet Vessel Leruo
(2 days, 22 hours ago)
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Baroness Goldie
To ask His Majesty’s Government what assessment they have made of the Russian shadow fleet vessel LERUO not being intercepted; and the potential implications of this for Russia’s on-going invasion of Ukraine.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Wood of Anfield) (Lab)
I thank the noble Baroness for this Question. I am not going to make specific comment on operational decisions or assessments, as I am sure she understands. To do so would only benefit Russia. Any UK action to intercept Russian shadow fleet vessels would be subject to strict legal procedures and comply with both domestic and international law. Potential targets are subject to assessment by law enforcement, military and energy specialists. Of course, we keep our policy under review.
Baroness Goldie (Con)
My Lords, this country can be proud of the unstinting support against the appalling illegal invasion by Putin that has been given to President Zelensky and Ukraine by successive Governments. Part of that support includes a robust framework of sanctions against Russia and Russian associates. Sanctions without enforcement is weakness, and Putin, like any bully, exploits weakness—but he is afraid of strength. How does it indicate strength to look hesitant in enforcing our sanctions regime, and will other potentially sanction-breaking vessels traversing our waters also be spared interdiction?
Lord Wood of Anfield (Lab)
The noble Baroness is absolutely right to point out that it is a consistent policy, and I am proud to say a world-leading policy, of support for Ukraine across different Governments—the last Conservative Government, the previous Labour Prime Minister and the current Labour Prime Minister. It is a consistent policy that we should both maintain and be proud of. The noble Baroness is also absolutely right that strength is important, and I am slightly surprised that she suggested the UK, in her view, has a reputation for weakness. Friend and foe alike acknowledge the UK to be world-leading in the breadth, strength and seriousness of the support it offers.
Since 2024 we have challenged more than 700 suspected shadow fleet vessels. The “Smyrtos” is currently detained by the Secretary of State for Transport under transport sanctions powers. It is easy to look at an individual case and ask why we do not repeat it. I can assure the noble Baroness and the House that serious legal, operational, diplomatic and other concerns go into the decision about interdiction and interception. But the idea that the UK is not leading with a broad-ranging, credible and strong policy on sanctions and not cracking down on shadow fleet vessels is not true.
Lord Addington (LD)
My Lords, when we are dealing with this situation, we are surely talking about making sure that we affect Russia’s capacity to keep waging this war. Can the Government give us some assurance that their attitude towards the shadow fleet, and possibly inspection and boarding, actually works? Can the Minister tell us exactly how he sees that happening now?
Lord Wood of Anfield (Lab)
The noble Lord is right that the real test of the serious action taken is whether it changes the calculus and makes an impact. Western sanctions have clearly denied Russia access to an estimated $500 billion since February 2022. Russia’s economy is stagnating: it slashed its economic growth forecast this year from 1.3% to 0.4%, it halved its forecast for 2027 and it is estimated to be paying something like a 40% to 60% premium for imports of sanctioned goods. Obviously, sanctions have been going on much longer than the regime for cracking down on the shadow fleet. But we are galvanising a group of countries that are taking this part of the sanctions action very seriously, and there is strong evidence, as I say, that it is actually having an impact on Russia’s capacity to wage war.
Baroness Stuart of Edgbaston (CB)
My Lords, no one country can deal with the Russian shadow fleet on its own. Are there any particular plans to work more closely with Germany on dealing with that problem?
Lord Wood of Anfield (Lab)
It is absolutely part of our approach to work in partnership, as it has been on the sanctions piece as a whole, as it has been on assembling a coalition of the willing for support for Ukraine and as it has been on assembling a coalition of countries to think ahead to what will be required to sustain the peace. It is an issue that came up in the Prime Minister’s visit to Berlin recently. I had the pleasure of meeting the German Chancellor at the Berlin process event in Montenegro where this issue was also discussed. There absolutely is partnership not just with Germany but with most of our European allies.
Lord Ricketts (CB)
My Lords, I can agree that the Government have an excellent track record on sanctions implementation, as did the previous Government. But while we are talking about Russian shipping, we have today’s news that the Black Sea is becoming more murderous than even the Strait of Hormuz for Ukrainian ships and others transiting to Ukraine. Are we in discussion with the Ukrainian Government about whether there is anything we can do to help tackle this latest manifestation of the Russians constantly changing their tactics to pile further pressure on Ukraine?
Lord Wood of Anfield (Lab)
The noble Lord puts his finger on a very important issue: the response of the United Kingdom and other allies to the Russian challenge in Ukraine has to change with the methods and tactics that vary on the part of the Russians. I discussed the Black Sea issue with my Bulgarian counterpart at the Berlin process meeting. It is of widespread concern. We are indeed in discussions with the Ukrainians. As noble Lords will know, this is an issue not just about security of maritime transport but about grain supply for the rest of the world, so it is a global humanitarian issue as well as a regional security issue. I can assure the noble Lord that we are absolutely focused on trying to get allies to provide the support that is relevant for this challenge.
Viscount Stansgate (Lab)
My Lords, speaking of Russia’s ongoing invasion of Ukraine, can my noble friend tell the House whether the Government have reached a view about who was responsible for the decision effectively to deny to Ukraine the use of Starlink resources on which it depends so heavily for its defence?
Lord Wood of Anfield (Lab)
I thank my noble friend for that question. Let me quote what the Defence Secretary said on 15 October. He was
“reassured directly by Secretary Hegseth that the service has been restored. And that is a demonstration … of the importance of the US contribution on intelligence sharing”.
Our focus is now on ensuring that we, together with Washington, can provide support for Ukraine in future.
Baroness McIntosh of Pickering (Con)
My Lords, the noble Lord will be aware that many of the shadow fleet vessels are potentially substandard. They sail very close to the Danish coast for onward journeys. How closely are the Government working with the Danish Government to avert a potential environmental tragedy as well as the fuelling of Russia’s forces?
Lord Wood of Anfield (Lab)
The noble Baroness is right that the concept of a shadow fleet is an organisation of shipping that does not have normal regulation, inspection and processes applied to it. The whole purpose of a shadow fleet is to try to evade international law. That means that issues such as standards and the possible environmental side-effects of substandard vessels are of concern to all the neighbouring countries where this maritime traffic goes through. We talk about it with our Baltic colleagues, in particular our north European and Scandinavian colleagues. It is a focus of our policy.
Lord Robertson of Port Ellen (Lab)
I support my noble friend the Minister in denying the accusation that in some way this country is being feeble in its exercise of sanctions against Russia to date. We have been in the forefront of the actions taken against Russia in this regard and in support of Ukraine. Anybody saying to the contrary is simply underestimating the effect that we are having in the Kremlin.
Lord Wood of Anfield (Lab)
My noble friend is right that, for those who dislike British policy and those who support British policy, there is usually no doubt that we are a leading figure in the strong opposition we provide. We think Putin has spent about $14 billion to establish the shadow fleet. We have now specified nearly 650 vessels under the sanctions regime, including more than 600 oil tankers. We have sanctioned more than 3,500 individuals, entities and ships under the regime, more than 3,300 of which have been sanctioned since Putin’s full-scale invasion. This country is proudly leading an aggressive but warranted response to Russia’s continuing brutal attack on Ukraine, and we should be proud of it.
Lord Hannay of Chiswick (CB)
My Lords, on the subject of feebleness, can the Minister say what the effect of the United States’ unilateral decision to lift sanctions on diesel exports has been so far? Is it having any effect on the market at all?
Lord Wood of Anfield (Lab)
I thank the noble Lord for that question. It is early days to look at any effect on the global price. The calculation made at the time, a couple of weeks ago, was that it would have a negligible impact on global prices. As I and my ministerial colleagues have said before, it is not a choice that we would have made. But our challenge now is to work with the United States, because without the United States there can be no long-run solution to a conflict that supports a peaceful, stable Ukraine.
Lord Pannick (CB)
Can the Minister assure the House that the decision not to intercept this vessel has nothing whatever to do with the policies of the President of the United States or, indeed, with representations made by the Government of the United States?
Lord Wood of Anfield (Lab)
Decisions about all interceptions are made using criteria that, sadly, I am reluctant to discuss for the reason I gave at the beginning: advertising them and discussing their complexities would aid only the Russians and the Russian war effort. All decisions are made using these criteria. They are hard and complicated decisions, but the criteria are used for all such cases.
Earl Russell (LD)
My Lords, as the NATO and British authorities have now found more than 500 instances of Russian fishing vessels having tracked our critical undersea energy and telecommunications infrastructure, what further thought and actions are the Government taking with our allies to provide further deterrence to these unwanted activities?
Lord Wood of Anfield (Lab)
The noble Earl raises a vital aspect of hybrid warfare. It is fair to say that anyone who is following European politics, British politics and national politics across the European continent will know that there has been not just a strong, galvanised effort in the last two or three months to focus on hybrid attacks, including the challenge of undersea cables and the particular dependence we have on certain undersea cables, but a strong attempt—which I am proud to say the UK is leading—on sharing information across countries. President von der Leyen recently talked about the need to develop a Europe-wide capacity on disinformation, but also on hybrid threats. We are working closely with our European allies on these things.
Lord Redwood (Con)
My Lords, will the Government speed up work on our naval vessels that are in home harbours, pending work on them, so that we have more naval vessels available to police our seas?
Lord Wood of Anfield (Lab)
We continue to do the maintenance, repair and support work that we need to do for our fleet.
Lord Forbes of Newcastle (Lab)
My Lords, the focus of this Question is on how we continue to build the international coalition around tackling the Russian shadow fleet. Have the Government made any assessment of where Russia might seek to replace the ships that are taken out of commission by these actions, so that we can try to prevent Russia acquiring further ships in future?
Lord Wood of Anfield (Lab)
My noble friend raises an important point about the supply of these often substandard vessels—as the noble Baroness said earlier—which will be tomorrow’s shadow fleet. We are doing a lot of work on that, and on co-operating with allies and third-party countries to try to assess that. Noble Lords will excuse me if I do not go into details about what that is, but my noble friend is exactly right that this is a forward-thinking way to act, rather than just responding to the day-to-day challenge of trying to tackle this long-term problem.
Baroness Neville-Rolfe (Con)
My Lords, the Government have rejected my amendments to strengthen penalties for tampering with critical undersea cables, whether by Russian shadow boats or by other operators, so I was very pleased to see the announcement by Ian Murray last week promising such action. My question is: when will this actually happen?
Lord Wood of Anfield (Lab)
If I were in charge of parliamentary timetables, I would be able to give the noble Baroness an exact answer; whether I would is another question, but I could give her an exact answer. This is a priority, as Ian said in his Statement. It is a priority not just because the law needs updating but because of the nature of the threat, as the noble Lord raised earlier. I am happy to provide more details on timing, or my colleague will, when more details emerge.
Saudi Arabia: RAF Support
(2 days, 22 hours ago)
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Baroness Goldie (Con)
My Lords, last year the Government authorised offensive action against Houthi targets in response to threats to international security. Last week the Minister in the other place indicated that the RAF Typhoon aircraft will operate solely in a defensive role. May I ask the Minister why the Government have reversed their position? Does such weakness not encourage an escalation in Houthi attacks against Saudi civilian infrastructure, with consequential risk to international security?
Baroness in Waiting/Government Whip (Baroness Antrobus) (Lab)
It is good to see the noble Baroness, Lady Goldie, in the Chamber, and I welcome her back. She is referring to activities that took place where RAF jets conducted a small number of precision strikes between January and August 2025 alongside US partners, separate from the larger US Operation Rough Rider. The situation this time is that we are responding to what the Saudi Arabian Government have asked us to help with. As she says, we are providing defensive air support within Saudi Arabia to protect cities, populations and critical national infrastructure. That frees up capacity for the Saudis to then prosecute their targets. The RAF presence is designed to prevent drones and missile attacks. That is what has been asked for, and that is what we have provided.
Lord Addington (LD)
Can we go a little further on that and ask: can the Government give us an assurance that, if we have to do any more or commit more resources to this, the capacity under which that is done will be discussed by both Houses of Parliament before any decision is made?
Baroness Antrobus (Lab)
As the noble Lord knows, we have been discussing this with and updating noble Lords and those in the other place. The Prime Minister delivered a Statement in the other place on the first day back after the recess. He set out the strategic case for why the UK is supporting Saudi Arabia and answered dozens of questions on the matter. As the noble Lord will also know, the Leader of the House of Lords and Lord Privy Seal repeated that Statement in this Chamber and took questions from noble Lords. Following adjustment to that support last week, the Defence Secretary laid a Written Ministerial Statement. The Minister for Veterans and People addressed it in the other place on Thursday, and I am delighted to continue to answer noble Lords’ questions today.
Lord Craig of Radley (CB)
My Lords, have the Government arrived at arrangements over rules of engagement with the Saudis? I am not asking what they are but I want assurance that they have been agreed. Will the Saudis be paying financially towards the contribution that we are making?
Baroness Antrobus (Lab)
The noble and gallant Lord asks important questions. On compliance with the law and specific issues about rules of engagement, I cannot comment, but we expect all partners receiving UK assistance to comply fully with their obligations under international law, including the protection of civilians, and we will continue to monitor and assess Saudi Arabia as part of our ongoing engagement. On cost, I cannot give the noble and gallant Lord details at the moment, although I can write to him afterwards. However, there is of course the interest that this country has in how activities around the Middle East and destabilisation in the region impact costs and other price of living issues here in the UK as well.
Baroness Uddin (Non-Afl)
My Lords, I declare my interest as a long-standing member of the All-Party Parliamentary Group on Saudi Arabia. Recently His Excellency the ambassador gave us a full briefing on what is going on. All our sympathies and prayers go out to those who lost their lives in some of the incidents that occurred—including those who were there purely for pilgrimages. I welcome the support that our Government are providing at the moment—on the understanding, of course, that they will review it on a regular basis. My question is simple: the Minister will know that the US is having discussions with the Houthis at the same time, so what discussion, if any, has taken place with our counterparts in the US with regard to our response here?
Baroness Antrobus (Lab)
I thank the noble Baroness for mentioning the impact that these terrible attacks are having on Saudi Arabia. As she knows, we strongly condemn them, hence our provision of support. Clearly, wider diplomatic actions are being led more by the FCDO than by the MoD, but officials on both sides are talking to allies in the region and, of course, the United States and other countries that are concerned that that action continues. I can confirm that the Secretary of State for Defence and the Chief of the Defence Staff spoke to their Saudi counterparts within days.
Lord Polak (Con)
My Lords, once again the Iranians are causing havoc and supporting the Houthis. It is heartening that we are supporting Saudi Arabia in this, but surely we can do something here at home and proscribe the Houthis.
Baroness Antrobus (Lab)
We keep the list of proscribed organisations under review. It is the Government’s long-standing position not to comment on whether or not a specific organisation is being considered for proscription. Decisions to proscribe are taken only after a rigorous process, in close consultation with operational partners, based on the best available intelligence and a careful assessment against the statutory tests set out in the Terrorism Act 2000.
Lord Kirkhope of Harrogate (Con)
My Lords, the alliance between this country and Saudi Arabia is very important, and all the training that goes on between our military units is also important. In discussing the deployment of Typhoon fighters, can the Minister comment on anything else in terms of the alliance that we would deploy, if necessary, to deal with these Iranian-backed terrorists?
Baroness Antrobus (Lab)
The noble Lord is right to comment on the long-standing relationship between Saudi Arabia and the United Kingdom. Indeed, I served in that country—more than 20 years ago, so that shows how old I am. We have agreed to work with the Saudis in providing the Typhoons, which we have discussed already, and an RAF A400M, which will support movement of defence matériel within Saudi Arabia. We already deployed air defence equipment and UK personnel to help protect Saudi Arabia against earlier missile and drone strikes. As the noble Lord will know, I am sure, there have been military personnel embedded within Saudi Arabia for many years, but there are additional advisers being provided as we see appropriate.
Lord Robertson of Port Ellen (Lab)
My Lords, I refer to my interests in the register. I support the Minister in the sympathy she expressed for the Saudi people, who are under relentless attack from the Houthis. I also commend the Government on the proportionate support and help that they are giving to Saudi Arabia.
Baroness Antrobus (Lab)
I thank my noble friend Lord Robertson for his thoughts on Saudi Arabia’s predicament. Our priorities remain to condemn the action of the Houthis, support our Saudi Arabian allies and help to protect the civilians on the ground. There are British nationals involved and at risk, and we are communicating with British civilians in the area. I would encourage any civilians there to ensure that they are registered for alerts. As well as with the immediate response to a critical incident, which demonstrates in many ways—I would say this, would I not?—the way in which air power can react so quickly to changing and moving situations, there is a longer-term need for diplomatic solutions; military solutions will not end this. Those are all reasons which have led to our providing support to Saudi Arabia.
Lord Mohammed of Tinsley (LD)
In terms of other defence partners with Saudi Arabia, particularly the Mecca joint defence agreement between Pakistan, Turkey and Saudi Arabia, how does the UK deployment interact and co-operate with that agreement and its deployment to support Saudi Arabia in its defence?
Baroness Antrobus (Lab)
As the noble Lord probably knows, the Mecca countries—Turkey, Pakistan and Saudi Arabia—have met and had discussions. That is a completely separate alliance from our own; our conversations are with allies in the region and other allies that are also offering support. There have been reports of France and Italy offering support, although I cannot confirm—it is not my place to do so—what that will be. The conversations are across different Governments and different departments, and they will continue, as the noble Lord would expect.
Cyber Security and Resilience (Network and Information Systems) Bill
Monday 26th October 2026
(2 days, 22 hours ago)
Lords ChamberRead Full debate Cyber Security and Resilience (Network and Information Systems) Bill 2024-26 View all Cyber Security and Resilience (Network and Information Systems) Bill 2024-26 Debates Read Hansard Text Amendment Paper: HL Bill 49-I Marshalled list for Report - (22 Oct 2026)