National Debt: It’s Time for Tough Decisions (Economic Affairs Committee Report)
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Lord Bridges of Headley
That this House takes note of the Report from the Economic Affairs Committee National debt: it’s time for tough decisions (1st Report, HL Paper 5).
Lord Bridges of Headley (Con)
My Lords, it gives me great pleasure to open this debate. Let me start by thanking everyone who has come in on this lovely sunny day, and, in particular, the members of the committee for their hard work and commitment over the years in which I was chair. Sadly, I no longer chair the committee, but I have passed the baton to the very capable hands of the noble Lord, Lord Wood, who we look forward to hearing from later. Before I move on, I thank the committee’s clerks, both past and present, our policy adviser and our specialist adviser, Isabel Stockton, and all those who gave evidence to this report. This report showed this House, as I think of it, at its best. It was a great cross-party effort—a team effort—and I thank everyone for all that they did.
The sustainability of our national debt is, in my mind, a central issue of our time. How we manage it and ensure that it remains sustainable touches on almost every aspect of our economy and our way of life. Between the turn of the century and March last year, public sector net debt, excluding the Bank of England, trebled to just under 100% of GDP. This rise was turbocharged by successive Governments’ responses to the financial crisis, to Covid and then to the energy shock. In the past, such a sustained increase happened only during wartime. This time, as our debt grew, so did the conspiracy of silence about it. None of the major parties wanted to confront head-on the economic and social consequences of this rising tide of red ink. Therefore, at the start of last year, the Economic Affairs Committee decided to give this issue the attention it truly deserved by asking a very basic question: how sustainable is our national debt?
Before I go any further, let me define what the committee meant by sustainability. Debt sustainability depends on tax and spending policies which credibly align with expectations for economic growth and the cost of borrowing. It is the trajectory, rather than the level of debt, and our ability to service our debt which should be the principal considerations when assessing debt sustainability. A debt level risks becoming unsustainable if there is an insufficient buffer to absorb future economic shocks, or if a Government’s approach to fiscal policy creates a long-term trajectory of increasing debt service costs.
Looking at our nation’s debt through this prism, our findings paint a very dark picture of our nation’s finances. Our core conclusion was that, without an appropriate fiscal policy that addresses the challenges the UK faces, there is a risk of the debt becoming unsustainable. We stated that if we wish to maintain the level and quality of public services and benefits that we have come to expect, we face a choice: taxes will need to rise, or the state will need to do less. Addressing this will demand clarity as to the responsibilities and role of the individual versus that of the state. Muddling through is not an option. If this choice is ducked in this Parliament, the UK risks being on a path to unsustainable debt.
Why did we come to this conclusion? First, the trends that helped us manage and bring down our debts in the past have been thrown into reverse. We now face what I call the Ds: higher defence spending; the pressure of demographic change; decarbonisation and the green transition; dependency, especially around labour market inactivity and welfare costs; and, of course, the cost of servicing debt itself.
Another reason for our concern was growth. If real interest rates exceed the growth of national income, there must be a primary surplus. In other words, government expenditure, net of interest payments, must be less than government revenue to prevent the debt ratio rising. With growth anaemic, we heard evidence of how the UK risks being sucked into a debt trap. Furthermore, we pointed out that while high net migration has boosted GDP growth, it cannot be the solution to debt sustainability, for it has made little impression on GDP per head.
The third reason for our concern was the structure of our debt. Successive rounds of quantitative easing have seen long-term debt exchanged for short-term debt, and a greater proportion of debt is index-linked and held by overseas investors. This has made the cost of servicing the UK’s debt more sensitive to rises in interest rates and inflation, as well as to sudden changes in investor sentiment. Given today’s geopolitical risks, the Government need a larger fiscal buffer if they are to weather future economic shocks.
Finally, we were concerned about the fiscal rules. We said that rules should hold Ministers accountable for reducing debt steadily, as a proportion of GDP, over time. The concept of a rolling target for debt creates a misleading impression as to the true state of the public finances and hides the need to take difficult decisions to secure debt sustainability in the medium to long term.
Since the report’s publication, we have had a Budget, we have had a Spring Statement, we have seen the impact of other challenges created by another D—this time Donald Trump—and we have received the Government’s written response to our report.
In that response, for which I am most grateful, the following passage stuck out. Let me quote it:
“The government agrees with the … Report that difficult decisions are required to avoid the UK’s debt being on an unsustainable path. The Budget took the necessary difficult decisions to put the public finances on a sustainable path—setting realistic plans for public spending while raising revenue—to create the conditions for growth. This will be supported by the government’s new fiscal rules”.
Let us dissect this passage. First, on the difficult decisions, tax as a share of GDP is going to rise to an historic high in 2027 and remain at that level for the rest of this Parliament. I do not think any of us would dispute that raising taxes to an historic high counts as a difficult decision, but has it put our public finances on a sustainable path and is this course of action creating growth, as the Chancellor’s letter stated?
Let us start with debt sustainability. On Wednesday, the latest figures showed that net debt as a percentage of GDP remains at levels last seen in the 1960s. Looking ahead, the OBR shows that, from 2025-26 to the end of the decade, debt will rise by an average of almost £11 billion more every year. Although public sector net debt is forecast to fall a fraction next year, it will then rise back to 96.1% in 2029-30. Obviously, the Government have changed the definition of debt that they use for their fiscal rules, but, as the OBR states, whichever of the four definitions of debt one uses, all four show debt remaining at historically high levels within the forecast period and show debt to be higher in 2029-30 than in 2024-25.
Next, are the Government creating the conditions for growth, as the Chancellor states? Growth largely stagnated over the second half of 2024 and is now forecast to be 1% this year—half of the October forecast—and that forecast could itself easily be blown off course. I make one point: were bank rates and yields on gilts issued across the forecast both 0.6% higher—this is less than the 1% volatility in 10-year gilts since early October—that alone would be enough to eliminate the minuscule headroom that the Government have to meet their fiscal mandate.
On tax and spending, the OBR assumes that the fuel duty indexation and the reversal of the 5p cut will take place and that unprotected departments’ budgets will be cut. It flags that the proposed welfare reforms are “very uncertain” and that previous reforms have saved much less than previously expected. Given all these uncertainties, the probability of meeting the fiscal target is 54% and the probability of meeting the debt target is 51%.
That brings me to the fiscal rules. The debt target is pinned to the third year in the forecast—a year that continuously moves forward. The Chancellor’s letter states that this
“avoids the need to make sharp policy adjustments in response to small changes in the forecast or economic shocks”.
I do not buy this argument for rejecting our proposal, which was for debt to hit a fixed target in a given year
“unless there are exceptional reasons”.
In other words, economic shocks would be catered for. If small changes in the forecast mean that the Government cannot meet their rule, this suggests that their plan failed to build in a fiscal buffer.
I highlight this key point: the committee proposed that the fiscal framework should show whether the Government have a sufficient fiscal buffer to withstand an economic shock. The Government’s plans show why this is so badly needed. Look at the buffer for meeting the debt rule—it has a margin of just 0.4% of GDP, or £15 billion, in 2029-30. This is not a fiscal buffer; it is a fiscal wafer, so thin and fragile that it will snap at the slightest tap, let alone an economic shock.
The central question in my mind is not whether the Government have taken tough decisions on our public finances but whether the Government have taken the right tough decisions. Yes, the world has changed since we wrote the report, but, back in September, we knew that defence spending was going to have to rise; we knew the pressures that our public services were under; we absolutely knew that, in a volatile world, we had to build up a fiscal buffer to protect us from unforeseen shocks. We knew this, and the committee said so in the report.
I would like to hear from the Minister some answers to some very basic questions about the Government’s approach. First, given that the Chancellor wrote to me on 15 November, saying that her Budget had put our finances on a sustainable path, why did she then have to rewrite her plans in the Spring Statement, just 131 days later? Next, given that the Chancellor wrote in her letter that her Budget had created the conditions for growth, why has the growth forecast been halved? Thirdly, given that the Chancellor has assured us that her Budget has taken the tough decisions to put our finances on a sustainable path and that she is not going to change her fiscal rules, will the Minister repeat the Chancellor’s assertion that she is
“not coming back with more borrowing or more taxes”?
I have a sneaking suspicion that we will not get clear answers to these questions, confirming my fears that, as our report said, we will continue muddling through and not being honest about the scale of the challenges that we face and the impact that they will have on our tax and spending policies, and therefore the risk of our debt becoming unsustainable will continue to grow.
Lord Liddle (Lab)
My Lords, I start by saying what an excellent and challenging report this is. It is exactly the kind of thing that the House of Lords exists to do and which political parties find very difficult to address. I congratulate the noble Lord, Lord Bridges of Headley, whom I have always seen as one of the stars of the Benches opposite, on his excellent introduction to this debate. I did not agree with some of it, but it was challenging, and he asked a lot of the right questions.
I suppose that the side of the argument that we should not be as worried about this question of debt, as the noble Lord, Lord Bridges, lays out, is that we are in the middle of the international pack. That is some reassurance. However, we live in a very unstable world—goodness knows what is going to happen in the United States. As the noble Lord pointed out, we have very particular vulnerabilities. We are dependent on the kindness of foreigners to fund our borrowing. We do not have the high domestic savings levels that countries such as Italy and Japan have. I do not want to get back into the European arguments that I have always made, but it is worth pointing out to the House that Greece now pays a lower interest rate on its debt than we do, because it has the power of the European Central Bank behind it. That is my view.
I also agree with the noble Lord, Lord Bridges, that really big challenges are coming down the track. My worry is that we must not set a debt rule that rules out investment in growth. If the interest rate is higher than the growth rate, we are in deep trouble, so we have to find a way of raising the growth rate, which requires a very strong policy of public investment, which the Government are doing. Things such as the Oxford-Cambridge link and the developments around it are very important. My own favourite development would be a massive transformation of urban connectivity in the north of England, which would have a very beneficial effect on productivity.
On spending, we must be really tough. We have to attack bureaucracy, as we are now doing in the National Health Service. We have to take on vested public interests. This is very difficult for people on our side of the House who have a lot of friends in the public sector trade unions, but we must be prepared to have a policy of reform. In addition to that, and to being tough on things such as PIP and SEND, which have got ridiculous in terms of their growth, we must be fair. I end on one this point. Being fiscally tough does not rule out fairness. One thing that I would like to see in future is a redistributive package which addresses child and pensioner poverty.
Lord Razzall (LD)
My Lords, in the light of recent events, the last report from the noble Lord, Lord Bridges, as the brilliant chair of our Economic Affairs Committee, could not have been more opportune. As he indicated, the growth of government borrowing in the last 20 years tells us why we have a problem. In Gordon Brown’s last Budget as Chancellor, public sector net debt was 35.1% of gross domestic product. When Covid struck five years ago, debt rose to almost 100% of GDP. Record borrowing of £314 billion the following year pushed public sector net debt up to £2.8 trillion pounds in cash terms, which is £1 trillion greater than before the pandemic and more than five times the £535 billion when Gordon Brown presented his 2007 Budget.
Historically, we have funded our deficit by the Government issuing a high proportion of long-dated gilts. This has meant that annual refinancing needs are lower than in other G7 countries and changes in interest rates take longer to have effect. Nevertheless, quantitative easing increased the sensitivity of government borrowing costs to short-term movements in interest rates. The unwinding of quantitative easing will take until 2028, according to the Office for Budget Responsibility, before the effective maturity of our debt returns to the pre-QE level of seven years.
There can be no doubt that the market requires the Chancellor to stay within her fiscal rules. As the noble Lord, Lord Bridges, indicated, it is never going to take much for the targets to be missed, even before the reduction in our growth forecast and Trump’s tariff wars. The Chancellor will already be hearing siren voices urging her to ignore her fiscal rules and increase borrowing, but as Sir John Kingman—now chair of Legal & General and Barclays, and formerly a Treasury mandarin—put it so well the other day, those who believe additional borrowing to be the answer should
“glance at the significant rise in the premium the UK is already having to pay in world markets to borrow very large sums each year … That is a clear warning sign. Of course no fiscal rule can be perfect. But the UK … is already treading a very delicate path, along a cliff-edge in deep fog. The protective fence may or may not be in quite the optimal place. But removing it seems unlikely to be a good idea”.
Perhaps in more political terms the Chancellor should remember what happened to Liz Truss when she ignored the debt market. However, it was James Carville, President Clinton’s adviser, who put it best. He was the man who coined the election phrase, “It’s the economy, stupid”. In this context, I think his better bon mot was, when asked who he would like to be reincarnated as, he replied, “The bond market”. I suspect the Chancellor feels the same.
Lord Burns (CB)
My Lords, I thank the noble Lord, Lord Bridges, for his time as chair of the Economic Affairs Committee and for securing this debate. He played a crucial role in ensuring that the committee’s work was relevant, timely and newsworthy. We can see that in the reports that were published during his time as chair. He summarised very well this report, which was completed last September. It remains pertinent—even more so considering many recent developments.
As has been said, the main emphasis of the report is on the need for a fiscal framework for delivering long-term financial sustainability. However, it also addresses some of the challenges that we face and presents some of the inevitable choices. As the report emphasises, two fundamental issues cast a shadow over future fiscal policies. The first is the persistent poor growth performance since the 2008 financial crisis. The second is the consequence of the succession of crises in recent years that have been addressed through substantial government spending and borrowing.
First, on growth, in conjunction with other high-income European countries, we have experienced a protracted economic slowdown since the financial crisis. The decline has been accompanied by a decline in the share of investment in the economy. The reasons for this are debatable—I do not think that there is any simple, compelling explanation. However, personally, I am persuaded that one contributing factor is that the European countries, including the UK, overreacted to the financial crisis by imposing excessive regulation on the banking system and the regulations that followed reduced the available finance for many small and medium-sized businesses.
In contrast, the US has managed to avoid the extent of the slowdown in growth that Europe has experienced. However, both the US and Europe are grappling with the consequences of deindustrialisation of traditional industries, and we are now witnessing the unfortunate resort of the United States to extraordinary tariff levels. I do not think anybody can be confident about growth rates over the medium term, which is going to have a significant impact on our own debt arithmetic.
The second core issue that has been mentioned is the consequence of the series of crises in recent years: the bank bailouts, the Covid pandemic support and the energy crisis. In each case they were funded by increased public spending and borrowing, and that is really the cause of this extraordinary rise in the debt ratio. There was a similar outcome in many other countries, as has been said. However, this is not too much of a comfort to thank, as it still leaves us, as the noble Lord, Lord Bridges, mentioned, with an inadequate fiscal buffer for the possibility of future economic shocks.
The report outlines some of the challenges to debt sustainability. These include continuing high debt interest payments by government; adapting to an ageing population, which is the subject of our current inquiry; transitioning to net zero; and, of course, future defence commitments. We should also consider the decline in the number of people available for work since Covid as another challenge—it was discussed in the committee’s most recent inquiry—and what we now see today: the extraordinary threat of serious trade wars.
The report discusses the case for a fiscal framework that will bring down the debt ratio over time. In general terms, this is consistent with the framework established by the Government in the last Budget—at least in spirit, if possibly not in detail. However, experience suggests that attempting to fine-tune fiscal outcomes on a year-by-year basis is nearly impossible and can lead to poor decisions, especially when the margin for error is wafer thin. What matters most is the direction of travel and the need for the debt trajectory to be downward.
Finally, the report highlights the difficulties we could face in delivering public services without further increases in the tax burden. This all points to the necessity of a long-term approach and a willingness to take some very difficult decisions.
Lord Lamont of Lerwick (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Burns, not for the first time in my life. It is also a pleasure to congratulate the noble Lord, Lord Bridges, on his incisive speech today and his excellent chairmanship of the committee that produced this report.
Despite the time lag, this debate is timely in another sense because of the IMF’s warning this week that global debt—that of all Governments in the world—is likely on track to exceed 100% of GDP. It said that is a risk to the financial system, so this debate is perhaps not just about the UK; it could be about many countries, including the United States of America. Nevertheless, I think many people were surprised in 2024 when the OBR came out with the projection, on certain assumptions, that debt to GDP in this country could rise to 270% in the 2070s. That seems an astonishing increase and would plainly pose a threat to sustainability. How could this be?
The reason, as has already been said by the noble Lord, Lord Bridges, is that in 2020 we saw one of the largest surges in debt since the Second World War. The UK debt-to-GDP ratio was below the G7 average in 2001; it then grew faster and is now forecast by the IMF to be above the G7 average in 2029. The problem is not just the ratio but the structure and the maturity of our debt, and it has also been, as the noble Lord, Lord Bridges, said, that this Government and previous Governments have tended to react to shocks by spending more money. Public expenditure and borrowing have increased, then public spending comes down but not to the pre-crisis level. That is the story of Covid and the response to the financial crisis.
Why is it that we have this threat to our sustainability? One reason is interest rates. Interest rates are unlikely in the future, many people think, to be as low as they have been in the recent past. It was the very low nature of interest rates, particularly with quantitative easing, that got us into this situation in the first place. Nobody knows whether interest rates are going to be higher in the long run, but many people think that is the case—they are higher today than they were. As the noble Lord, Lord Liddle, said, if the interest rate on government debt is higher than the growth of GDP, the debt-to-GDP ratio will increase in the absence of a primary surplus. I do not think the Government’s fiscal rules—perhaps the Minister will comment on this—provide for a primary surplus.
The funding of the existing stock of debt is a substantially greater burden today than it has been in the past. In the 2010s, debt could be stabilised while running a government deficit of over 2% of GDP. Today, because of higher interest rates in money and real terms, you need a primary surplus greater than 1% of GDP in order to stabilise the debt ratio. The Government will say they are aiming to achieve growth—that is their “get out of jail” card—but can they actually get a rate of growth that is higher than the interest rate? They may increase the growth rate but find that interest rates have increased further, and so they are not able to escape from the challenge that confronts them.
Then there is the significant risk of an ageing society. We are living through a period that is unique in world history. By 2070, one person in work will be equalled by one person in retirement. This poses huge problems fiscally. The dependency ratio will go up. The Prime Minister of Japan, a country further along this road of an ageing society than we are, said the other day:
“Japan is standing on the verge of whether we can continue to function as a society”.
These words are chilling, and we should reflect on them. The fiscal challenge of an ageing society is massive. There are no easy answers. As the noble Lord, Lord Bridges, said, we need to make some tough decisions. Nothing is inevitably going to happen, but if something looks unsustainable, the chances are that it will prove unsustainable, and that is the risk we face.
Lord Londesborough (CB)
My Lords, it is a pleasure, if somewhat daunting, to follow the former Permanent Secretary of the Treasury and the former Chancellor of the Exchequer, and to be shortly followed by the former Governor of the Bank of England. However, as a member of the Economic Affairs Committee, I first acknowledge and salute the noble Lord, Lord Bridges, for his astute and incisive chairmanship of the committee and his spot-on introductory comments.
It is indeed time for tough decisions, but I have to admit to growing increasingly cynical about our appetite to face up to them, let alone to take them. We have ducked those decisions for the majority of the last 20 years, and I fear we will go on doing so for the next 20. This highly topical report was published last September, just weeks before Rachel Reeves’s first Budget, which saw another rewriting of the fiscal rules as we ushered in another £30 billion of borrowing. Yes, taxes were raised by £40 billion, but at the cost of future growth.
Our public sector net debt has grown by almost 10 times over the last 25 years, from £300 billion in 2001 to approaching £3 trillion next year. We have had the financial crisis, the pandemic, Russia’s invasion of Ukraine and this ensuing energy crisis. Each event led to exceptional, “one-off” increases in government spending financed entirely by borrowing. But I argue that those shocks explain less than half of this £3 trillion debt pile and obscure the real malaise: low growth and poor productivity.
Not only is there no peace dividend or surplus in stable years, but we routinely borrow at least £100 billion a year to fund our budget deficits. In fact, it was £130 billion last year and, as we have learned this week, in the year to March it has grown to £152 billion—rather worryingly, £15 billion more than the OBR predicted; more on that in a moment.
The resulting interest bill of more than £100 billion a year cannot be paid by tax revenues. We meet those interest payments only through additional borrowing. It is a vicious cycle and it is, of course, unsustainable. I am afraid that business is usual is that R, representing interest rate on debt, exceeds G, our GDP growth rate, even in non-crisis years. So we are caught in a cycle of low growth and productivity accompanied by high borrowing and, crucially, that borrowing has not led to productivity gains.
This raises the uncomfortable question: how much of this £3 trillion debt has been channelled into truly productive areas that will accelerate growth, as opposed to simply financing budget deficits? I suggest to the Minister that we produce an asset register on our borrowing worthy of its name, with a proper impact assessment focusing on ROI—return on investment—to answer this very question.
My final point is on the rolling fiscal rule that foresees a budget surplus in five years’ time. It is a recipe for deferring tough decisions, as we have already heard, and it is aided and abetted by the OBR’s record of optimistic forecasting. Since its inception, the OBR has predicted budget surpluses five years out in 20 of its 28 forecasts when, in fact, the UK achieved such a surplus just once in the last 20 years. Let us have some economic realism.
Lord Forsyth of Drumlean (Con)
My Lords, it is a pleasure to take part in this debate. I add to the congratulations to my noble friend Lord Bridges, as chairman of the committee, and its members for producing this—I was going to say “timely” report, but this debate is some seven months after the report was published and quite a lot has changed in that time.
Short of national security, it addresses the biggest issue facing the country. That we have an advisory speaking time of four minutes tells you everything about the way in which Parliament is increasingly becoming the decorative part of the constitution. We now, apparently, take on huge, unlimited, unknown debt in nationalising industries over a weekend and give powers to civil servants to force people in private companies to do things on pain of being sent to prison if they do not—and Parliament has no say. It is clearly important that we address this issue not just in Parliament but in the country.
The lesson of this report is that our people—the constituents of the Members at the other end of this building, our families—have no idea of the crisis that is facing our country and the threat that it presents to our ability to deliver pensions and important public services.
Even this week we learn that borrowing has turned out to be £15 billion more than expected. In the year to March, as the noble Lord, Lord Londesborough, said, we spent £151.9 billion more than we had in income, and we are relying on growth, which we have not seen since 2008, to rescue us from that situation. As the report points out, there are fundamental strategic reasons why we need to tackle this now, and the longer we wait to bite the bullet the bigger the problem will be.
These reasons include the fact that, in the 1980s, we thought we had a peace dividend, but now we realise that we should not have spent that money, but we had committed that expenditure to welfare and other matters. The baby boomers were creating wealth and now they, like me, are a burden on the state in one form or another. The notion that we can finance the triple lock on pensions, however popular it may be, is ridiculous in these circumstances. We need to get the country to understand that and to lower its expectations for the future.
We had growth in world trade. Now we have an—I hesitate to use an adjective—Administration in the United States who are determined to destroy world trade. I assume that we should forgive them, for they know not what they do, but the impact on growth will be enormous. As my noble friend Lord Bridges pointed out, life expectancy is increasing; this and the success of the National Health Service point to further pressures that will be difficult to sustain.
Whenever there is a consensus on anything, one ought to worry. There was a consensus on quantitative easing and on lockdown, and now we are paying the price for that quantitative easing—for printing money on a vast scale. It has left the country more vulnerable to rises in interest rates and more dependent on the kindness of strangers and foreign investors, at a time when the world as a whole is under severe pressure. The latest estimate is that QE will cost us some £150 billion. The decline in the workforce to support all of this is such that, by 2070, there will be one person in work for every person in retirement. That is a huge burden to place on the next generation.
Therefore, this report should be taken seriously by the Government and by the Opposition. We need a consensus in our country, to explain to our people the crisis that we are facing, in the context of the world crisis, and to cut our cloth according to our ability to pay.
The Deputy Speaker (Baroness Bull) (CB)
My Lords, the noble Lord, Lord Weir of Ballyholme, is taking part remotely. I invite the noble Lord to speak.
In the noble Lord’s absence, I suggest we move on to the next speaker in the Chamber.
Lord Wood of Anfield (Lab)
My Lords, it is a pleasure to speak in this debate on such an important topic, and I congratulate the noble Lord, Lord Bridges—my predecessor as chair of the Economic Affairs Committee—and thank him for his kindness in the tricky transition period between our tenures and for his time chairing the committee. I have the privilege of succeeding him and now working with the excellent team that helped produce this report.
There is a lot in the report that is worth careful study—particularly that on the nature and composition of debt, as the noble Lord, Lord Lamont, and others have discussed. As the report says, the question of what exactly is our debt problem is not straightforward. It is a complex combination of the level of the debt-to-GDP ratio, its trajectory over time, the maturity profile changes, the robustness of the tax base that finances paying it off, fiscal policy plans and changing world circumstances. This report talks eloquently about the pressure points and why debt is a particular problem and under what circumstances. It discusses the key trends—the five Ds that the noble Lord, Lord Bridges, mentioned earlier—which push debt even higher. It also provides an excellent and crucial explainer of why, especially since Covid, the composition of the debt has changed in a worrying way.
It has not been said yet, but it is important to note that this report was written with reference to fiscal rules, before the current Chancellor changed various aspects of the fiscal framework. I think the Chancellor should be congratulated on those changes. In some respects, they make positive differences that very much chime with some of the concerns in the report. In particular, and most importantly, the shift to targeting the current budget balance, rather than overall borrowing as under the previous Government, reduces the budgetary incentives to cut valuable investment. I also very much welcome the switch in the debt definition to public sector net financial liabilities.
The Chancellor retained, of course, the principle in her second fiscal rule that debt needs to be falling at the end of a five-year period—now a three-year period as of 2026. The report’s main criticism of that is that a rolling target means the rule is easily gamed—you could have four years of rising debt and then one year of decline and meet the rule but still have a net increase in the stock of debt over time. That is a concern and is part of the design flaw of this five-year rolling, or three-year rolling, system. My concern about this rule is slightly different. The main problem is that it results in Governments basing long-term investment decisions on highly contingent, uncertain projections that are so dependent on complex, unknowable real-world developments. Making concrete long-term public investment decisions that have to be changed in virtue of forecasts that probably turn out not as accurate as you need them to be is a bit like chasing shadows.
In the spirit of being perhaps a friendly devil’s advocate to this report, let me just finish with three quick reflections. The first, to put some perspective on this, is that the debt-to-GDP ratio in the UK is now lower than it was in just under half of the entire 20th century.
Secondly, the question that financial markets are concerned with is less the level of debt-to-GDP ratio but whether Governments are using borrowing for productive growth-enhancing investment, as the noble Lord, Lord Liddle, referred to earlier, and whether they are prepared to take steps towards fiscal consolidation when the shocks that trigger debt increases subside. Our focus needs to be as much on those two concerns as it is on a numerical debt-to-GDP ratio.
Lastly, I personally have sympathies with the NIESR and economists who think that investment in service of long-term objectives crucial to the national interest should be taken out of the debt target. That does not mean they are taken out of public scrutiny; there are lots of things the OBR can and must do, but there is a case for the kind of long-term certainty, which the noble Lord, Lord Liddle, referred to, that the private sector needs in order to know that Governments will complete long-term transition investments.
Lord Howell of Guildford (Con)
My Lords, like others, I congratulate my noble friend Lord Bridges on his ambition and boldness in leading the Economic Affairs Committee to study the proverbially complex and nebulous subject of trying to control and direct our borrowing and the growth of our national debt.
I confess that I do not set much store by fiscal targets at all, especially when they apparently are adjustable to suit any changing conditions. That does not give them a great value. They are certainly not the fountain of all goodness, whether one year, two year or five years. Shocks always happen, as my noble friends have already observed. In fact, we are in one now, and I just wish and pray that the authorities of the governing party, and indeed all parties, would listen to the warning we just had from my noble friend Lord Forsyth about the extreme seriousness and dangers of the potential financial anarchy ahead. The truth is that borrowing and annual requirements adding to the national debt are the outcome of many judgments, decisions, red lights, shocks, as I have already said, and opinions on the bond market in world-lending conditions.
I am also no fan of the OBR. I am sure it works hard, but it is no more right or wrong than the rest of us. In fact, it is often wrong. I see it as a fifth wheel, or a sixth wheel, on the whole coach of processes, filtering, establishing and trying to control the level of borrowing that is needed in the annual budgetary scene. Creating the OBR was only a quarter way to what we really should be doing with the machinery of central government, which is to have a proper central, strategic budgetary authority looking at the whole national picture and our resources to meet it, public and private, long-term and short-term, right under the Prime Minister at the centre of government. We have been arguing for that for years. We have not got it. Many other countries— America is the best example—separate these things out. Until we do that, we will have continual difficulties on understanding the whole picture.
I emphasise private because the state is obviously overwhelmed by every conceivable spending demand, as my noble friend Lord Bridges outlined, and there is much more to come. It is always short of money and always up against the limits of taxation and of borrowing and interest rates. The private sector has unlimited funds, by contrast, and it is absolutely ridiculous that we now have huge pension funds tucked away in trillions in this country, one of the biggest in proportion to our population, and yet they find themselves short of opportunities and the nation finds itself starved of the necessary investment it is crying out for on every side.
The real need is for new forms of collaboration between the public and private sector that do not blow up the public sector net debt and to find a new model that escapes from the outdated binary form of debate that has dominated thinking in the past. We tried the private finance initiative, the PFI, and it failed for various reasons, which there is not time to go into now. Missing in the report is the concentration on this crucial grey area between PSBR, government accounts and private money, which is in profusion. It is in not only the pension funds but in sovereign wealth funds, FDI and a thousand other resources as well.
Can the Minister reassure us that the brains in the Cabinet, his own party and the Treasury are looking at tough decisions in this area—not the tough decisions addressed in the report but those that require the highest priority—of how we mobilise the vast funds available in the private sector with such vast needs overwhelming the public sector? That is the key, and unless we can find the lock to put that key in, we will have much worse conditions ahead.
Baroness Wolf of Dulwich (CB)
My Lords, I thank the noble Lord, Lord Bridges, for his truly excellent chairing of the Economic Affairs Committee and this inquiry, and for his opening remarks. This report has indeed, unfortunately, become even more relevant than it was last September. I will highlight three rather general lessons I took away from the inquiry and report, which are to do with public awareness, borrowing for investment and fiscal rules.
First of all, we take far too little notice as a nation of either the levels of public sector net borrowing or the cost of servicing debt. The Government should, in my opinion, highlight them more, not continue to avoid the subject. Many people do not understand just how much Covid cost, nor the implications of this for future investment. It is not just the rise in net debt, nor our consistent pattern of net borrowing. The level of debt interest spending relative to both GDP and revenues, illustrated very vividly in figure 4 of the report, is what should really hit home with the public. That shot up in 2022-23 to a post-war record. Although it has fallen a little since, the latest OBR forecasts show it staying very high over the next five years, as other noble Lords have pointed out. The public debate about priorities and patterns of government expenditure very rarely refers to debt servicing. I question how many people, even in the policy community, realise that almost 10% of government revenue currently goes on debt interest spending. They should, however, and Governments faced with difficult decisions would do well to emphasise this and not continue to ignore and run away from the situation.
Clearly, all of this matters much less if the underlying economy has grown, as other noble Lords have noted, and that brings me to my second point, which is the almost mythic nature of the idea that we should borrow only for investment—something for which our report did not have a great deal of time. The subtext here is that if it is investment, it will pay in the future and therefore generate growth and so solve the revenue problem. I think this is hopelessly optimistic. Investment can be hugely wasteful and pointless, as the Soviet Union used to teach us.
Moreover, human capital—the skills and knowledge of the workforce—is just as important for the economy as physical capital; a school building is useless without good teachers in it. The problem is that, once you start down this road of having particular types of spending which are different, you can easily classify huge parts of government spending as investment. One of our witnesses asked, “Why not nurses’ wages?” Of course we should spend on infrastructure—I share the enthusiasm of the noble Lord, Lord Liddle, for northern connectivity as well as the Oxford-Cambridge link—but this is where I disagree with our new excellent chairman, the noble Lord, Lord Wood: we should not be seduced by the idea that borrowing for investment is different and does not count.
One reason I feel that is related to my third and final point: the influence on government thinking and behaviour on specific fiscal rules. Fiscal rules—whether they are to do with investment, moving towards a reduction in the debt level or whatever—inevitably and constantly focus governmental attention on the rules and not the underlying patents. I had a short period in government, during which I was struck by the obsession with whether the OBR will score something. I would ask, “Will this particular policy help the Treasury make its case that it is actually going to meet the fiscal rules?” The extent to which rules undermine sensible policymaking was a recurrent theme in the inquiry for very good reasons. We badly need to move away from a narrow focus on them and towards a much broader approach, as our report argues.
Baroness Noakes (Con)
My Lords, I was a member of your Lordships’ Economic Affairs Committee under the excellent chairmanship of my noble friend Lord Bridges of Headley when this report kicked off, but the annual musical chairs of Select Committees saw my chair move to another committee before the report got seriously under way.
Since the global financial crisis, all Governments have normalised high levels of debt and focused on short timeframes. The report correctly calls out the lack of focus on medium to long-term debt sustainability, and we urgently need this to be a government priority. If we look back to the 1970s, when the debt-to-GDP ratio came back below 50% after about 60 years, there was no sophistry around whether R was greater or less than G, or whether tipping points could have been predicted; it was just accepted that keeping the debt ratio down to a sensible level was an important thing to do. There was not much science to Gordon Brown’s first iteration of his fiscal rules in 1997, which set the debt ratio at what he described as a “stable and prudent” level of 40% of GDP. It did not matter that the 40%—or indeed the EU’s 60%—could not be proven with intellectual rigour. These were rules of thumb which conveyed a sense of sound financial management.
These debt targets provided a sustainability underpin, as they allowed economies to absorb inevitable shocks. However, sustainability now seems to mean absorbing those shocks by being able to borrow more: as long as we keep borrowing, we will be okay. That is the approach to balance sheet management that brought Thames Water to its knees. Operating just the right side of a tipping point is a gamble, and it is one small shock away from financial disaster.
The prudent rules were thrown out of the window after 2008, and all iterations after that point, including that of the current Government, assume, in effect, that high levels of government debt are normal. These rules have allowed successive Governments to carry on spending as if the only issue were a few basis points on the trajectory of debt in a few years’ time. We currently have the crazy spectacle of debt levels hovering around 100% and the Chancellor making microadjustments to her fiscal strategy every time the OBR produces another forecast that eats into her tiny headroom. Changing the debt measure to one based on net financial liabilities is just another layer of smoke and mirrors. There is no plan to get debt levels seriously trending back towards pre-global financial crisis levels, and, equally, no plan to cope with debt hurtling towards 300% of GDP as demographics and other long-term pressures take their toll.
The Government are betting the farm on getting growth back into the economy, but it is going to take levels of growth way beyond those we have seen in recent years if debt is to trend down convincingly towards much lower levels. No one outside the Treasury bubble thinks that the growth mission has any traction whatever, and most government policies are pulling hard in the other direction. I agree with the Economic Affairs Committee that it is time for tough decisions, but the report should have been more explicit about what “tough” really means. The complacent government response to this report shows that the Government are completely blind to the problem.
Lord King of Lothbury (CB)
My Lords, I congratulate my erstwhile colleagues on the Economic Affairs Committee on their excellent report on the national debt. I also congratulate the noble Lord, Lord Bridges, on the clarity of his opening speech and on his outstanding chairmanship of the Select Committee.
The Chancellor of the Exchequer deserves sympathy for the difficult fiscal position that she inherited, but, unfortunately, her new fiscal rules are flawed. When non-negotiable fiscal rules meet reality, my money is on the latter. The Government have two fiscal rules: first, the current Budget must remain in balance or surplus from the third year of the rolling forecast period; and, secondly, net financial debt must fall as a share of the economy by the third year of the forecast period or 2029-30, whichever is the later.
The problem with the first rule is the Chancellor’s argument that:
“Balancing the current budget means that … over the medium term, borrowing is only for investment. This means future generations will not be burdened with the costs of public services today”.
If only that were true. I sympathise with the noble Lords, Lord Liddle and Lord Wood; as my noble friend Lady Wolf said, we have a need for public investment in infrastructure with the hope that it might improve economic growth. However, unlike the private sector, investment in the public sector does not, in most cases, generate an income to the Government that can be used to pay the interest on the debt taken out to finance the investment, and the burden of servicing that debt will fall on future generations.
The problem with the second fiscal rule is perhaps even more serious. Projecting the ratio of debt to national income to be falling in the third year of the forecast horizon is better than the previous metric of a forecast over five years, but it is still Augustinian—“Make me fiscally stable, but not yet”—and even Saint Augustine did not believe in a three-year rolling horizon. As the Select Committee pointed out in its report, a rolling horizon permits the rule to be met while debt keeps rising as a share of national income. The Chancellor defended a rolling horizon by arguing that it avoids the need to make sharp policy adjustments in response to small changes in the forecast, yet in her Spring Statement only a few weeks ago, the Chancellor did exactly that: cutting spending to meet a change in the OBR’s point forecast for 2029-30.
Although the OBR discusses risks to the outlook several years ahead, it presents just one precise number, to which the Chancellor is supposed to respond, and it does so every six months. This is no way to manage public spending. I suggest that the OBR should report only once a year, before the Budget, and focus on a qualitative assessment of risks rather than the spurious precision of a point forecast.
The pandemic is behind us, we have yet to increase defence spending by any significant figure, yet debt is still rising as a share of national income. The choice between raising taxes or cutting spending should not be deferred by resort to a rolling horizon. We owe it to our grandchildren to take seriously the challenge of reducing the national debt.
Lord Tugendhat (Con)
My Lords, as a former member of the Economic Affairs Committee, I add my congratulations to my noble friend Lord Bridges and to the other members of the committee for the outstanding report that they have produced. It is a privilege to follow the noble Lord, Lord King, whose time at the Bank of England I remember clearly, when I was operating in the private sector under his general supervision.
I take as my starting point paragraph 138 of the report:
“If we wish to improve the level and quality of services, and continue the current provision of benefits, taxes will need to rise”.
It goes on to say that clarity is required on the role of the individual versus the state. We certainly need a good deal of clarity on the part of the state because, as everybody knows and everybody has said, the world has changed out of all recognition since the Government made their pre-election pledges. Indeed, it has changed a good deal since the report was published—President Trump’s activities have seen to that—and the result is plain for all to see. On the one hand, the Government are going to have to spend more, and on the other it will be more difficult to grow the economy.
So what does that mean if debt is to be kept on a sustainable path? Are we to believe that, in order to stick within the Chancellor’s rules, defence expenditure will not increase as it must and as the Government have promised it will? Or are we to believe that there will be further benefit cuts? Sooner or later, taxes will have to rise. The longer it takes the Government to grasp the nettle, the worse it will look and the more the national debt will become unsustainable. Instead of reacting decisively to changing circumstances as they unfolded, as the Prime Minister has done on the international stage, the Government have delayed facing up to reality. In so doing, they are repeating a doom loop of the Attlee and Wilson Governments.
In making that comparison, I am indebted to a recent Substack by Peter Kellner, the former president of YouGov, in which he argues that, by failing to devalue the pound in 1946 when circumstances demanded it and going on to fight a rearguard action until 1949, the Attlee Government condemned the country to needless pain and themselves to a great political defeat—likewise with the Wilson Government, which many in this House will remember, not devaluing in 1964 and holding out until forced to do so in 1967. Both those Governments got left behind as the world around them changed, and the same is happening to this Government in respect of the national debt and the subjects covered by this report.
Now is indeed the time for tough decisions, as the title of the report suggests, and not just to prevent the national debt from becoming unsustainable. The needs of our armed services and our public services require it. The Government must grasp the nettle.
Lord Davies of Brixton (Lab)
It is a great pleasure to take part in this debate. It is a bit like the Economic Affairs Committee 2024-25 reunion tour, with added guest stars. I was a member of the committee, and preparing for the debate gave me an opportunity to reflect on what we achieved—or what I achieved, I suppose. I give great thanks to the chair of the committee, the noble Lord, Lord Bridges of Headley, who was an excellent chair who encouraged the full participation of members. I have no criticism of him at all. The committee was extraordinarily interesting—the members of the committee as much as the witnesses. We received formal evidence from witnesses but not from members of the committee, even though some committee members knew a lot more than the witnesses.
I am happy to add my name to the report, but that does not necessarily mean that I agree with everything in it. Another tribute to the noble Lord, Lord Bridges, is that he was assiduous in making sure that my views were made clear, even if they were not always successful. The key issue for me is that the committee did not say we were facing an inevitable crisis; it said we had a choice, expressed in terms of the state doing less or in increasing taxes. An increase in taxes was not ruled out by the report; it was in the report as a choice and, speaking for myself, that is the choice that I would make. There is actually a third choice that we did not consider, and I regret that we ruled it out: that we should borrow even more. I slightly regret that we did not explore that in more detail. We said, “We’re not interested in listening to the views of people who promote modern monetary theory” and we did not really hear from them. I think they may provide valuable insights, even if I do not necessarily agree with all their conclusions.
A big loss in this debate is, of course, my noble friend Lord Layard, who was a valuable member of the committee. He was assiduous in making the point that, with increasing demand for public services, with people getting older and improvements in medical technology, and with increasing demands for higher standards of public service, there is inevitably going to be an increased role for the state and for public expenditure within the total economic budget. In and of itself, increasing levels of public expenditure is not a cause of concern; it is a reflection of the needs of a modern society.
The standout for me within the evidence we received was from Professor Stiglitz, who raised the issue of investment. We rather kept out of the issue of investment because it was so big, but he asked what counted as investment. He gave the example of nurses’ training. Is that an investment? For the Government it is not, but in fact we need investments of that type and the narrow terms of investment that we see defined in the Chancellor’s letter do not reflect the changing needs of what we need from public services.
Lord Horam (Con)
My Lords, this is an extremely worthwhile report. Its worth is reflected in the fact that, despite the turbulence of the last six months, it is as relevant today as it was when it came out in September last year. As the report says, it invokes the need to make some hard choices. The Government said in their response that they had indeed made some hard choices—and they have made some, but unfortunately not enough of the hard choices that will be needed if we to overcome this real difficulty.
The noble Lord, Lord Liddle, made the point, in his trenchant style, about the hard choices of Greece, for example. Greece was in a terrible situation about five years ago. Now, it is growing fast and reducing its debt. Portugal is the same. The noble Lord, Lord Liddle, said that the reason for that was the help from the European Central Bank. I do not know what role it played in the recovery of Greece, but I know that Greece made hard choices on public expenditure of the kind that the committee is posing in this report that the Government should make. Hard choices are necessary.
Not all the choices are hard. For example, I was reading an article in the Times by Simon French, the managing director and chief economist of Panmure Liberum. He said:
“It is hard to overstate quite how mad the UK’s energy policy looks to outsiders”.
Energy policy is a fundamental issue of economic policy. The Industrial Revolution took place in this country because of our energy resources and the way we exploited them. This is an absolutely key element. Simon French went on to say that
“many investors struggle to square the government’s primary mission for economic growth with a penal 78 per cent tax rate on energy profits and a commitment to no new licences for the UK’s North Sea continental shelf … It is an impediment to economic growth … hiding in plain sight”.
The committee makes the point that there is a choice here, which the Government have to make. The article also said:
“Investors fully recognise the global imperative to decarbonise but in reducing domestic supply of oil and gas the UK is, in fact, adding to carbon in its energy mix. It does this by increasing its reliance on dirtier foreign imports”.
There are choices—common-sense choices—which are not that difficult to make if we are to deal with this problem. Look at other countries which are facing the same sorts of situations: debt is high in America, China and India. However, all three of those countries are steaming ahead on economic growth because they have sensible energy policies. That is just one aspect. In four minutes, I cannot say much more, but I think the best thing the committee and the chairman, who has produced this excellent report, can do, is to repeat it in four years and see where we are.
Lord Macpherson of Earl’s Court (CB)
My Lords, I congratulate the noble Lord, Lord Bridges, and his committee on their timely and well-argued report. I agree with pretty much all of it. The fact is that Britain’s national debt has more than doubled as a percentage of national income in 20 years and we have nothing to show for it in terms of increased productive capacity. The country is now far more vulnerable to the vagaries of the bond market, the performance of which reflects global as much as domestic factors.
I confess that I spent much of my final decade at the Treasury crying wolf about the potential inflection point in the gilt market. I was proved wrong at the time; helped by QE, the gilt market navigated the global financial crisis and Brexit. But every dog has its day. The Truss Government tested the bond market to destruction and, since 2022, funding the national debt has caused the Treasury more worry than at any time since 1976.
In recent years, fiscal rules have come and gone at alarming speed. Of course, “rule” is a misnomer. They are not rules any more than the inflation target is a rule, and successive Governments have found there are few consequences for breaking them—you just claim force majeure and adopt a new one. I accept that Governments need a fiscal framework, and that the guard-rail the rules provide helps the Chancellor manage her Cabinet colleagues. But, like my noble friend Lady Wolf, I worry that excessive focus on so-called rules can discourage Governments from focusing on the substance. As my noble friend Lord King put it, the rules, especially those of a rolling variety, allow Governments to pursue an Augustinian policy. We never quite get fiscal consolidation, invariably because spending projections prove undeliverable.
I broadly welcome the changes the Government have made to the framework, but what matters is not whether the Government stay within the rules. Much more important is the substance of fiscal policy. Is the deficit being reduced at sufficient speed? When will debt begin to fall in relation to national income? Is the proportion of public expenditure accounted for by debt interest on a downward path? Are fiscal policy decisions addressing long-term pressures, and are the policies the Government are putting in place likely to facilitate economic growth or to hinder it? The Government have taken some tough decisions over the last six months, but I fear they will have to take many more if they are going to deliver a sensible fiscal policy.
I shall finish with two small points. First, I encourage the Chancellor to agree a new framework for future bouts of quantitative easing, which will give the Treasury a greater locus to debate the implications for fiscal policy with the Bank of England and make the Treasury more accountable for the outcome. This did not seem necessary when the then Chancellor Alistair Darling agreed the first framework with my noble friend Lord King back in 2008. QE was thought to be an emergency measure that would not last long. But future rounds of QE, whether or not they were necessary—and I have my doubts—have changed the relationship between monetary and fiscal policy and we need to recognise this.
Secondly, my final point is that the Government should do all they can to raise the profile of the OBR’s fiscal risks and sustainability report. For my part, like my noble friend Lord King, I would amend the Industry Act so that the Government no longer have to produce two economic forecasts a year. Instead, the parliamentary time set aside for the Spring Statement should be devoted to a debate on the OBR’s fiscal risks and sustainability report, to raise its profile in the country and to encourage a greater focus on long-term projects. Who knows? It might even result in better proposals when the Chancellor comes forward with her annual Budget.
Lord Moynihan of Chelsea (Con)
My Lords, I congratulate the noble Lord, Lord Bridges, and his committee on this valuable report and its hard-hitting title, and my fellow Peers in this debate on their many excellent speeches. It is a pleasure to follow the noble Lord, Lord Macpherson of Earl’s Court. I declare my interest as a businessman, investor and author on this topic.
I am concerned, as was my noble friend Lord Forsyth, that the report was published six months after most of the evidence being taken, with this debate being a further seven months later. Despite my noble friend Lord Horam’s good points, its recommendations are dated. Furthermore, as the noble Lord, Lord Macpherson, has just said, they are mostly process- or rules-based rather than action orientated.
I have a few more concerns. First, the rapid growth in debt is not because of economic shocks, Russia’s barbaric war on Ukraine, or Covid. It is because we spent profligately under the previous Government during Covid. No one worried about inflation when increasing the money supply. It is because of our ruinous energy policy, and because our too high spend continues unabated. We could have adopted the Covid policy of Sweden or Florida. We could have avoided inflation like other countries have. We could have reduced our post-Covid spend, but we did not.
The report proposes increasing tax revenues to pay for increased spend, but my somewhat egregiously named Moynicurve says there is a ceiling on how much tax overall a given country’s citizens will cough up. For 10 years I consistently, and so far correctly, predicted that the UK’s overall tax take would not rise much above 36% of GDP. Yet the OBR’s forecast for Chancellor Hunt’s 2023-24 Budget was that tax revenues would rise to 37.7%, almost 38%, well above that 36%. Did they? They did not. Actual tax receipts for that year were 35.7% of GDP.
Now, the OBR predicts that the tax take from Chancellor Reeves’s current Budget will, again, be 38% of GDP. But it will not be—how could it be, with so many business closures and the flood of high-flyers, ambitious youth, enraged millionaires and non-doms pouring out of our country? How long will this misplaced belief that the overall tax take can be goosed up continue? How many more large deficits do we have to see before sense prevails?
Will growth arrive to save us? Both the IMF and the OBR predict growth of just 1% this year. That is no help, and they are overoptimistic—the Government do not understand how to produce growth and that there is no money. Deficit and debt figures released this week support my prediction that our debt-to-GDP ratio will inexorably rise, over some 10 years, to 150% or more if we continue on this path. Nothing extraordinary is required to get this right; we just have to get back to the first few years of Tony Blair’s Government, when, courtesy of John Major’s Government, we ran a surplus and debt levels were reducing. We can do that again.
Our current levels of deficit and debt are unsustainable. Debt service, at 9% of government expenditure and rising, is crippling us. Will the Minister acknowledge that the current level of national debt is entirely unacceptable and commit to bringing it down as a top priority?
Lord Browne of Ladyton (Lab)
My Lords, it is a pleasure to have the opportunity to participate, albeit briefly, in this morning’s proceedings. I enthusiastically join all previous speakers in congratulating the noble Lord, Lord Bridges, and the wider committee on its report. It provides a forensic, grim and justifiably challenging—drawing on adjectives used by other noble Lords—diagnosis of many of the long-term challenges in which we engage in the interests of economic sustainability.
For reasons of both brevity and modesty, given the superior qualifications of other noble Lords—almost all who have spoken—to engage with the finer points of economic theory, I plan to discuss a couple of specific elements from chapter 4 of the report. First, I should like to mention the opening of chapter 4 and the section on underlying demographic factors.
When the welfare state was created, there were around five workers for every pensioner. Today, that figure stands at around 3.5, and, as other noble Lords have spoken about, ONS figures suggest that that ratio will narrow exponentially from the 2030s onwards. In autumn last year, the Prime Minister rightly told an interviewer that he was not in the business of telling people how many children they should have. However, Dr Paula Sheppard has identified that there is a fertility gap of 0.3% in the UK, meaning that, for every three children wanted, only two are born.
It was in similar circumstances that the previous socialist Prime Minister of Finland, Sanna Marin, commissioned work that was successful in policy adjustments to ensure that women, couples and families who wish to have children do so in a public policy environment that seeks to empower them to realise that wish. France has shown us that family-friendly policies can have a material impact on long-term demographics, and it may be an area of policy that repays further consideration.
Secondly, as paragraph 101 outlines, it is clear that much of the fiscal space that allowed the expansion of social and welfare spending as the welfare state expanded into its modern dimensions was afforded by a dramatic decrease in defence spending from the 1950s onwards. Defence spending, when handled properly, is long term and strategic as well as reactive—a necessarily swift response to geopolitical uncertainty. Nothing in the auguries that I have seen suggests that the current uncertainty and strategic jeopardy that we face is likely to abate in the near future. Modern wars do not end.
This means that we must anticipate at least the possibility of a further expansion of defence spending, and that this will be calculated not to an economic slide rule but to the magnitude of the threats we face. Again, as paragraph 103 of chapter 4 makes clear, this will have consequences for other areas of government spending. Carl Emmerson from the IFS gave evidence to the committee and described the decades-long practice of diverting savings from the defence budget to other, perhaps more electorally appealing, areas of government activity. As we have seen, not least through the determination of the actions of the Prime Minister and the Defence Secretary, this period is now at an end. This will have political and structural ramifications that will continue, certainly over successive Governments.
In closing, I reiterate my welcome for this report, not least because it demonstrates, even if somewhat elusively, the unenviable economic circumstances this Government inherited. I look forward not merely to my noble friend the Minister’s response but to the Government’s continued work to engage these challenges.
Baroness Cash (Con)
My Lords, I congratulate the noble Lord, Lord Bridges, on this excellent report and welcome the discussion today. It is more urgent than when it was published, of course, and it is an issue that is pressing on us as rapidly as it is possible to imagine, as we see birth rates dropping and the elderly demographic increasing. I thank the many noble Lords who have preceded me, with expertise on the numbers that I do not pretend to have. I am a business leader, not an economist, but I want to address this conversation and centre it around people, particularly young people.
At some point over the last 30 to 40 years, we broke the contract with the younger generations in ensuring that we leave behind a safe legacy for their futures. Fortunately, we still have their confidence: 60% of young people under the age of 35 express a desire to run a business, and 12% of 18 to 25 year-olds in this country are already active in entrepreneurial interests. That is an amazing positive future investment that, as the generation ageing ahead of them, we have to look after and invest in for our future.
I welcome particularly today the consensus that has emerged across these Benches and the importance of that conversation and consensus going forward. My appeal is that, as we think about and discuss this in the remaining minutes of the debate, we appeal to the Government and urge them to think again about the policies they have pledged in this term of Parliament that will destroy opportunities for young people, and that are already destroying the prospects of our small and medium-sized enterprises across this country.
We are seeing businesses close at a rapid rate, with higher percentages of petitions for winding up and more orders for winding up. This is a catastrophic situation for us to be in when we are standing on the precipice of fiscal ruin, with our debt at this level. We need growth. Governments do not make growth happen; people, businesses and our young people do. We need to think about them and about reversing, if necessary, the national insurance rises, which are crippling them. We need to halt our debate on the Employment Rights Bill next week and take seriously the punitive levels of costs that we are going to layer on top of businesses in this country.
Day after day, we see young people come into the Public Gallery to sit and listen to what we discuss here. Let us remember them and put them at the centre of this. Let us reach across these Benches and remember that we are all here because of public service and we all wish the best for this country. We now need to focus on how we address this crisis and build for the future.
Baroness Grey-Thompson (CB)
My Lords, I declare an interest as president of the LGA and a recipient of personal independence payment. We are in a difficult economic position and, yes, we have to make difficult decisions. The benefits system currently supports 22.7 million people, which is not sustainable, but the Government’s wider reform strategy hinges on increasing labour market participation to ease long-term fiscal pressure. It aims to encourage more people to work by removing disincentives and providing personalised support. But will these measures result in a meaningful increase in employment, especially for disabled people? We do not need another tick-box scheme.
Tom Pollard, head of policy at the New Economics Foundation, highlights that these economic reforms are straight out of an economics playbook, but they overlook the lived realities of millions and the extra costs of living for disabled people, particularly those managing long-term conditions without consistent care or those who live in regions with low job availability or inadequate support services. It feels like we are about to tighten eligibility without discussing the real barriers to employment. I completely support getting disabled people into work, but we also need to look at the discrimination in housing, education, employment, physical activity, health and social care—and, of course, transport.
The Disability Discrimination Act said that all trains would be accessible by 1 January 2020. Every single Government have allowed derogations, which means that trains will not be step free for another 100 years. That means that people like me, who work, will not be able to get on a train without the support or permission of a non-disabled person for another 100 years. Access For All funding and level boarding must become a priority to enable disabled people to contribute to society; we cannot keep avoiding the issue. I pay tribute to Tony Jennings, a disability rights campaigner who has campaigned pretty much single-handedly to remove discriminatory bans on scooters travelling on trains and trams. Tyne and Wear still bans scooter users. How is a scooter user meant to get to work if they are not allowed to use public transport?
I am unsure how stopping under-22s accessing universal credit incentivises more young people to work when it is increasingly difficult for young people to find employment, regardless of disability. They need to be in work, but we need to find a better way. The words of the noble Baroness, Lady Cash, have given me a little bit of hope but, by pushing more children and more families into poverty, the Government are pushing the barriers to employment further away for those families.
As we have seen in the past, welfare reforms incorporated into previous OBR forecasts have in many cases saved much less than initially expected, as shown by the transition from disability living allowance to PIP and the delay in the rollout of universal credit. An estimated 800,000 people are set to lose their entitlement to PIP, which has often been misrepresented in the media as an out-of-work benefit. PIP can be received both in and out of work, making it less likely that it will boost claimants’ incentive to work. PIP restrictions currently form the largest part of the Government’s potential cuts. This is a failing system. You have to prove what you cannot do to get support and not what you can do and the ways that you are able to contribute. The Department for Work and Pensions’ own figures show that fraud rates are extremely low. There is an issue of overpayment and underpayment—but the system is failing.
I understand that the Minister may wish to write to me, but is he aware that disabled people appear to be receiving emails asking them how they spend their personal independence payment? It is instilling fear, when again there may be a better way of obtaining this information and developing a better process for a failing system.
Lord Griffiths of Fforestfach (Con)
My Lords, I acknowledge my debt as a member of the committee to the noble Lord, Lord Bridges, as chairman. He was totally engaged, always impartial and invariably responsive to members’ requests, so I thank him.
From the evidence that we have heard in this debate today and from the report, no one can judge that we are in other than a very serious position as a nation. If anything more was needed, there were flashing red lights earlier this week in March’s government borrowing figures. On any sober assessment, this debate has shown that public spending and public borrowing are out of control. At the same time, as the noble Lord, Lord Burns, made very clear, the potential tax revenue we can get from economic growth is going to be meagre, with growth forecasts by the Bank of England, by the OBR and this week by the IMF having been slashed.
I accept, of course, that the Chancellor is not helped by the paralysing uncertainty of the global economy, but we must face the fact that our debt problems are primarily homegrown. Government spending is clearly not under control, and the tax take, despite that, is at its highest level for years.
Meanwhile, the Chancellor recognises that tough choices need to be made. The debt or bond vigilantes may have saddled up, but I do not think that they are hostile to the Chancellor. What they are concerned about is that the Government’s fiscal policy is drifting; there is no clear direction, despite what is said. It appears that the Government are not really in control. This week, the IMF published its annual report and said that the outlook was “severely adverse” for all advanced economies.
I want to mention something that we touched on in the review—certainly questions were asked about it, but they were explored only superficially—and that is a fiscal rule, such as a debt break, placing a ceiling on the ratio of debt to GDP. This is a measure in which I have taken a particular interest because of my academic connections with Switzerland, which adopted a debt break, while Germany followed Switzerland and adopted it too. Today, the ratios of national debt to GDP are 38% in Switzerland and 63% in Germany, and their 10-year bond rates are significantly below the UK’s.
A debt break rule is not simple: it needs to have a ceiling, a cyclical adjustment and an exemption clause. The irony is that the UK once had such a fiscal rule—and who no less than Gordon Brown was Chancellor at the time? In his first Budget of 1997, he introduced a ceiling of 40% of national debt to GDP. When the euro was set up, we did not enter it; the euro set a ceiling of 60% and still does—yet Gordon Brown carried on insisting that the UK should have a rule of 60%.
In conclusion, I believe that there is a strong case for the Government introducing a debt break rule in the UK, accompanying it with actions that restrain the growth of government and reduce the overall burden of taxation.
Lord Weir of Ballyholme (DUP) [V]
My Lords, having now overcome technical difficulties, I belatedly commend the work of the noble Lord, Lord Bridges, and this committee in producing this excellent report, which pulls off the magnificent achievement of containing a thorough level of detail while keeping a focus on the strategic issues facing the United Kingdom of our vulnerability on issues such as quantitative easing, the level of foreign investors and their role in terms of debt, and inflation sensitivity. It also highlights the threats of the trajectory of the rising tide of debt as we move further into the century.
The report highlights the need for a strong fiscal framework. Undoubtedly that is true. However, as a number of noble Lords have highlighted, the political reality is that Governments will always view fiscal rules as a means to an end rather than an end. In an increasingly volatile world, in which we are getting further away from the ill-judged comments of Fukuyama that we were at the end of history, the need to ensure a level of agility in our economy to be able to deal with financial shocks is more pertinent now than it has ever been.
With that constraint in mind, there are two main areas that we need to concentrate on. First, in terms of growth, we need to move beyond the mantra of simply saying that growth is our priority and deliver the action points to ensure that growth is a priority. While we wait for the Government to put some meat on the bones of their planning reforms and indeed their aim of increasing productivity, the first lesson that the Government need to learn is not to score own goals when it comes to increasing the level of growth. In particular, I believe that the national insurance increase on employers is a strategic mistake by the Government which will only deter growth rather than facilitate it. We must also ensure that we have an appropriate energy policy. Energy costs in the United Kingdom are well above those of our competitors, and we therefore need a change in our energy policy. The Government need to move away from some of the doctrinaire approaches they take. We can either have strong growth or we can have the current energy policy, but we cannot have both. Finally in terms of growth, we need a more nuanced migration policy. Migration can play a very positive role in fuelling economic growth, but, as the report highlights, we are currently adopting a strategy which at best is creating a neutral impact.
Secondly, we need to ensure that we have a balanced budget. As the report highlights, there are really only two levers in connection with this: either higher taxation or lower spending by the Government. It seems to me that, as we hurtle towards one of the highest levels of taxation in our history, there is very little elasticity left in the situation of creating higher taxes. Indeed, those who would simply seek higher tax rates do not seem to bear in mind that what is really important is tax yield: simply increasing levels of taxation will not only be likely to be counterproductive in terms of economic growth but will also be unlikely to actually bring in more money into the Exchequer. That means we need a fundamental examination of the role of the state in terms of expenditure. During Covid, we saw, perhaps quite understandably, a large increase in the role of government and the amount of expenditure. We have never recovered from that situation, and we need to look at how much more we can move back towards a pre-Covid situation. That means more than simply targeting the vulnerable or soft targets for some cuts; there must be a more strategic and fundamental examination of the role of the state to see whether we are doing too much.
With all these levers, there is not a single silver bullet: I think we need to take all these measures if we are going to tackle this key strategic aim of reducing our debt burden.
Baroness Kramer (LD)
My Lords, first I congratulate the noble Lord, Lord Bridges, and the committee on taking on such a significant but challenging issue. I have great respect for the committee. I am one of its more distant alumni, if you like, but my years as a member were not just enjoyable but a brilliant opportunity to learn. I say to those who manage the parliamentary diary that bringing this debate seven months after the publication of the report, with four minutes for some of the most expert Back-Benchers we have, is simply not wise.
We are holding this debate in the age of Trump, when chaotic tariff wars have become a reality and the IMF has seriously downgraded growth forecasts for the UK and across the globe. The committee warned that we need sustainable debt which allows a contingency for unknown unknowns, of which Trump must be pretty much the worst possible, but I hope the committee acknowledges that this takes years to build. It is not within the capacity of a new Government, in less than a year in office, especially when handed a scorched earth by the last Government.
I also dispute the committee’s list of the shocks that have undermined our economy. Yes, it lists the financial crisis, Covid, Russia’s war in Ukraine, extended use of QE, but there is no acknowledgement in the report of Brexit. To ignore Brexit is in effect to get into a car and try to find your way forward while wearing a complete blindfold. A 4% scarring by Brexit, year in and year out, is the difference between a resilient UK and a struggling UK, and we have to recognise that.
I have a final disagreement. I am with those who believe that investment should be treated differently from day-to-day spending when we set debt targets if we are ever to tackle the short-term mindset that keeps undermining our economic future. I see this as essential for the growth agenda and for revival across all the regions of the UK, but I think we all acknowledge that, even without Trump and the reversal of globalisation that now seems under way, the UK faces very difficult economic headwinds. We have collapsed public services. We just listened to the noble Baroness, Lady Grey-Thompson, and I think everybody recognises that she speaks the truth. We have inadequate infrastructure and housing right across the country, an ageing population—others have spoken about the demographic challenge we face—but also economic inactivity. As the noble Lord, Lord Browne, says, we have inadequate defence spending in a very unstable world. We have low business investment, low productivity, high public debt and high taxes. Climate change, just like AI, is both an opportunity and a risk, depending on whether we drive to be a leader to seize the benefits and turn these into opportunities, or hang back and just bear the cost. I call for us to be a leader; indeed, green industries are currently a key growth area and one of our few areas of real success, which one would not know from listening to this debate.
I find it fascinating that, when I read the reports this week of the appalling figures from the ONS on soaring public debt and declining business activity, when I read the analysis and the follow-up, the focus falls on our failure and loss of exports. This is where I suggest we should concentrate our efforts. I believe that the Government need to move rapidly towards an EU customs union: we have to drive vigorously to revive our whole export profile. It has to be backed by a coherent, ambitious industrial strategy. I know that that is due soon, but it will be critical and it genuinely needs to tackle the full range of issues that are necessary for growth. Frankly, I think we should be taking full advantage of the brain drain from America. Growth was not the topic of this report, but the report says that this is where we should be focusing our conversations now. The noble Baroness, Lady Cash, talked about the young people who are our future: I can think of so many levers that would forward small business, scale-ups, new opportunities, and that is where we should be concentrating, rather than getting trapped in this current analysis.
Let me explain in part why. I do not think the report intends it, but it could easily be read as calling for us to focus on creating a new fiscal framework now. It is not the fiscal framework I would have chosen. If we were debating this back in September, when the report was published, I would have been talking about the Lib Dem manifesto at the last general election, which, whether you liked it or hated it, was certainly recognised as being fully costed. It would have been a very different kind of debate with a different focus. Now, I am looking at the world and saying that, at this time of absolute turmoil, when we do not even know that announcements that have been made today will change the growth profile to benefit it, disarm it or disadvantage it even more, when we face such a level of complete chaos, I hope that the Government will not feel that they have to jump forward and make immediate change, because, quite frankly, if the businesses that I talk to hear that there is going to be a dramatic change in the fiscal framework, they will basically be resorting to tranquillisers and therapy. There is a real need now for some measure of calm and stability; it is difficult, but the Government absolutely have to provide it.
The report says that we should not just muddle through, and that would be my normal instinct—do not muddle, seize the occasion and start making new decisions—but, at this point in time, I honestly have to say that muddling through until this chaos settles might actually start to look like success.
Baroness Manzoor (Con)
My Lords, I declare an interest, in that I am the chair of the Financial Ombudsman Service. I ask noble Lords to forgive me, as I am stepping in at very short notice for my noble friend Lord Altrincham, who was delayed in getting here earlier. He has listened to the debate and is here now.
I thank the Minister for hosting this important debate, and thank equally my noble friend Lord Bridges of Headley for bringing it forward, along with such an eminent group of noble Lords on the Economic Affairs Committee, whom I thank for attracting a distinguished group of witnesses. I thank my noble friend Lord Bridges for his outstanding opening contribution.
The report is an excellent example of parliamentary scrutiny and, with this debate, the transparency we have in the UK around fiscal rules and public debt targets. The report gathered comments from a wide range of economists—who were not always in agreement with each other—and we should be thankful for the committee’s grace and patience. The report was beautifully put together, and I thank committee staff for their excellent work. However, as my noble friend Lord Moynihan and others noted, it is seven months since the report was concluded, and much has happened since.
I will split my remarks broadly between the immediate short-term challenges raised in the report and the long-term systemic issues which underpin our overall debt trajectory, which formed the basis of the committee’s conclusions around sustainability.
In the short term, the UK continues to see a rising stock of public debt, as my noble friends Lord Bridges and Lord Forsyth articulated so well. This seems to be a one-way increase, going up again last month. Many of the contributors to the report expressed concern about both the flow rule and the stock rule, and, if there was any cause for optimism, it was not recorded in the report. As debt rises, the rules themselves are presenting some economic challenges.
As the noble Baroness, Lady Kramer, said, the figures released this week have shown that the Government spent £16.4 billion more than they received in income in March alone. This places the small fiscal headroom of £9.9 billion that the Chancellor presented in her Spring Statement under even greater threat. This is, of course, not counting the threat of tariffs, the increased cost of borrowing and future emergency spending decisions that the Government may face.
The very tight fiscal headroom that the Government have decided to leave themselves has shaken confidence in the Government’s fiscal plans. Ruth Gregory, deputy chief UK economist at Capital Economics, said this week that the borrowing overshoot raises the chance of “more tax hikes”, as noble Lords have indicated. On Wednesday, Elliott Jordan-Doak, of Pantheon Macroeconomics, warned,
“we think both taxes and borrowing will need to be raised in the October Budget”.
As my noble friend Lord Lamont said, businesses and taxpayers have no idea what to expect on tax rises come the autumn, and public services are uncertain about how their budgets are going to be cut. As my noble friends Lord Howell and Lord Griffiths said, the Chancellor’s red lines create doubt, concern and conditions which limit economic growth.
The Government suffer by obsessing over their estimates of very small headroom, alongside OBR forecasting. The IFS said that the Spring Statement was
“fine-tuned to return to precisely the same amount of headroom”.
Dr Robert Jump and Professor Jo Michell told the committee that the fiscal rule has taken a
“central and unhelpful role in fiscal policy-making”.
By placing this single rule at the centre of government spending strategies, the Government have lost perspective. To maintain the headroom, they are reduced to constant firefighting, all the while UK net public debt stands at £2.81 trillion—equivalent to £95,300 per household—and our debt obligations increase, as my noble friend Lord Forsyth and other noble Lords have stated.
I therefore welcome the approach taken by the committee in its report to encourage us to take a step back. When the focus is on short-term measures designed to meet short-term targets, we are all distracted from the underlying systemic factors behind the debate on national debt. The scale of the challenge we face is so much greater than any of the proposals we discuss when trying to address debt in the short term. We need a broader approach to try to address these bigger challenges, as my noble friend Lady Noakes and the noble Baroness, Lady Wolf, and other noble Lords have argued and articulated so clearly.
Paul Johnson, the director of the IFS, is quoted in the report as calling for “big decisions and trade-offs”. The noble Lord, Lord Davies, referred to Joseph Stiglitz, who captured it well when he reminded us that a discussion around debt is meaningful only alongside a discussion about how the money is spent. Does the Minister recognise that a broad approach is required to address debt? Are the Government undertaking an assessment of these deeper issues?
The committee’s report made several important recommendations, one of which was to alter the fiscal buffer to better prepare the UK economy for economic shocks. Can the Minister assure the House that the Government are confident they have the fiscal capacity to weather further financial shocks, while remaining within their fiscal limits and without violating their commitments on spending and tax rises?
I turn to the longer term, which was discussed briefly at the end of the report. The trends are for a significant increase in public debt, as in other developed countries. Richard Hughes suggested that there is an opportunity to address this trend in rising debt over the next five to10 years.
The report does not address intergenerational unfairness, but the steady passing on of costs to future generations erodes the social contract. As the noble Lord, Lord King, my noble friend Lady Cash and the noble Baroness, Lady Grey-Thompson, said, young people today are experiencing severe economic disruption and significant unemployment in the cohort under 28.
Long before we get to the dependency ratio, the UK will need to maintain consent for high taxation and potentially low growth. Richard Hughes is right to draw attention to the issue of not confusing the financing of UK public debt today with the appropriate level tomorrow. While year-to-year increases may be okay, financed by our own savers and debt investors around the developed world, it is possible that deficit financing of the Government is creating excessive levels of public expenditure today, and that part of our economic malaise comes from public sector productivity, the crowding out of the private sector, and the buffer-line declines in the marginal utility of public expenditure.
We need to have some serious discussions about how we can get the unemployment rate down and how we can work with educators and employers so that our young people have the skills they need to be positive contributors to our economy. These factors are central to improving productivity, which Professor David Miles in his contribution to the report called
“the almost pain free route to sustainability”,
which was also alluded to by the noble Lord, Lord Howell. Measures to cut long-term spending demands need to be incorporated as a priority across the public sector. We need to make sure that short-term political incentives do not discourage long-term sustainability measures.
I welcome the opportunity offered by the committee to discuss the wider problem we face, and to frame the discussion around fundamental issues as well as the immediate ones. We thank the Debt Management Office for its good work in volatile markets on behalf of the Government. It issued gilts yesterday, maturing in 2043.
I close by asking the Minister whether he believes that a longer-term strategy needs to be adopted by the Government to set a path to reducing the national debt, not just in year three or four but by the maturity of yesterday’s issuance in 2043.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, it is a great pleasure to respond to this debate on the Economic Affairs Committee’s report on the national debt, and a privilege to do so alongside so many distinguished and genuinely expert noble Lords. It has been an incredibly impressive and well-attended debate, and I thank all noble Lords for their contributions.
Lord Forsyth of Drumlean (Con)
I am most grateful to the Minister. He is a former member of the Economic Affairs Committee, and he is right to pay tribute to the importance of the subject. Will he make representations to his colleagues who are responsible for the business of the House? It really is not acceptable to have a debate on a committee report such as this on a Friday when people are limited to four minutes to speak.
Lord Livermore (Lab)
I absolutely hear what the noble Lord says and will of course pass those comments on.
I congratulate the Economic Affairs Committee on its report and the committee’s chair, the noble Lord, Lord Bridges of Headley, on his excellent opening speech, which achieved the extraordinary feat of summarising in just 12 minutes such a wide-ranging and in-depth report. As the noble Lord, Lord Forsyth, just mentioned, I had the privilege of serving on the Economic Affairs Committee under his chairmanship, so I know the amount of time and effort that go into producing reports such as this. As the Chancellor did in her response to the committee last November, I thank all members of the committee and the committee staff for producing this thoughtful and considered report.
As the report rightly recognises, and as the noble Lords, Lord Bridges, Lord Razzall, Lord Lamont and Lord Londesborough, highlighted, the UK’s national debt has risen rapidly over recent years, from around 64% of GDP in 2010 to over 98% in August last year, the highest level since the 1960s. Latest figures to the end of March this year show public sector net debt at 95.8% of GDP, which still remains high by recent historical standards. As the noble Baroness, Lady Wolf of Dulwich, said, debt interest payments alone now stand at £105.2 billion this year—that is more than we allocate to defence, the Home Office and justice combined.
The title of the report speaks of “tough decisions” to prevent national debt from being on an unsustainable path. The Government agree. That is why in the Budget last October, we took action to fix the foundations of our economy and repair the public finances, as the noble Lord, Lord Horam, observed. That included repairing—and noble Lords would expect me to say it—the £22 billion black hole in the public finances that we inherited. That meant making difficult choices. They were not easy decisions, but they were the right decisions.
Since the committee’s report was published in September last year, and then the Budget in October, as many noble Lords have rightly said today, the world has changed further significantly. As the noble Lords, Lord Burns and Lord Forsyth, and the noble Baroness, Lady Kramer, observed, new tariff barriers are now disrupting global trade. Borrowing costs have risen in all major economies; volatility in global markets has seen bond yields rise, including in the US; and growth has been downgraded across the world, with the IMF now predicting global growth to be 0.5% weaker than it was expecting as recently as January.
Of course, the UK has not been immune to these challenges. As the noble Lord, Lord Bridges, said, the OBR downgraded the UK’s growth forecast for this year at the Spring Statement, reflecting the worsening global outlook, and earlier this week the IMF did the same. In this context, maintaining sustainable public finances is a shared challenge for major economies right across the globe.
Against this backdrop, the decisions we took in the Budget to fix the foundations look ever more necessary. Imagine if we were now facing this global economic uncertainty with that black hole still in the public finances. What confidence would that have given to the Bank of England to cut interest rates? What signal would that have sent to investors about the stability and resilience of our economy?
The OBR will produce an updated forecast in the autumn, and despite the kind invitation of the noble Lord, Lord Bridges, I will not speculate now on the impacts of recent global events on the fiscal outlook ahead of that. But, as the committee’s report rightly concludes, global instability underlines the need to put debt on a sustainable trajectory and build resilience to future shocks. It also reaffirms the importance of stability as the foundation of our approach.
That is why, as the noble Lord, Lord Bridges of Headley, asked about, in the Spring Statement we again took tough decisions so that we continued to meet our non-negotiable fiscal rules, even when they were tested. That meant restoring in full the headroom against the stability rule, maintaining a surplus of £9.9 billion in 2029-30. It is why we continue to work with international partners, as the Chancellor has done at the IMF spring meetings this week, to make the case for free and open trade.
The noble Lords, Lord Bridges, Lord Burns and Lord Lamont, and the noble Baronesses, Lady Noakes and Lady Cash, all mentioned the importance of economic growth. It is why we are doubling down on our growth agenda of stability, investment and reform, including £13 billion of new capital spending in growth-generating projects announced at the Spring Statement, as well as support, for example, for a third runway at Heathrow and a new Oxford-Cambridge growth corridor, as my noble friend Lord Liddle spoke about.
As the noble Lord, Lord Griffiths, mentioned, this week’s IMF report makes it clear that the “landscape has changed” and has downgraded the growth prospects of all G7 nations. However, the UK remains the fastest-growing European G7 country, and the IMF has recognised that this Government are delivering reforms which will drive up long-term growth in the UK. Our upcoming modern industrial strategy, mentioned by the noble Baroness, Lady Kramer, and spending review will say more about how we intend to drive long-term sustainable investment and boost productivity.
The committee’s report includes a number of key recommendations, central to which is the committee’s call for an “overhaul” of the UK’s fiscal framework. The Government’s thinking was clearly along very similar lines, and in the Budget in October, we implemented the most significant change to the fiscal framework since 2010—as my noble friend Lord Wood said. I congratulate him on becoming the new chair of the Economic Affairs Committee, and I look forward to working with him.
The new framework we have put in place is designed to support long-term growth, by ensuring the UK’s debt is put on a sustainable path and by prioritising sustainable public investment. First among these reforms are the Government’s non-negotiable fiscal rules, the embodiment of our unwavering commitment to economic stability. The first rule, the stability rule, moves the current Budget into balance, so day-to-day spending is met by revenues, and ensures that the Government will borrow only for investment, which the noble Lord, Lord King of Lothbury, questioned. This rule differs from the previous Government’s borrowing rule, which targeted the overall deficit rather than the current deficit and created a clear incentive to cut investment that is detrimental to growth, as the IMF has made clear.
The noble Lord, Lord Lamont, asked about the primary surplus, which the OBR forecast to move from a deficit of 1.9% of GDP in 2024-25 to a surplus of 1% by 2029-30. The Government understand and respect the argument made by the committee in respect of the fifth year. However, the Government’s position is that targeting the third year of the forecast provides a strong anchor for fiscal sustainability, while providing the necessary flexibility to respond to macroeconomic shocks in the short term.
Our approach is supported by the OECD, which recommended that the UK should
“shorten the time horizon of fiscal rules”.
Similarly, the Institute for Fiscal Studies has made it clear that a fiscal rule targeting debt falling in the fifth year of the forecast is
“more arbitrary and gameable than most”.
The second rule—the investment rule—ensures net financial debt falls as a proportion of GDP. This keeps debt on a sustainable path, while allowing the step change in investment our economy needs.
The noble Baronesses, Lady Wolf of Dulwich and Lady Noakes, and the noble Lord, Lord Forsyth, raised the issue of definitions. Net financial debt is an accredited official statistic that has been measured by the Office for National Statistics since 2016 and forecast by the Office for Budget Responsibility since that date. It recognises that government investment delivers returns for taxpayers by counting not just the costs of investment but the benefits.
The noble Lords, Lord Burns and Lord Howell of Guildford, spoke about the importance of investment to economic growth, as did my noble friends Lord Wood, Lord Liddle and Lord Davies of Brixton. As a result of this second fiscal rule, we were able to increase capital investment by over £100 billion in the Budget in October, boosted by an additional £13 billion announced at the Spring Statement. The OBR has confirmed that we are meeting both fiscal rules, and borrowing is forecast to fall in every year of the forecast—from the 5.3% of GDP that we inherited to 2.1% in 2029-30.
In addition to our fiscal rules, the Government’s Charter for Budget Responsibility contains a further serious of measures to improve certainty, transparency and accountability in our fiscal framework.
Lord Lamont of Lerwick (Con)
I am very grateful to the Minister for answering my question about primary surplus. He said that the OBR is saying that there will be a surplus in 2029-30. Am I not right in saying that that refers to the current Budget, but of course might mean that there was, overall, a primary surplus? By itself, it does not mean a primary surplus. Can the Minister indicate whether there would be an overall primary surplus, which many people are saying is necessary to alter the debt-to-GDP ratio.
Lord Livermore (Lab)
I am very happy to check that point and I shall write to the noble Lord.
The measures set out in the Government’s Charter for Budget Responsibility implement many of the recommendations in the committee’s report and provide important guard-rails to ensure that capital spending is good value for money and drives growth in our economy. The IMF has called these important reforms to strengthen the fiscal framework. They include a commitment to hold one major fiscal event each year, giving families and businesses stability and certainty on upcoming tax and spending changes. The noble Lord, Lord King, suggested moving to just one forecast, a point echoed by the noble Lord, Lord Macpherson.
We introduced the fiscal lock through the Budget Responsibility Act, ensuring all major fiscal announcements are subject to an independent assessment by the OBR. Spending reviews must now take place every two years, setting departmental budgets for a minimum of three years. According to the IMF, this will
“improve the credibility of the medium-term fiscal framework”.
The Government have accepted all 10 recommendations in the OBR’s review of the March 2024 forecast for departmental expenditure limits, to ensure that no future Government can conceal unfunded spending pressures from the OBR, as the previous Government did.
The committee’s report sets out a number of recommendations relating to the nature of UK debt and how it is managed. The report argues—and the noble Lord, Lord Bridges, made clear—that it is the trajectory of debt, rather than the level, which should be the principal consideration when assessing debt sustainability and that debt levels become unsustainable if there is an insufficient buffer to absorb future economic shocks.
The Government agree with this analysis, which is why the Chancellor rebuilt in full the buffer against the fiscal rules at the Spring Statement—which was mentioned by the noble Lords, Lord Bridges and Lord Burns, and the noble Baroness, Lady Manzoor—and why our investment rule requires net financial debt to be falling in 2029-30. Building this resilience is key to protecting the UK against global shocks.
The committee’s report recognises that the UK is not currently an outlier in the overall stock of debt but notes the relatively high share of index-linked gilts. Issuing index-linked gilts has historically brought cost advantages, and analysis shows direct savings of around £90 billion in total from the issuance of index-linked gilts. However, it is right that the Government keep the proportion of index-linked gilts under review to balance the benefits and risks.
Separately, the noble Lords, Lord Razzall, Lord Lamont, Lord Forsyth, Lord Macpherson and Lord Weir, noted that the report argues that quantitative easing has increased the sensitivity of government borrowing costs to short-term movements in interest rates. However, it remains the case that the average maturity of the Government’s wholesale debt continues to be consistently longer than the average across the G7 group of advanced economies. This helps to limit how quickly changes in interest rates affect debt interest costs. Other countries also face significant effects because of quantitative easing. Quantitative easing is now unwinding, which will increase the effective maturity of the UK’s debt, all else being equal.
The last concern raised by the committee in this section of the report relates to the UK’s reliance on debt purchases by overseas investors, which my noble friend Lord Liddle and the noble Lord, Lord Forsyth, mentioned. The Government deliberately maintain a varied gilt-issuance strategy, to promote a well-diversified investor base. Overseas investors help maintain a diversity of gilt investors, keeping demand for UK debt strong and ensuring that the Government are not overly reliant on any one type of investor.
The committee’s report covers the longer-term challenges of getting debt to fall—the noble Lord, Lord Bridges, referred to these as the “Ds”. These include the impact that demographic shifts, such as an ageing population and a rising dependency ratio, will have on the public finances, as my noble friends Lord Davies of Brixton and Lord Browne of Ladyton said. The Government recognise these challenges, including the rising cost of care, which is set to double in the next 20 years alone. That is why, for example, we have established an independent commission, led by the noble Baroness, Lady Casey, to develop a new national care service, able to meet the needs of older and disabled people into the 21st century. We are taking immediate action to stabilise the care sector and invest in prevention, carers and care workers.
Other spending pressures discussed in the report include migration, the green transition and defence. The noble Lord, Lord Macpherson, made an interesting suggestion about debating annually the OBR’s fiscal sustainability report.
On migration, the report concludes that high net migration cannot be the solution to debt sustainability, as many noble Lords mentioned today. The Government’s position remains that we value the contribution that legal migration makes to our country, and will continue to strike a balance between ensuring that we have access to the skills that we need, while encouraging businesses to invest in the domestic workforce. Further detail will be set out in the forthcoming immigration White Paper.
The noble Lords, Lord Horam and Lord Weir, mentioned the green transition. The Government believe that early and ambitious climate action is vital to delivering long-term economic growth and enabling a cost-effective transition to net zero. As the Chancellor said earlier this year:
“Net zero is the industrial opportunity of the 21st century, and Britain must lead the way”.
On that point, I agree with the comments made by the noble Baroness, Lady Kramer.
The noble Lords, Lord Forsyth and Lord Tugendhat, and my noble friend Lord Browne of Ladyton spoke about defence spending. The committee’s report was published before the Government’s announcement that defence spending will rise to 2.5% of GDP next year, which represents the biggest sustained increase in defence spending since the Cold War. This new funding, delivered within our fiscal rules, will deliver the stability that underpins economic growth and unlock prosperity for working people, through new jobs and opportunities.
Finally, the report considers the impact of productivity improvements in the context of the projected rise in government expenditure. The Government’s view is that tackling the UK’s historic weak productivity performance is central to delivering higher economic growth. The OBR estimates, for example, that every 0.1% increase in productivity growth will reduce the rise in the debt-to-GDP ratio by 25 percentage points over the next 50 years. It is for these reasons that we are pushing ahead with vital reforms to cut waste and bureaucracy, including in the planning system, and to make the state leaner and more efficient.
I once again sincerely thank and congratulate the Economic Affairs Committee on its work on this important report. The Government share the committee’s view that tough decisions are required to put debt on a sustainable path. That is why in the Budget last October we fixed the foundations of our economy and, at the Spring Statement this May, took the action needed to meet our fiscal rules, even when they were tested. The global instability we have seen over recent weeks demonstrates why this approach was necessary. It is only by delivering sustainable public finances that we can maintain resilience in the face of global shocks. The approach we are taking will continue to put debt on a sustainable path. It will provide certainty to families and businesses in an ever-changing world, and it will generate the long-term investment we need to grow our economy.
Lord Bridges of Headley (Con)
My Lords, I thank all noble Lords for an excellent debate and their fantastic speeches. The debate has shown this House at its very best and shown why our committee is able to produce such hard-hitting reports. I thank all noble Lords for their very kind words about me, which were entirely unwarranted—I have had enough compliments to last me for several years.
From this debate, it is clear that it is utterly unavoidable that we are living in a world of extreme change and high volatility, that is becoming more dangerous by the day. That said, what has not changed—a number of noble Lords made this point—are the enormous trends and challenges we face, the Ds: debt, demographics, decarbonisation, dependency and defence. All these challenges were in the report. They are extreme challenges. As my noble friends Lord Forsyth and Lord Lamont, and the noble Lord, Lord Razzall, said, these are challenges that merit much more debate than two hours on a Friday morning.
Our approach to them raises enormous questions: ones that fall into the immediate category—those about policy and process—as well as far more fundamental questions of philosophy and belief. Let me briefly touch on what we have covered this morning. On the policies and the processes, as a number of noble Lords said, we face a dire problem with growth and productivity. As my noble friend Lord Forsyth quite rightly said, the responsibility of that falls on this side of the House as much as on anyone else, but we must confront and grapple with these challenges.
Noble Lords spoke about investment in infrastructure. The noble Lord, Lord Horam, spoke about the problems of energy. The noble Lord, Lord Weir, spoke about planning. My noble friend Lord Moynihan of Chelsea spoke about the crushing tax burden and our whole tax system. The noble Baroness, Lady Kramer, spoke about trade. Each one of those is a massive issue. Then there is the fiscal rule, which, as the noble Lord, Lord King, so rightly said, is Augustinian in nature.
Another enormous issue is about how we tackle and treat the concept of borrowing for investment—and today noble Lords could see the kind of debate we have in the Economic Affairs Committee between the noble Baronesses, Lady Wolf and Lady Kramer, and the noble Lord, Lord Davies. There is the question of whether our entire fixation on fiscal rules is overwhelming us and whether we should actually look at the substance of fiscal policy, as my noble friend Lady Noakes and the noble Lords, Lord Macpherson and Lord Burns, said.
Of course, an entirely new approach could have taken: the debt break approach of the Germans and the Swiss, to which the noble Lord, Lord Griffiths, pointed. That leads us on to the role of the OBR. Are we assigning too much importance to the OBR and has it grown too big for its boots?
Lord Bridges of Headley (Con)
We hear some answers here from our Front Bench, and my noble friend Lord Howell discussed that point. Then there are the further pressures we will face: the noble Lord, Lord Browne, spoke about defence and welfare, and the noble Baronesses, Lady Cash and Lady Grey-Thompson, tackled the intergenerational issues. Each of those points merits debate in itself and deserves to be heard.
What we did not hear today was assurances that taxes will not need to rise further; instead, we heard that the Government are sticking to their course, that they believe that debt is on a sustainable path and that we are able to weather the storm we are in. I dearly hope that I am proven wrong, for I fear that we lack a credible strategy for the problems we face.
That brings me on to the bigger, more fundamental problem of philosophy and belief. If we truly want to tackle these challenges, we need to have a debate about the role of the state versus that of the individual. It boils down to a simple question: do we trust the state to do more to tackle these challenges? In which case, taxes may inexorably have to rise. If so, what will be the impact on our economy, competitiveness and growth? Alternatively, do we take a different course, and do we trust the people? If so, what does that mean for the social contract? Where does the boundary lie between the responsibilities of the state and the individual?
These are enormous questions, which this debate on our report begins to open up. My deep concern is that we will continue to kick the can down the road and not have that debate, because all these challenges—all those Ds—come head-to-head with the other, massively bigger D: the D of democracy. Having this debate—and confronting these challenges—raises the enormous and, at times, tough and unpopular decisions and difficult trade-offs that have to be faced. However, if we do not have this debate, and we continue to try to tackle these problems piecemeal in an incoherent way, I fear that not only will the solutions fail but we will lack the legitimacy to take the action required. As the noble Lord, Lord King, said, we owe it to our children and grandchildren to muster the courage and have the honesty to confront these challenges now, so as to put our debt on a sustainable path before it becomes too late.
The Future of News (Communications and Digital Committee Report)
Baroness Stowell of Beeston
That this House takes note of the Report from the Communications and Digital Committee The future of news (1st Report, HL Paper 39).
Baroness Stowell of Beeston (Con)
My Lords, it is a great pleasure to open today’s debate on the future of news, which follows the report from the Communications and Digital Committee last autumn.
Like my noble friend Lord Bridges, I am no longer the chair of the committee, having been part of the rotation earlier this year, so I must take this opportunity—my first—to congratulate my esteemed successor, the noble Baroness, Lady Keeley; I look forward both to her contribution today and to following the work of the committee under her chairmanship. As I am sure she has already discovered, she has inherited a fantastic team from the Committee Office, which will provide great support to her and the whole committee; as always, my thanks go to the Committee Office for its work on this report and throughout my term.
I also thank the other members of the committee alongside whom I had the great pleasure of working. Even if I do say so myself, as a team, together with the committee staff, we created an effective operation; speaking for myself, this led to work that I found both enjoyable and rewarding. Finally, my thanks also go to everyone who contributed to both this inquiry and all the others that we conducted during my time in the chair.
The future of news matters. Access to professional news that supports a shared understanding of basic facts and helps us to understand each other is critical for a healthy democracy. However, as this report makes clear, we cannot take the future of news for granted. The economics of mass market journalism are worsening, trust is low and a growing number of people actively avoid mainstream reporting.
Let me paint a little detail into that picture. The Press Gazette reported just last week that digital ad spend with news brands has fallen by a third since 2019. Less than half of people surveyed in a recent Opinium poll said that they regularly watched television news, while only a quarter said that they visited news websites. In addition, the scaling back of local newspaper and radio journalism has led to worrying “news deserts” in many areas. I would say that the situation in local news is most serious: let us not forget that this deterioration is happening as more power is being devolved to mayors and unitary authorities, and power without scrutiny is dangerous.
When it comes to the impact of new technology on business models, the news industry is of course not alone. However, tech firms now have unprecedented influence over the type of news that we see and are competing with the news providers. The committee’s visit to San Francisco last year left us with no illusions about the fact that generative AI news summaries will continue to upend news publishers’ business models.
As to where all this is leading, our report concluded that a two-tier media environment was becoming increasingly likely. We warned that news aficionados would be well served with a variety of outlets, old and new—there are some great new offerings in news—but while us news junkies are okay, a growing demographic has limited engagement with professionally produced news. Sky News’s recent decision to create a premium paid content model is evidence that our prediction of fragmentation is already happening.
With all that said, a changing media environment should not be conflated with its imminent demise. Journalism has, thankfully, defied apocalyptic predictions over the past decade, but for news to survive and thrive into the future, some things need to change. It is critical that they do, because a two-tier news environment is bad news for democracy.
Clearly, the role of government must be limited; it cannot compel people to engage with news and must avoid doing anything that could undermine media independence. But the Government can and should establish the conditions that enable UK media to stand on its own feet. It is up to the news industry itself to ensure that audience needs and expectations are well served, to generate the demand and to rebuild trust.
The regulated broadcasters, especially the BBC, have work to do. They play an important anchor position in our media market, but this anchor role is earned, not ordained. In some areas they have failed to reflect the perspectives of large sections of their audience who feel criticised or caricatured, rather than authentically represented. Many are voting with their feet and turning to other providers, because they now have a choice. The public service broadcasters, and most importantly the BBC, will drift into irrelevance if they do not address urgently what is causing some people to feel they cannot be relied upon. As our report noted, the 2027 charter review provides
“an opportunity to re-examine the BBC’s future, including funding models and its strategic priorities”.
The Government have said that all options are still on the table for the future of BBC funding. But what assurances can the Minister provide today that the charter review process will engage critically with the purpose and performance of the BBC, and not just be an exercise in preserving the status quo?
Ofcom, too, must step up to the mark. Broadcasters will need to adopt innovative formats to compete in this attention economy while also respecting the rules. But these rules need to be clear, and I welcome Ofcom’s decision to review its Broadcasting Code following GB News’s successful judicial review, not least because the committee’s report raised concerns about ambiguity in broadcasting roles.
While the Government must not pick winners or prop up failing outlets, we identified two specific areas where the need for government intervention was clear. The first is support for local journalism. Local news has been hit hard by the changing advertising market and shift to online, leaving millions of UK citizens with no dedicated local news outlet. Some new models of local journalism have emerged, and that is very welcome, but the Government need to do more to champion innovation and investment in the sector. We recommended measures including tax incentives for hiring local journalists and changes to local government advertising rules. We also called for a review of the impacts of business rates relief on local newspaper offices introduced by the last Government, but the Chancellor simply allowed those reliefs to expire last month without committing to a review.
The Government told us that the financial health and sustainability of local journalism was an area of particular concern, but their actions to date seem to suggest otherwise, and details of a forthcoming local media strategy remain vague. Can the Minister shed any light on how this strategy is being developed and when we can expect it to be published?
Secondly, I remain disappointed by the Government’s inaction on strategic lawsuits against public participation, more commonly known as SLAPPs. These have a chilling effect on journalism and are a clear abuse of our legal system. The Government’s assertion that they are committed to upholding justice and tackling SLAPPs is undermined by their apparent determination not to legislate in this area. Can the Minister explain why this Government refuse to bring forward primary legislation—and they have an opportunity in the victims Bill that was promised in the King’s Speech—when they were vocal on SLAPPs in opposition?
The committee first considered the vital issue of AI and copyright in its 2021 report on the creative industries—long before it became the hot topic it is today. The committee has routinely examined this from different angles since. During our news inquiry, it became clear that up-to-date, high-quality news from reputable sources is valuable to AI companies, especially as they develop search products. We therefore must find a path forward that enables the tech and creative industries to reach mutually beneficial arrangements. Technical viability, transparency and enforcement will be key to any regime.
What must not happen—and, based on their actions so far, I worry it might—is for the Government to pursue rules that primarily benefit foreign big tech firms, which seem prepared to pay vast sums on energy, computing facilities and staff but not on data. Bearing in mind that the Data (Use and Access) Bill is actively passing through the other place, and that the amendments passed in this House have already been retabled, can the Minister tell us when the Government will set out their response to their recent consultation and provide clarity on the way forward?
This report also repeatedly highlighted the need for effective implementation of the Digital Markets, Competition and Consumers Act to allow the news industry to compete on a level playing field. We called on the Competition and Markets Authority to investigate allegations of anti-competitive practice by big tech firms acquiring AI training data, and were pleased to see this included in the scope of the CMA’s investigation into Google’s position in search.
It is worth emphasising that the strength of the UK’s new digital competition regime is its agility and nuance. It is not the blunt instrument deployed by the European Union. It is regrettable that I have to ask this, bearing in mind that the Government wholeheartedly supported the regime when in opposition, but their actions are making UK businesses, including news organisations, nervous, so can the Minister reassure me that the CMA has the Government’s full support in its implementation of the DMCC Act? On a more specific point, can the Minister provide an update on their consultation on updating the media mergers rules regime?
Before I conclude, I must raise the issue of foreign government ownership of British news organisations. This was not a feature of our inquiry, but the economic challenges and threats to business models facing the industry made it clear that, without action by Parliament, this serious risk to press freedom would not be limited to the Telegraph and the Spectator. I am pleased that the matter was put beyond doubt in the DMCC Act a year ago, but it is hugely disappointing that the Government have allowed the Telegraph sale process to drift, placing additional pressure on one of our national newspapers—particularly bearing in mind all the challenges the industry is facing, which I have just outlined. It is also disappointing that the Government have still not brought forward the relevant secondary legislation, which is vital to provide clarity to the whole news industry about future investment from sovereign wealth funds and foreign public sector pension funds.
Recent media reports suggest that there may, finally, be a resolution to the Telegraph’s ownership. If so, that is very welcome news, but it makes the secondary legislation even more urgent because regulators will need clarity. I have asked the Minister this several times in recent weeks and I ask her again: can she tell us, today, when the Government will bring forward that secondary legislation? I really hope she is able to answer that today.
The challenges faced by the news industry are immense, and the changes necessary to meet them must be led by the industry itself. But the industry needs government and legislators to provide a regulatory framework that creates a level playing field and provides clarity on ownership and foreign investment rules, so that it can compete and be financially sustainable. Fundamentally, our job is to support press freedom so that people can have confidence in the news they read, hear and see about what we are doing and deciding in their name.
I look forward to all the contributions in the debate, especially from the noble Lord, Lord Pack, who is giving his maiden speech, and I hope for an informative response from the Minister. Meanwhile, I beg to move.
Baroness Healy of Primrose Hill (Lab)
My Lords, it is a pleasure to follow the noble Baroness. I congratulate her on her sterling leadership in producing this report by the Communications and Digital Committee, on which I serve, and thank her for so eloquently outlining its wide-ranging recommendations.
In the time available I will highlight only one, which is the importance of media literacy to build societal resilience—not only to handle misinformation and disinformation but to aid critical thinking when bombarded by opinion often masquerading as fact. In analysing the future of news, our report warns:
“There is a realistic possibility of the UK’s news environment fracturing irreparably along social, regional and economic lines within the next 5-10 years. The implications for our society and democracy would be grim”.
Of course, news provided by professional journalism will continue to be available. Those fortunate, like we in this House, will continue to access it with ease, whether in print, online or by subscription. However, there is a risk of a two-tier media environment becoming the norm, where many will have little engagement with professionally produced news. There is already a growing local news desert in parts of the UK. Trust in institutions, including the media, is declining, and there is a worrying if understandable trend in news avoidance.
Studies have shown that those under the age of 35 are turning away from authoritative, professional news sources, in favour of what they consider to be authentic opinion from social media sources that they find more relevant and entertaining. Meanwhile, the platforms providing the information are increasingly removing links to established news sites, reducing access to professional journalism. Artificial intelligence models can already produce news summaries and provide the all-powerful tech firms with influence over the type of news that we see. News organisations, both print and broadcast, are trying hard to innovate and adapt to this new age by providing product in more social media-friendly formats—video, podcasts and bitesize chunks of information—some requiring their journalists to act more like influencers than reporters.
What can be done to equip our society, especially the young, to critically understand the world in which we are living? Fostering informed scepticism would be a start. Knowledge and education are by far the best weapons against disinformation. Our report called on the Government to develop their own strategy for media literacy and not outsource this complex policy issue solely to Ofcom, especially given the need for cross-departmental action.
I therefore welcome the Government’s acknowledgement that Ofcom should not bear the entire burden, and that they are now considering how best to target the next phase of media literacy activity and complement what Ofcom will be doing under the updated Online Safety Act duties. Can my noble friend the Minister explain how media literacy will be given greater prominence across all subjects from a young age within the curriculum following the Francis review?
In their response to our report, the Government said:
“Media literacy is a crucial skill for everyone—especially in the digital age”.
It is therefore vital that our citizens are given the tools both to prosper from the opportunities offered and to withstand bad actors who seek to harm and disrupt society. Government and other public and private bodies, including tech and media companies, need to take responsibility for ensuring that media literacy becomes a tangible skill shared by all. As Ofcom has said,
“media literacy must be everyone’s business”.
Because this report has highlighted how important media literacy is, our committee has now embarked on a new inquiry into how it can be best achieved.
Lord Pack (LD) ( Maiden Speech)
My Lords, it is both an honour and a privilege to be making my maiden speech. I give sincere thanks for the warm welcome I have had from noble Lords from all sides of the House, and from the attendants, doorkeepers, clerks and other staff, including those who put on the excellent induction programme for new Peers. In addition, both the clerks and my fellow Peers on the Secondary Legislation Scrutiny Committee have been particularly kind in helping direct my interest in procedural detail in productive directions. I am grateful too to my noble friends Lady Featherstone and Lord Newby, who introduced me.
I know that, were it not for the dedicated efforts of thousands of volunteers from my party across the country to help it recover from previous setbacks, I would not have had the huge privilege and opportunity of joining this House. Many of those volunteers know me well from the email newsletters that I produce, with several million emails from me landing in inboxes each year. Stephen Bush of the Financial Times once said—and who am I to doubt him?—that I write the longest-running solo-authored political email newsletter in the UK. Whether or not he is correct, that is certainly a large part of how I became the first non-parliamentarian to be elected by members to be my party’s president—a record I have of course sullied a little since.
That long-running involvement in digital communications, and email in particular, is what also gives me a special interest in the role of email newsletters in the media landscape. As I am speaking about email newsletters, I should draw the House’s attention to my entry in the register of interests regarding the political email newsletters I write.
Credit should go to the Communications and Digital Committee for the excellent report we are considering today. As it rightly highlights, there are promising signs of the growth of email newsletters as a new form of local media. While traditional, local and even regional media has, as we know, often sadly been in decline, in recent years we have seen a wave of media innovation, with email newsletters springing up, often breaking important stories, with high-quality investigative journalism that is then even followed up by national and more traditional media.
Email has much to commend it as a method of directly conveying news to citizens who are largely insulated from the algorithmic dramas that have seen the prominence of news rise and fall on other digital platforms. Indeed, the need to avoid spam filters drives up quality, while in so many other mediums the equivalent pressures pull it down. The low starting overheads and flexibility of email make it well suited to supporting innovation in news coverage.
Email also provides an important insurance for journalists: the ability to move their audience, if necessary, from one supplier to another, rather than being locked into dependence on any one digital firm whose priorities or preferences may take a sudden or unexpected turn. I therefore hope that, as the committee, this House and the Government continue to consider our news landscape, a particular focus will be given to how best to support the growth of these new forms of local journalism, especially as the committee’s report wisely highlights the question of where revenues from public notices advertising can flow, along with related issues such as the way basic information about our court system is often available only to those who can afford expensive legal logins, rather than to this new generation of email-based local journalists and start-ups.
I hope too that, having joined your Lordships here, I will be able to contribute to the House’s work on topics such as those we are discussing today. I look forward to listening carefully to, and undoubtedly learning much from, noble Lords across the House. It is and will remain an honour and a privilege to have the chance to do so.
Lord McNally (LD)
My Lords. I feel as if I am also making a maiden speech, in that it is some four months since I have been in this House while doctors have been testing me for various ailments. They have now come to the grand conclusion that I must have, or have had, some kind of Covid, but it will probably work its way out of my system. I must say that I belong to a generation where you went to Dr Wiley, he gave you a good bottle and that was the end of it—but I am grateful for the treatment I have had.
I am also grateful for the opportunity to thank my noble friend for that excellent maiden speech. It is interesting, and it might be a bit of encouragement to him, that I came into this House at the age of 52, and one of the great benefits of it was that, almost overnight, instead of being crippled by middle-aged angst, immediately I was “young Tom” again. My noble friend will have to accept that he will be thought of as “young Mark” for some time to come. It means that they forgive you quite a lot.
The other thing that my noble friend’s speech brought out, which I think is the real benefit to this House, is that he mentioned his blog, his newsletter and his mastery of the new communications. I think that is what he is. He is a communicator, and he has already passed the first test of anybody who takes the executive side of a political party in that under his chairmanship the Liberal Democrats achieved their best party representation, certainly since back in the old days of the pre-war Liberal Party. I worked for 10 years at the political headquarters. The rough rule is that the leader of the party wins elections and the head of the administration loses them. I think my noble friend has made a crack in that, in that I think everybody knows that the success of the Lib Dems in the last election was in no small measure due to the efficient machine that he created for the party. I suspect that that kind of eye to detail and delivery is going to benefit this House in the months to come.
Looking at the Opposition Front Bench, there is a familiar face, and of course there is the noble Baroness, Lady Stowell, and the noble Baroness, Lady Keeley, is in her place. I have had only one session under her chairmanship, so I am not sure yet whether she is in the strict disciplinarian role of her predecessor. I can tell the House that the noble Baroness, Lady Stowell, used to frighten the life out of me.
I see that the noble Lord, Lord Faulks, is in his place. I want to use the time I have available to suggest that having groups which believe in a government-controlled press and of those who are fighting for a free press is really a waste of time and energy at a time when the future of news is under threat from far more powerful forces than suggested by that squabble. I think that an effort should be made by the press itself and by those of us who criticise it. I am a strong supporter of Hacked Off, and I think it has done a good job on the issue of press credibility. It is interesting that in the 20th century there were three royal commissions on the press, and all of them highlighted the problems of press behaviour.
I was brought up in the old Guardian view that
“comment is free, but facts are sacred”.
However, the truth is that part of the strategy now of certain sections of the political sphere is that they feel they can undermine that concept of facts being sacred. That is why we should be making common ground.
On the attacks on journalists, for a number of years in the 1980s and early 1990s, I used to be invited to the Press Awards dinner. During that dinner, there was always a pause to remember journalists who had been killed in active service in the previous year. The grimmest thing about that was that, long before I was left off the invitation list, that pause for the list of journalists who had given their lives in the cause of journalism grew longer and longer. In the last few years, we have seen journalism in danger in many places—in some cases from intimidation and in others from direct attacks on lives.
There is an opportunity here. We are in an age almost like that of the invention of the printing press. A whole new strategy will be needed. As the overlap between old print media and electronic media increases, I am not sure we will be able to keep those divisions.
I worry about Ofcom being the receptacle for all suggestions of new responsibilities. There is a bit of a threat of overburden.
Lastly, I am in favour of SLAPPs being dealt with, but it is an amazing piece of barefaced cheek that the press barons should squeal at economic power being used to intimidate them when that has often been their stock in trade over the years. We must, if we are to deal with SLAPPs, also deal with press abuse and intimidation of the ordinary citizen, who quite often finds it impossible to deal with.
Before my Chief Whip hauls me down, I can say only that I have enjoyed my time. This committee will, I suspect, not have royal commissions in the future, but it is important that it continues to ask the right questions and push the right arguments. I have every confidence that we will, and it is nice to be back.
Baroness Wheatcroft (CB)
My Lords, I begin by welcoming back the noble Lord, Lord McNally, both to this House and to the committee. Having heard what he had to say about journalists, I must declare my interests as chairman of the Financial Times complaints committee and a long-time journalist.
Yesterday’s front pages provided a typical snapshot of the variety on offer in UK newspapers. Stories ranged from the latest skirmishes in the trade wars to those in the real war in Ukraine. There were selections of photographs of the royals—largely, the young ones—and, on the front page of one national paper, a snapshot of a grinning MP for Clacton proclaiming:
“I’ve got a … chance to be PM”.
That was the Daily Telegraph. We should still be concerned about who might own that newspaper in the future.
For those who are still consumers of traditional national media, there is still plenty of variety on offer. There are reasons to be concerned about its prospects—not merely financial but what changes in ownership might mean for its political leanings—but at least it is there.
In her introduction, the noble Baroness, Lady Stowell, explained some of the reasons why we should be fearful. Government intervention may be able to help, most notably on the issue of copyright. As AI becomes ever more prevalent, protecting the rights of those who generate original content is essential. Could the Minister assure the House that the Government will do this and will not be cowed by the power of the big tech companies? We heard chilling evidence in our committee of how the big companies can direct advertisers away from new and upstart news media because of their sheer power. Their power to intimidate government is something the Government must stand up to.
The independence of news is another issue in which the Government have a role. The noble Lord, Lord McNally, was absolutely right to stress the weight of the task now landing on Ofcom and the need for it to have all the resources it possibly can to deal with that. Independence is crucial.
I therefore stress the importance of the work the committee did and thank the noble Baroness, Lady Stowell, for her indefatigable and strong leadership. It got us to the place we needed to be. The staff were fantastically helpful, and I congratulate them too. I congratulate the noble Lord, Lord Pack, on a very interesting maiden speech. However, with only four minutes, I better get moving.
The area I really want to concentrate on is local news, because that is the area in which there is already a real desert. As many voters prepare to go to the polls on 1 May, they have no idea of what is going on in local politics because it simply is not covered any more. The news deserts mean that, according to the Media Reform Coalition, in 2023 over 2.5 million UK citizens lived in local authority areas without a single local newspaper. The situation is going to get worse.
While online publishing will fill a bit of the gap, we need strong, physical journalism. Local politics has to be reported. The reason a physical paper is essential is that it has longevity and is something that everybody can have access to. The importance of strong local news coverage was recognised by our committee, and we made several recommendations to the Government. Could the Government tell us whether they will do anything, as the noble Baroness, Lady Stowell, asked, to reinstate some sort of business rates incentive for local news offices? Could they also, while not putting too much obligation on the BBC, extend what it already does with the local reporting service to have an obligation towards local news? I ask the Minister if she will consider that.
The Lord Bishop of Oxford
My Lords, I welcome this timely report and this debate. The themes of the report—ethics, truth, access and trust—are of vital importance to the Lords spiritual, as I know they are to all Members of your Lordships’ House. My right reverend friend the Bishop of Leeds was part of the committee that produced this report, and he sends his apologies that he is unable to be in the Chamber today. I, too, congratulate the noble Lord, Lord Pack, on his fascinating maiden speech on email newsletters and new forms of communication, and I welcome him very warmly from these Benches to this House.
I have had an interesting response to the report, as I have read it today, and it has really been appreciative of the wonder of living in an age in which, at any hour of the day or night, it is possible to learn what is happening anywhere in the world. I think that is amazing. We are able to access unfolding events, combined with thoughtful commentary and analysis. This week, the world has rightly been paying tribute to Pope Francis, following his death on Monday, for his humility, humanity and courage. Within minutes of the Pope’s death on Monday, we had not only the news that he had, sadly, died but appreciations of his life, comments from world leaders, analysis of his many achievements and a sense of one single news story across the world. The same is true day by day, minute by minute. This report has helped me see afresh the living miracle of the 21st century news environment. So I join others in paying tribute to the media reporters and technicians who devote their lives to public service and good journalism.
The report is, of course, right that the news ecology is evolving and needs tending carefully by government and others. I will stress three of the recommendations as particularly vital and important. The first is the importance, as others have said, of nurturing and supporting the local alongside the global—essential for building resilience, participation and cohesion in communities. I particularly draw attention to the importance of local radio. I welcome the Government’s response and the news of the forthcoming local media strategy, and I too ask the Minister when that strategy might be available. Will it help in particular to arrest the decline in BBC local services that we have seen in recent years?
The second is to highlight recommendation 14: the suggested development by the BBC of a public interest generative AI tool, in partnership with others, to access reliable and authoritative information. This would be a really historic and strategic development to ensure a trusted source for the deployment of generative AI as a complement to commercial and multinational services. It has been suggested by other bodies that this recommendation does not feature in the Government’s response, and I wonder whether the Minister can offer a comment.
The third is to underscore the vital importance of building media literacy among every section of the population, not only the young, as the news media changes and evolves—that is recommendation 37(4). It was good to see the Government’s very full response to this recommendation through a number of different strands. Can the Minister offer an update on the progress of the media literacy review and the place of media literacy in the schools curriculum and assessment review?
We are privileged to live in an information age, which will continue to evolve. We need government to remain vigilant in cultivating this news ecology and diligent in equipping all citizens to navigate this world well. I welcome this report.
Lord Lansley (Con)
My Lords, I am glad to follow the right reverend Prelate and to contribute to the debate on this excellent report. I was also glad to listen to the maiden speech of the noble Lord, Lord Pack, the author of 101 Ways to Win an Election, which sadly was published after I had finished fighting elections—that is perhaps 100 more than I ever discovered. I will come back to that point in a minute.
I want to talk about how the media merger regime is to be amended to reflect the substantial changes in how the public access news, which is very well illustrated both in this report and in Ofcom’s report published last year. With colleagues on a cross-party basis—this did in fact include the noble Lord, Lord McNally, in the past—we have for several years argued that the public interest test for media mergers was out of date and needed to be updated. It was therefore very welcome that, in response to Ofcom’s 2021 review, the Government published last November a consultation proposing that the media merger rules should be updated.
A key proposal in the Government’s consultation is to change the definition of “newspapers” in Section 58 of the Enterprise Act to read:
“a publication which … consists of or includes news-related material which is subject to editorial control”.
“Published” would include online publication and “news-related material” would mean
“news or information about current affairs, and … opinion about … news or current affairs”.
Being “subject to editorial control” is defined as being
“if the publisher has editorial or equivalent responsibility for … its content (which may include commissioning it), … how it is presented, and … the decision to first publish it”.
The DCMS consultation states that
“online news aggregators (for example, Apple News or Google News) will not be treated as newspapers”
as they
“do not have ‘editorial control.’ In particular, they are not responsible for the commissioning of the news that they republish nor the decision to first publish the news”.
The committee had only a few days to consider this, but in paragraph 101 it recommended that
“the Government works with Ofcom to set out plans and timelines for capturing online news intermediaries within the scope of the media ownership rules”.
That was clearly justified by reference to the evidence it received. For example, it reported that Apple News top stories were
“chosen by human editorial teams based in each global region where the service was offered”.
That is a clear example of editorial control over news and, indeed, the algorithms driving news content online. We know that four in 10 adults who use online sources for news report using these news aggregators.
In response to the report, the Government said:
“Capturing news intermediaries, including social media platforms such as Facebook or X … could bring … a very large number of enterprises”
into the scope of the media merger regime.
At a very helpful meeting that we had with Minister Peacock at the department in December, a group of colleagues and I explained that focusing only on news aggregators that have editorial control functions, as compared with those that simply offer user-generated or moderated content, would narrow the scope of that test dramatically. News aggregators such as Google News or Apple News play an increasingly important role: they attract higher trust rating than other online sources, enable users to access the news of the day from a range of sources, and regularly decide what is the most significant news of the day.
Agenda setting, as I know very well from running past national election campaigns—as the noble Lord, Lord Pack, will recall—is no doubt one, or perhaps many, of his 101 reasons why you win an election, because you control the agenda of the election. Determining the agenda of the day is a significant news matter. In future, news aggregators will increasingly be making that crucial decision: what are the top stories today? I argue that the control of such enterprises should be brought in the scope of the public interest test on media mergers, and I hope the Minister can tell us that the Government will be willing to reconsider that when she updates us on the media merger regime.
Lord Knight of Weymouth (Lab)
My Lords, I pay tribute to the noble Baroness, Lady Stowell, not only for the excellent way in which she introduced this debate but for the tremendous job she did in chairing the Communications and Digital Committee. She led with energy and purpose, which was much appreciated by us all.
This is a critically important debate that goes to the heart of the future of democracy. A healthy democracy needs voters to be informed and engaged; instead, we are seeing a significant rise in news avoidance, significant disengagement with news among some demographics, and lowering levels of voter turnout.
During the work on this report I was most struck by the decline in local news, which others have mentioned, and the committee makes a series of important recommendations to tackle this. The growth of local news deserts is alarming. As the noble Baroness, Lady Wheatcroft, said, in too many areas voters next week will be going to the ballots almost blindfold. The absence of local professional journalism means local politicians not being held to account, a lack of transparency and an absence of channels for candidates to promote their policies. Instead, voters are reliant on social media. We know that these are the platforms for echo chambers and pile-ons, not reasoned debate. Voters are vulnerable there to simplistic populist policies that do not bear scrutiny. I therefore welcome the DCMS local news strategy and urge it to act robustly and with urgency.
I strongly encourage your Lordships to watch the latest TED talk by Carole Cadwalladr. Her previous talk blew the lid on Cambridge Analytica and the massive, widespread harvesting of Facebook data that then allowed social media to be used to influence voters in the Brexit referendum and other elections. As a result of that talk, she suffered a SLAPP at the hands of Arron Banks. I strongly support what our report said on SLAPPs and urge the Government to reconsider their position on a legislative solution during this Parliament.
Cadwalladr’s latest TED talk is brave and names the “coup” by the “broligarchy” in Silicon Valley. The tech bros have been given the freedom to make untold riches out of harvesting our data in exchange for loyalty to a President who has said that the press are the enemy of the people.
When the committee visited Silicon Valley, Meta was clear: news is too much trouble for it, so it is not servicing it to avoid paying for it. Now Meta in the US has abandoned fact-checking. X would not see us. Google is doing deals with news providers, as is OpenAI. I support what the noble Lord, Lord Lansley, said about news aggregators.
Cadwalladr reminds us in her talk that all these businesses are based on data harvesting. Their surveillance is extreme and they undermine our privacy. They have the infrastructure of totalitarianism, and the White House is freeing them up to do as they see fit. These are also the platforms that, yet again, are destroying the business models of news—this time through scraping their content, training their AIs and then generating news algorithmically.
The committee is right to push the Government to do better on the vexed issue of copyright and AI. I wish Ministers well in negotiating a crucial trade deal with the US, but this must not be at the expense of children’s online safety, our vibrant creative sector or the viability of news organisations, both large and small.
We are at a moment in history when I genuinely believe that democracy is at threat through the erosion of professional journalism. We are not powerless. We must prioritise protecting the viability of news and ensure that informed, diverse debate is unmediated by unaccountable algorithms.
Lord Birt (CB)
My Lords, journalism takes many forms, but its solemn democratic roles are to investigate and surface hidden matters of consequence, to inform public debate on critical issues and to hold to account people and organisations exercising power. Here’s the rub: the most valuable journalism—real journalism—requires expertise, time and money.
I spent my whole career as a journalist on the front line, as an editor or, latterly, as the supervising executive of the most powerful and respected news organisation in the whole world. In my early career, I was editor of two of ITV’s major current affairs programmes, “World in Action” and “Weekend World”. “World in Action” had a formidable record in investigative journalism, and we were not alone; we looked across in admiration at our colleagues on the Sunday Times Insight team lifting the lid on the thalidomide scandal and many other stories. “Weekend World” assembled the best policy minds to provide searching analysis of the major issues of the day: Peter Jay, then Brian Walden, then Matthew Parris courteously interrogated the leading politicians of the day about those issues, often for 30 to 45 minutes and often with highly revealing results. Which of today’s politicians could withstand that?
Later in my career, painstakingly skilful “Panorama” journalists, such as Peter Taylor and John Ware, carried the investigative baton revealing unpalatable truths, often about sensitive events in Northern Ireland. All these well-funded ventures had in common large, talented and dedicated teams, and the luxury of time. As a senior executive in ITV, I led a study that showed that, at the time, ITV spent more in total on its regional news and current affairs programmes than on all its network programmes.
At LWT we had a local current affairs programme, “The London Programme”, devoted only to London issues, on which young journalists such as Greg Dyke and the noble Lord, Lord Mandelson, cut their teeth. Its signature achievement was to expose rampant corruption in the Met.
The network and local broadcast journalism of today is a shadow of the world that I once inhabited. The BBC has been brutally cut back and the consequence is particularly painful for me to witness. The finances of ITV and Channel 4 are manifestly challenged, as are those of our leading broadsheet papers. As a result, we no longer have a sufficiency of penetrating, original journalism about the whole slate of issues and challenges that beset us and the wider world so starkly. In place of a sufficiency of rational, civilised dialogue, we have bedlam—the jabs, insults and fakery of social media. There are no easy answers to these problems, but one course of action is clear: the Government must do all they can to reinvigorate not just the BBC but all our public service broadcasters. And we have to consider an uncomfortable option. We invest public money in public goods—science, academic research, the arts and culture, defence, health and education. It is time, I fear, to think of investing public money, with appropriate safeguards, in supporting democracy with journalism of quality at national and local level, in print, broadcast and online media. We need to act before it is too late.
Lord Faulks (Non-Afl)
My Lords, I congratulate the noble Lord, Lord Pack, on his excellent maiden speech. As well as having considerable content, it also had the merit of brevity, a quality much admired in your Lordships’ House. I declare an interest as the chair of IPSO, which regulates 95%, by circulation, of the printed press and its online manifestations. I also declare an interest as a lifelong news addict and an admirer of journalists. I welcome the attention that journalists and news are obtaining in your Lordships’ House today in this debate, as they did yesterday, when we were concerned with the danger that so many journalists run in doing their job. Last week, I visited Germany with my brother, a former journalist, to see the grave of my grandfather, a war correspondent for the Daily Telegraph. He was killed on the, in the last months of the war.
The importance of news has never been greater and its reliability never more in doubt. I very much agree with the conclusions of this excellent report that we are in danger of moving towards a two-tier news environment. The intrusion of tech platforms, the drop in circulation of traditional newspapers, with the consequent fall in advertising revenue, and the often chaotic nature of the 24-hour news agenda have all played their part.
Regional news has been a particular loser. I and others at IPSO visit different parts of the United Kingdom where there are regulated entities, and the picture we have obtained is discouraging. A couple of weeks ago, while visiting the south-west, I spoke to a senior local journalist who has been working on various papers there for the last 30 years. When he started, 70 people were employed by his newspaper. There are now seven. There are virtually no subeditors and papers are put together by two or three journalists. Coverage of court proceedings, of local government affairs and of local elections inevitably suffers. These are matters of constitutional significance. There is nevertheless a considerable appetite for local news, as the emergence of hyperlocals illustrates. I welcome the suggestions in this excellent report for support for the regional press. The recent endorsement of their value by the Prime Minister, His Majesty the King and the Speaker were welcome. The latter spoke of the importance of NCTJ training, knowledge of the law and of the editors’ code, which governs complaints against the press and is the standard against which IPSO regulates.
As noble Lords might imagine, I should like to say a word about regulation. The first decade of IPSO has, I believe, shown that the model of independent regulation can contribute to accountable news content. Two separate independent reviews by respected former civil servants have confirmed this.
I do not pretend that we please all the people all the time. Some complainants think we are in the pocket of the press. The newspapers take a very different view. We have been accused of being captured by the transgender lobby by one, and another has said that we are providing ground-breaking guidance on the issue.
What we do is certainly transparent. I invite a visit to our website by the curious. It may be of interest if I tell your Lordships that the majority of the complaints that we receive that are within remit are resolved in the complainant’s favour, by an upheld complaint, a mediated resolution or an acceptable correction being published.
We have, however, come across a concerning trend: something called pink slime. IPSO was approached by a network of websites that were effectively churning out Russia Today talking points while purporting to be local news sites.
I endorse what others have said about SLAPPs and about the threat of AI, but I conclude by stressing the vital importance of good journalism and good, accessible news.
Baroness Fleet (Con)
My Lords, it is an honour to follow the noble Lord, Lord Faulks, and I congratulate him on the work that he does at IPSO, which is much appreciated by newspapers. I also congratulate my noble friend Lady Stowell on the excellent The Future of News report and her speech today. I declare my interests as set out in the register.
I am proud to have been a journalist in Fleet Street—indeed, I took “Fleet” as my title—and now in this place am honoured to speak up for my trade. It is a trade. My contribution to this debate is not an appeal for the nostalgic days of Fleet Street’s power and influence, which older Members will recall. Instead, I am raising the alarm about the threat to freedom of the press: the threat from lawyers, who are blocking promised legislation to protect this freedom.
Newspapers and the general media are the principal source of information to hold to account the Government, industry, the City and the powerful in general. Without a vibrant newspaper industry, there is no democracy. Everyone in this House will pay lip service to freedom of the press. I know they mean well, but it seems remarkably difficult to hold this Government to account when it comes to implementing protections vital for the freedom of the press.
I go further: it is Members of this House, the noble and learned Lords who sit in the Supreme Court and the lawyers and activist judges in the lower courts, who have consistently failed—with a few exceptions—to protect the freedom of the press, by allowing unscrupulous lawyers to use so-called SLAPPs, already referred to today, to defeat the exposure of their clients’ alleged crimes.
We are faced with a Government who, in opposition, supported legislation to remove the scourge of SLAPPs. They have reneged on that promise. Proposed changes to civil behaviour are simply not good enough. It is remarkable that the noble and learned Lord, Lord Hermer, the Attorney-General, prides himself as a champion of human rights but apparently resists being a champion of journalists’ rights. Many journalists ask themselves why the Attorney-General took the brief to assert the rights of Gerry Adams to claim compensation, but throughout his career was never seen in court fighting for a free press. Human rights depend on a free press.
The same lawyers obsessed with protecting the rights of, say, Albanian rapists threatened with deportation, are not prepared to protect the freedom of the press. Lawyers have been all too willing to pocket the roubles of billionaire oligarchs often linked to organised crime. Exactly what is happening to the rule of law in this country, when the Government are so passionate about advocating human rights and the rule of Strasbourg but ignore in our domestic courts the rights of journalists and newspapers?
At their best, newspapers hold the powerful to account. When I was editor of the Evening Standard, we exposed corruption in Ken Livingstone’s City Hall. Ken was enraged that anyone should challenge him. He went on television to call for me to be fired. We published; we were damned, but we won that battle. I doubt that newspapers could afford to take that risk today.
Outstanding investigations resonate for years; the wrongdoers are held to account, policy is influenced and politicians—when brave—change laws to protect the innocent. Fighting off complaints has become so financially onerous for newspapers that they prefer not to challenge wrongdoers. Courts have been repeatedly told to make it easier and cheaper for litigants to bring cases, but courts and the legal profession have resisted. Newspapers play a vital role in our democracy and must have the freedom to do so. I look forward to the Minister’s response.
Baroness Featherstone (LD)
My Lords, I congratulate the committee and the chair on this important report, and my noble and very dear friend Lord Pack on his excellent maiden speech—I look forward to many more.
With the growth of social media, everyone is a pundit: individuals, Governments and terrorist groups. The challenges in news collection and delivery are manifold, and now bear an unbearable burden of a 24/7 news cycle, political and ideological bias, fast reporting with poor verification, and pundits or guests spreading unverified claims. For me, the most important issue is to ensure that there is a go-to, unimpeachable source, or sources, where we and the world can be sure that we are getting the dissemination of truth and facts rather than opinions and pundits. This is becoming an ever more challenging ambition, as budgets are cut and organisations bend towards popularity, “gotchas” and feelings.
Messages are now put out by so many bad-faith actors, or if not actually bad, just “My way is the right way”. As the report terrifyingly says in relation to young people, within the USA—and I am sure here too—some news outlets are
“increasingly preoccupied with younger audiences and their preference for ‘authentic’ content rather than ‘authoritative’ sources”.
I loved what the noble Lord, Lord Birt, said. I could weep for the reduction in funding for proper journalism. “Newsnight”, as brilliant as Victoria Derbyshire is—and she is brilliant—is a shadow of its former self. Discussion is not news, and it should be renamed “Discussionnight”.
We are seeing public discourse driven by heat, not light, and the media feeding a frenzy of the negative and the nasty, amplified by the Twittersphere. So much is fuelled by political posturing and shouting, echoed but often led by a disgraceful print media whose sole purpose appears to be to spread hate in order to sell newspapers—because, of course, hate sells.
Of course, I turn to the BBC. The world needs the BBC to be the truth sayer. Its strength is in the very fact that it is publicly funded. It has strong editorial standards and global reach, and it is often a beacon in the darkest corners of this earth. But even the BBC stands accused of bias, reporting errors and breaking news inaccuracies, and it needs to do better. We need to make sure it can and does continue to be that beacon and trusted source, because the importance of that cannot be exaggerated. The danger of the BBC becoming untrustworthy is that there will be a loss of baseline truth. It will be harder, if not impossible, to agree on facts. There will be a global fallout. The BBC is trusted worldwide and if it fails, others will fill the void, including hostile state media. Conspiracy culture would be fuelled, as would anti-media sentiment. Democracy itself becomes undermined as voters are less informed on reality and facts, and polarisation arises. We would lose one of the only powerful watchdogs we have, leaving powerful figures to be held to account less often.
On those powerful figures—and this is intended more for the Government or Governments and political parties than news outlets—I am worried about government and political control of the media, even in sending out whichever Minister to do the rounds according to the No.10 grid, let alone the “lines to take” methodology of saying nothing. It is a conformity and control that diminish our politics and access to real news, and it is this impoverished discipline that makes people turn away from real news to feelings—and that way lies madness.
Lord Gilbert of Panteg (Con)
My Lords, I congratulate my noble friend Lady Stowell both on introducing this excellent report and on her very successful tenure as chair of the Communications and Digital Committee. Under her leadership, the committee has produced several significant reports on the creative industries, the media, and digital technologies and their regulation. I declare a former interest in that I professionally advised Daily Mail and General Trust—a role that ceased last year.
It was a privilege to precede my noble friend as chair of this committee. In reading this report, I was struck by some consistent themes of its work over the past decade. The committee is right to worry about how our news media will survive, let alone thrive, in a polarised world where we have allowed a small number of platforms to be dominant and to develop addictive, monopolistic business models. However, the report is also right to be cautious in its recommendations; in particular, it is right to be hesitant about the role of government and the extent to which it can intervene in the industry.
I want to focus on just two areas: first, platform dominance and product design; and, secondly, the related issues of our polarised society and trust in the media and institutions. It is clear that our news media organisations have faced powerful headwinds and have struggled to adapt to change. In many ways, the Conservative in me would say, “Well, what’s the problem? If an industry is out-innovated and better products emerge, and businesses fail to adapt, then they will die and something better will take their place”. However, that is not what is happening, because, for free markets to work, we must be sure that dominant players do not abuse their position and stifle competition, whether that is through the behaviour of a small number of platforms gatekeeping access to the internet, which keeps news organisation from building direct relationships with their readers; through opaque, changing algorithms that leave publishers unable to see how their content has been ranked and served; through lack of a complaints process, which leaves small and local publishers in particular unable to seek redress if they think their content has been unfairly treated; or through Google’s dominance of online advertising on both the supply and demand sides, which we have allowed to happen and which is at last being called out in the United States, where, in a landmark judgment, Google was found to have
“engaged in a series of anticompetitive acts to acquire and maintain monopoly”.
Now, it is in the debate about AI and copyright law, where, again, we are failing to address the issue of dominance. What is happening in reality, as the noble Lord, Lord Knight, pointed out, is that AI summaries head search results. They are based on content scraped—some might say stolen—from copyrighted material. Creators—in this case, professional journalists and news publishers—are neither remunerated nor even credited on the face of the summary. The creator does not get any credit or reward for their effort and investment. How can content creators possibly survive this? Can the Minister give an example of any other industry where this kind of exploitation is lawful?
However, it is not the fault of Google, Meta or any of the other big tech companies that these issues have not been addressed; it is our fault. Where we should have been focused on how these huge businesses stifled competition and created dominant business models and addictive products, we were focused on content and speech and how to regulate them. That is not, and never will be, the answer. We must focus now on dominance and design; the report is right to call for competition to be taken seriously. I hope that remedies such as interoperability, which was a key feature of liberating telecoms, and open banking, which has allowed new entrants to challenge in markets that were dominated, can be part of the set of interventions in this dominated market.
It is by tackling design and dominance that we will address the online harms we worry about. Tackling addictive products and abusive algorithms, with a real, muscular focus on digital literacy, will do a great deal more to deal with online harms than content regulation, kitemarking, ranking or trying to regulate speech.
One of the harms about which we worry most is increasing polarisation and intolerance, leading to online abuse. Polarised debate; accusing those we disagree with of peddling fake news or spreading misinformation; highlighting only differences while not acknowledging that, often, we seek the same ends and differ on only the means; wrongly labelling our opponents as extreme and delegitimising them; and calling out people with whom we disagree as, for example, far right—these are all behaviours that have contributed to polarisation and a breakdown in trust for which we cannot entirely blame the media. Indeed, a thriving and diverse news media, as well as free and vigorous but respectful debate, with a media literacy approach that skills young people to be sceptical and inquiring rather than cynical and untrusting, is the way forward and something for which we all have a responsibility.
Baroness Keeley (Lab)
My Lords, I congratulate the noble Lord, Lord Pack, on his maiden speech and on promoting the value of email newsletters. We certainly benefit from the Manchester Mill newsletter in Greater Manchester, which is delivered to 57,000 people, after being developed by independent journalists.
I congratulate the noble Baroness, Lady Stowell, the committee and the staff team working with them on all the work they have done, on selecting the future of news as an inquiry topic and on the report that has been produced. As the committee’s report points out, the stakes are high because having informed citizens with a shared understanding of facts is vital to democratic participation, but we know that that is under threat.
I agree with the comments by the noble Baronesses, Lady Stowell and Lady Fleet, and my noble friend Lord Knight of Weymouth about the importance of legislating on SLAPPs. I know that the committee agrees on the importance of that happening—and I understand that we will return to it—but we hope to see movement from the Government on that.
Many indicators for the news sector are not encouraging, as we have heard in this debate. Trust in the news has fallen, and that fall continues; news avoidance is rising substantially; and there are news deserts where no local news is published. The committee’s report on the future of news provides a backdrop to our committee’s new inquiry on media literacy. It explored the topic of misinformation and disinformation, which is now being explored further by the Commons Science, Innovation and Technology Committee in its current inquiry on social media, misinformation and harmful algorithms. It is vital that we hear what measures might be needed to prevent new technologies from driving social harms, such as the summer riots of 2024.
We know that enhancing media literacy is key to improving societal resilience to misinformation and disinformation. During the inquiry on the future of news, the committee raised issues with Ministers, including a 2023 report by the LSE that found the previous Government’s media literacy plans were characterised by
“fragmentation, duplication, administrative burdens and limited co-ordination”.
In response, the Minister, my noble friend Lady Jones of Whitchurch, agreed that lessons needed to be learned by the Government about their funding initiatives for media literacy that were not universal, and she agreed that we need a comprehensive strategy.
The Minister also made clear that part of that comprehensive strategy is about making sure both that education takes place in schools and that we educate adults to distinguish between respected news providers and those trying to imitate them and distort the news. The committee feels that we need action on that and, given the high stakes, we need to act quickly. Our media literacy inquiry seeks to address the question posed by the Government in their response to the Future of News report: how can the Government best target the next phase of media literacy activity? Our aims are to establish a clear vision for achieving good levels of media literacy across the UK population; to clarify the roles and responsibilities of the Government, regulators and the industry; and to identify and prioritise key actions from each of those to enhance media literacy skills across the UK.
The committee’s report, The Future of News, also highlighted the fact that the ongoing curriculum and assessment review creates an opportunity to ensure that media literacy is given the time and prominence in schools that it needs. I hope that our current inquiry will build on that point and assist Professor Becky Francis as she completes the next stage of her review.
I ask the Minister today whether she will support the call for changes that embed media literacy across the curriculum. There is clearly substantial room for improvement in media literacy levels in the UK. We find ourselves ranked 13th in the Open Society Foundations’ 2023 media literacy index, a drop from 11th and 10th in the indexes of the previous two years. Only 45% of UK adults are now confident that they can judge whether sources of information are truthful, and only 30% feel confident judging whether the content they see is AI generated.
The evidence we have received so far, as was identified in The Future of News, has emphasised the importance of media literacy in building the resilience of the population to the risks posed by the online media environment. I look forward to updating the House on the committee’s findings once our inquiry concludes later this year.
Baroness Cash (Con)
My Lords, I, too, welcome the report and congratulate the noble Baroness, Lady Stowell, on her chairmanship of the committee and the members who have done a lot of hard and meaningful work to deliver it. I congratulate the noble Lord, Lord Pack, on his maiden speech and look forward to hearing many more.
It is timely that we are having this debate, particularly as the Government’s consultation on a significant section of it—the scraping of data by AI—closed in February. There are not too many issues on which the BBC and the Daily Mail agree, but this is one, and I am pleased to welcome the considerable cross-party consensus on this issue. The noble Lord referred to the fact that copyright should not be any less meaningful in the context of these industries than it is in others.
A few weeks ago, the Daily Mail columnist Sarah Vine used her column to talk about the AI scraping issue. Like all good writers, she chose to show rather than tell, and quoted a conversation that she had had with a friend, who had been playing around with ChatGPT and asked it to give Sarah Vine’s views on a series of subjects. The ensuing column was highly entertaining, as her pieces so often are, and she used the point well to illustrate how vulnerable she and all other journalists and news organisations now are as their original material—their hard work, their unique creativity and their livelihood—is being hoovered up to train machines without any credit or compensation.
While we debate, that continues to happen every second. AI companies are scraping the web for millions of words, images and music beyond the news industries, often without permission and to the increasing alarm and detriment of the UK’s phenomenal £125 billion creative industries. We absolutely need to have stronger copyright laws. While we do not yet know what the outcome of the Government’s consultation will be, it is important that we make sure that the right legal protections exist going forward and that they can be enforced.
The initial proposal for an opt-out rather than an opt-in system is simply not fair. As Justine Roberts at Mumsnet said, it is like asking homeowners to defend against burglars. It is not the right way round; the law exists to protect and should do so in this context. We also need to see the licensing agreements between entities, such as Mumsnet and the AI companies that are scraping their data, to protect them. At this moment, Justine Roberts, on behalf of Mumsnet, is suing Open AI in a David and Goliath piece of litigation that she should not have to be doing. I am pro-business and pro-AI, but I am not pro-theft, and we have to put in place the right legislation to stop this.
To be honest, I thought that Sarah Vine might be exaggerating in her column, so I thought that I would play around a little with ChatGPT. I said this morning, “ChatGPT: tell me what Sarah Vine would say about the House of Lords”. This is the answer I got in the voice of AI Sarah: “Yes, it’s a bit mad. Yes, some of them looked like they were embalmed in the Blair years, but I’ll take a sleepy old Lord with a copy of Erskine May over a gobby Back-Bencher on GB News any day. The House of Lords isn’t perfect, but it is our last line of defence against the political toddler tantrum that is modern democracy”. Long may your Lordships grumble, and please let us ensure that we protect this industry.
Baroness Fox of Buckley (Non-Afl)
My Lords, it is hard to follow a speech that mentions “gobby Back-Benchers” without taking it personally. First, I commend the noble Baroness, Lady Stowell, and the committee for such a thought-provoking report. The variety of new material and the wide array of witnesses and opinion show a recognition that the evolving news media landscape requires a certain openness, even humility. None of us has ready-made solutions to present challenges. I have made copious notes about the report, but in just a few minutes I will raise some issues that might need further exploration.
In chapter 7, on dis- and misinformation, many witnesses raised unease about mission creep and how these elastic terms are often weaponised to denigrate viewpoints subjectively judged as wrongthink or harmful. This has led to accusations of partisan one-sidedness. Official fact checkers have not helped. BBC Verify has had, to say the least, a chequered career, and it certainly has ideological blind spots.
Since the report was written, Meta’s CEO Mark Zuckerberg has admitted that the company’s third-party fact checkers were politically biased. The leaked Facebook papers and X files have showed that politicians pressurised new media outlets to label factual, if inconvenient, truths as misinformation as a precursor to censorship. No wonder Spiked’s editor Tom Slater was so forthright with the committee, calling the new anti-disinformation industry a new “anti-dissent industry”. Do not get me wrong: I am not complacent about allowing untruths to go unchallenged, but I am not sure that fact checkers or indeed media literacy is the answer.
Ironically, the perceived inconsistency of the mainstream media’s factual gatekeepers has fuelled a broader cynicism about whom to believe and expertise of any sort. Interestingly, some of the more effective counters to this are coming from within alt media’s ranks. What does the Minister think of community notes on X or Meta, for example? What does she think of author Douglas Murray’s intervention when he went on Joe Rogan’s podcast to challenge him directly for a disregard of due diligence on guests on Israel and Ukraine? This has led to the “Podcastistan” pushback and debate on the dangers of ill-informed opinion presented as fact, led by fellow podcasters such as Konstantin Kisin and Winston Marshall. There are hopeful signs of self-correction here.
Young people especially tune in to news-adjacent podcasts, as they feel ill served by mainstream news. So chapter 6, on serving a diverse range of audiences, was key for me. I have one concern: a call for more diversity in the media can be confusing, as the term has become politicised and interpreted through the prism of identity politics. It hardly ever considers class, and diversity of viewpoints is even rarer. It is one reason why new market entrants such as TalkTV and especially GB News are snobbishly dismissed and subject to some frankly hysterical attacks from journalists within the news industry. I recently read one criticism of GB News for its lack of diversity because it had given double the coverage to the rape grooming gangs than all the five news channels combined. This was used as an accusation, but perhaps it shows underreporting of a story that tens of thousands feel passionately about, and that their concerns about it are being ignored.
The report tells us that complaints to Ofcom have risen by 600% since the launch of GB News and TalkTV, and no doubt some of that is merited. But, although some will assume that that immediately equates to guilt, I have a warning: a new brand of anti-free speech activism is skewing perception. In February, the infamous NGO the Good Law Project delivered nearly 72,000 complaints it had collected to Ofcom about an alleged transphobic and Islamophobic joke made by GB News’ “Free Speech Nation” presenter Josh Howie. Without commenting on the specifics myself, I note that that complaint has been refuted by many leading lesbian and gay campaigners.
Yet another tranche of complaints about Howie’s comments were made directly to Ofcom, but, after an orchestrated online campaign featuring a misleading edited clip—misinformation—some media commentators gleefully reported and suggested that this means that it being the most complained about programme in Ofcom’s history is proof that GB News should be closed down. But the incident occurred on a comedy show, “Headliners”, where three comedians, including Howie, made jokes as they reviewed the papers—
Captain of the King’s Bodyguard of the Yeomen of the Guard and Deputy Chief Whip (Baroness Wheeler) (Lab)
I remind the noble Baroness that the advisory speaking time is four minutes. Can she please wind up?
Baroness Fox of Buckley (Non-Afl)
I am sorry; this is my last sentence.
It was no riskier, though funnier, than “Have I Got News for You”, which is often offensive but does not offend the metropolitan elite. We should not have two-tier regulation.
Lord Ranger of Northwood (Con)
It is always a pleasure to follow the noble Baroness, Lady Fox; I never know when I will be standing up. I too welcome and congratulate the Communications and Digital Committee and the noble Baroness, Lady Stowell—the former chair of the committee—on their thorough and broad-ranging report. Fearing the time limit, I shall do it no justice in covering the challenges and opportunities it highlights for the future of news and the media more widely. I also congratulate the noble Lord, Lord Pack, on his maiden newsletter—sorry, speech.
I aim to summarise three areas in line with the report: my personal experience in the area of news digitisation; current challenges; and public sector broadcasting—which is a theme that has been recurring in the debate—namely, the BBC.
When I started to engage in mainstream politics 25 years ago, I was something of an outlier; I was a Sikh Conservative, and this brought me to the attention of the media, notably the BBC or, to be more accurate, the BBC Asian Network. I learned quickly that you have really only arrived if you have spoken to someone from the BBC. The respect for anyone, from an intern to a senior editor, who had a BBC pass was unsurpassed, for its history, standards and the trust placed in it by the public and the institutions reporting were unprecedented. It was the voice: Auntie.
However, the emergence of social media changed how and whose voices are heard, especially with the rise of Twitter, now sort of known as X. I started using Twitter in 2009. As the Mayor of London’s transport adviser, I had a myriad of policies, projects and initiatives to communicate, and the mayor had changes of mind quite regularly back then, so I had to make sure that I was on top of getting that message out. I saw Twitter as an ideal channel to broadcast on and to bypass the traditional media. In those very early days, I could consume some rather clear feedback, wanted or unwanted.
News digitisation has been turbocharged ever since then. News organisations and journalists face challenges from the pace of both technological and behavioural change, as society changes its wants and needs when it comes to news, and from the emergence of influencers. I refer to a new report, published this month by 5654 & Company and MessageSpace, titled Influence and Information, which dives into the media habits of Westminster. Unsurprisingly, it highlights that social media is the most popular media source among MPs. It concludes that 97% of MPs use social media every day—I wonder what the other 3% are doing—and highlights that more than three-quarters of MPs access digital news publications multiple times a day. That increases to 90% for MPs who were elected for the first time in 2024.
What does all this mean? Politicians are in a new era of digital news consumption and the news media will survive, but it has to evolve, and has evolved, in the digital era. Social media platforms will serve as the go-to aggregation services for daily news, but also for challenges to traditional news sources, such as influencers and new disruptive media outlets. We can see the application of AI, content aggregation or even generative AI, as further challenges, but news is now interwoven with market-driven content and clicks monetisation, as well as the type of editorial control exerted on news.
I return to the BBC. Apart from how we consume, we must consider our media’s influence and its soft power. The BBC, as has been mentioned, has generally been considered the global bearer of the gold standard for public sector broadcasting, but its position as a trusted news source seems to have become disputed. Internationally, the BBC News brand still holds the kind of respect and authority that aligns with institutions such as our monarchy, but it does not feel at home in a more modern Britain, as the BBC News source becomes diminished.
I would like to focus my ask of the Minister on the recommendation on the process leading to the next BBC charter review. The committee’s report highlights the struggles of the anchor institutions such as the BBC, but let us unleash the BBC into the future digital news world, understand the challenges that it faces from disruptors, platforms and global news markets and help it to find its footing in the new world of news media, to digitally evolve faster, to remain valued and trusted at home and internationally.
Baroness Grey-Thompson (CB)
My Lords, I declare an interest in that I was a board member of the BBC for five years, until 2022. I do occasional work in the media, am a member of the UK Soft Power Council and write a weekly unpaid column for the Evening Gazette in Middlesbrough, near where I live. I do that because it is important to connect the work that I do in London with local communities and vice versa. Over the years, I have seen huge cuts in local news, which is a great worry to me.
This is a timely report. The world of news, broadcasting and reporting seems to be changing so quickly, as is the world around us. When I was travelling around the world as an athlete, the BBC World Service was a bit of a gem. I used to spend a lot of time in the States, where there was a complete lack of news. It was an antidote to the rolling news that they had there. I have frequently been told how much it is valued in terms of accessing reliable information. We should think carefully about how it remains impartial and separate from governments. It should never be a political tool. However, building a sustainable model for news is important, as is having accurate, clear reporting and reliable information.
I understand that the role of government is complex. I was on the board of the BBC when we spent many months debating over-75s policy, and we are not far away from the next licence fee negotiation. Maybe it is time to have a reset of that relationship. We also need to keep up to date with how young people access news. I am really concerned about the drop in trust that the report discusses. I thank the noble Baroness, Lady Stowell, for her work and agree with her that authentic representation is essential.
In an age of misinformation and rapidly evolving digital platforms, media literacy is no longer a luxury but a necessity. I am really looking forward to the chairmanship of the noble Baroness, Lady Keeley, and the plans for the future, because it is essential that the skills required to navigate and critically assess information are embedded within the school curriculum. We must actively promote independent thought and critical thinking, particularly in how young people interpret and respond to information. A survey commissioned by the Student View discovered that 90% of UK teachers want media literacy to be included in the curriculum. According to the National Literacy Trust, over half of them believe that the curriculum does not equip children with the literacy skills that they need to identify fake news.
I use social media. It gives me a view, unbalanced, of the world. However, 68% of teenagers say that they use social media for news, while research by Ofcom in 2022 found that only one in 10 were able to tell what is real or fake. It also found that more than a third of children aged eight to 17 said that they had seen something worrying or nasty online in the past 12 months. Teaching students media literacy from a young age would allow them the tools to critically evaluate harmful posts by social influencers such as Andrew Tate.
While I welcome many aspects of AI, it also brings challenges, as others have said. The Internet Watch Foundation recently said that child exploitation is rocketing. Predators are becoming increasingly crafty, and 97% of those victims are girls. This is why we must be very careful about the future. I strongly support the committee’s recommendation that Ofcom work swiftly with platforms to align modernisation policies with its codes and the Online Safety Act 2023.
At times of crisis, we turn to what we trust, and we must trust our news. Independent, accurate news is more vital than ever before in a complicated and fast-changing world where spin, the potential for misuse of AI and those who wish to manipulate, can gain more power. Never has the future of news been more important.
Lord Young of Acton (Con)
My Lords, I begin by praising the maiden speech of the noble Lord, Lord Pack, and the work of my noble friend Lady Stowell and the members of the Communications and Digital Committee for this report. I declare my interests as the publisher of the Daily Sceptic, the general secretary of the Free Speech Union and an occasional contributor to the Daily Telegraph.
Last week, I wrote to the Secretary of State at DCMS, pointing out that her duty to issue a foreign state intervention notice regarding interference in a UK newspaper by a foreign state has been triggered—it was triggered more than three months ago—and asking why she still had not issued it. Under Section 70A of the Enterprise Act 2002, as amended by the DMCC Act 2024, the Secretary of State must give the CMA a foreign state intervention notice if they have reasonable grounds for suspecting that, among other things, arrangements are in progress that will create
“a foreign state newspaper merger situation”.
The Enterprise Act sets out the conditions under which a foreign state newspaper merger situation is in
“in progress or in contemplation”
and, if any of those conditions are met, the duty to issue an FSIN is triggered.
One of those conditions, condition 4, is if a
“foreign power has the right or ability to direct, control or influence to any extent, the … policy or activities (in whole or in part, and whether directly or indirectly)”
of a newspaper. On 17 January, the Telegraph reported that RedBird IMI had given directions seeking to influence the operational and financial management of the Telegraph. The headline on that story read:
“Telegraph Urged to Slash Jobs and ‘Forget’ Sale as Abu Dhabi Fund Applies Pressure”;
and the first paragraph read:
“The Abu Dhabi Fund which holds the fate of The Telegraph in its grip has urged executives to make more than 100 redundancies to deliver stretching profit targets”.
Plainly, condition 4 has been met.
Why, then, has the Secretary of State not adhered to her statutory duty to issue a foreign state intervention notice to the CMA? The purpose of the amendment to the Enterprise Act 2002, which was made last year by my noble friend Lord Parkinson after pressure was brought on the Government by my noble friends Lady Stowell and Lord Forsyth, was to prevent foreign states influencing or controlling UK newspapers. That is exactly what the Telegraph reported was happening last January. The IMI part of RedBird IMI is owned and controlled by the Vice-president and Deputy Prime Minister of the UAE, and RedBird IMI is the entity attempting to influence the operations and financial management of the Telegraph. Why is the Secretary of State allowing this to happen, contrary to the will of Parliament?
One of the recommendations of the report of the Communications and Digital Committee is that the news sector needs to innovate if it is to survive. The Telegraph would dearly love to innovate and develop its digital offering, but it cannot do that until RedBird IMI allows a sale to proceed—which, thanks to the inaction of the Secretary of State, it is under no pressure to do. Her failure to act means that the Telegraph has been kept in a state of suspended animation, with executives unable to make vital strategic decisions about its long-term future.
Another area in which the Secretary of State has been dragging her feet, as my noble friend Lady Stowell said, is in making the secondary legislation setting out, among other things, what percentage of the shares in a UK newspaper enterprise can be owned by a foreign state. If Redbird is indeed separating from IMI, as newspaper reports have said, with a view to putting together a new bid, possibly involving IMI, it cannot do that until these new regulations have been made. The last Government opened a consultation about this secondary legislation on 9 May last year, and it closed two months later. That is more than nine months ago, but the Secretary of State still has not made the secondary legislation. She has not even said when she is going to make it.
The Secretary of State replied to my letter yesterday, and I thank her for doing so, but it was wholly unsatisfactory, arguing that because Redbird IMI’s interference in the Telegraph was not significant, her duty to issue an FSIN had not been triggered. In fact, the interference reported means that the threshold has been met. The Secretary of State needs to act before it is too late. The committee’s report is entitled The Future of News, and I do not think I am the only member of this House who thinks that that future will be pretty bleak if it does not include the Telegraph.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful to my noble friend Lady Stowell of Beeston for her chairmanship of the Communications and Digital Committee, for the report that the committee has laid before us and for the way that she opened this debate. I understand that another report is still to come stemming from her time as chairman, so I shall save the encomium for then, but she does indeed deserve the praise that noble Lords have levelled at her again today, as I know from my short spell on the committee as a member under her chairmanship.
I have not yet had the opportunity to congratulate the noble Baroness, Lady Keeley, on succeeding her, and I look forward to the work and reports that she and her colleagues bring before us. I am pleased to see the noble Lord, Lord McNally, back in his place. We have missed him.
I congratulate the noble Lord, Lord Pack, on his excellent maiden speech. It is always a pleasure to welcome a fellow political historian to your Lordships’ House. Noble Lords have noted some of the many books he has written. I know him through his supportive work for the Journal of Liberal History, which certainly puts me and my colleagues at the Conservative History Journal to shame—theirs appears quarterly and ours is only an annual publication. He may be surprised to know that I am an admirer and occasional reader of his email newsletters, although I should confess that I used to subscribe to them when I was in the Conservative Research Department and responsible for monitoring the Liberal Democrats. I was looking to make mischief, but it is testament to his political shrewdness that I was rarely able to do so on the basis of what he had written.
This report, and indeed my noble friend Lady Stowell’s speech, began by stating that the future of news matters, and I wholeheartedly concur. We live in a world where myths and disinformation are rife. Increasingly brazen autocracies peddle propaganda to their populations and consumers of news around the world. Social media here in the United Kingdom is leading many to believe outright lies and fake news, and rogue actors across the world use our news media to propagate their poisonous ideologies and threaten their rivals. As the noble Baroness, Lady Featherstone, says, the problem is not just bad actors but intolerant and closed-minded ones who do not want to give any space to opposing views or scrutiny.
As my noble friend Lord Gilbert of Panteg reminded us, there is a role for us all in the way we conduct public discourse. There is a role, too, for the work of media literacy. I look forward to the work that the committee, under the noble Baroness, Lady Keeley, will do in this important area. For my part, media literacy can be delivered through traditional subjects such as history, English literature and history of art, which encourage young people to be sceptical of the sources that they see before them. I look forward to the committee’s views on all this.
Over recent years we have also seen the rise of state-sponsored disinformation campaigns, especially from the Russian Federation, with the intent of destabilising democracies and undermining the rule of law. Noble Lords are right to have highlighted the injurious effect of SLAPPs, strategic lawsuits against public participation. I echo calls for the Government to continue to close the legislative gaps in this area.
Importantly, the committee’s report highlights that trust in news is declining and that news avoidance is rising. More people are either no longer believing the news they read, even when it is factually accurate, or simply declining to engage with it altogether. That should concern us all. The importance of accurate and reliable news cannot be overstated. It is vital to the functioning of a vibrant and robust democracy, to free and fair elections and to countering the pernicious rise of extremism, so there is a lot at stake.
The root causes of these issues are numerous. Part of the problem lies in the failure of social media firms to regulate the content they put on their platforms—something that the previous Government committed to tackling through the Online Safety Act, which I had the pleasure of taking through your Lordships’ House. We watch carefully as the provisions of that Act start to come into force, and all recognise that there is continuous work to be done in this area, which I hope the Government will continue.
But the problem runs deeper. The report rightly highlights the inherent risks of the consolidation of the world’s major technology companies, and how this is already beginning to
“upend news media business models and change the way people find information”.
That is not necessarily bad, of course. Media habits and methods of consumption have changed enormously over the years, from the printing press to the telegraph—with a small t—to online news publications. Each has brought with it disruptions and challenges, but also opportunities. It is how we manage those disruptions and seize those opportunities that is important. As my noble friend Lady Stowell said,
“a changing media environment should not be conflated with its imminent demise”.
I agree with the noble Lord, Lord Birt: we should look at what we have lost, as well as what we want to see in the future. He was right to mention with pride the long-form interviews of “Weekend World”. I am sure other noble Lords have enjoyed the recent TV drama “Brian and Maggie”, the dramatisation by James Graham and Stephen Frears of Brian Walden’s 1989 interview with my late noble friend Lady Thatcher. It makes for compelling drama, but it is rather depressing that such interviews are the stuff of drama rather than current affairs. I think the responsibility for that lies with politicians as well as with broadcasters.
A number of noble Lords mentioned the Digital Markets, Competition and Consumers Act. The News Media Association has highlighted the possibility that the Government may review the implementation of that Act. Can the Minister shed any light on that? The Act, passed in the last Parliament, gave the Competition and Markets Authority enhanced powers to regulate digital markets. As part of it, the CMA has established a new Digital Markets Unit to address some of the anti-competitive and market-skewing behaviour that my noble friend Lord Gilbert of Panteg outlined. We understand the Government’s desire to reach new international trade agreements, but I hope they will proceed with caution in this area. The legislation that we passed was done to address some of the issues that noble Lords have raised in their contributions today and need to be watched very carefully.
Like other noble Lords, particularly my noble friends Lady Stowell and Lord Young of Acton, I will be grateful if the Minister is able to give us an update on the sale of the Telegraph and the secondary legislation we are looking for following the debates we had just before the general election. I sympathise, as I have said before, with the position she is in; it is a quasi-judicial decision for the Secretary of State to make but, as noble Lords have raised repeatedly, the fact that this is now being discussed in other news publications adds to the uncertainty for the staff and readers of the Telegraph. There is great concern about the importance of this and other daily newspapers in our very important media market. I look forward to any update the Minister is able to give us today.
It may be important to end on a positive note and hopefully to disprove the adage that good news is no news. Actions taken by the previous Government have made inroads in protecting our news media. The BBC remains the world’s most trusted news source, reaching a weekly global audience of 450 million people. On average, 75% of adults in the UK use BBC news in some capacity every week; that is quite impressive for a corporation more than a century old. It remains one of our most trusted and valuable institutions and can act as a welcome antidote to the poison of misinformation and foreign interference. I agree with my noble friend Lady Stowell, an alumna of the corporation and a constructively critical friend to it. It is important that the BBC and all our public service broadcasters continue to earn their status as anchor organisations.
I commend all those who work in our news media on the work they do holding the powerful to account, reflecting the diverse views of our increasingly fractious world and upholding the robust, independent and respected news sector, which is so important not just to this country but to our place in the world.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I am honoured to respond to this debate, initiated by the noble Baroness, Lady Stowell of Beeston, on the report from the Communications and Digital Committee into the future of news, which I enjoyed reading. I thank the committee for its work on this important matter and add my tributes to the noble Baroness, Lady Stowell, for her leadership of the committee. I look forward to the debate on the subsequent report in due course.
I am grateful to all noble Lords for their contributions today. It is clear that we have a wealth of experience and expertise, as well as a range of views, across your Lordships’ House. I add my congratulations to the noble Lord, Lord Pack, on his excellent maiden speech. It is clear that the noble Lord has already made a considerable contribution to UK politics, which will continue in your Lordships’ House, as well as a significant contribution to online political media. As the noble Lord, Lord McNally, said, the noble Lord, Lord Pack, is a communicator. Journalism and communication are clearly the lifeblood of our democracy. The Government unequivocally support a free, thriving and plural media underpinned by high-quality journalism and a sustainable press sector that helps democracy and communities to thrive.
The noble Lord, Lord Birt, reminded us of the importance of investigative journalism—intense resource as it is—in the media landscape. As the noble Lord, Lord Parkinson, stressed, news matters. This is something all noble Lords can surely agree on, as is the need for the media to be strong enough to hold politicians to account. I also thank the noble Lord, Lord Parkinson, for his television recommendation.
Rapidly changing media consumption habits continue to transform our media landscape. These trends are well documented in the committee’s report. It paints a challenging picture of news avoidance, declining trust, falling revenues and increased competition for attention from alternative and less reliable sources. The industry is responding to these existential challenges. Acknowledging principles of media freedom and independence, the Government are working to enable the framework in which the industry can thrive.
We are implementing vital legislation, and I acknowledge the work of the noble Lord, Lord Parkinson, and others in putting it on the statute book under the previous Government. The Media Act will future-proof our public service broadcasting system and encourage innovation, ensuring that the UK public continues to reap the benefits provided by broadcasters. The Digital Markets, Competition and Consumers Act will help rebalance the relationship between news publishers and dominant online platforms, which has been at the root of many challenges the industry has faced in recent years.
In response to the noble Baroness, Lady Stowell, on digital markets and independence, the Competition and Markets Authority is independent of government and will prioritise who it investigates through the new digital markets regime, in line with its principles and statutory duty.
The final thing to say on legislation brought in in recent years is that the Online Safety Act has safeguards to protect the press against takedown and other editorialising by platforms that host their content.
We are now focused on what more needs to be done. The noble Baroness, Lady Wheatcroft, highlighted the importance of local media. My noble friend Lord Knight referenced concern over news deserts. I am fortunate that where I live there are both online and physical newspapers covering the local area. I am also the proud aunt of a trainee journalist on another local newspaper, so I agree and understand how vital a vibrant local media is.
The Culture Secretary’s commitment to a local media strategy reflects the particular challenges facing local journalism. The closure and merging of newspaper titles, redundancies among local journalists and falls in print circulation risk leaving a democratic deficit in local communities. We saw what is at stake during the August riots. Recent DCMS-commissioned research, for publication in due course, explores the role that local journalism played in informing the public of events as they unfolded, helping to de-escalate tensions. Our strategy is intended to strengthen our local media in this vital role.
The noble Lord, Lord Pack, and the noble Baronesses, Lady Wheatcroft and Lady Stowell, asked specific questions around the local media strategy. The noble Baroness, Lady Stowell, asked for more detail. We are engaging with industry and recognise the urgent challenge faced by the sector. Although we have not ruled out options for financial support, noble Lords will understand the challenging fiscal context. In response to the points raised by the noble Lord, Lord Pack, we are also considering the role of public notices and the important role of the local press in holding local public services to account.
Numerous noble Lords, including the noble Baronesses, Lady Stowell, Lady Wheatcroft and Lady Cash, the right reverend Prelate the Bishop of Oxford, my noble friend Lord Knight, and the noble Lords, Lord Gilbert of Panteg and Lord Ranger, spoke about AI, tech platforms and the way in which the whole media landscape is evolving. Clearly, a significant challenge for local and national press is the evolution of technology and news consumption habits, including the relationship between news publishers and the online platforms through which citizens, including noble Lords, increasingly find their news.
Developments in generative AI bring opportunities but, clearly, also risk amplifying the challenges that this industry continues to face. Central to this is the interaction between the training of AI models and our copyright laws. The potential of AI to support human-centred creativity will open up new frontiers across a range of sectors, including the news media, which is central to our mission to drive economic growth and a key aspect of our plan for change. We also, however, recognise the key basic principle that rightsholders should have control over and be able to seek and receive payment for their work.
The Government, as a number of noble Lords noted, recently consulted on updating the AI copyright regime. We are engaging closely with stakeholders, and both the Minister for Media and the Technology Secretary have met recently with key press sector representatives to discuss the consultation. We want to ensure that actions taken forward provide certainty and strike a balanced approach to this issue. We recognise the urgency here, but it is important that we get it right. We will continue to engage extensively as we consider next steps.
My noble friend Lady Healy of Primrose Hill raised misinformation and disinformation, and I look forward to the committee’s forthcoming report on media literacy that my noble friend referenced. It is clear that developments in AI also heighten concerns about the risks of sophisticated disinformation, including from foreign states and hostile actors, polluting public discourse and undermining trust. That point was made by many noble Lords, including the noble Lords, Lord Parkinson and Lord Faulks, my noble friend Lord Knight and the noble Baroness, Lady Featherstone. The Government take this seriously. We are acting to make it more difficult to spread false information online and to reduce its impact. The Online Safety Act is key to improving user safety across a variety of online harms and placing duties on platforms to remove illegal disinformation.
In relation to points made by the noble Baroness, Lady Fox, there is a difference of view between where disinformation starts and ends and dissent begins. We may need to disagree on where the line falls, but to me, this disagreement itself represents a strength of our democracy.
In relation to the need for media literacy, which was raised by a number of noble Lords, including my noble friends Lady Healy and Lady Keeley, the right reverend Prelate, and the noble Lord, Lord Gilbert, we agree with the noble Baroness, Lady Grey-Thompson, that media literacy is not a luxury. As noble Lords will be aware, the Government have established an independent school curriculum and assessment review. The interim report of the review, published in March 2025, highlights the need for renewed focus on media literacy in response to evolving technological challenges.
We know that this is not just an issue among children. The Government are conducting research to help us target the next phase of DSIT’s media literacy work and ensure it complements Ofcom’s work under its Online Safety Act duties. But perhaps, if we are looking at a plural media landscape of the future, the best protection against the spread of misinformation and disinformation remains our news publishers and broadcasters. An independent and trustworthy press contributes to our national discourse and democracy, ensuring that the public can access fact-checked, accurate journalism. Therefore, we are also working to make sure that our media ownership rules are future-proofed. This means ensuring the media mergers regime reflects the changing ways in which people can access news and that foreign states should not own, control or influence the policy or operation of UK newspapers and news magazines.
I know members of your Lordships’ House were hoping for an update by today on two areas: first, on what level of exceptions to the new foreign state intervention powers in the Enterprise Act are required to permit sovereign wealth funds, sector pension funds or similar to invest up to strict limits; and, secondly, as referenced by the noble Lord, Lord Lansley, on our plans to expand the legislation to allow the Culture Secretary to intervene in media mergers involving a wider range of print news publications, online new publications and news programmes.
The noble Lord, Lord Lansley, spoke in particular about online news and bringing this into the regime. It is right that the media mergers regime is updated to reflect the way in which the public are increasingly accessing news, which is online. We plan to publish a response soon and will lay the necessary SIs shortly thereafter. At present, the Government are focusing on the reforms to the media ownership rules suggested in Ofcom’s 2021 review. The review did not recommend that online intermediaries, including social media platforms such as Facebook or Twitter, should fall within the scope of this regime.
The noble Baroness, Lady Stowell, as I fully anticipated she would, raised foreign state influence. I had hoped that it would have been possible for an announcement to be made by now. I appreciate how frustrating it is for noble Lords to have me give essentially the same response as during previous debates on this matter. However, we must ensure that we consider this topic carefully before proceeding. This matter remains a priority for the Government, and I will update the House very soon.
The noble Baronesses, Lady Stowell and Lady Wheatcroft, the noble Lord, Lord Young, and others referenced the Telegraph sale. The noble Lord, Lord Young, referenced his correspondence with the Secretary of State in his professional capacity. I want to reassure your Lordships’ House that the Secretary of State is committed to seeing the Telegraph thrive and wants a sale that aligns with relevant public interest considerations, including free expression of opinion, accuracy of reporting and a range of views in newspapers. As noble Lords are well aware, the Secretary of State’s powers and duties in relation to media mergers must, however, be exercised in a quasi-judicial way after she alone has considered all relevant factors that have a bearing on the statutory tests and in order to confirm whether or not the necessary thresholds have been met. We cannot provide a running commentary on the sale and these discussions, due to the commercial sensitivities surrounding any transaction and the quasi-judicial nature of Secretary of State’s role.
I want to be very clear to the noble Lord, Lord Young, and your Lordships’ House that the Secretary of State’s letter in response to the noble Lord’s correspondence made it clear that it was an initial response ahead of today’s debate, out of courtesy. A letter of the length and nature sent to her by the noble Lord, Lord Young, would usually, as it definitely does in this case, require a substantially longer period to respond.
The noble Baroness, Lady Stowell, and others raised the BBC and charter review. As the media landscape undergoes the next generational shift, the BBC must also adapt and be supported to do so. I agree with the noble Baroness, Lady Featherstone, about the importance of the BBC producing quality news, a point echoed by the noble Lords, Lord Ranger and Lord Parkinson. The forthcoming charter review is an opportunity to set the BBC up for success into the future. As a priority, this Government will start a conversation to ensure that the BBC represents and delivers for every person in this country.
As somebody who spends more time than I would probably like to admit listening to the radio, I also agree with the point made by the noble Baroness, Lady Grey-Thompson, about the role of the World Service internationally.
The noble Baroness, Lady Stowell, asked where we might be going with the charter review. The Secretary of State’s ambition is clear in this respect: she sees the charter review as an opportunity to secure the BBC’s future for decades to come.
The noble Baroness, Lady Stowell, also asked about Ofcom and the review of the Broadcasting Code. In the Government’s view, it is essential that news broadcasters are regulated effectively by Ofcom to ensure that broadcast news is duly accurate and impartial. Ofcom has an ongoing duty to keep the Broadcasting Code up to date. Following the judicial review that the noble Baroness referenced, Ofcom has announced that it will consult on changes to rules to restrict politicians from presenting news in any type of programme. That is a matter for Ofcom as the independent regulator.
The noble Baronesses, Lady Stowell and Lady Fleet, the noble Lords, Lord McNally and Lord Parkinson, and my noble friends Lord Knight and Lady Keeley referenced the issue of SLAPPs and media freedom. It is also essential to have a healthy news ecosystem in which journalists can report without fear of abuse, threat or intimidation. We recognise concerns over the use of strategic lawsuits against public participation—SLAPPs—to intimidate, harass and silence journalists, and understand the very real financial and psychological impact that this has on victims.
Our immediate focus is on implementing the anti-economic crime SLAPPs measures in the Economic Crime and Corporate Transparency Act. Our future approach will be informed by monitoring the operation of new procedure rules being implemented by the Civil Procedure Rule Committee so that future reform options are backed by evidence. We do not wish to legislate in haste, risking unintended consequences that could upset the interplay between the rights of access to justice and to free speech. We also continue to consider the issue of SLAPPs within the National Committee for the Safety of Journalists, which brings together stakeholders to discuss journalists’ wider safety issues.
The noble Lord, Lord Faulks, raised a number of points around press regulation; in particular, IPSO. Like others, I recognise his work in this area. Of course, with press freedom comes responsibility. We recognise the work that press regulators such as IPSO and Impress do to hold our press to account. This independent self-regulatory system is vital to ensure that the press adheres to clear and high standards.
I end by reiterating the importance of public interest journalism in our democracy. A free, fair, sustainable and plural press in an age of misinformation and disinformation is genuinely more important than ever. As politicians, we rely on and sometimes take for granted access to a wide range of views across media. We are among the most news-dependent—what the noble Baroness, Lady Stowell, rightly described as “news junkies”. We forget at our peril the rise in news avoidance and should ensure that we work across party divides to fight mis- and disinformation, rebuild trust and find ways to ensure access to high-quality news for all.
I again thank the noble Baroness, Lady Stowell, and the committee for the work that they have done in this regard. We are committed to supporting the future of news and the committee’s report is an excellent reminder of everything that is at stake.
Baroness Stowell of Beeston (Con)
My Lords, I am conscious of time and that there is another debate still to come. If I may say, very briefly, because the Government Deputy Chief Whip is in her place right now, I am hugely grateful to the Government for scheduling these debates today in the Chamber, but she may have heard frustration in the last debate about the time available for contributions. She might want to consider, if we were to do a similar sort of exercise in future, whether two debates on a sitting Friday might be a more realistic way of accommodating this kind of debate—but I say that with all due respect and huge thanks for the time that has been allocated.
I am also very grateful for all the contributions to the debate. We have heard speeches from Members reflecting the expertise in the House, as well as the expertise we have been able to enjoy on the committee and which the committee continues to enjoy.
I welcome back my noble friend Lord McNally—I call him my noble friend as both a noble friend in the past and during our time on the committee. He blew a bit of a hole in some of the euphemistic tributes that were paid to me by others by describing me as rather strict in my term as chair, but I am very grateful for all the kind remarks about me and the committee’s work. I restate what I said at the beginning: it was a real pleasure to chair the committee.
I congratulate the noble Lord, Lord Pack, on his great maiden speech and the emphasis that he put on email newsletters. They are important, not just to local media but to national media. One thing which is worth us reflecting on is that the reason a lot of news organisations are now investing in these newsletters is because it reintroduces for them a direct relationship with their readers, and it takes out the aggregators—the platforms—that my noble friends Lord Lansley and Lord Gilbert referred to, in terms of the control that they exercise. I look forward to more from the noble Lord, Lord Pack, in the future.
Time prevents me from going through in any great detail all the various points that have been raised by other noble Lords. The Minister covered a huge amount of the points that were raised in her response to the debate, and I am grateful to her for that. I know that she is a diligent member of the Front Bench and takes her responsibilities in the department seriously. It is somewhat disappointing, though, that we leave this debate not much better informed about some of these important issues than we started, in terms of where the Government are going on SLAPPs, for example, or when they are going to come forward with their local media strategy. I was pleased that she was as positive as she was about the CMA and the digital markets legislation, and I am grateful to her for that, as I know those watching this debate will be.
On the issue of ownership by a foreign Government, as the Minister will know and as I said—and as restated by my noble friend Lord Young—time really is of the essence here as far as ownership of the Telegraph is concerned. It really cannot be left unresolved. As I said, I am pleased that there are signs of a potential deal coming to an end, but that secondary legislation has to be in place. Bearing in mind all that the Minister said in response to an Oral Question before the Easter break, I really thought she would have been able to give us some comfort that those regulations would be coming forward very soon. I urge her to go back to the department today and say, “Keeping on saying that this is complicated and requires more time is not good enough”. The Government have now had nine months to sort this out, and there does not appear to be any legitimate reason why they have not done so. Again, I am grateful to the Minister for her efforts, but I urge her to press even harder.
As I say, I am grateful to all noble Lords for their contributions today.
Public Inquiries: Enchancing Public Trust (Statutory Inquiries Committee Report)
Lord Norton of Louth
That this House takes note of the Report from the Statutory Inquiries Committee Enhancing Public Trust (HL Paper 9).
Lord Norton of Louth (Con)
My Lords, it is a particular honour to move this Motion. The Select Committee on Statutory Inquiries was appointed last year as a special inquiry committee to review the report of the committee appointed in 2014 to engage in post-legislative scrutiny of the Inquiries Act 2005. The committee met throughout the year and I pay special tribute to its members for their commitment and support; to the clerk, Andrea Dowsett, for her superb clerkship; and to our policy analyst, Matthew Burton, whose capacity for data research was outstanding
Public inquiries are a notable feature of public life. Whenever there is a tragedy in which people suffer some catastrophic loss, be it physical or financial, there are calls for a public inquiry to investigate the circumstances and report on the causes—and, not unusually, to recommend what needs to be done to avoid a repetition. Ministers are empowered under the 2005 Act to establish inquiries with the power to take evidence under oath, although it is also possible to set up non-statutory inquiries, be they in the form of independent departmental reviews, independent panels or ad hoc inquiries.
Public inquiries are notable nowadays for the number, as well as the range, of subjects being examined. At their best, they undertake forensic examinations and establish the facts, the lessons to be drawn and the necessary actions to prevent a recurrence. They can also provide catharsis for those most closely affected by a tragedy. That may apply as much to non-statutory inquiries as to statutory ones. Implementing their recommendations may prevent further tragedies.
However, the fact that they are long drawn-out and costly attracts public criticism. As the Government noted in their response to the report:
“In the financial year 2023/24, the direct public cost of live UK inquiries was more than £130 million”
and, of those
“that have produced their final report in the last five years”,
it
“took on average nearly five years to”
produce a report. Also drawing notable criticism—a point to which I shall return—is the fact that they can produce recommendations that are not acted on.
Awareness that public inquiries are not engendering public trust to the extent that they are designed to do provides the underpinnings to our inquiry. To provide a clear focus, we addressed the extent to which public inquiries could be rendered more efficient in process and more effective in implementation. Although those calling for inquiries tend to favour statutory and judge-led inquiries, it was clear from the evidence that there was no optimum template for an inquiry. Non-statutory inquiries can produce benefits not found in statutory inquiries. They can engender candour and provide a means for greater and more informal involvement by victims and survivors. Judges may be good at being detached and able to weigh evidence, but they may be more used to adversarial than inquisitorial proceedings. On occasion, appointing a specialist in the field may prove more appropriate. It may also be appropriate to appoint a panel rather than a single chair.
However, the most notable and most troubling feature, and one that clearly most engaged witnesses who had been involved in inquiries, be it as chairs or officials or as victims and survivors, was that there is no means of ensuring that recommendations are acted on—and, indeed, no means of monitoring what has happened to recommendations. Once an inquiry has reported, it ceases to exist. It relies on others to act. The problem is that there may be no action. This clearly has the potential to undermine trust in the process, a potential that appears to have been realised.
The most egregious failure is where recommendations that could result in preventing a repetition of a disaster are not implemented. We heard of instances where, if recommendations had been acted on, deaths may have been avoided. It was clear from the evidence we received that if inquiries were to fulfil the purposes for which they were established, there had to be some change both to the process of establishing them and to monitoring what happens once they have reported. We therefore made recommendations, both in our own right and as a follow-up to recommendations made in the 2014 report.
To render the process more efficient, we recommended, where appropriate, consulting and involving victims and survivors in determining the terms of reference and providing guidance to those setting up inquiries on options for involving such groups. We recommended including in the terms of reference an indicative deadline for the final inquiry report, with ministerial approval possible to extend the deadline, and including a requirement that inquiries provide regular public updates on their work and consider issuing interim reports, especially in cases where inquiries are expected to be lengthy.
We also favoured enhancing the role of the Cabinet Office inquiries unit to ensure the sharing of best practice. All too often, chairs are left to reinvent the wheel when it comes to setting up an inquiry. We regarded sharing best practice and learning from past inquiries as essential. We therefore recommended that inquiry terms of reference include an obligation to produce a lessons learned paper and a working paper on what worked well and what could be improved—these to be submitted to the inquiries unit. All this will require the inquiries unit to be adequately resourced. We wanted to see the wider creation of a community of practice for all public inquiries.
These recommendations, we believe, will enhance the efficiency of inquiries. In terms of effectiveness, it is crucial that an inquiry’s recommendations are the start, not the end of a process. Presently, too many reports constitute the end product, with no action taken on many or any of the recommendations and with no systematic means of monitoring the Government’s actions in the light of the report.
The Government are legally obliged to respond to a report from an inquiry established under the 2005 Act, but they are not required to accept any recommendations or to provide a detailed explanation as to why not. When an inquiry into a tragedy makes recommendations designed to prevent a recurrence and no action is taken on those recommendations, not only is it a body blow to victims and survivors but it undermines public trust and calls into question the point of holding inquiries.
We, therefore, focused on how inquiry recommendations can be monitored and, if necessary, pursued when no action is taken by government. We recommended the appointment of a Joint Select Committee on public inquiries. If a Joint Committee is not agreed by both Houses, we propose the appointment by this House of a sessional Select Committee. As we record in the report, a parliamentary committee is superior to other options because it plays to the strengths of the existing committee system.
We recommend that its functions include monitoring the implementation of accepted public inquiry and major inquest recommendations and maintaining a publicly available online tracker. It would be able to conduct thematic research and meta-analysis of recommendations, enabling it to identify systemic policy failures and prevent future disasters. As a result of its work, it would also be able to make recommendations to the Inquiries Unit on best practice for establishing and running inquiries. If necessary, of course, it could hold its own parliamentary inquiry. The 1999 House of Lords inquiry into the 1994 Chinook helicopter crash shows that a parliamentary inquiry can fulfil the same purpose as a public inquiry and bring redress, even when the Government decline to establish a statutory inquiry.
Vesting power in a single committee would reduce duplication and ensure more systematic and comprehensive scrutiny than if spread among committees. It would, as we record, be constitutionally sounder to vest Parliament with this responsibility to hold the Government to account than to vest it in an independent arm’s-length body. If it is a sessional committee of this House, it will play to the strengths of the House in terms of its membership.
The fundamental point is the need to have a body to monitor and report on the implementation of recommendations accepted by the Government. If it is a parliamentary committee, it will also have the capacity to pursue Ministers if they fail to act. There are obvious resource implications, but, as I have stressed, the need to achieve public trust in public inquiries is paramount.
Given our remit, we also tracked what happened to the recommendations made in the 2014 report. Of the 33 recommendations, which we list in Appendix 4, the Government at the time accepted 19. However, as far as we can tell, none has been implemented. In its response to the 2014 report, the Government committed, where appropriate, to legislate when parliamentary time allowed—but it has not been allowed, so there has been no change. In our report, we reiterate 26 of the recommendations made by the committee.
The Government’s response to our report was much delayed, for reasons that are unclear, but in content it is very welcome. In a meeting I had with the Minister for the Cabinet Office, he made clear that the Government took the issue seriously. That is reflected in their response. It is especially pleasing to see the word “accept” appear so many times. Of the recommendations that derived from our investigation, they have accepted all those related to the efficiency of inquiries. They have also accepted nine of the 26 recommendations that we reiterated from the 2014 report; one has been partially accepted and eight are marked as under consideration.
On effectiveness, the Government acknowledge that our key recommendation—that a parliamentary committee be established—is a matter for Parliament. However, they state that, given the importance of the issues identified by the committee, they are
“actively considering whether there is scope for wider reforms to the frameworks within which inquiries are set up, run and concluded”.
They expand on that point, including examining
“how best to ensure more effective transparency and accountability around the response to inquiry recommendations and the implementation of those which are accepted”.
Given that, it will be especially valuable today to hear from the Minister on how far the Government have advanced in undertaking their examination and when we may expect their active consideration to bear fruit.
Such plans do not detract from the need for a parliamentary committee on public inquiries, for both the constitutional and practical reasons embodied in our report. The two developments—the reform of the inquiries process by the Government and the establishment of a parliamentary committee—are complementary, not conflicting, and together can help to deliver public inquiries that enhance public trust. For that neat reason, we need to pursue the Government on their proposals for reform and to press both Houses to establish a Joint Committee.
We have the potential to ensure that public inquiries more effectively meet the needs of victims and survivors and enhance public trust in the process. It is incumbent on us to realise that potential. I commend the report to the House, and I beg to move.
Lord Grantchester (Lab)
My Lords, I thank the noble Lord, Lord Norton of Louth, for his introductory remarks and his clear, disciplined leadership of the committee. With no experience in this field on joining the committee, I was struck by how an industry has grown up around inquiries, where government action and follow-up can be haphazard in their implementation. I strongly support the main recommendation that government behaviour has to improve, with the setting up of a parliamentary committee with oversight to monitor the Government’s responses and to hold the Government to account in implementing the accepted recommendations. As the Government agreed in their response, inquiries must become effective, cost efficient and trusted to make a difference. I emphasise “trusted to make a difference” in relation to Hillsborough, which was some 35 years ago.
I had hoped that the committee would have examined the duty of candour a little deeper. However, as reported, the disciplined approach of the committee’s examinations precluded that—perhaps wisely, as it remains part of the controversial make-up of the Hillsborough law. The previous Conservative Government, in their response to Hillsborough in December 2023, ruled out acceptance of a duty of candour, which was confirmed by their rejection of Labour’s amendment to the then Victims and Prisoners Bill. Our party’s election manifesto states:
“Labour will introduce a ‘Hillsborough Law’ which will place a legal duty of candour on public servants and authorities, and provide legal aid for victims of disasters or state-related deaths”.
As discussed at Questions on Tuesday this week, implementation becomes entangled with the aspect of legal aid and the independent public advocate. I apologise to my noble friend the Minister for bringing up the duty of candour today, as it is not really part of the committee’s report, but can she say whether a way through to make progress could be made to separate the duty of candour from these other aspects and to introduce it through guidance? The Government’s response makes extensive reference to wider reforms to the framework of inquiries: on page 1; on page 4, when committing to publishing guidance; and repeatedly in annexe A and on later pages. It is difficult to name specific paragraphs when they are not numbered and there are no page numbers to the response.
The Minister will be aware that the NHS has operated under a duty of candour following the Francis report on Mid Staffs, with regulations in 2014 followed up by a National Health Service evaluation last year by Jess Hornsby. The guidance on duty of candour in the NHS was updated in October 2020. It can be debated how effective this has been; culture change can be difficult.
My contention to the Government is that this experience could inform a similar introduction on all public servants and authorities. The previous Government sought to address this by laying on chief constables of each police force a duty of candour. I pay tribute to the Reverend Bishop James Jones for his extensive work, enhanced by the Welsh Government signing the Hillsborough charter in March this year, followed by a further 50 public bodies. This complements the proposed Hillsborough law and could be replicated here in incremental steps along the way, following implementations of this committee’s accepted recommendations.
I look forward to hearing other contributions today. The encouraging aspect to reforms in this area is that they remain bipartisan through continuous improvement. As the committee’s report states at paragraph 49, it adds insult to injury if recommendations are not subsequently implemented.
Baroness Ludford (LD)
My Lords, the Statutory Inquiries Committee, under the chairmanship of the noble Lord, Lord Norton of Louth, who introduced this debate, has done parliamentarians, the Government and the public a great service through this excellent report, and I commend it on that.
It is a fitting review, 20 years after the Inquiries Act 2005, of how and whether the system is working. I normally refrain from self-congratulation about how wonderful the House of Lords is—and I had no involvement in this report—but I think this report is an exemplary example of what a second Chamber can, and does, do: deploying wisdom, experience and expertise to consider important matters of public policy.
One of the themes that most resonates with me is that of reinventing the wheel: losing sight of previous experience, conclusions and actions by failing to have a record or register of lessons learned or best practice. This report’s concern for reducing costs and delays in new inquiries by learning from previous ones is entirely justified, since the suffering of victims, families and survivors is simply prolonged not only by procrastination in setting up an inquiry but by unnecessarily extended timeframes and failure to implement recommendations.
When I was a local councillor 30 years ago in the 1990s, I would rage against the lack of corporate memory. For instance, when the power failed in a 23-storey housing block, was there an emergency generator and, if so, where was it? The local council neighbourhood office had no plans or records. Thank heavens there were a few elderly tenants around who had lived there since it was built in the 1960s, and we were able to get the lift put back on, which was crucial. Ever since, I have hated haphazard reliance on a few personal recollections in place of the rigorous central record-keeping and follow-up systems that ought to exist. I am therefore especially grateful for the very wise and important recommendations the committee has made about lessons learned, a bank of information and community of practice.
The report’s title includes the words “Enhancing public trust”, and that is the key issue. Pollsters regularly report findings of loss of trust in politicians but, while some individuals undoubtedly behave badly, I think it is more about loss of trust in governance and institutions, with promises broken, pledges unfulfilled, mistakes repeated and long delays in recognition of harms caused, let alone any accountability for failure, redress or compensation.
We have had all too many examples of failures to deliver adequate or timely accountability, redress or restitution. When inquiries lead to real change or justice—like the Hillsborough inquiry, which overturned decades of cover-ups—public faith can grow. Conversely, if recommendations are ignored or the process feels like a stalling tactic or kicking the issue into the long grass, cynicism festers. The Post Office scandal, on which we had a debate two months ago, is outrageously still dragging on because the Post Office and Government have failed to deliver fair compensation, despite an interim report on that topic nearly two years ago from inquiry chairman Sir Wyn Williams.
Public disillusion and loss of trust are very damaging to maintenance of our liberal democracy. I think the core proposals of this report, for a new joint parliamentary Select Committee—a parliamentary inquiries committee—to undertake formal implementation monitoring, and an accompanying beefing up of the Inquiries Unit in the Cabinet Office to share best practice and learn from past inquiries, are vital.
In my experience, although the victims, survivors and family members who have experienced failings, mistakes, incompetence and disasters certainly want accountability—and, if appropriate, apologies, redress and compensation—they have an overwhelming altruistic desire to try to make sure that no one else suffers the agonies that they have suffered. The content of this report, which is possibly slightly dry on the surface, is about individuals and personal suffering. Trust depends on how independent, transparent and effective each inquiry proves to be. We can aspire to a better system, and this report, if implemented, would make a big contribution to achieving that ambition.
Baroness D'Souza (CB)
My Lords, I thank the noble Lord, Lord Norton, for his wise, inclusive and perceptive chairmanship. I note the expertise of colleagues on the committee and the truly marvellous committee staff, most especially Andrea Dowsett and Matthew Burton.
The noble Lord, Lord Norton, has already outlined our main concerns and conclusions on the processes and the output of public inquiries. I will focus briefly on the value of setting up a public inquiries committee of Parliament to act on what was one of our most pressing concerns: the lack of implementation of recommendations arising from the House of Lords 2014 Select Committee report on the Inquiries Act 2005. This review, as we have heard, concluded with 33 recommendations, focusing largely on mechanisms to improve implementation.
The setting up of a dedicated unit, preferably within the Courts & Tribunals Service, was a key recommendation, the rationale being that an institutional memory of public inquiry forms and processes was lost following the closure of inquiries. As we know, this did not happen. In the interim, there have been significant ongoing and new inquiries on Manchester Arena, the Grenfell Tower fire, the Post Office Horizon scandal and the long-running use of infected blood, as well as the child sexual abuse tribunals. If the purpose of inquiries, whether statutory or not, is to insist that all measures possible must be taken in future to prevent catastrophic public disasters, the safeguards currently in place do not fulfil this duty. However, it was stated time and again that the failure to capture the experience of a given inquiry with a mandatory “lessons learned” report, preferably by the chair, was a leading factor in what some witnesses have referred to as reinventing the wheel each time and, more problematically, committing the same elementary errors in setting up and running an inquiry.
Many inquiries failed to meet their own aims because the recommendations were not implemented. The main obstacles cited by the majority of our witnesses included the absence of, among others, updated and easily available guidelines, ready advice on the more practical aspects of establishing an inquiry, and a forum especially for chairs to reflect on the long-term successes and failures of previous inquiries.
The committee believed and believes that a joint parliamentary committee should be established, the main purpose of which would be to conduct post-legislative scrutiny on implementation. Recommendations might in turn exert some pressure on government, help to shorten the length of future inquiries and possibly also bring down the costs of inquiries.
The second major recommendation on strengthening public inquiries is to boost support for the existing Cabinet unit, which we all agreed does a good job. There is an obvious need for a repository of good practice, ranging from the practical details of setting up an inquiry to engaging more effectively with expert opinion, including non-governmental experts. Some of the mechanisms might include insisting on a “lessons learned” report on what went well and not so well, commissioning further research, updating the 2012 guide, establishing a forum for chairs, further online promotion of the unit and its services, and liaising with the Civil Service and policymakers to arrive at doable recommendations.
The changes our report suggests are not in themselves radical but more a deepening of what already exists. Improvement in both the efficiency of future inquiries and the outcomes would contribute to the purpose of inquiries, which is to take all measures to prevent the catastrophic conditions that provoke an inquiry in the first place.
Lord Faulks (Non-Afl)
My Lords, I declare an interest as a member of the committee and as a participant in a number of public inquiries, whether as a witness, a lawyer or indeed a chair.
Why do we have more and more of them? What do they achieve? Setting up a public inquiry can be a useful political tool, kicking into touch an issue which is uncomfortable for the Government of the day. By the time the inquiry reports, the issue may well have become less politically salient than it was.
Inquiries almost always take longer than was intended. I say this not to impugn the integrity of chairs or other participants, but it is undoubtedly the case that the very notion of a public inquiry carries with it the expectation that it will leave no stone unturned and provide an answer to questions that courts or the normal political processes have insufficient time or resources to do. It needs a strong chair to keep the length of an inquiry under control.
The choice of that chair is crucial. Judges are frequently selected, and such inquiries are often very lawyer heavy, with the result that they can often mimic a particularly lengthy and thorough civil trial. Of course, they are very expensive. I therefore particularly endorse the recommendation of the committee that very careful thought should be given as to the identity of the chair—a judge is not always the answer—and restricting the terms of reference in such a way as to result in shorter and, we hope, cheaper inquiries.
I respect the role of lawyers in the important role they play, but the optics of serried ranks of lawyers at an inquiry and the impression that this is a great bonanza for the legal profession can be unfortunate. The choreography of these things matters.
The report suggests that a chair with specialist knowledge may well be suitable, rather than a judge. I am also impressed by the argument that a commissioning Minister should suggest an indicative deadline in terms of reference. The purpose of the inquiry may make it particularly important that it reports in time, so that it has maximum impact. Restricting recommendations to a manageable number is much more likely to result in legislation—if it is necessary—and command respect from all interested parties.
At the centre of the recommendations is the need for lessons to be learned and the sharing of good practice between inquiries. We heard of the Inquiries Unit, which provides advice and guidance to departments, but it did not seem to be quite as well known as it ought to be. We made various recommendations as to how it could be better and to make sure that the knowledge that has been acquired is sufficiently disseminated.
As others have done, I pay tribute to our chair, the noble Lord, Lord Norton, who followed our own recommendations by keeping the inquiry very much under control and making sure that our recommendations were short but highly focused. I also pay tribute to Andrea Dowsett, Matthew Burton and Emily Tallentire, who played such an important role.
I know that the Minister will respond to this report when she winds up. I am afraid I have one rather difficult question for her. It may be a question she cannot immediately answer. I posed it to the Inquiries Unit during the various hearings we had with witnesses but received no reply. It is something I have heard about from a number of those who take part in public inquiries on a regular basis. Very often, particularly in high-profile cases, a witness will give evidence to a public inquiry and that witness will already have given evidence before a Select Committee. They may say something to the inquiry inconsistent with what they said before the committee, or they may add or subtract something in a way that is perhaps significant. But the practice has grown up that no reference can be made to evidence given in Select Committees because it is regarded by those advising various chairs that this would impugn proceedings in Parliament in such a way as to violate the Bill of Rights. I invite the Minister to respond to this, because this practice, which I do not think is sound in law, is inhibiting the proper inquiry into a number of important issues.
Baroness Bottomley of Nettlestone (Con)
My Lords, I agree with all those who have warmly commended the noble Lord, Lord Norton of Louth, and of Hull University, for his characteristically rigorous, accessible, practical report, and the other members of the committee.
The noble Baroness, Lady Ludford, said that in this place we are allowed to draw on our experience, knowledge and expertise, so, I thought I would. When I became a Minister, having a public inquiry was thought to be cowardly—kicking it into the long grass and creating trouble for your successors; you were not going to do anything about it, so “Let’s have an inquiry and forget about it”. Looking at the figures—the Institute for Government, of which I am a great fan, has a wonderful chart—we see that when I was a Secretary of State, there were two public inquiries in government at that time; there are now around 20. The big offenders were in the years 2000 and 2010. I am afraid that when Tony Blair was Prime Minister, there were 15, and when Gordon Brown was Prime Minister, there were 16—I do not wish to be politically partisan; I am simply making a comment.
My experience, having been to any number of child abuse inquiries before I was a Member of Parliament, was that they always said the same thing. Louis Blom-Cooper was my great friend; I am sorry that the noble and learned Baroness, Lady Butler-Sloss, is not here. The situation was always that nobody wanted to believe the unbelievable, so the child had fallen between the cracks, nobody had picked up the bruises and nobody had recognised that the child was never seen at school or at home. There was nothing new; it was always the same; we had been through all the misery in the court and then had to go through it all in an inquiry.
What professional is really going to spill the beans in a public inquiry? If you have an inquiry in private, they are much more likely to explain why they did not follow up, what went wrong that day and what the institutional issues were. Of course, judges know nothing about these matters. That is why I support those who think you should have an expert. Louis Blom-Cooper, although a judge, was an expert in the subject.
In my case, there was a subject which was new—Christopher Clunis murdered Jonathan Zito; he was a psychiatric patient and, as with the child abuse story, nobody had followed up; he was okay in hospital and okay when he came out, but not okay when he stopped taking his medication. To me, this was an issue which we had to really ram home and reinforce to people. Since that very good inquiry—a QC, Jean Ritchie, did a very good job; I am not against lawyers on all occasions—we have had any number of inquiries on the same subject. We do not need to have the same inquiry time and again.
When it came to Beverley Allitt, the nurse who was murdering patients, I asked Sir Cecil Clothier, a QC and former health service ombudsman, to have an inquiry in private. He did it in nine months and the recommendations were excellent. We do not need to have a judge-led inquiry for Lucy Letby—there is very little new there; we have had a court case—but the key point that my noble friend Lord Norton makes is that there was no follow-up. When people talk to me about Lucy Letby, they ask, “What happened to your recommendations?” I say, “I don’t know”, because I had moved on.
The chair of an inquiry is critical—this is a serious point—and I am so pleased that the noble Lord, Lord Bichard, is going to speak shortly. He is not a QC, I understand, or a distinguished judge. He did a brilliant report on Soham, as have so many others. Currently, Sir Jonathan Michael, a very distinguished doctor who was chief executive of Saint Thomas’ and of the Radcliffe, is investigating David Fuller and the appalling Tunbridge Wells and Maidstone hospital cases. Our colleague, the noble Baroness, Lady Lampard, has done some extremely good inquiries. So let us get a chair who knows what they are doing, and not fourth time lucky as in the ridiculous child sex abuse case, which should be used as an example of bad practice—who wants a QC from New Zealand to do this?—and not like the Infected Blood Inquiry, where we should have had a panel with people on it who actually knew about health. The noble and learned Lord, Lord Phillips, had a geneticist and a public servant with him.
I know that cannot speak any longer, although I really want to. I commend the report. There is so much more to say—please, can we have a longer debate next time?
Lord Aberdare (CB)
My Lords, it was a pleasure to serve on this committee, which was brilliantly chaired by the noble Lord, Lord Norton of Louth. I echo the tributes to our clerk and policy analyst.
The committee was set up against the background of widespread concern about the effectiveness of statutory inquiries—as well as their efficiency, but I am going to concentrate on their effectiveness. They are growing in number; they take too long; they cost too much; they lack consistency, and, at the end of the day, their recommendations are often not implemented. The committee addressed all these issues, but I will only add my voice to the question of how recommendations made by statutory inquiries should be monitored and enforced. I am afraid I am bound to repeat some of my colleagues and earlier speakers.
The evidence was clear that, at present, recommendations are often implemented inadequately, or indeed not at all. As the noble Lord, Lord Norton, pointed out, the result of not learning those lessons could be further disasters. If the Government, having accepted the recommendations of an inquiry, do not actually deliver on them, how should they be held to account? The phrase “Quis custodiet ipsos custodes?”—who will guard the guardians—occurs to me from my days of learning Latin.
We looked at a range of options for this monitoring. Inquiry chairs might have a continuing role in monitoring implementation. Some chairs have indeed tried, but many might not be available or willing to undertake such a commitment and, of course, there would not be continuity or consistency between different inquiries. We looked at the idea of victims and survivors playing a role in implementation monitoring, and it is interesting we have not heard much about that aspect so far. However, inevitably, that would be informal and might raise questions of objectivity. We looked at the Australian model of independent implementation monitors reporting to Parliament, which works well. But again, these monitors work only on individual inquiries. We considered other things, including the National Audit Office, a national oversight mechanism, or upgrading the role of the Cabinet Office Inquiries Unit. However, as we have already heard, the inevitable conclusion was that effective monitoring needed to be done by Parliament.
It has always been possible for parliamentary Select Committees to review the implementation of inquiry recommendations, but this has happened for only six out of 68 inquiries since 1990. Something more is needed, as proposed in our recommendation for the Liaison Committee of this House. The Government, in their response, note that these are “for Parliament” to address, but that should not let them—or the Minister in her response—off the hook of explaining how they propose to improve the frameworks around inquiries and, in particular, in terms of monitoring. We recommended that the Liaison Committee should both monitor the implementation of our report and look to establish a new committee—either a Joint Committee of both Houses or a Lords committee—to monitor implementation.
I will end with a question and a rallying cry. First, I ask the Minister: how and when will the Government act upon the recommendations they have accepted, including undertaking a wider reform of the frameworks around inquiries as they said in their response? It would be more than a pity if a further committee has to be set up some time in the 2030s to explore why the recommendations of this one have not been implemented.
Secondly, I look to our chair, the noble Lord, Lord Norton, to promote, drive, and co-ordinate a campaign to persuade the powers that be on the Liaison Committee that a new public inquiries committee is not only badly needed but would represent an important way for Parliament and this House to contribute to the greater effectiveness of statutory inquiries, both in meeting the reasonable expectations of the public and, even more, in avoiding the potentially catastrophic result of lessons not being learned from findings.
Baroness Berridge (Con)
My Lords, it was a privilege to serve on the Select Committee. I note that I have appeared before one public inquiry, the IICSA inquiry, and I hope it is not two as I stand ready for the Covid inquiry. Last business on a Friday is an antithesis to the importance that public inquiries play in the public mind. In a 2014 report to your Lordships’ House, there were 33 recommendations, of which 19 were accepted by the Government. None of those accepted recommendations was implemented. It is ironic that so many recommendations of public inquiries suffer the same fate. This is causing harm, as noble Lords have mentioned, to the reputations of inquiries, to victims and to the taxpayer.
Victims are harmed first by the difficulty in getting a public inquiry, involving years of campaigning and fighting through every avenue you can think of—media, multiple layers of politicians who come and go, even celebrities. The evidence to our committee on this issue from Bill Wright of Haemophilia Scotland was compelling and exhausting even just to listen to. Therefore, calling for a public inquiry would be an important function of the new public inquiries Select Committee that our report recommended to Parliament. It would also be an important go-to place for MPs and Peers who are being lobbied. I join the noble Lord, Lord Aberdare, in saying that, while the decision to create such a committee is for Parliament, I would be interested to know His Majesty’s Government’s views on the matter, as I expect that they will be consulted.
Then, of course, victims go through the years of an inquiry. For many, that is cathartic and healing, but then too often, as has been mentioned, they see recommendations that they believe will prevent future harm being accepted but ignored. So, for many, further campaigning then begins. What was supposed to be the end of the road is not. This is no way to treat already injured people, so if His Majesty’s Government do not support the recommendation for the public inquiries Select Committee, what mechanism will they put in place to ensure that recommendations that are accepted are implemented, or explanations given as to why implementation is no longer possible? Of course, even if a recommendation is enacted, such as that for compensation, schemes currently being run by the Government can be cumbersome, causing further harm—the noble Baroness, Lady Ludford, recognised that. At the moment, there are similar concerns about the infected blood scheme: will His Majesty’s Government provide an update on progress?
The committee heard much evidence that, even with an Inquiries Unit, lessons are not learned from one inquiry to the next. Besides leading to time delays and duplication, this is a waste of public money. The financial cost, we have heard, is affecting the reputation of inquiries. So, in addition to the committee’s recommendations, is the Minister aware of any efforts to compare the costs of various inquiries across the different government departments? Are they learning from each other on better value for money, monitoring lawyers’ fees and infrastructure costs? Are former chairs and counsel ever asked how money could have been saved? Could the use of AI limit the costs? While the process to allow Covid health workers, the bereaved and victims of Covid to tell their experiences, in a process similar to IICSA’s Truth Project, is valuable, is that really within the scope of a statutory inquiry, as Sir Brian Leveson told us in written evidence?
Finally, I believe that His Majesty’s Government should not shy away from narrowing the terms of reference and giving indicative time limits and indicative budgets that are extendable only with ministerial approval. Enough of these inquiries have now been done to know approximately how long one will take. Also, in accordance with some of the evidence we took from former inquiry chairs, I do not think that parliamentarians should shy away from asking Questions of Ministers in Parliament. These are not civil or criminal proceedings with chairs that can be influenced by such Questions or Answers. These inquiries should not, I believe, be the long grass through which parliamentary scrutiny cannot peek.
Baroness Grey-Thompson (CB)
My Lords, I thank the noble Lord, Lord Norton of Louth, and his committee for this report. I agree with the committee’s view that inquiries can be cathartic for victims, survivors and their families. However, I am not always optimistic that such inquiries necessarily reassure them that similar tragedies are less likely to occur again. There have been countless public inquiries, national and local, into child sexual abuse in this country, yet there remains a profound lack of confidence that such tragedies will not be repeated. For years, we have witnessed a cycle of failure, apology and inaction.
I decided to speak in today’s debate because I have a Private Member’s Bill, the Regulated and Other Activities (Mandatory Reporting of Child Sexual Abuse) Bill, which has progressed through Second Reading. I do not generally think that such matters should be dealt with via a Private Member’s Bill, but it is a way to debate the topic and shine a light on the issues. I and other noble Lords have made several attempts to get this on the statute books.
On 20 October 2022, the Independent Inquiry into Child Sexual Abuse published its final statutory report, which was presented to Parliament. I and others were hoping that this would be taken up quickly. I was able to speak to Professor Alexis Jay before my Second Reading: she and others have been exceptionally helpful in moving the discussion on. I thank Mandate Now, which I have been working with over a number of years to help progress this issue. My concern is that nearly three years passed before the Government issued an adequate response to IICSA’s findings, and action on its recommendations remains even further behind. The current Government have said they will enact the recommendations in full, but that is still a long way off. I know that I and others will push for the full recommendations to be accepted.
Over the Christmas Recess, there were countless reports and column inches on child sexual abuse, which gave my Private Member’s Bill some coverage, but it should not be down to that to move the debate on. So much work goes into these inquiries; there is so much trust from people. Trust in due process must be restored for victims and the wider public, who expect accountability and change.
Your Lordships have held several debates—we have just come from one—about trust in the media. So much of that holds true to this debate: inquiries and legislation are always playing catch-up—just look at the online abuse legislation. The Internet Watch Foundation published data that shows that AI-generated sexual abuse is massively on the rise and 97% of victims are girls. Inquiries look at what happened years ago, not what is happening now and certainly not what will happen in the future, so we have to make them work better. If we do not reform, we will never catch up.
I welcome the establishment of a joint parliamentary committee. As many other noble Lords said, we need to look at how we monitor recommendations.
I and, I am sure, a number of other noble Lords have had our names on reports that have sat on shelves and not gone very far. I authored one in 2017—a report, not an inquiry—about duty of care in sport. Since then, a number of governing bodies have been through the same process and come up with the same recommendations. We need to do better. I look forward to supporting the noble Lord, Lord Norton of Louth, in his continued work.
Lord Hendy (Lab)
My Lords, I too had the pleasure of serving on this committee and add my tribute to the noble Lord, Lord Norton, chair of the committee, and Andrea Dowsett, clerk to the committee, and her team for conducting this inquiry—as exemplary as an inquiry into inquiries should be.
Over some 40 years of practice at the Bar, I have appeared as counsel in inquiries, usually for the bereaved and injured. I seek to make four points—two by way of footnote and two of more substance. The first footnote is that we had a discussion in the committee about the role of an inquisitorial, as opposed to adversarial, process. This is uncontroversial: an inquiry is obviously an inquisitorial process, conducted by the chair with his or her counsel within the terms of reference; as opposed to an adversarial process, which occurs in the courts and tribunals of the country, where the parties define the issues, and decide what evidence to call, what questions to ask and so on.
However, I turn to the slight misunderstanding there was among some witnesses, who appeared to think that cross-examination was a technique appropriate only in an adversarial process. I remind the House that the techniques of examination-in-chief, cross-examination and re-examination are used in forensic inquiries of all kinds. In an inquiry nowadays, although the rules usually say that the questions are put by counsel for the inquiry, we heard evidence that pointed to a discretion on the part of chairs to allow counsel for parties to ask questions under some circumstances. I remind the House of that area of discretion.
The second footnote is to take up a point made by my noble friend Lord Grantchester about the duty of candour. He explained the utility of that duty in various fora. I remind the House that the duty of candour emerged in the administrative law context of judicial review. All it means is that public authorities have a duty to lay all the cards on the table and not just those that support the decision that is being impugned in the proceedings. It would be advantageous to adopt that in future public inquiries.
My third point is to endorse recommendation 6 of the committee, which is that the Liaison Committee of this House should supervise the implementation of the recommendations of the committee. This leads me to my fourth and final point. Recommendation 7, that there should be a joint public inquiries committee to supervise the implementation of the recommendations of public inquiries, seems such a good suggestion. However, I am unclear about the mechanism for the establishment of such a committee. Will the Government do everything that they can to implement whatever that mechanism is so that we end up with such a Joint Committee?
Lord Bichard (CB)
My Lords, as a former chair of a non-statutory inquiry, the Soham inquiry, more recently chair of an expert group advising the Infected Blood Inquiry, and a witness before four public inquiries, I was naturally very interested in reading the report. I very much welcome it and agree with the vast majority of the recommendations.
I want to touch upon two issues. The first is the importance of the independence of the chair of any inquiry. It is important to retain the trust of the public, if the inquiry is to look objectively at the events which led to it being set up. It is also key to it being able to make robust recommendations. Nothing in the report, or in the Government’s response, directly contradicts any of that. But we need to be careful that putting an emphasis on the importance of a community of practice, with which I agree, coupled with a stronger Inquiries Unit in the Cabinet Office, does not lead to excessive prescription. The proposal in the Government’s response for templates for secretaries sounded prescriptive to me. We should be careful about that.
I have similar concerns about the committee’s own recommendations that inquiries should
“use policy-making and Civil Service expertise to support chairs in making practicable recommendations”
that are implementable. I have to tell your Lordships that necessary changes in policy and practice do not always look practicable or implementable at the time that they are made. Sometimes they might even look a bit inconvenient to officials. Again, we need to be careful that there is no pressure brought to bear on chairs to produce recommendations that are convenient to Ministers, officials or even the Cabinet Office.
This may seem an odd point, but I am uneasy at the suggestion that guidance on inquiries should include advice on how to engage with the victims and who should lead on this. The relationship between a chair and the victims or their families is pivotal to the credibility of the inquiry and its effectiveness. Chairs should be left to lead on this. Sir Brian Langstaff at the Infected Blood Inquiry has done a magnificent job in difficult circumstances. Again, we should be careful not to, for example, encumber the situation by departmental officials developing their own relationship. They will often be seen as part of the problem, not part of the solution.
I am going to be inconvenient here, I am afraid, but my next point is on the implementation of inquiry recommendations. This is paramount and too often, as the report says, overlooked. That is why I included in my inquiry report not just a recommendation to reconvene in six months but a recommendation that the Government should at the same time report to Parliament. It seemed to work pretty well. Without it, I doubt that we would now have a vetting and barring scheme. I doubt that we would have a national police intelligence system. But, as the report says, too often the recommendations are ignored.
The committee considered a number of options. I have my doubts about both a Joint Committee and a House of Lords-sponsored committee, simply because they are too distant from the issues that are under consideration. I would prefer to see the Select Committees in the other place taking responsibility for this monitoring process and for them to be expected to report, not allowed to consider whether they report. It should be a mandatory part of their responsibilities.
By the way, finally—I am sorry about the time—I do not know why we suggest that chairs should be excluded from any role in monitoring or implementation. They certainly should not be campaigning, but the people who have the greatest knowledge and greatest investment in some good coming from often tragic circumstances are the chairs and we should retain their involvement.
Baroness Sanderson of Welton (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Bichard. He has just ably demonstrated why his Soham inquiry is so regularly cited as one of the best examples of how inquiries can effect real and far-reaching change.
I am afraid that today I am going to repeat the main points that everybody else has made—you can definitely see a theme here. It became very clear very quickly that the severe and biggest weakness in the inquiry system is the lack of any formal structure for monitoring. I have worked on and helped with inquiries over the years and it came as quite a surprise to me that I had not actually thought about this before.
I have been involved in trying to deliver inquiry recommendations, both the interim reports for IICSA and for Grenfell. That experience has taught me that it is really hard to get inquiry recommendations over the line. They span different departments, which means that it is very difficult to get people to take responsibility. It requires a political will and a political momentum. As has been said, inquiries take quite a long time, so the person who called the inquiry in the first place tends to have moved on.
Even when you get over those hurdles and to the point where you have delivered recommendations, you are then reliant on GOV.UK to communicate that to those affected. Frankly, GOV.UK is not up to the task. It is very dry, you cannot isolate or identify a recommendation that you might be interested in and see where it is in the process, and people just give up, frankly—and I do not really blame them.
When I was working in this area, we found a lot of complaints that it was taking too long, with people asking when it was going to get done, etcetera. They were completely justifiable complaints. We did not ever hear a doubt that it would get done; we just heard that it was taking too long. Something has changed in recent years. I do not know if that is because of the number of inquiries or the nature of the inquiries and the programmes they have led to, but what has undeniably happened is that we now have a backlog of undelivered recommendations across a range of inquiries. That is a problem.
As well, more recently, we are seeing a bit of a problem in that people are accepting recommendations because they want to show that they are accepting them. However, they accept in principle and they do not give any pathway or any sense of how these recommendations will be delivered.
Back to the victims and survivors affected, we are left with people losing trust in the process. I am hearing from people, “Well, what’s the point, because they’re never going to implement the recommendations anyway”. That really is a problem because, as others have said, public inquiries are expensive and long but are a hugely important part of our democratic process, because they step in when the worst thing has happened. They are there to find out what happened and to prevent it from happening again.
As our very able chair, my noble friend Lord Norton of Louth, said, the point is to not repeat the mistakes, but the problem is that if we are not implementing the recommendations, there is a danger that we are repeating the mistakes. In the territory of public inquiries, I am afraid that those mistakes are very often literally fatal mistakes.
As others have asked, I would be really grateful to hear what the Minister has to say about what they are looking at. There are other alternatives: there is Inquest and the national oversight mechanism, and there is the independent public advocate. But we need something in place to put right this wrong before it threatens trust in the whole system.
Lord Carter of Haslemere (CB)
My Lords, what a privilege it is to follow such a distinguished line-up of speakers. I commend the noble Lord, Lord Norton, on his brilliant report and his committee. I have two points—although my second point will inevitably echo some of what others have said.
First, the Statutory Inquiries Committee recommends that Ministers should keep in mind the option of holding a non-statutory inquiry and then converting it if witnesses fail to co-operate. I agree—but is this not a golden opportunity to be bolder and to go slightly further than that? As witnesses, including Bishop James Jones, said to the committee, the biggest difficulty is the prioritisation of statutory inquiries over non-statutory inquiries. The 2005 Act has given a sense of hierarchy, based mainly on the fact that only statutory inquiries have the power to compel evidence.
This could easily be overcome by legislative change. The more inquisitorial approach of non-statutory inquiries, with less formality and with swifter and less legalistic processes—I agree with the noble Lord, Lord Faulks, that statutory inquiries have become too formalistic and almost adversarial; I say that with respect to the noble Lord, Lord Hendy—could then make them the norm for most inquiries, instead of being perceived as the inferior option by victims. Statutory inquiries would then be reserved for exceptional cases, such as Covid. This would, as the title of our debate says, enhance public trust in non-statutory inquiries.
In their response to the committee three months ago, the Government said that they are
“actively considering whether there is scope for wider reforms to the frameworks within which inquiries are set up, run and concluded”.
That is excellent, but that was three months ago. Have they reached a conclusion? I am looking forward to hearing the Minister’s answer.
Secondly, the Statutory Inquiries Committee’s report chimes with a recent report by the Committee on Standards in Public Life, which emphasised the need for public bodies to learn lessons so as to respond better to early warning signs about emerging risks. There can be no better way to learn lessons than from recommendations of public inquiries. Only two weeks before the report we are now debating was published, the recommendations from phase 2 of the Grenfell inquiry were released, which the Government said must be a
“catalyst for long-lasting, systemic change”,—[Official Report, Commons, 26/2/25; col. 777.]
to prioritise the safety of high-rise blocks. That is so true, but what a pity that was not done following a very similar recommendation, three years earlier, from the inquest into the Lakanal House fire disaster. That was just three years before the Grenfell refurbishment, which resulted, as we know, in the most awful, but tragically avoidable, loss of life.
There are many examples one could point to. This is not about the Government being compelled to implement inquiry recommendations; it about putting in place a system for holding the Government robustly to account for any refusal to accept a recommendation or a failure to implement those they have accepted. The Statutory Inquiries Committee hits the bull’s-eye by recommending a new Joint Select Committee of Parliament: what an excellent and long-overdue change that would be. Ideally, it would also include prevention of future deaths reports by coroners within its remit, which are as serious as many recommendations of inquiries.
So far, in response to the Grenfell inquiry, the noble Lord, Lord Khan, and the Government have agreed only to publicly accessible records of inquiry recommendations and annual reporting to Parliament. That is not remotely the same thing. It is very likely to mean that important inquiry and inquest recommendations, often costing tens or hundreds of millions to produce, will fall through the implementation net. As the Committee on Standards in Public Life noted, valuable lessons will not be learned which could prevent future tragedies.
Lord Addington (LD)
My Lords, I thank the noble Lord, Lord Norton, for chairing the committee. I was one of its members who did not have a legal background, and I was not made to feel too much like I was running to keep up the whole time. It was an interesting process, because we looked at something for which agreement was established pretty early on: that the committee itself might have been a moment in the process of solving something, but action after it had reported was the important thing. If we lost sight of that, there was absolutely no point in meeting in the first place.
The way to do this—we spent a great deal of time looking at this; I will not repeat words that have already been said or are presented in the report—was as efficiently as possible and to pay attention to the lessons learned before. We also had a very interesting discussion about the most appropriate ways of getting at the truth—ones that we should all pay attention to. The fact that distinguished lawyers said, “It’s not always the way lawyers traditionally do it that is important”, is something that everybody should listen to.
When an organisation criticises itself and its brethren, pay attention. Organisations know their own faults, even if they do not admit them very often. The same is true about making sure that something happens here. This has to be something that affects Parliament. A committee of both Houses would be best because, at the start of a Government, the Government may feel that they have all the time in the world, but they will not do so in three years’ time.
We also have a huge backlog of things to go through. If the Government are going to be brave, as we understand they will be, we must get down something that states what the priorities are and what is standing. The first phase will be the most difficult because there is a huge backlog of recommendations to bring into law. It may only be smaller adaptations to bits of law going through and an emphasis going down—we have all played this game long enough to know that—but it is about how you get a structure that says you are addressing things. Indeed, it is about looking back and saying, “We’ve subsequently covered this”; proving it and going through are important.
Those things will happen only if the Government are under pressure from Parliament to make sure that they are happening. We all know that all Governments have their own wonderful schemes they have thought out and that, really, nothing should get in the way. In effect, that is saying, “Things have gone wrong”, and correcting on the way through. By the way, in my experience, no one party is removed from this process. They all have a series of priorities. This is a break to say, “No matter what your priorities are, something has gone wrong. We’ve got to address this now”. I hope that, when the Government respond, they will bear that in mind. It is not an easy thing to do; if the Government are going to do something about it, I salute their bravery, because they have to do it.
This will not happen if we continue to kick it into the long grass. The noble Baroness, Lady Bottomley, who does not seem to be in her place, gave us a good example of the long-grass punt that is going on. If we are to get away from that, including structurally, we need from the Government undertakings that once again refer back to this monitoring committee that will come about. The noble Lord, Lord Bichard, came up with another way of doing it, but it is still the same thing; it is still the same input into Parliament to say that we will not go back to that way of saying, “Well, we’ve done something, but it will be somebody else who has to deal with it—and who knows what will be happening by then?”. That is clearly the underlying message around what has happened, or has in effect ended up happening, in the past.
I hope that the Government would have no objections to some of the things about gathering good information on how you run a committee. It was sometimes the case that people sat there and said, “You mean you don’t do this? You mean you disregard what others have done?”. I had never been through this before. People were nodding and saying, “Yeah, this is how it happens. I thought it was ridiculous that we weren’t doing that”. I hope we can have a happy “yes” on that.
I could go on, but I would end up repeating myself. We must make sure that the process of a public inquiry is something that leads to action. We must make sure that the recommendation about time becomes very important in that process; and that the interim reports, which are a spur to action, are also used. If we do those things, we can give a bit of faith back to the process whereby we look at real problems and come up with solutions that we in Parliament have identified.
Baroness Finn (Con)
My Lords, public inquiries are supposed to shine a light into dark corners. Too often they resemble a candle flickering in a drafty room—costly, slow and easily extinguished. When they work, they deliver truth, justice and change. When they fail, they become a bureaucratic cul-de-sac, a place where answers go to die, as the noble Baroness, Lady Grey-Thompson, pointed out.
Therefore, I thank my noble friend Lord Norton of Louth and all the members of the committee for their excellent report. As my noble friend set out so eloquently, the report provides clarity on what many of us have long suspected: while inquiries remain essential to good governance, their delivery too often falls short—on speed, cost, follow-through and, above all, accountability.
I also thank the Government for their constructive response to the report, but there is a wide gap between agreement in principle and reform in practice, and there are too many areas where the answer remains, “Not now, not yet”. We agree with much of the committee’s report, and we are grateful to the committee for taking evidence from the then Cabinet Office Minister, the Member for Brentwood and Ongar in the other place, as part of its inquiry. While in government, we took important steps in the right direction, not least in establishing the Cabinet Office Inquiries Unit in 2019, in line with the recommendation of a 2014 report. We are pleased that the Government have engaged positively, but we have some questions that I shall come to later.
For 84 years, public inquiries in this country were given legislative force by the Tribunals of Inquiry (Evidence) Act 1921. The entire Act is less than two pages in length; under its provisions, it was Parliament that established a public inquiry and it was to Parliament that the tribunal of inquiry submitted its findings. Reports issued under these inquiries were perfectly capable of causing difficulty and embarrassment for Governments of whatever persuasion. These inquiry tribunals enjoyed many of the powers of the High Court in compelling the production of documents and witnesses. The noble Lords, Lord Carter and Lord Faulks, have pointed out that we do not always need statutory inquiries to achieve that.
Fast-forward to 2005 and, against significant opposition from NGOs and judges, the previous Labour Government replaced the two pages of the 1921 Act with the 35 pages of the Inquiries Act 2005. Those 35 pages place exclusive power in the hands of Ministers to establish public inquiries, select a chair and panel, set the terms of reference, restrict public access to evidence and redact the content of any report ultimately produced. This remarkable Act was justified on the grounds that the expense and delay in conducting inquiries under the 1921 Act had become unacceptable. Yet here we are, 20 years later, as the noble Baroness, Lady Ludford, said, and all sides of the House largely agree that the more restricted inquiries under the 2005 Act are just as slow, expensive and cumbersome as those undertaken before its enactment.
Indeed, the Government now accept that inquiries established under the 2005 Act take too long and are too expensive. In the financial year 2023-24, the direct public cost of ongoing UK inquiries had exceeded £130 million, and, on average, inquiries are taking nearly five years to complete their work, as we have heard today. They are often ineffective. Recommendations accepted by Ministers are not routinely implemented or even tracked—I was struck by how many noble Lords emphasised that point today, including the noble Baronesses, Lady D’Souza and Lady Grey-Thompson, and the noble Lord, Lord Aberdare. My noble friend Lady Sanderson has demonstrated the practical problems that she has encountered, and my noble friend Lady Bottomley highlighted the failure to follow up a number of recommendations from previous health inquiries. Despite this, and as the committee highlighted in its report, public inquiries can be an effective way to establish facts and identify where mistakes are made and who is accountable for them.
I suggest to the House that a successful inquiry requires three things. The first is the autonomy, authority and coercive powers to establish the facts surrounding a matter of public concern. We have seen all too many instances of public inquiries struggling to establish the facts of the matter as relevant documents, in a manner all too convenient for those under scrutiny, simply disappear.
The second is the capacity to draw meaningful conclusions from the facts it discovers and to offer useful recommendations based on those conclusions. It is vital that the public policy recommendations are of a kind that Ministers can act on. The noble Lord, Lord Faulks, talked about the role of lawyers in inquiries, but lawyers are not always best placed to make such recommendations.
The third is the willingness of Ministers to consider and, if they agree, implement the inquiry’s recommendations. Here, I fully recognise that successive Governments must accept their share of responsibility for not being as expeditious in accepting recommendations as they ought to have been—this implementation point has been repeatedly raised today.
Inquiries should always seek to conduct their work in timely way, so that lessons can be learned as quickly as possible and costs can be kept to an acceptable level to protect taxpayers’ money. Ministers should also seek to respond to inquiries in a similar timely way, so the public can have trust that inquiries are being taken seriously. When Ministers accept recommendations or make commitments to consider them, they should be held to their commitment.
We therefore welcome the Government’s decision to accept many of the committee’s recommendations, including on the format of future inquiries, proper consultation of victims and survivors, and stronger Cabinet Office capability. The Government have said that they will implement these recommendations through updated Cabinet Office guidance. Can the Minister confirm when this work will be complete and commit to updating the House with the full guidance at that point?
The Government have also committed to better resourcing of the Cabinet Office Inquiries Unit. This is a welcome step; Ministers must not treat each new inquiry as though it is the first. My noble friend Lady Berridge correctly identified the need to monitor the cost of inquiries. Can the Minister confirm what the cost of this additional resource will therefore be, and how many additional staff members will be allocated to the Cabinet Office Inquiries Unit to deliver these improvements? I am sure she can. Will those staff also be spared from the much-publicised staff cuts currently taking place in the Cabinet Office? The noble Lord, Lord Bichard, raised the risk of a potential conflict of interest or potential overreach with the independence of the chair and the inquiry itself, so how will this actually be managed?
We very much welcome the Government’s acceptance of the need to produce proper “lessons learned” papers at the end of each inquiry. Will the Minister please confirm whether these will be published and provided to Parliament?
On the proposed Joint Committee on statutory inquiry, strongly endorsed by a number of noble Lords today, including the noble Baroness, Lady D’Souza, and the noble Lords, Lord Aberdare and Lord Hendy, we agree that this is a matter for Parliament. However, it is worth considering the scope of such a committee; there is a danger that it could become a forum for relitigating issues already settled by an inquiry and government response. One alternative would be to narrow its focus to tracking the implementation of accepted recommendations—I would welcome the Minister’s reflections on this point.
The Government have disagreed with the committee’s recommendation that legislative reform is needed at this time, and there is no explanation for this in the Government’s response. I am not certain whether it is the Government’s view that parliamentary time is too limited to deliver this, but I note that the Government are already planning legislative reform in this area through the Hillsborough law—a point made by the noble Lord, Lord Grantchester. Can the Minister explain why the Government have not taken the opportunity of that legislative vehicle to implement the committee’s recommendations?
Let us not forget what is at stake. The infected blood inquiry laid bare not only the scale of the tragedy but the failure of government to respond with candour, urgency or responsibility. As Sir Brian Langstaff explained, the Civil Service’s repeated reassurances that patients had received the best care amounted to cruelty for those who knew they had been failed. That failure must not be repeated: not in Grenfell, not in the Post Office and not in any future crisis yet to come.
I conclude by once again commending the excellent and thoughtful report and urge the Government not just to agree with the report but to implement it. Do not just publish guidance: do so transparently and soon. Do not just nod to Parliament’s role: give it teeth. Public inquiries must not become the graveyards of accountability. Let them be what they are meant to be: engines of justice, vessels of truth and proof that this country knows how to learn from its mistakes.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, it is a privilege to respond to today’s debate. I thank the noble Lord, Lord Norton of Louth, and his committee for their work on this important subject, and many of the noble Lords in your Lordships’ House today for the work they have done in and on public inquiries to date. We truly have a House of experts, and that is no less the case on this matter.
The report is a valuable contribution to the wider discussion about the efficacy of public inquiries and the adequacy of the Government’s response to them. The Government’s response to the recommendations by the noble Lord, Lord Norton, was later than it should have been, and I repeat the Government’s apologies. The recommendations contained in the committee’s report deserve very careful consideration, and we want to get this right. My response today will reflect on many of your Lordships’ comments, but this is an ongoing and iterative process, and we want to work with all noble Lords to make sure that we get it right. At the heart of what we do are the people who have experienced these issues, and it is to them we need to deliver answers. I propose to answer the general themes and then I will come to the specifics that have been raised during the debate.
The Government are clear that, when done well, public inquiries serve as an independent, legitimate and trusted method of investigating complex issues of significant public concern. They play an important role in shedding light on past injustices, giving victims and survivors a voice and rebuilding trust in our national institutions. They also play a crucial part in providing answers, vindication and the opportunity for catharsis for those who have been deeply wronged by failures of the state. Having recently met with some survivors of the Omagh bombing—the inquiry is ongoing—I am aware of the impact and importance of these processes for the people, survivors and their families touched by the initial tragedy. As the noble Baroness, Lady Ludford, highlighted, we do this work to help people. It is with their testimony and stories that I speak today.
However, the Government acknowledge the concerns regarding the cost and duration of inquiries, and the importance of ensuring they are as effective as possible, as highlighted by the committee and in the valuable contributions made in this debate. Too often, inquiries take too long and cost too much, as the noble Baroness, Lady Finn, highlighted. In 2023-24, we exceeded £130 million and the average inquiry length is now in excess of five years. These timeframes are undermining public trust in the process and, allied to the all-consuming nature of inquiries for victims and survivors, can be incredibly retraumatising—a key factor that we should never forget, as was so articulately laid out by the noble Baroness, Lady Sanderson.
The response of Governments to the recommendations of inquiries has too often been inadequate, incomplete, opaque and slow to materialise. In some instances, it has led to appalling tragic events; as the noble Lord, Lord Carter, noted, Sir Martin Moore-Bick has highlighted that important recommendations affecting fire safety were ignored in the years leading up to the Grenfell Tower fire. The government response to the recommendations made by the Lakanal House coroner was inadequate. Had those recommendations been addressed at the time, the terrible loss of life could have been avoided and we would be much further along in helping those who are still suffering.
In response to these concerns, the Government agree with the committee’s finding that the Inquiries Act 2005, the broader governance structure of public inquiries and the way the Government respond to recommendations must be improved. We are committed to examining potential reforms to enhance the framework within which inquiries are established, operated and concluded—although the noble Baroness, Lady Finn, will not be surprised if I do not yet give a timeframe or say which legislative vehicle we may or may not use. This includes considering the roles of the independent public advocate and a statutory duty of candour, both of which are crucial for the administrative justice system.
A commitment to publish a record of recommendations of current and future inquiries was an underlying theme of several contributions from your Lordships. The noble Baroness, Lady Bottomley, argued it would not only change operations in terms of current day-to-day activity but also ensure how and why we reflect on whether a future public inquiry is necessary.
In response to the recommendation from the Grenfell Tower Inquiry, we committed to publishing a record of recommendations made by inquiries since 2024 and the Government’s responses to them. We plan to quickly develop this public record so that it captures the recommendations made by future inquiries as well as recommendations made by recent inquiries that remain outstanding. They will be updated regularly and will provide a means of tracking the implementation process so that recommendations can never again be lost or overlooked. The judiciary already maintains a publicly accessible record of prevention of future deaths reports made by coroners, and the Government are now working with the Chief Coroner to improve their transparency and availability, as well as to improve accountability for responses to them. Select Committee recommendations are, of course, routinely published and responded to by the Government.
As highlighted by the noble Lord, Lord Carter, we also fully acknowledge that the approach to establishing public inquiries should not be a one size fits all. For that reason, it is important that Ministers are given a suite of options and select the appropriate inquiry format, chair and panel on a case-by-case basis, guided by the Cabinet Office Inquiries Unit. Non-statutory inquiries can be both flexible and effective, often achieving their objectives more swiftly and at a lower cost. They are certainly not the poor cousin of statutory inquiries, and there will be many circumstances where a non-statutory inquiry is the best format. Given the work that I have done supporting colleagues in Northern Ireland, I am also very aware that investigations such as Operation Kenova are another effective option for considering issues of concern and are very much supported by some of the survivors associated.
We will soon be publishing the inquiry practitioners’ handbook, as we have committed to do in our response to the recommendations of the noble Lord, Lord Norton. I hope that will be reassuring to the noble Baroness, Lady Finn. The handbook, a guide for new inquiry chairs, secretaries and officials establishing and sponsoring inquiries, has been significantly revised in the light of these recommendations. It includes guidance on the different options available to the Government when considering an inquiry.
It is important that inquiries engage with those directly impacted. The practitioners’ handbook will include advice on how best to involve victim and survivor groups from the inception of an inquiry, ensuring that their perspectives are considered and supported throughout the process. The Truth Project, established by the Independent Inquiry into Child Sexual Abuse, is an example of a way to offer victims and survivors the chance to share their experiences and be heard in a respectful way, outside of the often stressful formalities of a witness statement or oral hearing.
Moreover, we agree that indicative deadlines, where appropriate, may enhance the efficiency of inquiries. Although it is acknowledged that determining the duration of an inquiry at the outset can be challenging, we will strengthen advice that chairs maintain transparency regarding their process.
Interim reports have been recognised as beneficial tools for ensuring that lessons are learned swiftly and public confidence is maintained. We will publish guidance encouraging Ministers to include provisions for interim reports where suitable and highlight the merits of dividing an inquiry into phases—as the Grenfell Tower Inquiry did, enabling it to produce its first report in two years—or adopting a modular approach to covering multifaceted areas, such as the UK Covid-19 Inquiry.
The Government are also committed to strengthening the sharing of lessons learned from inquiries. We will require secretaries to produce lessons learned papers and, to this end, the Cabinet Office inquiries team has developed more comprehensive templates to assist—not restrict, I hope—the production of these papers. Furthermore, the Cabinet Office has helped to establish an active community of practice among inquiry teams across government to facilitate the sharing of best practice and professional development. This includes 10 separate networks covering the range of professions on inquiry teams, including inquiry secretaries, communication, finance, procurement, and knowledge and information management. These networks meet regularly to share best practice, tackle common issues, provide mutual support and, on occasion, share resources. Given the typical nature of the issues that require a public inquiry, the Cabinet Office continues to champion the development of the cross-government inquiry community.
At this point, I also want to acknowledge the stresses experienced by inquiry teams and the importance of ensuring resilience by providing an effective duty of care for inquiry teams and the civil servants who work hard to implement the recommendations of inquiries. They are exposed to details that are heartbreaking and extremely personally challenging. I thank them for undertaking this incredibly important but challenging work.
Importantly, we also agree that inquiries should be inquisitorial rather than adversarial, ensuring that the process remains fair and proportionate. Our handbook reflects the committee’s recommendations, and we will strive for swift and considered publication of responses to inquiries to enhance accountability.
In response to the noble Lords, Lord Norton and Lord Aberdare, the noble Baroness, Lady D’Souza, and my noble friend Lord Hendy with regard to the recommendation for a parliamentary committee, it will come as no surprise that I am going to say that is a matter for Parliament, but the Government would seek to actively engage and build a co-operative relationship with such a committee. We think it could potentially be a very strong force for good.
The noble Lords, Lord Norton and Lord Aberdare, asked about timings. We are actively considering reforms. This is a complex area, and we want to get it right. We will be keen to update Parliament as this works develops. As has been a theme of the day, the role of Parliament is to hold the Government to account, so I look forward to being in front of your Lordships on a regular basis to ensure that this work is progressing.
My noble friends Lord Grantchester and Lord Hendy asked about a duty of candour. As outlined in the King’s Speech, we will deliver on our manifesto commitment to implement a Hillsborough law. We remain fully committed to bringing forward this legislation at pace, but having consulted campaigners over the past few weeks, we believe more time is needed to draft the best version of a Hillsborough law. We are very aware that those families have waited a very long time, and we want to get it right for them. Our engagement with victims, families and survivors is essential to getting this right, and we will continue to engage with them in the coming weeks.
In response to my noble friend Lord Grantchester’s interesting point regarding how we can progress with some of the recommendations but not others, I would happily meet him to discuss this further—of course, that offer goes to all noble Lords with regard to some of their specific issues.
The noble Lord, Lord Faulks, asked me a very interesting question about the reach of parliamentary privilege—there are some occasions in your Lordships’ House where I get all the easy questions. If the noble Lord will bear with me, I will write to him, because I will need to seek advice from lawyers.
The noble Lords, Lord Faulks and Lord Bichard, and the noble Baroness, Lady Bottomley, asked me about the role of the chair. Senior members of the judiciary have professional skills which make them well qualified to chair inquiries, but we agree that non-legal chairs with relevant experience can be extraordinary chairs and are appropriate to have in place. Inquiries often take too long, and this is a key area, along with cost and the implementation of recommendations, that we will seek to improve in our reforms.
In response to the noble Baroness, Lady Berridge, given that I am now responsible for the issue of infected blood in your Lordships’ House, I am very grateful that she has given me the opportunity to update on progress. The Government are working closely with the Infected Blood Compensation Authority to ensure that compensation is paid as swiftly and compassionately as possible. The noble Baroness will be aware that we passed a SI just before recess to ensure that we can now move from compensation for infected people to compensation for affected people. Following the compensation scheme becoming law on 31 March, IBCA now has the powers it needs to press ahead and make payments to all those eligible for compensation. It began making compensation payments in December 2024, and as of 24 April, it has invited 475 people to start a claim, with 77 people having accepted their offers, totalling more than £78 million.
With regard to AI and general learning and how we can ensure that we are moving forward, AI could genuinely reduce costs, and we are actively considering its use as part of our reform work, both in this area and across government. On general learning, the Cabinet Office Inquiries Unit collects lessons learned documents. Through its networks, it commissions discrete lesson-learning documents from different inquiries on specific issues, and those will be used going forward.
The noble Baroness, Lady Grey-Thompson, raised a genuinely valid point; I think every Member of your Lordships’ House has been involved in drafting a report that has sat on the shelf and gone no further. It is a responsibility on us all, especially Members of your Lordships’ House, to make sure that that is not the case when we are talking about such heart-rending issues that we need to ensure are fixed.
I assure my noble friend Lord Hendy that we support the more inquisitorial approach, but that should not stop cross-examination. That will definitely be part of our efforts going forward.
I think I have only one further question to respond to from the noble Baroness, Lady Finn, but obviously I will look at Hansard and come back to her if I have missed any of her questions. With regard to costs and staffing, the noble Baroness would like to tempt me into areas where she knows I am not going to go. I appreciate the effort. I am sorry, but that is not a matter that I can reflect on and respond to today. I thank the noble Baroness for the work she did in her previous roles in getting us to where we are today, with the efforts of the Cabinet Office and the cross-departmental operations for how we can now move forward in public inquiries. There is still clearly some distance to go, and I look forward to working with her as we reflect on them in this House. I will come back to her on the matter of overreach.
While we cannot commit to immediate legislative changes, we are actively considering wider reforms and will provide updates to Parliament on our progress. The publication of the handbook and other information on a new GOV.UK inquiries page—I hope it will be slightly more accessible than previously—will underscore our commitment to effective and transparent inquiries that rebuild trust in our institutions and deliver just outcomes for all those affected.
On a personal note, it is easy for us to consider these matters dry; they are how we set up legal fora to discuss issues about where the state has not performed well. But I know, and I think all noble Lords know, that we do this because they are so incredibly important to the people who are going to go through the process and have experienced heartbreak that is beyond the comprehension of many of us. So I look forward to working alongside all colleagues in your Lordships’ House to further these objectives and enhance the inquiry process for the benefit of the public to make sure that we do them justice.
Lord Norton of Louth (Con)
My Lords, I am grateful to all those who have spoken. It has been an excellent debate. I am especially grateful to the Minister for her detailed response. I appreciate enormously what she said about a Joint Committee, and I know we look forward to her updates on the progress of the implementation of the commitments that the Government have made in their response to the committee’s report.
I am also grateful to fellow members of the committee, not least those who have spoken today. The report is very much the product of a collective endeavour, drawing on a range of experience and expertise. As the noble Baroness, Lady Ludford, said—the Minister endorsed this—the report demonstrates the strength of this House. I commend the resilience of the noble Baroness, Lady Grey-Thompson, who I believe is speaking in her third debate of the day.
I commend the point made by the noble Lord, Lord Bichard, on the importance of the independence of the chair of an inquiry. That points to the need for a very effective process for the selection of the chair. I hear what he said about the responsibility of the Commons Select Committees—he would like to give them responsibility for monitoring inquiry report recommendations—but I fear the problem is that the Select Committees in the other place are already overburdened with the tasks that they have to undertake, and I think finding time to do this would be a little too much.
My noble friend Lady Finn made some important points about the 2005 Act. As the noble Lord, Lord Carter, stressed, statutory inquiries should not be seen as the gold standard. There is a range on offer and it really is horses for courses, selecting the method that is most appropriate to deal with the particular problem.
As I said in opening, reports from public inquiries should be seen as the start of a process, not the end of one, and that applies to Select Committee reports. This report is the basis for action to ensure that public inquiries deliver on what is expected of them. That entails some action on the part of the Government. It also entails action on the part of this House—ideally, as we have discussed, on the part of both Houses, and the Minister will have heard the near-unanimous view of the House on that subject.
I think we are agreed that public inquiries need to be more efficient and more effective; I hear the rallying cry of the noble Lord, Lord Aberdare. We owe it to victims and survivors to deliver these outcomes.