Pension Schemes Bill

Lord Bishop of Hereford Excerpts

Report stage
Thursday 19th March 2026 Lords Chamber

[Lord Fuller (Con)]

My Lords, the Government are obsessed with size, but everyone knows that it is not about size but what you do with it. That point was made forcefully in the Financial Times this morning, which discussed the fact that the larger funds are not necessarily better performers, with the sub-headline:

“Seeking size for its own sake can distract fund managers from focusing on clients and shareholders”.


There is so much I can say, but I will restrict myself to one substantive point. When schemes get large, their normal market investment size gets bigger too. They do not have the time, capacity or need to go away from the big global stocks, most of which are, by their nature, overseas. It limits the constellation of investment ideas, so they chase the same MSCI stocks, creating a value-destroying bubble and systemic risks by all chasing the same thing. It becomes all about speculation.

That is not necessarily what capital markets are for. Capital markets exist to provide capital so that smaller companies can become big ones. Right now in the UK, there are lots of smaller companies with bright ideas and great prospects that could become bigger if only they were relevant to the funds—a few million pounds here, perhaps a few tens of millions there. But they are all but invisible to the superfunds, for which anything less than half a bar is a rounding error.

The problem for the UK is that, while Ministers are worshipping the false icons of scale, they will actually make it harder for the stock market to invest in small British businesses at home. If the schemes are forced to bulk up, they simply will not have the time to look for or after the small fry. British companies that are crying out for long-term patient capital will go hungry, which directly contradicts the Mansion House objectives. Once again, the Government have been suckered into a position by the big boys, understandably keen to cut out the competition, visiting harm on the UK economy and especially on small British firms we all want to see do well. As the Financial Times says today:

“A substantial body of evidence in academic research suggests that mergers in financial services frequently lead to prolonged periods of underperformance. Revenue synergies often fail to materialise and cost synergies tend to be overstated”


—quite.

[The Lord Bishop of Hereford]

My Lords, I speak in favour of Amendment 55, in the name of the noble Baroness, Lady Noakes. There is a questionable theory of change in the Bill—that bigger pension schemes are necessarily better, suggesting the minimum scale of £25 billion. While scale certainly creates advantages, Australian experience suggests that funds can be run at less than this size and still provide value and good outcomes for members. However, concentrating the market into a few megafunds introduces a new system of risk, of schemes that become too big to fail and so are effectively the state’s problem.

Also, megafunds are unlikely to allow for nuance and specialism, such as faith-based funds. Unfortunately, the understanding of faith-based funds in the commentary on the Bill seems to be limited to Sharia-compliant funds and exclusions. The understanding of and engagement with the nuances of faith-based investing in the Bill commentary are superficial at best. There may be perfectly good arrangements with faith-based or ethical distinctiveness; such arrangements may perform well for members in financial and non-financial terms and be significantly smaller than the threshold envisaged. The distinctiveness that they offer might easily be lost in generic megafunds. This amendment makes the important point that absolute size and performance for members need not be correlated.

[Baroness Altmann (Non-Afl)]

Obviously, I support Amendment 55 and a number of the other amendments in this group, but I urge the Minister to consider the dangers of trying to engineer a few large schemes while at the same time knocking out new entrants and competition. From now to 2030, if a scheme is not yet at the £25 billion scale requirement, it will find—and it is finding, such as in the case of Penfold—that it cannot get new business. The employer cannot be confident that it will reach the £25 billion in time, and knows that it could potentially have to change provider. This requirement is undermining innovation and competition in the market right now, and may continue to do so. I hope that the Minister will recognise the dangers.

I apologise to the House, as I should have declared my interests. As stated in the register, I am a non-executive director of a pensions company and an adviser to a pension master trust.

Poverty Reduction

Lord Bishop of Hereford Excerpts

Thursday 22nd February 2024 Lords Chamber

[The Lord Bishop of Hereford (Maiden Speech)]

My Lords, I begin by recording my grateful thanks for the welcome and encouragement I have received since my introduction to your Lordships’ House. I am especially grateful for the forbearance of the staff as they have helped me navigate the labyrinthine corridors of this place, and to my colleagues for their patience in introducing me to the various procedures and protocols that govern our business.

I became the Bishop of Hereford in early 2020, just before the start of the first lockdown. The diocese of Hereford celebrates the 1,350th anniversary of its foundation in 2026—we are a diocese that predates the foundation of England. Indeed, the earliest timbers in the episcopal residence were acorns in the year 910. I have both worthy and ignoble predecessors in this role. I have already done better than four of them, who never actually came to the diocese at all. I hope not to emulate one of my Saxon predecessors, who, angered by the burning of the cathedral by the Welsh in 1055, took up arms with some of the canons and died in battle as a result. I also hope to avoid the fate of the cousin of the bishop who was murdered in the garden in 1256 on the coat-tails of his cousin’s unpopularity.

Hereford is the smallest and most rural diocese in England. We comprise the counties of Herefordshire and the southern half of Shropshire, one parish in Worcestershire and 14 in Wales. Sustaining a diocesan infrastructure with such a small base presents its challenges. For every 800 people who live here, we have one church building, and three-quarters of them are grade 1 listed.

I am grateful to be the Bishop of Hereford, not least because of my agricultural interests. My first degree was in agriculture and forest sciences, followed by a master’s in soil and water engineering. Prior to ordination, I spent a number of happy years as an agronomist, advising farming clients in the south of England. I also married into a farming family, so the success of the agricultural sector and the health of the rural economy is a particular interest. I am probably the only Bishop on this Bench who can tell you both how to grow an excellent wheat crop and how to build a ventilated improved pit latrine.

It is therefore a privilege that I should make my maiden speech in this debate sponsored by the noble Lord, Lord Bird. It is also an honour to speak in the same debate as my right reverend friend the Bishop of Durham, who has been a tireless campaigner for the economically disadvantaged across our country. Rural poverty is often hidden and can be affected by a wide variety of policy areas. It can also be concealed by statistics. Average income figures for the county of Herefordshire are unremarkable; however, they conceal a huge gulf between the wealthiest and the rest. Recent statistics show that 60% of the population were earning £1,000 a month or less. One-third of 18 year-olds leave the county never to return. There are few opportunities for a well-paid career locally.

It is said that Herefordshire is the poor man’s Cotswolds. I hope that is a model of development we will avoid. The depopulation of rural communities, to be replaced by large numbers of second homes, is not the way to create a thriving countryside. A report from the Campaign to Protect Rural England, published in November 2023, highlighted what it rightly describes as a

“chronic shortage of genuinely affordable housing”

and noted the impact this has on social housing waiting lists and the ability of people to stay in their own communities—the challenge here of maintaining the social fabric of our rural communities is acute.

The disparity between rural house prices and rural wages means that the pressure on these communities is particularly severe. This is a classic example of the importance of coherence in government policy, and recent government announcements in this area are most welcome. An unregulated housing market leads, especially in attractive rural areas, to a growth in second homes, Airbnbs and holiday lets, and the pricing of local people out of the market. Such rural depopulation impoverishes community life; we cannot think of poverty simply in financial terms.

The agricultural sector in my diocese is innovative and pioneering, and is one of our largest employers, both directly and in its support industries. However, smaller farmers are struggling. The transition from basic farm payment support to environmental land management schemes post Brexit, while welcome in many of its aims, has not been seamless. The gap in funding, particularly that which occurred at the transition last summer, added to the stress. Access to these schemes is more difficult for tenant and upland farms in particular. Suicides in the farming community in my area approach one per month despite the best efforts of local charities such as We are Farming Minds. This regular tragedy reminds us of the importance of personal welfare, which includes the certainty we all need in order to plan for the future. It is essential for farmers, and essential for the rest of us as they seek to run viable and profitable businesses which produce food for all of us. This is a public good.

Competitiveness must be a level playing field. For example, the UK-Australia free trade deal, the first agreed under the UK’s independent trade policy, opens up UK agricultural markets for Australian produce, regardless of whether or not it is produced to the same standards that are required by law of UK farmers. Henry Dimbleby, who led the Government’s national food strategy, said that a failure to adopt a “core standards” approach to animal welfare and the environment in our pursuit of free trade deals risks

“exporting the cruelty and the carbon emissions abroad”.

I urge the Government to be mindful of these risks in future trade deals.

I hope I may have opportunity to speak in debates on these issues in the future. Poverty is an issue that affects all communities, but in rural areas it runs the risk of being neglected in policy because of a smaller, more dispersed population. I look forward to being a voice in your Lordships’ House for the people of the diocese of Hereford and the thriving of our rural communities.