Commons Chamber

Monday 7th July 2025

(began 4 months, 3 weeks ago)

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None Portrait Q9. If she will review the temporary worker visa regulations for the fish processing sector. (905022)
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**** Possible New Speaker ****

As it happens, I can. We have extended that to the end of the
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None Portrait Q12. What recent progress her Department has made on improving neighbourhood policing in Leigh and Atherton constituency. (905025)
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visa holders have a chance to share views during the conversation and we will listen to those views very carefully.
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None Portrait Q20. What steps her Department is taking to tackle knife crime. (905033)
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**** Possible New Speaker ****

We are strengthening those checks and we are continuing to assess potential threats in the UK and ensuring we guard against them.
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None Portrait Q22. What steps her Department is taking to tackle the antisocial use of off-road bikes. (905035)
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retailers are part of those conversations, so we are doing everything we can to tackle these organised gangs.
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None Portrait Urgent question: To ask the Chancellor of the Exchequer if she will make a statement on the Government’s performance against the fiscal rules
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moments for the Frontbench to

**** Possible New Speaker ****

Urgent question. To ask the Chancellor if she will make a statement on the government's
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Darren Jones Portrait Rt Hon Darren Jones MP, The Chief Secretary to the Treasury (Bristol North West, Labour)
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make a statement on the government's performance against fiscal rules?

**** Possible New Speaker ****

As the Shadow Chancellor knows,

**** Possible New Speaker ****

As the Shadow Chancellor knows, it is a long-standing convention of this and previous governments not to provide running commentary on the fiscal forecast and it is for the independent Office For Budget Responsibility to make this Responsibility to make this assessment as part of the official economic and fiscal forecast. In the economic and fiscal forecast. In the most recent forecast, published in March alongside the Spring Statement, it was on track. This is Statement, it was on track.

This is a choice and a responsible choice because when you contrast that with because when you contrast that with the actions of the party opposite he the actions of the party opposite he lost control of public finances and we are seeing working people across the country still paying the price. Following the usual process, the Chancellor will request a new fiscal Chancellor will request a new fiscal forecast in the autumn for the annual Budget, including a bit assessment of government performance assessment of government performance against fiscal rules aren't as was confirmed last week, the government has committed to the fiscal rules, has committed to the fiscal rules, which remain nonnegotiable.

We have seen what happens when fiscal rules are put to one side and the members persist may be chuntering but families are still paying the price of the Liz Truss experiment with higher mortgage rates and we will not risk the finances of the nation, as they happen. In contrast, this government is meeting fiscal rules and as a consequence of the decisions of the Chancellor, we are investing billions of pounds on renewing Britain with schools, hospital, affordable public transport, and keeping the nation state.

Any future plans will be set state. Any future plans will be set
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Mel Stride Portrait Rt Hon Sir Mel Stride MP (Central Devon, Conservative)
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The Chancellor said she would not make any commitment that were not fully funded and fully costed. The Chief Secretary to the Treasury has just said that he now expects us to wait until the autumn to hear how they intend to cover the £6 billion of unfunded commitments which their U-turns have run up in the last month alone. I government divided, government racking up unfunded spending, a government wrecking public finances. Why is the chief secretary not prepared to explain how they will fund these U-turns? There are two possible answers.

Either the Treasury have made them without a clue as to how they will be funded or they do now but are refusing to tell us. Either is completely unacceptable. Can he set aside the usual blather that we have just heard and tell us whether he knows how these unfunded commitments will be paid for or is his government simply refusing to say? The house will also have noted the inherent contradiction in the chief secretary sticking to the line that decisions will be made at a physical event in the normal way when that is precisely what the government have not done.

By losing control of the finances and his own Parliament -- party, the government has made decisions outside of a physical event. Can I ask the chief secretary. The Chancellor said at the budget she would not be coming back with more tax rises, is this still the position? Will the chief secretary rule out a wealth tax along with confirming there will be no rise in income tax, National Insurance or VAT? The Chancellor said she would not extend the freeze on tax thresholds because it hurt working people.

Is this still the consideration...

**** Possible New Speaker ****

The shadow Chancellor will now his time.
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Priti Patel Portrait Rt Hon Priti Patel MP (Witham, Conservative)
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As we mark the 20th anniversary of the London terrorist attacks, the victims, survivors and their families and emergency services who responded that they continue to be in our thoughts. Two weeks have passed since US airstrikes against Iranians facilities. Does the Minister have an impact assessment -- assessment of the impact? Given Tehran's refusal to cooperate, is the Minister and the Department discussions with partners about snapback sanctions being applied and other measures? Is he concerned that Iran will continue to pursue nuclear weapons and the entire program? And with the information received with discussions in America -- in discussions with America, will the government finally come off the fence about those strikes and agree with this side of the house that they were absolutely necessary? An interest in the region, can he assure us that he is taking continued steps to bolster the security of our military assets and personnel? And what assessment has he made of rands listed missile capabilities and the threat that they continue to pose to our interests? We agreed that Iran can never have a nuclear bomb but the regime is a fundamental menace and so many other ways, sponsoring terrorism across the Middle East and threatening our own country with sophisticated plots.

What more will he do to take down the finance structures propping up the regime's destabilising activities and to stand with the brave people of Iran, including human rights defenders who face the most barbaric oppression. With the Iranian regime and its terrorist proxies in a weakened state due to Israel and America's actions, does the Minister agree that this is a moment for the government to publish a serious strategy to roll back the regime's malign influence, and finally, can he give an update on the discussions he has had with partners about the US plans for a ceasefire in Gaza, US plans for a ceasefire in Gaza, freeing hostages, aid access and how freeing hostages, aid access and how
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Bridget Phillipson Portrait Rt Hon Bridget Phillipson MP, The Secretary of State for Education (Houghton and Sunderland South, Labour)
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Statement Statement Secretary Statement Secretary of Statement Secretary of State Statement Secretary of State for Education Bridget Phillipson.

**** Possible New Speaker ****

Thank you Madam Deputy Speaker. With permission I will make a statement to update the House on statement to update the House on this government's vital work to change our country for good by giving every child the best start in giving every child the best start in life. The focus today is firmly on our youngest children, but the impact will be much broader. This government is building a stronger ferrous society, and will lay the ferrous society, and will lay the foundations in the earliest years of our children's lives.

Because we are determined to tackle the root causes of problems, not just the symptoms, of problems, not just the symptoms, we begin at the start. The we begin at the start. The inequalities that stay in our country, the way that opportunities heaped on some but hidden from others. Those disparities don't suddenly spring up in adulthood. Our suddenly spring up in adulthood. Our babies are born into an unequal world, and the inequality grows with world, and the inequality grows with them. Right from the very first days when we carry them home from hospital.

Those early differences in hospital. Those early differences in the support families can get, and the support families can get, and the early education a child and the parents can access. In the opportunities they have to start exploring. These are the differences, these and many more, differences, these and many more, that we all know take hold early on. The winds of fortune there already The winds of fortune there already on the first day of school. Gail on the backs of some, a blizzard in the face of others.

These are the differences that means that some children arrive in the classroom not yet ready to learn. These are the differences that means that while two thirds of children reach a good level of development by age 5, one third do not. These are the differences that fuel the injustice that half of our children on free school meals miss that important milestone. A Labour government will not tolerate our children being failed like this. Within months of taking office, we set out our ambition and our Plan for Change, a record share of children reaching a good level of development by the age of five.

Because it matters so much for those young lives. But it goes further, it sets the tone. 40% of the disadvantage gap at the age of 16 is already there at age 5. Next month we know that young people across the country will pick up their exam results. Some will do well, but sadly some others will be disappointed. Those results day stories of smiles and frowns, though stories about young people, though stories begin to be written in the first years of their lives.

If we want to build an education system where every child can achieve and thrive, if we want to grow a society where the opportunity to get on is open to all, if we want to deliver the change this country so desperately needs, we have to focus on the early years. We have to give every child the best start in life. And that is why it my priority as Education Secretary lies there. It is why 12 months after entering government, I am proud to be here today to set out our best start in life strategy throughout the term it will change this country for good.

Giving every child the best start in life begins with families. Becoming a parent or a carer is full of joy and wonder. We all know it can sometimes be hard and it can feel isolating. Parents and carers need- to-know that they can tap into a community of support. They need to know they are not alone. But we are falling short. One in four families with children under five struggle to get advice. For families on low incomes it is one in three.

It wasn't was like this. There was a time when government cares deeply about children's development. Members across this House will know all about Sure Start, about the quiet revolution in the lives of our children carried out by the last Labour government. Sure Start was one of the proudest achievement of that Labour government. I'm proud today to build on its legacy. Because we remember all the good it did for our children, our communities, and for our country. Sure Start raised exam results and reduced hospitalisations.

It improved early identification. It boosted physical health. It boosted mental health. It reached disadvantaged families and it made a difference to their lives. Sure Start was a triumph. Of course it wasn't perfect, no program ever is. But it worked. In so many ways and for so many families. But never more so that when it stuck to its principles. When it's brought together the excellent services parents need. At the heart of its success with the children centres. One-stop shops where families knew they could go for help.

A comforting and consistent offer of support all in one place. There are many ways in which 14 years of Conservative government damaged our country in our society. But the vandalism they inflicted on the lives of our youngest children, tearing the services out of communities, deepening inequalities, abandoning families. They should never be forgotten. Today this government will write this terrible wrong and restore hope to families. Our best to start service will honour the proud legacy of Sure Start.

Today's Labour government stands on the shoulders of those who went before. To look forward to the better future our children deserve not back to the past. That is how we will deliver for a new generation of families. We will introduce a new best start family service in best start family hubs, the first step to a national family service which ensures they can get the right support their children from conception to age 5. Giving parents the freedom to focus on loving their children. Today as we announce the National year of reading for 2026 this morning, we want to give parents more time to read with their children.

Grow a love of learning that starts in the home and flows right throughout a child's life. Best start at family hubs will be open to all, rooted in disadvantaged communities. There were nurseries, childminders, schools, health centres, libraries and local voluntary groups. The whole community coming together around one goal, to give children the best possible start in life. Our best start digital service into your ready for the future. Linking families to the local best start family hubs and looking at how the power of AI can help parents find the right information.

We will make early education and care more affordable and easier to access. From the day this government won the backing of the people, we have set up delivering the entitlement of 30 hours of government funded childcare each week for working families. Backed by funding reaching £9 billion next year. Last July we inherited a pledge without a plan. But this government is delivering on our promise to parents because I know how much that matters. The promises made promises kept. To the future of our country and to the trust between families and the government.

The cost of childcare no longer pricing parents out of the jobs they love. Instead choice and freedom to work the hours they want. And an average of £7500 each year back in their pockets. I want to thank all of those who are working with us to drive that change. From private to school-based nurseries, group based providers to childminders, dedicated professionals and early years educators transforming life chances. With almost £370 million provided by the Chancellor at the Spending Review, we are building and expanding more nurseries in primary schools.

With the first of 6000 extra places from September this year. Soon enough, 80% of childcare in this country will be government backed. The message is clear, this Labour government is on the side of families. The Labour Party, the party or family. But it also means that childcare must be better linked to educational priorities. Better geared to closing attainment gap. Better focused on all of our children succeeding at school. Our early years educators are too often hidden heroes in our communities. And it is past time we back them.

We will raise the status of our workforce. A new professional register because working in early years is just that, a profession. More high quality training for staff, lighted by a golden thread of the best evidence. And we will train more early years teachers because we know the difference they make to young ones. Our stronger practice hubs will double in number. We will offer new financial incentives to attract and keep rate early years teachers in nurseries that serve the most disadvantaged communities.

Every child deserves a great education, and a great early start in life and that must extend to our children with SEND. Early intervention can work wonders to lower barriers to learning. Under this government, inclusive practice This government is driving a decade of national renewal, but there can be no decade of renewal for our country without a decade of renewal for our children, and this is urgent. Children only get one chance. If opportunities are missed, if parents don't get what they need, if the nursery down the road hasn't been built yet, there is no going back.

For 14 years, children's lives marched on and services were ripped away, and I won't stand back and watch as more and more children are let down. Through the strategy, I am bringing change for all of our families, communities, but above all, change for our children. It is for them that our strategy was written. It is for them that we will see it through. To each and every child from the first day in this world, their best start in life, and I commend this statement to the house.

house.
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Laura Trott Portrait Rt Hon Laura Trott MP (Sevenoaks, Conservative)
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Thank you. When the right honourable lady was in opposition, she criticised every announcement simply because it came from the Conservatives. Take childcare. She called the ours model that she talked about today broken and she said she would have a new childcare said she would have a new childcare system like the creation of the NHS. Yet now in government, she trumpets the childcare system the Conservatives designed as one of her main achievements. And family hubs, she once dismissed them as a poor imitation but now after last week's chaos, what is she turning to for the government's research? Yes, the Conservatives family health plans.

That is why I was surprised to hear this weekend how claims that this can only happen under Labour. The irony being this program was started under the Conservatives. We didn't hear that today. And the expansion wasn't in the Labour manifesto. It was in the conservative one. Her strategy document published today has even lifted the name of our best for life plan published in 2021. Imitation really is the sincerest form of flattery, for which I thank the right honourable lady.

Perhaps recent events have reminded her that Labour doesn't have a monopoly on good ideas, if indeed any good ideas at all. Now, I won't take her approach which was opposition for opposition's sake. I agree in principle with much of what has been proposed today, but as with free school meals and the children's care, I will do my job and point out the cup, raise concern and raise proper answers. The lady might consider engaging with the questions this time instead of falling back on a rant about the Conservatives which frankly convinces no one and improves nothing.

So, with that in mind, is this genuinely new money being announced today or just re- announcement of the family hubs money from the spending review? The honourable lady talks about £500 million of funding which financial years and how many it is this cover? Is the funding for new hubs only or will it support existing ones too? Well there be new capital funding for bricks and mortar provision? And, as she acknowledged, it failed to effectively target support to those who needed it most.

What has been done differently to avoid making the same mistakes? When I visited a family have been Dartford earlier this year, I was shocked to hear how many mothers are being referred because they are facing domestic violence from their own children. Children who grow up witnessing this abuse at home. What data is being collected through these helps to trash National tends like this, and how is that informing the governments response to the most pressing issues facing these families? I welcome the government's focus on school readiness.

Children who live through lockdown arriving at school with speech delays and gaps in basic skills. It is one of COVID's longest shadows. But if we are serious about tackling it, we need to be honest about responsibility. What. Parents and what for to teachers? Teachers are stepping in where parents are not. They do it because they care, but it is not their job to party train, brush teeth or teach children to get dressed. Children with SEND need tailored support, different conversation entirely.

But when it comes to most children, that support needs to start at home, so while the government has set a target for school readiness, it is using schools at the end of reception. We need to target what affect school readiness and what happens at home, not the brilliant work of reception teachers. The right honourable lady has said that her number one priority was early years, but the rhetoric does not match the reality. Nurseries across the country are on the brink because of decisions her government has made.

We welcome the rollout of our early years offer, the lack of conversation for the increases forcing providers to either hike themes or shut their doors. There is no use getting out incentive payments for jobs at nurseries if providers are closing because they have been clobbered with nets. And finally, I must raise the issue of SEND. This is been splashed across national newspapers and despite the record refrains from the Department, the honourable lady has failed to give parents any reassurance over the weekend.

Her anxiety, as we all know, is through the roof, so I give her one more opportunity. Can she confirm that no parent or child will have their rights to support reduced replaced or removed as a result of her planned changes because right now, this is a government devoid of ideas. A year on, they are defined by broken promises and U-turns. Parents need and deserve answers to what the government is doing and until that happens, they have every reason to doubt everything this government has to say.
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Bridget Phillipson Portrait Rt Hon Bridget Phillipson MP, The Secretary of State for Education (Houghton and Sunderland South, Labour)
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Every time I come here to announce the positive changes that a Labour government is bringing, whether free breakfast clubs, school nurseries or a best start in life strategy, what is the response of the right honourable lady? The same outrage and the same negativity and the same petty point scoring. No provision for the future of our education system for the best start in life, and we can talk all they in life, and we can talk all they want.

This is what they put in an unsuccessful manifesto, a post dated cheque if ever there was one. And the British people judge their politicians rightly, not what they claim they will do but what they actually deliver, and it is on this basis that the government will be judged. She asks a number of detailed questions about the nature of what we are delivering. We are travelling in just and invest our family hubs across the SR period. All of the detail is there for her to see through the spending review and in the strategy we publish today.

This is additional investment that we are putting into supporting our youngest children because this Labour government prioritises the early years and wants to make sure that all of our children get the best start in life. The only policy, the only policy that the right honourable lady has is to cut budgets in state schools and hand tax breaks private schools. That is it. Now the right honourable lady

**** Possible New Speaker ****

.$$NEWLINE Order. I certainly want to listen to what the secretary want to listen to what the secretary of state for education has got to say.

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say. Thank you. The right honourable lady asks about the needs of children with special educational children with special educational needs and disabilities. And I would say to all parents of children with SEND that there is no responsibility SEND that there is no responsibility I take more seriously than our responsibility to some of the most vulnerable children in our country, and we will ensure as a government that children get better access to that children get better access to more support, strengthen support with a much sharper focus on early with a much sharper focus on early intervention, and that is why we are investing more in support for investing more in support for children with SEND.

740 £740 into more placements, better training and support for children working with support for children working with children with SEND, but there is no group that suffered most under the last government than children with SEND. And what I would say to the right honourable lady is that a right honourable lady is that a degree of humility on her part is well overdue. This is a serious and well overdue. This is a serious and complex area, one that we as a government are determined to get right.

They ducked the difficult decisions. They failed to put in point things so that the secretary described it as a lose lose lose. This government will make sure that all of our children get the best start in life, including children with SEND, and that is why through the schools paper, we will ensure that all of our children get better outcomes than they have at the moment. We will step up and deliver the change that our children need, and we will make sure for our best strategy, families once again get early support, timely intervention, access to healthcare, the chance to speak about the challenges and joys of parenting, and that is why I am so proud that, in the first year of so proud that, in the first year of a Labour government, we are delivering more that they achieved in 14 years.
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Munira Wilson Portrait Munira Wilson MP (Twickenham, Liberal Democrat)
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Thank you. Every child deserves to have the very best start in life possible, so I welcome any measures to tackle inequality and improve support for early years and support for families. So, I welcome today's for families. So, I welcome today's announcements, both on the hubs and on the announcements around the early years workforce and helping to raise the professional status of those who work with children in early years, something that Liberal Democrats have long been calling for, given the expertise required in the profession, and with the hubs as we have heard, there is a great opportunity to identify special needs nerdy and important advice for needs nerdy and important advice for I hope the government will start by reversing the National Insurance hike for early years and learning centres, and reducing the rates for paid providers to ensure they are covering the costs of delivering high quality care and early years education because we do know that many nurseries across the country are struggling.

Whilst I have the Secretary of State tension on early years, can I raise with her the tragic cases of someone in Stockport and Cheadle and the children at the Twickenham Green Nursery in my constituency were completely failed by the early years providers, at the hands of extremely cruel vicious and caring staff. The verdicts in both of those cases have been utterly shocking. I know the Minister sitting next to the Secretary of State met with my honourable friend from Cheadle last week.

Although her announcement did not include it, I have read in news reports that the government will be increasing Ofsted inspections for nurseries, something that my honourable friend from Cheadle and myself are pressing for. But we also need to see a strengthening of the early years framework to include the use of CCTV. One sentence if I may, can I press the Secretary of State to put the parents and carers of children with and the across the country out of their misery and rule out...
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Bridget Phillipson Portrait Rt Hon Bridget Phillipson MP, The Secretary of State for Education (Houghton and Sunderland South, Labour)
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Secretary of State.

**** Possible New Speaker ****

Thank you Madam Deputy Speaker.

**** Possible New Speaker ****

Thank you Madam Deputy Speaker. The honourable lady asked a number The honourable lady asked a number of questions. I'm grateful to the warm welcome she is given to the government intends to make sure children get the best start in life. children get the best start in life. When it comes to the early years system, she will know that as of next year we are investing money into the system as well as a near doubling of the pupil premium. That goes hand-in-hand with the £75 million expansion grant to expand million expansion grant to expand the sector ahead of a September further expansion.

In addition, we are working across government as the are working across government as the strategy sets out about how we can consider simplification in funding, to make sure it is working in the to make sure it is working in the way intended for providers and parents. Of course I would be happy parents. Of course I would be happy to discuss further issues with her. As she says, the Minister for early years education did meet with the years education did meet with the family and with the honourable Member last week.

Just to answer the question in terms of Ofsted, from next April, Ofsted will inspect new early years providers and we will move towards inspecting all providers at least once every four years compared to six years years compared to six years currently. Alongside additional investment to strengthen quality assurance and inspected training to make sure all children are safe love and protected. I would also join her in sending my condolences to families affected.
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Bridget Phillipson Portrait Rt Hon Bridget Phillipson MP, The Secretary of State for Education (Houghton and Sunderland South, Labour)
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I am grateful to my honourable friend for her questions, and where it comes to the statutory override that she mentions, I know she takes a serious interest in this area. We recognise that local authorities will need support to a reformed SEND system. It is why we have done this at the spending review, and she knows that we have set out and will set out more detail around this for local authorities. In terms of the digital offer, I appreciate the point that she raises around ensuring that all families can access services, and there are still challenges around digital exclusion, and she is right to draw attention to those.

It is why, alongside the digital offer with how that aligns with the offer before long, it is why effective outreach support and engagement is also critical, and learning the lessons, one of the key lessons that I think we should all take from that and where the evidence is incredibly strong is that it was at its best at its most effective had the greatest reach and impact where it came to disadvantaged children where there was strong engagement with communities, and through the work of the Cabinet Office has been leading, we have learned some really important ways in which we can ensure that more disadvantaged parents with children like poverty are able to access those services, and as we take forward the rollout, we will ensure that we take that.
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Jenny Riddell-Carpenter Portrait Jenny Riddell-Carpenter MP (Suffolk Coastal, Labour)
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They say it takes a village to raise a child and it takes a Labour Government to give every child the best start in life and I thank the Secretary of State for the announcement. She may well know that not a penny is spent on family hubs in Suffolk at the moment. She talked about how this will be a game changer for children with SEND and she also mentioned future provision being inclusive. Will she outline in rural areas where we have declining populations in primary schools whether there is opportunity to use the increase in capacity to work and increase provision for SEND? Kick I'm grateful for that and through the announcement, her community will the announcement, her community will benefit from funding that will allow benefit from funding that will allow a Best Start family hub and wider services through that and she's right to identify that the following right to identify that the following birthrate does present a challenge, but also allows us to look at but also allows us to look at delivering better support for children.

It's a key priority of this Labour Government to deliver this Labour Government to deliver more specialist provision within mainstream. I've seen examples across the country where children across the country where children have been able to go to school but with targeted specialist support that is needed and they can spend some time in a mainstream setting but get the additional specialist support required. That is why through capital settlement at the Spending Review, we will deliver Spending Review, we will deliver more support for children across the country.

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None Portrait Presentation of Bills
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Water Regulation Bill.
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None Portrait Legislation: The Pension Schemes Bill: Second Reading
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12 September. The clerk will now proceed to read the orders of the

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day. Pension Schemes Bill. Second Reading.
18:45
Torsten Bell Portrait Torsten Bell MP, The Parliamentary Under-Secretary of State for Work and Pensions (Swansea West, Labour)
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Reading. Minister to move second reading. Minister.

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Minister. I beg the bill will now be read for a second time. This is a bill that aims to deliver fundamental that aims to deliver fundamental reforms to our pension landscape. It is good to see that the prospect of discussing along, slightly technical pensions bill has seen so many members flooding into the house today. These are reforms on which there is a broad consensus across the pensions industry. They also build on at least something of a consensus across this House.

In its principal focus on higher return on pension savers, the bill also response to specific responsibilities that we hold in this house. It is because of decisions of Parliament that over the past 10 years, something significant has happened. British workers have gone back into the habit of saving for a pension. Today, over 22 million workers are building up a pension fund which represents a large increase since 2012 when Parliament introduced a policy of automatically enrolling workers.

There is lots to celebrate as more save. There is no ground at all for complacency around what they all for complacency around what they If these pension schemes do not deliver good investment returns, that is a problem for the employer, not the saviour. For tomorrow's retirees with a defined contribution pension, they are taking all the risk and nothing is guaranteed. How well the scheme that they put money into performance matters usually. Even small differences in how fast the part drawers can make a massive difference over time.

This is the system that the House has chosen and the onus is on us to ensure it delivers but the pension system today is to fragmented and too little does it ensure savings work to support people in retirement and it is too disconnected from the economy and that is the case for change. The UK has the second- largest system in the world, worth £2 trillion, and is the largest source of domestic capital, underpinning not only the retirement we look forward to but the investment on which future prosperity depends but the system has too few big pension schemes.

They are less than 10 providers who currently have £25 billion or more in assets. There is already a consolidation process under way with the number of schemes reducing by around 10% a year and this bill will add to the winnings from that consolidation and implements the findings of the review with the creation of so-called mega funds and for the DC requirements we will look for multi-employer schemes to have at least £25 billion in assets by 2030 or a critical pathway to be there by 2035.

This would deliver lower cost, diversified investment and better savings for people. As this House as discussed before, in May, 17 major pension providers managing about 90% of active pension signed the Mansion House Accord, and Pledged to put 10% into projects and infrastructure by 2030 with 5% that I said that this could support better outcomes and back clean energy developments or fast-growing industries. To support this, there industries. To support this, there is a reserve power in the bill would mean a set percentage would be invested into wider asset classes, reflecting the reality that the industry has called for the shift for some time but the words out slow to translate into action.



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I am a trustee of the Parliamentary Pension Fund. This is Parliamentary Pension Fund. This is the right direction of travel to consolidate, so there are better experts who can advance but I have experts who can advance but I have slight concerns. We have got to be slight concerns. We have got to be the schemes to invest in and they must make sure they get the returns and so how do we make sure it actively delivers on both sides of actively delivers on both sides of the equation? I thank her for the the equation? I thank her for the question and for the oversight of pensions and I think it is reassuring.

I will come directly reassuring. I will come directly onto... It is reassuring. Directly onto the points she makes because it is one question that members on all sides of the House will want to raise but with traditionally duty, the legislation explicitly the legislation explicitly recognises the duty of trustees towards members and, as I was towards members and, as I was saying, we support this industry- led...

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led... In the last Parliament, a number of us raise concerns about the of us raise concerns about the administration of defined benefit schemes from, among others, DP, Shell, Hewlett-Packard, and I think the view was shared by the then- chair of the select committee that another problem was insufficient independence and oversight by defined benefit pension trustees. For in this bill protects the

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position of pensioners in retirement in these schemes? The right honourable member

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The right honourable member invites me to skip forward in my invites me to skip forward in my speech, which is a long speech. That is not the support I was hoping for. is not the support I was hoping for. Understandable but harsh. Coming Understandable but harsh. Coming onto some of the points in terms of referring particularly to indexation before 1997 and I will address that before 1997 and I will address that point in some time but as I said the bill includes reserve power that bill includes reserve power that will require a set investment into larger assets in the scheme and larger assets in the scheme and reflects the wider calls have been made but have not allowed to take place.

Where employers focus too place. Where employers focus too narrowly on the lowest charges narrowly on the lowest charges rather than the highest returns for savers, there are problems. I do not intend to use this power in the bill but the existence gives clarity to but the existence gives clarity to the editor that change will come this time. Some will argue, and I this time. Some will argue, and I will come to that, that it somehow undermines the duty of providers to pensioners but this is wrong.

The bill includes clear safeguards to prioritise the interests of savers and is consistent with the core principle of additionally duties. There is an explicit mechanism that I discussed with the main three parties in the house to allow providers to opt out if there is a detriment to savers and second, and I think this is a key point, savers are being let down by the status quo and there is a reason major pension schemes across the rest of the world are already investing in the more diverse range of assets at the fragmentation within the industry happens within Vegas, not just between them with some insurers having thousands of legacy funds and the clause 41 extends the ability that the trust-based schemes already had to provide this and they can transfer to another arrangement without the proactive individual consent if it is individually certified as being in the best interests of the members.

Another point I hope is of common ground is we have to do more to understand the untapped potential in England and Wales. We need skill to get the most out of the £400 billion of assets and the billable tension census into concrete action, providing for the assets to be fully consolidated into assets to be fully consolidated into Assets are managed effectively and at skill with each authority continuing to set an investment strategy including how much local investment they expect to see.

These reforms will build on the strong track record of the Local Government Pension Scheme allowing pension schemes to work with mayoral authorities and bigger pools will help with private pension funds and other investors getting into investments across the country. The measures to build scale and support investment and deliver for savers but the bill does more to ensure rocky people get the maximum bang for buck. Move away from a narrow focus on cost, clause 5 provides a U-value for money in the framework and will for the first time I standardise metrics to prove we are value for money and schemes themselves will deliver on what is delivered.

Regulators will have the power to force consolidation, protecting savers from getting stuck in schemes. We are addressing the small pension pots issue was that I was doorknocking in Swansea and a woman told me something was riding her up and it was not me knocking on the door. Trying to keep track talkback very unsupportive audience! Trying to keep track of the savings from small jobs and the only thing that was worse was her husband kept going on about it and there are no 30 million of the small pension funds with £400,000 or less floating around with another 1 million coming this year at this creates hassle with £31 billion in pension pots estimated to be lost, costing the industry to ring £40 billion a year to administer and so clause 20 provides the power to bring the pots together into one scheme that has been certified as delivering good value.

Anyone that wants can opt out, but the change could boost the pension pot of an average earner by around £1000. Once you have a pension pot, the question is, what do you do with it? We talk about pension freedom but there's nothing liberating about the complexity currently involved in turning a pension pot into retirement income because you have to consult it, choose between annuities, lump sums, cashing out, analyse providers and products that are countless. Choice can be a good thing but the overwhelming complexity is not with 77% of savers here to access the pension do not have a clear plan of how to do so.



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I agree with a lot of what the Minister is saying. Given what was said by the FCA untargeted support, said by the FCA untargeted support, would he look again at what is being resisted by maps because they are not prepared to work with pension schemes to allow automatic appointments so that pension savers can be guided to better outcomes and can be guided to better outcomes and I realise they are saying they are I realise they are saying they are too busy but if we could get people to engage at the age of 50, we would see vastly different outcomes if they invested properly and in better

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ways with pensions. I thanked him for the question and the discussions we've had on and the discussions we've had on this important topic. He spent years working on this and it raises the priority for maps right now is to let the system set up to deal with let the system set up to deal with the calls which will come when they are ruled out and I will keep this point in mind and he and other honourable members have written about that point and, as I promised in the letter, I will keep it under in the letter, I will keep it under review.

It must deliver when pension dashboards come on...

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dashboards come on... I thank the Minister for giving way. Can he update us on if we will see the introduction of the patient dashboard?

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Recent progress on the Pension

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Recent progress on the Pension Dashboard needs a little less laughing I was saying some of the first connections driving progress and they are due to be connected by the autumn of 2036 but I will the autumn of 2036 but I will provide good notice of a firm date for that point and my honourable friend and near neighbour has friend and near neighbour has secured himself exactly that happening. We must make the choice is clear for people as they move from building savings into using them and the bill gives the ability them and the bill gives the ability to thrive default solutions and there is clear potential to opt out there is clear potential to opt out and it will support higher returns because providers can invest in assets for longer if they don't have to secure the idea that they make a to secure the idea that they make a provide at retirement.

Each of the measures to drive up the tone for have their own impact at the have their own impact at the cumulative impact matters most, especially compounded over decades especially compounded over decades to save for a pension and to provide skill, someone in average earnings saving over the edge of your could see their retirement pot is due by £29,000 thanks to the high returns the bill supports and it's a significant increase and for something that should matter to all of us and it will transform the landscape.

With £1.2 trillion of assets supporting around a million people, benefit schemes have already been raised by one honourable member and the improved funding position is usually welcome. Around 75% are now in surplus, enabling far more schemes to reach buyout with Alan Shearer and many more welcome the security it offers and book on the security but others may not and will stay on the scheme for a while. This will provide the trustees with a wider range of options and clause if you think it's more trustees the option to share safely funds safely and that is something they have already done.



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What will this bill do for Patricia Kennedy, my constituent, and other people who are asking for and other people who are asking for more action on pre-1999 more action on pre-1999 more action on pre-1999 Let me use this opportunity to acknowledge that my Honourable friend has raised this before. Some friend has raised this before. Some people do not see the increases are expected on their pensions. What I expected on their pensions. What I would say is that one of the things would say is that one of the things that surplus release may allow is that surplus release may allow is that trustees may at that point have to consider how can members benefit from any release that takes place.

One thing they may well want to One thing they may well want to prioritise, and I would encourage them to prioritise this, is that indexation that they haven't received it on their pre-1997...

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received it on their pre-1997... I'm extremely grateful to the Minister for taking my intervention and for the letter he sent on 30 and for the letter he sent on 30 June about schemes of this sort and in particular one involving the Exxon Mobil pension scheme of this type. The problem is that his letter says encouragingly, following our reforms trustees will continue to consider the correct balance of interest between members and the sponsoring employer when making decisions about release of surplus funds.

Trustees will be responsible for determining how members may benefit from any release of surplus and have a suite of options to choose from." The trouble is that these pensions have received a letter from the trustees of the Exxon Mobil pension fund saying the power to avoid discretionary interest increases is held by SA Petroleum Co Ltd. Whether or not any discretionary increases provided -- release is provided... This may be a loophole that he needs to address if the trustees cannot abort the surplus benefit and the company says

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no, it's not going to benefit my constituents. I thank my honourable friend for

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I thank my honourable friend for raising that specific case. I will look at it in more detail for him. What I would say is that he is raising a point that will have more general application, which means that more schemes will have a range of roles. He is raising one of those which is about discretionary increases. And consistent across all increases. And consistent across all the schemes with the legislation we are bringing in is that trustees must agree for any surplus to be released.

It may be the case that released. It may be the case that the employer in the details of those the employer in the details of those scheme rules is required to agree to a discretionary increase but the trustees are perfectly within their trustees are perfectly within their rights to request that that is part of an agreement that leads to a separate increase. I don't think that... In any circumstances, the that... In any circumstances, the trustees would need to agree to the surplus increase. They can say they surplus increase.

They can say they will only agree to it on the basis will only agree to it on the basis of change. Happy to discuss that with him further. I think there may

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be other schemes in a similar situation. Of course. I'm grateful to the Minister. The way in which he was talking about insurance buyout suggests that insurance buyout is still somehow a gold standard. Can he reassure the House that he is seeking to flatten the playing field such that this increased choice available to benefit schemes means that perpetual's that run on which started off as the municipal employees retirement scheme and now worth billions of dollars, that there is safety in these funds as

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there is with insurance buyout? I know the honourable member has

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I know the honourable member has a long-standing interest in super a long-standing interest in super funds. I think it is relevant to the point he is raising. It is a different receipt of a range of options is what I would say. These

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options is what I would say. These clauses provide... I apologise. Just in relation to the surplus funds, obviously, that can only happen where there are surplus funds. There may not be surplus funds. There may not be surplus funds in all the circumstances. I just wanted to give him a bit of a heads up that in relation to those which is about employee benefits, it would be useful at committee stage to have a bit more information about to have a bit more information about what analysis the government has done of how many of these surplus releases will benefit the employees, rather than the employers, which I rather than the employers, which I understand the government wants to invest in growing the company as well, for what kind of spite does he

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well, for what kind of spite does he expect to see split does he expect to see? It's nice to be able to surprise

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It's nice to be able to surprise sometimes on the upside. I would expect in most cases employees to expect in most cases employees to benefit. Trustees are in the driving seat and want to consider how employers and employees will benefit from any surplus release. Obviously, the exact split between the two will be down to the individual case. We will discuss this at committee. I want to reassure the House that this is not about return to the 1990s free from.

Regulation has been transformed since then. Schemes will have to remain well funded and trustees remain in the driving seat. They were only agree to release where it is in members interests. As I said, not all schemes are able to afford buyout. Not all schemes are able to afford to buy out members pensions with insurance, sorry. The bill also introduces the long- awaited regime for super funds. And alternative means to consolidate DB-DC capabilities. As they grow super funds will have potential to increase invest in more productive increases.

It increases a savers security. The Pension Protection Fund is the security backstop for DB members. It celebrate its 20th anniversary this year and secures the pensions of over 2000 hundred 95,000 people -- 295,000 people. They can reduce their levy were appropriate. Second, ensuring scheme information will be displayed on the dashboard as they come on stream. Thirdly, and most importantly is a change to support people going through the toughest of times. Several Honourable members in this house have called for, we are extending the definition of a terminal illness from 1/6 to a 12 month process -- prognosis for those who need it most.

-- 6-month. This bill also legislates to provide clarity. The decisions of the pension ombudsman may be enforced without going into a further court. Had been clear that the government will also look to introduce legislation to give effect to Pension Schemes the ability to retrospectively confirm confirmation for historical benefit changes to meet necessary centres. Governments are like people and what they respect. They can bit of thinking about pensions until it is too late. And determined not to do that.

Were ramping up the pace of pension reforms of the past two decades have delivered a big win. More people have been saving. It is only have to deal. Today, too many are on course for retirement is less than they deserve and less than the extended. This bill focuses on securing higher returns for savers, supporting higher income in retirement without asking any more than is necessary of workers living standards in the here and now. It sits within wider pensions reforms as we seek to build not just savings but but pensions system.

System that delivers comfortable retirement and underpins the country's future prosperity. Legislation for multiplayer collective defined contribution schemes will be introduced as soon as possible after the summer recess and we will shortly launch the next phase of our pension review to complete the job by building a system that is strong, fair and sustainable. It is time to make sure pension savings work is hard for all of our constituents as our constituents work to earn them. I commend this bill to the House.
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Mark Garnier Portrait Mark Garnier MP (Wyre Forest, Conservative)
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That question is that this bill now be read a second time. I call

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the Shadow Minister. Thank you very much indeed. It is a pleasure to be here this evening a pleasure to be here this evening with the. Can I start by welcoming the Minister to his seat. He's been the Minister to his seat. He's been a couple of days over when you. He has taken a very important bill to Parliament. It is good to see him Parliament. It is good to see him and I look forward to working constructively with him as we progress this through the House.

Well this bill is not perfect, he Well this bill is not perfect, he will be pleased to hear there is cross-party consensus to be found in much of the planned changes. That's because we all want our pension system to be working better. If you rewind back to 2010, the private pension system that was not quite ideal, the move to find DB motivate ideal, the move to find DB motivate ideal, the move to find DB motivate -- dominated system left millions of people buying.

In 2011 cover nearly 40% of people were saving for our 40% of people were saving for our quiz pension. The change was an quiz pension. The change was an overwhelming can -- success. Now eligible employers are saving into a eligible employers are saving into a pension. The remaining 10% of the doubt 10 to do so because of sound investment advice. Like this, we are investment advice. Like this, we are proud on the side of the house to have offered support to our pensioners.

The triple lock we delivered lifted pensioners out of poverty. Workers deserve dignity in retirement, not just a safety net in old age. They deserve to look forward to their later years with hope, not anxiety. With choice, not constrained. And that is why before the last election, the previous government had turned its attention to two central issues. One, giving the best -- getting the best value for money out of a Pension Schemes. I will come to pension advocacy later in the speech.

Let me start by recognising some of the positive measures contained in this bill to make our pension funds work better for savers. With the party opposite gets pension policy right, it is often by building on Conservative legacy. Recognising what works and seeking to extend it. That is why we broadly support the measures in this bill which seeks to consolidate the enrolment. We also welcome the continued progress towards a pensions dashboard. This will revolutionise the way people access pension information. For too long, the complexity and fragmentation of pension pots, as we had before, has less -- left savers consumed and disengaged.

-- Confused and disengaged. If you are thinking actively about your retirement You might have spent countless hours trying to track down all the pensions. We will support measures in this bill to improve the implementation of the dashboard and it's a very. I also want to highlight the question of large megafunds. As well as consolidation megafunds. As well as consolidation of local Pension Schemes, the LGPS is one of the largest Pension Schemes in the UK and has 6.7 million members.

Yet it is highly fragmented as we have heard. There is a great deal of divergence in the funding positions of these councils, even amongst geographic neighbours. They range from Kensington and Chelsea which has level of 207% to local authorities such as Brent which were underfunded in 2022, according to review. We support the according to review. We support the concept of microphones, there are legitimate questions I have which I hope the Minister will address -- megafunds.

I first got my teeth in politics as a counsellor. Soon after being elected, I was given the task of being appointed as the chair of the Finance authority. One of our tasks was overseeing the performance of pension funds. Let me assure the house that Forest of Dean is a truly wonderful place but it is not the city of London. Our finance committee was made up of a dedicated local council but we came to scrutinising pension funds, we were out of our depth, to put it kindly.

Meanwhile, pension fund managers seemed to treat a trip to Gloucestershire like other expedition into the outer reaches of the earth. One thing struck me when it came to small local government pension funds. They did not work. It's not just in government. Small funds are not fit purpose, as we heard from the Minister, in a global investment and. The creation of larger funds will enable investment efficiency and ultimately better value for money from members. It will allow pension funds to compete at the world stage, to invest more in UK infrastructure and to deliver high returns for British savers.

There are other areas of the bill we support and welcome. The consolidation of small fragmented pension pots is long overdue reform, and bringing these together will reduce costs and prevent erosion of savings through unnecessary fees. The introduction of value for money framework is essential to ensure that savers are getting the best possible deal, not just in terms of charges but in terms of investment performance. We also welcome the development of guided retirement products. We cannot simply leave savers on their own to navigate complex choices at retirement.

Changes to provide greater support to those facing terminal illness will help those in challenging circumstances. These are all positive steps. We will work constructively with the government constructively with the government There is so much to welcome but also areas where we believe the bill falls short I something truly fit for the future. Fundamentally, it is not address the issue of the adequacy of pensions with the truth that millions of people in the country are not saving enough for retirement and many are not saving enough to deliver a decent standard of living and statistics show more than 50% of savers will fail to meet the targets set in 2005.

Closing the gap between what people are saving and what they will need must be a pressing concern of the government and we urgently need a second part of the review to be fast-track and to focus on adequacy and we need a bold and ambitious plan to ensure every worker can look forward to retirement free from poverty and insecurity.

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He is not wrong and the Public

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He is not wrong and the Public Accounts Committee was looking at pension schemes and finding younger people were not enrolled because of the cost of living and the government must take responsibility government must take responsibility for that. There is no easy answer but I'd be interested to know if the Conservative party has policies in place to resolve this issue. place to resolve this issue.

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place to resolve this issue. An important question and I have no doubt I will come to it in due course and watch this space for what will be a fascinating manifesto in will be a fascinating manifesto in the run-up to the general election. We need a bold and ambitious plan to make sure everyone can participate.

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make sure everyone can participate. Further to the point, in every

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Further to the point, in every election, we will cherish the triple lock and seek to gain electoral lock and seek to gain electoral advantage from it but do we not need advantage from it but do we not need to come to a settled and collective view about the combination of the triple lock and the inadequacy of triple lock and the inadequacy of automatic enrolment. At 8%, it is not enough and it has to get to Australian levels and one speaks to the other and unless we understand that elements and the third pillar, you are not honest about the trade- off of dealing with the tax relief.



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A good and very important point

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A good and very important point and he is trying to bring together related and district issues which we must think carefully about. I would must think carefully about. I would not want to ask for proof at the not want to ask for proof at the dispatch box. Many people with urge dispatch box. Many people with urge me to do so. These are important points and I think he would understand that I would not want to understand that I would not want to rush into anything about care but we rush into anything about care but we may well get together.

We need a bold and ambitious plan to ensure every worker in the country can look forward to being free from insecurity and that means looking insecurity and that means looking again at the contribution rates and at employers and supporting those currently excluded from the system. currently excluded from the system. Another omission is the failure to extend benefits and automatic extend benefits and automatic enrolment to the self-employed enrolment to the self-employed because there are nearly 4 billion people, people who are driving the economy and creating jobs and taking risks and many face the prospect of risks and many face the prospect of old age in poverty with little or no provision.

Research found that 20% of workers saving in the private pension, with the self-employed sector continuing to grow, the bill misses the opportunity to come up with innovative solutions and we are also concerned with the lack of

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detail in the build with too much left to the discretion of regulators under the secondary legislation. The other group missing in

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The other group missing in relation to this are those under 22 relation to this are those under 22 years old and it seems to be set up the view that people would go to university before entering the jobs market but is not the case for many and its possible starting earlier and its possible starting earlier would be more adequate for the future because the earlier you save,

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the bigger it grows. A fairly important point and the earlier you start putting in the money with compound interest over money with compound interest over many years, you end up with a bigger engine part even if the contribution is small at the beginning and it will aggregate over a long period of will aggregate over a long period of time and I think that we will discuss this and look at it in the committee stage of the bill. Too committee stage of the bill.

Too much is left to the discretion of much is left to the discretion of the regulator and Parliament deserves to have oversight of these reforms. From my discussions with reforms. From my discussions with the industry, there is tentative support for many reforms that it contains but the message that comes contains but the message that comes back is that the devil will be in the detail and I hope the bill, as it makes progress through the House, the Minister will fill in more blanks and I am sure he will.

I will move to the most important aspect of the bill, growth. We want to support the party opposite in the growth agenda but often we think they are going in the wrong way and if you take these services and the defined benefit pension schemes as an example, as interest rates have risen post Covid many schemes have been put into surplus and we support the greater flexibility in the extraction of the circumstances in principle, that is to be more robust safeguards and this message is coming back from the industry and under current legislation, there is nothing to stop the services from being used for things such as share buying back dividend payments.

Neither out come necessarily helps the growth agenda and we would welcome amending the bill to prevent undue pressure for non-dual purposes and, in addition, to prove stability, to provide stability, the government should carefully consider looking at this rather than buying levels to future proof the fund. The government is keen to extract services from the private sector but the bill does not contain the same gusto with local government pensions. This House has discussed in detail the fiscal rules of the Chancellor earlier today and under the revised rules, the measure of public debt is shifted to net financial liabilities and consequently there is a record £45 billion surplus now counted as an asset which offsets government debt, giving the chance for hitting fiscal targets and it is shrinking every week.

Not to sound cynical but perhaps that is the reason it is when it comes to better using the circumstances and the surpluses could have been used to deliver mentalities for councils to pension scheme. The government could make it easy to follow the example set by Kensington and Chelsea where employer contribution pensions were suspended for one year to support victims of the Groenefeld tower tragedy. This would help of local opportunities such as this incubators or improving the high street or even taking money out of the pockets of taxpayers.

In my speech, I will end by saying we have fundamental disagreement on the Mandy shin. The reserve of power in the bill to mandate the pension funds to investigate not only goes against the fiduciary duties of trustees, and I appreciate the point made earlier, but it means potentially worse outcomes for savers. I recognise his point. Pensions are not just numbers on a spreadsheet but represent a lifetime of, sacrifice, and hopefully secure future and people are under a legal duty to prioritise the financial well-being of savers and the job is not to make rulings that invest prudently and uphold the trust placed in them by millions of ordinary people.

The fiduciary duty is not just that but also the bedrock of confidence the system rests on and this is about finding the sickest and best investments, regardless of where they may be in the world and if things go wrong, we can hold them to account but if the reserve power becomes law you must ask the question, if investments go wrong, who carries the can of responsibility? Pension fund manager, schemes, the government? Likewise, this power focuses on defined contribution market but the shift of emphasis impact the set.

The UK pension funds along with insurance companies hold approximately 30% of the government debt market. Therefore, they benefit scheme moves to equities, it has the potential of a profound impact on debt management or the ability to manage debt and therefore interest rates and mortgages. For that reason, we welcome the Minister confirming if there had been any concerns raised by the Debt Judgement Office. And the widespread opportunities from across industry I've been part of this. I am getting there. There are better ways the government could look at changing obsolete rules to remove restrictions and I am sure we can move on from this.

Elsewhere, Madam Deputy Speaker, there is a new market and currently we are preventing insurers from owning equity in assets and windfarms deliver stable returns and meets the green agenda. It could be an ideal match for long-term investment and also deliver clean energy. Releasing their lender of the ability to do this has the potential to unlock as much as 700 billion do this has the potential to unlock as much as 700,000,000,000 x 20 35 according to the research. Rather than imposing the top-down levels we want the government to turn over every part of this to maximise growth and opportunities with the industry by sitting at unintended consequences of all the regulations and not imposing new ones.

Let me conclude. You will be delighted to hear. Thank you. I've taken a lot of interventions. Quite right. I rear from the commitment to working with the government and the stability in the markets is of paramount importance and we recognise the need for a collaborative approach as the build progresses through the House. We will bring forward amendments will make believe improvements can be made and we will engage with ministers in good faith to get the detail right. We want to go with another against the grain of what the government is seeking to achieve with the bill and I look forward to working with the Minister in the

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weeks and months to come. I will call the chair of the select committee.

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select committee. I want to make three points.
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19:28
Debbie Abrahams Portrait Debbie Abrahams MP (Oldham East and Saddleworth, Labour)
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schemes have around £500 million in assets and around 20% of the assets are invested in the UK and that is down from 50% 10 years ago and so it is very welcome that the government is focusing on this so that we can ensure that this will contribute to growth. The committee received evidence in me from the Finance Innovation Lab and they told us the UK that the lowest level of investment in the G7 for 24 of the last 50 years and the fundamental drive behind this is the financial system including pension funds does not support business investment as not support business investment as much as it should.

And so, again, the point is that this is very welcome and saw in the measures in the bill that should help achieve that, particularly in terms of multi-employer schemes having £25 billion in assets under management by 2030, it will mean more schemes have the advantage of economies of scale. In a welcome step, in the Mansion House Are Quite of May, 2025, we paid tribute to the Chancellor and the team in achieving this and there was a pledge to invest 10% of assets from the schemes that we are part of the accord to boost...

10% in assets to boost the economy by 2030 and Italy 5% is portfolios and they have been ring fenced for the UK and this is expected to enlist £25 billion to the UK economy by 2030. Nonetheless, the bill includes a reserve power which the government could use to mandate skills. I could invest more mandate skills. I could invest more in the UK economy. In the evidence on July 14, the committee heard concerns that this would interfere with the dish or the duty of trustees to prioritise investments that the belief would bring the best return to the benefits.

And the committee was told in May that they do not think that the mentation is desirable and that the aim should be for it to be a rational choice and the UK should have attractive environment to invest in. The industry wants the government to concentrate instead on enabling the development of suitable assets for schemes to invest in, for example by improving the planning process if the regulatory environment is more the regulatory environment is more Forcing us to invest in the UK may revert from that primary duty unless there is a pipeline in a format suitable for Pension Schemes to invest in.

Of that is the case, we will invest in them. If not, primary duty will be to look elsewhere. Chris Curry of the Pensions Policy... It still has to work in the interests of members and that is important. Fear removing the barriers, it will be easier to invest, at the same time providing more a pipeline to investment and trying to package it so it works well. We are creating that opportunity. He described mentation as blunt and inflexible. It will be difficult to design a scheme that works effectively which does not give rise to unintended consequences.

For example, there will be a challenge in defining what counts as a UK investment. This is what he was saying. If the government decided to mandate, for example, the schemes invested in particular to -- -- in a particular percentage in the UK... And they would want the government to consider the unintended consequences of this. The episode in September 2022 showed the potential risk of a lot of Pension Schemes effectively being asked to do the same thing at the same time.

The bill includes a sunset clause preventing the use of the mentation power beyond 2035. Pensions UK wants to see this Pensions UK wants to see this timeframe reducing. It also wants to see the scope limited so that investment mentation cannot be prescribed beyond the allegations prescribed beyond the allegations voluntary committee. 5% are in UK based assets. Hearing from the finance innovation lab around fiduciary duties, Jesse greases -- Griffiths said the government has a different and broader mandate and needs to look at the collective interests of all pension savers as a whole.

In particular, he wanted us to consider the deep inequality that is embedded in the system. He reference the ONS estimates that the bottom half of the population holds just 1% of all pension assets and the top 10% holds almost two thirds. If you focus on growing the returns, most people will not benefit. He argued a system that supports a stronger economy and the green transition would benefit most people. So, could the Minister help us in terms of understanding in what context, what are the criteria were mentation powers might be used, and what would also be seen as success criteria other than the 5% investment from this approach? On the sunset clause to prevent the use of this foundation power beyond 2035, should this be brought forward to the end of Parliament? Does the government guarantee that mentation

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should go no further? I thank my honourable friend for

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I thank my honourable friend for giving way. I share some of these issues around mentation and the issues around mentation and the Minister seems to be listening so we hope we get some answers and that. These changes, if they take this, These changes, if they take this, will have to take place over a long period of time. Trustees cannot just period of time. Trustees cannot just flip out of investments. I can see there were arguments both ways. I'm there were arguments both ways.

I'm concerned it might push bad decisions to be made by trustees.

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decisions to be made by trustees. Understand what she is saying. There is always the balance in terms of the long-term decisions that of the long-term decisions that should be made on actual aspects but I also understand the point that is I also understand the point that is I also understand the point that is being made that this is part of a political decision. I will point to the Pensions Minister to be able to the Pensions Minister to be able to come up with a response on that.

Does the government propose to consult on the design on the -- of the mentation power? Does the the mentation power? Does the government think there is a case for changing the law on fiduciary duty to make trustees take account of wider issues such as the impact of Pension Scheme investment in the economy and environment? What would be the pros and cons of doing this? If I might very briefly touch on the LGPS. I slightly disagree with the Shadow Pension Minister and the points he was making their.

Since 2015, we have seen the 86 funds come forward into eight groups. Now the pensions minister is proposing to reduce the system further, who can say what the reasons behind that might be. What is the problem that merging them even further is trying to fix? In his closing remarks, perhaps you could let me know about that. Finally come I would like to touch on the pre-1997 indexation. At the end of March At the end of March 2024, the Pension Protection Fund had assets or surplus rather of 13.2 billion.

The levy has been reduced in 2020 220 million in 2025. If the levy is reduced again, we will not be able to increase it again. It was recommend that the PPF and DWP work together. I would like to raise another issue on this. Again, my honourable friend will be aware of that. The members from the PPF and also the Financial Assistance Scheme members, particularly in their later years, are really struggling. I came across a piece in The Telegraph saying that one of the key supporters of the pension action group and these are members Jackie Humphrey who died recently just after the death of her husband.

They were both employed by a company which folded and like hundreds of others, refused to leave it there. Is there any comfort we can provide? I understand and recognise what he is saying about the surplus on the PPF being on the public sector's PPF being on the public sector's balance sheet, but given that these people are in their 70s and 80s and unable to live in dignity, what can we do to provide better conditions

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in their later years? Liberal Democrat spokesperson, Steve darling. Thank you. As the Liberal

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Thank you. As the Liberal Democrat spokesman, I would like to not disappoint the Minister by not disappoint the Minister by ensuring him we have agreement with an awful lot that is within this
19:39
Steve Darling Portrait Steve Darling MP (Torbay, Liberal Democrat)
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an awful lot that is within this bill. However, there are some areas that we touched on in our meeting earlier today where we do have concerns and they are not dissimilar to my colleague in more ways than one. For us as Liberal Democrats, it is ensuring that the individuals have confidence and given the ability to actually invest, knowing what they are about, and supporting businesses to be able to get their pensions out and supporting the employees. Elements of this bill is about re-engineering to actually drive better outcomes for those who have pensions and that is to be very much welcome.

Also the investment. For us, it is about making sure that the individuals are front and centre of that support. After all, we know and others have already alluded to this, that there are 12 million people who are not saving enough, and the challenge for me I know in my own constituency of Torbay is that some people have challenges just to get enough money to put rent on the table and cover their bills. And yet to save would be he owned their wildest dreams for their pensions.

Reflecting on how we can drive that agenda of supporting people to make those changes around how they can save is absolutely essential. I come to my father who was a lorry driver and was self- employed. He saw the poverty that his father lived in, and he chose in the 1980s to save for a private pension as Mrs Thatcher suggested. He did and he put probably have of his income at times into savings but because he was poorly advised, the stock market crashed and he was left with less money than what he actually put in to the savings.

That was horrific for him. Fortunately, was horrific for him. Fortunately, the system is now protective -- more protective of people who put into pensions, but it is a cautionary tale of what can go wrong. So making sure we are supporting those is absolutely essential. As Liberal Democrats, we welcome the development of larger pots that will hopefully drive better outcomes for individuals. Also, we know that in our more complex world of employment, many people will have small pots so whilst we welcome the idea of drawing these together in certain parts, we are not convinced whether perhaps the pots should follow the pensioner rather than having certain points that the government would manage.

That is to be discussed elsewhere as part of these proposals that we have before us today. And then the final area that I wanted to explore was investing in our economy because clearly growth is absolutely essential. And if our pension industry can be part of what oils the wheels of growth then that is to be welcomed. As Liberal Democrats, making sure that we are driving social rented housing which is desperately needed and our high street and seeing if those can be areas that can benefit from investment is absolutely essential.

However, I would agree with colleagues who have already raised this, that we do have concerns around mentation. The Minister has said positive things around mentation. We look forward to unpicking that through the committee with him. But we believe that part of that is making sure there is clear transparency and what we would also like to do is make sure that there is clear evidence as to how pensions are helping us drive climate change in a positive way and preparing for that.

In conclusion, we want as Liberal Democrats to make sure that the pensions themselves are roaming the pensioners themselves are front and centre. Fresco driving that positive growth in our economy is absolutely essential as part of these proposals -- for me, driving that positive growth in our economy is absolutely essential as part of these proposals. Thank you.
19:44
Sarah Edwards Portrait Sarah Edwards MP (Tamworth, Labour)
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I am delighted to be speaking in this debate today. In a former life, I was the trustee of the pension scheme and sat on the investment subcommittee. In my new incarnation, I'm a chair of the all-party Parliamentary group on pensions and growth. Pensions sound boring too many and to the young far away. Is difficult to engage with people. People are not saving in a. It's hard to think about and it's a scenario that could be for some 30 years away.

Albert Einstein said the compound interest is the eighth wonder of the world. Paying into your pension pot from an early age exponentially increases your pension pot and this is one of the reasons why am passionate about people understanding pensions or rather their retirement income. What we can do as a government to boost them. The sooner we start, the wealthier we can all be in retirement. The Pension Schemes Bill aims to strengthen pension investment by supporting around 20 million people who can benefit from the reforms.

Through better outcomes and better value and increasing the amount available to the. I support the aim of this bill to enable the reforms of the investment manager -- management in England and Wales. The aim of these is to make sure that the management of the LGPS investments delivers the full benefits, skill, including greater expertise, better value for money and improve resilience. One of the key engines of growth will be unlocking the potential in our local authority pension funds to direct investment towards the UK, and in particular, local and regional development.

It is vital that investment reaches before went beyond those areas -- beyond those areas. I would therefore encourage the Minister to foster the emerging ideas on how local authority pension pools can help review potential local investment opportunities to achieve the best outcomes. I will

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An excellent speech and a powerful group has been convened powerful group has been convened with the City Minister playing an active part in the last meeting. Does she agree with me it is appropriate for high streets and local entrepreneurs to find new forms of investment to help business?

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business? Absolutely. I thank my honourable

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Absolutely. I thank my honourable friend for the contribution because it's essential we make sure investment gets two times in high streets, not just cities and that people -- gets to pounds and high people -- gets to pounds and high streets are not just city. This is streets are not just city. This is currently in transition. They cannot allocate assets far not members of allocate assets far not members of the new rule they will join and the investment strategies are on hold investment strategies are on hold until they joined the new pool.

I would like to ask the Minister to would like to ask the Minister to liaise with colleagues who have been involved in the process of local government reorganisation and government reorganisation and whatever the framework is, the pension fund will still be there. pension fund will still be there. Local authority workers in my constituency are part of the Staffordshire LG PS, one of eight authorities owned by Central who reported £29.9 billion of assets under management. The scale of the funds underlines the link between pensions and growth.

The partnership was announced in 2024 by the Chancellor and Secretary of State for Business Entry and sits alongside the British business bank and they want to put growth into innovative companies and create jobs. The partnership aims to raise hundreds of billions of pounds for investors including venture capital and this is part of a cornerstone investment for the capital. It leverages the British as this banks expertise and offers pension funds a fruitful investment opportunities delivering for members and the British public.

By blocking investment, the partnership seeks to enhance competitiveness in future industries, particularly in technology and innovation and I'm fortunate we have an innovative technology business which has grown the workforce over the past 35 years. Linking pension funds to growth, it will be possible to create opportunity to see Britain at the forefront of markets. An area of caution is the trend towards finances being pulled into funds of which there is limited parliamentary oversight and I must raise concerns and we must ensure the taxpayer and pension PR money is distributed appropriately.

-- pater. It has been a great pleasure to meet with colleagues and speak about where the strengths and challenges lie on the proposals and I thank the Minister for attending the meeting to assist us in gaining a better understanding of the approach she is taking the next stage of the bill and I invite colleagues to come along and join us on Wednesday. Chapter 2, part one, enables the surplus to be paid out of more defined benefit schemes and safety regulatory framework will ensure responsible sharing of funds and it may determine that as a deficit or surplus but they are both only a snapshot in time despite the contribution of highly skilled actually.

For example, a scheme evaluated this spring would have reflected the moment of the US reflected the moment of the US President's decision which had asset prices at alternative circumstances could have created a surplus. I've been to this process as a trustee and must put my scepticism on record about the scepticism relating to surplus and I as they minister to reassure constituents that he recognises must be fly in the interest of scheme members and would be welcome to look at heavy definition of surplus is defined by the way of how it would be calculated.

There are many different versions through canvassing the pensions industry. Chapter 4 of part two is provision made for providers of automatic enrolment and pension schemes regulated by the Financial Conduct Authority. They would be permitted to change the way it is regularly, transfer to a different scheme with the same provider or transfer the pot to another provider without individual member consent. Where it would be in the best interest of members are on the whole. I welcome the fact the bill states a range of procedures must be followed before oversight occurs.

It is a sad fact and often difficult to engage members in the details of the pension and this is true when there are small pots accrued early in life and with the rise of insecure work which has been the normal and I welcome the fact this will create fear and secure work because working people are protected not just at work but when they sit at retirement age and thinking about how the career contributed. Will the Minister ensure safeguards are clear and given real problems? The narrative must be positive.

It will confer powers on the Secretary of State to make regulations to evaluate and promote the value for money of pension schemes and unable to find contributions occupational schemes -- to find contribution to occupational schemes and there is an argument that too much focus on cost for this example being management fees has had a detrimental impact on pension funds and this would stem from an approach which says if the fund is chosen based on cost then the fund can minimise the cost and look at what has characterised part of the market and that is why little investment has taken place so far and therefore pushing forward in the value for money agenda is the way in which the Minister can encourage more investment, strengthen competition and ultimately offer better returns for members.

Chapter 3 in part two will enable schemes to participate in the default fund for this to be used in automatic enrolment properties and the aim is to encourage smaller ones to merge into larger ones to invest in the UK. There are two issues with the first relating to market assets and the price of the good rises if there is a shortage of the good and the government has been innovative in asking for investment in assets including infrastructure and assets vital to where people live and there are new profitable investments in the Kippish in a particular direction.

Tamworth is a rare breed of pig and without opportunity to expand support first, any ministerial direction to buy the stock of the Tamworth pig would

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spread the price and lead to poorer returns for investors. It is a wonderful speech and it

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It is a wonderful speech and it is distinctive and moving away from is distinctive and moving away from animals, perhaps we can say more animals, perhaps we can say more about the success of the type of legislation in Australia which legislation in Australia which delivers real value to investors and savers.

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savers. There has been interesting changes in the way they have changes in the way they have conducted the review and I'd be interested to hear what the Minister has heard and certainly we have has heard and certainly we have learned a lot about real growth and learned a lot about real growth and real change in the countries. I would urge the Minister to focus on expanding the pipeline and building expanding the pipeline and building on the success would be around

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creating a voluntary framework. The honourable that he refers to

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The honourable that he refers to good opportunities and this gives a good return because it provides steady return over a period of time and so does she believe that would be a rare opportunity for these

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funds? Is important we make sure the investments are put into things that investments are put into things that will change lives and building will change lives and building houses will do that and she will be aware of the fact the state pension is calculated on the basis people are going to own a house in are going to own a house in retirement and were heading to a place where they will not own a home and it might not be enough.

In and it might not be enough. In conclusion, it offers a great deal to constituents with the respect of to constituents with the respect of better places to invest for the future of the living standards are higher and for younger generations, real need for investment now, in the long-term future of the economy, to long-term future of the economy, to eventually retire with an appropriate income to sustain us. There are fitted to channel There are fitted to channel investment beyond major cities and mural authorities to shire districts to deliver change at the heart of to deliver change at the heart of to deliver change at the heart of the mandate.

-- mqayoral. The bill has that opportunity and offers positive opportunities but there will be challenges and I asked the will be challenges and I asked the Minister to take forward with a listening ear as he looks at pension listening ear as he looks at pension and growth for long-term benefit for us all.

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I am afraid you will have to

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I am afraid you will have to forgive me for puncturing the positivity about the bill because positivity about the bill because I'm not with it and it's my duty to be suspicious of consensus, be suspicious of consensus, particularly when the city of London is conspiring with Labour to mess is conspiring with Labour to mess around with pensions and there were so-called reforms in 1997 and this so-called reforms in 1997 and this struck a hammer blow to the pension struck a hammer blow to the pension fund and the late great Frank Field was called a spectacular mistake was called a spectacular mistake which struck a hammer blow to the which struck a hammer blow to the solvency and drove a dagger into the heart of the find benefit landscape heart of the find benefit landscape and resulted in extinction and I rise to raise significant rise to raise significant reservations about this legislation on the instinct it betrays because on the instinct it betrays because it is wrapped in reform but actually it is wrapped in reform but actually this is in control and there are risks to disenfranchise the people that it purports to help and persist.

I would reiterate on the point of, I am a member of the scheme and the authority and I'm uniquely affected by the legislation as our 6.5 million other public sector workers in my view is that their rights are being denied and they should have the right to petition the committee to explain why they are affected with investment pulling and the changes investment pulling and the changes to the traditionally legislation and they are uniquely affected and this strikes at the governance of the pension fund into they have paid and it does not affect other in the country and if we're going to look at the rules, we should stick to them and I'm looking forward to the G promised and you've asked me not to refer to the procedure and the other place -- looking forward to the procedures you have promised.

The honourable Lily asked the Minister the problem and I would repeat the question and also what has it got to do with him? It is my money and not Hayes and it is for members of the scheme to make decisions and it is not taxpayer money but my money and we have all paid into it and 52nd minister to try to interfere with the pension scheme and I stood in the chamber and opposed Michael Gove who is a Lord in the other place when he attempted to manipulate the local government pension scheme for political reasons and I urge the Minister to think twice before he Secondly, I believe this bill is conceptually flawed.

If we are being conceptually flawed. If we are being
20:01
Kit Malthouse Portrait Rt Hon Kit Malthouse MP (North West Hampshire, Conservative)
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Obviously, the ambition behind this bill is to unlock capital that can be invested for the purposes of growth. The method is proposes are growth. The method is proposes are chillingly... And make the assumption that Whitehall knows assumption that Whitehall knows best. That assumption by best. That assumption by government... Essentially, what he is doing with this bill is turning the pension fund industry into an element of government procurement by element of government procurement by the back door.

There are three further points I want to raise just further points I want to raise just to put on the radar at second reading. I understand the bill is reading. I understand the bill is going to go through but I hope the Minister will take this into account. First of all, it is not account. First of all, it is not true that megafunds perform better. There is plenty of academic and There is plenty of academic and empirical evidence that actually the picture is much more mixed, and that often smaller funds with better governance and a more focused investment strategy can perform better.

Of these supertanker better. Of these supertanker monopoly funds you -- lose agility, they become distant from pensioners and members of the fund, and their investment discretion and their ability to move quickly on investment decisions becomes sclerotic and Socratic. In particular, this is true that these megafunds underperform when they invest in the kind of liquid assets the government is hoping to push them into. Into infrastructure and private equity. I would urge the government and the Minister to examine carefully the evidence from the United States and elsewhere that shows that these very large funds do not necessarily produce better returns for investors.

They may well be able to reduce costs because of scale but in terms of fundamental investment terms, I'm afraid the evidence is just not there. The second point I wish to raise is the danger of politicisation. We have seen elsewhere in the world were pension funds have been pushed into government priority to their own detriment. In Canada, were large pension funds have come under significant government pressure to invest in state infrastructure, and in France, were pension fund surpluses have been directed into government bond buying programmes, effectively against their will.

Once these assets become controlled and directed into state-favoured investment vehicles, which is what the government is proposing through this bill, the temptation for ministers, not necessarily this Minister but future ministers, the temptation for ministers is to go further and put funds into politically convenient infrastructure project, which may prove to be financially disastrous. It becomes clear if this power, for example, had been available to the political team that decided to instigate the frankly financially disastrous HS2 and put my pension fund and it, where would I be now? I would urge the Minister to think carefully about the responsibility for my retirement and my future, and by me I am referring to myself as a member of the pension fund, so for my purposes and my pension, where would I be? I'm afraid that essentially what has happened in France and what happened in Canada and what may happen under this is that the UK pension fund system effectively becomes a tool of government fiscal policy that effectively absent capitals spending, the government directs capital spending from pension funds come from private money, and plugs holes that it itself creates by writing checks it cannot fulfil.

I would be interested in the Minister's response to that. Finally come I wanted to echo... Yes.

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I'm grateful to my Honourable

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I'm grateful to my Honourable friend for giving way. Would he like to comment on the fact that to comment on the fact that owners... These megafunds returned a owners... These megafunds returned a 7.1 return over the last year. --

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Last 10 years. The evidence about performance across the population of funds is across the population of funds is mixed. Some smaller funds do extremely well. They do well because they have strong governance and a focus in the investment strategy. focus in the investment strategy. Megaphones do reasonably well because they are able to spread risk across a variety of asset classes. across a variety of asset classes. It is not a given that a big fund will perform letter than a smaller fund, though.

In certain circumstances, smaller funds may well because they have better accountability and are able to have a better focus investment strategy. a better focus investment strategy. They may well perform better. Frankly, and this is to this point, performance or otherwise, it's for me as a member of the pension fund to decide what I wanted to, because it is my money. My view is it is not necessary under circumstances which were made clear to me when I contracted within in it as part of my employment or otherwise, it's not necessarily for the government to steam in and tell me what I should and shouldn't do with my own money.

That means I carry a certain element of risk. Absolutely. Unless we are going full throated for the total financial and fertilisation of British people, I can't see we have

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any other way to present our own financial freedom and autonomy. My right honourable friend makes out he might be a typical to the

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rest of scheme members. That may well be true but that's a different question. I think there is a question about financial is a question about financial education and the ability of large numbers of our fellow citizens to understand some of these financial understand some of these financial complexities. We have a large and complexities. We have a large and very professional IFA community. I very professional IFA community. I do think over the years steps like this have disenfranchised the this have disenfranchised the British people from their own financial decisions and yet we hold them responsible for their debts and responsible for mortgages and responsible for mortgages and responsible for their future.

And I think there is a larger question for us in this House about how much we have subtracted from the autonomy of the British people and therefore how the British people and therefore how much blame attaches to us as politicians when their own financial circumstances are not what they expect.

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I thank him for giving way and he is giving a lucid speech as he always does. He speaks well. And failing to understand the exact point he is making. Is talking about Local Government Pension Scheme which is guaranteeing him an income which is guaranteeing him an income in the meantime. As opposed to a contribution scheme where he is at contribution scheme where he is at risk for changes in investment risk for changes in investment changes. It is our job to make sure those taxpayers have the best possible chance of not having that returns leading to bad outcomes for returns leading to bad outcomes for them.

He is not a risk at risk and the way he is talking about.

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the way he is talking about. But I have paid into that scheme. Yes, I have. I paid contributions through my employment at city hall. through my employment at city hall. I paid into that scheme, as did my employer. Admittedly, it was a employer. Admittedly, it was a scheme that was based on a defined and if it rather than a defined and if it rather than a defined contribution. It was done on a settled contract that this is what I would bring forth in my contribution and every year I review my pension benefit forecast and consulted by benefit forecast and consulted by the fund about how it should conduct its affairs.

I must to turn up to my its affairs. I must to turn up to my pensioners conference to discuss with trustees about how they are looking after my future and the point is government is steaming and with no consultation with me as a pensioner, no consultation whatsoever, and no right to be -- I have no right to be represented even though I am affected. I find it high-handed. It is solving a problem quite frankly that does not exist. And the third point I wanted to raise is one that my honourable friend of the frontbench race.

Who carries the can? When the Minister tells my private pension scheme or tells the parliamentary pension scheme they must invest in HS2 and it turns out to be a disaster or whichever ministerial pet project rises to the top of the priority list for pension allocation, what rough beast has come round at last and slouching towards Whitehall, when that goes horribly wrong... When that goes horribly wrong, who will pay? When there is a deficit on defined contribution pension funds that have been so affected by -- so highly spoken of by the honourable gentleman.

When he says that the bill contains pension funds, that is not strictly accurate. It doesn't create an opt out for trustees. It creates the ability for them to request the ability to opt out from the regulator. The discretion to opt out lies with the regulator. It also reverses the burden of proof. That the trustees have to prove even if it is upon their own judgement. They have to empirically prove that investing will be further detriment of the fund.

This is not a true. It's not at the discretion of the trustees. All they can do is request and all they can do is try to offer whatever evidence they may have. And I have to reflect on the fact that an awful lot of investment decisions are made by trustees on the judgement. Yes, on advice but on judgement, and that is a very hard thing to disprove. So just in conclusion, I'm afraid I feel this bill is bulldozing into an area of highly sensitive financial structure, and is not taking care, frankly, with those people's interests which it purports to protect.

It is reclassifying risk, it is re-centralising power, and it is rewriting contracts that have hitherto been existent for many years. It is too important I'm afraid to my future and the future of millions and millions of pensioners first you rust into this consensus-driven bill without there being proper examination in committee with pensioners themselves and pension funds themselves able to petition as they should be under a petition as they should be under a

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hybrid bill structure. Thank you. I'm probably a parliamentary oddity and that I am writing to oddity and that I am writing to support this Pension Schemes will. support this Pension Schemes will. I'd like to cover an interesting intervention by the honourable gentleman. I think this is a gentleman. I think this is a landmark piece of legislation which does build on the progress made by does build on the progress made by the previous administration. It has the opportunity to fundamentally the opportunity to fundamentally shape the trajectory of British capitalism by addressing one of the capitalism by addressing one of the most important, long-term challenges facing our country.

Namely how we unlock and unleash the full potential of British savings to support growth and prosperity here
20:14
Callum Anderson Portrait Callum Anderson MP (Buckingham and Bletchley, Labour)
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support growth and prosperity here at home. It is a challenge we must overcome if we are to tackle the number of deep-rooted structural weaknesses in our economy. Be that productivity, the business -- low business investment as well as the financial insecurity that purveys across too many of our older citizens, especially those who don't own their own home. Before I go further, I pay tribute to my Honourable friend the member for Swansea West, the pensions Minister. I also commend the speech made by my Honourable friend who had a very interesting speech.

This bill seeks to address the issue of alignment between our nation's domestic savings and long-term investment needs of our economy, and over recent decades, that misalignment has become all too more evident in communities across the UK. Our domestic tension funds now are mounting to around £3 trillion and have steadily retreated from investing in the UK itself. This is over the past few decades. This is not a trend that has been replicated in comparable economies. Despite receiving over 60 or 70 billion, a year in taxpayer support, too little capital is finding its way into British companies, British infrastructure or British innovation.

And indeed, data from the capital markets industry task force, and I must disclose I used to work for one of the companies before entering into this place, it reflects the scale of the problem. This is primarily focusing on public This is primarily focusing on public When music in other countries and compare the total allocation relative to the domestic equity market, Canada's pensions are 2.5 times over with. France's nine times in Italy is 10 times and Australia is 27 times and South Korea is 30 times.

The UK is massively of the pace and domestic pension funds are underweight by around 40%. I think this represents a structural weakness with direct consequences for global competitiveness of the economy and the vitality of industries and ultimately economic resilience and they believe we will invest in ourselves and ultimately holding back long-term growth prospects. The UK has long needed catalysts for modern economic renaissance and I believe the government has taken important first steps and the industrial strategy, the AI action plan, reforms to planning systems, but the current ingredient required to ensure success is a reliable source of long-term capital and I think that even a modest rebalancing of that could unlock billions of investment in domestic growth and will currency that constituents will understand and the digital, physical, social infrastructure and great infrastructure and great opportunities for us to look at this and make it something globally consequential, providing better jobs and higher incomes and across the country.

These investments are not only good for economies but getting the fundamentals right delivers the growing cohort of retirees and the government is right in proposals to tackle this across the pension system and with the market and the NHS which remain to fragmented. I agree with the honourable member opposite and there are too many schemes which have driven up cost and that has resulted in less suboptimal outcomes. Larger funds can manage risk better and investment opportunities for higher

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returns for savers. I do not dispute there are too

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I do not dispute there are too many funds but my question is whether it is a government that whether it is a government that should correct the issue. If the should correct the issue. If the government consolidates another pension fund and that turns out to pension fund and that turns out to reduce my return, who carries the can?

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can? Thank you. I thank the honourable

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Thank you. I thank the honourable gentleman for the response and gentleman for the response and larger funds can manage the risk and deliver better outcomes for savers deliver better outcomes for savers and we have to take more control of how they spend retirement years and I think the threshold for our mega I think the threshold for our mega funds in the market is the right level to deliver on the objective level to deliver on the objective and as we have seen in other and as we have seen in other jurisdictions, especially Canada, Australia, the Netherlands, they Australia, the Netherlands, they have demonstrated skill does lead to better governance and stronger returns and I welcome the path towards professionalisation of the local government pension scheme and before I entered this place, I was also the chair of the local authority pension fund.

There are many experiences with the Shadow Minister. I respect that there will

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implemented... My honourable friend is making an excellent speech but there is consensus with trade bodies involved consensus with trade bodies involved in promoting this for some time and perhaps what we're talking about is within the pension industry and duck

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I thank him for the intervention

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I thank him for the intervention and in terms of people I've spoken to in the local government sector to in the local government sector and we are unanimous that it is an and we are unanimous that it is an economic imperative and I would be economic imperative and I would be grateful if he returns and perhaps we can discuss whether the we can discuss whether the government has considered the role of the centres or the role that they can play in helping to drive the exhilaration of consolidation of the funds and if there is scope to funds and if there is scope to reduce the number of pools in the year ahead.

I also welcome the year ahead. I also welcome the proposal in the bill for a comprehensive value for money three to guide the consolidation, as my honourable friend, the member for Tamworth, was saying. It tackles had owned the issue of the mindset which often prioritises the cheapest of the most appropriate allocation and that approach is tried and tested to deliver poorer returns for savers and missed opportunities with the economy and so I hope it can be implemented as soon as possible.

Finally, I want to address the issue of foundation which might warrant a debate all by itself and I appreciate the concerns raised by colleagues across the House and I refer to the honourable member for Shoreditch who referred to the Parliamentary fund and without being facetious, I was not it is barely 1% of assets to UK companies...

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I thank the honourable member for giving way and in Hampshire the giving way and in Hampshire the population is ageing and so financial returns are frequently financial returns are frequently raised in my constituency and one constituent group to me and said, because I Want My Pension to Deliver Sustainable Long-Term Growth and Sustainable Long-Term Growth and Prosperity to Allow Communities in the UK to thrive. It should require full transparency to empower them to support sustainable long-term growth in communities.

Thus the honourable in communities. Thus the honourable member agree that transparency would

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be the most effective way of incentivising investment? I thank the honourable lady for

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I thank the honourable lady for the intervention and the financial markets, public or private, the markets, public or private, the disparity is the best way to derive the most beneficial outcomes for the most beneficial outcomes for those benefiting from schemes and those benefiting from schemes and what energy difference has been referred to a number of times has been a welcome step and private sector leadership when it comes to asset allocation should always be preferable where possible and I think we must be candid that the challenge we are facing is start in the UK and it is immediate.

I consider it to be necessary that the government can signal to the markets that it will not ignore the reality that this allocation has fallen sharply over my lifetime and certainly recently and it is prepared to exercise the degree of empathy required. Any reserve power would not be required to be used and if the government succeeds in the broader economic strategy, there will be a wealth of investment opportunities to attract capital and the government will need to exercise power and this means we simply cannot allow the domestic market to be hollowed out and not everyone is in favour of the state intervening and the Minister, my honourable friend, he will remember working with the Treasury and in terms of rescuing Lloyds through RBS and sometimes the government has to act decisively in the long-term interest and so, in conclusion, I think the and so, in conclusion, I think the bill is welcome and necessary step towards answering the question of injecting greater confidence into companies and markets and the economy and providing people with retirement and I am pleased to support this.

support this.
20:26
Kirsty Blackman Portrait Kirsty Blackman MP (Aberdeen North, Scottish National Party)
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I start off with the apology to the Minister and I had a giggle when this was mentioned and I've been here for a long time and we talked about this for the entire time I've been here I suggested they are around the corner from most of the last 10 years and it feels like this is something that we talk about on a regular basis and it would be great if we were around the corner and I look forward to them coming forward and a few comments on the bill, firstly, I am unsurprised that our ideologies are different on the subject of interventionism and I believe it's acceptable for the believe it's acceptable for the government to choose direction in relation to specifically, and I will give way at the second, this is not a car in Scotland and that does not apply to constituents...



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I understand that if she is keen on this, she recognises it on this, she recognises it represents a risk and therefore the government should underwrite the government should underwrite the risk and fairness to pensions? Three risk and fairness to pensions? Three auto enrolment is part of this and auto enrolment is part of this and auto enrolment is part of this and there are rules around the pensions having to increase after 1997 and there have been a interventions by there have been a interventions by there have been a interventions by the government and in terms of where the assets are held, and the trustees still have this requirement trustees still have this requirement and I agree with relation to specific projects and I would have concern looking at projects, the imagination is around UK assets and around the places that could be around the places that could be invested and I would love to see the investment in social housing, for investment in social housing, for example.

In terms of defining benefit schemes, the member will always get what he has been promised to get, no matter how the fund is managed and there is defined benefit from the scheme, unlike the contribution scheme where it is the size of the pot that grows. I will carry on. There is a lot to do. In relation to value for money, and issues around looking at value for money, it is difficult and competing There are ways this does not make sense to most people and value for money is important and I think it's important that in terms of the surveys, I have some concerns with the value for money section but in terms of the consolidation section for smallpox, there is no requirement to publish draft regulations before they actually become regulations.

There is a requirement for consultation and not the requirement for draft and I think it would be important for those to be published so the widest possible range of you can come forward because the value for money think it's important to such a wide range of people -- value for money thing is important to a wide range of people and the other part impacts fewer people and that will be in the draft. Talking about adequacy and thinking about it, I'm disappointed the government has not made more moves but given where we are with the cost of living crisis, I understand why it may be difficult to get consensus on the creation of adequate supervision.

I think this bill could have taken more of a look at pensions in general rather than specifically because what the bill is seeking to do is improve every individual's pension pot potential for growth, which is an admirable aim but I think some of the larger picture could have been included in ensuring, for example auto enrolment, people adding small amounts of money who do not qualify for that and looking at those for that and looking at those As mentioned by the previous Conservative member, I agree people should be sent an opponent at the same time as they get their cancer screening.

They get sent through the post, please take part in this. They should get exactly the same when it comes to midlife MOT. It's so important and semi-People duck and dive it, and actually when you are coming up to the point of view that millennial so reaching this point, millennial cyber generation that are particularly adverse to thinking about retirement. Because we don't think it will happen to us. You think we will die before we get there because the amount of cynicism there is a millennial's is incredible, so we tend to avoid thinking about it because we won't reach that point.

So forcing millennial's in the nicest way possible by giving them that appointment and making it for them means they are much more likely to undertake it. In relation to some of the guided retirement things, again I think you tackle the issue pretty well, the bill I mean. Around to ensuring that people have got more information and particularly I'm concerned about the people who drawdown money, the 25% tax-free and then don't have a plan for the rest of it. And how many of them are in a situation where they have just thought about that 25%, having thought about the rest of it and how complicated and unpredictable it can be depending on what year it is, depending on whether...

I was talking about somebody I know who doesn't smoke or drink and runs 10k a couple of times a week. It will get smaller duty than someone who does the opposite, so how unpredictable it is. How much you will get and how you can't tell from what the pot looks like what the actual outcome will be for your living expenses, so I think any kind of understanding people can be given on that is really important. I do still have concerns around some of the issues with freedoms and how financial disadvantage as it can be for significant numbers of people.

In terms of small parts, I agree with some of the stuff around consolidation of small pots. I do have a concern again with the fact that the Home Secretary and the Minister can make changes to the definition of small pots with looking at some consultation and then absolutely taking an aside to the House, but I would appreciate some clarification and agreement that the Minister will consult pretty widely before taking a decision on changing the definition of small pots in secondary legislation.

Going into surplus release, I think I would disagree with a chunk of the members over here who would use surplus release for a slightly different things than what I would. In terms of the surplus release I press the Minister on the balance between the economic growth, mission and what employees will get as a result of it. I'm pleased to hear the trustees will have A-level of flexibility but I'm concerned that this creates a system with a number of tears because it depends on how passionate the trustees are about helping the employees or how passionate the trustees are about helping the government's mission to growth.

So I think some guidance from the government about what they would expect and when they are making that deal with employers, they've got to agree with the employer how much of the money will go to either increasing the pension pots, go into people's salaries, where that money will go. And I think there will need to be a significant amount of guidance for trustees and by the government expects them to go, and it would be appreciated if we could be involved in the creation of that guidance but at least be consulted and what that is supposed to look like.

The last thing on the bill is around the mega funds. I think there is a bit of a wait and see on what mega funds, both in the master trusts and the super funds on what they will look like and how they will pan out. I can understand some of the looking at other places the government considers to be successful around how the pension funds are managed and very large investments that could be created as a result of these huge funds.

I do appreciate that you can again reduce the amount of overheads that there are and funds can be run more efficiently as a result. And then you can invest in very large long- term patient capital projects if you have a significant size of fund. The question I had specifically on the super funds was a brand-new entrance to market. It says that there is an ability for firstly transition, say the organisations that are likely to meet the Superfund status at some point in a certain given level of time perhaps like given to them until they can reach that status, and that is utterly sensible.

But then talks about new entrants, and talks about new entrants coming into becoming a Superfund. There is a pathway for that and an ability for them to get an approval to do that, but only if they are innovative. And I'm slightly concerned about what innovative means because it's not defined. I think you will be defined in the secondary legislation that comes through. But why should they be innovative? Surely if a new entrant is excellent, that should be enough. Innovative concerns me and I don't really understand what it means or why it is in their for the rules around new entrants.

So anything the government can say to explain what they think that is supposed to mean and what they intended it will mean in the secondary legislation would be really helpful. On the whole, the SNP is cautiously optimistic about this bill. We do believe there needs to be some changes about it. We have some very specific questions in various areas, but largely in terms of the rationale towards even the rationale in relation to mentation rationale and the rules in relation to value for money and fallible impact individuals.

The consolidation of small pots and again how that will ensure individual have better outcomes because small pots are consolidated because small pots are consolidated and it's obscene here but pulling up the pension dashboard and making sure that happens so people can see the consolidation of small pots happening in real time. There will be incredibly helpful. The best outcome we can get is to have everybody have an adequate pension when they reach retirement and we are not coming together if people can't see and understand what they

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have in their pensions and if they small pots are not consolidated. Thank you. Before I caught the next speaker

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Before I caught the next speaker I just want to be clear that it will be about an hour before windups. There are nine members bobbing, so perhaps you can all reflect on that in your contributions so you don't

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have to put a time limit on. Arrester speak in favour of the bill. On a policy basis. It bill. On a policy basis. It addresses a number of very important challenges we face, the verses
20:39
John Grady Portrait John Grady MP (Glasgow East, Labour)
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challenges we face, the verses ensuring the pension system delivers good outcomes for millions of pensioners in Britain. And that's critical because in my lifetime the critical because in my lifetime the risk of pension saving went to the employee, in other words to our constituents. And at the heart of these reforms is one essential fact, that investment in a diverse set of assets needs to better returns my leads to then investment in a narrow set of assets. And move away from a focus of cost in the industry and onto a focus on overall value of the outcomes that savers get so they have comfortable retirements.

And I'm determined that working people in Glasgow East have comfortable retirements and are properly rewarded for their hard work. And therefore the bill's objective of ensuring the savers in Glasgow East and across the United Kingdom have ultimately access to a wider pool of investments historically have been restricted is a good outcome and a good policy. The second challenge that the bill seeks to address is growth. And people in Glasgow East are very ambitious as I know are people in Aberdeen North too.

As I knocked ahead of last year's general election on doors, people said Britain has lost its way and may people said they felt their children will be better off working abroad with more opportunities. And it's this challenge that this bill pays a part in addressing. Because we do not invest enough in our productive capacity, and therefore we have lower skill erotic economic growth. And pension savings are an essential source of finance for British industry and British infrastructure. Now in that regard the bill includes a chapter 3, something that seems to be causing some anxiety, which is the backstop mentation of investment and contribution pension funds into privacy classes linked to the United Kingdom.

One thing I'd say his private none listed shares and there are now essential in the way that they were when I started off as a junior lawyer many years ago. Growth companies in areas such as medicine, AI, technology, and of course space remain private for much longer and list on public markets much later if frankly at all. So this mentation power must be viewed in that context. If UK pension funds do not address these classes of domestic assets, working people may miss out on significant returns and we also risk losing the opportunity of growth in developing the great innovations from our fantastic

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universities, including Strathclyde. I'm grateful to the honourable

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I'm grateful to the honourable gentleman. He is making a good point, but would you accept that a liquid make illiquid investments by their very nature tend to be more volatile and from a risk-adjusted volatile and from a risk-adjusted point of view, they represent therefore much higher risk for investors? He mentioned investment in for example life science in for example life science companies. He will be aware of the companies. He will be aware of the collapse couple of years ago if the fund led by Neil Woodford which was a significant investor in illiquid private sector life sciences companies, and because of that volatility and illiquidity collapsed.

The point is if we are mandated to do their stuff, again I asking the question as I asked his asking the question as I asked his colleague, who will pay? Who carries the day?

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I hope my honourable friend would accept that diversification is a critical thing here. Of course illiquid private assets are not something one hot/obvious and then something one hot/obvious and then sells but provide for funds and the size of the funds are designed to be large enough to bear risk from diversification. I think that is the diversification. I think that is the critical point here. Now pension funds are a statutory arrangement. With significant taxation and legal benefits.

This of course creates an opportunity for pension providers and quite right too. But against that background I gently say that it's right that the government does review whether these arrangements savers are getting a fairer term from this special statutory and legal arrangement. And given the tax breaks, it's not unreasonable to address questions as to whether there is sufficient investment in the United Kingdom. I want to close by making a remark about our attitude to risk in the United Kingdom because the success of pension arrangements turns our attitude to risk is to sell a desire for more economic growth.

We will not get more economic growth unless we take more reasonable risks. As Chancellor of the Exchequer and others have made clear. And it is essential the banks and fund managers consider whether they are taking enough risk. This was a point made by the Chief Executive of the National Wealth Fund last Tuesday the Treasury Select Committee full to pieces as follows, " I would encourage them to go back and challenge them in their risk appetite. Countries growth outcomes are familiar, largely consistent with countries with appetite generally." And I would venture to say that our great fund managers need to turn their lines to whether they are taking enough risk because that drives economic growth and drive success outcomes for savers.

Another aspect is the individual savers and this was all to me at difficult or which promotes the history of football in Glasgow East. They explained to me as we stood in Glasgow East and Glasgow South too that Queens decided to organise the first Scotland England international match in 1872 will stop the Queen's Parkhead just over 7 pounds. They had a choice, the low risk to hold the match free of charge. The higher risk was to halt the match at the West of Scotland cricket club.

This was an old ground. You could sell tickets and potentially get revenue. The problem was the West of Scotland cricket club wanted more by way of friend than the football club Queen's Parkhead, much more than 7 pounds and the guys put the choice to all of us as we stood Justin Classico South constituency, just out of my constituency and the vast majority of people take the low-risk option, an indication of the end of the week as to how risk averse we have become in Britain.

And encouragement of economic risk- taking is crucial to pension saving everyone economic growth. In fact Queen's part to the high-risk option were rented the cricket club, made a huge profit and the game transformed the profile of football and was a foundation for Queens with the first international for the stadium in the world opened a year later in 1873. Queens particle risk which was pivotal to development in modern football and modern verbal contributes billions to the Exchequer. So the point I make here is risk is essential to economic capital.

As Mr Flint made me earlier and illustrated later on in the The bill is critical for economic growth, takes active steps to ensure that money flows to the entrepreneurs and risktakers that will create wealth across Britain and ensures that working people have

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access to better pensions and on that basis I support the bill. I regret the fact that pensions

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I regret the fact that pensions minister is no longer in his place because I didn't want him to pay him because I didn't want him to pay him something of a compliment in getting this bill here today with typical ambition and enthusiasm. I do have
20:47
Lincoln Jopp Portrait Lincoln Jopp MP (Spelthorne, Conservative)
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ambition and enthusiasm. I do have to remind him that my grandmother's favourite saying which is that amounts of experience is worth a ton of enthusiasm. Because while I stand here to talk about part three of the bill I do so on the basis of about four years experience as a director of first the pension Superfund, and attempting to get it through the pensions and the interim regime that was put up under the last government. It was ultimately unsuccessful and part of the reason why we are going to need the pensions ministers enthusiasm and ambition is because he will come up against a series of vested interests, and one we attempted to launch the pension Superfund and I welcomed the pension minister back to his place I'm grateful for him to be here to listen to this, we were bombarded by people who wanted to strangle the Superfund in the street strangle the Superfund in the street at birth.

The Association of British insurers, an extraordinary intervention by the governor of the Bank of England, I'm not sure of the pensions minister has had a chance to reprogram the governor of the Bank of England recently, but certainly I would hope that he is going to be more enthusiastic about his proposal than he was about the last governor. Lastly the pensions itself. -- Regulator itself. I think the Minister wants to create a thriving market in the super funds. However capital requirements for super funds under the current interim guidance around twice those for insurers providing buyouts, that hardly surprising we have seen the number of recent new entrants to the insurance market but no new super funds.

The solvency to regime which applies, apology to the type technical language here, the solvency to regime which applies to insurers works from a one-year 99.5% confidence level, but over time the industry has been allowed to apply a number of important adjustments including diversification, matching adjustments and deferred tax credits. All of which have had the effect of effectively reducing the capital requirement for insurers. In combination these mean that the capital buffer for a buyout provided is approximately half that of the Superfund under the current interim regime, even taking into account the super funds are proposed to handle one-year 99% confidence level.

This bill must address this inherent unfairness if as the Minister wants, the Superfund market to grow. Because at the moment it is the proverbial baby which refuses to put on weight. Can the Minister assure me that this bill will address this problem and create a more level playing field which will allow super funds offer the 10 to 15% pricing discount to insurers which is department has set. There are a number of techniques to achieve this as the Minister knows he might consider specifying super funds applying a 98% one year confidence applying a 98% one year confidence Rule as the matching adjustments as they apply to insurers.

Or extending a VAT exemption to super funds for essential pension services such as admin actuarial and investment including scheme origination and transfers of the scheme to Superfund. All, and I suppose it's in and or, allowing Superfund you structured capital instruments such as subordinated that and preferred shares to lower the cost of capital to enhance investment tax ability without compromising quality. Lastly, and this is the bit where I have the scars on my back, on the pension regulator's process for assessing super funds and giving them a licence to operate, will the Minister take a very close personal interest in this and change the way the pensions to works so that there are stricter and shorter time limits on the amount of time for assessing suitability, shorter than currently in the bill which is six months as a default and nine months there is a stretch.

In the pace -- case of the pension Superfund we had three applications and the use that similar timescale and you can just imagine why the investor's patience finally ran out and the whole thing was wound up. I don't want the Minister to be in the position of the former, his predecessor, who stood in this place and said that green lighting Superfund was his greatest achievement during lockdown. And yet as a result of the combination of the regulatory environment that has been put in place and also the vested interests who argued against birth of Superfund the whole concert was strangled at birth.

So I want the Minister to avoid that and I would encourage him to look back at the experience of the first effort to produce super funds and tell the pensions a great deal more of how it is to do its business. The reason why the pensions regulatory risk averse was because the last government refused in the pensions bill then the Pensions Act to cover super funds and they didn't take the pensions regulated didn't see why it should take any additional risk if politicians were going to.

So I would just encourage the Minister that the strength of his convictions to use primary legislation to tell the pensions the market that he wants it to regulate and then he will give the pension Superfund is a fighting chance of coming into existence and consolidating where notwithstanding some of the concerns that others have had, 5,100 of anything is not a working marketplace and it is right for consolidation as it was then and is

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now. Firstly I might declare an interest as I subscribe to my interest as I subscribe to my current Parliamentary pension and have preserved in its previous occupational pensions and the Member occupational pensions and the Member
20:53
Rachel Hopkins Portrait Rachel Hopkins MP (Luton South and South Bedfordshire, Labour)
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for North West Hampshire chair I too have in government Pension Scheme though I don't propose to speak much and that element of the bill but I suppose as a worker with a variety of pensions I'm going to benefit from this bill coming forward. I do welcome the government proposals under this new Pension Schemes Bill has too many people have their hard earned cash scattered across pension pots deliver poor returns on their pet savings and even confused about the future and worse off in retirement.

The bill will deliver more money for savers by making pensions simpler to understand, easier to manage and return better value over the long-term. The new Contributions to small pension pots to cut costs the same as an industry and how people view their full pension picture easily and protect them from getting stuck in underperforming schemes for years. The bills welcomed by the pensions industry are setting out a long-term plan to create bigger and better pension funds that will boost returns to savers and drive long- term investment across the country.

In the UK pension system we've heard there are more small pension pots than there are pensioners, currently there are 13 million small pots holding £1000 or less with the holding £1000 or less with the number increasing by a million every year. The small pots costly to savers in industry, you can lose money through flat rate charges or administrative costs and deliver poor returns because they're not big enough to invest in high yield and productive assets. The bill will introduce a new value for money system to improve outcomes for savers and it will assess the schemes and the arrangements based on cost, investment performance and service quality.

This will identify and address poor performing schemes or arrangements, encourage consolidation and improve member outcomes were promoting investment in a wide range of productive assets and it will protect savers by getting stuck in underperforming schemes for years. The proposals in the bill will help unlock around £50 billion for investment in the UK economy, easing the rules around surplus funds could help unlock billions for employee thus my employers and deliver for scheme members. For many businesses this may be the financial lifeline they need to free up capital for investment or debt reduction.

To flag that Pension Schemes trustees working with employers will decide whether to release surplus and act in the interest of scheme beneficiaries, trustees will be required to maintain strong funding position so they can pay members future pensions when they fall due stop I asked the Minister whether plans would ensure that members representation worker representation on trustee boards as part of these plans. As I close, like many people I bring lived experience to this space so I am to speak as someone who worked in human resources and was often asked questions by employees about their pensions.

I wait had to say I'm not providing advice solely information. As I dished out their annual pension benefits statements. I'm very aware that most employees just want to understand more about their pensions, what their contributions are and how they will benefit them in the future. I very much welcome the introduction of the pensions dashboard, the long-awaited pensions dashboard I should add, to provide savers with the whole pensions picture including workplace and state pensions, securely and all in one place on the line.

Even if it is finally going to be next year we hope. I commend this bill to the House.

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While this bill aims to

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While this bill aims to strengthen pension investment may improve resilience and boost pension
20:57
Manuela Perteghella Portrait Manuela Perteghella MP (Stratford-on-Avon, Liberal Democrat)
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pots, many of my constituents in Stratford-on-Avon are among the large number of individuals in this country that they serious pension injustices right now. I welcome some of the reforms that the government has introduced in this bill, including the measure around terminal and life expectancy. However I'm concerned that it does not go far enough to protect the vulnerable pensioners in UK now and tomorrow. In fact to ensure that we do not have future pension scandals. Recently I raised in the south the issue of Midland Bank now HSBC invention different pension schemes whereby long serving employees are unfairly deprived of large portions of their DPS pensions by misleadingly labelled deductions.

The government response to this issue is to state that this is a legal process and they are powerless to assist former employees were being financially impacted by these deductions. Disproportionate number of them are women. Experts from Exeter University have put together a number of recommendations for the government that would ensure pension injustice like this scheme are no longer able to operate. If the government acknowledges these injustices now it wilfully continues to keep pensioners, my constituents in poverty. The same can be said for the widows and widowers and partners of former policemen and women upon their remarriage.

Despite the fact in Northern Ireland, Scotland and for widows and widowers of Armed Forces personnel survivors pensions Forces personnel survivors pensions are upheld regardless of pre- marriage or cohabitation. The court ruling in 2023 decided this was not to be the case for widows or widowers of policemen and women. These pensioners deserve consistency across the police force and throughout the UK. Of course probably the most pension -- high- profile pension injustice is that of the WASPI rent women whose reduces to the state pension age without adequate notice and for whom the government had failed to provide adequate compensation despite instruction of the ombudsman to do so.

So I ask, what is the point of establishing the legal powers of the ombudsman and restoring these as a ombudsman and restoring these as a pension court if the government themselves refuse to listen to their judgement. This is by no means an exhaustive list, there are many other pension scandals that need addressing. Finally we don't see an explicit amendment in this bill to support divestments of pension funds from planet wrecking industries. For example local authorities invest around £10 billion in direct or indirect fossil fuels industries through the LTP funds so we must start to protect passengers deliver prosperity for our future generation but also to protect our planet.

We

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must do it now. This bill does represent I think
21:00
Neil Duncan-Jordan Portrait Neil Duncan-Jordan MP (Poole, Labour)
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This bill does represent I think timely attempt to create a system whereby fewer and bigger pension whereby fewer and bigger pension funds can provide better value for members and do more to support the UK economy. But key to this will be ensuring that pensioners get a decent income in retirement, alongside creating the conditions that allow pension funds to invest in ways that benefit the UK, support good jobs in finance a just good jobs in finance a just But this in the direction it is taking also needs to acknowledge the scale of the task it faces.

One in six pensioners today live in poverty. Only 62% of pensioners receive an occupational pension of any kind, and those that do get an average of just £210 a week. Half of defined contributions saved is around 40 million people not on track for the income they expect, and we note that the 2017 or to enrolment review recommendations have still not been implemented. These challenges therefore need to be addressed. Along with I would say the unfairness of the current rules around tax relief, which benefit higher earners, and I think needs reform.

What this bill also does not consider, and it's come up in the debate earlier this evening, is the specific issue of advocacy. And how the state pension -- adequacy, given that the aim is to provide income in retirement, it's vital we look at pensions in the round and not just those associated with occupational or private schemes. Now a statutory review into retirement incomes every five years would therefore enable this government and future governments the oversight needed to regularly assess the adequacy of our pension system, including the opportunity to look at contribution rates from employers and employees.

I'm aware that the second stage of the pension review will consider the pension review will consider these points, but I'd be grateful if the Minister could give a little more clarity as to when this is likely to begin. Now another area of the bill that I think needs strengthening is around the issue of climate change and the destruction of nature. UK pension schemes continue to hold billions in fossil fuel companies, amounting to around £88 billion, including those in new coal, oil and gas exploration as well as having investments in companies linked to deforestation around the globe.

At 85% of leading schemes also lack a credible climate action plan. Consolidating smaller pension pots into larger megafunds absolutely have the ability to invest in long-term infrastructure projects, but these must not be at the expense of the environment.

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Thank you. I thank him for giving way. Would he agree with me that there is a real opportunity here to do something transformational for do something transformational for By existing funds, particularly enabling funds particularly local government and funds to invest in government and funds to invest in much-needed infrastructure like care homes or special schools or even our high streets which would also provide a secure long-term return and could be transformational to

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and could be transformational to local communities with much needed investment? I thank the Member for her

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I thank the Member for her intervention. I think what she raises is the creativity we need. In raises is the creativity we need. In this issue. To look beyond the obvious investments and look at some that are perhaps more socially worthy, and I hope that the bill will allow for that. So for pension will allow for that. So for pension savers to have a secure future, we will therefore need in my view to phase out investments in fossil phase out investments in fossil fuels and as the Chancellor has already recognised, all financial sector regulation and legislation sector regulation and legislation should integrate climate and nature.

I'd be grateful if the Minister I'd be grateful if the Minister could therefore address whether there will be legislative action, not just voluntary commitments to phase out the destructive environmental investments that pension funds currently make and introduce an element of the bill that will acknowledge the connection between green investments, environmental protection, and decent pensions. Turning now to the LCP, the Local Government Pension Scheme, government structures do vary widely across existing pools and reporting has been inconsistent.

Pooling arrangements have not always given the power to influence investments either, which is why the TUC for example are calling for a thorough review of the performance of existing pools to identify best practice for the relationship between funds and pools, the governance arrangements and to introduce clear and consistent reporting requirements before any acceleration and further consolidation takes place. It's also important to point to the democratic deficit that I believe exists within the scheme as a whole.

Whilst the role of member representatives within the LGPS is a great strength, they are largely absent from Paul governance structures at present, and this legislation does not specify a role for those people. Given that pension funds are the deferred wages of the workforce, we must ensure that there is greater member engagement in democratic oversight by those involved in the scheme. Not only should this stretch to having guaranteed places on board with full voting rights but it must also ensure that scheme members can have their say as to where their money is invested.

There will undoubtedly be occasions where members are concerned about investments, in particular industries or I would hasten to add particular countries, and they should have a mechanism by which these views can be expressed.

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Does he agree that it's good that on the Local Government Pension Scheme is the representations can be made and representatives can sit on made and representatives can sit on the pension committee for both employers and employees so we have trade union representatives often on

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committees as well? I thank the honourable member for her contribution and she is quite her contribution and she is quite right that of course trade unions do sit on many of the LGPS committees. sit on many of the LGPS committees. It's the Paul's Wireless making the point that there was less representation for those member representation for those member voices to be heard, and that's extremely important I think going extremely important I think going forward. Finally, I just wanted to forward.

Finally, I just wanted to talk about the pre- 1997 pensioners. We know that those who have seen the biggest drop in income are those who biggest drop in income are those who built up pensions before 1997. They haven't received an annual inflation linked increase to their pension, and over time, particularly when inflation is high, the value of inflation is high, the value of their pension is eroded. Some 80,000 pension protection fund members, pension protection fund members, mostly older people and disproportionately women of course, including some of my constituents find themselves in this position.

I hope the government will therefore consider legislating to provide inflation protection on pre-97 benefits and to give the PPF greater flexibility to use its surplus to give discretionary improvements to members. In conclusion, the idea that workers pension funds can be used to build much-needed social housing and invest in green technology and jobs is something I believe a progressive labour government should be proud of, and I hope we can ensure this bill delivers a winter pensioners, a win for our environment, and a win for society as a whole.

society as a whole.
21:09
Peter Bedford Portrait Mr Peter Bedford MP (Mid Leicestershire, Conservative)
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Thank you. Cross-party working is essential to main -- making sure we have confidence in our twilight years. That's what BR ready to work constructively to improve this legislation and when necessary provide that critical friend approach and challenge the government's own thinking. When it comes to pensions and the long-term financial security of our constituents we should not play party politics. It's in this period I raise my own concerns with the bill. The bill does not focus enough on increasing the amount of money flowing into people's pension pots, something we can't literally afford to ignore.

I'm proud that it was the last Conservative government that led the introduction of auto enrolment, a significant pensions reform that dramatically improved individual's financial well-being in later life. The 8% contribution was a game changer. Of course the system relies on inertia but for the first time millions of workers began saving for their own retirement. But we must now confront an uncomfortable truth, their contribution rate is looking less adequate by the day. Too many file constituents are heading towards retirement without the income they will need.

For example the pensions policy Institute have highlighted that there are 9 million UK adults currently under pensions. Inaction is not an option. We are allowing people to sleepwalk into a retirement crisis. The level of auto enrolment contribution was never intended to be a silver bullet, but instead it was conceived as a foundation with starting point for pension savings. Importantly that foundation was once supported by two key pillars. First defined benefit schemes which offered guaranteed income is to many.

Second, high levels of homeownership which provide an asset to full back on in later life. Both of which have significantly eroded over the last two decades. And I'm afraid to say that the 8% or two enrolment is woefully inadequate. Many workers when realise this for their own financial circumstances until it's too late. I believe it would be too easy, all too easy to simply raise the auto enrolment rates to some arbitrary level. We will find ourselves back here in 15 years time having the same conversation about the system where inertia and disengagement continue.

If we truly want lasting change we cannot solely focus on the percentage will need to dramatically improve how people engage with their savings. This starts with improving financial education. As a sponsor the Private Member's Bill on this precise topic and is a chartered accountant by background, this is a cause I place great importance on. Shockingly, although perhaps not surprisingly, standard life are piloted at three in four people do not know how much they have in pension savings, and this needs to change.

Increased engagement also allowing savers increased control of their own savings. People should be able to All their parts in one place, which is why it's a little frustrating to have seen delays in the roll-out of the pensions dashboard which I know many honourable members have mentioned in this debate. The pensions what my view will encourage individuals to make active choices to understand their options and to assess whether their current savings are enough for their desired lifestyle in retirement.

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On that note, I wonder if he agrees that we should also make it easier for Beale to understand what to defined contribution scheme for people to understand what it means for them, how much they can get on a monthly basis or annual basis rather

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monthly basis or annual basis rather than just this is the valley of the pot? I think the honourable member

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I think the honourable member makes a really important point and that goes back to financial education, ensuring people truly understand their pensions and their understand their pensions and their savings. Increasing savings is important. We need to make sure it's important. We need to make sure it's driven by individuals who understanding that shape their own financial futures will stop other countries of later increasing incentives for saving stop South incentives for saving stop South Africa and the US have schemes enabling people to draw from their pension pots in tightly defined pension pots in tightly defined circumstances such as for emergencies and for investment opportunities.

Such flexibility would increase confidence in pension would increase confidence in pension savings and help address the other concerning fact that 21% of UK concerning fact that 21% of UK adults have less than £1000 set aside for emergencies. Leaving them susceptible to economic shocks susceptible to economic shocks outside their control and in turn less likely to prioritise savings in less likely to prioritise savings in their pensions. Poor pension adequacy doesn't just harm retirees, it has serious implications for the state as well.

As a life expectancy continues to rise, the state's pension bill or QT to increase. Benefits like pensions credit will increase exponentially as a lack of adequate private provision leaves more and more relying on the state. As we saw just last week, it's often incredibly hard to reform welfare. As a conservative, I believe that the answer lies in personal responsibility and encouraging and helping people to build up their own private pension provisions for the benefit of themselves, their family

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and ultimately for the rest of society. Is making a very strong speech

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Is making a very strong speech and some very strong points. Would you agree that the alarm bells that he is ringing about financial education and the provision of pensions, and the longevity is even more stark and even more alarming more stark and even more alarming when you put it next to the demographic change that over the next 30 years will see the drop in next 30 years will see the drop in the number of workers per pensioner plummet. We are going to go from plummet.

We are going to go from about 3.6 the moment are well under three We are going to go from about 3.6 the moment are well under 3 x 20 70 which means that even if pensions 70 which means that even if pensions aren't enough, the country won't be able to afford to plug the gap as it

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able to afford to plug the gap as it does at the moment. Thank you. My honourable friend

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Thank you. My honourable friend makes a really compelling speech and makes a really compelling speech and gets back financial education making sure we all understand the sure we all understand the implications of pension adequacy. My concerns around adequacy does not mean the bill doesn't have its merits because it does. The continuation of Conservative policy, continuation of Conservative policy, small pots consolidation and the creation of megafunds are sensible reforms that will increase individuals pension pots for the individuals pension pots for the reduction in dominant pots and increased economies of scale, but I believe this is a missed opportunity for a government with a large majority to act bolder to move faster and to improve pension The Labour Party has long since professed to be the party of workers, yet some will be looking the spill and sense it does not go far enough in preventing the UK declining into being a society funded by welfare in retirement.

That's encourage people to strive, work hard and save more for a better future. I very much hope the government will work collegiate the with her Majesty's opposition during Committee stage to work cross-party to ensure that our constituents don't sleepwalk into a retirement crisis.

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Are someone who was lucky enough to share local government pension scheme committee and sit in a pool scheme committee and sit in a pool oversight board purely because I was the only person left on the the only person left on the committee after the election, I would like to talk about the bills impact on ill GPS is. The bill will
21:17
Jayne Kirkham Portrait Jayne Kirkham MP (Truro and Falmouth, Labour )
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impact on ill GPS is. The bill will consolidate these funds into six pools on the basis that they will be effective in achieving scale, diversification of assets and cost savings. Ill GPS is have recently been merged into eight pools by the last government of course, Contain nine such funds from the south-west and the Environment Agency. It took a number of years to set up and transfer the funds over to the pool and setting up costs meant that the consolidation savings from acting at scale were only starting to show a few years later.

Hiring an extra tier of staff on top of the ill GPS staff you still need to administer the staff and correspond with members and employees and manage investments was expensive. Closing down therefore our current pool and joining another is likely to also be the same and there are concerns which I would like the Minister to address that going to these larger pools may affect that local links that we have because we have a very strong south-west pool at the moment.

To remove that link and scatter us across the country could impact upon how effective our pool is in those local investments, that's what I was going to talk about next because bringing the schemes together will enable them to hopefully invest in big local projects from infrastructure to clean energy which infrastructure to clean energy which should help returned. Cornwall was very good at this, we used our 2.3 billion which isn't actually a huge fund when you consider the size of the pools we are talking about now.

To do this kind of thing exactly, firstly some other members have talked about responsible investment. We had a very strong responsible investment policy and actually a quicker carbon neutral target than the rest of the pool and we were able to maintain that and our ESG able to maintain that and our ESG focus by strong and presence in the oversight board, which enabled us to influence that Paul and I would hope that kind of influence will continue said the pools won't get dragged down to the lowest common denominator within the pool when you are talking about ESG and responsible investment, but will be responsible investment, but will be -- impact fund was in the end 7.5% of our investments.

We were able to channel our ill GPS investment into affordable private rental housing and renewables, local renewables within Cornwall. As well as widely around the UK. The local authorities be able to set their own targets within the pool in this way and do their own thing, because although we worked closely with the pool to ensure that pooling delivered those scaly advantages, we wanted to make sure that our local impacts portfolio as part of our social impact allocation enabled us to combine our fiduciary responsibilities to our members with delivering that social and environmental positive change within Cornwall where we were, where our members worked and lived.

I had a massive impact on how the fund was viewed as well locally within Cornwall and we did hope that it would provide a framework for others to follow although within our pool of 10 I think we were the only one who did it. Again we would like confirmation that local ill GPS is will be able to set their own targets within a big pool even if that is a disparate geographical area. The only other point I wanted to talk about was the measures that require scheme regulations for the ill GPS to include a duty for administering authorities to work with strategic authorities in the local area to identify opportunities for investment.

It was quite difficult to organise when we ran our social impact fund at an arm's- length level because of course those members who were part of that local authority wanted to direct where all the investments go, that had to be done at an arm's-length level 3 investment fund managers. But they had little connection to the area. So it was quite hard to stand back and watch them do that. My question is how would the fiduciary duty work with that to allow local government pension scheme administration authorities to work with the strategic authorities in their area, particularly if like Cornwall they are one and the same thing because Cornwall unitary was exact the same Just to say what works well in corn well and it did work well and provided good results, I still drive past can well look at some of those houses that were built by the local government pension scheme with local people living in them doing local jobs, was mainly down to good officers and a flexible pool that allowed us to do our own thing and allowed us to do our own thing and go down our own roots.

I hope this freedom will remain under the spell. -- This spell.
21:22
Blake Stephenson Portrait Blake Stephenson MP (Mid Bedfordshire, Conservative)
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I think we will fare in the ambition to ensure the sustainability of pensions -- this bill. In the best possible income for all of our constituents in retirement. I will keep my comments short given the time, but having short given the time, but having come to this place from the city and I have to say not working in the pensions industry, but also as an officer in the APPG for pensions and growth I look forward to providing more detailed scrutiny on the spell as it progresses.

I will rise to share concerns that I have with this bill and some of which have been shared with me by city institutions. A broader problem with this government's approach to the economy. Rather than seek to support free enterprise and entrepreneurship to grow our economy, they instead seek state led interventions to direct funding government approved investments. I think that is the wrong approach and I think many members have expressed that this evening. On scale and asset allocation reforms and concerned the government seems to believe that government and regulators should be able to direct our pension funds invest rather than schemes acting in the best interest of their members.

A matter that my right honourable friend from Northamptonshire made. -- North Hampshire. Trustees directed to need to be protected in my opinion by safe harbour There investments perform less well than alternative that may have chosen and I'd ask the Minister to reflect on whether any consideration has been given to such safe harbours in the bill. It's not clear to me why these reforms are necessary perhaps the Minister could address in his remarks why, given policies like the value for money tests and small pot consolidation which are already in process he feels these additional requirements are needed.

I'm also concerned that ministers A statutory requirement for schemes to follow a specific route when considering transfers into a super fund. Trustees have a fiduciary duty to their members, we've heard a lot about that this evening, this direction from ministers runs counter to that duty. Perhaps the Minister can provide some assurance to the House in those points. Turning to the sustainability of UK pensions I would welcome further clarity from ministers and their proposals for the powers to pay surplus to an employer. In particular I would like to understand how confident the ministries that the threshold set for the release of surplus of sufficient to protect member benefits.

This is particularly important given the scheme surplus have only emerged recently. I would also like to know whether the Minister plans to specify the authorised uses for surplus returned. For example, when surplus will be, whether surplus will be protected from being paid to overseas parent companies for example. I welcome the government's desire to ensure that our pension system is sustainable and contributing to UK economic growth. I'm just not as enthusiastic about some of the government instincts to deliver government led investment at the expense of market led growth.

I look forward to scrutinising the bill further as it progresses. bill further as it progresses.
21:25
Jim Shannon Portrait Jim Shannon MP (Strangford, Democratic Unionist Party)
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With real pleasure to speak in this bill tonight. Increasingly pensions and regulations of private pension must be of national interest and that why I agree regulations needed, so I do welcome the bill coming forward. Obviously the small print of it will become more apparent as we develop this but it is good we do it, increasingly government's intention was that people have a private pension to supplement their income people eventually reach retirement is being realised. Most people by and large have a pension, 22 million I understand.

The Minister will remember the story I told, I think I'm right in saying so whenever I was 18 it wasn't yesterday. The fact of the matter is whenever pension advice was almost unheard of. The best pension advice I ever had was my mum. She took me when I was 18 down to the pension man and she said to me, you need a pension, I said my mum only 18 what do I need a pension for? She says you're getting a pension.

When your mum tells you you're doing something you just do it. So I got a pension, I got it on her advice. I ended up with four pensions over the course of my working life and they were all beneficial. I didn't understand the value of them all until I came to the stage where I was going to cash some of the men and realise the value of them then. The thing is today we have an opportunity to advise young people of the need to have a pension and to have not just my mum because not everybody has my mum, everybody has an equivalent through government when it comes to pensions.

I want to give a quick story if I can about my office staff. Employs six ladies and one young fella, they are in their 20s or 30s or 40s or 50s or 60s, they push the pensions with the age bracket and that's a fact they see it differently full stop listening to the discussion we need to have to educate the importance of paying into a pension, so important to get right will stop that's why this bill is important because it is an opportunity to advise people.

One member of staff, I give this example of two children at primary school paying an additional five% into pension on the advice of her colleague who sold only to find the tax on her savings this year that she actually had less money in her account each month compared to last year. The first thing to go was not the kids piano lessons, not the hockey camp, with the experience she had of her child's memories of the first reduction was to scale back on her pension additions.

My goodness me it was, if you want that lifestyle with your children. The tax on savings mean that one mum makes the choice to supplement pensions and solve their children's lives just now I know this is not the aim of government or the Minister here, so is only so much we can tax the middle-class before they are in the best interest of the future. With this legislation we are not directly Northern Ireland apart from the number of clauses but I do notice should be noted that accompanying legislation indeed a number of legislative concerns or SIs will come to this chamber which will change the Pension Schemes ultimately what we discussed it tonight and will happen through this bill would come to us in Northern Ireland.

Northern Ireland assembly will bring this, therefore I considered the aims and whether I believe this legislation will be effective in achieving those aims, the Minister said this bill will fundamentally prioritise higher rates of return for pension savers putting more money into people's pockets. And in a host of different ways. The first time we will require Pension Schemes to prove they are value for money, focusing on their mindset on the returns it will cost and preventing savers from getting stuck in underperforming schemes. Really when we look at it we understand the necessity for we have before us tonight.

The Minister in referred to 13 million small pension pots floating about in the UK pensions system, each with, it seems logical to have a better pension system for people, I think it does. Probably maybe we all do. I make this last point, it's essential that the opt out is ironclad and here's the reason why. One of my office staff members who would not be comfortable in her pension paying into any companies the animal testis one example. Another says she wants the highest return..

We must ensure the ability of those people. I ask for pots. With that in mind, I welcome this bill to regulate but it must ensure that the bill does not become wafer government to control the private pension industry and direct pension pots into government investment. We must ensure this bill simply protects the pensioners. I look forward to hearing how this
21:30
Rebecca Smith Portrait Rebecca Smith MP (South West Devon, Conservative)
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Thank you. It's been a privilege to hear so many well-informed and considered speeches this evening. In fact there is clearly significant expertise in the chamber. I'm sure we would all agree. Now the heart of this entire bill are people doing the right thing, preparing for their future and saving into their pension pots. Since the introduction of auto enrolment by the Conservatives in 2012 there are now over 20 million employees saving into a workplace pension.

That is with 88% of eligible employees now saving into a pension and preparing for later in life. This is a great achievement that I hope everyone in this House can celebrate. However, whilst the number of people who are saving has increased significantly, as we've had this evening, engagement has remained low. Less than half of savers have reviewed how much their pension is worth and 94% are invested in a default strategy. So as people are taking the right steps and saving early, we must now ensure that the pensions market is working for them.

So they get the best returns on their savings and ultimately have the comfortable and secure retirement they were planning for. Now we had many contributions this evening and I thought I would ruefully mention the honourable member of the Tamworth and the honourable member North West Hampshire, both of which gave us lengthy and very detailed speeches presenting both sides of the argument, but very enjoyable. That wasn't a criticism, just an observation of the way things are going this evening. However, I think both of them clearly showed both the expertise they have garnered early on in their careers and also some legitimate concerns, particularly around the consensus we perhaps have in the chamber this evening.

However I feel there are also some points that have been made they show their consensus is not entirely guaranteed, certainly by this side of the chamber. Now we support the principles behind the bill. Indeed much of what we have heard built on the work the Conservatives were doing whilst we were in government. We want to ensure that poorly performing pension schemes are challenged, excessive administration costs are removed, and savers receive the best returns on their investments. Ultimately we believe this is how we ensure more people have a comfortable retirement.

However, we do have concerns about some specific measures in the bill which we will be scrutinising further as it progresses through the House of Commons. In particular we have significant concerns about the reserve powers that allow the government to set a percentage target for asset allocation in core defaults offered by defined contribution providers. In other words, a future government can tell pension schemes where they must invest their funds regardless of whether it delivers good returns for savers and potentially conflicting with the fiduciary duty to act in the best interests of its members.

Last November was stress they do not intend to use this -- reserve power, that neither addresses concerns about what a different future government could do no explains why it is therefore being brought in, in which case it could be possible to ask why adding the reserve powers at all. We want to see more investment in the UK market. Other countries one of the largest pension markets in the world can only around 20% of the sea assets are invested in the UK, but the solution should be to make domestic more attractive to create opportunities that deliver better returns to savers, not simple mandating investment into assets that deliver lower returns.

During our last term in office we worked with the industry to introduce the Mansion House reforms as a voluntary agreement to boost investment into the UK, but this bill goes further and could mandate it against the wishes of industry. Similarly, the Local Government Pension Scheme will have a new duty to invest in the local economy. Now while understandable at face value, it does raise concerns about returns on investments if there are not suitable local opportunities. We also have questions about some of the assumptions that government have made and would like to understand more about how they were reached and the evidence used, for example why is the minimum value for megafunds just £25 billion, one could argue? Why is having fewer and larger pension providers better? We recognise the benefits of economies of scale but what about competition and innovation? It's also been raised by the industry that is significant number of details unknown as they will come later in the form of regulations.

So can the Minister set out some more details on when the various sets of regulations will be published and with it will be before the bill has passed through Parliament? And finally there are a number of areas that the bill fails to cover, and we would like to understand why. There are concerns about pension adequacy that have been touched on this evening and whether people are saving enough to have the security and dignity in retirement that they deserve. Auto enrolment was a very good start, but it will not be the only solution.

Indeed there are still lots of people not eligible. When we passed the extension of automatic enrolment act in 2023, the then Conservative government confirmed their intention to reduce the lower age limit to 18, something that has been mentioned this evening. But as of yet the current Labour government has not done so. Auto enrolment does not apply to self-employed people, despite just 16% of self-employed people actively saving into a workplace or personal pension. The bill in front of us does not look at whether people are saving enough and early enough, and I'd be grateful if the Minister could set out whether this is deliberate and whether further action will be taken in the future.

Briefly draw their houses attention to my register of interest as a serving councillor but hastened adamant falsely not a member of the local government pension schemes, sadly elected after never scrapped however and tie make an entire chapter is given to this in the bill. It's a key element of the bill enabling local authorities to use pension schemes to invest in the local economy. However as with much of the legislation being taken through Parliament at the moment, the who, what and when remain unanswered.

Without the English Devolution Bill before as for example, we are not entirely clear on what form local government would take in the future, not entirely clear on how compatible this pension scheme bill is to their forthcoming local government legislation. We are in effect being asked to legislate on a movable feast. Indeed there are likely to be a considerable transition timetable for local government changes so all this raises the questions as to how does the local government reorganisation transition fit in with the plans within this bill? And interestingly, following in the comments by the honourable member for that matter, how will asset Paul's work under local government too? Who gets the spending power and where does all the investment take place? The bill also fails to mention any reforms to the local government pension scheme which reached a record surplus of £45 billion in June 2024.

One reason for that may be that it's currently being used to offset government debt under the Chancellor's current fiscal rule, which uses public sector net financial liabilities to measure that debt. But this is a huge amount of money in local government terms, money that's not going towards local services, business support or regional projects. So can the Minister confirm whether the government intends to take any reform of the local government pension scheme beyond the measures outlined in this bill? I will be coming to a close. And in one finer point on Local Government Pension Scheme's, I look forward to seeing more detail as to how newly created asset Paul's as already mentioned in relation to new government pension schemes will work in practice.

Local Treasury management over recent years has seen local authorities taking advantage of investment authorities available to them to invest in acquiring properties in the like but often some distance from the local authority. So I believe this some entities out during the committee stage I'm sure but when the government states it wishes local authorities to have finance available to invest locally, to bring economic growth, what local look like? Finally can minister confirmed that fiduciary rules regarding investments and how they are assessed will prevail going forward? Overall we will support a bill which reduces administration costs, removes complexity for savers and maximises value for members.

Outwardly helping people who take the right action to save for their retirement to live in comfort and dignity. But there is more to do to get it right and we look forward to working with the governor to achieve that. There are plenty of food for thought for amendments to take us forward. forward.
21:39
Andrew Western Portrait Andrew Western MP, The Parliamentary Under-Secretary of State for Work and Pensions (Stretford and Urmston, Labour)
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Thank you. And at the outset may I take the opportunity to declare my own interest, unlike the Member for South West Devon, I was elected prior to Lord Cameron edge acting councillors from the Local Government Pension Scheme, so as a former member of traffic Metropolitan Borough Council I also have savings in the Local Government Pension Scheme. And therefore set to benefit from the improved governance of the LGPS initiated by this bill. These measures are testament to our dedication to building a resilient, efficient and fair pension system, galvanising and creating potential to bestow economy at every opportunity.

It's our aim to build a future in which every saver can look forward to a secure and prosperous retirement. I welcomed the broad if not entirely universal support for this bill. The open discussion we had today is important because as a responsible government, we want this House to be assured that the new powers this bill includes come with appropriate mitigations. We understand the members will have questions and have listened carefully to those raised. I would like to remain -- remind everyone that the highly fragmented pensions network has not served savers well first there's a need for improvement as both the industry and savers demand a better service.

This bill goes to the core of what is needed. Providing big solutions to the big problems undermining so much potential for savers and the economy. If I may, I would tender some of the comments and queries that have arisen throughout the debate, and firstly at like to thank my honourable friend for Tamworth, Luton South and South Bedfordshire, Glasgow East, the element of the bill in which they have spoken in favour and the recognition of the investment and growth opportunities that this bill can unleash.

Looking at some of the specific points that have been made throughout the debate, beginning with the opposition spokesperson in opening the debate, can I welcome the constructive support and consensus that we have had from both the open and closer for the opposition? And they are right to acknowledge the spectacular success of auto enrolment. But as my honourable friend says, that was half the job, and indeed in her closing contribution I think the member South West Devon acknowledged that we do need to now move on to the pressing task of dealing with pension adequacy, something the pension review will take forward.

There will also correct acknowledgements of the fragmentation of pension pots and I welcome his support for the long- awaited pensions dashboard and was particularly pleased to hear a support the changes to the local government pension schemes, the heated race of concern around certain areas of the bill and the certain areas of the bill and the potential for propping up failing schemes that arises from changes to the Local Government Pension Scheme, just to reassure him that there is no cross subsidising between administrating up authorities that will be changed by any changes in the bill.

On the question of safeguards on surplus release, we can't stop share buybacks or other such but confidence in the ability of trustees to adhere to their fishery juicy and imagination, which I understand is the fundamental objection, not just for the honourable gentleman that a number of speakers we've heard from today, it is not my view that this undermines few fishery duty, there are clear safeguards within the bill that is consistent with those duties, not least on clause 30 and the opt out if there is material detriment to members of a fund.

He raised questions of gilts, and the impact of the bill and there is nothing within the bill that we believe would undermine a well- functioning Delta market. But again, just to reiterate, I welcomed the broad support particularly around money, small pots, products and terminal illness changes. Turning to the... I will briefly.

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I just want to be clear, so the House is clear about this opt out, which both ministers have referred which both ministers have referred to. Is it a correct interpretation that it's not an opt out at the discretion of the trustees to the fund? That under the bill they have to apply to the regulator with to apply to the regulator with evidence for the regulator term make a decision to grant them the ability a decision to grant them the ability to opt out.

So this idea that somehow trustees are free to make a somehow trustees are free to make a decision in the interest of the fund

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is not actually correct is it? He is correct in his interpretation, although I don't agree entirely with this characterisation. It's painfully characterisation. It's painfully reasonable I think that we would ask trustees to highlight how they feel that what is proposed would be to that what is proposed would be to the detriment of their scheme members, but if I can come to the Liberal Democrat spokesperson, and Liberal Democrat spokesperson, and again welcome his support for many of the general proposals within the bill, agree entirely with his comments about the need to give savers the best advice and savers the best advice and protections possible.

And agree also with what he said about the opportunities to deliver further investment into our economy. He was absolutely right is it that out. Specifically on the question of social housing which others have raised, you know that many pension schemes are ready make such investments, and I certainly am very supportive of them continuing to do that. We then heard an excellent speech from my honourable friend from Tamworth. I did just want to particularly welcome her comments on the value for money changers.

She is absolutely correct to highlight the importance of looking at schemes in the round, not just on cost, and in the pipeline of investments which she set out I hope she is reassured by some of the steps the government are taking, for instance with planning and the structure bill to ensure there are a range of exciting projects, reservoirs, houses, other major projects that people will be able to invest in. Coming to the right honourable gentleman, he certainly correct to say punches the air of consensus and outlining his reservations.

I know my right honourable friend, honourable friend rather, promoted, has agreed to have a conversation with him next week. And I hope that he will find that incredibly helpful. And clearly it's not for me to comment on the question of whether or not they should be a Hybrid bills, but what I would say is that on the question of megaphones, and he's right to say that all large schemes, not all provide a better return but the evidence shows that while that's not always the case, on average they do see better returns anything that is an important point.

The Member for Aberdeen North was correct to raise how long we have been waiting for the pensions dashboard. I'm simply excited, anticipate its arrival and promise it will be worth the wait promise it will be worth the wait On the point around the scope of the bill, the pensions review will take forward a number of the issues that she and other members have stated where this bill could have gone further the pensions review is away we will say more about that incredibly soon.

Just to say a millennial myself, I will take that.

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Just in the pensions review around adequacy there is massive cross-party consensus that there is an issue with adequacy and we want to tackle. Will the Minister agree to tackle. Will the Minister agree to take this forward in the cross- party away as they can because we

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ought care strongly about this. This is a matter that is important to everyone in this House important to everyone in this House because it's important to the constituents of everybody in this House so I will be very open to ensuring that people members of this ensuring that people members of this House able to feed in as much as possible, it's incredibly important piece of work but put returning to the question of my age as a the question of my age as a millennial myself I'm terrified admit that I have now reached an age where I should be thinking about my pension at 40, but some of the Wagram consolidation, smallpox will Wagram consolidation, smallpox will help those people in any event.

On help those people in any event. On the balance of redistribution number of members asked that question. It's ultimately for trustees to decide on ultimately for trustees to decide on that balance but on the point that she made and the Member for Mid Bedfordshire touched on this as well around potential guidance going forward that is something that I will discuss with the Minister for pensions and they will be teased out at Bill Committee. The Member for Spelthorne I can simply say that I hope he will also be a member of the Bill Committee and can continue dialogue with the Minister for.

I'm always keen to find volunteers and I hope he will be bringing felt so forward. On the question of Registry decision-making I hope the pensions regulatory will have heard what you said about pay -- pace. Very briefly on the issue of divestment climb and fossil fuels et cetera, it's a matter for trustees and individual tax ability on investments as a cornerstone of the system but we are consulting on UK sustainability, importing standards and on transition plans. Finally to the honourable gentleman the Strangford we always save the best for last, I'm very grateful for his support of the bill, if he wasn't 18 yesterday I'm sure it was the day before but nonetheless I wish that everybody had a mum like his.

We may not have had some of the challenges in the adequacy of people's pensions how they all received such superb advice from their parents at the age of 18. Today we embark on a transformative journey with this Pension Schemes Bill. This legislation underscores our readiness to deliver fundamental changes to the pensions landscape and endeavour that is not only urgent but essential for savers and our economy can derive the benefits of a better organised, less fragmented and easier to navigate pension system, and I am pleased by the widespread support for the bill

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because the House today. The question is that the bill is now read a second time. As many are of that opinion say, "Aye", and of of that opinion say, "Aye", and of the contrary, "No". The "Ayes" have the contrary, "No". The "Ayes" have it. Programme motion to be moved it. Programme motion to be moved formally. The question is on the Order Paper. As many are of that opinion say, "Aye", and of the opinion say, "Aye", and of the contrary, "No".

The "Ayes" have it. contrary, "No". The "Ayes" have it. Money motion to be moved formally. The question is as on the Order The question is as on the Order Paper. As many are of that opinion say, "Aye", and of the contrary, say, "Aye", and of the contrary, "No". The "Ayes" have it. Ways and Means motion to be moved formally. Means motion to be moved formally. The question is as on the Order Paper. As many are of that opinion say, "Aye", and of the contrary, say, "Aye", and of the contrary, "No".

The "Ayes" have it. Motion number five on environmental number five on environmental protection. Minister to move.

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protection. Minister to move. I beg to move. Question is as on the Order Paper. As many are of that opinion say, "Aye", and of the contrary, say, "Aye", and of the contrary, "No". The "Ayes" have it. Motion number six on financial assistance to industry. Minister to move. The question is as on the Order Paper. As many are of that opinion say, "Aye", and of the contrary, "No". The "Ayes" have it. Petition, Tom Gordon.

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Thank you. Harrowgate spring
21:52
21:53
Margaret Mullane Portrait Margaret Mullane MP (Dagenham and Rainham, Labour)
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discuss the provision for special educational and disability within the London Bor of Barking and Dagenham, an area which I monitor partially represent alongside my colleague and honourable friend the Member for Barking. The backdrop to this debate is multifaceted but my focus this evening is specifically on the pressure facing provision for children and young people. There are currently over 5,500 children and young people in Barking and Dagenham schools require SEND support. As of January 2025 3111 of these young people had an education, health and care plan or AHDB they are more currently refer to -- EHCP.

With the following breakdown. 12 at nursery level, 1350 at primary, 946 at secondary, 480 post 16 and 323 post-19. This highlights quite clearly that present pressures have fell most the quote like acutely across primary and secondary schools in Barking and Dagenham. 2022 requests for EHCP assessments summarise of 100% and increased 400 times the national average in April 2025 there were 1,000 children, more children with EHCPs in the borough compare to January compare to January 2023.

That is a 50% increase over 15 months. Since these spikes the level of demand has remained high with between 500 to 600 new requests every year. This is partly due to population growth and churn with around 26,000 additional residents since 2014 and a similar number of around 18% churn. It's also worth noting that Barking and Dagenham still offers some of the cheapest options in London which accounts for the sheer scale of the population growth. In 2024 150 children and young people with existing EHCPs moved into all are placed into Barking and Dagenham from other boroughs with around 40% requiring a specialist placement.

Staff working in the EHC team in Barking and Dagenham Council are recording caseloads of 200 to 300 per staff member which is just not sustainable as a working model.

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Certainly full stop Thank the honourable lady Ford Dagenham for bringing this forward, she is right to do so. Does she agree that the progress in SEND action has showed how early action has showed how early intervention with a classroom assistant can be the difference for many children and it is essential that the funding for these teaching assistants is retained to ensure that children in St Joseph's primary school in Dagenham for example or Saint Finian's primary school as another example both have access to early intervention support and a bright future?

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bright future? He makes a very good point. This afternoon the Minister was afternoon the Minister was discussing that and tomorrow my honourable friend from Barking has got into bait on that very point as got into bait on that very point as well. Alongside the growing pressures to the health system, shortage event educational psychologists, speech and language therapists and occupational therapists also have to make the therapists also have to make the issue worse. As it currently stands issue worse.

As it currently stands there is very little likelihood that the EHC teams will be able to even meet the demands in Barking and Dagenham. On behalf of the local

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authority. I hear the heartbreaking stories from Barking and Dagenham about the huge demand for SEND provision and the difficulty in meeting that, similarly in Surrey we have heartbreaking cases of children who cannot move out of mainstream school cannot move out of mainstream school with autism because the capacity isn't there, and as a result when my constituents is getting terribly bullied and the council have refused to fund his place in a special school. Heartbreakingly that story is not unique in Surrey or in Barking and Dagenham.

Despite that Barking and Dagenham. Despite that the County Counsel leader Tim Oliver claimed that the vast majority of Surrey families, SEND families are happy with their support. That is despite the council is suppressing a survey of 1,000 parents for six

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months. The honourable gentleman's intervention has far to long. As the adjournment started for 10 o'clock adjournment started for 10 o'clock he will of course be free to make a

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speech. I want to say thank you to the honourable gentleman and the point he is making but I do think that he is making but I do think that needs to be realised against the backdrop of 14 years of no investment to councils as well and they are really struggling. The they are really struggling. The local authority on behalf of the local authority on behalf of the Department for Education I urge them Department for Education I urge them In truly inclusive schools, well funded and resourced so that Barking and Dagenham can increase the provision of SEND in a mainstream setting.

If the local authority setting. If the local authority could ensure a high standard of support through on-site arcs and support through on-site arcs and other mainstream settings that would reassure parents of children with reassure parents of children with SEND that their children's educational needs will be met without the reliance on ease EHCP. I think would help to significantly reduce the stress and anxiety alluded to for thousands of people alluded to for thousands of people in our borough. Having spoken to many parents of children with SEND many parents of children with SEND across my constituency of Dagenham & Rainham I know they have to fight for everything and that in most cases they get little or no support cases they get little or no support at present without an EHCP in place.

The system is too convoluted and it doesn't work of the parents, the children or for local authorities. More needs to be done to streamline the assessment programs -- process so parents are not jumping through hoops for months on end to deliver the best possible care and education support without the constant battle that parents currently face. When considering provision of services in Barking and Dagenham we must also take account of the level of deprivation and the impact this has on the level of need. Barking and Dagenham has the 21st highest deprivation school, 317 local authorities in England with 62% of households in the borough having at least one measure deprivation as measured on the Index of Multiple Deprivation.

Furthermore 46% of children in Barking and Dagenham are estimated to live in poverty, which is the third highest across England and where. Deprivation on the scale also means we have some of the poorest health outcomes in London, 30% of all houses in the borough are home to a resident with some form of disability that requires a support service. The council try really hard to find innovative means to support growing demand for services in the face of mounting financial pressure. They simply do not have the resources to establish long-term stability in this area.

Barking and Dagenham also has one of the highest proportions of arts in the country with almost 1/3 of schools in the borough post and ARP. This translates as 33 primary...

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I beg to move that this House do now adjourn full stop The question is that this House do now adjourn. Margaret Mullane.

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This translates as 33 primary and secondary in the borough compared to just 14 decade ago. Over that period the number of children who rely on the services has increased from 180 the services has increased from 180 borough compared to just 14 decade ago. Over that period the number of children who rely on the services has increased from 182 450. Despite creating 230 specialist places over four year period with 90 more by September this year, this will increase proportion of children with SEND in mainstream schools, the local authority are still facing a monumental challenge in trying to provide enough places to support the needs of all the children who needs of all the children who require them.

Over the past decade the local authority has worked diligently to ensure our schools are inclusive and place children and young people with SEND in mainstream schools locally where possible. schools locally where possible. I taking this approach it's enabled the council to manage the dedicated the council to manage the dedicated schools grant high needs blocks within budget, and that's despite within budget, and that's despite chronic underfunding over the past 14 years under the previous government. So much so that in 2024 Barking and Dagenham was recognised for effective practice and has been referenced in what works in SEND publication released by the ISO essay partnership.

To the degree, the local authority is a victim of its own success. When you combine low housing costs with exceptional SEND provision, delivering good educational outcomes, is it any wonder the parents of children with complex needs are moving to Barking and Dagenham? I personally have heard many stories from constituents over the years who have moved to the area specifically for this reason. But most are from other London boroughs but some are from as far afield as Cornwall. At this point I would like to personally thank the Secretary of State for education for her visit to a primary school in my constituency early this year.

It attracted such positive press of our SEND provision and highlighted the inclusive approach to send my education in Barking and Dagenham schools. From an outside perspective, given the sterling service provided amazing the concerns and pressures betrayed by the local authority and myself are being overstated, yet under the surface the council is facing a perfect storm of increasing demand and significant funding shortfalls. In the last financial year Barking and Dagenham faced a significant overspend which was covered using council reserves. The local authority only had the capacity to do this to balance the budget for one year.

The 1 billion additional funds from the government, the high needs blocks in 2025 to 26 whilst its welcome, doesn't fully address the pressures that are faced in Barking and Dagenham. The uplift of 5.3 million only serves to cover the current year end demands without consideration of the significant level of growth taking place in the borough. It's clear to me that the high needs block funding allocation formula needs reviewing and updating to ensure its evidence-based and better targeted. This funding stream is still to an extent determined by historic data and does not reflect the changing patterns of need in London.

Because of this at present, boroughs like Barking and Dagenham find themselves underfunded compared to inner London. Boroughs, whilst managing the increasing demand for families who have moved out of the better funded in the London area. The crisis in send my provision in early years and education is not due to a lack of good intent but is perpetuated through long-term underinvestment, fragmentation of services and a degree of inflexibility that was built into the system by the last government.

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I thank her for giving way. I'm glad she recognises the disparity in funding between inner Greater London and out of Greater London. But she and out of Greater London. But she will also be aware of the DA BD charity based in her constituency charity based in her constituency which provides special educational which provides special educational needs for young children during summer, Christmas and Easter terms and how they have been defunded, so they can't carry on their activities for young people based in the London for young people based in the London Borough favouring which she also represents.

Was she also join me for call to hey bring Borough Council to ensure the fun continues of the ensure the fun continues of the children can get the funding they need?

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need? As my seat covers to councils I will always support the best outcome will always support the best outcome for my constituents, so I would for my constituents, so I would agree and happy to do that. Councils are the frontline of service delivery in Britain and whilst this delivery in Britain and whilst this debate is not about broader service funding, I must take this opportunity to thank the government and to welcome the introduction of the recovery grant as part of the the recovery grant as part of the most recent local government funding settlement, a move which marked a significant step change from the previous administration.

However I will return to the subject of SEND provision and funding allocation, which desperately needs a similar Stepchange as I begin to conclude my contribution. The London Borough of Barking and Dagenham is doing everything the governors asking, yet we are still working to a system built by the Conservatives. The last governor allocated safety valve funding based on the scale of the deficit rather than the scale of need. The safety fail agreements essentially meant the local authority must cut their spending to meet targets and in return they get a contribution towards their overspend.

This means that our local authority having worked to implement inclusive strategies through innovative means to reduce pressures on the high needs budget gets nothing from the funding stream. Comparatively authority such as Kent which are far less deprivation in need of a hat might have received in excess of 42.6 million since 2023 /24. A fraction of this money would help Barking and Dagenham maintain and progress the inclusive service it's worked so hard to deliver over the past decade. I must say it's wonderful to see our inclusive send my provision under the national spotlight being championed by ministers, but for me it still beggars belief that under the current system if a local authority manages to fly in the face of low expectation, deliver an exemplary service, they are penalised for it within the safety valve program.

I hope that as this Government gets to grip the SEND crisis facing local authorities in the coming years, a process of coproduction and consultation will lead to a delivery model which incentivises the inclusion approach that has been taken in Barking and Dagenham. Local authorities like ours are desperately calling for a national funding formula which allocates resources based on the evidence and need, bringing schools, health partners, parents of children with SEND and the council altogether. I know we can build a service which provides the best possible starting life may start in life and outstanding educational outcomes to the most disadvantaged young people in our communities, so I will end by repeating the governance mantra from last July, it's time for change.
22:08
Chris Coghlan Portrait Chris Coghlan MP (Dorking and Horley, Liberal Democrat)
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Thank you. I was very moved by the honourable members speech, and actually heartened to hear about the effectiveness of SEND permission in Barking and Dagenham because it is so important that we do have effective examples in the country, particularly at the moment as the government is considering its national SEND provision, so it's very encouraging for me to hear that. Because in my experience and my constituency a vital part of this is what I've seen tackling the culture of dishonesty of certainly my local authority.

I don't know about elsewhere, that is a key barrier to effectively addressing SEND provision. And this can be more serious because I have constituents who are suicidal children with autism who are repeatedly denied the support that is their right, and desperate parents coming to me as an MP trying to literally bake the council to do their duty. And the level of dishonesty is very hard to exaggerate. Surrey has the highest level of complaints in the country.

They covered that up for over 14 months to their own internal council scrutiny committees. The county council leader then denied this in a formal written response to the Liberal Democrat Members of Parliament in Surrey. The next trick Parliament in Surrey. The next trick was to start the TV to reclassify complaints as inquiries to try to manipulate their complaints volumes, then denied there was a problem at all, that the problem was in fact that Surrey parents are, " To articulate" And most recently, the county council leader said in his annual general meeting that, " The vast majority of Surrey SEND parents had a good experience of SEND." This was despite them suppressing a survey for six months of a thousand parents, 1000 SEND parents where only 16% of those parents said they trusted the county council on SEND and only 21%, I will remind myself, only 21% said that they trusted case officers to act in the best interests of the child.

So it's a matter of extreme concern for me that the government in terms of its SEND reform is putting so much faith in local authorities were certainly in my case they are so manifestly dishonest. And I am particularly worried about Surrey because the county council leader as chairman of the county council's networks has major influence across SEND reform, across the country and fight the local authorities are calling for a way to solve the SEND crisis is to water down EHCP rates by parents.

Parents, there are many things wrong with SEND system, but the one thing parents do have confidence in, it may take far too long to get the EHCP, but at least they have their legal rights and the right to take to tribunal. So it desperately hope the government is not going to water down those commitments, and the government is going to respond to the call of my colleague honourable member for Surrey Heath for an investigation into Surrey County Council because only then can I hope that my constituents get the justice and the opportunity they so desperately need.
22:12
Jas Athwal Portrait Jas Athwal MP (Ilford South, Labour)
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Jas Athwal. honourable friend the Member for Dagenham and Rainham for securing this crucially important debate? Children with special educational needs have just as much potential as other children, and they deserve to have that potential nurtured. But for boroughs like Barking and Dagenham there remains an urgent problem with SEND provision. As the Member for Dagenham and Rainham has eloquently described, chronic underfunding and under resourcing of these vital services has led to a critical situation whereby children are not getting the vital support they need and parents are facing a constant battle and excessive wait times to secure any support for their child.

Last year in the borough, only 15% of the decisions on EHCP needs assessments were made within six weeks. The rest taking much longer. I know that this is a problem facing all boroughs, but is particularly acute in Barking and Dagenham, an area with a higher proportion of those applying the EHCP needs assessment than other boroughs. In fact in my constituency, home both to the borough of Redbridge and of Barking and Dagenham, the rate of disability is far higher in wards like marks game, the only ward in Ilford South that falls under Barking and Dagenham.

Amongst the backdrop of underfunding and comparatively high demand, Barking and Dagenham has a lot to be proud of. As my honourable friend says in 2024, the borough was recognised for effective practice in what works in SEND that report. But there are some problems that just good practice and perseverance can't fix. This crisis in SEND stems from the wider issue of changing demographics and an outdated funding formula that hasn't kept up. Ilford South and the boroughs of Barking and Dagenham and Redbridge may be outer London areas but they are

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facing inner London problems. You mention is Barking and Dagenham, mentions Redbridge but Dagenham, mentions Redbridge but also hey viewing is out to Greater also hey viewing is out to Greater London, marks Katie's -- marks gate London, marks Katie's -- marks gate is next to. We all in agreement there is total lack of funding and there is total lack of funding and the outer London areas, so will he back my ongoing campaign for fairer funding at any for special educational needs but on a range of educational needs but on a range of areas where our boroughs on the edge of London and Essex constituencies of London and Essex constituencies which fall within Greater London are not getting our fair share of

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resources? I thank the honourable friend

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I thank the honourable friend erasing that point. As a matter of fact as a leader of Redbridge Council, for many years I campaigned for outer London funding to be fairer. Because I do feel that the outer London is now in a London problems. But we are not getting a problems. But we are not getting a fair share of funding, so I'd be happy to certainly get involved with the funding needs of outer London. And imagine Barking and Dagenham and Redbridge because they both fall in my constituency, and of course as I said, other outer London boroughs like hey viewing warts offer similar consequences, and I agree with my At a London bar is facing inner That diminutive outer London funding packages can't fix the stop if we are to fully support all children, provide them with a tailored support that they need and unlock their potential then we need serious reform.

I stand with my honourable friend and calling for three key reforms, one, a change to the outdated funding formula which puts boroughs like Barking and Dagenham Redbridge and Hay flooring on the back foot. Second, more funding for additionally resourced provisions so that children with special education scan be supported in mainstream schools. This would mean that children can reap the benefits of learning in a mainstream environment like a reduction in emotional distress and better educational outcomes whilst teachers are given resources they need.

Thirdly, a more streamlined process of needs assessment so that parents are not left alone to fight for their children to have their provisions they need and deserve. Every child has the right to thrive. Every child has the right to achieve their dreams, to be supported in an environment, even if they learn a little differently. But SEND provision is struggling. We are it to these children to fix the system, we are it to their parents to support their children to thrive. Thank you.
22:17
Catherine McKinnell Portrait Catherine McKinnell MP, Minister of State (Education) (Newcastle upon Tyne North, Labour)
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Congratulations to the honourable member for Dagenham & Rainham on securing this debate on this incredibly important subject and I know she, as others here today, have an interest in supporting families in their constituencies to navigate the special education system which I think honourable members have conveyed quite compellingly this evening just how complex it can be. The honourable lady made her interest in the subject and her passion for the improvements that need to be made very clear in her very powerful opening speech and indeed in calling this debate today and ensuring that we have it.

I want to reassure everyone here today that improving the system is a priority for this government stop we want all children to feel that they belong in a mainstream setting if that is the a mainstream setting if that is the best place for their needs to be met that they receive the right support to succeed in their education and they lead happy, healthy and productive adult lives. We know this is possible and we have seen it in examples across the country and more recently when the Secretary of State visited a primary school in Dagenham in December.

It was heartening to hear the honourable lady's account of the practice that is happening in Barking and Dagenham but we know that much more needs to be done to improve the system for children and their families and also to ensure that there is consistent good practice in every part of the country. I am grateful to the honourable members for -- also for their contributions today. It is clear this is an issue that there is much shared interest in and the contributions today have been an important contribution to what is a very timely debate.

Because every child, regardless of their individual needs deserves the opportunity to achieve, to thrive, to succeed. We are absolutely clear that the current system is too difficult for parents, carers and young people to navigate, and it simply is not delivering the

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outcomes that we want to see. In the 23/24 academic year there

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In the 23/24 academic year there were over 1,800 SEND stories Matt were over 1,800 SEND stories Matt Chilton in Surrey's school, only Chilton in Surrey's school, only interested to hear what steps are being taken to ensure promised schools are delivered, particularly

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schools are delivered, particularly like the batch Woodvale Academy SEND school in my constituency. I know the honourable gentleman

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I know the honourable gentleman cares passionately about this issue cares passionately about this issue and is clearly keen to see the expansion of provision. As he knows, expansion of provision. As he knows, expansion of provision. As he knows, And supporting mainstream And supporting mainstream schools And supporting mainstream schools to expand, we were given local authorities the funding and we anticipate and hope they are working with the local schools in order to increase that capacity. Obviously increase that capacity.

Obviously any additional schools to be built are being considered in light of that because we need to make sure that we do have the right provision that we do have the right provision where it's needed and that is available for the children that need available for the children that need it so we are giving close consideration to that but we are working closely with local authorities because it is their duty to make sure that they have the to make sure that they have the places to meet the needs.

As I was saying we have announced the details of our longer term approach to SEND reform will be set out in the schools white paper in the autumn. We are not wasting any time on this. We are already working to ensure that children and young people the And that means building a robust evidence-based on what works, to drive inclusive education including creating the expert advisory group for inclusion led by Tom Rees, we are introducing new reasonable -- regional improvement for standards and excellence advisers to work with mainstream schools to become more inclusive, were extending the partnership in your diversity in schools to end further cohort of additional mainstream primary schools to build teacher and staff capacity to identify and betting meet the needs of neuro diverging children in mainstream school settings we are prioritising early intervention and inclusive in in mainstream settings because we know early intervention prevent those unmet needs from escalating.

It's the best way to support all children and young people to achieve their goals alongside their peers and we are absolutely committed to working with the sector and our partners to ensure that our approach is fully planned and developed in partnership with families with stakeholders and with the entire sector that we know needs to deliver on these reforms. The number of education, health and care plans has increased each year since their instruction in 2014 with over 630,000 children and young people now having an EHCP as of January 2025.

Over time floors and lack of capacity in the system to Additional strain on specialist services. It had a really detrimental impact on the experience of accessing support through the EHCP process and it's contributed to pushing up costs and creating an increasingly unsustainable system. The latest data shows that in 2024 just over 46% of new EHCPs were issued within the 20 week timeframe. The government wants to ensure that EHC needs assessments progress promptly and plans are issued quickly to provide children and young people with support they need to help them achieve positive outcomes.

Independently commissioned insights published last year showed that extensive improvements to the system using early intervention and better resourcing of mainstream schools could have a significant impact on improving the system with more children and young people having their needs met without an EHCP and in a mainstream setting rather than a specialist placement. We listen to parents, local authority colleagues and partners right across education Health & Social Care and we are considering really carefully how to address and improve the experience of the EHCP process for families and reflecting on what practice could or should be made consistent nationally.

We know that children and young people with SEND equally require access to additional support from abroad, specialist workforce. Right across education health and. To support the demand we are in partnership with NHS England, we are funding early language support for every child, this is trialling new ways of working to better identify and support children with speech, language and communication needs in their early years at primary schools. Scenes in practice for myself, I've seen the difference it makes not just to the children who participate in the program and clearly thrive as a result of it, but also for the teaching workforce grow in confidence, growing ability to untapped and unlock the learning of children.

It really is having a great impact and we are very keen to see the results of the pilot and the rollout see that impact taking root within schools. We know that continuing to build a pipeline of speak channel language therapists is essential and that's why we have introduced a speech and language degree apprenticeship, it's now in its third year of delivery and it offers a really excellent alternative pathway to the traditional degree route into a successful career as a speech and language therapist.

And of course we need many more. We also know it takes a vast workforce of teachers Educators, allied health professionals to help children and young people thrive and we are not investing in each of these areas to improve outcomes and experience is across the country. I'm aware of the honourable member for Dagenham's Ten Minute Rule bills motionless due to be presented now is tomorrow on this issue. High quality teaching is central to ensuring that pupils with SEND are given the best possible opportunity to achieve in their education, and so to support teachers we are implementing high- quality teacher development.

It begins with their additional training, it continues into their early career teaching right through to middle and senior leadership. We want to offer professional development for teachers to have the skills to support all pupils to succeed including those with SEND. We know that through the partnership for inclusion and neurodiverse city in schools that is also deploying health and education specialists within the workforces to up skill primary schools to support neuro diverging children, this support operates on a whole school level comments not reliant on a diagnosis, that supported their four children dependent on their needs.

We know that local authorities need support with educational psychology services, we are investing over £21 million to train 400 more education psychologists. These trainees as they complete their studies will be able to join the workforce to support local authority education services, including contributing to statutory assessments which we know is a big challenge because of workforce shortages or huge barrier to delivering our ambition for an inclusive mainstream education

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system. Has a lot of positive things being said this evening which I think will be welcomed on all sides of the House. Does she acknowledge of the House. Does she acknowledge the concerns of the honourable member for Dagenham & Rainham, the honourable member Ilford South and myself in pointing out that there is myself in pointing out that there is this huge disparity of funding for boroughs like Barking and Dagenham Redbridge and particularly Haven ring, we are not getting a fair ring, we are not getting a fair share.

Will she please help out share. Will she please help out London boroughs to get a fairer share of the cake because at the moment that simply is not happening.

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moment that simply is not happening. I derecognise the challenge that

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I derecognise the challenge that he sets out an obviously either members and has evening, we are looking at the national funding looking at the national funding formula. Obviously this can't happen as fast as one might want because it's very important to maintain it's very important to maintain stability in the system and as it changes from year to year this can changes from year to year this can create challenges for local authorities and also for schools so we have to look at the system very we have to look at the system very we have to look at the system very carefully and introduce any changes in a very careful and considered way.

That is what we are doing but we are taking on board the representations that we are receiving in relation to the funding that is currently in the system. One other area we are focused on is the capital funding to expand the estate, we note that many mainstream settings are going above and beyond to deliver specialist provision but we want to make sure that all capacity is maximised and where local authority identifies a school that could provide more places or provide more provision within their school, we need to make sure they have the capital to support that which is why we've allocated £740 million for 25/26 to deliver those additional places in mainstream schools and other specialist settings, or indeed just to adapt existing buildings to make them more accessible and more appropriate for providing inclusive mainstream education in particular.

The Department Spending Review has also confirmed the funding for reform of the current SEND system, details of which we will set out in the white paper in the autumn. But we recognise that local authorities will need support during the transition to a reformed SEND system so we will commence the phase transition process, work with the local authorities to manage their budgets, to manage their deficits alongside an extension to the Dedicated Schools Grant statutory override and we will do that up until 27/28 financial year because we recognise the time it will take to put this right.

We will provide more details on this by the end of the year. We are running out of time and I want to wish my honourable A thank you for bringing this matter forward, and for all who have contributed to the debate today. We have made a clear commitment to addressing the challenges as part of supporting children and young people to succeed and thrive, I'm determined progress is made on this issue and I want to conclude by issue and I want to conclude by Are working currently in our education health systems, working for children and young people with SEND, in Barking and Dagenham, right across the country, I know we all want to deliver the best for children and young people including those with SEND.

We all want to give them the best start in life and prepare them for life, work in the

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future, and as the government we will continue to work to that end. The question is that this House do now adjourn. As many are of that opinion say, "Aye", and of the opinion say, "Aye", and of the contrary, "No". The "Ayes" have it.
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