Arrangement of Business
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, in the admittedly unlikely but none the less possible event of a Division in the Chamber, the Committee will adjourn for 10 minutes from the sound of the Division Bells.
Pension Schemes Bill
(1 day, 7 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
My Lords, the noble Baroness, Lady Bennett of Manor Castle, who has tabled the lead amendment in the first group, is not currently here. Before I call it, I ask whether any other Member present wishes to move her amendment. I give the Committee a moment to think about that, because if no one wishes to move it, I will have to regard it as not moved. Given that the next amendment in the group is, helpfully, consecutive to the first, with the permission of the Committee I will move to the next amendment, having called the amendment in the name of the noble Baroness, Lady Bennett, which we have to assume will be not moved. Does the Committee accept that as a way forward?
The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)
I thank noble Lords.
Clause 11: Relevant schemes: value for money
“(4A) Value for money regulations must take account of—(a) a VFM assessment over 3, 5 and 10 years;(b) the nature and spread of assets and their purpose in the portfolio including diversity, stability and risk management;(c) the characteristics of the members of the scheme;(d) whether comparisons, benchmarking, scaling and advisory consensus risk herding, market movements, lack of diversity or systemic risk;(e) fee structuring, including performance fee management and inter-cohort fairness, including managing how the J-curve effect and consolidation can shift costs or benefits between different cohorts of pensioners.”
Baroness Bowles of Berkhamsted (LD)
My Lords, those noble Lords who have examined the Marshalled List will know that Amendment 46A constitutes what was in Amendment 46 but with an extra paragraph (e) in the proposed new subsection; that is the difference. The amendment proposes a small number of matters that value for money “must”, rather than merely “may”, take into account. The Bill ultimately leads to schemes being graded as performing or non-performing, so the framework must be sophisticated enough to reflect long-term investment reality, not just short-term metrics.
Value for money is a judgment about appropriateness, risk, purpose and fairness. Paragraph (a) of the proposed new subsection is based on long-term assets requiring a long-term view. I suggest assessments over three, five and 10 years, but that is to illustrate the point, rather than being a fixation. Private assets often show negative early returns and we need a way of understanding valuations through the cycle, especially where valuations drive fees. As more investments are moved into private assets, especially if back books have to be adjusted to meet authorisation percentages, there will be cluster effects. I worry about that and its effect on value for money.
How can we check valuations in the private equity context as well? There is a lot of literature around how it is useful to have a market price comparator for what is an otherwise opaque and infrequent exercise. Listed investment companies are routinely used in institutional analysis as a valuation cross-check for private assets because they provide daily pricing for similar underlying exposures and frequent net asset value valuations. For example, the ICAEW’s 2020 report, Fair Value Measurement by Listed Private Equity Funds, notes that listed funds provide observable market prices for benchmarking unlisted investments. The Bank of England has noted in several financial stability reports that market price vehicles, including listed funds, provide useful information about liquidity conditions and valuation dynamics in private markets, particularly when model-based valuations adjust slowly. These valuation and transparency credentials make it all the more extraordinary—and, I dare say, suspicious—that the Bill shuts them out.
My second point—paragraph (b)—is that value must be assessed in the context of the nature, spread and purpose of the assets. Long-term infrastructure behaves differently from assets for liquidity or inflation protection. The question is whether the assets are good value for what they are meant to do. Some assets, or the way in which they are packaged, serve hybrid purposes—as listed investment companies have long done—combining private asset exposure with market liquidity. Directly held assets have fewer fees, but selection and achieving wide diversity are more challenging. LTAFs will package a mix of illiquid and liquid assets and it will be interesting to see how it works over time.
My third point—paragraph (c)—is that value must be seen in the context of the characteristics of members. Those on lower incomes cannot afford excessive risk or prolonged losses; they are more likely to remain in default funds, and trustees will be mindful of that. A more cautious strategy in lower returns may be entirely legitimate for value for money. Trustees must retain the ability to choose strategies that are appropriate for their members, not strategies that score well on a narrow template. This is particularly relevant because assessments created for the DC default funds may well be adopted more widely.
My fourth point—paragraph (d)—concerns the risk of herding. Too much measurement, comparison and advisory consensus can drive correlated strategy. The Bank of England has repeatedly warned about pro-cyclical behaviour and systemic vulnerabilities. A value-for-money framework must not unintentionally reinforce those behaviours; not going with the crowd is sometimes the value-preserving strategy. If we reduce value for money to consensual metrics, we will distort behaviour and risk repeating the mistakes of the charge cap era.
My final point—this is the new one, paragraph (e)—concerns fairness between cohorts. Private assets, especially private equity, typically follow a J-curve: early losses or flat value followed by rising value and, often, high late gains. Gaming or late realisation of value scores high in performance fees. That can be emphasised deliberately or just through the valuation timetable. Thus early cohorts end up bearing the set-up losses while later cohorts—these are long-term assets, so it may be 10 or 20 years later—are the ones that benefit from the late-stage gains. This will be exaggerated, too, if there is back-book adjustment. Performance fees and valuation-linked fees distort fairness over time. If value for money is to be fair, these effects need to be managed—as, indeed, they do for the payment of the pensions.
Additionally, as funds scale, investment will shift from external vehicles to internal management—the models used in Australia and Canada and, increasingly, by Nest and USS in our own pension funds. It will be important to observe how that affects fees and performance.
I strongly support the amendment tabled by the noble Baroness, Lady Altmann, on member services, which I would have added to my essential list if I had thought of it first—but I did not steal it. I have added my name to the amendment of the noble Viscount, Lord Younger, on fee transparency, with the caution, again, that we must not repeat the mistakes of the current cost disclosure regimes, which do not properly recognise where costs are borne. I note that it will take more ingenuity than fee percentage transparency to get the full picture out of private equity. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I strongly support Amendment 46A from the noble Baroness, Lady Bowles, to which I have added my name and which she so eloquently explained. I will speak to my own Amendment 47, which she referred to and which looks at the value-for-money ratings from the point of view of members. For me, that is an extremely important element that is often overlooked when concentrating on the investment side alone—not that that is not important.
I draw the Committee’s attention to some of the specifications that I have made in my Amendment 47, which I think are crucial to understand when one is choosing a pension scheme for one’s workforce. The quality of service for members can be extremely important and can indeed drive adequacy in ways that are not recognised by the investment side. The investment side is of course important, but if quality of service and the education, guidance and support provided to members are working well, that can be a driver to encourage members to increase their contributions. Ultimately, that can be at least on a par in importance with investment performance over time. If members gradually build up their contribution levels to, say, twice what they were before by adding 1% a year every time they get a bonus, that combined with the investment performance can be an extremely powerful driver for value for money over the long run, which is of course where we are meant to be examining and assessing the schemes.
On communications with members, I have specifically included in that what I call “jargon-light” communications, because I have not yet seen a communication with members about pensions that does not include baffling or off-putting terms, including—I will come to this later—the very term “default funds”. We all know what this refers to, but if you are talking to a young worker or someone in later life who is not on a high salary and does not know a lot about pensions and you tell them that what they are supposed to do with their money is to put it into a default fund, that may not sound terribly attractive to them. The last thing that most people want to do with their money is default.
The Minister is looking somewhat askance at my remarks, but this is just one example. I apologise—perhaps she is just looking at something in her notes. Certainly, those are the kind of looks that one sometimes gets from the pensions industry, which does not tend to understand that the ordinary person has never heard of a default fund and it does not sound particularly attractive. If we can include, in communications, words in plain English that may sound more enticing than the usual pension jargon, I think it could be helpful. I would argue that that is potentially a measure of the value offered in a workplace scheme, which is what the ratings are going to be looking at. I hope that the Committee will understand the aims of my specifications in Amendment 47 and, perhaps as we go through, Members of the Committee may suggest other elements.
Baroness Kramer (LD)
My Lords, I will be exceedingly brief. I may participate on an occasional basis on this Bill, despite the fact that it is very important. However, we have many people with exceptional expertise in the Room, for which I am extraordinarily grateful.
I have Amendment 167 in a later group on its own, which has relevance to one of the issues raised by my noble friend Lady Bowles in Amendment 46A, in which she introduces the concept that value-for-money regulations must take account of certain factors. Proposed new paragraph (c) particularly interests me, on
“the characteristics of the members of the scheme”.
In all the discussions that I have heard in the Mansion House compact and in the Bill, very little attention is paid to the characteristics of the members of the schemes, because they differ widely. I am particularly concerned that people on low salaries, whose primary savings for pensions and then investment is through auto-enrolment and default funds, have a very different risk profile from those of many people who otherwise engage in pension savings.
This is a group for whom the downside has far more serious consequences than for other groups. Many of us can afford to take a chance with parts of our pensions: if we lose some money, we are still going to be in relative comfort. That is essentially not true for this group. The upside benefit of taking risk and doing well from that risk is nice, but the consequences of taking risk and losing because of that risk are far more serious. I want to draw the Committee’s attention to that issue. As I said, I will pick it up again in Amendment 167, because to me it has been overlooked.
It is key that, when we devise pension arrangements, we recognise the very different risk profiles of members, so that what they are required to do—auto-enrolment and default schemes are in effect a requirement—matches their risk profile. I hope that we will begin to start to shift some of our thinking. There are amendments, in this group and in others, that could help very much with that issue.
Baroness Coffey (Con)
This group of amendments is quite interesting in starting to sketch out what is important in the value-for-money approach that is being adopted through the Bill. I did not know when the noble Lord, Lord Palmer of Childs Hill, would speak to Amendment 49 and I will be interested to hear what he has to say on this, because the only other form of occupational pension is, in effect, the defined benefit, where you know what you are getting. I was a bit surprised that he felt that that would need to go further, because that is a direct relationship between somebody and their employer. Nevertheless, I am sure he will explain further.
The noble Baroness, Lady Bowles of Berkhamsted, has tabled Amendments 55 and 56 to Clause 12, which are sensible, but one thing that concerns me at the start of that clause is the word “may”. We should be beyond that at this stage, which is why I also support my noble friends on the Front Bench in opposing Clause 13 standing part of the Bill. There are just too many ifs, buts and maybes, but when it comes to Clause 13 there is nothing at all. It is just a blank cheque for the future. I am conscious that things can vary over time, but we should be in a position where we are getting some clarity on what will be in these value-for-money assessments so that people can make choices. We should be getting that clarity now. If necessary, we can put down regulations for affirmative procedures but, candidly, I do not think it is good enough that we have this sort of approach to defining what is there for the future.
I say to the Minister that I appreciate that this is a real step forward and I welcome that. People put their money in, they are not exactly sure what return they are getting and they might look every now and again at where it is coming out. I appreciate that there is a whole journey to go on in pensions education, as well as for the trustees, in terms of what is really happening with their advisers who continue to do low-risk, low-reward. I encourage the Minister, however, to come back on Report with a much stronger sketching out of what will be in these assessments, as required by Clause 13. For example, instead of just having the word “may”, have some “must” in there and then open up the power later to adjust as necessary. It is also valuable to be able to repeal.
Amendment 74 concerns the “Duty to formalise the Value for Money framework”; I know that my Front Bench will speak to that shortly. It is a useful exercise to check whether it is working. There are other amendments which basically make comparisons with other pension providers. That gets trickier if it is done at such a detailed level because, again, people might want some basic information on what is happening with their money. To pick at random, they might want their money with Standard Life instead of Scottish Life; if there is some variation, they might want to make a change. It is those sorts of things that I encourage the Minister to have more detail on by the time we reach Report.
Lord Palmer of Childs Hill (LD)
My Lords, as has been expressed, this group establishes the foundation of the value-for-money framework. We welcome the ambition to improve outcomes for savers. However, the effectiveness of value for money will depend on how it is defined, measured and implemented, and I welcome the comments from the noble Baronesses, Lady Bowles, Lady Altmann and Lady Kramer, which elaborated on these points.
I shall concentrate on Amendments 49 and 54 and I hope I can persuade the noble Baroness, Lady Coffey, that they are of value. These amendments will extend the scope of the Bill’s value-for-money provisions. They ensure that they apply not only to defined contribution schemes but defined benefit occupational pension schemes as well.
The arrangements make it clear that regulations can make different provision for different types of scheme. Critically, however, all schemes must be covered by the value-for-money assessment, with a proper value-for-money rating. Members of DB schemes deserve the same transparency and assurance about value for money as members of DC schemes. DB schemes still represent a significant part of the pensions landscape. Excluding them risks creating an uneven playing field and less scrutiny where it is still needed.
A single, consistent framework across occupational pensions improves comparability, avoids regulatory gaps and ensures that all savers benefit from the same standards of accountability. The two amendments in my name would ensure that the Bill delivers on its promise of value for money across all pension schemes. The measure is simple: every saver in every scheme, whatever its type, deserves value for money. Other noble Lords have expressed this in detail.
The noble Baroness, Lady Altmann, spoke about pensions jargon. We are here in a very rarefied atmosphere, where people have some knowledge—I have less than many in the Room—of what pensions are about and what phrases such as “default pensions” mean. We need to make it clear to people who have no interest in pensions other than receiving a cheque at the end of the month at a certain age what it all means. Some people need to be clear about the choices they make, and we need to do as much as we can. These amendments, both those that have been spoken to already and the two in my name, seek to protect people’s interests.
Baroness Stedman-Scott (Con)
My Lords, we come again to a varied group. I shall focus my remarks on the amendments in my name and that of my noble friend Lord Younger of Leckie. I welcome the contributions from other noble Lords and I look forward to the Minister’s response. We have a few amendments in this group: Amendments 50, 51, 52, 53, 57 and 74, and the Clause 13 do not stand part proposition.
Before I turn to the amendments in my name and that of my noble friend Lord Younger of Leckie, I will say a few words about the value-for-money framework that sits at the heart of the Bill. The introduction of a value-for-money framework has the potential to be genuinely transformative for workplace pensions if it is designed and implemented well. We support the principle of value for money. However, much of what this legislation seeks to achieve will stand or fall on how the framework is designed, applied and enforced.
As drafted, the provisions are relatively skeletal, despite the pivotal role that value for money is expected to play. If value for money is to drive real improvement rather than box ticking, it must be transparent in its methodology, robust in its metrics and genuinely comparable across schemes. Cost alone cannot be the determining factor. A scheme that is cheap but delivers persistently weak net returns does not represent good value for money for savers. Comparability will be key. Without clear, standardised metrics, there is a risk that value for money simply reinforces price-chasing behaviour rather than improving outcomes. My amendments are therefore intended not to oppose the concept of value for money but to strengthen it, to ensure that it is implemented in a way that improves saver outcomes, respects fiduciary duty and avoids unintended consequences.
I turn to the amendments in more detail. Amendments 50 to 53 in my name and that of my noble friend Lord Younger of Leckie, and the noble Baroness, Lady Bowles of Berkhamsted in the case of Amendment 53, are probing amendments that go to the heart of whether the value-for-money framework established by Clause 11 will operate as a genuinely effective tool for improving saver outcomes.
Clause 11 creates a very broad enabling power. It allows for the creation of a value-for-money framework, but is largely silent on what value for money should actually consist of. Given the centrality of value for money to the Bill as a whole, it is important to test the Government’s intentions on the minimum elements that will underpin the framework.
Amendment 50 would require value-for-money regulations to include publication of a fees-to-returns ratio. The purpose here is straightforward: cost on its own is not value. As I have said, a scheme that is cheap but delivers persistently weak net returns cannot sensibly be said to offer good value to members. If value for money is to be outcome-focused, it must show what savers are receiving relative to what they are paying, rather than allowing headline charges to dominate decision-making.
Baroness Warwick of Undercliffe (Lab)
My Lords, I am sympathetic to the probing amendments in the names of the noble Baroness, Lady Altmann, and the noble Viscount, Lord Younger—Amendments 47 and 51 respectively—on value for money, which I alluded to at Second Reading. With any Bill or set of regulations, it is important to have clarity on the intentions and in minimising any unintended risk. That is particularly so when looking at the protection of citizens’ lifetime pension savings.
The FCA, the DWP and TPR have just published their consultation on their detailed proposals for the new value-for-money framework for DC schemes. These proposals come with real bite. When introduced, all relevant DC schemes will have to report on the value that they provide to members across a range of metrics. That assessment report will provide the basis for comparing the value that the scheme provides against other schemes. If a given scheme offers poor value, the firms and trustees must deliver improvements or otherwise transfer their members to a scheme that does provide good value. The framework requires an online central database to capture the disclosure of value-for-money data.
The Bill mandates the framework for contract-based schemes regulated by the FCA. The DWP and TPR will consult on draft regulations for the trust-based schemes. The first value-for-money assessments are expected in 2028. The framework provides for consistent measurement and disclosure on investment performance, costs and service quality; objective and consistent comparison against the market; transparency and disclosure; and action to be taken where a scheme is not delivering value. However, there are clearly concerns—we see them expressed in the briefings that noble Lords have received—that the framework could give rise to problems, which I, too, would like to probe.
The VFM framework provides for forward-looking metrics to be considered alongside backward-looking metrics, with the stated aim of allowing for
“a holistic approach to investment to deliver the best possible long-term outcomes”.
There is a risk that the value-for-money framework could result in herding, as others have alluded to, as schemes seek to avoid poor value assessments. There is also a risk of forward-looking metrics being used to game a scheme’s assessment. I ask the Minister: what guardrails are explicitly allowed for in this Bill to control these risks?
On quality of service, the recently published VFM framework takes a more limited approach to quality service and administration metrics. Furthermore, metrics on how members engage with their pensions have not been included in the framework, but they will be important in informing schemes’ responses to changes, such as guided retirement and the targeted support regime.
Looking ahead, how will these concerns be addressed? Poor-performing schemes that are rated “red”—meaning that they cannot be improved—must transfer out members where it is in their best interests. This is stronger than the originally proposed wording to consider a transfer. It is made possible by the Bill’s provision for a contractual override to allow transfers for contract-based arrangements without members’ consent. However, it is worth noting that some members will have safeguarded benefits. My final question to the Minister is: what will happen to those benefits? It is not clear what mitigations this Bill provides to protect members.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I am grateful to all noble Lords for introducing their amendments and for the debate that followed. The amendments rightly seek an assurance that the VFM framework is strong and effective and they try to clarify how it will take account of a range of important factors that can affect the value that a scheme provides. I regret that I cannot accept them, but I am going to go through the reasons why, as some interesting issues are being raised. Obviously, if I told the Committee that I was going to accept them, noble Lords would all fall over in shock, but this is a good opportunity to get these issues out there.
Let me say at the outset that the aim of the VFM framework is simple: we want to ensure that all savers are in schemes that deliver the best possible long-term outcomes for their retirement. The framework seeks to raise standards across the DC market by driving transparency, comparability and competition on genuine value rather than just on cost—a point made by the noble Baroness, Lady Stedman-Scott.
Clause 11 is deliberately drafted to provide enabling powers that allow the regulations establishing the VFM framework to be developed in consultation with industry and to be adapted as markets evolve. However, the VFM framework must be able to adapt to future financial market developments and to align with the FCA requirements for contract-based schemes. The risk is that hard-wiring any detailed technical criteria or rigid deadlines into primary legislation takes away the flexibility that is genuinely needed. It could get in the way of effective regulation and risks locking in concepts that could become outdated. However, I accept that there is a question around how Parliament gets to scrutinise the detail.
Clauses 11 and 14 set out key features of the VFM regime and provide enabling powers for the Secretary of State to make regulations on how VFM assessments will operate, including the metrics, the benchmarks and the processes that they will have to follow. The regulations will be subject to formal consultation with industry and regulators before being laid in draft for parliamentary approval under the affirmative procedure. In our view, this strikes the right approach: the Bill has the overarching framework in primary legislation while the technical detail is developed transparently through secondary legislation.
However, the noble Baroness, Lady Coffey, made an important point: Parliament needs to be able to understand what the assessment process will look like. A joint consultation was launched in early January by the FCA and the Pensions Regulator; it will run until 8 March. This consultation is the next step in the process of consultation on the technical-level detail of the framework, which will help to inform development and consultation on draft regulations and draft FCA rules—those are, of course, legal instruments.
I am conscious that some of the amendments were tabled before that consultation was launched. Those noble Lords who are up to their ears in the pensions world will no doubt have read the consultation in detail, but I will make sure that we send any noble Lord who has not done so a summary of, as well as a link to, it. I would be happy to answer any questions, if that would be helpful, but I will unpack the basics of this now.
The consultation sets out updated proposals and detailed draft FCA rules for implementing the VFM framework in the workplace DC pensions market and it reflects stakeholder feedback from the previous FCA consultation. FCA rules will apply to contract-based schemes, whereas regulations made under the powers in the Bill will apply to trust-based schemes. By bringing them together, responses to the consultation will help to inform both the draft DWP regulations and the FCA rules, with the obvious aim of ensuring consistency across trust-based and contract-based schemes. We do not want to end up with any kind of regulatory arbitrage in this or any other area. It is important that we do not pre-empt the outcomes of that process to make sure that we get the details right. Draft regulations will be consulted on.
Baroness Bowles of Berkhamsted (LD)
My Lords, it falls to me to do the summation as a stand-in. I thank the Minister for her comprehensive reply. I wish I could speak that fast. It answered quite a lot of the points that I raised. It is obviously quite irritating for us when we commence a Bill and then consultations that provide a lot of the key points and information trail behind the Bill. We spend some time thinking about it and then discover we have to do a consultation response. I do not know how the timings for these things would fit together. Nevertheless, it would be quite nice for some of those key points that are being consulted on to perhaps find their way into the Bill somehow. I just point that out.
What is an Act of Parliament supposed to do? It is supposed to give you the front-end lead-in to what people’s expectations are. They cannot easily be expected to go wandering around on regulator websites and rulebooks, because, my goodness, I find those difficult. Talking about finding things difficult, when I retired from being a Member of the European Parliament, I got a booklet sent through because, for some of my time there, I was in the UK pension fund that applies to MPs and MEPs. This was just after I had finished negotiating all the post-financial crisis financial services legislation. I looked at the scheme rules and I gave up. I lost the will to live and thought, “Well, I’ll just take what comes, thank you very much”. If it is going to do that to me, what is it going to do to the ordinary person? We have to take a lot more care about more gentle lead-ins and simple ways of explaining things. Of course, that was some time ago.
I think we have had quite a good trot around the factors. I would still like to see something distilled from the work that has gone on which is accessible and where people might look for things if they are curious—they might be people representing people—and not have to resort to complicated scheme books and complicated regulator rules. Maybe we will have an update by the time we get to Report on the timings and dates and what has come out of these consultations. I suppose it will be a bit early for that. For now, I beg leave to withdraw the amendment.
Baroness Altmann
Member's explanatory statement
This amendment seeks to simplify the language in Value for Money assessments, to make them more intuitively understood by members, especially as 'fully delivering' may give an expectation that all required metrics are being fully met.
Baroness Altmann (Non-Afl)
My Lords, I will speak to my Amendment 58. My remarks will apply to all the other amendments in this group, apart from Amendments 64 and 65, to which I will speak shortly, and Amendment 69 in the name of the noble Viscount, Lord Younger, which I also support.
My views on this group of amendments follow on from the comments I made earlier about jargon and trying to make pensions more member-friendly—more intelligible to the ordinary person. I believe that this is an extremely important area, having met so many members who simply do not understand what they are being told. The remarks from the noble Baroness, Lady Bowles, encapsulate some of that: if we cannot understand what we are being told in the communications, neither can members.
It was interesting to see that the original consultation suggestions of red, amber and green, which people would have at least a good chance of understanding, have instead been put into the Bill as “fully delivering”, “intermediate” and “not delivering”. Delivering what? We are talking about value; this is not Ocado or Amazon. The noble Baroness, Lady Warwick, in her remarks on the first group used the terms “good value” and “poor value” as if they were in the Bill—but they are not. My proposals in these amendments—to change the term “fully delivering” to “good value”, and “not delivering” to “poor value”—simply respond to what most people would expect this clause to tell them. I hope that the Minister understands that. Obviously, this is a probing amendment, so she may prefer other ways to express what we are trying to achieve here, but I hope that the intention behind these amendments will, in some way, feed into both the Bill and how the value-for-money framework will be considered when we develop it. It is a very sketchy framework at the moment.
I take the point about the consultation, but I have a related question. The critical players in moving away from the idea of cost to value, when assessing the merits of any particular scheme being used for the workforce in auto-enrolment, will be the employee benefit consultants. They advise the employers that they currently simply use cost as their major recommendation metric. They are not, in any way, properly scrutinised or regulated. Having done all this work to develop a value-for-money framework, will any attention be given to ensure that the people advising the employers on whether a scheme should be used will properly use the value-for-money framework that we will devise?
Amendments 64 and 65, which are also probing amendments, specifically address the “intermediate” rating, which is designed to have many levels or gradations. However, it seems that all of them could lead to scheme closure. They will all certainly lead to significant costs for a scheme rated “intermediate” due to the extensive reports and explanations that need to be given. My amendments simply seek to avoid significant extra costs, or the risk of scheme disclosure, for schemes that receive an “intermediate” rating on a shorter-term basis. It seems that it is almost possible that a “not delivering” rating will have a similar outcome to an “intermediate” rating because of how the Bill is phrased.
My suggestion is—and it is, as I said, probing and open for discussion and change—that you have to have an intermediate rating every year for, say, four years before the extensive requirements of this section kick in, so that in cases of up to five years you would need to notify the employer if you have changed from a good value to intermediate and the scheme would need to explain why this rating has been given and what plans it has for improvements. That would not be an extensive report, but it would obviously be helpful and would focus the minds of the scheme without the draconian implications that seem implied by the consequences of the intermediate rating as specified in the Bill. That brings me briefly to my support for Amendment 69, tabled by the noble Viscount, Lord Younger, and the noble Baroness, Lady Stedman-Scott, which probes what the penalties are, how they have been assessed and whether they are appropriate. I beg to move Amendment 58.
Baroness Coffey (Con)
My Lords, this is an interesting group of amendments. My noble friend has explained the importance of clarity in who decides whether something is fully delivering. I want to ask about the different assessments being made at this point. We are now, effectively, on Clause 15 onwards. We have the ratings coming through. My noble friends on the Front Bench will explain why they do not agree with certain elements. There is merit, however, in trying to work out whether something is taking a nosedive and whether it is it fixable, but we need to be more specific about a reasonable period, and then a prescribed number of VFM periods needs to be put in the Bill, which it is not at the moment.
Thinking through what has been suggested, I am trying to understand how this will work. Clause 13, which we have discussed briefly, has a certain amount of potential calculations. We then have the trustees doing their own assessment, and then we jump forward to Clause 18 and the Pensions Regulator may check. This is all feeling quite random. Normally when we do ratings, the CQC or Ofsted make that judgment, so I am trying to understand how this will work in practice. Are the guidelines going to be fixed—for example, the average or the benchmark across all pension schemes is this, or the FTSE 100 index has changed this much, or the costs are this percentage? It would be helpful to start to get a proper pitch. I appreciate that the consultation may have gone out, but there must be thinking in the Government’s mind, not just the regulator’s, on what “good” looks like. There are risks, as identified by my noble friends, that we may be overburdening to the point that the minutiae become an industry in their own right. I am surprised to see the penalties put in primary legislation, which is unusual nowadays, although I agree that we need a better sense of how that compliance element, as set out in Clause 18, will work alongside the other amendments. My noble friend is right to say that we need to keep this straightforward and simple for people to be able to understand.
Lord Palmer of Childs Hill (LD)
These are obviously probing amendments. They are all to do with the jargon: if we are arguing about the jargon, how much more confused will the normal punter be in trying to understand the jargon. This group focuses on how value for money is expressed, enforced and communicated.
We support the principle that members should be able to understand whether their scheme is performing well. However, value-for-money ratings also carry significant power. They will influence trustee behaviour, in particular, as well as employer decisions and market structure. That makes proportionality and precision essential.
I am particularly concerned about overreliance on short-term performance metrics. Saving for a pension is, or certainly should be, inherently long-term. Schemes should not be penalised for temporary underperformance driven by market cycles or responsible long-term investment strategies.
We also question whether compliance mechanisms become blunt instruments. Labelling schemes “poor value” without clear context may drive consolidation for the wrong reasons, reducing competition without improving outcomes. Clear language matters—I use the word “jargon” once again—but so does nuance. Members need information they can trust, not simplified labels about market complexity.
I have some questions for the Minister. How will this regime distinguish between persistent structural failure and short-term variation? How will it use this intermediate rating? How will it encourage genuine improvement rather than defensive behaviour by trustees? Trustees are meant to be very careful; they will be cognisant of the intermediate position. I will be interested to hear the Minister’s views on that.
Baroness Stedman-Scott (Con)
My Lords, again, this is a substantial group. I will not detain the Committee for too long but, before I turn to my amendments, I briefly welcome those tabled by the noble Baroness, Lady Altmann. As she set out so clearly, her amendments seek to simplify the language used in value-for-money assessments so that they are more readily and intuitively understood by scheme members. This goes to a point that has arisen repeatedly during our discussions in Committee: many of the concepts in this Bill, as well as the language used to describe them, are dense, technical and difficult to grasp. A considerable level of prior knowledge is often required simply to understand what is being proposed, let alone its practical effect. I am reminded of a remark attributed to Joseph Pulitzer. He said that information should be put before people,
“briefly so that they will read it, clearly so that they will understand it … picturesquely so that they will remember it, and, above all, accurately”.
Surely that is the standard to which we should aspire, in not only this Bill but more broadly in our legislative work. Clarity, intelligibility and accessibility should be central objectives. The language we choose and the way in which we define key terms in legislation are fundamental, yet they are too often treated as secondary concerns.
I therefore warmly welcome the amendments in the name of the noble Baroness, Lady Altmann, precisely because they address this issue head-on. Jargon is easy to reach for, but it is also, in a sense, lazy. When we are constructing a value-for-money framework whose purpose is to communicate value for money, we must be vigilant about terminology that obscures rather than illuminates and about euphemisms and phrases that sound authoritative but fail to convey real meaning. Many noble Lords will be familiar with Eric Blair’s essay, Politics and the English Language, and the amendments tabled by the noble Baroness serve as a timely reminder of some of the lessons it contains.
The first amendments in this group to which I have added my name—Amendments 60 and 61—would remove sub-paragraph (ii) from Clause 15(1)(b) as well as subsection (2). These amendments speak to a simple point: where responsible trustees or managers have determined that a scheme is not delivering value for money, that judgment should be sufficient to justify a rating of “not delivering” without the need to satisfy additional statutory conditions that risk being overly prescriptive.
Trustees already sit at the centre of this framework. They are charged with assessing investment performance, costs, charges, service quality and long-term member outcomes. They are subject to fiduciary duties and regulatory oversight. It is therefore entirely reasonable to trust their professional judgment when they conclude that a scheme is failing to deliver value for money. As the Bill is currently drafted, that judgment must be supplemented by one of a series of defined conditions, whether persistent intermediate ratings, a lack of realistic prospect of improvement or regulatory non-compliance. While well-intentioned, those conditions risk turning what should be a principles-based regime into a mechanistic one, encouraging trustees to focus on meeting thresholds rather than acting decisively in members’ best interests.
Baroness Sherlock (Lab)
My Lords, I again thank the noble Baronesses, Lady Altmann and Lady Stedman-Scott, and all noble Lords who have spoken. Let me start with the amendments from the noble Baroness, Lady Altmann. I completely appreciate her desire to make the VFM framework easier for everybody to understand. I recognise there is a need for clarity here and a role for regulators to support member engagement with something as complex as this, but our concern with her proposals is that they would reduce precision and could unintentionally weaken regulatory accountability and undermine comparability across schemes, and those are three pillars on which the VFM framework depends. There is a genuine challenge here, which is to balance technical accuracy with clarity for members. Obviously, the latter will help to overcome the kind of behavioural inertia that we all see and so will ensure that VFM assessments result in meaningful action, not just awareness.
That is distinct from the regulatory precision required for the VFM system, which is why these terms are in the Bill. That current wording of “fully delivering” and “not delivering” is not accidental: it is designed to reflect objective compliance with all the mandated metrics: costs and charges, investment performance, governance and member outcomes. The terms provide clarity for trustees and regulators about whether a scheme meets the required standards. Replacing them with “good value” and “poor value”, even if it sounds attractive on the surface, would introduce subjectivity. Good value is not a regulatory test. It risks creating ambiguity about what triggers action when a scheme falls short.
Members deserve clarity and I absolutely agree that language should be understandable. However, the right place for explaining concepts to members is in disclosures and guidance, not primary legislation. We intend to work with the Pensions Regulator, the FCA and industry to ensure that member-facing communications such as rating notifications to employers and the regulator-supporting guidance, which will be aligned with the implementation of VFM, explain these outcomes in plain English that is suitable for its intended audience. I take the challenge from the noble Baronesses, Lady Altmann and Lady Bowles, about how to make sure that happens. That is something I am really happy to reflect on quite carefully. However, changing the statutory terms dilutes precision, creates inconsistency and risks uncertainty. Our approach preserves enforceable standards while committing to clear, accessible explanations for members.
Amendments 64 and 65 from the noble Baroness, Lady Altmann, would limit the powers the Government have to specify the consequences for pension schemes that have had an intermediate VFM rating for fewer than five years in a row. Let me pause before I answer that to come back to the noble Baroness, Lady Coffey, who always asks clear questions. One of her questions was “How is this going to work, anyway?” Let me give a very quick rundown, subject to time. The consultation sets out updated proposals—they were updated in response to the previous consultation—and draft FCA rules, showing how the VFM framework will work. The paper sets out the proposed metrics for performance, costs, charges and service quality. It outlines how the assessment process will work. It gives more details around the ratings structure and the consequences associated with each rating. Basically, trustees of in-scope DC workplace pension schemes and arrangements will have to publish standardised performance metrics and follow a consistent and comparative assessment of value to assign an overall VFM rating. The regulator will ensure compliance with those obligations and will have the ability to enforce transfer of savers—I will come back to that in a moment—from consistently poorly performing arrangements.
I said that the consultation had changed. There were five key changes from the previous consultation. The most relevant one here proposes, in response to feedback, the adoption of a four-point rating system: red, amber, light green and dark green. There was strong pressure to have more granularity, so that it was not quite as stark. I make it clear that it is only amber that could lead to possible enforced transfer. I hope that is helpful.
A good question is “How will members know what ‘fully delivering’ means?” Obviously, we are not proposing to use the Bill’s terminology when communicating ratings to members. Instead, the schemes will use the four-point RAGG rating. Red corresponds to not delivering, amber and light green to intermediate performance and dark green to fully delivering. It is proposed that this more accessible and granular terminology will be used in the assessment reports published by all schemes at the end of 2028, and the reports will be made publicly available. Guidance will also include plain English explanations and a summary of metrics so that members understand what the outcome means for them.
Baroness Altmann (Non-Afl)
In what the Minister has just described, I do not quite understand how dark green and light green fit with “fully delivering”. Only dark green would be fully delivering, so why is light green not in the intermediate category? To me, this is quite confusing. I understand what the Minister is saying, but I urge her to work with whoever is devising this to iron out this kind of confusion at this stage, rather than running with it, as seems to be the intention here.
Baroness Sherlock (Lab)
We are still consulting on this. We consulted on the initial proposal and the response came back that more granularity was needed. We have to accept that clarity pulls in one direction and precision and granularity pull in the other, so the job of the Government is to support the regulator in making sure that we end up with a framework that does its primary job, which is not just to work out where a scheme is now but what the right consequences are for that scheme and then to make sure that is communicated to those who need to know in ways that are appropriate. On the one hand, the noble Baroness wants clear, strict categories, and on the other she wants to have different consequences for schemes depending on their circumstances. We think it is important to be able to judge appropriately and come up with a scheme. I would be happy to write to point out all the areas and explain more about how this works, but the point is that this needs to be understood by those who will do the assessments and the communication of the results of that has to be in the right language for those who need to understand them. As the noble Baroness knows as well as I do, it is the nature of pensions that the challenge is that marketing simple language does not map neatly onto precise legal language. I hope that at least explains what we are trying to do on that.
Baroness Altmann (Non-Afl)
My worry is we have a term “fully delivering” in this legislation. It does not seem to me that very many schemes are likely to be fully delivering, even in a light green capacity. Therefore, I think we are already sowing the seeds of confusion if we go along this route. That is all.
Baroness Sherlock (Lab)
I am going to explain a little bit about the consequences because the thing that matters most is the consequences. Amber schemes may be required to close to new employers. Red schemes must close to new employers. I am just getting that down for the record, which suggests that I probably did not say that a moment ago. Just to be really clear, amber schemes may close to new employers; red schemes must close to new employers. Much nodding, I hope, from behind me. Great sighs of relief all round. Excellent.
Let me come on to the consequences of this. On Amendments 64 and 65 from the noble Baroness, Lady Altmann, we think that making reporting less comprehensive, even for schemes with intermediate ratings, could reduce the early warning signals on which regulators will rely to protect savers. I fully understand her desire to make this reporting proportionate. The current framework is designed to strike a balance. Powers are designed to enable the Government to ensure that trustees keep sponsor employers informed and that any issues are addressed promptly via the improvement plan without putting unnecessary burden on schemes. The noble Baroness may want to note this bit. The Secretary of State has discretion under Clause 16 on the consequences of an intermediate rating and could require different consequences to flow from different levels of intermediate rating. It is not the intention that a requirement to close the scheme to new employers would necessarily flow from all intermediate ratings. I think that is what she is shooting at, so I hope that helps to reassure her. That enables some flexibility around the consequences for pension schemes that have, for example, received an intermediate rating for fewer than five years, which is the space that she was shooting into just now.
Changing the powers as suggested risks missing the signs that a scheme may be heading into trouble. Early sight of any negative impact on a scheme’s performance and value really matters. I am sure that the Committee agrees that it is better to catch problems sooner rather than later and to put in a plan to remedy things, ensuring that schemes provide value and avoiding harm to members and greater costs in the long run.
The amendment suggests that schemes should face full reporting only if performance issues continue for five years or more, but five years is a long time for problems to go unchecked. I think members deserve better protection than that. We certainly would not want to see situations where savers are left in a poorly rated scheme for many years. That is why we propose to give schemes in the intermediate rating a period of up to two VFM assessment cycles to make the improvements needed to provide value to their savers.
I know that Amendments 60, 61 and 69 from the noble Baroness, Lady Stedman-Scott, are probing amendments that want to challenge and clarify the terms “reasonable period” and “relevant period”. The relevant period is the VFM period, or rather the annual reporting timescale for data collection assessment against VFM metrics, which we expect to run from January to December of the preceding calendar year. We expect to set that out in regulations following consultation. The reasonable period is a period during which the regulator would normally expect the scheme to deliver value for money. Due to the level of detail this will involve, this will all be outlined in regulations. We will, of course, formally consult on draft regulations, and I am more than happy to make sure that we engage with interested noble Lords during the consultation to provide an opportunity to feed thoughts into that. The finer proposals behind the VFM ratings, such as the conditions under which each rating will apply and when they should be used, are outlined in the joint consultation which is currently open and will be provided in full in regulations.
Turning to Clause 18, Amendment 69 seeks to understand the rationale for the maximum penalty levels for non-compliance set out in subsection (5). As pension schemes grow in size, it is vital that the fines we impose on schemes carry real financial weight. This ensures that compliance and enforcement remain effective, safeguard members’ interests and, of course, maintain confidence in the system. These figures represent a significant deterrent against non-compliance while not being overly excessive in the current market landscape. We have worked closely with regulatory bodies and taken care to ensure the penalties align with other powers taken in Part 2 of this Bill. We believe the figures are proportionate to both the current and future scale of schemes.
Baroness Coffey (Con)
I am keen to get a sense of what the Government think the current spread is between the different ratings. For example, what proportion might be red? Is there any sense of this at all?
Baroness Sherlock (Lab)
I am absolutely not going to answer that. If there is answer which is known to me, then I will be happy to share it with her, but it certainly not known to me.
Baroness Altmann (Non-Afl)
My Lords, I thank all noble Lords who have spoken and the Minister for her responses and patience with the comments made, especially by me. I have ongoing reservations but will obviously look carefully at the consultation. I would be grateful if we might have a further discussion before Report, because this is a crucial area, for employers and members. Perhaps we can bring this back in some form to iron out this huge intermediate range that could have a wide variety of implications that might be quite costly—I know how much these reports cost when you try and commission them—to schemes that may be having a bad performance patch for a year or two, but for understandable reasons. I thank the Minister and I beg leave to withdraw the amendment.
Member’s explanatory statement
This probing amendment would replace the 12-month dormancy period with an 18-month period in order to test the rationale for the Government’s chosen timeframe.
Viscount Younger of Leckie (Con)
My Lords, supported by my noble friend Lady Stedman-Scott, I am glad to be leading off in another group of amendments, largely designed to probe the Government and clarify their thinking, plans and rationale on the small pots regulations in the Bill. Indeed, I know that many industry bodies are watching our proceedings with interest and will be taking note of what the Minister says. This is after we had a series of meetings with those at the sharp end in the industry, as she will probably guess.
I will speak briefly to the other amendments in this group before turning to my own. First, I speak to the amendment in the names of the noble Lord, Lord Vaux, who is not in his place, and the noble Lord, Lord Palmer. Ensuring that a qualifying dashboard service has been available for a period before small pots can be consolidated seems an entirely sensible and proportionate measure. If we are to move pension savings automatically, often without an active decision by the member, it is surely right that individuals should first have a practical opportunity to see and trace their pots in one place and to engage with them themselves.
I also welcome Amendment 81 from the noble Baroness, Lady Bowles, which, as I understand it, would ensure that a pot is not treated as dormant where contributions have ceased for a legitimate and expected reason, such as a temporary break from employment with an intention to return. This strikes me as a pragmatic refinement that would better reflect real-world working patterns and help to ensure that consolidation targets genuine dormancy rather than planned inactivity. I have no doubt the Minister will explain that in more elegant terms than me.
Amendment 88, in the name of my noble friend Lady Noakes, addresses the definitions set out in Clause 34, which itself gives the Secretary of State a broad power to alter the definition of a “small” pension pot, including increasing the threshold, with no upper limit set in the Bill. The amendment would retain flexibility but place a clear ceiling on how far that power could be used. I look forward to my noble friend’s remarks. I know that my noble friend will expand on that point, but I would be grateful if the Minister could also explain why an upper limit is not currently included and how the Government envisage safeguarding against this power being used to capture significantly larger costs in the future. That is an important question that I hope will be raised.
I turn to my first amendment in this group, Amendment 79, which would replace the 12-month dormancy period in Clause 22 with an 18-month period. This is a probing amendment intended to test the rationale for the Government’s choice of a 12-month timeframe. The definition of “dormant” is critical, because once a pot meets that definition it may become eligible for automatic consolidation with no active decision by the member. Many savers engage with their pensions only intermittently, often on an annual basis, and employment patterns do not always follow neat or predictable cycles. Therefore, extending the period to 18 months would allow the Committee to explore whether a full year of inactivity is genuinely sufficient to infer disengagement, or whether it risks capturing individuals who are simply between roles or engaging on a longer cycle.
I want to be clear that this amendment does not seek to undermine the policy of small pots consolidation, which, as the Minister knows, we broadly support. Rather, it is intended to probe how the Government have balanced administrative efficiency with member protection, and what evidence has informed the choice of a 12-month period rather than a longer one. I would therefore welcome the Minister’s explanation of how this timeframe was determined, and whether alternative periods were considered.
Amendment 80 would leave out Clause 22(3)(b). This too is a probing amendment; it is intended to explore what the Government mean by the reference to “prescribed exceptions” in the definition of a dormant pension pot. As drafted, Clause 22(3)(b) assumes that a pot may be treated as dormant not only by reference to contribution inactivity but by whether a member has taken steps to confirm or alter how their pot is invested, subject to exceptions that are left entirely to regulations. Many savers remain in default investment arrangements by choice and engage with their pensions only intermittently, often in ways that are not easily captured by scheme records. Therefore, it is not clear what types of member action the Government intend should prevent a pot being treated as dormant, nor what kinds of behaviour might be carved out as exceptions.
This amendment is intended to prove whether investment-related actions are an appropriate proxy for engagement, how prescribed exceptions will operate in practice and whether the approach adequately reflects real-world member behaviour. I would welcome the Minister’s clarification on how these exceptions are envisaged and why this test has been included in the definition of dormancy.
Finally, my Amendment 82 concerns the level of parliamentary scrutiny applied to regulations made under Clause 22. As drafted, the Bill applies the affirmative procedure to only the first set of small pots regulations or regulations that meet certain specific triggers. Thereafter, changes to the consolidation regime may be made under the negative procedure. This amendment is probing and is not dissimilar to one raised previously in Committee. It is intended to test whether that approach provides sufficient ongoing parliamentary oversight. The regulations made under Clause 22 will govern when and how small dormant pension pots may be consolidated, often without an active decision by the member, and they therefore go to the heart of member protection and confidence in the system itself.
The amendment would require all such regulations to be subject to the affirmative procedure, ensuring that Parliament has the opportunity to scrutinise and approve changes to this framework wherever they are made, not just at first use. I would be grateful if the Minister could explain why the Government consider the negative procedure appropriate for subsequent regulations in this area, and whether there are safeguards to prevent significant policy changes being made without fuller parliamentary scrutiny. I thank in advance the Minister for her comments and answers and all other noble Lords for their contributions on this group, which I feel concerns an important matter. I beg to move.
Baroness Bowles of Berkhamsted (LD)
My Lords, my Amendment 81 is very small; I hardly need to say anything about it. It came from one of those occasions when you are going through the Bill and you write a little query which you then convert into an amendment. It concerns Clause 22(3)(b), which says that a pension pot can be moved into a consolidator if
“the individual has, subject to any prescribed exceptions, taken no step to confirm or alter the way in which the pension pot is invested”.
There are instances in which a person may want to stay attached to a pension fund they have in a workplace, particularly if they do not necessarily have a long relationship with an employer or have done some intermittent work and then gone off to have a family, because they may have an informal agreement to go back. How do you cater for that? I realise that it might just fall under “any prescribed exceptions”, which you write in a note to deal with, but that is the basis of the amendment. I am sure it will be very simple for the Minister to say, “Yes, that is covered”.
While I am on my feet, I support Amendment 83. I also support Amendment 88 from the noble Baroness, Lady Noakes, because it is worth having some guardrails for things that are doing very well.
Baroness Noakes (Con)
My Lords, my Amendment 88 proposes to limit the power in Clause 34 to increase the size of the pot classified as small so that it is limited to £10,000. I welcome the fact that the power to make regulations under Clause 34 has to be consulted on and that they will be subject to the affirmative procedure, but we know that Parliament has close to zero power to alter the content of regulations, so it is important that the guardrails around the power are sufficiently strong.
There is widespread acceptance in the industry that there should be consolidation of small pots of £1,000 or less. I understand that there are already around 13 million pots of that size, and that is predicted to rise to over 30 million in only a few years’ time, so this is clearly an important issue. There is a concern, however, that the Clause 34 power could be used beyond its core purpose, which is to ensure that multiple small pots do not accumulate within pension providers and that individuals do not lose track of their own pension pots. It is one thing to use the power for sensible tidying up, but it would be quite another if the power were used to drive further consolidation, for example, which would not necessarily be in the interests of either savers or pension providers.
Baroness Coffey (Con)
My Lords, this is an interesting part. It recognises a lot of our labour market, where people are working with multiple employers over a variety of time periods. Even those young people who were on the Kickstart scheme will have got contributions to a pension scheme, which they may completely forget about once they go to their next, perhaps longer-term, job.
I remember a few years ago the lovely people over in the Department for Culture, Media and Sport. They have a “good purposes” fund where they go after dormant assets all over the place and take them away, with a general promise that the money will come back if somebody tries to get it. I seem to recall telling them to jog on when it came to pension funds, although some negotiation might have been arranged.
I am just trying to understand how all of this is going to fit together. That is why I think Amendment 83 is particularly helpful; basically, it says that the pensions dashboard must be in place. This is about making an informed choice. One of the things I am trying to understand is whether Clause 22(3)(b), which my noble friends on the Front Bench have suggested should be removed, is passive and non-engaged. Will the trustees running the scheme be required to make some effort to try to contact that person so that it does not just slide away without people even realising?
In terms of the other aspect, I assume, under Amendments 80 and 81, it is right to try to get into some more detail about prescribing, which could perhaps be further enhanced by just getting to understand in Clause 25 what the Minister is thinking at this point, especially when it suggests that the trustees or managers of a scheme can determine whether it is the best interests for this to transfer or not. Are we talking about, say, people who are in prison, people who have gone abroad or people who are on a career break? It would be helpful to have a sense of what Ministers are thinking in terms of having this variety of powers, first, to be able to do it, but then to say, “Actually, we’ll leave it to the managers or trustees of the scheme to determine whether it is that person’s best interests”. I would be grateful for some understanding, again, of how this might work in practice, but the solution will definitely be Amendment 83 and I hope that the Minister will give that consideration for Report.
Lord Palmer of Childs Hill (LD)
My Lords, this is an appropriate time to stand, because Amendment 83 is signed by the noble Lord, Lord Vaux, and by me. In the absence of the noble Lord, Lord Vaux, today, and having discussed the matter with him, I speak on my behalf and his to Amendment 83. As has been stated, it is intended to deal with the risk that consolidating small pots might worsen the problem of lost or forgotten pensions.
We are all aware of the problem of people losing track of small pension pots: a problem that has increased in recent years as people tend to move between jobs more frequently, and may therefore end up with several small pensions, perhaps from many years ago. Chapter 2 of the Bill allows the Government to make regulations to consolidate small, dormant pension pots. I, and indeed the noble Lord, Lord Vaux, and the noble Baroness, Lady Coffey, support this as we believe that providing additional scale to small, dormant pots should enable greater efficiencies and a reduction in costs.
However, a possible unintended consequence could be to make it more difficult for a person to trace a forgotten pot if it is moved to a consolidator without their knowledge: for example, if any notice is sent to an old address. The introduction of a pension dashboard, as enabled by the Pension Schemes Act 2021, was intended to make it easier for people to identify pensions that they have lost track of or even forgotten. This has been somewhat delayed, but progress does, at last, seem to be happening. The connection deadline is October 2026, so hopefully people may start to be able to access the dashboard in the not-too-distant future.
In order to avoid making the problem of lost pensions worse, Amendment 83, in the name of the noble Lord, Lord Vaux, and myself, simply says that the regulations that would mandate the consolidation of a dormant, small pot could not be made until the dashboard had been available for at least three months. The three months is designed to give a bit of time to ensure that it is actually working and that any teething issues have been resolved. I think it prudent to ensure that we do not cause unintended consequences from what is otherwise a good policy, I hope the Minister will be sympathetic to the intention of the course outlined in Amendment 83.
Baroness Altmann (Non-Afl)
My Lords, I support the amendments in this group, particularly Amendment 83, which has received wide support. I think it is really important, as is the idea of lengthening the 12-month period for so-called dormant pots, and Amendment 81 from the noble Baroness, Lady Bowles, where, for example, a woman may take time off to care for children or other loved ones and intends to return, but her pension will have been moved before she gets back. Those are distinct possibilities under this scheme. We are talking about moving somebody’s savings—or investments; I am doing it myself—from one place to another, just because they have not done anything with their pension for a while. The pension fund is not meant to have anything done with it when you are younger; it is meant to just sit there and stay there.
Of course, the big problem that needs to be solved here is the costs to providers of administering all these very small pots. But the aim of the dashboard itself is meant to be to help people move their pots from one place to another. It seems to me that this particular section of the legislation is trying to deal with something that is meant to be dealt with by a different policy area. The consolidators, of course, will be attractive to providers to establish, and the money saving from not administering these small pots will also be attractive to the providers. But have the Government given any consideration to the idea of making, for example, NEST the consolidator? That is a Government-sponsored scheme. It has obviously had to have reasonable charges. Any transfers do not incur an upfront fee. That would run less of a risk of having consolidators that end up perhaps not performing well.
Baroness Coffey (Con)
I understand what the noble Baroness is saying about NEST. It is a brilliant organisation. But my recollection is that it does charge 2% on the transfer of assets into it. That is not something we should be particularly encouraging.
Baroness Altmann (Non-Afl)
No. I was just saying, if you transfer assets in, that 2% charge does not apply and will not apply. Otherwise, obviously, it would be uneconomic. But I understand that the idea of NEST is that the transfer in of a pension from another provider does not incur the upfront charge of, I think, 1.8%. So that would not be an issue. It is just a 0.3% flat fee. I hope the Minister will be able to respond on that element. There is a residual risk to government in moving somebody’s long-term assets from one provider to another if the other provider eventually proves not to deliver good value.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords who have spoken on this. I will start by addressing the proposed amendments to Clause 22. I will say at the start that we regard this clause as being a vital measure to tackle the structural inefficiency caused by the ever-greater proliferation of small, dormant pension pots in the auto-enrolment market. It empowers the Secretary of State to make regulations to consolidate these pots into authorised consolidator schemes, improving outcomes for pension savers and reducing unnecessary costs to providers.
Amendments 79 and 80, from the noble Viscount, Lord Younger, seek to extend the dormancy period for a pot to be considered eligible for automatic consolidation from 12 months to 18 months. We concluded that the 12-month period strikes the right balance between legislative clarity and administrative practicality. The timeframe was consulted on extensively with industry in 2023, under the previous Government. I suspect the noble Viscount was the Minister, so he may recall this well. Twelve months represents a supported middle ground: long enough to ensure that pots are genuinely dormant but not so long as to delay consolidation unnecessarily. Extending the period to 18 months would create inefficiencies and higher costs for both savers and providers, and slow progress towards consolidation.
Amendment 80 proposes removing subsection (3)(b) from Clause 22 as a means of probing the circumstances in which a pot should not be treated as dormant. This was picked up, slightly glancingly, by the noble Baroness, Lady Coffey, as well. I make it clear that the scope of the policy is deliberately aimed at unengaged savers in default funds, where fragmentation poses the greatest risk to value for money and retirement outcomes. It is not designed to consolidate pots from those who are engaged and have made active decisions about their pension.
The exceptions provision is designed for cases where investment choices have been made that are driven by factors other than active financial management, such as religious belief. For example, following the consultation in 2023, sharia-compliant funds emerged as a suitable case for this. The aim was to ensure that savers in those funds remain eligible for consolidation and the benefits it brings, because, even though they have made a choice to be in a sharia-compliant fund, Clause 22 would allow schemes to differentiate that choice from other forms of pension engagement which might indicate that the member would not want their pot to be moved. I make it clear that anyone brought into scope under these exceptions will retain the option to opt out, so member autonomy is preserved, and consolidated schemes would need to offer a sharia-compliant option for consolidation to ensure that members’ wishes continued to be recognised and respected.
Although the power allows for wider exceptions in future, proportionality is key. For example, it would not be appropriate to consolidate members in ethical funds into a default fund; nor is it feasible for consolidators to cater to every ethical fund in the market. However, this flexibility would ensure that the framework could evolve if another religious or other fund reached sufficient scale. It balances the inclusion of disengaged savers with the need to limit complexity, cost and operational burden for authorised consolidator schemes; that is crucial to ensure that the automatic consolidation model remains viable.
Again, to be clear, this is not about bringing into scope people who do not want to be consolidated; it is about ensuring that those who are likely disengaged on pension saving are not automatically excluded from consolidation and its benefits simply because of their religious beliefs. For clarity, I note that, similarly, this clause does not allow or compel a pension scheme to move someone who has not selected a sharia-compliant fund into a sharia-compliant fund.
Viscount Younger of Leckie (Con)
My Lords, I will conclude fairly briefly. I thank all noble Lords for their contributions and the Minister for her reply. I thank in particular the noble Baroness, Lady Bowles, my noble friends Lady Noakes and Lady Coffey, and the noble Lord, Lord Palmer. I see, as the Minister pointed out, that the noble Lord, Lord Vaux, is in his place, which has, if I may put it this way, hitherto been dormant.
As we have discussed, the amendments in this group are designed to test how the framework will operate in practice and whether the balance struck is the right one. In particular, they probe how dormancy is defined; how member behaviour is interpreted; and how far Parliament will continue to have oversight as the regime evolves.
I have a few points to make in winding up. First, it would be helpful to hear from the Minister more details about how members can be reunited with their dormant pots—or, indeed, find their missing pots. I particularly look forward to hearing an update about the dashboard. May I make a request? It would be helpful to have more granular detail on how it would work and the different aspects of an individual’s experience in using the dashboard service. I remember that, when I was in the department, I was thoroughly briefed on it; it is a very big, important and interesting project. I am sure that the Committee would appreciate that particular type of update.
My second point was made by my noble friend Lady Noakes when she said that Clause 22 gives significant powers. She was right in saying that there is no real underlying purpose and that there are concerns around the constraints. More granular detail on the definition of small pots is required; as my noble friend said, bearing in mind their value and growth in future, more clarity needs to be given.
Finally, I want to make two points about the 12-month dormancy period that the Minister raised. We will consider what she said about 12 months being the right balance rather than extending, as we proposed. I will also read Hansard concerning her points about the affirmative procedure versus the negative one; I carefully noted what she said.
To conclude, the powers in this chapter are substantial. The point we are making—and, indeed, the points that other noble Lords have made—is that clarity around definitions, proportionality in timeframes, transparency, and how exceptions and future changes will be handled will be essential if members are to feel secure, rather than sidelined by the process. With that summary, I beg leave to withdraw my amendment.
“(6) Transfer notices must be clear, concise, and accessible to all members, including those with low financial literacy or limited digital access.(7) Transfer notices must also be provided in prescribed alternative formats for digitally-excluded, visually-impaired, or otherwise vulnerable members.”Member’s explanatory statement
This amendment ensures transfer notices are easy to understand and available in alternative formats so that all members, including vulnerable or digitally-excluded individuals, can engage meaningfully with transfer decisions.
Viscount Younger of Leckie (Con)
My Lords, I shall address each amendment in this group briefly in turn to provide some of the context and rationale for why we have introduced them. First, Amendments 84 and 85 relate to Clause 24. These amendments are concerned with how this policy will operate in practice and whether it does so in a way that is fair, comprehensible and properly accountable. Clause 24 places significant weight on the transfer notice. It is the principal mechanism by which an individual is informed that their pension pot may be transferred automatically if they do not respond. In many cases, silence will result in action, which makes the quality and accessibility of that notice critical.
Amendment 84 therefore seeks to ensure that transfer notices are clear, concise and accessible to all members, including those with low financial literacy or limited digital access. It also requires that notices be available in prescribed alternative formats for members who are digitally excluded, visually impaired or otherwise vulnerable. I took note of the Minister’s remarks about definitions that may need to be properly defined—better defined than I can define them—in legally recognisable terms, and I recognise that.
As we discussed earlier today, we are all aware that pensions communications can be complex and intimidating, even for those who are relatively engaged. We need only to remind ourselves of the challenges experienced in recent years over pension credit communications. I think my noble friends Lady Coffey and Lady Stedman-Scott have had some experience of that. I will leave it at that.
For individuals with small dormant pots, often lower earners, those with fragmented work histories or those disengaged from pensions altogether, the risk is that they simply do not understand what is being proposed or do not realise that inaction has consequences. Often, it is fair to say that pension communications, when received, are by default put in the too-difficult box or the another-day box or in a convenient receptacle placed on the floor—I will leave it at that. The noble Baroness, Lady Altmann, made a similar point in her remarks on an earlier group, but it is a serious point. If the policy depends on member engagement, it is only reasonable that the communication is genuinely capable of being understood. Amendment 84 would simply put that principle in the Bill.
Amendment 85 addresses a different but related concern about oversight and accountability. As drafted, the clause requires transfer notices to be issued, but does not require anyone to monitor how many notices are sent, how members respond or what outcomes are produced. Amendment 85 would place a duty on the Secretary of State through regulations to record and report annually on the number of transfer notices issued and the outcomes arising from them. This matters for two reasons. First, it allows Parliament to assess whether the policy is working as intended. Are members actively choosing options or are transfers overwhelmingly occurring by default? Are certain cohorts disproportionately disengaged? Without data, we simply cannot know. Secondly, it ensures that responsibility for this policy does not rest solely with schemes and regulators but remains subject to ministerial oversight and parliamentary scrutiny, which is particularly important where automatic processes affect individual savers. I hope the Minister will see these amendments as seeking to address important points that will make this part of the Bill work more effectively, and I look forward eventually to hearing her response. I listened very carefully to her remarks on communications and customer service in an earlier group.
Let me now address our Clause 31 stand part notice; noble Lords will be aware that, as set out in its explanatory statement, this is intended as probing. This clause contains a wide enabling provision that allows Ministers, through regulations on small pots, to confer functions; create appeal rights; require extensive data processing; amend primary legislation; and, most notably, authorise the Pensions Regulator to charge prescribed fees in connection with authorisation under the regime. My concern is not that these powers exist at all but that the clause gives us little indication of how they will be constrained in practice. In particular, can the Minister explain how the fee-charging power for the Pensions Regulator will operate? Will fees be strictly limited to cost recovery? How will their level be set? What parliamentary scrutiny will apply?
Baroness Altmann (Non-Afl)
My Lords, the noble Viscount, Lord Younger, and the noble Baroness, Lady Stedman-Scott, have done the Committee a great service. I wish to flag up that these amendments are really important for us to consider before we come back on Report.
The noble Viscount’s comments on Clause 31 potentially being dangerous are right on the mark. Many of the wide powers suggested here should say “must” rather than “may”, but they say only “may”. We are talking about moving somebody’s money, potentially without their knowledge; yes, we will have to write to them, but we know very well that many schemes have dormant pots because either they have lost track of the members or the members have lost track of the scheme. There is a danger here in public policy terms.
In connection with this policy area, the Minister mentioned at the beginning of the debate that there are risks to members and providers. I understand the risks to providers of having small pots, as well as the costs of administering them being higher than the fees they receive from managing them, but what is the risk to the member of having their money stay where it is until they come along and ask for it to be moved? There are risks in leaving as well as in staying if they are moved into a scheme that is less suitable for them, performs less well or has a different charging structure.
What if the member is away for a couple of years on a secondment, for example? What kind of protections will there be? Pensions are typically designed to be left alone. Having default funds, making regular contributions and not being able to take any of your money back until you are 55, for example, are part of the whole structure—indeed, the intention—of private pensions. Is there any intention to ensure, for example, that the member and the dashboard have been operational? I know the Minister said—we talked about this in the previous group—that there might be conflicts between the intention of the small pots legislation and the timing of the requirements relative to the timing of the dashboard, but if a member is moved and it is discovered that they are suffering a loss as a result of the move because their scheme was better or because they have come back to that scheme after a temporary absence, is there any consideration of who might be responsible for any compensation due for money that was moved when the member might well have known nothing about it?
Baroness Sherlock (Lab)
My Lords, I thank the noble Viscount, Lord Younger of Leckie, for introducing his amendments. I should have said at the beginning of the previous group that I thank him for his support for this policy. I recognise that he has tabled his amendments in the spirit of exploring how best to make this work.
Let me start with the proposed amendments to Clause 24, which is a key part of the framework to enable the consolidation of small dormant pension pots. It sets out requirements for transfer notices: communications that inform members when their pot is due to be moved into an authorised consolidator scheme. These notices are an important safeguard, ensuring transparency and giving members the opportunity to opt out if they wish to. Amendment 84 proposes that the transfer notices must be clear, concise, accessible and so on and must be provided in prescribed alternative formats for digitally excluded or visually impaired members.
I fully support this principle, but we think the amendment is not needed because the objectives are already embedded in the Government’s approach. The Bill provides powers to set detailed requirements for transfer notices in secondary legislation, and we have committed to consult to ensure that notices are simple, jargon-free and easy to understand. Moreover, existing regulatory standards and guidance already require schemes to provide communications in accessible formats for vulnerable members, including those who are digitally excluded or visually impaired. We do not think that overlaying additional prescriptive requirements in primary legislation is helpful, but the underlying point is very strong. We need a framework that can evolve as technology and members’ needs change. Locking rigid requirements into the Bill could hinder that process, so we think the right place for these detailed standards is in guidance and regulation, where they can be updated as best practice develops.
Amendment 85 would require the Secretary of State to record and report annually on the number of transfer notices issued and the outcomes arising from them. Again, although I understand the intent, we do not think this amendment is proportionate, given the administrative burden that it would impose. The DWP already has robust mechanisms for monitoring the implementation and effectiveness of pensions policy, including through regular engagement with the Pensions Regulator and industry reporting. We will continue to publish updates on the progress of small pots consolidation as part of our wider reporting on pensions reform. The focus should remain on ensuring that the policy delivers better outcomes for members, reducing fragmentation, improving value for money and supporting a market of fewer, larger schemes. We believe that this can be achieved through existing oversight arrangements and targeted evaluation, rather than setting rigid reporting requirements in primary legislation.
I recognise that the Clause 31 stand part notice has been tabled to probe the extent and scope of the small pots regulations enabled by this clause, with particular focus on the powers conferred on the Pensions Regulator to levy fees. For clarity, Clause 31 does not create new powers beyond those already set out within the small pots measure. Its purpose is to provide clarity and detail on how those powers can be exercised to deliver the small pots consolidation framework effectively. This mirrors the approach taken with the authorisation of master trusts, for example, under the Pension Schemes Act 2017, where fees were introduced to ensure that the costs of regulatory oversight are borne by those seeking authorisation, not by the taxpayer. This is a well-established and proportionate mechanism that supports robust regulation while maintaining fairness.
As already discussed elsewhere, we believe that the clauses within this chapter strike a careful balance. They ensure that key regulations get full parliamentary scrutiny through the affirmative procedure, while allowing the Government to act quickly on minor or technical changes via the negative procedure when necessary.
Clause 31 sets out the circumstances where the use of a Henry VIII power may be required. To be clear, this is about ensuring that the legislation delivers a workable and proportionate framework. The Henry VIII power provides necessary flexibility to apply existing technical and procedural legislation to small pots regulation in order to ensure the effective implementation of the small pots regime. I shall give an example. It may be necessary to make consequential amendments to the Pensions Act 2004 so that the Pensions Regulator’s existing administrative powers can extend appropriately to the small pots framework. An example in the Bill is the amendment to Section 146 of the Pension Schemes Act 1993 to ensure that the remit of the Pensions Ombudsman is broad enough to investigate complaints or disputes in relation to the destination proposer, but this cannot be legislated for before final decisions around the delivery model are made. That is a good example of why this would work. Of course, any regulations made under this power will be subject to the affirmative procedure.
We think that that flexibility is essential for the effective implementation of the small pots regulations. Any regulations made under this power will be affirmative, but it is also worth noting that, given what I have said, removing Clause 31 would reduce the clarity for members and pension schemes on how the power to make small pots regulations may be used.
Finally, I will address the proposed amendments to Clause 32. Clause 32 is essential to maintaining trust and integrity in the small pots consolidation framework. It ensures that the Pensions Regulator can take direct action to uphold compliance with the regulations, protecting members and supporting the volume of transfers required accurately. Amendment 86 seeks to remove subsection (2) as a means of probing the expansion of regulatory powers conferred on the Pensions Regulator. Subsection (2) provides transparency for stakeholders by setting out the types of enforcement tools that may be included in regulations, such as compliance notices, third-party compliance notices and penalty notices. These are not new concepts; they align with the Pensions Regulator’s existing practices and procedures in other areas of pensions regulation. Removing this provision would not prevent enforcement powers being introduced in regulations, but it would remove clarity for schemes and members. Without it, we risk creating ambiguity and undermining confidence in the framework. This clause is not about overreach, but about ensuring that the regulator can act proportionately and effectively where schemes fail to meet their legal duties.
Finally, Amendment 87 seeks to remove Clause 32(4) to probe the rationale behind the maximum penalty limits. Subsection (4) provides clear, proportionate caps on financial penalties: £10,000 for individuals and £100,000 in any other case. These limits have been increased compared to existing frameworks to reflect the importance of compliance in this area. As pension schemes grow in size, it is vital that the fines we impose on schemes carry real financial weight. This ensures that compliance and enforcement remain effective, safeguard members’ interests and maintain confidence in the system. These amounts align with the wider compliance regime across the Bill. Without this subsection, regulations could still introduce penalties, but without any statutory cap. That would create uncertainty for schemes and could lead to disproportionate outcomes. By contrast, the current approach provides transparency and safeguards, ensuring penalties are significant enough to deter non-compliance but not excessive. It also enables appeals to the First-tier or Upper Tribunal, guaranteeing procedural fairness and accountability.
In conclusion, Clause 32 is not about granting unchecked powers; it is about providing clarity, proportionality and effective enforcement to protect members and deliver the outcomes this policy is designed to achieve. Removing this provision would create uncertainty and risk undermining confidence in the system.
The noble Baroness, Lady Altmann, asked me a question that I think related more to the previous group, but let me see what I can do. Why do we need small pot consolidation if we have the pensions dashboard? I think her question was slightly underpinned by the question, why do we need this at all, why can we not just use dashboards? We think they serve different but complementary roles in strengthening the system.
Viscount Younger of Leckie (Con)
My Lords, I will be pretty brief in closing. Across this group, the common theme is not opposition to the direction of travel—I give further reassurance to the Minister on this point and I appreciate her remarks—but a desire for clarity, proportionality and accountability as these powers are taken and exercised. I am very grateful for the support of the noble Baroness, Lady Altmann, and indeed for her extra questions on this group. The small pots regime will rely heavily on automatic processes, regulatory discretion and secondary legislation, which makes it especially important that Parliament understands how these measures will work in practice and where the guardrails sit.
The amendments that we have brought forward are deliberately probing, as I said at the outset. They seek reassurance that members will be able to engage meaningfully with decisions that affect their savings, that Ministers will retain visibility and responsibility for how the system operates once it has gone live, and that the regulators’ powers, whether in relation to fees, enforcement or penalties, will be used in a way that is targeted, proportionate and subject to appropriate oversight. I respect the fact that the noble Baroness has given much time to addressing the amendments, and indeed those particular points, for which I am very grateful. It has been a short debate, and I hope a helpful one, and we will consider the responses given. But, for the moment I beg leave to withdraw my amendment.
Member’s explanatory statement
This amendment seeks to scrutinise the scale of the Secretary of State’s powers to exempt schemes from Conditions 1 and 2 set out in subsection (4), and to probe whether these exemption powers are intended to apply to Collective Defined Contribution (CDC) schemes.
Viscount Younger of Leckie (Con)
My Lords, this is a busy group and I shall not detain the Committee by speaking to all the amendments therein, but I do want to welcome the amendments that have been tabled by other noble Lords, which will allow us to have a detailed and, I hope, fruitful debate and discussion on these important matters.
Amendment 89 is a probing amendment. It would leave out new subsection (1B), which allows the Secretary of State, by regulations, to exempt descriptions of relevant master trusts from the approval requirements in conditions 1 and 2, covering both the scale default arrangement and the asset allocation approvals. The purpose here is to understand the intended scope of this power and the safeguards that will govern its use. As drafted, new subsection (1B) is very broad: it permits exemptions for
“any description of relevant Master Trusts”
and gives examples, including schemes designed to meet the needs of those with protected characteristics and hybrid schemes.
I have three straightforward questions for the Minister at the outset. First, why is it necessary to take such wide exemption powers in the Bill, rather than tightly defining the circumstances in which exemptions may be granted? Secondly, how will the Government ensure that exemptions do not create a route by which schemes can avoid the central policy intent of this chapter: namely, improving outcomes through scale and an appropriate approach to asset allocation?
Thirdly, can the Minister clarify whether these exemption powers are intended, in whole or in part, to apply to collective defined contribution schemes, or other non-standard money purchase arrangements? If so, what is the rationale; and if not, will she put that clearly on the record? I am mindful of the recent debate that we had in this Room on the CDCs. I hope the Minister can respond to those points.
I know that the noble Baroness, Lady Bowles, will set out her reasoning for Amendment 92, so I do not wish to pre-empt or emulate what I know will be a very well-reasoned and informative set of remarks. But, as I have added my name to the amendment, I will briefly say that I welcome this proposal. It would put in the Bill a clear signal that a trust which provides “exceptional” value for money—as assessed by the regulator under its VFM framework—could be a legitimate basis for exemption from the new approval requirements. It seems sensible that trusts that already provide exceptional value for money should be trusted to carry on their good work under the established framework in which they are already operating.
Amendment 100, in my name and supported by the noble Baroness, Lady Altmann, to whom I am grateful, seeks to provide helpful clarity, not to weaken regulation, by making clear that schemes offering genuinely specialist or innovative services can demonstrate that they meet the exemption. This is important because innovation in pensions does not always mean novel technology alone; it can include specialist provision for particular workforces, new approaches to member engagement or delivery models that better serve groups who might otherwise be poorly catered for. Without clarity, there is a risk that worthwhile innovation is discouraged simply because schemes are uncertain about how the exemption will be interpreted.
The amendment also gives the Secretary of State the power, through regulations, to define “specialist or innovative services”. That provides appropriate flexibility, allowing the definition to evolve over time, while ensuring proper scrutiny and regulatory oversight. The amendment supports innovation without undermining member protection, and it gives both trustees and regulators greater certainty about how the exemption is intended to operate. I therefore hope the Minister will look favourably on it and speak to the point that is raises.
Amendments 105 and 107 are intended to ensure that group personal pension schemes are treated fairly and proportionately under the new scale requirements in Clause 40. We are clear that scale alone is not always a reliable proxy for quality or value. There are group personal pension schemes that are smaller by design yet provide highly specialist or innovative services, for example, to particular sectors, workforces or member needs, and that deliver good outcomes despite not meeting a blunt asset threshold. Amendment 105 creates an additional route for relevant GPPs to meet the quality requirement, by allowing those that satisfy an innovation exemption not to be automatically required to meet the scale requirement.
Amendment 107 provides the necessary framework for that exemption. It allows a GPP to demonstrate that it offers specialist or innovative services, and gives the Secretary of State the power, through regulations, to define what those terms mean. That ensures flexibility as the market evolves, while retaining appropriate regulatory and parliamentary oversight. I hope the Minister will see these amendments as a constructive way of balancing scale with innovation, competition and member outcomes, and I look forward to her response.
Amendment 135 would revert the eligibility test for new entrant pathway relief under Clause 40 to the simpler principle-based formulation contained in the Bill as introduced. The purpose of the new entrant pathway is clear: to ensure that credible, innovative schemes are not locked out of the market simply because they are new and have not yet had the opportunity to build scale. As the Bill is currently drafted, that test has become more prescriptive, with a risk that genuinely innovative entrants could struggle to qualify despite having strong growth potential. By refocusing the test on whether a scheme can demonstrate strong potential for growth and an ability to innovate, this amendment would restore the original balance between safeguarding member outcomes and allowing healthy competition and innovation in the market. This amendment would simply ensure that the pathway for new entrants remains realistic and proportionate and is aligned with the policy intent.
Finally, Amendments 165 and 166 are probing amendments about parliamentary scrutiny—back to that subject. Clause 41 gives the Secretary of State the power to make regulations setting out how the Pensions Regulator will assess whether master trusts meet the scale requirement and have sufficient investment capability. These assessments will have a direct bearing on which schemes can operate, which must consolidate and how the market develops over time. As drafted, the Bill provides that the first set of regulations is subject to the affirmative procedure, but all subsequent regulations may be made under the negative procedure. I think we have heard this before. Amendments 165 and 166 would remove that distinction, so that any regulations in this area would require affirmative approval.
The question that these amendments pose is simple: if the initial framework is considered significant enough to warrant full parliamentary scrutiny, why should later changes, potentially just as consequential, receive a lower level of oversight? These regulations are not mere technical updates; they go to the heart of how scale and capability are judged, and therefore to the structure of the pensions market itself. It therefore seems reasonable that Parliament should retain the guaranteed opportunity to debate and approve changes of that kind whenever they are made. I look forward to the Minister’s explanation of why the negative procedure is considered sufficient for subsequent regulations and whether there is scope to strengthen ongoing parliamentary scrutiny in this area. I look forward to contributions from other Members of the Committee and particularly to the Minister’s response. I beg to move.
Baroness Bowles of Berkhamsted (LD)
My Lords, I will speak very briefly to Amendment 92 because it is a “what it says on the tin” amendment. It arose during a conversation. Somebody asked me what happens if a scheme is doing very well but is forced into consolidation because it does not meet the scale requirements. Would there be any legal consequences if it did not do quite so well under consolidation? On whom would those legal consequences fall if, as a result, somebody received a worse pension? Is there any comeback on the scheme because it was not big enough and so got consolidated? Is there any indemnity? Is there any making up? Let us take a theoretical situation in which the consolidator it goes into ends up doing very badly—I would hope that would never happen, but this is just to probe the safeguards around such circumstances. I could not answer the questions. It may be that there is something in the vast number of papers I have not read and the Minister can advise me. There is nothing terribly special or secretive behind it, it is just something that could happen, and can I obtain clarity about what comeback there may or may not be?
Baroness Noakes (Con)
My Lords, Amendments 134, 137 and 138 in this group are in my name. I thank my noble friend Lady Neville-Rolfe for adding her name to Amendment 137; unfortunately, she needs to be in the Chamber imminently so was unable to stay in the Committee.
I support the other amendments in this group. I am very sorry that the noble Lord, Lord Davies of Brixton, is not in his place; I hope he has not been silenced by his Front Bench. On our first day in Committee, I found myself in near agreement with the noble Lord—that is quite unusual for me—when he said that he was not totally convinced by the Government’s line that big is necessarily beautiful. He said that he was open to that debate, but my position is less nuanced: I am absolutely certain that big is not always beautiful. There are plenty of examples of big being beautiful. The US tech industry is probably a good example of that, at least from a shareholder perspective. On the other hand, there are many examples of where being big is not good. Big can be bureaucratic and low-performing. It can be hampered by groupthink, unresponsive to customer needs and hostile to innovation and competition; we can all name organisations in that category, I am sure.
I buy, as a general proposition, that an investment management scale has many attractions, including efficiency of overhead costs and the ability to diversify into a wider range of asset classes in order to achieve superior investment returns, but I have absolutely no idea whether £25 billion is the right threshold for forcing people into certain kinds of investment. I am absolutely certain that we should not dogmatically force all organisations towards that asset threshold in order to leave the door wide open for new entrants and players who can demonstrate good returns for savers and innovation.
My Amendment 137 would widen the qualification for the new entrant pathway relief so that it can include schemes that will produce above-average performance. If smaller, more agile providers can provide equal or better returns than the big boys, why should they be excluded? If a provider has a winning formula, why must it also demonstrate that it will achieve scale? What benefit is there for pension savers in restricting the market in this way? Noble Lords should also ask themselves why the big providers in the market, in their emails to us, have generally not challenged the scale proposals. The answer is very simple: this Bill acts as a barrier to entry, and large players love barriers to entry. We must not let them get away with it.
Amendment 134 probes why subsection (2)(a) of new Section 28F, which is to be inserted into the Pensions Act 2008 by Clause 40, restricts new entrant pathway relief for schemes that do not have any members. The main scale requirement is to have assets of £25 billion under management by 2030. The transitional pathway is for existing smaller players, provided they have assets of £10 billion under management by 2030 and have a credible plan for meeting £25 billion by 2035. The new entrant pathway relief is available only to completely new schemes—that is, those with new members—and only if they have strong potential to reach £25 billion. This leaves a gap in which new players that have been set up very recently, or will emerge between now and when this bit of the Bill comes into force, will not qualify for new entrant pathway relief and may also not qualify for transitional pathway relief. They may well have strong potential to pass the new entrant test—that is, if they were allowed to because they had no members—but they would not satisfy the regulator that they have a credible plan for transitional pathway eligibility.
Growing a business is not a linear matter. At various points, additional capital will generally be needed, but the Bill will make it difficult to raise funds because of the significant uncertainty about whether a pension provider would satisfy the transitional pathway test; and failing that test would mean that the business could not carry on and would thus be very risky for investors or lenders. Do the Government really intend to drive out of the market new providers that have only recently started or will start between now and the operation of the scale provisions? I am completely mystified by this.
My Amendment 134 deals with the substance of Amendment 136 in the name of the noble Baroness, Lady Altmann, which she has degrouped into a separate group and which will not come up until later. I think they deal with the same issue, but I will wait to see what she has to say on her amendment in due course.
Finally, my Amendment 138 seeks to delete subsection (4) of new Section 28F in order to probe why the Government need a regulation-making power to define “strong potential to grow” and “innovative product design”. The Government are probably the last place I would go to find out about growth or innovation. The regulators that will implement the new entrant pathway are, or ought to be, closer to their markets and therefore will understand in practice how to interpret the terms for the providers they regulate. Why can the Government not simply leave it to them? What value can the Government possibly add to understanding how these terms should be implemented in practice? I look forward to the Minister trying to convince me that the Government know about growth and innovation.
Baroness Altmann (Non-Afl)
My Lords, as the noble Baroness, Lady Noakes, said, my Amendment 136 is in a later group and was degrouped deliberately to explore the issues that she has just raised. If the Committee is comfortable for me to deal with Amendment 136 here today, I do not mind doing so, but that would potentially cause a problem for the Ministers or other Members of the Committee. May I do so? Alternatively, I could speak to it later; whatever the Committee decides is fine with me.
Baroness Altmann (Non-Afl)
Okay. I have not fully prepared for it, but I am happy to do that; it will save us time later on.
The concerns expressed in Amendment 136 and the amendments that the noble Viscount, Lord Younger, mentioned—some of which I added my name to—revolve around schemes that are already established. There is uncertainty about whether the schemes that are currently below the level will be permitted as new entrants or be able to access new business.
I am already being told that advisers are opting to advise employers only to join schemes that are already almost at or above the current £25 billion default fund threshold, which is creating market disruption and preventing schemes currently below the scale threshold from growing, as they cannot access the amount of new business they would otherwise have anticipated. Therefore, the risk is that these schemes will close prematurely but could offer good value to members who would otherwise be able to benefit from a scheme that is potentially on track to enter the transition pathway but will not quite be there.
I will offer the Committee an example. One of the recent new entrants, Penfold, which was established in 2022, will not have the time that other new entrants, established a few years before it, will have—such as Smart Pension, which may well be on track to reach the goal by 2030. Penfold faces a cliff edge because it launched only in 2022, has already surpassed the £1 billion asset-under-management mark and could well quadruple business over the coming few years, which would be an extremely positive achievement, but it will not qualify it not to have to close.
There are other new potential entrants that were planning to enter the market in the next three or four years, but they cannot now do so unless they are able to enter the pathway. That is why Amendment 136 suggests that schemes that have been established for, let us say, less than 10 years—again, that is a probing figure—would be able to enter either the transition or new entrant pathway if there is a demonstrable case that they will be able to grow. However, I am completely aligned with the noble Baroness, Lady Noakes, that big is not necessarily best and that there are risks of an oligopoly developing in this connection, which I hope the Government would not have intended. I am convinced that that would not necessarily be in the interests of the market, innovation or pension savers more generally.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords for introducing their amendments. As this is the first time we are going to debate scale, let me first set out why we think scale matters. I hope to persuade the noble Baroness, Lady Noakes, with my arguments, but she is shaking her head at me already, so my optimism levels are quite low given that I am on sentence two—I do not think I am in with much of a chance.
Scale is central to the Bill. It adds momentum to existing consolidation activity in the workplace pensions sector and will enable better outcomes for members, as well as supporting delivery of other Bill measures. These scale measures will help to deliver lower investment fees, increased returns and access to diversified investments, as well as better governance and expertise in running schemes. All these things will help to deliver better outcomes for the millions of members who are saving into master trusts and group personal pension plans.
Baroness Noakes (Con)
Will the Minister say what the evidence base is for the assertions she just made?
Baroness Sherlock (Lab)
I was going to come on to that, but I am happy to do so now. Our evidence shows that across a range of domestic and international studies, a greater number of benefits can arise from scale of around £25 billion to £50 billion of assets under management, including investment expertise, improved governance and access to a wider range of assets. This is supported by industry analysis, with schemes of this size finding it easier to invest in productive finance. International evidence shows funds in the region of £25 billion invested nearly double the level of private market investment compared to a £1 billion fund. Obviously, we consulted on these matters and we selected the lower band, but there is further evidence that demonstrates the greater the scale, the greater the benefits to members. We did go for the lower end of that.
I turn to the amendments to Clause 40 from the noble Viscount, Lord Younger. This probing of how exemptions might operate, especially in relation to CDC schemes, is helpful. Our intent is clear: to consolidate multi employer workplace provision into fewer, larger, better run schemes. To support this, exemptions will be very limited and grounded in enduring design characteristics; for example, schemes serving protected characteristic groups or certain hybrid schemes that serve a connected employer group. I can confirm that CDC schemes are outside the scope of the scale measures. Parliament has invested considerable effort to establish this innovative market, and we will support its confident development while keeping requirements under review.
I turn to the broader point about why the exemptions are intended for use for schemes for specific characteristics; for example, those that solely serve a protected characteristic or those that serve a closed group of employers and has a DB section—hybrid schemes. I agree with the noble Lord that, if we were to have too many exemptions, it would simply mean the policy had less impact, but we need to have some flexibility and consultation.
Amendment 92 from the noble Baroness, Lady Bowles, proposes that master trusts delivering “exceptional” value under the VFM framework could be exempted from scale and asset allocation requirements. Exemptions listed in new Section 20(1B) relate to scheme design and are intended to be permanent. Introducing a performance based exemption tied to ratings would be inherently unstable for members and would risk blurring two parallel policies. Scale and VFM complement each other, and both support good member outcomes. However, we do not agree that VFM ratings should be used to disapply structural expectations on scale, and we do not wish to dilute either measure.
Baroness Noakes (Con)
I am struggling to understand why the Government are setting their face against good performance. They seem to be obsessively pursuing scale and consolidation of the industry, unable to see that, for pensioners and savers, equally good or better returns can be achieved from sub-scale operators. That is a question of fact. The evidence that the Minister gave earlier merely points to there being a correlation between size and returns; it is not an absolute demonstration that, below a certain scale, you do not achieve good returns for savers. I hope that the Minister can explain why the Government are so obsessed with scale rather than performance for savers.
Baroness Sherlock (Lab)
I feel that we will have to agree to disagree on this point. The Government are not obsessed with scale; the Government believe that the evidence points to scale producing benefits for savers. We find the evidence on that compelling. I understand the noble Baroness’s argument, but the benefits of scale are clear. They will enable access to investment capability and produce the opportunity to improve overall saver outcomes for the longer term.
I cannot remember whether it was this amendment or another one that suggested that a scheme that did well on value for money should be able to avoid the scale requirements; the noble Baroness, Lady Altmann, is nodding to me that it was her amendment. The obvious problem with that is that schemes’ VFM ratings are subject to annual assessment and, therefore, to change. It is therefore not practical to exempt schemes from scale on the benefit of that rating alone.
We are absolutely committed to the belief that scale matters. It is not just that we think big is beautiful—“big is beautiful” has always been a phrase for which I have affection—but I accept that it is not just about scale. It is not so for us, either. We need the other parts of the Bill and the Government’s project as well. We need value for money; we need to make sure that schemes have good investment capability and good governance; and we need to make sure that all parts of the Bill work together. This vision has been set out; it emerged after the pension investment review. The Government have set it out very clearly, and we believe that it is good.
Baroness Altmann (Non-Afl)
The remarks that the Minister is making are of concern to me—and, I think, to other Members of the Committee—because they are just what the big providers would say. They have the power. I have seen this in the pensions landscape for years: the big players have this incredible advantage and lobbying power and the power to get their way on legislation somehow. That is not always bad for members; I am not saying there is something terribly wrong with the big providers. What I am saying, though—this is an important point—is that there is a real need for innovation, new thinking and new ideas in this space. Huge sums of money are under discussion here. If we are bowing to the existing incumbents and not making provision even for those small businesses that are currently established but will not necessarily reach that scale in time, I am not convinced that we are improving the market overall. I would be grateful for a thought on that, or for the Minister writing to me.
Baroness Sherlock (Lab)
I am going to push back on the premise of the noble Baroness’s comments. I understand that she feels very strongly about this, but the Government are not doing this to benefit large pension schemes. The Government are doing this to benefit savers. The Government established an independent pension investment review, looked carefully at the evidence and reached the view that the best thing for savers is, via these measures, to encourage and increase the consolidation that is already happening in the marketplace. It is our view that that, combined with the other measures in the Bill, will drive a better market for savers and better returns for savers in the long term. That is why we are doing it—not because we want to support any particular players in the market; that is not what we are about.
The noble Baroness mentioned her Amendment 136; I want to respond to that as well as to the noble Baroness, Lady Noakes. There is an issue around whether schemes already in the market have enough time to make scale. From when the Bill was introduced in 2025, schemes have up to 10 years, if we include the transition pathway, to reach scale. We project that schemes with less than £10 billion in assets under management today could still reach the threshold based simply on historical growth rates. For example, a £5 billion fund today, growing at 20% a year, broadly in line with recent growth in the DC market, could reach £25 billion within 10 years—and that does not take account of the impact of consolidation activity, which we expect to see within the single employer market as a result of reforms brought forward in the Bill, such as VFM, which we expect to lead to poorly performing schemes exiting the market.
Baroness Altmann (Non-Afl)
Is there a reason why the Government will not even consider allowing some transitional entry for schemes that are already established, such as the one I mentioned, which may or may not reach that number? This is not a magic number—£10 billion or £25 billion are not magic numbers—but these are businesses that are already established. It will put people off entering the market if suddenly, with no warning, a company that started in 2022 is under pressure. Let us say that there are bad markets or that it takes longer; as I was saying, at the moment, employers are not going to give these companies new business. If the Government could look at some minimum period of establishment that could get new entrants into the 2010 transition, that would be good.
Baroness Sherlock (Lab)
The important thing here is clarity. The noble Baroness mentioned a single scheme. I am not going to comment on individual schemes, for reasons she will appreciate—she would not expect me to do so, I know—but we have to set some clear boundaries. The boundary has to be somewhere. As I said, we have actually gone for the bottom end of what was consulted on. We have created a transition pathway precisely to give schemes the opportunity to grow; they need to be able to persuade us that they have a credible path to do that.
In the case that the noble Baroness mentioned, if there were some particular market conditions that caused problems across a sector, she will be aware that in the Bill there is something called a protected period. There are powers in Sections 20 and 26 of the Pensions Act 2008 that give regulators the ability to delay temporarily the impact of the scale measures. That is to ensure that the consequence of a scheme failing to meet the scale requirement—having to cease accepting any further contributions—is planned and managed. There is a range of reasons why that might happen. It might be about an individual scheme that has been approved as having scale but has failed to meet the threshold or it might be a market crash that affects all schemes. There is flexibility there for the Government.
However, the principle is that we have to set some boundaries around that. The Government have reviewed the evidence carefully, and we have concluded that the point that we have chosen is appropriate. We have created a transition pathway in order to do that, and we have created new entrant pathways in order to accommodate those situations. We believe that that will protect members’ interests.
Baroness Bowles of Berkhamsted (LD)
The Minister has not yet mentioned whether there is any kind of indemnity or legal consequence. What the legislation does is not neutral in the sense that it provides cut offs and reasons not to invest. Is a company doing something wrong by continuing when it should say that it will not be able to make £25 million and it should roll up now? These are issues about which questions have come to me. It has not been looked at in the research. Could the Minister write to me to say whether there are any legal dangers for either side and whether there would be any compensation if the value of the pension becomes less than expected?
Baroness Sherlock (Lab)
We expect schemes with scale in a future landscape to deliver better outcomes for members. Consolidation is not created by the scale measures. It is already happening in the market, but we expect it to accelerate. Those running schemes are expected to carry out due diligence and act in the interests of their members in any consolidation activity. If there is anything else I can say on that, I will write to the noble Baroness. I am happy to look at it. The core question is whether it is a matter for those running schemes to make those judgments.
Baroness Noakes (Con)
Does the Minister understand that if you are currently a small scheme, unless you have certainty about being able to qualify to go into transitional relief, you will not be able to raise any money to facilitate your growth? It becomes a Catch-22. The Bill is creating uncertainty, which is destroying the businesses of those who might well be able to come through, but will not be able to convince equity or debt providers that they will be a viable business at the end because of the hurdles that the Government are creating in this Bill.
Baroness Sherlock (Lab)
I understand the noble Baroness’s concerns, but I contend that we are doing the opposite. We are creating certainty by being clear about what the intention is, what the opportunities are and where we expect schemes to be able to get to and in creating transition pathways but making it clear that people will have to be able to have a credible plan to do that. We are making that clear now. I have given the reasons why I anticipate that there is a pathway to scale for schemes that are around at the moment, but that is a judgment that schemes will have to make. If they do not believe that they can make scale, they will need to look at alternative futures in a way that is happening in the market already through consolidation. I accept that it may accelerate it, but it is not creating it.
Amendment 134 seeks to remove the no-members requirement entirely, accepting that it would potentially allow any existing DC workplace scheme to claim new entrant status, circumventing the scale policy, which, while contested, is the point of our proposal. Our inclusion of the no-members provisions in Committee in the Commons clarified the original intent and prevented a loophole.
Amendment 137 would mean that existing schemes would be able to access the new entrant pathway if they had stronger investment performance than can be achieved by schemes with scale, which we have touched on. While I understand the intention to reward and maintain strong investment performance, the focus there would be on short-term rather than long-term outcomes. There are various practical problems with doing that in any case, but I am also conscious that there will be occasions where a scheme that depends on its investment performance does not deliver and no longer qualifies on the pathway. That is then not a stable position for employers that use the scheme or its members. At the heart of the requirement is the need to create buying power for schemes to drive lower fees and increase returns. A small scheme simply cannot generate the same buying power, and schemes with scale are expected to deliver better outcomes over the long term.
Amendment 138 would strip the power to define “strong potential to grow” and “innovative product design” in regulations. The Government believe that these are key attributes of a successful new entrant in the market. Like other noble Lords, I know about the importance of ensuring that the measures we implement will be clearly understood and workable in the complex pensions landscape. The form that innovation will take is, by definition, difficult to predict; we would not seek either to define its meaning without input from experts and industry or to fix that meaning in law without retaining some flexibility. Consultation with industry will be important in ensuring that schemes can demonstrate these attributes; to be clear, we will consult on this and other aspects of the new entrant pathway relief first, before regulations determine the meaning of these terms.
Viscount Younger of Leckie (Con)
My Lords, I will be brief in closing as I suspect that the Committee is keen to get on to the next group.
Across this group, with the focus on scale—looking at both the merits and the demerits—the consistent theme has been a desire to ensure that the framework we are putting in place is proportionate, intelligible and capable of accommodating diversity in the pensions market. There has also been the theme of “big is not necessarily beautiful” in the course of this debate. My noble friend Lady Noakes was supported in particular by the noble Baroness, Lady Altmann; they were assiduous in their questions on scale.
I should just remind the Committee that the Minister for Pensions has stated that return on investment is paramount, so this has been a very interesting debate. What if suboptimal scale produces better returns than merely big scale? That was one of the themes in this debate. Is there not a tension here? I would say that there clearly is.
From the remarks made by a number of Peers in this Committee, I think that more thought needs to be put into the threshold, including the criteria for reaching the threshold and whether the threshold level is right in itself. As the noble Baroness, Lady Bowles, pointed out, a question on legal dangers has been posed.
A number of issues here absolutely need to be explored further. I have no doubt that this will be done prior to Report—indeed, we will look at what we might bring back on Report. Several of these amendments seek reassurance that sensible exemptions will be exercised narrowly and transparently without undermining the policy intent; others are concerned with ensuring that innovation, specialisation and strong value for money are not inadvertently crowded out by rigid thresholds.
Finally, there is an understandable concern that, where regulations will shape market structure and regulatory judgment over time, Parliament should retain meaningful oversight in how these powers are exercised.
I am grateful to noble Lords for their thoughtful contributions on this group. I thank the Minister for her attempts to answer the questions covering the CDCs on exemptions criteria and on innovation. With that, I beg leave to withdraw my amendment.
Member's explanatory statement
This amendment, linked to others in the name of Baroness Bowles of Berkhamsted, is consequential on an amendment leaving out the inserted section 28C from Clause 40. That amendment removes the Government’s broad mandation power.
Baroness Bowles of Berkhamsted (LD)
My Lords, I did not expect to lead this group, but due to the diligence of the Public Bill Office in tracking down consequential amendments, my Amendment 90 has come to the top.
My Amendment 110, which is my main amendment in this group and on which I will focus my remarks, seeks to delete new Section 28C of FSMA. At the heart of new Section 28C is the asset allocation definition, which is flawed not because of its aspiration but because it rests on a complete misunderstanding of what investment trusts or listed investment companies actually invest in, and it excludes them.
Last Monday, I explained the anti-competitive and reputational effects of encouraging the flow of investment exclusively via the new LTAF vehicle and excluding the long-standing listed investment company structure. Today I have touched on the role that they play in valuation. Before turning to the wider reasons why this clause is fundamentally flawed, I will dispel another misconception I hear in circulation: “Investment trusts do not do infrastructure”. Well, I do not know what you call the Thames Tideway Tunnel, Sizewell C, utility-scale onshore and offshore wind, schools, hospitals, hydroelectric schemes, solar and nuclear energy, space, communications and satellites—but I call them infrastructure. All are substantially invested in, at the building stage, by investment trusts. Perhaps the Minister would accompany me to see some of these, although maybe not in space.
I also hear the claim that they do not do the big infrastructure projects that the Government are focused on. That is not really true, but there is nothing in the asset list of private equity, private debt, venture capital and interests in land that says, “Only the mega size”, or that stops them being qualified assets when held by another route. Anyway, we all need all scales of infrastructure investment and ongoing funding for expansion.
On Monday this week, our much-vaunted new prospectus rules came into effect; they make it easier, cheaper and faster to raise both IPO and follow-on capital. This applies to listed investment companies, too. What was this for? It was precisely so that companies can grow faster, bigger pools of capital can be raised more efficiently and larger infrastructure projects and bigger funds can be built. What is the point of celebrating our new financial market regulation if the Government then block the very vehicles it was designed to support? Why are some people in charge of investment—yes, some of them are to blame, too—still of the mindset that investment trusts do not do primary investment, at the very moment when rule changes are being made to build on the boom in primary infrastructure investment that has come through this route in recent years?
I come on to mandation more generally. I am not against the underlying intent of encouraging more pension investment in private assets. However, there is already a far greater awareness of the need to do that. The policy argument is won, but we have only just got to setting up LTAFs and the listing rule changes. The Government have not given the financial industry the chance to show what it can do. It is hardly a vote of confidence in our largest industry—financial services. What message does that send to the world? It says, “Go somewhere else; we have to bully to get things done in London”. What does it say about our famous and canny asset management in Edinburgh? If the Government want to add encouragement, use “comply or explain”—or, better still, “always explain”—to add transparency and understanding to the system. My goodness, neither the Government nor parts of the pensions industry seem to know what goes on in the wider asset management industry. Do not just ask the same people who have driven the old pension investment strategies.
Then we come to trustees. I have amendments elsewhere in the Bill aimed at clarifying that they can and should look to wider systemic and economic effects, but they should not be overridden. At their core, members’ interests are paramount for trustees. New Section 28C does not have members’ interests paramount. It threatens deauthorisation and the disruption and cost that that would cause if, in the judgment of trustees and in full knowledge of the characteristics of their members, they consider that a little less infrastructure or private equity is appropriate. What if the phasing of big projects means that there is a dip when investments exit? What if you are still in the J-curve dip? If some things perform badly, or the rush to invest exaggerates prices, do trustees have to keep pumping money in at poor value? No, that is the moment for explanation and perhaps a modification of strategy, not compulsion or deauthorisation.
Let us be clear: a deauthorisation power of this kind is not neutral. It creates a structural pressure towards consolidation. If a scheme risks losing authorisation simply because its trustees judge that a different phasing or balance of assets is appropriate for its members, they get closed down or forced to merge. That is backdoor consolidation, not member-focused governance.
These are some of the reasons why I want to remove new Section 28C entirely. It does nothing but harm. It is economically inept, competitively unfair, legally unprincipled and blind to the regulatory opportunities that have only just come on stream. I beg to move.
Lord Sharkey (LD)
My Lords, it is a pleasure to follow—and I did—my noble friend discussing the reserved mandatory powers in the Bill. I will speak to my Amendments 111, 161 and 162. I thank the noble Lord, Lord Vaux, for adding his name to all three and the noble Lord, Lord Sikka, for adding his name to the first.
The purpose of these amendments is to remove the reserve power of mandation from the Bill. The case against these reserve mandatory powers has been set out by a large number of important institutions. Most criticism seems to focus on the issue of conflicts with fiduciary duty. Critics of mandation have argued, correctly in my view, that directing trustees to hold a fixed share of specified assets conflicts with the trustees’ duty to act solely in the interests of their members. Mandation of investment in specific asset classes for policy reasons rather than on a risk/return consideration risks subordinating members’ interests to political objectives.
This also exposes trustees to legal liability for breaching their duty, especially if the investments are seen as politically motivated or fail to deliver competitive returns. The lack of legal clarity around the scope of fiduciary duty, particularly regarding systemic risks or broader economic impacts may well exacerbate trustees’ concerns about litigation and regulatory risk.
I know that the Government are alive to the fiduciary duty issue and have promised to produce statutory guidance to help. At our meeting before Second Reading, I asked the Minister whether this guidance would have binding provisions. The answer was no. The guidance will have, apparently, the same force as the many other “have regards” in our financial services sector. I also asked the Minister whether we could see a draft of this guidance before the end of Committee, but I have not had a reply to date. I therefore ask the Minister again whether we will see draft guidance so that we may scrutinise it before the end of Committee, or at least on Report. It is easy to understand, in these circumstances, why some legal experts and industry groups have called for a statutory clarification of fiduciary duty and argue that only primary legislation can provide the cover that trustees need to invest confidently, as the Government wish, without breaching their duties.
There is also the question of definition. What is the appropriate test for “productive” when applied to mandated assets? What is the appropriate test for “UK investment”, or even “qualifying assets”? Can the Minister say what these tests are and when they are likely to be available to Parliament for examination? There are other significant concerns with mandation. For example, it may produce lower returns and higher costs if it drives crowded trades, pushing schemes into lower-quality or overpriced assets simply to hit targets. As the large DC providers have noted, if there are not enough good-quality opportunities in the mandated classes, schemes may be forced into illiquid or sub-optimal funds. This concern has been made clear as a condition of voluntary participation in the Mansion House Accord. Then there may be a risk in reducing diversification. Concentrating pension assets in restricted geography or restricted asset classes inevitably increases vulnerability to UK-specific economic shocks.
Lord Vaux of Harrowden (CB)
My Lords, before I start, I apologise to the Grand Committee for failing to be here to speak a previous amendment. It was unavoidable, unfortunately. I am very grateful to the noble Lord, Lord Palmer, for stepping into the breach. I have had an exciting afternoon moving from R&R to pension schemes. I apologise that I am afraid I am going to be in the same position next week, so it will not be me speaking to my Amendment 119. Anyway, there we go.
I speak in support of Amendments 111, 161 and 162, tabled by the noble Lord, Lord Sharkey, to which I have added my name. To be honest, I support all the amendments in this group that seek to remove the asset allocation mandation powers, which is probably the most controversial part of the Bill. The trustees or managers of pension schemes have an obligation to act in the best interests of scheme members. That is their fiduciary duty. It is not their job to carry out government policy and they should not be forced to act in a way that they may believe is not in the best interests of scheme members. That is the clear implication of mandation. If the assets that the Government wish to mandate are so suitable or attractive for the relevant scheme, the trustees would presumably already be investing in them. If mandation is required to force trustees to invest in such assets, it implies that they have decided that they are not suitable assets for the scheme. That drives a coach and horses through the whole fiduciary principle. As we will come to in a later group, personally I would feel very uncomfortable about taking up a trustee role in such circumstances.
It begs a range of questions. Who will be liable if the mandated assets perform poorly? The Bill is silent on this. Why should scheme members take a hit because of government policy? Are the trustees liable for any below-par performance? Why do the Government feel they know better than professional managers and trustees? I do not see any evidence at all that the Government are a better manager of investments. Who will decide on the asset allocation, and based on what criteria? There is nothing in Bill that sets out the purpose or criteria for the asset allocation: just some examples, including private equity, which the noble Lord, Lord Sharkey, mentioned, which will be looked at in a different group. All the Bill says specifically is that the allocation may not include securities listed on a recognised exchange. How will the impact be measured and reported? The Bill does require the Secretary of State to publish a report setting out the expected impacts on scheme members and UK economic growth, but there are no reporting requirements on the actual outcomes.
Surely it would be better to try to understand why pension schemes are not currently investing in these so-called productive assets. What are the barriers to them doing so? That is not a rhetorical question; I would very much like to hear why the Minister thinks this has not been happening. What is, or has been, stopping the pension schemes investing in those assets they believe are so desirable? Surely, the better answer must be to try to remove those barriers, to make the assets more investable, rather than mandating, perhaps by refining regulation or adjusting tax—Gordon Brown’s dividend tax raid has, I am sure, quite a lot to do with this—or taking whatever other actions may be required to remove or reduce the identified barriers. Mandation is, frankly, the lazy option. We should identify and deal with the root causes if we want a sustainable solution.
The Government say they do not intend to use the mandation powers and, in some ways, that is worse than using them. The powers are there as a stick in the background, to force trustees to invest as they want, but without giving the trustees any of the protections that might exist if they could at least show they were acting as required by law. In any case, as a matter of principle, Governments should never take powers that they have no intention of using. This mandation power drives a coach and horses through the fundamental fiduciary duties of trustees. The Government say they do not intend to use it; it should be removed.
Baroness Altmann (Non-Afl)
My Lords, I support all the amendments in this group. I echo the words of noble colleagues in the Committee about the dangers of the Government mandating any particular asset allocation, especially the concerns about mandating what is the highest risk and the highest cost end of the equity spectrum at a time when we are aware that pension schemes have probably been too risk-averse and are trying to row back from that.
What is interesting, in the context of the remarks made by the noble Lord, Lord Vaux, is that I was instrumental in setting up the Myners review in 1999, which reported in 2001, under the then Labour Administration. As Chancellor, Gordon Brown’s particular concern was about why pension funds do not invest much in private equity or venture capital. That was the remit of the review. The conclusions it reached were that we needed to remove the investment barriers, to change legislation, to encourage more asset diversification, to have more transparency and to address the short-term thinking driven by actuarial standards—at the time, it was the minimum funding requirement, which was far weaker than the regime established under the Pensions Regulator in 2004.
So this is not a new issue, but there was no consideration at that time of forcing pension schemes to invest in just this one asset class. The barriers still exist. In an environment where pension schemes have been encouraged, for many years, to think that the right way forward is to invest by reducing or controlling risk and to look for low cost, it is clear that the private equity situation would not fit with those categories. Therefore, I urge the Government to think again about mandating this one area of the investment market, when there are so many other areas that a diversified portfolio could benefit from, leaving the field open for the trustees to decide which area is best for their scheme.
I am particularly concerned that, as has been said in relation to previous groups, private equity and venture capital have had a really good run. We may be driving pension schemes to buy this particular asset class at a time when we know that private equity funds are trying to set up continuation vehicles—or continuation of continuation vehicles—because they cannot sell the underlying investments at reasonable or profitable prices and are desperately looking for pools of assets to support those investments, made some time ago, which would not necessarily be of benefit to members in the long run.
Baroness Noakes (Con)
My Lords, I support all the amendments in this group. When I came to draft my own amendments, I discovered that this area of mandation was a rather crowded marketplace, so I decided not to enter it. I will not speak at length on the subject, but I endorse everything that has been said so far and wish to commit my almost undying belief that mandation must not remain in the Bill.
Viscount Younger of Leckie (Con)
My Lords, my noble friend Lady Stedman-Scott and I have only one amendment in this group: Amendment 109, which would remove the Government’s broad mandation power. That has been very much the theme of this debate, of course. I want to be absolutely clear at the outset that we are also seriously and fundamentally opposed to investment mandation in the Bill, which I sure will come as no surprise to the Minister.
Baroness Sherlock (Lab)
My Lords, the broad, combined effect of these amendments would be to remove from the Bill the ability of the Government to require certain pension schemes to hold a prescribed percentage of their assets in qualifying assets. I confess that, after Second Reading, the reaction of some noble Lords has not been entirely a surprise to me. However, I have to say at the start that, although the provisions divide opinion, they deliver an important element of the pensions investment review that the Government concluded last year.
I will make two headline points. First, as I have said, we do not presently expect to have to use the powers, as we are confident that the industry will deliver voluntarily on its commitments made under the Mansion House Accord. Secondly, the Government would not be proposing these powers if there were not strong evidence that savers’ interests lie in greater investment diversification than we see today in the market. DC pension providers recognise that a small allocation to private markets can improve risk-adjusted returns as part of a diversified portfolio. Despite this, in many cases providers are holding back, not because it is necessarily in savers’ best interests but, among other reasons, because of a lack of scale or because of competitive pressure to keep fees low. That problem, alongside the potential economic benefits of this sort of investment, is why we have made investment diversification such a big focus of these reforms and why we have welcomed the Mansion House Accord. It is also why it is so important that the industry is pulling in the same direction and why it is necessary that the Government have taken reserve asset allocation powers as a backstop to be used only if necessary.
Noble Lords have raised various concerns about the powers, which we will no doubt explore in much more detail on Monday—I look forward to that. However, as an opening point, I emphasise that the Government have taken care to build in appropriate guardrails. First, the power is time limited. It will expire in 2035 if it has not been used, and any percentage headline asset allocation requirements that are in force beyond that date will be capped at their current levels.
Secondly, the Government are required to establish a savers’ interests test, in which pension providers will be granted an exemption from the targets, where they can show that meeting them would cause material financial detriment to savers. The Government will need to consult and publish a report on the impacts of any new requirements on savers and economic growth, both before exercising the power for the first time and within the five years following the power being exercised. The regulations implementing this framework will be subject to parliamentary scrutiny.
A number of points have been raised. I will keep my response fairly high level; I know that some of those points will come up again next week, so I will return to them then, given that we have limited time before the Grand Committee must end. I start with the question of whether this is necessary. The Government are strongly encouraged by the Mansion House Accord, which is an industry-led, voluntary commitment by 17 of the UK’s largest pension providers to invest 10% of their default funds in private markets, with at least half of that in the UK, by 2030. It means that savers will benefit from greater diversification and the potential for better long-term returns. In view of this progress, the Government do not currently expect to need to use these powers.
In response to the noble Viscount, Lord Younger, and the noble Lord, Lord Vaux, I note that there is a continued risk of a failure of collective action here. Individual providers are under competitive pressure to keep costs as low as possible, which can discourage them from investing in the full range of asset classes, even where it may be in savers’ interests to do so. The reserve powers signify to the industry that change is happening across the market, and in that way—together with our other reforms—they support the transition to which the industry has itself committed. That is the top line as to why we are taking the power and the circumstances in which we think we would use it. I will come back to the issue of private markets when we have a debate on private markets next week.
We will have a longer debate on trustees and fiduciary duty, particularly the issues around regulations, when we come back next week, if that is okay with the noble Lord, Lord Sharkey. However, the Government do not accept that this proposal cuts across fiduciary duty. There is widespread recognition of the benefits that a diverse investment portfolio can bring for savers. Indeed, that is exactly why the signatories to the Mansion House Accord are committing to investing in private markets. However, if the reserve powers did come to be used, the Bill provides for a savers’ interest test to ensure that schemes can deviate from any asset allocation requirements where they can demonstrate that savers would suffer material financial detriment. The Minister for Pensions has committed to working with the sector to ensure that guidance gives trustees the confidence they need to invest in the best interests of savers and the UK economy. A stakeholder-wide round table will begin this work early next month, and I will keep noble Lords informed on that.
The noble Lord, Lord Vaux, asked what happens if a scheme makes losses. Trustees continue to be responsible for investing in their savers’ interests. We will come back to this in more detail, but the headline is that this means savers would continue in all circumstances to be protected by the core fiduciary duties of trustees. Trustees would also continue to be subject to a duty to invest in savers’ best interests in line with the law. We would expect that duty certainly to apply to the selection of individual investments in a portfolio, the balance of different asset classes in a portfolio and to any decision to apply for an exemption under the savers’ interest test.
The noble Lord, Lord Vaux, asked about sorting out other barriers first. Last year, we completed a comprehensive review of pensions investment, which identified that greater scale, as well as a greater focus on value rather than cost, has the potential to unlock significant additional investment that benefits both savers and the economy. The measures in the Bill tackle that. However, that does not mean that the work stops on barriers and investment opportunities. For example, the FCA announced last month that it will consult on rolling out to the pension funds it regulates a target exemption from the 0.75% charge cap, to accommodate the sorts of performance-based fee structures often used in private market investment. The signatories to the accord have explicitly called for that.
The noble Lord, Lord Sharkey, asked about enablers and whether there are enough investment opportunities. The answer is yes. We will continue to engage closely with the industry on the steps it is taking and any obstacles it is encountering. At this point, we are encouraged by early signs of progress and are confident that the momentum will continue. On future investment opportunities, I draw the noble Lord’s attention to one example of the role that the Government are playing: the Sterling 20 Group of leading pension providers launched by the Chancellor at the October regional investment summit. That group, convened by the Office for Investment, includes all the Mansion House Accord signatories and has already met twice to discuss specific investment opportunities in venture capital and energy generation.
The noble Lord, Lord Sharkey, asked about the consumer duty. The FCA’s consumer protection objective will continue to apply to FCA-regulated schemes. The FCA will apply it in parallel to any asset allocation requirements: in other words, where it does not believe there is a conflict. Or at least, where we do not believe there is a conflict. Or someone does not believe there is a conflict. Savers’ interests tests will be available for FCA-regulated firms, just as for TPR firms.
Lord Sharkey (LD)
Can the Minister respond to the point I made about statutory guidance?
Baroness Sherlock (Lab)
I will answer that next week, if that is okay, when we discuss the issues of fiduciary duty.
Viscount Younger of Leckie (Con)
I have a couple of points to raise. The Minister mentioned that the reserved power was designed to be a signal, and I would argue that it is a pretty strong signal to put in the Bill. Will she strongly consider whether there are other ways to encourage investments in the UK other than using this, and what might they be? This is one of the things that we will want to press.
Secondly, she did not answer my question about the dangers of a future Government taking up these powers, even though she mentioned the sunset clause of 2035, which is, frankly, some time off.
Baroness Sherlock (Lab)
I am sorry I did not namecheck the noble Viscount in responding to the second point. I intended to respond by pointing to the safeguards and the guardrails that have been built in. That was the nature of the response to that.
In response to the first question, I thought I said that the Government accept that this is not the only issue and that we are addressing the other ways. We have been looking at the other barriers and investment opportunities. We also mentioned that the FCA has looked at examples. It is not the only thing; we are looking at the other things as well. We think there is already significant progress, but we think this reserve power is a way of ensuring that progress goes forward and not backwards on this issue.
Baroness Bowles of Berkhamsted (LD)
My Lords, I will be brief. There is a lot that could be said, but we will have other opportunities later on in this Bill.
This should have been a happy Bill, doing good for ordinary workers and building the economy, looking after the future in two interconnected ways. For the main part, we had cross-party policy consensus and continuity. We had public and industry support, which is just what you need for issues such as pensions and long-term investment, aided by significant and consensual regulatory changes—culminating this week—that should enhance diversity, choice and transparency in investment decisions.
However, at the heart, we got this devil’s clause. The Government have not given development a chance and such a reserve power is a massive intervention. It is a clause that, where there was unity, brings division; where there was trust, brings doubt; where there was confidence, brings concern; and where there was hope, brings despair. No wonder noble Lords oppose it. It ticks every bad box. I urge the Government to think again. They have not given policy and process any due regard and therefore I am sure that many of us will return to this on Report. But, for now, I will withdraw my amendment.
The Deputy Chairman of Committees (Viscount Stansgate) (Lab)
That concludes the business of the Committee today. However, I will say that we have had a distinguished young visitor with us for most of today’s Committee: a school student who is learning about pensions at school. I thank the Committee for presenting such a very good example of the serious way in which this House deals with public Bills. The Committee stands adjourned.
Number Plates Intended to Defeat Enforcement Cameras
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Snape
To ask His Majesty’s Government what steps they are taking to prevent the manufacture, sale and use of number plates intended to defeat enforcement cameras, including automatic number plate recognition systems; and whether they plan to strengthen regulation or enforcement in this area.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
The Government recognise the urgency and importance of tackling the use of illegal number plates designed to evade enforcement cameras. The Driver and Vehicle Licensing Agency is working hard with the police, other enforcement agencies and the industry to address the manufacture and misuse of such plates. This includes tightening application, inspection and audit processes for number plate suppliers. In the recently published Road Safety Strategy, the Government have set out proposals for reviewing standards, tougher enforcement, tougher penalties and the potential use of AI to help stamp out illegal plates.
Lord Snape (Lab)
My Lords, will the Minister join me in congratulating Sarah Coombes, the Member of Parliament for West Bromwich, on pursuing this matter in the way that she has? Does he agree that the fact that anyone can apply to be a number plate issuer on a payment of £40 to his department, and that 36,000 people or companies have already done so, is an open incentive for fraud so far as motoring is concerned? As the penalty for non-compliance with number plate regulations is £100, does he further agree that it is a better bet to take a chance with a false number plate than it is to properly insure your own vehicle?
Lord Hendy of Richmond Hill (Lab)
I second my noble friend’s congratulations to Sarah Coombes on raising this important subject. The DVLA is already on the case to strengthen the application process to become a registered number plate supplier and to make it more robust. Options being considered include, as my noble friend remarked, the fee level, the structure, eligibility criteria, and much greater enforcement.
Baroness Pidgeon (LD)
My Lords, what discussions are the Government having with major online retailers about preventing the sale of illegal number plates, and what is the Government’s assessment of the scale of this problem?
Lord Hendy of Richmond Hill (Lab)
The actions taken by the Government include considering online sales of number plates, which is clearly one source of illegal number plates. As to the scale and for an example: in 1,000 vehicle checks carried out by the Metropolitan Police with Transport for London in March 2023 using cameras which are able to detect ghost number plates, 41% of licensed taxis and private hire vehicles were found to have non-compliant plates.
Lord Hogan-Howe (CB)
My Lords, the noble Lord, Lord Snape, raised a really good point, together with others. The ANPR system is very good. It is fixed in various places around the country, it is also in many police vehicles, and it helps to spot people who commit crime, particularly those who have no insurance. Some people pass that off, but 70% of those who are uninsured are criminals, so it is a really interesting group to keep an eye on. People in that group are five times more likely to have collisions, and when they have them, it is nine times more likely that they will be serious. This is a really important piece of kit. There are two things the Minister might want to look at. One is that the scientific support that was available to the police has been subsumed within the defence realm, and I am afraid it has reduced in its significance and the expertise has been lost. Secondly, and probably as importantly, the people who deliver these registration plates to us all are registered, so somebody needs to check that they are doing what they say they are doing. I am afraid that that is not happening.
Lord Hendy of Richmond Hill (Lab)
Of course, the noble Lord has huge experience in policing and enforcement. I have to say that I was not aware of the point that he makes about scientific support, but the department is working hard on understanding the technical characteristics which prevent these plates being seen by ANPR. I answered the point about registered makers on a previous question.
Viscount Goschen (Con)
My Lords, given what the Minister has quite rightly said about enforcement, why do the Government and the police appear to tolerate the use on our streets of illegal, high-powered electric motorcycles, particularly by delivery companies, which bear no registration marks and whose riders carry no insurance?
Lord Hendy of Richmond Hill (Lab)
The noble Viscount is straying some way from illegal number plates, but that subject has been discussed in this House before. The enforcement is of course a matter for chief police officers, but the Government are very seriously considering the sale of such motorcycles.
Lord Spellar (Lab)
My Lords, I echo the comments from my noble friend Lord Snape regarding the Member of Parliament for the neighbouring seat to my old one, Sarah Coombes in West Bromwich, but I also highlight the point that this is linked to lots of other crime. It is linked to petrol theft, which is an enormous problem for retailers, to county lines drug dealing, and to robbery and car boot sales. There is a real problem with this. Therefore, should we look not just at increasing the penalties but at the confiscation of improperly plated vehicles?
Lord Hendy of Richmond Hill (Lab)
My noble friend is absolutely right, and the Government are considering precisely those two things, among others.
Lord Geddes (Con)
My Lords, is the legality of number plates checked during MoT inspection?
Lord Hendy of Richmond Hill (Lab)
That is a very good point. The legality of number plates is checked during MoT inspection, but my understanding is that many of those who use false number plates have a proper set for the MoT or other examination and an illegal set which they then change afterwards.
Lord McLoughlin (Con)
My Lords, bearing in mind that the Question relates to enforcement cameras, would the Minister like to inform the House as to the reliability of those cameras, bearing in mind the recent story about Highways England failing to monitor them correctly?
Lord Hendy of Richmond Hill (Lab)
I refer the noble Lord to Hansard for yesterday, when we discussed precisely that issue at Questions.
Lord Moylan (Con)
My Lords, as noble Lords have made clear and illustrated, we are living in an increasingly lawless environment on the highway: everything from bicycles at red lights to uninsured vehicles—a number of things have been mentioned. The Department for Transport seems to regard its role as quite separate from that of the enforcement authorities. When the department is devising new regulations or changing existing ones, what engagement does it have with the police but also with local highways authorities, who are there to enforce those regulations, as to how realistic it is and what resources they have to be able to deliver the enforcement?
Lord Hendy of Richmond Hill (Lab)
I refer the Lord to page 40 of the recently published Road Safety Strategy, where there is a lot of text headed by:
“Continuing to work closely with the police and other enforcement agencies to ensure the outcomes of the Roads Policing Review are fully considered”,
and underneath it is text that indicates very clearly that the department is working very closely with the police, other enforcement agencies and highway agencies to get the law enforced on our roads.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful that the noble Lord is showing such an interest in the pilots for illegally operated, privately-owned e-scooters. Can I urge him to show a degree of urgency? When will the pilots come to an end, and when will the Government bring forward legislation to implement regulations?
Lord Hendy of Richmond Hill (Lab)
I absolutely guarantee that this Government will show more urgency than the last one, who started an experiment a very long time ago but concluded nothing from it, and we have had to virtually start again.
Baroness Royall of Blaisdon (Lab)
My Lords, does my noble friend agree that, while I understand what the noble Lord opposite said about a “lawless” society, it is irresponsible to use such terms? In fact, we live in a much safer society than in many parts of the world and live in the great city of London, and I think we would all admonish some people in other parties who refer to London as an unsafe city.
Lord Hendy of Richmond Hill (Lab)
I certainly support my noble friend’s statement in that regard. We are dealing here with a particular issue, that this boil needs to be lanced. It is not indicative of our whole society crumbling.
Lord Leigh of Hurley (Con)
My Lords, in other parts of the world, bicycles for hire—Lime bikes—are required to have small number plates attached to them so that perpetrators of crimes and offences can be easily identified. Can we adopt such plans?
Lord Hendy of Richmond Hill (Lab)
This Government and previous Governments have looked at identifying cycles on the road and concluded that it is really quite a difficult issue and would be disproportionate to the results, but the noble Lord must know that the Government are taking action about bicycle hire schemes, because their proprietors bear responsibility for the safety of the cycles and some responsibility for the behaviour of the riders. That is being considered by the Government and will come before this House.
Artificial Intelligence: UK Preparedness
Lord Pitkeathley of Camden Town
To ask His Majesty’s Government what plans they have to ensure that the UK is adequately prepared for the risks and opportunities presented by rapidly advancing artificial intelligence.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, the Government’s AI Opportunities Action Plan sets out how we will harness AI opportunities by measures including expanding our domestic compute infrastructure, backing UK start-ups and investing in skills. We have established the AI Security Institute to deepen our understanding of frontier AI risks and are already taking actions on emerging issues, including those linked to AI chatbots. As recent developments have shown, we will back our regulators to act decisively when required.
Lord Pitkeathley of Camden Town (Lab)
My Lords, I thank my noble friend the Minister for that reply and acknowledge the long-standing work of many noble Lords on this issue. Given the pace of AI development and the risks highlighted by analyses such as AI 2027, can my noble friend outline how the Government are preparing the UK and engaging with international partners for what lies ahead and whether, in the absence of a specialist AI committee this year, there is scope to strengthen cross-departmental collaboration within this House?
Lord Leong (Lab)
My Lords, the AI Security Institute conducts research, builds tools to understand and mitigate frontier AI risks, and works with like-minded partners through the International Network for Advanced AI Measurement, Evaluation and Science to advance the science of AI evaluations. We will continue to update this House with our latest initiatives to ensure that the UK understands and, where necessary, mitigates the impacts of advanced AI systems.
Lord Howell of Guildford (Con)
My Lords, does the Minister agree that AI systems are proliferating rapidly and may compete rather than co-operate, and that this degree of self-correction is perhaps one of the areas that we should encourage to stand in the way of the undoubted spreading power of the AI system generally?
Lord Leong (Lab)
My Lords, artificial intelligence is the primary driver of productivity across the economy, from life sciences to the creative industries. We are accelerating adoption by providing businesses of all sizes with access to essential skills, data and compute. I understand the noble Lord’s point about the power of AI. We are ensuring that the AI Security Institute does all the necessary tests to ensure safety before any products are rolled out.
Lord Stirrup (CB)
My Lords, the United States and China, among others, are working at pace to leverage AI in military capability. Meanwhile, in this country, high-technology companies are in despair at the lack of progress towards the kind of innovative capabilities set out in the Government’s own strategic defence review. Is this another manifestation of the defence procurement valley of death, where good ideas go to die?
Lord Leong (Lab)
The noble and gallant Lord is absolutely right. That is why, last year, the Government set up the Sovereign AI Unit to strengthen the UK’s domestic AI capability and ensure that British firms can compete and lead globally. We supported it with £500 million. It backs high-potential UK start-ups and scale-ups, helping them to become national AI champions in strategically important sectors. Its sole purpose is to secure the UK’s ability to access, shape and, where necessary, control critical AI capabilities, protecting national interests, enhancing resilience and driving long-term economic growth.
Baroness Ritchie of Downpatrick (Lab)
My Lords, given the Government’s promise to consult and legislate on artificial general intelligence and superintelligence, which experts warn could lead to the extinction of humans, what indication can my noble friend the Minister give us of a timetable for such legislation in the forthcoming parliamentary Session?
Lord Leong (Lab)
The Government are adopting a proportionate, context-based approach to regulation. By empowering existing regulators to apply cross-cutting principles such as safety, fairness and transparency, we ensure that oversight is tailored to specific sectoral risks rather than a one-size-fits-all model. This framework improves innovation while maintaining credible and forcible safeguards. We remain in constant dialogue with industry and civil society to ensure a regulatory regime evolves in lockstep with technological advancement.
Earl Russell (LD)
My Lords, the director-general of MI5 recently publicly warned that it would be reckless to ignore AI’s ability to implement harm, particularly from autonomous systems that are free of human oversight. Anthropic recently detected the first documented large-scale cyber espionage campaign using agentic AI. Given that we are entering an era when AI systems change tasks together and make decisions with minimal human input, what specific mechanisms are the Government establishing to maintain meaningful human control over increasingly autonomous AI systems, before we effectively lose the ability to do so?
Lord Leong (Lab)
The noble Earl makes an interesting point. Progress has never been risk-free. Every major leap forward has come with doubts, critics and problems to solve. If it had not, we would never have heard,
“one small step for man, one giant leap for mankind”,
and Henry Ford would not have been making cars. With that same spirit, we are investing £500 million in our sovereign AI capabilities. It is why we are creating AI growth labs and growth zones. These are places where the private sector can invest, experiment, scale and turn ideas into real products. The facts are on our side. We are the third-largest destination for AI investment in the world, behind the US and China. We have world-class talent, ambitious companies and a drive to lead.
Lord Markham (Con)
My Lords, maximising the opportunities from AI while managing the risks rests on three pillars: compute power, skills and regulation. However, in each case, the government pace of delivery is being overtaken by the speed of technology change. Attempts to increase compute and energy centres are being held up by the planning system. The Government’s framework for AI and the national curriculum are still in the planning stage, and regulators are constantly playing catch-up with AI. It is clear that traditional methods of governance cannot keep pace with the speed of AI. What plans do the Government have to change this?
Lord Leong (Lab)
The noble Lord is right to draw attention to this matter, on which he has been a long-time thoughtful voice. All I can say is that we are investing in this sector. We have put aside £500 million to develop our sovereign AI capabilities. We are going to establish AI growth zones and AI growth labs, where companies can invest, scale and test products before rollout. We are doing a lot more and, at the same time, are leading internationally in ensuring that the safeguards are there so that the products that are rolled out are safe for everybody.
Lord McNicol of West Kilbride (Lab)
My Lords, I want to agree with one of my noble friend the Minister’s previous answers about opportunity. Yes, there are risks, but the UK is best placed to seize the opportunities that will come forward and the developments that will happen with AI. AI is not going to be put back in a box. How do we as a country seize those opportunities and support our SMEs, which are developing many new products that will deliver on productivity, to get the best of growth for the UK? How do we continue to support those companies that are already leading the way on that?
Lord Leong (Lab)
My noble friend is spot-on. Small and medium-sized enterprises are vital to AI-driven growth. The Government are supporting SMEs through targeted innovation funding and access to test-based and digital adoption programmes, alongside partnerships with research institutions. By lowering barriers to experimentation, we enable smaller firms to enhance productivity and compete more effectively. This ensures that the economic benefits of AI are shared right across the United Kingdom, fostering a diverse and resilient digital economy throughout the United Kingdom.
Lord Walney (CB)
My Lords, with that in mind, will the Government think very carefully about regulating social media, as is a big concern for the Government and the House at the moment? Will they acknowledge the danger of setting up a system which could lock out innovation from precisely those smaller companies in favour of the giants in the States which can find their way through the regulatory system and get the exemptions that are being talked about in this House?
Lord Leong (Lab)
The noble Lord highlights a couple of issues. I mentioned earlier that we are investing to develop our own sovereign AI capability. We are setting up investment zones across the country, working with UK-based companies to scale up. As the noble Lord will know, AI has different stacks—the infrastructure layer, the data layer and the model layer. We must work with each level and steer the course between extremes. We must ensure that AI becomes an engine of national renewal, rather than the author of our own demise.
Creative Industries: Freelance Champion
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Bonham-Carter of Yarnbury
To ask His Majesty’s Government what progress they have made in the appointment of the freelance champion for the creative industries as announced in the Creative Industries Sector Plan on 23 June 2025.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
Freelancers play a vital role in the creative industries, which is why we committed to appoint a freelance champion in the creative industries sector plan. Since then, we have been working closely with industry to develop the scope of the role. In two weeks’ time, my colleague, Ian Murray, who is the Minister in the other place responsible for the creative industries, will hold a round table with freelancers’ representatives in the sector to finalise discussions. We will make an appointment as swiftly as possible after that.
Baroness Bonham-Carter of Yarnbury (LD)
I thank the Minister for her response. As she says, freelancers are an essential part of our creative industries and these Benches have been asking for a freelance commissioner for a long time. We thank the Government for the champion. The Covid pandemic exposed the truth: a financial and benefits system that does not take into consideration the fragmented employment practices of the creative sector. Can the Minister assure us that not only the remit but the powers of the champion will be significant enough to work across government to enable change and end the discrimination that freelancers experience; in particular, in access to mortgages, loans, credit and pensions?
Baroness Twycross (Lab)
The champion-type role appointed by the Government is designed exactly for the purpose of making sure that these conversations are had and action is taken across government. We are very keen for the person who is appointed to this role to be involved in developing their own work plan, in discussion with the department, the Minister and the sector. The appointee will produce a work plan in their first months in the role, which will set out their priorities and planned actions. I might suggest that they have a conversation with the noble Baroness in that first period, so that she can be assured that they are looking at the right things that will support what is a vital part of the creative industries, but also one that has particular issues, as she outlined.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from the Labour Benches next, if we can please make our minds up.
Baroness Wilcox of Newport (Lab)
Please could my noble friend the Minister update us on the progress of implementing the creative industries sector plan? How is DCMS addressing problems of social mobility as part of the “arts for everyone, everywhere” vision?
Baroness Twycross (Lab)
Delivery of our ambitious vision is on track. Key achievements include the £150 million creative places growth fund allocated to six mayoral strategic authorities; we have secured agreement to boost music creator streaming income; we have announced the price cap to ban for-profit resale of live event tickets; and we have secured investment for three Bollywood films in the UK, which are expected to create over 3,000 jobs. We also have an increase in innovation funding of £369 million from UKRI and over £4 billion for scaling creative businesses through the British Business Bank. I am delighted to say that the Culture Secretary announced today that £1.5 billion will be invested to save more than 1,000 arts venues—museums, libraries and heritage buildings—across England from closure. These are just a few of the actions that we have taken so far.
Lord Kennedy of Southwark (Lab Co-op)
We will hear from the Conservative Benches next, then the Cross Benches.
Baroness Buscombe (Con)
My Lords, is one of the problems not that, in spite of the creative industries enjoying vast subsidies recently and throughout Covid—the Government were very generous—there are scant employment rights? The noble Baroness asked about freelancers, but the industry is rife with people who are nepotistic and people who say, “Come and work for us, but we cannot pay you”. Will the Government please track where those huge subsidies are going? I think I know; I think they are going to what are called non-executive and executive producers. Where is the money going in terms of employment rights?
Baroness Twycross (Lab)
There is strong evidence, including in the report from the trade union Bectu that was published last year, on some of the real issues that the noble Baroness identified within the creative industries. They particularly affect freelancers, who struggle with a huge range of issues—everything from late payment through to not getting paid or not having pensions. The Government are determined to strengthen employment rights, not least to help people thrive in good-quality self-employment. These are some of these issues that the freelance champion will need to look at to make sure that we get the type of creative industries that are fair to all those involved.
The Earl of Clancarty (CB)
My Lords, there is concern that the Creative Industries Council, of which the freelance champion will be a member, has very little workforce representation within its newly expanded membership. It includes not one working practitioner in any area. Will the Minister promise to look at this?
Baroness Twycross (Lab)
I am happy to take that back to the department. I do not have a list of the make-up of the council, but I will take the point back and write to the noble Earl.
Lord Wigley (PC)
My Lords, I draw attention to my registered interests. Does the Minister accept that creative practitioners suffered disproportionately during the Covid lockdown and many from the impact of Brexit? Their predicaments are many and varied; in these circumstances, will she give an assurance that, when the appointment is made and is effective, it will relate to all the many and varied people in this sector to make sure that there is a proper channel to hear their needs?
Baroness Twycross (Lab)
The noble Lord describes exactly what a freelance champion should do: to be a representative and voice for all those across the sector. I will make sure that I forward the working spec to all noble Lords who have taken part in this debate.
Lord Kennedy of Southwark (Lab Co-op)
We will hear from the Conservative Benches next, then the Labour Benches.
Baroness Stedman-Scott (Con)
My Lords, I genuinely congratulate the Government on the appointment of a person to look at these things. Notwithstanding what my noble friend said, the creative industries have been an absolute powerhouse in creating opportunities for young people. When the Kickstart scheme went live—I was involved—they embraced it, especially the people at Pinewood Studios. They gave them opportunities, such as James Bond, and some of us might remember the Ealing comedies. This was very good, but please can the Minister tell us whether the Government have done any impact assessment on the Employment Rights Act and the national insurance hikes? I think we will find that they have stopped opportunities for young people, so I hope it is something that the commissioner will look at.
Baroness Twycross (Lab)
One of the key priorities for this Government is to make creative careers accessible for everyone, including by making sure that we get career opportunities for more people from diverse backgrounds. I will have to come back to the noble Baroness on those points. We want to make sure that we get join-up, on which this freelance champion will engage.
Baroness McIntosh of Hudnall (Lab)
My Lords, my noble friend the Minister will agree with me, I am sure, that, within the overall creative industries, the arts sector—performing and visual arts, and museums—is a significant employer of freelance practitioners. I would just say that within that sector there is a great deal of good practice in the employment of those freelancers. What progress has been made on the excellent report that our noble friend Lady Hodge recently produced on the Arts Council, which funds many of those organisations?
Baroness Twycross (Lab)
The Government and particularly DCMS strongly welcomed our noble friend Lady Hodge’s review of Arts Council England. It is an excellent read, which I commend to any noble Lords who have not read it. We are planning to publish our full response later this year, but we are already looking in detail at how our noble friend’s recommendations could be worked through.
The Earl of Effingham (Con)
My Lords, Minister Murray in the other place is driving success for creative industries in Liverpool but relies on government funding. As we have just heard, the Arts Council has advised, quite rightly, that a mixed-economy model, which combines public funding and private investment, produces the optimum outcome. Is DCMS working with the Treasury to make it easy for companies to invest and give them some kind of tax break incentive, the net result being positive for the sector and economic growth?
Baroness Twycross (Lab)
There are a number of tax incentives within the system currently. We are very clear that there is significant investment in creative industries in this country. I outlined some of those in relation to the rollout of the sector plan. We are very confident that we are working across government on the issues that the noble Earl raised.
Diego Garcia: Comments by the President of the United States
Lord Robathan
To ask His Majesty’s Government what assessment they have made of the recent comments by the President of the United States of America about Diego Garcia, and whether those comments have changed their policy view.
The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
My Lords, the Diego Garcia military base is essential to the security of the UK and our allies and to keeping British people safe. As we have repeatedly made clear, the agreement we have is vital for protecting our national security, guaranteeing the long-term future of a vital base for the UK and US which had been under threat. That is why the US and President Trump welcomed this deal in the spring and all our Five Eyes allies support it: they understand the security capabilities that the base provides.
Lord Robathan (Con)
My Lords, I find that a rather strange response. David Lammy said that we would listen to the United States when we made a decision, and I think I am right in saying that Donald Trump has now come out and said that this is an act of gross stupidity. This is being pursued because of Matrix lawyers who are pursuing international law above the needs of this country. Will the Minister take this back to the department and argue against going along with the decision to give Diego Garcia to Mauritius?
Baroness Chapman of Darlington (Lab)
No. The noble Lord is completely wrong in his assertion about the motivation for doing this deal. This is about keeping this country and its citizens safe. That will always be the first priority of this Government. It is unedifying to see His Majesty’s Opposition take any opportunity to jump on a bandwagon led by Nigel Farage, who claimed this week that the President had a point in threatening Greenland’s sovereignty. We fundamentally disagree with that position.
Lord Watts (Lab)
My Lords, is it the case that President Trump supported this measure and then changed his mind? Can I suggest not to take too much notice of a man who does not know the difference between Iceland and Greenland?
Baroness Chapman of Darlington (Lab)
In all seriousness, we are speaking intensively, as noble Lords would expect, with our friends and allies in the United States. It is our understanding—and the United States’ understanding, as far as we are aware—that this is still a deal that secures our security and that of the United States, and that this is a joint project. We will continue to have those conversations, as noble Lords would want us to do, and we will resist the temptation to get into megaphone diplomacy over this. There were those here who were urging us on Monday to get into pre-emptive tariffs, inflammatory comments and all that. We did not do that, and I think that the agreements that are starting to emerge show that that approach has been right.
Lord Callanan (Con)
My Lords, at the last count, there have been 12 U-turns from this Government recently. Let me suggest to the noble Baroness that 13 could be her lucky number on this occasion. The former Foreign Secretary, David Lammy, as my noble friend said, really is a gift that keeps on giving. Last year, while negotiating this agreement, he said:
“If President Trump doesn’t like the deal, the deal will not go forward. … they’ve got to be happy with the deal or there is no deal”.
Is that still the policy of the Government?
Baroness Chapman of Darlington (Lab)
As I have explained on I do not know how many occasions, this is a joint initiative. It is about securing a base for the United Kingdom and the United States, which we believe to be in the interests of us here in the UK, our allies in the US and global stability. That is why we have gone about this and, presumably, that is why the previous Government set about negotiating a deal with Mauritius, too.
Lord Purvis of Tweed (LD)
If the reporting is correct, the leader of His Majesty’s loyal Opposition asked the House Speaker Johnson to ask President Trump to change his position on the treaty—I heard a “Good for her!” to my right. Does the Minister agree that it is the British Parliament that should hold the British Government to account, not a foreign state? Furthermore, does the Minister agree that, in this House, we must focus on Chagossian rights, which have been denied them for a generation, and value for money for the British taxpayer—and not pander to President Trump and ask him to intervene in British politics?
Baroness Chapman of Darlington (Lab)
I know the noble Lord does not always want me to be nice to him on the Floor of the House, but I must say that the Liberal Democrats, much as they have had their issues with this agreement, have always been focused on the rights of the Chagossian communities and have put that case clearly and consistently. I respect the way that they have gone about this. What we have not seen is any attempt to undermine the position regarding the sovereignty of Greenland or to leverage other issues that fundamentally undermine NATO and the security of the Arctic region. Sadly, that is what we are seeing from others. I agree with the noble Lord about the sovereignty of this Parliament and commend him for the consistency with which he has approached this issue.
Lord Craig of Radley (CB)
My Lords, we have been clear that the Americans are likely to spend a considerable amount of money in developing resources and so on in Greenland. If they were to do that, what assessment do the Government make of the effect on the amount of money that might be available for Diego Garcia?
Baroness Chapman of Darlington (Lab)
We are talking through our allies in NATO with the United States, because we agree with them about how vital Arctic security is, and that does involve Greenland. But the right way to do this is collaboratively, through NATO, and that is the position that we are getting to. The same applies, in many ways, around the way that we will be approaching the base on Diego Garcia, because this is very much a shared endeavour.
Lord Lilley (Con)
My Lords, the Government claim that, although neither the International Court of Justice nor the tribunal of the UN Convention on the Law of the Sea can reach a judgment binding on us on the sovereignty of Chagos, other countries may respond to opinions of those courts by withholding supplies, goods and facilities, which the Government claim would render the base inoperable. Can the Minister now tell us what she refused to say during the passage of the Bill: which countries could withhold which supplies, goods and facilities, which would render the base inoperable? Has she told President Trump that those same countries could still do that even once we have transferred sovereignty to Mauritius?
Baroness Chapman of Darlington (Lab)
Any country could help withhold any service relating to the operability of the base at any time because the legal jeopardy in which it stood was sustained, and it would be their right to do that. The reason we are trying to get the base on to a more secure legal footing is to avoid that proposition. We are talking to the US about this, and it is one of the reasons that it was supportive of the deal that we have done. Those conversations continue. I can only assume that this is the same legal jeopardy that confronted the previous Government and led them into multiple rounds of negotiation on the same issue.
Lord Bellingham (Con)
My Lords, I worked out that this Minister and other Ministers have told Parliament on over 50 occasions that the treaty can go ahead only with American support. It is not just the President of the United States who condemned the deal: Marco Rubio did the same, as did Scott Bessent, who said that, if the deal goes ahead, our FTA could be put at risk, thus jeopardising thousands of jobs in this country. Surely, the Minister should be statesmanlike and now insist that we put everything on hold pending grown-up talks with the American Administration.
Baroness Chapman of Darlington (Lab)
I do not know what I have done that is not statesmanlike, but our intention is to have those conversations with the United States and come to an agreed position, and that has consistently been our view. I encourage the noble Lord to consider the words of the Prime Minister yesterday, when he made our position clear, in talking about Greenland, that the reason why President Trump made his comments about Diego Garcia was to try to leverage them to encourage us to take a different position on Greenland. That has not worked, and our position is consistent.
Lord Razzall (LD)
My Lords, on the “Today” programme this morning, the Foreign Secretary was asked by Amol Rajan whether it was true that this was going to cost £34 billion, spread over a number of years. She failed to answer. She said that was not true but then failed to give us the right figure. Is it £34 billion or is it another figure?
Baroness Chapman of Darlington (Lab)
It is £3.4 billion. The reason why there has been a dispute over this is that some people do not understand inflation. These numbers have been calculated in the normal way, as they are for all these kinds of projects.
Lord Harris of Haringey (Lab)
My Lords, the noble Lord, Lord Callanan, has implied that the previous Foreign Secretary’s remarks about not having American consent would somehow now apply. Surely it is the case that the Government took the views of the Americans and then reached an agreement, and that agreement is the one that stands. So could my noble friend tell the House, first, whether we are still committed to the principle of security, to the importance of the base and still committed to the clearly held view that this is the best option for the British people and for world security as a whole?
Baroness Chapman of Darlington (Lab)
That is correct. The relationship that we have with the United States on security, defence and intelligence sharing is the deepest such relationship that has ever existed on this planet, and it is precious to us. We believe it to be precious to the United States, and we will continue to talk with them and to try to get to a common understanding that that can be understood by everyone.
Crime and Policing Bill
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Hogan-Howe
“Scrutiny of investigation timeliness(1) The Police (Complaints and Misconduct) Regulations 2020 (S.I.2020/2) are amended as follows.(2) After Regulation 13 (timeliness of investigations), insert—“13A Scrutiny of investigation timeliness(1) A legally qualified person must be appointed to scrutinise any investigations of misconduct or gross misconduct which have not been completed within 12 months.(2) The legally qualified person must determine whether there is good and sufficient reason for the time already taken, and how much time is anticipated to be needed for completion of the investigation.(3) In determining whether there is good and sufficient reason, the legally qualified person may have regard to any relevant matter, and must have particular regard to—(a) whether the investigation has been efficient and effective;(b) whether there has been unnecessary or unreasonable delay, having regard to the complexity and seriousness of the case;(c) the impact upon the officer and others;(d) any anticipated further delay;(e) the public interest and effect on confidence in the police disciplinary system;(f) representations made on behalf of any person entitled to receive a copy of the information provided.(4) If the legally qualified person determines that there is good and sufficient reason to continue the investigation, then the legally qualified person must set a date for the conclusion of all proceedings. (5) Nothing in this provision shall have any effect in relation to any criminal investigation.”(3) The Police (Conduct) Regulations 2020 (S.I.2020/4) are amended as follows.(4) After Regulation 19 (timeliness of investigation), insert—“19A Scrutiny of investigation timeliness(1) A legally qualified person must be appointed to scrutinise any investigations of misconduct or gross misconduct which have not been completed within 12 months.(2) The legally qualified person must determine whether there is good and sufficient reason for the time already taken, and how much time is anticipated to be needed for completion of the investigation.(3) In determining whether there is good and sufficient reason, the legally qualified person may have regard to any relevant matter, and must have particular regard to—(a) whether the investigation has been efficient and effective;(b) whether there has been unnecessary or unreasonable delay, having regard to the complexity and seriousness of the case;(c) the impact upon the officer and others;(d) any anticipated further delay;(e) the public interest and effect on confidence in the police disciplinary system;(f) representations made on behalf of any person entitled to receive a copy of the information provided.(4) If the legally qualified person determines that there is good and sufficient reason to continue the investigation, then the legally qualified person must set a date for the conclusion of all proceedings.(5) Nothing in this provision shall have any effect in relation to any criminal investigation.””Member’s explanatory statement
This amendment proposes a 12-month limit, unless extraordinary circumstances reviewed by a legally qualified person dictate otherwise, which would encourage forces and external bodies to complete misconduct and gross misconduct processes quicker, allowing officers to resume duties and limiting the negative impact on their health and wellbeing.
Lord Hogan-Howe (CB)
My Lords, the noble Lord, Lord Bailey, has made a good suggestion with this amendment. He makes the broad point that the police misconduct process takes far too long, and I agree. To be fair, it is not the only misconduct process that takes a long time, but this one is particularly challenged.
I will particularly mention two things. First, time deadlines would be helpful. There are two ways to approach that. One is that there might be an absolute deadline of 12 months, as the noble Lord, Lord Bailey, suggests, and then some independent, legally qualified person looks at the case. That could work. The alternative is to set some deadlines so that, for example, 90% of cases are resolved in one year, which at least would give the system a kick. At the moment, I am afraid the system is not getting any better—rather, it is getting worse—so either something statutory or some kind of guidelines would be a good idea.
On Tuesday I raised the issue of firearms officers, a group particularly affected by this, and that is what I want to speak to here. I have argued that there should be a higher bar before they are prosecuted for murder, but the Government do not accept that at the moment. They have offered anonymity, and we are to debate that shortly.
Part of the problem, particularly for firearms officers, is the incredible length of time in some cases. There have been two cases over the last 20 years that took 10 years: the case of PC Long, who was prosecuted after a series of legal machinations only to be found not guilty 10 years later, and that of W80, where after a public inquiry—basically an inquest led by a High Court judge because intercept evidence was involved in the case—the High Court judge decided that there was no unlawful killing, the IOPC or its predecessor decided that there should be some gross misconduct, the Metropolitan Police disagreed, the Supreme Court ordered that there would be a misconduct hearing and the legally qualified chair of the independent tribunal said there was no case to answer. After consideration by the Supreme Court, an officer had been under investigation for 10 years. That cannot be right.
Some of the problems are to do with the sequential nature of the decision-making in these cases. Officers are often under jeopardy, first from the IOPC and then from the CPS. Then obviously it could go to court and there may be a finding of not guilty, but then—for firearms officers in cases where someone has died—the case can go back to a coroner’s inquest, which can find an unlawful killing verdict, at which point it goes back through the cycle again. That is one of the reasons why some of these problems are arising.
First, deadlines would be a good idea as either an advisory or a mandatory limit. Secondly, I do not understand why some of the people involved in the decision-making that I have described have to do it sequentially, not in parallel. For example, why can the CPS and the IOPC not decide together whether something is a crime or misconduct?
At the moment, not only are there many links in the chain that sometimes come to contradictory conclusions but, more importantly, it is taking too long. I argue that in all this there are two groups of people who suffer: one is firearms officers, the group whose case I am arguing, but the other is the families waiting to hear what is happening. If people have lost someone, they deserve to hear whether or not this is a crime or misconduct, but at the moment that is not happening.
This amendment from the noble Lord, Lord Bailey, is a sensible suggestion and I support it. If the Government do not, perhaps they would like to make some indication of how they intend to improve the misconduct system, particularly as it affects firearms officers in the circumstances I have described.
Baroness Doocey (LD)
My Lords, this has been a short debate. I agree with many of the points made by the noble Lord, Lord Hogan-Howe. I find it almost extraordinary that misconduct investigations linger on for so long; it really is a disgrace for everybody involved. Police professional standards departments have for too long been seen as something of a Cinderella function within forces, chronically underprioritised, underfunded and understaffed, and now they are buckling under the surge in the volume of complaints. This is combined with a narrowing of the remit of the IOPC, which increasingly takes on only the most serious and high-profile cases, resulting in a growing backlog and indefinite drift.
Amendment 422A confronts this head on. Such independent legal oversight could act as a checkpoint, strengthening individual case oversights and extracting timely lessons from failures. Criminal investigations would stay exempt, protecting the pursuit of serious crime.
There are risks in setting time targets for investigations—there is no question about that—not least the incentive for officers to delay co-operation if the clock is ticking. We have concerns that a rigid cap could risk corner-cutting on complex investigations. At the very least, stronger guidance on the expected length of inquiries is now required, as well as real scrutiny when these expectations are missed.
There also needs to be a much sharper focus on leadership and case management. Complainants should not face long waits, especially knowing time will diminish the strength of their evidence; neither should innocent officers endure years in limbo, with their careers stalled and well-being eroded. Taxpayers should not bear the rising cost of suspensions while losing front-line capacity at the same time.
Amendment 422A would restore some balance by prioritising fairness to officers, closure for victims and credibility for policing. We are happy to support it, and I look forward to the Minister’s reply.
Lord Cameron of Lochiel (Con)
My Lords, I thank my noble friend Lord Bailey of Paddington for tabling his Amendment 422A and the noble Lord, Lord Hogan-Howe, for ably stepping into the breach to allow it to be debated. It is a very important matter and I am glad we have had a chance to debate it.
I am very sympathetic to the amendment’s goals. It aims to set a 12-month time limit for misconduct and gross misconduct investigations within police forces. As others have said, timely legal restitution is the only way that justice is effectively served. That applies both to those in the police who are under investigation and, obviously, to victims who are let down by delays that are needlessly, but often, the result of administrative workload. Applying a strict deadline for remedies, excepted under only extraordinary circumstances, is an easy way by which institutions can be encouraged to proceed with investigations in a timely fashion.
That said, I am a little wary of fully endorsing a blanket time limit on police forces for investigations. Although in some cases, perhaps even most, misconduct investigations can and should be sped up, it would be heedless to assume that all forces are simply being inefficient in the time that investigations take. There is a vast disparity between forces’ capacity to deal with their primary function of investigating crime, let alone with administrative internal matters, such as misconduct matters. Certain forces’ ability to spare the resources to source, for instance, legally qualified adjudicators should not, therefore, be assumed. Officer numbers are down, crime is up, and we should be careful about placing additional requirements on police forces that expedited conduct investigations might entail.
Of course, we support the aim of increasing efficiency and ensuring justice is delivered. I thank my noble friend for his amendment and look forward to hearing the Minister’s response.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
I am grateful to the Committee, and in particular to the noble Lord, Lord Hogan-Howe, for moving the amendment. To be fair to the noble Lord, Lord Bailey of Paddington, he stayed here very late—until the end—on the previous day on this. I am sorry that he is not able to be in his place today. He was here to move the amendment when we pulled stumps on Tuesday night at gone 11 pm.
Having said that, the noble Lord’s amendment seeks to introduce a new system of independent legal adjudicators with powers to close down investigations. I think I can agree with the noble Lords, Lord Hogan-Howe and Lord Cameron of Lochiel, and the noble Baroness, Lady Doocey, that delays in investigations are in nobody’s interests—of police officers who subsequently are proved innocent, of victims, or of speedy justice for those who have strayed and committed potential offences. Lengthy delays risk impacting the confidence of complainants and the welfare of the police officers involved.
Lord Hogan-Howe (CB)
It is certainly a first for me.
I thank the Minister for his reply and other people for their comments. I thought I might make only a couple of points in response. I indicated that although the amendment from the noble Lord, Lord Bailey, suggests a mandatory limit, there may be difficulties with that. I wonder whether the Government, might consider three things in their review, which the Minister mentioned. First, they could set an expectation so that, for example, cases should be completed within 12 months unless, for example, the director-general of the IOPC or some arbiter concludes otherwise. Secondly, I raised the sequential nature of the decision-making. That compound effect gives a longer time than I regard as necessary.
I am trying to work out now whether I should let the noble Lord, Lord Bailey, speak—
Lord in Waiting/Government Whip (Lord Katz) (Lab)
The noble Lord was not here for the start of the group, so I am afraid that he cannot contribute.
Lord Hogan-Howe (CB)
I will conclude. I wonder whether, in the review, the Government could consider this sequential decision-making, which I do not think helps speed. Thirdly, if they are really adventurous they could look at whether police officers should be employees, because then you would get lawyers out of the system—I sit surrounded by them, but they never make it quicker or cheaper. Everyone else who is an employee can go to the employment tribunal, but officers cannot; it is on these grounds that lawyers get involved. I am afraid that is one of the major factors in why this takes so long and is expensive. I have taken my life in my hands, so I will sit down and withdraw the amendment.
Lord Black of Brentwood (Con)
My Lords, I oppose Clauses 152 to 155 standing part of the Bill. I declare my interests as deputy chairman of the Telegraph Media Group and chairman of the News Media Association. This stand part notice is in the name of the noble Lord, Lord Pannick, who unfortunately cannot be here today as he is on business abroad. I added my name to it along with the noble Baroness, Lady Cash, to whom I am very grateful. Like the noble Lord, Lord Hogan-Howe, I am aware that I am surrounded by lawyers wherever I look, but I must admit to not being one of them.
These clauses introduce a statutory presumption of anonymity for firearms officers charged with a qualifying offence involving the discharge of a lethal weapon. Clause 152 creates a presumption that the criminal courts grant anonymity to any firearms officers charged with a “qualifying offence”, unless to do so would be
“contrary to the interests of justice”.
Clause 153 allows the court to preserve or reimpose anonymity after conviction if there is an appeal. Clause 154 defines the reporting direction as barring the publication of any matter that might lead to identification, including name, address, place of work, photographs and video. Clause 155 sets out the kinds of measures that may be required to be taken under an anonymity order, including screening or voice modulation during a court appearance.
Under the clauses, anonymity would apply from the point of charge until conviction and sentence or, where relevant, an appeal is abandoned or dismissed. If an officer is acquitted or charges are dropped, anonymity, including reporting restrictions, can persist indefinitely. Taken together, these measures are a significant attack on open justice, press and media freedom, and the public’s right to receive information, something that should be curtailed in only the most exceptional circumstances. They would undermine the already fragile trust in the police, limit opportunities for public scrutiny of those entrusted with firearms—which is a most serious manifestation of state power—and have a profound chilling impact on public interest reporting.
I will outline the reasons why I believe these clauses are wrong. First, their provision is unnecessary. Judges already have the power to grant anonymity where there is clear evidence of a real and immediate risk to an officer or their family, with proper and proportionate safeguards in place for fairness and review. Under the current law, a defendant applying to the court for anonymity must rightly demonstrate, with clear and cogent evidence, that anonymity is strictly necessary to protect their rights. Such orders are tailored, time-limited and subject to review. They therefore do not interfere with the rights of the media or the expectations of the public, and they strike the right balance between officer safety, which we must obviously be very concerned about, and open justice. That is a workable and trusted balance between safety and open justice. These clauses reverse that position for a special category of alleged offender and are therefore an unprecedented shift in English law.
Secondly, there is no evidence for making such sweeping changes to the law. The Home Office has never provided evidence that police officers as a group are more likely to be subject to harm by being identified as a defendant in a criminal case than any other defendant in a high-profile or controversial case. There is therefore no need to upend the existing law to give firearms officers greater protection from legitimate scrutiny than anyone else. That would create a justifiable perception in the public’s mind that there is one rule for firearms officers and another for everyone else, and they would be right.
Thirdly, these provisions clearly undermine the long-standing principles of open justice that are a fundamental tenet of our legal system and essential to our free society. Justice must not only be done; it must also always be seen to be done by the public, and therefore by the press. Such a sweeping privacy regime, which would apply automatically, regardless of any actual risk posed to an officer, and which gives protection to state agents, would clearly undermine confidence in the system. If anything, there is the clearest possible public interest in serious criminal cases involving police officers being subject to the highest form of rigorous public scrutiny and transparency, not the most lax. Anything that undermines open justice risks increasing the possibility of miscarriages of justice.
Fourthly, one of the most practical advantages of open justice and transparency is the critical role of a robust media in identifying systemic issues and patterns of offending. These clauses would make that impossible. Clause 155, for instance, allows for a wide range of contextual information to be kept from the public, including, vitally, an officer’s workplace. How can the press and the public help identify patterns or bring additional information to light in the absence of such basic information? That would hamper investigations and make public appeals for information far less effective. Indeed, Metropolitan Police Commissioner Mark Rowley has recently supported calls to share more details, not fewer, about suspects with the public earlier, in a bid to stop the spread of misinformation.
Fifthly, and on that very point, these clauses create a heightened risk of jigsaw identification of a suspect, where separate, anonymised details are combined with publicly available information to identify an individual. This is inevitable, particularly in small communities with their own online networks. The danger of false identification, with very serious repercussions for an individual, is all too obvious. That would also produce a chilling effect on legitimate, verified journalism, because editors would inevitably act with extreme caution in reporting, needlessly censoring it to avoid harsh penalties for breaching a court order.
Finally, there are issues about the compatibility of these clauses with the ECHR. Others are far more expert on this than I am, and I will let them deal with it during this debate, but it is clear to me as a lay person that the interference with freedom of expression contained in these clauses is wholly disproportionate given that no pressing social need has been demonstrated.
In summary, no evidence has been provided as the basis for such a sweeping change in the law set out in these clauses, which would produce a two-tier justice system. They would interfere with press and media freedom in a wholly disproportionate way and create a profound chilling effect on public interest reporting. They undermine the principles of open justice that are the bedrock of our judicial system and vital to our open democratic society. They risk further damaging public confidence in the police, already at an all-time low after the appalling murder of Sarah Everard, and in our judicial system. Above all, they are unnecessary because suitable safeguards that balance officer safety with public accountability and scrutiny already exist and have proved themselves workable and effective. For all these reasons, these clauses should not stand part of the Bill. I hope the Minister will indicate that the Government are going to think again.
Baroness Cash (Con)
My Lords, I support the stand part notices tabled by the noble Lord, Lord Pannick, and supported by the noble Lord, Lord Black of Brentwood. Clauses 152 to 155 should be removed from the Bill in their entirety.
Before I begin, I want to make absolutely clear to the Committee that there is no question of whether authorised firearms officers encounter danger, because of course they do. I pay tribute to them and their families for the risks they assume in the course of their daily lives to protect us all. Nor is this about whether the court should protect individuals where there is a real and immediate risk to life or safety, because that already exists. I spent 15 years in chambers as a libel and media barrister with the noble and learned Lord, Lord Garnier, defending freedom of expression with great passion against the imposition of reporting restrictions. It is that defence that I am here to speak about today, because these clauses would see a constitutional cornerstone of our democracy overturned.
Open justice is not a concession to the media; it is about the public. It is about understanding what is going on in our criminal justice system. It protects the very sacred principle in this country of policing by consent, in which we rely on the public’s confidence and belief in transparency. It maintains confidence in the legitimacy of criminal proceedings. When, tragically—let us be realistic, it is what we are talking here—the state, represented by a fire officer, has killed or maimed someone by the use of force, open justice provides accountability to the public, and the public should have that accountability. That is why anonymity has always been exceptional. It is justified only on evidence and where strictly necessary. Even in cases of national security and terrorism, that remains the case.
Lord Carter of Haslemere (CB)
My Lords, I respectfully disagree with the proposition that these clauses should be removed from the Bill. My views will come as no surprise to the 10 noble Lords who were present in the Chamber on Tuesday night at 11.15 pm to debate my amendment on why police officers who use excessive force on the spur of the moment, in the honest but mistaken belief that their use of force was reasonable, should be sentenced differently. There will be an opportunity to debate that further at on Report.
The underlying principles here as to whether anonymity should be given to police firearms officers in criminal proceedings where they are charged with a qualifying offence are exactly the same. As the House of Lords Judicial Committee said 30 years ago in the case of Lee Clegg, law enforcement officers deserve to be treated differently, since they go on patrol to assist in the maintenance of law and order with no intention of killing or wounding anyone. They face evil people who get out of bed with the full intention of trying to kill them and us. That life and death situation does not normally confront the rest of us. These officers have to make split-second decisions in order to protect us and deserve, at the very least, to be given anonymity if they are charged with a criminal offence, so that they and their families are protected from adverse publicity during those proceedings.
The last thing we want is such brave officers being deterred from volunteering for firearms training when the National Police Chiefs’ Council says that police forces across England and Wales are grappling with a significant shortage of firearms officers, exacerbated by the lack of legal protections afforded to them, particularly regarding criminal and misconduct proceedings.
Clauses 152 to 155 are a welcome recognition by the Government that police firearms officers are in a unique position. As I have said, I would take this further to address how such officers are sentenced, but that must wait for Report. In the meantime, the modest protection of anonymity during criminal proceedings, with an exception built in where anonymity would not be in the interest of justice, is a proportionate measure which is long overdue.
Lord Faulks (Non-Afl)
My Lords, I share with the noble Lord, Lord Carter, concern and admiration for our firearms officers and officers generally, who have a very difficult job. I declare an interest having acted for police forces in cases involving the use of firearms. However, I do not share his conclusions about these provisions.
I should also declare an interest as the chairman of the Independent Press Standards Organisation, which regulates the press or those bodies that choose to be regulated by it. I hope that has given me some indication of some of the challenges that journalists face, particularly in reporting court proceedings. Very often, they struggle to cover court cases because of the reduced number of journalists and the general facilities available to newspapers. Were this provision to become law, they would be faced with a presumption that changes the balance and represents, on the face of it, a challenge to our principles of open justice.
Given that there is already a discretion available to the courts on anonymity, I ask the Minister this: what is wrong with the existing law, which provides that there is such a balance to be exercised by the judge? If there is nothing wrong with the law, there is no need to change it. This is a significant change, and the Government must have some very clear thoughts as to why they are making it. What is the situation that now persists which requires a fundamental change in questions of reporting and free speech?
Supposing it is possible to persuade a judge to rebut the presumption which will now exist in these provisions, what would be a good reason for lifting the anonymity which prima facie is going to be imposed by them? It is important, before we make such a significant change in the law, that the rationale is clearly understood.
While not in any way undermining or questioning the importance of protecting officers in appropriate circumstances, I say that the balance is a very subtle one, and that balance should not be disturbed by these provisions. I do not think we even need to consider the European Court of Human Rights’ position. This is an ancient tradition of open justice, and it is one which is, I am afraid to say, threatened by these provisions.
Lord Hogan-Howe (CB)
My Lords, I oppose the stand part notices and support the Government in their clauses. I have heard the proposers of the stand part notices make much of what is a relatively weak argument, suggesting that this is a constitutional outrage, when all that is happening is a change in the assumption about anonymity. Anonymity is already available; this is just about who has to prove whether it should be granted. A lot of hyperbole has been used about this. I accept that the media will make this argument; I do not deny that. I agree that the police should be held accountable; that is not the issue. It is about a very small group of people. I will try to address the point about evidence. A point was made about what evidence had been advanced; I will try to address at least two things.
First, of course, this was built on the Chris Kaba case. Frankly, I think the judge made the wrong decision about anonymity. I believe that because Mr Kaba was arrested having been connected to two shootings and linked to an organised crime gang who had access to firearms. Naming the officer put him at risk of attacks by connected people. Bear in mind that, three years later, within three hours a jury found him not guilty. It was never a very strong case, but why did the judge order the anonymity order to be lifted in those circumstances?
Lord Garnier (Con)
My Lords, I am grateful to the noble Lord, Lord Carter, for reminding us of his late-night work the other night, and I look forward to discussing that subject when we come back to it on Report. I am also grateful to the noble Lord, Lord Hogan-Howe, for bringing a practical police view to this very difficult debate. I come at this from a position essentially in favour of these clauses not standing part, for the reasons so far advanced by my noble friends Lady Cash and Lord Black, and the noble Lord, Lord Faulks.
This is a difficult question. Unquestionably, it is a difficult question. If it were not, we would not be here. We have, as parliamentarians, as legislators, to work out where the balance should lie between the desire for anonymity for police officers in these circumstances and the desire for openness, open justice and the ability of the public—not just the press but the public as a whole—to see what is being done in their name in the court system.
I hope I shall not go on too long merely repeating what others have already said, but it is worth reminding ourselves that the courts work on the basis of open justice. The public are entitled to watch, to read and to comment about trials, and to know who has been charged and prosecuted and with what result. There are exceptions to protect national security, vulnerable witnesses, victims of sexual offences and children. We have a regime for, first of all, providing for reporting restrictions; secondly, for restricting public access to the courtroom and for holding all or part of some trials in private; and, thirdly, for withholding the name of witnesses—for example, under a witness order under the Coroners and Justice Act 2009. But a witness order under that provision is a special measure of the last practical resort, and requires the court to be vigorous in its consideration of the statutory hurdles that have to be overcome and to ensure that the defendant is not irreparably disadvantaged or denied a fair trial. Fourthly, we have within that regime provision for anonymity in investigations—for example, when considering fatal gang crimes involving the use of guns and knives by those aged 11 to 30.
Police officers are human—I underline the word “human”. They are a human example of state power—and I underline the word “state”. We respect and we admire them for their often dangerous and selfless work. We know from our own work here in Parliament how vital police officers are for our own protection. I was not far away from the scene of PC Palmer’s murder in March 2017. He was unarmed and later awarded a posthumous George Medal, but there were armed officers there who had to kill PC Palmer’s murderer. I heard those shots as I walked along the colonnade in New Palace Yard from my office in Portcullis House to take part in a Division in the other place. The noble Lord, Lord Hanson, may well have gone through the same experience. I was grateful then, as I am to this day, to the police men and women on duty that day who ushered me and other Members of the other place to safety, regardless of their own.
But it is, in the final analysis, a matter of judgment on which side of this argument we need to come down—on the side of anonymity or on that of open justice. I bear in mind the need for armed police officers and their families to be protected from reprisals, as I think the noble Lord, Lord Hogan-Howe, mentioned. I bear in mind the operational need not to discourage volunteers suitably qualified to become armed response officers or armed officers. We have been reminded this morning of the case of Martyn Blake, which created, I think, the genesis of these clauses.
However, I also bear in mind the constitutional and public policy demands. I would not describe this as a constitutional outrage; it is a perfectly rational debate about which side of a difficult line one wishes to land. It is not a constitutional outrage to do one thing or the other. It is just advancing an argument. But I bear in mind the constitutional and public policy demands for open justice, for public trust and for transparency in a justice system that applies to us all without creating different categories of defendant as a question of blanket rule. Blanket rules of the sort envisaged by Clauses 152 to 155 are, I suggest, best avoided where a stronger, focused case-by-case approval approach can be achieved—and it is, in my experience, already achieved under our current system.
In the last few days, we have seen the ICE officer shoot that woman driving her car in Minnesota. Of course I have only seen the news footage, but I suggest that, here, that ICE officer would be prosecuted for murder, subject to any defence he could advance. That case aside, we face the problem of some lawyers and campaigners using every police shooting as the basis of an anti-police pile-on, or for some other political campaign that they happen to support. In short, if we are, as I hope we will be, sceptical about Clauses 152 to 155 standing part of the Bill, we must prevent the appalling hunting parties against the police. Let us then pause and reflect before agreeing to these clauses.
I dare say we will not make a decision today, other than that the issue advanced by my noble friend Lord Black will be withdrawn. But we all have a little time between now and Report—we come here with the best of intentions and good will—to think a little more carefully about the practical solution to this, and whether we need to use the blunderbuss of legislation or whether we can still rely on judicial discretion, vigorously applied and well argued for in each separate case, to see where justice can be found.
Lord Hogan-Howe (CB)
Before the noble and learned Lord sits down, may I ask him this? I respect his opinion, for obvious reasons, but one issue he did not address—it was one of my arguments for why these clauses should stand part—is the difficulty of proving the threat at the beginning of an investigation. It is not straightforward. We have to say that someone out there is going to kill this officer or try to attack them—that there is a threat to them in some way. Of course we all make our best attempts to assess whether that is accurate or not. He describes the present system as a blanket arrangement, but actually there is only an assumption, which can be removed, and in the Kaba case was removed. That leaves the officer at risk of that decision being automatic—that is, to be named if they cannot prove otherwise. Why should they bear the risk of being named, when the reverse could allow, first, an assumption they would not be named, and if later that changed, they could be named. What we can never do is name someone, then introduce anonymity—so it is a one-way valve that surely the law might help to respect.
Lord Garnier (Con)
The matter that the noble Lord is bringing up is the very sort of discussion that ought to be had in front of the judge. Presumably, no prosecutor, and no one acting on behalf of a police officer who wished to maintain his anonymity, would advance an argument unless there were some basis for it. If someone went in front of the judge and said, “I’m generally fearful that, just because he’s a police officer who bears arms, he is likely to be the victim of reprisal”, I think they would probably need to do a bit better than that. I suspect nobody would go in front of the judge and make that argument unless they had something better than that.
I suspect that, in the usual run of things, there will be information. It may not be information that the court would wish the world at large to know about. It could be intelligence evidence. It could be other information that both the applicant—the applicant police officer or the applicant prosecutor—and the judge would agree should be kept private. That surely can be done now. We have all sorts of national security cases where evidence is not disclosed to the world at large. All I ask is: let us just think a little bit further. It may well be that, at the end of the day, we shall come to the same conclusion as the noble Lord, Lord Hogan-Howe, and as the Government do in their clauses. But I have yet to be persuaded that we have got to the right answer today.
Earl Attlee (Con)
My Lords, I strongly support keeping these clauses in the Bill. I admire the moral courage of Ministers in this Government for putting these clauses in the Bill, despite the well-made arguments against doing so.
My calculation is that, in central London, a rampaging terrorist’s life expectancy is about nine minutes. Not surprisingly, these events are infrequent, because they are not likely to be successful. This is primarily due to the fortitude, courage and training of the armed police officers of the Metropolitan Police.
I have been on duty in an operational military headquarters, in the field, overseas, when we had to deal with life-threatening emergencies. There is nearly always an information fog, and it is exceptionally difficult for commanders to understand what is actually happening on the ground. The same will apply to police control rooms during a terrorist attack. I understand the difficulties; I have been there. Nevertheless, the Metropolitan Police and other forces usually manage to suppress an attack within a few minutes, for which we should all be really grateful. Unfortunately, it is inevitable that, if there are enough such incidents, perceived or real problems will arise. We only need to think of the difficulties that arose with the Bondi Beach tragedy. We must accept that things might not go as desired.
I am not a lawyer, but the Committee will be aware that I have engaged in armed military operations. I knew that I was accountable for my actions, as well as any troops under my command. That was an obvious risk, but one that, as a prudent risk-taker, I was prepared to accept because I was confident that I would be fairly and promptly dealt with if something went wrong. I am not convinced that the same applies to armed police operations. We have already discussed in the last group delays in the disciplinary machinery. Unfortunately, I was late attending, but I agreed with everything that the noble Lord, Lord Hogan-Howe, said—I apologise for not being there at the start.
In questionable police firearms cases, the CPS has the very difficult task of balancing two conflicting factors. On one hand, there is the very low probability of conviction in these cases—perhaps the Minister will tell us how many armed officers on duty have been convicted of such offences. If that were the only consideration, it would be difficult to authorise a prosecution because the prospect of a conviction would be very low. But, on the other hand, we need to secure public confidence that the police and the state are not above the law and that the evidence against a relevant police officer will be tested by a jury in court. If we do not agree these clauses, we run the risk of prudent risk-takers declining to be trained or to keep their firearms ticket.
The noble Lord, Lord Hogan-Howe, touched on the use of the military instead of the police. The military is not correctly trained to undertake civil policing duties. It can in certain circumstances be used, but the military will apply overwhelming military force to resolve the issue.
This lack of willingness to volunteer for firearms duty could, in turn, result in standards being surreptitiously lowered in order to meet demand for authorised firearms officers, leading to precisely the opposite effect to the one we desire. I am sure the Minister will deny that there is any possibility of standards being surreptitiously lowered, but I assure noble Lords that, in the military—not so much in firearms training but in other areas—we are surreptitiously lowering the standards, so this is a very real risk. The noble Lord, Lord Carter, touched on existing recruiting difficulties.
When, regrettably, an armed police officer has to do his or her duty, we cannot allow the lives of his or her family and friends to be turned upside down by media attention that serves no useful purpose.
Lord Phillips of Worth Matravers (CB)
My Lords, this is not a small matter that we are debating. I have listened to both sides of the argument. The argument in favour of these stand part notices was made in detail, initially by the noble Lord, Lord Black, and was then supported by the noble Baroness, Lady Cash. I listened to those submissions, and they strongly reflected my own. I asked myself: is there anything I can usefully add? I do not think there is, but we are dealing with a matter of high principle. The noble Baroness, Lady Cash, reminded us of the statement that hard cases make bad law. What we have heard in opposition to these stand part notices exemplifies that proposition. We are dealing with a very important matter, and we should not allow a few hard cases to make bad law.
Lord Sentamu (CB)
My Lords, I find myself persuaded by the noble and learned Lord, Lord Garnier. This is a moment when, as legislators, we have to pause and ask where the balance really lies. For me, this is not an either/or. When legislators try to legislate, they must not pass the burden of coming to terms with difficult conundrums to someone else to resolve. I would be quite unhappy if we were to leave it to the judge to decide. If they go for anonymity, the courts could then be seen by some people as being on the side not of the citizen but of a few. We have to resolve this and come to a common mind on where we think this should be done. It seems to me that we should not burden the courts with coming to a decision. Legislators should make up their minds on what way they want to go.
I am persuaded by the arguments of the noble Lord, Lord Hogan-Howe. I have always been in favour of open courts, trial by jury and no citizen being above the law. We should all have equality before the law, but that argument can sometimes, unfortunately, ignore circumstances that need to be differentiated—not because you do not want fairness and equality but because, if you blindly go down a particular road, you may cause a greater injustice. That is why I am not in favour of people who are so moralist and who keep to their morals: if you are not careful, you could end up with an injustice.
To those who oppose these clauses and to the Government, who bravely want to put this particular way of doing it in the Bill, I suggest that a further conversation needs to be had. How do we resolve this? Clearly, some of us—and I am one of them—would like to defend police officers who have to decide in a split-second to do something, without a lot of thought. They see a danger and they want to neutralise it—not like in Minnesota, where I do not think there was any danger; I would not want to defend those kinds of actions. The noble Lord, Lord Hogan-Howe, has given us the figures, and actually the statistics are very low. In the unfortunate cases where this has happened, most of our armed police officers are disciplined and well trained. However, in life, you always end up with risks you did not anticipate.
I would want to go the way that the noble Earl, Lord Attlee, argued for—that if somebody took a decision because they saw greater danger and they took somebody out, I can tell you, the media and other people will focus on their family, not on the decision that was taken. We who are legislators cannot ignore the difficulty that that raises for families.
I do not think that volunteers will disappear immediately if these clauses are not part of the Bill. I still think there are people who, for the sake of security and the well-being of society, will continue to volunteer—but you are going to make it more difficult. I plead with all of us in that regard. The noble and learned Lord, Lord Garnier, has encapsulated my thoughts on this but I am still in a quandary: will I vote for this or for that? I just hope that the mover of this stand part notice will withdraw it, knowing that Report is still to come, so that it is a clear conversation, and then we can all make up our mind where this is going to lie.
Earl Attlee (Con)
My Lords, can I just make an observation that the question is whether we agree these clauses in the Bill or not? If we do not agree the clauses in the Bill, they will fall out of the Bill and then we cannot consider them at a later stage. If we want to consider them at a later stage, we must agree them today.
Viscount Goschen (Con)
My Lords, it is with great trepidation that I speak, very briefly. Having heard such powerful legal voices discussing these issues—and I hugely respect the legal expertise that we have in the House—on the basis of what we have heard and how the Government have approached this issue, I am minded to support the Government in the initiatives that they are taking here. I feel that we really ought to support these highly disciplined firearms officers. We are living in the era of lawfare and of the courts being used not to the advantage of those who seek to protect us all.
We are very fortunate in this country, unlike in other countries, as the noble and learned Lord, Lord Garnier, mentioned, to have a situation where the discharge of police firearms is a very rare eventuality. Those who hold that responsibility are highly trained, highly disciplined and highly motivated individuals. If there is a situation where they end up in a court of law because of the discharge of their firearm in the course of their duty, we should support them until there is a decision of that court. Of course, everything changes at that point. But this is about them being endangered, and having the threat of being endangered. I listened very carefully to what the noble Lord, Lord Hogan-Howe, said about how difficult it is to describe that threat in the beginning—and you cannot go backwards on this. In this very specific and rare eventuality, I believe that we should give those who put their lives in danger to protect us the benefit of the doubt.
Baroness Butler-Sloss (CB)
My Lords, I may be wrong, but I had never understood that until there was a vote anything in a Bill disappeared. Consequently, unless I am wrong, unless we vote on these three clauses, they will remain until Report. Consequently, I do not entirely understand what the noble Earl, Lord Attlee, was telling us.
To move on, I shall speak extremely briefly—and, I have to say, unlike some noble Lords, I genuinely mean briefly. First, as the noble and learned Lord, Lord Phillips, has pointed out, this is a profoundly important issue. Secondly, hard cases do not make good law. I am very unhappy at the idea that anyone should automatically be given anonymity in a situation in which they have behaved in a way where there is at least a possibility that they may be guilty of some crime. I would prefer to see the situation as it remains today—but I also listened to, and think that it is a very sensible suggestion from, the noble and learned Lord, Lord Garnier, that the pause should give us time to discuss further how on earth this should be dealt with.
Baroness Doocey (LD)
My Lords, from these Benches we support a carefully framed presumption of anonymity for firearms officers facing criminal charges, but we believe that it should be tightly drawn and subject to clear judicial safeguards.
Giving automatic anonymity to firearms officers who face criminal charges would mark a major and highly sensitive change. It deserves careful and measured consideration and scrutiny to strike the right balance. The public must have confidence that wrongdoing by officers will be dealt with fairly and transparently. But equally—and I think this is very important—officers must feel assured that if they act in good faith and follow their training, the system will protect and not punish them.
We welcome the wider provisions of the Bill to strengthen police accountability, particularly those speeding up investigations by the IOPC, but we understand why firearms officers seek reassurance. These are exceptionally difficult and high-risk roles, where hesitation can have tragic consequences. With fewer than 6,000 operational firearms officers across England and Wales, those concerns cannot be lightly dismissed.
At the same time, we recognise the force of the arguments made by those noble Lords who support the stand part notices proposed by the noble Lord, Lord Pannick, and accept that a broad, inflexible anonymity system sits uneasily with the principle of open justice. The public have a legitimate right to know when those entrusted with legal powers are alleged to have acted unlawfully. Our preference is for a statutory presumption in favour of anonymity in firearms cases, rebuttable when the court is satisfied that identification is necessary in the interests of justice or public confidence.
We should trust our judges to apply a clear statutory test, protecting officers where necessary, while safeguarding the principles of open justice on which confidence in policing depends. A narrowly tailored presumption, coupled with robust judicial oversight, can provide the reassurance that firearms officers need without creating the perception of a two-tier justice system that treats police officers differently from everyone else. Of course, rebuilding trust in policing must be our shared priority, and ultimately that rests not on secrecy but on transparency, fairness and confidence that accountability will apply equally to all.
Thankfully, fatal police shootings are rare, and it is even rarer still for such cases to reach the courts. In these exceptional, highly charged cases, a carefully limited presumption of anonymity is a reasonable and proportionate step to keep skilled officers in these vital roles, while upholding open justice.
Lord Sandhurst (Con)
My Lords, as I think we all agree, this is a profoundly important issue, and one in which there is realistically no perfectly right answer. But let us start with the position that it remains one of the greatest triumphs of British policing that to this day we do not routinely have armed police officers. The image envisaged by Sir Robert Peel when he established the Metropolitan Police—that of policing by consent and the avoidance of a militarised police force, when he had the example of what he saw on continental Europe at the time—has endured. I have listened anxiously to the speeches today, which have been thoughtful and balanced. But we start, on this side, in His Majesty’s Opposition, with the view that on balance the approach of Clauses 152 to 155 is the right one. I shall say more about that in a moment.
While the vast majority of police officers in this country are unarmed, we know that, in order to protect the public, a few thousand brave officers volunteer to put themselves in harm’s way and become authorised firearms officers. The latest figures show that, as of 31 March 2025, there were 6,367 firearms officers in England and Wales. Of those, 5,753 were operationally deployable. That represented a decrease of 108—or 2%—from the previous year. There is a downward trend in the number of armed police officers, which should be a matter of concern to us all. It has to be arrested.
It is not hard to see why fewer and fewer officers are willing to take on this role. The recent prosecution of, and events surrounding, Martyn Blake demonstrate what can go wrong. Throughout, Martyn Blake was public property. He was left in limbo for two years while awaiting an IOPC investigation, a CPS decision and then a murder trial. As we have heard, he was eventually acquitted in October 2024. Despite that acquittal, the IOPC then announced that it was launching a further investigation for gross misconduct. This remains unresolved. Through all of that, he has been publicly known to everyone.
Matt Cane, the general secretary of the Metropolitan Police Federation, has criticised that in the strongest terms—with which we, on this side, broadly agree. The concern and criticisms which he raised have real-world consequences. Police officers feel that their reasonable use of force may be treated disproportionately or unreasonably after the event in a manner which does not recognise the pressures they face when they make split-second decisions.
During the trial of Martyn Blake, dozens of officers handed in their weapons. There was a serious concern that, in the event of a guilty verdict, police forces across the country would be faced with real, severe shortages of armed officers. The publicity given to all that must have been an aggravating factor for Mr Blake. We have to protect these police officers.
We have heard powerful speeches, from the proposer, my noble friend Lord Black, my noble friend Lady Cash and others, not least the noble and learned Lords, Lord Phillips of Worth Matravers and Lord Garnier, either in full support of these stand part notices or asking us to look very carefully at them with a view to doing something along those lines.
There are important issues to consider: open justice; whether or not there should be special treatment for police officers; and concerns about unintended consequences. I remind the Committee of the provisions in Clause 152(3), which says that the court must, first,
“cause the following information to be withheld from the public in proceedings before the court, in each case unless satisfied that it would be contrary to the interests of justice to do so”;
then come the identification details. The court must also
“give a reporting direction … in respect of D”—
the defendant—
“(if one does not already have effect), unless satisfied that it would be contrary to the interests of justice to do so”.
This is putting in place a presumption which can be rebutted.
I feel that this is rather broad. In practice, it would be helpful for the courts and for those who have to deal with applications to act on that presumption and to lift that bar, if this was put rather more clearly, with some examples. I do not have any to put before the Committee today, but I came to that view when listening to the debate. I invite the Government to think very carefully about whether something should be done about the terms in the clause. This might go quite a way to addressing the concerns of those who are legitimately concerned about the wrong sort of special treatment being given to police officers, and about open justice more generally.
Lord Faulks (Non-Afl)
His Majesty’s Opposition are broadly in favour of these provisions, but I ask the noble Lord: if this becomes law, how is a judge going to change his or her approach to the issue of anonymity from the position that prevailed before this change? How is it going to alter things?
Lord Sandhurst (Con)
He is going to start—assuming that the judge is a he—from the position that, unless there is an application to the contrary, the bar against publication is in force. I am asking the Government to consider, before we return on Report, whether guidance can be developed and something put into the Bill which addresses the concerns about it being too difficult and imprecise to address in practice. We can listen to and address this on Report. At the moment, we support the provisions in the Bill, but I advance certain—I would not say reservations—anxieties about how this will work in practice and whether, in fact, it would be an absolute bar. Clearly, one hopes that this is not what is intended and that these words are not there just as some sort of fig leaf.
This is not an easy position. We heard some powerful and very persuasive speeches on the other side from the noble Lord, Lord Carter of Haslemere, calling for support for our officers, and from the noble Lord, Lord Hogan-Howe, who, perhaps, more than any of us, knows what is truly involved for these police officers.
We support the clauses as they are. I remind the Committee that, as we stand here debating the issue of anonymity for firearms officers, outside this building, we are being protected by members of this very special group. In and around this building, they work every day—day in, day out—to keep us safe. We are able to continue with our important work of legislating only because of the safety which armed police officers provide. We owe those who protect us a real degree of protection. On the assumption that they are acting in good faith, they must be spared from the anxiety that if something goes wrong—and it will have gone wrong if they feel they have to shoot—they must not then be left exposed, as Martyn Blake was. We have seen how that went wrong. On this basis, for the time being at least, we support these clauses.
The Parliamentary Under-Secretary of State, Ministry of Justice (Baroness Levitt) (Lab)
I thank the noble Lord, Lord Pannick, for giving notice of his opposition that Clauses 152 to 155 stand part of the Bill, and the noble Lord, Lord Black of Brentwood, for introducing the clause stand part debate and allowing this important and interesting discussion. I acknowledge from the outset that the Government agree these are not easy issues.
Clauses 152 to 155 largely stand or fall together, creating a bespoke system for a very small and discrete category of defendants in criminal trials; namely, authorised firearms officers charged with offences arising from the discharge of their weapon during the course of their official duties.
Notwithstanding the comments of the noble Lord, Lord Hogan-Howe, about lawyers—of which, of course, I am one—made during the course of the debate on the last group, I agree with much of what he has said. The starting point for the Government is that armed police officers perform a unique and high-risk role. They are trained to use lethal force, on behalf of the state, to protect the public, often in fast-moving and dangerous situations. This puts them personally at risk of death or serious injury every day in the course of their duties. They deserve our thanks and admiration for putting themselves in harm’s way to protect the public—and that, a point made by many of your Lordships, includes you and me. Because many of those with whom they engage are involved in serious crime, it exposes them and their families to the risk of retribution. That is the Government’s starting point.
There is another equally important principle in play: we do not have secret trials in this country. The principles of open justice and the ability for the press to report on cases continues to be one of our proudest and most carefully and jealously guarded traditions. I pay tribute to the noble Baroness, Lady Cash, for whom I have the utmost respect, for putting in impassioned terms the importance of freedom of the press and freedom of speech.
So why then have the Government decided to introduce a presumption of anonymity in trials for authorised firearms officers? This limited presumption is being introduced due to the unique nature of firearms officers’ roles and the risks that arise from them being identified during court proceedings. What marks them out from other categories of defendant is that these are not risks merely to their reputation but to their lives. These are not theoretical risks. Firearms officers who have been charged with an offence can face serious death threats and other forms of intimidation. The threats do not stop with them but extend to their families as well. The real and present nature of this danger cannot be ignored.
I want to give two illustrations of incidents which demonstrate how extreme the consequences can be for those who serve as firearms officers. In one case, a contract for murder was issued against an officer who had acted in the line of duty and who was later found to have acted entirely within the law. In another, a bounty was placed on an officer who, as things turned out, had been lawfully carrying out their responsibilities. The threat is not theoretical; it is a stark reality. The safety of our officers and those they love must not be compromised. Some of these officers may later be found not guilty by a jury, but if they and their families have faced real and credible threats, by then the damage is done.
The time has come for action to be taken. The National Police Chiefs’ Council has said that firearms officers are fearful of the consequences and processes for them if they are involved in a death or serious injury case because of what has happened to colleagues, mostly so because of how it has played out in the media.
The noble Lord, Lord Black, and the noble Baroness, Lady Cash, made the point that the courts already have the power to order reporting restrictions in a case where the court judges that disclosure of a defendant’s identity would give rise to a real and immediate risk to life, and asked why a presumption is necessary. Our answer is this. It must be remembered, as the noble Lord, Lord Hogan-Howe, pointed out, that police officers volunteer for armed roles and they are not compelled to undertake such duties, nor are they paid more to do so. Data from armed policing shows the start of a slow decline in the number of those wishing to serve as armed officers. The armed policing attrition and retention document records that, since 2019, there has been a loss of 583 armed officers. That is an 8.8% reduction. Everyone hearing this should be worried. We rely on these officers to keep us and those we love, as well as our fellow citizens, safe. We, a Labour Government, are persuaded and have decided to act.
We have concluded that we need to strike a balance between the safety and security of our brave firearms officers, who are presumed innocent unless or until convicted by a court of law, and their families and our inviolable principles of open justice and freedom of the press. I venture to suggest that this is what these provisions achieve. The most important things to note are that these. First, once a jury has decided that the defendant is guilty then of course their identity will be made public. Secondly, these provisions establish only a presumption of anonymity during the trial. The judge at any stage has the ability to order that part or all of the defendant’s identifying characteristics should be revealed. It changes only where we start, not necessarily where we end up. Thirdly, the media and others will be informed, as is usual, of cases where there is a reporting restriction in place. Journalists and others will be able to make representations to the judge as to why they say that the identity should be known at an early stage, to help the judge decide where the balance should be struck in any individual case.
I remind your Lordships of the old truism about the difference between what is in the public interest and matters in which the public are interested. It is judges who make decisions of this kind every day and are best placed to do so. I add the reassurance that, where a judge concludes that narrower steps will suffice, the court will order only the minimum necessary. I can say to your Lordships from my own experience, and knowing my former judicial colleagues as I do, that they take the freedom of the press to report trials very seriously indeed. I venture to say that the two distinguished former judges who have spoken in this debate—the noble and learned Lord, Lord Phillips of Worth Matravers, and the noble and learned Baroness, Lady Butler-Sloss—have shown just that.
Open justice remains the starting point. This measure introduces a narrow, rebuttable presumption for a small, clearly defined cohort. Proceedings will remain public, evidence will be tested in open court, and judicial reasons are given. Only the defendant’s details may be withheld, where necessary, until the point of conviction. It expressly allows the court to lift anonymity wherever it would be
“contrary to the interests of justice”
for the anonymity to remain.
I agree with the noble and learned Lord, Lord Garnier, that this is a difficult issue that needs to be approached with care and that everyone should be moderate in the way they approach it. However, this measure does not compromise transparency or judicial independence. All it does it ensure that officers are not exposed to undue risk before the facts have been tested and decided upon by a court. It is about fairness, safety, and maintaining confidence in policing and justice.
I hope that my explanation of these clauses has gone some way to reassuring your Lordships. It would, as always, be a pleasure to meet the noble Lords, Lord Black and Lord Faulks, and the noble and learned Lord, Lord Garnier, again—I think this is the third time in 48 hours that I have offered to meet him—as well as representatives of the News Media Association, who have written to me at least twice on this important topic. I would be more than happy to discuss all of their concerns. In the meantime, I invite the noble Lord, Lord Black, to withdraw his opposition to the clause standing part.
Lord Black of Brentwood (Con)
I thank the Minister very much for her comments and the offer to meet. I suspect she is involved in a large number of meetings at the moment, and we will try not to add too much to the burden.
This has been a very good debate on a difficult subject, but one, as we have heard from a number of people, that is of profound importance. We have to get the balance right, as the noble and learned Lord, Lord Garnier, said, and that is what this debate has shown.
I will make three quick points, if I may. First, to underline what we heard a number of times in this debate, of course we all have huge admiration and respect for firearms officers. They are a very brave group of people who do a great deal here to protect us, and we are in their debt. They deserve protection. The points we have tried to make are that they have it at the moment. The difficulty with these clauses is that it is made automatic. That means, as the noble Lord, Lord Faulks, said, it is not always going to be easy to rebut.
There is an issue, as far as the media is concerned, that a presumption of anonymity could mean that the media is not put on proper notice and therefore is unable to challenge the presumption, if indeed those media outlets possess the resources to do so. If it is left to potluck that reporters become aware then open justice erodes, because the media has not got a chance to consider whether it should contest the presumption.
Secondly, the noble Lord, Lord Hogan-Howe, and others have said that, thankfully, it is a very small number of cases such as this that ever come to court. It is not about that; this is a matter, as the noble and learned Lord, Lord Phillips of Worth Matravers, and the noble and learned Baroness, Lady Butler-Sloss, said, of high principle. In my experience, open justice and press freedom do not perish because of obvious assaults against them but because of apparently innocuous incremental changes such as this and the provision of special cases. The point, as my noble friend Lady Cash said, is that if anonymity becomes the default, openness has to be justified. That is the end of a very slippery slope, which is one of the things the Minister and I can talk about when we meet.
Finally, to echo a point that the noble Baroness, Lady Cash, made, at the end of the day, this is about state power and the exercise of state power. We chip away at the scrutiny of that at our peril. To do so, we should have overwhelming evidence. I appreciate what the Minister said in summing up, but I still do not believe that the case has been made. A number of noble Lords have said that we have time before Report to consider this further. It is a matter of huge importance, so let us take the time before Report to do so. In the meantime, I beg leave to withdraw my opposition to the clause.
Lord Hanson of Flint
Member’s explanatory statement
This amendment removes provision that is no longer needed because of the general data protection override in section 183A of the Data Protection Act 2018, which was inserted by section 106(2) of the Data (Use and Access) Act 2025 and came into force on 20 August 2025.
Baroness Chakrabarti
“Service as a police officer: aggravating factor in criminal sentencing(1) On sentencing for any criminal offence, current or past service as a police officer shall be presumed to be an aggravating factor.(2) Where in a particular case, a court decides against any such aggravation justifying an increased penalty, it shall state the reasons for this decision.”Member’s explanatory statement
This new clause and another in the name of Baroness Chakrabarti relate to the criminal sentencing of serving or retired police officers. This amendment creates a rebuttable presumption that such service should be an aggravating factor.
Baroness Chakrabarti (Lab)
My Lords, I will rise slowly to allow for the appropriate exodus.
I have Amendments 425 and 426 in this group. They are probing amendments only, and therefore I do not propose to detain the Committee for too long, not least as these follow the excellent previous debate, for which I commend the noble Lord, Lord Black of Brentwood, and all the participants. Many of the sentiments in that discussion informed my thinking behind these two amendments.
Let me explain. Like other noble Lords, I have a huge amount of respect for the overwhelming majority of police officers in this country, perhaps best exemplified by those who keep us safe outside and inside this building, and indeed those former officers who contribute so ably to debates in your Lordships’ House. Unfortunately, that is not the whole story of policing.
Baroness Jones of Moulsecoomb (GP)
My Lords, I am never sure what a probing amendment means, because surely all our amendments are probing, and I certainly would support both these amendments on Report, because they are actually crucial. Although I am vastly older than the noble Baroness, Lady Chakrabarti, I, too, have been working on this for quite a long time, but only for two and a half decades. The number of police officers who have, in some way, been found guilty of a crime and yet still get their police pensions and all the benefits of having been a police officer for some years, however badly it has ended, really is annoying.
Police officers do a very difficult job—I am very appreciative of that and understand the problems—and most do it well. But when someone abuses that role, the damage is much greater for public trust. It is wider than any single case. Trust in policing depends on people believing that no one is above the law. In the previous debate the noble Baroness, Lady Cash, made the point that the rule of law is for us all, and I will bring that issue up again when we get to the public whatsit Bill, on—
Baroness Jones of Moulsecoomb (GP)
I thank the noble Baroness very much.
At the moment the rule of law is not for us all, as exemplified by the way we treat police in some cases. On pensions, why do the Government prefer decisions about pension forfeiture to be taken later behind closed doors rather than in open court, where reasons are given and can be tested on appeal? If a judge has heard all the evidence in a criminal case involving a police officer, and has seen the harm done and the abuse of trust, why do the Government think that a judge should have no say at all over a publicly funded police pension?
I ask this out of long experience. We have been told for decades now that existing systems are enough or that reforms are coming, and clearly that is not happening. I personally would like to see, instead of these little baby steps, a bold, straightforward move towards the kind of accountability that people can see and understand. Time and again, in cases of serious police misconduct, the consequences remain unclear and invisible to the public.
From the public’s point of view, the current system makes very little sense. Some serious criminal convictions of police officers fall outside the pensions rule altogether, simply because they do not meet a narrow legal definition. I would be grateful if the Minister could explain why judges who hear the evidence are excluded and why transparency in court is still seen as a step too far.
When this Labour Government got elected, I really hoped for some changes in the way that we apply a sense of fairness to the whole of our legal system. Quite honestly, they have disappointed me very badly. They are no better than this side of the Chamber. As the noble Baroness, Lady Chakrabarti, said, we have been waiting a long time for this, and a Labour Government should really put it right.
Baroness Doocey (LD)
My Lords, both these amendments seek to sharpen the consequences for police officers, serving or retired, who commit criminal offences. High-profile cases and damning reports have exposed toxic elements of policing culture, eroding public trust. Yet the vast majority of police officers do an excellent job and are let down by a small minority. Recent cases highlight public expectations that the law should rightly demand higher standards of personal integrity from police officers and, at the very least, adherence to the law of the land.
There is also no question but that public confidence in policing’s ability to police its own is fragile. While the latest figures from the Independent Office for Police Conduct show record high complaints, over a quarter of the public lack confidence in the organisation itself, most cannot even describe what it does, and nearly half distrust the police complaints system. That should give us pause for thought, because it is really quite serious.
When officers are seen to evade scrutiny or punishment, trust erodes further. This has major repercussions for those doing the job properly, because many members of the public then say, “Well, they’re all the same, aren’t they?” I fully accept the noble Baroness’s argument that more can and should be done.
Amendment 425 would create a rebuttable presumption that police service can be treated as an aggravating factor in sentencing. This rightly recognises the unique betrayal of public trust when those entrusted to uphold the law instead break it. However, I have a concern that in marginal cases, being a police officer could flip from helping to reduce the sentence, as somebody who has served the public, to becoming an automatic burden.
Amendment 426 goes further, granting courts the power to forfeit a sizeable chunk of an offender’s police pension. This could serve as a highly effective deterrent. However, I worry on two counts. First, it could discourage quality recruits, who fear that one mistake could destroy their and their family’s lifetime financial security. Secondly, it could entail taking away pension benefits that the officer has already earned fairly during what were presumably good years of service.
These amendments definitely merit serious consideration, but they also focus on symptoms rather than causes. From these Benches, we want to see the Government go further to strengthen the front line of police misconduct systems, with vetting that catches risks early and misconduct processes that are swift, transparent and trusted. Only then will sentencing reforms such as this land with any amount of force.
Lord Sandhurst (Con)
My Lords, Amendments 425 and 426 in the name of the noble Baroness, Lady Chakrabarti, relate to the criminal sentencing of serving or retired police officers. We on this side of the Committee cannot support them. These amendments are well intentioned, and we understand where the noble Baroness is coming from, but we believe they will cause more problems than the issues they are trying to address. I do not see, for example, that they would have had any impact on the behaviour of the officer in the Everard murder or in other cases of police misconduct.
Amendment 425 would create a rebuttable presumption that current or former police officers should have their service as a police officer treated as an aggravating factor when being sentenced for a criminal offence. We, like the noble Baroness, believe that police officers should be held to a high standard. Abuses of power should be treated with the utmost seriousness, but the amendment is far too wide and risks creating unintended outcomes. Sentencing should, as far as is reasonably possible, be a specific exercise based on the facts of the case before the court.
At present, the courts already have the ability to treat an abusive position of trust or authority as an aggravating factor where relevant. This will allow for judges to distinguish between offences that may have been connected to an individual’s role as a police officer and those that are completely independent of it. They should be dealt with on a case-by-case basis. Amendment 425 would apply regardless of whether the offence had any connection to police service, resulting in the inclusion of offences that were wholly unconnected to an officer’s professional role and committed perhaps many years after the officer had retired or left the force.
Introducing such a provision, even as a rebuttable presumption, risks introducing an unnecessary and inappropriate counterproductive legal complexity. In practice, judges reflect on the defendant’s status and whether it is an aggravating factor. Furthermore, it would require the court to judge a person by their job and quite possibly what they were doing many years before. It could be 20 years before the commission of the offence and wholly unconnected with their service.
Similarly, we have significant concerns about Amendment 426. Pensions are deferred pay. They have been earned by service. I appreciate that issues arise where, while being so paid, the officer embarks on perhaps corrupt behaviour, but the police service will have to think about how it addresses that. It requires careful consideration of terms of service. If the police service wishes to include appropriate terms to address that sort of conduct, it is a matter for careful and balanced drafting, not for the relative sledgehammer—I mean that politely—proposed here. Once money has been earned and transferred to the relevant individual, that money is now their property. This amendment would undermine that principle and give the courts the power to deprive someone of money that may be entirely unrelated to the crime of which they are being convicted. It is potentially a large mandatory fine on top of any other sentence. We all know that police officers who go to prison face undoubted unpleasantness and very often have to be offered solitary confinement and protection. That in itself is a very substantial penalty.
We agree with the noble Baroness, Lady Doocey, about the risks of these amendments and the steps that should equally be taken to improve the way in which the police service operates. But the forfeiture of pension rights for just any criminal offence, especially in cases distinct from instances of abuse of police powers, could lead to disproportionate unintended consequences. We recognise that maintaining public confidence in policing is essential, but that confidence must be upheld through clear standards and conviction when things go wrong, then more effective punishment if needed; and, if necessary, by revision of the terms of service, but done by a matter of the terms of service, not by this rather blunt instrument. We look to the Minister for assurances on those points.
Relevant penalties must be imposed on the basis of conduct, not just status, so we cannot support the amendments. The context in which the sentence is passed is the fact of service; that would be relevant, but it is relevant only if that particular case comes before the court.
Lord Hanson of Flint (Lab)
My noble friend Lady Chakrabarti indicated that this was a probing amendment and I am grateful for the opportunity to discuss these points.
I start by saying to the noble Baronesses, Lady Jones of Moulsecoomb and Lady Doocey, and my noble friend that this Labour Government are committed to making improvements in police standards. That is why we have introduced significant reforms to strengthen police vetting and to act on misconduct and performance systems. This includes placing a duty on officers to hold and maintain vetting clearances and introducing a presumption of dismissal for proven gross misconduct. There are a number of measures in the Bill, but also in secondary legislation—and I trail the White Paper on police reform, shortly to be produced—that will show that this Labour Government, to answer the noble Baroness’s point, are committed to upholding standards and improving them, particularly in the wake of the murder of Sarah Everard and the conviction of police officers for simply heinous crimes. I put that on the record as a starting point because, with due respect, I do not accept the noble Baroness’s position that we are not doing anything on these matters.
I also support my noble friend’s broader position on strengthening accountability in the police service. I wish to see that happen but, in probing these amendments, I ask her to consider whether they are proportionate, fair or necessary. I take up and share some of the points that the noble Lord, Lord Sandhurst, made in his contribution.
Amendment 425 would make an individual’s current or former service as a police officer a statutory aggravating factor when sentencing them for any criminal offence. It is right that an officer’s service should be an aggravating factor where an offence has been committed in connection with their service, particularly where officers have abused their position of trust. It cannot be right that individuals should be sentenced more harshly than other members of the public based on their occupation or, as the noble Lord, Lord Sandhurst, said, their former occupation. That is why the existing sentencing guidelines issued by the Sentencing Council must be followed by the courts, unless it is not in the interest of justice to do so, and make clear that abuse of power or position is an aggravating factor in sentencing. My noble friend knows that, because she mentioned it in her contribution. Introducing a statutory provision is therefore unnecessary. I submit to my noble friend that there is no gap in law or practice, and it would be neither fair nor proportionate to presume that a person’s current or previous service as a police officer was an aggravating factor in all cases.
Amendment 426 would give powers to the Crown Court to make decisions on the forfeiture of police officers’ pensions where an officer has been convicted of a criminal offence. As I have mentioned already, I am sympathetic to strengthening accountability in the police service, but responsibility for the forfeiture of a police officer’s pension is already set out in legislation. I know that my noble friend knows this, because she referred to it. In most cases, the matter is in the hands of elected police and crime commissioners. Police and crime commissioners are not only the pension supervising authority for police officers but the locally elected officials designed to represent the public and local communities. I therefore contend to my noble friend that they are clearly well positioned to consider the impact of such offending on public confidence in policing.
However, it is also worth mentioning to the Committee that the Home Secretary has a role in this matter. Pension forfeiture cannot happen without a conviction having been first certified by the Home Secretary as being gravely injurious to the interests of the state or liable to lead to serious loss of confidence. While the Crown Court has an existing role as the relevant appeal body following a forfeiture decision, the process of considering whether to pursue and apply for pension forfeiture is not, I suggest, properly the responsibility of the criminal courts, especially given that they have an appeal role in that process and that there is no mechanism in the amendment that would allow the Home Secretary to make submissions to the Crown Court on public interest factors that should be considered.
I know that my noble friend has probed in this amendment, and I know she knows this because she referenced it in her speech: those two mechanisms are available. We are trying to look at the key issue, which in my view is sorting out vetting issues and standards and making sure that we maintain those standards. That is what we are doing in the Bill, and in the White Paper that will shortly be before the House of Commons and the House of Lords. I therefore ask my noble friend, at least on this occasion, to withdraw her amendment.
Baroness Jones of Moulsecoomb (GP)
I did not hear an answer to my question about why a judge should not hear about pension forfeiture in an open court. The forfeiting of pensions does happen, but it happens outside the court in closed rooms, and we never really understand the reasons given. Why not allow it to happen in court in front of a judge?
Lord Hanson of Flint (Lab)
As I just said, it can be done in court in front of a judge on appeal. The decisions are taken by the police and crime commissioner and/or the Home Secretary, who is accountable for those matters, and the Government intend to hold to that position. It may not satisfy the noble Baroness, as ever, but I look forward to her support on the key issue, which is improving vetting to make sure that we do not have those significant bad apples in the police force in the first place. That is our key focus in the White Paper and the measures in the Bill.
Baroness Chakrabarti (Lab)
I am grateful to all noble Lords who have taken part in this short debate. I said these were probing amendments because I thought it was important that we discussed in Committee on this Bill the issues of police standards, discipline and public confidence, as well as all the other measures that we are constantly debating to do with additional police powers. I am so grateful.
I say gently to the noble Lord, Lord Sandhurst, that in his response to the pension forfeiture provision he spoke as if this was not already an established principle. I think the noble Baroness, Lady Jones, got it right when she said the issue here is about how you will inspire most public confidence when forfeiture proceedings are happening. Would there not be some benefit in this being part of the sentence and therefore being given greater publicity because it has been announced in an open Crown Court? I think that is really the only difference between us.
I am grasping at any straw of how we might try to improve confidence in policing in this country, where, year on year, this is not happening. I was particularly grateful to my noble friend the Minister for, in a sense, responding to the provocation of the noble Baroness, Lady Jones, to talk about what he plans with the White Paper and so on. I am sure we all look forward to engaging with all that. For the moment, though, I beg leave to withdraw my amendment.
Baroness Doocey
“Police training – independent review(1) Within six months of the day on which this Act is passed, the Secretary of State must establish an independent review of the quality of in-service police officer training within police forces in England and Wales. (2) The review must—(a) assess the consistency, effectiveness and outcomes of all training provided to police officers after completion of their initial entry-level training, including all—(i) in-service training,(ii) workforce development programmes,(iii) refresher courses, and(iv) specialist training,(b) consider the extent to which training equips officers with the necessary skills, knowledge and professional standards to reflect the demands of modern policing, including—(i) digital skills,(ii) investigative skills,(iii) trauma awareness and conflict management, and(iv) processes by which police officers are informed of, and trained in, changes to the law, and(c) make recommendations for improvement, where appropriate.(3) The review established under subsection (1) must complete its work within 12 months of its establishment.(4) Within three months of receiving the review, the Secretary of State must lay a statement before Parliament containing their response and proposals to take forward the recommendations in the review.”Member’s explanatory statement
This amendment requires the Secretary of State to establish an independent review on police training.
Baroness Doocey (LD)
My Lords, Amendment 427 concerns one of the most vital levers for improving the performance and professionalism of our police service: the training of front-line officers. The amendment would require the Secretary of State to commission an independent review of the training that officers receive once deployed by their forces. At present, the College of Policing sets national standards and issues codes and regulations, but it cannot force them to comply. Implementation depends on the forces themselves, the Home Office and inspectorates to give those standards real force. The result is uneven training and a postcode lottery for the public.
Baroness Brinton (LD)
My Lords, it is a pleasure to support the noble Baroness, Lady Doocey, on Amendment 427, and I have signed Amendment 428, which I will address. I come to the issue of mental health because I was present at and contributed to the debate the last time your Lordships’ House reviewed and improved the Armed Forces covenant. Mental health plays a vital part in that. I have friends and family members who are past and present members of the military, and I have seen how the military, over the last 15 to 20 years, has managed and improved its mental health.
That is the position I took when trying to have a look at how our police, not just officers but ancillary staff, are supported when they face difficult circumstances that might put their mental health under pressure. The difference between the MoD’s approach and the College of Policing’s approach is really quite stark. To start with, the College of Policing—I looked at some individual constabularies as well—is all about signposting elsewhere to outside organisations. There is virtually nothing on what happens inside your own organisation if you are a police officer. The front page of the advice rightly refers to the Samaritans first; it then talks about Mind, social media support, and support for police officers and staff experiencing mental illness or distress. Then, and only then, on page four, does it start to talk about what happens inside your own place of employment and how you can find support there.
The contrast with the MoD advice on mental health is that soon after the headline
“Armed forces covenant and mental health”,
it has a massive headline that says:
“Getting advice or help urgently”
for “serving personnel”; it goes through that and then it does it for “veterans”. It starts by saying that
“your first point of call should be your chain of command, unit medical officer, welfare officer or chaplain if you are in the UK or overseas”,
so if you are a serving member of staff you know instantly that your first place is the place in which you live and work, and you have your chain of command—the people above you and the people who may be junior to you.
I recognise that the details of the Armed Forces covenant are different from the employment relationship that police officers have, but before I move specifically on to the amendment I want to say that one of the other things that the armed services learned as a consequence of the Afghan campaign was that they needed to get a much better dialogue going on between staff. They were almost the first people to start introducing mental health first-aiders. It absolutely transformed areas of the military where it was introduced with gusto. This idea about the chain of command meant that there was an instant response from somebody who, like a first-aid trainer, could go and say to a colleague, “Are you all right? Have you got some problems?”, or whatever.
In policing, it appears very patchy as to whether mental health first-aiders are properly encouraged. In fact, the only thing that I could find online was that Staffordshire Police said in 2023 that it had over 50 mental health first-aiders. That is a really good standard, but there is no evidence held centrally about that level. It also indicates the seriousness with which a service, in its entirety, looks after its personnel.
I looked at the amendment from the noble Baroness, Lady Doocey, which sets out some criteria to start to gather that information about the response to mental health—not just mental health first-aiders. Again, I could not find anything online that was solely about policing. However, there was a recent report by the King’s Centre for Military Health Research, jointly researched by King’s College London, the OU and the Royal Foundation, entitled Assessing the Mental Health and Wellbeing of the Emergency Responder Community in the UK. That obviously is not just the police; it includes the ambulance service and firefighters.
In its very good research paper, the centre noted that, across the three emergency responder services, there was generally an absence of definitions and very little monitoring and evaluation. The paper talked about the importance of trauma support, including for PTSD. It emphasised, as I have already mentioned, the reliance on signposting to outside bodies and a lack of involvement inside police forces, and it certainly emphasised the lack of data collection and evaluation, including on self-harm, suicide, and alcohol and substance misuse.
The paper noted that there was no real sense of how emergency responder services were going to address what worked and did not work, and therefore whether any training that they were doing was going to be relevant. The paper recommended a promotion of good practice, so that responders know what good practice is, as well as the promotion and extension of support for “mental health/wellbeing ‘champions’”, which I think means mental health first aiders and some of the other forms of that.
The key thing the paper said was that there should be access to a single “Universal Gateway” website, analogous to the MoD page, and that to have that universal gateway there must be a single, universal collection of data and evaluation, so that across the board the police can understand what works and what does not work.
The UK systematic review found 81 recent results of ad hoc research projects, of which 43 were from police forces. Frankly, everybody needs to work together much better to make this work. That brings me back to the amendment, which, at the very least, sets out a route to collect that data right across the police forces in England and Wales. It focuses on a series of issues that I have already mentioned, and it would be a good start to approaching issues of mental health in the way that the military does for its people, which is having success. I hope that the Home Office Minister will look at that when deciding whether or not this amendment should be supported.
Lord Sandhurst (Con)
My Lords, Amendments 427 and 428, both in the name of the noble Baroness, Lady Doocey, raise important questions about police training and how best to ensure that officers are properly equipped for the demands of modern policing.
Amendment 427 would require the Secretary of State to establish an independent review of in-service police training. We recognise the important underlying principle of the point being made here. Policing has changed significantly in recent years, not least because of the growth of digital crime, involving investigative techniques and greater awareness of trauma and professional standards. It is entirely right that we ask whether training keeps pace with these demands and whether there is sufficient consistency and effectiveness across forces. An independent review is one way of taking stock of that landscape and identifying gaps or best practice.
However, reviews of this nature inevitably come with costs in time and resource and risk introducing potential further bureaucratic hurdles for the police. It is worth reflecting on whether there may be other mechanisms, such as through existing inspection or the monitoring of professional standards frameworks, that could achieve similar outcomes. I look forward to hearing from the Minister how the Government currently assess the quality and consistency of in-service training and whether further work of this kind is already under way.
Amendment 428 focuses specifically on mandatory mental health training for front-line officers. The intention behind this amendment is clear. Police officers are often the first responders in highly distressing situations involving individuals in mental health crises. A degree of appropriate training in de-escalation and communication is clearly valuable. However, we on this side have some concerns that I hope the Minister can address.
Lord Hanson of Flint (Lab)
I am grateful to the noble Baroness, Lady Doocey, for raising these issues. I know she feels strongly about them. We have an interchangeable Front Bench here between the noble Baronesses, Lady Doocey and Lady Brinton. It is always of interest to me that we have a good dual ability between the two noble Baronesses on these matters; I am grateful for the support of the noble Baroness, Lady Brinton, for her colleague, the noble Baroness, Lady Doocey, from the Front Bench/Back Bench.
The noble Baroness is right that training and support are vital. Police officers do a difficult job. They need to identify and have that support. I am grateful to her for shining a light on this in the amendment today. She knows—I just want to put this on the record again—that the College of Policing currently sets standards for police training and development, including the national policing curriculum, to support initial learning for new recruits, and standards and an accreditation for those who work in high-risk or specialist roles. The College of Policing also works strongly with police forces to support standards and to look at ongoing training and development. Again, our White Paper, which will appear in very short order, will consider the future workforce and will set out reform proposals on leadership and on culture to ensure that the Government’s safer streets and other projects and the mission that we have is equipped with support to achieve those objectives.
The noble Baroness will also know that my noble friend Lord Blunkett and the noble Lord, Lord Herbert, who is currently the chair of the College of Policing, have been appointed to review police leadership in a new commission, which the Government support. I expect that that will include looking at the wider training issues that the noble Baroness has made reference to today. I do not want to pre-empt that work, but it is important that we just recognise that. The request for the Home Secretary to commission as independent review, as Amendment 427 suggests, would potentially duplicate or pre-empt what is already being undertaken by the White Paper and by the two colleagues from this House.
Amendment 428 would ensure that police officers are equipped to deal with people suffering a mental health crisis. It is an extremely important issue. It is important that our police have the training and skills to not just be able to identify when a person is vulnerable but to understand how to intervene appropriately when people are experiencing a mental health crisis. For the reasons that the noble Baroness, Lady Brinton, has given, very often officers will be the first port of call when mental health crises happen, because they are the first port of call in every circumstance. It is important that officers are equipped to make appropriate decisions in that range of circumstances and to treat people fairly, with humanity, and understand the issues accordingly.
Evidence shows that they are doing a reasonable job. The Mental Health Act review by Professor Sir Simon Wessely noted that
“numerous examples of police treating those with mental health problems with kindness and compassion”
were identified. That is what the public can expect, and that is what we want to see.
I say to both the noble Baronesses, Lady Brinton and Lady Doocey, that the College of Policing sets relevant standards, guidance and training on these operational matters. The noble Baroness, Lady Brinton, said that she tried to find examples of that. The College of Policing currently has a mental health learning programme available via College Learn. It has programme specification and training guides which are updated and have been updated very recently—in the last few years. There are module titles on mental health and the police, providing a first response to mental health incidents, responding to suicide, providing specialist support at incidents of mental health and developing a strategic response to mental health.
With operational support from chief constables, who are independent of government, how they use that resource is a matter for the police. Different police forces will face different challenges and pressures and have different ways of doing it. But there is a level of support, which the outcomes of the police White Paper and the reviews by the two noble Lords I have mentioned will assist and support. It is important that we recognise that work is ongoing.
Baroness Brinton (LD)
I am very grateful to the noble Lord. I think I was making a very slightly different point. I am aware of these courses, but my argument was that what the military has achieved has been through culture change within the entire organisation, rather than just sending people on a course to get a qualification.
Lord Hanson of Flint (Lab)
It is important to do that, but I also say to the noble Baroness that the police are not mental health experts, nor should we expect them to be. At the end of the day, they will be the first responders who have to identify and support people. The work on the Right Care, Right Person project over the last two years by police and health partners, to ensure that people who are in mental health crisis get the right response from the right person with the right training and skills at the right time, is important. That work has shown a decrease in unwarranted police intervention in mental health pathways. We want people with a mental health challenge to have support. The police are dealing with the crisis in the moment, and perhaps the consequential behaviour of the crisis, rather than the underlying long-term trends.
There will always be a role for police in dealing with mental health calls where there is a risk of serious harm. It is important that police have access to relevant health information and use their police powers to do that.
Importantly, as I have mentioned already, there is an important set of training material available, which goes to points that the noble Lord, Lord Sandhurst, mentioned. The College of Police’s mental health training is for all new officers to go through. There is an additional suite of training material I have referred to that provide, I hope, the approach to the culture change that the noble Baroness is seeking. This training provides officers with knowledge to recognise what mental health challenges there are and to communicate with and support people exhibiting such indicators.
I think this is a worthwhile discussion, but I say to the noble Baroness, Lady Doocey, that it would be helpful to withdraw the amendment now, and we will reflect on the outcome of the White Paper in due course.
Baroness Doocey (LD)
My Lords, I thank the Minister for his response and my noble friend Lady Brinton for her summing up, which I thought was excellent. I just want to make a couple of quick points.
I am very much aware that the College of Policing determines what training should be provided for police officers. However, the point I was making—perhaps not strongly enough—is that the training does not work. The training is inappropriate; every police chief will tell you that. HMICFRS, which is the inspectorate, has said on multiple occasions and in multiple reports that the training is inadequate and there need to be changes, and nothing has happened. I honestly think that, whatever happens, there has to be an independent national audit of police training because there has not been one since 2012. The last one was a PEEL inspection, which examined individual forces but not the national picture.
I am so looking forward to the Minister’s White Paper. I cannot even begin to describe how excited I am about it. I think I am correct in saying that the Minister has referred to it—that it will solve all our problems—in almost every topic we have ever discussed. My only concern is that, if it contains as many subjects and if it is going to solve as many problems as the Minister suggests, it will probably be more like an encyclopaedia than a White Paper. I beg leave to withdraw the amendment.
Baroness Doocey
“Neighbourhood policing(1) The Secretary of State must ensure that every local authority area in England and Wales has a neighbourhood policing team which must be assigned exclusively to community-based duties, including—(a) high-visibility foot patrols,(b) community engagement and intelligence gathering,(c) crime prevention initiatives, and(d)s solving crime.(2) The Home Office must publish proposals detailing the additional funding that will be required to ensure that police forces can meet these requirements without reducing officer numbers in other frontline policing roles.(3) The Secretary of State must publish an annual report detailing—(a) the number of officers and PCSOs deployed in neighbourhood policing roles,(b) the total cost of maintaining the required levels, and(c) the impact on crime reduction and public confidence in policing.(4) If a police force fails to meet the minimum staffing levels required under subsection (1), the Home Office must intervene and provide emergency funding to ensure compliance within six months.”Member's explanatory statement
This new clause would require the Secretary of State to ensure that every local authority area in England and Wales has a neighbourhood policing team which must be assigned exclusively to community-based duties.
Baroness Doocey (LD)
My Lords, I shall speak to Amendments 429 and 430, in my name. An effective, responsive and trusted police service must be built from the ground up, not imposed from the top down. I hope the forthcoming White Paper will start from that premise and reflect the Government’s stated commitment to community policing.
The Minister will no doubt highlight the neighbourhood policing guarantee and the promise of named officers in every community, and much of the Bill is described as strengthening neighbourhood officers’ ability to tackle the priorities of most concern to local communities—respect orders, tighter shoplifting laws and new vehicle seizure powers. However, none of this addresses the central challenge for chief constables: how to deliver on these promises amid rising demand, high turnover and chronic funding shortfalls. Front-line delivery depends on forces retaining officers in visible community roles rather than constantly redeploying them to plug shortages elsewhere.
Despite the new neighbourhood policing grant, the early signs are troubling. Last month, Cheshire police announced a 70% cut in PCSO numbers, from 87 to 27, despite public opposition, citing the need to save £13 million. Nationally too, PCSO numbers fell by 3.3% in the year to March 2025—a loss equivalent to 253 full-time officers—while front counters continue to close, and more and more school liaison programmes disappear.
This simply is not good enough. Public confidence rests on local responsiveness, yet neighbourhood policing teams today have about 10,000 fewer officers and PCSOs than in 2015. The police inspectorate has warned that some forces lack sufficient neighbourhood officers to deal effectively with anti-social behaviour, with huge variations of service across the country. Between 2019 and 2023, over 4 million anti-social behaviour incidents were not attended by an officer in person. Some forces responded to every report; others to very few. Of course, trusted neighbourhood officers are critical to tackling not only anti-social behaviour but knife crime, domestic abuse and retail theft, to name just a few.
Amendment 429 therefore seeks to guarantee for every local authority area a dedicated neighbourhood policing team protected from being routinely diverted to fill response gaps, and to require an annual Home Office report on the state of community policing.
Amendment 430 would make it a statutory duty for forces to maintain neighbourhood teams at effective staffing levels, the level to be determined by forces, councils, communities and ward panels to ensure that resources meet local demand. To support this, we propose ring-fencing 20% of future police grants, supplemented by a share of recovered proceeds of crime. This approach preserves operational flexibility. Forces could, of course, choose to exceed the minimum level if they so wished. I urge the Government to work with these Benches towards our shared goal—restoring visible, trusted and effective neighbourhood policing. I beg to move.
Lord Sandhurst (Con)
My Lords, I thank the noble Baroness, Lady Doocey, for tabling Amendments 429 and 430. Neighbourhood policing is one of the most important facets of the job, and we support any approach that intends to increase the presence of officers within neighbourhood communities. It is all consistent and very much part of the approach of that great Conservative Sir Robert Peel. Visible police presence on the streets of local communities is an incredibly important role. There is the obvious consequence that more officers out on patrol results in more crime being deterred and prevented, but the latent impact is that more noticeable, familiar and engaged officers contribute to an atmosphere of order and civility within local neighbourhoods—in other words, generally better behaviour.
Lord Hanson of Flint (Lab)
I am grateful to the noble Baroness, Lady Doocey, for her amendments. I start, however, with the noble Lord, Lord Sandhurst, who prayed in aid the great Conservative, as he said, Robert Peel. From my recollection, Robert Peel was certainly not in charge of the police force during the 14 years of the previous Government, under which the noble Lord served. I was Police Minister in 2009-10 and know that we lost 20,000 police officers—I repeat, 20,000—in the first years of the Conservative Government. I think Sir Robert Peel had gone walkabout during that period and was not serving as a neighbourhood police officer under the Conservative Government’s watch at that particular time.
There was a lamentable decline in neighbourhood policing between 2010 and the last election. This Government have delivered on our commitment in the election to restore neighbourhood policing. We have already announced that police forces will be supported to deliver an increase of 13,000 officers for neighbourhood policing by the end of this Parliament. In the previous six months, we have delivered 80% of our year-one target, with nearly 2,400 additional neighbourhood officers in post. We remain on track to reach a full 3,000 uplift by April this year, which goes to the heart of the amendments of the noble Baroness, Lady Doocey. We backed that with £200 million of additional investment in the current financial year, as part of a total funding settlement to police forces of £17.6 billion. Total funding will again rise next year, 2026-27, by £746 million, taking the total funding for police forces up to £18.3 billion next year. That is a major level of investment in policing that this Government have brought forward, and I argue that it meets the objective of the noble Baroness’s amendment.
It is because of our neighbourhood policing guarantee that every neighbourhood across England and Wales now has named and contactable officers. These neighbourhood teams are dedicated to engaging with communities, gathering intelligence, and preventing crime and anti-social behaviour. Forces are ensuring that regular beat meetings take place, providing local people and businesses with a direct platform to shape policing priorities. We have more visible patrols, and officers and PCSOs have started to complete the new neighbourhood policing programme. There is career pathway training, launched in June 2025. There are designated leads for anti-social behaviour in every police force and a commitment to 72-hour response times to neighbourhood queries. These are all measures that I am sure Robert Peel would have welcomed had he been in charge for the previous 14 years—but he was not, and it did not happen, but it is now.
The new police standards and performance improvement unit will ensure that police performance is consistently and accurately measured. The work of the unit is going to reinforce our commitment to transparency and, for the noble Baroness, I pray in aid the upcoming White Paper on police reform—she will not have too long to wait for it now. It will detail how wider reforms will support the Government’s pledge to rebuild neighbourhood policing.
The amendments from the noble Baroness, Lady Doocey, are absolutely in the right direction of travel. The question is whether she wants to constrain chief constables with the demands that she seeks to put centrally. I argue that the Government will continue to bolster neighbourhood policing and have reversed the cuts imposed by the previous Government—the noble Lord, Lord Sandhurst, seems to have had a memory blank around what happened over that time. The Government have set clear standards of local policing, and will work with the National Police Chiefs’ Council, the College of Policing and others. We are heading in the direction of the noble Baroness’s amendment, without the need to legislate.
Baroness Neville-Rolfe (Con)
Could the Minister say something about the Police Federation’s attitude to the list of changes to enforcement that he has laid out?
Lord Hanson of Flint (Lab)
The Government work closely with the Police Federation and will always listen and gauge the situation with them. I have met the chair of the Police Federation on a number of occasions, and other Ministers in government do the same. We will engage with that body. Like other federations or any form of trade union—although it is not a trade union—there will on occasion be differences between the organisation, the police chiefs and the Government, as is perfectly natural. I believe that we are investing in supporting police officers on the ground to do a better job in what they are trying to do and ensuring that the Government undertake a focus on neighbourhood policing, as the noble Baroness, Lady Doocey, seeks. On that basis, I urge her to withdraw her amendment.
Baroness Doocey (LD)
I thank the Minister for his response. I do not think that we are miles and miles apart. To be clear, I would never do anything that I thought chief constables would not be very much in favour of. They do a fantastic and astonishing job, and I would never do anything that I thought would be operationally wrong for them.
Our amendments are designed to complement what the Government are trying to do, but our aim is to ensure that all communities receive a guaranteed minimum level of visible local policing attached to the funding that makes that happen. I look forward to discussing in further detail with the Minister how that can happen. We are not miles apart and I am sure that when we see this mythical White Paper it will give us all the answers that we require. Meanwhile, I beg leave to withdraw the amendment.
Baroness Doocey
“Duty to record algorithmic tools(1) Each police force in England and Wales must disclose its use of any algorithmic tool used in the exercise of its functions that may affect the rights, entitlements or obligations of individuals by completing entries in the Algorithmic Transparency Recording Standard (ATRS).(2) Under subsection (1) “algorithmic tool” means a product, application or device that supports or solves a specific problem using complex algorithms.”Member’s explanatory statement
This amendment places a duty on police forces to disclose any algorithmic tool used in the exercise of its functions.
Baroness Doocey (LD)
My Lords, powerful AI tools are transforming policing and reshaping how forces investigate, patrol and make decisions, often with profound implications. This amendment would make it a legal requirement for forces to disclose any algorithmic tool used in this way that might affect a person’s rights or freedoms.
The Government’s algorithmic transparency recording standard, ATRS, provides a consistent way for public bodies to explain how their algorithmic tools work, what data they use and how human oversight is maintained. Its goal is a public, searchable record of these systems. Use of the ATRS is mandatory for arm’s-length bodies delivering public services, though the previous Government did not extend that to the police, despite calls from the Committee on Standards in Public Life and from the Justice and Home Affairs Committee.
The College of Policing has now integrated the ATRS into its authorised professional practice. Forces are expected to complete an ATRS report for all relevant tools. That is welcome progress. The hope is that forces will increasingly comply to build public trust and meet their equality and data protection duties. However, while compliance is now expected, failure to record a tool is still not a legal requirement. A force could still choose not to use the ATRS, citing operational necessity, and it would not be breaking any law.
Transparency is vital across public services but nowhere more so than in policing, where these systems have the power to alter lives and restrict liberty. That is why Justice and civil liberties groups such as the Ada Lovelace and Alan Turing institutes want police use of these tools to be publicly declared and for this to be placed on a statutory footing. What is ultimately needed is a national register with real legal force—something the NPCC’s own AI lead has called for.
Government work on such a register is under way. I welcome that project but it will take time, while AI capabilities advance very rapidly indeed. The ATRS is the mechanism we have for now. This amendment would immediately strengthen it, requiring every operational AI tool from facial recognition to predictive mapping to be publicly declared.
Why does this matter? Take gait analysis, identifying people by how they move. No UK force has declared that it uses it, but its potential is recognised. Ireland is already legislating for its use in serious crime. Without a legal duty here, a UK force could deploy gait analysis tomorrow, with no public knowledge or oversight, just as facial recognition pilots proceed today with limited transparency.
This year, forces will spend nearly £2 billion on digital technology and analytics. With growing demand and limited resources, it is no surprise at all that forces turn to AI for efficiency. Yet, without total transparency, this technological shift risks further eroding public trust. Recognition of that need is growing. No one wants to return to the Met’s unlawful gangs matrix, quietly risk-scoring individuals on dubious grounds. For that reason, I urge the Government to accept this vital safeguard. It is a foundation for accountability in a field that will only grow in power and in consequence. I beg to move.
Lord Clement-Jones (LD)
My Lords, as my noble friend Lady Doocey explained, Amendment 431 seeks to place a statutory duty on every police force in England and Wales to disclose its use of algorithmic tools where they affect the rights, entitlements or obligations of individuals.
We are witnessing a rapid proliferation of algorithmic decision-making in policing, from predictive mapping to risk assessment tools used in custody suites. Algorithms are increasingly informing how the state interacts with the citizen, yet too often these tools operate in a black box, hidden from public view and democratic scrutiny. As we have discussed in relation to other technologies such as facial recognition, the deployment of advanced technology without a clear framework undermines public trust.
This amendment requires police forces, as my noble friend explained, to complete entries in the algorithmic transparency recording standard. The ATRS is the Government’s own standard for algorithmic transparency, developed to ensure public sector accountability. My Private Member’s Bill on public authority algorithmic and automated decision-making allows for a more advanced form of reporting. In my view, the ATRS is the bare minimum required for accountability for AI use in the public sector.
Lord Sandhurst (Con)
My Lords, the noble Baroness’s amendment would place a duty on police forces in England and Wales to disclose their use of any algorithmic tool that may affect the rights, entitlements or obligations of individuals by completing entries in the algorithmic transparency recording standard.
That standard, ATRS, was developed as part of the Government’s wider digital and AI policy to ensure transparency about how public sector bodies use algorithmic tools in decision-making that impacts the public. It provides a template to publish information about such tools—specifically, information concerning what the tools are, why they are used and how they influence outcomes. This is seen as an important step to build public understanding of and trust in algorithmic systems used by government.
ATRS is already mandatory for central government departments and their arm’s-length bodies when tools have a significant influence on decisions with public effect or interact directly with the public, and guidance has been issued to support the publication of records. I recognise the intention behind this amendment, to promote transparency, accountability and public confidence in the use of algorithmic tools in policing. The use of complex algorithms and artificial intelligence in law enforcement raises legitimate questions about fairness, oversight and the protection of fundamental rights. It is right that Parliament scrutinises how we manage such risks.
I look forward to the Minister’s response, including the Government’s assessment of whether the ATRS framework as it currently applies can readily be extended to policing and what further measures might be needed to ensure that transparency and accountability are enhanced, without unintended consequences for operational effectiveness.
Lord Katz (Lab)
My Lords, Amendment 431 deals with the use of algorithmic tools in policing. While the Government agree on the importance of transparency in the use of algorithmic tools by police forces, we do not believe that the amendment would be the optimal means of delivering either meaningful improvements in public confidence or operational benefits for policing.
The proposed duty would require police forces to disclose all algorithmic tools through the Algorithmic Transparency Recording Standard—the ATRS. The ATRS was designed for government departments and arm’s-length bodies, not for operationally independent police forces. While it is an effective tool for those organisations, its high level of technical detail and lack of narrative explanation mean that disclosures would not provide the clarity expected by the public and would risk burying key information in jargon. More importantly, mandating disclosure of all tools beyond the exemptions policy of the ATRS could inadvertently compromise operational security and policing tactics.
The Government are, however, keen to encourage transparency in the use of algorithmic tools by police forces in England and Wales to maintain the support of the public for their use and in keeping with the core tradition of policing by consent. In line with this, the Government have commissioned work on transparency measures for police use of AI and are working closely with the National Police Chiefs’ Council’s AI portfolio and the National Policing Chief Scientific Adviser to develop policies encouraging and supporting appropriate levels of transparency while safeguarding operational integrity. This approach will ensure that transparency is meaningful, proportionate and does not undermine the effectiveness of policing.
It is important to recognise that we are listening to the public in dealing with concerns that have been raised by the noble Baroness, Lady Doocey, around policing encroaching on civil liberties. Indeed, the Government commissioned and published research into public attitudes on the police’s use of AI last year. The research demonstrated strong support for AI use by the police. There are rightful concerns about the need for AI use to be underpinned by rigorous oversight, humans always being clearly involved in decision-making and transparency. These findings have been supported elsewhere; for example, in recently published research by CENTRIC, which surveyed 10,000 members of the public. That is why we are working closely with the NPCC to build upon and implement the principles of the covenant for the use of AI in policing, to which all forces in England and Wales have signed up. Of course, it is important.
The noble Baroness, Lady Doocey, referred to the use of gait analysis, and there was a comparison to live facial recognition. It is important that we understand the risks of bias and discriminatory outcomes from using any policing tool.
To be clear, police deployments must comply with the Equality Act 2010 and data protection law. Forces are required to assess potential discrimination risks and should be able to evidence that tools are necessary, proportionate and fair. Humans remain clearly involved in decision-making, and forces are expected to monitor performance against protected characteristics so that any bias is identified and addressed. Where tools cannot meet these standards in practice, they should not be deployed or must be withdrawn pending remediation.
The noble Lord, Lord Clement-Jones, referred to black box systems. To be clear, we are not comfortable with black box systems being used in policing. Policing requires—
Lord Clement-Jones (LD)
I thank the Minister. Much of what he said about developing an alternative to the ATRS has been encouraging, but, obviously, quite a lot will also depend on—and he went on to talk about data protection—whether officers are trained in how Article 22 of the GDPR operates in terms of automated decision-making. What assurance can the Minister give about the level of knowledge and training in that area?
Lord Katz (Lab)
As I said, police deployments must comply with the Equality Act 2010 and data protection law, which, of course, include the latest data protection law under the GDPR. In relation to that specific point on Article 22 of the GDPR, I will have to write to the noble Lord to give him the full details, but, as I say, the general principle of compliance applies.
Just to finish the point I was making in reference to the noble Lord’s point about black box systems, where a system is inherently opaque, forces must have compensating controls such as rigorous testing, performance monitoring and strong human review, or not use that system.
Given these assurances—and I am grateful to the noble Lord for saying that he was encouraged, and we will wait to hear from his colleague as to whether she is encouraged by these responses—I hope the noble Baroness will be content to withdraw her amendment.
Baroness Neville-Rolfe (Con)
I am very interested in this area and supportive of the right use of AI in policing, because it can be enormously helpful to the police in terms of resources. I remember when I was at the Cabinet Office, they were doing a trial where they were using AI instead of officers to look through CCTV of abuse and child abuse, and that was saving a lot of resource and a lot of difficulty for police officers. The Minister did not mention what kind of use the police were making of AI. Does he have any information on that, or can I be referred elsewhere?
Lord Katz (Lab)
A range of use is made by police forces at individual force level. Each force makes operationally independent decisions as to what tools they test or deploy. Sometimes it is around administrative tasks that we see across lots of public services and sometimes it is specifically around operational issues and investigation. It is probably best that I do not go into too much detail, but I can certainly go back and talk to officials to see what we might be able to follow up on in writing with the noble Baroness, if there is more detail we can provide.
Baroness Doocey (LD)
My Lords, I thank the Minister for his response. Yesterday, I looked at the public ATRS repository that is meant to record what AI tools police forces are deploying. It contained only two entries for police AI tools, even though we know that many are already being used, including systems such as live facial recognition, which is not listed at all. A great deal of AI development takes place within individual police forces, rather than through national programmes, and there are several reasons why these tools may not be appearing in the central record. Some forces believe that putting information on their own website is sufficient to meet transparency requirements. Others may avoid reporting tools by categorising them simply as standard software rather than as algorithms or AI systems. There may also be worries about publishing full information which could make it easier for defence lawyers to challenge decisions in court.
I think, therefore, that both the Government and we are clear—as well as the Official Opposition—that there absolutely is a problem that needs to be addressed, because it is not being addressed at the moment. AI is moving at such a rapid pace that this is not something that can be kicked into the long grass; it really needs to be addressed now. I therefore look forward to seeing the proposals that the Government are going to come forward with—I will not mention the war or the White Paper—but, for now, I beg leave to withdraw the amendment.
Baroness Doocey
“National plan on police data intelligence systems(1) Within 12 months of the day on which this Act is passed, the Secretary of State must publish and lay before Parliament a national plan to modernise police data and intelligence systems in England and Wales.(2) The plan must include steps to be taken to further the aims of—(a) replacing any antiquated police technology;(b) closing capability gaps identified in the National Audit on Group-Based Child Sexual Exploitation and Abuse;(c) enabling real-time secure information exchange between police forces and partner agencies;(d) supporting improved—(i) risk identification,(ii) early intervention, and(iii) co-ordinated action,to protect children.(3) The national plan must set out clear milestones of how to achieve the aims set out in subsection (2) within five years of the plan being published.(4) Every 12 months after publication of the plan under subsection (1), the Secretary of State must lay a further report before Parliament outlining the progress to date in achieving the aims set out in subsection (2), until those aims have been completed.”Member's explanatory statement
This amendment aims to take forward part of Recommendation 7 of Baroness Casey’s National Audit on Group-Based Child Sexual Exploitation and Abuse, relating to updating police information systems.
Baroness Doocey (LD)
My Lords, Amendment 432 seeks to press the Government on their plans to address long-standing problems of fragmented police and criminal justice data systems. I must tell noble Lords that I was working on this very subject when I was a member of the Metropolitan Police Authority, which I left more than 16 years ago, and the system has neither changed nor got any better. The recent national audit on group-based child sexual exploitation produced by the noble Baroness, Lady Casey, described policing’s data intelligence infrastructure as antiquated and identified systemic failures that continue to put children at serious risk. The audit also highlighted the wider paucity of technology underpinning policing.
These concerns echo what has been said for many years, and when I served on the Metropolitan Police Authority, the same warnings had already been voiced about creaking systems that did not keep pace with the demands placed on them. Yet despite endless reviews, there is still no fully integrated digital system linking the police with the rest of the criminal justice system.
Fragmented, outdated IT undermines public protection more broadly. Officers’ time is wasted on manual workarounds; investigative opportunities are missed; prosecutions are delayed, and known risks are not always identified, let alone shared. As digital evidence proliferates and crime becomes more cross-border and complex, the lack of seamless data sharing between forces and agencies becomes even more damaging.
Concerns about poor IT integration between the police and the Crown Prosecution Service were being formally raised as far back as the late 1990s. A major joint inspection published in July 2025 reiterated that the CPS case management system was never designed to interface properly with the 43 different police IT systems, contributing to delays, low charge rates and victim frustration. In other words, the same structural problems persist nearly three decades on.
Baroness Neville-Rolfe (Con)
My Lords, I support much of what the noble Baroness, Lady Doocey, said about the problems we face. This links in well with my amendments, which will be taken next week: Amendment 436 on enforcement data and Amendment 437 on police paperwork.
The fact of the matter is that a lot of officer time is wasted. There is too much paper and too much copy and paste, and, as the noble Baroness said, opportunities are missed. I know this because my son works in the Met and often complains when he comes to see me about the poor IT integration, particularly between the police, the CPS and the courts, where cases are being progressed.
I am sure that the Minister is well aware of all this and that steps are being taken to improve things, and I know, having worked in government on IT systems-related work, that it is very difficult. However, there is an enormous advantage to be gained from making progress in this area and spending police time on chasing and catching criminals, not on so much bureaucracy.
Baroness Ludford (LD)
My Lords, I want to make a very brief contribution—cheekily, because I have not taken any role in this Bill. My noble friend’s amendment, what she said in support of it and the words of the noble Baroness, Lady Neville-Rolfe, are highly pertinent to the debate on the Government’s proposal to restrict jury trials. On the Tube in, I read an account of the report from the Institute for Government, which has looked at the Government’s proposals and concluded that the time savings from judge-only trials would be marginal at best, amounting to less than 2% of Crown Court time. It suggests, pertinently, that the Government
“should instead focus on how to drive up productivity across the criminal courts, investing in the workforce and technology required for the courts to operate more efficiently”.
As others who know the situation much better than I do have said, it sounds dire. One is used to all these problems of legacy systems—lack of interoperability and so on. I remember all that being debated at EU level. It is difficult and probably capital-intensive work—at least, initially—but instead of promoting these headline-grabbing gestures about abolishing jury trials, the Government need to fix the terrible lack of efficiency in the criminal justice system. I am not sure that the civil justice system is any better. Having, unfortunately, had a modest involvement in a case in the county court, I found that it was impossible to phone any staff. You might be lucky to get a response to an email after a week.
Making the system work efficiently, with all bits interacting with each other, would do a great deal more to increase productivity and save the time of all those people who are running around. One hears accounts from people who work in the criminal courts of reports not being available, files being lost and staff being absent, let alone the decrepit state of court buildings. All this investment needs to go in before the Government resort to gesture politics and things such as abolishing jury trials.
Lord Clement-Jones (LD)
My Lords, Amendment 432 was so well introduced by my noble friend Lady Doocey. This lack of appropriate technology and how it is handicapping our police services is something that she feels very strongly about. I was delighted to hear what the noble Baroness, Lady Neville-Rolfe, and my noble friend Lady Ludford had to say, because this lack of the appropriate technology extends beyond the police services into the wider criminal justice system. This proposed new clause would address the desperate state of police data infrastructure by requiring the Secretary of State to publish a national plan to modernise police data and intelligence systems within 12 months.
As mentioned in the explanatory statement, this is not an abstract bureaucratic request. It is a direct response to, among other things, recommendation 7 of the National Audit on Group-based Child Sexual Exploitation and Abuse by the noble Baroness, Lady Casey. The audit painted a damning picture of the current landscape: intelligence systems that do not talk to one another, vital information trapped in silos and officers unable to join the dots to protect vulnerable children. It is unacceptable that, in 2025, we still rely on fragmented, obsolete IT systems to fight sophisticated networked criminality. This amendment seeks to mandate a coherent national strategy to ensure that antiquated police technology is replaced, that intelligence regarding predatory behaviour is shared effectively across police borders in real time and that we finally close the capability gaps that allow perpetrators of group-based child sexual exploitation to slip through the net.
Amendment 432 would ensure that, when the police hold vital intelligence, they have the systems to use it effectively. We cannot claim to be serious about tackling child exploitation if we do not fix the digital infrastructure that underpins our investigations.
Lord Sandhurst (Con)
My Lords, I am grateful to the noble Baroness for bringing forward this amendment, which seeks to require the Government to publish a national plan to modernise police data and intelligence systems in England and Wales. At its heart, this amendment speaks to a very practical and pressing concern: that our policing infrastructure must stay up to date with modern crime, particularly the most harmful and insidious forms of abuse.
Outdated and fragmented information systems can frustrate effective policing. That point was raised by the noble Baroness, Lady Casey, in the National Audit on Group-based Child Sexual Exploitation and Abuse, which noted that some police forces are still operating antiquated legacy systems that inhibit real-time data sharing and hinder co-ordinated action across forces and with partner agencies.
Group-based child sexual exploitation is a complex crime. Our response must therefore be equally networked and technologically capable. Recommendation 7 from the noble Baroness, Lady Casey, made it clear that improving data systems is essential—I emphasise that word—to ensuring children’s safety and enabling earlier intervention and more efficient information exchange. I look forward to the Minister’s outline of the steps the Government have already taken to address this issue.
This amendment seeks to take that recommendation forward by requiring a national plan with clear steps and milestones to modernise police data and intelligence systems. We strongly support the idea of having clear milestones not just for police forces and agencies but for the public and Parliament. Transparent targets allow for progress to be measured and debated, and provide operational leaders with something concrete and tangible to work towards.
We also welcome the requirement for annual progress reports to be laid before Parliament until the plan’s objectives are achieved. That level of ongoing scrutiny is important if we truly want to drive systemic improvement rather than to allow good intentions to gather dust. I therefore echo the helpful contributions of my noble friend Lady Neville-Rolfe and the noble Baroness, Lady Ludford; we really must do better.
I look forward to the Minister’s response to this amendment. I would be grateful if he would outline how the Government intend to address the problems identified in the national audit and how they will respond to the constructive challenge that this amendment presents.
Lord Katz (Lab)
My Lords, I am grateful to the noble Baroness, Lady Doocey, for explaining the rationale behind her amendment, which would require that a comprehensive national plan to improve police data and intelligence systems is set out within 12 months of the Bill receiving Royal Assent.
While I am sympathetic to the intent of this amendment—I think probably everyone in the Committee is—I stress that Parliament already has a role in holding the Home Office to account on policing systems. The Public Accounts Committee has oversight of the Law Enforcement Data Service and has required the Home Office to provide detailed information on its development. The Commons Home Affairs Committee also regularly scrutinises Home Office digital transformation and policing technology, and it is open to the Justice and Home Affairs Committee of your Lordships’ House to do likewise.
Additionally, His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services publishes State of Policing: The Annual Assessment of Policing in England and Wales. This report is laid before Parliament, ensuring that Parliament remains informed about the performance, challenges and progress of police forces across England and Wales. This provides information on police efficiency, effectiveness and progress on reforms, including those relating to IT and crime data integrity.
Work to improve access to policing data is already under way. For example, last June the Home Office conducted a preliminary market engagement to better understand what solutions the market could offer policing to improve data integration. We are currently evaluating those responses against the existing policing landscape to determine the best way forward. We also awarded a contract to deliver a police technology strategy and road map.
Baroness Neville-Rolfe (Con)
Before the Minister sits down, I am obviously delighted to hear about the White Paper. We are really looking forward to it being published. He helpfully mentioned a contract that has been let to look at this whole area—a police technology strategy and road map for intelligence and the technical use of it. I wondered who that contract had been let to and what the timeframe was for delivering conclusions. The other point raised by the noble Baroness, Lady Doocey, was the question of having enough capital for the IT. Being a businesswoman, I know very well how expensive that can be. If the Minister could say a little bit more about that, that might help us before Report.
Lord Katz (Lab)
I do not have details of the contract in front of me. I am, of course, aware that there could be commercially confidential issues at play which might prevent the level of disclosure that she wants, but, in the spirit of trying to be helpful, I will certainly go away, take it back and write to the noble Baroness if I can.
Baroness Brinton (LD)
I am very sorry. I am recalling the passage of the Procurement Act, where we discussed at some considerable length what contract could and could not be kept from the public. The detail can be confidential, but the fact of the contract and who it is let to should surely be part of the public domain—it should be on websites.
Lord Katz (Lab)
I will certainly defer to the noble Baroness’s knowledge of the Procurement Bill because I think it went through the House before I was in the House. I am happy to share what detail that we can under the details of that Act. I hope that that satisfies the noble Baroness.
I will also go away and look at the issue of capital funding. I am afraid I do not have the figures in front of me, but of course it is important that we fund all these systems adequately. We would contend that, unfortunately, for the past 14 years some of the investment in policing that we would have liked to see has been lacking, and we have been very clear about our wider approach as a Government to investing, particularly in neighbourhood policing but in policing at all levels. We want to improve on recent experience.
Baroness Doocey (LD)
I thank the Minister for his response, but I am, frankly, gobsmacked at his suggestion that my amendment was not needed because the Home Office had a role in deciding what IT the police had and making sure that they had what they needed. For more than two decades, report after report has documented the same weaknesses: fragmented systems, wasted effort, and vital intelligence lost between agencies. People who did not understand would find it almost impossible to believe that vital intelligence can be lost between agencies, but it has been happening for years and years. We cannot keep treating this as a series of isolated IT upgrades that are needed when what is needed is a national strategy, with clear responsibility and sustained investment. There is no way past that; that is what is needed and it is what must be provided. This amendment does not prescribe the solution. It simply asks for leadership and for a timetable to deliver what everyone thinks is now essential.
The Minister mentioned talking to different people and finding out what was needed. All you have to do is talk to 43 chief constables and they will tell you exactly what is needed, for free. We do not have to go out to thousands of people and run various inquiries, taking days and months trying to work out what is needed. Everyone knows what is needed: the money, the will and the leadership. But, for now, I beg leave to withdraw the amendment.
Policing: devolution to Wales(1) Schedule 7A of the Government of Wales Act 2006 is amended as follows.(2) In section B5 (crime, public order and policing)—(a) omit “and policing”, and(b) omit line 41 “policing”.(3) The Secretary of State may by regulations make further provision under this section.”Member’s explanatory statement
This new clause seeks to devolve policing to Wales, by removing it from the list of reserved matters in the Government of Wales Act 2006.
Baroness Smith of Llanfaes (PC)
My Lords, Amendments 433 and 434 are in my name. I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, and the noble Baroness, Lady Humphreys, for adding their names to both amendments, and the noble Lord, Lord Hain, for supporting Amendment 434. I look forward to hearing contributions from across the Committee on how we can ensure that policing and youth justice in Wales genuinely meet the needs of the people of Wales.
I will take the amendments in turn, beginning with policing. Amendment 433 would remove policing from the list of reserved matters in the Government of Wales Act, thereby devolving responsibility for policing to Wales. My case rests on two central arguments. The first is the current shake-up in police governance across England and Wales and what that means for Wales, and the second is the reality of how policing in Wales is already funded.
First, on governance, His Majesty’s Government’s proposal to abolish police and crime commissioners in England and Wales makes the amendment particularly timely. In England, PCC functions are expected to transfer to mayoral authorities. Wales, however, has no equivalent governance structures. That leaves a serious constitutional gap, with no clarity as to where those powers will ultimately sit. This moment therefore presents a clear choice: either Wales is left in a governance limbo or policing is devolved to the Senedd, allowing Wales to take responsibility for its own public safety. It cannot be right that devolved English regions, such as Greater Manchester, can exercise greater control over policing than the democratically elected legislature of Wales.
Secondly, on funding, what strengthens this argument considerably is the financial reality. My understanding is that in 2024-25 only around 43% of policing expenditure in Wales came from the UK Government. The remainder came from within Wales itself, with approximately 44% funded directly through council tax; in other words, the people of Wales are already paying for the majority of their policing.
It therefore follows that policing policy and priorities should better reflect Welsh needs and Welsh circumstances. The Welsh Government have, for example, used their health budget to support police officers working directly within the education system, engaging with young people on substance misuse, healthy relationships and cybercrime. This preventive work not only supports public health objectives but helps build trust between communities and the police.
The geography and demographics of Wales are markedly different from those in much of England. We have fewer large urban centres and many rural communities, where access to services is already challenging. Centralisation, often driven by cost-saving decisions made at a distance, has had a particularly damaging impact in Wales. Court closures provide a clear example—increasing travel times, costs and complexity for victims, witnesses, offenders and professionals alike. Within this context, policing must strike a careful balance, recognising Cardiff’s role as a capital city, while also addressing the unique challenges faced by rural communities, where service delivery is often more expensive and more fragile.
Wales is also a bilingual nation, yet the College of Policing, which trains officers for England and Wales, is not required to comply with the Welsh Language Act. Welsh-medium training for police embedded in Welsh communities should not depend on good will. It should be embedded as a core requirement. That too points towards the need for devolved control.
I turn to Amendment 434, which would remove youth justice from the list of reserved matters and devolve it to Wales. Youth justice is already, in practice, quasi-devolved. The services that young people most frequently interact with—education, health, social services—are all devolved. In Wales, the vast majority of young people who come into contact with the youth justice system are low-level offenders and many are dealt with out of court through youth bureaus. These bureaus run by Welsh local authorities take a public health and restorative justice approach. The Welsh Government’s child-centred framework, Children First, Offenders Second, has been widely recognised. Sometimes described as the “dragonisation of justice”, it reflects Welsh values and Welsh priorities.
Once again, funding tells an important story here. In 2022-23, around 64% of youth justice funding in Wales came from devolved sources. While more recent data is not publicly available, there is little reason to believe that this position has materially changed. That same year, the proportion of funding provided by the Ministry of Justice to Wales was lower than for any English region. For example, the Youth Justice Board core grant made up 44% of total funding in the north-east of England and 40% in the north-west. In Wales it accounted for just 24%. Once again, Wales is largely funding a system it does not control.
On the wider constitutional point, Scotland and Northern Ireland both have full responsibility for their justice systems and Wales remains the outlier. This is not an argument for devolution for its own sake; it is an argument for fairness, coherence and effectiveness. Many of the most powerful levers for reducing crime—health, housing, education and social care—have been devolved to the Senedd for over 26 years. Retaining justice powers here at Westminster fragments responsibility and weakens accountability. When systems fail, it is often unclear who is responsible, and communities pay that price. Welsh Labour’s 2021 manifesto committed to pursuing the case for devolution of policing and justice, as set out by the Thomas commission. We have had report after report, commission after commission. This is not a moment for further exploration, it is a moment for action.
Let Wales take responsibility for policing and youth justice. The people of Wales are already paying for these systems. They deserve the ability to shape them in line with their needs and values. The time is now. I look forward to the Minister’s response and hope that His Majesty’s Government will give serious consideration to these amendments as the Bill progresses through the House. I beg to move.
Lord Hain (Lab)
My Lords, I have not added my name to Amendment 433, but I have to Amendment 434. I am grateful to the noble Baroness for having tabled it.
Lord Thomas of Cwmgiedd (CB)
My Lords, I will speak briefly in support of the amendments, to which I have put my name. As the noble Lord, Lord Hain, has made such an eloquent speech in relation to youth justice, I will concentrate on the police because the arguments are identical. The reason I say they are identical is that the three commissions that have looked at this issue—commissions made up not of politicians interested in hanging on to power but of individuals who have experience and expertise in the systems—have all recommended the devolution of youth justice and the devolution of the police. The first was Sir Paul Silk, the distinguished clerk; then I chaired a Commission on Justice in Wales, which reported in October 2019; and then there was the report of Dr Rowan Williams and Professor Laura McAllister. All recommended the same thing.
In view of the pressing need for a debate to occur at 4 pm—it may be a minute or two early—I refer to paragraphs of the report that we wrote. The police are dealt with at paragraphs 4.77 to 4.151, and youth justice is dealt with at paragraphs 4.181 to 4.195. I give those paragraph numbers in the hope that someone in the Home Office might read them. One of the problems of the report that the commission I chaired submitted is that no one has ever answered it. I assume it has never been answered because it is unanswerable. It is therefore important, in the light of the forthcoming paper on the police, that this point is grappled with.
The two fundamental arguments have been outlined by both the noble Lord, Lord Hain, and the noble Baroness, Lady Smith. First, if you devolve everything else, you have to devolve police and justice. They are integral to the proper management of a system. Secondly, there is the democratic argument that if Wales is paying the greater part of what it costs, there should be accountability—certainly greater accountability than that enjoyed by the Mayors of Manchester and London. At the moment, the accountability is the other way around.
Where this is so important is that the view used to be expressed that the people of Wales really were not up to governing themselves. That was the 19th-century and early 20th-century view and, thank goodness, is gone. But now one asks: what is the argument against devolution? It is very difficult to see what it is. It will be a testing point as to what will happen on the publication of this White Paper.
The Government are abolishing police and crime commissioners. I express no view as to whether that is a good thing or a bad thing, but it forces the Government to grapple with what happens in Wales. Are they going to set up some elaborate structure to avoid devolution, or are they going to face up to devolution? We shall know the answer to this in the forthcoming White Paper. I hope that the Home Office officials, when they have read the paragraphs to which I have referred, will see that there is one unanswerable response to this question: devolution. On the other hand, if they set up some elaborate structure, no longer will it be said, “Well, the Welsh aren’t quite up to running their own police force”. It might be said, “There are other reasons why politicians don’t like giving up power in London. They want to hang on”. One has already seen reflected in remarks made in and across Wales that it is about time that these important powers were transferred to Wales to make the Government coherent, rather than hanging on to them and to power for what I hope I have wrongly understood—or been told—are purely party-political reasons. I hope that is not the case, but the proof will be in the pudding of the police White Paper.
Baroness Brinton (LD)
My Lords, we on the Liberal Democrat Benches are grateful to the noble Lady Baroness, Smith of Llanfaes, and the noble and learned Lord, Lord Thomas of Cwmgiedd, for tabling Amendments 433 and 434, and to the noble Lord, Lord Hain, for adding his name to Amendment 434. These amendments relate to the devolution of policing and youth justice to Wales.
My noble friend Lady Humphreys has signed both amendments as they agree with Lib Dem policy and our ambitions for Wales, but, unfortunately, she cannot be in her place today. Our manifesto for the general election in 2024 promised to:
“Deliver a fair deal for the people of Wales by … Devolving powers over youth justice, probation services, prisons and policing to allow Wales to create an effective, liberal, community-based approach to policing and tackling crime”.
To the disappointment of many in Wales, the issue of devolving justice to Wales was absent from Labour’s general election manifesto, despite Keir Starmer committing a year before, in 2023, to introducing a take back control Bill to devolve new powers to communities from Westminster. This commitment appears to apply to England only, and gradually, over the months since the election of the Labour Government, their lack of ambition for Wales has become more apparent.
After the State Opening of Parliament in 2024, there was no new mention of new powers for Wales in the King’s Speech. In July 2025, the noble Lord, Lord Timpson, said that the UK Government could row back on its promises on the devolution of probation and youth justice, despite the Welsh Government beginning the groundwork to prepare for what they believed to be a realistic project.
Noble Lords have raised queries about the consequences of the decision taken by the Government in November last year to abolish police and crime commissioners—a decision that those of us on these Benches applauded. At the time, noble Lords from Wales were concerned about the lack of clarity on the Government’s plans for the transference of the PCCs’ functions to Wales. The assumption was that the functions would transfer to mayors in England and to the Senedd in Wales. However, far from providing clarity, the answers they received amounted to pure obfuscation. Now we learn, in what could be described as a slap in the face to the Senedd, that the functions of the PCCs are to be transferred to a new board, placing the Welsh Parliament on the same level as a non-mayoral authority in England.
On these Benches we understand the difficulties so ably clarified by the noble and learned Lord in his contribution to the Sentencing Bill of devolving just one part of a system. But where has English Labour’s ambition for Wales disappeared to? For all the platitudes about mutual respect and co-operative working, the disrespect is beginning to show, sadly. Where is the recognition that Wales has been ready for the devolution of the justice system for the last 25 years at least, and where is the road map for our two nations to achieve that together?
Lord Sentamu (CB)
My Lords, I do not come from Wales. I am speaking because I have sympathy, and I have friends there. I remember somebody asking me, “Are you evangelical or Anglo-Catholic?” I said, “Catholic, yes; Anglo, no”. Wales may sometimes feel it is singing that song.
The devolution of justice and policing to Wales are two sides of one coin, as the noble and learned Lord, Lord Thomas, said. To those who tabled Amendments 433 and 434—the noble Baroness, Lady Smith, the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Hain—I simply ask one question: if policing and youth justice, this one coin with two sides, are devolved to Scotland, why not Wales?
Lord Sandhurst (Con)
My Lords, we oppose Amendments 433 and 434, which seek to devolve policing and youth justice to Wales. Let me be clear: I make no observations on the principle of devolution for its own sake, but these amendments would make profound constitutional and operational changes. They are presented without convincing evidence that devolution of policing or youth justice would improve outcomes for victims, communities or young people themselves.
Policing and youth justice are not isolated administrative functions—
Lord Thomas of Cwmgiedd (CB)
May I ask the noble Lord whether his staff have read the report that contains all the evidence? To say that this is put forward without evidence is not correct.
Lord Sandhurst (Con)
I cannot answer that from the Dispatch Box, I am afraid; nor do I have many staff.
Policing and youth justice are not isolated administrative functions. They sit at the heart of a single, integrated criminal justice system spanning England and Wales. Police forces operate across borders daily; so too with the criminal justice system. Intelligence sharing, counterterrorism, and serious organised crime and public order policing all rely on consistent legal frameworks, operational standards and accountability structures. Fragmenting those arrangements would introduce complexity, duplication and risk at precisely the moment when policing faces unprecedented pressures.
Policing in Wales is already delivered locally, is locally accountable and is responsible to Welsh communities. Police and crime commissioners in Wales set priorities based on local need. Chief constables in Wales are not directed from Whitehall on day-to-day policing. What is proposed is not so much localism but the creation of a new layer of political control over policing.
The amendments ask your Lordships’ House to place policing and youth justice under the control of the Welsh Government. This has been run by Labour continuously since devolution began. It is therefore legitimate to ask what that Government’s track record tells us about their capacity to take on these serious responsibilities. In area after area of devolved public policy, Labour-run Wales has failed to deliver. Educational outcomes in Wales have fallen behind those in the rest of the United Kingdom on many international measures. Health waiting times are persistently worse than in England. Major infrastructure projects have been delayed or mismanaged. Those are not ideological assertions; they are documented outcomes of more than two decades of one-party dominance and failure.
When systems fail in devolved areas, the response of the Welsh Government has often been to blame Westminster rather than to reflect on their own actions or inactions. If policing and youth justice were devolved, who would be blamed if and when crime rose, youth reoffending increased or serious failures occurred? Experience suggests that accountability would become more opaque, not clearer and more robust. Constitutional change should be driven by clear evidence of benefit, not by political symbolism. It has not yet been demonstrated how these proposals would reduce crime, improve public confidence or deliver better outcomes for young offenders; nor has it been shown that fragmentation would be avoided and how cross-border crime would be tackled more effectively, or failures remedied. For these reasons, we cannot support the amendments.
Lord Hanson of Flint (Lab)
I am grateful to the noble Baroness, Lady Smith of Llanfaes, the noble and learned Lord, Lord Thomas, and my noble friend Lord Hain for tabling these amendments. I speak as Home Office Minister but also as a resident of Wales, a Member of Parliament for Wales for 28 years, a Parliamentary Under-Secretary of State for Wales who helped bring in devolution, and a Welsh Whip who took it through the House of Commons, so I am a supporter of devolution and know my way around this patch. However, I say to the noble Baroness that the Government cannot support in full the direction of travel that she has proposed.
I recognise again the great contribution that the noble and learned Lord, Lord Thomas, has made on this issue and in his reports, but the view of the Government remains that devolving police and youth justice would require extensive institutional change and carry major operational and financial implications. Devolving policing in particular would undermine the UK Government’s ability to deliver crime prevention and the safer streets mission in Wales.
The noble Baroness raised finance. The position she mentioned in Wales is no different from that across the border in Cheshire. Taxpayers there have a burden of funding carried forward, with UK central support. That is a common issue. The noble Baroness does not have too long to wait, as the police settlement for England and Wales will be issued by the Home Office very shortly. I expect that—
Baroness Brinton (LD)
The noble Lord commented about it not being the right time for Wales, but does this mean that the Labour Government are changing their view about police devolution in Scotland? It works perfectly well.
Lord Hanson of Flint (Lab)
There are significant differences between the positions in Scotland and Wales. Scotland has its own legal system, prison system and policing system; it has had that for some time. In Wales, we have a very integrated England and Wales court system and a cross-border, east-west relationship. For example, the regional organised crime centre that services the area of north Wales where I live is a cross-border co-operation on a cross-border issue.
We have looked at the noble and learned Lord’s points and reports and, from my perspective, attempting to separate elements of the offender management system from the wider criminal justice system would in practice be extremely complicated. It would lose some of the economies of scale that we have in the current arrangements, and it would put a jagged edge on an entirely new and complex interface. I know that the noble and learned Lord has looked at those issues, but that is the view of the UK Government. The UK Government recognise the importance of Welsh partnership structures such as the Policing Partnership Board for Wales and the Police Liaison Unit, but ultimately the Government have no plans to devolve policing in Wales at this moment.
Noble Lords mentioned the decision announced on 13 November last year to abolish police and crime commissioners. We have put in that plan, and it will require legislation at some point to give effect to those proposals. There will be further discussion in the forthcoming White Paper on them, but we have committed to work with the Welsh Government and other stakeholders to ensure that new arrangements provide strong and effective police governance for Wales, while recognising the unique nature of those Welsh arrangements.
Having said that, on the Labour Government’s commitment that the noble Baroness, Lady Brinton, mentioned, we are working with the Welsh Government to undertake a programme of work on the Labour Government’s 2024 manifesto commitments around youth justice, which goes to the heart of one of the amendments tabled by the noble Baroness. In light of the manifesto commitment, we are trying to ensure that the youth justice system delivers effectively for the people of Wales. We are undertaking a programme of work to meet that aspect of the manifesto commitment, which meets in part the objectives of the noble Lords who spoke to these amendments.
I am conscious of time, and I am sorry that this is a speedy debate pending the debate that is due any moment now. We can return to this on Report, as the noble Baroness may do, but the view of the Government to date is as I have outlined.
Lord Thomas of Cwmgiedd (CB)
First, I do not want the Minister to answer this now, but I would be very grateful if he would look again at the funding for the police in Wales. Unless I am mistaken, Manchester and London do not have a Government who make a grant to policing as the Welsh Government do. Secondly, the argument has been put forward, but the arguments that we have put contrary to all this have never been answered—and I hope they will be answered in the police White Paper. If the argument is a good argument, it stands or falls by its strength. The Government in London have never had the courage—and those who seek political advantage have stood behind that lack of courage in failing to answer independent views that have been expressed.
Lord Hanson of Flint (Lab)
The Government will answer those questions, and they can make a very robust case for why devolution of policing should not happen. As I have said, we are exploring the issue of devolution of youth justice with the Welsh Senedd and the Welsh Government, and in the forthcoming police White Paper we will look at what the governance systems should be in consultation with the Welsh Senedd, police and crime commissioners and the police chiefs in Wales. That is a further debate. The noble Baroness has opportunities on Report to table amendments to get a fuller debate, and there will have to be legislation capacity at some point around the objectives set in the announcement on 13 November and in the forthcoming White Paper, which is coming very shortly. In the light of all that, and given the time that we have now, which is far too short to debate this in full—and I would like to do that at some point with the noble Baroness—I ask her to withdraw the amendment.
Baroness Smith of Llanfaes (PC)
My Lords, I thank the Minister for his response, although I admit that I am quite disappointed with the position expressed by the Government. I certainly do not agree that it is too complicated to devolve policing to Wales when apparently it is not too complicated to abolish PCCs and create a brand-new structure—so I do not accept that argument. But today we have a debate to come after this one, so I shall withdraw the amendment. However, I do not think that we have resolved the argument over how the policing will be governed after the abolition of PCCs. I hope that the police reform White Paper includes detailed proposals in relation to that issue.
The Minister mentioned some positive steps on youth justice, and it would be good to have further discussions on the details between Committee and Report. I beg leave to withdraw the amendment.
Arrangement of Business
The Deputy Speaker (Lord Russell of Liverpool) (CB)
Before we start the next debate, I would like to alert two of the noble Lords whose maiden speeches we are looking forward to that the speaker that they thought was in front of them, either the noble Baroness, Lady Meyer, or the noble Baroness, Lady Foster, is no longer speaking in the debate. Just to make sure that they are not taken by surprise, it will be the speaker preceding those speakers on the list before noble Lords stand up to make the speeches to which we are all looking forward to very much.
Retail and Hospitality Sector
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Monckton of Dallington Forest
That this House takes note of the impact of Government policy on the retail and hospitality sector.
Baroness Monckton of Dallington Forest (Con)
My Lords, I am grateful for the opportunity to lead this important debate. I declare my interest as a non-executive director of the Watches of Switzerland Group plc, a FTSE 250 company, and as founder of Team Domenica, a charity based in Brighton which owns and operates a pub—the North Star.
I see that the Deputy Speaker is sitting on the Woolsack. As my noble friend Lord Borwick pointed out to me, the Woolsack symbolises the economic foundation of the nation from the days when the wool trade was of huge importance to England. The fact that the Lord Speaker presides on this wool-stuffed cushion demonstrates that government is supported by business. But this Government are the most anti-business that I can remember. Perhaps because no one in the Cabinet has any experience of running a business, they simply have no empathy or understanding of its risks and challenges.
I do not understand how the Government can claim to be helping hospitality, small businesses and retail. Admittedly, in her most recent Budget, the Chancellor added a new lower rate multiplier but, at the same time, removed previous relief and massively revalued all the rates upwards, leaving pubs facing eye-watering increases. She also announced that business rate discounts would fall from 75% to 40% and that, from April, there would be no further discounts.
As Mark Wrigley, a publican in Manchester, wrote:
“Two years ago, we paid £9,000 in rates, which rose to £13,000 in 2025. But this year, it has more than doubled to £31,000. Within three years, it is expected to reach £42,000”.
He said that these figures are based on the so-called rateable value—a calculation that often seems plucked from thin air. He wrote that the pub’s rateable value
“is a scarcely believable £97,000”;
his annual rent is £70,000.
“So the RV is 40 per cent higher than the rent … And the madness gets worse. When we compare our RV to other pubs and bars on our street, some of them pay much less, while one of them has seen its RV soar from £50,000 to a frankly ludicrous £165,000”.
And this is being replicated across the country.
Pubs are facing an average tax rise of 76%, while hotels’ tax bills are going up by 115%. Utility costs have risen by 57% in the last five years. Ed Miliband’s energy policies have not helped, although perhaps he might feel that, with every pub that closes, we are getting closer to net zero.
One pub a day closed last year. Just think for a moment what this means for rural communities, for employment and for the social fabric of our country. When a pub shuts, a small part of England dies. Particularly in rural England, local pubs are vital to combat loneliness and social isolation. They are places that welcome everybody: places where you belong as soon as you walk in the door; places where you do not need to be invited to visit; places which are, literally, home from home for many.
If the Prime Minister’s local pub, the Pineapple, in north London closed, he could easily find somewhere else to slake his thirst, drown his sorrows and contemplate his U-turns. In rural villages, which have already seen shops and post offices close, there would be nowhere else to go. The Government’s proposed intensification of the drink-driving laws is clearly designed to stop these locals getting into the car and going to the next village—if, indeed, the pub there remains open.
The Chancellor is effectively destroying pubs, as much as if it were her very purpose. An estimated 89,000 jobs were lost in the hospitality sector after her first Budget. UKHospitality predicts that a further 100,000 jobs are at risk after the November Budget. This week, we learned that, in the month after that Budget, the number of staff on payrolls fell by more than 42,000—the biggest fall in the number of workers since the pandemic. The lowering of the NI employer threshold seems to have been designed to kill off starter jobs which are at the heart of the hospitality and retail industries.
Flexible working is key in both hospitality and retail. As Sam Carlisle, a rural restaurateur, eloquently put it:
“These are jobs that fit around lives”.
If zero-hours contracts are abolished under the Employment Rights Act, as planned, hospitality businesses might as well close altogether. I know from my own experience at the North Star that you must monitor rotas minutely.
Retail and hospitality are significant and huge players in the economy. These sectors are less impacted by AI and should therefore be stimulated to grow and expand. This is where the human jobs of the future will be, and fiscal policy should be supporting them, not increasing the burden. When people work, their well-being tends to get better; getting them into work will reduce the burden of benefits and reduce the strain on our healthcare system in treating people for depression. When Team Domenica advertised for jobs for our pub, for every job we advertised, we got over 200 applications. What does that tell you?
The Government’s proposal for extending licensing hours is tokenistic: many pubs already close two days a week and are closing earlier in the evenings as they can no longer afford the staff costs. Hospitality employs people from every socioeconomic background, in towns and villages all over the country. The impact of so many policies all at once is confusing and devastating. Put simply, it means that pubs will simply not be able to afford to employ the people who need the job most.
Tom Kerridge, the chef and restaurateur, has gone on record about the 148% surge in costs on one of his establishments. I imagine he now has buyer’s remorse, having been vocal about voting for the Labour Party in the last election—or indeed anyone else who took Keir Starmer at his word when, as leader of the Opposition, he declared:
“my Labour Party is determined … to breathe life back into our high streets”.
He said:
“Small businesses are the beating heart of our economy”.
Instead, they are now on life support.
The are rumours of a U-turn on pubs, but nothing for hotels and restaurants. The hospitality sector must be looked at as a whole. A friend of mine who owns and runs three successful hotels and was planning to start a fourth has changed her mind. Instead, she is having to make redundancies in her existing portfolio and curtail all capital investment. Without such investment, there is no growth. The employer national insurance changes alone cost her £0.5 million on her bottom line.
Hotels are facing a dual tax hike. On top of business rates, there is now going to be an overnight visitor levy, which Labour is allowing mayors to impose. The steep rise in wage costs, national insurance and other regulatory costs means that the 5p discount to the business rates multiplier announced in the Budget is not sufficient to ease these pressures. What is needed is the full 20p discount permitted in legislation.
A new surcharge is being applied to higher-value premises with rateable values above £0.5 million. This is hitting high street shops, supermarkets, hotels and sports clubs. Twice as many retail premises are being hit compared to the online warehouses, which this was supposedly meant for. In its 2024 election manifesto, Labour promised it would
“level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”.
I think that should now win the Booker Prize for fiction.
Our local town of Heathfield in East Sussex has a charming café, the Pink Cabbage Co, which is run by an energetic, inspirational, entrepreneurial lady called Lucy Howlett. She employs 16 people, all local. The café is always full, the food is delicious and it is an important part of the community. She told me that, after last November’s Budget, having spent months mitigating as much as she could from the previous Budget, she lay on the floor and cried. At the end of that month, having paid all her bills, she had £23. She decided to do tapas nights. Why tapas? Because the food can go on one platter and you can prepare it beforehand, so you need to employ fewer staff. I remember the days when being an entrepreneur meant that you grew your business, you employed more people and you were an important contributor to the economy, not that you had to think of creative ways to lose your employees.
I have spoken previously about Heathfield Ironmongers, which closed after 100 years of trading. Since then, several other businesses in our two-street town have closed their doors. We now have seven charity shops, and there have also suddenly sprung up a Turkish barber and two Vietnamese nail salons—cash only. How can they afford to operate when the traditional English shops have had to close? I wonder.
The Government claim to want more young people in work, but their policies have made it harder for them to find jobs. It is often said that one needs to be cruel to be kind, but the Government’s policies on the minimum wage are kind to be cruel. Subsidising job opportunities and creating state-funded work placements, as the Government are suggesting, is not the answer. Enabling the private sector to employ more people by removing a punitive tax burden is the sustainable way forward.
This Government have said they want long-term growth, but instead, because of the last two Budgets, retailers and hospitality owners are facing harsh financial choices, forcing them to pull back on investment when they should be focusing on growing their businesses and creating job opportunities.
Napoleon, in an ill-judged sneer, described England as a nation of shopkeepers, implying that the English were too materialistic to be focused on profit. The Woolsack signifies a nation driven by trade and commerce, but where are we now? We are a nation of charity shops, boarded-up high streets and a plethora of fake and illegal Harry Potter shops and so-called British tourist shops, which are creeping from Trafalgar Square down Whitehall, as I am sure many noble Lords will have noticed. It is desperately sad that Nelson, on his column after his great victories over Napoleon, should have to witness the state-promoted decline of our nation’s proud history as shopkeepers. I beg to move.
Baroness Dacres of Lewisham (Lab) (Maiden Speech)
My Lords, it is a great honour to rise in this House for the first time. I would like to thank noble Lords across the House for their warm welcome.
I speak today as the noble Baroness, Lady Dacres of Lewisham, a title I hold with enormous pride. Lewisham is where I serve as the directly elected mayor, and I have proudly called it home for over 40 years. It is where community, resilience and ambition are part of everyday life—an area proud of its history of inclusion and as a borough of sanctuary. It is a place where you can eat your way around the world.
My journey here has been shaped by a strong work ethic, a belief in fairness and opportunity and a commitment to public service. I bring with me a background in science, computing and law, alongside lived experiences rooted in place, community leadership and local government.
It was a grant from Lewisham Council that allowed me to attend university and be the first in my family to do so, completing a degree in physical sciences with computing. I worked at the UK Atomic Energy Authority.
In later years I undertook a degree in law and was called to the Bar in 2006 while maintaining my IT career within investment banks and bringing up my son, the honourable Darnell Dacres, as a single parent. Together, these experiences have shaped who I am today.
I am deeply conscious that none of us arrives in this House alone. My paternal grandfather served in the RAF here, coming from Jamaica, during the Second World War. My parents came to this country as part of the Windrush generation, seeking opportunity and determined to build a better future. They raised me and my siblings with a deep respect for education, a strong sense of responsibility and the belief that leadership is shown through example. Those values continue to guide how I serve, and I know that they are values shared by noble Lords across this House.
Before turning to the substance of today’s debate, I would like to place on record my sincere thanks to Black Rod and the Garter Principal King of Arms. I am also grateful to my noble friends Lord Kennedy of Southwark and Lady Kennedy of Cradley for their support and friendship. I thank my noble friends Lady Smith of Basildon, Lord Collins of Highbury and Lady Wheeler for their support as I join this House. I also thank the staff of the House of Lords and the doorkeepers for their professionalism, guidance and—yes—directions.
I would also like to thank my noble friends for their care and support of my guests on the day of my introduction. My family spanned four generations and my guests included people who have played a significant role in my life, including my former primary school teacher, Tom Deveson, and my law degree lecturer, Professor Vick Krishnan. Their presence was a powerful reminder of the lasting impact of education, encouragement and daring to dream.
These experiences bring me to the subject of today’s debate and the positive impact that the Government’s policies are having on retail and hospitality, when shaped with local communities in mind.
In Lewisham and across the country, I know that retail and hospitality are central to the vitality of our high streets. Independent cafés, restaurants, market traders and shops provide jobs, support local supply chains and create welcoming social spaces. They are often the first step into employment for young people and an important source of flexible work.
I have seen how targeted support, town centre investment and measures that boost footfall can make a real difference. In Lewisham, regeneration, improved public spaces and new housing have already brought, and will continue to bring, more people into our high streets, helping local businesses to grow, employ local people and invest with confidence.
When policy is well designed, with local communities empowered to make decisions, our retailers and hospitality businesses do not just survive; they thrive.
Positive interventions strengthen local economies, sustain livelihoods and help to ensure that high streets remain vibrant and resilient.
Retail and hospitality succeed when policy recognises their role, not only as economic drivers but as anchors of community life. My experience in Lewisham shows what is possible when government works in partnership with local leadership and local enterprise, and when the voices of communities are heard.
As I take my place and my duties in this House, I do so with a deep sense of responsibility, determination and hope. I look forward to contributing constructively to our work, informed by lived experience, grounded in community and guided by the desire to improve lives.
My Lords, I thank you.
Lord Hannett of Everton (Lab)
My Lords, it is an absolute privilege to congratulate my noble friend Lady Dacres of Lewisham on an excellent maiden speech. I am sure all noble Lords will agree with me that she is going to be a real asset to this House. My noble friend was born in south London, her parents coming from the Windrush generation. She represents the best of our country. My noble friend brings to this House a wealth of experience in local government, serving first as a local councillor and then as a cabinet member, as Deputy Mayor of Lewisham and finally as the elected Mayor of Lewisham—a proud record. She is hugely respected and liked both in London and across the wider local government sector, as demonstrated by how, the day after taking her seat in the House of Lords, she was at Windsor Castle with her parents and son receiving an OBE from Her Royal Highness the Princess Royal. I know that my noble friend is already making friends across the House and that all noble Lords are looking forward to hearing more thoughtful contributions like the one she just made. We welcome her.
This is an important debate on an important sector—in fact, as a former general secretary of the trade union USDAW I am particularly well versed in the retail sector. I often try to avoid tribal politics in these discussions, because the issue is the most important thing. I have to say to the noble Baroness that she nearly pulled me into a debate of comparing records, but of course time does not allow me to forensically examine previous legislation from the other side, maybe during the 14 years that they were in office.
I look at the time we have been in office and I see a determination—a Government with values, of trying to do the right thing, not just for employees but for employers and growth, and with a vision for good. Therefore, when people criticise the legislation of a Government who have been in office for a relatively short time, I say, “There should be some humility about the trends started on your watch”. I say that not to be adversarial but to say that when you criticise a Government who have been in office for a short time, you have to be honest and self-reflective with regard to your own performance.
More positively, I said that I know the retail sector, and I know that any legislation that comes in takes time to bed in and that the full impact of legislation is seen over time. I want to draw attention to two issues that make a difference and which apply to these two sectors.
The Employment Rights Act, which was rightly scrutinised in this House, has gone through, and history will judge its impact over a period of time. The other one that I draw attention to, although there are many over the lifespan of many Labour Governments, is the introduction of the national minimum wage in 1998. I was a member of the Low Pay Commission for 11 years and took evidence from employers, employees, economists and a whole range of interested groups. I remember at its introduction how the critics—by the way, some of them in the trade union movement—and many employers declared that this was the end of the world, that to lift people out of a low wage with a minimum floor was risky. That was 1998; it is now 2026, and no Government would even think about replacing that. So my cautious note to the critics on any period of legislation is: give it time but also have a period of self-reflection.
The reason why coming into the House is important to me is that I want to be a part of a Government who have values at the core and who want to do the right thing by those at the bottom and not just those who can look after themselves at the top. I have seen this in evidence. Will we get things wrong? Of course we will, but who does not? For me it is about how the passion and the values of this party will sustain it going forward.
I just want to make reference to the Low Pay Commission again for this reason. I represented USDAW members in many of the large supermarkets, and we had good relationships with most of the big companies. But not all employers are equal. The invention of good legislation is a crucial part of our responsibility. If we are about anything, it has to be about supporting those who are the most disadvantaged, the most vulnerable and the most insecure. I have to say that in these two sectors, many people fall into that category. It succeeded because we were prepared to take a few risks and to compromise.
I do not want to just throw it back to the other side, but if it going to lead with its chin, let it be accepted that pubs were in decline under the watch of the previous Government. It is not something that this party was responsible for when we started.
Baroness Neville-Rolfe (Con)
I start by welcoming today’s maiden speeches. One of the most civilised aspects of life in the Lords is the Long Table. I had the pleasure this week of dining with the triumvirate of the noble Baroness, Lady Dacres of Lewisham, and the noble Lords, Lord Forbes of Newcastle and Lord John of Southwark. I know that they and the noble Baroness, Lady Shah, will make an energetic and positive contribution, such as we have already heard from the noble Baroness, Lady Dacres.
My noble friend Lady Monckton of Dallington Forest started off with a stirring speech. She explained clearly how pubs are struggling and waiting desperately for the extra help that the Government have promised. The uncertainty of their position, as the Government dither, is deafening. One minute, Rachel Reeves is imposing a huge increase in their costs, notably on rates, through a botched revaluation. Then we have a series of briefings suggesting that not only pubs but hotels and others might benefit, only for their hopes to be dashed by the Chancellor yesterday in Davos—hardly a democratic gathering. I hope that the Minister will have the grace to share the Treasury’s thinking with us. Parliament is paramount, however much the leadership might like to think differently.
I am speaking today because my neighbour, who owns a London pub, thinks that he will become bankrupt and have to move abroad unless substantial changes are made on rates. He has a pub with a hostel—not a smart hotel but a lodge, in the bureaucratic vernacular. He is in the category where rateable values alone will rise by 70% rather than 30%. Can the Minister look into this unfairness? Add to this the quadruple whammy of: first, the increase in NICs; secondly, the steep rises in the national minimum wage, particularly for young people; thirdly, IHT on family businesses that will still kill many of them; and, fourthly, the new cost of the Employment Rights Act. Multiply that across the economy and you have a crisis, so it is no surprise that thousands of pubs are closing.
The position will erode further with the introduction of a lower drink-drive limit. It will strike a hammer blow to pubs in rural areas—look at Scotland. Like so much modern regulation, it is not necessary. Those who, like me, take care to stay below the limit will stop going to the pub and the reckless will continue to drink and drive. The Government are right to say that they will act on rates, but it is complex. I am not convinced that Treasury Ministers have ever taken the time to understand what they have done.
What is clear is that growth is going backwards, which brings me on to hospitality more broadly. It is a huge industry suffering from that quadruple whammy and from tourist uncertainty, not helped by the failure to tackle street crime. Magnets for tourism such as music venues and stately homes are also in peril. The visitor levy on hotels is a threat to a slowing sector that is already facing a high tax burden and mushrooming construction costs. There is also another long-term hit: the impact of slimming drugs, reducing demand in restaurants and for alcoholic drinks. I have a relative who manages a vodka start-up. Assailed by national insurance, rates and a tougher economic backdrop, he is now working with a partner in the US, which they see as a more business-friendly country, even with today’s rolling Trump news.
Finally, I turn to retail. This is a highly productive sector. But it already shoulders a disproportionate tax burden: 7.4% of all business taxes, or £33 billion a year, according to the BRC. As well as rates, there are more costs in the pipeline on packaging and recycling. Employment is falling in retail, as it is in hospitality. The Government should be wary of increasing the burden there. The sector saw the promised rates reform as a possible driver of growth, only to be gravely disappointed.
The truth is that this Government have so far made a mess of the economy. Taxes, spending and now inflation are up, while growth, productivity and employment are sluggish. I believe that this partly reflects the Government’s ignorance of business, particularly less elite businesses such as retail and hospitality, as was highlighted by my noble friend. The noble Lord, Lord Timpson, is an honourable exception, as is the noble Lord, Lord Leong, who is winding today. A useful new year’s resolution would be for the Prime Minister to seek their counsel as he frames his overdue U-turn on rates.
Lord Smith of Hindhead (Con)
My Lords, I thank my noble friend Lady Monckton for securing this important and timely debate today and wish her every success and good luck with her pub venture. She, like others, will need some luck when being involved with the hospitality industry.
I declare my interests as set out in the register, in particular my financial interest as the chairman of the Association of Conservative Clubs—a role that I have undertaken since I stepped down as the CEO last year. For the record, I have worked for the association my entire working life, having joined the team some 39 years ago. I congratulate the four new Members of your Lordships’ House who are making their maiden speeches in this debate. I sincerely wish them well and look forward to hearing their future contributions.
We are all well aware that the hospitality industry is facing a crisis worse than it has ever seen—astonishingly, even worse than it experienced during the Covid pandemic and lockdown. We know this as there are daily articles in the press and coverage in the media about the plight of pubs and, in particular, the unfair rating increases that are set to cripple many establishments, with eye-watering multipliers which, for many, will be unsustainable over the next three years. Putting to one side the increase in wages, which affects all employers, and food inflation and other costs, the proposed increases to business rates have been seen as the final nail in the coffin. I am therefore pleased that noises from His Majesty’s Treasury indicate that there may be some re-examination of this issue, with the prospect of some sensible arithmetic being applied.
My concern, however, is that this appears to be directed towards the plight of pubs alone, and I would like to make a case for the circa 3,000 private members’ social clubs. I do not mean just the Conservative clubs that I know so well, but the working men’s clubs, the Royal British Legions, miners’ welfare institutes, naval and Air Force clubs, railway clubs, Liberal and Labour clubs—indeed, all the social clubs that make up such a significant part of so many people’s lives. These clubs are not run for profit or underwritten by a hedge fund or private equity firm, as so many pub companies are, but managed by volunteer officers and committees. Some 12,000 people are employed within the clubs.
So often, we hear how important pubs are to their communities, which is true, but every one of the members’ social clubs that I have mentioned is a community in itself. They are part of the fabric of many people’s lives, and essential to the social well-being of members, as well as to the furtherance of the objects for which the clubs were formed. As such, I ask the Minister to feed back to the Treasury team that any help or assistance that may be on the way to help pubs should be extended to help clubs in the same way, for the same reasons, and for the same outcome—in other words, a level playing field.
The society which socialises together is a stronger society, and our pubs, clubs, bars, restaurants and hotels put that into practice every day. As I said in my maiden speech, 10 years ago, virtual friends can never be the same as actual friends. Let us do everything we can to ensure that our clubs, pubs and all the places where we socialise remain, so that we can continue to meet friends and make friends in the years ahead.
Lord Forbes of Newcastle (Lab) (Maiden Speech)
My Lords, it is the tradition in your Lordships’ House that maiden speeches are heard in silence, originally as a mark of respect for the recently deceased father of the hereditary Peer being introduced. This does not apply in my circumstances today, obviously, but I did lose my father six months ago, and I am profoundly sorry that he is not here to witness my first contribution in this place.
I first wish to express my thanks and gratitude to all Members across the House for the warmth of their welcome, and extend this to the staff, particularly Black Rod, the Clerk of the Parliaments, the doorkeepers, security guards, clerks, catering staff and all those who sustain the life of this remarkable institution. Your support has made these first few days far less daunting than they might otherwise have been.
I would like to thank my sponsors, who represent important milestones in my life. I first met the noble Baroness, Lady Armstrong of Hill Top, at the age of 15, when, as my constituency MP, she came to speak in an assembly at Wolsingham comprehensive school. It was she who sparked my interest in politics generally and Labour values specifically, and she has been a steadfast mentor and friend for the past 35 years. The noble Baroness, Lady Blake, and I were contemporaries as leaders of our respective great northern cities, Leeds and Newcastle, building the case together for investment in the north through our collaboration in the northern powerhouse partnership, as co-founders of Transport for the North, and participating actively—in fact, both chairing—Core Cities UK.
Growing up in rural County Durham, my post-school employment options were limited. I, like many others, found my first job in the hospitality sector. In 1992, I was paid £3 an hour to work in a fast food restaurant. I had a zero-hours contract, no minimum wage, no predictable income, no sick leave or holiday pay entitlement, and no trade union or pension rights. Thankfully, for retail and hospitality workers these days, successive Labour Governments, including this one, have made progressive changes to employment legislation, bringing in more protections. But I still have my name badge from those days, as a reminder that I am older than many of my rights.
I welcome this Government’s recognition of the hospitality sector’s importance and the steps already taken to stabilise and support it. Expansion of the small business support scheme, and transitional business rates relief, are not abstract economic interventions; they are lifelines for the pubs, cafes, restaurants, hotels and other venues that give our communities their heartbeat. But hospitality also offers us a wider metaphor for the kind of economy we want to build. No Government can create a good society through policy or programme alone. By supporting businesses to grow, and by encouraging them in turn to create more and better jobs, we can offer opportunity, hope and a sense of belonging for future generations.
I belong to Newcastle. I am immensely proud to include the name of my home city in my title. At the time of my retirement from local politics, I was the second-longest serving leader of the council, second only to Lord Beecham—I imagine that being second to Lord Beecham is something that many Members of this House have experienced in previous years. I was also its first LGBT leader. I worked hard to create a culture of no outsiders, a place where everyone is valued for who they are and the talents they offer. But I am concerned about the trend towards exclusion, rather than inclusion, that I witnessed during my 22 years in elected politics.
At various times in our history, some people have been othered and blamed for the perceived ills of all. Jews, Muslims, LGBT people, asylum seekers, single parents and many others have been, and continue to be, denigrated and dehumanised. We must be staunch in our opposition to the politics of grievance: they are divisive, corrosive and diminishing of all of us. There is much hatred in this world, but the answer to this is not more hate; it is the opposite. It is love; love for our families, our friends, our neighbours, our communities and our country. Beautiful and gloriously imperfect though we may be, we always have so much more in common that unites us rather than divides us.
I believe that the mark of future success of this nation is not the riches of a few but the fortunes of the many. I believe that opportunity should be universal and hard work rewarded, and that the purpose of economic growth is to spread wealth, as well as generate it. It is therefore with the spirit of ambitious and generous collaboration, with curiousness about how we can change things for the better, and with a fundamental belief in the dignity and equal value of all, regardless of the circumstances of their birth, that I approach my service to your Lordships’ House.
The Lord Bishop of Newcastle
My Lords, it is a great honour to follow the noble Lord, Lord Forbes of Newcastle, and to welcome him to your Lordships’ House. I also extend a welcome to other noble Lords making their maiden speeches today.
I thank my friend, the noble Lord, Lord Forbes, for his excellent maiden speech. He made some immensely wise comments that superbly illustrate his capacity for, and commitment to, the work that he will undertake in this place. His mention of the values that have shaped his life are those that we should all aspire to and live out in our collective endeavours in this House. His calling our attention to the importance of inclusion is particularly vital.
The noble Lord’s years of dedicated service to local government and his commitment to creating thriving communities will greatly benefit this House. His lived experience, coupled with his kind heart, fierce mind and strong spirit, underpins his integrity, determination and resolve to seek the welfare of people and communities, especially those in deprivation. A keen listener and one who is ready to learn, he is well equipped for his new role in your Lordships’ House. I wish him well and look forward to working with him.
I turn to the subject of this debate. I thank the noble Baroness, Lady Monckton of Dallington Forest, for bringing it to your Lordships’ House. I am aware that, with the noble Lord’s contribution, noble Lords are getting a double dip of north-east input, but I hope this adds value.
Just yesterday, two chefs from Michelin-starred restaurants in Newcastle and Northumberland warned of major hospitality job losses caused by higher tax bills. Cal Byerley and Kenny Atkinson said that many businesses were on their last legs. For some hospitality venues in Newcastle, it is too late, with popular and long-standing venues having closed their doors permanently even in recent weeks. The North East Chamber of Commerce reports that many businesses used the temporary reliefs during Covid and subsequent energy crisis support to cover fixed costs rather than to invest, meaning that resilience remains thin.
On the upside, in Newcastle city centre, bus reform and subsidised young person fares have increased evening and weekend footfall, helping the night-time economy, which in Newcastle is rather lively. Regeneration investments make the city a more attractive visitor destination, which supports hospitality and retail spending. Information given to me by the North East Chamber of Commerce reports that the visitor economy supports around 63,000 jobs and contributes over £6.6 billion to the regional economy, representing 8% to 11% of regional GDP.
The Government’s announcement today of the investment in cultural organisations is therefore welcome in its potential to boost the broader economic landscape. Similarly, the overnight visitor levy could be a tool to invest in communities and support better jobs. Time will tell. Will the Minister monitor its impact?
In Northumberland, co-ordinated tourism strategies promote heritage assets such as Alnwick Castle and the coastal trail. This draws millions of visitors annually, boosting accommodation, cafés and retailers in towns such as Bamburgh and Berwick-upon-Tweed. However, these gains are strongly seasonal. A café might thrive in August but struggle in January, even as fixed costs remain year round. Government policies, through business rates, labour regulation and demand-side investment, exert powerful and concrete effects on retail and hospitality in Newcastle and Northumberland.
An underlying theme is what policy does at a granular level to communities and their ability to thrive in the short, medium and longer term—a point that the noble Baroness made so eloquently in her opening speech. The noble Lord, Lord Forbes, and I have in common that we both grew up in the north-east, as well as the year of our birth, 1973—the year Sunderland won the FA Cup. In that regard, we will both have similar memories of the impact of the decline of industry on communities, and the knock-on effect of that on the economic prosperity of the region and on people, the effects of which are long-standing and intergenerational.
The challenge now, which is also an opportunity, is not only to craft a policy environment that balances cost pressures with sustainable demand and opportunity for growth but to truly set forth a long-term vision that enables the welfare and flourishing of people and communities—not driven by fear and anxiety, but drawn by confidence, hope and economic sustainability.
Baroness Verma (Con)
My Lords, I join all noble Lords in thanking my noble friend for this debate. I look forward to the remaining maiden speeches and congratulate the noble Baroness, Lady Dacres of Lewisham, and the noble Lord, Lord Forbes, on their excellent contributions to today’s debate. I also refer noble Lords to my interest in the register as a businesswoman for over four decades.
I suspect that, like me, many noble Lords over the past 14 to 15 months have met and spoken with many businesses, a proportionately large number of them from the retail and hospitality sector. According to the House of Lords Library, the number of businesses in hospitality in 2025 was around 176,685. What does the Minister believe the number will be this time next year? Hospitality is the seventh largest of the main sectors and almost all of hospitality—99.6%—is made up of SMEs. Some 7% of all jobs in the UK in 2025 were in this sector. What does the Minister think that number will be this time next year?
Most businesses are started by local people to serve local communities, creating economic wealth and job creation in those communities. Hospitality usually sits in the centre of those communities. They do not just have economic impacts; as other noble Lords have said, their presences brings people together. Hotels help bring in tourism, along with pubs, cafés, restaurants, et cetera. Social interactions bring an abundance of good health and well-being benefits. But we have seen a decline over the past 25 years in the number of pubs, going from 60,800 in 2000 to 45,000 in 2024, as stated by the British Beer & Pub Association.
Sadly, we have seen many of our industries leave our shores; that surely cannot be good for our long-term desire to be a resilient country that can withstand the sort of global shocks that are increasingly impacting on our everyday cost of living. Instead of helping to support these incredibly important sectors, the attack on small and medium-sized businesses has been blood-curdling. I remind noble Lords that most businesses are SMEs—local people investing their hard-earned money into enterprises that very often will take quite a few years to show a return on their investment.
There was a time when we prided ourselves on being world leaders in enterprise. My grandfather started his manufacturing business in 1952 and my father in 1967. They illustrated to us how this great country enabled anybody and everybody to be socially and economically upwardly mobile, part of the economic growth of the nation and to give back to the community. I started my first business in 1980. A brilliant example is the Ugandan-Asian community, who came as refugees from Uganda. They contributed so much to my city, Leicester, even though the then Labour council had advertised for them not to come.
Given the impact of the national insurance hike from 13.8% to 15%, the increase in the minimum wage in April, the level at which employers will have to pay NI going from £9,000 to £5,000, the fact that many businesses in retail and hospitality are facing revaluations, which will see huge increases in their business rates, and the levels of crime and attacks on these sectors, meaning an increase to the costs of insurance, property protection and other added costs, how will the Government provide support to businesses that are already reeling from sluggish growth? Can the Minister tell the House how many job vacancies have been filled with the Pub is the Hub initiative? Does he seriously believe that £1.5 million of support for hospitality is sufficient? What has the response been from the hospitality sector?
Finally, if the Government are serious about helping hospitality, what can they do to help reduce its energy costs? To help the Minister, if the Government are serious about climate change, reducing carbon emissions and, above all, supporting the continued existence of the hospitality sector, maybe, instead of providing advice on how to get to net-zero carbon emissions, the Government could provide products at zero cost, or at hugely subsidised costs.
Lord Borwick (Con)
First, I must declare my interest, in that my wife, Victoria, is chairman of VisitEngland—what older Peers might call the English Tourist Board.
I congratulate all noble Lords who have made their maiden speeches. I congratulate the noble Baroness, Lady Monckton of Dallington Forest, on securing this debate on such an important subject. It has allowed me to open up an unimportant interest in my personal history: the fact that I was born in a hotel. I can claim to be one of the few people to have arrived at a hotel stark naked. Noble Lords may have left a hotel stark naked, in circumstances that I would rather not know, but very few will have arrived at one in that state.
Retail and hospitality are industries with much in common, but they have at least one important difference. In hospitality, problems, like babies, tend to arrive at strange hours of the day and night. An innkeeper must have someone who is responsible for solving problems available 24 hours a day, and someone who can solve problems at minimum cost is likely to be paid above minimum wage. Retail has a much more predictable time cycle of problems, but they are no less urgent. Shoplifting is a growing problem for all retail businesses, and government policy could be more helpful. Science could be used, in the form of permitting the more widespread use by shopkeepers of facial recognition systems in stores. I have little doubt that this will be considered on these Benches in due course.
The more interesting subject is the problems that the two sectors have in common. The most clear-cut is that both sectors have a relatively high use of minimum wage labour, because they use a lot of young people. For many people, a job in retail or hospitality is their first interaction with that wonderful, valuable and rare creature: the customer. They learn something in their first job that will be invaluable and exciting—that customers can and must be satisfied. Some young people learn lessons in self-reliance from retail and hospitality that they have not achieved in years of schooling. With a bit of luck, they might have been at a school that has a scheme run by a fabulous charity called Young Enterprise, which teaches 15 year-olds to run a small business. It is hoped that the kids pick up entrepreneurialism through this route. Last year, that great charity, founded by an old friend of mine, the late Sir Walter Salomon, taught more than 566,000 young people how to manage money and start a business.
However, no amount of entrepreneurial skill teaches you to cope with the biggest problem that retail and hospitality have in common: the cost of taxation in the form of national insurance and business rates. No doubt other noble Lords will talk of the difficulties caused by a tax on jobs—as national insurance is sometimes called by those not calling it a disguised income tax—but business rates have a peculiarity of rising fast and unpredictably. The recent rise in business rates has caused a lot of stress to shopkeepers, uncertain if their customers will be prepared to pay the increase in retail prices needed to finance it. Of all the problems caused by government to business, the most intractable and dispiriting will always be taxation.
What is the solution? It is entrepreneurs. Behind every retail shop and every hospitality pub is an entrepreneur. They need to be encouraged. If we are lucky, she or he will be a driven individual, determined to do well despite problems. These entrepreneurs feel unappreciated —so many of them are leaving for places such as Dubai because of government policy. This happened in the 1960s and was called the brain drain. Their children, the entrepreneurs of the future, may easily never come back. That is one of the tragedies of socialism.
Lord Empey (UUP)
My Lords, I congratulate the noble Baroness, Lady Monckton, on securing this debate. I also congratulate our new colleagues on their maiden speeches, which were both entertaining and informative. I am sure we will hear more from the other maiden speakers as the debate goes on.
I do not have personal experience of the hospitality sector, other than that, as a Minister, I had responsibility for tourism. However, I was engaged for a large part of my life, as was my family, in retail, and I think there are a couple of areas that we have not touched on today. One of them is the fact that customers’ habits are changing and have been for many decades. The traditional shops on the high street, with produce spilling out on to the pavement, have passed—probably because somebody with a clipboard wants to ensure that the pavement is not cluttered up. The other big thing is online retail, which has had a huge impact.
We need to focus on the fact that we do not have, and have never really had, a proper system for dealing with town centre and city centre retail. First of all, we make life as difficult as possible for people to get into it. That comes back to parking—inadequate or expensive parking, with wardens running around issuing tickets. How is anybody going to buy anything of substance if they are forced on to public transport in the pouring rain? People are not going to do it; they are just going to go somewhere where they can stop at the door. That was the lesson of America over many decades. The other factor is that the smaller units in town centres have rates that are much higher per square foot than out-of-town shopping centres—the supermarkets and big stores are a classic example of that.
We all want to support tackling climate change, but we have to be realistic. If going into the town or city centre becomes more and more expensive and difficult, people will go somewhere else, because they have options. We need to re-engineer our town centres. We have talked about it—it has been around for years—but nobody has actually done it. It seems that all I hear of, even at home in the last couple of days, is significant retailers packing in because a Marks & Spencer, say, has moved out of a town centre to a shopping centre on the edge of town. Footfall drops and the local retailer is left high and dry.
Whatever way you look at it, rates are an enormous cost. When you add the cost of employing people, you get to the “Why bother?” stage. I have been in local government for 25 years, and local councils depend heavily on business rates for their revenue. There is a temptation to say, “Oh, big business can cope with it”. That is true to some extent, but it is not true in town centres by and large because the big battalions—the Sainsbury’s and the Tescos—apart from their express units, go outside. We have changed habits, and we have not managed to mix residential, retail and hospitality in our town centres in a sensible way. All we get is vape shops, charity shops and so on, proliferating in these places and making the town centres completely unpleasant environments.
Looking at the totality of the challenges that our retail sector is facing, I have to say to the Government and the Minister that he needs to take this back to his colleagues because it needs to be rethought. What we are doing is taking the existing problems and simply making them worse. Some local authorities, for a perfectly legitimate reason of trying to improve climate change, are actually forcing people out and making life so difficult that people are not prepared to go into retail. I hope that this debate will stimulate the Minister to bring it back to his colleagues, because I think there is a widespread feeling on all sides of the House that much more needs to be done.
Lord Hannan of Kingsclere (Con)
My Lords, I congratulate my noble friend Lady Monckton on securing this debate and will take us back to how she started—with the Woolsack, which is currently sustaining the graceful and delicate form of the noble Baroness, Lady Bull. The people who designed this Chamber knew what they were doing. England medievally was a one-sector economy, as dependent on the wool trade and as associated with that one sector as today Qatar is with natural gas or the Maldives is with holidays. They were reminding us that everything we do as politicians and people in government is literally supported by the surplus of the private sector. They knew that they needed to remind us of that, and they need to remind us still.
I have been struck ever since I arrived here by how readily people spend money that is not theirs and how easily we expect warmth and approval when we demand that more be spent on something, but we never—or almost never—talk about where it is coming from. I think that happens because of a bit of faulty wiring in our neural networks. When a politician talks about public spending, it is received as though he is talking about his own money. So when he proposes spending more, he is thought to be generous—as though it was his own—and when he proposes spending less, he is thought to be mean. In fact, of course, he is standing up for people who will never thank him—what the poet calls
“Your children yet unborn and unbegot”.
These are the people who are not there yet, whom he is sparing from our extraordinary debt levels.
I think a similar dynamic happens with the very unpopular thing that I am about to talk about now. It is specifically hitting the hospitality sector, as opposed to business more widely: the huge and unprecedented rises in the minimum wage. People always personalise this. Whenever anyone criticises the levels of minimum wage, the reaction is the rhetorically powerful but logically utterly irrelevant question: how would you like to live on £12.21, or whatever the current rate is?
For what it is worth, my first job, like that of the noble Lord, Lord Forbes of Newcastle—to whom I say welcome and thank you for speaking so well—was also in that sector. I worked as a waiter in a golf club. It taught me lots of things, some of which were really useful. For example, since then I have always been able to tell the difference between when a waiter has genuinely not seen you and when he is just busy—not for me a lifetime of making little squiggling gestures in the air ineffectively, because I learned that. It also taught me punctuality. It taught me how to deal with customers. It taught me how to deal with employers, and how they are different from your parents or your teachers; the relationship is an altogether more transactional one. For me, as for millions of others including my children and, I am sure, others in this Chamber, that sector was the beginning of how I got into the world of work.
The measure we should be applying is: are we making it easier for that sector to hire people, or are we, as we keep pushing up that wage level, privileging one section of low-paid workers over everyone else, particularly people who are looking for work, who are becoming more and more numerous? It is difficult to have this argument without emotion, but I invite noble Lords to ask a couple of questions about the mechanics of those rises.
When I joined your Lordships’ House the minimum wage stood at £8.72. Now it is £12.21—an extraordinary rise. It has gone from being so low that it did not make much difference, in the period that the noble Lord, Lord Forbes, talked about, to being, I think, the highest in the OECD after France and New Zealand. What has been the impact of that rise? We can see it in the unemployment figures. We can also see it in the skewed incentives.
Lots of things happen when the minimum wage increases. First, some employers will simply claw it back in other ways. They will be less forthcoming with offers of subsidised purchasing, help with travel or other perks. If it gets high enough they will go elsewhere, either to automation or, let us be honest, to the large pool of illegal workers in this country—perhaps more than 1 million people. It is almost never noted that the people most affected as low-paid workers are also consumers of the industries most affected. If the minimum wage is passed on to customers in the fast food sector, let us say, or indeed in hospitality generally, it is not so much Members of your Lordships’ House who are affected by the rising prices.
Prior to these rises we had 30 years of structurally low unemployment in this country. We had waves of people coming here from southern Europe because they had regulated employment sectors and high minimum wages, and therefore structurally high unemployment. All the way through previous Governments of both parties, we managed to stay away from that and to remain a magnet for young people. By heaven, we are going to miss that when it goes.
Baroness Shah (Lab) (Maiden Speech)
My Lords, it is a great honour to rise for the first time here in your Lordships’ House, and I do so with a profound sense of humility. To sit among Members whose experience, wisdom and dedication to public service I have long admired is both a privilege and a responsibility I do not take lightly.
I begin by thanking the staff of this House—the clerks, Black Rod’s team and particularly the doorkeepers, whose professionalism, warmth, patience and, today, hydration have been extraordinary as I have found my way, mainly slowly, around its procedures and corridors. I am also deeply grateful to my two sponsors, my noble friends Lord Evans of Sealand and Lord Katz, for their generosity, encouragement and guidance. Their support has meant a great deal to me, and I thank them sincerely for welcoming me so warmly to your Lordships’ House. I would also like to thank my noble friends Lady Smith and Lord Kennedy of Southwark for helping me through this very surreal process.
It is a great honour to be the first Jain in Parliament, and swearing my Oath of Allegiance on Jain scripture was a moment of great significance for my community and family in London, Kenya, India and beyond.
My journey to this place has been shaped by family, by education and by public service. My grandmother and my mother both lived lives of unshakable commitment to their families, whose lives are marked by challenges and community expectations, but also by determination. They believed deeply in education, not as an abstract good but as a practical route to dignity, independence and opportunity. My father, a small business owner, worked hard to ensure that my brother and I could stand on firmer ground than he had himself.
I learned that progress is rarely sudden and never accidental. It is built patiently through work, service and a sense of responsibility to others. Those values have guided me through every stage of my life.
They also sustained me through profound personal loss. My husband Richard died in 2016 at the age of 36. Living with bipolar, he was a man of great kindness and creativity and an exceptional singer, whose life was cut short by cancer. His experience deepened my understanding of mental health, grief and the fragile line many people walk while still contributing richly to their families, workplaces and communities. Ten years ago, my life was very different. I was a back-bench councillor, a mum to a six year-old, a carer to my husband and a history teacher. Had life been different, I would probably be talking about being a head teacher rather than my elevation to this place.
I mention this not for sympathy but because it strengthened my conviction that public policy must be grounded in compassion, and that our systems, whether in health, housing or employment, must be designed for real lives, not idealised ones.
As I said earlier, my professional life began in education. Teaching is an act of hope. Every day, you stand before young people and make a quiet promise that their background need not determine their future. I taught students of extraordinary talent and ambition, many navigating overcrowded housing, economic insecurity and uncertainty about what lay ahead. They taught me that aspiration exists everywhere but opportunity does not.
It was those experiences that led me into local government, where I sought to turn principle into practice. As a Labour councillor in the London Borough of Brent, home of Wembley Stadium, I had the privilege of working in one of the most diverse and dynamic boroughs in the country.
I led work on regeneration and planning, and my work was driven by a simple belief that growth must be inclusive and development should strengthen communities. I encountered daily the reality of families living in temporary accommodation and young people being priced out of housing, often due to wage stagnation. These challenges demand long-term thinking and political courage, and I am proud of our work to deliver housing of all tenures and to play our part in tackling the housing crisis.
Alongside this, I led work in economic development, with a particular focus on supporting local businesses and high streets—the subject of this debate. High streets are not merely commercial spaces but social infrastructure. When they thrive, communities thrive. When they decline, the effects ripple far beyond empty shopfronts.
Working in partnership with the Mayor of London, I helped to deliver programmes to support small businesses in Wembley to get online, recognising that digital access is no longer optional but essential. I championed affordable workspace policies, ensuring that start-ups and growing businesses could access space they could genuinely afford and remain rooted in their communities, and supporting businesses to adapt and grow—the power of local, regional and national government working together.
I come to this House shaped by education, local government and lived experience. I do not claim expertise in all fields, but I hope to contribute particularly to debates on education, housing and regeneration—areas where long-term thinking is essential. I look forward to joining your Lordships’ House in scrutinising, revising and improving legislation. In that spirit, I bring with me the voices of the students I taught, the residents I served, the businesses I worked alongside and the families whose values brought me here.
I will endeavour to listen carefully, to speak thoughtfully and to serve with integrity.
I thank all noble Lords all for the warmth of their welcome, and I look forward to contributing to the vital work of this House.
Lord Rook (Lab)
My Lords, it is a great honour to welcome my new and noble friend Lady Shah to her place in your Lordships’ House, and it is a joy to congratulate her on a beautiful maiden speech. Tomorrow marks the first anniversary of my own introduction, and over the past year I have sometimes wondered exactly what I contribute to this place. Reflecting on my noble friend’s life and leadership, it is abundantly clear that she offers a huge amount to this Chamber and this community.
My noble friend’s experience in education will greatly enrich our work in helping to shape legislation that helps children to flourish and thrive in the future. Her contribution to grass-roots politics and community life in Brent will deepen our understanding of what it takes to build stronger and more united communities at a time of growing division. Her distinguished service in local government will offer invaluable insight into how central and local government can collaborate more effectively and creatively. Her vision for the arts and creative industries will challenge us all to forge a future for our country as a creative superpower.
Last but by no means least, as someone who spends a great deal of his time welcoming people of faith to this House, I am delighted to welcome my noble friend Lady Shah as the first parliamentarian from the Jain community in this country. Her presence here is a source of great pride to that community and an answer to its prayers.
As I reflect on my own first year, it is the moments of humanity and humility displayed by your Lordships that have made the greatest impression on me: when adversity is met with honesty, when courage meets crisis, and when sometimes the harder aspects of human experience have shaped the terms and tone of our deliberations. It is clear from my noble friend’s speech that she brings all those qualities in abundance. She spoke movingly and bravely about her late husband, Richard, and her presence here honours his legacy. To her daughter, Emily, we say: “You should be very proud of your mum—and also don’t worry, we don’t sit at weekends, so the newly ennobled Baroness Shah will continue to act as your chauffeur and personal assistant, getting you to all your dance lessons on Saturdays”.
In commending my noble friend Lady Shah to me this week, a noble Minister said simply, “She is so lovely. She has so many friends”. In this House, it is our convention to use the term “friend” to describe those in our own party. Despite this, I have no doubt that my noble friend Lady Shah will make many great friends across this House in the years to come. To that end, I welcome her as our new and noble friend.
To turn to today’s debate, I commend the Government’s recent support for pubs. This may be somewhat surprising, as I speak as a lifelong teetotaller. I was brought up in the Salvation Army and my only taste of alcohol so far has been the occasional sip of communion wine, the occasional cheeky portion of sherry trifle, and an occasion when my drink was spiked with ouzo on holiday in Greece. Despite remaining abstemious, which is even more surprising as I am now an Anglican, I recognise the importance of what the Government have done, economically and socially, to support pubs.
In the Budget, the Chancellor took decisive action to support pubs. She recognised the contribution that they make to our economy and our community. Treasury analysis suggested that pubs might face 45% increases in costs in the next year. As a result of the action by the Chancellor, that increase is probably reduced to around 5%. That is not marginal; that is the difference between survival and the ability to plan and invest.
Pubs are good not just for business and our economy but for our community and society, as has been picked up in this debate already. Research by Pub is The Hub, a non-profit organisation, demonstrated the critical role that pubs play, fostering community cohesion, social interaction and resilience. Research outlines additional services, both economic and social, provided by our public houses. Measuring social return on investment shows that every £1 invested in services and activities delivered through a local pub generates more than £8 of social value to the community in return. Our pubs provide places where people gather—they belong, they are known—and they reduce loneliness and isolation. In many rural and deprived areas, they provide a hub for services that may otherwise have disappeared. They contribute to individual well-being and community resilience in ways that are hard to replicate elsewhere.
For these reasons, it is possible for this lifelong teetotal noble Lord to raise a glass to our public houses, even if it contains only lemonade and lime. What is more, I say cheers to the Government for the support provided to the hospitality sector for the good of our economy and the good of our community.
Lord Harlech (Con)
My Lords, it is a pleasure to hear the very personal stories of today’s maiden speakers, and we look forward very much to the fourth one coming. I too congratulate my noble friend Lady Monckton of Dallington Forest on securing this crucial and timely debate. I declare my interest as a board member of Historic Houses and the owner-operator of hospitality assets in Wales.
As others have done, I will address the growing crisis facing our hospitality and retail sectors—a crisis significantly exacerbated by recent government policies. These are not abstract statistics but the livelihoods of 3.8 million people working in tourism-related businesses.
The hospitality sector faces a perfect storm. Inflation is driving up costs, while the cost of living crisis erodes consumer spending. Yet, rather than providing relief, government policy has compounded these challenges at every turn. To be specific about the financial burden, the 2024 Autumn Budget imposed £1.4 billion in additional costs through national living wage increases, on top of £1.9 billion in increased employer national insurance contributions and £500 million in business rates. This is a cumulative £3.8 billion burden on a sector that is still recovering from the pandemic.
As my noble friend so eloquently outlined in her introduction, the human cost is already evident. By July 2025, more than 100,000 jobs had been lost, driven primarily by the rise in employer NICs. UKHospitality warns that current policies could see another 100,000 jobs disappear. These are not just numbers; they represent families, communities and their local economies.
This comes at a particularly unfortunate time. The Social Mobility Policy Committee of your Lordships’ House, of which I was a member, drew attention to the fact that there are almost 1 million young people not in education, employment or training. The hospitality sector has historically been a crucial entry point for young people seeking their first employment. We have heard personal examples from noble Lords today. My first job, during that hazy summer after GCSEs, was at a local go-kart track where I learned the value of a hard day’s work. Yet, just when we most need these businesses to provide opportunities for young people, government policy is forcing them to cut jobs, rather than create them.
Heritage businesses face particularly acute challenges. Changes to business property relief and agricultural property relief mean that 54% of Historic Houses members cannot develop or diversify their businesses, while 41% are making redundancies or putting a freeze on hiring. We are forcing custodians of our national heritage to choose between their workforce and their heritage obligations.
The tourism sector contributed £145.8 billion to UK GDP in 2023. Yet, we have allowed the UK to plummet to 113th out of 119 countries for price competitiveness. Visitors to the UK pay on average 43% more tax than they do when visiting other destinations. We are pricing ourselves out of the international market.
The proposed visitor levy would add a further burden. While Manchester’s and Liverpool’s business improvement districts succeeded through genuine sector involvement and transparent revenue ring-fencing, without these safeguards we risk creating another tax that discourages visitors and burdens the micro-businesses which comprise 76% of tourism enterprises.
The Digital Markets, Competition and Consumers Act presents another challenge. The 14-day cooling-off period for subscriptions creates perverse incentives. Members can sign up, visit multiple attractions and cancel for a refund, bearing no relation to the costs incurred. This affects Historic Houses, the National Trust, English Heritage, our museums, zoos and countless other attractions. We must allow traders to set deduction calculations based on the proportion of service actually provided.
The evidence mounts. More than 17,000 shops, offices and warehouses in rural areas sit empty, and 37% of Historic Houses members have not seen visitor numbers return to pre-pandemic levels. We are witnessing the slow constriction of a vital sector through accumulated policy decisions made without considering their cumulative impact.
We on these Benches urge immediate action and look forward to the Minister’s response as to how he is going to address these sector challenges.
Lord John of Southwark (Lab) (Maiden)
My Lords, it is the greatest pleasure to rise in this debate and to give my maiden speech—the last in a quartet from the Labour local government family. I did wonder whether we look like a 1990s pop group announcing our reunion tour.
I first thank Black Rod, the Clerk of the Parliaments, the doorkeepers, the police and all of the House staff who made my introduction such an awe-inspiring and memorable experience, and to all noble Lords for giving me such a warm welcome. I of course give my very real thanks to my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark who supported me at my introduction. Not only are they the real A-team of the Labour Benches, but they have been very real friends and champions of mine over many years. Both have strong connections with Southwark, the borough I led and which I am so proud to have in my title, which is now very widely and objectively regarded as the best borough in London.
I understand that it is customary in a maiden speech to a go a little bit “Strictly Come Dancing” contestant and to talk about my journey to this place. In my case, my journey began in Weston-super-Mare. My parents were not political, but my Labour Party education came from my great-aunt, Peggy England-Jones, who was the party agent and secretary in Swansea for many years, and among whose charges was a young MP, my noble friend Lord Anderson of Swansea, who I am terrified to note has known me since I was aged seven.
My journey moved from Worle comprehensive school in Weston to university at Queen Mary College here in London; a career at the Bar, practising for the last 25 years in contentious probate; election as a local councillor in Southwark for 20 years, with 10 of those as council leader; and two and a half years as chair of London Councils. In the last few years, I have returned to practice at the Bar, have become involved in business and am proudly a member of the board at the Old Vic Theatre, one of our very real national cultural gems.
That journey has informed my political priorities and interests, from delivering high-quality social and private housing across Southwark to promoting the regeneration of a borough which not so long ago was seen as somewhere no taxi driver would take you, because it was “sarf of the river”. Today, you can look from the Shard and London Bridge to the Elephant and Castle, from Blackfriars Road to Peckham, and from Bermondsey to Canada Water, and see the demonstrable benefits of growth in new homes, new businesses and new jobs, and from ensuring that every young person has the best start in life and vastly increased skills and training opportunities, to ensuring that the arts and culture are something which are accessible to all and valued by many. Those are the priorities which will inform my work in this House and why it feels appropriate for me to be speaking on this subject today—for I believe that local government has a critical role to play in creating the best circumstances for the retail and hospitality industries to flourish.
When Southwark embarked on the regeneration of the Elephant and Castle, few would have believed that it could so quickly develop such a vibrant new hospitality offer, so that people of all ages now choose to meet and spend their leisure time there. I am pleased to report that the aim of recreating the Elephant’s historic heyday as the Piccadilly of south London is well on the way to being achieved. But it did not happen by accident, and that together with other examples, such as Borough Yards and Peckham Levels in the borough, demonstrate the critical role that local authorities can play in creating and curating the environments in which restaurants, bars and shops can prosper. It requires vision and it requires confidence.
I am not blind to the fact that the nature of retail and hospitality on our high streets is fundamentally changing; it has been for at least the last decade. The complaints from the sector today are, sadly, not new. I am sure that it can sometimes feel that government gets in the way or adds unnecessary burdens, but we will all have also seen a café, bar, restaurant or shop which does succeed—apparently against the odds.
Let us recognise the challenges the sector faces, encourage local governments to be the leaders in place-making—which we know they can be—support our local businesses and reject any counsels of despair. Let us be the optimists.
Baroness Jones of Whitchurch (Lab)
My Lords, it gives me great pleasure to welcome my noble friend Lord John and thank him for his excellent maiden speech, which was both entertaining and wise, as befits a barrister of over 25 years’ standing. I am sure we were all impressed by his knowledge and insight into how best to develop commercial and residential spaces where communities can thrive. These challenges are faced by so many local councils up and down the country, and we have so much to learn about how to do this successfully.
The transformation of the Elephant and Castle site from a run-down housing estate and shopping centre to a highly desirable residential, commercial and retail centre is just one example of my noble friend’s skill as a hugely respected council leader in London. In fact, my noble friend Lord Spellar, who lives in the development at Elephant and Castle, described it as rather like one of the better parts of Manhattan. That is indeed praise for the work that my noble friend Lord John has succeeded in doing.
My noble friend Lord John has also been applying his expertise to work with other councils across London, helping to make London the thriving, attractive city it is becoming today. I know that his commitment to the arts, in particular his work with the Old Vic and the Central School of Ballet, will also be welcome across this House. He has a huge contribution to make to the work of this House, and I am sure he will continue to make that impact in the months and years to come. We will watch his progress with great interest.
There has been much criticism from the party opposite about the passing of the Employment Rights Act and its impact on the retail and hospitality sectors, but I am proud of the fact that the Government delivered their manifesto commitment to bring the UK’s outdated employment laws into the 21st century by passing the legislation in December. It will turn the page on an economy blighted by insecurity, poor productivity and low pay, which the previous Government were happy to see continue.
Instead, hundreds of thousands of the lowest-paid workers will be protected from exploitative zero-hours contracts for the first time, allowing them to manage their work and income and to plan for the future. Families will benefit from day-one rights for paternity, parental and bereavement leave. Workers will benefit from improved sick pay and will no longer have to choose between their health and financial hardship. The new Fair Work Agency will ensure that good businesses are not undercut by bad employers.
We are raising employment standards to those already enjoyed by the better employers in the retail and hospitality sectors. We are confident that these measures will be beneficial for employers, will help to keep people in work and will reduce employment costs for employers by increasing staff retention and creating a more loyal and motivated workforce.
The government report on the legal and economic implications of the Employment Rights Act supports our expectation that the Act will have a beneficial impact. For example, it shows that, far from being an outrider, the measures will simply bring the UK closer to the OECD average for employment law protections.
It also shows that in areas of new policy, such as zero-hours protections, the adoption of similar laws in other OECD countries has led to productivity and employment improvements. Its econometric analysis shows the Act as having a small positive effect on employment.
As the Bill was nearing its conclusion, representatives from the main business organisations wrote to the Secretary of State welcoming the outcome of the dialogue on the Bill, which they said
“represented a significant step forward which will have a positive impact on growth and opportunities”.
They went on to say that
“now is the time for Parliament to pass the Bill”.
This support from the business community was crucial to the passing of the Bill and set the way forward as to how we should work with businesses in the future. Underpinning these new rights will be a partnership between trade unions, employers and government, which will create a new spirit of co-operation. This partnership will be crucial as we move forward with the next phase of implementing the Act.
We have made it clear to businesses that these new rights will not be implemented overnight. We have always said that we would engage and consult comprehensively on the implementation of the measures in the Act to make sure that they work for everyone. This period of consultation has now begun, and it is important that all voices are heard and understood. The implementation road map sets out a timetable for the phased introduction of the new rights, ensuring that all stakeholders have time to adapt to the change so that it works for everyone. The consultation process will be supplemented by guidance and codes of practice, with ACAS and other delivery partners providing time and resources to support the process.
All this should mean that employers—particularly small and micro-businesses—have the time and the space needed to prepare, with tailored support where necessary. Does my noble friend the Minister agree that the business representatives in the hospitality and retail sectors should, crucially, play an active and positive role in shaping the detailed implementation of the legislation going forward so that their voices are properly heard? Does he agree that the Employment Rights Act, when fully implemented, should have a positive impact on the economy and on our vital growth agenda? I look forward to his response.
Lord Northbrook (Con)
My Lords, I will start my speech with the special crisis that pubs face, outlined with figures from the British Beer & Pub Association. In addition to the business rates problem to which I will refer later, pubs face multiple policy changes that will affect sector costs. First, there is the issue of wage increases, putting pressure on pubs’ margins. The national living wage rose by 7% in 2025 and is going up by 4.1% in April 2026. The national minimum wage rose by up to 18% in April 2025 and is forecast to rise between 6% and 8.5% for 16 to 20 year-olds in 2026.
Then there has been the effect of increased national insurance. The threshold for employer NI decreased from £9,100 to £5,000 and the rate of employer NI increased in April 2025 from 13.8% to 15%. In addition, there are the problems of the change of rules for packaging recovery notes, shifting the full cost burden on to brewers; the regulatory burdens and uncertainty from the newly introduced extended producer responsibility; the deposit return scheme, which I will discuss later; and, of course, the reduction of the legal alcohol limit, especially affecting rural pubs.
The trade body UKHospitality’s key message is that the 2025 Budget did not deliver needed changes, such as a rebalancing of the business rates system, easement of employment costs or a reduction in VAT. Rather, there was minimal rates relief, steep hikes in rateable values—wiping out the 5p business rate discounts for hospitality—as well as wage increases and holiday tax proposals. Rising costs and taxes add further pressures on business, resulting in job losses and closures. Sector job losses since the 2024 Budget have reached 100,000, and without immediate action this will continue leading to reduced investment, further hollowing out of high streets and fewer opportunities for young people, the group most dependent on hospitality for employment.
Let us look at the business rates problem in more detail. The 5p discount for retail, hospitality and leisure businesses is far below the 20p relief allowed under legislation, and the benefit is outweighed by steep rateable value increases. Hospitality faces far steeper multiyear increases in rates bills than supermarkets, warehouses, offices or banks, directly contradicting the Government’s manifesto commitment to levelling the playing field between high street businesses and online giants.
UKHospitality estimates that business rate rises will cost small hospitality business £318 million. An average pub’s rates bill will rise 15% in year 1, reaching 76% over three years. A four-star hotel’s rates bill will rise 30% in year 1, reaching 115% over three years. In comparison, online companies’ warehouse rates will rise by only 9% in year 1 and 16% over three years. In contrast, large supermarkets will see rates fall by 2% in year 1 and rise by only 4% by year 3.
According to the Association of Convenience Stores, local shops are facing significant increases in business rates as a result of the 2026 revaluation and withdrawal of reliefs. While the ACS states that the introduction of lower multipliers for retail businesses was welcome, these changes do not go far enough. The multiplier needs to be set at a materially lower level to properly offset these increases and protect local shops. Transitional relief will only delay the impact of higher bills; it does not remove it. Even when increases are capped, many retailers are facing rises of several thousand pounds in April, with full effect pushed further into the parliamentary term rather than resolved.
Independent retailers, particularly those operating on petrol forecourts, are set to be hardest hit. These businesses benefited proportionately more from reliefs that are now being withdrawn and face sharp increases, despite the new retail, hospitality and leisure multiplier and transitional release package. These higher business rates costs directly affect the retailers’ ability to invest in stores, retain staff and continue to provide essential community services. Without further support, higher business rates risk undermining jobs, investment and the long-term viability of local shops that communities rely on every day.
Listening to the Minister’s response to the repeat of the Commons Urgent Question on Tuesday, I got no indication of a rapid response to the business rates problems for these businesses. I emphasise to the Minister here today the urgency of the situation. With his rare business experience among the Labour Front Bench, he must realise that remedial action is needed as soon as possible.
Lord Kempsell (Con)
My Lords, how perspicacious it was of my noble friend Lady Monckton to secure this vital business today. I join others in expressing my appreciation for her opening speech, which set the scene for this debate, replete as it was with illustrations and examples from her own experience. I congratulate newly minted noble Lords and Ladies on the Benches opposite on their maiden speeches. If they are to be treated as a pop group, they sang, if I may say so, a beautiful song in this Chamber. I hope that they continue to feel very welcome in your Lordships’ House.
George Orwell imagined his favourite public house. He called it the Moon Under Water, and stipulated, in post-war style, that it should have,
“draught stout, open fires, cheap meals, a garden, motherly barmaids and no radio”.
The prices have gone up since 1946, and I think you are more likely to hear music nowadays in hospitality establishments, but even George Orwell, that master of English dystopia, could not, even in his worst nightmares, have imagined the fate that awaits British pubs today under this Government. Indeed, his vision of the Moon Under Water has given way to the grim reality of the pub under Starmer.
There is one fact in this debate which sums up all other points—this indictment alone: that under Labour, one pub permanently closes every day in this country, and that is before all the measures from last year’s Budget are fully implemented. Noble Lords opposite spoke with high mind about public services in this country. I have to inform them that, in many places in Britain, especially in rural Britain, the pub is the only real public service that remains. Hospitality venues are safe and hospitable places, one of the few on the high street where people can meet without breaking the bank. British landlords are de facto social workers, changing lives as well as changing barrels, whether, as we have heard in this debate, by giving young people their first job and income or by healing the epidemic of loneliness that is faced by the old. How much more vividly the humblest member of hospitality establishment staff understands the daily reality of life in this country than those who sit in the Cabinet—not one of whom has run so much as a small business between them, let alone faced the scale of challenges that now confront the hospitality sector.
From April, when the minimum wage increases and the new rateable values take effect, pubs, cafes, restaurants and other venues will face what for many of them will be impossible bills. Business rates for the average hospitality business will rise by 94% over the next three years. Labour is driving publicans and hospitality entrepreneurs, like farmers, to the brink of despair. The Government already moved in the Budget last year to destroy their profits, and now they are targeting their revenues, meaning that many of them will not even be able to open. I hope that the right honourable Chancellor in the other place enjoyed a drink in Davos. How much more she could have learned had she travelled instead to the Dog and Duck.
I am old enough to remember—it was only a few weeks ago—when the Government promised not to increase taxes on working people. There are no harder-working people in this country today than those in the hospitality trades. Can the Minister, who speaks with experience and gravity on these topics, please answer the questions that have been raised in this debate? Until those questions are answered by the Government, it will be no surprise if every Labour MP continues to be routinely barred from public houses in Britain. I hope that the Prime Minister likes to use vending machines, because if he carries on with his policy he may never be served in a public house in Britain again.
Lord Young of Acton (Con)
My Lords, I declare my interest as the director of the Free Speech Union. I congratulate the four new Members on their excellent speeches.
I draw the attention of your Lordships’ House to Section 21 of the Employment Rights Act, which extends the liability of employers for the harassment of their employees to third parties, and its impact on the hospitality sector. From October this year, employers will have a duty to protect their workers from third parties. I should make it clear that we are not talking about third-party sexual harassment, which they were already liable for, but third-party non-sexual harassment.
What does that mean for the hospitality sector? Employers will have to take “all reasonable steps”—those are the words in the Act—to protect their employees from harassment by customers. That might not sound too onerous, until you factor in that harassment includes indirect harassment, which has been defined by the employment tribunal as including overheard conversations, remarks, comments or jokes that an employee may find offensive or upsetting by virtue of their protected characteristics. It is for that reason that the Free Speech Union has been referring to Section 21 as the “banter ban”.
A couple of weeks ago, the Government quietly released a 40-page impact assessment about Section 21. It says that it is likely to cost the owners of small businesses £23.7 million to familiarise themselves with their new legal obligations, with ongoing costs of £124,000 a year for 10 years. The total cost during that period, it says, could be as high as £59 million. That is a woeful underestimate.
One of the assumptions in the impact assessment is that it will take business owners no more than half an hour to master their new duties under Section 21 of the Act. That is not the view of the Equality and Human Rights Commission, as set out in a briefing that it produced for your Lordships’ House when we were debating the Bill. The EHRC drew attention to the conflict between Clause 21, as it then was, and existing anti-discrimination provisions. It said that a third party may themselves be protected from discrimination while their conduct could simultaneously be considered harassment by an employee. That makes the legal balancing of rights and obligations difficult for employers to manage in practice.
I will give just one example of the kind of conflict that the EHRC has in mind and which hospitality businesses will now have to navigate. Should they prevent trans women customers from using the ladies’ lavatories? On the one hand, a female employee may have a claim for third-party harassment in the tribunal if she finds herself having to share the facilities with a biological male. On the other, a trans woman customer may have a claim for discrimination if the business owner, as a service provider, fails to discharge its duty under Section 29 of the Equality Act, which makes it unlawful for a service provider to discriminate against a person who is using, or seeking to use, its services.
This is precisely the issue that the Women and Equalities Minister has been wrestling with since the EHRC submitted its advice last October about how to revise the code of practice on services, public functions and associations covering, among other things, access to single-sex women’s spaces. We were told in this House only this week that the reason there has been such a delay in issuing this code of practice is that this is such a fiendishly complex area of law and it is essential that the Government get it right. Yet, if a Government Minister cannot master this area of the law in three months, with all the legal resources at her disposal, what hope do publicans have to get their heads around it in half an hour?
Section 21 of the Employment Rights Act imposes a new duty on small businesses in the hospitality sector that touches on an incredibly complicated area of law, with real financial risks if they get it wrong. For many publicans, the cost of the legal advice alone, let alone the compliance costs, will be the final straw. Remember that we are talking about just one section of the Employment Rights Act. Could the Minister, at the very least, give retail and hospitality businesses a 12-month reprieve before strangling them with this new profoundly unwelcome bit of red tape?
Lord Fox (LD)
My Lords, it was a delight to hear the four maiden speeches from the noble Baronesses, Lady Dacres and Lady Shah, and the noble Lords, Lord Forbes and Lord John, who bring really meaningful experience to your Lordships’ House. I want to empathise with the noble Lord, Lord Forbes: I was in exactly the same position with my father 10 years ago.
This has been an interesting but somewhat predictable debate. I expected all the issues that came out, and mostly from the people who I expected to give them, but it has been an important debate because it was an opportunity to air the pressures facing Britain’s high streets. Some of those pressures are historical—Covid, Brexit and things like that—and some are general and local, such as those brought up by the noble Lord, Lord Empey, such as parking, the overall environment, the variety on the high street and the presence of anchor stores. But some of the pressures can be laid at the door of the current Government.
Noble Lords talked about raising employers’ NICs, which has undoubtedly had a catastrophic effect on employment in businesses. Retail and hospitality are very people-centred and are among the businesses worst hit by this rise. Lib Dems oppose this and we would scrap it. Energy costs have hit some sectors of the high street particularly hard, and hospitality is very much hit by the increase. We do not think that the Government have demonstrated the necessary practical understanding of what that has done to those businesses.
SMEs—which, of course, many pubs are—in particular are exposed to a deregulated energy market with little support after the previous Conservative Government’s decision to slash the energy bill support for businesses by an average of 85% when they replaced the energy bill relief scheme with the energy bills discount scheme, which itself ended in March 2024. We estimate that 3.1 million SMEs saw a total bill increase of £7.6 billion when the initial energy bill relief scheme ended. That is a huge benefit.
A couple of Peers decided to relitigate elements of the Employment Rights Act, and I am delighted that they did. Since the noble Lord, Lord Young, trooped out his greatest hit, I am afraid I will have to bring mine out. During the debate, I felt the phrase “banter ban” to be entirely revealing. Since time immemorial, the phrase, “It was only a piece of banter”, has been used to justify homophobia, racism and misogyny, and I think it is a very revealing choice of words.
The noble Baroness, Lady Jones, was more subtle in her relitigation. I take issue with some of the points that she made, and the noble Lord, Lord Sharpe, will no doubt fail to resist that temptation. However, I note that she is correct in that there is still an awful lot of consultation and, of course, of secondary legislation to come. I reiterate another of my greatest hits: when the noble Lord, Lord Sharpe, stands up and brings this issue to the fore, I hope that he can persuade his Front Bench to engage in meaningful debate on secondary legislation—which means jeopardy that that secondary legislation will be voted down. Until His Majesty’s loyal Opposition meaningfully make that threat, the Government are on a pass. That is done for the day.
For retail, the competition from online sales has continued to mount. Over the past 15 years, we have seen internet shopping increase its market share by five times to around a quarter of all sales. It is clear that although some high street businesses also practice online trading, they cannot compete with the global concerns supplied from out-of-town fulfilment centres. There have been government claims of levelling the playing field between their two retail models, but there is no such levelling.
Here, we come to the bit about non-domestic rates. I know that the Treasury has been busy, but I find completely incredible the recent claims that the Chancellor was surprised by the effect of the changes she is making to business rates on retail and hospitality. This time last year, some of us were debating the then Non-Domestic Rating (Multipliers and Private Schools) Bill, which is now an Act. During the stages of that Bill, my noble friend Lady Pinnock, the noble Earl, Lord Lytton, on the Cross Benches, and I spoke at length of the twin effects of the scaling back of the Covid relief and the future valuation, which was, at that time, not available. We noted that the phasing would not eliminate the sharp jump in rates. We launched a wider critique of the structure and effect of business rates, arguing that the Government’s proposals on multipliers were poorly targeted and risked damaging public services and regional fairness, rather than delivering a genuinely fairer system for high streets.
My noble friend Lady Pinnock repeatedly criticised the lack of an impact assessment, saying that the Committee on the Bill was “debating in the dark” about a combined effect of the new higher multipliers and the withdrawal of the Covid-era reliefs. She argued that the Government’s claim to be creating a fairer system was not being met because the Act relies solely on rateable value rather than genuinely targeting online distribution warehouses, despite all that rhetoric about an Amazon tax. She was able to cite an Amazon warehouse near her home which is levied at about £25 per square metre, versus a local shop in the town just nearby which is at 10 times that, at £250 per square metre.
That said, without a root-and-branch change in the way that valuations are done, business rates will continue to penalise high streets and advantage large out-of-town operators. The noble Earl, Lord Lytton, with all his expertise, added further valuation data to that argument, which the Government and the Minister simply ignored.
Above all, we criticised the absence of a meaningful impact assessment and the absence of new valuations. It is clear that, without these, the ministerial comments at the time were plain nonsense; the Minister was reading out wild guesses and wishful thinking from the Dispatch Box. However, by the time the Chancellor stood up this autumn, that information was available, so either her comments at the time of the Budget were seeking to deceive us or she had allowed herself to be deceived. Either way, the new business rates will be a hammer blow for many high street businesses, where rates are often more than rent, as we heard, and the Chancellor should and could have been aware of that when she made her announcement.
There is, of course, a need for holistic reform of business rates. The Liberal Democrats have proposed a commercial landowner levy, but in the short term we also propose to lower the retail, hospitality and leisure multiplier by the full 20 pence permitted under the legislation recently passed by the Government, as opposed to the 5 pence reduction that the Government have implemented. Also in the short term, to further stem the haemorrhaging of businesses, we would cut VAT from 20% to 15% for hospitality, accommodation and attractions, and we set out details of that before the Budget.
Meanwhile, Parliament needs full details of the Government’s proposed U-turn on what exactly the rates will be and who will be paying what. Businesses need to know what they are facing; they need to be aware of the kinds of changes that are coming down the track. I have to say that the responses on Tuesday to the Question before your Lordships’ House were completely inadequate.
If there is to be a recovery in our economy, it will come from a turnaround in consumer confidence. For that confidence to materialise, we need vibrant and successful high streets where people go to buy things and enjoy flourishing hospitality. There is a big danger that that will not be available and that we are moving in the wrong direction. There is much to be done, and I look forward to the Minister’s response to this debate.
Lord Sharpe of Epsom (Con)
My Lords, I join in the general congratulations and welcome to the four maiden speakers. I enjoyed all their speeches very much and I wish them all the very best. I also thank my noble friend Lady Monckton of Dallington Forest for bringing this debate to the House and for her most eloquent introduction. I also wish her well with her new pub venture.
The Government have been in power now for almost two years and, frankly, it has been nothing short of a disaster for our retail and hospitality sectors. I applaud the efforts of noble Lords opposite to tease out some of the illusory positives, but the facts speak for themselves. I shall start with the £40 billion tax rate in this Government’s first budget, which included the disastrous jobs tax. This measure has frozen hiring across the sector and has led to unemployment going up every single month under their watch. UKHospitality has reported that 90,000 jobs have been lost in hospitality since the jobs tax was introduced—90,000 jobs that would exist if the Government had listened to His Majesty’s Official Opposition about the costs of their policies.
The House will be pleased to know that I am going to disappoint the noble Lord, Lord Fox, and not relitigate the entire Employment Rights Act, but I say gently to the noble Baroness, Lady Jones, that there are hundreds of thousands of lower-paid workers who lack all security because they have lost their jobs. That is a consequence of the Government’s policies.
The scale of the damage extends far beyond hospitality. Overall, official figures from HMRC show that the 2024 Budget has led to more than 250,000 jobs lost, and unemployment is now reaching pre-pandemic levels. That is a catastrophic failure of economic policy that was entirely predictable and preventable.
On retail specifically, the numbers are equally alarming. According to analysis by the British Retail Consortium, the changes to national insurance rates and thresholds have added close to £2.5 billion in employment costs to retailers. In retail, they say it is now 10% more expensive to hire a full-time worker and 13% for a part-time worker. As has been observed across the House, many of us got our first start in the world of work in part-time retail work. I certainly did when I worked for Sainsbury’s while I was still at school. Think about what those numbers mean for young people seeking their first position, for students looking for part-time work and for those trying to get back into employment. The ladder of opportunity that was offered to all of us is being denied to them.
If our small businesses thought that the November 2025 Budget would offer some respite, they were sorely mistaken because instead of relief, they received yet another hammer blow. Britain’s high streets now risk being crushed by what the Federation of Small Businesses rightly called a “tax timebomb”.
I turn to the business rates that are affecting shops, cafés, pubs and hospitality across the board. Specifically on pubs, I too worked in a pub, it was one of my first jobs, and I say to my noble friend Lord Hannan of Kingsclere that I very quickly learned lessons there, including which regulars to serve and which to swerve. Analysis from UKHospitality shows that the average pub faces a 15% rise in business rates next year. That will increase to £7,000 more by 2028-2029 and £12,900 over the next three years. These are average numbers. Hotels, as has been noted by a number of speakers, are hit even harder, with bills rising by £28,900 next year and £111,300 by 2028-29, totalling £205,200 extra over the next three years. It is estimated that, without urgent action, 540 pubs will close this year.
It is inevitable that not only our pubs but our breweries are struggling. In 2025, there were around 100 fewer breweries operating in the UK than the year before, which is a stark sign of the pressures that the sector faces. The Society of Independent Brewers has warned that some independent breweries have seen their rateable values rise by as much as 300%, alongside new and rising costs that many simply cannot absorb.
During a Question yesterday, a noble Lord and union baron opposite suggested that brewers were making record profits. Where are they? This sort of attack on bosses is so 20th century, it is, frankly, embarrassing. I say again to noble Lords opposite: please look at the facts.
These pressures are being felt by heritage and rural businesses as well. Data from Historic Houses, as my noble friend Lord Harlech explained, shows that changes to business property relief and agricultural property relief are having a severe impact. Some 54% of heritage business owners say they will be unable to develop or diversify, while 41% report that they will have to make redundancies or freeze hiring altogether.
The FSB has urged Ministers to make full use of the relief available for small businesses and allow a 20 pence reduction in the multiplier used to calculate bills—rather than reducing it by just 5 pence—which would bring the discount back into line with the previous level. Following on from what the noble Lord, Lord Fox, said, I will ask the same question of the Minister: will the Government commit to do this?
No doubt the Minister will talk a little about the £4.3 billion of relief measures and tapers that were aired on Tuesday during that Question that I have already referred to. But that is the economic equivalent, surely, of giving with one hand but taking with the other, but just not quite yet. Are the Government really saying that these businesses will be in a better place to play in a couple of years’ time? If they are, they need to explain why they think that, especially after the implementation of further legislation such as the Employment Rights Act.
For weeks, we have watched the familiar post-Budget ritual unfold: a series of Treasury leaks on business rates, first relief for everyone and then relief only for pubs. As my noble friend Lady Neville-Rolfe rightly observed, one might have hoped that after the chaos ahead of the 2025 Budget, the Treasury and Chancellor would have learned that governing by leak creates uncertainty and undermines confidence. But, sadly, it appears that old habits die hard. Businesses need decisions, not briefings. They need certainty, not speculation.
In addition to all these costs, businesses across the UK face electricity prices that are among the highest in Europe and around four times higher than in the United States. These costs are undermining competitiveness, stifling investment and, ultimately, suppressing economic growth. The reason for these persistently high prices lies in the ideological approach to our energy policy, particularly the ever-growing subsidies layered across the system to support renewables, with the burden passed directly on to businesses. As an aside, it is worth noting that, in December 2025, 16% of hospitality businesses reported that energy prices were their top concern. This is very real, and these high prices are a direct consequence of government choices.
As my noble friend Lord Borwick noted, beyond economic pressures, retail crime is now a daily reality for too many small businesses. The Association of Convenience Stores reported over 57,000 incidents of violence against convenience store workers last year, forcing retailers to spend more than £250 million on security just to keep staff safe. Shop theft and violence persist because enforcement has failed and repeat offenders face too few consequences. That is why it is so disappointing that the Government rejected a Conservative amendment to the Sentencing Bill that would have ensured that repeat offenders usually go to prison rather than receive suspended sentences. Why did the Government reject this amendment? The Official Opposition, industry groups, the Federation of Small Businesses and UKHospitality have warned the Government, but they have so far refused to listen.
Our high streets are having a very hard time; some might say that they are dying. Our pubs are closing at an accelerating rate, jobs are disappearing, unemployment is rising every single month and small business owners, who took the risk to start their ventures, are being forced to scale back or shut down entirely. That is not just poor policy; it is a comprehensive assault on the very fabric of our communities and the livelihoods of millions of hard-working people. The Government must act, and they must act now.
To conclude, I will ask the Minister a few more questions. First, when will the Government publish the details of their turn on business rates, and will they ensure that pubs, retail and the wider hospitality sector all receive business rates relief? That would go some way towards answering my noble friend Lord Smith of Hindhead’s question on clubs. A recent report from Sky News suggested that the Government have warned the hospitality sector that publicly criticising government policy could affect the availability of concessions or support. Is that true? Can the Minister shed some light on this report? Representatives from the Valuation Office Agency told the Treasury Select Committee that policy teams across the Treasury and the Ministry of Housing, Communities and Local Government had access to data enabling judgments to be made about business rate multipliers and reliefs. Given this evidence, can the Government confirm that Ministers had the relevant information on the impact of business rates when these decisions were taken? If so, why has the Treasury suggested otherwise?
I remind the Minister of a couple of other questions that were asked, to which I would particularly like answers. My noble friend Lady Verma asked a very good question on how many hospitality businesses the Minister thinks will still be operating this time next year. My noble friend Lord Young of Acton asked a very important question about Section 21 of the Employment Rights Act, and I would be grateful if the Minister can give us his thoughts on that. With that, I close my remarks.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, it is my privilege to respond on behalf of His Majesty’s Government. I am grateful to the noble Baroness, Lady Monckton of Dallington Forest, for securing this debate. I thank all noble Lords for their thoughtful, informed and passionate contributions on a subject of real importance to our economy and to communities across the United Kingdom. I will endeavour to answer all questions. If I do not, I will go through Hansard and write to all noble Lords, and I will place a copy of the letter in the Library.
I congratulate my noble friends Lady Dacres of Lewisham, Lord Forbes of Newcastle, Lord John of Southwark and Lady Shah on their excellent maiden speeches. They bring a vast amount of knowledge and insight in local government, regeneration, science, computing, law, education, arts and culture. I look forward to working with them and listening to their contributions in this House going forward.
I should also declare an interest. When I was much younger, I harboured ambitions of opening a nightclub —we called them discotheques in those days. In truth, however, I spent far more time boogying on the dance floor than on any serious business planning, and that, I fear, was the end of my nightclub venture. It might have been a brilliant idea, because it gave me the opportunity to set up various businesses, and I became a sort of serial entrepreneur before I joined the Front Bench.
More seriously, I have many friends and relatives working in hospitality, tourism and retail, owning restaurants, wine bars and shops. Through them, I see at first hand the pressures these sectors face every single day: rising costs, staffing challenges and the constant need to adapt. That personal experience informs my appreciation of just how demanding, and how important, these businesses are.
This debate resonates particularly with the noble Baroness, Lady Monckton, and I pay tribute to her remarkable charity, Team Domenica, and to its inspiring new establishment, the North Star in Brighton. This pub is a powerful testimony—an example of social enterprise in action. It supports young adults with learning disabilities and autism through vocational training in hospitality, while fostering inclusion, confidence and opportunity within the community. That it was delivered despite some well-publicised cautionary advice from one Jeremy Clarkson speaks volumes about the noble Baroness’s determination and vision.
Retail and hospitality are far more than economic sectors. They are part of what might be called the everyday economy. They are woven into daily life, shaping how people work, shop, meet and socialise. They anchor our high streets and town centres, provided first jobs and flexible work to many noble Lords—including me —and offer routes into long-term employment and management for those who wish to build a career within them. They also play a vital role in the character and vitality of our towns, cities, seaside communities and villages.
I note here the contribution made by the noble Lord, Lord Young, on Section 21. I do not need to say any more. The noble Lord, Lord Fox, has said everything I needed to say. I was a victim of a bit of banter, but it was nothing more than racist comments; I will just park it there.
A successful high street is rarely just about shops. It is about cafés, pubs, services, culture and places where people feel welcome and connected. Retail and hospitality sit at the heart of that mix. To summarise their impact briefly, in 2024 the retail sector produced something like £115 billion in gross value added, representing 4.4% of UK output, and by September 2025 it supported about 2.8 million jobs. The hospitality sector generated £51.3 billion, about 2% of total economic output, and supported approximately 2.1 million jobs.
While these figures are significant, they tell only part of the story. The true importance of these industries is in their functions as local employers, community centres and catalysts for footfall, investment and civic pride. The Government are clear-eyed about the pressures that retail and hospitality face. In recent years these sectors have weathered an extraordinary series of shocks: the pandemic, supply chain disruption, rising energy costs, inflation, labour shortages and profound changes in consumer behaviour. Government policy cannot remove all these challenges, but it can provide stability, reduce unnecessary burdens and help businesses plan, invest and adapt for the long term.
Several noble Lords mentioned business rates, which rightfully featured prominently in this debate. We recognise that the current system places a disproportionate burden on many high-street businesses, which is why we are continuing its reform in line with our manifesto commitment to protect the high street. From April 2026, we will introduce permanently lower tax rates for eligible retail, hospitality and leisure properties, benefiting more than 750,000 ratepayers. A higher multiplier will apply to the most valuable properties, affecting around 1% of premises, helping to fund this relief in a fair and sustainable way. In addition, we have announced a £4.3 billion support package over the next three years to protect ratepayers facing bill increases following revaluation. These measures are designed to ease pressure where it is felt most acutely, while ensuring local services remain properly funded.
On top of the support package announced at the Budget, the Chancellor also commissioned work to look at what more can be done to support pubs. Further details will be announced in the coming days. Treasury Ministers have met with a range of stakeholders to discuss business rates before and since the Budget, including the British Beer & Pub Association and UKHospitality. Many noble Lords have spoken with real feeling about the future of pubs.
Lord Fox (LD)
I thank the Minister. In outlining the changes in the rate system, the Minister is talking about the process. Could he perhaps talk about the outcome, which, when conjoined with the reduction and removal of Covid relief, leaves many businesses—indeed, most businesses—paying more, not less, business rates? Will he at least acknowledge that from the Dispatch Box?
Lord Leong (Lab)
I thank the noble Lord. I am coming to the part of my speech that addresses some of the noble Lord’s concerns.
Many noble Lords have obviously spoken with real passion about the future of pubs, including me, and understandably so. Pub closures are always painful, and each one represents the loss of a place where people meet, talk and feel part of something local. Around 2,000 pubs in England and Wales have closed permanently over the last five years. That is a matter of genuine concern, although it reflects a long-term trend that pre-dates recent changes to national insurance, the minimum wage or business rates. Much of this reflects changes in how people live and socialise. People are drinking less often, particularly young adults, including my 19 year-old daughter, with a growing interest in low and no-alcohol options. The pandemic accelerated shifts towards home-based socialising, remote working and more food and experience-led venues.
Costs do matter, and the Government continue to provide targeted support, including specific help for community pubs. The future of pubs depends not only on managing costs but on being supported to adapt to changing habits and expectations. Our approach reflects that reality. Following the establishment of the Licensing Taskforce last April, we published the National Licensing Policy Framework in November. This was co-created with industry councils and various trade associations.
The Government work closely with the Hospitality Sector Council to improve the productivity and reliance of hospitality businesses by co-creating solutions to issues impacting business performance. Likewise, the Retail Sector Council is also undertaking to support growth, working very closely with government on sustainability and the circular economy. High streets, international trading and cybercrime are the main areas of focus. It sets out a vision for a simpler, more consistent and pro-growth regime that reduces bureaucracy, supports investment and promotes cultural and community life. We will build on this work through further planning reforms to help hospitality and high-street businesses grow and adapt.
Alongside regulatory reform, we are also providing targeted support. The Government have introduced a £1.5 million hospitality support scheme, including £440,000 to help rural pubs diversify as community hubs delivered with Pub is The Hub. This initiative is only the start. The Government are committed to supporting pubs and further announcements will be made very soon. This has already unlocked more than 40 previously stalled projects, generating jobs and new services. Industry research suggests that every £1 invested generates more than £8 in social value, as my noble friend Lord Rook said.
The noble Baroness, Lady Neville-Rolfe, made a point about drink-driving. One in six road safety casualties involves drink-driving. I can share with the noble Baroness that the Government are consulting on lowering the limit, which is currently the highest in Europe. In 2014 an academic study showed no impact from the reduction of the limit in Scotland.
It is also right to recall the scale of support provided to hospitality and leisure during the pandemic. These sectors were, rightfully, among the largest beneficiaries of emergency intervention, including furlough, business rates relief, grants, VAT reductions, government-backed loans and measures such as Eat Out to Help Out. That support helped many businesses survive an unprecedented shock.
Since then many parts of the sector have seen a recovery in output and revenues, though I readily accept that this experience is not uniform and that pressures remain acute for some businesses. Emergency support was, by its nature, time-limited and designed to help businesses through an extraordinary period rather than to replace the need for long-term sustainability. The Government will continue to engage constructively and to support growth through skills, investment and proportionate regulation, as businesses move forward on a sustainable footing.
Labour and skills are central to the success of these sectors. I recognise the concerns expressed about changes to the national minimum wage and the national living wage—but I can say to the noble Lord, Lord Hannan, that we are not the highest. Countries with higher minimum wages include Luxembourg, Australia and the Netherlands. Working people have borne the brunt of the cost of living crisis, and it is right that pay reflects living costs, productivity and wider economic conditions. In setting wage rates, the Government rely on the independent expertise of the Low Pay Commission, which my noble friend Lord Hannett mentioned, balancing fairness for workers with the need for businesses to grow and employ.
Concerns have also been raised about the Employment Rights Act. I take this opportunity to thank my noble friend Lady Jones of Whitchurch, who was the Minister who took that Act through this House. My department consults daily with businesses in all sectors and trade associations on implementing the Act. There will be further consultation on parts of the Act, and further announcements will be made in due course.
Economic growth is our foremost priority, but growth cannot be built on insecure or unpredictable work. By strengthening employment protections we are improving stability for workers and employers alike, and supporting a modern, productive economy. These reforms sit alongside our wider commitments to skills development, tackling economic inactivity, accelerating construction and delivering a modern industrial strategy. Together they form part of our long-term plan for national renewal.
I want to address directly the concerns raised in this debate, including by noble Lords who take a different view from that of the Government. I recognise that the pressures that many businesses face, particularly smaller operators, are immediate and personal. Policy choices, even when carefully designed, can feel very different on the ground, and that is why the scrutiny of this House matters. I welcome that scrutiny. Where noble Lords have raised concerns about costs, regulation or the cumulative impact of change, I want to be clear that the Government are listening.
We do not claim that the system is perfect, nor that there are no difficult trade-offs. Our task is to strike a balance between supporting growth, protecting workers, maintaining public finances and enabling businesses to plan with confidence. Retail and hospitality succeed when high streets succeed. Through the Pride in Place programme we are investing £5 billion across 339 communities to renew high streets and centres.
The noble Lord, Lord Borwick, who is elegantly suited this afternoon, talked about retail crime, as did the noble Lord, Lord Sharpe. The Government are committed to restoring visible and responsive neighbourhood policing, with 3,000 additional officers in neighbourhood policing roles by the spring of 2026 and 13,000 by the end of this Parliament. We are also ensuring that the right powers are in place. In the Crime and Policing Bill, we have brought forward a new offence of assaulting a retail worker, to protect the hard-working and dedicated staff who work in stores. We are removing the legislation that makes shop theft of and below £200 a summary-only offence, sending a clear message that any level of theft is illegal and will be taken seriously. But funding alone is not enough, which is why we remain committed to ongoing engagement with local authorities, trade bodies, businesses and workers, so that policy remains grounded in lived experience.
The noble Baronesses, Lady Monckton and Lady Neville-Rolfe, asked about the visitor levy. The precise design and scope of the power for the levy is still under development. The Government have published a consultation, which will run until 18 February 2026, to ensure that the public and businesses can shape the design of this power.
Retail and hospitality are not just engines of economic activity but places of connection, opportunity and shared experience. They matter deeply to communities across the country, and they matter to this Government. Through targeted support, community investment and proportionate reform, we are determined to work with these sectors as they adapt to a changing world. We may not agree on every point, but I hope all noble Lords will recognise our commitment to engagement, stability and long-term renewal. I thank all noble Lords once again for contributing to this important debate. I owe the noble Lord, Lord Fox, an explanation about business rates, so I will write to him.
Lord Sharpe of Epsom (Con)
My Lords, can I make a request to the Minister? In the letter that he plans to write to us, can he explain how many consultations across the whole of government are currently being run? It is a huge number, and I would like to know what it is.
Lord Leong (Lab)
Is the noble Lord referring to on employment rights or does he mean across everything?
Lord Leong (Lab)
I obviously do not have the figures here, but I will endeavour to find out and will write to the noble Lord accordingly.
Baroness Monckton of Dallington Forest (Con)
My Lords, I thank all noble Lords for their contributions to this debate, particularly the quartet of maiden speakers.
Briefly, I will run through a few comments. The noble Lord, Lord Hannett, is right, and I agree that history will judge the impact of raising the minimum wage. I thank my noble friend Lady Neville-Rolfe for talking about drink-driving in rural communities. One of our local pubs repurposed an ambulance—they called it the “paralytic unit”—and drove people home, so perhaps there is a business opportunity there for some people. I thank my noble friend Lord Smith of Hindhead for his passionate support of members’ clubs. I congratulate the noble Lord, Lord Forbes of Newcastle, on his maiden speech. I thank the right reverend Prelate the Bishop of Newcastle for telling us about what is happening in Newcastle—I think one of the establishments that closed was called the Pickled Toad, and it is such a shame to lose something with that name.
I also thank my noble friend Lord Borwick for giving us such a vivid description of his birth and for recognising the importance of entrepreneurs. To the noble Lord, Lord Empey, I say that all those issues on town centres and retail are so important. I thank my noble friend Lord Hannan for talking about public spending and the importance of taking ownership of that money.
I particularly single out as a maiden speech that of the noble Baroness, Lady Shah, for expressing what we all think in this House—it is a surreal experience when you join, and I still have not quite got over it myself—and for so bravely sharing her own personal journey and that of her family, with all its sadnesses and challenges.
I thank the noble Lord, Lord Rook, who, despite being teetotal, still raised his glass of lemonade in celebration of pubs, and my noble friend Lord Harlech for raising the issue of historic houses and the challenges that they face, which are so often forgotten.
The noble Lord, Lord John of Southwark, took us on a journey from Weston-super-Mare to the House of Lords, and recognised the challenges that this sector faces. I appreciated that.
If, as the noble Baroness, Lady Jones, says, the Labour employment laws increase employment in the hospitality sector, I shall apologise. If she is not right, it will not be people in this House who suffer.
I thank my noble friend Lord Kempsell for recognising that publicans are very often social workers. I have seen that already in our pub. I thank my noble friend Lord Young for raising indirect harassment. That worries me about my cohort of people with learning disabilities who work in pubs; they have absolutely no social filter whatever—I can imagine we will have some very interesting conversations.
I thank the noble Lord, Lord Fox, for recognising the effect of the national insurance changes and the rates, and for his suggestion of reducing VAT from 20p to 15p, which would make a huge difference to pubs.
I thank the Minister for recognising what needs to happen and giving a shout out to the North Star. I end by saying that you are all welcome to come to Brighton and have a drink.