English Devolution and Community Empowerment Bill

Baroness Stedman-Scott Excerpts

Committee stage
Wednesday 4th February 2026 Grand Committee

Moved by

[Baroness Stedman-Scott]

148: Clause 42, page 41, leave out lines 35 to 39
Member’s explanatory statement
This probing amendment seeks to understand why the provision is limited solely to current employees of a constituent council of a combined authority, and does not extend to other employers participating in the LGPS. It aims to explore the rationale for excluding staff of housing associations, admitted bodies, and other local employers who play a significant role in the community, and to question whether this distinction is justified or creates unnecessary inconsistency within the scheme.

[Baroness Stedman-Scott (Con)]

My Lords, it is a pleasure to open this debate on behalf of my noble friend Lady Scott of Bybrook.

Noble Lords from across the Grand Committee and indeed the House will be aware that the pensions Bill is currently in Committee and that the first two days of scrutiny were marked by a substantial number of amendments probing the Government’s approach to the Local Government Pension Scheme. We tabled numerous amendments on the technical detail of the valuation methodology, contribution rates, consultation requirements and interim reviews. I am sure the Minister will be relieved to hear that I do not intend to rehearse those matters again today.

Likewise, I do not wish to upset the Minister in any way, but I note that it was disappointing that no Minister from the MHCLG was present during the discussions. The LGPS sits squarely across the responsibilities of both the DWP and the MHCLG. While long-standing, this overlap too often creates complexity and tension, and I fear that it could result in policy that is not always well aligned with the realities on the ground.

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[Lord Wilson of Sedgefield (Lab)]

I am grateful to the noble Baroness for Amendments 148, 149, 150 and 153. I will try to clarify the questions that she asked and, if I cannot, I am more than willing to write to her. Some of these pension aspects are very technical.

These amendments relate to the important requirement that strategic authorities work with the Local Government Pension Scheme funds in their area. This mirrors the duty to co-operate with strategic authorities placed on LGPS funds in the Pension Schemes Bill. The aim is to help strategic authorities to identify local projects that are appropriate for pensions investment and drive growth.

I recognise the noble Baroness’s intention, in tabling Amendment 148, to seek to broaden the provisions to include other employers participating in the scheme. The clause requires the strategic authority itself, rather than its constituent authorities, to co-operate with the relevant pension fund. In my view, this is the correct approach. Strategic authorities are responsible for driving local growth; as such, they should be aware of the interests of housing associations, admitted bodies and other local employers. An additional requirement for multiple other organisations to collaborate with the LGPS would place an unnecessary burden on those employers.

I turn to Amendments 149 and 153. I recognise the intentions to preserve the independence of LGPS-administering authorities and to reduce the burden of regulation on their functions. I assure noble Lords that the Government are not seeking to undermine the fiduciary duties of local pension funds in any way. The decision on whether or not to invest in a particular asset will be made by the asset pool, not the fund. This will help protect the fund against potential conflicts of interest, ensuring that all investments are made in the interests of the fund. Supporting guidance will be clear that investments should only ever be made where that investment helps the investing pension fund to meet pension liabilities.

The Government want to see funds and asset pools working closely with combined authorities, including corporate joint committees in Wales, in order to identify and develop appropriate investment opportunities so that the investment might of the Local Government Pension Scheme can drive local growth. I share the view of the noble Baroness that this requirement must be workable. For this reason, the high-level requirement does not put a restrictive framework on exactly how strategic authorities must work with the scheme. It will be up to strategic authorities to establish a system that is workable for them. Further, I point your Lordships to the existing guidance for strategic authorities on the development of local growth plans, which supports strategic authorities in establishing a productive relationship with investors.

I turn now to Amendment 150. I thank the noble Baroness, Lady Stedman-Scott, for asking important questions regarding a requirement for funds to participate in an asset pool. Asset pooling is the cornerstone of the Government’s investment reforms for the LGPS, bringing significant benefits of scale and expertise. As I have said, the Government are not seeking to undermine the fiduciary duty of local pension funds in any way. The responsibility to set an investment strategy—the key driver of investment returns—will remain with funds, ensuring that they retain local accountability and decision-making and that they can drive performance. The duty in this clause is complementary to the duty that will be placed on LGPS funds through regulations made under the Pension Schemes Bill. It will work effectively only if the concept of participation is defined in the same way in both pieces of legislation. That is why the Government are tabling amendments to this clause to reflect changes that have been made to the Pension Schemes Bill.

A question was asked about pooling. Integrated models in which strategic advice and investment management are both delivered by the same fiduciary manager are commonly used in private sector schemes and internationally. These models can deliver greater value for money and economies of scale. Asset pool companies will be required to have robust policies and procedures to identify and manage conflicts of interest. In contrast to external advisers, asset pools owned solely by LGPS AAs are expected to provide services in their interest. They do not stand to gain financially from the partner fund taking their advice or from providing poor-quality advice. I will look again at the noble Baroness’s speech in Hansard to make sure that we have covered all her questions and so that she has what we are doing in writing.

I turn now to government Amendments 151, 152, 154, 155, 156 and 157. These minor and technical amendments correct the definition of participating in an asset pool company. They will accommodate a pool company structure where the pool is owned by a holding company, thereby allowing an existing pool—the Local Pensions Partnership—to be included in the definition. This is not a change in policy but a correction.

[Baroness Stedman-Scott (Con)]

My Lords, the Government have now confirmed a substantial programme of reform of the Local Government Pension Scheme through this Bill and the wider pensions Bill. Taken together, these measures represent a significant moment in the evolution of LGPS asset pooling and governance.