Pension Schemes Bill

Steve Darling Excerpts

Wednesday 22nd April 2026 Commons Chamber

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

[Steve Darling (Torbay) (LD)]

The Liberal Democrats broadly support the proposals before us in the Bill as a whole. I know from conversations with residents in Torbay that there are some challenges within the pensions market, and the Bill as a whole addresses an awful lot of them. However, I suggest that the Minister has been studying his Greek history, assumed the position of Odysseus and developed a Trojan horse, which he has sneaked into the Bill. The Trojan horse is, of course, mandation.

While the Minister may have cut off a couple of the Trojan horse’s legs, it remains a Trojan horse before us. Clearly, as Liberal Democrats, we welcome that as a step in the right direction, but the Government should be shaping the market appropriately through policy so that there is a pipeline of opportunities for investments—that goes across to the Mansion House accord—so that the market has those opportunities and can invest in them appropriately.

There is an element that we need to touch on. Since 2008, there has been risk aversion in the market, which stifles profits; we need to be alive to that. Risk is a good thing when investing, but investments should be sensible and with appropriate spreads. The Bill does elements of that, but I fear that some of the monitoring could stifle risk and therefore stifle returns.

The Liberal Democrats are keen to ensure opportunities. The Government should be ensuring that there are baskets of opportunities to invest in things that matter to our communities, whether regenerating our town centres or social rented housing. We know that people such as Legal & General lead the market in those investments; we need to think about how we can enhance those opportunities. We must also ensure that we are investing in net zero, which is close to the heart of several parties. Again, the Government should be shaping the market in that way rather than dictating. While the Minister alludes to this as a one-shot opportunity, other colleagues are fearful that mandation is the thin end of the wedge.

Finally, I would like to reflect on the changes that the Minister has proposed. We welcome the changes allowing greater innovation and greater development of the market, which are significant steps in the right direction. However, as Liberal Democrats we are not prepared to see the dead hand of Government directing here. We continue to oppose mandation in whatever form it may take.

[Torsten Bell]

I thank the Members from across the House who have contributed to the debate today. Let me respond directly to a few of their comments. I welcome much of the shadow Secretary of State’s remarks. I am glad that she welcomed many of the Government’s amendments, including those on public sector pensions and around innovation and competition—I appreciate that. I hope, when those issues are debated in the Lords in the near future, that there will be similar consensus across that House.

The shadow Secretary of State raised the question of scale. Again, I am glad that she has welcomed the review that will happen within 12 months of the Bill’s commencement. On scale, I am a bit more confident than she is on the role of small schemes to grow, because we can see significant growth right across the market, including among small schemes, partly because the market itself is growing so fast in the current climate. However, I offer no comment on her pessimism about Tottenham Hotspur; that is for others to speak on.

To be fair, as the shadow Secretary of State set out, the main area of disagreement that remains is around the reserve power. She raised the question of the accord and whether it applied to the whole industry. She is correct; it does not apply to the whole industry, but it does cover 90% of defined contribution assets held within the industry. We are therefore talking about not just a majority but the overwhelming majority of the industry.

The hon. Lady mentioned the Labour manifesto, which set out two focuses on pensions. One was around the question of scale, on which we have just touched and which I think is a matter of cross-party consensus; the second, which, again, I think is a matter of cross-party consensus, is on the importance of delivering change in terms of investment in productive assets in private assets. That is exactly the focus of both the Mansion House accord and the reserve power.

The hon. Lady said the power was about directing specific outcomes. As I have been setting out, it absolutely does not do that. It will not allow any direction of savers into particular assets or particular asset classes, and it offers no ability for Government to take control of pension savers’ pensions. Indeed, I think it is actually dangerous to have members of the public hearing remarks like that when that is categorically not the case.

The shadow Secretary of State is right to say, though, and this maybe gets to the crux of where we are, that the money belongs to savers. That is what this is about and that is what we all agree about; we want to see higher returns to savers. The industry is telling us that diversifying their range of assets is in their savers’ interest and it is admitting that it has not done so to date. [Interruption.] No, that is what the industry is saying. Savers are not saying that, because savers do not have that choice and they are intermediated by providers, some of which have trustees and some of which do not. That is the underlying point: they need to see that change happen, that it has not happened and that we have seen it not happen. Implicitly, what that is saying is that members are losing out from the status quo, and what I am not hearing from the Conservatives is a serious engagement with that reality that has let down savers. [Interruption.] I will come to the point about the previous amendment tabled by the hon. Member for Wyre Forest (Mark Garnier) shortly.

I now come to my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), not least because he admirably set out the big challenge facing Britain, which is to turn this country back into a country that invests in its own future once again. That means higher investment. It is not acceptable that Britain saw both the second-lowest public investment in the G7 and by far the lowest business investment in the G7 under the last Government—and not for some years but for almost every single year. That is the challenge that I think we all want to see addressed. Part of the issue being raised about whether this is about UK assets or private finance is overdone, because what we see around the world is a higher home bias among private asset investments than among public asset investments, for all the obvious reasons about the comparative advantage of different investors in those situations.

My right hon. Friend also rightly says—I think this is, again, part of a cross-party consensus—that moving to that high-investment world is overwhelmingly not about pensions, but much wider changes and about making sure that actual investment happens so firms can actually get things built. That is why this Government have come in and provided the go-ahead for solar farms, wind farms, national grid investments and nuclear power stations that have been held up for too long. That is what a higher-investment country looks like and that is what we need to be getting on with, and I have a nugget of good news to bring my right hon. Friend on that. If hon. Members go and look at the investment levels in the national accounts—I know everybody in this room spends their time doing that—they will see that, since the election, Britain has seen the fastest investment growth of any country in the G7. That is what we are starting to deliver against what we set out as our core objective, which is turning Britain back into a higher-investment country.

The hon. Member for Wyre Forest mentioned his previous amendment, which asked for the reasons why schemes say the change would be in savers’ interest but have not done it. The problem is that we have had a lot of reviews. The Association of British Insurers has written some and published them, explaining why the previous Government’s attempt with the Mansion House compact did not work. We have the answer; I am afraid the hon. Gentleman just does not want to engage with what he is being told.