Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025
(1 day, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Wilson of Sedgefield
That the Grand Committee do consider the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, I will also speak to the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025. That order, which the Secondary Legislation Committee has identified as an instrument of interest in its 41st report, will bring the provision of environmental, social and governance ratings, commonly referred to as ESG, within the regulatory parameters of the FCA. Regulation will raise standards, enhance investor confidence and reduce the risk of greenwashing. It has strong support from across the financial sector.
I will outline the importance of ESG ratings and their role. ESG ratings encompass a range of products that seek to assess the ESG profile, characteristics, risk exposures or impacts associated with the company, fund or other financial instrument. ESG ratings are widely relied upon by investors to guide investment decisions, in line with sustainability risks, opportunities and preferences. Of the £10 trillion-worth of assets under management in the UK in 2024, half had integrated ESG factors into the investment process. More than 5,400 firms were using ESG ratings during that period.
Work with the ESG ratings market has developed rapidly and without formal oversight. This has prompted concerns among stakeholders regarding transparency, governance, internal control and potential conflicts of interest within ESG ratings providers. In response to these concerns, the International Organization of Securities Commissions published recommendations for ESG ratings and data providers, emphasising the need for higher standards and appropriate oversight. The Government have acted swiftly to deliver progress on this important agenda. The consultation was issued by the previous Government in June 2023, and this Government ensured that the consultation response and draft legislation were published for technical comments as part of the Chancellor’s first Mansion House speech in November 2024. That draft has since been refined into the instrument before the Committee today.
I now turn to the instrument itself. It establishes a new regulated activity: the provision of an ESG rating where that rating is likely to influence the decision to make a specified investment. Providers of ESG ratings will therefore be required to obtain authorisation and will be subject to supervision by the Financial Conduct Authority. Recognising that ESG ratings are provided by a range of different persons, the scope of the regulated activity is designed to be proportionate to the risk of harm to avoid dual regulation and to maintain consistency within the existing regulatory framework.
The regulation contains specific exclusions to give effect to this—for example, where a firm provides ESG ratings as part of another regulated activity. To uphold the integrity of the UK market and ensure a level playing field, the ESG ratings provided to a UK customer by an overseas provider will fall within the scope of the regulated activity, except where such ratings are provided without remuneration or financial incentive.
The Government remain committed to open, competitive and internationally connected financial markets. In that context, further consideration will be given to market access arrangements for overseas ESG ratings providers. To allow sufficient time for industry engagement while ensuring timely implementation, the FCA launched its consultation on the specific regulations for ESG ratings providers on 1 December following the laying of this instrument on 27 October. The FCA’s consultation has been welcomed by industry, and its rules will be designed to be proportionate and tailored to address harms while protecting innovation, in line with the regulator’s secondary growth and competitiveness objective.
This legislation forms a central element of the Government’s agenda to promote growth in the UK sustainable financial market—one of the priority areas identified in the Financial Services Growth and Competitiveness Strategy.
I turn to the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025. This technical instrument makes changes to support reforms to UK banking regulation. It will keep our legislation on financial services effective and assist the Treasury in applying the FSMA model of regulation to set a prudential framework for banks. The instrument does not introduce any new regulatory requirements for firms.
Noble Lords will be aware that banks are required to follow a set of prudential regulations to manage their risk appropriately and maintain adequate levels of capital to protect against any losses. In addition, the biggest banks are required to hold additional loss-absorbing debt to ensure that they can be allowed to fail without the need for taxpayer-funded bailouts, as we saw in the global financial crisis.
A significant amount of prudential regulation is set out in the Capital Requirements Regulation, or CRR, which formed part of domestic law during our time as an EU member state. Following our exit from the EU, the Government have been tailoring the existing financial services framework to the UK’s needs. This includes the CRR, which will be removed from the statute book and largely restated in the Prudential Regulation Authority’s rulebook, providing more flexibility and allowing the PRA to set the relevant requirements. To do this, legislation has been passed to revoke the CRR, notably the Financial Services Act 2021 and the Financial Services and Markets Act 2023. Subsequently, this July the Government made commencement regulations to revoke certain articles of the CRR, with effect from 1 January 2026.
In that context, the Government have brought forward these technical regulations to make a small number of consequential amendments to pieces of legislation that refer to specific CRR articles, to ensure that the broader legislative framework remains coherent. Specifically, they amend the Banking Act 2009 to ensure that definitions relating to share capital instruments in banks’ own funds reflect the revocation of certain CRR articles. They also make changes to secondary legislation concerning bank resolution, the bank levy and financial conglomerates to reflect the revocation of certain CRR articles.
In summary, while this statutory instrument is technical in nature and does not introduce any new rules, it is nevertheless a necessary step in continuing the reforms to our banking regulation and ensuring that our regulatory framework remains coherent. I beg to move.
Lord Jones (Lab)
My Lords, surely these instruments must be welcomed, and surely we all want a smarter regulatory framework. I thank the Minister for his helpful and concise outlining of the regulations and the order. There is a lot of business ahead and time is of the essence, so my brevity is guaranteed.
One can only welcome the policy context as stated at paragraph 5 of the helpful Explanatory Memorandum. Can my noble friend the Minister or his department say what the Prudential Regulation Authority is? In particular, can he perhaps give some detail on how big it is and who sits on it? Who chairs it and, on the presumption that the chair is full-time or part-time, is he or she salaried and how much are they paid? Are all the PRA membership paid or are they voluntary? How often does the PRA meet? The department may not give answers now but if not, might the Minister reply by letter?
Baroness Kramer (LD)
My Lords, I will take these two statutory instruments in the order in which they are on the Order Paper, which is the reverse of the Minister’s discussion. That is not a criticism; it is just to explain where I am starting from.
The first of these two SIs removes the current assimilated law on capital requirements for banks, building societies and investment firms and replaces it with rules to be set solely by the regulator—in this case, the PRA. In effect, it removes the control of capital requirements from any intervention by Parliament. As always, I want to register my concern that an issue of fundamental importance to the financial stability of the country is, in effect, being removed from any meaningful parliamentary oversight or action.
The regulators may be experts, but they got it terribly wrong in the 2000s by misunderstanding CDOs, which triggered the financial crash of 2007-08, and by not recognising the precarious state of liquidity or lack thereof in many of the big banks, which worsened the crisis. They also turned a blind eye to the manipulation of Libor benchmarks, which damaged the UK’s reputation for integrity in financial services in ways that are still with us today—never mind, frankly, the financial damage to so many clients across the globe. Recently, the PRA has been permitting an erosion of capital requirements, almost certainly to fit with the Government’s agenda for short-term growth, rather than being based on any evidence of risk reduction, which I have looked for and cannot find.
I sat on the Parliamentary Commission on Banking Standards that examined the 2007-08 crash for nearly two years. We predicted that amnesia about how risk actually works would set in. I note that the banks are using the new leeway provided by looser capital requirements to leverage private equity funds, even though they cannot assess the risks embedded in those funds, which are, by definition, not transparent. However, of course, we recognise that those funds pay the banks’ substantial fees. It is all so predictable.
The second SI makes provision for environmental, societal and governance ratings, as related to investments, to be set in the rulebook of the FCA. Once again, what is properly a policy decision will escape parliamentary oversight and intervention. Clear rules will be welcomed by investors, but this is a contentious area. Is nuclear included? Is carbon capture and storage included? Is defence green? I am not answering those questions; I am saying that those questions naturally arise. In the Commons debate on this SI, the Conservatives basically reflected a Trumpian view of oil and gas investments—the “burn, baby, burn” view. Is that the view the FCA will follow, or will the Minister say to me, as I think he must, “That’s not up to Parliament; it’s up to the FCA”? The investment market is an international one and, frankly, investors care much less about what the rules are and much more about whether they are globally consistent. How will the FCA rules sit with the new anti-green US approach? The EU has a new ESG framework, which comes into effect in 2026. How will the UK rules sit with that? How will the UK’s overseas recognition regime work—the Minister referred to it—and what will be its parameters and consequences?
Surely, Parliament should have more of a view than just being one of the many consultees, which seems to be the current position. I continue to be very concerned about the direction of travel away from legislation, with debate, oversight and parliamentary responsibility, to rulebooks in the sole control of the regulators.
Baroness Neville-Rolfe (Con)
My Lords, I, too, rise to speak to the two statutory instruments: the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025, and the Financial Services and Markets Act 2023 (Prudential Regulation of Credit Institutions) (Consequential Amendments) Regulations 2025.
I am content with the second of these instruments, but I have some broader questions which it may be helpful to address first. My first question is a repeat of one posed in the summer. How is the Treasury getting on with the post-Brexit regulatory changes for which it is responsible? The answer in the summer was that 51% of assimilated law from the retained EU law and assimilated law dashboard had been dealt with. It seems extraordinary not to have completed this task more than nine years after the vote on Brexit. A second question is, now that we are no longer bound to match the EU, have we taken advantage of the obvious opportunities? I highlight helping smaller financial service providers and banks, addressing the perennial problem of finance for SMEs, and encouraging innovation. I look forward to hearing from the Minister on this, and on the progress of the Government’s financial services growth and competitiveness strategy, including the welcome announcement on 4 December on plans to lower barriers to authorisation for new firms.
That brings me to how our onshored EU law is being replaced by regulator rules, and how Parliament can maintain proper oversight of it. Can the Minister tell us how the Treasury and the regulators are co-ordinating the mapping exercise from the EU’s capital requirements regulation provisions into our PRA rulebook? In particular, how are the Government assuring themselves, and by extension this House, that the cumulative effect of these changes will preserve and enhance the safety and soundness of firms—a concern of the noble Baroness, Lady Kramer—and the competitiveness of the UK as a financial sector, which, given its sheer scale, is critical to the future of our country? The noble Baroness explained the importance of continued parliamentary involvement, rather than leaving everything to the regulators and their rule books. Does our Financial Services Regulation Committee, with its distinguished membership, perhaps have a role to play?
As we move further into the FSMA 2023 framework, what is the Government’s plan for post-implementation review? I know from my business experience that for success, implementation far outweighs strategy. Will the Treasury undertake a structured evaluation of whether the shift from detailed retained law to rules made by the regulator is delivering the outcomes envisaged by Parliament: high standards of prudential regulation, clear and accessible rules for firms, and a regime that supports innovation and growth? The noble Lord, Lord Jones, said he wanted to see a smarter regulatory framework, and I will be interested in the Minister’s reply. These are, I hope, constructive and broadly supportive questions.
I turn to the instrument on ESG ratings. As the Minister has said, this market has grown rapidly in recent years without formal regulatory oversight. That has inevitably led to concerns being raised around transparency, governance arrangements, internal controls and potential conflicts of interest for ESG rating providers. Both the International Organization of Securities Commissions and the OECD have recommended that national authorities bring greater scrutiny to bear on this part of the market, and I suppose that the UK was bound to fall into line. I understand the need to ensure that ratings are given in a proper way for market integrity, although I regret that the market has not sorted itself out voluntarily—though that may be difficult, given that so many territories are involved.
I am not convinced about the evidence base for intervention, in terms of harms caused by incorrect ESG ratings. I also question why the Government have defaulted to bringing organisations into the FCA’s sphere using the Financial Services and Markets Act 2000 rather than the simpler and less costly designated activities route, which the 2023 Act created. Why have the Government not started with making ESG ratings a designated activity to see whether that could cope with the issues satisfactorily? The Explanatory Memorandum simply asserts that full regulatory oversight is necessary. This is against a background of an
“entrenched culture of risk aversion”
and regulatory complexity, in the words of the House of Lords Financial Services Regulation Committee. I believe that the FCA route on ESG risks adding such needless complexity. I am sure that the Minister will want to answer this point. The Prime Minister has focused as recently as last week on the importance of growth and lighter regulation, which, as the Minister knows, I welcome. Is there a left hand/right hand issue underlying today’s apparently technical discussion? Is this use of the 2000 Act rather than the 2023 Act the direction of travel for the future? Will that deliver the simpler, smarter regulation that many of us crave?
For similar reasons, I am cautious about the state telling the market whether such ratings ought to be used at all. Companies and investors must remain at liberty to make a business decision on whether ESG ratings add value to their processes. In my view, it is not the role of government or regulators to favour particular investment philosophies or to promote one set of metrics over another. Against that background, can the Minister confirm that it is not the Government’s intention that the FCA, through its supervisory expectations or guidance, should in practice encourage or pressure firms into using ESG ratings or into favouring particular ESG ratings providers or methodologies? In other words, can the Minister assure the Committee that the regime is about the integrity of the ratings, where they are used, rather than about mandating or promoting their use?
In the same vein, can the Minister say what safeguards will be in place to ensure that ESG ratings are not indirectly hard-wired into other parts of the regulatory framework—for example, into prudential rules, disclosure regimes or stewardship expectations—in a way that would amount to de facto regulatory endorsement of specific ESG approaches without further and explicit parliamentary scrutiny? The Minister mentioned that this ESG instrument has been supported by business. Which businesses? Did they include SMEs and their representatives?
I end with a thank you. It is helpful that the Government regularly come to the House and explain the purpose of the panoply of financial regulations that are being made. This is a major constitutional and regulatory transition—hence it is right that we have the chance to examine carefully each step in the process, its progress and its broader impact. The sunlight of transparency makes for better government and better regulators.
Lord Wilson of Sedgefield (Lab)
My Lords, I thank noble Lords and noble Baronesses for the one or two questions that I have been asked. I will do my best to get through them all; I very much doubt that I will, as they came thick and fast, but, obviously, we will scour Hansard and respond by letter to anything to which I do not respond.
First, I thank my noble friend Lord Jones for his questions about the PRA. There were some questions about its consistency and how it works institutionally; I can write to him about that. The PRA produces an annual report in which all the costs and everything else that my noble friend asked about are laid out, but, if the answer is not in there, I am sure that we can come back with an answer to his question. I am pleased that he welcomes the statutory instruments that we have here.
The noble Baroness, Lady Kramer, asked a lot of precise questions, which I will try to answer. The main thing I took away from what she said was partly to do with parliamentary oversight: whether we have forgotten what happened in 2008 and why we are essentially allowing the regulators to take over on prudential regulation. Basically, we are revoking the capital requirements regulations, allowing the PRA and FCA to set rules relating to the prudential regulation of banks. Parts of the CRA were revoked in July 2025 and this will come into force on 1 January next year. This SI makes consequential amendments relating to the parts of the CRA revoked in July. This is necessary to ensure that the statute book functions properly, and there is nothing in this SI that is additional to what was there before. Obviously, the Leeds reforms and the Basel 3.1 reforms will ensure that these transitional measures will work into the future.
I turn to the questions from the noble Baroness, Lady Neville-Rolfe. On adjusting to being outside the EU, it has been nine years since the referendum; we have been in power for just over one of those years, so the question is what happened in the previous eight years to get us to the position where the noble Baroness thinks we should be.
There were also questions about cutting regulation on firms by 25%. This Government are committed to cutting administration. The Financial Services Growth and Competitiveness Strategy set out the Government’s plans to stabilise the streamlined regulatory framework for sustainable finance, prioritising policies that will have the greatest impact. This SI is one of those priorities. It improves clarity around the ESG rating methodology, giving investors greater confidence in their decisions. It will also promote more accurate understanding of how companies are evaluated. That is why the sector itself has been strongly supportive of the proposed regulations: 95% of those consulted supported them. In the Mansion House speech in November 2024, the Government published the consultation response and draft legislation, and we are now following on from that. Some 5,400 UK financial services firms now use ESG ratings.
As far as the international context is concerned, the EU will regulate ESG rating providers from July 2026. I believe that two or three other countries—Japan, Hong Kong and Singapore—have a code of conduct on this, and I think India is taking a similar approach.
Both noble Baronesses raised the Government’s delegation to the FCA of rules about transparency. What we have done is in line with the UK’s general approach to financial services regulation. This is founded on the Financial Services and Markets Act 2000, under which Parliament sets the overall policy framework, with the detailed regulatory requirements set by the expert independent regulators. The regulators are required to conduct an open and transparent consultation process, which includes undertaking a rigorous cost-benefit analysis before introducing new rules. The regulators are also required to keep their rules under review and to provide clarity and transparency to stakeholders now and when the rules are reviewed. They must also stay within the parameters of the statutory requirements.
As far as parliamentary scrutiny is concerned, the FCA is an independent body. It is a non-governmental public body and its independence as a statutory regulator is vital to its role. However, it is fully accountable to the Government and Parliament as to how it exercises its functions. This accountability is critical in ensuring that the FCA is advancing the objectives that are given to it by Parliament. Senior representatives of the FCA regularly give evidence to parliamentary committees. The Financial Services and Markets Act 2023 introduced secondary growth and competitiveness objectives for the FCA. This creates a clear legislative framework for the regulator to follow.
Baroness Neville-Rolfe (Con)
I thank the Minister so much for saying that he will look at the details—we asked a lot of detailed questions—and follow up, as he has done on previous occasions. That is extremely helpful and much appreciated.
I want to come back on a couple of points which might be the subject of correspondence. First, on the pace of change, this 51% and how we are getting on, I appreciate that we were in power for a lot of the time. However, there is a common wish that the regulatory regime should be up to date. We did a lot of work and some of that the Government have, fortunately, moved forward with. How are we getting on?
Secondly, I focused on small business because smart regulation is so important to small business. The Minister did not talk much about that. Could he follow up a little more on the good things that I think are planned? On ESG, he mentioned the number of firms. Does that mean that there is a de minimis rule with ESG? If so, I would be interested to know whether small companies are not covered by this regulation—or will they get a lot of extra burdens as a result of rules that are not that relevant?
The Minister did not really answer on why we are using the 2000 Act rather than the 2023 Act. The Treasury has done it this way for this instrument, and I understand that. I am interested to understand why it is being done that way and whether there would be a quicker, smarter approach using the powers in the 2023 Act as well. But with that, I thank the Minister for his full and helpful reply.
Lord Wilson of Sedgefield (Lab)
In response to that, we are using the legislation that we are using essentially because it is the appropriate piece of legislation that we need for what we are introducing today, but I will obviously give her a fuller answer on why that is. As far as small businesses are concerned, 5,400 UK financial service firms used the ESG ratings in 2024. The FCA analysis said circa 80 providers are active in the UK ESG ratings market, with potential growth of up to 150 providers. Globally, the top five providers represent 75% of the market. That is the make-up of the industry. As to whether the small companies were consulted, we can get that information to her.
Baroness Neville-Rolfe (Con)
I am interested in the impact of the regulations on the financial services people less than on the ESG companies themselves. The ESG companies are providing services. Some of them will be small firms; that is fine. In terms of growth and innovation—the sort of objectives that are rightly set out in the strategy—is that holding back London in an inappropriate way?
Lord Wilson of Sedgefield (Lab)
I do not think that it is holding back London and the City of London in any way whatsoever. What is important is that we have the right regulation on this. The consultation that we took part in was not just among the regulators; it was with trade bodies et cetera. It was a wide consultation. I am sure that I can get a more detailed response on the consultation to the noble Baroness.
Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025
Lord Wilson of Sedgefield
That the Grand Committee do consider the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025.
Relevant document: 41st Report from the Secondary Legislation Scrutiny Committee
Procurement Act 2023 (Specified International Agreements and Saving Provision) (Amendment) Regulations 2025
(1 day, 12 hours ago)
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Baroness Anderson of Stoke-on-Trent
That the Grand Committee do consider the Procurement Act 2023 (Specified International Agreements and Saving Provision) (Amendment) Regulations 2025.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, the purpose of this statutory instrument is to implement the procurement chapter commitments of the UK-Iraq partnership and co-operation agreement and the UK-Kazakhstan strategic partnership and co-operation agreement. Both agreements are part of the UK’s ongoing continuity trade programme following our exit from the EU.
The UK’s trade continuity programme aimed to replicate existing EU trade agreements with partner countries after the UK left the EU. The goal was to ensure that businesses, consumers and investors maintained stability and access to benefits such as preferential tariffs. These are two of the last remaining trade agreements to be updated, and the SI before the Committee today implements the procurement chapters of those agreements.
The UK-Iraq PCA and UK-Kazakhstan SPCA establish frameworks to govern our trade and economic relationship with Iraq and Kazakhstan. The UK-Iraq PCA was signed during Prime Minister Sudani’s historic visit to the UK in January 2025 while the UK-Kazakhstan SPCA was signed in April 2024 by the previous Government. The procurement chapters of these agreements broadly replicate the standards and market access commitments of the original EU agreements. Some of the language has been tweaked, however, better to reflect the specific bilateral context between the UK and these two countries.
The key distinction between the Iraqi and Kazak agreements is that the procurement market access commitments in the UK-Kazakhstan SPCA can be considered to be broadly equivalent to that of the WTO government procurement agreement, to which Kazakhstan is currently in the process of acceding. However, the market access levels in the UK-Iraq PCA are lower than this as they include only access to central government entities.
As part of the process under the Constitutional Reform and Governance Act, to enable parliamentary scrutiny of treaties, both agreements were laid in Parliament on 9 July 2025. The agreements cleared the CRaG scrutiny process on 16 October, and this statutory instrument was subsequently laid on 21 October. The procurement chapters of these agreements can take effect only once the agreements have been implemented in domestic legislation. This statutory instrument will achieve this by updating Schedule 9 to the Procurement Act 2023 to implement in domestic law the UK’s procurement obligations under both agreements. By our adding these agreements to Schedule 9, suppliers entitled to benefit from them will be considered “treaty state suppliers” under Section 89 of this Act. This will provide them with UK public procurement access and rights equal to those afforded to UK suppliers. In turn, the agreements require Iraq and Kazakhstan to provide equivalent access to UK suppliers.
The Procurement Act 2023 (Commencement No. 3 and Transitional and Saving Provisions) Regulations 2024 are also being amended to ensure the UK’s obligations under both agreements apply in relation to contracts that can still be entered into under the previous procurement regime.
The territorial extent of this instrument is the United Kingdom. The territorial application of this instrument in relation to contracts under the Procurement Act 2023 extends to England and Northern Ireland. The same extends to Scotland, but not in respect of procurement carried out by a devolved Scottish authority. The same extends to Wales, but not in respect of procurement regulated by Welsh Ministers. The Welsh Government are therefore making a separate statutory instrument to implement these agreements in respect of procurements regulated by Welsh Ministers. The Scottish Government will be implementing these agreements separately under their own legislation in respect of procurement carried out by a devolved Scottish authority. Finally, the territorial application of this instrument in relation to contracts under the previous procurement regime extends to England and Wales and Northern Ireland.
I hope noble Lords will join me in approving this SI today, which helps to update and strengthen our relationship with both Iraq and Kazakhstan. I beg to move.
Baroness Finn (Con)
It looks as though it is the “Baroness Anderson and Baroness Finn show” again. I am grateful to the Minister for setting out the measures before us today. These regulations amend Schedule 9 to the Procurement Act 2023 to implement the procurement chapters in the new partnership and co-operation agreements with Kazakhstan and Iraq. By adding both agreements to Schedule 9, the instrument ensures that suppliers from those countries are treated as treaty state suppliers and that the United Kingdom can meet the procurement obligations we have entered into.
This is a pragmatic measure that helps maintain stability and consistency in the UK’s post-Brexit trading relationships. The agreement with Kazakhstan, as the Minister pointed out, was concluded under the previous Conservative Government and it is right that its implementation be now brought to completion.
The Minister said that the procurement provisions in these agreements broadly replicate arrangements that existed under the previous EU agreements. That continuity provides reassurance for contracting authorities and businesses operating across borders. Unsurprisingly, therefore, the instrument attracted no comment from the Secondary Legislation Scrutiny Committee and was not drawn to the attention of either House by the Joint Committee on Statutory Instruments.
While the regulations are narrow and technical, they reflect the wider importance of procurement arrangements for British businesses operating internationally and for the reciprocal access they secure overseas. On that principle, we are aligned with the Government. I would, however, be grateful if the Minister could provide three brief points of clarification. First, nothing in these regulations diminishes the need for contracting authorities to apply proper due diligence, national security checks or sanctions compliance. It would be helpful if the Minister could confirm that further guidance will be issued to ensure that contracting authorities understand the risk profile associated with new treaty state suppliers.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I welcome you all to the “Baroness Finn and Baroness Anderson show”. I am delighted that you are here with me.
I thank the noble Baroness, Lady Finn, for the very pertinent points raised. I am waiting for a magic piece of paper, and if it does not arrive in the next 30 seconds, I will have to write to the noble Baroness. The one point I can respond to is on the divergence of and impact on the devolved Governments. As I made clear in my opening remarks, there are complicated elements that Wales and Scotland need to legislate for directly, but there should be no divergence from this legislation. On the timescale of those legislative actions, I will have to write to the noble Baroness—but there is at least one magic piece of paper coming my way. Scotland has already implemented the Kazakhstan agreement and will be doing the Iraq agreement early next year. Wales’s will be implemented directly after the UK; that will come into force the day after the SI gets Royal Assent.
I have been given another, absolutely magic piece of paper—anyone would think it was Christmas—and I can now answer on whether the Government intend any changes regarding evidence in regulations to be communicated to suppliers and potential suppliers based in the UK, and when the updated guidance will follow. The FCDO will issue public communications once both agreements are ratified, alongside any guidance for suppliers. Once the agreements are enforced, they will be available to view online in the treaty series of command papers available on GOV.UK. Interested persons can also apply for monthly updates on treaties by signing up to the FCDO’s UK treaty action bulletins, which I am sure, after listening to this speech, many colleagues will wish to do. On the other points, I will write to the noble Baroness.
The Government are committed to enhancing our bilateral relationships with Iraq and Kazakhstan so that they go beyond security to include strength and co-operation on trade and the economy. As I said earlier, the purpose of this SI is to implement the procurement chapter commitment of the UK/Iraq: Agreement on Partnership and Cooperation and the UK/Kazakhstan: Strategic Partnership and Cooperation Agreement. This will provide Iraqi and Kazakh businesses with access and rights to UK public procurement equal to that afforded to UK suppliers. In turn, the agreements require that Iraq and Kazakhstan provide equivalent access to UK suppliers. I am grateful for the support of the Opposition, and I beg to move.
Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025
(1 day, 12 hours ago)
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Baroness Sherlock
That the Grand Committee do consider the Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025.
Relevant document: 40th Report from the Secondary Legislation Scrutiny Committee
The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I am pleased to introduce this instrument. Subject to the approval of this Committee, these regulations will be another significant step forward in the reform of our occupational pensions framework, building on the foundations laid by the Pension Schemes Act 2021 and the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022. The primary purpose of these regulations is to extend the legal framework for collective money purchase schemes—commonly known as collective defined contribution, or CDC, schemes—to allow multiple unconnected employers to participate. Until now, CDC schemes have been restricted to single employers or groups of connected employers.
I have been advised that there are two minor drafting errors in Schedule 2 to the SI as laid in draft, resulting in two cross-headings before paragraph 2 where there should be only one and a repetition of “regulation” in paragraph 2. The intention is for these to be corrected in the version that is made so that there is a single cross-heading reading “General” and a single appearance of the word “regulation” in paragraph 2. I apologise for these errors, but I assure the Committee that these corrections do not change the legal meaning of Schedule 2 in general or paragraph 2 in particular.
Before I move on to the detail of this instrument, it may be helpful if I give some context. The Pension Schemes Act 2021 provided the statutory framework for CDC schemes in the UK. The Government believe that CDC schemes have an integral role to play in addressing the challenges faced in our pensions system, so long as the guiding principle is to ensure that we protect the interests of members. Although good progress has been made, four in 10 working-age people are under-saving for their retirement. CDC schemes can help address this issue: by pooling longevity and investment risk across the membership, such schemes have the potential to target higher investment returns for their members than a DC scheme. CDC schemes also have potentially infinite investment horizons and no need to lifestyle investments, which means they can invest productively for longer. Industry modelling suggests that CDC schemes could boost retirement income by anywhere between 25% and 60%. The Committee will agree, I am sure, that if such increases in returns were realised, CDCs could really help address the issue of inadequate retirement incomes.
CDCs can support the wider economy, too. Longer investment horizons mean greater investment in vital UK infrastructure and the technologies of the future, such as renewable energy. Pooling can also shield savers from much of the uncertainty and risk faced by members of DC schemes, which is especially important as they approach retirement. CDC schemes offer members a seamless transition from saving into receiving a trustee-managed retirement income. We know that many people do not want—and, indeed, feel ill-equipped—to make complex financial decisions at retirement. Some 72% of DC members want a pension income yet 50% of pots are taken fully as cash, exposing them to individualised longevity risk. CDC schemes provide a target income for life and will target at least inflationary increases in member benefits at a scheme’s outset, helping members’ money keep pace with the cost of living through their retirement.
The Government want to ensure that as many savers as possible can take advantage of these benefits. That is why we have introduced this legislation. This instrument opens the door for broader adoption of CDCs: it will allow different, unconnected employers to participate in the same scheme, including smaller employers who lack the scale or expertise to go it alone. It also opens the door to CDC being a solution for specific sectors and for commercial schemes. For employers, the benefits are clear. Their liability is no greater than in a DC scheme, with contributions being made in the same way. Yet, with the aforementioned benefits, CDC schemes can be a valued employee benefit, allowing employers both to attract and retain talent in a competitive labour market.
I will now dive into the detail of this instrument, and there is, of necessity, plenty of detail. Despite the successful launch of the Royal Mail collective plan last year, CDC remains a relatively novel concept. It is critical that employers and their employees can have confidence in CDC pensions. The Government therefore make no apology for this instrument setting a high bar for entry. The robust authorisation and supervisory framework introduced by this legislation means employers can be confident they are joining well-run, well-governed schemes.
Part 2 of this instrument removes the exclusion in the Pension Schemes Act 2021 which limits the schemes that can be collective money purchase schemes to schemes used, or intended to be used, by single or connected employers. This allows for the creation of unconnected multiple employer schemes. Part 2 also amends the definition of a qualifying scheme, so that a broader range of organisations can set up a collective money purchase scheme. This will enable commercial organisations to establish unconnected multiple employer schemes.
A scheme applying for authorisation must satisfy the regulator that it meets the authorisation criteria. These criteria are listed in Section 9(3) of the Pension Schemes Act 2021. Part 2 amends the existing authorisation criteria in the 2021 Act and thereby creates additional criteria, specifically for unconnected multiple employer collective money purchase schemes. We have identified persons that we consider will have important roles in unconnected multiple employer CDC schemes and have brought these people within the scope of the “fit and proper persons” test, so that they are subject to appropriate scrutiny.
Regulation 10 amends the 2021 Act to require that the scheme has a single scheme proprietor meeting specific criteria and the specific requirements set out in new Section 14C of that Act. As we are seeking to extend CDC provision to unconnected multiple employer CDC schemes, we know there will be new entities involved in the operation and funding of these new types of CDC scheme. We want to ensure that any financing required to meet relevant costs is credible and realisable, so that it is available at the point of need. Therefore, the scheme proprietor’s ability to deliver such financing will need to be assessed by the regulator, both at authorisation and on an ongoing basis.
Regulation 10 of the instrument also inserts a business plan requirement under new Section 14A of the 2021 Act. The scheme proprietor would be required to prepare, maintain and submit a business plan to the regulator, which will include the key financial information for its financial sustainability assessment. The detailed content of the business plan is set out in newly inserted Schedule 1B to the 2021 Act.
These regulations will permit schemes that intend to operate on a commercial basis. This will involve acquiring new business through the promotion or marketing of their scheme. To mitigate the risk of schemes overpromising to gain a commercial advantage, or mis-selling, we are introducing a new promotion or marketing authorisation criterion for these schemes. The requirement is that no person has carried out promotion or marketing of the scheme that is unclear or misleading without rectification, and that the scheme has adequate systems and processes for ensuring that its promotion or marketing is clear and not misleading.
We also want trustees of these schemes to focus entirely on the interests of the scheme members and to have complete autonomy to do so. If the trustee were also to act as a person who promotes or markets the scheme, or as the scheme’s CFO, it would detract from that responsibility and create a clear conflict of interest. Regulation 5 makes a separation of these roles a criterion for authorisation. The Government’s intention is that running an unconnected multiple employer CDC scheme as a closed scheme should always be an option open to trustees, where it is viable to do so, and to the extent permitted under wider legislation. Regulation 5 therefore inserts a new authorisation criterion into the 2021 Act to ensure that trustees can choose this option if appropriate.
Finally, on Part 2, Regulation 6 imposes a mandatory deadline of 24 months from authorisation by which an authorised unconnected multiple employer CDC scheme must start being operated. This is to deter speculators. We want only people or organisations that are fully committed to providing well-run and soundly designed unconnected multiple employer CDC schemes to apply for authorisation.
Part 3 of this instrument supplements the meaning of “connected” in Section 49(2)(a) of the Pension Schemes Act 2021. This is relevant for determining whether a collective money purchase scheme is a single and connected employer scheme or an unconnected multiple employer scheme and therefore which of the two legislative frameworks applies to it.
Lord Davies of Brixton (Lab)
We have here the interaction of a number of different pieces of legislation. Of course, we are all looking forward to the Second Reading of the Pension Schemes Bill next week. We have before us the Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025. We also have the 2022 regulations that first set out the regulatory requirements for CDC schemes. In parallel, we have the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations. As the Minister and the Front Bench well know, that sets out another of the Government’s initiatives: to provide CDC schemes that can offer retirement pensions, rather than people having to buy annuities. All these different pieces of legislation interact in ways, I think it is fair to say, that are sometimes difficult to grasp.
What worries me about these regulations is that it is a bit like when you have extensive building work in your house, and the architect asks you where you want the light switches. Of course, you do not know where you want the light switches until you have lived in that house for two or three years, but you have to decide in advance. This is my concern about these regulations: we do not know how these schemes will work in practice. We are all agreed that they are a good thing, we want to see them supported and developed and we have to start somewhere, but certain aspects of what is before us today cause me some concern—or, to tone it down, some level of interest.
First, is it clear that the provisions in the Pension Schemes Bill dealing with value for money, guided retirement and particularly scale will apply to these schemes? They are closer to these schemes than they are to defined benefit. It is quite clear in the legislation that the scale requirement applies to DC arrangements. To what extent will the scale requirement directly, or indirectly through the supervision requirements, end up requiring schemes of a particular scale? My fear is that, if there is a scale requirement, it will just be another barrier to establishing these schemes that, in practice, we all want.
An associated point that has been raised is that we are now effectively getting separate CDC regimes. The existing one with the Post Office scheme is the only live example, and that is very scheme specific. We do not know how far the legislation can cover other sorts of single-employer CDC schemes. Then we have the multi-employer scheme regime and the retirement pension CDC regime. Are these regimes completely separate? To what extent is there going to be scope to make transfers from one regime to another? Are these regimes overlapping or are they distinct?
One problem is always raised. I am a strong supporter of CDC arrangements. It should be the future of private sector pension provision and we want to encourage it as much as possible, but there are problems with the way it works in practice. Ultimately, however deep it is hidden down in the workings and however many formulae you adopt to ensure fair treatment, there is always the risk of some form of cross-subsidy between members. There will be winners and losers.
With multiple employer CDCs, there is also the possibility of cross-subsidy between employers. It is inherent in the approach, in my view. I know supporters of CDC argue that it is not the case, but I think you should always be concerned about the fear of that. We do not know, because so many of the supervisory powers are given to the regulator, the detail of how they are going to be applied. Will it be made clear that this will not be an impediment to developing these sorts of arrangements? The important point is communication. We need to be clear in the regulations about the need for full and adequate communication so that potential members are fully aware of the nature of the arrangement they are entering.
My final concern is that we are heading towards a retailisation of this sort of provision. It will become a retail product, and that is not how I and many other people envisaged CDC operating. It should be a collective endeavour. I must admit that I have an instinctive reaction against the use of the word “proprietor” for the sponsor of these arrangements. I would prefer the word “sponsor”, because “proprietor” implies that it is not a collective arrangement but a commercial one.
Clearly, it will cost money to set up these arrangements and, to a certain extent, the complexity introduced by these regulations means that even more money will be required to do so. But my fear is that we will ultimately end up with underregulated insurance companies, rather than the collective and co-operative arrangement that I think is the true way forward for CDC arrangements. My fears are that it is all too complicated. We need to be clear about the overlap between these different areas of legislation and the different types of CDC arrangement. A system in which people have the right to transfer their money out of a scheme at the same time as the Government are encouraging schemes to invest in non-market based investments, means that there is a contradiction, which could be the Achilles heel of this type of arrangement.
I am taking this opportunity to express my concerns and raise them formally with the Minister. The specific questions are about multiple CDC arrangements, information communication requirements and an approach which enables people to understand what they are getting here—it is better than pure DC.
My final complaint is that the regulations persist with the business of calling these schemes “collective money purchase”. I have made the point before in these discussions that they are not collective money purchases. They are called money purchase schemes because you purchase an annuity, and these schemes are being set up specifically with the introduction of retirement-only CDCs so that you do not have to buy an annuity. I am really sorry that the department has persisted in using the term “money purchase” in these regulations when they are clearly not money purchase arrangements.
Viscount Younger of Leckie (Con)
My Lords, I am pleased to speak in this debate on the regulations extending collective defined contribution schemes to unconnected multiple employer arrangements. I say at the outset that I accept the apology given by the Minister for the changes needed in Schedule 2. I hope that when she responds she will confirm that these are minor changes, as I assume they are; that would be helpful.
By any measure, this is a highly technical statutory instrument that even seasoned pensions professionals would concede is difficult to absorb on first reading. Yet precisely because of that complexity, and the potentially far-reaching implications for the architecture of our pensions system, it is essential that this Committee scrutinises it with particular care. Collective defined contribution schemes—CDCs—are an important and promising innovation. They offer the potential for better outcomes than pure defined contribution schemes for risk-sharing across generations and smoothing investment volatility in retirement. They could and should play a larger role in the future of pension provision in the United Kingdom.
We also recognise that this SI is an enabling vehicle. It is a mechanism to broaden the CDC framework so that unconnected employers may participate. We raise no objection to that direction of travel. I am surprised that this debate will not have more contributions from other Peers. I am very pleased that we have the welcome and regular presence of the noble Lord, Lord Davies. I am quite surprised that we have no representation from the Liberal Democrats. I am not sure why that is.
Baroness Sherlock (Lab)
My Lords, I am grateful to the Committee for the handful of questions that has been offered up. I share with the noble Viscount, Lord Younger, disappointment that there are not hordes of colleagues here wanting to question these regulations. They are extremely important and utterly fascinating, but there is no accounting for taste—what can we say? I am very grateful to him and to my noble friend Lord Davies of Brixton for being here, asking such excellent questions and keeping me on my toes. I am going to try to work my way through them.
It is worth saying at the outset that my noble friend Lord Davies had quite a nice analogy about moving into a house. I moved house a year ago, and he is absolutely right—I now realise there should be power points in the middle of my kitchen where I actually use my devices and none of them are there. However, the reality is that there have to be some power points; some decisions have to be taken. At some point down the line, I may decide on additional power points and just have them put in. There may be new lights in the house, but we have to start off with lights, and we may add more lights later.
We have gone to considerable care to make sure that the system is set up as robustly as possible, but we will adapt and learn as we have experience from this. That is an important question, but it is one I am happy to offer reassurance on.
We think that CDCs are a type of money purchase because there is a type of money purchase benefits in the legislation. They are covered by the legislation applying to money purchase benefits and not DB benefits. I can see him shaking his head; I have failed to persuade him, but I will keep trying on subsequent questions.
My noble friend mentioned in passing that there are lots of different kinds of legislation and asked how they join up. I assure him they absolutely do join up. The Government have a vision for the pensions landscape. Most of these issues are coming in stages; for example, we have made our views known; we have had comments and clear steers from the Chancellor; we have had the pensions investment review, which set out the landscape, and as a result of that, we have the Pension Schemes Bill, which starts next week and which he and I are looking forward to so much. That will make the necessary adjustments to the landscape so that the Pensions Commission, which is doing its work on issues such as adequacy, can make sure that if savers, or indeed employers, are encouraged to invest more, or in different ways, the market is fit for it at that point.
These things do connect; I accept that they are complicated. One of the challenges is that pensions are very complicated, and there is a lot of money at stake, and therefore it matters—he raised the point about regulation—that we get that absolutely right.
My noble friend mentioned in passing the question about retirement CDCs. He will be aware the consultation has just closed and so more information on that will be coming out soon. He asked about whether CDC schemes will be captured by things such as the scale requirements in the Pension Schemes Bill. Because CDC schemes are a new and innovative development with the potential to offer improved outcomes, they will need to have a degree of scale and a long investment horizon to enable them to invest in a wider range of assets, including productive assets. It is right to give this new market the space to develop with confidence, but we are going to keep the requirements for these schemes under review as the market develops.
He asked about how the legislation will ensure fairness between members of different employers. Regulation 40 specifies that any adjustment to benefits that may need to be made must be applied to all members “without variation”. Regulation 40 also requires that benefit rates must be determined on the principle of actuarial equivalence and that, as he will of course be only too aware, is achieved when the expected accrual and expected contribution levels are equal over a period of time. That prevents new entrants unfairly subsidising existing members and avoids cross-subsidies between employers, which could, for example, happen if one employer had a younger workforce than another.
Both he and the noble Viscount, Lord Younger, asked about communication to members of CDC schemes. The regulations require schemes to inform members regularly and clearly that the rate or amount of benefits provided under the scheme is not guaranteed and can fluctuate. This includes providing this information at joining, annually and in retirement. CDC schemes are also required to have adequate systems and processes for communicating with members and must provide information in their authorisation application about monitoring them to help ensure the systems and processes remain effective. To ensure transparency, key scheme information must be made available on a publicly available website, including the scheme rules, a summary of the scheme design and information about the most recent actuarial evaluation of the scheme.
My noble friend commented about whether the regulation is all too burdensome or too hard to join, but as in DC schemes, members will bear all the risks of the CDC scheme in accumulation and decumulation. So, we think it is only right that we make sure these schemes are well-designed, well-run and resourced properly so that employers, members and the Pensions Regulator can have confidence in the scheme at authorisation and on an ongoing basis.
My noble friend raised the question of commercial interests. I know he was not necessarily challenging there being commercial providers; it was more about the language and how that is understood. We have worked quite hard to make sure that the authorisation criteria require a clear separation between the trustees and those funding the scheme, promoting the scheme and trying to make a profit out of it. The promotion and marketing authorisation criterion mitigates against the risk of overpromising to gain a competitive advantage, as I said in my opening speech. Although my noble friend does not like the term “proprietor”, the financial sustainability requirements are designed to prevent that person passing on to members the costs of setting up and operating the scheme.
Viscount Younger of Leckie (Con)
I thank the noble Baroness for spelling out the code of practice; we look forward to seeing that. I remain quite surprised that the Pensions Commission will finally report as late as spring 2027. I cannot believe it is going to take that long, despite the fact that pensions are generally known to be quite technical and detailed. I am not expecting the noble Baroness to comment on that, but I just wanted to put it on record. The noble Baroness did not answer my question about surpluses, and I am very happy to be written to about that. Perhaps the main question I wanted to ask, which the noble Baroness also did not answer, is about membership take-up at Royal Mail. What was the rate of take-up for the Royal Mail scheme?
Baroness Sherlock (Lab)
On the question of surpluses, the regulators will ensure that a scheme has sufficient financial resources through a range of key mechanisms centred around the role of a scheme proprietor, robust planning and ongoing regulatory oversight. The Pensions Regulator must be satisfied that the scheme is financially sustainable before it can be authorised. That would obviously involve a rigorous assessment of its expected costs, income and the strategy for recovering any shortfalls. The schemes accounts have to be submitted to the regulator on an ongoing basis to give transparency. I am not sure that that does answer his question on surpluses, but if I have an answer, I will write to him.
On the membership take-up of the Royal Mail scheme, 110,000 people have joined and around 700 have opted out. I hope that answers that question, and that I have answered all the other questions. I thank both noble Lords for their helpful contributions to this debate. This instrument will allow CDC schemes to play an integral role in the future of pensions in this country, affording potentially millions of savers access to the benefits they offer. With that, I commend this instrument to the Committee, and I beg to move.
Education (Scotland) Act 2025 (Consequential Provisions and Modifications) Order 2025
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I am grateful for the opportunity to debate this order today. As with all the Scotland Act orders we have considered since the start of this Parliament, this is the result of collaborative working between the UK and Scottish Governments. The order before us will be made under Section 104 of the Scotland Act, which, following an Act of the Scottish Parliament, provides the power for consequential provisions to be made to the law relating to reserved matters or the laws elsewhere in the UK. Scotland Act orders are a demonstration of devolution in action, and I am pleased to say the Scotland Office has taken through 10 orders in the past 12 months. This is a legacy of the historic devolution settlement, introduced by the last Labour Government, of which we are rightly proud.
Let me turn to the purpose and effect of this order. It is being brought forward to make provisions in consequence of the Education (Scotland) Act, which received Royal Assent earlier this year. This Act of the Scottish Parliament provides for the establishment of a new qualifications body—Qualifications Scotland—to replace the existing Scottish Qualifications Authority, or SQA. It also creates the office of His Majesty’s Chief Inspector of Education in Scotland, removing the inspection function from Education Scotland, which is an executive agency of the Scottish Government.
The UK Government have worked collaboratively with the Scottish Government on this draft order, which is needed for the commencement of some of the provisions of the Act. The draft order under consideration today is necessary to ensure that the functions currently exercised by the Scottish Qualifications Authority can be fully transferred to the new body being set up: Qualifications Scotland. This will ensure that Qualifications Scotland is able to deliver all of the services and products that are currently delivered by the SQA, maintaining the same functional and geographical scope.
The order also makes a number of consequential amendments in reserved areas—and to UK, Welsh and NI regulations—to reflect the replacement of the SQA with Qualifications Scotland. These are needed so that existing provisions across numerous regulations can continue to operate in the same way as they do now.
Finally, this draft order is needed to designate the newly created office of His Majesty’s Chief Inspector of Education in Scotland as a non-ministerial officeholder in the Scottish Administration for the purposes of the Scotland Act 1998. This change is needed to ensure that the person appointed to the role is a civil servant; this is required to support the delivery model for the inspectorate being set up by the Education (Scotland) Act.
This order is about making limited changes to the law only so far as is necessary to give full effect to the provisions of the education Act of the Scottish Parliament. Although the order’s provisions extend to the whole of the UK, its practical effect is limited to Scotland. Without this order, there is a risk of disrupting both the education system in Scotland and the hard work of teachers and young people across Scotland. This order is an example of devolution in action; it is about the UK Government working with the Scottish Government to deliver for the people of Scotland. In that spirit, I commend it to the Committee and beg to move.
Lord Bruce of Bennachie (LD)
My Lords, I thank the Minister for introducing this measure. It is not a controversial measure in itself, but I probably need to declare an interest as all five of my children have been through the Scottish educational system—the older two, at a time when it was the admiration of the world. The latter three did all right but, I have to say, they were in the system at a time when Scottish education was not performing to its previous high standard.
The consequence of that was the legislation that is this order’s precursor—namely, on the abolition of the SQA, which was deemed pretty unfit for purpose. One of the things that did for it in the end was Covid. Children in school—I speak of my own—were in a situation where even the teachers did not know what they were preparing them for in terms of examination. In the end, awards were given without any examinations having been taken on a “here you go” basis; that was not at all satisfactory and raised questions, which have probably gone by, around whether the qualifications the children got were as valid as they might have been. It was a very unfortunate situation.
Going back, before that there was the establishment of the curriculum for excellence in Scotland. I genuinely believe that it was introduced for the best of reasons but, over a number of years, it became clear that it simply was not working effectively. I never quite understood the Scottish Government’s problem with the curriculum for excellence. It was established not by them but by the previous Scottish Government, yet they did not seem to be willing to accept the fact that something was not working and needed to change. They felt that that would somehow be an admission of failure on their part, as opposed to what it should have been: leadership.
I have to talk about anecdotal evidence. There were concerns about the way the curriculum was influenced by political undertones. What I would call nationalistic elements were introduced into the curriculum, with some subjects taught selectively to promote Scottish otherness rather than the UK dimension or Scotland’s role within it. That caused some concern and I know that some teachers, because they were allowed to do so under the curriculum for excellence, made their own interpretations and gave children the benefit of a broader assessment.
The Earl of Effingham (Con)
My Lords, I thank noble Lords who have made valuable contributions to this debate. With all due respect, it is of great concern that the Scottish National Party has allowed educational standards to slip for way too long, thereby damaging the prospects of a generation of young Scots. The aim of His Majesty’s loyal Opposition is to do everything we can to reverse this downtrend. While this reform might be a step in the right direction towards a common goal of better education for Scotland, many questions need answering.
The previous Conservative Government understood that, to achieve educational excellence, a country needs a goal-oriented and data-driven plan. From our first day in office, we reorganised authorities and implemented new measures that reflected this belief. In doing so, we demonstrated exactly what is possible and can be achieved with a Conservative outlook on education. From when we took office until the last PISA assessment in 2022, England jumped from 27th to 11th in the world in mathematics and from 25th to 13th in reading, in addition to improvements in science. It is deeply regrettable that this was not replicated in our devolved nations. Nowhere is this more evident than in Scotland, where educational standards have continued to slip across the board, more so than anywhere else in the UK.
Scottish children now sit 32nd in the world in mathematics and science; worse, the unnecessary decline has hit hardest those who desperately want a better education. Since 2015, the Scottish National Party has said that closing the attainment gap is its priority. Why, then, have we seen the opposite: an increase in the gap between the proportion of school leavers from the most and the least deprived areas who have one pass or more in National 5s, which now sits at 22.7%? At the Highers level, that gap now sits at 38.4%—an increase from 36.9% in 2023. This appears to be a postcode lottery, which is totally unfair by anyone’s reckoning.
A key element of this detrimental outcome is driven by a qualifications body that does not achieve the purpose it exists to serve. The Scottish Qualifications Authority has been described as misaligned with the wider school curriculum. Schools aim for breadth but are forced to narrow their scope due to an increased focus on exams in later years. Unfortunately, the SQA has lost the confidence of teachers—this was confirmed by Andrea Bradley, who heads Scotland’s largest teaching union, the EIS, and who welcomed the introduction of a new qualification service—as well as that of parents and children. As was highlighted so well by the noble Lord, Lord Bruce of Bennachie, in 2020, the SQA overlooked the professional judgment of teachers, issuing grades to 125,000 students through an algorithm. The result was that young people from the most deprived backgrounds had their grades downgraded.
It is crystal-clear that change is needed. A qualifications board that has the trust of neither teachers, parents nor students is not fit for purpose; that is why the announcement of a new qualifications body seems welcome. Looking past the announcement, though, it appears to be the same engine under a slightly different bonnet. In fact, I am particularly pleased to confirm to your Lordships that I am not able to put it better than the Scottish Labour Party, which is rightly on the record as saying that this is nothing more than a “superficial rebrand”.
The primary issue with the SQA was that it both awarded and accredited qualifications. Its remit was to issue qualifications and, at the same time, to set the standards to which those qualifications would have to adhere. It was self-referential and accountable to no one but itself. Its success was judged on how well it wanted itself to do. Various education experts have surmised that it had become its own policeman; it was marking its own homework. I am sure that noble Lords would agree that that is no way to run a qualifications authority.
It appears that the SNP has now brought forward the same failed strategy with the new Qualifications Scotland—another body that fulfils the same awarding and accreditation functions. No one wishes to see a repeat of the 2020 fiasco. Why should parents, students and teachers believe that this new body will have their best interests at heart? It is of course challenging for any noble Lord to answer for the SNP’s failings, and it serves no purpose to regret this Motion formally, but devolved Governments must take responsibility for educating children seriously. They cannot simply rebrand failing organisations, cross their fingers and hope that the outcome will be different a second time around.
His Majesty’s loyal Opposition are sceptical of this change. We wholeheartedly agree with our colleagues in the Scottish Conservative Party and other education experts that the SQA’s functions should have been separated. However, if that is not going to happen, our mission must be to have a relentless focus on bettering education for Scottish children through whatever means possible; we will retain a laser focus on that.
Lord Katz (Lab)
My Lords, I thank the noble Lord, Lord Bruce of Bennachie, and the noble Earl, Lord Effingham, for their contributions to the debate; it is a distinct pleasure to respond to my fellow Whip across the divide. Both noble Lords focused not so much on the order but on its impact on the education of children in Scotland. Let me take a moment to say that we can all agree that the record of the SNP Government in Scotland on educational attainment levels is appalling.
The noble Earl, Lord Effingham, said that Anas Sarwar, the Scottish Labour leader in the Scottish Parliament, described the creation of Education Scotland as nothing more than a “superficial rebrand”. Earlier in the year, he went further in his critique of the whole of the SNP’s failure on education, saying that it was the “defining failure” of the Scottish Government under the Scottish National Party. All of us in this Room might agree with that; indeed, with many young Scots leaving full-time education today without a single Higher or equivalent qualification to their name, it is certainly not a record to be proud of.
I regret the fact that there are no SNP Peers available here to defend their Government’s record in Holyrood when it comes to education or any of the other public services that they deliver—or, mostly, fail to deliver adequately. They simply do not know what they are missing here but perhaps they are, as they might say, a little frit. However, we are here not to scrutinise the failures of the education system under the SNP but to discuss the order being brought forward at the request of the Scottish Government, on which the UK Government, the Scotland Office and the Scottish Government have worked closely together as per the normal practice of the devolution settlement.
It is clear that, as we have already discussed, this order is necessary to implement the Scottish Parliament’s Education (Scotland) Act 2025. It is important for the whole of the UK because Scottish qualifications, whether under the SQA or Education Scotland, are taken by people in other parts of the UK—that is, in England, Scotland and Northern Ireland. It is important that we align our regulations properly so that there is continuity for everybody in the UK taking qualifications offered and examined by what will be Qualifications Scotland, whose functions will become fully operational in early 2026. As I said, the order will also enable His Majesty’s Chief Inspector of Education in Scotland to be fully operational as an officeholder in the Scottish Administration, which is also planned for early 2026. Scottish Ministers simply cannot commence certain provisions in the 2025 Act until this order is made.
In closing, this instrument demonstrates the continued commitment of the UK Government to work with the Scottish Government to deliver for Scotland. As we have had a slightly critical discussion of the state of education in Scotland, I should add that, of course, voters in Scotland will have an opportunity next May to run the rule over the Scottish National Party’s record in office when it comes to education and much else. For my part, I am sure that they will find the report card wanting and will want to replace the teacher with Anas Sarwar and his Administration; I am also sure that others will have other views. With that, I commend this order to the Committee.
Infrastructure (Wales) Act 2024 (Consequential Amendments) Order 2025
(1 day, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Anderson of Stoke-on-Trent
That the Grand Committee do consider the Infrastructure (Wales) Act 2024 (Consequential Amendments) Order 2025.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, this order was laid before your Lordships’ House on 27 October 2025. The draft order is needed following the passage of the Senedd’s Infrastructure (Wales) Act 2024. The 2024 Act streamlines and unifies the decision-making processes for devolved infrastructure projects in Wales, including significant energy, waste, water and transport projects. It does this by creating a new consenting regime for these devolved projects, with a number of existing consents, authorisations and licences integrated into the new process. Previously, these devolved projects in Wales have been consented under various pieces of legislation, including the Electricity Act 1989 and the Transport and Works Act 1992. They will now require infrastructure consent under the Welsh Government’s 2024 Act.
The Welsh Government will commence the Infrastructure (Wales) Act 2024 and bring the new consenting process into force next week, on 15 December 2025. This draft order makes consequential amendments to UK legislation that falls outside the legislative competence of the Senedd. The amendments are necessary to ensure that the Act can take effect as intended and are therefore needed in advance of the new process coming into force. As the 2024 Act establishes a new consenting arrangement in Wales, it is not reflected in UK legislation in the same way that existing processes are. This order updates the relevant UK Acts to take account of the establishment of infrastructure consent in Wales by ensuring that it is treated in a way that is consistent with those existing consenting arrangements.
First, this order amends the Nuclear Installations Act 1965. Under the 1965 Act, applicants for a nuclear site licence may be directed to notify relevant public authorities about their application. This power of direction, however, does not apply to applications for nuclear generating stations, which require consent under the Electricity Act 1989. This is because the 1989 Act sets out its own requirements for consultation with public authorities. In line with this, Article 2 of this order ensures that the power of direction in the Nuclear Installations Act 1965 does not apply to projects which require infrastructure consent under the Infrastructure (Wales) Act 2024. This is because the 2024 Act similarly places its own requirements on applicants to consult with public authorities.
Secondly, this order amends the Planning (Hazardous Substances) Act 1990. When granting infrastructure consent under the 2024 Act in circumstances where hazardous substances consent would also be required, the Welsh Ministers can deem hazardous substances consent to be granted. This enables hazardous substances consent to be granted without a separate application being needed. Article 3 of this order amends the 1990 Act to create a requirement for the Health and Safety Executive to be consulted before hazardous substances consent can be deemed to be granted by the Welsh Ministers as part of an application for infrastructure consent. This ensures that the HSE can consider the risks that the hazardous substance may present to people nearby and provide science-based advice to the Welsh Ministers. This replicates the process for other consenting regimes, including under the Electricity Act 1989, which require consultation with the Health and Safety Executive in these circumstances.
This order amends Section 130 of the Finance Act 2013, which relates to the annual tax on enveloped dwellings. This tax is payable on properties that are within the UK, classed as a dwelling and owned fully or partly by a company or a collective investment scheme. Where a building is being converted for non-residential use and the conversion requires infrastructure consent under the new Welsh processes, Article 4 of this order ensures that the building will be classed as a dwelling for the purposes of the tax until consent required for the modifications is granted. This is in line with the process for conversions to buildings which require planning permission or development consent under the Planning Act 2008.
I welcome the Welsh Government’s infrastructure Act and the new streamlined consenting arrangements for devolved infrastructure in Wales. This draft order makes the necessary consequential amendments to reserved legislation, helping to ensure that the Welsh Government’s Act can take effect as intended. I beg to move.
Baroness Humphreys (LD)
My Lords, I welcome this statutory instrument, which provides the necessary consequential amendments following the enactment of the Infrastructure (Wales) Act 2024. It represents a sensible and measured step to ensure that the new Welsh infrastructure consent system is aligned with existing legislation across the United Kingdom. While this order is by its nature technical, it none the less reflects an important moment in the ongoing evolution of Wales’s governance arrangements. I therefore ask the Minister whether she views this legislation as an expression of confidence in Wales’s ability to manage and deliver major infrastructure projects and, more broadly, whether she considers it indicative of a direction of travel towards further devolution.
The Minister will know, as many of us do, that there is growing concern in Wales that the party which proudly introduced devolution in 1999 now appears resistant even to discussions about extending those powers or devolving additional services. In the last year alone, Members of both Houses have made the case for the devolution of policing, justice, youth justice and the Crown Estate, all to no avail. However, this order shows that effective co-operation between the Welsh and UK Governments is possible and productive. Can the Minister clarify whether she sees this as part of a broader commitment to strengthen that partnership and recognise Wales’s capacity to take greater responsibility for its own affairs?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for introducing this order to the Committee. The order makes minor and technical changes to UK legislation, recognising the provisions in the Infrastructure (Wales) Act 2024. That Act, passed by the Senedd in June 2024, simplified the consenting process for infrastructure projects in Wales. As the Minister outlined, energy, electricity, transport, water and waste projects can now proceed through a single approvals process monitored and applied by the Welsh Government. The effect of this order is to ensure that existing UK legislation aligns with the Act. This includes amendments to the Nuclear Installations Act 1965, the Planning (Hazardous Substances) Act 1990 and the Finance Act 2013. These changes are largely consequential, but they are necessary to make the provisions of the 2024 Act fully operational.
While we accept the technical purpose of this instrument, a number of questions arise. I am very happy to receive any answers in writing if necessary. First, are the agencies in Wales sufficiently resourced to handle the additional applications and responsibilities arising from these powers? Secondly, while the processes are broadly similar to current UK procedures, how will the Government ensure that assessments in Wales meet the same standards and rigour as those elsewhere in the UK? Thirdly, what types of projects are most likely to be affected by this new consenting regime over the next five years? I note the impact on the Nuclear Installations Act 1965, as the Minister would expect me to. Finally, do the Government anticipate this instrument acting as a gateway to further devolution of infrastructure powers to Wales? If so, how will safeguards be maintained to protect the public interest and ensure safety in vital sectors?
Third-party commentators have welcomed the aim of simplifying infrastructure approvals. It is hoped that this will encourage sustainable investment and support Wales in reaching its net-zero targets. That said, clarity and consistency in guidance will be essential if investors, the public and decision-makers are to have confidence in the new regime. Subject to the Minister’s assurances on the questions I have raised, we recognise the technical and consequential purpose of this order and support it.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I thank both noble Baronesses for their valuable, if a little cheeky, contributions to the debate this afternoon. This order provides for a number of consequential changes to UK law and is necessary ahead of the Infrastructure (Wales) Act coming into force this month. I will touch on some of the points made; I may have to write to the noble Baroness, Lady Bloomfield, but I will make sure that both noble Baronesses receive the correspondence.
On the point made by the noble Baroness, Lady Humphreys, I believe that this order demonstrates that we have genuine confidence in the Welsh Government’s ability to undertake infrastructure projects.
Touching on a related point made by the noble Baroness, Lady Bloomfield, concerning the resourcing of agencies, obviously, that will be a matter for the Welsh Government, but they have received a record-breaking budget response in the SR and have promises in the SR going forward, so they should be fully resourced. As this area is devolved, it will be a matter for them.
On more devolution, the Labour Party’s manifesto at the last general election was clear about the areas in which we were working with our partners in Wales to explore and discuss options for further devolution. What we are seeing today with this SI is genuine devolution in action, with two Governments—one in Westminster and one in Cardiff—working hand in hand to deliver for the people of Wales. I hope and expect that still to be the case after May next year when the good people of Wales continue to vote Labour.
On the point about standards being maintained, we will expect standards to be maintained, of course. I am so pleased to be opposite the noble Baroness, Lady Bloomfield, when we can talk about Wylfa; I was delighted by all her questions in the run-up because she will probably be as excited as many of our colleagues to see the development announced with £2.5 billion of investment and a genuine supply chain that will lead to a generation of jobs in north Wales and beyond.
I will reflect on the other comments made by the noble Baronesses. I close by offering my thanks for the productive manner in which the UK and Welsh Governments have worked together in preparing this order.
Judicial Appointments Commission (Amendment) Regulations 2025
(1 day, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Levitt
That the Grand Committee do consider the Judicial Appointments Commission (Amendment) Regulations 2025.
The Parliamentary Under-Secretary of State, Ministry of Justice (Baroness Levitt) (Lab)
My Lords, this amends the Judicial Appointments Commission Regulations 2013, which govern the composition of and eligibility criteria for the board of commissioners of the Judicial Appointments Commission, to which I shall refer as the JAC for brevity.
As your Lordships will be aware, the JAC is the independent body established under the Constitutional Reform Act 2005 to select candidates for judicial office in England and Wales, and for some tribunals with UK-wide powers. It is governed by an independent board of commissioners, appointed by His Majesty the King, on the recommendation of the Lord Chancellor.
One of the board of commissioners’ primary objectives is to ensure that the JAC fulfils its statutory responsibilities and obligations. These include ensuring that judicial appointments are made solely on merit through fair and open competition and having regard to diversity and good character. Commissioners oversee the selection processes, review recruitment strategies and make final selection recommendations to the appointing authority.
The current regulations set out the structure of the JAC’s board, specifying that there should be 15 commissioners, including a lay—i.e. non-judicial—chair. Of the other 14, seven must be judicial officeholder members, five must be lay members and two must be professional members—that is, people practising or employed as lawyers.
One of the purposes of these regulations is to expand the number of professional members from two to three, which will then expand the overall number of commissioners. Each of the professional commissioners must come from one of the three categories of legal professional; they must be either a barrister or a solicitor or a fellow of CILEX, which is the Chartered Institute of Legal Executives. At the moment, there is a barrister commissioner and a solicitor commissioner, but there is no CILEX commissioner. Apart from the three senior judicial members, the other 12 commissioners are recruited and appointed through open competition.
The regulations are being updated to strengthen the JAC’s capacity and ensure its continued effectiveness in judicial recruitment in two ways. First, the total number of JAC commissioners will be increased from 15 to 16, which is needed because of the anticipated increase in the volume of work. This will be done by increasing the number of professional commissioners from two to three. The requirement that they be from different professions will remain, so the effect will be that all three main legal professions—barrister, solicitor and CILEX fellow—are represented simultaneously on the board.
The reason this matters is that CILEX membership is generally more diverse than the other legal professions. Some 78% of CILEX fellows are women, and because CILEX provides a non-graduate route to become a lawyer, its members tend to be from more varied socioeconomic backgrounds. This amendment will support the JAC in its duty to promote diversity in judicial appointments by providing for a commissioner to lead on outreach in this field.
Secondly, there is, at present, an anomaly in the eligibility criteria for the senior tribunal commissioner role. These regulations will expand the eligibility criteria by including a wider range of senior salaried tribunal officers. Currently, only Upper Tribunal judges, chamber presidents of the First-tier Tribunal, chamber presidents of the Upper Tribunal and presidents of employment tribunals for England, Wales and Scotland are eligible.
The effect is that it is not open to all senior salaried members within the unified tribunal structure. In order to remedy this, the amendment expands eligibility to include all salaried members of the Upper Tribunal, certain judges of the Employment Appeal Tribunal, deputy chamber presidents of the First-tier Tribunal and deputy chamber presidents of the Upper Tribunal. This ensures equality of opportunity for those holding broadly equivalent roles, and it is a change that has been requested by the Senior President of Tribunals.
The extent of this instrument is UK-wide, and the territorial application of this instrument is UK-wide. The Lady Chief Justice and the JAC chair on behalf of the board, the Bar Council, the Law Society, CILEX, the Legal Services Board, the Senior President of Tribunals, the Lady Chief Justice of Northern Ireland and the Lord President of Scotland have all been consulted and are all supportive of these changes.
As far as public consultation is concerned, although there was a public consultation exercise for the 2013 regulations, it has not been considered necessary to conduct a further such exercise for these amendments given their limited effect. The amendments are necessary to strengthen the JAC’s capacity, provide greater equality of opportunity for those applying to be commissioners and support the JAC’s commitment to encouraging judicial diversity. I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, I hope not to detain the Committee for very long. I declare my interest as a solicitor of the senior courts of England and Wales—a professional qualification that fills me with considerable pride even now, after many years of practice. In mixed company, where no one is aware of my political or administrative responsibilities over the years, I always indicate my function, when I am asked, as being a lawyer, not a politician, because that is the priority I place on that profession.
In no way do I wish to criticise these arrangements—indeed, I think that they are very sensible—but I want to point out a little of the history here and a bit about what I think may be a misunderstanding in the composition, particularly in relation to the three professional members that we will be discussing. Before the 19th century in this country, the provision of legal services was an amorphous, muddled arrangement that caused considerable difficulties; I will not refer to Shakespeare’s view on lawyers because plenty of people since Shakespeare have had a similarly negative view.
By the time we reached the 19th century, we had ended up with a clear division between barristers and solicitors. Although many countries went down that path and went on to merge those two sides of the legal profession into attorneys or some other single name, we retained that until the Legal Services Act 2007, so who a lawyer is has probably always been, in most people’s minds, a solicitor or a barrister.
We were then joined by legal executives: fellows of CILEX. I must pay tribute to the people who had previously been described as managing clerks, in terms of their functions in offices—they were people doing enormously important jobs—because all of my knowledge of property law was given to me by the managing clerk of the firm to which I was originally articled and in which I became an assistant. I pay massive tribute to their ability and knowledge.
Originally, though, however well-equipped they were, they were not lawyers. The 2007 Act came in and redefined “lawyers”—a word that is spread around. I know that my noble friend has talked about legal practitioners; again, they are slightly different from lawyers, in my opinion. We had lawyers being redefined in 2007 as solicitors, barristers, legal executives—fellows of CILEX—and licensed conveyancers. I have to say that the word has taken on a rather broad description, frankly. A lot of solicitors now have difficulty in dealing with licensed conveyancers whose licences appear to have been granted by bodies that most solicitors have never heard of. Trademark agents, patent agents and law costs draftsmen are lawyers under the Legal Services Act 2007.
Paragraph 5.2 of the Explanatory Memorandum states that commissioners should be
“persons practising or employed as lawyers”.
This Motion has been defined by the Minister as simply being moved so that fellows of the Institute of Legal Executives are eligible to be the third lawyer. However, if you then describe lawyers more broadly in this document without defining them in the context of, specifically, fellows of CILEX—or you do not include all those defined as lawyers under the Legal Services Act 2007—it is rather confusing because, if you say “lawyers” and maintain that description, there is no reason whatever why a law costs draftsman should not be appointed, thus maintaining the diversity that the Minister rightly suggests should be brought to bear in the commission. I think that that is confusing.
I know that these documents are mostly looked at only by other lawyers, as are the constitutions of the commission. But looked at from a public point of view, or if there is an argument or a discussion, clarification of this really is necessary. The Minister made it clear and I am perfectly happy with that, but it is wrong to generalise the term “lawyers” unless you define it within the terms of eligibility in that long list I have just given of people who are now claimed to be lawyers—much to my surprise, I have to say.
I am not looking at this narrowly; I am old-fashioned and have been around so long that, as I said at the start, I always thought that lawyers were either solicitors or barristers. I did not know about this longer list because of my ignorance in not actually having looked at the 2007 Act, which I have now read. I would be grateful if the Minister would reflect on that and perhaps make it clear—it has to be made clear somewhere—that merely being a lawyer, which is argued to be necessary in having the three representatives, is not broad at all but is actually confined to that one strand of lawyers under the 2007 definition, which is to be a fellow of the Chartered Institute of Legal Executives.
Lord Sandhurst (Con)
My Lords, I am grateful to the Minister for introducing these regulations. They make technical changes to the Judicial Appointments Commission. As explained, the number of commissioners will increase from 15 to 16 and a third professional commissioner will be added. This will mean, subject to the observations of my noble friend Lord Kirkhope, that a barrister, a solicitor and a fellow of the Chartered Institute of Legal Executives will be on the panel. The regulations also expand the list of offices from which the senior tribunal commissioner may be drawn. This ensures that holders of broadly equivalent judicial offices have equal opportunity to serve.
The Minister notes that these changes are intended to help the JAC manage a higher level of recruitment. The number of exercises and recommendations has grown in recent years, and the addition of a further commissioner should assist in meeting that workload. We accept that these regulations are largely technical, but remain concerned about the structure of the JAC. The current arrangements separate ultimate responsibility for judicial appointments from Ministers who are accountable to Parliament. This can weaken accountability, fracture responsibility and leave Ministers less directly answerable when appointments fail or standards fall short.
For that reason, the Conservatives continue to propose a judicial vetting committee within the Lord Chancellor’s office. Such a committee would be appointed by and accountable to the Lord Chancellor, ensuring that appointments are made on merit while restoring democratic accountability. In doing so, it would place ultimate responsibility for judicial appointments clearly with Ministers, who are answerable to Parliament and the public.
We would be grateful if the Minister could offer a few brief points of clarification. First, will the expanded eligibility of the senior tribunal commissioner affect the independence of the JAC or the balance of judicial representation? Secondly, is any further review of the JAC’s structure planned, particularly in light of proposals for a judicial vetting committee? Thirdly, will guidance be issued to ensure that adding commissioners does not create delays or extra burdens in the recruitment process?
Finally, I touch on the observations of my noble friend Lord Kirkhope of Harrogate. He acknowledged that these arrangements are sensible, but helpfully highlighted that the definition of a lawyer has been expanded over recent years to include a much wider range—not simply barristers, solicitors and, more recently, legal executives, but licensed conveyancers, patent agents and others. He suggests that the term “lawyer” is looked at carefully if it is to mean eligibility for judicial appointments, because it needs clarification if it is not to extend to a wider range than those in the three premier categories—if I can call them that—of barristers, solicitors and legal executives. Having said that, and subject to the assurances which I have sought, we on this side recognise the technical purposes of these regulations and are content not to oppose them.
Baroness Levitt (Lab)
My Lords, I am very grateful to both noble Lords for their contributions. The noble Lord, Lord Kirkhope, declared an interest as a solicitor. The noble Lord, Lord Sandhurst, and I should declare our interests as barristers in that case. I am not sure that it is an interest; it is more an interesting fact that everybody should know about. I am very grateful to the noble Lord, Lord Kirkhope, for his interesting historical trip down memory lane about how lawyers used to be categorised. I am old enough to remember when there was talk of giving members of his profession rights of audience in the upper courts. There was the most terrible outcry from our branch of the profession—one that most of us would now think was misguided.
I utterly understand that the noble Lord is not making any criticism of CILEX fellows or suggesting that there is any hierarchy of desirability of lawyers but merely making the point that the drafting is perhaps not clear enough. Has the noble Lord looked at the Explanatory Note? That makes it clear that there will be three commissioners
“who are persons practising or employed as lawyers”,
one of whom must be a barrister in England and Wales, one a solicitor of the senior courts of England and Wales and one a fellow of the Chartered Institute of Legal Executives. The Explanatory Note, taken together with the regulations, makes it clear that there are only three categories of lawyer. The concern that the noble Lord raised about it not being clear enough has not been raised by any of the consultees. I hope that the Explanatory Note is sufficient to allay his concerns. If not, he can write to me, and we will consider the matter further, but certainly for my purposes I am content that it makes the position entirely clear.
Turning to the concerns of the noble Lord, Lord Sandhurst, about the structure of the Judicial Appointments Commission and His Majesty’s Opposition’s proposal for a judicial vetting committee sitting within the Ministry of Justice, were any such body to be created, the very first accusation would be of political interference in the judicial appointments process. It would be difficult to avoid that perception, even if it was not correct, if politicians were ultimately deciding who should be appointed and who should not. I am not suggesting for a moment that the noble Lord, Lord Sandhurst, is older than I am. I am sure that he is younger than me—he looks younger than me and possibly feels it. However, even I am old enough to remember when judges were appointed by the touch on the shoulder. The reason the Judicial Appointments Commission exists is to have as much transparency in the process as it is possible to obtain. For that reason, this Government have no proposals and no plans to introduce a body within the Ministry of Justice such as he suggests.
He raised three other points. First, on expanding eligibility, the answer to that is no. Secondly, on whether there is a further review, the answer is also no. Thirdly, on whether it will create extra delays, the raising of the number of commissioners is designed to speed up the process. We are trying to do this anticipating the increase that is going to come. The noble Lord’s further point echoed the point made by the noble Lord, Lord Kirkhope. I hope that I have answered that.
I thank both noble Lords for their constructive approach. These powers are an important tool to support diversity in the appointment of our judges and ensure that the JAC can deal with an increased volume of work.