Arrangement of Business
The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)
Good afternoon, my Lords. If there is a Division while the Grand Committee is sitting, the Committee will adjourn for 10 minutes while we vote.
Pension Schemes Bill
Monday 19th January 2026
(1 day, 10 hours ago)
Grand CommitteePension Schemes Bill 2024-26 View all Pension Schemes Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 152-III(b) Amendments for Grand Committee (Supplementary to the Third Marshalled List) - (19 Jan 2026)
The Deputy Chairman of Committees (Baroness Scott of Needham Market) (LD)
Before I call the noble Lord, Lord Davies, I point out to the Committee that there is an error on the Marshalled List, in that Amendment 30 is to Clause 10 and not Clause 9, as it says here. It makes no practical difference to the debate, but it will do when we call the amendments later.
Clause 9: Power to modify scheme to allow for payment of surplus to employer
Amendment 23
Lord Davies of Brixton
Lord Davies of Brixton (Lab)
This group raises important issues about the purpose of these proposed changes to the legislation on pension schemes. I am going to move my Amendment 23 and speak to my Amendments 25, 27, 28, 29 and 30—and I thank the Chairman for the correction. I look forward to the speech of the noble Viscount, Lord Younger, on his Amendment 26, which on the face of it asks a perfectly valid question.
The main amendment in this group, Amendment 25, seeks clarification from my noble friend the Minister about the purpose of Part 1, Chapter 2 of the Bill. This chapter is headed
“Powers to pay surplus to employer”.
Other than that, the Bill and the Explanatory Notes are silent on why the law is being changed. I will come back to that, but first I will address my Amendments 23, 27, 28, 29 and 30, which simply seek a change in the terminology used in the Bill, leaving out the word “surplus” and inserting the word “assets” instead.
I make no apologies for what may appear a pedantic point. Words are important. Later amendments from the noble Baroness, Lady Altmann, would also change the wording, so I think that there is an understanding that words are important, but what do I mean in this specific case? Let us consider the difference from the point of view of a scheme member between being told that their employer has taken some surplus from their pension fund and hearing the statement that their employer has taken some assets from their pension fund. I believe that the latter statement is a much better reflection of what is happening. “Surplus” suggests that the money is not needed, which is never true in a pension scheme; “assets” suggests something far more concrete.
It is worth emphasising that there is no certain meaning of what constitutes a surplus. It is not a technical term in actuarial speak; it was not a word that I ever used when devising pension schemes as a scheme actuary. It is widely used in general conversation—I sometimes use it myself—but it does not appear in the technical actuarial guidance, except as required by a cross-reference to legislation on surpluses. I suggest that using the word “assets” is a much clearer and more honest reflection of what is happening and I urge my noble friend the Minister to accept the change.
Amendment 24 was tabled to make it clear that the intended purpose of releasing assets is to be for the benefit of scheme members as much as for the benefit of scheme sponsors—if not more, in my view. As mentioned, there is no indication in legislation of why scheme assets might be released. What are the purposes for which surplus assets will be released? What is the purpose of the change in legislation and the facilitation of such release? It is left entirely in the hands of scheme trustees exercising their fiduciary duty. Government Ministers during the passage of the Bill have made reference to that on numerous occasions.
However, I believe that this is highly problematic. Experience tells us that we cannot rely on all trustees to interpret the appropriate purposes of the release of assets. It has to be in the Bill. The title of the chapter,
“Powers to pay surplus to employer”,
illustrates the problem. I have been advised by the clerks that it is not possible to amend those parts of the Bill, but it simply reflects the content of that particular chapter. As I said, this illustrates the problem. It only talks about the employer but says nothing about scheme members.
The absence of any reference to scheme members in the Bill contrasts with what Ministers have told us on numerous occasions. There has been a consistent message from Ministers throughout the passage of this Bill that the change will be of benefit to members. On the release of surplus, ministerial statements have suggested consistently that it is intended that members will share in the benefits of releasing assets. For example, my noble friend the Minister said at Second Reading,
“the Bill introduces powers to enable more trustees of well-funded defined benefit, or DB, schemes to share some of the £160 billion of surplus funds to benefit sponsoring employers and members”.
So it is not just about employers. In the Government’s own words, it is about members as well as employers. My noble friend went on to say:
“The measure will allow trustees, working with employers, to decide how surplus can benefit both members and employers, while maintaining security for future pensions ”.—[Official Report, 18/12/25; col. 875.]
Scheme members hearing this must assume that, if the employer benefits from a release of assets, they will as well. But there is nothing in the Bill that will make that happen. The Minister for Pensions made a similar statement many times. He has argued consistently, and rightly, that the release of assets—surpluses, if you will—is not just about employers but about delivering better benefits for scheme members.
Look, for example, at the Government’s road map for pensions. It states under the heading “Surplus flexibilities”:
“We will allow well-funded … pension schemes to safely release some of the £160 billion surplus funds to be reinvested across the UK economy and to improve outcomes for members”.
But there is nothing in the Bill that delivers on that promise. The DWP press statement about the Bill said:
“New freedoms to safely release surplus funding will unlock investments and benefit savers”.
Again, there is nothing in the Bill.
Then we find a statement by the Minister for Pensions on 4 September during Committee on the Bill in the Commons:
“It is crucial that the new surplus flexibilities work for both sponsoring employers and members”.—[Official Report, Commons, Pension Schemes Bill Committee, 4/9/25; col. 130.]
Yet again, there is nothing in the Bill. I could go on—there are plenty of examples—but I hope that I have made the point.
If that is the case and the intention is that members as well as scheme sponsors are expected to benefit when assets are released, this objective should be set out clearly in the Bill. This is particularly important because the Bill, as drafted, removes the existing requirement on trustees only to release surplus where this is in the interests of members. We will come to this again when we reach Amendment 37 in the name of the noble Viscount, Lord Thurso. I will support that amendment, but I think that it would be better to put the requirement for members to benefit as well as employers clearly and unambiguously in Clause 9. A defined benefit scheme is a joint endeavour, involving both employees and employer. They should be treated on an equal basis. I ask my noble friend the Minister to accept the point and bring forward a suitable amendment on Report. I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, I will briefly intervene because the probing amendments here are important to how we look at the precise nature of surpluses. Clearly, the principle of making it easier to return a genuine pension scheme surplus to employers is worthy of support, particularly given how much has historically been paid by employers into DB schemes, often at the expense of capital investment. But safeguards are absolutely critical—this is the point I want to make about the relationship between employers and trustees in this area. It must be a trustee decision to distribute surplus, and trustees must be required to consider how the surplus has accumulated, as was touched on by the proposer. Was it due to employer contributions, member contributions or strong investment returns?
Under the proposed legislation, employers will no doubt apply immense pressure to steer the distribution towards them and not the members. In exercising their discretion, trustees must be unencumbered, properly advised and protected from the undue and inappropriate pressure that sponsoring employers will no doubt place on them. That is a real concern to me. We must be wary of employers exercising their powers to put in place weak trustees, who will not act in members’ best interests. We must also be wary of making it harder for trustees to distribute surplus to members in favour of employers.
Surplus distributed to members through increased benefits will directly improve the position of the real economy through increased domestic expenditure and of course increased tax receipts. If we are to restrict the use of surplus assets away from scheme memberships to employers, we must ensure that surplus distributed to them is used for reinvestment in the UK economy through capital expenditure. I would like to hear the Minister’s view on that.
On what a surplus is, the changes made by the Pensions Regulator to the DB funding code of practice in November 2024 have codified the requirement for pension scheme trustees to fund DB pension schemes very prudently—I think that those are the words that he used. Further, the investments that trustees are strongly encouraged to hold, through that code of practice, mean that the investment strategies are usually much lower risk than the insurance companies that many pension schemes are now being transferred to en masse under bulk annuity contracts.
In June 2025, the Pensions Regulator issued guidance that suggested that excessive prudence or hoarding of surplus could be considered poor governance by trustees. If we are to make it easier to distribute surplus from pension schemes, the bar for that should not be so low that the security of member benefits is weakened and it should not be so high that it requires schemes to be excessively funded. The current bar of buyout funding is, in my opinion, far too high.
Safeguards are important. It is absolutely critical that trustees are required to take appropriate advice and that actuarial advice is compliant at all times with the relevant technical actuarial standards. Trustees must be able to make informed, evidence-based decisions, unencumbered by the interests of the insurance industry and free from undue employer pressure. That particular relationship concerns me most in our probe into the functions of the surpluses. I hope that the Minister can give reassurances about the position of trustees—how they will be protected and by whom—in this particular contest or area of decision-making.
Viscount Thurso (LD)
My Lords, we come to three groups of amendments. The next two deal with what you might do with the surplus, and I have amendments in those. This group deals with the principle of what a surplus is. I am grateful to the noble Lord, Lord Davies, for giving us the chance to consider that.
Baroness Noakes (Con)
My Lords, I will say a little more in our debate on the next group about how surpluses should be used, but we must recognise that employers in defined benefit schemes underwrite defined benefit scheme finances; they are the ones who have been putting in very large sums of money to keep these schemes going for the past 20-odd years. It is only right that we should recognise the interest that employers have in taking money that is no longer required within a scheme.
We have had so many years of deficits in pension schemes that we have rather forgotten that this was like an everyday happening in the pensions world, if you go back to the 1990s, when surpluses arose. Indeed, pension schemes were not allowed to keep pension surpluses; there were HMRC rules which made that rather difficult to do. These were perfectly ordinary transactions in the pensions world which we have just forgotten about because of the deficits that have existed for the last 20 or 30 years, which employers—not employees—have had to bear the burden of.
On the amendments in the name of the noble Lord, Lord Davies, I understand the technical point about removing assets rather than surplus, but surplus is the language that has always been used in the context of pension schemes; it is in the 1995 Act. The noble Lord’s amendments amend only this Act; as I understand it, they do not go on and amend the earlier Act. It is just language that has been used for a long period; I think people know what it means, and it will be very confusing at this stage to change the language.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the noble Lord, Lord Davies, for putting these amendments down and speaking in detail about them. We also heard good words from the noble Lord, Lord Kirkhope, the noble Viscount, Lord Thurso, and the noble Baroness, Lady Noakes. I almost thought, “Is there any point in getting up and speaking?” but I am a politician.
This group goes to first principles. What is a defined benefits pension surplus and what is it for? For us, DB surplus is not a windfall or an accident, as I think others have said. It is a result of long-term assumptions, member contributions, employer funding decisions and investment outcomes—all those—but above all, it exists within a framework of promises made to members in return for deferred pay. We are therefore concerned about renaming—we keep on coming back to this—“surplus” as simply “assets” available for redistribution.
Language matters here because it shapes both legal interpretation and member confidence. Treating surpluses as inherently extractable risks weakening the fundamental bargain that underpins DB provision. Our position is not that surplus should never be accessed, but that it should be considered only after members’ reasonable expectations have been fully protected. That includes confidence in benefits security, protection against inflation erosion, and trust and accrued rights not being retrospectively interpreted. I have always thought that with DB pensions you need prudence. How far do prudence and good governance go?
Finally, the question for Ministers is whether the Bill maintains the principle that DB schemes exist first and foremost to deliver promised benefits or whether it marks a shift towards viewing schemes as financial reservoirs once minimum funding tests are met. In that case, one has to think, “What is the minimum for the funding tests?” We shall come on to that in an amendment that the noble Lord, Lord Sikka, has put down later in the Bill on where companies fail. It is a question of when those surpluses are available, if they are ever available.
Baroness Stedman-Scott (Con)
My Lords, when I entered the department in July 2019, defined benefit pension schemes did, on occasion, report surpluses. However, those surpluses were neither of the scale nor the character that we are now observing. If one looks back over the past quarter of a century and beyond, it is evident that both the funding position of defined benefit schemes and the methodologies used to assess that funding have changed materially.
The surpluses reported today are not simply large in absolute terms but different in nature. They are measured against significantly more prudent assumptions, particularly in relation to discount rates, longevity and asset valuation, than would have been applied historically. It is therefore right that these emerging surpluses are examined with care and transparency. Bringing them into the open is necessary, and I say at the outset that the Government are right to have raised this issue explicitly in the Bill.
That said, we consider that the Bill does not yet fully reflect a number of the practical and operational issues faced by both trustees and sponsoring employers when seeking to make effective use of those provisions. In that respect, our position is not materially distant from that of the Government. Our concerns are not ones of principle but of application and implementation. We recognise that issues relating to potential deadlock between trustees and sponsors are important, but we are content for those matters to be considered at a later stage in the Committee’s proceedings. Our immediate focus is on understanding how the proposals are intended to operate in practice, how decisions are expected to be taken within existing scheme governance arrangements and how these new powers interact with established trustee fiduciary duties and employer covenant considerations.
This is a busy group, and noble Lords have done a sterling job in setting out their reasoning and rationale. I shall, therefore, not detain the Committee further by relitigating those points but will speak to my Amendment 25 in this group. Like a number of our amendments in this part of the Bill, it is a probing amendment intended to seek clarity. Clause 9 inserts new Section 36B into the Pensions Act 1995. The new section gives trustees of defined benefit trustee schemes the ability by resolution to modify the schemes’ rules so as to confirm a power to pay surplus to the employer or to remove or relax existing restrictions on the exercise of such a power.
The clause contains one explicit limitation on that power. New Section 36B(4) provides that the section does not apply to a scheme that is being wound up. In other words, wind-up is the only circumstance singled out in the Bill in which the new surplus release modification power cannot be used. Amendment 25 would remove that specific exclusion, and I want to be clear that the purpose of doing so is not to argue that surplus should be released during winding-up; rather, it is to test the Government’s reasoning in identifying wind-up as the sole circumstance meriting an explicit prohibition in primary legislation.
By proposing to remove subsection (4), the amendment invites the Minister to explain whether the Government consider wind-up to be genuinely the only situation in which surplus release would be inappropriate or whether there are other circumstances where the use of this power would also be unsuitable. If those other safeguards are already captured elsewhere, it would be helpful for the Committee to have that clearly set out on the record. Equally, if wind-up is used here as a proxy for a broader set of concerns, the Committee would benefit from understanding why those concerns are not addressed more directly.
Surplus release is a sensitive issue. The way in which the boundaries of this new power are framed therefore matters. Where the Bill chooses to draw a line in the legislation, it invites scrutiny as to why that line has been drawn there and only there. This amendment is intended to facilitate that discussion and to elicit reassurance from the Minister about how the Government envisage this power operating in practice and what protections they consider necessary beyond the single case of wind-up. On that basis, I look forward to the Minister’s response and any clarification she can provide to the Committee.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I am grateful to my noble friend Lord Davies of Brixton and the noble Baroness, Lady Stedman-Scott, for explaining their amendments, and to all noble Lords, who have spoken so concisely—we positively cantered through that group; may that continue throughout the day.
It is worth saying a word about the Government’s policy intent, but let me start by saying that the DB landscape has changed dramatically, a point made by the noble Baroness, Lady Stedman-Scott. Schemes are currently enjoying high levels of funding. Three in four schemes are running a surplus and there is around £160 billion of surplus funds in the DB universe. Schemes are also now more mature. The vast majority minimise the risk of future volatility with investment strategies that protect against interest rate and inflation movements. In addition, the DB funding code and the underpinning legislation require trustees to aim to maintain a strong funding position so that they can pay members’ future pensions. In response to the noble Lord, Lord Palmer, that is the primary purpose of DB funding schemes: above all, they must be able to pay members’ pensions. That is what is set out quite clearly in the DB funding code and the underpinning legislation. That is overseen by the Pensions Regulator.
Lord Kirkhope of Harrogate (Con)
I am sorry to interrupt the Minister. I raised the question of safeguards. There is a lot of evidence in the industry that there is a lot of pressure. The Minister talks about the driving seat, but the actual installation of the driver into the car is at the behest of employers. It seems to me that there is likely to be some pressure here, perhaps more pressure than before. I just want to be sure that the safeguards are in place—we are perhaps going to be discussing these later—including safeguards for the trustees, who have the basic obligation of doing the best for the beneficiaries of the scheme. To what extent are they going to be protected in circumstances like that?
Baroness Sherlock (Lab)
I am coming on to that, but I am grateful to the noble Lord for pressing me on it. All trustees are bound by duties which will continue to apply when making decisions on sharing surplus. They have to comply with the rules of the scheme and with legal requirements, including a duty to act in the interests of beneficiaries. If trustees breach those requirements, the Pensions Regulator has powers to target individuals who intentionally or knowingly mishandle pension schemes or put workers’ pensions at risk. As the noble Lord knows, that includes powers to issue civil penalties under Section 10 of the Pensions Act 1995 or in some circumstances to prohibit a person from being a trustee.
The key is that the Pensions Regulator will in addition issue guidance on surplus sharing, which will describe how trustees may approach surplus release, and that can be readily updated. That guidance will be developed in consultation with industry, but it will follow the publication of regulations on surplus release and set out matters for trustees to consider around surplus sharing, as well as ways in which members can benefit, including benefit enhancement. That guidance will also be helpful for employers to understand the matters trustees have to take into account in the regulator’s view. I hope that that helps to reassure the noble Lord.
We will come on to some of the detail in later groups around aspects of the way this regulation works, but I hope that, on the first group, that has reassured noble Lords and they feel able not to press their amendments.
Lord Davies of Brixton (Lab)
I thank my noble friend the Minister for her reply and other speakers who have contributed to this debate, which I think was worth having. I am pleased that I raised the issue on terminology. I recognise that it is a lost cause, but I have never been afraid, like St Jude, to support lost causes. It is an important point that we need to understand the vagueness of the concept of surpluses and that it is actual assets that disappear from the fund.
On the substantive point, I am afraid that I did not find my noble friend’s response satisfactory. As she said—I made a note of it—trustees remain the heart of decision-making. That exactly is the point. I am afraid that I do not share the Panglossian view of trustees. Many of them—large numbers of them—do a difficult job well, but it is not true of them all.
It is enough of a problem, as I can attest from my own experience of many years in the pensions industry, that we cannot rely on trustees to deliver in all cases. The balance of power between members and trustees is totally unequal. Members, effectively, are not in a position to question trustees’ discretion and responsibilities, and they cannot take it to the ombudsman, because it falls outside the remit.
When my noble friend says that the Government have been clear, that was exactly my point: they have not been sufficiently clear and have frequently given the members a reasonable expectation that they will share in the release of assets. With those words, I beg leave to withdraw my amendment.
Baroness Altmann
“(7A) Regulations may provide that payment of surplus to the employer may only be made to the employer on the condition that—(a) enhancement to member benefits particularly relating to provision of pre-1997 inflation increases, or (b) one-off payment to reflect lack thereofis simultaneously provided by the employer.”Member’s explanatory statement
This amendment would allow regulations to require employers to enhance member benefits (including provision of pre-1997 inflation protection or offer a one-off payment) if they want to extract surplus payments from the scheme.
Baroness Altmann (Non-Afl)
My Lords, in moving Amendment 26, I shall speak to my similar Amendment 39, to both of which I am grateful for the noble Baroness, Lady Bowles, adding her name. To follow on from the words of the noble Lord, Lord Davies, I am introducing these amendments as a marker, because I genuinely believe that it is important, if we are talking about distributing assets—I agree with the noble Lord on that terminology—to employers, that members should participate in the benefits that the excess funding has delivered.
My particular concern revolves around protecting members’ pensions against rises in the cost of living over many years. To go back to the Goode committee report of 1993, which followed the Maxwell scandal, that was the first talk of protecting private pensions in a similar way to state pensions, which would automatically be expected to have some kind of protection against either rising living standards or the rising cost of living. The protections put in place for pension schemes, however, were watered down to some degree and not introduced until 1997, so there are many people now retired who have a significant chunk of their private pension without any inflation protection at all. As inflation has become a much greater concern in recent years particularly, I hope we will be able to agree that attention should be paid to looking after what will be the most elderly of the pensioner population—those with pension accruals since before 1997. If there is to be an enhancement of member benefits, I would argue that the first consideration should be helping to rectify and remediate the shortfalls that many of these people face when trying to afford to live in 21st-century Britain.
I have included in the amendment the option of a one-off payment instead of enhancing the actual pension. In Amendment 26, it is a “may” rather than a “must”. The aim would be to make sure that some money is received by the member who has lost out, while bearing in mind that immediately lifting the pension from the pre-1997 accrual—which could be half or more of the person’s pension—up to a new level and then requiring the employer scheme to continue enhancing from that position, could add a significant extra strain on the scheme in the future if funding deteriorates.
However, we know that currently, in a scheme considering distributing surpluses, there is much more than is required on the current expectations, and for the likely nearer-term future, to meet the liabilities that will arise in, say, the next five to 10 years. Thereafter, one does not know; many of the members affected will not, sadly, be with us in that timeframe. But if actuaries are concerned about a permanent rise in the base level of pensions that must be paid by the scheme and then ongoingly increased over the very long term, payment of a one-off surplus amount to reflect the lack of inflation linking that the member has suffered over past years would, in my view, be easier to absorb but would also significantly enhance the well-being of the members themselves.
These amendments do similar things, although one is more definite than the other. I hope the Government and Minister can confirm that there is sympathy with this idea. Obviously, in a wider context, we will talk about enhancing members’ benefits more generally—I will come back to that on the next group—but, on that basis of the need for inflation protection in particular, I beg to move.
Viscount Thurso (LD)
My Lords, I rise principally to speak to my Amendment 38 in this group and to support my noble friend’s Amendment 44, to which I added my name. I am in broad sympathy with the mover of Amendment 26.
I think we can all agree that we would like to deal, if possible, with inflation eroding the purchasing power of a pensioner. As was said on the last group, there is basically a contract between the employer and the employee in a DB scheme, where the employee expects to receive a certain pension. The case I raise in my amendment stems from the many pension schemes that do not offer an absolute inflationary rise as part of their terms and conditions. Quite a number do, but some say in their terms that there would “normally” be an increase of an inflationary amount, but it is not guaranteed. There are a number of schemes where the literature at the time the person went into the scheme—in the 1980s, 1990s or whenever—indicated that they may reasonably expect to get inflationary increases, but they did not.
In this instance, I am grateful to the BP Pensioner Group, which brought its case to my attention and helped with the drafting of this amendment and my others. Broadly behind its request is the fact that the BP scheme, which is now closed, is an extremely good scheme with quite a large surplus in it. It is very well funded and therefore, as per the last group, may well be something that could go back to the company in part. But it has chosen for a number of years to refuse the request of the trustees to make discretionary increases.
It is worth noting just how pernicious the effect of inflation is on these incomes. I used the Bank of England inflation calculator to see what had happened. Bearing in mind that the statutory amount is 2.5%, if you go back with the inflation calculator to 2005, it is 2.8%—you might say that is not too bad—but inflation from 2015 to 2025 was 3.11% and, from 2020 to 2025, it was 4.35%. In every year there has been a modest but rising and quite large difference between what the statutory cap would allow and what the actual inflation was.
Of course, that compounds every year. So, every year, the loss is compounding up. Today, a pensioner may well be significantly worse off than if they had been getting something. By definition, surpluses comprise funds in excess of those required to meet the totality of members’ entitlements in full; they are, therefore, the resource out of which discretionary payments can be made. As such, any payment of surplus to the employer could prejudice the possibility of a discretionary payment to members. What I am seeking, and what my amendment seeks, is to make sure that that is in balance.
As I mentioned, since 2021, inflation as measured by CPI has been well over 4%, much ahead of the cap of 2.5%. The Pensions and Lifetime Savings Association’s survey indicated that, during the recent period of exceptional inflation, only 12% of UK pension funds made permanent discretionary increases to protect the purchasing power of members. In looking at surplus being distributed in part to employers and in part to members, the economic good if the part of the surplus that goes to the employer is used in investment is obvious, but let us not forget the economic good in increasing the purchasing power of the pensioners. There is an equal economic good on both sides of this argument.
The noble Baroness, Lady Noakes, made the valid point that a great many companies supported their pension schemes during the difficult times of the late 1990s and early 2000s, but I would argue that that was in their contracts because they had contracted to make the payment at the end. We are now in a situation where, through the far better quality of trustees, the training offered by the Pensions Regulator—I have taken it and can attest that it is well worth doing—and the governance rules that have been brought in, we have the ability to make those surpluses available.
What this amendment would do is add to Clause 10 that the regulations to be made by the Secretary of State would include the words on the Marshalled List, which would mean simply that the Secretary of State could regulate to ensure that trustees took inflationary pressures into account. That is pretty modest, on the scale of the amendments that are being put forward, to deal with the surplus. Although the amendment is probing at this stage, if it is not met with some sympathy now, it may become a bit more than probing as we go on.
My noble friend Lord Palmer’s Amendment 44 is along the same lines, although it addresses pre 1997, which my amendment does not specifically do; I will leave my noble friend to argue the case for that. In passing this legislation, we owe it to those pensioners who have been left behind to do something to help them catch up.
Baroness Noakes (Con)
My Lords, I understand the motivation behind the amendments in this group, which call, in one way or another, for inflation protection, in particular for pre-1997 pensions that do not benefit from indexation to have a first call on pension scheme surpluses. I do not, however, support these amendments.
When compulsory indexation was first introduced by statute, it was applied only to pension rights which accrued after April 1997. That was a deliberate policy choice by government at the time. Although the cap and the index have been tinkered with over time, the basic policy choice has remained intact. The 1997 change was itself quite costly for those employers that had not previously included indexation or inflation protection in their pension offer to employees, which was quite common at the time. I am sure that the Government at the time were aware that imposing indexation on all accrued pension rights would have been very expensive for employers and would very likely have accelerated the closure of DB schemes.
The period after 1997 saw the evaporation of the kind of surpluses that used to exist, which, incidentally, vindicated the 1997 decision to exclude the pre-1997 accrued rights, because if they had been included, that would almost certainly have accelerated the emergence of deficits, which led in turn to employers considering how they could cap their liabilities by closing schemes entirely or future accrual. As we know, the period of deficits lasted until the past couple of years; they lasted a very long time.
Alongside this period of deficits emerging, there was a mutual interest among trustees and employers to de-risk pension schemes. That is why they shifted most of the assets into things such as gilts, which, in turn, increased the sensitivity of the defined benefit schemes to gilt yields, as we saw in the LDI crisis, and resulted, when interest rates started to rise again, in the surpluses starting to emerge. It was not the only cause but a very significant cause of the surpluses that we now see. We now have schemes in surplus: DWP figures suggest £160 billion—that figure will probably change daily as interest rates change—but that was only after significant employer support throughout the 1990s and the noughties was required, when significant deficit recovery plans had to be signed up to by employers to keep their defined benefit schemes afloat.
The amendments in this group seem to be predicated on the thought that these surpluses are now available for member benefits, as though employers had nothing whatever to do with funding their emergence. Because DB pension schemes are built on the foundation of the interests of members, it is obvious that the surplus will have to be shared between the two—that was partly covered in the previous debate—but the one thing we must always remember is that they have emerged largely from the huge amount of funding that has had to be put in since 1997 to keep the schemes afloat. That the surpluses have emerged does not mean that they are available for whatever good thing people want to spend them on. I certainly do not think it is right to use surpluses to rewrite history to create rights that deliberately were not created in 1997, for the very good reasons that existed at the time. For that reason, I do not support these amendments.
Lord Willetts (Con)
My Lords, I want briefly to enter this discussion to identify another group not captured in the neat divide of employers and scheme members. When there is £160 billion knocking around, people tend to work out elegant arguments for why some group or another has a claim on that money. I understand the arguments for the pre-1997 claims, but I have to say that what my noble friend Lady Noakes just said is a very accurate account of the history and the thinking at the time. There is indeed an argument that, looking back, there was a fundamental change in the character of the defined benefit pension promise with that legislation then, which probably ended up as the reason for their closure. A with-profits policy became one where you had a set of rights, which were more ambitious and have proved in many cases too onerous for employers.
Baroness Altmann (Non-Afl)
May I ask my noble friend a couple of questions? I totally accept the rationale for the change happening only post-1997, but does he accept that because we now have surpluses and there is this gap, a one-off payment would be a potential way of recognising the problem faced by the pensioners without changing the long-term funding position of the scheme?
Lord Willetts (Con)
I am not against such payments. As I say, I think this is highly discretionary—there would be a negotiation. I absolutely understand that argument, and we have all received letters from the people suffering financial distress in some circumstances because of not having pre-1997 inflation protection. But I just want to bring in another consideration and try to find out where it would fit in when the employers or the trustees are reaching a decision.
The Government have a policy, or rather we now have on a cross-party basis, a successful policy of auto-enrolment. The levels of pension contribution to the next generation, who are not in these schemes, are way lower than the pension contributions that have generated these large surpluses. It would be great if we could see increasing contributions. Where might a decision fall if an employer says, “We have now turned our scheme into surplus because of the work of the company, and one thing we could do with the money is to put some enhanced contribution into the auto-enrolment pensions of the next range of employees, whose pension rights at the moment will be far lower than those of the people covered in this debate”?
Baroness Bowles of Berkhamsted (LD)
I am quite pleased to follow the noble Lord, Lord Willetts, because I feel that we are fishing slightly in the same pond. I added my name to the amendment proposed by the noble Baroness, Lady Altmann, and I support doing something for the pre-1997 people. When you look at something as long-term as pensions and you have different cohorts coming in, moving along and coming out, you have to somehow get into cohort fairness. You will always have the circumstance that people have paid into something and then they get something out when there is something else in the pot. We will come to this even more so when we start to deal with private assets, so I shall not go on at length here, because I will go on at length there. I am in the same camp as the noble Lord, Lord Willetts, in thinking that you do not say that it is clean cut and these people are in and those people are out—you have to look at fairness more broadly across the piece.
Lord Fuller (Con)
My Lords, I first became a pension fund trustee in 1997. The trustees at the time knew that there was a turning point, and it was probably just as well to get someone who might be alive 30 years later at least tutored in the principles of pensions at that moment—so it was clearly a moment in time. How right they were, because 30 years later, here I am.
I recall that it was a difficult moment for the scheme of which I was a member, and the private company for which I worked. Since the Barber reviews of 1991, with regard to the benefits payable in the final salary scheme, which was still open, it was the will of the directors that at all costs the final salary scheme should remain open and open to new accruals. Progressively, the benefits were diluted from RPI to RPI capped at 5% to RPI capped at 2.5%. Every step was taken and every sinew strained to keep that scheme open. But in 2003, the actuary reported that, on a scheme with assets of just £5 million, £4 million extra had to be tipped in; that was a sucker punch, and the scheme was inevitably at that stage closed to new members.
It turns out that the assumptions that were made, with the benefit of hindsight, were overly prudent. The deficit was exaggerated. But notwithstanding having put more than £4.41 million—that is the number that sits in my mind—into the scheme, three years later there was another £2.6 million to find as well. My goodness, the company could have made much better use of that capital to grow the business, rather than to fill a hole that history tells us was not there to the extent that it appeared.
We are in a situation where our scheme, which we kept open as long as we could, could not stand it any longer when we got to 2003. There was another turning point in 2006, in “A-day”, but I shall park that to one side. All that money was tipped in—and the suggestion that all the money that has gone into the scheme is some sort of pot to be shared now down the line, equally or in some proportion with the members as well as the company, is a false premise. Without the commitment of these private companies in those darkest days, the schemes would have closed much earlier and members would not have participated for those extra increments that they did.
I listened carefully to the noble Baroness, Lady Altmann, who asked what happens for all those people in the pre-1997 schemes. Well, here is the GMP rub. Astonishingly, I received a payment in the past six months, wholly unexpectedly, from my pre-1997 accrual, for the guaranteed minimum pension. So the suggestion that members are not sharing in any of the benefits of the pre-1997 scheme is a further false premise.
I am no longer a trustee of the scheme, but I know the trustees. The professional and actuarial costs associated with calculating these GMPs have been quite extraordinary. In fact, it would be much better for the trustees to have just made an offer, forget the GMP, and everybody would have been much better off.
The GMP issue illustrates the folly of going down the path that this amendment would lead us. All it is going to do is drive trustees into having more expensive calculations, actuarial adjustments, assessments and consultations, whereas, for the most part, the trustees are minded to make some sort of apportionment and that apportionment needs to be balanced, individual for the scheme in its own circumstances, based on how much excess money was tipped into the scheme for all those years in the post-1997 world. It is about having some sort of fair assessment, a fair apportionment. For the most part, the trustees of private schemes have the benefits and the interests of the members completely at heart and I do not see any circumstance when that does not happen.
This amendment is unnecessary for two reasons. On the one hand, trustees take these things into account. Secondly, that money is truthfully the employers’ money because they went above and beyond, listening in good faith to the professionals, the actuaries and everybody else who had put their oar in on the overly prudent basis, as it now turns out, to make good deficits that were not actually there. I say to noble Lords that for all the pounds that were put in post-1997, when other things happened in the macroeconomy and the Budget—which I will not detain noble Lords with—this country’s pension schemes could have been in a significantly stronger position than they are now had the trustees carried on as they were and not listened to some of the siren voices in government and the so-called professional advisers.
Lord Davies of Brixton (Lab)
I strongly support Amendments 26 and 39 from the noble Baroness, Lady Altmann. I have a question on Amendment 39, the proposal that trustees should be able to make one-off enhancements. I understand that there has been some recent change in the tax treatment of such payments, and I wonder if my noble friend could update the Committee on where we are with that.
The noble Lord, Lord Willetts, made the point that we are referring to an issue which will depend on the regulations—one of the problems we face is that this is a skeleton Bill. As I understand it, the question is, in essence: can the trustees use the surplus assets to pay the DC contributions of people who are not in the DB scheme? There is a particular quirk with that. Purely randomly, some schemes established the DC arrangement as part of the DB scheme, and other employers established the DC arrangement as a separate legal entity. It is pure chance which way they went; it depended on their advisers. I have questions about it in idea and principle, but if we are going to admit that, it would be wrong to distinguish between the chance of the particular administrative arrangements that were adapted. I wonder if my noble friend is in a position to comment on that point.
I have significant reservations about the amendment from the noble Lord, Lord Palmer of Childs Hill, for free advice being paid for by surplus. Most members of DB schemes do not need advice—which is the entire point of being in a DB scheme. You just get the benefit. That is what is so wonderful about them. Advice rather than guidance is extremely expensive. The idea that a free, open-ended offer of providing advice should be made needs to be looked at extremely carefully. We have the slight difficulty here in that I am replying to the proposals of the noble Lord, Lord Palmer of Childs Hill, before he has made them, but I have to get my questions in first, and maybe he will comment on that point.
Lord Palmer of Childs Hill (LD)
This seems like a good moment to come in. I first ask the Minister: do the Government agree that a responsible use of surpluses should strengthen confidence in DB schemes and not leave members feeling that prudence has benefited everybody but them? In this, I disagree with the noble Lord, Lord Fuller, because people do feel aggrieved.
I have three amendments here. Amendment 32 is designed to ensure that regulations take account of the particular circumstances of occupational pension schemes established before the Pensions Act 1995. Members of pre-1997 schemes, so often referred to in this debate, are often in a different position to those in later schemes. These schemes were designed under a different legal and regulatory framework. Current legislation does not always reflect those historical realities, creating unintended iniquities.
Amendment 32 would require regulations under Clause 9 to explicitly consider—that is all—these older schemes. It would allow such schemes, with appropriate regulatory oversight, to offer discretionary indexation where funding allowed, so it would provide flexibility while ensuring that safeguards were in place. It would give trustees the ability to improve outcomes for members in a fair and responsible way, and it would help to address the long-standing issue of members missing out on indexation simply because of their scheme’s pre-1997 status. It would also ensure that members could share in scheme strength where resources permitted. Obviously, safeguards are needed, and Amendment 32 would make it clear that discretionary increases would be possible only where schemes were well funded. Oversight by regulators ensures that employer interests and member protections remain balanced.
My Amendment 41 is about advice. When you are as knowledgeable as the noble Lord, Lord Davies, you do not need the advice, but many pensioners are missing it. This amendment would allow a proportion of pension scheme surplus to be allocated towards funding free—
Lord Davies of Brixton (Lab)
The amendment talks about surpluses, so it is talking specifically about defined benefit schemes. It is not talking about DC schemes because such schemes do not have surpluses. I just want to be clear.
Lord Palmer of Childs Hill (LD)
I thank the noble Lord; it is just that impartial pension advice for members is not always available to everybody. Many savers struggle to navigate pension choices, whether around a consolidation investment strategy or retirement income. Without proper advice, members risk making poor financial decisions that could damage their long-term security. If you are in the business, you have to take the good with the bad, but we would like to give members a bit of advice if the money is available. Free impartial advice is essential to levelling the playing field.
Surpluses in pension schemes should not sit idle or be seen simply as windfall funds. Redirecting a small—I stress “small”—proportion to fund member advice would ensure that surpluses are used in a way that benefits members directly. Amendment 32 would not mandate a fixed share; it would simply give the Secretary of State powers to determine what proportion may be used. This would, I hope, create flexibility and safeguards so that the balance between scheme health and member benefit can be properly managed. Further advice from surpluses reduces the need for members to pay out of pocket and it builds trust that schemes are actively supporting member outcomes beyond the pension pot itself.
Amendment 44, to which my noble friend Lord Thurso referred, would insert a new clause requiring the Secretary of State to publish
“within 12 months … a report on whether the fiduciary duties of trustees of occupational pension schemes should be amended to permit discretionary indexation of pre-1997 accrued rights, where scheme funding allows”.
It aims to explore options for improving outcomes for members of older pension schemes. I maintain that this amendment is needed because many pre-1997 schemes were established before modern indexation rules. Trustees’ current fiduciary duties may limit their ability to avoid discretionary increases, which is what this amendment is about. Members of these schemes may be missing out on pension increases that could be sustainable and beneficial. I will not go on about what the report would do, but there would be many benefits to this new clause. It would provide an evidence-based assessment of whether discretionary indexation can be applied safely; support trustees in making informed decisions for pre-1997 scheme members; and balance members’ interests with financial prudence and regulatory safeguards.
The amendments in this group are clearly going to progress on to Report in some way. Sometime between now and then, we are going to have to try to amalgamate these schemes and take the best bits out of them in order to get, on Report, a final amendment that might have a chance of persuading the Government to take action on these points. Many of the amendments in this group—indeed, all of them—follow the same line, but there needs to be some discipline in trying to get the best out of them all into a final amendment on Report.
Viscount Younger of Leckie (Con)
My Lords, I thank the noble Baroness, Lady Altmann, and the noble Lord, Lord Palmer, for their amendments in this group. I also thank other noble Lords for all their other contributions in Committee so far this afternoon. Our debate on this group has stimulated a most valuable discussion. Of course, I look forward to the Minister’s responses to the points that have been raised.
I wish to start off by saying that I thought it was helpful that the noble Baroness, Lady Altmann, steered the Committee—my words, not hers—towards a focus on scheme members. The debate went a lot beyond that, but I just wanted to make that point at the outset. I wish also to take this opportunity to set out our stance on indexation, as well as some of the related questions that we for the Opposition have for the Government on this point.
As the noble Baroness, Lady Bowles, said, these amendments raise understandable concerns about fairness, inflation and the use of defined benefit surpluses. But our core line is simple: mandating how trustees and employers use DB surpluses would be overly prescriptive and risks being actively anti-business. Many employers are already using surpluses constructively, improving DC provision for younger workers, supporting intergenerational fairness, strengthening scheme security through contingent assets, SPVs or insurance-backed arrangements, or reducing long-term risk in ways that benefit members as well as sponsors. Employers have also borne DB deficit risk for many years, as we have heard a bit about this afternoon. If they carried the risk in the bad times, it is reasonable that they can share in the benefits in the good times, provided that decisions are taken jointly with trustees.
I will explain this through a simple analogy—I say at the outset that it will not be up to the standard of the buckets analogy utilised previously in Committee by the noble Baroness, Lady Bowles, but here we are. The employer and members walk into the casino together. The bets are placed and the investment strategy, funding assumptions and longevity risk are collective decisions overseen by trustees. If the bet goes wrong, the employer must cover the losses, often over many years, through additional contributions and balance sheet strain. If the bet goes right, however, some argue that the employer should be excluded from any upside and that all gains must automatically be distributed to members.
That is not, we believe, how risk sharing works. In any rational system, the party that underwrites the losses must surely be allowed to share in the gains—I know there are other arguments, but I believe this was the one posed by my noble friend Lady Noakes—otherwise, incentives are distorted, future participation is discouraged and employers become less willing to sponsor schemes at all. The fair outcome is that neither the employer nor the members take everything and that surplus is discussed and allocated jointly by trustees and employers in a way that balances member security, scheme sustainability and the long-term health of the sponsoring employer. I think this was the central argument of the noble Viscount, Lord Thurso, and, in a different way, my noble friend Lord Fuller. Legislation should support that partnership, not override it.
My noble friend Lord Willets made an interesting point. He asked whether it is fair that, in DB schemes, current employees often contribute to enhancing or rescuing the surplus position of pension schemes, making up for past mistakes—or deficits, perhaps—and the potential consequence of that linking to lower remuneration for those current employees. I add one more thing, which is probably a bit unfair because it is slightly hypothetical: if that current employee, having perhaps been paid less, is then made redundant, that is a double whammy for them. The question is whether the surplus should be used for helping current employees or giving them a better deal, as well as, or instead of, looking to help the pre-1997 members. That is the way I look at it.
Against that backdrop, amendments that would make benefit uplifts—whether pre-1997 indexation or lump sum enhancements—a statutory condition of surplus extraction raise real concerns. Automatic uplift would ignore wider economic impacts, including higher employer costs; increased insolvency risk, ultimately borne by the PPF; knock-on effects on wages, investment and employment; and potentially higher PPF levies.
For PPF schemes, mandatory uplift is manageable because the employer covenant has gone and Parliament controls the compensation framework. Imposing similar requirements on live schemes risks destabilising otherwise healthy employers. Uplift should therefore be an option and not an obligation. That said, focusing on choice does not mean ignoring power imbalances. In some schemes, there is genuine deadlock. Trustees may be reluctant to deploy surplus for fear of sponsor reaction or member backlash, so instead sit on it and de-risk further. That may be a rational defensive response, but it is also a deeply inefficient outcome. The Government should be looking at how to enable better use of surplus by agreement, rather than mandating outcomes.
My questions to the Minister are as follows. How do the Government intend to preserve flexibility while avoiding blunt compulsion? How will they support trustee-employer partnership rather than hardwiring outcomes into legislation? What consideration has been given to mechanisms for breaking deadlock—including overprudence, if that is a term that can be used—so that surplus can be used productively rather than simply locked away?
To conclude, these amendments raise important issues. Our concern is not with the objectives but with the method. Choice, partnership and proportionality should remain the guiding principles. I look forward to the responses from the Minister.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords— that was a very interesting debate. I will come to some of the detail in a moment. I am grateful to the noble Baroness, Lady Altmann, the noble Lord, Lord Palmer of Childs Hill, and the noble Viscount, Lord Thurso, for explaining their amendments.
We do not have a smorgasbord here, as I think the noble Lord, Lord Palmer, observed. Essentially, Amendments 26, 32, 38 and 39 would, in different ways, allow regulations to require member benefit enhancements prior to surplus release, require regulations to do so, and require trustees to consider indexation and the value of members’ pensions before making a surplus payment.
I say at the outset that I understand the concerns of scheme members whose pensions have not kept pace with inflation. They may have made contributions for many years and are understandably upset at seeing inflation erode the value of their retirement income. But I am afraid that I am not able to accept these amendments, for reasons I will explain.
I will give a bit of context first, because it is worth noting that over 80% of members of private sector DB schemes currently get some form of pre-1997 indexation on their benefits. However, as I explained in the previous group, we think the way forward is that our reforms will give trustees greater flexibility to release surplus from well-funded DB schemes and will encourage discussion between employers and trustees on how those funds can be used to benefit members.
In response to the final question from the noble Viscount, Lord Younger, about deadlock-breaking, we do not think it is necessary because, in a sense, it is not a balanced position between employers and trustees. Trustees are in control. Employers cannot access surplus directly. Trustees are the ones who make a decision. If the trustees do not agree to release the surplus, the surplus is not being released. In a sense, it is quite intentional for the power to sit with the trustees, and that is the appropriate way to manage that issue. We think that that way of putting trustees in the driving seat is a better approach than legislating for how surplus should be used. I found that discussion of history, from the noble Baroness, Lady Noakes, the noble Lords, Lord Willetts and Lord Fuller, and others, very helpful.
The DB landscape is a complex situation. It has a varied history and there are variations within it: within schemes, over time, between schemes, across time and across the landscape. Benefit structures have varied, in many cases over the course of a scheme’s history. Although some schemes may not provide pre-1997 indexation, they may have been more generous; they may have been non-contributory or may have provided a higher accrual rate at different points in time. All schemes are different. That is why we do not think it is possible to provide an overall requirement on schemes for indexation. We think it is better that trustees, with their deep understanding of the knowledge of individual schemes, their characteristics and history, remain at the heart of decision-making in accordance with their fiduciary duties. In addition, of course, as I keep saying, they must act in the interests of scheme beneficiaries.
Viscount Thurso (LD)
I am grateful to the noble Baroness for her explanation. However, does she agree that a case where the employer has the right to prevent the trustees making a payment—with some surpluses, the trustees may wish to make a payment but the employer can stop it if it is not going to them—is a special case, which needs to be looked at slightly differently?
Baroness Sherlock (Lab)
I will need to come back to the noble Viscount on that specific point. Obviously, at the moment, a minority of trustees have the power in the scheme rules to release surplus; our changes will broaden that out considerably. If there is a particular subcategory, I will need to come back to the noble Viscount on that. I apologise that I cannot do that now—unless inspiration should hit me in the next few minutes while I am speaking, in which case I will return to the subject when illumination has appeared from somewhere.
It is worth saying a word on trustees because we will keep coming back to this. It was a challenge in the previous group from my noble friend Lord Davies. The starting point is that most trustees are knowledgeable, well equipped and committed to their roles. But there is always room to better support trustees and their capability, especially in a landscape of fewer, larger consolidated pension funds. That is why the Government, on 15 December, issued a consultation on trustees and governance, which, specifically, is asking for feedback on a range of areas to build the evidence base. It wants to look at, for example, how we can get higher technical knowledge and understanding requirements for all trustees; the growth and the use of sole trustees; improving the diversity of trustee boards; how we get members’ voices heard in a world of fewer, bigger schemes; managing conflicts of—
Lord Davies of Brixton (Lab)
Sorry. Corporate trustees are a specific issue. Does the consultation include the particular responsibility of single corporate trustees?
Baroness Sherlock (Lab)
Absolutely. There may be—I am not saying that there are—risks that need to be explored around the use of sole corporate trustees. The consultation will look at that, and at generally improving the quality and standards of administration to improve service quality and so on. That runs until 6 March. My noble friend may wish to contribute to it; I commend it to him.
On safeguards, trustees will need to notify the regulator when they exercise the power to pay surplus. As part of that notification, we anticipate the provision to be made in regulations for trustees to explain how, if at all, members have benefited because that will help the regulator monitor how the new powers are being used.
In response to the noble Viscount, Lord Thurso, the Pensions Regulator has already set out that trustees should consider the situation of those members who would benefit from a discretionary increase and whether the scheme has a history of making such increases. Following this legislation—and as I may have said in the previous group—TPR will publish further guidance for trustees and advisers, noting factors to consider when releasing surplus and ways in which trustees can ensure members and employers can benefit.
On that broader point, we feel that it must be a negotiation, because increasing indexation would increase employer liabilities, so it is right that it ends up being a negotiation. All the safeguards are already there. My noble friend Lord Davies asked what advice trustees should take. We expect trustees to take appropriate professional advice when evaluating a potential surplus release and making a payment. As well as actuarial advice, this should also include legal advice and covenant advice to enable trustees to discharge their duties properly. Let us not forget that a strong covenant is the best guarantee a scheme has; not undermining the covenant, or the employer that stands behind it, is crucial to this.
Amendment 44 would require the Secretary of State to publish a report on whether trustees’ duties should be changed to enable trustees to pay discretionary increases on pre-1997 accrued rights. It is not clear to us why this would be needed as the scope of trustee fiduciary duties do not prevent trustees paying discretionary increases, where scheme rules allow them to do so. We expect trustees to consult their professional advisers, including lawyers, on their duties if they are not sure.
Amendment 41 from the noble Lord, Lord Palmer, highlights the importance of ensuring that members have access to good quality pensions advice. Although we understand the intention, we remain clear that we will not be mandating the use of surplus released from schemes. My noble friend Lord Davies made the good point that, in some ways, the greatest need for support is on the DC side rather than the DB side. DB scheme members expect to receive a lifelong retirement income, which trustees must regularly and clearly communicate to members. This is typically based on salary and length of service, offering strong financial security. For DB, the benefits they will receive on retirement are generally known.
The Government recognise the importance of robust guidance, however, and we already ensure that everyone has access to free, impartial pensions guidance through the Money and Pensions Service, helping people to make informed financial decisions at the right time. The MoneyHelper service offers broad and flexible pensions guidance that supports people throughout their financial journey.
A couple of other questions were asked, including what employers will use the surplus for. The Pensions Regulator published a survey last year, Defined benefit trust-based pension schemes research. In a sample of interviews, it found around 8% of schemes with a funding surplus reported having released a surplus in the last year. That equates to nine schemes. Of those nine, seven schemes used the surplus to enhance member benefits. One used it to provide a contribution holiday for future DB accrual and one to make a payment to a DC section established in the same trust. None of the nine schemes stated that the surplus was released to the employer.
In answer to the noble Lord, Lord Willetts, and my noble friend Lord Davies, it was always the case that it depends on the scheme rules. I want to make sure I get this right. I had a note somewhere about it, but I am having to wing it now so I will inevitably end up writing and correcting it. If there is a DB and a DC section in the same trust, it could be possible, depending on the scheme rules, for trustees to make a decision to release funds from one to the other. But trustees may not be able to agree to that; it would obviously depend on the circumstances. However, as I understand it, there is nothing to stop an employer releasing funds—surplus released from a DB scheme back to an employer. The employer could then choose to put that money in, for example, a DC scheme. I understand the tax treatment would be such that the tax payable on one can be offset as a business expense on the other, making it a tax neutral proposal. In any case, as noble Lords may have noted, the tax treatment of surplus rate has dropped from 35% to 25%. A decision has been made to make that drop down. If by winging it I have got that wrong, I will clarify that when I write the inevitable letter of correction.
My noble friend Lord Davies asked about tax treatment. I will read this out, as it is from the Treasury, and I will be killed if I get it wrong. Amendments to tax law are required to ensure these payments—one-off payments—qualify as authorised member payments and are taxed as intended. The necessary changes to tax legislation will have effect from 6 April 2027. Changes to tax legislation are implemented through finance Bills and statutory instruments made under finance Acts. There will be consequential changes to pensions legislation where necessary, which will be dealt with through regulations. I hope that satisfies my noble friend. If it does not, I will write to him at a later point.
I hope I have covered all the questions. I am really grateful for that contribution; it is one of the ways in which this Committee illuminates these matters. But I hope, having heard that, the noble Baroness feels able to withdraw her amendment.
Baroness Altmann (Non-Afl)
I thank the Minister for her explanation. Although it is rather disappointing, I understand where she is coming from. I also thank all noble Lords who have participated in this group. There is a general feeling across the party divides—but obviously not unanimity—that lack of inflation protection is an issue. How or whether it is dealt with is the big question. I hope that maybe we can all meet and discuss this and how it could best be brought back on Report, if it is going to be brought back. With that, I beg leave to withdraw the amendment.
Member’s explanatory statement
This is a probing amendment which seeks to determine why the Secretary of State is permitted to change the conditions for paying surplus using the negative procedure after the initial conditions are first set using the affirmative procedure and to question the extent and scope of the Secretary of State’s regulatory power in setting the conditions for surplus release.
Viscount Younger of Leckie (Con)
My Lords, we come to another busy group, in which the noble Baroness, Lady Stedman-Scott, and I have amendments. I will speak only to our amendments so that other noble Lords have time to set out their reasoning and questions to the Minister. I look forward to hearing them. Essentially, this group covers surplus release, how it will operate and precisely who will oversee the rules of this. We are also concerned about the very wide delegated powers within this area.
Viscount Thurso (LD)
My Lords, I will speak to my Amendments 34 and 37 and will briefly comment on the other amendments. Quickly, before I do that, I seek to assist the Minister with the question I asked her on the last group. I was written to by people who came together as a small group to protest against the failure of a trustee and an employer to award discretionary increases, contrary to their joint policy of matching inflation, originally published in 1989 and repeated in pensions guides and newsletters over the years. For the last four years, the employer has refused consent to modest discretionary increases recommended by the trustee and supported by the independent actuary. That is the situation I am looking at. I hope that is helpful.
I turn to the current group. Let me say, first, in response to the noble Viscount’s amendment and his Clause 10 stand part notice—as he said, both are probing amendments—broadly speaking, I concur with him. If we had had regulations, draft regulations or just something to look at, an awful lot of these questions would not have needed to be put at this stage. As a matter of principle, I am always in favour of the affirmative procedure, rather than the negative one; I shall leave that there.
I know that the noble Lord, Lord Davies, will speak eloquently to his own amendments in a moment, but they are a bit of a variation on the theme of the ones in my name. My Amendment 34 would, in Clause 10 and at line 23,
“after ‘notified’ insert ‘and consulted’”.
What that would do is to say that the trustees would have not only to notify the members but to consult them. My Amendment 37 is very much along the same lines. It would insert, at the end of proposed new subsection (2B), a new paragraph—paragraph (e)—
“requiring that the trustees are satisfied that it is in the interests of the members that the power to pay surplus is exercised in the manner proposed in relation to a payment before it is made”.
Both amendments seek to explore the relationship between the employer, the members and the trustees.
I have listened to the arguments where it has been put forward that the employer has underwritten the surpluses, almost, and is at the mercy of the trustees. The case that I have put forward shows that, actually, there is often a power imbalance between the members—they are probably at the bottom of the pile—the trustees and the employer. I completely concur that the idea of mandating a response is wrong, but it is open to have regulations that require the trustees both to have regard to and to look at that, so that we reach a situation where members’ interests have at least equal value, in the eyes of the trustees, as the requirements of the employer.
I feel that these amendments are very modest. Who knows what might happen later on, but this stage the amendments are designed to reinforce members’ ability to be consulted and know what is going on.
Lord Davies of Brixton (Lab)
My amendments address how members’ interests can best be represented whenever a release of assets is under consideration.
As the Bill stands, the first members will know about such proposals is when they are a done deal—that is, when the decision has been made by the trustees, having talked to the employer. That is what the Bill says, and that is clearly wrong. There is also nothing in the Bill about any involvement of members in the process, such as consultation. This is obviously unacceptable; they should be involved fully from the start. I support the amendments in this group in the name of the noble Viscount, Lord Thurso.
I would probably oppose Amendment 42 in the name of the noble Baroness, Lady Noakes, but, obviously, I shall wait to hear what she says before coming to a conclusion—although the noble Baroness’s remarks on the previous group gave me the gist of what is proposed. Finally, I shall await my noble friend the Minister’s response to the questions raised by the amendments in the name of the noble Viscount, Lord Younger of Leckie.
My Amendment 36 is relatively straightforward and, I hope, uncontentious. Members need to be told before, not after, a decision is made by the trustees and agreed by the employer. This is a point of principle. Scheme members are not passive recipients of their employers’ largesse; they should be equal partners in a shared endeavour, and they have the right to be involved.
My other two amendments would bring scheme members’ trade unions into the process. A question has been asked a number of times during the passage of the Bill in the Commons: who represents members when a release of assets is proposed? The answer, of course, is their trade unions. This is a matter of fact. Consultation is inherently collective and there is now extensive and detailed legislation on how members are to be represented collectively. This applies here, as it does to all other terms and conditions of employment. I should emphasise that this is a requirement to consult on the employer, not the trustees. It applies to trade unions recognised for any purpose under the standard provisions of employment law.
Amendment 36 is relatively straightforward. It would simply require the employer to inform recognised trade unions at the same time as scheme members of the proposals that it is considering in discussion with trustees to release scheme assets. Amendment 40 would go further; it would require an employer to consult with those recognised trade unions before reaching any agreement with the trustees. The requirement to consult with trade unions about changes in pension arrangements that they sponsor is not a new provision. I am not proposing anything radical or new. Pension law already requires consultation with trade unions in this particular form; it requires them to take place before major changes in employees’ collective arrangements. My case is simply that the decision to release assets is a major change and hence it should be brought within the consultation requirements that are already set out in legislation.
This is all in accordance with Section 259 of the Pensions Act 2004 and the regulations under the Act. These are the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006, that is SI 349 of 2006. These regulations require employers with at least 50 employees to consult with active and prospective scheme members before making major changes—known as listed changes in the legislation—to their pension arrangements.
The key requirements set out in the legislation includes a mandatory consultation period. First, employers must conduct a consultation lasting at least 60 days before a decision is made. Secondly, there must be a spirit of co-operation. Employers and consultees are under a duty to work in the spirit of co-operation and employers must take the views received into account. Thirdly, the affected parties consultation must include active members, those currently building benefits, and prospective members—eligible employees not yet in the scheme. Deferred and pensioner members are generally excluded, which I have always regarded as a shortcoming in the legislation.
The listed changes that currently trigger statutory consultation are: an increase in the normal pension age; closing the scheme to new members; stopping or reducing the future accrual of benefits; ending or reducing the employer’s liability to make contributions; introducing or increasing member contributions; changing final salary benefits to money purchase benefits; and reducing the rate of revaluation or indexation for benefits. It should be noted that this is not just about changes in benefits; it is about changing the financing of the scheme. A release of assets is a change in the financing of a scheme, and so it should be included in the list in these regulations. My amendment would simply direct that regulations should be laid that will add release of assets to the list of these listed changes.
There are consequences under the legislation for employers that fail to comply with it, but the spirit here is one of setting out a process of working together, in order, as far as possible, to reach changes to the scheme that are accepted to both sides of the employment relationship.
Baroness Noakes (Con)
I want to comment briefly on Amendment 35, tabled by the noble Lord, Lord Davies of Brixton, where he seemed to characterise the need to have members in the room alongside employers and trustees. He seems to forget that trustees’ responsibility is to act for the members. The members are fully part of the negotiation through the trustees. I personally do not agree with his amendment requiring formal consultation, as with some of the existing listed changes to pension schemes. But there was a good reason why the release of surpluses was not included when that legislation was first drafted, and I have seen no reason to change that.
My Amendment 42 is rather unlike other amendments in this group, which is why I spoke in the previous group and probably should have asked for my amendment to be grouped there. I reiterate my remarks in that group on the importance of the interests of the sponsoring employers, who have for the most part provided the funding which has now led to the surpluses emerging, which is the subject of these clauses in the Bill. My Amendment 42 simply says that regulations made under new subsection (2A) of Section 37 of the 1995 Act may not replace restrictions on employers once surpluses have been paid to them.
The DWP’s post-consultation document on the treatment of surpluses said:
“Employers could use this funding to invest in their business, increase productivity, boost wages, or utilise it for enhanced contributions in their Defined Contribution (DC) schemes”.
The noble Viscount, Lord Thurso, referred to that being used elsewhere as a justification for these new release powers. I agree that they could use it for those things, but there are also other things that they could use it for. For example, they could use it to fund a reduction of prices in the goods and services they sell to gain a competitive advantage in the marketplace.
The thing that concerns me in particular is whether the funds are used to pay dividends or to make a return of capital, because companies have shareholders and that would be a fairly normal use of surplus funds. My key concern is that the Government would use the power in new subsection (2A) to specify that employers could not use the money in the way they chose, and in particular in relation to dividends and share buybacks.
I completely understand the Government’s desire to see more investment, but holding money within the company might be the economically illiterate thing to do. Businesses make investments in assets, productivity or people if they think they have a reasonable prospect of making a return. They do not invest because they happen to have some surplus cash lying around. If they cannot be reasonably sure of making a decent return themselves, the right thing to do is to return the money to the shareholders and let the shareholders recycle that into other investment opportunities which make a reasonable return. That is why low-performing companies are often under pressure to return capital to the shareholders. In the context of the whole economy, that is the sensible thing to do, because it gets capital to the right place in the economy. Therefore, I hope the Minister can reassure me that new subsection (2A) will not be used to restrict what companies do with the surpluses extracted from pension schemes.
The Minister made some quite helpful remarks in the first group about the Government not telling people what to do with the surpluses, but I hope she can be specific in relation to the use of the power in new subsection (2A) that that would not be used to restrict what companies can do.
Lord Fuller (Con)
I support my noble friend Lady Noakes in her assertion that members’ interests are already taken into account on many trustee boards. In fact, all but the very smallest schemes have procedures and requirements to appoint member-nominated trustees. It is almost so obvious that it is hardly worth saying, but it is the truth. It is the job of the member-nominated trustees, not the unions or the members themselves, to represent the interests of that cohort. Even the local government scheme has arrangements whereby the needs of the employers and the employees are balanced, so it is not just a question of the private schemes; all schemes have those balances as a principle, and that is entirely appropriate.
I am disappointed to disagree with the noble Lord, Lord Davies, because I felt we got on so well in the previous two days in Committee, but, on this occasion, I part company with him. I do not think his amendments are needed, because of the existence of that member-nominated trustee class. It is their job, and if the members do not like it, they can get another one.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords who have spoken on these amendments to Clause 10. Having previously set out the Government’s policy intent and the context in which these reforms are being brought forward, I start with the clause stand part notice tabled by the noble Viscount, Lord Younger. As he has made clear, it seeks to remove Clause 10 from the Bill as a means of probing the rationale for setting out the conditions attached to surplus release in regulations rather than in the Bill. It is a helpful opportunity to explain the scope and conditions of the powers and why Clause 10 is structured as it is.
The powers in the Bill provide a framework that we think strikes the right balance between scrutiny and practicality, enabling Parliament to oversee policy development while allowing essential regulations to be made in a timely and appropriate way. It clearly sets out the policy decisions and parameters within which the delegated powers must operate. As the noble Viscount has acknowledged, pensions legislation is inherently technical, and much of the practical delivery sits outside government, with schemes, trustees, providers and regulators applying the rules in the real-world conditions. In pensions legislation, it has long been regarded as good lawmaking practice to set clear policy directions and statutory boundaries in primary legislation, while leaving detailed operational rules to regulations, particularly those that can be updated as markets and economic conditions change and scheme structures evolve, so that the system continues to work effectively over time.
In particular, Clause 10 broadly retains the approach taken by the Pensions Act 1995, which sets out overarching conditions for surplus payments in primary legislation while leaving detailed requirements to regulations. New subsection (2B) sets out the requirements that serve to protect members that must be set out in regulations before trustees can pay a surplus to the employer—namely, before a trustee can agree to release surplus, they will be required to receive actuarial certification that the scheme meets a prudent funding threshold, and members must be notified before surplus is released. The funding threshold will be set out in regulations, which we will consult on. We have set out our intention and we have said that we are minded that surplus release will be permitted only where a scheme is fully funded at low dependency. That is a robust and prudent threshold which aligns with the existing rules for scheme funding and aims to ensure that, by the time the scheme is in significant maturity, it is largely independent of the employer.
New subsection (2C) then provides the ability to introduce additional regulations aimed at further enhancing member protection when considered appropriate. Specifically, new subsection (2C)(a) allows flexibility for regulations to be made to introduce further conditions that must be met before making surplus payments. That is intended, for example, if new circumstances arise from unforeseen market conditions. Crucially, as I have said, the Bill ensures that member protection is at the heart of our reforms. Decisions to release surplus remain subject to trustee discretion, taking into account the specific circumstances of the scheme and its employer. Superfunds will be subject to their own regime for profit extraction.
Amendment 37, tabled by the noble Viscount, Lord Thurso, seeks to retain a statutory requirement that any surplus release be in the interests of members. I am glad to have the opportunity to explain our proposed change in this respect. We have heard from a cross-section of industry, including trustees and advisers, that the current legislation, at Section 37(3)(d) of the Pensions Act 1995, requiring that the release of surplus be in the interests of members, is perceived by trustees as a barrier because they are not certain how that test is reconciled with their existing fiduciary duties. We believe that retaining the status quo in the new environment could hamper trustee decision-making. By amending this section, we want to put it beyond doubt for trustees that they are not subject to any additional tests beyond their existing clear duties of acting in the interests of scheme beneficiaries.
I turn to Amendments 31 and 43, which seek to clarify why the power to make regulations governing the release of surplus is affirmative only on first use. As the Committee may know, currently, only the negative procedure applies to the making of surplus regulations. However, in this Bill, the power to make the initial surplus release regulations is affirmative, giving Parliament the opportunity to review and scrutinise the draft regulations before they are made. We believe that this strikes the appropriate balance. The new regime set out in Clause 10 contains new provisions for the core safeguards of the existing statutory regime; these are aligned with the existing legislation while providing greater flexibility to amend the regime in response to changing market, and other, conditions.
Amendments 35 and 36 seek both to prescribe the ways in which members are notified around surplus release and to require that trade unions representing members also be notified. I regret to say that I am about to disappoint my noble friend Lord Davies again, for which I apologise. The Government have been clear: we will maintain a requirement for trustees to notify members of surplus release as a condition of any payment to the employer. We are confident that the current requirement for three months’ notification to members of the intent to release surplus works well.
However, there are different ways in which surplus will be released to employers and members. Stakeholder feedback indicates that some sponsoring employers would be interested in receiving scheme surplus as a one-off lump sum, but others might be interested in receiving surplus in instalments—once a year for 10 years, say. We want to make sure that the requirements in legislation around the notification of members before surplus release work for all types of surplus release. We would want to consider the relative merits of trustees notifying their members of each payment from the scheme, for example, versus trustees notifying their members of a planned schedule of payments from the scheme over several years. Placing the conditions around notification in regulations will provide an opportunity for the Government to consult and take industry feedback into account, to ensure the right balance between protection for members and flexibility for employers.
I understand the reason behind my noble friend Lord Davies’s amendment, which would require representative trade unions to be notified. They can play an important role in helping members to understand pension changes. However, we are not persuaded of the benefit of an additional requirement on schemes. Members—and, indeed, employers—may well engage with trade unions in relation to surplus payments; we just do not feel that a legislative requirement to do so is warranted. The points about the role of trustees, in relation to acting in the interests of members in these decisions, were well made.
Amendment 34 would require member consultation before surplus is released. I understand the desire of the noble Viscount, Lord Thurso, to ensure that members are protected. The Government’s view is that members absolutely need to be notified in advance, but the key to member protection lies in the duty on scheme trustees to act in their interests. Since trustees must take those interests into account when considering surplus release, we do not think that a legislative requirement to consult is proportionate.
Lord Davies of Brixton (Lab)
Just to be absolutely clear, the three-month notification period relates to the notice of implementation; it is not three months’ notice of the decision being made.
Baroness Sherlock (Lab)
I believe so; if that is not correct, I shall write to my noble friend to correct it. Coming back to his point, the underlying fact is that we believe that the way to protect the interests of members is via the trustees and the statutory protections around trustee decision-making.
I apologise to the noble Viscount, Lord Thurso, as I misunderstood his question in our debate on the previous group. I am really grateful to him for clarifying it; clearly, he could tell that I had misunderstood it. At the moment, when a scheme provides discretionary benefits, the scheme rules will stipulate who makes those decisions. In many cases, that involves both the trustees and the sponsoring employer, as may be the case in what the noble Viscount described.
When considering those discretionary increases, trustees and sponsoring employers have to carefully assess the effect of inflation on members’ benefits. But, as the noble Viscount describes, if it is not agreed, the employer may effectively in some circumstances veto that. We think the big game-changer here is that these changes will give trustees an extra card, because they will then be in a position to be able to put on the table the possibility for surplus being released not to the member via a discretionary increase but to the employer. However, they are the ones who get to decide if that happens, and therefore they are in a position where they suddenly have a card to play. I cannot believe I am following the noble Viscount, Lord Thurso, in using the casino as a metaphor for pensions, which I was determined not to do; I am not sure that that takes us to a good place. But it gives them an extra tool in their toolbox to be able to negotiate with employers, because they are the ones who hold the veto on surplus release. If they do not agree to it, it ain’t going anywhere. So that is what helps in those circumstances.
Viscount Younger of Leckie (Con)
My Lords, I am very grateful to the Committee for the discussion on this group, which goes to the heart of how Clause 10 is intended to operate in practice. I have a few closing remarks, but I just say at the outset that I think we all realise that it was for the Minister to answer the very concise questions raised by the noble Lord, Lord Davies, the noble Viscount, Lord Thurso, and my noble friend Lady Noakes. Across these amendments and our stand-part notice, our concern has been a consistent one, which is that Clause 10 confers wide powers on the Secretary of State to determine the conditions under which surplus may be paid to an employer and to alter those conditions over time, largely through regulations. That is a significant delegation of authority in an area both technically complex and deeply sensitive for scheme members.
Although we recognise the case for flexibility, that flexibility must be balanced with proper safeguards. When changes to the surplus regime could materially affect member protections or the balance of interests between employers and members, it is not unreasonable for Parliament to expect a meaningful and continuing role in scrutinising those changes, not merely at the point when the framework is first established.
I listened very carefully to the Minister in her responses in terms of the legislative process, and I take note of the fact that she says that the measures are in line with existing legislation. I will reflect on that and read Hansard, and I will look more deeply at her points about the negative procedures having been used in the past, and the fact that she says that this is different and the Government are bringing forward an affirmative procedure before the negative procedure, if your Lordships see what I mean. I shall look at that.
As I said at the outset, our amendments have been probing in nature. They are intended to test the rationale for the proposed approach to parliamentary procedure and seek reassurances that the level of scrutiny will remain commensurate with the importance of the decisions being taken.
Finally, given the nature of the Bill as a framework Bill—a theme that we have been promulgating on the first two days in Committee, and which the Minister herself explained on Monday—I hope that the Minister will anticipate that we and other noble Lords will be bearing these questions in mind on many other parts of the Bill. I hope that in raising this and flagging it, she can continue to respond to these issues in the round, explaining why this structure was adopted in the first place throughout the Bill, what constraints the Government envisage placing on the use of these powers, and how Parliament will be able to satisfy itself that future changes to the surplus regime remain appropriate and proportionate. With that rounding off, I withdraw my amendment.
Baroness Altmann
“(ca) requiring the relevant actuary to confirm that work to comply with Technical Actuarial Standards issued by Financial Reporting Council on risk transfer processes has been completed,”Member’s explanatory statement
This amendment will ensure that prior to a surplus payment being made the trustees and sponsor have considered the impact on bulk transfer and run-on strategies currently required under TAS300V2.1 P5 other financial considerations for the scheme and the sponsor.
Baroness Altmann (Non-Afl)
My Lords, I hope that noble Lords will understand as I go through my remarks that I believe my Amendments 33 and 33A are incredibly important to the future of defined benefit schemes and the aims of the Bill.
Clause 10, which is about the restrictions of power to pay surplus, specifies in new subsection (2B)(c) a requirement for
“the relevant actuary to give a certificate”.
My Amendments 33 and 33A seek to add a strengthening of the trustee considerations of alternatives, rather than just having a certificate from the actuary. Amendment 33 would state that the actuary must confirm that the required technical actuarial standards work has been completed. Amendment 33A is about the trustees, who must ensure that they receive the report on the relative merits and consider alternative options such as buyout, superfunds or even a change of sponsor—I will come to that in a moment—before making payment of surplus.
Why are these amendments required? There are standards in place, but I have been careful not to specify a number for the standard. I am talking about today’s technical actuarial standard, TAS 300, but of course these standards change—there is already version 1 and version 2—so the amendments aim to see that the standards are applied, taken notice of and fed into the consideration before any irreversible changes are made to the scheme.
The trustees obviously have a fiduciary duty to consider members’ best long-term interests, but it seems that they do not already receive the depth of analysis required in many cases. The calculations done for the TAS 300 are not consistent; they are not applied consistently, according to the information that I have received from those in the market. There is no standard calculation methodology, but the DWP regulations that were changed recently require trustees to set funding and investment strategies. In my view, TAS 300, as it stands, should be part of that.
Before any surplus is paid out, or a decision to buy annuities, enter a superfund or change sponsor is made, a proper risk assessment should be carried out looking carefully at the downside risks of any potential move versus the upside potential. The actuarial calculations to quantify these, which are specified in the Financial Reporting Council’s technical standards, do not necessarily become applied, and there are regulatory gaps. The technical standards require actuaries to provide TAS 300 comparative advice, but it is not clear how, when or whether the trustees must consider them.
Consistent application of the assessment, in my view, could be significant in changing the standard mindsets about the best choice for the future of DB schemes. But, even today, there is no consistency, no agreed pro forma, no standard template and no detailed implementation guidance, even, from the Financial Reporting Council or other bodies. It has long been recognised that there is a lack of co-ordination and scrutiny of technical actuarial standards. The Kingman report in 2018, the Morris report and the Penrose report, dating back to 2000, all proposed urgent improvements but not much has changed.
There are seven regulators reporting to three government departments. The Pensions Regulator and the PPF report to the DWP; the FRC and the CMA to the Department for Business and Trade; the PRA and the FCA to the Treasury; and the Institute and Faculty of Actuaries is self-regulating. These regulators need to work together to address this massive pool of assets and national wealth. My amendments are an attempt to help this integration and move it along.
Currently, there is over £1 trillion-worth of assets in these schemes. Since 2018, £350 billion of the value in defined benefit schemes has been transferred to insurance companies, many of which are now offshore. The scrutiny and regulatory control over those massive amounts of money is being diluted, and that has not been recognised. It is still considered that the gold standard for the future of defined benefit schemes is annuities, whether a buy-in or a buy-out; that is meant to be the no-risk option. That is not necessarily the case any more. The Bank of England itself has stated that there are risks in terms of the offshore insurers.
This TAS 300 exercise could become part of a crucial element in deciding what the future of these schemes will be. Currently, the transfer of assets to insurance companies, which is so frequently being carried out—we are told that there may be another £500 billion in their sights from DB schemes in coming years—is handing the surplus assets of these schemes to the insurance companies. I argue that proper use of the TAS 300 exercise could help the surplus be used for national investments, for improving member benefits and for improving the resources of corporate UK.
It is estimated that the scheme assets which are currently being transferred to insurers are invested in such a low-risk manner that their aim—this is the Pensions Regulator’s recommended strategy for low dependency to attain a return of gilts plus a half or so—as soon as the insurer takes these assets in, is to re-risk, invest in other assets, and sell the gilt and aim for a return of gilts plus, say, one and a half. Every £100 billion of assets transferred to an insurance company is the equivalent of about £200 million of scheme assets that are not going to members or employers but are transferring offshore.
Stagecoach, which uses this TAS 300 exercise, actually managed to justify changing the sponsoring employer, while enhancing member benefits and paying extra out in surplus. That could be the way of the future if we get away from the current obsession, which states that the no-risk option is annuities and everything else is risky. This is a huge amount of money. These schemes have changed fundamentally. The outlook has changed fundamentally: we are no longer worried about deficits and employer covenants. We should be talking about using this national pool of wealth to boost Britain.
Lord Davies of Brixton (Lab)
I find myself in some difficulty in speaking to these amendments. First, although I declared my interests as a fellow of the Institute of Actuaries at the beginning of Committee, it is appropriate, in accordance with practice where there is a specific interest involved in the amendment, to declare it again. I am not a practising actuary at the moment, but I could be, and this would bear directly on my ability to earn money.
I support what I think is behind the proposals being made by the noble Baroness, Lady Altmann. We should consider ways of strengthening trustee consideration of the way forward, whatever it is. More specifically, an automatic response to go to annuitisation is clearly wrong. If trustees do not consider the other options, they are not acting properly and are not discharging their fiduciary responsibility. The suggestion is that this is happening too often at the moment.
Broadly speaking, I agree that there has been a rush to buy out, but that has happened for a wide variety of reasons, of which I would suggest that the presence or absence of particular actuarial advice is only a small part. To overemphasise this part without looking at what else is going on is a problem. Trustees should be supported to make better decisions, and part of that process is the actuarial report that they produce from their scheme actuary.
Just to provide a bit of background, we need to understand that actuarial regulation is just a little confusing. We have two regulators for actuaries. There is the institute itself, which is responsible for professional standards—“you should not bring shame on the profession and you should make sure that you know what you are talking about before you provide advice”. All that side of things is handled by the profession itself. Technical standards, such as what should be in a valuation report, are the responsibility of the Financial Reporting Council, a completely separate body that is not part of the actuarial profession. Although there are actuaries involved in the work of the FRC, it is not an actuarial body but an independent body. I will not go into the history, but, for whatever reason, it was decided to take that technical supervision away from the institute and place it with the Financial Reporting Council.
The particular standard referred to here is the technical actuarial standard, or TAS 300. That does not mean that there has been a previous 299; it starts at 300. There is a 100, and there are other numbered standards that come and go. This is the one that relates to advice to trustees, not just for valuation purposes but for calculating what basis the fund should use to calculate transfer values, commutation rates and so on. So there is this technical standard, set by an independent body.
I understand that that standard is controversial, and the noble Baroness, Lady Altmann, reflected some of that controversy in her speech. It would be fair to say that views differ. It is also important to understand that the current edition of TAS 300 was issued after extensive consultation last July and came into effect only on 1 November last year. It is always open to debate what the standard should say. My concern is that that standard is intended for actuaries, to tell them how they should provide actuarial advice to trustees. Its role is not to tell trustees how to behave. The problem, which I recognise, and which has been suggested as a reason for these amendments, is that trustees are not behaving properly—or it could be that they are being ill-advised by actuaries. That is not something that I am going to endorse but, if that is true, there is a disciplinary process under the Financial Reporting Council. Again, that is not part of the actuarial profession; it is a separate disciplinary process for anyone identified as not complying with the TAS. The issue can be raised with the FRC, and it may well be that it should have been raised more often, because that is really the first port of call if you think that the advice is wrong. It is not to put it into a piece of legislation.
I am very sorry to find myself in contention with the noble Baroness but, if trustees need to be regulated, it is not the job of the Financial Reporting Council to do it. It is not its job to tell trustees how to do their job. That is an issue that I am sure that we could debate extensively. I recognise the problem, but I am not convinced that we have been presented with the correct answer.
Lord Fuller (Con)
My Lords, I know that this is a technical amendment, and in the last group I disagreed with the noble Baroness, Lady Altmann, but on this one I totally agree with her analysis, particularly her identification of the groupthink that trustees suffer, bamboozled and pressured by the FCA, TPR and actuaries, and sometimes investment managers, to be overly risk-averse in some of their investments. In particular, there is a drive—it is explained that it is prudential and that the regulations require it, which means that we need to look at the regulations—for pension funds to apply an increasing proportion of their assets to liability-driven investments.
If your scheme happens to be in deficit, these LDIs will anchor you in deficit for the rest of time, because that is how they work. That is wrong, because the trustees have no control over what the interest rate, discount rate or gilt rate might be. They can adjust—plus or minus, in the case of gilts—but, ultimately, liabilities are driven by the gilt rates. They have no control over that, but they do have control over how the assets in their scheme are invested for the greatest return.
However, that is not how their schemes are valued at the triennial, which is valued on the gilt rate. As the noble Baroness, Lady Altmann, said, the value of their assets is depressed by virtue of being in a scheme. As people buy out and are forced to buy out—Amendment 33A contemplates what happens when you approach a buyout—schemes are being mugged. Members are being short-changed by this artificial diminution in the value of the assets, which at the moment pass into the hands of an insurance company, as the noble Baroness, Lady Altmann, said. No longer impeded, weighed down or anchored from being in a scheme, they can be let rip. The uplift happens quickly, and there is an immediate profit to the insurance company.
It is perverse that the entire regulatory advisory industry is mandating schemes to go into overly prudent investment products, almost suckering them down so that they have to pay a premium to be bought out, and all the profits go somewhere else. That is not prudence; it is short-changing the members of the schemes and diverting huge amounts of productive capital for the engine of our economy and the private businesses that generate wealth and pay taxes.
Regarding Amendment 33A, it is really important that trustees have imagination and are encouraged to think as widely as they possibly can, asking, “What does this mean? Are we in the appropriate asset mix? Should we be rammed into LDIs because we are chasing a deficit, or should we be invested in growth to pay benefits for members?” That is the dilemma, and this amendment shines a light on it almost for the first time in the Bill. Trustees in as many schemes as I can think of are being misdirected, ostensibly to reduce risks. But they are not reducing risks; they are reducing the sustainability of their schemes and their ability to pay for today’s members, including, most importantly, the youngest members of their scheme, who have the longest to go to retirement. Following the dismal, dead hand of these regulators is prejudicing the ability of these schemes to pay out for their youngest members in 20, 30 or 40 years’ time.
I notice that the noble Lord, Lord Willetts, is not in his place, but he made this point in a previous group. This is the generational problem that we have, between the eldest and the youngest people in the scheme. We need to strengthen and empower our trustees to play their roles simply and straightforwardly and not as though they are not competent or do not feel confident to resist the so-called advice they are getting from regulators, which are acting in groupthink and not in the scheme’s best interest, or the interests of either members or companies.
Viscount Younger of Leckie (Con)
My Lords, we understand that these amendments are doing something that is really quite straightforward and, in our view, sensible. The amendments in the name of the noble Baroness, Lady Altmann, would ensure that, before any surplus is extracted, the relevant actuary has confirmed that the work required under the Financial Reporting Council’s technical actuarial standards of risk transfer has been completed. In other words, they would ensure that trustees and sponsors have properly considered the scheme’s credible endgame options, whether that is bulk transfer, run-on or another long-term strategy, rather than looking at surplus in isolation.
I was pleased to listen to this interesting debate, commenced by the noble Baroness, Lady Altmann, with her strong reference to the TAS 300 exercise and the link to insurance. She mentioned the reinsurance market and the subsequent debate, as well as the amount of money potentially in play—£200 million, I think. Surplus extraction ought to sit within a wider assessment of the scheme’s long-term direction, the securities of members’ benefits and the financial implications for both the scheme and the sponsor. Requiring confirmation that this work has been done would help anchor surplus decisions in that broader context.
This has been a very brief speech from me. We see these amendments as a proportionate safeguard, reinforcing good governance and ensuring that surplus payments are considered alongside—not divorced from—the scheme’s long-term endgame strategy. I look forward to the response from the Minister.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness, Lady Altmann, for setting out her amendments. I am also grateful to all noble Lords who have spoken. I must admit that I have learned more about actuaries in the past week than I ever knew hitherto, but it is a blessing.
Three different issues have come up. I would like to try to go through them before I come back to what I have to say on this group. In essence, the noble Baroness, Lady Altmann, has us looking at, first, actuaries: what is their role, what are the standards and how do they do the job? Secondly, what are the right endgame choices—that is, what is out there at the moment? Finally, what should be in the surplus extraction regime? We have ended up with all three issues, although the amendments only really deal with the last of those; they deal with the others by implication. Let me say a few words on each of them, then say why I do not think that they are the right way forward.
We have just finished hearing from the noble Lord, Lord Fuller. Obviously, we are talking about the position now. DB schemes are maturing and, as such, are now prioritising payments to members. Given this context, they are naturally more risk-averse, as they are now seeking funding to match their liabilities. Since the increases in interest rates over the past five years, scheme funding positions have—the noble Lord knows this all too well—improved significantly in line with their corresponding reductions and liabilities.
However, when setting an investment strategy, trustees must consider among other things the suitability of different asset classes to meet future liabilities, the risks involved in different types of investment and the possible returns that may be achieved. The 2024 funding code is scheme-specific and flexible. Even at significant maturity, schemes can still invest in a significant proportion of return-seeking assets, provided that the risk can be supported.
On actuaries, actuarial work is clearly an important part of the process. It helps set out the picture, as well as highlighting the risks, the assumptions and the available options, but it does not determine the outcome. My noble friend Lord Davies is absolutely right on this point. Decisions on how a scheme uses the funds are, and will remain, matters of trustee judgment. The role of the actuary is to support the judgment, not replace it. Trustees are the decision-makers, and they remain accountable for the choices that they make on behalf of their members.
Of course, in providing any certification, actuaries will continue to comply with the TAS standards set by the Financial Reporting Council. I am not going to get into the weeds of exactly how the standards work but, on the broader points made by the noble Baroness, Lady Altmann, we agree that the requirements and the regulations must work together. As my noble friend said, after the funding regime code was laid, the FRC consulted on revisions to TAS 300 covering developments; it has now published the revised TAS. These are complex decisions. Regulators need to work together. We will come back to this issue later on in the Bill, following an amendment from the noble Baroness, Lady Coffey.
In terms of the endgame choices, the independent Pensions Regulator has responsibility for making sure that employers and those running pension schemes comply with their legal duties. Obviously, the Government are aware of the recent transaction that resulted in Aberdeen Asset Management taking over responsibility for the Stagecoach scheme; we are monitoring market developments closely. Although we support innovation, we also need to ensure that members are protected. Following the introduction of TPR’s interim superfund regime and the measures in this Pension Schemes Bill, we understand that new and innovative endgame solutions are looking to enter the DB market and offer employers new ways to manage their DB liabilities. I assure the noble Baroness that we continue to keep the regulatory framework under review to ensure that member benefits are appropriately safeguarded.
Then, the question is: what is the right thing to be in the surplus extraction regime? I know that the noble Baroness, Lady Altmann, is concerned that, following these additional flexibilities to trustees around surplus release, trustees continue to consider surplus release in the context of the wider suite of options available to their scheme, including buyout, transfer to a superfund or other options beyond those. Following these changes, trustees will remain subject to their duty to act in the interests of beneficiaries. As such, we are confident that trustees will continue both to think carefully about the most appropriate endgame solution for their scheme and to act accordingly. For many, that will be buyout or transferring to a superfund, rather than running on.
Let me turn to what would happen with these amendments specifically. Amendment 33 would link the operation of the surplus framework to existing standards on risk transfer conditions in TAS. In essence, it seeks to ensure the scheme trustees have considered a potential buyout or other risk transfer solution before surplus can be released. Amendment 33A has a similar purpose; again, it aims for trustees, before they can release surplus, receiving a report from the scheme actuary assessing endgame options and confirming compliance with TAS.
Although I appreciate the noble Baroness’s intention to ensure that trustees select the right endgame for their scheme, these amendments are not needed because trustees are already required, under the funding and investment regulations, to set a long-term strategy for their scheme and review it at least every three years; that strategy might include a risk transfer arrangement. Furthermore, although I know the noble Baroness has tried to minimise this, hardwiring any current provisional standards into the statutory framework could have unintended consequences, including reducing flexibility for trustees and requiring further legislative or regulatory changes to maintain alignment as these standards evolve over time.
We are back to the fact that, in the end, trustees remain in the driving seat with regard to surplus release. As a matter of course, TPR would expect trustees to take professional advice from their actuarial and legal advisers; to assess the sponsor covenant impact when considering surplus release; and to take into account relevant factors and disregard irrelevant factors, in line with their duties. We are working with the Pensions Regulator regarding how schemes are supported in the consideration of surplus-sharing decisions. The new guidance already considers schemes as part of good governance to develop a policy on surplus. TPR will issue further guidance on surplus sharing following the coming into force of the regulations flowing from the Bill, which will describe how trustees may approach surplus release and can be readily updated as required. Alongside the Pensions Regulator, we will work with the FRC to ensure that TAS stays aligned.
I am grateful for the noble Baroness’s contribution and the wider debate, but I hope that she will feel able to withdraw her amendment.
Baroness Altmann (Non-Afl)
I thank the Minister and everybody else who has spoken. I have enormous respect for the noble Lord, Lord Davies, and take what he says seriously. I am most grateful for the support of the noble Lord, Lord Fuller.
I make no apology for the technical nature of these amendments, but I apologise that they had to be shoehorned in; this is such an important issue, though. This environment of higher inflation risk, excessive prudence and hoarding of surpluses is damaging pension adequacy. The de-risking overshoot has sucked innovation, energy and impetus out of the pension system and the economy. Indeed, the chair of the trustees of Stagecoach described to me that he faced what he termed co-ordinated and insidious behind-the-scenes lobbying against the trustees’ aim to try to obtain better pensions for their members; he also said that the lobbying was in favour of annuitisation as the best option for the scheme.
There is no lobbying for either improving member benefits or giving a lot more money back to employers at the moment. If we were able to get an amendment such as this one into the Bill, so that everybody must consider the range of available options plus innovative strategies, I would hope that the outcome of the Bill would be much better, more productive use—which is the aim of the Government: the Minister, Torsten Bell, has rightly talked about using surpluses in a productive manner.
The FSCS backs annuities. It has no government guarantee. I hope that, on Report, we may come back to the spurious safety of the current recommended future for this enormous amount of assets and find ways in which the Bill might be able to accommodate the need for a mindset change in this connection. For the moment, I beg leave to withdraw the amendment.
“Independent review into state deduction in defined benefit pension schemes(1) The Secretary of State must, within three months of the day on which this Act is passed, commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit pension schemes for banks.(2) The Secretary of State must by regulations set out the terms of reference for the review, including the bank or banks to be investigated.(3) The regulations in subsection (2) must make provision for the terms of reference to include —(a) the origin, rationale and implementation of state deduction in bank pension schemes,(b) the clarity and adequacy of member communications regarding state deduction from inception to present,(c) the differential impact of state deduction on pensioners with varying salary histories, including an assessment of any disproportionate effects on—(i) lower-paid staff, and(ii) women, (d) comparisons with other occupational pension schemes in the banking and public sectors, and(e) the legal, administrative, and financial feasibility of modifying or removing state deduction provisions, including potential mechanisms for redress.(4) The Secretary of State must ensure that the person or body appointed to conduct the review—(a) is independent of the banks investigated and its associated pension schemes,(b) possesses relevant expertise in pensions law, occupational pension scheme administration, and equality and fairness in retirement income, and(c) undertakes appropriate consultation with—(i) affected scheme members,(ii) employee representatives,(iii) pension experts, and(iv) stakeholder organisations.(5) The person or body conducting the review must—(a) submit a report on its findings to the Secretary of State within 12 months of the date the review is commissioned, and(b) the Secretary of State must lay a copy of the report before Parliament and publish the report in full.(6) Within three months of laying the report before Parliament, the Secretary of State must publish a written response setting out the Government’s proposed actions, if any, in response to the report’s findings and recommendations.(7) Regulations under this section are subject to the negative procedure.(8) For the purposes of this section—“state deduction” means any provision within a defined benefit occupational pension scheme that reduces pension entitlements by reference to the member reaching state pension age or by reference to any state pension entitlement;“defined benefit pension scheme” has the meaning given in section 181 of the Pension Schemes Act 1993.”Member’s explanatory statement
This new clause would require the Secretary of State to commission an independent review into clawback provisions in occupational defined benefit pension schemes, for example, the Midland Bank staff pension scheme.
Lord Palmer of Childs Hill (LD)
This proposed new clause would require the Secretary of State to commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit schemes. It is a very narrow request that focuses specifically on clawback provisions in the Midland Bank staff pension scheme.
The Deputy Chairman of Committees (Baroness Morgan of Drefelin) (Lab)
My Lords, there is a Division in the House—we all knew it was coming—so we need to adjourn. If it is acceptable to the Committee, we will adjourn for 20 minutes because there is, I believe, a number of Divisions coming.
Lord Palmer of Childs Hill (LD)
My Lords, I will try to make this quick. Proposed new clause in Amendment 45 requires the Secretary of State to commission an independent review into the application and impact of state deduction mechanisms in occupational defined benefit pension schemes. It focuses on the clawback provisions, particularly in the Midland Bank staff pension scheme and associated legacy arrangements.
Why is this review needed? State deduction provisions can reduce members’ pension entitlements, sometimes in ways that are complex or unclear. There are concerns about fairness and transparency and a disproportionate impact, particularly on lower paid staff and women. It ensures members, regulators and Parliament have clarity about the origin, rationale and effects of these provisions.
The review will examine the history and rationale for state deduction in a Midland Bank staff pension scheme and assess clarity. It will be conducted by a person or body independent of HSBC and associated schemes. We will also try to ensure that it must consult affected scheme members, employee representatives, pension experts and stakeholder organisations. I beg to move.
Baroness Stedman-Scott (Con)
My Lords, we are broadly supportive of the purpose behind this amendment. It raises an important set of questions about whether members of defined benefit schemes have been given clear, timely and accessible information about state deduction or clawback provisions, and whether the rationale for those provisions has been properly explained to them over time.
Of course, individuals must take responsibility for managing their own finances and retirement planning. But that responsibility can only be exercised meaningfully if people are properly informed in advance about what will happen to their pension, when it will happen and why. When changes or reductions are triggered at state pension age, members need adequate notice so that they can make sensible and informed financial decisions. In that context, a review of the adequacy of member communications, the transparency of the original rationale and the accessibility of this information is welcome. While we may not necessarily agree with some of the more precise parameters and timetables set out in the amendment, as a way of posing the question and prompting scrutiny, it is a reasonable approach.
That said, we have spoken to someone who has intimate, working knowledge of the Midland Bank pension scheme and has experience of the workings of the scheme. They confirmed to us that they were fully aware of this provision, because it was in all the literature they were sent when they were enrolled. Given this, can the noble Lord give some more insight into why he thinks some members of this scheme were aware, and others not, and how could this be addressed?
I would be interested to hear from the Minister whether she has any initial views on the issues this amendment raises. In particular, how accessible is this information to members in practice today, and what steps, if any, would the Government or Department for Work and Pensions take if it became clear that these arrangements are not well understood?
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Lord, Lord Palmer, for introducing his amendment and drawing attention to this issue, which is of real importance to some members in integrated schemes. After a lifetime of work, people rightly expect their pension to provide security and stability in retirement. For many, their occupational pension forms a key part of that.
Integrated schemes can feel confusing or unexpected to those affected, particularly when their occupational pension changes at the point when their state pension is paid. These schemes are designed so that the occupational pension is higher before state pension age and then adjusted downwards once the state pension is paid, because the schemes take account of some or all of a state pension when calculating the pension due. However, if it is not clearly explained, the change could come as a surprise. I acknowledge that and the worries some members have expressed. It is important to be clear that members are not losing money at state pension age. The structure of these schemes aims to provide a smoother level of income across retirement by blending occupational and state pension over time.
Concerns have been raised that deductions applied within integrated schemes may represent a higher proportion of income for lower-paid members, many of whom are women. This reflects wider patterns of lower earnings during their working lives, rather than any discriminatory mechanism within the schemes themselves, but I appreciate why this feels unfair to those affected. The rules governing these deductions are set out in scheme rules. Employers and trustees can decide on their scheme’s benefit structure within the legislative framework that all pension schemes must meet. The Government do not intervene in individual benefit structures but do set and enforce the minimum standards that all schemes must comply with.
Although this type of scheme is permitted under legislation, it is essential that members understand how their scheme operates. Therefore, it is extremely important that people have good, clear information about their occupational pension scheme so that they can make informed decisions about their retirement. What matters just as much as the rules is that people understand them. Good, clear information is essential so that members are not taken by surprise when they reach state pension age.
If a member believes that the information they received was unclear or incomplete, they are not without redress. They can make a complaint through their scheme’s internal dispute process or, if needed, escalate their case to the Pensions Ombudsman for an independent determination.
The Government absolutely share the desire for people to have confidence in the pensions they rely on, but, given the protections already in place and the long-established nature of schemes, we do not believe that a review is necessary. For those reasons, I ask the noble Lord to withdraw his amendment.
Lord Palmer of Childs Hill (LD)
I thank the noble Baroness and withdraw the amendment.
Lord Sikka
“Insolvency within 10 years of payment of surplus: prioritisation of pension scheme above other creditors (1) Where—(a) an employer has received payment of surplus under section 36B of the Pensions Act 1995 (inserted by section 9 of this Act) and goes into insolvency within 10 years of receiving such payment, and(b) at the point of insolvency, the employer’s pension scheme has a deficit,the Secretary of State must, by regulations, make provision to ensure that when the employer sells assets to repay creditors, the pension scheme from which the surplus was initially distributed is paid before any other creditor.(2) In order to fulfil their duty under subsection (1), the Secretary of State may amend the Insolvency Act 1986 and the Enterprise Act 2002 to alter the hierarchy of creditors in the circumstances described in subsection (1)(a) and (b).(3) Regulations under this section are subject to the affirmative procedure.”Member’s explanatory statement
This amendment seeks to ensure that, if a company goes into insolvency within 10 years of receiving a payment of surplus from the pension scheme and the pension scheme has a deficit at that point, then the pension scheme must be prioritised as a creditor.
Lord Sikka (Lab)
My Lords, this amendment deals with a gap in the Bill. The transfer of surplus to employers could leave employees in jeopardy, especially when an employer enters bankruptcy. I will lay out a scenario. Suppose a pension scheme surplus is distributed to an employer but, soon afterwards, the pension scheme is in deficit and the employer enters bankruptcy. Under the pecking order at insolvency, as specified in the Insolvency Act 1986 and the Enterprise Act 2002, pension schemes rank as unsecured creditors, which is near the bottom. This usually means that they will receive little or nothing from the sale of assets of the bankrupt entity, and employees could lose some of their pension rights. A pension scheme with a deficit can be bailed out by the Pension Protection Fund, but the bailout is restricted to a maximum of 90%. This means that future retirees will lose some of their pension rights. Those already retired may lose some value compared with their original scheme, as the PPF annual increase could be lower than the rate of RPI or CPI.
There is nothing in the Bill that enables a pension scheme to claw back surpluses taken by employers during the last few years—the amendment mentions 10 years, but I am happy to change it to five if that persuades some noble Lords to support it. In any case, if the employer is insolvent, there is no chance of recovering the deficit from the employer anyway, so the only possibility is to prioritise payment to the pension scheme from the sale of the assets of the bankrupt entity. In other words, the pension scheme must be paid before any other creditor.
Lord Sikka (Lab)
Just to recap quickly, I was looking at a scenario where an employer had received a surplus from a pension scheme but soon afterwards became bankrupt. Normally, the PPF will rescue, but that is limited to 90%, which means that employees will face a haircut in their pension rights. So the only possibility to help to protect employee pension rights is to prioritise payment to the pension scheme from the sale of the assets of the bankrupt entity. In other words, pension schemes must be paid before any other creditor.
Deficits on pension schemes of bankrupt companies are not uncommon. I was adviser to the Work and Pensions Committee on the collapse of BHS and Carillion, and we looked at that closely. I also wrote a report on the collapse of Bernard Matthews for the same committee. Basically, they showed all kinds of strategies used by companies to deprive workers of their hard-earned pension rights.
This probing amendment seeks to protect employees by ensuring that pension scheme deficits not met by the PPF are made good by being first in line to receive a distribution from the sale of the assets of the bankrupt company. This applies only where the employer has taken a surplus in the last 10 years. As I indicated earlier, there is nothing sacrosanct about 10 years; if noble Lords wish to support this, it could be changed.
From a risk management perspective, it makes sense to put pension scheme creditors above other creditors. Unlike banks and financial institutions, employees cannot manage their risks through diversification. Their human capital can be invested only in one place. Employer bankruptcy is a tragedy because employees lose jobs and pension rights. For those of your Lordships who are not familiar with portfolio theory, the basic message is that there is a correlation coefficient of plus one, and it multiplies their risks. As human labour cannot be stored, employees will have no time to replenish their pension pots, and as we all get older, our capacity to work is also eroded. So, despite making the required contractual payments, employees will face poverty and insecurity in old age.
I urge the Government to protect workers’ pension rights. They should not be left in a worse position after the extraction of surpluses by employers. I beg to move.
Baroness Noakes (Con)
My Lords, I do not support Amendment 45A, tabled by the noble Lord, Lord Sikka. I am not sure that the kind of regulations envisaged in this amendment could actually create a creditor which has a priority in insolvency where a creditor does not exist at present. At present, a deficit in a pension scheme is generally not as a matter of law a creditor if the sponsoring employer goes bust.
Lord Palmer of Childs Hill (LD)
This amendment raises a very important point. The question, though, is when the surpluses could be paid out. If the company seems to be in a robust way, there is no reason why the pension fund should be overprotected. While everything in the garden is lovely, there is no reason to give them a 10-year position when things may have deteriorated in subsequent years. So, I agree in principle with the amendment of the noble Lord, Lord Sikka, but 10 years is far too long, because in those 10 years, all sorts of things can happen. If it was five years or fewer, it would be very good, but while everything in the garden—in the company—is lovely, the pension fund should not be overprotected for the extent of 10 years.
Baroness Altmann (Non-Afl)
My Lords, I have enormous sympathy with the thoughts behind the amendment of the noble Lord, Lord Sikka. However, I share the concerns expressed by the noble Baroness, Lady Noakes, in that it is not clear how that would work, because this would then need to be a contingent payment or some kind of conditional payment which can be recouped, and that would impact creditors or debt holders of the company as well. Does the noble Lord feel that if, as a consequence of the surplus payment, members also got enhanced benefits, that would in some ways compensate for the future eventuality of what he is concerned about?
Finally, in the days before we had a Pension Protection Fund, I was very much in favour of increasing the status of the unsecured creditor position of a pension scheme. But in the current environment, where there is a Pension Protection Fund, and where the Bill will be improving the protections provided by it, it is much less important to increase the status on insolvency of the pension scheme itself than it would have been in past times. I certainly agree with the noble Lord, Lord Palmer, that if there were to be any such provision, it should be a lot less than 10 years.
Baroness Stedman-Scott (Con)
My Lords, I am grateful to the noble Lord, Lord Sikka, for tabling this amendment, which is clearly motivated by a desire to protect scheme members and guard against the risk that pension surpluses are extracted prematurely, only for employers to fail some years later. I suspect that there is broad sympathy with this objective across the Committee. However, I have a number of questions about how this proposal would operate in practice and whether it strikes the right balance between member protection, regulatory oversight and the wider framework of insolvency law. My noble friend Lady Noakes, the noble Lord, Lord Palmer of Childs Hill, and the noble Baroness, Lady Altmann, have all raised points connected to this amendment. I hope I am not duplicating their questions, but I will ask mine.
First, can the noble Lord say more about how this amendment would interact with the existing hierarchy of creditors under the Insolvency Act 1986? As drafted, it appears to require pension schemes to be paid ahead of all other creditors, including secured creditors and those with statutory preferential status? Does the noble Lord envisage this as a complete reordering of creditor priorities in these cases? If so, what thought has he given to the potential consequences for lending decisions, access to capital or the cost of borrowing for employers that sponsor defined benefit schemes?
Secondly, I would be grateful for further clarity on the choice of a 10-year clawback period, which other noble Lords have raised. As has been said, 10 years is a very long time in corporate and economic terms, and insolvency occurring at that point may bear little or no causal connection to a surplus payment made many years earlier, perhaps in very different market conditions. What is the rationale for that specific timeframe, and how does the noble Lord respond to concerns that this could introduce long-tail uncertainty for employers and their directors when making decisions in good faith?
Thirdly, how does the amendment sit alongside the existing powers of the Pensions Regulator? At present, trustees must be satisfied that member benefits are secure before any surplus is paid, and the regulator already has moral hazard powers to intervene where it believes scheme funding or employer behaviour to be inappropriate. Does the noble Lord consider those tools insufficient and, if so, can he point to evidence of systemic failure that would justify addressing this issue through restructuring insolvency priorities rather than through pension regulations?
I am also interested in the practical operation of this provision. Proposed new subsection (2) would allow amendments to both the Insolvency Act 1986 and the Enterprise Act 2002 to achieve the intended outcome. That is a very broad power, even acknowledging the use of the affirmative procedure. Has any thought been given to how this would operate in complex insolvencies; for example, where surplus has been paid to a parent company, where assets are held across a corporate group or where insolvency proceedings involve cross-border elements?
Finally, although I understand the protective instinct behind this amendment, I wonder whether there is a risk of unintended consequences. Might the creation of a potential super-priority for pension schemes discourage legitimate surplus extraction, even where schemes are demonstrably well funded, trustees are content and regulatory requirements have been met? If that were to occur, could it inadvertently weaken employer covenant strength over time rather than strengthen it?
None of these questions is intended to diminish the importance of member protection or suggest that concerns about surplus extraction are misplaced. Rather, they are offered in the spirit of probing whether this amendment is the most proportionate and effective way of addressing those concerns, or whether there may be alternative approaches, perhaps within the existing regulatory framework, that could achieve similar objectives with fewer systemic risks. I look forward to hearing the noble Lord’s response and the Minister’s comments.
Baroness Sherlock (Lab)
My Lords, I thank my noble friend Lord Sikka for introducing Amendment 45A. For clarity, I will speak to the amendment as if intended to address the power to pay surplus under Section 37, as Section 36B contains the modification power.
I fully recognise the concern that members’ benefits must remain protected when surplus is paid and that trustees take a long-term view of scheme funding and employer covenant. This is why there are strong safeguards, which I have described, as set out in Clause 10. Before the release of any surplus, trustees will need to make sure that the scheme is prudently funded and seek advice and sign-off from the scheme actuary, and other advisors, about the viability of any release and the impact that may have on the long-term health of the scheme.
While trustees perform an essential role in safeguarding members’ benefits, prioritising them above all other creditors in these circumstances risks distorting the already established insolvency regime. It creates uncertainty for businesses, ultimately harming the very members we all seek to protect.
On the points made by the noble Baroness, Lady Noakes, it is our concern that placing trustees ahead of other unsecured creditors could create significant uncertainty, increased borrowing costs and restricted access in future to finance, especially for smaller businesses. In the long term, this could potentially weaken employer support for pension schemes and threaten their sustainability, rather than strengthen it.
It is important to recognise that the current system already provides significant security for pension scheme members. Pension funds in UK occupational schemes are held in trust and are legally ring-fenced from the employer, so they cannot be accessed by creditors in an insolvency. The PPF exists precisely to offer a safety net to members who would otherwise risk losing their pensions when their employer fails.
Following the Chancellor’s announcement at the Budget, this Bill will also introduce annual increases on compensation payments from the PPF and FAS on pensions built up before 6 April 1997.
The insolvency regime is designed to operate alongside the compensation system. The structure of the pension protection levy already reflects the risk of employer failure and spreads that risk fairly across eligible schemes. The PPF assumes the creditor rights of the pension scheme trustees in the event of insolvency of the sponsoring employer and seeks to maximise recoveries from the insolvent employer’s estate.
Pension schemes, backed by a strengthened PPF, are already in a stronger position than many unsecured creditors. Giving trustees priority would leave small suppliers, contractors and even some employees with significantly reduced recoveries, despite having far fewer protections. We should not create a system where small businesses and individual workers bear disproportionate losses because a pension scheme deficit overrides all other obligations. There is also the risk of moral hazard, where trustees could be less prudent when deciding to release surplus, knowing that, under employer insolvency, they would have guaranteed priority above other priorities.
The amendment could affect the employer’s business plans as creditors may be less likely to lend money to the employer. Equally, banks may place conditions on borrowing to prevent surplus release if trustees were given priority. That dynamic could push companies towards insolvency earlier, not later, having a knock-on effect on members.
The only other thing I will add is that there are other tools open to trustees that are concerned about the strength of the employer covenant and the security of benefits. It is open to trustees during funding discussions or other negotiations to seek a fixed or floating charge over the employer’s assets, which would, in effect, elevate the scheme’s position in the insolvency priority order, providing additional protection should the employer become insolvent.
I want to be clear that trustees will have the final decision on whether to release the surplus. Before they can do so, the Bill stipulates statutory safeguards before a surplus can be released. I thank the noble Lord for his concern but for the reasons I have outlined, I ask that he withdraw his amendment.
Lord Sikka (Lab)
I thank all noble Lords for their observations, comments, suggestions and many questions. I will briefly address some. Does this risk distorting insolvency law? It is already distorted. Pension scheme members are unsecured creditors. People who cannot hold a diversified portfolio lose their job, lose some of their pension rights and have no opportunity to rebuild their pension part. It is already distorted and already against them. I am trying to offer something right to, generally, the weakest of the creditors. Sure, banks that are secured creditors may get a little less if you pay pension scheme creditors first, but banks hold diversified portfolios. They are in a better position to manage the risks compared to employees. Creditors are less likely to lend money to companies.
Do we have any evidence to show that, if you change the order and empower some creditors, somebody takes secure charge number one, somebody takes number two and somebody takes number three—the whole hierarchy? That does not seem to persuade creditors to lend less just because there is a new hierarchy; it does not seem to support that. Changing it to five years is a possibility. A pension scheme creditor comes into existence as and when an employer goes into bankruptcy. Therefore, the pension scheme is basically a creditor.
Introduction: Lord Pitt-Watson
Equality and Human Rights Commission: Code of Practice
(1 day, 10 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Strasburger
To ask His Majesty’s Government when they plan to publish the Equality and Human Rights Commission’s code of practice on single-sex spaces.
Baroness Ludford (LD)
My Lords, on behalf of my noble friend Lord Strasburger, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
The Minister of State, Office for Equality and Opportunity (Baroness Smith of Malvern) (Lab)
My Lords, the Code of Practice for Services, Public Functions and Associations provides guidance on all protected characteristics, not solely sex and gender reassignment. The Government are considering the draft updated code, and if the decision is made to approve it, the Secretary of State will lay it before Parliament. Parliament will then have 40 days to consider the draft code. It is important that the correct process for considering the code is followed to ensure that the Secretary of State can make an informed decision.
Baroness Ludford (LD)
My Lords, the Education Secretary—the Minister, supposedly, for Women—has run out of road, with her procrastination, excuses and flannelling the object of ridicule. Organisations are using the Government’s refusal to lay the guidance as a pretext to stick with the Stonewall law, which has been wrong for a decade. This means that women encounter situations which compromise their safety, privacy and dignity in changing rooms, toilets and leisure centres, because these are not guaranteed to be single-sex. Why are the Government continuing to fail women and defy the rule of law?
Baroness Smith of Malvern (Lab)
My Lords, the Secretary of State for Education and the current Minister for Women has a proud and lifelong record of representing women. She also understands that in order to be able to do that, we need a code of practice that is both clear and legally defensible. I would have thought that anybody with women’s best interests at heart would agree with that.
Baroness Thornton (Lab)
My Lords, proportionality, as I am sure the whole House recognises, is central to the Equality Act. But, of course, it will be difficult to apply. Can my noble friend the Minister assure the House that the Government promote a consistent and lawful understanding of proportionality across policy areas, particularly where rights appear to be in tension, while ensuring that decisions remain fair, evidence-based and respectful?
Baroness Smith of Malvern (Lab)
My Lords, that is an important principle in terms of the interpretation of law and the sometimes difficult ways in which law is applied. The For Women Scotland judgment on the definition of “sex” within the Equality Act was clear, but it is important that it is applied in a way that both has legal clarity and respects the rights and dignity of all those involved.
Baroness Hunt of Bethnal Green (CB)
My Lords, on a number of occasions in this House the Government have outlined how they are carefully considering the draft code and following proper process. Can the Minister clarify how the Government understand the balance between the independence of the EHRC and the Minister’s statutory role in approving a code and laying it before Parliament? I think that there is some confusion.
Baroness Smith of Malvern (Lab)
It is for the independent commission to consult on and put forward the code to the Minister, as it has done. The full code, following the most recent judgment, was received on 3 September by the department. It is important that it is then properly reviewed. As I have outlined previously, various elements must take place; for example, consultation with the devolved Administrations. Then it is the Minister’s responsibility, if satisfied with that code, to lay it before the House under the process set out in the Equality Act.
Baroness Cash (Con)
We have had a number of Questions now on this matter so it would be very helpful to the House if the Minister could finally provide a timetable to indicate when we might have this laid before Parliament.
Baroness Smith of Malvern (Lab)
I have been pretty clear every time that I have answered. People might not like the answer. But ensuring that what is laid before Parliament is legally defensible will enable those who need the protection of this code and of the Equality Act to receive it without us being bogged down in lengthy legal proceedings. I think that is a sensible thing for any Government to be spending a bit of time on getting right.
Lord Paddick (Non-Afl)
My Lords, I declare an interest. I am paid to advise the Metropolitan Police on culture and leadership. I joined the Metropolitan Police as a constable 50 years ago in 1976—I tell people I joined when I was seven. One of the things that undermine public confidence in laws and those who enforce them is when rules and regulations, however legally sound and well intentioned, are not enforceable in practice. How sure are the Government that the EHRC Code of Practice is actually workable?
Baroness Smith of Malvern (Lab)
Workability is one important criterion; so is a certainty that the code fulfils the legal requirements and the clarity that has now been brought into the law by the For Women Scotland judgment. But the noble Lord is right that what can be very clear in law may be more complex in terms of its application in every single circumstance. It is important that that is clear through the process of the code.
Baroness Chakrabarti (Lab)
My Lords, I am very grateful to my noble friend the Minister for her very clear answers so far. Does she agree with me that although the Supreme Court is definitive on the meaning of the Equality Act, it was silent as to other continuing obligations—for example, to trans people under the Human Rights Act—and that navigating coterminous legal obligations is one of the complex challenges of the guidance and that it has to be got right?
Baroness Smith of Malvern (Lab)
My noble friend is right that it is important, and it is the basis of the Equality Act, to recognise the rights of all those with protected characteristics within it. What was helpful in the Supreme Court’s judgment was the absolute clarification that trans people’s rights remain protected within the Equality Act 2010. We have been clear that the laws to protect trans people from discrimination and harassment will remain in place and that trans people will still be protected on the basis of gender reassignment, which is a protected characteristic written into the Equality Act.
Work is already under way to fulfil our commitment to advance the rights and protections afforded to LGBT+ people, and that includes delivering a full trans-inclusive ban on conversion practices, working with the Home Office to deliver our commitment to equalise all existing strands of hate crime, and working with the Department of Health and Social Care to improve services for trans people.
Baroness Fox of Buckley (Non-Afl)
My Lords, does the Minister have any advice for women such as Miranda Newsom, who, assuming that the Supreme Court had settled the matter, challenged a biological male in the female-only changing room at a council-run leisure centre in Southwark and received a torrent of abuse from the man, yet it was she who was punished and barred from the gym? Can the Minister assure the House that after the victory of the Darlington nurses the Government are urgently instructing NHS bodies to bring their policy fully into compliance with the law? If they do not, they are complicit with unlawful behaviour of service providers.
Baroness Smith of Malvern (Lab)
The Government have been clear that the judgment provides clarity around the definition of sex within the Equality Act. We have been clear that therefore all providers should be following that, taking specialist legal advice where necessary, and ensuring that, with respect for everybody’s rights and dignity, we can make progress on this in a way that respects the law but also ensures that everybody is able to have the rights and protections that the Equality Act so importantly laid down in 2010.
Baroness Stedman-Scott (Con)
My Lords, in the wake of the Sandie Peggie v Fife Health Board and the Darlington nurses v County Durham and Darlington NHS Trust decisions—the participants are in the Gallery—does the Minister accept that there is also an urgent need for all NHS trusts to update their policies in the light of the Supreme Court ruling? Have the Government sought this? As my noble friend Lady Cash set out so well, what timetable have the Government set up for compliance? How much longer do we have to wait? With all respect to the House, if my grandmother was saying this, she would say that Nelson will get his eye back before this happens.
Baroness Smith of Malvern (Lab)
As I have already been clear today and previously when responding to this, it is important that all bodies, public and private, consider the clarity of the For Women Scotland Supreme Court judgment and review their policies in line with that. That goes for the NHS, and it goes for other organisations as well. I just emphasise that the fact that some people have found it necessary to revert to legal cases to get their rights is precisely why we need to make sure that the interpretation of the most recent judgment is clear and not going to mean people having to take their rights through the courts to have them realised in future. It is in order to ensure that that is more likely to be the case that the Government are taking the time necessary to get this right.
Public Inquiries: Costs
(1 day, 10 hours ago)
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Lord Spellar
To ask His Majesty’s Government what was the cost of public inquiries in 2025, and what were the Government’s legal costs for representation in public inquiries.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, individual inquiries report their own costs. The Covid inquiry, for example, spent approximately £31 million in the first two quarters of the 2025-26 financial year, whereas the Post Office/Horizon inquiry reported spending of approximately £26 million in the 2024-25 financial year. The Cabinet Office also published Covid-19 inquiry legal response costs of £25 million for the 2024-25 financial year. Public inquiries remain vital for investigating serious concerns, shedding light on injustices and spurring change, as well as getting answers for victims and their loved ones.
Lord Spellar (Lab)
I thank the Minister for the response, but the public will be slightly concerned that the Government do not seem to have an aggregate figure for the cost of inquiries, let alone the costs of their own legal expenses and of Civil Service time. At a time when cash is immensely tight, it would be a very good idea to tighten this up. Would it not be much better for future inquiries to set a fixed limit on how long they will take and a fixed budget that they cannot go beyond?
Baroness Anderson of Stoke-on-Trent (Lab)
My noble friend raises some interesting points. It may help him to be aware of two developments that this Government have done in recent months. First, changes to the Ministerial Code have made it clear that, since October last year, any government department that wishes to bring forward a public inquiry has to bring forward a business case to a Cabinet Office Minister before the request goes to the Prime Minister. This is so that we can ensure that best practice is achieved. We have also updated the practitioners’ handbook with guidance for sponsor teams and inquiry staff on the set-up and operation of inquiries, the results of which will be published shortly.
Lord Forsyth of Drumlean (Con)
My Lords, I hesitate to go too far back in the past, but the key to the inquiry following the Piper Alpha disaster and the Dunblane inquiry, which I commissioned, was appointing a judge with experience and having terms of reference that were clear and precise. In that way, one can get an inquiry that produces important results and which is conducted in time and well within reasonable expenditure.
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord makes a genuinely important point, in remembering that this is also about value for money. But I remind all noble Lords that this is truly about getting answers for people who have been victims of potentially horrendous and heartbreaking experiences, and about rebuilding trust in the state. He is absolutely right that it is key to make sure that we have learned best practice; however, I gently say to your Lordships’ House that it is also key to ensure that we implement the recommendations from each inquiry, to make sure that they are not books that sit on shelves, as has happened historically in some cases.
Baroness Manningham-Buller (CB)
Could the Minister tell us how many public inquiries are on at the moment? Picking up the point made by the noble Lord, Lord Spellar, the cost is not just to judges, but to the number of public servants who have to be removed from their current work to service the inquiries.
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Baroness is absolutely right. The responsibilities on everybody to truly participate to provide evidence is key. To answer her specific question, there are currently 21 public inquiries on the statute book, of which 16 are active, 12 are statutory and eight have been initiated by this Government.
Lord Wallace of Saltaire (LD)
My Lords, there is a danger that public inquiries end up like the royal commissions of old: taking minutes, lasting years and losing public confidence. Is there not now a case for looking at the way that public inquiries are handled and at how one can make sure that at least some of them conclude more quickly, so that we do not have to wait several years, as well as looking at the questions of overall cost and time spent?
Baroness Anderson of Stoke-on-Trent (Lab)
I absolutely agree. We have seen, whether in the infected blood scandal or the Horizon scandal, that people who genuinely wanted answers had to wait years before we even got to the point of a public inquiry. The Government have an opportunity to help rebuild trust in the institutions that should matter to people. At a time when there are significant threats to our democracy, it is incredibly important that people have trust in them. So, expediting this is key.
One of the things we have also done brought forward the dashboard where people can see what recommendations have been made by some of these public inquiries, to make sure that the recommendations are being implemented. There is a balance here. We must listen to people and ensure that they have their day and have their issues heard, and we must also act on the recommendations of the inquiries.
Baroness Finn (Con)
My Lords, some of the most serious matters considered by public inquiries inevitably touch on the actions or knowledge of the intelligence and security agencies. Can the Minister explain how the Government ensure that bodies such as MI5, MI6 and GCHQ are able to participate fully and properly in public inquiries by providing relevant evidence and assistance while also preserving their essential national security duties and statutory obligations? In particular, how do the Government ensure that national security considerations do not unduly limit an inquiry’s ability to establish the facts and command public confidence in its conclusions?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Baroness will be very aware of the pre-existing processes that are in place through the public interest immunity certificate and the fact that, in statute, chairs of committees can see intelligence reports that allow them to work to ensure that nothing is being hidden and that key findings are made. PII certificates are a mechanism for Ministers to withhold highly sensitive material from disclosure in court proceedings, and they can be used in relation to statutory inquiries. It is fundamental that we make sure we get the balance right between ensuring that everybody is duly held to account while at the same time protecting the people who strive every day to keep us safe.
Lord Brennan of Canton (Lab)
My Lords, in relation to my noble friend the Minister’s earlier remarks about the implementation of the recommendations of public inquiries, many of us would have liked to have seen the Leveson 2 recommendations implemented. But I commend the Government for the work they have done on the Hillsborough law, which of course derives directly from the outcome of this sort of public inquiry. Can the Minister update the House on the latest position with regard to the security services and the Hillsborough law?
Baroness Anderson of Stoke-on-Trent (Lab)
I think I thank my noble friend for that question. A Statement will be made in the other place this afternoon that will update us. I reassure your Lordships’ House that this Government are completely committed to the Public Office (Accountability) Bill. Obviously, there are ongoing discussions with key stakeholders, not least the families. My honourable friend in the other place will report this afternoon on next steps.
Baroness D'Souza (CB)
My Lords, I declare an interest, having been a member of the Statutory Inquiries Committee. No one doubts the value of these committees, but a common concern of all committees, which has been noted here, is the degree to which Governments are prepared to implement their recommendations. In our committee, one of the key recommendations was the setting up of a new, independent committee of Parliament to have oversight of public inquiries and to monitor the publication of government responses on implementation. Has progress been made on that?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank the noble Baroness for the work she has done in this space: it was an excellent report that is feeding into the Government’s thinking about next steps. She may be aware that the PACAC in the other place currently has a call for evidence. I urge all Members to contribute on how we should do this. But, obviously, how we scrutinise the Government is a matter for Parliament. Having said that, we do appreciate that more scrutiny is required.
Lord Arbuthnot of Edrom (Con)
My Lords, public inquiries have had a bad rap recently, partly because of the eye-watering sums of money spent by the Post Office on its legal fees and the Post Office inquiry. But the Post Office inquiry, so far as I can tell, has been doing a really good job. There is one problem the Minister might consider: public inquiries can be used as an excuse for organisations, such as the Solicitors Regulation Authority, not to take action until the public inquiry reports. I understand why that is, but what can we do about it?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord has been an incredible campaigner for those people who have been the subjects of the appalling IT disasters within the Post Office. His specific point is genuinely important. We have seen this throughout several of the inquiries and their impact. People feel that some of the inquiries have been pushing the can down the road. This is a genuine thing we need to reflect on. I will speak to Ministers in the Cabinet Office and come back to the noble Lord.
Domestic Violence Against Children
(1 day, 10 hours ago)
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The Lord Bishop of Newcastle
To ask His Majesty’s Government what steps they are taking to reduce domestic violence against children, and prevent such behaviour being learned and repeated by those under 16.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
Tackling abuse in teenage relationships and preventing abuse before it happens is a priority for the Government. The recently published violence against women and girls strategy commits to ensuring that all children learn about healthy relationships and consent in school, provides a helpline for young people concerned about their own behaviour to provide support and guidance, and delivers interventions for young people which challenge and change harmful attitudes and behaviours.
The Lord Bishop of Newcastle
I thank the Minister for his Answer. Can he give an update on the Government’s response to calls to lower the statutory age at which individuals can be seen as victims of domestic abuse? This is otherwise known as Holly’s law, named after the Northumberland teenager, Holly Newton, who was murdered by her ex-partner.
Lord Hanson of Flint (Lab)
I am very aware of the murder of Holly Newton, and my thoughts are with her family and friends. As the right reverend Prelate may know, the Home Office is undertaking a scoping review into the legal framework of domestic abuse to ensure that it captures the experience of adolescents in particular. This includes—the point that the right reverend Prelate mentioned—reviewing the age limit in the Domestic Abuse Act 2021. The review will conclude during the course of this year, and I will be able to report back in due course.
Baroness Chisholm of Owlpen (Non-Afl)
My Lords, there is always, quite rightly, multi-agency involvement in these distressing cases, but there can be a problem when victims fall through the cracks and the joined-up approach fails. How can we be assured that this is being improved? This is difficult for the Minister to answer, but it is an important point to air because we see, over and over again, how there are problems with the joined-up approach with one agency talking to another. I wondered if the Minister might have some views on that.
Lord Hanson of Flint (Lab)
All agencies have a responsibility to provide safeguarding for young people. Co-operation between agencies—by that I mean schools, social services and, potentially, the police—is extremely important. In the violence against women and girls strategy, we are trying to look at how we can do this better. I would refer the noble Baroness to that document, because there are potential steps in there that we are seeking to achieve, but it will be not an easy or quick solution.
Baroness Brinton (LD)
My Lords, the VAWG action plan proposes increasing the number of family help lead protection practitioners—that is a senior social worker—but children’s services teams across the country are severely stretched now. Can the Minister say how many more children’s social workers will be needed to deliver family support? Will the Government guarantee that funding for it will be ring-fenced inside local authorities?
Lord Hanson of Flint (Lab)
The noble Baroness will know that I cannot give a figure on that today. We have put an extra £20 million into the violence against women and girls strategy to deal with the particular issues that are the focus of this Question. There is a need—to go back to an earlier point made by the previous noble Baroness—to have co-ordination between local authorities, education and, in some cases, the devolved Administrations. I cannot give a definitive answer, but I will take the point back to my right honourable friend Jess Phillips, the Minister with direct responsibilities, and ensure that the noble Baroness receives an answer.
Baroness Winterton of Doncaster (Lab)
My Lords, does my noble friend the Minister agree that one of the issues to be solved by the points that have already been raised is information sharing between the police, social workers and teachers? We could also make better use of school nurses and educational psychologists in getting support to vulnerable young people at risk. Could my noble friend’s department really drill down on this, find out what the best practice is and share it with others so that we can all learn from it?
Lord Hanson of Flint (Lab)
My noble friend makes a very good point. She will know that the Home Office has invested £13.1 million to fund and launch a new National Centre for Violence Against Women and Girls and Public Protection to improve the response, particularly in relation to child sexual abuse. That goes to the heart of the point that both the noble Baroness and my noble friend have mentioned about co-ordination, and it is important that we try to resolve this. The strategy was published just before Christmas; it is a 10-year strategy; there is a lot of stuff in it, but the objective is one that my noble friend has pointed to and one that we share.
Baroness Finlay of Llandaff (CB)
My Lords, will the Government undertake to work with the AFRUCA organisation? Often, a problem for girls with skin of colour is that bruises do not show. Therefore, the people who may encounter these girls with early signs of abuse, which then escalates, do not easily have the triggers to open the conversation and allow the girls to express that they are at risk.
Lord Hanson of Flint (Lab)
The noble Baroness makes a very good point. Again, one of the areas that the violence against women and girls strategy is looking at is how we can improve training for professionals who come into contact with people who may be involved in that type of abuse. The particular point she mentions related to people of colour is extremely important, and I will take it away.
Lord Sandhurst (Con)
My Lords, a Guardian article last week said, in reference to the Sentencing Bill, that the Victims’ Commissioner feared that
“plans to radically change sentencing could leave victims of domestic abuse in danger”.
Is the Victims’ Commissioner wrong?
Lord Hanson of Flint (Lab)
The Victims’ Commissioner has a statutory duty to comment on any issues that she wishes. She made representations regarding the Sentencing Bill. This House has completed its proceedings on that Bill, and the Minister for Justice, the noble Lord, Lord Timpson, has reflected on the comments that the Victims’ Commissioner made at that time. That point is self-evident but one that I do not wish to comment on further.
Lord Meston (CB)
My Lords, it is a particularly sad feature of domestic violence cases that adults are doing what was done to them as children. Indeed, their children are in turn exposed to similar violence and come to see it as normal and acceptable. This difficult problem is recognised in the Government’s strategy, but can the Minister indicate what more specifically they hope to do to address these cycles of intergenerational violence?
Lord Hanson of Flint (Lab)
One of the key areas is ensuring that, through the education system, we strengthen relationship education, personal relationship education and, in particular, respect for young girls. That is a very difficult job, because there is a mass of social media that has an exact opposite approach to the type of things that we wish to see within the education system, so we are also, through the Online Safety Act, looking at what we need to do with online harm, because the world has moved on, even in the past 10 to 15 years, and will continue to do so. That is a very important point and one that the Government are very much apprised of and trying to find some resolution to.
Lord Watts (Lab)
My Lords, the Minister is quite correct to say that social media has much more impact than government policy in this area, but is he confident that the regulator, which has continued to fail to do anything about this, will be up for the job that it now has, with the changes in the policy direction, and that it will do the job that it is supposed to do to protect the public?
Lord Hanson of Flint (Lab)
Ofcom, which is the appropriate regulatory body, is determined to ensure that the existing Online Safety Act legislation is implemented and, in particular, that social media companies are held to account for their performance on it. Again, on the violence against women and girls strategy and other matters such as fraud, which is within my direct remit, we are looking at whether we need to give additional powers and support to Ofcom to ensure that it performs those tasks properly.
The Lord Bishop of Manchester
My Lords, the Question was about domestic violence, and it seems we have strayed slightly off the subject. Does the Minister agree that most harm that comes to children is within the home? We hear an awful lot about social media and other forms of harm, but children are usually most at risk from a relative or a close friend of the family.
Lord Hanson of Flint (Lab)
It is. The Question was phrased in relation to teenage-on-teenage violence, but it is important that parental responsibility is also managed effectively. In the violence against women and girls strategy, that is certainly recognised, and I hope that the right reverend Prelate will be able to support us over the 10-year period to try and do so.
Lord Hanson of Flint (Lab)
Female genital mutilation is outlawed. The Government are taking steps, through the Home Office in particular, to give advice and support and to look at issues to do with individuals and sentencing as well. There is a programme to deal with female genital mutilation, including spotting the signs of abuse. We have recently taken steps at the border to ensure that checks are made on individuals who may be going in or out of the country for the purposes of being impacted by female genital mutilation. It is an abhorrent practice and one that we will continue to crack down on.
High Temperature Gas-Cooled Reactors
(1 day, 10 hours ago)
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Baroness Bloomfield of Hinton Waldrist
To ask His Majesty’s Government what plans they have for the National Nuclear Laboratory to work with the Japan Atomic Energy Agency to achieve early deployment of high temperature gas-cooled reactors in a mutually beneficial manner.
The Minister of State, Department for Energy and Net Zero and Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab)
The Government will publish very soon the advanced nuclear framework, setting a pathway for privately led advanced nuclear projects. The framework will introduce an assessment process, identifying credible projects that are potentially deliverable within the UK. We would welcome a proposal regarding deployment of a Japanese HTGR, Japanese-led or alongside a UK partner. UKNNL is open to proposals from any country, including Japan. Any developer can approach UKNNL to discuss support.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the Minister for that encouraging Answer and welcome him and all Peers to nuclear in Parliament week—my happy place. The Minister will know that HTGRs are classed as AMR technology and the UK is on track to be the first country outside Russia to produce HALEU, the base fuel for AMRs. I think the Minister will agree that the MOC between NNL and JAEA signed in 2023 is too modest. Does the Minister agree that it would be highly desirable in terms of securing the UK supply chain and employment to accelerate the commercial development of Japanese HTGR technology in the UK? In this regard, would he perhaps undertake to engage with his Japanese counterpart to provide the necessary commitment to progress this technology?
Lord Vallance of Balham (Lab)
We have two MOCs with Japan. One, as the noble Baroness rightly said, was signed in 2023, and a second, on HTGRs and fuel, was signed in 2024. We have regular meetings with our Japanese counterparts. Japan has long been held as an important collaborator for us in nuclear. The last of those meetings, the 14th, was held on 3 December last year, and we will continue with regular interactions with the Japanese, who we certainly view as extremely important partners, particularly in this area.
Viscount Hanworth (Lab)
My Lords, our much vaunted nuclear revival is based on the deployment of pressurised light-water reactors. These are grossly inefficient in their use of uranium fuels, which will be in short supply within a decade. They will need to be replaced by safer and more efficient reactors, such as thorium reactors and fast-neutron reactors that breed their own fuels. However, within the past 12 months we have seen the departure from the UK or the closure of projects aimed at developing such reactors. Are there any remaining prospects of developing advanced reactors in the UK, or will we be dependent in future on foreign technologies based on technologies pioneered in the UK?
Lord Vallance of Balham (Lab)
My noble friend is right that there are many different technologies coming along, and one of the reasons why we put the advanced nuclear framework together is to make it possible for all those technologies to have a pathway through to production in the UK. This is an important moment, when private-sector leadership of nuclear is real and can happen because of the new designs. We welcome all the different technologies as part of that framework, which, as I say, will be published shortly.
Lord Hunt of Kings Heath (Lab)
My Lords, perhaps in contrast to my noble friend, I congratulate the Government on the final investment decision on Sizewell C and the SMR programme by Rolls-Royce at Wylfa. This is the foundation for a fantastic new nuclear industry in the UK. But does he agree that in welcoming private-sector investment, we need to look at siting policy and making it more flexible, as the recent taskforce recommended?
Lord Vallance of Balham (Lab)
On the first part of my noble friend’s question, he should partially congratulate himself, because he was very involved in making that happen, and I join him in congratulating him. We have a very significant nuclear programme with SMRs coming along; and the Fingleton review and a series of other processes, including EN-7, which was laid on 18 December, make planning and other aspects much easier. Siting is very important. A siting review, by GBN, is going on at the moment, looking at potential sites for future gigawatt production as well; it will report in the autumn.
Earl Russell (LD)
My Lords, can the Minister outline how the continued co-operation with Japan on HTGR reactors will contribute to achieving the Government’s net-zero ambitions and improving our long-term energy security, in particular by providing a reliable low-carbon heat and power source to decarbonise industrial sectors that are otherwise particularly hard to abate, such as steel-making and hydrogen production? What assessment will be made of the cost-effectiveness of alternative types of technology?
Lord Vallance of Balham (Lab)
The point raised about the heat production of HTGRs is very important. This is not just about the electricity; it is about the heat and what can be done with it. It is why we are keen to encourage advanced modular reactors in the UK. There is also an opportunity to make them much smaller and to site them in different places, which will free up the link directly to industrial purposes. The advanced nuclear framework lays this out very clearly and encourages the private sector and others to join in putting forward new technologies.
Lord Moynihan (Con)
My Lords, given that the Minister has mentioned new technologies, is he aware that the Japanese high-temperature gas-cooled reactors operating at 950 degrees—he mentioned the importance of heat—produce hydrogen at scale and at reasonable cost? Would it not be beneficial to co-operate further with the Japan Atomic Energy Agency on multi-purpose nuclear heat applications, especially hydrogen production, using its high-temperature engineering test reactor, since the low-cost production of energy should be our overall policy objective?
Lord Vallance of Balham (Lab)
We have had two collaborations with the Japanese over the last couple of years, one on HTGRs and one on coated fuels, and we have an ongoing one on robotics. The point made about heat production is crucial. The Japanese, through our collaboration with them through UKNNL, have the demonstrator HTGR ready to go in 2028, specifically focused on hydrogen. We will keep in close contact with them over that, because that production of green hydrogen through nuclear is a very interesting opportunity.
The Earl of Kinnoull (CB)
My Lords, can the Minister update the House on the plans to replace Russia in the nuclear fuel supply chain, given that it has a very dominant place there at the moment?
Lord Vallance of Balham (Lab)
We have a committed ban on using any import from Russian nuclear fuel by 2028. As of now there is no direct use of Russian fuels; by 2028 indirect use will be eliminated as well. By that I mean fuel processed elsewhere that may have originated in Russia. We have also invested £300 million in making sure that we have our own fuel production, particularly high-assay low-enriched uranium, which is going to be particularly important. That is a major step forward in becoming self-sufficient in some of this fuel.
Lord Naseby (Con)
My Lords, the Government have done a considerably good job in this area in the limited time they have been there. There is a problem, in that I am not sure the general public understand, and they are still worried about, the development of nuclear in a variety of areas. Can the Government reassure us that they will look hard at that so that we can at least begin to reduce the extensive time for consultation that is holding back a fair number of developments?
Lord Vallance of Balham (Lab)
I think public opinion is changing, and it has changed quite a lot in the past few years, but the noble Lord is right that there remain a lot of obstacles to moving fast in this space. That is why the Fingleton report, with its 47 recommendations, is so important. We will be responding fully to that within the three-month period—that is, by the end of February—and will propose to drive that forward as fast as we can, for exactly the reasons he has raised.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, it is the turn of the Labour Benches.
Lord Spellar (Lab)
My Lords, the Government’s impetus on the nuclear programme is extremely welcome, but would it not be even better for the nations and regions of this country, and for our important manufacturing industry, if our world-leading position were being reinforced by doing the maximum amount of engineering for the construction of these projects here in the UK?
Lord Vallance of Balham (Lab)
The short answer is yes. The slightly longer answer is that, as we move towards contract completion with Rolls-Royce for the small modular reactors, we want to ensure that 70% of the supply chain, both onsite and offsite, is through British construction.
Lord Trefgarne (Con)
My Lords, is not some of the work that would be done by the project that is the subject of the question of a highly sensitive nature? Is it properly protected?
Lord Vallance of Balham (Lab)
Sorry, I missed the middle of the noble Lord’s question. Is what properly protected—the fuel?
Lord Vallance of Balham (Lab)
Yes. There is a big focus on security of information across the nuclear space, including of course cybersecurity, and on making sure that we retain the intellectual property and the know-how that are so crucial for the safety of this technology.
Greenland: Proposed US Tariffs
Lord Ahmad of Wimbledon
To ask His Majesty’s Government, in light of recent developments in relation to Greenland, what assessment they have made of the impact of proposed US trade tariffs on the UK economy, and what diplomatic efforts they are making to ensure the sovereign rights of nations to their territories.
The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
I am grateful to the noble Lord. It is always good to hear him speak on these issues. As the Prime Minister stated this morning, the use of tariffs against our allies is completely wrong. It is not the right way to resolve differences within an alliance. Any decision about the future status of Greenland belongs to the people of Greenland and the Kingdom of Denmark alone. The Prime Minister spoke to both President Trump and Prime Minister Frederiksen yesterday, as well as other key partners.
Lord Ahmad of Wimbledon (Con)
My Lords, I welcome what the Minister has said and fully align myself with it. I think I speak for most, if not all, in your Lordships’ House in saying that we are at one with the Government’s position on the issue, and I welcome the recent statements by all political leaders in this respect.
I would like to press the Minister further. First, what are the implications of the tariffs, particularly for the negotiations on the existing agreement that has been made for exports such as car manufacturing? Some 17.4% of our exports go to the US and the sector needs to have long-term planning. What assessment has been made in that respect and what briefing has been given? Secondly, bearing in mind that the President of the United States is going to be in Europe at Davos, surely now is the time for the British Government to convene an emergency meeting of the NATO alliance to address the issues of the alliance’s long-term security and, importantly, not just the sovereign rights of Greenlanders and of Denmark but of other territories around the world.
Baroness Chapman of Darlington (Lab)
As noble Lords would imagine, we are speaking constantly—this is happening in real time—with our friends, allies and partners in NATO and beyond. Any meetings that are needed to be convened will, I am sure, happen. The impact of these tariffs would be extremely damaging, not least to our car industry, aerospace, the life sciences and steel. It is not something that we wish to see happen and we hope that this proposal can be averted.
Lord Purvis of Tweed (LD)
My Lords, I feel that it is obvious to everyone that the US President is an unserious person whose actions have very serious consequences. The threat from the US to not only a very close ally in the European Union but a NATO partner—and then punishing us for standing with it—is utterly reprehensible. As the Minister said, the PM has said that the actions are “completely wrong”, but the Government refuse to raise a formal complaint to the WTO, the rules of which these actions are trashing. The Prime Minister said that they are completely wrong because they are economic coercion, but has refused to put in place protective anti-coercion measures. What is the point of saying something is completely wrong when you do completely nothing as a result of it?
Baroness Chapman of Darlington (Lab)
It is called diplomacy. Our aim is to de-escalate the situation and not take measures which would inevitably cause this to escalate and become more damaging for our manufacturers and for people’s jobs and livelihoods in the United Kingdom.
Baroness McIntosh of Pickering (Con)
My Lords, I remind the House of my interests. I congratulate the Government on the line that they are taking. If the US were to ask nicely then it could have all the military bases and all the military personnel it would wish for. It chose to withdraw the personnel after the Cold War. My understanding is that China has negotiated contracts to extract minerals in Greenland. If the US were to barge in, in an aggressive way, what does the Minister think would happen to the Chinese rights to mine which have already been negotiated?
Baroness Chapman of Darlington (Lab)
I appreciate that the noble Baroness takes a strong personal interest, for reasons that I understand, in what happens in Denmark and Greenland. I do not think it helps anybody to speculate about what we would do if certain things were to happen. I must also thank, as I should have done in my initial remarks, the leader of the Opposition, Kemi Badenoch, for the support that she has given to the Government in regard to the position we have taken this morning.
Baroness Hoey (Non-Afl)
My Lords, the Prime Minister has said that Greenlanders must have a say in what is happening, and I fully accept that. What is the difference between this and not allowing the Chagossians to have any say at all in us buying and selling off the Chagos Islands and paying for the pleasure of sending them to Mauritius?
Baroness Chapman of Darlington (Lab)
As I think we examined at length through the progress of the Bill, the right to self-determination is not something that you can claim for yourself; it is something that can be legally determined. When this question was tested before every court which has considered it so far, including here in the UK—we can all have our own personal feelings and emotions and reaction to this, as I know I do—the legal situation was found to be that Chagossians do not have the right of self-determination as regards to the Chagos Archipelago. Greenlanders have the right to self-determination and we respect that right. What happens to Greenland is a question for it and for the Kingdom of Denmark.
Lord Callanan (Con)
My Lords, I will resist the temptation to pursue that last question, the Minister will be relieved to know.
The Prime Minister is right to tell President Trump on this occasion that he is wrong. Imposing tariffs for pursuing the collective security of NATO and supporting the absolute right of self-determination for the people of Greenland is madness. It is the case that many Members of Congress, on both sides of the aisle, also think that Trump is wrong on this. Will the Minister tell the House what steps we are taking to utilise our considerable diplomatic presence in Washington to build on that support in helping to persuade Trump to back down?
Baroness Chapman of Darlington (Lab)
We talk with relevant partners as appropriate, but the main conversations that have happened between the United Kingdom and the United States have taken place between our Prime Minister and President Trump—most recently yesterday, and there may have been more contact since then that I am not aware of. That is the right level at which to address such a serious situation.
Lord West of Spithead (Lab)
My Lords, I have never been one to underplay a threat, but does my noble friend the Minister agree that there seems to be no intelligence assessment whatever to say that there is an immediate threat to the mainland of Greenland? It is extraordinary that things are being done at this pace. We need to take a deep breath, look at the intelligence assessments, and assess the real threat and the real situation before doing anything.
Baroness Chapman of Darlington (Lab)
The noble Lord is encouraging us to be calm and to respond thoughtfully but clearly. Luckily, that is the approach that our Prime Minister is taking.
Baroness Bennett of Manor Castle (GP)
My Lords, there is a notable difference in tone between the response of many of our European allies and that of Sir Keir Starmer to the actions and words of President Trump. Does the Minister think that the softly-softly approach of the United Kingdom is having a positive impact, or is it inviting further aggressive actions and words?
Baroness Chapman of Darlington (Lab)
I watched the Prime Minister’s statement this morning and I would not at all describe it as softly-softly. It was made very clear what the United Kingdom stands for and what we think of this proposal. The Prime Minister stood there publicly and laid it out for people to make their own assessment of where they think we are. The right thing to do is to carry on in that vein. That has served us well up until now. Our Prime Minister has a good relationship with and the respect of President Trump—much to many people’s surprise, I might add. Nevertheless, that is where we are. He is someone I know quite well, and I would say that he is quite well suited to this kind of diplomacy.
Lord Fox (LD)
My Lords, to hear the Minister talk about diplomacy is reassuring, I am sure. However, does she agree that, to back up that diplomacy, bringing forward a credible plan as to how we are going to meet our spending obligations in defence to meet our NATO obligations would be sensible, and that publishing the defence industrial plan now would be a good way of backing up that diplomacy?
Baroness Chapman of Darlington (Lab)
It is Monday, and these announcements were made at the weekend, so further announcements will be made. I agree that the defence investment strategy is incredibly important, but it should be published when it is ready and we should not be rushed into doing things before that.
The Lord Bishop of Manchester
My Lords, I agree with many noble Lords who have spoken about the importance of diplomacy in this, yet I feel that there is a danger that diplomacy takes place at a high level, over the heads of the Greenlanders themselves. It was only a few days ago in this Chamber that my right reverend friend the Lord Bishop of Chester, who unfortunately is not able to be with us just yet this afternoon, asked whether we could strengthen our diplomatic ties in Nuuk with the Greenlanders directly. That would give a lot of moral support and would mean that Britain’s Government would have a much better understanding of what the Greenlanders themselves are thinking, rather than what other people are telling them to think.
Baroness Chapman of Darlington (Lab)
I agree that this needs to have the Greenlanders at the heart of it. I am pleased that many Ministers have met their counterparts in Greenland, not just in response to recent events but as part of a long-standing arrangement. The right reverend Prelate makes a strong point that diplomacy should never happen somewhere else. What recent events have proved is that geopolitics is not something that happens out there, away from here. It has a direct impact on people’s jobs and livelihoods, our manufacturing industry and almost every element of life in the United Kingdom. That is why this is being taken quite so seriously by the Government.
The Earl of Kinnoull (CB)
My Lords, much of what has been said so far is of the respectful and firm way in which the intergovernmental dimension of the relationship is reacting to this news. Tomorrow, of course, we have the opportunity for someone from the interparliamentary dimension to react, with the visit of Mr Mike Johnson, who is speaker of the US House of Representatives. Does the Minister feel it is helpful if we, as parliamentarians, reflect the same respectful and firm tone on this issue in an interparliamentary dimension as well?
Baroness Chapman of Darlington (Lab)
I would not dream of advising noble Lords or my good friends at the other end of the building on what they should and should not say to a visiting speaker from the United States. The noble Earl makes a good point about having clarity in the position—which I think is widely, if not unanimously, held, at least within this Chamber—as regards Greenland.
Baroness Goldie (Con)
I revert, if I may, to the matter of NATO, referred to by my noble friend Lord Ahmad. A defensive and strong alliance such as NATO requires, in addition to resource, two vital components: unity of purpose among the members and seamless cohesion among the members. The recent pronouncements by President Trump have, frankly, thrown a bucket of sand into the engine room. Will the Minister discuss with her colleagues in the Ministry of Defence convening an urgent meeting of NATO, if only to reassert what all of us believe NATO to exist for and to underpin that, while one member may have an aberrant view, the rest of us are totally united in why we need NATO, why we want NATO and why we support NATO?
Baroness Chapman of Darlington (Lab)
I completely agree with the noble Baroness on what she says about unity of purpose. That is why the Prime Minister made the statement that he did this morning. When it comes to what meetings to hold, who should convene them and when that should happen, I will leave that to others to determine. She can rest assured that I am speaking regularly to colleagues in the MoD about this and other issues.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, could the Minister assist the House by informing us which eight wars President Trump has ended?
Baroness Chapman of Darlington (Lab)
I am afraid I am not responsible for interpreting statements of anybody other than myself.
Lord Pannick (CB)
Could the Minister confirm that, under the 1951 agreement between the US, Denmark and Greenland, the United States has considerable existing powers to establish military bases in Greenland? Has the Prime Minister emphasised this point to the President?
Baroness Chapman of Darlington (Lab)
There are many ways that the current situation and the concerns that the United States has could be resolved. What matters is that that is done collegiately, diplomatically and in a way that is respectful of the alliance that we are all part of. We are hopeful that that is what can come about.
Lord Scriven (LD)
My Lords, if defence of diplomacy, as the Minister said, is the foremost approach of the Government, and to continue the line of questioning of my noble friend Lord Purvis, when will the WTO be brought into that diplomacy? Have the Government already reached out to the WTO about these tariffs?
Baroness Chapman of Darlington (Lab)
My response is the same, essentially. Decisions on the measures we use and the institutions we involve will be made using the test of whether those decisions are likely to improve the situation, de-escalate and bring us closer to resolution or make negotiations more difficult, raise the temperature and make a straightforward resolution harder to achieve. That is the test that we will apply at every stage.
Biodiversity Beyond National Jurisdiction Bill
Monday 19th January 2026
(1 day, 10 hours ago)
Lords ChamberBiodiversity Beyond National Jurisdiction Bill 2024-26 View all Biodiversity Beyond National Jurisdiction Bill 2024-26 Debates Read Hansard Text Amendment Paper: HL Bill 157-I Marshalled list for Report - (8 Jan 2026)
The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
My Lords, I am pleased to update the House that both the Scottish Parliament and the Northern Ireland Assembly have now granted legislative consent to the Bill. I express my thanks to devolved Ministers and their officials for the constructive and collaborative way in which they have worked with us to reach this position.
I also place on record my gratitude to noble Lords from across the House for their careful scrutiny, thoughtful challenge and constructive engagement throughout the passage of this Bill. They have brought considerable expertise to bear on a range of important issues. In particular, I thank the noble Lord, Lord Teverson, who spoke convincingly on enforcement and human rights considerations on the high seas, and the noble Baronesses, Lady Jones and Lady Miller, who raised important issues on environmental protections and plastic pollution. I also thank my noble friend Lord Whitehead for his support on the Bill and his thoughtful maiden speech at Second Reading. I am also grateful to the Opposition Front Bench for its constructive approach throughout the Bill’s passage. Beyond Parliament, I pay tribute to the scientific community, from the National Oceanography Centre and the Natural History Museum to researchers across our universities, whose advocacy has been instrumental in demonstrating the urgency and ambition of this legislation and the wider agreement.
This Bill is vital to protecting our ocean, advancing marine science and ensuring that the United Kingdom continues to lead global efforts on ocean conservation. The ocean regulates our climate, sustains global fisheries and produces around half of the oxygen on earth. Protecting it is not simply an environmental aspiration; it is an economic, scientific and moral imperative. By passing this Bill, your Lordships will enable the United Kingdom to take the next steps to ratify the BBNJ agreement in the coming months. This will send a clear and powerful signal that the United Kingdom stands ready to lead in protecting our shared ocean, grounded in science, partnership and international co-operation.
Finally, I take this opportunity to thank the officials and lawyers in the Foreign, Commonwealth and Development Office, Defra and the Department for Transport whose expertise, diligence and commitment have underpinned the development and passage of this Bill. I beg to move.
Lord Callanan (Con)
My Lords, our debates on this Bill have been constructive, so I can be brief. I thank the Minister for her positive tone during our scrutiny of this legislation. The origins of the Bill, as has been said, lie in the agreement signed by the previous Government. We are pleased that this Government are following the lead that we set when in office and are delivering on our commitment to play our part in protecting oceans beyond national jurisdiction from environmental harm. This is an important commitment which we hope will ensure that future generations inherit cleaner and more biodiverse oceans.
I am grateful to all noble Lords who have contributed to our debates. We are pleased to have been able to challenge the Government on sustainable fishing and the maintenance of the marine protected area around the Chagos Islands in Committee. We look forward to constructively challenging the Government as they press ahead with their work, alongside the other signatories to the treaty, to deliver the appropriate environmental protections for those areas of the ocean beyond national jurisdiction that will in future be designated as marine protected areas.
Lord Teverson (LD)
My Lords, the treaty came into operation on Saturday, so this is a very appropriate day. My only sadness on this excellent occasion is that, as I said on Report, I believe that this is probably one of the last agreements that we will have internationally from the United Nations in the near future, given the disrespect that we increasingly have for international law and international agreements among the community and certain major players within the United Nations.
Having said that, this is a moment of celebration. We have made an important step forward in terms of biodiversity and the protection of nature across a very large proportion of our planet’s surface, which until now has been—as the Bill says—beyond jurisdiction. There are now 81 ratifications of that treaty, and we will hopefully very soon be among them. We expect the conference of the parties, probably in August, and the plea from our Benches is that the United Kingdom has one of the greatest ambitions at that first meeting and collaborates with other parties that have ratified the treaty to make sure that it really does mean something and makes a real change for our planet and our oceans.
I thank the Minister for her co-operation, help and advice as we have gone through this Bill, and for the way that she has listened. It has been good to have the opposition and government spokespeople speaking as one, generally, on what we have sought to achieve here. I thank my Whip’s Office, particularly Ulysse Abbate for his work, and Members on our Benches for the work that they have done on this Bill. Let us make this something that is really special and really works, allowing us to move towards the global target of a third of our oceans being put aside for protection and biodiversity in one of the most important areas of our planet.
Baroness Jones of Moulsecoomb (GP)
I do not think that any Bill on the ocean would ever have gone far enough for me, but I am very happy that this Bill is passing. I congratulate the Minister on her efforts to keep us calm when we were getting a bit overexcited about what we wanted to see in the Bill. I look forward to watching exactly what happens at the forthcoming meetings.
Baroness Chapman of Darlington (Lab)
Very quickly, given that there is such a high level of agreement and support, I thank noble Lords for their co-operation and efforts in getting this done. I note what the noble Lord, Lord Teverson, said about the conference of the parties; our intention is to play the fullest of roles in making this treaty work. Any time that the noble Baroness, Lady Jones, wants a bit of calm or to dull the excitement a little bit, she knows where to find me.
Digital ID
(1 day, 10 hours ago)
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Baroness Finn (Con)
My Lords, following yet another U-turn from this Government, I—and, I am sure, other noble Lords—have a number of questions. First, can the Minister tell the House the Government’s current projected cost of this digital ID programme and whether the £1.8 billion figure previously cited remains the Government’s own estimate? Can he also tell us how many public services now require citizens to use GOV.UK One Login as a mandatory gateway, rather than as an option? Which of those services are legally required to operate only with the DIATF-compliant identity assurance? How many of the National Cyber Security Centre’s 39 cyber assessment framework outcomes does One Login currently meet, and which does it not? What whistleblowing concerns have been raised since 2022 about security clearances, administrator access, overseas development and undetected red team intrusions? What security incidents have occurred, and has any personal data been compromised?
The Deputy Leader of the House of Lords (Lord Collins of Highbury) (Lab)
I thank the noble Baroness for those questions. On costs, the Government do not recognise what the OBR reported as an accurate cost for the programme, because the scope of the scheme, and therefore its cost, has not yet been decided. The design and delivery will be subject to a public consultation, following which we will have a clearer idea.
The noble Baroness asked about the GOV.UK One Login, a subject she has previously raised with my noble friend. It follows the high standards of security for government and private sector services, and about 9 million to 10 million people have been using it. The programme adheres to the National Cyber Security Centre’s advice to ensure that its data is protected, fraud is detected and threats are monitored and responded to. More specifically, we are aware—I think this is the point that the noble Baroness is making—that the nature of cyber threats is changing and that there is an increase in the number of attacks against the United Kingdom. The Government are committed to improving resilience among operators of essential services, including through legislation currently before the Commons that will update the UK’s regulatory framework.
Lord Clement-Jones (LD)
My Lords, the Liberal Democrats strongly opposed the previous proposal as a serious threat to privacy, civil liberties and social inclusion, so we welcome the Prime Minister’s U-turn in saying that digital ID, after all, will be voluntary. Can the Minister therefore confirm that no citizen will face any disadvantage, delay or reduced access to public services if they choose not to adopt it? Further, given that GOV.UK, which is the foundation of this system, has met only 21 of the 39 NCSC cyber assessment framework outcomes—the noble Baroness referred to that, and I was assured by Ministers that the outcomes will be met by this April—will the Minister halt expansion until independent assurance confirms that it meets all mandatory security standards?
Lord Collins of Highbury (Lab)
I do not want to repeat what I said to the noble Baroness, but I assure the noble Lord that we are absolutely focused on those standards and on better understanding new threats, which is why legislation is being considered by the other place. After all, we are talking about how people can access government services properly without complicated hurdles to go through constantly. Having one access is important, so the scheme will be available at no cost to the individual and to all British citizens and legal residents from the age of 16, subject to the consultation. It will be introduced after the technical build and primary legislation are delivered in around 2028, and underpinned by robust privacy, resilience and security measures. I stress that all citizens, in time, will be able to get the new digital ID, but it is not compulsory. We will consult on minimum wage.
We are ensuring that it is inclusive and that, whatever the Government do, we maintain inclusivity. Rolling out a free national digital ID will be accompanied by a massive inclusion drive across the United Kingdom. This is an opportunity to empower the vulnerable and the left-behind in our society. Inclusion will be at the heart of the design and delivery, and no one will be disadvantaged as a consequence of the scheme.
Lord Harper (Con)
My Lords, the Minister fell into the same trap as his colleague at the other end of the Parliamentary Estate by saying that the digital ID would be free. He may quibble with the OBR’s assessment of a £1.8 billion cost, but it is not going to be free, is it? Why do the Government think that a government-designed ID system is going to be better than just setting some standards and allowing the private sector to provide solutions that people can use instead?
Lord Collins of Highbury (Lab)
I repeat that the cost has not been determined yet, because the scope and design of the scheme have not been agreed. That will be subject to consultation. Any cost in this spending review period will be met within existing settlements. The purpose of this scheme is to ensure that all services that the Government provide in the United Kingdom are properly accessible in this new day and age. I do not think that is something we should leave to the private sector. We want to be leading it, so I do not agree with the noble Lord’s assertion.
Baroness Ludford (LD)
My Lords, this saga, and particularly reading about the Chief Secretary to the Prime Minister, Darren Jones, in the Times on Saturday, reminds me very much of 20 years ago, when Tony Blair and colleagues tried to introduce an ID card system. The way it was put by Mr Jones was that it is going to offer access to nearly all public services except, crucially, the NHS—that is a big exclusion, so it is not quite as convenient—and that it is a kind of magic bullet that will solve all your problems. It is very reminiscent of what happened 20 years ago. Have the Government learned lessons from that fiasco 20 years ago? Can the Minister assure us that there will not be a centralised database? Actually, he cannot, because there will be a centralised database of everyone’s IDs, which will be a honeypot for cyber criminals.
Lord Collins of Highbury (Lab)
The world has moved on from 20 years ago. We are talking about recognising the opportunities that this new age presents for us—certainly in the provision of public services. Darren Jones was absolutely right to focus on that. We are not going to create a central database. There will not be that “honeypot” opportunity, as the noble Baroness put it. We are determined to ensure that those systems can talk and communicate more effectively with each other.
Lord Brooke of Alverthorpe (Lab)
My Lords, does my noble friend the Minister not agree that this is a typical example of what is now alleged to be “broken Britain”? We were moving forward in 2010 to deal with the changes that were taking place, and it was abandoned by the alliance. It was thrown out, and here we are again with the same problems facing us. Can he please give us an assurance that what is now before us will be stuck to and will not be withdrawn or watered down?
Lord Collins of Highbury (Lab)
I appreciate the comments of my noble friend. We have an absolute determination, and this is what Darren Jones was talking about, to deliver better public services and make them more accessible to all people who have traditionally been excluded and disadvantaged. We are determined to do that. To reassure my noble friend, the whole point is that, fairly soon, we will launch a consultation so that we can hear from all those people who have a concern about public services and how they access them. We are determined to do that, and I am sure that, as a result of that consultation, we will have a better policy and better delivery of public services.
Northern Powerhouse Rail
(1 day, 10 hours ago)
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Lord Moylan (Con)
My Lords, Northern Powerhouse Rail has been with us now for over a decade. During that time its meaning and shape have changed somewhat, backwards and forwards, but nothing very much has been delivered. The Secretary of State in her Statement on Wednesday started with a lengthy castigation of the preceding Government for not having delivered anything despite having originated the concept when George Osborne was Chancellor. One must admit that she has some justification for doing so because the record of the previous Government in delivering major rail projects was not glorious and not something that I stand here with a view to defending.
The other thing that I want to say by way of preliminaries is that this is an ambitious programme and if the Government were to deliver it, the Conservative Party would applaud them—because the people of northern England deserve better rail transport links and this programme would transform what they currently have into something more effective and probably something that would bring greater economic benefits to the area. But that does leave us with quite a number of questions about the Statement made by the Secretary of State, which perhaps the Minister can answer.
When the Labour Party was in opposition, it thought of and presented Northern Powerhouse Rail as an almost wholly new line stretching from Liverpool across to Leeds, but what we have here is not a new line but a series of improvements. The Liverpool to Manchester part of it is to be a new line, but most of it is a series of improvements. Have the Labour Government now abandoned definitively the notion of a new line across the Pennines, which previously they supported?
When in opposition, the Labour Party stated repeatedly that trans-Pennine improvements would not be effective except in combination with the full delivery of HS2—certainly to Manchester and ideally to Leeds. Can the Government say definitively that this view has now been abandoned, that there is no plan for HS2 to be extended and that these improvements that are proposed are the stand-alone project on which they are depending for a transformation of the economy of that area?
My three remaining questions concern money. The Statement announces expenditure of £1.1 billion over the next four years. As I understand it—although I would be grateful for clarification from the Minister—that £1.1 billion is to be spent on preparatory work. By preparatory work I mean studies, scoping and design. I do not mean preparatory work of a physical character. As far as I can make out, none of that money over the next four years is to go on physical works. Am I correct that all the other works that are promised here are to be delivered after 2030 and some even later than that? I am not criticising the need for phasing but asking about the date. Is the £1.1 billion actually going to give us any improvement or will it be simply on preparatory works? Is there nothing to be seen before 2030?
Next, there is a funding envelope promised of £45 billion in total. Now, I ask this question in all sincerity. It happens all the time. Politicians and Governments do it. They say, “This is what something is going to cost”, but they cannot tell you what the something is. Until you have done the £1.1 billion of preparatory works—scoping and design—how can you possibly know what it is going to cost?
We made the same mistake over HS2. In fact, the noble Lord, Lord Adonis, made the same mistake over HS2 when he initiated it. We had a cost before we had even a line of route. What is the basis for the £45 billion if the preparatory, scoping and design work has not yet been done?
Finally, will the Minister confirm that the £45 billion is to be spent after 2030; that is, wholly by their successor Government? Do the Government not feel the slightest shame in claiming credit for that when they are landing it on another party?
Baroness Pidgeon (LD)
My Lords, as we have heard, the northern powerhouse initiative was launched in June 2014 by the then Chancellor George Osborne. Featuring new and significantly upgraded railway lines, it should be the region’s single biggest transport investment since the Industrial Revolution. Twelve years on, despite various promises by various Prime Ministers, all that seems to have happened so far is lots of talking and planning, but no concrete plans.
On these Benches, the Liberal Democrats fully support measures to grow our economy across every nation and every region. We are supporters of delivering Northern Powerhouse Rail and a new Liverpool to Manchester rail connection. But the only solid information in this Statement, as we have heard, is just over £1 billion be spent over the next four years planning what should be in the final plan, not on spades in the ground.
I absolutely accept that the previous Conservative Government failed to deliver infrastructure projects such as this and High Speed 2, but surely our northern towns and cities were hoping for so much more. Can the Minister confirm that while we can hope that there may be some upgrades to rail infrastructure at some point in the 2030s, there will be no new trains running on new tracks until 2045 at the earliest? Can the Minister assure the House that the Government are not falling into the trap of the previous Government’s playbook of stop-start funding and delay on rail projects?
Safe, reliable and affordable railways are vital for employment, quality of life and economic growth. This is particularly true for the north of England, where the need for investment in infrastructure is clear. How will the Minister ensure that this major transport infrastructure project, no matter how welcome, secures the funding that is needed and does not go wildly over budget and end up years behind schedule? Will some clear strategic thinking by shadow Great British Railways be undertaken now to avoid costly feasibility studies being undertaken by other parties and to ensure a grip on the project?
Northern Powerhouse Rail, if delivered properly, will unlock growth, connect communities and boost employment opportunities. I hope the Minister can provide clear answers that help us all understand what is being promised in this Statement and when it will be delivered.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, the Statement by my honourable friend the Secretary of State in the other place last Wednesday set out a practical and deliverable set of railway improvements in northern England related to an economic plan for the northern growth corridor across either side of the Pennines. The noble Lord, Lord Moylan, and the noble Baroness, Lady Pidgeon, have set out some of the more tangled history of Northern Powerhouse Rail over the past 10 years.
This Government are drawing a line under some uncosted and, frankly, undeliverable plans, of which Network North was the worst, although the Integrated Rail Plan for the North came near it, because there was a little bit of funding but it was not prioritised in any way. We are setting out a realistic plan for the delivery of a better railway for the north of England, which will include more frequent trains—so frequent that you do not need a timetable—more reliable trains, faster journey times and a mixture of using existing lines, upgrading existing lines and, as has been pointed out, a new railway between Liverpool and Manchester.
It is also phased. Noble Lords will note that, on the east side of the Pennines, improvements can come more quickly, because the upgrading will be to existing lines. The line across the Pennines is already being significantly upgraded: the trans-Pennine route upgrade has not so far been mentioned, but £11 billion-worth of railway improvements are being carried out now, with capacity, electrification, reliability and journey time improvements. The plan then sets out a new railway between Liverpool and Manchester, using the northern part of the stalled powers for HS2, which are languishing in Parliament at the moment, together with a new railway from Millington to Liverpool.
Thirdly, upgrades will be made later from Bradford to Manchester and Sheffield to Manchester. The Government believe that the plan, set out in that way, is much more deliverable and practical than any previous plan has been.
The noble Lord, Lord Moylan, asks about abandoning a new railway across the Pennines. Yes, there will not be a new railway across the Pennines because, in effect, the trans-Pennine route upgrade will deliver what is virtually a new railway but on the existing alignment. He also asked about the proposition that, somehow, Northern Powerhouse Rail will not be effective without the delivery of HS2 to Manchester. He will note that one of the things in the Government’s plan and the Secretary of State’s Statement is the reservation of the existing purchase of land from Birmingham to Manchester, because more capacity—note that phrase; it is more capacity, not a high-speed line—is likely to be needed at some stage. It will therefore eventually complement the part of the HS2 alignment that will be used as a result of the new railway from Liverpool to Manchester.
The £1.1 billion-worth is in this spending review period, rather than to 2030, which was referred to last week. It will deliver some enhancements, too: for example, the cost of the new station in Bradford, subject to its business case, will be part of that £1.1 billion. We expect delivery to be well started, because the site is nearly agreed and the proposition is sound. We are also expecting improvements to Leeds station, which is a critical block to having more trains on either side of the Pennines, as a result of this expenditure. But it is true that a lot of that money will be spent on planning, because one of the lessons from HS2, to which this House will return fairly shortly, was the foolishness of starting to build a railway without specifying it and with contracts that make the contractors money whatever they are building and however long they take to build it.
The funding envelope of £45 billion is a very sensible proposition, bearing in mind the experience of HS2, by which government can limit the costs and give some budgetary pressure to those specifying the improvement. As the House will hear fairly soon, one of the difficulties with HS2 was the zealotry with which the original specification was written and the consequent enormous cost. We are not going to make that mistake. The last point of course is that the £45 billion is a sum to be spent after the end of this spending review, so the first part of it will be in this Government’s term.
The Government are working very hard to produce a practical programme of improvements that can be delivered by both the railway and its supply chain. I say to the noble Baroness that we do need to plan first; it is sensible to do that. She asked whether GBR would be involved. It will: very much so. One of the mistakes of HS2 was to regard it as a completely independent railway when, actually, it has to be regarded very much as part of the railway network, which is certainly what this Government envisage Northern Powerhouse Rail to be.
Baroness McIntosh of Pickering (Con)
My Lords, can I press the Minister on the timetable? Obviously, I have a vested interest as a resident of the north. The Chancellor of the Exchequer has announced that the benefits will be felt by the early 2030s, but I understand that the final project will not be finished until the 2040s, and there may be a change of Government in that time. Can the Minister give a clearer setting out of the timetable, and in particular when the stretch from York to Middlesbrough might benefit?
Lord Hendy of Richmond Hill (Lab)
The noble Baroness is right that railway improvements, sadly, take a very long time. They take a long time to be delivered safely, unlike in the Victorian era when hundreds of people were killed during their construction, and many of them have to be done on the operating railway, which can tolerate some closures but cannot tolerate everything.
The Chancellor spoke correctly in saying that the benefits will start to be felt in the 2030s. In fact, I think some benefits will be felt before then, because we must improve Leeds station and a new station in Bradford will make a significant difference to Bradford’s economic prospects. I cannot tell the noble Baroness precisely when all the parts of the improvement will be delivered, because we need to plan this out properly, but the Government hope that, with a general consensus about the economic prospects of the north of England being improved by better transport, we have for the first time seen a plan that sets that out in a progressive way that enables it to be delivered. The hope is that, whoever the Government are—hopefully, this Government will be here for a long time—it can be delivered over the course of a number of Parliaments.
The noble Baroness will of course recall that the most difficult occasion in the recent history of railway planning was the peremptory cancellation of phase 2a of HS2, which was done, sadly, without any contemplation of a replacement. If future Governments were to modify this plan, one hopes they would contemplate the effects of what they were doing, in order to be able to deliver the plan roughly as it is set out today.
Lord Grocott (Lab)
My Lords, there is a great deal in this Statement that I warmly welcome: in particular, the bit the Minister has just referred to about what was HS2, the link from Crewe to Manchester. He has repeated, and it is clear in the Statement, that
“we will retain land … already purchased between the west midlands and Crewe”.—[Official Report, Commons, 14/1/26; col. 931.]
The only point of retaining the land—I strongly welcome the fact that it will be—is that a railway will be built on it at some stage.
I would like the Minister’s confirmation that, welcome as these improvements to east-west connectivity are—they are very welcome and probably should be taking precedence—they will not in any way help to solve the capacity problems on the west coast main line, which are being solved in part as far as Birmingham but need to be solved between the West Midlands and Manchester as well. What hope can the Minister offer me that a new railway—he can call it HS2 or whatever he likes—will be built to replace HS2 to Manchester and correct the huge mistake that was made when it was cancelled?
Lord Hendy of Richmond Hill (Lab)
My noble friend is right: the Government are retaining that part of the land between the West Midlands and Crewe that they have bought for precisely that purpose, because they know that at some stage a railway will have to be built. It will probably not be a high-speed railway. It is certainly not a railway to the specification of High Speed 2 phase 1, which has cost an extraordinary amount of money because of its specification. It might be that only part of that route is needed sooner than the more northern parts.
It is clear that the west coast main line is full of trains. There is no space left. The Office of Rail and Road declined all the open access applications last summer, simply because there was no timetable space on the railway to accommodation them. It is right for the Government to think about the future and to plan to deliver this new railway at a time when it is needed.
Lord Birt (CB)
My Lords, I worked at No. 10 as Tony Blair’s strategy adviser in 2005 when an in principle go-ahead was given to an ambitious high-speed rail network for the whole country. Twenty-odd years later, we do not even have one small part of that plan in place. In the same period, since 2008 China has built 48,000 kilometres of high-speed rail.
I am a Liverpool supporter, so I regularly go—
Lord Birt (CB)
It has been a difficult weekend. I regularly visit the north-west of England, as I did at the weekend. I am involved in an east of Pennines business, so I am very familiar with the 19th-century infrastructure of the whole of the north of England. Are we remotely ambitious enough with our rail infrastructure?
Lord Hendy of Richmond Hill (Lab)
The simple answer is yes. What the north of England needs is better, more reliable connectivity, most importantly at a frequency at which a timetable is not needed. This is the intention of this Government’s whole plan. It can be delivered as a consequence of finishing the trans-Pennine route upgrade and carrying out, in sequence, the plans set out by the Secretary of State last week.
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
May I remind noble Lords that this is an opportunity to ask questions of the Minister? Can we keep comments succinct? There is plenty of time for everyone to get in if we all keep our questions sharp, so that he can answer them.
Lord Harper (Con)
My Lords, I am grateful to the Minister for recognising the success of the trans-Pennine route upgrade—which was, of course, started by the last Conservative Government, when a lot of significant work was done. The Minister also had responsibility for that in a previous role.
I have two specific questions. Is the £45 billion pound cost envelope that the Minister mentioned calculated in 2026 pounds, or is it going to be uprated for inflation? That is a very important question, given the length of time HS2 has taken and the significance of that. Secondly, is the delivery authority for the Northern Powerhouse Rail project going to be GBR?
Lord Hendy of Richmond Hill (Lab)
The £45 billion is in 2026 pounds. I think the noble Lord will recognise that, for example, we have been accounting for HS2 in 2019 prices for a number of years, which is clearly a ridiculous proposition. I expect GBR to take responsibility for much of this, except that the Government may well decide to deliver building a brand new route between Liverpool and Manchester separately, as with East West Rail. We have to regard the whole thing as part of the national railway network and not as something dreamt up, delivered from Mars and imposed on the railway, with the consequent loss of connectivity and the ability to change trains at stations for all the journeys people want to make.
Lord Liddle (Lab)
My Lords, I accept the incrementalism of the plan, but can the Minister give us a little more detail about how it will be managed? What will be the role of the northern mayors? Is funding to be solely from the Treasury, or will it be regionally based? Are the Government exploring how the railway can benefit from the development value of the surrounding land, which will then increase greatly in value?
Lord Hendy of Richmond Hill (Lab)
I thank my noble friend for raising a really important point. First, the mayors are party to the proposal, and there is a compact with each of them in the northern growth corridor. This is really important, because previous proposals have been done to those mayors and not with them. They play an important role because, as it says in the announcement, although there is a funding cap, which has been discussed already, they should have the ability to change or improve the specification in line with the aspirations for their region’s economy, jobs and homes. If they do, they should be able to raise some money, and the Government are going to pursue that with them discussions.
The noble Lord is right that one of the underused features of infrastructure funding so far is not buying into the inevitable rise in value of the land. One of the most difficult things to witness and not comment on is that, as you approach Birmingham, the skyline is full of cranes and buildings but none of the owners or developers of the land has paid a penny towards the railway. That cannot be right.
The Lord Bishop of Newcastle
My Lords, I have spoken in the Chamber before about the Leamside line, which is a modest 21 miles of railway in the north-east. Would the noble Lord agree that it illustrates the disconnect between statement and construction timeline? Would it be worth considering prioritising projects such as the Leamside line in order to power up the northern powerhouse, particularly in the north-east, which sometimes feels on the edge of plans?
Lord Hendy of Richmond Hill (Lab)
I am delighted that the right reverend Prelate has raised that, because I discussed this very subject with Kim McGuinness two or three times in the last month. The extension of the metro to Washington, which is the northern part of the Leamside line, is proceeding anyway. The development of the southern part of the Leamside line will be pursued alongside the first tranche of Northern Powerhouse Rail, with a view to deriving economic growth, homes and jobs benefits from extending services southwards. I hope I have answered the right reverend Prelate’s question very positively.
Lord Lennie (Lab)
My Lords, I welcome the noble Lord’s statement regarding Liverpool, Manchester, Leeds and Bradford. There is also Newcastle, as the right reverend Prelate just said. The journey time from Newcastle to Manchester is longer than from Newcastle to London. Is the plan designed to improve that particular journey?
Lord Hendy of Richmond Hill (Lab)
The answer to my noble friend is yes. The trans-Pennine route upgrade will make a significant improvement to the journey time across the Pennines. In addition, the intention is to have trains at higher frequency, which means less waiting time. That journey time will be improved in both respects.
Viscount Stansgate (Lab)
My Lords, I am delighted that the right reverend Prelate raised the question she did because, by pure chance, I have a Question on tomorrow’s Order Paper about east coast main line capacity. What impact, when delivered, will the Statement, which I welcome, have on the east coast main line, as well as on the points raised by other Members about capacity from the Midlands to the north and to the west coast?
Lord Hendy of Richmond Hill (Lab)
I will not spoil the Answer to my noble friend’s Question tomorrow, except to say that the east coast main line has a better timetable with more trains on it. The Government do not see the end of their aspirations for railways in the north to be solely the announcement from last week. There may well have to be further improvements to the east coast main line; if there are, they will only enhance its capacity, both in journeys north-south and in the connections between Newcastle, York, Leeds and places to the west side of the Pennines.
Lord Kempsell (Con)
My Lords, I thank the Minister for the update on this important cause. Let us assume that the cap will be busted. If that is the case, and the Treasury’s £45 billion envelope is broken, what assessment have the Government made of the impact on local authorities and businesses that will have to shoulder the local funding uplift?
Lord Hendy of Richmond Hill (Lab)
Let us not assume that the cap will be busted, because the progress on the trans-Pennine route upgrade demonstrates pretty satisfactorily that, planned properly, you can make substantial railway enhancements without limitless additions to the budget. We will come back to this House and the other House in short order about the costs and timescale of HS2, but there are some really substantial lessons to be learned from starting a project with no specification and giving contractors, in essence, a licence to print money. There is no way that this Government are prepared to do that with anything that has been announced in the past few days. One of the consequences of that is to allow ourselves time to plan what needs to be done properly, to cost it properly and to contract for it properly. I do not think that we can tolerate assuming that caps will be busted, because we have a terrible example of it at the moment, and we should leave that example in isolation and deliver projects properly, having planned them first.
Lord Faulkner of Worcester (Lab)
My Lords, I thank every noble Lord who has spoken in this exchange and warmly welcome the Statement that was made last week in the other place. I congratulate the Minister on getting his head around the facts and being able to explain what is happening with such clarity—for example, to the right reverend Prelate the Bishop of Newcastle on her remarkably technical but important question about the Leamside line. Did the Minister see the press coverage at the weekend on the completion of the Chiltern tunnel for High Speed 2, and does he agree that it is time that we started to celebrate such engineering feats? When it is built, the railway is going to have some marvellous engineering—not just tunnels but viaducts as well—which I think will make our railway the envy of the world.
Lord Hendy of Richmond Hill (Lab)
I agree with my noble friend. There are some remarkable structures, either in the ground or coming out of the ground, for HS2, but he would have to agree with me that you have to be tinged with sadness to stand here and not know how much they have cost so far. That is a shocking weakness, which we will come back to and no doubt debate at some stage. My noble friend is right that British engineering can produce some extraordinary feats, and the tunnel that was in the newspapers at the weekend and the viaduct across the Colne Valley are very elegant structures.
Incidentally, if noble Lords who take a train journey between Manchester and Leeds would like to give me prior notice, I can arrange for them to travel in the cab with the driver, and they can see the extraordinary amount of work that is being done on an operating railway, which is neither trivial nor simple, and get some understanding about what is going on there. My noble friend Lord Faulkner is right to highlight these great structures on HS2, but, equally, what has been going on between Leeds and Manchester and out to York is extraordinary, and it has been done with relatively little disruption to the train service. If any noble Lords—within reason—would like to see it at some time, I will arrange for them to be able to do that.
Children’s Wellbeing and Schools Bill
(1 day, 10 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
18:42 - Division on Amendment 46 - Ayes: 235 / Noes: 164 - Amendment 46 agreed.
18:54 - Division on Amendment 49 - Ayes: 232 / Noes: 160 - Amendment 49 agreed.
19:15 - Division on Amendment 51 - Ayes: 216 / Noes: 161 - Amendment 51 agreed.
19:52 - Division on Amendment 56 - Ayes: 159 / Noes: 153 - Amendment 56 agreed.
20:02 - Division on Amendment 58 - Ayes: 148 / Noes: 156 - Amendment 58 disagreed.
Baroness Tyler of Enfield
“(vi) financial support and financial literacy.”Member’s explanatory statement
This amendment adds financial support and financial literacy as services relevant children must be provided access to, as part of “staying close support”.
Baroness Tyler of Enfield (LD)
My Lords, I shall speak to Amendment 35 in my name, and I thank my noble friends Lord Storey and Lord Mohammed and the noble Baroness, Lady Barran, for adding their names to it. It seeks to extend the remit of Staying Close to include support in helping care-experienced young people to access services that provide financial support and literacy. I want to say immediately that I was delighted to see the Government’s amendments introduced on Report that will amend the information that local authorities must include within their care leavers’ local offer to cover financial support and services that provide financial literacy. This builds very much on our discussions in Committee, and I am grateful to the Minister for bringing forward those government amendments. This change will provide greater transparency and will help young people to understand their rights and entitlements better, as well as encouraging local authorities to think about the support they provide to equip care leavers to manage their finances effectively.
In our previous discussions on this topic, we highlighted how young people leaving care are much more likely to be living independently from a young age than other young people with greater financial responsibilities and often without a safety net—the bank of mum and dad that so many parents provide certainly is not there for them to fall back on. These factors, combined with young care leavers often feeling unequipped, unprepared and unsupported to manage the financial responsibilities that come with living independently from a young age, can put care-experienced young people at risk of facing unnecessary financial hardship and insecurity, falling often into rent arrears or debt, all of which can have a long-term impact on their well-being and security.
By seeking to expand the remit of Staying Close, my Amendment 35 would have plugged this gap even further, ensuring that young people who are leaving care are supported. I feel that this change would have real benefit, but the fact that the Government have brought forward these two amendments is an example of how constructive the debate was in Committee on this legislation. I thank the Government for that and for being open to amendments such as my Amendment 35, which would do a lot to improve the lives of care-experienced young people. Perhaps when the Minister responds, to provide absolute clarity, she will be able to confirm that government Amendments 39 and 40 will have the same effect as my Amendment 35, which, obviously, now I will not be pushing to a vote.
The Lord Bishop of Manchester
My Lords, I am very grateful that these amendments have been proposed. They may not go as far as my Private Member’s Bill did a few months ago in terms of seeking a better financial deal for care leavers, but Amendment 40 takes us some considerable way towards that. At least it will make local authorities be honest about what they are and are not doing. My only regret is that it will not completely get rid of the postcode lottery that besets so many young care leavers, particularly if they move from one authority to another. But I am grateful for the amendments the Government have tabled, and I hope that they will be swiftly passed.
Lord Storey (LD)
I thank my noble friend Lady Tyler for all the work she has done on this important topic. It shows the real power and strength of this House that, by talking to each other, listening and supporting, we can bring about real change, so I thank the Government for putting down these amendments. As my noble friend rightly said, there are so many young people living independently by themselves, and the most important thing is that they have an understanding of how finances work. I do not like the term “financial literacy”, but it is important. The national curriculum is going to bring that in for every young person, but for these young people it is even more important. So, I thank the Minister for getting to a place where we can all support and get behind this important issue.
Baroness Barran (Con)
My Lords, like the noble Baroness, Lady Tyler of Enfield, I welcome the amendments that the Government have tabled to Clause 8. I think they will meet the aims of our Amendment 35, so I look forward to hearing from the Minister about the additional support that the Government will offer to care leavers.
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
My Lords, I thank all noble Lords and Baronesses for their positive comments today; they are a measure of the fact that all of us in this Chamber want to put the needs of the most vulnerable people in our society at the centre of the Bill. I think the Government have clearly put across that we are strongly committed to improving support for care leavers, both through the measures in the Bill on Staying Close, local offer and corporate parenting and through our other programmes of work, such as the care leaver covenant and the care leavers interministerial board, all of which seek to ensure that young people leaving care have stable homes, access to health services and support to build lifelong loving relationships and are engaged in education, employment and training.
We want to support those in care and preparing to leave care before they reach adulthood, and to ensure that they have the same support as all young people. They will of course benefit from the wider changes that we are making for all young people in this space; we have had some fantastic discussions about the need for financial literacy for all young people in different places over the last few months.
I emphasise that in November the independent curriculum assessment review published its report, along with the Government’s response. As part of the review, we are taking forward recommendations that will help to deliver a high-quality curriculum for every young person. One key recommendation is to embed applied knowledge throughout the curriculum, including financial literacy. We have given a clear commitment in our response to the review to strengthen financial education through both the maths and the citizenship curriculum so that all young people and children have the skills they will need in adulthood. These commitments will benefit those children in care and preparing leave care.
Amendment 35, tabled by the noble Baroness, Lady Tyler of Enfield, seeks to ensure that Staying Close support includes support to access services relating to financial support and literacy. Having said what I did about the review in general, I acknowledge that care leavers have particular and additional needs in this area. I fully endorse the noble Baroness’s intent with this amendment, recognising the importance of care leavers being properly informed of the financial support available to them as they transition to independence.
We have listened to concerns from both Houses about ensuring that care leavers receive the support they need from local authorities, particularly with financial management, and helping care leavers to develop the skills and knowledge that they require in this area. That is why we have tabled two government amendments to Clause 8. Amendment 39, in the name of my noble friend Lady Smith, adds services relating to financial literacy to the list of services in Section 2 of the Children and Social Work Act 2017, meaning that local authorities will have to publish information about those services as part of their local offer for care leavers. Amendment 40, also in the name of my noble friend Lady Smith, amends Clause 8 to require each local authority to include information about the arrangements that it has in place for providing financial support to care leavers in its local offer. In bringing forward these amendments, I acknowledge the continued advocacy for care leavers to receive assistance with financial literacy and financial support that the noble Baroness, Lady Tyler of Enfield, has provided in this area, and I thank her for that.
Most care leavers already receive a pathway plan before leaving care that should cover their financial capability, money management skills and strategies to develop these abilities. Adding these government amendments will ensure that care leavers are better aware of the services available to them, and it will increase local authorities’ accountability in supporting care leavers to receive the support they need. That further underscores how the Government have listened to the voices of children and young people because, as we have heard and as everyone engaged in this area acknowledges, when we listen to care leavers’ requests for support, the message that comes across loud and clear is that they want more support in understanding their finances. For that reason, we consider Clause 8 the most effective place for the amendment, ensuring a robust and consistent level of support for every care leaver, not only those accessing Staying Close.
Importantly, including the amendments in Clause 8 does not remove or dilute the support for care leavers receiving Staying Close. Financial literacy remains a key factor in helping young people to find and, importantly, keep accommodation and will continue to be considered as part of the overall assessment of their ability to maintain a tenancy. This will be reflected in the initial programme guidance we will be sharing with local authorities before April this year as the national rollout of the programme begins. This has been developed in collaboration with local authorities, stakeholders and people with care experience and will be updated after evaluation of local authority practice and ahead of the publication of final statutory guidance. I hope that this answers the questions that the noble Baroness asked in moving her amendment, that noble Lords are reassured, and that the noble Baroness feels able to withdraw her amendment.
Baroness Tyler of Enfield (LD)
My Lords, I thank the Minister for that helpful and comprehensive response. The fact that the government amendments will go into Clause 8 and my amendment was to Clause 7 does not matter to me. What matters is that those government amendments will be there and that the care-experienced young people will now have access to the financial support and financial literacy that they need. I thank the Government again for their extremely constructive and helpful response. On that basis, I beg leave to withdraw my amendment.
“Review of staying put funding(1) The Secretary of State must undertake a review of the level of funding provided for staying put arrangements (within the meaning of section 23CZA of the Children Act 1989) to local authorities and independent fostering agencies to determine its adequacy to meet its aims.(2) The review must produce recommendations regarding any steps necessary to increase the funds available per young person.(3) The review must be laid before both Houses of Parliament.” Member’s explanatory statement
This amendment would ensure the Secretary of State undertakes a review into the level of funding allocated to local authorities for “staying put” arrangements to determine if it is sufficient to allow all eligible young people to benefit and meets its aims as set out in Staying Put Guidance.
Lord Watson of Invergowrie (Lab)
My Lords, I am introducing this group as Amendments 37 and 38 are in my name and I have added my name to Amendment 59 in the name of the noble Baroness, Lady Tyler. I will not steal the thunder of the noble Baroness on Amendment 59 so will merely say that the arguments I advanced when a very similar amendment was discussed in Committee seven months ago still apply. I stressed then that, in the long term, there will be a significant cost benefit to the Treasury of young people being allowed to extend Staying Put from 21 to 25.
Four years ago, the MacAlister report quoted figures from 2020 which showed that the average cost of supporting a child in foster care was just 35% of that of a residential care placement. Mr MacAlister is, of course, now the Children’s Minister so he will know that it really is not in the Government’s financial interest to deny support to those between 21 and 25 who want to remain with their foster families. I acknowledge the point made by my noble friend when she replied to my amendment in June that the Government wanted to prioritise filling the gaps in current support, in particular for young people transitioning to independent living. That is admirable but it is exactly what the support of a foster family provides.
Amendment 37 seeks a review of Staying Put funding. That would involve the Government conducting a full and comprehensive review into the level of funding allocated to local authorities for Staying Put arrangements to determine whether it is sufficient to allow all eligible young people to benefit and whether it meets the aims as set out in the Staying Put guidance. A review of funding for Staying Put is certainly overdue, given that the arrangement was introduced as long ago as 2014. The case for such a review is bound up with the arguments in support of Amendment 38, which aims to introduce a national minimum allowance for foster carers offering Staying Put arrangements, which does not currently exist, and to ensure that it matches the amount currently paid for 16 and 17 year-olds.
Recent surveys have highlighted the need for the extension of Staying Put support beyond the age of 17. In fact, a Department for Education report published two months ago—after Committee had concluded—found that in 2024-25, 62% of 18 year-old care leavers continued living with their former foster carers, but that figure halved for those aged 19 and 20. This illustrates that Staying Put is not being provided for as many young people as it could really help as they transition to adulthood and independent living.
Baroness Tyler of Enfield (LD)
My Lords, this is an important group of amendments and I am extremely sympathetic to the case that the noble Lord, Lord Watson, has just put forward for his amendments.
Amendment 59, in my name, seeks to enable care-experienced young people to remain living with their former foster carers under what are called the Staying Put arrangements to the age of 25. I thank the noble Lords, Lord Watson and Lord Farmer, and the noble Baroness, Lady Bennett, for adding their names. Staying Put arrangements currently provide an important opportunity for young people to remain with their former foster carers until the age of 21, if they wish to and their foster carer agrees. Evaluation of the programme demonstrates that continuing to live with foster carers beyond the age of 18 can benefit care-experienced young people in a range of ways, including providing a more positive and planned transition from care to independence, a stronger support network and relationships, increased stability, stronger health and well-being, and a reduced risk of homelessness, as well as greater likelihood of remaining in full-time education.
While it is welcome that the introduction of the Staying Close support, through Clause 7, will apply to young people whose final placement was in foster care, this does not enable them to continue living with their former foster families. Many young people and foster carers across the country would like the children they are fostering to stay with them past the age of 21, but cannot at the moment because there is currently no provision in law for this or funding to support it.
Extending Staying Put arrangements to the age of 25, which is what my amendment is about, would provide more continuity for young people leaving foster care in their transition to independent living at a time that is right for them. We all know that strict age points do not work for everyone—everyone is different. It would provide a more stable home, family environment and support network for them as they start adulthood after what has been a difficult start in life. It would align Staying Put with other care leaver entitlements, such as Staying Close, which runs to age 25. I urge the Government to support this amendment.
I have also added my name to Amendment 95, in the name of the right reverend Prelate the Bishop of Manchester. This proposed new clause would require the Secretary of State to publish a document called the national care offer, which would set out minimum standards of information that local authorities must publish in relation to Section 2 of the Children and Social Work Act 2017. I am going to leave the right reverend Prelate to set out the case—I do not want to steal his thunder. I simply want to say that this is a great opportunity, in my view, for the national and the local care offers to be strengthened. I very much hope that that opportunity will be taken.
The Lord Bishop of Manchester
My Lords, I am grateful for the amendments in this group. We are continuing, as the Bill makes progress, to strengthen the offer that is made to care leavers. In the previous group, we discussed matters that, assuming they are voted on in a little while, will improve conditions and improve what local authorities have to publish.
My Amendment 95, which I am grateful to the noble Baroness, Lady Tyler of Enfield, for signing, would simply extend that to make sure that care leavers have a clear understanding of what their local authority is willing to offer and what it is not, particularly given that so many care leavers at age 18 or 19 end up leaving. Some, I am delighted to say, go to university and end up in a different town in perhaps a different part of the country entirely; others, for whatever reason, may decide it is appropriate to move and perhaps go back to be closer to friends from former times.
It is therefore not just the people who are already in a particular local authority who need to really know what the care leaver offer is; it is young people who might be considering moving to that area. As became clear in discussion of my own Bill a few months ago, that is often where people fall through the gap: they move for good and solid reason from one part of the country to another, and in that new part of the country they find that the services they expected are not there because that local authority either chooses not to provide them to anybody or, as is sometimes the case, chooses to provide them only to young people who have been in its care through the previous years.
I hope that we can get some support for Amendment 95. Understanding procedure—I am slowly learning this place, after about six years in—I know we probably will not get to a vote on this tonight, so maybe the noble Baroness, Lady Tyler, and I can agree between now and Wednesday whether this matter should be put to a Division or not.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow the right reverend Prelate. Having signed his amendment in Committee, I did not manage to catch up on Report, and I encourage him to think about putting it to a vote if necessary when it gets to that stage.
I support all the amendments in this group, but will speak to Amendment 59, which is about continuing the Staying Put arrangements to the age of 25. As the noble Baroness, Lady Tyler, said, I have signed this amendment, along with the noble Lord, Lord Farmer, who is not currently in his place, and the noble Lord, Lord Watson. You could say that that is the broadest possible range of political support imaginable for this amendment.
I spoke extensively on a similar amendment in Committee, so I will not go into it at great length here. I cross-reference the horrific tale I told in Committee about Duncan, who was dragged with no notice at all out of his fostering arrangements and dumped into wildly unsuitable accommodation. That is the kind of thing that is happening to young people now. If we are to think of the state as a statutory parent, as it is to children in care, surely we should expect the same kinds of things from it that we expect from other parents, such as the societal expectation that parents will often have their children at home until age 25 or later. That is a reality that the state should be making provision for.
To pick up a point made by the noble Lord, Lord Watson, even this amendment would not finally cover the financial issues here. The Fostering Network notes that three-quarters of foster carers who continue caring after 18 end up financially worse off. The idea that housing benefit or wages—we know how low wages are for young people—might be able to top that up does not reflect the reality of our society.
I was discussing this morning the intrusion of private equity into the fostering system. A quarter of all places in fostering are now provided by private equity-based companies, which are making massive profits. There is a commodification of fostering. We would really like to think about how we can address that issue more broadly and whether there are ways to ensure that massive profits are not being made from this important additional provision that the state should be providing.
Lord Storey (LD)
I very much look forward to the Minister’s reply on this group of amendments. There are 80,000 children in care—12,000 more than a decade ago—all of whom have different needs and requirements, mature at different ages and experience different feelings. I do not think you can put an arbitrary date on when somebody has to leave. Nationally, young people increasingly stay with their family into their 30s and get all the support that a family gives them. A friend of mine and his wife, the Kellys, foster regularly. They had two foster boys; one came to the age to move on and just said, “I am not going—I am staying”. Malcolm, being the sort of person he is, said “Okay”. That child needed that. He needed that support from the family. I hope the Government will consider this carefully.
On the amendment from the right reverend Prelate the Bishop of Manchester, I do not understand what the problem is. Why can this information not be available? It seems to me good, solid practice for society generally and for people in care and care leavers. I do not understand why we cannot say yes. Will it cost more money? Do we think local authorities do not have the expertise to do this? I would be interested to know why the Minister thinks it cannot be agreed.
Baroness Barran (Con)
My Lords, we have had a good debate on this group. I have a great deal of sympathy with the amendments in the name of the noble Lord, Lord Watson, and would be interested to know whether the Minister knows what the cost of this funding would be if it were extended in the way that the noble Lord’s review suggests. One could absolutely imagine a situation where proper funding for foster carers of young people in receipt of Staying Put support might relieve pressures elsewhere in the system.
I also look forward to the Minister’s response on Amendment 59, which, as we heard, would extend Staying Put support up to the age of 25. We agree with the principle underlying Amendment 95 that local areas should constantly be learning from one another about the best support for care leavers, but we are not convinced that it would be achieved by this approach.
I turn briefly to my modest Amendments 41 and 42. I reread the Minister’s argument in Committee that these amendments were not really necessary—a familiar term—as every care leaver should have a pathway plan that would cover accommodation, health and several other important aspects of their life. As she said, the pathway plan covers accommodation, yet the Government have chosen to put the publication of the local offer in relation to accommodation in the Bill, if I have understood correctly, so I am not quite clear about the resistance to minimum commitments in relation to healthcare. To be absolutely clear, my Amendment 41 would create a statutory duty for the health service to set out arrangements for those leaving care so they can be given additional considerations that they deserve as they enter adulthood. The Minister knows very well that children in care tend, through no fault of their own, to have much more complex health needs than those not in care. A lot of the specialist care available to children stops at 18. Taking the time to make sure they understand what support is available to them as adults is surely the minimum we might ask for.
That links to Amendment 42, which would make it explicit that care leavers under 25 need additional support from their GP. The noble Baroness will remember from Committee that the suggestion is that there should be an extended initial appointment offered to those young people as they transition from specialist support to universal systems. They do not have parents to support them through that and, as we all know, their needs are extended. It seems a tiny request that might make a great difference.
Baroness Blake of Leeds (Lab)
My Lords, I thank noble Lords for their interest in this area. As he opened the group, I particularly thank my noble friend Lord Watson for his sincere interest, as we heard in Committee, when we had a good exploration of the issues.
I will first discuss three amendments together: Amendments 37, 38 and 59. Amendments 37 and 38, tabled by my noble friend Lord Watson of Invergowrie, seek a review of current Staying Put funding and the introduction of a national minimal allowance for Staying Put arrangements. Amendment 59 tabled by the noble Baroness, Lady Tyler of Enfield, proposes extending current Staying Put duties to the age of 25. We know that the existing Staying Put duties, which continue until a young person reaches 21, enable local authorities to support young people to remain longer in the stable and secure foster homes they know. This continuity helps them to step into adulthood with the same opportunities and life chances as their peers. We recognise that additional stability at a crucial age.
We remain firmly committed to supporting young people in Staying Put arrangements. The provisional local government finance settlement includes continued funding of £100 million through the first multiyear settlement in a decade for local authorities supporting these arrangements. I am sure that all Members who have had local authority experience will recognise that multiyear settlement as crucial in bringing stability back into local government finance. As I said, this will provide greater certainty and enable effective sufficiency planning for Staying Put arrangements.
However—and I emphasise this again—we must also ensure that we prioritise addressing the gaps in current provision with the available resources that we have. That is particularly the case for those moving into independent living at 18 who have not been able to remain with their former foster carers and for those with the most complex needs. This is precisely why we are introducing statutory Staying Close duties. Under these duties, all former relevant children under the age of 25, including those who have a Staying Put arrangement, will receive Staying Close support where their welfare requires it. This will help them find and keep suitable accommodation, and access the wraparound services they need to thrive.
As we introduce a number of new duties for care leavers through the Bill, it is essential that we allow these changes to embed and begin to deliver the outcomes we expect before we review Staying Put and look to amend or include further requirements within the duty. I hope that this gives some comfort to my noble friend Lord Watson. We are not seeking to ignore his comments; we are looking at this in a pragmatic way that will bring things forward.
The noble Baroness, Lady Barran, asked about the initial cost estimates, which amount to several hundred million pounds. Further proper assessment is therefore needed, and we will not shy away from that. Further assessment of the impact of local authority funding will be needed, in this changing picture, for both residential and foster care. As has been set out, we must prioritise those gaps. I know that this is a difficult message to get across, but we need to make sure that, through Staying Close, we reach as many young people as possible.
Amendments 41 and 42 were tabled by the noble Baroness, Lady Barran. Amendment 41 seeks to require local authorities to publish information in their local offer about transition arrangements for care leavers in relation to health and primary care. While fully supporting the aim of the amendment, we believe that it is not required, as there is already an expectation that local authorities will include details of services that may assist care leavers in relation to health and well-being in their local offer.
Similarly, the Government support the intention behind Amendment 42, also in the name of the noble Baroness, Lady Barran, which would require that general practice contracts have due regard to the additional health needs of care leavers under the age of 25 when negotiating general practice contracts in the future. However, again, it is not required, as there are already clear expectations in statutory guidance for local authorities, integrated care boards and NHS England to have effective plans in place for looked-after children to make a smooth transition to adulthood, including continuation of access to the health advice and services they need. Additionally, the corporate parenting responsibilities that will be introduced through the Bill, which we will go on to discuss, will require the Secretary of State for Health and Social Care and NHS England, as relevant authorities, to be alert to matters that might adversely affect the well-being of looked-after children and care leavers in the exercise of their functions, including negotiating GP services.
Amendment 95, tabled by right reverend Prelate the Bishop of Manchester, seeks to introduce a new clause requiring the Secretary of State to consult on and publish a national offer for care leavers. Throughout the Bill, the Government are taking significant steps to ensure that young people leaving care are not left to navigate adulthood alone. Our aim is clear: to ensure that every care leaver has a stable home, access to necessary health services, support to build lasting relationships, and the opportunity to thrive in education, employment and training. These are the foundations that every young person deserves, and care leavers should be no exception.
Care leavers’ legal entitlements are already set out in the Children Act 1989, supported by regulations and statutory guidance. The Children and Social Work Act 2017 strengthened this by requiring local authorities to consult on and publish a local offer for care leavers. Statutory guidance makes it clear that this local offer must include information on both the support that care leavers are legally entitled to and any additional help a local authority chooses to provide. Clause 8 of the Bill further strengthens those expectations. Here I am addressing in particular the argument on local as against national that the right reverend Prelate made.
Most importantly, it is local authorities that are best placed to understand the needs of their young people. Crucially, this support should be shaped in consultation and by understanding the needs of care leavers themselves. Therefore, the amendment risks unintentionally creating a one-size-fits-all approach that leaves care leavers in different areas and with different requirements not getting the support that best meets their needs.
With regard to the noble Baroness, Lady Bennett, I suggest that her comments about the cost of foster caring are possibly more relevant to the next group, under Amendment 110C.
I recognise that we are putting in place measures that will take some time to embed and move forward, but I hope that noble Lords will understand that we are absolutely committed to improving the life chances of all young people and, in this case, particularly of young people in care. With those comments, I hope my noble friend will feel able to withdraw his amendment.
Lord Watson of Invergowrie (Lab)
I thank my noble friend the Minister for those remarks. I will just start on the point that she finished on: that the Government are totally committed to ensuring that all young people have the support that they need. I do not question that. It is unfortunate that there seems to be a cohort of young people who are in foster care, and when they reach the age of 17, they may be able to continue with their foster parents, if they want to and the foster parents are happy to keep them, but there will not be the national minimum allowance, which applies to 16 and 17 year-olds. So, it is incumbent on the foster carers themselves to make up that shortfall. In many cases, with the best will in the world, that simply is not financially possible.
It then opens up the situation where some young people, having just turned 18, have to find alternative arrangements. I take the point that my noble friend the Minister made about wraparound care, the local authority’s offer and the Staying Close arrangements. All those are valuable, and most young people in that situation will make use of them and take advantage of them. But there are some who will not be able to do so. I stress the fact that, in seeking for the national minimum allowance to be extended beyond 17, it would apply only to those situations where the foster family felt able to keep the child and the child wanted to keep the family, as it were. It would not apply to every child of that age.
I am not quite sure about the answer my noble friend gave to the noble Baroness, Lady Barran, on her question about cost. In my Amendment 37 on a review, there is no cost implicit. My noble friend the Minister gave a ballpark figure of several hundred million. I do not know whether that would be the case or not: it would depend on the outcome of the review. I had hoped that she might say—although obviously it was never my intention that this should go in the Bill—that the Government would undertake that review. I cannot see any harm in undertaking a review of the Staying Put arrangements that have been in place now for 12 years, since 2014.
I cannot avoid saying that I am disappointed in the response. There are many options for young people. The place I am coming from is: how would any noble Lord who had a child who turned 18 feel if they were obliged to leave home—I am not talking about going to university or college—and find other arrangements at that important and psychologically difficult time in their life? It is no accident that children in care are far less likely to go to university than their peers who live with their birth parents and are far less likely to take up training and apprenticeships. I just make that point to my noble friend. I am not saying that she is being unsympathetic, but I hoped we could at least have a review, which might have pointed the way forward to advancing the number of young people who turn 18 and are able to stay with their foster parents. Foster parents do such a fantastic job. Having said that, I beg leave to withdraw the amendment in my name.
Baroness Smith of Malvern
“(2A) In subsection (2), after paragraph (f) insert—“(g) financial literacy.””Member’s explanatory statement
This amendment would add services relating to financial literacy to the list of services in section 2 of the Children and Social Work Act 2017 which may assist care leavers in, or in preparing for, adulthood and independent living, and about which a local authority in England must publish information.
“(ca) providing financial support for care leavers;”Member’s explanatory statement
This amendment would add arrangements made by local authorities for providing financial support to care leavers to the information that the authority must publish as part of its local offer to care leavers under section 2 of the Children and Social Work Act 2017 as amended by clause 8.
Baroness Tyler of Enfield
“Promoting relationships for looked after childrenIn section 22(3A) of the Children Act 1989 (duty of local authority in relation to looked-after children), at end insert “and a duty to promote the child’s family and social relationships in ways which are consistent with the child’s welfare.””Member’s explanatory statement
This amendment adds promotion of a child’s family and social relationships to the safeguarding duties of a local authority.
Baroness Tyler of Enfield (LD)
My Lords, this is an important group of amendments regarding family relationships and the appropriate placement of children in care. I have four amendments in my name in this group and will move through them as quickly as I can.
Amendments 43 and 49 are linked. They are about promoting children in care’s family relationships and particularly improving sibling contact, an issue that we discussed at some length in Committee. We know and previously debated that children in care are too often separated from siblings when in the care system. Unfortunately, we have also heard that, for too many children in care, they are not supported to have either consistent, appropriate or high-quality contact with their siblings when they are separated so that they can maintain these most vital relationships and stay connected.
The evidence shows that there is real variability in the type and frequency of contact between siblings. It can be affected by things such as workforce issues, instability and geographical factors—including where children are moved to. As we discussed in Committee, there is a real disconnect between policy and practice here. Amendment 43 seeks, in general terms, to strengthen the duties on local authorities to promote children’s family and social relationships, including with siblings. This would make a real difference to overall family relationships and to a sense of identity for these children.
Amendment 49 seeks to close a specific loophole in the current regulations. Paragraph 3(1) of Schedule 1 of the Care Planning, Placement and Case Review (England) Regulations 2010 includes provision for arrangements to promote contact between siblings who are in care but who are not placed together to be set out in children’s care plans. The key point and the purpose of this amendment, however, is that this does not cover the promotion of contact between a child who is in care and a sibling who is not in care. While there is currently limited data about how many children in care have siblings outside of the care system, the charity Become has reported examples from children and young people who have felt unsupported to adequately maintain relationships with siblings who are not in care, particularly when they are living miles away.
This amendment seeks to close this loophole by requiring a child’s care plan to include arrangements for promoting contact with all their siblings, whether they are in care or not, as far as that is consistent with the child’s welfare. For children in care, their relationship with siblings can be the most important relationships that they have, with lifelong consequences. Too often, these relationships are being strained or damaged by a system that just does not support these relationships effectively. This needs to change. These amendments seek to strengthen the policy framework, close a loophole and influence practice to better protect these fundamental relationships.
Amendment 61 seeks to amend the sufficiency duty to prevent children in care being moved far from home when that is not in their best interest. This amendment seeks to amend the sufficiency duty in a number of ways. First, it would place a stronger requirement on local authorities to take “all reasonable steps” to provide children with appropriate local accommodation. It would place a more explicit requirement on local authorities to plan, deliver or commission on a range of accommodation to meet children’s needs locally. It would also require local authorities to plan to keep children near to the local authority if they are unable to be kept within their own local area.
In recent years, local authorities have faced real challenges in delivering sufficient places close to home and in ensuring that they have enough of the right type of homes and carers in the right places at the right time to meet children’s needs and keep them close to the relationships, places and support networks that matter so much to them. Increasingly, for too many children this has meant being moved far away from the people and the places that they love. Last year, 22% of all children in care in England were living more than 20 miles away from their home communities and support networks. This number has increased by over 40% over the last decade. There are also too many children living hundreds of miles away from home. Become’s “Gone Too Far” campaign has highlighted the devastating long-term impact that living far from home can have on children’s relationships and well-being.
Relationships, which is what these two amendments are all about—where children in care live and who with—are pivotal to children’s outcomes and experiences. There needs to be greater accountability and oversight about the extent to which this sufficiency is being delivered to drive real system change, starting with a stronger sufficiency duty, and to keep more children living close to home. I very much hope that the Government will look sympathetically on this amendment.
I thank the noble Lords, Lord Russell and Lord Hampton, for adding their names to my Amendment 62, which is essentially about the mental health needs of children in care. They often experience dramatically higher levels of mental ill-health than their peers, yet their mental health needs are often underidentified and poorly supported. While current regulations require health assessments to include mental health, they do not require the involvement of health practitioners with mental health expertise. As a result, assessments are often inconsistent and frequently fail to identify need early enough to offer the sort of evidence-based professional responses to address mental health needs and prevent deterioration of a child’s mental health.
My amendment addresses this gap by seeking to ensure that mental health is assessed by a qualified mental health practitioner as a core part of the initial and ongoing health assessment for children in care. This builds on the work of the Education Committee, which has done very important work in this area in its inquiry. It reported that specific considerations around mental health were frequently absent or treated very superficially in health assessments. It is a limited change but an important change. It is asking that mental health is not simply included in the initial health assessment, but that mental health expertise is involved in carrying it out. Because of the importance of mental health to children in care, because of the high prevalence that they have and because of the difficulties that they have in accessing the right sort of mental health support and treatment, I very much hope that the Minister will look sympathetically at this amendment.
Lord Bellingham (Con)
My Lords, my Amendment 51 seeks to highlight the need to include health agencies in the RCC arrangement.
As I mentioned in my speech in Committee back in June, integrated care boards now have a pivotal role to play in the NHS. The main argument advanced when they were proposed that they should replace the clinical care commissioning groups was that they could unite health, social care and all the voluntary partners that are involved. A lot of discussion took place about health inequalities, delivering holistic care and co-ordinating GP services. The regional care co-operatives are at the heart of the MacAlister proposals and have received widespread welcome and endorsement. Indeed, across parties, the view is that they are a pragmatic initiative and absolutely deserve all-party support.
I will not repeat the arguments that I made in Committee—we have been urged not to go over ground that has been trodden on already—and I certainly will not talk for very long, but I feel that it would be unusual and, indeed, illogical for the new RCCs not to be built on a strong and proactive relationship with the existing integrated care boards. This would indeed be the professional outcome that most people would desire. I say to the Minister: why rely on good will when what I am suggesting could be put in the Bill?
In her response to my amendment in Committee, the Minister fully agreed that it was vital that the sort of co-operation and collaboration I am talking about, between the two bodies, does indeed take place. However, she said that
“Section 10 of the Children Act 2004 specifies that local authorities must make arrangements to promote co-operation with relevant partners, including local integrated care boards, to improve the well-being of children”.—[Official Report, 17/6/25; col. 1925.]
in care. She went on to say that the statutory guidance, Working Together to Safeguard Children, provides the necessary clarity. In other words, the Minister said that my amendment was not necessary and was surplus to requirements.
However, I would argue that this is a flagship Bill. Indeed, throughout the entire Bill, there is a lot of talk about consolidation, clarification and updating existing legislation, so why not accept that rationale here? I obviously accept that my amendment has an element of “safety first” to it. But surely, we should not be relying on good will among professionals both in local authorities and in the local NHS.
I want to make one final point on the feedback that has come through from the National Network of Designated Healthcare Professionals, which has commented on this particular clause. I will quote very briefly:
“Children in care are our collective responsibility. As a society, we cannot continue to fail those most in need of our support and protection. … Those who are not able to be cared for by their birth family and do not settle into fostering families or children’s homes often have multiple placements and experience nowhere that they feel accepted and cherished. Many end up in crisis in our acute hospitals, not meeting the criteria for child and adolescent mental health services and not having a home to be discharged back to”.
It goes on to say that the RCCs will now be
“a cornerstone of the governments children’s social care reforms, and a golden opportunity to address the failures of our care system”.
It also points out that
“Two pathfinders are currently testing the models to address the significant difficulties with finding the right homes, with the right care for our most vulnerable children with complex lives”.
It goes on to say that not having, on the face of the Bill, the need for co-operation and integration between these two bodies
“is a strategic omission of significant importance, and runs counter to the inclusion of health as a statutory, and strategic, issue in safeguarding partnerships”.
Finally, it says that the Bill therefore needs to name integrated care boards as partners in the RCCs to
“enable health to take greater direct responsibility for the health outcomes and the life chances of this most vulnerable group of children and young people.”
That is not me; that is the National Network of Designated Healthcare Professionals.
I just say to the Minister that this is quite a simple amendment, but it is an important one. If the Government do not accept it, I suggest to the Minister that we are missing a very important opportunity, because if we do not put it in the Bill, we will be relying on the good will of hard-pressed professionals up and down the country.
Lord Farmer (Con)
My Lords, I rise in support of Amendments 43 and 49 tabled by the noble Baroness, Lady Tyler of Enfield, to which I have added my name.
In Committee, the Minister clearly understood the basic principle of this group was to ensure that young people leave care with supportive and, hopefully, lifelong loving relationships. She assured the Committee that the Government
“are funding a number of family-finding, befriending and mentoring programmes. These help looked-after children and care leavers to identify and connect with important people in their lives and create safe, stable, loving relationships”,
which last. She said:
“The family-finding, befriending and mentoring programme is being evaluated, and this will help to inform decisions about the future of the programme”.—[Official Report, 12/6/25; col. 1607.]
However, I understand funding runs out in March this year for these family-finding, befriending and mentoring programmes, and there is no decision yet on continuation. I am concerned that the good work to date will be wasted, but perhaps she has encouraging news on funding and the results of the evaluation. I particularly want to flag again lifelong links and how this picks up the vital relationships identified by family group conferencing, which is in the Bill.
Lord Meston (CB)
My Lords, I wish to speak in support of Amendment 49, specifically relating to sibling contact, to which I have added my name. In doing so, I do not want to repeat what the noble Baroness, Lady Tyler, said, other than to stress, as she did, the importance of maintaining and developing sibling contact.
Where a child has to be separated from his or her parents, temporarily or permanently, the most important viable relationship remaining is often with that child’s siblings or half-siblings. Typically, siblings have shared experience of the parenting they have received, and they have, of course, a relationship which can long outlive the relationship that they have or have had with their parents.
The Children Act created a presumption that children should be placed together, but that is not always possible to arrange or to achieve. Contact between separated siblings, particularly if no longer in the same school or placed at some distance apart, can require commitment not only by their respective carers but by the responsible local authorities. Properly arranged sibling contact typically requires a concrete plan by the local authority and an underlying framework of support. It may, it has to be said, sometimes influence what happens at the next stage after the care proceedings and determine what happens if the children are to be placed for adoption.
Amendment 49 would help, because it would not require or assume that both or all of the children will be in the care of the local authority, and it would thereby sensibly extend the scope of local authority duties towards siblings.
Lord Russell of Liverpool (CB)
My Lords, I rise briefly to speak in support of Amendment 62 in the name of the noble Baroness, Lady Tyler.
The case for this is, really, fairly straightforward. Children in care often have quite strong mental health needs and are not in the best of mental health. Care leavers comprise about 1% to 3% of the general youth population, but that translates into them being responsible for one quarter of the homeless population. That group are twice as likely to die prematurely than the general population, and in many cases suicide is the largest reason for that high death rate. That is a fairly strong causal link between children in the care system, or those going into the care system, having fragile mental health, and that not being picked up as early as it should be. This amendment simply asks that we please ensure that, when children have an assessment of the quality of their mental health, the practitioners who are doing that are qualified in mental health. Only in that way can we be sure that we catch those vulnerable young people at that early stage and that they do not become one of the depressing statistics that I have just mentioned.
Lord Hampton (CB)
My Lords, I will speak briefly to Amendment 62, tabled by the noble Baroness, Lady Tyler, and to which I have added my name. I declare, as ever, that I am a teacher and I thank the National Children’s Bureau for its help on this.
Children do not come into care because they have won the lottery of life; trauma is unlikely to be far from their lives. Yet our assessment processes still rely on professionals who may have little or no training in mental health or trauma-informed practice. Care-experienced young people told the Education Select Committee, as part of its inquiry into children’s social care, that local authorities are not always fulfilling their obligations to include emotional and mental health in their health assessments of children in care. One young person told the committee:
“I feel a lot could be explained if they understood the experience of trauma. It will take time. It will not go away at night, and sometimes before it gets better it could get worse. No one talks about that. You will not be okay if you are going into care; there is a reason why you are there, and so it is important that the minute you go into care every child should have a mandatory assessment, physical and mental, and there should be that on-call support for them”.
Bringing qualified mental health practitioners into the mandatory health assessment of children in care is simple, practical and overdue. I hope that the Government will use this amendment as an opportunity to do more for children in care and to make their lives and, as importantly, their futures better.
Lord Sentamu (CB)
My Lords, I feel a strong need to speak on Amendment 61, this wonderful amendment, on
“Amending the sufficiency duty to prevent children being moved far away from home”.
Especially where a child has been put under a deprivation of liberty order, if you then move them a long way away, it means that parents or even foster carers have quite a difficulty in keeping in touch with the child. So the sufficiency duty on local authorities should be amended from requiring them to take
“steps that secure, so far as reasonably practicable”
to requiring them to take
“all reasonable steps to secure”,
which is a far better phrase that gives some assurance.
As somebody who fostered children and was in touch with other foster carers, I know that children were put a long way away when, under the expression of the Children Act 1989, steps had been taken that were “reasonably practicable”. But, actually, you could scratch under the surface and see the pressure in an area such as Tulse Hill near Brixton, where I was a vicar and where a lot of children were placed in care. The council had a big job to do, and your Lordships and I know that it was extremely busy. It is easy to say, “Yes, I’ve taken reasonable steps and done what is practicable”, whereas “all reasonable steps” should be taken, and you need to catalogue them in case somebody asks questions.
I suggest to the Committee that Amendment 61 would remove a lot of anxiety from parents whose children find themselves deprived of their liberty. Moving them a long way away is almost suggesting that parents will, or maybe will not, find a way of going to where these children have been placed. In the place where I ministered for 13 years, they were always living in a time of financial crisis. Buses were needed, taking a long time, to get to where these children had been put, which was such a huge burden.
I hope the Minister will see that this amendment would actually help our children. They are not someone else’s children; they are our children. As that wonderful African proverb says, it takes a whole village to raise and educate a child. They are ours; would we be happy if they were placed such a long way from home? That would be quite a burden, and I congratulate the noble Baroness for tabling this amendment.
Lord Storey (LD)
I will speak on Amendment 71 in my name. I am grateful to the Minister for her movement on this issue. In her letter to me of 7 October 2025, which was some time ago, she said:
“When used effectively, non-school alternative provision offers tailored support that meets individual needs and helps re-engage children in education, supporting future regular attendance in school. However, in some areas, inadequate oversight is putting already vulnerable children’s safety and the quality of their education at risk. Too often, children whose needs could be met in school are instead placed in unsafe, low-quality settings with no clear plan for returning to mainstream education”.
I do not understand why anything in our society is unregistered—whether a school, a care home or alternative provision. We should not allow that to happen, because we put the lives of people at risk.
Let us understand what alternative provision means. It means that a child or young person who has been permanently expelled or removed from school becomes the responsibility of the local authority. The local authority has to make provision for them. However, in many cases, schools have their own units on site, which is the best model by far. Where that provision is not available, local authorities have to find providers.
Remember that these children and young people are the most vulnerable. They often have special educational needs, are from difficult circumstances or suffer trauma or mental health problems. The Minister realises the issue and has come forward with some suggestions of how we might develop this. I am genuinely grateful for that. I hope that this will be another way that we can deal with this issue.
I will raise a number of issues with the Minister on which I hope she might be prepared either to write to me or to respond in her reply. Unregistered provision cannot be inspected by Ofsted, but we use the same criteria for registered provision that we use with maintained schools, academies and independent schools. This is a very different situation. These pupils require flexible timetables, smaller groups, therapeutic approaches, outreach work, incremental attendance and a curriculum that prioritises core skills, well-being and preparation. Often, inspections of alternative provision already highlight that applying mainstream criteria to alternative providers creates inconsistent judgments, perverse incentives and misunderstandings about what meaningful progress looks like for these pupils. Without adaptation, the strengthened regulatory framework in the Bill may unintentionally constrain innovation, reduce placement availability, push provision back into semi-regulated spaces or penalise alternative providers for not behaving like mainstream schools.
I am sure that the Government and the Minister want to get to grips with this issue, and I hope that their proposals actually deliver what we all want.
Baroness Barran (Con)
My Lords, this group of amendments focuses again on children in the care system. As we have heard expertly and eloquently expressed across the House, the focus on relationships is so important for those children, as is allowing them to sustain relationships with siblings and families where it is safe to do so, and not being moved too far from their home and network wherever possible. Obviously, this is most sensitive where siblings do not live together, either because they are not all in care or because they are in different care placements.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, on Amendments 43 and 49, in the name of the noble Baroness, Lady Tyler, everybody who has contributed to the debate today, and certainly the Government, are fully committed to every care-experienced child having loving, life-long relationships with those they care about—particularly with siblings, as several noble Lords have focused on. We recognise that relationships are fundamental to identity, well-being and long-term outcomes.
Although I absolutely support their intent, neither of these amendments is necessary and would duplicate existing legislation. As stated in Committee and referenced today, there is already a legal duty on local authorities, in paragraph 15 of Schedule 2 to the Children Act 1989, to “endeavour to promote contact” between looked-after children and their relatives, friends and other connected people,
“unless it is not reasonably practicable or consistent with”
the child’s welfare.
Additionally, Amendment 49 would not serve to strengthen the duty placed on local authorities to make contact arrangements between siblings; it requires only that where contact arrangements are made, they are recorded in the care plan—a duty that already exists in paragraph 3 of Schedule 1 to the regulations. Existing statutory guidance, such as the Children’s Social Care National Framework, which sets the outcomes that local authorities should achieve for children, young people and families, already emphasises the importance of family networks. This, alongside other guidance, builds on the legislative duty to emphasise the importance of family networks and listening to children’s voices about who and what is important to them.
It is absolutely right that the care system and professionals involved in the care of looked-after children should help them to maintain relationships, including staying connected to siblings, family, carers and wider community networks. That is why the Government have been taking practical action to unlock any barriers to this and have already made clear commitments in this area. For example, as discussed last week, we are mandating the offer of family group decision-making at pre-proceedings where that is in the child’s best interests, which could of course include considerations about contact arrangements with family members.
The family-finding, befriending and mentoring programme mentioned by the noble Lord, Lord Farmer, helps children in care and care leavers to identify and connect with the important people in their lives. We are currently funding 46 programmes across 43 local authorities, with 21 local authorities delivering lifelong links. The evaluation mentioned by the noble Lord is ongoing, but the interim evaluation report, published in September 2025, shows a statistically significant increase in reported relationships after children and young people have participated in the programme.
The noble Lord asked about the funding of the programme. We are determined to continue learning from the effectiveness of programmes such as this that support children and young people in care to build and strengthen relationships. Plans for the continuation of this programme beyond this financial year are currently subject to business planning and will of course also be subject to the continued evaluation that we are committed to.
Having said that, our view, and the view of stakeholders with whom we have consulted, is that issues in promoting contact, particularly between siblings, tend to be more practical and logistical than legislative or caused by a lack in legislation. My officials have met the noble Baroness, Lady Tyler, who I know takes a very close interest in this, to discuss this important topic and have taken her very useful insights on board, which is why we will commit to identifying and sharing best practice on facilitating sibling relationships to ensure that local authorities support all children in care to have loving relationships with family members. We think that that is the right way to focus on ensuring that this is achieved in practice.
Amendment 61, tabled by the noble Baroness, Lady Tyler, aims to prevent looked-after children being placed far from home through amending the sufficiency duty on local authorities. The Government are clear that ensuring children can remain close to their home, community and connections with loved ones is crucial to improving the outcomes of care-experienced children, as several noble Lords have emphasised. That is why, to support local authorities in meeting their sufficiency duty, over £130 million is being invested in fostering hubs, kinship care and children’s homes.
Additionally, the Bill introduces legislation that will enable the Secretary of State to direct local authorities to establish regional co-operation arrangements to improve the commissioning of children’s social care placements and meet their sufficiency duty. However, the proposed amendment would not strengthen the existing sufficiency duty; in fact, we believe that it would weaken it. It would allow local authorities to provide and rely on more accommodation “near to” their area rather than “within” it, risking increased out-of-area placements and more children being placed far from home, not fewer. We also do not consider that changing the wording in the way proposed would have the effect on the effort required by local authorities that the noble Baroness wants it to have. It would not, in effect, have any meaningful impact on local authorities’ decision-making.
Amendment 62, tabled by the noble Baroness, Lady Tyler, seeks to add a requirement for a registered mental health practitioner to undertake an assessment of every child’s state of health when they become looked after, and for a registered mental health practitioner to be added as a professional who may undertake health reviews of looked-after children. As many noble Lords have identified during this debate, the significant trauma that many children who become looked after have experienced, and the lasting impact this trauma can have, means that providing effective mental health support is absolutely crucial.
Unless a child who is of sufficient age and understanding to consent, refuses to do so, all children must have an assessment of their health when they become looked after. Existing regulations require that this must be completed by a registered medical practitioner. It must include an assessment of emotional and mental health and it must be kept under review. The statutory guidance states that the health practitioner carrying out the assessment has a duty of clinical care to the child. This includes making the necessary referrals for investigation and treatment of conditions identified. So there is already a clear expectation for the necessary referral to be made where a child is assessed as needing investigation or treatment from a mental health practitioner. This means that it is not necessary to add the specific requirement for a registered mental health practitioner to the legislation. However, I understand the noble Baroness’s concerns. This will inform changes to statutory guidance to further strengthen implementation and ensure that children in care receive the services and support they need for their mental health and well-being. It is a strengthening of the position that we took in Committee.
Alongside that, we have also made progress since then. In December, the Health Secretary and the Minister for Children and Families announced that, in a boost for mental health support, the Government will trial a three-year pilot to make sure that children in care have access sooner to the support they need. This will build on existing work across the country, bringing together social workers and NHS health professionals to work together to provide direct mental health support to children and families when they need it most.
In relation to points made by the noble Lords, Lord Hampton and Lord Russell, the DfE is committed to understanding and addressing the shockingly high number of early deaths among care-experienced young people. As the department progresses this work, we will carefully consider how to improve the support that care leavers receive across a range of aspects of their lives, including their mental and physical health. We know, however, that there will be more to do to ensure that this focus on mental health is implemented as consistently and effectively as possible. We would welcome a meeting with the All-Party Parliamentary Group for Children, which I know has made this a priority, to discuss this important matter and what more we can do. I thank the noble Baroness for raising this important point and for pushing it in the way that she has.
I turn to Amendment 71, tabled by the noble Lord, Lord Storey. This amendment is on registration and local authority oversight of accommodation for looked-after children and education provided in alternative settings. This Government are absolutely clear that placing children in illegal, unregistered homes is unacceptable. Looked-after children should only ever be placed in accommodation that is run by a registered provider. For children’s homes and supported accommodation, providers must be registered with Ofsted, the single national regulator that is able to ensure that safeguarding and quality standards are being met. Creating a second registration system run by local authorities, as proposed in this amendment, risks creating confusion and duplication. For this reason, we do not believe that this amendment is the right approach to reduce the use of unregistered accommodation placements.
In his remarks, the noble Lord, Lord Storey, focused on non-school, unregistered alternative provision. I welcome the noble Lord’s support for the proposals that we announced last year to strengthen protections for children in these settings, including for those in care. As I set out in the letter to which the noble Lord referred, these reforms comprise creating a new local regulatory framework and national standards. They are substantial and require careful engagement with the sector. Introducing these measures now, in the Bill, would bypass full parliamentary scrutiny. But we recognise the significance of what the noble Lord was saying and, instead, they will form part of our wider SEND and alternative provision reforms in the forthcoming schools White Paper, ensuring that they deliver for children.
Baroness Tyler of Enfield (LD)
My Lords, I thank the Minister for her comprehensive and helpful response to a large number of amendments. I listened very carefully indeed to what she had to say on family relationships and sibling contact, an issue that is very dear to my heart. I welcome that she talked about sharing best practice on sibling contact, which will certainly be helpful, but I must admit I was disappointed that she was not able to go further, particularly on my Amendment 49. I give notice that, when it is reached, I am minded to seek the opinion of the House. Finally, I thank her for her response on Amendment 62, in particular her commitment to make changes to statutory guidance on mental health and to consult with the APPG for Children. On that basis, I beg leave to withdraw Amendment 43.
Lord Storey
“Adoption and special guardianship support fund review(1) Within one month of the day on which this Act is passed, the Secretary of State must conduct a review of the level of funding available per child from the adoption and special guardianship support fund.(2) The review must produce recommendations regarding any steps necessary to increase the funds available per child.(3) The review must be laid before both Houses of Parliament.”
Lord Storey (LD)
My Lords, the adoption and special guardianship support fund was established in 2015 to provide therapeutic support to families caring for children through adoption and guardianship. Since its inception, the fund has supported over 4,000 families and played a transformative role in so many families’ lives, offering interventions that have helped children manage emotions, process early trauma and build trusting relationships, while equipping parents and guardians with the tools they need to care effectively. In fact, over the past 12 months, the Home for Good charity talked to a large number of families who had used the fund: 67% accessed therapy, such as counselling, play therapy and family therapy; 34% accessed therapeutic parenting support or training; and 33% accessed specialist assessments.
I am grateful to Minister MacAlister for his letter following a meeting with a number of us, in which he said:
“Many children who become adopted or are in kinship care have faced difficulties in early life that mean that they cannot live with their birth parents. These experiences place them at greater risk of mental health challenges, often made more complex by increased SEND prevalence compared to their peers. I am clear that government has a responsibility to these children which I am determined to meet it both now and in the future”.
He also said:
“The Adoption and Special Guardianship Support Fund has helped children and their families access a wide range of interventions, including play therapy and therapeutic parenting courses”.
Imagine the dismay among those parents that this element of the fund has been reduced.
In Committee, I gave the example of a family living close to me that had adopted two children at a very young age who were absolutely traumatised. Counselling, paid for by the support fund, has created a huge change in those children. Because the fund has been cut, they are not able to continue with that provision.
Interestingly, that has been mirrored by a number of comments from other families talking about the support, who have said: “The support we had so far dramatically helped. Any loss of it would be devastating”; “My child is sick. She needed the help so she grows up feeling accepted and cared for and not angry and let down”; “Both our boys have additional needs. It scares us that we might lose the help they desperately need”; “The recent reduction of the adoption support fund has been a shock and has led to huge stress for the families who rely on it’; “The new financial limits imposed are a major concern. We are already stretched to our limits financially”; and, from a professional, “It is hard, when told by professionals that your child needs more support, and then you realise you cannot access what they recommend”.
My amendment is simple: that element of the fund should be restored, so that parents who adopted and fostered children can get that resource, which those children so desperately need. I beg to move.
Lord Russell of Liverpool (CB)
My Lords, in speaking to these amendments, I declare that I am a co-chair of the All-Party Parliamentary Group on Adoption and Permanence, alongside Rachael Maskell, the MP for York. In 2019, the APPG carried out an inquiry into the fund. I will simply read its recommendation 6, which is headed “Continuity”:
“The department should ensure a continuity of therapeutic support by removing the current annual application requirement, enabling agencies and authorities to apply for support that orients around the needs of children and their families”—
not necessarily the budgeting needs of the department in question.
I know, from carrying out that inquiry and subsequent work that I have been involved in—I am a governor of Coram, the children’s charity, which has a large say in adoption—that the experience of families that have been fortunate enough to access the support given by the fund is that it is literally transformative, albeit in many cases, when the therapeutic support is accessed, there is already a situation within the family where adoption breakdown is potentially a reality. Unfortunately, over the past couple of years, there has been an increase in the level of adoption breakdown. If one looks at the amount of effort, time and emotional expense involved in going through an adoption, one will find it difficult to imagine having, in the end, to admit that it has not worked but has failed—which is devastating both for the adoptive family and for the child or the children. This fund genuinely does make a difference. One of the achievements of His Majesty’s occasionally loyal Opposition when they were in government was getting it on to the statute book.
One of the problems with it is that continuity of support is fundamental; this is not the sort of support that responds well to being stop-start. Unfortunately, because the flow of funding has not been consistent and because, for whatever reason—perhaps through negotiations with the Treasury—the department has been unable to be assured enough of the funding, that makes it extraordinarily difficult for the department to say to the families that are currently getting or wish to get support that it will be available.
It makes the livelihoods of those practitioners providing this therapeutic support very difficult. This support is highly specialised because, in many cases, these children have been, and are, subject to really quite severe trauma. To be able to give the level of care required at the rate required, those professionals need consistency of funding from the Government, to enable them to stay in business and to be able to engage with a family on the basis that they will be able to provide sufficient support, over whatever time required for it to be effective, and to really make a difference. For those reasons, I hope that the Government will look at this carefully.
Lord Watson of Invergowrie (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Russell. As he said, he has played a major role within Coram, the organisation which, as we sit here now, is celebrating the centenary of the Adoption of Children Act 1926. For noble Lords who do not know about this, the celebration is on the Terrace between now and 8 pm. If you get the opportunity, please go along and meet the many people who make such a large contribution to adoption within the UK. It is appropriate to mark the centenary appropriately.
That landmark legislation introduced, for the first time in England and Wales, a legal process by which the rights and responsibilities for a child could be transferred from birth parents to adoptive parents. Because of that, I find it unfortunate to say the least that on the centenary of that Act, the Bill we are discussing this evening features the word “adoption” only four times in 137 pages. I do not understand that. Three of those mentions are just mentions of adoption in other Acts of Parliament. Why that should be the case, I simply do not understand. A Bill with children’s well-being in its title surely should not ignore the key role played by adoptive parents in their children’s well-being. I made this point in Committee and I am not going to repeat what I said then, but those working with adoptive families who have suffered the cut in the adoption support fund to which the noble Lords, Lord Storey and Lord Russell, have referred feel undervalued, despite the important job they do in keeping children out of care and residential homes.
We need to think again about how we approach adoption and give it the respect and resources it deserves. If any noble Lords choose to go down to the Terrace this evening, they will meet people who are very active and hardworking in that sector, who will tell you that they feel undervalued and under-supported. I hope that before long, that will change.
Baroness Barran (Con)
My Lords, I am pleased to support Amendments 46 and 47 tabled by the noble Lord, Lord Storey. In Committee and again this evening, we covered in detail the distress caused to parents and children by the very late timing of the announcement in relation to the support fund and by the cut in the size of the grant. In particular, Amendment 46 gives the Government an opportunity to review how best to use this funding ahead of the grant period in March 2027. I am not aware of any compelling evidence that supports the earlier decision to cut the grant size and to reduce the funding for specialist assessments, but if that exists perhaps the Minister can share it today. Of course, we on these Benches are open to improving the way funds are distributed, but we are genuinely concerned by the lack of visibility on what will happen next year. I hope very much that the Government will address this tonight.
I have also retabled my Amendment 100, which would give foster carers clear delegated authority for the children in their care on practical day-to-day matters. Foster carers have been clear that they would value this and, crucially, it is one of the reasons why we see too many leaving the profession. I hope the Minister can be more encouraging today than she was in Committee on this important point.
Baroness Smith of Malvern (Lab)
As I reply to this group of amendments, I assure noble Lords that I will try not to drench anybody during the course of my response—although I have now decided to set myself an ambition of juggling three bottles of water by the time we get to the end of Report.
Important issues are covered in this group. Amendments 46 and 47 tabled by the noble Lord, Lord Storey, concern funding for the adoption and special guardianship support fund and provide a further opportunity to debate these important issues. Around 3,000 children are adopted each year and more than 3,800 enter special guardianship. I salute all those who welcome these vulnerable, often traumatised children into their homes and hope that the centenary celebrations noble Lords have alluded to, taking place here this evening, enable a celebration of that contribution and, rightly, as we have heard in this debate, a challenge about how we can do our best to support those who undertake adoption and special guardianship in future.
Almost 57,000 children have received adoption and special guardianship support since 2015, and many of them more than once. Since April 2025, we have approved applications for nearly 16,000 children. However, it is important to remember that this is not the only source of funding. The Families First Partnership programme will total £2.4 billion over the next three years. That funding is available to both adoptive and kinship families and to the services that support them. We have already confirmed that adoption and special guardianship funding will be continued for 2026-27. Further details will be shared in due course through the usual funding announcements.
As several noble Lords, including my noble friend Lord Watson, have made clear, we need to think longer term about the future of adoption support, as we promised to Parliament in September that we would—and perhaps even more so as we celebrate the centenary of adoption. We will shortly set out plans to engage widely on this with the aim of understanding how best to support children and young people to thrive in their new families and get the support they need in the most effective way.
I turn to Amendment 100, tabled in the name of the noble Baroness, Lady Barran, and thank her for raising this important issue again. I would have to look back at the record, but I have a considerable amount of sympathy on this, which I hope I shared in Committee. Foster carers offer crucial support to some of the most vulnerable children in our society. They provide love, stability and compassion to children and young people when they need it most. They therefore need to have the ability and the responsibility to make the decisions that they think are suitable for children.
The Government are prioritising fostering. Through the fostering recruitment and retention programme, we have been supporting over 60% of local authorities across England in 10 regional clusters to recruit and support foster carers. We know that we need to build on this to further accelerate foster-care recruitment and retention and we will soon publish a comprehensive set of measures to achieve this with regional care co-operatives and fostering hubs at the heart of these plans.
In relation to the issue specifically covered by this amendment, which seeks to ensure that foster carers have, by default, delegated authority on day-to-day issues, except where an alternative decision-maker is listed on the child’s placement plan, our guidance already sets out that foster carers should be able to make day-to-day decisions about the children in their care. I accept that too often we hear that this does not happen in practice, meaning that children in care miss out on normal childhood experiences and feel as if they are treated differently from their peers. I agree with the spirit of this amendment, but it is not necessary to include this in this Bill. Local authorities should already delegate all day-to-day decisions, and we have clear guidance that sets this out. We will nevertheless be taking further action on this issue as the noble Baroness pushes us to do.
Our upcoming fostering publications will set out our plans for ensuring that foster carers can feel confident in making day-to-day decisions for the children in their care. Our publications will also set out plans to reform the fostering national minimum standards. These will also reflect our position on day-to-day decision-making and how fostering services can support carers to make these decisions. Any changes to the national minimum standards, including those concerning decision-making for foster carers, would benefit from a period of consultation with relevant stakeholders. I accept the noble Baroness’s point that it is important that we make progress in this area.
Given that commitment and our plans on the longer-term provision of adoption support, I hope that I have addressed the concerns of noble Lords and that the noble Lord, Lord Storey, feels able to withdraw his amendment.
Lord Storey (LD)
My Lords, I am grateful that the Minister agrees with the spirit of this amendment. She highlights that some parents have made up the difference and found the money themselves to carry on with this. I find it perverse that, for children with all sorts of problems who need therapeutic counselling, it is suddenly going to stop because the money is not there. Some parents have made up the difference, but those who cannot afford it are not able to do so. Those who come from a poor background and do not have the money are probably the ones who most need it. Those who have got the money can dip their hand in their pocket and pay the difference. That cannot be right in 21st-century UK. For those reasons, I wish to test the opinion of the House.
Lord Storey
“Restoration of funding to the adoption and special guardianship support fundWithin one month of the day on which this Act is passed, the Secretary of State must increase the funding available per child per year under the adoption and special guardianship support fund to a level equal to or greater than the funding available per child under the fund in March 2025.”Member’s explanatory statement
This amendment would reverse the cut to the adoption and special guardianship support fund.
Lord Storey (LD)
My Lords, I am sure that the Minister will want to carry out the wishes of the House and ensure that those parents—all parents—have the support that they need. In the spirit of co-operation, I will not move the amendment.
Baroness Tyler of Enfield
“Promoting contact between siblings who are not living togetherIn paragraph 3(1) of Schedule 1 to the Care Planning, Placement and Case Review (England) Regulations 2010 (S.I. 2010/959) (care plans), for the words from “for” to “together” substitute “whom they are not living with”.”Member’s explanatory statement
This amendment extends requirements to promote contact between a child in care and siblings who are not living with them, including those not in care, so far as this is consistent with the child’s welfare.
Baroness Tyler of Enfield (LD)
My Lords, as I indicated during the debate on this vital issue of sibling contact, including siblings both in care and not in care, I wish to test the opinion of the House.
Baroness Smith of Malvern
“Children in temporary accommodation(1) After section 213A of the Housing Act 1996 (homelessness: co-operation in certain cases involving children) insert—“213AA Duty of local housing authority in England to notify in certain cases involving children(1) This section applies where a local housing authority in England secures that accommodation is available for occupation by a child, in response to an application for assistance under this Part, unless securing that such accommodation is available means the authority ceases to be subject to the duty under section 193.(2) Except as provided in subsection (3), the authority must ask the parent of the child—(a) to agree to the authority notifying each relevant body applicable to the child that accommodation has been secured for the child as mentioned in subsection (1), and(b) if that agreement is given, to provide the authority with information about those bodies to enable the authority to identify each relevant body applicable to the child.(3) If the child— (a) is 16 or 17 years old,(b) is living independently from their parents, and(c) is the applicant for assistance within the meaning of section 183(2),the authority must ask the child as provided in subsection (2)(a) and (b).(4) If the parent or child (as the case may be) agrees to the authority making the notification mentioned in subsection (2)(a), the authority must take reasonable steps to notify each relevant body applicable to the child within 14 days beginning with the latest of—(a) the day on which the authority receives agreement,(b) the day on which the information about the relevant body is provided to the authority, and(c) the day on which the child is placed in accommodation.(5) The duties in subsections (2) and (4) only arise once in relation to each application for assistance under this Part.(6) In this section “relevant body” means—(a) the general medical practice in England with which the child is registered;(b) the body in the child’s local authority area in England through which health visiting services are available to the child;(c) the appropriate authority of a relevant educational institution in England at which the child is a registered pupil or student.(7) The Secretary of State may make provision by regulations for the purposes of this section—(a) specifying any other description of body as a “relevant body”;(b) specifying any other institution as a relevant educational institution;(c) specifying the appropriate authority to be notified under this section in relation to an institution specified under paragraph (b).(8) In this section—“appropriate authority” means—(a) in relation to an Academy, a non-maintained special school, a special post-16 institution, an independent school or a provider of post-16 education or training, the proprietor;(b) in relation to a school maintained by a local authority or an institution within the further education sector, the governing body;“child” means a person under the age of 18;“parent” in relation to a child, includes any person—(a) who is not a parent of the child but who has parental responsibility for the child, or(b) who has care of the child, disregarding any absence of the child at a hospital or boarding school or any other temporary absence;“parental responsibility” has the meaning given by section 3 of the Children Act 1989;“proprietor” means the person or body of persons responsible for the management of the school or institution;“relevant educational institution” means—(a) an Academy (as defined by section 579(1) of the Education Act 1996) other than a secure 16-19 Academy (within the meaning of section 1B(7) of the Academies Act 2010);(b) a school maintained by a local authority (within the meaning of section 142(1) of the School Standards and Framework Act 1998); (c) a non-maintained special school (within the meaning of section 337A of the Education Act 1996);(d) an independent school (within the meaning of section 463 of the Education Act 1996);(e) an institution within the further education sector (within the meaning of section 91(3) of the Further and Higher Education Act 1992);(f) a special post-16 institution (within the meaning of section 83 of the Children and Families Act 2014);(g) a provider of post-16 education or training that provides the kind of education or training mentioned in section 123(1)(d) or (g) of the Education and Inspections Act 2006;(h) a provider of post-16 education or training that provides education or training, other than in institutions within the further education sector, which is suitable to the requirements of persons aged 16 or over but under 19 and funded wholly or partly by the Secretary of State.”(2) The amendment made by this section does not apply in relation to a child for whom a local housing authority in England has secured accommodation in response to an application for assistance under Part 7 of the Housing Act 1996 which was made before the date on which this section comes into force.”Member’s explanatory statement
This amendment would insert a new section into the Housing Act 1996, imposing a duty on local housing authorities in England to notify health and educational bodies when a child is placed in temporary accommodation where the parent (or the child in some cases) agrees to that notification being made.
Baroness Smith of Malvern (Lab)
My Lords, government Amendment 50 regards notifications where children are placed in temporary accommodation. All noble Lords who spoke to this in Committee saw this as a clearly sensible change to make sure such children can receive the right support when they need it. I am pleased to tell noble Lords that, following extensive cross-government work, the Government have tabled an amendment to introduce a new duty on local housing authorities to notify educational institutions, GP practices and health visiting services when a child is placed in temporary accommodation, if consent is provided.
This underscores this Government’s commitment to break down barriers to opportunity and support all children to have the best life chances. I particularly thank the noble Lord, Lord Russell, and my honourable and very good friend Dame Siobhain McDonagh for raising what the House in Committee agreed is a very important issue and for engaging the Government constructively on it. This government amendment builds on the previous amendments, achieving their intent. Children in temporary accommodation are particularly vulnerable and may need additional support. This notification will alert health and education providers, enabling them to respond appropriately in accordance with existing duties and responsibilities and help to mitigate the harmful impacts of living in temporary accommodation.
For example, schools and colleges may wish to consider interventions such as providing pastoral support or practical assistance such as breakfast clubs, after-school activities and homework support. Health services may consider making proactive contact with families in temporary accommodation to ensure they do not experience gaps in healthcare provision. Guidance will follow for local authority housing officers and the public bodies receiving the notifications to ensure that we effectively implement this very important measure. Therefore, I beg to move this amendment.
Lord Young of Cookham (Con)
My Lords, this is an improved version of Amendment 165, tabled in Committee by the noble Lord, Lord Russell, and supported by the noble Lord, Lord Hampton, the noble Baroness, Lady Bennett, and me. We are all very grateful for this very positive response. Some 41,000 households in temporary accommodation have been placed out of area and 26,640 of them are households with children, so a large number of children will benefit from this.
I have three quick questions for the Minister. First, when she wound up the debate in Committee, she said some technical issues needed to be resolved. I think she said there were some operational issues to see how it can work. I assume those have been resolved. I hope there can be some IT solutions that mean we do not have to do this manually and it will be done automatically. Secondly, under proposed new subsections (6)(a) and (6)(b), the bodies that have to be notified that there is a child in their area in temporary accommodation out of area are medical practices and schools in England. Those living in Shropshire, for example, may be placed out of area in Wales—is there any duty to notify the Welsh authorities that they have children in temporary accommodation living in their area? Thirdly and finally, when will this very helpful amendment come into operation? What is the commencement date? Having said that, I warmly welcome this initiative.
Lord Russell of Liverpool (CB)
My Lords, as the noble Lord, Lord Young, said, I tabled this amendment in Committee. I also pay tribute to Siobhain McDonagh for having pursued this for many years and the way in which she has worked with different parts of government to try to work through the issues. It was always really about the children and not about the problems that government has in doing this. I will now make a very lengthy peroration and simply say thank you.
Baroness Bennett of Manor Castle (GP)
My Lords, as the noble Lord, Lord Young, said, I supported and spoke to a similar amendment in Committee. Again, I will not be very long.
I want to celebrate this great example of when campaigning works. I pay tribute to Justlife, which worked alongside the Shared Health Foundation for the All-Party Parliamentary Group for Households in Temporary Accommodation. I want to stress the importance of this, and will not apologise for repeating what are such horrific figures. From 2023 to 2025, 80 children died while in temporary accommodation; that was 3% of total child deaths. From 2019 to 2024, temporary accommodation was cited as a factor in the deaths of 74 children.
Having said that, I want to stress, as I think the noble Lord, Lord Young, was hinting at, that it is crucial that this comes into effect as soon as possible. We could potentially save a life if GP surgeries and schools know the situation that children are in. Much more broadly, we need to get to a situation where we do not have children in temporary accommodation for the long periods of time they are now. Please let this be done as soon as possible.
Lord Hacking (Lab)
I give heartfelt thanks to the Minister from these Benches for moving this amendment. I have not dared count the number of amendments my noble friend has tabled, but this is a magnificent example of a Minister and a Government listening.
Baroness Barran (Con)
My Lords, we on these Benches warmly welcome the amendment and thank the Government for tabling it.
Baroness Smith of Malvern (Lab)
I thank noble Lords for their thanks and contributions. Tabling and discussing this amendment has been an important first step. We are clear that, if it is agreed, as it appears it will be—this goes to the point that the noble Lord, Lord Young, raised about some of the technical areas where we need to ensure that this works effectively—we will continue to work across departments so that it has the impact that the Government desire: to strengthen information sharing so that educational institutions and health providers are aware where children living in temporary accommodation may require additional or different support.
As I said, alongside the legislation we will provide guidance for local authority housing officers and relevant education and health bodies to ensure that the duty is well understood by all relevant bodies. Where possible, we will update existing guidance to minimise burdens and support accessibility.
In response to the noble Baroness, Lady Bennett, it is worth saying that this is one part of the action that the Government are taking with respect to temporary accommodation. Through our homelessness strategy, published in December, we have set out a range of measures to support families with children in temporary accommodation, including protecting record levels of investment in tackling homelessness and rough sleeping, and eliminating the use of bed and breakfast accommodation for families, other than very short-term use in emergencies, by the end of this Parliament. We have set an ambition to cut school days lost for children in temporary accommodation, with a stronger role for pastoral teams to work closely with families in that situation, including preventing unlawful removal from a school’s roll. We have made a clear pledge to prevent deaths caused by gaps in healthcare. To achieve that, there will be proactive health outreach to families in temporary accommodation, and a clinical code to improve data and prevent incidents. We will end the practice of discharging newborns into bed and breakfast, or other unsuitable housing, and work with the NHS on safe and robust pathways.
In response to another question asked by the noble Lord, Lord Young, there is no duty within this amendment to notify the Welsh, but we will look at how we can do that in regulations in the future, if needed. I wholly take his point, given that I come from that part of the country myself, about areas that are close to the border, where moves may be happening across the border.
I will write to noble Lords with an update on the timetable for the implementation of this very important step. I thank noble Lords for the welcome they have given it this evening.
Lord Bellingham
“(2A) Regional co-operation arrangements must include the local integrated care board in their development, delivery and governance.”Member’s explanatory statement
The amendment aims to highlight the need to include health agencies in the regional cooperation arrangements.
Lord Bellingham (Con)
My Lords, I listened very carefully to what the Minister said. Although she went some way to satisfying me and others who support this amendment, I do not think she went far enough. I would like to test the opinion of the House.
Baroness Barran
Member’s explanatory statement
This amendment seeks to ensure that children deprived of their liberty have access to education.
Baroness Barran (Con)
My Lords, we come to this important group, which covers children who are deprived of their liberty. Noble Lords will remember from our debate in Committee that the number of such children has risen by 11 times in only seven years to almost 1,300 in 2024. Most troublingly, the number of children under the age of 12 deprived of their liberty grew by more than 50% in the last quarter, and 97% of these children are already in care. They are deprived of their liberty, typically for an average of six months, and restraint of those children is permitted in two-thirds of cases. The amendments in my name, and those of the noble Lords, Lord Russell and Lord Meston, and the right reverend Prelate the Bishop of Manchester, offer a practical route to turning this tide. They would create greater integration of services, stronger accountability and a focus on recovery rather than containment.
Amendment 56 would place an explicit responsibility on local authorities and health partners to be jointly responsible for the funding of care for children who are deprived of their liberty or at risk of being so. The amendment would make clear, through government guidance, the expectation that agencies work together not only at the point of crisis but at an earlier stage.
Amendment 58 would require the Secretaries of State for Education and Health to lay a report before Parliament annually with transparent data showing how many children are deprived of their liberty, as well as their characteristics, circumstances and outcomes. This would bring crucial transparency to the system and show whether the Government’s initiatives are working.
Amendment 55 would ensure there is comprehensive guidance for placement and care planning in relation to the specific aims when applying for a deprivation of liberty order and, crucially, to how a child’s plan will support their recovery so that they spend the shortest possible time with their liberty removed. Currently, children are stuck in limbo for many months, and this amendment would address that.
Amendment 53 would ensure that children deprived of their liberty receive an education. Amendment 60 would strengthen the role of the independent reviewing officer to make sure that decisions are scrutinised robustly. Finally, Amendment 54 would ensure monthly reviews of every deprivation of liberty order by a director of children’s services or head of social work practice to ensure that it continues only where strictly necessary.
These proposals have not been developed in isolation. They seek to build on the important collaborative work led by the Nuffield Family Justice Observatory, which has brought together representatives from child and adolescent mental health services, children’s social care, regional care co-operatives, NHS England and the Department for Education itself. I urge the Minister not to wait for another review or pilot. These children do not have lobbyists; they do not write to their MP; they do not have front-page advocates. They are, for the most part, invisible. Their lives are bound by locked doors and constant supervision. They cannot ask for change. We must therefore act for them.
The Lord Bishop of Manchester
My Lords, I have promoted a number of amendments in this group and signed others, for the reasons that the noble Baroness, Lady Barran, has so elegantly given. I will not waste your Lordships’ time by repeating them. I simply say that, over these last few years, I have become all too familiar with the acronym ACE—adverse childhood experience. We know that any child who has had four or more of those experiences is effectively traumatised, in one way or another, for life. It is a major thing to deprive them of their liberty, so whatever we can do to support these children and ensure it happens as little, for as short a time and with as careful scrutiny as possible will be vital. I therefore urge noble Lords, if these matters are put to a Division, to support them.
Lord Meston (CB)
My Lords, I too support these amendments. The debate in Committee threw a light on the working of the deprivation of liberty jurisdiction, which, one could not help noting, was not altogether familiar to many.
Typically, these orders are made when parents cannot provide good enough care and the child concerned needs protection from outside pressures and their own risk-taking behaviour. Before they come to court, the local authority, the guardian and the court have to do their best to provide placement in appropriate settings and to enable the child to maintain significant relationships, both of which are easier said than done. Problems that follow the initial order can include unstable placement and repeated changes of placement. These are not easy to manage. I have read of a child saying that it was pointless to try to build up any relationship in the setting in which she was placed because she knew that she would be moved again or the staff would leave. That is a very unhappy state of affairs.
There can be review hearings by the court, but they are not always satisfactory in my experience. Therefore, sensibly, Amendment 54 would require review by the director of children’s services to ensure proper monitoring and adherence to the objectives of the original authorisation to deprive liberty. Therefore, among this package before us, I strongly support this amendment, which would also comply with the child’s right to regular reviews in accordance with Article 25 of the UN Convention on the Rights of the Child.
Baroness Bennett of Manor Castle (GP)
My Lords, I will briefly focus on Amendment 53, on the right to education. I want to bring in the voice of one child who spoke to the Children’s Commissioner in her report on this issue. Talking about the lack of education they were receiving, this child said:
“I don’t think it’s fair that they’re making us miss out on our education because they don’t know where to put us”.
That child understands the situation they are in, and it is just unacceptable. All but two of the children whom the Children’s Commissioner spoke to said they were receiving less education when subjected to deprivation of liberty than they received in their otherwise often very chaotic circumstances. We have to make sure that these children continue with an education.
Baroness Tyler of Enfield (LD)
My Lords, this is a very important and sensitive area of law, and valid issues and concerns are raised in the amendments spoken to so ably by the noble Baroness, Lady Barran. I also pay tribute, as she did, to the work of the Nuffield Family Justice Observatory in this area. I know the Government have been working hard to see what can be done and to give various assurances. I hope the Minister can provide further assurances today so that we can all be satisfied that they are taking this issue very seriously and have a clear plan to tackle it.
Lord Hampton (CB)
I have added my name to Amendment 53. It is vital that children who are deprived of liberty can access quality education. Otherwise, we really are depriving them of hope and a future. I too quote the Children’s Commissioner:
“For the very small number of children where controls on their freedom are necessary in order to keep them or others safe, we must make sure they have not only excellent, individualised care, but also full protection under the law … we have a moral obligation to ensure that children at risk of harm are not simply contained and kept out of the community, but are seen, heard, and given the care and support they need to thrive”.
She continues later:
“Where a deprivation of liberty is authorised, the conditions should include a plan for meeting the child’s specific needs through intensive intervention and work aimed at helping them to be safe in the long-term. This plan should be co-produced by health and social care if appropriate, and could include mental health support, mood and behaviour management, work on addressing risks of exploitation, educational support, and any other specialist therapeutic intervention that is required”.
Once again, adding one word to the Bill could change many futures.
Baroness Smith of Malvern (Lab)
My Lords, I thank the right reverend Prelate the Bishop of Manchester and the noble Baroness, Lady Barran, for raising important points regarding Clause 11, which, as noble Lords have identified, relates to some of the most vulnerable children in the country. I know that noble Lords rightly feel particularly strongly about this measure. I thank the noble Baroness for her engagement with my officials ahead of this debate, as well as the noble Lord, Lord Storey, and the noble Baroness, Lady Tyler of Enfield.
It is important to remember that Clause 11 will already make an important change from some of the situations identified by noble Lords. The noble Lord, Lord Meston, correctly and graphically identified some of the challenges with the current operation of the system, which is why this measure seeks to bring more children who would otherwise be deprived of their liberty under the inherent jurisdiction of the High Court within a statutory scheme where they will benefit from enhanced safeguards and protections, which many of the amendments in this group are seeking.
Turning to these amendments, I reiterate that this measure is intended not to encourage the practice of depriving children of their liberty but to ensure that there are appropriate rights and safeguards in place to prevent children being deprived of liberty inappropriately or for longer than is absolutely necessary. We are committed to reducing the number of children in complex situations as part of reforms to rebalance the system away from crisis intervention towards earlier help and to prevent children’s needs escalating to the point where they need to be deprived of their liberty, and to ensuring that when they are, it can happen in more appropriate accommodation than has been the case up to this point.
We are grateful to the Delegated Powers and Regulatory Reform Committee for its scrutiny and have, in government Amendment 57, accepted its recommendation that regulations developed using the powers under Section 25 of the Children Act 1989 be subject to the affirmative procedure, ensuring parliamentary scrutiny and approval in both Houses.
Amendment 56 tabled by the noble Baroness, Lady Barran, is about joint funding arrangements between partners for children deprived of their liberty under this measure. The Government wholly agree that care for these children must be jointly funded and delivered through an integrated, whole-system approach, which should include social care, health, education and youth justice. However, we do not wish to restrict pooled funding arrangements in the way this amendment does, tying it to the existence of the Section 25 order. We think pooled funding arrangements would be beneficial to a wider cohort of looked-after children, including those whose order has recently come to an end or who are at risk of needing to be deprived of their liberty. This requires testing first to ensure that the right cohort of children and relevant partners are included.
That is why the Department for Education, with NHS England and the Department of Health and Social Care, is leading a national programme to tackle underlying systemic failures and to support local areas to work together more effectively. We are building cross-system integration, starting with the peer collaborative convened by the Nuffield Family Justice Observatory—rightly praised by several noble Lords this evening—which identified key elements for transforming care for children with complex trauma, supporting professionals to stand together so that risk is better tolerated and supported.
West Sussex, part of the South East Regional Care Cooperative, is working closely with the ICB to test how a cross-system team can drive integrated support, build an understanding of need and identify gaps in the current pathways across health, social care and justice for this cohort of children. We are not waiting; we are making quick progress in a way that is most likely to be appropriate and solve the problems. Next year we will expand to pilots, where we will evaluate methods of pooled funding, developing best practices that can be adopted and adapted by other local areas. We know that pooled funding works—such as through the better care fund for adults—but legislating now would be premature. We must first test and refine the most effective approach to ensure that the eventual framework enables the right level of cross-system integration and innovation.
Amendment 55 on recovery plans, tabled by the right reverend Prelate the Bishop of Manchester, aims to ensure that there are plans to remove restrictions from a child. The Government agree that no child should be deprived of their liberty any longer than absolutely necessary, which is why there are already several existing duties on local authorities in this regard, including the duty to safeguard and promote the welfare of any child looked after by them, and that placement decisions are informed by a care plan based on an understanding of the child’s needs and best interests.
Rather than legislate further in this space, diverting local authorities’ attention toward navigating an increasingly complex statutory framework instead of focusing on the child’s needs, we want to strengthen the way in which existing legislation is applied, re-emphasising the need for a care plan that is co-designed between all the professionals involved in a child’s care and treatment.
As part of the court application, it is the practice of local authorities to submit the child’s full care plan. The court should be provided with both the restrictions they plan to impose and the action and progress required to end restrictions as quickly as possible. The plan should be formulated with input from all those professionals involved in the child’s care and will be scrutinised by the court and used to assess progress. If the court is not satisfied about the level of detail included in the plan to allow it to monitor progress and de-escalation, the court should require further input from the relevant professionals.
Similarly, regarding Amendment 60 tabled by the noble Baroness, Lady Barran, relating to the abilities of independent reviewing officers to escalate concerns on the implementation of a child’s plan to Cafcass, IROs already have the statutory power to perform this function. They are responsible for monitoring the performance of local authorities in relation to a child’s care plan and must consider escalating cases to Cafcass whenever appropriate. This includes issues related to deprivation of liberty. It is therefore not necessary to legislate to expand the legal duties of IROs.
Baroness Barran (Con)
I thank the Minister for her very full reply and recognise the commitment of the Government and some of the initiatives that she raised.
I do not feel that her response to my Amendment 56 met its aims. She said that it could restrict pooled funding for the group of children to whom it might apply. She knows better than me that the Government can come back with a better version. Until we come to that, I beg leave to withdraw my Amendment 53.
Baroness Barran
“(8ZB) Where arrangements are made for the accommodation of a child under this section, health authorities specified in subjection (8ZC) must make joint funding arrangements under this section for the provision of that care.(8ZC) The authorities are—(a) NHS England,(b) any integrated care board, Local Health Board, Special Health Authority, National Health Service trust or NHS foundation trust,(c) the Secretary of State in relation to his or her functions under section 12 of the National Health Service Act 2006, and(d) any person authorised by the Secretary of State for the purposes of this section.”Member’s explanatory statement
This amendment requires joint funding arrangements to be made by relevant health providers for the accommodation of children under section 25 of the Children Act 1989. By mandating joint funding from NHS England, integrated care boards, and other specified health authorities, this amendment seeks to ensure that children receive more holistic and joined up support.
Baroness Smith of Malvern
“(9A) In section 104 of the Children Act 1989 (regulations and orders)—(a) in subsection (3A), after “(3B)” insert “, (3BZA)”;(b) after subsection (3B) insert—“(3BZA) Regulations fall within this subsection if they are regulations made in the exercise of the power conferred by section 25(2) or (7).””Member’s explanatory statement
This amendment ensures that regulations made under section 25(2) or (7) of the Children Act 1989 (use of accommodation for restricting liberty) as amended by clause 11, will be subject to the affirmative procedure.
“(12) The relevant Secretaries of State for Education and for Health and Social Care must collaborate to lay before Parliament, annually, a review of the impact of the measures contained in this section.(13) The review must, as a minimum, consider and report on the following matters—(a) the numbers of new section 25 orders made during the last year in England and in Wales, the ages of the children placed under them, and an analysis of whether and where the rate of use is increasing or decreasing;(b) the durations of child detention or other restriction of liberty under such orders (minimum, maximum, mean and median);(c) the types of accommodation in which section 25 orders have been applied, including their registration status with Ofsted or the Care Quality Commission; (d) the approval and use of “recovery plans” for all children to move on from section 25 orders in a short a period as safely possible; (e) the involvement of Independent Reviewing Officers, independent advocates and children themselves in the making and reviewing of section 25 orders;(f) the types of accommodation where children live following the end of a section 25 order.”Member’s explanatory statement
This amendment would require a review to be laid before Parliament, outlining the quantity and impact of section 25 orders that year.
The Lord Bishop of Manchester
My Lords, we made good progress this evening. None the less, having an annual report laid before Parliament would bring together the information that we need in a coherent form, which would allow this House and the other place to properly scrutinise what is going on. I therefore wish to test the opinion of the House.
Offshore Wind
(1 day, 10 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Moynihan (Con)
My Lords, I declare my interests. I am chair of Amey UK Ltd, Acteon and Buckthorn Partners LLP. As this is the first time that I have spoken to a Statement on an energy debate from the Front Bench since I was Minister for Energy, I inform the House that I have spent my working life in the energy sector. I was also Minister for Energy in the Margaret Thatcher and John Major Governments and aimed to maximise a low-cost oil and gas province in the UKCS, always emphasising production with the highest importance attached to the environmental impact of all offshore activity, while in 1990 simultaneously launching the non-fossil fuel obligation, the renewable support framework and establishing the UK renewable energy advisory group. I place that on record because that political experience informs the contributions that I intend to make and the questions that I will be asking.
It is axiomatic that we should judge the Statement against the principles of creating greater energy security; increased affordability to all consumers, both industrial and domestic; strengthening the base of low-cost, firm power in the grid; and moving towards cleaner energy. Every decision we take should be addressed against fuel poverty. How can this be so when the order promises the highest prices for intermittent offshore wind in over a decade? How can it be affordable to the UK industry when this order is still more expensive than the £80 per megawatt for gas—which goes down to £55 if you deduct the government-imposed carbon taxes? How can it be when the overall price of contract extension is 24% higher than last year? Why are the Government using the levelised cost of energy matrix when we should be using the only true cost comparator, a full systems cost? As it is intermittent power, do the Government acknowledge that we need more firm gas power plants anyway? Is it not the case that the Government told NESO that there need to be 40 gigawatts of backup generating capacity?
Let us look at what is happening this evening. At a time when the wind is hardly blowing, is it not the case that we are here, this evening, generating nearly 60% of our power from firm gas and only 18% throughout the whole of the United Kingdom from intermittent wind? Worse still, is it not the case that we are importing gas from an increasingly unstable global economy and burning more CO2 through imported LNG than we would if we developed our own resources to the full, while this minute continuing to burn biomass in Drax, which is more polluting than coal and comes, at this point in time, to only 50% of the total wind generation throughout the whole of the United Kingdom?
Does the Minister agree with Prime Minister Støre of Norway who, at the same time as the Secretary of State was making this announcement, faced the country and stated that he regarded Norway as facing many similar choices to us in the North Sea? He said:
“gas … is crucially important for Norway, and should be developed, not phased out”.
He also said:
“The oil and gas industry is crucial for Norwegian jobs and our welfare state. At the same time, Norwegian gas has never before been as important for European energy security as after Russia’s full-scale invasion of Ukraine”.
Does the Minister agree with him?
Does the Minister agree with Jensen Huang, the CEO of Nvidia, who came to these shores in September 2025 and stated on a visit that the UK will need to utilise natural gas-fired power alongside renewable energy to meet the massive energy demands of new artificial intelligence data centres? For without that strategy, we will have no chance of generating thousands of jobs with competitive new data centres.
We need to keep our eyes open to the economics of energy and to the wider UK economic and political consequences of this Statement and the Government’s energy policy. Does the Minister agree it reduces energy security by increasing the need to buy more foreign LNG to meet the need for firm power; that it increases unemployment through higher energy costs; and that it accelerates the Government’s deindustrialisation of the chemical and petrochemical industries, which was all over the news this weekend, by pricing them out of the market? It drives a coach and horses through affordability for households and industries alike, and it takes us in the direction of significantly increasing the cost of energy when the rest of the world is managing to reduce costs in a highly competitive global market.
Yet, in this order, are we not faced with record subsidy contracts for offshore wind? Is there not a rise in the annual budget for fixed-bottom offshore contracts from the £900 million when the terms were first announced in October—only three months ago—to £1.8 billion last week?
Is the consequence not a poorer UK economy and a loss of jobs from the once prosperous Aberdeen now facing the chill winds of offshore recession? Is it true these are massive wins to the Germans who totally dominated the round and won the lion’s share of the contracts?
I conclude by asking the Minister whether he agrees with the analysis in the FT of the article which covered this round. One reader wrote:
“We have … just about the highest electricity prices in the world despite access to relatively low cost North Sea gas…We have loads of gas boilers…so ongoing gas grid upgrades are required irrespective of…investment in extremely expensive renewables”.
Do the Government agree with Sir Dieter Helm that current UK electricity prices are high because the true system costs of integrating intermittent renewables—wind and solar—plus grid upgrades and back-up are not fully priced in? Does the Minister agree that we all want clean, low-cost renewable energy, and we all want, and can have, domestic gas production which has far lower impact on the environment than imported LNG or high-cost CO2 emissions from Drax? Why can we not strive to deliver a policy built on these three pillars? I look forward to the Minister’s reply.
Earl Russell (LD)
My Lords, I start by welcoming the noble Lord, Lord Moynihan, to his position, and I look forward to working with him.
On these Benches, we welcome the results of allocation round 7, which has secured a record 8.4 gigawatts of future offshore wind capacity, including 192.5 megawatts of innovative, floating offshore wind, and seen £22 billion in private investment. This marks an important step forward on our clean power journey and towards our future energy independence—enough clean energy to power the equivalent of some 12 million homes or roughly equivalent to 12% of national energy demand.
This shows that, when properly managed, Britain can lead the world in clean, secure and affordable energy. After the chaos of the previous Government’s failed allocation round 5, which delivered no offshore energy contracts at all, this progress is indeed an enormous relief. This auction confirms what my party has long argued—that offshore wind is the future backbone of our energy electricity system.
Projects such as Berwick Bank in Scotland—set to become the largest offshore wind farm in the world—and the one in Wales, the name of which literally means “sea breeze” and is the first major Welsh project in over a decade, show that progress is being made.
But this is not only about climate targets; it is about our future national energy security. In an increasingly unstable world, every turbine we build reduces our reliance on volatile fossil fuel markets. Securing Britain’s wind power means freeing ourselves from the price shocks of the global gas markets. We should recall that the Office for Budget Responsibility estimated that the UK’s energy support response for the war in Ukraine, driven by fossil fuel prices, cost us £78.2 billion over 2022-23 and 2023-24. In contrast, CBI figures show that the green economy grew by 10% in 2024, and AR7 secures an important future pipeline of continued and sustained green jobs and green British jobs.
The UK has some of the best wind resources in the world and, when we harness our renewables—wind, solar and tidal—we strengthen our energy independence. Despite what some may claim, wind power remains the most effective long-term way to bring down energy bills. The Energy and Climate Intelligence Unit reports that, in 2025 alone, wind generation reduced wholesale electricity prices by around one-third. The average strike price in this round, around £91 per megawatt hour, remains extremely competitive. By comparison, building and running a new gas power plant today would cost around £147 per megawatt hour, making wind power roughly 40% cheaper.
However, we must be candid about the challenges that the sector faces: rising bid prices, driven by global supply chain pressures; high interest rates; and soaring material costs, particularly for copper and steel. I therefore ask the Minister what steps the Government are taking to address these issues so that our 2030 onshore wind targets remain achievable.
The contracts for difference mechanism protects consumers and secures inward investment. It is a policy that has stood the test of time, but it can still be improved. Is the Minister considering extending CfD contract lengths from 20 to 25 years? This could provide greater certainty, lower financial costs and ultimately deliver cheaper electricity. Similarly, we think that moving older renewable projects from more expensive renewable obligation certificates to new CfD contracts could save typical households up to £200 a year.
More broadly, urgent action is needed to reduce energy costs by other means. Now that the Government have ruled out zonal pricing, I ask the Minister what alternative market reforms are being pursued to drive down energy bills. Despite rising renewable generation, gas still sets the market price around 97% of the time. Are proposals being assessed to move gas plants into a regulated asset base? As has been suggested, this could save some £5.1 billion a year by 2028, according to calculations done by Greenpeace. If we do not urgently upgrade and streamline our transmission systems, this record capacity will remain stuck in connection queues instead of reaching our homes and businesses. Does the Minister agree that a long-term, properly resourced spatial energy plan is now urgent and essential to ensure that these connections happen at speed?
The Liberal Democrats have a clear vision for 90% of the UK’s electricity to be generated from renewables by 2030. AR7 is indeed a welcome step on the road, but more must be done to ensure that we reach our targets, reduce the cost of energy bills and update our transmission systems.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
I thank the noble Lords for their contributions this evening. They were deeply contrasting in both tone and content: one I substantially agree with; the other I do not at all. We need no guesses as to which is which. I am particularly disappointed by the contribution from the Opposition Benches and the noble Lord, Lord Moynihan. I think I have already welcomed him to his place in Questions, but this may be the first time we have sat across the Benches for a Statement or other debate, so a further welcome would not go amiss. I hope this, as it is shaping up to be, will be the beginning of a good debate between us in the House.
It is worth just reiterating what actually happened in AR7 for the House to judge whether this was the miserable failure that the Opposition Benches appear to suggest it was or the great success that I and, I think, the noble Earl, Lord Russell, think it was.
In AR7, we procured 8.4 gigawatts of new, clean, low-carbon power for this country. That is new capacity over and above what we have at the moment and, indeed, represents no less than 40% of the installed capacity of offshore wind so far. In one round, the amount of wind capacity we have has leapt. That is at a clearing price 20% below the administrative ceiling price—a very competitive auction was undertaken—and that is within the bounds of present energy market prices. In the likely future that we see, it is not only below or around market prices; it is also a stable cost. Whereas, of course, we do not know where gas and other energy prices are going because of the extreme volatility in the world, and of gas prices over the last five years.
Interestingly, between this Statement being read in another place and repeated now, gas prices have leapt by nearly 40%. We are in a volatile gas market. Do not forget, prices went up as high as 600p per therm in the period just after the invasion of Ukraine. Compare the volatile price of gas fuels if we go down the energy route suggested by the Opposition—more purchases of unabated gas-fired power stations. Do not forget that this is not only an auction about energy prices and capacity; it is an auction about low-carbon energy prices and capacity. Among other things, if the Opposition had their way, we would apparently invest in a huge number of unabated natural gas power stations. That means we would be locked into that high-carbon system of generating power for perhaps another 30 to 40 years, which would be completely insupportable in terms of anybody’s energy ambitions.
The noble Lord says that he wants our energy policy to be characterised by security, affordability and clean energy. In this round, we achieved a great step forward for our energy security: this is all homegrown energy, not energy coming in on ships from elsewhere, or that is the responsibility of a dictator or a cabal of overseas energy organisations. This is British home-grown local energy that we have procured, and with it a bright future.
On affordability, the noble Lord referred to the levelised cost of energy, which he said was no longer the way to compare prices. That is a little bit surprising, because that is exactly what the last Government did in previous rounds. In the previous round—AR5—they secured precisely zero low-carbon energy, so compare and contrast, if you will, with what we are talking about today.
It is true, as the noble Earl, Lord Russell, says, that the clearing price of this auction ought to be put in the context of what you can do to try to get new capacity on board as far as this country is concerned. You can either buy a series of gas-fired power stations at a cost of £134 per megawatt hour—the levelised cost of energy—or you can procure low-carbon capacity which both meets your climate targets and keeps the prices down on a constant basis of affordability for the future.
The result of the auction is actually good for affordability and for the stability of prices in the future. If we are thinking of building new capacity at £134 per megawatt hour levelised cost of energy as against £91, and we have procured something like five gas-fired power stations-worth of energy output with this auction, as far as we are concerned, there is really no contest.
Finally, as I have said, it is clean energy. This is what I thought we were all committed to for a period in the past. It is extremely disappointing that the Benches opposite appear to have decided to move away from clean energy and go back to gas and dirty energy, which we really cannot sustain as far as our future is concerned.
Baroness Bennett of Manor Castle (GP)
My Lords, for the Green Party I welcome both this Statement and the decisions that it records.
I have a question about a specific area which is going to need vastly more development. The allocation includes two floating offshore wind projects. They have higher prices but there is a clear strategic intent if the Government are going to meet their target for offshore wind. We do not have enough sites for turbines embedded in the seabed and we are going to need these floating turbines.
If the Government are going to move beyond these demonstration-type levels and deliver pipeline depth and cost reductions, this will need to advance very fast. Can the Minister give us a picture and a sense of where the Government see this going in terms of floating offshore wind?
Lord Whitehead (Lab)
I thank the noble Baroness for that intervention. It gives me an opportunity to confirm the two floating offshore wind projects that have been agreed under this auction round. I might add, by the way, that the auction rounds were not a sort of shoo-in for anybody who wanted to come along and invest, as some people have portrayed them. They were very competitive. The number of entrants to the auction was substantially larger than the number of contracts finally agreed. Among other things, this shows that there is a real appetite for this kind of investment going forward.
That is the case with floating offshore wind. Although the two schemes that were agreed—one in Scotland and one in the Celtic Sea—are not, shall we say, final, full-scale arrays as far as floating is concerned, they represent a tremendous step forward in the development of offshore beyond the continental shelf in the UK. Huge new areas offshore from the UK can be opened up to offshore wind.
Of course, that price is not the same as the price we achieved with the mature, bottom-based offshore wind that we have been talking about, but, if we look at the original administrative strike prices when offshore first took off, they were not dissimilar to the sort of prices that we are now seeing for floating offshore wind. I am confident that, once those arrays get larger, and with the flow of fabrication and assistance which the noble Baroness will probably know is already happening very positively, in the Celtic Sea in particular, the net benefit for Great Britain of floating offshore wind will not just be a large number of jobs and more income coming into different areas of the UK than has been the case for bottom-based offshore at the moment. It will represent a technology that really will allow the whole of the UK to participate in the offshore wind revolution, not just the areas which hitherto have had the main developments in their particular zones.
The Celtic Sea, in particular, is just a taster of what is going to come in the not too distant future—and, by the way, it will be a future in floating offshore wind that will be a British future. Home-grown technology will lead in this particular area, which will not only have an impact in UK but will have a substantial export impact as well.
Lord Teverson (LD)
My Lords, I also welcome the noble Lord, Lord Moynihan, and his expertise to the Front Bench. He is certainly a very effective parliamentarian, even if I do not agree very much with his narrative. But we will see where we get to there.
I also welcome the Government’s announcement, but it is important that we remember that electricity is only part of this country’s energy need. The other sides are, in particular, transport and heating. I am concerned that, although the Government may remain strong on electricity generation, we are getting whispers of them moving backwards in those other areas, including on electric vehicles, heat pumps and finding alternatives to space heating. I would like reassurance from the Government that that is not the case. I certainly hope it is not. Also, where are we now on the future homes standard? That is absolutely fundamental for how we move forward domestically on energy consumption.
Lord Whitehead (Lab)
I am afraid the noble Lord will have to wait for about a week before the warm homes plan comes out. That will contain, so I am reliably informed, a great deal of detail about precisely the areas of heat, efficient low-carbon homes, heat pumps—all the sorts of things that are the other side of the energy revolution. We hope they will begin to be combined together into coherent programmes, working with each other to ensure that, among other things, that greatest piece of low-carbon energy—the energy you do not use—is properly incorporated into overall programmes.
I assure the noble Lord that this is uppermost in our minds. We are aiming, as we always have, to develop a comprehensive palette of policies that will deal with all aspects of low-carbon energy, energy security and energy efficiency. Indeed, the noble Lord will note that the AR7 announcement is not complete, inasmuch as there are further pots to be reported on, including solar, tidal, geothermal and various other things, in the next week or so. So I hope we will come back to this Chamber and compare and contrast notes on the picture that we will have when those two things have actually happened. I think the noble Lord will be pretty pleased with what will result from it.
Baroness Young of Old Scone (Lab)
My Lords, I commend the Minister on this Statement and welcome it very much. It is a welcome return from the terrible days when you put out an auction and nobody played the game. It really was quite heartbreaking when we had those dreadful doldrum days.
I shall focus on something that the noble Lord, Lord Moynihan, raised, which is the increased demand for energy, particularly that caused by data and AI centres. The one thing we must not allow to happen is that we accept that that is a given. We have been fairly effective in keeping the whole concept of energy efficiency alive, and the warm homes standard is going to be a good example of that. The question about the predictions of the energy demand of AI needs to be approached in a different way that says we cannot simply see demand increase but must adopt measures that mean that some of these centres are using not only the most up-to-date modern technologies but are encouraging future technologies in order to reduce their impact on the environment, by not only energy use but water use. I would love to say that photonics is the answer if I only knew what photonics is, but technologies are being talked about that will impact on AI demand. I would appreciate a comforting voice from the Minister that at this very new point in seeing a further increase in demand, we will not lose sight of trying to examine seriously possible technologies.
Lord Whitehead (Lab)
My noble friend makes an important point about the amount of work we still have to do and the extent to which we have to integrate what we are doing into a whole low-carbon system that works. For example, one consequence of the previous Administration’s grievous neglect of grid development and of methods of supporting grid development is that, if we can get grid queues shorter and develop the grid itself and use it more efficiently, a lot of the constraints in the system that we are seeing at the moment will fade away. The system will be used far more efficiently with a greater amount of electricity flowing around it, making much more efficient use of what we have already.
I agree that there are some unprecedented demands coming our way, particularly as far as data centres are concerned, and we need to look at imaginative ways in which we can not only make sure that we are ready for that demand, but start to look at how those data centres can fuel their own requirements, for example, by developing data centres in conjunction with heat sources so that their heat requirements can be dealt with on site. Ways in which local grid systems, outside constraints, can feed into data centre development need to be looked at in the context of a whole system analysis of how an efficient energy system is going to work for the future. We recognise that getting a fabulous result as far as offshore wind is concerned is only part of the issue. It is a much wider issue than that, and one we have got to get right in terms of what we know will be a substantial demand for electricity in the years ahead.
Lord Moynihan of Chelsea (Con)
My Lord, I congratulate my noble and homonymous friend on his new position, which I am sure he will occupy with distinction. The Minister asked a question about dirty energy and how could we possibly promote it. In fact, the truth is the reverse. The Minister is promoting dirty energy. Having deindustrialised this country with impossibly expensive energy, we now buy our steel, our goods and even the solar panels for this renewable energy from China, which makes them using power from energy generation stations fuelled with coal, of which they build one per week. The dirt is going up into the atmosphere and, amazingly, it travels around the world. It does not just hang over China. That is where the dirt is. It is a complete mistake to believe that this side is against clean energy; we are just for sensible energy.
I noticed also that the Minister did not reply to my noble friend’s remark about intermittency and the fact that, right now, we have quite a lot of offshore wind, but it is not being used much because the wind ain’t blowing. Does he think that these new contracts for difference will make any difference to the wind as it decides whether to blow or not? I do not believe so.
I agree with the noble Earl, Lord Russell, that we can lead the world. We are leading the world in high electricity prices right now. Regardless of whether we have offshore wind, we will need gas, as the noble Lord implied earlier, and we are closing down our gas; we are refusing to build new gas wells in the North Sea. So, what are we doing? We are buying it from the North Sea from Norway. It was announced today that Norway’s sovereign wealth fund, its $2 trillion oil fund, has embarked on a major sell-off of its holdings in London-listed small-cap and mid-cap companies, even as Rachel Reeves hails a new golden age for the City, blah blah.
The noble Baroness, Lady Young, said, “In the bad old days nobody played the game; it is great that now they are playing the game”. Can the Minister confirm that the private equity houses, which are the major financiers of these contracts, agreed this very high price, which will further ruin our economy, only if they got 20 years? Is that why the noble Baroness is able to rejoice that somebody is playing the game now, because they got 20 years in which our economy will be ruined?
Lord Whitehead (Lab)
I do not recognise the scenario that the noble Lord paints. Not only is this AR7 settlement good for energy prices—indeed renewables and low-carbon energy have reduced overall prices by 25% because of the effect of the merit order and the driving of gas to the margins in terms of prices—but the industrial work that will be undertaken will be enormously good for a large number of jobs with the fabrication and erection of piles, jackets and all sorts of things which go with this. By the way, the Government are producing a clean energy bonus to make sure that that work is in Britain, so it is a major industrial step forward for this country in its own right.
The noble Lord mentioned that I had not said anything about intermittency. I thought that I had dealt with that issue by saying that one thing we have to do as far as our energy is concerned is run the whole system smartly. Wind, both onshore and offshore, has tremendously increased its efficiency—ie, the proportion of time it produces wind—and the issue at the moment is not whether wind collectively produces a large output on a reliable basis. After all, we had over 80 days last year when renewables and low carbon completely fuelled our energy economy. The fact is that intermittency is a problem only if you do not have a smart system to use that energy where you have it in the smartest possible way. That is why, among other things, there has been such a development imperative on batteries and other low-carbon forms of storage that distribute the energy in a much more coherent way from the sources that we have.
It really is not a scenario that I recognise. I do not think the British economy is going to be ruined by this; on the contrary, this is going to be a great leap forward for the British economy. After all, as has been said on a number of occasions, the green economy in Britain is growing three times as fast as the general economy. This is where the growth is going to come from over the next period, and is very much a leading part of that growth and the new industrial future.
Baroness Bennett of Manor Castle (GP)
My Lords, the Minister referred to onshore wind. Under previous Governments, we saw onshore wind come to a grinding halt for reasons of apparent short-term political advantage. Onshore wind has the potential to be part of community energy schemes. Offshore wind inevitably tends to involve large multinational companies, but onshore wind gives communities the chance to decide for themselves how to generate their own energy and use local resources. Can the Minister outline where the Government are going with that?
Lord Whitehead (Lab)
I am sure the noble Baroness will be aware that one of the first things that the new Labour Government did when we took office was, literally at the stroke of a pen, to remove the ban on onshore wind. We have subsequently made sure that onshore wind enters the allocation rounds. At a local level, Great British Energy will undoubtedly be supporting quite a lot of onshore wind and a number of other community and local renewable resources. The future for onshore is set very fair. After all, it is even cheaper than offshore and just as reliable and long term—indeed, it is marginally better in its overall performance. Onshore is something that we very much want to see as part of the overall package. The noble Baroness will have to wait for about a week before she sees what we have come up with as far as the allocation of further pots is concerned.
Children’s Wellbeing and Schools Bill
(1 day, 10 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Barran
“(1A) After section 16, insert—“16A Registration of parent undertakings(1) In making an application for registration under this Part, an agency or establishment which is a subsidiary undertaking must ensure that the application contains information about the parent undertaking.(2) If the application is granted under section 13 (grant or refusal of registration), the establishment or agency must ensure that information related to the parent undertaking is regularly updated.(3) The Secretary of State may, by regulations under section 16 (regulations about registration), make provision for the enforcement of the duty under subsection (2).(4) In this section, “parent undertaking” and “subsidiary undertaking” have the meanings given by section 1162 of the Companies Act 2006.””
Baroness Barran (Con)
My Lords, noble Lords will remember from our debate in Committee that on this side of the House we had considerable practical reservations about the Government’s approach to regulating groups of children’s homes and foster care providers. These two amendments aim to improve the process that the Government plan to embark on.
Amendment 63 would simply require an agency or an establishment to provide information about its parent undertaking when it registered with Ofsted and to keep that information regularly updated. I assume that it would make it simpler for future regulation and enforcement if the identity of the parent undertaking was clear from the outset, given the complexity of the ownership structures of some of these groups.
My Amendment 64 aims to strengthen the effectiveness of the enforcement regime by giving it commercial teeth that would impact on these businesses. One would hope that preventing them expanding and restructuring financially or organisationally when they were subject to an improvement plan would lead to speedier compliance with the regulatory framework, as well as preventing a suboptimal group from expanding. I look forward to the Minister’s reply.
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
My Lords, in the absence of other comments I will turn to Amendments 63 and 64, tabled by the noble Baroness, Lady Barran, in relation to the provider oversight scheme. The scheme will enable Ofsted to require provider groups to implement an improvement plan across multiple settings where Ofsted reasonably suspects standards are not being met. If the provider group does not adequately implement improvements, Ofsted will be able to issue it with a fine.
Amendment 63 seeks to ensure that, where an applicant for registration with Ofsted is a subsidiary undertaking, the applicant must provide information about its provider group. This information must then be kept updated and new powers would provide for enforcement of these requirements in regulations. I do not believe this amendment is necessary. There are existing powers in Sections 12 and 22 of the Care Standards Act 2000 which we intend to use to impose requirements on an applicant for registration, or a person already registered to carry on an establishment or agency, to provide information in relation to its parent undertaking—for example, contact details for service of relevant notices by email, and information about other subsidiaries under the same parent undertaking.
Amendment 64 seeks to ensure that, when a parent undertaking is required to implement an improvement plan, it is subject to financial and commercial restrictions, including the limitation on the acquisition of further subsidiaries, the opening of new establishments or agencies, and the organisational or financial restructuring of the parent undertaking while the improvement plan is being implemented. The measure as drafted allows for regulations to set out that a person is not a fit and proper person to carry on an establishment or agency where their parent undertaking—the provider group—has failed or is failing to comply with an improvement notice. This will allow Ofsted to refuse registration applications in respect of new settings that are under the ownership or control of the parent undertaking that has failed to comply with provider oversight requirements. The significant restrictions created by this amendment on parent undertakings which are implementing an improvement plan would not be proportionate, given that the purpose of this measure is to require the provider group to implement change quickly across all settings where concerns have been identified.
I turn to government Amendment 65. It is vital to the safeguarding of children that relevant authorities can quickly and efficiently issue notifications and documents where needed to persons carrying on or managing establishments and agencies and parent undertakings. This measure will amend Section 37 of the Care Standards Act 2000 so that Ofsted notices and documents under Part II of the Act can be served by email, giving the option to choose between delivering notifications by post, by hand or by email. This amendment aligns with our wider aims to deliver efficient technological services. It will bring coherence to communications across reforms and eliminate outdated, costly and time-consuming requirements of delivery only by hand or by post. This will reduce the risk of sensitive financial information being lost, and reduce delays to decisions that could impact the delivery of children’s social care services and to resolving concerns about the care that children receive. I hope I have addressed the concerns of the noble Baroness, Lady Barran, and that she will withdraw her amendment.
Baroness Barran (Con)
I thank the Minister for her remarks. I perhaps accept them more in relation to my Amendment 63 than my Amendment 64, but time will tell how the Government’s plans work out. With that, I beg leave to withdraw my amendment.
Baroness Smith of Malvern
“(5) In section 37 (service of documents)—(a) in subsection (1)—(i) omit the words from “carrying” to “agency”;(ii) omit the “or” at the end of paragraph (a);(iii) at the end of paragraph (b) insert“; or(c) by being sent by email to the person’s email address.”;(b) after subsection (3) insert—“(3A) A notice or other document sent to a person by email is, unless the contrary is proved, to be treated as having been served on the working day immediately following the day on which it was sent.”;(c) after subsection (5) insert—“(6) A person’s (P’s) email address for the purposes of this section is—(a) an email address identified for the time being by P, or by a person who manages an establishment or agency carried on by P, as an address for contacting P, or(b) if an email address is not so identified, an email address which the person serving the notice or other document believes is used by P.For the purposes of this subsection, a person “identifies” an email address by providing it to a registration authority or publishing it.(7) In subsection (3A) “working day” means a day other than a Saturday, a Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.””Member’s explanatory statement
This amendment would allow for notices under Part 2 of the Care Standards Act 2000 to be served on parent undertakings and others by email.
Baroness Smith of Malvern
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Baroness Smith of Malvern
Member’s explanatory statement
This amendment is consequential on my amendment to clause 18, page 35, line 35.
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Member’s explanatory statement
This amendment is consequential on my amendment to clause 18, page 36, lines 17 to 22.
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Baroness Smith of Malvern
Member’s explanatory statement
This amendment would provide that for the purposes of the care provider offence in section 21 of the Criminal Justice and Courts Act 2015 (as amended by clause 20) “regulated care” includes care or support provided for any child rather than only a child aged 16 or 17.
Member’s explanatory statement
This amendment is consequential on my amendment to clause 20 at page 38, line 33.
“(i) before ““health care”” insert ““child”, ”;”Member’s explanatory statement
This amendment is consequential on my amendment to clause 20 at page 38, line 33.
“(e) to have due regard to the need to remove or minimise the disadvantages suffered by looked-after children and relevant young persons.”Member’s explanatory statement
This amendment strengthens the current duty to be “alert to” the needs of looked-after children by requiring public bodies to have due regard to removing or reducing the disadvantages they face. It builds on awareness by turning it into action, ensuring that understanding leads to measurable improvement.
The Lord Bishop of Manchester
My Lords, I am grateful for the opportunity to have this debate this evening. I will keep it fairly short, given the time.
Amendment 75, in my name, simply seeks to change the current duty of being “alert to” the needs of looked-after children to one requiring public bodies to have “due regard to” removing or reducing the disadvantages they face. There are lots of things that I am alert to; that does not mean that I take any great notice of them. I am alert to them, but I can choose to ignore them. What we need is something that requires local authorities to take this seriously, and the concept of “due regard” is well understood in many other aspects of law. As a bishop, I am used to there being policies of the Church of England to which I am required to have due regard. If I simply had to be alert to them, I do not think that they would get the attention and focus they need. Instead of a duty of being alert, Amendment 75 would put in place something that I think we all understand to be a higher bar, but something that I think is achievable.
Amendment 76 says:
“A relevant authority exercising the duty … must take reasonable steps to avoid, reduce or otherwise mitigate any adverse impact of its policies and practices on looked-after children and relevant young persons”.
The key here is that we are not asking for anything unreasonable. This concerns what it is that it is reasonable for a public body, particularly a local authority, to do, beyond just being aware. The word “aware” is really no better than “alert”. How are they going to take reasonable and practical steps to prevent harm that is being done when some policy is being implemented? This would complement the aims of the Bill and provide a clear framework for shared action and accountability.
Finally, Amendment 96 concerns equality impact assessments. I know it is not practically possible to make being care-experienced yet another protected characteristic in the law, but we need some way of understanding the particular impact that those bits of the law have on children in care, or people who have been in care. There is a misprint, I fear, in the text as printed on the Marshalled List. The very famous Equality Act was of course enacted in 2010, not 2020 —it has been around rather longer than the amendment says. I am sorry; it was my people who put the wrong year in there.
The amendment is asking that we look at the impact on persons under 25 who are looked after by local authorities. Again and again we have tried, through various aspects of the Bill, as I did in my own Private Member’s Bill a few months ago, to say that the impact of care experience needs, at the very least, to be tracked through to the age of 25. We need to support young people up to that age. As was said on an earlier group this evening, most young people are still heavily dependent well beyond the age of 25—including, I fear, my kids, who were still heavily dependent on my wife and me well beyond that age. We are talking here about young people who do not have the bank of mum and dad or traditional parental support. We really need to do our best for them.
I will not delay your Lordships any further. I urge the Minister to give me such assurances as she can possibly give me this evening that will persuade me that I do not need, at this late hour, to test the opinion of the House. I am grateful to the noble Lord, Lord Mohammed of Tinsley, who has supported these amendments. I hope that he will have something to add in a moment or two.
Lord Moraes (Lab)
My Lords, I rise to introduce Amendment 77 in my name and that of my noble friend Lady Lister, who tabled a similar amendment in Committee. I apologise to the House for not being in Committee to speak to this amendment due to a period of illness last year.
The amendment concerns a new statutory duty for corporate parents to be alerted to matters concerning children’s well-being. In this respect, there are a group of children in the UK who are entitled to citizenship but for various reasons do not achieve it. This is not widely understood generally, nor even among parents, foster parents and corporate parents of those children. Achieving their citizenship under British nationality law is good for the children, who gain stability, and for society, which sees the integration of children often in vulnerable situations. Here, I should declare that I am a patron of the non-profit Project for the Registration of Children as British Citizens.
We want to ensure in this amendment that there is no duplication of duties on the Secretary of State, while ensuring that duties on corporate parents under Section 21(1) concerning the well-being of young people include appropriate consideration of nationality rights. We do not want to see children being wrongly categorised or treated as if this is wholly a matter of immigration or discretion.
In Committee the Minister placed an emphasis on Section 55 of the Borders, Citizenship and Immigration Act, which states that the Home Secretary should be the one discharging citizenship in relation to the safeguarding and welfare needs of the child. But this places the sole duty on the Home Secretary; it does not apply to the corporate parents to whom the new duty is to apply. Our amendment understands the importance of Section 55 but would ensure that care providers to whom the new duty is to apply are not left without the protection of any statutory duty altogether in relation to these child citizenship applications.
In Committee the Minister suggested that the Government are reflecting on the requirement to support children in gaining citizenship. That is welcome, and it is welcome that the Government are considering what further steps to take in this area. But this amendment would support those efforts by ensuring that corporate parents could act on whatever new policy or practice was brought forward by the Home Office.
While we welcome the Government’s steps to improve local authority practice in relation to child citizens, the experience of credible practitioners on the ground, such as PRCBC, is that these rights are not widely known or acted on, and any improvements that are seen are not uniform, with some local authorities showing evidence of no improvement at all.
My noble friend the Minister is probably aware that a number of noble Lords, including my noble friend Lady Lister, have been pressing the case for children in this situation for many years. Government support for this amendment would ensure that these important children’s rights are not overlooked by local authorities in their role as corporate parents.
Lord Mohammed of Tinsley (LD)
My Lords, I support and will talk to Amendments 75 and 76, which the right reverend Prelate the Bishop of Manchester set out powerfully; I fully support the arguments. Last week I hosted a meeting in your Lordships’ Committee Room 1, which showcased care experience and protected characteristics. The room was full. Care-experienced people had travelled from across the United Kingdom to be there because they wanted their voices to be heard, and I speak today to ensure that those voices are heard in your Lordships’ House.
Care-experienced people are asking that relevant bodies in the exercise of their corporate parenting duties are required to have due regard, as we heard earlier. One care-experienced person told us: “I deserve to have my voice heard to create real change. Too often decisions are made about us but without us”. Another said: “Care-experienced individuals need recognising because our outcomes are constantly poor yet our insight is rarely used when services are designed”.
At that meeting, Terry Galloway, who often helps and supports these young people with care experiences, offered a simple but striking example. He asked us to imagine driving down a road in a fast car and seeing a child standing in the road. You are alert to that child being there, but you drive straight through them—and you say your duty has been discharged because you were alert to them being there. Contrast that with a duty of due regard. On the same road and with the same child, discharging that duty would require you to stop the car, get out and speak to them. You would seek an understanding of why they are in the road and whether there is something you can do to help them.
Baroness Lister of Burtersett (Lab)
My Lords, I am pleased to support Amendment 77, to which I have added my name. I take this opportunity to thank my noble friend the Minister for the helpful meeting that I and stakeholders had with her to discuss the other issue I raised alongside this in Committee.
As my noble friend has said, I and other noble Lords have been pressing for many years the case of children who have not claimed the citizenship status to which they are entitled, including the high fees that can act as a barrier. Indeed, we have earned the label of “terriers” on the subject. I am delighted to welcome my noble friend Lord Moraes to the noble band of terriers. Like him, I speak as a patron of the Project for the Registration of Children as British Citizens.
This amendment, so ably introduced by my noble friend, would help to ensure that these children’s citizenship rights are not overlooked by local authorities in their role as corporate parents. As he emphasised, this concerns a statutory entitlement to citizenship and is not a matter of immigration or discretion: all too often, the Government have conflated the two in the past. The consequence of this right not being given effect has been spelled out by the High Court, which noted that children who identify as British but who have effectively been deprived of citizenship can
“feel alienated, excluded, isolated, second-best, insecure and not fully assimilated into the culture and social fabric of the UK”.
I also echo my noble friend’s welcome for the consideration the Government are giving to how better to support these children in establishing their right to citizenship. The White Paper, Restoring Control Over the Immigration System, stated that in the “near term” the Government will ensure that
“children who have been fully in the UK for some time, turn 18 and discover that they do not have status, are fully supported and able to regularise their status and settle. This will also include a clear pathway for those children in care and care leavers”.
This amendment, which also relates to some children born in this country, will make it less likely that children in this situation will turn 18 without having claimed their right to citizenship. So there is a good case for the Government accepting it. Given that the White Paper commitment was made last May, and related to the “near term”, what have the Government done to realise it?
These are important issues for children’s citizenship rights and well-being, so acceptance of this amendment would strengthen the Bill as it relates to some of the most marginalised children in our country.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Lister, as I have many times before on this subject, joining the terrier pack yet again. It is a great pity that that pack still needs to form; all the other occasions were under the previous Government and we were hoping that we might be able to disband and head on to other things.
I join the noble Baroness, Lady Lister, in welcoming the noble Lord, Lord Moraes, and thank him for tabling this amendment, to which I attached my name very late in the day. I just caught up with this Bill along the tracks.
The noble Baroness and the noble Lord have both made the case overwhelmingly for Amendment 77, so I will not go over the same ground as they did. I will just highlight again the campaigning work of Citizens UK in particular, which has focused on the incredible difficulty of the cost of more than £1,200 for a citizenship application and the fact that so many people are unaware that it is necessary.
I will make one additional point. We have seen in the Windrush scandal that the British state failed to meet its responsibilities and failed to do the right thing by British citizens. With the reality of Brexit, many children with European links and European families but with the right to British citizenship risk being trapped in the coming years unless their situation is sorted out before they turn 18. Let us not create another Windrush scandal for those Brexit and indeed other children.
Lord Storey (LD)
My Lords, I will talk briefly to Amendments 75 and 76. These amendments are very important, and it is a great pity that we are discussing them at the end of the day. I always think of the saying that
“words without actions are the assassins of idealism”
and I wonder if these are not too general. I do not know what “alert” means. I can be alert to something and do nothing about it, where I actually want something to happen. It says “have due regard to”; I can have due regard to the fact that it is raining and choose not to put my umbrella up or not to warn other people that it is raining. I want something more definite. I think the spirit—dare I say that to an Anglican bishop?—is there in the amendment and I very much understand what the right reverend Prelate the Bishop of Manchester is saying in this amendment.
I also like that the right reverend Prelate mentioned silos and silo working. I suggest that he talks to those noble Lords who served on the then Children and Families Bill during the coalition period. We came up with education, health and care plans, but the health service was not interested at all. It wanted to work entirely in its own silo, and every attempt to get them to work across failed completely. I do not know what to say further; I am not being very helpful here, I am afraid. It is important to listen to children’s voices and to do things. There must be good practice up and down the country, and we need to know about that. Perhaps the Minister’s department knows about good practices where children’s voices are being heard and something then happens.
From my professional experience, I remember one group of young children in a care home who formed a care children’s council and met each month. Somebody from the education department came along and listened to what they said. They had to report back to the councillors and then come up with an action plan and go back to the school council. That actually brought some results. Not least, it gave the young children the confidence to stand up and speak, and to challenge why things were not being done. These amendments are important, but we need to spend more time pinpointing what we need to do.
The Earl of Effingham (Con)
My Lords, while His Majesty’s loyal Opposition agree that these amendments are sensibly drafted and—as was highlighted by the noble Lord, Lord Storey—that the right reverend Prelate the Bishop of Manchester clearly has the best interests of looked-after children in mind in wanting to see stronger duties placed on local authorities to acknowledge, assess and act to reduce the disadvantages they undoubtedly face, we do not believe that Amendments 75 and 76 are entirely necessary given the measures already contained in the Bill.
Amendment 75 would require relevant authorities to have due regard to the need to minimise the disadvantages faced by looked-after children, in addition to the measures already stipulated in the Bill. While we understand that this is absolutely the right thing to do, the Bill contains provisions similar to that aim. Authorities will be required to be alert to matters that adversely affect, or might adversely affect, looked-after children and then to assess what services are available to them. The requirement to be alert and then to assess available steps represents an intention that action be taken to aid children. We believe that this achieves the same aim as that of the amendment from the right reverend Prelate and the noble Lord, Lord Mohammed.
Amendment 76 builds on the previous amendment by then placing a duty on relevant authorities to act on policies or practices which may be having an adverse impact. Again, in our opinion, this overlaps with the duties already set out in the Bill. Authorities will be required to assess their services in Clause 21(1)(b), while subsections 1(c) and 1(d) create provisions through which authorities must seek to provide opportunities that enhance well-being and future prospects. Amendment 76 appears, in essence, to seek to ensure that authorities enact policies and practices that are in the children’s best interests. This duty is already prescribed to authorities under the Children Act 1989 and is already legislated for.
Amendment 96, also in the names of the right reverend Prelate the Bishop of Manchester and the noble Lord, Lord Mohammed, would include care experience in equality impact assessments. We welcome the intention behind the amendment but, with all due respect, are not convinced by the impact it will have.
The Government already review outcomes for children in need, which includes looked-after children and, as such, we are mindful of adding additional administrative workloads to public bodies. It would very much be our preference not to add bureaucratic layers to public bodies if we are uncertain that they will result in positive outcomes.
Baroness Blake of Leeds (Lab)
My Lords, through the Bill, for the first time, key public bodies, from Secretaries of State to schools, NHS organisations and regulators, will be required to be alert to matters that affect looked-after children and care leavers when shaping policy and services. These new corporate parenting duties aim to drive a culture change, tackle stigma and improve outcomes for some of the most vulnerable in our society.
I reassure the noble Lord, Lord Mohammed, that the voice of care-experienced young people is crucial in this. The noble Lord, Lord Mohammed, and I are two people in this Chamber who have experience of being corporate parents—I do not know how many others there are. We know just how serious that is. I understand the reference to language, but the responsibilities that come with this are real and important and need to be taken very seriously indeed.
Amendments 75 and 76 in this group were tabled by the right reverend Prelate the Bishop of Manchester. Again, I completely understand where he is coming from, and we have debated this in this Chamber under other debates. These amendments quite rightly seek to strengthen the corporate parent duty by requiring relevant authorities to have due regard to removing or minimising disadvantages faced by looked-after children and care leavers and to take steps to avoid or mitigate any adverse impact of their policies and practices.
We fully share the intent behind these proposals oftackling disadvantage and ensuring that care-experienced young people are not adversely affected by public policy. This is central to our vision for corporate parenting. However, as discussed in Committee, the new corporate parenting responsibilities are broad duties that apply in relation to a corporate parent’s existing functions and can be implemented in a way to fit the unique circumstances of each corporate parent. We believe that our existing measures achieve the aim of tackling disadvantages experienced by looked-after children and care leavers.
Just for a bit of clarity, the current responsibilities require corporate parents to be alert to matters which adversely affect the well-being of the cohort. This will require them to take action as appropriate. I just give the reassurance that this is not just a means of being aware; it comes with responsibilities. Therefore, we anticipate that corporate parents would already consider disadvantages experienced by these young people and how they may be addressed.
We will support implementation through statutory guidance, which will set out the responsibilities and include best practice examples for tackling disadvantage among care-experienced young people. Best practice will draw on not only relevant authorities but wider organisations, including local authorities that have taken action such as representation on governance boards, financial support and discounts, and treating care experience as a protected characteristic. This is the best way to deliver impactful change, not through this amendment, which, as I have outlined, is already sufficiently covered by the clause as drafted. I am delighted to say that we are in contact with Terry Galloway, who is very supportive of the direction we are going in. With his vast experience he will be an invaluable resource, ensuring that we keep moving in the right way.
Amendment 96, also tabled by the right reverend Prelate the Bishop of Manchester, seeks to place a duty on public authorities to include in equality impact assessments an assessment of the impact on persons who are being or have been looked after by a local authority. We are determined to tackle the stigma and discrimination faced by care-experienced young people. This is why the Bill introduces corporate parenting duties for Secretaries of State and public bodies, already requiring them to consider the needs of care-experienced young people with the aim of improving outcomes. Clauses 21 to 25 aim to embed this cohort’s challenges into policy and service design. We will commission an implementation partner to support implementation through provision of training and circulation of best practice, including training on how to effectively assess the impact of policies and practices on looked-after children and care leavers. For this reason, the amendment is unnecessary.
Amendment 77 was tabled by my noble friend Lord Moraes, who I am very pleased to see back in his rightful place in the Chamber. It seeks to amend the exemption on immigration, asylum, nationality and customs functions in respect of looked-after children so that action that would be taken in adherence with the corporate parenting responsibilities in the exercise of these functions would still be taken where it is not already required by Section 55 of the Borders, Citizenship and Immigration Act 2009. It also seeks to distinguish functions in relation to the acquisition of British citizenship by statutory right from other nationality functions when exercising duties under Section 55 and Clause 21.
While I understand my noble friend’s intent with this amendment, I emphasise that, as my noble friend the Minister noted in Committee, our measures require that public bodies named in this legislation be alert to matters affecting the well-being of looked-after children and care leavers, regardless of immigration status, except when performing asylum, immigration, nationality or customs functions. We fully intend on partnering with the sector and care-experienced young people in the immigration system to make sure that our statutory guidance covers their specific needs and vulnerabilities. We will also ensure that our implementation partner develops and delivers training on this cohort to all new corporate parents. As we have heard, my noble friend the Minister recently met with my noble friend Lady Lister and partner organisations, who were greatly reassured by our proposed actions in this area. I hope that this is sufficient reassurance for my noble friend to withdraw his amendment.
Additionally, Department for Education officials will work closely with the Home Office as it develops its proposals in the immigration White Paper to reduce the financial barriers to young adults who have lived here throughout their childhood accessing British nationality.
Local authorities already follow a separate set of corporate parenting principles and are best placed to take steps to consider whether a young person in their care needs support to seek British citizenship. The Home Office has taken significant steps in recent years to support local authorities in ensuring that children in their care are able to access British citizenship, including by introducing an exception in June 2022 that removed the requirement to pay a fee for an application for citizenship registration by children who are looked after by a local authority.
I want to reassure the noble Baroness, Lady Lister, that we will continue to work with the Home Office on how we can improve the experience of looked-after children and care leavers in the immigration, asylum and nationality system, building on existing measures that the Home Office has taken in this space. The further efforts will include working on proposals set out in the White Paper published on 12 May, Restoring Control Over the Immigration System, to ensure that children who have been in the UK for some time then turn 18 and discover they do not have status are fully supported and are able to regularise their status and settle. This will include a clear pathway for those children in care and care leavers.
The White Paper also sets out that the Home Office will consider measures to reduce the financial barriers to young adults who have lived here through their childhood accessing British nationality. Applying the duty to the asylum system would not require the Home Office to decide asylum claims for young people as soon as possible. Given the steps we are taking in this area to ensure that looked-after children in the immigration system benefit from the corporate parenting measures, we do not see the amendment as necessary.
Amendment 79A, tabled by the noble Lord, Lord Mohammed, seeks to ensure that the corporate parenting guidance issued under Clause 24 is laid in draft before Parliament. This amendment has of course been helpfully raised in reference to the Delegated Powers and Regulatory Reform Committee’s report. Our response to the recommendation explained that guidance issued under Clause 24 will not introduce requirements on corporate parents beyond those enabled by this legislation.
The guidance will help corporate parents understand how the duties could be implemented, using examples of best practice. We will develop statutory guidance in partnership with corporate parents and this will then be subject to consultation. This gives all those affected by the changes, including corporate parents, local authorities, looked-after children, care leavers and all of the above an opportunity to have their say. We will also draw on the expertise of the care-experienced community and representative bodies from within the sector, including those who have campaigned for these amendments, to support guidance drafting.
I can assure the noble Lords that their input will form the backbone of guidance. I hope that with those comments I have addressed the right reverend Prelate’s concern and that he will be able to withdraw his amendment.
The Lord Bishop of Manchester
My Lords, I am very grateful for the short debate that we have had this evening. It is clear that we are all passionate about the same thing—we would not be here at this time on a Monday night if we were not. We are passionate about getting the best deal we can for care leavers and young people in care, and I am very grateful to hear that. The fact that we are hearing that from all the Front Benches gives me some assurance that this is not something that would float away were there to be a change of Government—at least not one to any of the parties in this Chamber tonight.
Moving on quickly, I really appreciate the guidance that has been spoken of, and I accept the assurances of the Minister that there are many matters that we sought to put in the Bill, as is proper on Report, but which can be dealt with in that way before the Act is implemented in due course.
Were I merely alert to the fact that it is late at night and I do not have the support of the Front Benches, I might still waste your Lordships’ next 15 minutes by pushing this to a Division, but I am not only “alert to”, I am “having due regard to” those factors. Therefore, I beg leave to withdraw Amendment 75 and will not press Amendment 76 either.
Baroness Smith of Malvern
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Member’s explanatory statement
This amendment is consequential on my amendment to clause 23, page 41, lines 9 to 12.
Baroness Smith of Malvern
Member’s explanatory statement
This amendment is consequential on my amendment to clause 26, page 45, lines 1 to 5.
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Baroness Blake of Leeds
Member’s explanatory statement
This amendment and my other amendment to Clause 26 at page 45, line 6, would amend Clause 26 to change references to a “statutory instrument” containing regulations made by the Welsh Ministers to a “Welsh statutory instrument” to reflect the Legislation (Procedure, Publication and Repeals) (Wales) Act 2025.
Baroness Blake of Leeds (Lab)
My Lords, this group consists of government amendments in the name of my noble friend Lady Smith. They are Amendments 82 to 85, 244, 245, 249 and 253 in relation to consequential provision for Welsh and Scottish Ministers, and minor and technical changes relating to the Legislation (Procedure, Publication and Repeals) (Wales) Act 2025.
Amendments 82 to 85 relate to Clause 26 on the employment of children in England and Wales, and simply update references to the Welsh statutory instruments and the procedure to be followed in the Senedd in consequence of changes made by the 2025 Act, which came into force on 1 January 2026.
Amendments 249 and 253 do the same for Clause 67. This is a change that we are making to refine the drafting in the Bill and ensure that the terms used align with the latest legislative developments.
Amendment 244 will confer power on Welsh Ministers to enable them to make provision consequential to Clauses 11, 12(5), 20 and 31 to 36 in relation to matters that are within the legislative competence of the Welsh Parliament. Amendment 245 will confer power on Scottish Ministers to enable them to make provision consequential to Clause 11 in relation to matters that are within the legislative competence of the Scottish Parliament. This would ensure that if any such consequential amendments are identified, Scottish and Welsh Ministers could make those changes to the legislation.
I am grateful for the continued engagement of our Welsh and Scottish counterparts on the passage of this landmark legislation. I beg to move.
The Earl of Effingham (Con)
My Lords, we thank the Minister for her clarification of the reasons behind these consequential amendments. They seem entirely reasonable, and His Majesty’s loyal Opposition support them.
Baroness Blake of Leeds (Lab)
My Lords, I thank the noble Earl for his comments and emphasise again how grateful we are to the devolved Governments for their engagement with the Government on this Bill. We will continue to work closely with them as the Bill progresses through Parliament.
Baroness Blake of Leeds
“(4A) Regulations under section 18 made by the Welsh Ministers are to be made by Welsh statutory instrument.””Member’s explanatory statement
See the explanatory statement for my other amendment to clause 26 at page 45 line 6.
Member’s explanatory statement
This amendment and my amendment to clause 26 at page 45, line 11, would update references to the parliamentary procedure for Welsh statutory instruments containing regulations under new section 18 of the Children and Young Persons Act 1933 to reflect the Legislation (Procedure, Publication and Repeals) (Wales) Act 2025.
Member’s explanatory statement
See the explanatory statement for my other amendment to clause 26 at page 45 line 10.
Member’s explanatory statement
This amendment is consequential on my amendment to clause 26, page 45, lines 1 to 5.
Baroness Blake of Leeds
Member’s explanatory statement
This amendment is consequential on my amendment to clause 27, page 48, lines 14 to 18.
Member’s explanatory statement
This amendment would remove provision no longer needed because of the protection provided by the new general data protection override in section 183A of the Data Protection Act 2018, inserted by section 106(2) of the Data (Use and Access) Act 2025 and which came into force on 20 August 2025.
Member’s explanatory statement
This amendment is consequential on my amendment to clause 27, page 48, lines 14 to 18.