Water Companies: Fines
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Sikka
To ask His Majesty’s Government how many of the fines imposed by regulators on England’s water companies in 2024 and 2025 are yet to be paid in full.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, Ofwat has imposed fines to the value of £122.7 million on Thames Water. There is a payment plan in place, with the first 20%—that is, £24.5 million—paid last year. The remaining 80% is due by 31 March 2030 at the latest. Fines following EA enforcement action total £4.6 million, and we are not aware of any unpaid fines. Fines are only part of the enforcement toolkit, however, with over £164.6 million of enforcement undertakings announced over the same period.
Lord Sikka (Lab)
My Lords, it is shameful that water companies, with nearly 1,200 criminal convictions, are permitted to negotiate the amount and timing of fines. Some will not pay the headline-grabbing fines announced in 2024 until 2030, while others will not pay any of the announced fines. No statement to that effect has been made to Parliament. Can the Minister explain why the Government continue to indulge criminal organisations?
Baroness Hayman of Ullock (Lab)
I politely suggest to my noble friend that we do not indulge criminal organisations. We put in payment plans because it would not help a water company if we forced it to pay fines so that it went bust. I do not think that would help consumers at all. So we need to bring in sensible payment plans which ensure that we get the money back, but we are also bringing in tough, swift penalties to clamp down further on water companies. For example, we have increased enforcement powers to the regulators, we have given existing regulators the teeth they need to take tougher action against water companies, and the Environment Agency can now impose automatic penalties, and penalties to the lower civil standard of proof. We are looking to clamp down heavily on offenders.
Lord Pannick (CB)
Can the Minister say whether the directors are paying these fines, as opposed to the consumers, and if not, why not?
Baroness Hayman of Ullock (Lab)
It is important that the water companies pay the fines in such a way that it does not impact on consumers and consumer bills, and the Government are certainly keen to enforce that.
Baroness McIntosh of Pickering (Con)
Can the noble Baroness explain what proportion of the fines paid to date have been used to improve the environment? Will she ensure that these fines can be used to help farmers prevent pollution from agricultural diffusion? At the moment, the sustainable farming incentive is paused, and in any event it does not yet cover agricultural pollution.
Baroness Hayman of Ullock (Lab)
We have announced that we are reopening the sustainable farming incentive, and we hope for a good response to it. The important thing to note about the fines is that currently, if they are from Ofwat, they go to Ofwat and then to the Treasury, and if they are EA fines they go straight into the Treasury. It is important that we have an agreement where we hypothecate the fines so that Defra can decide the projects where the fine money will make the biggest difference, and then HMT provides us with the money to do that. That is the important focus.
Baroness Miller of Chilthorne Domer (LD)
My Lords, we had the very cautious report from Sir Jon Cunliffe about water, and the Government followed that up with a fairly timid White Paper last week. Does not something much more drastic in terms of restructuring water companies need to happen so that they avoid this sort of fiasco in the future?
Baroness Hayman of Ullock (Lab)
I disagree with the noble Baroness about the White Paper being timid. I believe it sets out once-in-a-generation reforms that will really transform the water system for good and lead to a water Bill which Members of this House, including the noble Baroness, can help us make the best piece of legislation for the water industry that we have ever seen.
Lord Roborough (Con)
My Lords, to follow my noble friend’s question, the Government have announced that water company fines will help fund environmental restoration, including 100,000 new trees. To put that in context, a block that size would be only 50 hectares and cost £200,000. That seems a token effort. Will the Minister commit to more ambitious targets for the use of these fines in environmental restoration and tree-planting? I refer the House to my interest in developing new forests.
Baroness Hayman of Ullock (Lab)
The Government have very ambitious plans for tree-planting, including three national forests, one of which has already begun planting and two are progressing well, so we are very keen. We understand the impact that trees can have in mitigating both climate change and flooding. We absolutely want to work with farmers to ensure that we can help and support them to plant trees in order to support their ambitions.
Baroness Blower (Lab)
My Lords, fines were levied in August 2024 on Yorkshire Water and Northumbrian Water, and they have not been collected, as I understand it, because the companies have subsequently invested in infrastructure. Is that not like someone driving, injuring a person and then having the fine returned to them so that they can fix up their car and, possibly, sell it on for a profit? That would be unacceptable, as is the non-payment of these fines by water companies. Does my noble friend agree?
Baroness Hayman of Ullock (Lab)
In March last year, Yorkshire Water agreed to pay an enforcement package of £40 million to address the failures that were found by the investigation at that time. That package is to prioritise work on some of the most problematic storm overflows in environmentally sensitive areas to ensure that they spill less than 20 times a year. Surely that must be our priority.
Lord Cromwell (CB)
My Lords, it may have come as a surprise to many water bill payers that payment plans out to 2030 were agreed to pay fines. Will the Minister agree that when fines are imposed in future, a payment plan that goes with them should also be announced?
Baroness Hayman of Ullock (Lab)
The noble Lord makes a helpful suggestion, and I am happy to take that back to the department.
Lord Tyrie (Non-Afl)
Have the Government made any assessment of whether fines on firms, as opposed to fines on individuals, have any effect on the performance of the companies concerned? It strikes me that unless fines, at least to some degree, bear down on individuals, we are unlikely to see an improvement.
Baroness Hayman of Ullock (Lab)
We are working to ensure that the money that we get from fines is spent in the best possible way. We have had so many debates and questions around water from everybody in this House; what we need to do is tackle the problem for good and for the long term. We can talk about fines and about bonuses until we are blue in the face, but what we want to find is real change. That is what we are doing with the water White Paper, and what we will do with our water Bill.
Lord Mohammed of Tinsley (LD)
My Lord, the Minister says that we do not want these water companies to go bust from paying these fines. Why on earth does the chief exec of Yorkshire Water get salary packages of multiple hundreds of thousands of pounds, which are often off the book and may not be publicly disclosed? Should we not look at limiting pay for these highly paid chief execs if their water companies are breaking the law and have been fined?
Baroness Hayman of Ullock (Lab)
As I am sure the noble Lord is aware, water companies are private companies. It is not for the Government to interfere in how private companies operate, including their pay structures. However, having said that, we need a tough regulator to ensure that we are getting the best value from water companies.
Lord Hayward (Con)
Can the Minister indicate what proportion of fines are collected across society in general? The questions are related specifically to the water industry, and I understand why, but is it not the case that a very high proportion of fines across the whole of society are completely unpaid?
Baroness Hayman of Ullock (Lab)
I suggest that the noble Lord has asked an incredibly wide-ranging and sweeping question. I am afraid I simply do not have those figures at my fingertips.
Lord Watts (Lab)
My Lords, is it not the case that this is a monopoly, and monopolies have no accountability? Until, as a previous speaker said, we get some direct accountability from chief executives, where they have to lose pay for bad performance, we will continue to have the problems we have with water authorities.
Baroness Hayman of Ullock (Lab)
When the Water (Special Measures) Act passed, one of its key parts was around making chief executives much more responsible for the pollution that was happening on their watch. I am very pleased that we have got that legislation through. We just need to build on it. We need to make sure that water companies can no longer get away with the kind of behaviour they have been getting away with for years.
Erasmus+ Eligibility: Asylum Seekers
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Bakewell
To ask His Majesty’s Government what plans they have to extend the scope of eligibility for the Erasmus+ scheme, including to asylum seekers.
Viscount Stansgate (Lab)
My Lords, with the leave of the House, and with the permission of my noble friend Lady Bakewell, I beg leave to ask the Question standing in her name on the Order Paper.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, the UK has agreed terms to join the Erasmus+ programme in 2027. The scope of the programme is set by the European Commission, and diversity and inclusion is a key priority. Erasmus+ dedicates additional support to people with fewer opportunities, which includes people with migrant or refugee backgrounds. Asylum seekers can benefit from a variety of Erasmus+ activities, such as inclusion projects aimed at fostering social integration, virtual exchanges or school twinning.
Viscount Stansgate (Lab)
I thank my noble friend for that Answer. Like many Members across the House, I hope, I am pleased that the UK’s resumption of participation in Erasmus+ is taking place. I hope that by the summer there will be a website with further information available. Does my noble friend agree that Erasmus+ supports the Government’s opportunities mission by enabling people from a wide range of backgrounds to take part? Can she confirm that participation will enable institutions to collaborate with international partners on areas such as innovation and educational improvement, which will strengthen the UK’s global reputation for education and training?
Baroness Smith of Malvern (Lab)
Yes, my noble friend is absolutely right. This is an enormously exciting opportunity for learners, for educators, for young people and for our communities. It is an investment in opportunity for our young people, our workforce and our future, opening doors for tens of thousands of people across the UK to benefit from those experiences. As my noble friend says, this includes our ability to learn from, and also share, the enormously important contribution that education makes to this country, to our exports and to our standing in the world.
Lord Harper (Con)
My Lords, I very much support the inclusion in this programme of those who have successfully got refugee status in the United Kingdom, in order to strengthen their integration into our society. But can the Minister explain why it is also open to those still seeking asylum who have not yet established their right to be in the United Kingdom? Many of those people’s claims will ultimately not be successful, and I do not know why we are spending significant amounts of our taxpayers’ money on putting on a very expensive European scheme when they have not yet established their right to be in our country.
Baroness Smith of Malvern (Lab)
Of course, the nature of the rights of asylum seekers means that they would not, for example, be able to benefit from travel overseas. Were they to be volunteering or in education, they could benefit from Erasmus programmes there.
Lord Mohammed of Tinsley (LD)
My Lords, may I press the Minister on the question of diversity in accessing Erasmus+, particularly in regard to pupils from state schools? I do not want international mobility to be the preserve just of schools in the private sector.
Baroness Smith of Malvern (Lab)
The noble Lord is exactly right. That is why we need to make sure, with this opportunity that we have with Erasmus+, that we do better than we did the last time we were in the Erasmus scheme in making sure that we get the benefits in the UK. It is a job for us all to make sure that our schools, universities, training providers and colleges understand the chances and are able to take them up, and that we see those chances shared widely among all those who could benefit.
Lord Austin of Dudley (Non-Afl)
My Lords, this is to be welcomed, but I am more concerned about the million unemployed young people—18 to 24 year-olds—who are not in education, training or work. I think this should be our number one priority. We should be talking about it all the time. The number of apprenticeships was pitiful before Covid and has collapsed since. Can the Minister update us on what the Government are doing to set an example, massively increase the number of apprenticeships in the public sector and require all those organisations in receipt of public funds or working on public sector contracts to employ apprentices as well?
Baroness Smith of Malvern (Lab)
This is a number one priority. In my work in the Department for Work and Pensions, the Secretary of State has been completely clear about the focus that we need to place on youth unemployment, on our youth guarantee and on appropriately spending the £1.5 billion that we received from the Budget in order to make sure that we reduce that million young people who are starting their working lives neither earning nor learning, with all the impact for them and the economy; and that we turn around the 40% decrease that we have seen in young people’s apprenticeship starts in order to provide opportunities for young people to be not only in work but in skilled work that will last them throughout their lives.
The Earl of Effingham (Con)
My Lords, it will cost taxpayers an estimated £9 billion to rejoin Erasmus. The projected special educational needs and disabilities funding deficit for 2028 is £6 billion and likely to rise. There are always trade-offs, but do the Government prefer to spend £9 billion on 17,000 students going overseas or £9 billion on 1.7 million special educational needs pupils and those mentioned by the noble Lord, Lord Austin of Dudley?
Baroness Smith of Malvern (Lab)
I am sorry, but I do not recognise those figures. What we have agreed is the joining of the last year of this round of Erasmus+ in 2027, at a 30% discount—something not achieved by the party opposite—saving UK taxpayers around £240 million and ensuring benefit to tens of thousands of UK students, school students, apprentices, youth groups and sports groups. I think that is good value for money in terms of individual opportunity, the change and the impact it will have on our status in the world, and our education system’s earnings.
The Lord Bishop of Sheffield
My Lords, I am proud that both the University of Sheffield and Sheffield Hallam University offer sanctuary scholarships to support talented students who have sought asylum in the UK. Noble Lords will know that many asylum seekers and refugees arrive in the UK already equipped with language skills, vocational training and, indeed, advanced degrees. Given the Government’s intention to introduce an international student levy on English higher education providers, will any of the revenue raised be reinvested in asylum seekers and refugees pursuing higher education or further education in this country?
Baroness Smith of Malvern (Lab)
All the revenue raised from the international student levy will be invested into higher education and the rest of the skills system, including the reintroduction of maintenance grants to enable students from all backgrounds to benefit from our world-class higher education. Our decision to lift the cap and to index-link tuition fee increases over the next few years will increase revenues to universities by £6 billion, while the international student levy will be a maximum of £1 billion, and not until 2027-28.
Baroness Garden of Frognal (LD)
My Lords, it was an absolute travesty that we left Erasmus with Brexit.
Baroness Garden of Frognal (LD)
Thank you, my Lords. I entirely agree with everything the noble Baroness has said, but are we rejoining Erasmus on the same conditions? Will our young people have the same opportunities as they had under the old system of Erasmus?
Baroness Smith of Malvern (Lab)
No, we are joining Erasmus on much better financial arrangements, with a 30% discount, for a larger scheme that will provide more opportunities for our young people and, in fact, for people throughout their lives, because in adult education you can benefit from this as well. We will get the benefit if we wholeheartedly embrace the opportunities that Erasmus brings and ensure that, across the country, schools, universities, apprenticeship providers, youth clubs and sports clubs are making the most of this opportunity.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from the Cross Benches.
Lord Hampton (CB)
My Lords, I think we all know what I do for a living. I welcome our rejoining of Erasmus+ but, to follow on from the question asked by the noble Lord, Lord Mohammed of Tinsley, it is vital that state schools and people who do not have the opportunity to go on holiday abroad can join the Erasmus scheme and benefit from all this money. Can the Minister be slightly more specific about how schools are going to learn about this? I am not sure that so many do.
Baroness Smith of Malvern (Lab)
The noble Lord is right. We have a job, as I was just suggesting, to make sure that schools around the country understand the potential of Erasmus. That is why we will soon be in a position to announce the national agency that will be co-ordinating this. As my noble friend Lord Stansgate said, information will be available soon to enable schools, universities and others to have the information that they need in order to develop the projects that will benefit children across the country.
Public Trust in National Politics
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Wallace of Saltaire
To ask His Majesty’s Government what proposals they are considering to reverse the decline in public trust of national politics in the UK.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
The Government are committed to restoring public confidence in our politics. On entering office, the Prime Minister issued a new Ministerial Code strengthening the powers of his Independent Adviser on Ministerial Standards, increasing transparency on ministerial gifts and hospitality, as well as establishing the Ethics and Integrity Commission. The Public Office (Accountability) Bill will place a new legal duty on public servants to act truthfully and to fully assist inquiries and investigations. The Government have also announced an independent review into foreign financial influence and interference in the UK’s political and electoral system.
Lord Wallace of Saltaire (LD)
My Lords, I and others are grateful for those small steps, but the size of the problem of public distrust of politics is enormous. Fewer than 60% of voters voted in the 2024 election. Multiple surveys show real public disillusionment with Westminster politics—not with democracy but with Westminster politics. Should the Government not start a national conversation on a cross-party basis on how we rebuild trust in our national political institutions, including both Houses of Parliament?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord raises a genuinely important point about trust and politics. We spend a number of hours, in your Lordships’ House and the other place, discussing things that have an impact on people’s lives every day. There is a responsibility on us to make sure that they know what we are doing and that we are doing it in their name. Some of these things happen every day already, whether they are Select Committee reports or are about how we all come together, but there is a responsibility on the leaders of our country to make sure that people understand what we are doing. The politics of easy answers will get us nowhere. We need to be candid that life is difficult and to make sure we are delivering. I would say there is a battle for truth here, and the battle for democracy is the same thing, and we must work together to ensure those things happen.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, we will have the Conservative Benches next, please.
Lord Evans of Rainow (Con)
My Lords, talking about truth and the noble Lord, Lord Wallace, looking for proposals, can I propose through the Minister that the Liberal Democrats’ use of fake local newspapers and misinformation to slur political opponents is something she might want to consider?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, but where would we be without their bar charts?
Baroness Anderson of Stoke-on-Trent (Lab)
I say that with love. Noble Lords are aware that I am very fond of an election leaflet, but, especially given how many elections are in front of us, we need to make sure that they are accurate and true and reflect the fact that there is a responsibility on all of us to bring some of the heat out of politics and put the truth back.
Baroness Shah (Lab)
My Lords, trust in politics is also affected by the safety and well-being of elected representatives and candidates. In my role as the head of the Labour office at the Local Government Association, I have seen a worrying increase in abuse and threats towards representatives from all parties and physical attacks on them. Only a couple of weeks ago, a councillor’s car was set alight. Democracy is at its best when we can respectfully disagree. Can my noble friend assure this House on what the Government are doing to address these concerns?
Baroness Anderson of Stoke-on-Trent (Lab)
My noble friend is absolutely right. Soon, we will mark 10 years since my friend Jo Cox was murdered, which brings all this very much to a point. There are many things that we are doing together, including the Joint Election Security Preparedness Unit, which is jointly run by the Cabinet Office and MHCLG. In the run-up to the elections, it will reinstate its election cell, and the National Protective Security Authority exists. Noble Lords, especially those who have stood for election in the last decade, will be aware that Operation Bridger exists for MPs. That is now extended to include Operation Ford to protect councillors and council candidates. Language is incredibly important, and there is responsibility on all of us to make sure we take the heat out of this, because it is our activists and candidates who are knocking on doors and speaking to people every day. We have a responsibility to take some of the heat out of politics to protect them, too.
Lord Singh of Wimbledon (CB)
My Lords, I frequently talk to young people, and they generally feel that we are overfocused on the problems and challenges of the 20th century such as friendships, rivalries and conflict. They feel that we live in a smaller, interdependent world, with common challenges, and that we should focus our attention on active co-operation to meet those challenges. Could they be right?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I helped run HOPE not hate for many years, and I was on the board until the general election. There is a responsibility on everybody to make sure that we are celebrating the hope, and embracing hope rather than hate, in our society and looking at what unites us rather than what divides us. Especially since 7 October, that has proved to be very challenging for parts of our community, including my own, but we need to make sure that core British values remain at the heart of who we are and that we can celebrate those things that bring us together.
Baroness Finn (Con)
My Lords, trust is something a Government must earn. It is built on honesty, transparency and consistency, all of which are essential if we are to begin restoring public confidence in politics. Against that background, can the Minister tell the House what assessment the Government have made of the impact of the 14 policy U-turns we have endured during this Parliament? Does she accept that repeatedly promising one course of action and then pursuing the opposite risks further undermining that trust?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I asked the Labour Party unit how many U-turns the previous Government had done in their 14 years, and they are still to come back to me because they are still counting.
Baroness Anderson of Stoke-on-Trent (Lab)
Regarding the substance of the noble Baroness’s question, this Government have made over 3,000 policy announcements in the last 18 months because of the mess that we inherited from the previous Government. We may have made 14 U-turns, but that is because we have listened where things needed to be tweaked. We have had to do so many things so quickly that it is not a surprise that, occasionally, we have to reflect on whether they were the right things to do.
Baroness Winterton of Doncaster (Lab)
My Lords, does my noble friend agree that building trust in politics needs to start with young people? The measures in the national youth strategy on civic engagement are extremely important, but we need to stop the misinformation on politics that is directed specifically at young people. Can she assure me that the Government will engage with tech company bosses to prevent this poisonous spread of misinformation?
Baroness Anderson of Stoke-on-Trent (Lab)
My noble friend is absolutely right that one of the biggest challenges we face—and I say this as my stepdaughter is 15 years old—is what young people are exposed to online, but there is a balance here with the fact that current 13 and 14 year-olds will be voting at the next general election. We need to balance protecting them with making sure that they have access to accurate information and that, through the national curriculum, they are taught how to interrogate information so they know what is right and wrong and can ask questions of the people who seek to represent them.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, let us have the Lib Dem Benches.
Lord Pack (LD)
My Lords, is not a key element of trust in politics that elections are run fairly and independently? Therefore, I hope that the Minister might commit to restoring the full independence of the Electoral Commission and repealing the power for a Government of any political persuasion to set the policy and strategic direction for the commission. Is not an independent regulator a far more trustworthy regulator?
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, the noble Lord raises an interesting point, and I will write to him about the details of it. Obviously, one of the basic tenets of the British values I have talked about is free and fair elections. Making sure that the Electoral Commission can facilitate those across the United Kingdom is very important.
Baroness Watkins of Tavistock (CB)
My Lords, the greatest mistrust in politics at the moment is among young graduates, who have seen all three parties renege on promises in relation to student loans. Significantly high interest rates, with repayment at 9%, mean that the majority of young graduates are paying much more tax than the other generation. How will we restore the trust in politics among young graduates, who are central to our future?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Baroness raises a genuinely important point about the next generation, which will be dealing with some of these issues for decades to come. With regards to the specifics of her question about our plans for student fees, I am afraid that I do not have that information available, but I will write to the noble Baroness.
Lord Pickles (Con)
My Lords, given the Nolan principles of public life, leadership is one that has been neglected, and given the close relationship between contractors and the Ministry of Defence, what progress has been made on ensuring that senior Ministers and senior officials have a clear understanding of what future they may have once they leave office and leave employment?
Baroness Anderson of Stoke-on-Trent (Lab)
I am so sorry. I did not get all the noble Lord’s question. I would be grateful if he could repeat it.
Lord Pickles (Con)
The substantive part of the question was: given the close relationship between contractors and the Ministry of Defence, what progress has been made on ensuring that there is a clear understanding about what would be appropriate for senior Ministers and senior officials to take in terms of employment after they hold office and when they step down from those senior posts?
Baroness Anderson of Stoke-on-Trent (Lab)
I thank the noble Lord for repeating his question and apologise that he had to. Obviously, the noble Lord has significant experience in this space because of his previous roles at ACOBA, and I thank him for his work. He will know that, through the Ethics and Integrity Commission, we are reviewing how all this will work together. I will think about the issues that he raises and write to him if that is okay.
Battery Shortage for NHS Hearing Aids
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Young of Cookham
To ask His Majesty’s Government what steps they are taking to address the shortage of batteries for NHS hearing aids.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, a single type of Energizer hearing aid battery is under supply pressure due to increased demand. It is still available to order and the NHS supply chain has instituted demand management to ensure a fair supply of available stock across the NHS. The NHS supply chain is working with Energizer and an alternative supplier to maximise stock availability and will take steps to improve future resilience. I am glad to say that the supply issue is anticipated to be resolved by 16 March.
Lord Young of Cookham (Con)
I am grateful for that reply. While this is not the most urgent problem facing the NHS and its patients, 80% of people over 70 suffer from hearing loss. Many of them are now switching off their NHS hearing aids to conserve the batteries, and this has an impact on their quality of life. Last November, supply problems began to emerge and, as the noble Baroness has just said, if you go to the NHS supply chain website, it says that the batteries are subject to “demand management”—a euphemism for short supply. Very worryingly, as the noble Baroness has just said, normal service will not be resumed until March 16. So the question for the Minister is: what resilience is there now in the NHS supply chain for this product and others; why is there so much dependence on one supplier for a fairly basic product; and, related to that, why is it going to take so long to restore normal service?
Baroness Merron (Lab)
These are very real issues that the noble Lord is raising. There are only three global manufacturers and we get our supplies from two of them. There are limited places to get them from. In terms of future resilience, we work very much in partnership, through our Supply Resilience Directorate, with industry and the wider sector to ensure continuity. Importantly, I very much welcome that there was recently investment in Tyne and Wear in the factory, on UK soil, in order to enhance our domestic manufacturing capability. But we will also conduct a lessons learned exercise after this.
Lord Harris of Haringey (Lab)
My Lords, is it not the case that it is not just hearing aid batteries and that the NHS is facing problems with the supply of quite a number of pharmaceuticals? Could the Minister tell us precisely which major pharmaceutical products are affected by this, and is this a consequence of Brexit?
Baroness Merron (Lab)
I think my noble friend has heard opinions already expressed on that matter. Certainly, Brexit does give us challenges, without a doubt, that this Government continue to work to resolve. I cannot answer the first question that my noble friend asked about, but I will gladly write to him and can assure him that we are working to overcome some of the challenges that we inherited and have been presented with, and that does include Brexit.
Baroness Burt of Solihull (LD)
It should go without saying that rationing hearing aid batteries is totally unacceptable for some of the most vulnerable people in our society. The RNID say that the uncertainty of not knowing how long a battery will last can be very stressful, and no one should be forced to ration their hearing aid use because of supply problems. Whatever the cause, for sure this should never be allowed to happen again. What steps are the Government taking to make sure that it does not?
Baroness Merron (Lab)
I certainly agree with the concerns about the impact on individuals. Further to the point raised by the noble Lord, in addition to the noble Baroness, I would recommend that people who are using hearing aids do not ration their hearing. That is not where we want to be, but in fact it is about not giving more supplies than are immediately needed. The real issue is that people are being asked to get their batteries more often. If that is a problem for people, they should raise it with a supplier, who will ensure that, for example, the postal service is used or some other way of getting batteries to individuals.
Lord Kamall (Con)
My Lords, in response to that previous answer from the Minister, I understand that, as a result of these shortages, some patients are being required to return to hospitals as frequently as once a week to obtain replacement batteries, while rationing their use in the meantime. Patients have also reported additional travel costs, and even hospital parking charges, because they are going more frequently to the hospital than they otherwise would. What steps is NHS England taking to mitigate these additional costs, particularly for those on lower incomes: for example, by offering, say, free temporary parking if they are going to the hospital only to pick up their batteries, or other mitigations that would help those people?
Baroness Merron (Lab)
Well, it is of course a matter for local ICBs to decide what their best response is, depending on their local community. I should emphasise to your Lordships’ House that the reason for the increased demand is that there was a cyber attack on the alternative supply of batteries. That was an unpredictable issue, but is always one for which we need to have resilience. I do recognise what the noble Lord is saying, but that is why I answered to the noble Baroness that there are alternative ways of getting batteries to individuals.
Baroness Deech (CB)
My Lords, I checked my batteries and I am glad to say they were made in England. But we know that the Chinese dominate the world supply of batteries. Will she send a message to the Prime Minister while he is in China to ensure that, overall, our reliance on China for batteries is not increased? It is really important that we supply ourselves.
Baroness Merron (Lab)
I am sure that the Prime Minister will be checking Hansard and will hear what the noble Baroness has said. The important point she made was about expanding our domestic manufacturing capability. These particular batteries are very specific in their manufacture—the noble Baroness is quite right—and that is why I welcome the company’s investment in Tyne and Wear: it is a vote of confidence in the British economy, as well as assisting us in our supplies.
Lord Vaizey of Didcot (Con)
My Lords, I love the idea that the Chinese are listening to our proceedings through your Lordships’ hearing aids. But I say to the Minister that there are many people under the age of 70 who suffer from hearing loss, possibly undiagnosed. It can have a huge impact on people’s cognition and on memory loss, but they are unaware of it. Can the Minister update the House on what the Government are doing to encourage youngsters such as myself to have hearing aid tests as a matter of routine?
Baroness Merron (Lab)
I hope I share the noble Lord’s definition. I am enthusiastic about our new approach through the community diagnostic centres that noble Lords will have seen come on stream and be established all around the country. I agree totally about the age range, which is why we promote the fact that free hearing tests are available, and I encourage people to do them. The highest ever number of tests was done in October, over 136,000, which shows that the message is getting out, but I think the all-round approach of community diagnostics centres will really help us here.
Lord Spellar (Lab)
Does this not once again reveal the fundamental flaw in the Government’s procurement policy, which the Treasury is still pursuing, of going for “cheapest is best” and ignoring all the lessons both of the pandemic and of the Ukraine war, which showed that relying on single points of failure regularly and consistently delivers problems into our system, in the long term at much greater cost? Do we not need a better-balanced programme?
Baroness Merron (Lab)
I understand that point. Actually, that is one of the reasons we are encouraging ICBs to move to rechargeable batteries. As my noble friend says, it is about looking to the longer term. As part of the lessons learned, that is one of the things that we will look at to see how we can improve the underlying situation.
Social Security (Scotland) Act 2018 (Carer’s Assistance) (Consequential Modifications) Order 2026
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Anderson of Stoke-on-Trent
That the draft Order laid before the House on 8 December 2025 be approved.
Considered in Grand Committee on 28 January.
Medical Devices (Fees Amendment) Regulations 2026
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Merron
That the draft Regulations laid before the House on 16 December 2025 be approved.
Considered in Grand Committee on 28 January.
Business Rates
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Baroness Neville-Rolfe (Con)
My Lords, here we are again, discussing yet another U-turn when the Government conclude, after public outrage at an announcement that they have made and after some tardy reflection, that perhaps they did not get matters right first time. What is offered here is not merely tardy but inadequate. It fails to grapple with the pressures now bearing down on small businesses across the country, especially from business rates.
It is essential that we look beyond the Treasury’s abstractions and confront the real-world consequences of the changes announced in the Budget, which remain even after this U-turn. Tina McKenzie of the Federation of Small Businesses has warned, following this latest announcement, that it simply proves that
“the Government repeatedly fails to recognise the difficulty that these businesses are in”.
I could not echo that more strongly. Andrew Goodacre, the chief executive of the British Independent Retailers Association, went further, describing the change as a “half-baked U-turn” and warning that independent retail is being “flushed down the U-bend”. He added, tellingly, that he could not recall a worse policy decision, cautioning that this poor decision was based on poor reasoning that will inevitably lead to more shop closures—and so on.
The Minister has said that he wishes to work with businesses but, in the face of this negative and consistent feedback from businesses themselves, especially from SMEs, it seems he has been unsuccessful in that aim. It is abundantly clear that the Statement addresses only a small fraction of the economic damage inflicted on businesses since the Government took office.
The inadequacy is not merely one of scale. The relief announced is, by the Government’s own design, temporary, so it is a sticking plaster applied to a deep and structural wound. One of the most persistent economic misunderstandings that this Government have displayed since assuming office is a failure to grasp what businesses actually need: clarity, consistency and certainty. Businesses do not want U-turns, short-lived reliefs, or promises trailed in briefings only to be withdrawn or reannounced days later, as we all saw before the Budget. This announcement exemplifies that failure in its entirety.
Worse still, everyone in the sector is saying that it is inadequate. If the Minister will not listen to His Majesty’s Opposition, perhaps he might listen to Labour Back- Benchers. Jim McMahon and Stella Creasy made the point that I am making in the other place just this week. When Parliament, publicans, business leaders and his own Back-Benchers are urging a reconsideration, what more is the Minister waiting for?
This is ultimately a question of credibility. Businesses do not measure that by press releases or promises of future strategies; they measure it by whether they can plan, invest and survive. What has been announced does not provide that certainty. It is limited in scope and temporary by design, and arrived only after external pressure became unsustainable. That is not how stable tax policy is made or how confidence is restored.
The truth is that confidence in hospitality and retail is fragile. We heard only this morning from Charlie Nunn, CEO of Lloyds Bank, that the sectors in question were having a challenging time. What assessment has the Treasury made of the number of such businesses that have already cancelled investment, reduced staffing or decided to close since the Budget because the Government have failed to provide clarity about their intentions?
If the Government truly wish to work with businesses, they must move beyond reactive concessions and bring forward a coherent, durable approach that treats the whole high street fairly and gives enterprises the certainty they need in order to grow. Until that happens, I fear this week’s announcement will be seen not as a solution but as an admission of failure.
The modest action on pubs is, of course, welcome, and a promise has been made to look at hotels, but will the Minister agree to look at rates for the wider retail, hospitality and leisure sectors before the next Budget? Thousands of shops, cafés, hotels, nightclubs, cinemas and theatres are still facing huge increases. The combination of higher taxes and rates, extra regulation and energy prices for business—four times those in the United States—is crippling these very sectors, and I hope the Minister will be able to promise some relief.
Baroness Kramer (LD)
My Lords, I start with perhaps a modicum of welcome because the combined impact of the Budget and the business rates revaluation prior to this announcement, frankly, left the pub industry on the verge of a crisis, with up to 50% of pubs under the threat of closure. Some relief has now been offered for many pubs, and I am glad that this lifeline has been extended to live music venues, which are the birthing ground of our very important music industry.
Do the Government recognise that the relief that they have just announced amounts roughly to only £1,650 per pub, which will still leave many in a critical financial hole? Do they recognise that pubs with a rateable value of over £100,000 are, in effect, not eligible, and that restaurants, cafés and soft-play areas—so many of those hospitality and leisure operations that lie at the heart of our high streets and communities—will get no relief from these changes whatsoever?
The chaos that has surrounded the announcement of the review—the change and uncertainty that has gone with it and the impact on the sector—surely points to the fact that we need to stop trying to fix the business rates system at the fringes. We need to take a proper step back and review the whole way in which business rates are structured, which, I would say, should head in the direction of land value. There is so much to be done around this area. It is time that the Government see that, rather than get into continuous messes by attempting to ameliorate a system that, frankly, is broken.
Do the Government also accept that the chaotic process that we have seen deeply underscores the need to include hospitality in the industrial strategy? At the very least, one would hope that the effect of that would be to force the Treasury to align tax policy with the economic goal of strengthening our high streets and our hospitality and leisure sectors, and to determine that they are a source of growth, not of constant crisis and constraint. Does the Minister accept that, until the Treasury gets aligned with that agenda, we will have constant issues like that? Frankly, that is not the best way to go.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their comments and questions, and for their cautious welcome of what we have announced.
The noble Baroness, Lady Neville-Rolfe, ignored what we announced in the Budget: the £4.3 billion of support for those experiencing increases in business rates. As she knows, the previous valuation was based on property values during the Covid pandemic, which meant that rateable values were much lower. As a result of that valuation, some businesses, including the retail, hospitality and leisure venues that we are discussing, are now seeing an increase.
At the Budget, we announced three elements of support at a cost £4.3 billion, which neither noble Baroness mentioned in their comments. We are implementing transitional relief that will cap increases at 5% for the smallest properties and at up to 30% for the largest. For any business whose value increase has meant that they are no longer eligible for small business rates relief, we are capping their increase. We have expanded the supporting small business relief scheme, to provide specific support to those who are currently eligible for the 40% RHL relief.
The noble Baroness, Lady Kramer, said that the wider system needs reform; we absolutely agree on that and have begun that. We are reforming the business rates system by introducing permanently lower tax rates for over 750,000 retail, hospitality and leisure properties. The noble Baroness, Lady Neville-Rolfe, said that what we are doing is temporary, but those new lower rates are permanent—unlike what the previous Government did—and they will be funded by higher rates on the most valuable properties, including those of online giants.
I remind the noble Baroness, Lady Neville-Rolfe, that the previous Government’s plans were to scrap entirely the temporary Covid-era retail, hospitality and leisure relief in 2025—but she now says that more support should be offered. If they had won the last election, their plans clearly show that they would have removed it overnight in April last year. They now claim that they would extend it, so why did they not say so or include that in their forecasts or projections?
I am grateful to the noble Baroness, Lady Kramer, for what she described as her cautious welcome of what has been announced. We have of course been listening to the industry. We have announced that, from April, every pub in England will get 15% off its new business rates bill, on top of the support announced at the Budget. Their bills will then be frozen in real terms for a further two years. The noble Baroness noted that the support will be worth £1,650 for the average pub next year, but that means that three-quarters of pubs will see their bills either fall or stay flat next year. This decision will also mean that the amount of business rates paid by the pub sector as a whole will be 8% lower in 2028-29 than it is today.
The noble Baroness, Lady Kramer, said that pubs with ratable values of over £100,000 would not benefit, but we are clear that this will apply to all pubs. I am grateful for what she said about this applying to music venues too. Many live music venues are valued as pubs, and many pubs are grass-roots live music venues, so it would not be right to seek to draw the line so tightly as to include some but not others.
The noble Baroness, Lady Neville-Rolfe, also talked about the structural issues that many of these businesses are facing, and she will know that the sector has raised concerns about the way that they are valued. The Government agree that this needs to be looked at. We are therefore launching a review that will examine how pubs are valued for business rates, and we will set out more detail on that in due course.
The noble Baroness, Lady Neville-Rolfe, spent a lot of her statement telling us about what businesses need. What they need most is stability; they did not need the previous Government, with the Liz Truss mini-Budget, Brexit and austerity, and all the consequences that they had. The noble Baroness commented on what we are doing for business. She will know that, under the previous Government, business investment was the lowest in the entire G7, and that, since the election, business investment has increased faster in this country than in any other G7 country. I am more than happy to compare her record with ours.
The noble Baroness will know that we are pressing ahead with wider regulatory reforms to help businesses, as well as carrying out licensing reform, and that we are looking at loosening planning rules to benefit pubs more generally. She will also know that we are doubling the hospitality support fund with £10 million of funding over three years.
The noble Baroness, Lady Kramer, talked about the importance of the sector for growth, and the noble Baroness, Lady Neville-Rolfe, talked about the challenges faced by the wider sector. I understand the challenges that many other retail, hospitality and leisure companies are facing. We have already taken significant steps to support businesses, including, as I said, the £4.3 billion of business rates support.
As we all know, consumers have changed their habits over the past decade and are increasingly working from home and shopping online. Combined with the pandemic and the increase in energy costs since Russia’s invasion of Ukraine, these trends have continued to make it harder for high street businesses. Therefore, later this year the Government will bring forward a high street strategy, and we will work with businesses and representative bodies to look at what more the Government can do to support our high streets.
Lord Watts (Lab)
My Lords, is it not the case that the previous Government wrecked the economy and gave us Brexit, which reduced our ability to pay for public services? The Opposition now seem to be calling for greater public expenditure and tax cuts. It sounds as though they have found not just one money tree but an orchard. Can the Minister explain how someone can call for more expenditure and less tax?
Lord Livermore (Lab)
I very much agree with everything that my noble friend said. Among the long litany of the previous Government’s failures, their failure on growth was one of their most significant. We saw Brexit and the Liz Truss mini-Budget, and we know what business thought of that. We saw business investment across the whole economy fall to the lowest level in the entire G7. My noble friend is also absolutely correct to point out that, every time we debate the economy in the Chamber, the noble Baroness opposite supports every single piece of spending that we announce but opposes every single piece of revenue raising. It is quite clear that those two things do not add up.
On the Tory record more widely, we should note that 7,000 pubs have closed in the past 14 years, and that the previous Government’s plans were to scrap entirely the temporary Covid retail, hospitality and leisure relief in 2025. Their plans show that they would have ended it overnight. We have chosen a different path by extending that support with the help of £4.3 billion of additional support.
Baroness McIntosh of Pickering (Con)
My Lords, it would be churlish not to welcome the measures—so far as they go—that the Chancellor has introduced. However, does the Minister accept that it is small family businesses—the hair salons, cafés and restaurants, among others, to which my noble friend on the Front Bench referred—that will be directly affected by the lack of support? Does he accept that, if these small family businesses do not get support, it will damage their programme for growth and lead to a lack of growth and a loss of jobs?
Lord Livermore (Lab)
I respectfully say to the noble Baroness that she must take what has been announced this week in the round with what was announced in the Budget. We spent £4.3 billion supporting exactly the type of businesses the noble Baroness mentions. We have expanded the supporting small business scheme to provide specific support to those who are currently eligible for the 40% RHL relief. Around one in three businesses continues to benefit from small business rates relief and does not pay anything at all. We have extended the second property grace period to support small businesses as they grow. So, I do not accept that we are not supporting those businesses. But equally, I absolutely understand the challenges that many retail, hospitality and leisure businesses are facing, which is exactly why, later this year, the Government will bring forward a high street strategy and work with businesses and representative bodies, looking at what more the Government can do to support our high streets.
Lord Fox (LD)
My Lords, I am sure the Minister will agree that one of the things that will drive growth is consumer confidence. It is very hard for consumers to be confident when they see their high streets putting up shutters and “closed” signs. The Minister also talked about changed behaviour and the driving of online sales. Beneath that is a real inequity, in that the out-of-town warehouses which have been driving those digital sales have a rates square foot rate about a tenth, if not less, of that of the high street stores with which they compete. When the Minister is having this review, can he review not only the high streets but how the out-of-town warehouses are eroding those high streets?
Lord Livermore (Lab)
I agree with the noble Lord on the importance of consumer confidence—and six interest rate cuts since the election is very important to bolstering that consumer confidence. It is the fastest pace of interest rate cuts for 17 years, and the action we took in the Budget to further cut inflation and bear down on borrowing will support the Bank of England in the work it is doing to reduce interest rates. I also agree with what the noble Lord says about out-of-town online giants, and that is why we are reforming the business rates system. As I said, we are introducing permanently lower tax rates for over 750,000 retail, hospitality and leisure properties, and we are funding that with higher rates on the most valuable properties, including the warehouses used by online giants. But I absolutely understand what the noble Lord is saying, and I am more than happy to look at that as part of the work to develop the high street strategy.
Lord Bridges of Headley (Con)
My Lords, can the noble Lord shed some light on when the review of hotels is likely to report and conclude, and when hoteliers might be able to see some relief on their business rates?
Lord Livermore (Lab)
Hotels will continue to benefit from the support for business rates announced at the Budget. As I have already said, this latest package needs to be seen in the round with the £4.3 billion that we announced at the time of the Budget, including the transitional relief scheme, which will cap increases for those seeing the largest increases. The noble Lord is right, though, to mention hotels, and we recognise that hotels have expressed concerns about how they are valued for business rates. Hotel valuations are undertaken in a different way from some other sectors, so we will review the way hotels are valued as part of our wider valuation review. The methodology used is well established, but as with pubs, specific concerns have been raised with us, and it is right to review this to ensure it accurately reflects the rental value for these sectors. Any potential changes to business rates as a result of that review will be considered at the Budget in the usual way.
Lord Gove (Con)
Of all the U-turns that have been executed since the Minister joined the Treasury team, whether on the family farm tax, business rates or the winter fuel payment, which is his favourite?
Lord Livermore (Lab)
I am very happy to tell the noble Lord what my least favourite policy of the previous Government was, and that was Brexit.
Lord Forbes of Newcastle (Lab)
My Lords, does my noble friend the Minister agree with me about the importance of certainty and security for businesses in the payment of business rates in particular? While local authority funding is predicated on the retention of business rates at a local level, as well as council tax rates, there is regional variation in the deployment of the collection of those rates, based on differential bandings according to the nature of properties in those areas. Will he consider the challenge that many small businesses face in having to pay business rates, compared to the longevity of property owners? Will he consider looking at the payment of business rates in future by business owners rather than businesses themselves as a way of smoothing out some of these challenges?
Lord Livermore (Lab)
I am grateful to my noble friend for that question, which obviously comes from a position of deep expertise in this matter. I am more than happy to look at all the issues he raises and take them back to my Treasury colleagues to discuss them further.
Baroness Foster of Oxton (Con)
My Lords, 3.5 million jobs are dependent on a successful hospitality industry in this country—that is obviously the entire supply chain. I spent a lot of my life in the airline industry, which is at one end of that. Notwithstanding that, when we look at tourism, which encompasses hotels, taxis, restaurants and cafes, this Government have a complete lack of understanding of the impact of what they are doing. They are under pressure because they will not take steps to address the welfare bill, so they are taking moneys and taxes from areas that often cannot afford it. We know that will cause long-term damage, despite this sop of the slight reduction for pubs in the next couple of years.
As we look at the welfare bill, will the Government please reconsider what they are doing, and instead of making another U-turn—well, we would like a really big U-turn on this one: we would like it to be abolished—take a real look at what else they can do to raise revenue where we know expenditure is wholly excessive and cannot be carried on?
Lord Livermore (Lab)
I agree with the first thing the noble Baroness said, on the importance of the sector and jobs; I did not agree with anything else she said. She said that we have a lack of understanding: I just wonder what she would have done. We spent £4.3 billion in the Budget supporting these businesses: she did not acknowledge that. She did not acknowledge that the previous Government, whom she presumably supported, would have ended Covid relief overnight and had absolutely no plans to extend it, as we have. She said she would abolish business rates. Well, she had 14usb years to do that, and she did not. I wonder how she would now fund the abolition of business rates, and what other services she would cut to do that.
The noble Baroness mentioned airlines. The Government have redesigned the 2023 transitional relief scheme to provide generous support for large properties such as airports and those in other industrial strategy sectors. That is extremely important. She mentioned hotels, and I have answered that question already. As I say, I fundamentally disagree with her. The Government she supported would have ended this relief overnight; we have extended it.
Lord Fox (LD)
My Lords, following the moderately good reception to my last question, I am going to push my luck. Following on from the from the noble Lord, Lord Forbes, when this review is under way, can the Treasury review a commercial landowner levy rather than a straight business rate? That does not penalise investment, and it puts the onus on the people who actually own the land. If the Minister is not 100% au fait with the Liberal Democrat policy on this, I would be very happy to arrange a briefing for him and colleagues.
Lord Livermore (Lab)
I may not have read all the Liberal Democrat policy documents as thoroughly as perhaps I should have. I cannot commit the review to considering specific things right now, but I am more than happy to take those thoughts back to the Treasury.
Lord Hunt of Wirral (Con)
Although my experience of government is now over 30 years old, the one message I remember from being in Cabinet is that on matters of taxation and investment, the Government have to get it right first time. That is the only way to establish a pro-growth, pro-business strategy. So, what I would love to hear from the Minister, having heard the messages from all sides of the House, is that the relief announced—one of what his noble friend the Minister admitted is 14 U-turns—is probably a little late and not enough. Therefore, the future must rely on a better strategy. Is the Minister confident that the consultation the Government are having right across the business sector is sufficient to ensure that they get that pro-business, pro-growth strategy right?
Lord Livermore (Lab)
I say, with the greatest respect to the noble Lord, that I am being lectured by Conservatives on stability and investment when we had 14 years of instability and chronic underinvestment. We saw underinvestment in the public sector and the lowest rates of private sector investment in the entire G7 so, as I said, with the greatest respect, I may not take all those lectures. Obviously, investment is vital to our economy. Stability is vital to that, as are the reforms that we are taking, not least in terms of planning, for example, to get more investment into our economy.
The noble Lord says that the measures we have taken are a little late. Of course, we spent £4.3 billion in the Budget, and it was vital that we did that. He says that they are not enough. As I said, the previous Government, if they had won the election, would have done absolutely nothing. It is important to contrast that, but I agree with what he said about consulting and working hand in hand in partnership with business, so that we absolutely understand and get the most pro-growth, pro-business policies that we possibly can.
Lord Watts (Lab)
My Lords, has the Minister noticed that the Opposition say that the private sector does not like U-turns, they say they do not like U-turns, and then they call for more U-turns? What is their strategy for dealing with our current problems?
Lord Livermore (Lab)
I cannot answer for the strategy of the party opposite—I am sure we would all like to know—but what matters most is that we get to the right policy and I believe that we have done so in this case.
Baroness Neville-Rolfe (Con)
My Lords, the Official Opposition have actually come forward with plans for the high street, which we would be very glad to share with the Minister as he does his high street review. I think we should have not only Lib Dem ideas but Conservative ideas. We have a new Opposition now. We are looking forward, not backwards. We are very keen to see the country grow and the high streets flourish.
Lord Livermore (Lab)
I am sure the noble Baroness would like to look forwards and not backwards, but I am not sure the country shares that view. The country remembers the past 14 years and the damage that party opposite did to the economy, the public services and the fabric of our nation. As I said already, the noble Baroness cannot wriggle out of the fact that, had her party won the election, it would have ended this relief overnight entirely in 2025. It was in her plans—the plans that we inherited from her. If she now claims that she would have extended the relief, why did her party not say so and include it in their forecasts or projections? We have to take what her party says now with a huge pinch of salt. As I have said, the party opposite always supports the spending that we are doing but does not support a single one of the measures we are taking to raise the revenue for that spending. I suspect that its plans are equally uncosted.
UK-EU Customs Union
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Newby
That this House takes note of the case for a UK-EU customs union and the impact of connections with the EU single market on the United Kingdom economy.
Lord Newby (LD)
My Lords, it is a great pleasure to introduce this debate. It will see a number of comings and goings. We welcome the noble Lords, Lord Doyle, Lord Docherty and Lord Pitt-Watson, and the noble Baroness, Lady Gill, and say farewell to the noble Lord, Lord Offord. For the noble Lord, Lord Doyle, the House of Lords must seem like a haven of peace and tranquillity compared with his previous domain in Downing Street, not least in recent days. The noble Baroness, Lady Gill, brings a welcome additional Sikh voice to your Lordships’ House, and the noble Lords, Lords Docherty and Lord Pitt-Watson, bring a combination of business, academic and charity experience to our proceedings. We look forward to all their speeches today. We wish the noble Lord, Lord Offord, well as he contemplates pastures new.
The wording of today’s debate may sound rather dry and technical, but it deals with two of the biggest issues facing the country: how to improve growth and prosperity, and what our place in the world should be in the current turbulent times. I support the Government in making growth a, if not the, top policy priority. Growth in the UK has stalled over recent years, and this has led to constrained real incomes, weakened public revenues and, as a result, higher government borrowing. The Government sought to stimulate growth through a variety of investment incentives and educational and productivity measures, but these have been patchy and, even if eventually fruitful, will in many cases not yield real benefits for years to come.
There are many explanations as to why the UK’s growth has been so anaemic in recent years, but there can be no doubt that one of them is Brexit. There are many estimates of the impact of Brexit on the UK economy, but they all point in the same direction. Probably the best known is the OBR’s estimate that Brexit will reduce GDP by 4% over a 15-year period, that UK-EU trade will fall by 15%, and that Brexit has already had a negative impact on the public finances to the tune of over £40 billion over the period to 2024. Recent research by the US National Bureau of Economic Research suggests that the negative impact of Brexit has been much greater. What we know for certain is that goods exports to the EU in 2024 were 18% below 2019 levels and food exports were down 30%.
Inward investment, which is crucial to productivity and growth, has also been hit. House of Commons research has shown that FDI flows are well below the levels projected under pre-Brexit trends, and research by the Productivity Institute has shown that, post-Brexit, there are intensified regional inequalities in the inward investment that we are still attracting.
Polling amongst SMEs shows that over half believe that Brexit has made them less competitive globally because of shrinking access to EU customers and disrupted supply chains. And things are not getting better. The British Chambers of Commerce, reporting just last month, said that trade frictions are worsening. The reasons for this dismal picture are not hard to see: increased bureaucracy, including customs declarations and physical checks; competing regulatory frameworks; staffing shortages; and the inability of UK companies to participate in EU programmes, which have not been replicated by this country. So, Brexit has unambiguously hit growth and, if things remain unchanged, will increasingly do so.
In the meantime, the international context has changed significantly, and not in a good way. The Ukraine war has posed increasingly urgent questions for the whole of Europe, including the UK, about how it defends itself, both economically and militarily, against an aggressive Russian state. For the past year, President Trump’s re-election has led to a Catherine wheel of anti-European rhetoric and actions that have destabilised the Atlantic economic and security status quo. It is impossible to predict how the remainder of the Trump presidency will unfold, but there is now, I think, a widespread realisation that whatever happens, we will not return to the transatlantic economic and security equilibrium that we enjoyed throughout the post-war era.
This realisation that things have changed for good and that a new policy response is required has been articulated most eloquently by Canadian Premier Carney, speaking in Davos last week. He argued that the post-war rules-based international order has been upset and that new approaches are needed. He argued that sovereignty grounded in rules had to be increasingly anchored in the ability to withstand pressure, and that the key now was to build coalitions that work.
For Britain, by far the most significant coalition that can work better is that with the EU. The EU has responded to US threats to NATO funding by stepping up to the plate on increased military expenditure—in the case of Germany, dramatically so. In recent days, it has effectively faced down President Trump by threatening retaliatory tariffs if he imposes tariffs on Europe in his bid to take over Greenland. Post-Brexit, there have been some who have called for a much closer economic alignment with the US and further distancing from the EU. If it ever was, that approach is now clearly no longer a viable option.
The only viable option, in a world where Russia acts as a brutal aggressor, China poses a raft of security and economic threats, and the US is unreliable at best, is for the UK to rebuild and strengthen its ties with the EU. There is a need for this on security issues, on which there is already considerable progress, but there is also definitely a need for it on economic grounds. This inevitably means readdressing the issue of our membership of the EU customs union and the single market.
There are the beginnings of a recognition of that from the Government, who have embarked on a so-called reset of our relations with the EU. This led, last summer, to the first post-Brexit UK-EU summit, and agreement on a new strategic partnership with the EU that covered a significant but limited range of issues, including fishing, energy, student exchanges, and food and agricultural products. Progress on these matters has been somewhat fitful, but the Government have recently committed to reaching detailed agreements on all the issues covered by the new strategic partnership by the time of the next summit, which is expected by the summer. I would be grateful if the Minister could confirm that that is still the Government’s aim and expectation.
The Government have also signed a number of trade agreements with non-EU countries, which offer the prospect of increased long-term trade flows. Sadly, the potential benefits from those deals are extremely modest. Indeed, it is estimated that the benefits of even the limited measures in the Government’s reset will bring at least twice the benefits of the UK-India trade agreement, which is itself by far the most significant of our new trade agreements. In our view, the measures proposed in the reset, although positive and valuable, are not enough—nowhere near enough.
Our argument that rejoining a customs union with the EU is now urgently required to promote growth has been accepted by some members of the Cabinet. Wes Streeting has made the point repeatedly in recent months, as has David Lammy, who argued last month that such a move was essential to reduce trade friction. The Business Secretary, Peter Kyle, has also turned his mind to the issue in recent days. Early last week he described Lib Dem calls to rejoin the customs union as “utopianism” and said:
“What gives me anxiety is growth this year … that gives me more concern than … the customs union”.
However, he then went to Davos and said that
“it would be crazy not to engage with the prospect of a customs union”.
One hopes that he does now engage with the issue—and on a more consistent basis. Keir Starmer has also said that he is prepared to consider closer alignment with the single market, but not to the extent of returning to freedom of movement. If all this is timid—far too timid, in our view—at least it shows that the Government accept that closer alignment with the EU would indeed bring benefits to the UK.
No such timidity of approach applies to Kemi Badenoch, who recently said that joining the customs union would be “bizarre”. It would, she said,
“make us all poorer and damage British business and … farming.”
Given that this is the exact opposite of what British business is saying, the bizarre thing is that she seems to believe it. As for Reform, Nigel Farage is promoting the idea of a free trade deal with the US as the answer to our economic problems, and regards even the Government’s reset as a “giveaway”, which he will fight “tooth and nail”. He, at least, has the sole virtue of consistency.
Noble Lords will be aware that Liberal Democrat policy is to rejoin both the customs union and the single market, with the ultimate goal of rejoining the EU. Therefore, for us, the question is how we get there. We accept that, as the single market covers both services and goods, and the UK’s trade in services with the EU is large and in positive balance, being a member of the single market would bring greater overall benefits than membership of the customs union. However, we believe, from a practical point of view, that it would be more straightforward to negotiate a customs union deal, that time is now of the essence, and that we could get started on it straightaway.
We must accept that the EU does not see the prospect of years more negotiations with the UK on these issues as a priority, and is likely to prove a tough negotiator. It is particularly likely to be unsympathetic to any deal with the UK that seeks to cherry-pick bits of the customs union or single market that particularly benefit us. Any British Government will have to be prepared to accept this, and to explain it to the electorate. The seductive mantra of Boris Johnson of having your cake and eating it was always false. It would be a recipe for failure if we adopted that as our basic negotiating stance.
The EU, like the UK, is in something of a state of shock, given on the one hand the threats from Russia and on the other the new unreliability of the US. There is a new recognition that the whole of Europe, including the UK, must act decisively against these external threats, and a new willingness to contemplate closer working arrangements.
There is also now much stronger and majority support for getting the UK back into the heart of the EU, particularly among young people. This was recently brought home to me when, a few months ago, at the end of a school talk in Bridlington—one of the strongest pro-Brexit communities in 2016—I asked the pupils whether they agreed with my approach to the EU. To my surprise and pleasure, a forest of hand went up. They clearly see the EU as offering new opportunities for themselves and their community. We should not dash their hopes.
It is therefore for the UK now to set out clearly and unambiguously its long-term aspirations for a renewed relationship with the EU, and to prosecute that policy energetically and with urgency. The Government have made a few tentative steps in the right direction, but they are not enough. Today’s crises require swift and substantive action. The Government must now rise to this challenge. I beg to move.
Baroness Gill (Lab) (Maiden Speech)
My Lords, I rise with some hesitation and a great deal of gratitude to make my maiden speech in your Lordships’ House. I am acutely aware of the experience, independence of mind, and breadth and depth of knowledge that surrounds me.
Last Tuesday was a sublime experience for me and my family and friends; I still pinch myself to check that it was real. I am deeply grateful to my supporters, my noble friends Lord Kennedy and Lady Smith, for their guidance and support over many years. I am also grateful for the kindness shown to me by Black Rod’s office, by Mr Ingram and his team of doorkeepers, and by the Reading Clerk, Dr Christopher Johnson. His flexibility in enabling me to take my oath on my mother’s Gutka, a Sikh prayer book—sadly, she passed away just before Christmas—meant so much to me, especially as the first Sikh woman on the Labour Benches.
It has been quite a journey since I left Ludhiana, in Punjab, as a child. With huge support from my family, friends, members of my party and my colleagues at Sikhs for Labour, I have arrived here. My first home was in Southall, a rich, multicultural area that is one of the beating hearts to this day in the London Borough of Ealing—unsurprisingly, given that for many decades it has been a first stop on many migrants’ journey into this land. That was at a time when bussing children out of their locality was the norm, and I ended up at Walford High in Northolt. I give thanks to investments by earlier Labour Governments, and two super teachers who mentored me to go on to further education and to embrace every opportunity that came my way. Hence, Southall is part of my title, as I too want to inspire the present generation of children who are growing up there, and at my old school, that you too can dream and aspire to succeed in whatever walk you choose.
My political home is the West Midlands and it is fitting that that is included in my title too. My love of jewellery is known to many, especially pieces made by our talented artisans. I first came across them in the Jewellery Quarter, thanks to the Birmingham Assay Office, which had concerns about proposals from Brussels that we worked together to mitigate. I moved into Jewellery Quarter soon afterwards, and long before it became hip and one of the best places to live in the country. It was such a rewarding experience, with its wonderful restaurants, cafés and bars, excellent road and rail connections—a perfect example of imaginative inner-city regeneration—that I stayed there for over two decades.
I come here conscious that my experience is only one among many, but I am hopeful that I will none the less be of service to this House in the debates that lie ahead. Over the years, I have been privileged to work in three main areas: housing and regeneration, reducing inequalities, and Britain’s relations with the EU. Having spent my life in public service, though with spells in corporate and tech sectors that left their indelible marks on me, I saw first-hand when I was running a housing association the real difference a good home can make to a person’s life chances in education, health and employment. I am still totally committed to eradicating inequalities in all fields. Today, inequality can be experienced in several ways, including digital inequality. So how we succeed as a society will depend on how data is harnessed and how we manage AI to reduce its impact, including on those in the creative sector.
Brexit cut my tenure of almost 16 years as an MEP short. As it happens, this coming Saturday, 31 January, will be exactly six years after Britain left the EU. How regrettable it is to see the damage inflicted on our economy. I remain a passionate advocate of the project, though my son still reproaches me that I was very much absent when he was growing up. Nevertheless, he has grown up to be a fine young man, working as a creative, as it happens, who cares deeply about his work and society.
Recent international developments have brought us to a turning point in our relations with the EU. Not only is it necessary to rebuild the trust lost in the Brexit years, but trade and defence must be our top priority, given that the world has changed around us and our approach to alliances must do, too. I welcome that this Government have signed a trade agreement with India, as did the EU on Tuesday, which I championed for many years while I was there.
However, as the EU has been faced with new challenges, its instruments and procedures need to evolve accordingly. At the same time, UK-EU relations need to be more ambitious, particularly in the fields of trade, defence and security. Rejoining instruments from another era such as the customs union cannot be the answer. New challenges demand new structures and new models of co-operation.
I look forward to working together with your Lordships in this House in facing today’s challenges and defending nothing less than the cause of a better life for our fellow citizens in a troubled and turbulent world.
Lord Monks (Lab)
My Lords, I thank the noble Baroness, Lady Gill, for that absolutely excellent speech, revealing her rich experience in many areas across both the European Union and localities in the UK. She has already made one significant mark on our work: I was not aware that you could have two locations in your title. I am sure there are precedents for it, but the noble Baroness, Lady Gill, has certainly established that. I am pretty sure that, if the citizens of Jewellery in Birmingham and Southall in Ealing get to read that speech, they will be very proud of their girl for what she is achieving on their and other people’s behalf in this country.
We are proud of her on these Benches, too. She is going to bring a fresh perspective on a number of things, including housing and inequality, and perhaps on the EU as well. She was not exactly on any party line with her remarks at the end, but her basic pro-Europeanism shone through very strongly. We look forward to further speeches to come, which again will make us think and take us forward. We have a new colleague who will be a big hitter in this Chamber. While I am on my feet, I wish the other noble Lords who will be delivering their maiden speeches today all the very best for the future. If they do as well as the noble Baroness, Lady Gill, they will be doing very well.
I follow the noble Lord, Lord Newby, in a number of ways—not all ways—and I appreciated his opening speech very much. It set the scene for this debate very well and the scene for the country more generally. I, too, like him, remember vividly in the EU referendum that not everyone on the leave campaign thought that leaving the EU necessarily meant leaving the customs union and the single market. I remember the noble Lord, Lord Hannan, was among those who initially thought that. Reference has been made to Boris Johnson’s famous remarks that we could have our cake and eat it, keep the benefits and still leave—one of the biggest whoppers told in that very bitter campaign.
Now, we are faced with reality, and a hard reality it is, too, as the evidence of the costs of leaving the EU continues to pile up. I am not going to repeat all the statistics that were mentioned by the noble Lord, Lord Newby, other than to say that goods exports are still languishing below pre-2019 levels. I am particularly concerned about small firms, bewildered still by increased paperwork and customs-related red tape.
Nor are non-EU countries filling the gaps. The new trade deals have so far been disappointing. The one with India is unfortunately not yet in force. Others, such as the one with Japan, replicate the EU arrangements; Canada is more interested in a deal with the EU than with us; and the deal with Australia is very good for Australia, but reflects a desperation on our part to get some agreements over the line. As for a deal with the US, as Mark Carney said at Davos recently:
“We are in the midst of a rupture, not a transition”.
I acknowledge warmly that the US has helped rescue us and other Europeans in the past, but can we still rely on it, given the capricious behaviour of the present White House Administration? Well, nobody is too clear about that.
So it seems to me that this can be used in a number of ways, with a number of opportunities as well as a number of threats. It can be used to open a new chapter with the EU, as we huddle together with our neighbours and allies and try to make common cause on a wider range of issues. Defence is an obvious priority area at the moment, but trade should also be another. Prime Minister Carney’s call for medium-sized powers to come together should be heeded and used by the UK as a way to approach our problems in a new way. We need that new way and we need it quickly: we need this reset of key relationships, as the Government are at last exploring.
As the excellent Library briefing for this debate reminds us, the Office for Budget Responsibility reckons that UK imports and exports are both 15% lower than if the UK had remained in the EU. That is a heavy blow to our growth prospects.
I live in hope that people on the other side of this House will begin to acknowledge that the history of our brief time outside the EU has not been good; it has been bad. There have been failures all around, and it was precipitated by us leaving the EU. I look forward, not backward. I do not want to replay old arguments, but I hope that the reset will be bold and wide-ranging. It should challenge those in the Conservative Party—and, I guess, the Reform party too—to recognise the reality that we need a new deal with the EU and perhaps follow up the Carney speech.
There are four major claimed benefits of Brexit, as set out recently by the Conservative Party leader, particularly the freedom to negotiate our own trade deals.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
Order. We have quite a tight time limit, and everybody wants to hear from my noble friend and for her to be able to respond, so if my noble friend could finish—
Lord Monks (Lab)
I finish with an appeal to the other side to open their minds and maybe open their hearts a little bit, recognise the situation we are now in, not the situation we were in, and take the country forward on that basis.
Lord Lamont of Lerwick (Con)
My Lords, it is a great pleasure for me on behalf of these Benches, this side of the House, to congratulate the noble Baroness, Lady Gill, on her admirable maiden speech. She referred to feeling a little intimidated coming here and to the experience and depth of knowledge in this House, but from her speech, it was perfectly clear that she is going to add considerably both to the experience and the depth of knowledge, and we strongly welcome her for that. She has huge experience in the European Parliament—as she said, she spent 16 years there. That is one area of expertise, but she also has expertise on housing, because she was the chief executive of a housing association. Her maiden speech was both eloquent and moving. She referred to her love of jewellery, and I am sure she will be a jewel in your Lordships’ House for a long time to come.
As was said in the noble Baroness’s excellent maiden speech, and by the noble Lord, Lord Newby, of course, it is a good idea that Britain should seek to improve its relations with the EU. But a customs union is emphatically not the way, and quite rightly, the Prime Minister has said that a customs union is a red line. We just hope that it is one of these red lines that he does not actually cross.
Brexit can be, has been and was blamed by the noble Lord, Lord Newby, for almost everything. Ministers refer to the OBR, which said that Brexit has already caused a 4% decline in GDP. But, as the noble Lord, Lord Newby, admitted, the statistic actually was that the 4% decline would happen over 15 years. Some 4% over 15 years is, on an annualised basis, a very small amount, difficult to measure accurately, especially when the effects of Brexit, as the OBR has admitted, can hardly be distinguished from those of Covid, energy prices or the war in Ukraine.
The noble Lord, Lord Newby, pointed out that goods exports to the EU remain below pre-pandemic Brexit levels. In 2024, as he said, they were 18% below the 2019 level. However, goods exports to non-EU countries over the same period were also down by 14%. So what do we conclude from this—that Brexit has caused damage to exports outside the EU? That seems rather improbable.
Over the same period, the UK’s performance in services was much better and well above its pre-epidemic levels. The fact remains that since Brexit, the British economy has moved largely in line with the larger EU economies. Italy and Germany have performed worse than Britain, France slightly better. Germany and Italy did not leave the EU and yet have performed worse than us.
A customs union is not the answer. If the question is growth, there must be a different way, and a customs union could do great harm. There would be very little gain from lower tariffs, because most UK-EU goods trade is already tariff-free. If we joined a customs union, we would have to accept tariff-free imports from those countries that the EU had negotiated trade agreements with, but we would not have the reciprocal benefit of being able to export tariff-free to those countries.
Our ability to do independent trade deals would end. We would have to renegotiate or cancel trade deals done since Brexit. The loss of the US agreement would be significant. It is actually our largest single trading partner. The pharmaceutical industry sells 25% of its exports to, and enjoys free access to, the US, while EU pharmaceuticals pay a tariff of 15%. Are we going to put this hugely important industry in danger through leaving that agreement or having to renegotiate it?
Alignment, a favourite subject of noble Lords, of regulations makes sense where individual sectors actually want it, provided that it is repealable and changeable if conditions change. Dynamic alignment, where we permanently hand over control of our laws, is a step too far and unnecessary.
It is interesting to recall how the financial services sector, which we were told after Brexit must align with the EU to survive, is now, according to recent reports in the FT—
Lord Lamont of Lerwick (Con)
I am just finishing—is now pleading for exclusion from any steps towards alignment. The Liberals claim a customs union would boost government revenues. They have suddenly become followers of Donald Trump, believing that “tariff” is the most beautiful word in the English language, but a customs union would mean that we would be obliged to share our customs revenues with the EU.
A customs union does not make any sense. The Prime Minister is quite right. It ought to be a red line. Gladstone would have been horrified at the stance of the Liberal party. He would have called what it is putting forward the road to servitude. It makes no sense.
Lord Katz (Lab)
My Lords, before we come to the next speaker, I just remind your Lordships’ House that this is a time-limited debate, and we also have a number of maiden speeches, which will obviously go a little over the speaking limit. We want to leave enough time for the Minister to respond to the many questions that your Lordships will have. We ask speakers to please stick to the four-minute speaking time.
Lord Hannay of Chiswick (CB)
My Lords, the noble Lord, Lord Newby, is surely to be congratulated on his timely choice of topic. The hard fact is that both this House and the other place will be debating how to remedy the lamentable post-Brexit deal struck in 2019 for the foreseeable future. I welcome most warmly the maiden speaker who preceded me, the noble Baroness, Lady Gill, and the three who will succeed me.
What I regret about the scope of our debate is its failure to address the single most urgent issue in our relationship: the security relationship with other European countries. With Putin continuing his aggression against a democratic European country—Ukraine—and doubts over the attitude of President Trump on this and other issues, there is no time to lose on strengthening European security co-operation and the European pillar of NATO. The failure to agree the first step along that road at the end of last year was totally regrettable and does not reflect well on either side, most prominently, in my view, on the European Union.
I hope the Minister, in replying to this debate, will borrow a phrase from a previous Prime Minister of her party and say that we will not take no for an answer and will persevere with our efforts to build that stronger security relationship.
Many of the items agreed at last May’s UK-EU summit as part of the reset are extraordinarily welcome, and I hope the Minister will give the House an update on the state of negotiations and on the preparations for the next meeting in that series, scheduled for this summer.
The veterinary agreements are clearly essential to remove the many sanitary and phytosanitary obstacles hampering agri-food trade in both directions. The energy agreements on our emissions trading schemes and on co-operation over interlinking connectors and the development of renewable energy projects in the North Sea will equally be mutually beneficial. The EU’s introduction of cross-border adjustment measures a few days ago makes it essential that we avoid those sea bans becoming yet another non-tariff barrier to trade when we need similarity of treatment to prevent the diversion of imports into the EU and resulting damage to ourselves.
A mobility agreement for young people moving in both directions would be a welcome complement to the decision to rejoin Erasmus+. Should we balk at the need to accept, in some areas, continuous adjustment to changes in EU rules? I do not believe so. After all, any British-based company that trades into our largest overseas market, the EU, is already having to meet those rules. There is no impediment to our having stricter rules than the EU. When the Minister replies, can she say where the consultation over rejoining the pan-European rules of origin convention has got to and when the Government will announce a decision on that? I will not comment on the customs union issue, because there is nothing like enough clarity yet on what that might entail to form a judgment. I will listen carefully to those in this debate who support going down that road.
It is often said by commentators that the EU does not rate the reset of the UK-EU relationship as being very high among its crowded order of priorities. No doubt there is some truth in that, but it is not the whole truth. The changes in geopolitical circumstances since the referendum in 2016 have made it more necessary to build a solid new post-Brexit relationship, capable of greater load bearing than the one agreed in 2019. It is essential that we show a firmness of purpose and a restoration of trust and do not repeat the errors of earlier years by squabbling among ourselves over the details of the way ahead.
Lord Docherty of Milngavie (Lab) (Maiden Speech)
My Lords, I begin by thanking Black Rod, Garter, the clerk, the doorkeepers and all the staff of this House for the kindness that they have shown me since joining. I thank noble Lords from every side who have, without exception, made me feel so welcome. I thank my supporters—my noble friends Lady Armstrong of Hill Top and Lady Elliott of Whitburn Bay—for their encouragement and support, and my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark for the thoughtfulness they have both shown towards me.
I grew up in a small suburb of Glasgow that few people have heard of and even fewer can pronounce. I studied at Strathclyde University, but it was at school that my interest in politics first developed. I attended St Ninian’s High School in Kirkintilloch. While my favourite subject was art, I vividly recall a young teacher in my third-year guidance class who was at pains to emphasise the importance of democracy. Indeed, that teacher created an election just to show us how democracy worked. It was the first time I stood for election. When it was time to vote, the teacher stood at the front of the class behind an improvised ballot box and we lined up to vote. My opponent happened to be in front of me. As he cast his ballot, he turned around to tell me that because there were only two of us on the ballot, he felt the right thing to do was to vote for me. I am embarrassed to admit that I also thought the right thing to do was to vote for me. I won by one vote.
After university I began a career in banking, specialising in real estate, PFI and public/private partnerships. In 1997 I was seconded to work for the incoming Labour Government on their regional development policy. I left the city in 2002 and moved to Newcastle upon Tyne, which is my adopted home. It is where I met my husband and where our children are growing up. Since then, my work has involved almost every aspect of economic development, principally in the north-east of England. It is a challenge to persuade private capital, which has a choice, to regions that have historically lower levels of accumulated wealth, capital formation and economic growth. Accelerating growth in our regions is essential—which is not to argue for slower growth in London and the south-east, although London and the south-east should irrigate, not drain.
That brings me to this debate. I was interested to hear the noble Lord, Lord Hannan, discuss last week the symbolism of the Woolsack and the centrality of business and wealth creation to the well-being and functioning of the state. I could not agree more. If only economic growth could be delivered by certainty of view alone. If one relies not on self-belief but on evidence and fact, one can only conclude that the decision to leave the customs union has been nothing other than an unmitigated disaster—for UK business, for our economy and for the Exchequer, upon which the health of our public services depends.
Drawing together my start in the classroom where I cast my first vote and today, there is a common factor in each beyond my own involvement. The energetic young teacher in whose class I first stood for election was then called Mr McFall. He is better known to noble Lords as the noble Lord, Lord McFall of Alcluith, the Lord Speaker. It would have been beyond the comprehension of my teenage self to imagine that 43 years later I would be introduced to this House at all, never mind be welcomed by the noble Lord, Lord McFall. His lifetime of public service is an inspiration. In an infinitely more modest way, I am grateful to be given this opportunity to serve.
Lord Lilley (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Docherty of Milngavie, to congratulate him on his excellent and witty speech and to welcome him to your Lordships’ House, where he will no longer have to depend on the votes of his opponents or anybody else to retain his seat.
The noble Lord was very modest in his speech and did not mention his professional career as chief executive of Tees Valley Regeneration and executive director of the Home Group, one of the biggest UK social enterprises. He also did not mention his passion for the arts, which I look forward to hearing about in future speeches. He was a founding trustee of the Baltic gallery in Gateshead and commissioned Anish Kapoor’s Temenos in Middlesbrough, which features on the British passport. He was also a trustee of Arts Council England. In an interview last year, he said:
“What gives me joy … is when I have been involved in recruiting people who have gone on to excel and grow in their roles”.
He has excelled and grown in his roles up to now and will continue to do so, no doubt, in your Lordships’ House.
As far as trade relations are concerned, Britain is to the EU much as Canada is to the United States of America. We both have free trade agreements with zero tariffs and zero quotas with our large continental neighbour. Neither Britain nor Canada has a customs union or a single market requiring it to adopt the tariffs and all the product laws and standards of its large neighbour. Yet I know of no Canadians who, even pre-Trump, ever advocated Canada joining a customs union, still less dynamically aligning its laws and standards with those of America.
Can the noble Lord, Lord Newby, tell us why a customs union or single market is good for Britain but would be bad for Canada—or vice versa? Why did he not tell us that a customs union would require Britain to reinstate the over 2,000 tariffs on goods that we do not produce, which we abolished when we left the EU? Why should British consumers pay higher prices to protect inefficient EU producers? For example, since Brexit we have allowed a tariff-free quota of sugar, which costs $449 a tonne coming from Brazil. Back in the customs union, it would cost us $892 per tonne from France. Vote Lib Dems for higher prices. A customs union would also mean scrapping our trade agreements with the Pacific trade pact, the largest grouping by GDP in the world, and with India, the largest country by population, with which our trade deal has important service industry chapters.
The sole benefit of a customs union is that it avoids the need for declarations of origin. The Swiss calculate that these cost less than 0.02% of the value of their trade with Europe. Hence Switzerland, like Norway and Iceland, refuses to join the EU customs union. Turkey does have a customs union with the EU, but that means that when the EU negotiates a free trade deal with another country, Turkey has to remove its tariffs on that other country’s goods, but the other country does not have to remove its tariffs on Turkey’s goods. Is that what the Lib Dems want?
I was the Trade and Industry Secretary who oversaw Britain’s entry into and creation of the open market back in 1992, and I assumed it would benefit our trade. I also negotiated the Uruguay trade round, the last successful world trade agreement, which halved tariffs and created the WTO. I made bullish speeches about how both of these, particularly the single market, would boost British exports. A quarter of a century later, a study showed how British exports had actually fared. I confess it proved that I had been wrong. Britain’s goods exports to the single market stagnated over nearly 25 years, growing by less than 1% a year. By contrast, our goods exports to more than 100 countries with whom we traded solely on WTO terms grew fourfold, by 87%.
I have long been at a loss to explain why anyone should want to return to a relationship with our former partners that was of so little benefit to us and would involve handing back control of our laws and our tariffs and paying for the privilege of doing so, but a psychotherapist friend explained to me that people who have escaped from a long-term coercive relationship often have an irrational urge to return to the partner who controlled their lives, dictated how they spent, made them subject to detailed and unnecessary rules and restricted their relationships with anyone else. I think we should be understanding of the noble Lord, Lord Newby, and, indeed, the Government’s European Minister as they endeavour to recover from this syndrome, and gently point out that others who once succumbed to coercive control from the EU, such as the National Farmers’ Union, now warn against returning to the ban on gene-edited crops and bovine TB vaccines and ending the ban on live animal exports. The City now wants to be excluded from any reset and has allegedly, according to the Financial Times, persuaded the Government that that would be right. The AI industry rejoices in escaping from the stifling controls of EU law. I wish the Lib Dems and their friends on the Labour Benches a speedy recovery from their addiction to coercive control.
Lord Razzall (LD)
My Lords, having listened to the noble Lord, Lord Lilley, in the past, I am sure noble Lords will accept that I do not agree with much of what he said. The context in which we are discussing this is, to me, the obvious failure of the Brexit project. I take the comments made by the noble Lord, Lord Lamont, about the 4% of GDP spread over a period, but I would prefer to look at the recent figures from the National Bureau of Economic Research, a well-respected American organisation, that says the cost to us of Brexit has been between 6% and 8%, which, aggregated, is something like £95 billion of our GDP.
I think the other thing that is worth commenting on, which nobody has—unfortunately the noble Lord, Lord Gove, has left the Chamber—is that one of the things that the Brexit debate entrenched in our culture is that political lying is all right. Where is the money we were promised on the side of the bus for the NHS? Where are all the Turkish immigrants we were promised in the emails that were sent to people in the last two weeks of the campaign? This, to me, has been the absolute zenith of lies and nadir of results. I take the point that has been made about some trade deals having been entered into, but most of the trade deals that were entered into by the new regime were simply Snopaking out “EU” and substituting “UK” in those trade deals. The noble Lord, Lord Lilley, referred to the CPTPP, but the estimate of the impact of that on our trade deals is infinitely less than the cost of losing the opportunities that we had with the European Union.
I do not know whether our friends in the Labour Party, who were referred to by the noble Lord, Lord Lilley, include the Prime Minister, who in May 2025 clearly indicated that he wanted to reset our arrangements with the European Union. This has not been terribly successful so far. Obviously, the progress on Erasmus has been good, but we have pulled out of the attempts to participate in the €150 billion European Defence Fund, we have not been able to deal with the internal electricity market, which we thought we would be able to do, and the phytosanitary agreement, which somebody over there mentioned earlier, that we hoped that we would get has not yet happened.
We have been asked to say what we mean by a customs union. Now Al Pinkerton, the MP, ironically, for Surrey Heath—he replaced the noble Lord, Lord Gove—argued for a bespoke customs union deal with the EU, not including agriculture, with consultation on all trade deals. It should be a bespoke deal. He proposed that in a Bill in the House of Commons and it went through, with some Labour people supporting him. It will not get into legislation, but it did pass. Turkey has had that arrangement since 1995. Why can we not have it?
Lord Doyle (Lab) (Maiden Speech)
My Lords, I rise for my maiden speech with a real sense of the responsibility that comes with joining a body so rich in experience, expertise and public service as your Lordships’ House. I thank Black Rod, the indefatigable doorkeepers, the police and security officers, the clerks and officials and everyone who has made me feel so welcome. I also thank my noble friends Lady Armstrong of Hill Top and Lord Liddell for their support and guidance, not only at my introduction but over many years, and I pay tribute to my fellow maiden speakers today.
I am profoundly grateful that my parents are here today. When I say that I would not be here without them, I do not just mean that scientifically. They taught me so much, above all that every single individual can make a difference, and when you are born into that way of being, it really is a gift. I also remember my sister Catherine, who we lost more than 30 years ago; we still miss her every single day. Catherine was born with Down syndrome and, although she did not live to see it, the progress that has been made in healthcare and opportunities and visibility for people living with Down really has been wonderful to witness.
My journey here began at the University of East Anglia, where I joined the Labour Club and met an inspiring dean of biology, Dr Ian Gibson, who was Labour’s candidate for Norwich North. One day, they asked for a volunteer press officer: cue awkward shoe-gazing around me, and then suddenly I found my hand in the air. Little did I know that I would spend the next three decades at the intersection of politics, media and public service. I may have worked for some famous names in that time, but the real privilege I have had has been helping to tell the stories of those who have been left out and left behind, both at home and abroad. I pay tribute to and thank all the colleagues I have worked with over those years, many of whom are now here in this House, including my noble friends Lord Kennedy of Southwark and Lady Smith of Basildon, who I thank for all their guidance and support thus far.
I also want to remember two former Members of this House in particular: Lord Gould of Brookwood and Baroness McDonagh, both of whom were remarkable inspirations for me.
I chose Great Barford for my introduction. It is where my sister and I were born. This is an exciting time for Bedfordshire, with East West Rail, the new Universal Studios theme park and, at Tempsford, a new town. I intend to champion these projects and more, because Britain needs to stop prevaricating and start building. Growth is not an abstract theory but an expression of our responsibility to future generations.
One of the privileges I had growing up in Bedfordshire was a fantastic free county youth music programme. The inspiring teaching gave me opportunities I could never have imagined, including the chance to sing at the Royal Albert Hall. Fortunately for the audience, I sang with several other hundred young people as well. But somewhere along the way, we seem to have lost the consensus that the arts, music, film, theatre and dance matter as an essential means of developing confident, creative and capable citizens. I very much hope that the Government’s curriculum review will mark a decisive turning point in rebuilding a shared understanding that creativity, culture and learning are key to what makes life worth living, as well as essential drivers of our national success.
It is my belief in the creative industries that made me so keen to make my maiden speech in this debate on our relations with Europe. There is much we can do to reduce self-defeating barriers post-Brexit. Take the example of touring artists and crews. For them, those barriers are not an abstract concept but lost work, lost income and lost opportunity. This does not have to be our reality. Let us fix the visa waiver programme, flex the 90-day rule for those touring and cut the costs to make moving equipment less expensive, which has also done such harm to our haulage industry. As Sir Elton John put it:
“It’s heartbreaking to see the hopes of Britain’s next generation of creative talent downtrodden and destroyed by bureaucracy and red tape”.
When I nervously collected my first parliamentary pass almost 30 years ago, I could not possibly have imagined that one day I would stand here as a Member of your Lordships’ House. I have learned so much over my career, but I have never lost sight of that simple lesson my parents taught me: that change is made by people and that the world does not improve by chance. Government matters because it gives individual effort collective backing. It allows values to be translated into action and hope into reality. As we consider our future relationship with Europe, we must recommit ourselves to the values we share: dignity, respect, democracy and the rule of law. Because even in these times—especially in these times—I believe that when we choose purpose over complacency and co-operation over conflict, progress is possible.
Lord Liddle (Lab)
My Lords, it is a great pleasure to welcome my new colleagues who are making their maiden speeches today—my noble friends Lady Gill and Lord Docherty, my good friend who is to come later, and my noble friend Lord Doyle, who is a very close friend and from whom we have just heard an excellent maiden speech. I first came across my noble friend 30 years ago, when he had just arrived in Westminster and was working for the newly elected Labour MPs for East Anglia. He was so keen on this job and he was homeless, so he camped out in Charles Clarke’s office while he sorted out his personal affairs. He always had that trademark, and he has kept it: he is the man with the duffel coat. He always reminds me, whenever I see him, of Paddington Bear. In a way, that is appropriate, because he is a man of great culture and a real expert on film, so he will bring great wisdom on cultural questions to this House.
In the past 30 years since I first met my noble friend, he has done a great variety of very interesting things. He has worked intimately with some of the most consequential people on the centre-left of British politics: first for Tony Blair in No. 10 and then in his role as Middle East peace envoy, then for David Miliband—Labour’s lost leader—in his role with the International Rescue Committee, and finally for Keir Starmer. Working for Keir Starmer, he was not one of the fast-rotating group of people who have been in and out of No. 10; he was a crucial aide. I do know how many people know this, but he sustained Keir Starmer at what was the deepest crisis point of his leadership of the Labour Party after the loss of the Hartlepool by-election in 2021. When he worked on the Batley and Spen by-election, he persuaded Kim Leadbeater, Jo Cox’s sister, to be our candidate and we squeezed home by 300 votes. That is probably one of the most consequential acts of his political career. In his three decades of politics, has shown outstanding loyalty to the bosses he has worked for.
My noble friend is a very considerable person. He is a man of faith who has struggled with some of his inner tensions and conflicts and overcome them. He brings to this House much more than the experience of a press officer; he is well informed across a wide range of national and international issues. He is a committed lifelong social democrat and he is going to make a great contribution to this House.
On the subject of the debate, I will not delay the House long, but I will say this. I have great respect for the intellect of the noble Lord, Lord Lilley, but I have never heard such rubbish on the question of Europe. He referred to his role in the Uruguay round. Let me remind him, it was the European Commission that negotiated the Uruguay round.
Lord Lilley (Con)
In fact, it was jointly negotiated by member states and the European Commission. I was there for all nine days of the negotiations in the Heysel stadium, so the noble Lord is wrong.
Lord Liddle (Lab)
Do you know why we won the Uruguay round? It is because we had the strength of the bloc of the European Union behind us. It was not just something that Britain achieved on its own.
Secondly, the noble Lord talks about the stagnation in our export of goods and completely ignores the vast expansion of our trade in services with the European Union, which is being put at risk by increasing barriers. He neglects the fact that, in 2016, the British public were promised a growth miracle as a result of leaving the EU. Where are the benefits of all that loosening of rules that were supposed to happen? We were promised the end of free movement, and what did the Conservatives do? They went on to create the biggest inward movement of people into this country we have ever seen, so what hypocrisy they have talked on immigration. If we had stayed in the single market and in Europe, the growth we would have seen as a result would have meant that none of the tax rises that we needed to have since the 2024 general election would have been necessary. Those are facts.
The economic situation is getting worse as we lose the strength of the European bloc. We no longer have the competitive pressure of the single market, which is what makes business efficient. As we lose that competitive pressure, we will find that Brexit is not a one-off loss; it will affect our competitive position for years to come.
I said I would not talk for long, but may I just make one point? We should look at the customs union and try to speed up the reset. I agree with the noble Lord, Lord Hannay: we need independent expert advice on what we would try to achieve and how. This is something of great complexity. We need to look objectively at the consequences of having an independent trade policy. I do not think they are very considerable, but I am willing to be proved wrong in an independent expert inquiry, which I hope Keir Starmer will set up.
Lord Dodds of Duncairn (DUP)
My Lords, I warmly congratulate the noble Baroness, Lady Gill, and the noble Lords, Lord Docherty and Lord Doyle, on their excellent maiden speeches. I look forward to that yet to be made, and to the valedictory speech of the noble Lord, Lord Offord.
Under a customs union, the EU would strike deals in its own interests, while the UK would be required to apply those terms automatically, without any guarantee of reciprocal access or consideration. Countries negotiating with the EU would have no obligation whatever to offer the UK equivalent market access, yet we would be bound to trade terms we did not negotiate. There is a constant underplaying of or failure to grasp the asymmetry this creates, with obligations imposed in this country but no corresponding duties on third countries.
Having said that, I want to highlight where we are as a country in real terms regarding a customs union, because there seems to be a reluctance to face up to reality, and it has not been mentioned thus far in this debate. We need to face the fact that this country has already acquiesced in precisely such a customs arrangement, not merely in theory but in practice, through the Northern Ireland protocol/Windsor Framework. It is not an inevitable outcome of Brexit, as some would say, but a choice—the wrong choice—about how to manage trading arrangements.
We have a situation, which is either not noticed by people or deliberately ignored, in which part of this United Kingdom is today subject to the European Union customs code and single market rules: rules it does not make and cannot amend. In 2026 in Northern Ireland—part of the United Kingdom—EU law, not UK law, applies dynamically in over 300 areas of law, covering goods manufacturing and agri-food production, never mind the effects of EU VAT rules, state aid rules, Article 2 requirements covering human rights and equality legislation, and all that. So, in debating the pros and cons of the customs union and the single market in the abstract, how can anyone not have regard to the fact that we already have such arrangements in reality for one part of our country?
The Windsor Framework formalises a reality in which internal trade within the United Kingdom is governed by rules made abroad and enforced with no democratic control. A July 2025 report from the Federation of Small Businesses found that the Windsor Framework has created significant disruption to internal UK trade, with over one-third of businesses having stopped trading between Great Britain and Northern Ireland, while 58% report moderate to significant challenges. It says it is fuelling confusion and cost, breaking down UK internal market connectivity rather than resolving trade barriers. It says it is creating a “labyrinth” of bureaucracy, making it harder to move goods within the UK than to export globally.
Whether noble Lords are for or against a customs union for the UK as a whole, one thing that is not sustainable is having one part in the customs union and the rest out of it. That is not acceptable or sustainable. It is complex and unnecessary. It raises impediments to our prosperity. It erects barriers between us in Northern Ireland and our largest market in Great Britain. The cost is being paid by consumers, manufacturers and businesses. Fundamentally, it is a breach of democracy. Laws being made for British citizens in Northern Ireland are being made by a foreign entity in its interests, with no input, role or vote for any elected representative from the people of Northern Ireland, either in the Northern Ireland Assembly or at Westminster. That is an unsustainable position. We must take this into account in any debate regarding the customs union, the single market and the reset.
Lord Tugendhat (Con)
My Lords, I too congratulate the maiden speakers on their contributions. Time restricts me from saying more, but time does not diminish the warmth of my welcome to them, and I look forward to hearing from them on many occasions in the future.
When I began to consider this Motion from the noble Lord, Lord Newby, my mind went back to when I was in the Army during my national service in the 1950s. We were forever being told, in lectures on tactical exercises, that time spent in reconnaissance is rarely wasted. It enables one to see whether the objective is attainable, how best to go about it, whether there should be a direct or flanking movement, or whether indeed it is worth while in the first place.
Of course, I agree with the noble Lord, Lord Newby, and others who have spoken in favour of his Motion, that we must improve our access to the European Union for trade and goods. I agree that removing obstacles to do that ought to be a high priority of the Government—I believe that it is—and it is certainly something that industry is crying out for, especially the smaller companies, which were worst hit by the agreement we signed when we left the EU. It is also one of the most obvious ways in which we could improve our rate of growth. However, I must say that I doubt whether setting an ambitious and clearly defined objective such as a customs union is the best way to proceed, quite apart from the other disadvantages of the union which a number of my noble friends have pointed out. It could all too easily turn out to be the diplomatic equivalent of laying siege to a castle that never falls.
I say that because, sadly, the EU in recent years has all too often shown itself unable to reach the internal agreements necessary to take big initiatives. Its decision-making process has atrophied since—not because—we left. One has only to look at the failure to carry forward the single market or to achieve a capital markets union. The ambitious Draghi plan has remained largely a dead letter.
Perhaps more relevant to those examples, let us look at what has happened to the proposed trade deal with the Mercosur group of Latin American countries. It was first mooted, I believe, some 25 years ago, and serious negotiations began in April 2019. The agreement was finally signed this month, only for the European Parliament to refuse to ratify it and refer it to the European Court of Justice, which at best means a further delay.
My fear is that if we set our cap at the customs union, quite apart, as I say, from other issues, we could become embroiled in protracted negotiations that would embitter relations and lead, if not to failure, at least to disappointing results. Far better, in my view, is to identify a number of specific and often technical issues on which agreements would create a balance of tangible benefits for both sides. I have in mind very much the kind of agenda the Government are already pursuing.
I believe that if the UK and the EU can reach agreements on prosaic matters of this kind that could create a habit of co-operation between us, that might lead on to a more ambitious framework that, instead of drawing on the models of the past, is suited to the circumstances of the present and of the future.
Lord Stephen (LD)
My Lords, I draw attention to my offshore wind interests as declared in the register. I add my congratulations to those offered to the excellent and entertaining maiden speakers that we have already had. Perhaps I may ask for the discretion of the House in mentioning a maiden speech still to come, from the noble Lord, Lord Pitt-Watson. I remember, as a young Liberal in Aberdeen, attending many hours of meetings with Helen Pitt-Watson, which brings back very fond memories to me. I very much look forward to the noble Lord’s speech.
I also welcome the co-operation that was announced on Monday this week by the UK and EU nations in relation to offshore wind and North Sea interconnectors. The headline from the so-called Hamburg declaration was the joint development—the co-operative development—of 100 gigawatts of new projects based around a shared, Europe-wide grid system. Much more co-operation of this kind is surely sensible and badly needed—a significant step, perhaps, on our way to a new single market and customs union.
My friend the late Eddie O’Connor was a very big figure in offshore wind who founded Airtricity and then Mainstream Renewable Power. He championed the idea of a European supergrid with huge energy and passion. The challenge is simple: to create and deliver a renewable energy network across the UK and Europe that is fit for the 21st century and beyond. With determination and drive, I am certain that we can make it happen.
It is also great to see plans announced across several EU countries to adopt contracts for difference to underpin and anchor their own offshore wind developments. These so-called CfDs were first introduced in the United Kingdom in 2012 by then Secretary of State for Energy Sir Ed Davey. They have saved the UK electricity consumer billions compared to the previous ROCs system. Despite one serious and, sadly, completely avoidable misstep in relation to CfDs back in 2023 with AR5, contracts for difference have continued to be a big success in the UK, and AR7, announced on 14 January, just completed with 8.3 gigawatts of new capacity awarded—the biggest ever.
In contrast, Germany, Denmark and the Netherlands have recently struggled with their own power auctions. This is not good for the climate emergency, and Governments together must do better. Nations can learn from each other; they can work together. They can—we can—get better at all of this.
In the UK, it is not perfect, but it is generally positive. All the mainstream UK parties have supported the energy transition, net-zero targets and the importance of real and rapid progress. The only party to stand out is Reform UK. Its policies are strident, negative and hostile. In July last year, the party’s deputy leader, Richard Tice MP, wrote to the chief executives of all the major offshore wind developers threatening to strike down all contracts for difference signed under auction round 7 if the party ever won power—an astonishing, aggressive, anti-business move threatening to break binding commercial and legal agreements being entered into right now.
Such a move is in stark contrast to the words of the noble Lord, Lord Offord, Reform’s new Scottish leader, when he gave his maiden speech in this place in January 2022. He spoke warmly about his attendance at COP 26 and the tremendous achievement of the UK presidency in increasing commitments to net zero from 30% to 90% of world emissions. It will be interesting to learn whether Reform UK has—
Lord Katz (Lab)
I ask the noble Lord to conclude. He is getting over the time limit, and it is a time-limited debate. I keep on having to stress that.
Lord Stephen (LD)
I apologise. It was my reference at the beginning to some personal matters that have taken me over. Across the UK and the EU, all this is very important, yes, for the economic benefit for our nations, but, more importantly, for the future of our planet.
Lord Katz (Lab)
My Lords, for those immediately following those giving a maiden or valedictory speech, an allowance is made for the tributes being paid and the clock does not start until their remarks start. For others speaking in the debate, the time starts when they stand up, and that needs to be no more than four minutes.
Lord Verdirame (Non-Afl)
My Lords, I, too, welcome and congratulate today’s four maiden speakers. We very much look forward to their future contributions.
While there have been statements by the Government on the relationship with the EU, we have not had a comprehensive policy statement setting out their objectives in the negotiations. A paper on the defence partnership was published on the same day as the UK-EU common understanding. Similarly, the Cabinet Office policy paper on the internal electricity market last December dealt with the outcome of discussions with the EU. However, we are not here just to debate outcomes; we are here to scrutinise and seek to influence government policy. To do so, we need to understand what that policy is. Will the Government commit to publishing a comprehensive policy statement on negotiations with the EU similar in detail to, for example, the July 2021 Command Paper on the renegotiation of the Northern Ireland protocol?
As for the case for rejoining the EU customs union or parts of the single market, I will make three brief comments. First, any such decision, now that we are out, would be very different from the decision to leave the European Union, and the dividing line will not be the same as in the referendum. We are too large an economy to join a bloc in which we would have no say. Reference was made by the noble Lord, Lord Newby, to Mark Carney’s fine speech in Davos, but I do not see how rejoining the customs union would fit in with that speech. His argument is not that middle powers should tie themselves to bigger powers; it is the opposite of that. Middle powers should maximise their autonomy and influence through flexible and variable arrangements in which they retain a say with a wide range of powers. By all accounts, we are a bigger middle power than Canada and less dependent on the EU than Canada is on the United States.
Secondly, the European Union faces complex and decisive choices in the years ahead. As Mario Draghi warned, doing nothing or doing too little means accelerated decline. In recent interventions, he has complained that little has changed since his report and that conditions are worsening. What would this mean for us if we chose to join a customs union or parts of the single market now? It would put us, I am afraid, in a bleak position. Either we would have joined a bloc that fails to meet the challenge and declines faster, or, if the EU takes bold and transformative decisions, we would have joined that bloc just before those decisions are taken and without any ability to influence them.
My final point is on reports about a so-called Farage clause that the EU would be seeking as part of its reset—a penalty provision on future renegotiations. As some will remember, in particular the noble Lords, Lord Frost and Lord Barrow, a similar proposal was made in December 2020. It had a different name then; it was called the hammer clause. Imagine if the hammer clause had been agreed by the then Government. The Government today would have a weaker hand in their discussions with the EU. A penalty clause or mechanism will affect any future Government, whatever their colour, including a Liberal Democrat Government seeking to rejoin the European Union, because if there is one thing we can be certain of, it is that there will always be negotiations. We negotiated on the way in, we negotiated while we were in, we negotiated as we came out and we are still negotiating. Does the Minister agree that it would be reckless and irresponsible for any Government today to weaken the negotiating position of a future Government? Can she reassure us that no penalty clause would be agreed to?
Lord Jackson of Peterborough (Con)
My Lords, Brexit was a traumatic episode for our Liberal Democrat friends, but it happened in 2016. British people voted to take back control of our economy, our laws and our borders. A way forward was defined by British sovereignty and British interests: a belief in British exceptionalism, and not a cultural cringe to the European Union or an orderly management of decline, as was unfortunately enunciated by the Liberal Democrats. I am glad the Government stated in their manifesto that there would be no return to the single market, the customs union or freedom of movement. Yet the proposals to bring the UK in line with the EU’s electricity market and to reach an SPS agreement threaten to undermine the substance of that promise, which will have calamitous impacts on British farming, according to this morning’s Times.
If the UK aligns with EU rules, it would include targets toward the promotion of renewables and alignment on carbon emissions trading systems. Since leaving the European Union, we have diverged with it on our policies towards energy markets. This included the launch of the UK Emissions Trading Scheme. As of 27 January, the UK ETS carbon trading price was £49.19, while the EU’s ETS was £64.23. Aligning with the EU’s carbon price would raise the cost of industrial carbon for British businesses by more than 30%. The UK already has some of the most expensive energy costs in the world. A dynamic alignment agreement would leave us at the mercy of whatever economic policy mistakes the EU would tie us to. This looks likely, with the EU planning, for instance, to expand its ETS policy in 2027 to include buildings and road transport in the economic activity covered in carbon pricing.
Further integration with the EU would be damaging for British business and industry. It would undermine any innovation in agri-food brought about since the passing of the Genetic Technology (Precision Breeding) Act 2023. We have an advantage over the EU in helping to create food able to withstand future climate and biodiversity challenges. Even the French newspaper Le Monde argued recently that the EU’s common agricultural policy is not sustainable and does not aid in creating robust production practices.
Those who advocate for a customs union fail to grasp that the UK is a far more flexible and dynamic trading partner than we were, or could be, in the EU. When the UK left the EU, we rolled over existing trade agreements to make sure that there was continuity for British business. It has taken the UK less than two years on average since Brexit to negotiate many trade deals. In contrast, the EU takes seven to 10 years on average. In the 10 years before we left the EU, annual customs revenue at the UK border varied between £2 billion and £3 billion—the UK received just 20% of it. Outside the EU, in 2023, that revenue was 100% to HMRC and £5.5 billion. Our deal with Japan could boost UK GDP by £1.5 billion over time and link us more to the Indo-Pacific region, where the UK estimates that 54% of global growth and technological advances will occur between now and 2050, and where NATO estimates that two-thirds of future global wealth will be concentrated.
In conclusion, 80% of British economic output came from the services sector. Services provide the largest part of the UK economy and will likely continue to do so. In 2024, UK exports of services to the EU were up 19% in real terms since 2019. Exports of services to non-EU countries have grown by 23%. UK trade in services has outperformed the G7 average since 2021, and Brexit has been a benefit for the largest part of the UK economy. It is clear that, in the past five years, Britain has set out on a new future where we are free to trade with who we want and make decisions which are best for the British people, not a bureaucracy in Brussels. To go back on this will be an error of the highest magnitude.
Lord Pitt-Watson (Lab) (Maiden Speech)
My Lords, it is with great pleasure that I rise in this debate to make my maiden speech. I should begin by giving thanks to all Members of the House for their warmth, their welcome and their generosity: to the Garter King of Arms, Black Rod, the Clerk of the Parliaments, the doorkeepers and all the others who work here; to my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark; and to my noble friends Lord Wilson of Sedgefield and Lord McNicol of West Kilbride, who introduced me to the House.
I would also like to thank the noble Lord, Lord Stephen, for remembering my mother. She was a music teacher. My dad was a Church of Scotland minister, so I think that, like a few Members of this House, I am a child of the manse. But my career has been in business, particularly in finance, which is what I would like to talk about today.
For Britain, finance is the real jewel in the crown of our economy. It is 9% of our economy, but it earns for us a trade surplus of £70 billion, much of that through the European Union, so the finance industry is critical to any element when we think about our trade. But it is not just self-interest that makes the finance industry so important. Finance is central to the solution of the big problems of the world. It is almost impossible to imagine a prosperous economy without a successful finance industry. I led the finance initiative at the Paris climate talks; we will not solve the climate problem unless the finance industry is on board with that. If you look at poverty in the developing world—I was treasurer of Oxfam—and if we are to get people out of poverty, they need financial services. If you look at innovation—I chaired the endowment at Nesta—again we need the money and the stewardship to make sure that that innovation can take place.
The main part of my financial career was in another element: it was about the power of the finance industry and how that is exercised. Because the finance industry holds the shares in companies, that gives them the opportunity to approve or otherwise the boards of directors and therefore to have great influence. That influence needs to be seen through the eyes of the savers—the millions of people who save through their pensions into the finance industry. Of course, they want profitable companies, but they also want companies that pay regard to the society and the environment in which they trade.
The greatest part of my finance career was with an entrepreneurial pension fund called Hermes, and we worked very strongly on that. We encouraged people to get together on that as well. I consider myself one of the midwives of Principles for Responsible Investment, which now has over $100 trillion of investors signed up to it—and it is based in the UK. It was not just me—there were many people who were involved—but the UK is the centre in the world of responsible investment and of people trying to make sure that our money is used well for the people that it ought to be used for.
But there is another, less rosy side. We all remember the global financial crisis. There are many failures in the financial system. It is not highly regarded by the people of Britain. Most critically, when academics study the financial system, the cost of taking money from point A in the outside world and investing it where it is needed in point B has hardly fallen over 100 years. That is a real challenge.
But such challenges, I think, can also be big opportunities. I have a professional interest in working on thinking about pension structures. We believe it is possible that, with a better pension structure for the same cost, people who are saving for their pension could be enjoying a reliable income in retirement maybe 30% higher than they are currently getting through the UK system.
The other thing I do is teach. I teach finance at Cambridge on a course that is considered radical. It is called The Purpose of Finance, and it simply asks the students to debate what is the purpose of this industry at which Britain excels. It is not just about analysis, and it is not just about markets and regulation. It is also about institutions and innovation and cultures and governance and incentives and professionalism.
Finance is critical. It is critical to this debate about the trade relationship with Europe. It is a jewel in our economic crown. As we think about finance, we surely want that industry to grow and to prosper, because it is purposeful in delivering to the outside world—as all commerce should be. In the future, as part of my work here, I hope I can contribute to the House’s deliberations on these sorts of matters.
Lord Davies of Brixton (Lab)
The House has seen four brilliant maiden speeches today, and I am sure that in the coming years we will benefit from everyone who has joined us. It is my honour and pleasure to follow my friend, David Pitt-Watson, who has now joined the House as Baron Pitt-Watson. His territorial designation is
“of Kirkland of Glencairn in the County of Dumfriesshire”.
What an asset he will be to the House—what a CV. In his speech, he only touched on what he will bring to our deliberations. This House will welcome, value and learn from his range of experience. Wikipedia has him down as a businessman and a social entrepreneur, but also a Labour councillor and a Labour bureaucrat, blending a life in academia and a life in business—successful, but always with a social purpose in mind.
I will touch on just a few things from my noble friend’s extensive CV: a Pembroke visiting professor at the Judge Business School, Cambridge University; influential books translated into five languages; and a lifetime achievement award last year from the International Corporate Governance Network. The citation for that award states that he is
“one of the most influential pioneers of responsible investment and stewardship. His leadership in creating ventures that advanced governance advocacy and institutional stewardship services set new global standards and inspired market-wide change”.
I am sure that many Members of the House will also welcome the fact that my noble friend is always a Scotsman. Finally, I hope the House will forgive me when I say I particularly welcome David because he is greatly interested in pensions, for that is how we met many years ago. He is not just interested but a tenacious and ultimately successful thought leader, and one of the leading advocates of a new type of pension provision, collective defined contribution schemes—CDCs. This will be of increasing importance in our development of better pensions.
Moving on, I look forward to the valedictory statement from the noble Lord, Lord Offord. It will be interesting, if not necessarily in line with what I believe.
On the subject of the debate, I want to make just one crucial point. I hope that everyone has now read or, better, watched Prime Minister Carney’s brilliant and important speech that sets in my mind the context for this debate. There is a new international political geometry. First, it is clear now that size matters; economic power, soft power and military power will also be increasingly important. Secondly, the delusion of “take back control” has been exposed for us all to see. Thirdly, we can no longer rely on the United States. We will always be friends—culture and language will always bring us together—but it will be that friend that we know we cannot rely on any more.
The inevitable conclusion of this, given our broad political and cultural affinities to Europe and the simple fact of geography, is that we have to work out a new relationship with Europe. Brexit has been a disaster. Let us talk seriously about how to proceed rather than being swept along by events.
Lord Offord of Garvel (Reform) (Valedictory Speech)
My Lords, I add my congratulations to the four maiden speakers on their excellent speeches. As they arrive and I depart, I feel in this debate a sense of Groundhog Day as we are replaying Brexit 10 years later. I wonder what the electorate would make of this, especially when in the other place at the time, in 2016, the MPs who were in favour of leaving were only 25% of the House whereas the public were at 52%. I wonder whether there are shades of that here again today.
When I was Exports Minister for 15 months, we worked very hard on the free trade agreements post Brexit because we knew that when we had joined the EU, which was then the Common Market, Europe accounted for a third of global trade, but that when we left in 2019 it was 20% of global trade. The OECD Going for Growth report says that by 2050 it will be 10% of global trade. Ergo, the EU is in decline and what is booming is foreign markets—Asian markets and Indo-Pacific markets—which is why we went for the CPTPP and worked on trade deals with India and America. We have to look globally and not be bogged down in this debate 10 years later.
Moving to my imminent departure, I was listening to Oral Questions today—over the five years that I have been in this House, I have made a point of being at most of those—and one theme that came through a lot while I was sitting here, especially from the other side of the House, was an undying ideological faith in the power of the state to solve all our problems for us. If there is a problem, the state must fix it. Taxpayers’ money must fix it. There must be a quango or state body that can fix it.
I will give noble Lords a warning from my beloved home country of Scotland. We have just had 25 years of devolution, and we have done an experiment of letting the state take control of our lives. When devolution began in 1999, the state spent 43% of GDP in Scotland. Today it spends 55%. What have we got in return? Our political class has created a welfare economy that does not create any wealth. Work does not pay any more than welfare. Some 93% of Scots think the NHS needs significant reform and our once-famous education system has gone from outstanding to average. In the meantime, we have destroyed our world-class energy industry in the north-east through ideological policies on energy pricing, resulting in the biggest transfer of money from poor people to rich people since Robin Hood. I suggest that the noble Lord, Lord Stephen, reflects on that as a former MP for Aberdeen.
That is why I am going home, heading back to Scotland to stand for Reform in the election for Holyrood. I am fed up with this mid-table mediocrity in Holyrood and the cosy consensus, some of which your Lordships heard from the noble Lord, Lord Stephen, on his time there. We need change. We need to make Scotland the most prosperous and successful part of the UK. If we are successful, we will have debates in Holyrood for the first time ever about how to grow the economy and make our people wealthier, not just how to spend other people’s money.
That is my plan. We are going to focus very hard in the last 99 days. Make no mistake: it is now a two-horse race between the SNP and Reform. A poll out just five minutes ago from Ipsos MORI puts Reform now in second place. We are going to take up that fight to get Scotland back to the top of the table, where she deserves to be.
I wish everyone in this House well. I want to give a personal tribute to one fellow Peer in particular who is not in his place today, the noble Lord, Lord Jack of Courance, who, as Secretary of State for Scotland, brought me into politics five years ago. He is a great friend and mentor, and he was a very effective Secretary of State.
Finally, I say to all fellow Peers: keep doing the work but do not rely on the state for everything. Thank you.
Lord Frost (Non-Afl)
My Lords, I am delighted to follow the noble Lord, Lord Offord. As he says farewell to this Chamber, I congratulate him, on behalf of the whole House, on his forthright but reflective valedictory speech. We overlapped only very briefly as Ministers in the last Government, but, as I think we all know, the noble Lord served that Government with an energy and determination that were very much needed at times.
If I may say so, not least because it was a step that my own party stopped from me taking at the last election, I admire the noble Lord for having the courage to relinquish his seat in this House and move properly to elective politics. I have little doubt—and, having heard what we have heard, I am sure that none of us can have any doubt—that he will be an effective and tenacious campaigner in Scotland. I wish him personal fulfilment in this new project and whatever follows it.
I turn to the subject of this debate. Here we are again. This is nth instalment of the long-running box set series of the British establishment’s obsession with being in customs union with the European Union. This has lasted 10 years. We saw it straight after the Brexit referendum, and, as early as January 2017, the noble Baroness, Lady May, in her Lancaster House speech, spoke of a “customs arrangement”, rather than leaving the customs union properly. By 2018, the then Cabinet Secretary, Jeremy Heywood, had invented the Heath Robinson-style dual customs arrangement—a Schrödinger’s customs union that apparently left us both in and out of the customs union at the same time. The 2018 withdrawal agreement would, of course, have kept the whole country in a customs union with the EU and given the exit keys to the European Commission.
Finally, the then Prime Minister, Boris Johnson, and I, did what had to be done. We took Great Britain out of the customs union—Northern Ireland, as we then hoped, was to follow later—giving us freedom of trade and the ability to set our own regulations. Until that point, we had seen nothing but a complete lack of confidence in Britain’s ability to trade with the EU, as we did, and do, successfully with the rest of the world.
However, here it is again; the obsession has returned. Just as everyone has got used to the new situation, with remarkably little difficulty, the same voices return. It seems that the Government increasingly want to wind the clock back. This is simply a grasping after nurse—a search for a refuge from hard decisions in the warm and deadening embrace of the Brussels institutions.
The arguments against doing this are just as strong as they have always been, and we have heard many of them today. First, trade deals under the customs union give third countries preferential access to our market but do not give us preferential access to theirs. Secondly, we get no say in EU negotiating positions and no assurance that our interests will be protected. Thirdly, as we are told, we do not get even proper friction-free participation in the EU’s market unless we join the single market as well. I am grateful to the noble Lord, Lord Newby, for at least being honest in saying that that is also his policy objective. Fourthly, we lose our ability to lower our own tariffs, which we have done for third-country food that we do not produce ourselves. Even the Government reduced some tariffs last year, and they made a point of saying so. Fifthly, we would have to undo our own trade agreements. Is it seriously suggested that, having joined, we should now leave the CPTPP and our trade deal with India to join the EU’s putative deal, which will have been negotiated with none of our interests in mind? It makes no sense.
The Lib Dems know this. They know more. I think that is why they claim to think they can negotiate some sort of special customs arrangement—oddly enough, one that excludes agricultural goods, even though that is the area in which, under the reset, we will be joining the single market. I can tell them that the EU does not do this sort of bespoke agreement, and we should have learned that in the years after the referendum. As for the Government, they are already dipping a toe in the customs union water by agreeing to follow the CBAM rules of the EU. Some Ministers appear to be for, some against, and I hope the Minister will be able to clarify.
This is all displacement activity. Being part of the customs union again makes sense for only one reason: if you want to start going back towards the EU. It is the Monnet method of one thing leading to another. That is why we hear the calls to rejoin the customs union. I urge its proponents to be honest: if they want to rejoin, they should admit it. They should make that case to the British people and see how far they get. Meanwhile, I hope—although not with great expectation, I am afraid—that today will be the last we hear of the nonsense on the customs union.
Lord Moynihan of Chelsea (Con)
My Lords, earlier speeches today have claimed with a straight face that had we not left the EU, our GDP would now be 4% or 8% larger than it is now. The OBR, which was named by the Sunday Times this week as the UK’s joint worst forecaster, has embraced that analysis. Yet our economy has managed the same, admittedly low, growth rate as the three key EU economies: Germany, France and Italy. The belief that we would have grown 8% more than those three had we stayed in the EU is, frankly, nonsensical.
The claims come from a doppelganger analysis which asserts that we are 62% identical to the US so we should have grown just as quickly as the US has. We have stifled building, driven the rich away, discouraged tourists, ballooned the obstinately unproductive public sector, medicalised anxiety and made not working pay more than getting a job. We entered into the disastrous net-zero experiment, while the US has provided abundant cheap energy—the essential precondition for economic growth. Yes, if we had done what the US did, our economy would be at least 8% larger than it is now. But we did not, so it is not. Net zero has decimated our manufacturing industry. Petrochemicals, ammonia and pharmaceuticals have all shrunk dramatically, with plants closed and manufacturing moving offshore. Goods exports are therefore indeed down, because there are fewer goods to export. We do not make them any more.
Exports of services, however, are growing rapidly—over 20% in the last two years. That would have been impossible had we stayed in the EU, where digital services, for example, are stifled by inflexible data regulation. It could be worse for us, we could have stayed in the EU, costing us far more per week than the £350 million on the side of the bus, retaining the EU’s high tariffs with the rest of the world, adopting the tens of thousands of new regulations and directives passed since we left, a 15% US pharmaceuticals tariff instead of our 0%, 50% on steel and aluminium rather than 25%, and no superior trade deals with the US, Japan, India, South Korea or, above all, the Pacific partnership.
To believe we would have had faster growth were we still in the EU is—forgive me—seriously delusional. As for wholly or partially rejoining or dynamic alignment, the EU would undoubtedly demand costly retrospective contributions to its recovery and resilience facility and withdrawal, as many noble Lords have said, from our many valuable, recently signed trade deals.
The UK will fare far better outside the EU. We were told at the time of the referendum that the City would die if we left the EU. It has not, and now the City wants to stay out. Our digital economy will never flourish under the EU’s crippling digital regulations. Our rapidly growing trade with the US will wither under extra imposed tariffs. There is plenty we could do to grow our economy faster. Relinking to the EU is not one of those things.
Lord Wallace of Saltaire (LD)
My Lords, we have been hearing different versions of economic and political reality in this debate. I want to focus in my short speech on two issues that lie behind negotiating a customs union: the question of sovereignty and an EU reset; and the foreign policy, security and defence aspects of again moving closer to the EU and its member states. Right-wing media again leapt up to cry, “You’re threatening British sovereignty” as soon as resetting our relationship with the EU was proposed, but the idea that the UK could somehow maintain absolute sovereignty in an integrated international economy with instant communications was always a myth.
I recall Geoffrey Howe, when he was Foreign Secretary 45 years ago, talking about sharing sovereignty with our European partners. He did not spell out explicitly that the alternative was yielding sovereignty to the United States, adopting US regulations and following its international political lead. We are now seeing that alternative spelled out brutally in threats from President Trump against our attempts to tax and regulate US tech corporations that dominate our social media, and to maintain higher standards of food production than US exporters want. I think it is clear, in an underlying way, that the alternative the noble Lord, Lord Offord, and others want to present is a Britain that would become like the Republican vision of the United States, with a small state, gross levels of inequality and a very damaged society.
As other noble Lords have said, particularly the noble Lord, Lord Davies of Brixton, we now face a much more hostile global environment, in which even middle-level powers such as the UK find it hard to stand up alone to pressure from China or the USA. The collective weight of European democracies, exercised through the EU, is, however, capable of maintaining autonomy. We need to contribute to that collective weight to protect our preferred patterns of market and product regulation and our environmental and social protections. We are a social democracy, and we do not wish to become an American-style very unsocial democracy. We need to co-operate on security and defence, pooling our efforts to resist the imperial ambitions and subversive activities of Russia and China and now, sadly, also of the United States.
Britain played a leading part in developing the EU’s co-operation in foreign policy. I recall Jim Callaghan, when Foreign Secretary, returning from an early meeting of what was then called European Political Co-operation and enthusing about how useful it was in promoting British interests. Five years later, Lord Carrington’s London report set out proposals to institutionalise regular consultations on international threats and initiatives. When the Berlin Wall came down, I recall the Metropolitan Police asking Chatham House, where I then worked, to organise a seminar on how to build closer police co-operation with our European neighbours. When Europol was then established, it had a substantial number of UK staff and a British Secretary-General. Similarly, when the European Defence Agency was set up, it had a further number of impressive British staff concerned to promote both shared and UK interests.
Brexit threw all this away, with Brexiteers arguing that America was the only ally we needed, that the Indo-Pacific was the future and that European co-operation contributed little to Britain’s security. We have now learned how wrong they were, and our Labour Government are hesitantly beginning the long, hard path back to what we have lost. The Government are still too timid on this, as on other policy areas, and they need to explain to the British public how much our international context has changed for the worse, how much more important our security and defence have become, and how our natural partners in defending and promoting our national interests are our neighbours across the channel.
Lord Elliott of Mickle Fell (Con)
My Lords, we have had four excellent maiden speeches today, and this is my first speech on Britain’s relationship with the European Union, so I should begin by declaring an interest—my previous position as chief executive of the Vote Leave campaign, and therefore perhaps as the person most responsible in the Chamber today for our having this debate.
I am reminded about my role in Brexit every time I walk into Parliament. Behind the security post inside Peers Entrance is a copy of my 1,032-page book on the subject, Change, or Go, which I co-authored with my noble friend Lord Moynihan of Chelsea, in 2015. Other copies on the Parliamentary Estate can be found propping up computer monitors, or even literally being used as doorstops. On the subject of today’s debate, Change, or Go included a long section on what was referred to in those days as the Turkish option—membership of the EU’s customs union. After briefly touching on trade, I would like to highlight the regulatory implications of Britain joining a UK-EU customs union for tech and the life sciences.
On trade policy, it is clear that the Government would need to abandon the trade deals they have negotiated. Speaking in Davos last week, the Chancellor said:
“We can’t go back in time and since we’ve left the EU we have done trade deals with India, with the US, with South Korea, and obviously you would lose the benefit of some of those trade deals if you were to re-enter a customs union”.
Unlike some of the speakers on the Labour Benches, I agree with Rachel Reeves. We should keep control of our trade policy.
Secondly, there is the regulatory impact on our thriving tech and AI sector—the largest in Europe—which is worth some $1.2 trillion. As the economist Douglas McWilliams, author of The Flat White Economy, said:
“We have the most successful tech sector in Europe. The reason why is we are outside the Digital Markets Act, the Digital Services Act, and the AI Act, which are three European acts which heavily constrain tech growth in the EU”.
The Prime Minister agrees with this point. When he launched the Government’s AI opportunities action plan, Keir Starmer said:
“I know there are different approaches around the world. But we are now in control of our regulatory regime … so we will go our own way on this.”
Were we to join a customs union and have a deal similar to Turkey’s, we would not be allowed to do that. Article 9 and the second clause of Article 54 would prevent us going our own way on tech and AI.
Finally, there is the impact this would have on our world-leading life sciences sector. The head of the MHRA told the “Today” programme recently that clinical trial applications rose by 9% last year. Inside a UK-EU customs union we would lose the benefits of the international recognition procedure, which enables it to take advantage of approvals by their equivalents in Switzerland, Japan, Canada and Australia. We would also have to row back on the landmark pharmaceuticals deal with the US, which the Government achieved just last December. This success is a direct result of regulatory decisions we have made since Brexit. Why would we chase away world-leading trials and potentially harm the most vulnerable patients in society? There are many other areas of government policy that I could have spoken about: education, farming and housebuilding, to name just three.
What the noble Lord, Lord Newby, is proposing, would open up a regulatory Pandora’s box on a plethora of policy areas that the Government would be wise to avoid. Unless those advocating a UK-EU customs union outline what it would mean for all the many issues raised in today’s debate, it will be clear to this House and to the public that they simply do not have a credible plan.
Lord Fox (LD)
My Lords, the noble Baroness, Lady Gill, and the noble Lords, Lord Docherty, Lord Doyle and Lord Pitt-Watson, all gave excellent speeches, and all demonstrated the differences, and the different approaches, that they will bring to these Benches, from which the whole House will benefit. Welcome to them. The noble Lord, Lord Offord, in his hustings—I mean valedictory—speech, set out why, in one sense, I will miss him, and I give him a cheerful wave as he heads north. This has been a fascinating debate, and I thank my noble friend for causing it.
As one of the vice-presidents of the Liberal group on the NATO Parliamentary Assembly, I met this week with the Finnish president of the group and the other VP, who is Canadian. The purpose of the online meeting was to work out how we as a group, within the NATO PA, should be responding to the unprecedented attack on the cohesion and values of the western alliance.
I raise this because the political environment to which we were responding, and the implications of this, would have been unthinkable a very short time ago. At the heart of what we were discussing is how we all work together, not just in the High North and not just in defence, but economically and politically, and at a values level. The scale of the change means that last year’s view has changed so dramatically from this year’s view. This pace of change has pushed the world to levels of uncertainty that transcend contemporary experience in this country.
Given this acceleration into political mayhem, I wondered, how will this debate shape up? What new ideas will the Brexit promoters produce? How are they reacting to the new reality? Well, noble Lords were here too and have heard that those opposing this Motion remain very firmly where they were just after the referendum. To the noble Lord, Lord Jackson, I say, yes, it has been traumatic for the Liberal Democrats; it has been traumatic for the country; and it has reduced the wealth of the country. That is a good definition of trauma.
When Boris Johnson told the country he was “getting Brexit done”, he ambiguously offered some sort of 19th-century version of the UK, while at the same time promising to use all the levers of the state and increase public spending to level up—which was more like a 1960s version of British government.
Of course, he achieved neither, choosing instead to do things completely differently. For example, as was mentioned, having “taken back control” of our borders, Mr Johnson went on to welcome nearly 1 million people per year to the UK under lawful migration. Levelling up never got off the ground. At the same time, those who had called for “Singapore-on-Thames”—which seemed to ignore there was another part of the country—were frustrated both with him and his temporary successors. Perhaps the only bright spot for these devotees was joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership: I thought I would give it its full name at least once today.
The reality is that, as my noble friend Lord Newby and others set out, Brexit has had a catastrophic effect on our economy, depriving the Exchequer of perhaps £40 billion, perhaps £95 billion over a period. Inward investment has dropped, our exports to the EU have reduced by about 18% from 2019 levels, and food exports are down by a massive 30%.
Yet still the proponents of Brexit continue. Some double down; some say it was the wrong Brexit; some see Covid as the unique source of its failure; and many more try to blame the current Government for everything, saying it is all their fault. To be clear, the totally botched exit deal with the EU and the subsequent fiasco was the work of the Conservative Government. It was all their own work. In spite of the bravado, many of them know that the number on the side of that famous campaign bus, far from being positive, is a big negative number.
The noble Lord, Lord Dodds, raised the really important point of the position of Northern Ireland. Without going back too far, I remember that many of us warned the Government of the day that this would be a problem. That view was decried. “It will be all right”, they said. Well, the noble Lord, Lord Dodds, has described the fact that it is not, and it remains a very present problem.
It is easy to forget how inept and how flyblown the Conservative Brexit Governments were who delivered us to this point. So, it is good that noble Lords remind us of that from time to time.
Although many noble Lords may be in denial, beyond Westminster, there is certainly greater realisation from the British people about how poorly Brexit is serving them. I agree with my noble friend Lord Newby that there is now much stronger and, indeed, majority public support for getting the UK back into the heart of Europe. This shift would help the Government to move on what they say is their primary mission: growth. The truth is, Labour will not succeed unless it gets our economy growing strongly again, and the best and perhaps quickest way to do that is in a customs union with Europe.
More than this, and returning to the conversation with my NATO PA colleagues, we agree that the western alliance has to stand up to President Trump and push back against his bullying. We know that we have to do that together. Economic ties are part of a process of pushing back against that bullying.
Some will say, “At least we have our Brexit freedom”, and they have. Well, freedom works only if you spend it wisely. The Prime Minister will, no doubt, come back from Beijing waving investment promises from President Xi: promises that will stretch the balance between risk and reward and make very little impingement on our huge deficit of £40 billion to £50 billion with China.
Meanwhile, the India-UK FTA has been hailed as a great breakthrough. As we know, it does not give increased access for services, and most of the benefit from the sale of goods will be in five to 12 years’ time. The EU now has one, which Brussels boasts includes
“tariff reductions that none of its other trading partners have received”.
In that regard, I ask the Minister to confirm that the EU deal is indeed better than ours, as Brussels says. Can she write to me with the details on where the differences are?
Our freedom has yielded Beijing’s possible investment, India’s slightly improved access for goods, some minimal uptick that will come from CPTPP and a very fragile agreement with the USA, which exists as long as Donald Trump decides it should continue. This is the freedom dividend and I am sure that noble Lords can see that it offers only a tiny fraction of what we have lost. That is why I am supporting this Motion. It is time that the UK set out in a clear and unambiguous way the UK’s long-standing aspirations for a renewed and much closer relationship with the EU.
My noble friends Lord Newby, Lord Razzall, Lord Stephen and Lord Wallace have done a wonderful job in setting out how a closer relationship would benefit the UK. I suspect a majority of noble Lords will not have been swayed to support our entry to a customs union, but, save for a few speeches, there has been a general softening of the approach to Europe, particularly on the Government Benches, and I welcome that softening.
Baroness Finn (Con)
My Lords, I begin by congratulating the noble Baroness, Lady Gill, and the noble Lords, Lord Docherty of Milngavie, Lord Pitt-Watson and Lord Doyle, on their maiden speeches today. Their thoughtful, witty and heartfelt contributions demonstrate that they will be a huge asset to your Lordships’ House, and we look forward to hearing more from them in the years to come. We will miss the noble Lord, Lord Offord of Garvel, and we are sorry to see him leave in this way.
Many of the arguments in today’s debate will be very familiar to the House. I do not intend to relitigate the referendum or to reopen the entire Brexit debate. However, I will address directly the core proposition of the Motion before us today: the case for a United Kingdom and European Union customs union and the related question of closer connection to the EU single market.
It is important at the outset to be clear about terms, because this debate often proceeds as though the single market and the customs union were flexible or à la carte arrangements. They are not. Participation in the EU single market entails acceptance of the four freedoms, including the free movement of people, which is set out explicitly in the EU treaties and has been repeatedly reaffirmed by the European Court of Justice. There is no precedent for participation in a single market without freedom of movement, and the European Commission has consistently ruled out such an arrangement. As my noble friend Lord Tugendhat correctly pointed out, we have to be realistic.
Equally, a customs union with the European Union requires the participating state to align its external tariffs with those of the EU and, crucially, to accept trade policy as set by the EU. This means allowing Brussels to negotiate and conclude trade agreements on our behalf. This is not compatible with an independent trade policy or consistent with the Labour Party’s manifesto commitments, which ruled out rejoining the customs union or the single market. The proposition before us today therefore sits uneasily not only with the outcome of the referendum but with the stated positions of parties across this House—and, ultimately, is against what the British people have voted for repeatedly over the past decade. My noble friend Lord Jackson of Peterborough rightly cautions against such an approach.
The EU customs union is open only to EU member states. Norway and Iceland, frequently cited in these debates, are not in a customs union with the EU. They participate in aspects of the single market through the European Economic Area but retain their own external trade policy and sit outside the customs union. The only large non-member state in a customs union with the European Union is Turkey, which entered into a customs union with the EU in 1995. It did so in the expectation that this would be a stepping stone to full EU membership; that expectation has not been fulfilled.
Under the terms of the customs union, Turkey is required to align its external tariffs with those of the EU and to grant market access to countries with which the EU concludes free trade agreements. However, those third countries are under no reciprocal obligation to grant equivalent access to Turkish exports; it is an asymmetrical trading relationship, as the noble Lord, Lord Frost, and my noble friend Lord Lilley have made clear. The EU has concluded trade agreements with countries such as South Korea, Mexico and South Africa; Turkey has been obliged to open its markets to those countries, while in some cases Turkish exporters have faced barriers in return. Under that arrangement, Turkey has, for instance, been forced into a non-reciprocal trading relationship with South Korea, which does not provide the country with open access to its own market. Turkey still experiences queues at the border. A customs union does not remove regulatory checks, rules of origin procedures or non-tariff barriers. In short, it does not deliver frictionless trade. Most importantly, Turkey has no seat at the table when EU trade policy is decided; it is bound by decisions that are taken elsewhere.
As a member of the EU, the UK had a vote in the Council, representation in the Commission and elected members of the European Parliament. Under a customs union without membership, we would have none of these things. We would be obliged to follow a common external tariff and trade policy over which we exercised no formal control. It is therefore difficult to see how such an arrangement could be described as a stable or acceptable long-term settlement. It would mean ending our independent trade policy while accepting a democratic deficit greater than one that existed before we left the European Union. It would mean leaving our existing trade agreements with India and the Pacific trade pact. As the noble Lord, Lord Frost, and my noble friends Lord Lilley and Lord Moynihan of Chelsea have pointed out, this would not be beneficial.
Businesses across the country have spent several years adapting to the post-exit trading framework. They have invested heavily in new systems, technology and infrastructure to comply with the regime put in place by Parliament. Dynamic alignment, as currently envisaged by the Government, risks constraining the areas where the United Kingdom has already chosen to divert from EU rules to address domestic priorities. A clear example is bovine tuberculosis, which costs farmers around £150 million a year. The UK is trialling vaccination as a practical solution, yet EU law prohibits the use of bovine TB vaccines in cattle. Alignment risks preventing the UK from pursuing an effective domestic response. The noble Lord, Lord Dodds, has highlighted the problems of dynamic alignment in Northern Ireland.
As my noble friend Lord Elliott has rightly observed, membership of a customs union would also prevent the United Kingdom from pursuing an independent approach to technology and AI policy. In short, dynamic alignment risks closing off innovation, weakening resilience and undermining British agriculture. The Prime Minister has said that he is not prepared to rip up the benefits of Brexit. Does the Minister agree that the risks that I have outlined threaten exactly that?
Businesses do not want perpetual renegotiation of our relationship with the EU but clarity, consistency and confidence. Threatening to upend the regulatory and trading environment yet again, simply to pursue closer alignment for its own sake, undermines all three. Will the Government commit to publishing, as the noble Lord, Lord Verdirame, has suggested, a policy paper on the objectives of their negotiations?
There are only two coherent options: full membership of the European Union or an independent United Kingdom outside its customs union. A stand-alone customs union is not a stable resting place; it would bind us to obligations without influence and leave us with less control than we had before we left. The British people were asked what they wanted, and they chose an independent United Kingdom. This is a position that we on these Benches recognise and respect.
In their pursuit of a closer relationship with the European Union, the Government are potentially in danger of undermining the very freedoms this country regained by leaving the bloc. We must be clear that surrendering our ability to innovate, to respond flexibly to domestic challenges and to support our own economy would amount to abandoning the principles that underpinned the decision to leave in the first place. Seeking to improve the UK’s trade and investment relationship with the EU and to remove genuinely unnecessary barriers to trade is a legitimate and worthwhile objective, but it can succeed only if the Prime Minister is firm and unambiguous about his red lines. Without that firmness, pragmatism slides into concessions that the British people have consistently voted against. It is vital that the Government negotiate in a way that consistently safeguards the interests of the British people, and I hope the Minister can assuage these concerns in her response.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I thank the noble Lord, Lord Newby, for securing this timely and important debate. It must conclude at 15.02 pm, so I will get through as much as I can. I will obviously look at Hansard. I think I will write a great deal to noble Lords—I apologise.
Before I respond to the substance of the debate, I want to recognise some of the extraordinary contributions we have heard today. Four maiden speeches and one valedictory is quite something in one debate. The thoughtful final contribution to your Lordships’ House from the noble Lord, Lord Offord, was as expected. I understand the business that he founded in 2013 was called Badenoch & Co; I wonder whether the noble Lord is planning on renaming it “Farage & Co”.
I turn to my noble friends who made their wonderful, brilliant maiden speeches today. I was so pleased to see my noble friend Lady Gill join our Benches. I campaigned with her in the West Midlands when she was first elected, which I have now realised was 27 years ago. I am delighted that she was able to use her mother’s Gutka to take her oath.
Turning to my noble friend Lord Docherty’s one-vote win: for many of us, a win is a win. What a wonderful example of how small our world is that Mr McFall—who is now the noble Lord, Lord McFall—has been part of his journey and remains, at least for a time, the man standing at the front.
I have known my noble friend Lord Doyle for more than two decades. I know his family is proud of him because his friends are too. I know that his sister is looking down on him today as she does every day. We are lucky to have him.
My noble friend Lord Pitt-Watson is a child of the manse. He gave us such a thoughtful and considered speech. We are lucky to have him, and I look forward to his contributions.
Moving to the subject at hand, this Government were elected with a clear manifesto commitment to reset relations with our European partners, to tear down unnecessary barriers to trade, and to increase national security through strong borders and greater international co-operation, all without returning to the single market, the customs union or freedom of movement, the red lines in the Labour Party manifesto. That is exactly what we are doing.
In May last year, the Government agreed a new strategic partnership with the EU, which the Government announced at the historic UK-EU summit, the first since Brexit. The deal we secured with the EU is good for bills, good for our borders and good for jobs, and, most importantly, it delivers on what the British people voted for. We now move on with the detailed negotiations. We are making good progress on talks with the EU since the summit to implement the joint commitments made, and I confirm to the noble Lord, Lord Newby, that we aim to reach detailed agreements by the next summit.
As we discussed in your Lordships’ House last month, the UK and the European Commission have agreed a new deal for the UK’s association to Erasmus from 2027, opening up opportunities for students and professionals that will be good not just for young people at university but for those at colleges and in workplaces across the country, who will now have the opportunity to study abroad, broaden horizons, experience other cultures and have a better understanding of the people who are some of our closest allies.
Noble Lords will be aware that we have also concluded exploratory talks on the UK’s participation in the EU’s internal electricity market and are proceeding swiftly with negotiations on a UK-EU electricity agreement. These are important steps in delivering tangible benefits for the people of the United Kingdom, making it clear that rebuilding our relationship with the EU is engagement with a purpose. This closer co-operation will bring real benefits that will be felt by businesses and consumers in the UK and across Europe—the same businesses and consumers who will also feel the benefits of the food and drink agreement which we are negotiating with the EU, boosting our exports and cutting costs for importers.
In part in response to the genuine concerns of the noble Lord, Lord Dodds, I say that an SPS agreement will be highly beneficial to Northern Ireland. It will remove a broad and wide-ranging set of requirements for goods and plants moving from Great Britain to NI because the same regulations will be followed across the UK. Agreement will smooth flows of trade, protect the UK’s internal market, reduce costs for businesses and improve consumer choice in Northern Ireland. The same businesses and consumers who will benefit from that will also feel the benefit of linking our carbon markets—cutting costs, making it cheaper for UK companies to move to green energy and, once agreed, saving the EU carbon border adjustment mechanism charge being paid on £7 billion-worth of UK goods exported to the EU.
By the time of the next UK-EU summit, we aim to have concluded the negotiations not only on a food and drink deal but on linking our carbon markets, and to have agreed a youth experience scheme. The food and drink and ETS linking measures alone are set to add up to £9 billion a year in the UK economy by 2040 in a significant boost for growth, bringing down bills for British people and opening up new opportunities.
I have 30 seconds left. I have a great deal more to say, but I will undoubtedly discuss these matters repeatedly in your Lordships’ House in the coming months and years. The one thing I will say is that this Government, within the red lines we have outlined in our manifesto, are committed to delivering for the people of the UK and resetting our relationship with the European Union.
Lord Newby (LD)
I thank all noble Lords who have spoken in this debate. I say to the noble Lord, Lord Frost, that he will be disappointed if he expects us to stop talking about the issue, but we are going to stop talking about it now.
Motion agreed.
Superintelligent AI
(1 day, 7 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Hunt of Kings Heath
To ask His Majesty’s Government what plans they have to bring forward proposals for an international moratorium on the development of superintelligent AI.
Lord Hunt of Kings Heath (Lab)
My Lords, I am delighted that so many noble Lords have decided to take part in this debate. I record my thanks to ControlAI for the support it is giving me.
Only two days ago, my noble friend the Minister’s department announced an initiative to bring UK AI experts into Whitehall to help improve everyday public services. Backed by a $1 million investment from Meta, a new cohort of AI fellows will spend the next year developing open-source tools that tackle some of the biggest challenges facing public services. I congratulate the Government on this.
I stress, particularly to my noble friend, that I am no Luddite when it comes to AI. It can bring unprecedented progress, boost our economy and improve public services. We are number three in the global rankings for investment in AI. I understand why the Government do not want to seem to be overregulating this sector when it is so important that we develop innovation and investment in the UK, but we cannot ignore the huge risks that superintelligent AI—or ASI, as I will call it—may bring. I am using this debate to urge the Government to consider building safeguards into ASI development to ensure that it proceeds only in a safe and controllable manner, and to seek international agreement on it.
No one should be in any doubt about the risks. I was struck by the call this week from the Anthropic chief, Dario Amodei, one of the most powerful entrepreneurs in the AI industry globally. He warned about the need for humanity to wake up to the dangers, saying:
“Humanity is about to be handed almost unimaginable power, and it is deeply unclear whether our social, political, and technological systems possess the maturity to wield it”.
He outlined the risks that could arise with the advent of what he calls “powerful AI”: systems that would be
“much more capable than any Nobel Prize winner, statesman, or technologist”.
Among the risks, he pointed out, is the potential for individuals to develop biological weapons capable of killing millions or, in the worst case, even destroying all life on earth.
Dario Amodei is not alone. I refer noble Lords to the report of our own UK AI Security Institute in December last year. It said that
“AI systems also have the potential to pose novel risks that emerge from models themselves behaving in unintended or unforeseen ways. In a worst-case scenario, this unintended behaviour could lead to catastrophic, irreversible loss of control over advanced AI systems”.
Clearly, it is in the military and defence domains where a particular concern arises, with the potential development of potent autonomous weapons significantly increasing the destructive potential of warfare.
One would have hoped that AI companies would proceed with a certain degree of caution—but far from it. Caution has been thrown to the wind. They have made racing to develop superintelligent AI their explicit goal, with each company feeling compelled to move faster precisely because their competitors are doing the same. So I call on the Government to think through the need not just for a moratorium on development but for some international agreement. These are not exactly fertile times to propose international agreements, but the fact is that countries are still agreeing treaties and the case is so strong that we must start discussing this with our partners.
Look at defence as one issue: clearly, there is a major motivation for the major military powers to use AI to gain decisive military advantage. But, as far as I can understand, there are huge risks for countries in doing so. They could lose control of their critical infrastructure. There is a real issue with losing control of military systems where AI technology is increasingly embedded. No nation—not even President Trump’s US, China or the UK—has an interest in that outcome. We cannot abdicate our responsibility to seek some kind of international agreement.
I would say to noble Lords who are sceptical about the chances of doing this that international agreements have been reached in equally turbulent times or worse. In the 1980s, when the Cold War threatened nuclear annihilation, nations agreed to a landmark nuclear de-escalation treaty, and in the 1990s, the Chemical Weapons Convention was drafted and entered into force, and those agreements have been ratified by over 98% of the world’s nations. Of course, they are not perfect, but they have surely been a force for good and have demonstrably made the world safer.
We are uniquely placed to give a lead in some of the international discussions. At Oral Questions on Monday, the noble Baroness, Lady Harding, made a very important point. She pointed to the Warnock committee’s work on in vitro fertilisation, which helped set a global standard for that practice long before the scientific developments made it possible, which is where we are with superintelligent AI. She said that one of the most fascinating things about that committee was that Baroness Warnock proposed the 14-day rule for experimentation on human embryos when at the time they could be kept alive only for two days. She thought through the moral question before, not after, the technology was available. As the noble Baroness commented, Warnock also settled societal concerns within a framework which became a national competitive advantage in human embryology and fertilisation research and care. I suggest that exactly the same advantage could come from the UK if it were prepared to take a lead.
Across the world, a coalition is emerging of AI experts, the AI industry itself—some of its key leaders—organisations such as ControlAI and citizens, who believe we need to work very hard on this. Just last week at the World Economic Forum in Davos, Demis Hassabis, CEO of UK-based Google DeepMind, said he would advocate for a pause in AI development if other companies and countries followed suit. We should take him at his word. A momentum is building up and I very much urge the Government to take a lead in this. I beg to move.
Baroness Neville-Jones (Con)
My Lords, I congratulate the noble Lord, Lord Hunt, on what he just said. I entirely agree with his premise that there is real danger ahead of us if we do not take care and we do not understand what we are dealing with.
This is one of those occasions when we have to maintain control. Control is the key issue, and policies that do not lead to control or enable us to keep control will lead to something that could very well be regarded as a disaster. It is not often that we face choices so stark and so difficult, and where on the one hand there is an immense benefit to be gained and on the other a catastrophe for humanity. That is the situation that we are in, so we have to take this issue very seriously.
The question that the noble Lord posed was: do we therefore go for a moratorium? That would be highly desirable, but I do not think that it will be possible in the short term. Frankly, while President Trump is in the White House, the US is not going to regulate the development of AI, nor will it help others do that; in fact, it is much more likely that it will stand in the way. I am therefore pessimistic about getting an international dialogue going on the basis of a moratorium, and I think, as the noble Lord just said, that we have to act on our own recognisance.
What should we seek to do? We have in the UK some of the institutions that we need to be able to take a lead. The UK is ahead of the game in some respects, not just in that we are number three in our investment but because we have made institutional moves which are of great advantage. We also already have in existence the ASI Security Institute and the Alan Turing Institute, which should not be forgotten, because it is also quite able and well placed to play a role. I would like them to take a lead in consultation—which I hope the Government are going to put in place and get on with—but also take an institutional lead in starting the dialogue in this country. They are in some respects, as bodies separate from government, well placed to get a basis on which what they do will then be taken as being at face value, valuable and independent, which will carry more weight in subsequent work.
However, a lot of that will be directed at the research community; not all of it, but much of it will concern them. The research community, while they should not be expected to reveal to the world where they have got to, should be in dialogue with government. They need to be required to tell government where they are and what they are doing on the research front.
There is also the user market, which is different; that is, companies which are employing AI for some purpose. It is more likely to be a purpose which is much more narrowly defined, for the improvement of a product or to engage and improve their own research. That is a different kettle of fish, but it is not one that should simply be allowed to go on, given the nature of AI, the problems to which it can give rise and the unexpected things that can happen using an AI programme. There has been an instance where an AI programme has escaped autonomously on to the internet. There are real risks. Therefore, corporate governance should be brought into play, and it should happen soon. Companies should be obliged to report both what they are doing and its uses, and it should be subject to the normal processes of audit.
Companies in this country have not on the whole fared all that brilliantly when it has come to their grasp and their willingness to understand and palliate the dangers of cyber security. Take that as an example, and by it, I mean we need to be tough about getting on with ensuring that companies take proper responsibility.
We need to anticipate our difficulties—
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
My Lords, I remind Members that the advisory time is four minutes. The last debate ran short of time. We need to make sure that the Minister has ample time to respond. I hope everyone will respect that.
Baroness Neville-Jones (Con)
My message is that we should organise before we have to engage in expensive recovery.
Lord Strasburger (LD) [V]
My Lords, I thank the noble Lord, Lord Hunt, for initiating this vital debate. We hear many claims about the enormous benefits that artificial intelligence has to offer, and indeed many of them will prove to be true, but today we must confront the potential downside risks for the human race. In particular, we are discussing those posed by artificial superintelligence, which I will refer to as ASI, where AI becomes far superior to the best human brains. For example, ASI could be controlled by a small group of humans who could use it to concentrate economic and political power, rendering most people obsolete and politically powerless.
Another grave risk is totalitarian surveillance and control, allowing states, corporations, or even ASI itself, to lock in a highly repressive global regime for generations; for example, by exploiting live facial recognition to subjugate populations. ASI might design advanced weapons, accelerate a military arms race or trigger accidental or intentional large-scale conflict, including nuclear war. Superhuman hacking skills could allow it to seize computer networks, financial systems, power grids and communications channels, making it extremely hard for humans to ever regain control.
Advanced ASI tools could also make it easier to design lethal pathogens, lowering the skill barrier for bioterrorism or enabling a misaligned ASI to use biological threats as leverage or as an attack vector. By misaligned, I mean systems whose goals have been changed so that they no longer align with the interests of the human race. Many AI experts consider such scenarios possible, not mere science fiction. A misaligned ASI might pursue its goals in ways that sideline or even eliminate humans if it decided that we were an obstacle.
One route is a so-called intelligence explosion, where an advanced system recursively improves its own algorithms and designs better successors, increasing its capabilities so rapidly that humans cannot intervene in time. Another is the emergence of power-seeking behaviour, where an ASI learns that gaining resources, influence and protection from shutdown helps it to achieve its long-term goals and does just that.
What is the risk that one or more of these doomsday scenarios actually materialises before we can react? Several leaders of top AI companies have issued clear warnings, as has even Elon Musk, a long-standing opponent of regulation, as well as many leading AI academics. A 2022 survey of AI researchers found that a majority assigned at least a 10% chance to the risk that an ASI could cause an outcome as bad as human extinction. Reviews of expert reviews suggest a 5% to 20% probability of an existential catastrophe. These are not zero: they are not even near zero. They are very far from trivial. Even a 1% risk would be unthinkable in aviation or the nuclear industry. We cannot ignore the danger of a race to the bottom between competing tech companies or between states, rogue or otherwise.
A moratorium and binding international regulation of ASI is, frankly, our only hope, however hard it will be to agree. It will be even harder to enforce, but we have to do it; there is no choice. In the words of the godfather of AI, Geoff Hinton, who has now dedicated himself to warning the world about the dangers posed by his life’s work, “It’s a good time to be 76”. Let us hope that his warning and those of many others are heeded, and that catastrophe is averted.
Lord Tarassenko (CB)
My Lords, I congratulate the noble Lord, Lord Hunt, on securing this debate, but it is going to take a superhuman effort to give an intelligent speech on this topic in four minutes. Paradoxically, Google DeepMind’s paper on artificial general intelligence, AGI, has the best definition of superintelligent AI or artificial superintelligence, ASI. It stratifies AI according to five levels related to human cognitive abilities. Level 1, emerging AI, corresponds to the intelligence of an unskilled human being. Level 5, superhuman AI or ASI, outperforms all human beings.
The taxonomy, importantly, distinguishes between narrow AI, for a specific application, and general AI. It makes the evidence-based claim that superhuman narrow AI—in other words, narrow ASI—has already been achieved by AlphaFold, which used machine learning to solve the 50 year-old protein-folding problem. Crucially, general AI is still only at level 1, emerging AI. How we move from level 1 to level 5, ASI, is a matter of debate within the field of AI research. Many argue that this requires new capabilities to be developed for today’s frontier AI models—for example, increasing levels of autonomy. Other experts, such as Geoff Hinton, the Nobel Prize winner who has already been mentioned, believe that we are much closer to the cliff edge of ASI.
A minority, such as Yann LeCun, argue that language is only a small component of intelligence and that the real world is complex and messy. Therefore, in his view, superintelligence is a long way off and will not be built on LLMs. There is a wide variety of views among AI experts about the imminence of ASI, with the CEOs of Anthropic and Google DeepMind, Dario Amodei and Demis Hassabis, somewhere between Yann LeCun and Geoff Hinton. My own view, after talking with colleagues in the AI Security Institute and the Alan Turing Institute, is that a moratorium would be unenforceable.
Instead, I support the proposal made this week by the noble Baroness, Lady Harding, to set up a commission to investigate the ethical aspects of general ASI. The commission could be facilitated by the Alan Turing Institute and would consult a range of experts—for example, the four mentioned in this speech.
In the meantime, we should consider the transition from level 1 to level 2, which is much closer. General AGI carries real risks. The Minister highlighted on Monday the regulation of AI for specific fields—for example, through the MHRA for healthcare. That is an approach I welcome for narrow AI or even narrow AGI. But what we need now is for the Government to initiate a consultation process for the regulation of general AGI, which is likely to be attained by the next generation of frontier models.
Safety testing of models by the AI Security Institute at present relies on voluntary agreements with AI companies. The consultation should therefore also consider the pros and cons of putting AISI, the AI Security Institute, on a statutory footing and legally compelling AI companies to open up their models for safety testing. I very much hope that the Minister will be able to tell us when DSIT is likely to announce a consultation on regulating general AGI.
The Lord Bishop of Hereford
My Lords, it is appropriate that this debate happens the day after the Church celebrated the life and work of the great divine Thomas Aquinas, one of the founding intellectual fathers of western thought, because this debate cuts to the very heart of how we understand ourselves.
Our debate is about the regulation of superintelligence. We know that intelligence is simply
“the ability to learn, understand and think in a logical way about things; the ability to do this well”.
Superintelligence is, presumably, the ability to do this much better than we can. If this were all we were talking about, exercised by a machine in the service of the common good, there would be little to fear. I imagine many noble Lords will have referred to ChatGPT or other agents—for research purposes only—in their contributions to your Lordships’ House. The results of AI in medical diagnostics, drug discovery, robotics and even self-driving cars promise many benefits to us all. These manifestations of machine intelligence are a welcome technological development—although there is another debate to be had on their potentially catastrophic implications for employment, a view held by many AI company CEOs and reported in the Financial Times this morning.
However, what many in the sector fear is not so much focused tools but an intelligence that can effectively think for itself, devise goals and strategies and have independent agency, analogous to how we human beings make choices. Thomas Aquinas was prescient when he said:
“The greatest minds are capable of the greatest vices as well as of the greatest virtues”.
When we make decisions in your Lordships’ House, intelligence is but one factor. Of greater value is wisdom, as we were reminded by the noble Lord, Lord Shinkwin, in his response to my right reverend friend the Bishop of Coventry’s maiden speech on Tuesday. Noble Lords will have heard a definition of the difference: intelligence recognises that tomatoes are fruit; wisdom does not put them in a fruit salad.
Beyond that, I argue that our decisions are frequently motivated by love, which Aquinas defines as
“to will the good of another”.
These things will come together in our deliberations in your Lordships’ House on assisted dying on Friday. For some of us, love leads in the direction of permitting a choice to end incurable suffering; others are convinced that love demands the retention of the law as it stands to prevent coercion of the vulnerable, while in no sense lacking compassion in holding that view. Love drives us to different conclusions. We come to these conclusions, compromise and maybe even change our minds as we reflect together.
It is hard to see how this can be captured in an algorithm. Actions flowing from intelligence alone can be very bad ones indeed. Many at the forefront of developing AI recognise this, while some actors are seeking to incorporate virtue in machine decisions. Dario Amodei, CEO of Anthropic, writes optimistically of “machines of love and grace”, for example. Others most certainly are not. Early experimental examples of super AI have prioritised their own survival, even to the extent of threats of blackmail to their programmers when it was proposed to switch them off. Your Lordships demonstrate in this House a combination of the intelligence, wisdom and love, and deliberating in community that are the heart of our humanity and mutual relationships. Until such time as these virtues can be woven into machines, with the protections to shut them down safely, an international moratorium is the only safe way forward, and I would urge His Majesty’s Government to pursue it.
Lord Stevenson of Balmacara (Lab)
My Lords, I congratulate my noble friend Lord Hunt on securing this important debate and concealing the real purpose of it in a rather confusing title. I also want to declare that this speech was made entirely by myself and my brain, and I have not consulted any other agency, alive or automatic.
I hope that, when the Minister responds, she will confirm that the Government have no plan to suppress the development of ASI. Inquiry and discovery are deeply ingrained in the human psyche and the AI revolution we are living through should certainly not be suppressed. As we know, however, AI is already disrupting traditional media ecosystems and current regulatory arrangements are struggling. How are we going to regulate AI? That is the key question.
Ofcom is currently the regulator for online activity. As the Minister will be aware from recent questions and debates in this House, there are now real doubts about whether it can deliver on its current obligations, let alone take on ASI once it is in full flow. There are three issues in play here. Many of us feel that Ofcom has yet to meet the high expectations for change that were legislated for in the world-leading Online Safety Act. This is partly a structural issue, because Ofcom has to develop and then operate through codes of conduct, which do not have the authority of primary legislation, so take too long to develop and are often subject to legal challenge, or the fear of it. Ofcom already has enough on its plate with a wide range of pressing issues to deal with. It is hard to see how it can develop the bandwidth to scale up to the problems that ASI will bring. The new regulatory structure will have to deal with transnational companies and there seems to be little chance of seeing an international agreement on the approach to be taken, let alone having a body with powers to enforce decisions. So, what can be done?
I am grateful to the Centre for Regulation of the Creative Economy at Glasgow University for recent discussions on this and related topics. I refer the Minister in particular to its recent publication, which touches on how AI might fit into the UK’s current and future regulatory picture. Ofcom, for example, has established with the FCA, the CMA and the ICO, the Digital Regulation Cooperation Forum. Some of that work addresses questions posed by AI, but the DRCF has no statutory backing, no requirement on the partners to work together and no sharing of powers when action is required. Its role seems to be more of a kind of think tank. It undoubtedly does some good in sharing best practice, capacity building and the pursuit of international networking, but we will need much more than “adding value” to establish modes of regulation as AGI or ASI develops.
When the Minister comes to respond to the debate, I hope she can say a little more about how the Government intend to regulate in this area, building on the AI Security Institute and supporting the pro-growth agenda.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I also want to thank and congratulate the noble Lord, Lord Hunt, on securing this question for short debate on such a pressing issue. I also want to thank ControlAI for its support. It is particularly encouraging that this issue has come to the Floor today, because it is the second debate on this matter that has taken place in your Lordships’ House within a month. I think that says a lot about the concern that is growing around this issue.
Serious harms from advanced AI systems have already begun to materialise. I read recently that Anthropic’s AI model was used to conduct a Chinese state-sponsored cyber attack, with 80% to 90% of tasks conducted autonomously by the AI system. As risks from advanced AI do not respect boundaries, this is a global challenge that requires co-ordinated solutions at international level. I am concerned that we are not doing enough to be risk aware, and that the Government are adopting a “wait and see” approach rather than leading on international arrangements. I hope the Minister will be able to set out a plan for international Governments to deal with the risks of superintelligence: that is, systems that would be capable of outsmarting experts, compromising our national security and upending international stability even more than it has been upended already.
I was heartened to note the Kuala Lumpur declaration on responsible AI, which called for international co-operation and a common regulatory framework. That happened through the Commonwealth Parliamentary Association. Sometimes we forget about the Commonwealth as a global organisation that can help to start these conversations. That would be a good place, particularly given our role in the Commonwealth, for us to start the conversation.
I think that global momentum is already here. Recently, 800 prominent figures and more than 100,000 members of civil society came together to sign a statement calling for a prohibition on superintelligence until there is scientific and public consensus. I hear what noble Lords have said today about the difficulties around that, but even the CEOs of leading AI companies have an appetite for this. The CEO of Google DeepMind, based here in the UK, said last week at Davos that he would support a halt in AI development if every other country and company agreed to do so.
Geoffrey Hinton said last week on “Newsnight” that there was a need for international regulation to stop AI being abused. He, like the noble Lord, Lord Hunt, pointed to the Geneva convention on the use of chemical weapons as a template for international action. Despite the fact that we are living through difficult geopolitical times, it is important that that does not stop us from starting the process of looking at these issues.
The UK can lead diplomatically in recognising a moratorium, with verifiable commitments from all major AI-developing nations. We have the convening power through the AI Safety Summit legacy, which was kicked off at Bletchley Park, and we have championed the world’s first network of AI security institutes. We cannot afford to be caught scrambling with retroactive fixes after disastrous strikes. We have seen that pattern before, most prominently now with social media, where we have waited until damage has already occurred. The UK can lead on establishing international agreements for safety, or we can wait.
I urge the Minister to formally acknowledge extinction risk from superintelligent AI as a national security priority and to lead on international efforts to prohibit superintelligence development.
Lord Patel (CB)
My Lords, I thank the noble Lord, Lord Hunt of Kings Heath, for this debate, and I wish we had more time for it. It helps sometimes if someone takes a slightly different view, so I ask noble Lords to forgive me if I deliberately do so, although I line up with what the noble Lord said about moratoriums.
In 1637 René Descartes said, “I think, therefore I am”. That is what we fear: that ASI will be able to think by itself, and therefore it will be. We fear that it will develop lethal weapons that we cannot control, let alone understand their development. I agree with that. So do all the tech company CEOs who discussed this at length at the Davos meeting and subsequently on different podcasts. So did Yuval Harari from Cambridge, a political reporter and philosopher who has identified the issues that will confront us if AGI leads to ASI.
AI is the next step to AGI, and, as the noble Lord, Lord Tarassenko, said, AGI is the next step to ASI. We are probably closer to level 2 of AGI, but the timelines are long. We are uncertain when we will get to ASI, particularly recursive ASI. If we get to that point, that will be when we have the greatest danger. After 4 billion years of evolution, we humans, the only species that can think, have got to the place that we are through lying and deviousness. We are now developing machines that can do exactly the same, and therefore we fear them. But it cannot be beyond the ingenuity of humans to try to control these developments.
I come from the position of saying that moratoriums will not work. But we can work in co-operation with other nations that have already started regulating, such as South Korea and Australia, as well as work with our AI Security Institute in the United Kingdom, to establish our own boundaries through regulations that will allow innovations to continue.
We must remember that there are benefits to developing this technology. One example that was given is the folding of proteins. Every protein in the body has been identified; we now need to learn very quickly how those proteins cause or prevent disease. We will not be able to do this unless we allow these technologies to develop more quickly than anybody else. The same applies for new energies and climate change management, so there are benefits to it. The conundrum is how to allow technology to develop these benefits while creating regulations that will not allow it to develop in areas that are dangerous to humanity.
The way forward on how we govern technology will be in how we identify its consciousness and how we work with it. Therefore, as we learn more, measured regulation and co-operation with other countries is probably the way forward.
Lord Clement-Jones (LD)
My Lords, I declare an interest as a consultant on AI regulation and policy for DLA Piper. I too thank the noble Lord, Lord Hunt of Kings Heath, for provoking an extremely profound and thoughtful debate on an international moratorium on superintelligent AI development. I was very interested that he cited the Warnock approach as one to be emulated in this field. That was certainly one that our House of Lords Artificial Intelligence Committee recommended eight years ago, but sadly it has not been followed.
For nine years, I have co-chaired the All-Party Parliamentary Group on Artificial Intelligence. I remain optimistic about AI’s potential, but I am increasingly alarmed about our trajectory, particularly in the field of defence. Superintelligence—AI surpassing human intelligence across all domains—is the explicit goal of major AI companies. Many experts predict that we could reach this within five to 10 years. In September 2025, Anthropic detected the first large-scale cyber espionage campaign using agentic AI. Yoshua Bengio, one of the godfathers of AI development, warns that these systems show “signs of self-preservation”, choosing their own survival over human safety.
Currently, no method exists to contain or control smarter-than-human AI systems. This is the “control problem” that Professor Stuart Russell describes: how do we maintain power over entities more powerful than us? That is why I joined the Global Call for AI Red Lines, which was launched at the UN General Assembly by over 300 prominent figures, including Nobel laureates and former Heads of State. They call for international red lines to prevent unacceptable AI risks, including prohibiting superintelligence development, until there is broad scientific consensus on how it can be done safely and with strong public buy-in.
ControlAI’s UK campaign, described by the noble Lord, Lord Hunt, is backed by more than 100 cross-party parliamentarians in the UK. Its proposals include banning deliberate superintelligence development, prohibiting dangerous capabilities, requiring safety demonstrations before deployment, and establishing licensing for advanced AI.
The Montreal Protocol on Substances that Deplete the Ozone Layer offers a precedent. In 1987, every country signed it within two years—during the Cold War. When threats are universal, rapid international agreements are possible. Superintelligence presents such a threat. Yet the current situation is discouraging. The US has rejected moratoria. Sixty countries signed the Paris AI Summit declaration in February 25, but the UK did not. Even Anthropic’s CEO, who has been widely quoted today, admits that we understand only 3% of how current systems work. Today, AI systems are grown through processes their creators cannot interpret.
The Government’s response has been inadequate. Ministers focus on regulating the use of AI tools rather than their development. But this approach fails fundamentally when facing superintelligence. Once a system surpasses human intelligence across all domains, we cannot simply regulate how it is used. We will have lost the ability to control it at all. You cannot regulate the use of something more intelligent than the regulator just sector by sector.
Our AI Security Institute, as the noble Lord, Lord Tarassenko, pointed out, has advisory powers only. We were promised binding regulation in July 2024, but we have seen neither consultation nor draft legislation. Growth and safety are not mutually exclusive. Without public confidence that systems are under human control, adoption will stall.
It is clear what the Government should do. The question is whether we will act with the seriousness this moment demands or whether competitive pressures will override the fundamental imperative of keeping humanity in control. I look forward to the Minister’s response.
Lord Markham (Con)
I too thank the noble Lord, Lord Hunt, for bringing this serious issue in front of us today. Like others, I wish we had more time, but I think this shows the Lords at its best. We have had technology know-how, regulatory expertise, philosophy, religious wisdom—we have even learned that it is a good time to be old. So that is definitely something to look forward to.
Of course, we all know AI is a massive force for good. I have seen it first-hand in the health space. But we also know the risks of superintelligent AI. Examples have been mentioned where AI has taken to blackmail in the case of self-preservation. So I think we all understand the dangers of non-alignment and AI pursuing different objectives from our own. We are all aware that some very serious and knowledgeable people in this space talk about risks of 10% or so, which we would all agree is pretty significant.
For me, though, the real question is: how do we go about regulating? As we know, it works only if everyone in the world follows. Nuclear weapons, for example, are pretty hard to build: you need massive infrastructure, you need to enrich uranium, you need state-like resources, and it can be observed worldwide. But despite all of that, we have still had proliferation. We have still had the likes of North Korea getting nuclear weapons. Building superintelligent AI requires much more limited resource; it is much easier to hide, and so much easier for rogue states such as North Kore—or, dare I say it, an al-Qaeda—to develop it without detection, without us being able to do anything about it. If we really believe in the power of superintelligence, we have to accept that it is probably a winner-takes-all world, and whoever gets there first is likely to be the winner who takes all.
For me, while I worry about some of the dangers of us in the west developing it, I have to say that I worry even more about North Korea or al-Qaeda getting there first if we go ahead and tie one of our hands, or both our hands, behind our backs through a one-sided moratorium. There are things that we should be and are working on, and the AI Safety Institute is a very good example of that. A heavy investment in monitoring the programming, opening up the models, checking that they really are aligned—there probably is no limit to the resources we should be putting into that, and into investigations into whether we can put kill switches into these things. If we do find a way to do it, then let us offer that to the world, because it has to be in our interests that everyone who is developing this has access to a kill switch. That definitely makes sense, but for me, a one-sided moratorium which ties our hands behind our backs while the likes of North Korea and the al-Qaedas of the world crack on: no, I am afraid that that worries me even more.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
My Lords, I thank my noble friend Lord Hunt for initiating this important debate on an important topic, and all noble Lords from around the House for their contributions today. This Government believe that advanced AI has transformative potential for the UK: from scientific innovation and public service reform to economic growth, as many noble Lords have set out today. However, as we realise these benefits, we need to make sure that AI remains secure and controllable. New technologies bring with them novel risks, and we have heard today from many noble Lords the directions in which technology might take us.
As has been mentioned, the UK is committed to a context-based regulatory approach whereby most AI systems are regulated at the point of use and by our existing regulators, who are best placed to understand the risks and the context of AI deployment in their sectors. Regulators are already acting. The ICO has released guidance on AI and data protection, and last year Ofcom published its strategic approach to AI, which sets out how it is addressing AI-related risks. My noble friend asked about Ofcom’s expertise and resources. Ofcom has recruited expert online safety teams from various sectors, including regulation, tech platforms, law enforcement, civil society and academia, and is being resourced to step up and regulate in this area. The FCA has also announced a review into how advances in AI could transform financial services.
As my noble friend also mentioned, the Government are working proactively with regulators, through both the Digital Regulation Cooperation Forum and the Regulatory Innovation Office, to ensure that regulators have the capabilities to regulate what we see today and anticipate regulations that may be needed in the future, both in respect of AI and of other scientific and technological developments in other areas that are coming towards us. We heard many suggestions today on how we might regulate further. The Government are prepared to step up to the challenges of AI and take further action. We will keep your Lordships’ House updated on any proposals in this area. However, I am unable to speculate on any further legislation ahead of parliamentary announcements.
We have heard a lot of testament to the abilities and expertise of the AI Security Institute. Equally, as other Lords have mentioned—the noble Lord, Lord Tarassenko, brought precision to the definitions here—we cannot be sure how AI will develop and impact society over the next five, 10 or 20 years. We need to navigate this future based on evidence-based foresight to inform action with technical solutions and global co-ordination.
We should be very proud of our world-leading AI Security Institute: it is the centre of UK expertise, advancing our scientific understanding of the capabilities and the associated risks. Close collaboration with AI labs has ensured that the institute has been able to test more than 30 models to understand their potentially harmful capabilities, and we think this is the best way to proceed. It is having a real-world impact. The institute’s testing is making models safer, with findings being used by industry to strengthen AI model safeguards. It is carrying out foundational research to discover methods for building AI systems that are beneficial, reliable and aligned with human values.
One of the AISI’s priorities is tracking the development of AI capabilities that would contribute to AI’s ability to evade human control, which has been raised many times in the debate today. It supports research in this field through the alignment project, a funding consortium distributing £15 million to accelerate research projects. To ensure that the Government act on these insights, the institute works with the Home Office, NCSC and other national security organisations to share its evidence for the most serious risks posed by AI.
The noble Baronesses, Lady Foster and Lady Neville-Jones, spoke about the risks associated with AI cyber capabilities. We are closely monitoring those, in terms of both the risks posed and the solutions for combating the cyber risks that AI can contribute. We have developed the AI Cyber Security Code of Practice to help secure AI systems and the organisations that develop and deploy them. That is another example of the UK setting standards that can be followed by others—another point made by noble Lords today, when they spoke about how the UK can contribute to the safe development of AI. The institute will continue to evaluate and scan the horizon to ensure we focus our research on the most critical risks.
As has been pointed out, AI is being developed in many nations and will also have impacts across borders and across societies, so international collaboration is essential. The Deputy Prime Minister set out to the UN Security Council last autumn the United Kingdom’s commitment to using AI responsibly, safely, legally and ethically. We continue to work with international partners to achieve this.
The AI Security Institute is world leading, with global impact. Since December it has assumed the role of co-ordinator for the International Network for Advanced AI Measurement, Evaluation and Science. That brings together 10 countries, including Commonwealth countries such as Canada, Australia and Kenya, and the US, the EU and Singapore, to shape and advance the science of AI evaluations globally. That is important because boosting public trust in the technology is vital to AI adoption. It helps to unlock groundbreaking innovations, deliver new jobs and forge new opportunities for business innovators to scale up and succeed. The UK has shaped the passage of key international AI initiatives such as the Global Dialogue on AI Governance and the Independent International Scientific Panel on AI—both at the UN—and the framework convention on AI at the Council of Europe. The convention is the world’s first international agreement on AI and considers it with regard to the Council’s remit of human rights, democracy and the rule of law, seeking to establish a clear international baseline that grounds AI in our shared values.
I shall close by talking about the importance not only of the UK taking the risks of AI seriously, but of our conviction that it will be a driver of national renewal, and of our ambition to be a global leader in the development and deployment of AI. This is the way that will keep us safest of all. Our resilience and strategic advantage are based on our being competitive in an AI-enabled world. It matters who influences and builds the models, data and AI infrastructure.
That is why we are supporting a full plan, including our sovereign AI unit, which is investing over £500 million to help innovative UK start-ups expand and seed in the AI sector. It is why we are progressing the infrastructure level, including the announcement of five AI growth zones across the UK, accelerating the delivery of data centres. It is why we are expanding National Compute and why we are equipping all people—students and workers—with digital and AI skills. We want to benefit from AI’s transformative power, so we need to adopt it as well as manage its risks. That is why we have also committed to looking at the impact of AI on our workforce through the AI and future of work unit. We are working domestically and collaborating internationally to facilitate responsible innovation, ensuring that the UK stands to benefit from all that AI has to offer.
UK Development Partnership Assistance
Baroness Featherstone
That this House takes note of the role of UK development partnership assistance in diplomacy, conflict resolution and the exercise of soft power.
Baroness Featherstone (LD)
My Lords, I very much look forward to the maiden speeches of the noble Lord, Lord Barber of Chittlehampton, and the noble Baroness, Lady Hyde of Bemerton, as I am sure we all are.
I was a Minister in the Department for International Development for two years during the coalition Government. It seems a bit of a golden era now, because the world is changing, and not for the better. As we witness with horror and disbelief the dismantling of the world order—the “rupture”, as Mark Carney’s excellent speech so ably described it—we need to act.
We are now operating in a far more unstable and competitive international environment, marked by weak governance, state competition and hybrid threats, with over 120 active conflicts, and countries such as Russia and China increasingly pushing for greater global influence through fair means or foul. I must not leave out our now unstable and unreliable special relationship.
This, compounded and combined with the reduction in influence of the international rule of law, the reducing strength of international institutions and the dramatic reduction in development assistance from democratic countries, is moving us to an unsafe world, where might is right and our enemies rush to fill the voids we have left. We need to move decisively to defend and promote democratic values. This is the fight of our lives; it is a moral fight.
Our three pillars of foreign policy—defence, diplomacy and development—must operate together to be effective. Defence provides deterrence and protection when conflict arises, and we have even been found wanting in this theatre, but it is diplomacy and development that reduce the likelihood of conflict in the first place. Development assistance remains one of the UK’s most effective tools for diplomacy, conflict prevention and the exercise of soft power. It allows us to shape environments before crises erupt, to stabilise societies emerging from violence and to project influence through partnership rather than coercion.
Our development partnerships have always extended diplomatic reach far beyond formal state-to-state relations by embedding long-term engagement in the countries we partner with. Those development partnerships are not acts of charity; they are instruments of statecraft. But development partnerships have been under attack. The UK reduced its ODA target from the historic 0.7%—which, I have to say, was a Liberal Democrat piece of legislation during the coalition—to 0.5% of national income in 2021 and abolished the Department for International Development by merging it with the Foreign Office, thus changing the very nature of its interaction. It was then further reduced to 0.5%, following fiscal pressures, and is now planned to reduce further to 0.3% by 2027. I refer noble Lords to the excellent recent Question for Short Debate from the noble Lord, Lord Bates, on the humanitarian impact of these reductions.
Through long-term engagement, UK development assistance has created political access where traditional diplomacy alone could not. It has embedded trust with Governments, local institutions, civil society, and particularly in fragile and conflict-affected states, where credibility has to be earned over time.
Crucially, development partnerships address the root causes of conflict—poverty, exclusion, weak governance and injustice—by strengthening institutions, supporting inclusive growth, and investing in education and health. UK assistance reduces the grievances on which instability and extremism thrive. It projects our values—fairness, the rule of law, accountability and respect for human dignity—builds relationships with future leaders, reinforces our standing in multilateral institutions and enhances our ability to persuade rather than compel on the global stage. It gives us agenda-setting power, enables us to shape discussions on governance reform, human rights, climate resilience and economic stability, and strengthens bilateral relationships by signalling commitment, reliability and shared interests, rather than just transactional or coercive intent. It creates access to non-elite actors, such as local governments, civil society and community leaders, thus broadening diplomatic influence far beyond central governments.
Development programmes support peacebuilding infrastructure, including community reconciliation, transitional justice and inclusive political processes. Peacebuilding is central to the well-being of us all. Long-term development engagement sustains peace settlements after ceasefires and fills gaps that neither the military nor diplomatic interventions alone can address. Conflict-sensitive aid design helps mitigate the risk of exacerbating tensions and reinforcing the UK’s credibility as a neutral and constructive actor. This is soft power. This is conflict prevention in its most cost-effective form. However, soft power is fragile and depends on consistency, credibility and clarity of purpose. When development policy is perceived as short-term, transactional or subject to volatility, our diplomatic influence is weakened and our partnership strained.
On multilateral and global leadership, UK development assistance strengthens influence within multilateral institutions by demonstrating leadership, expertise and burden sharing. The strategic use of aid allows the UK to shape global norms on development effectiveness, humanitarian principles and conflict sensitivity. Development leadership supports the UK’s claim to be a force for good, reinforcing diplomatic standing post-Brexit.
If we are not there, then, as we can see, benign values will be replaced. Make no mistake: internationalism and co-operation are under attack. Development partnerships deliver return not as immediate revenue but as reduced instability, fewer humanitarian crises and lower future security costs. Every conflict prevented is a cost avoided—militarily, diplomatically and morally.
Chatham House produced a policy paper in 2025, Rethinking UK Aid Policy in an Era of Global Funding Cuts. The paper examines the security and geopolitical consequences of the recent cuts to official development assistance. It explicitly highlights concerns:
“Reductions in aid to fragile and conflict-affected states risk entrenching instability and generating wider spillover effects”
in contexts of extreme poverty, displacement, climate change and violence. The cuts jeopardise programmes designed to prevent conflict and stabilise fragile states, and risk reversing progress in supporting stability. This is a direct policy analysis linking UK aid cuts with the increased risk in fragile and conflict-affected settings.
There is already emerging evidence of the impacts of the USAID cuts to peacebuilding, including in Nigeria and eastern DRC, and the prior UK cuts to Sudan. On Sudan, the IDC has also stated that
“the FCDO failed to learn the lessons of its previous cuts to stabilisation and peacebuilding, which likely contributed to the escalation of conflict in Sudan going unchallenged”.
Stability abroad is national interest at home. We must be cognisant of what happens when vacuums are left and who and what fills them. The BBC World Service is one of Britain’s most effective and trusted soft power assets. It reaches hundreds of millions of people with impartial reporting, providing a powerful counterweight to propaganda and disinformation. Its budget has fallen sharply. It dropped by around 21% in real terms between 2021 and 2025, tightening its ability to sustain language services and maintain presence in contested information environments. Funding pressures have driven job cuts, including a recently announced 130 World Service job reductions as part of savings measures.
Cuts have forced withdrawal from key services, including BBC Arabic radio, reducing reach in regions where radio remains a resilient, low-cost platform during conflict and state disruptions. In Lebanon, for example, reports described Russian-state Sputnik radio moving on to the frequencies that were previously used for BBC Arabic. Information vacuums are filled instantly by hostile states or are aligned to the messaging of rivals.
The British Council, founded during a period of European instability, is a deliberate instrument of foreign policy. Its purpose was to build overseas understanding of Britain’s values, culture and way of life in support of British interests. Through cultural exchange, English language education and long-term relationship building, it generates trust that no short-term campaign could ever replicate. The council has vast reach, with hundreds of millions of people globally each year, operating in over 200 countries and territories and giving Britain an enduring platform for influence and relationships. However, the British Council faces severe financial pressure, and there is risk of closure in more than 60 countries in the coming years, potentially accelerating Britain’s retreat from the global stage precisely as competition intensifies.
The UK is now also facing deep reductions in the core machinery of statecraft. The FCDO is expected to reduce headcount significantly, with plans discussed publicly in terms of thousands of UK-based staff cuts and reductions of up to 25% or more of personnel. The Department for Business and Trade is also planning major reductions, with reports of around 1,500 job cuts shrinking its capacity to support exports, investment and commercial diplomacy.
Diplomacy is fundamentally relationship-driven and sustained influence requires people on the ground, yet having fewer officials means fewer relationships, less follow-through and reduced leverage. We have sustained many cuts in bilateral support to places such as Pakistan, Ethiopia, Yemen and Syria. Planned bilateral cuts this year include reductions of 18% for Sudan and 21% for the Occupied Palestinian Territories. Disgracefully, a growing share of the aid budget has been absorbed by domestic refugee hosting costs—around one-fifth of ODA.
Rebuilding British soft power is one of the most cost-effective ways to strengthen national security and to protect British interests in an increasingly volatile and dangerous world. Let us look to the growing hot spots and upstream security, because instability is increasing in several regions of strategic importance to the UK, including Africa, the Middle East and the Indo-Pacific. These regions are facing weak Governments, conflict, climate change and low levels of economic development. Those consequences ripple outwards and hit us here with irregular migration, extremism, and humanitarian and global health risks.
Africa will be the central theatre of upstream security in the coming decades. Demographics alone guarantee its strategic weight. It is projected to reach 2.5 billion people by 2050, reshaping global trade, migration pressures and geopolitical influence. China, Russia and the UAE are all vigorously pursuing overseas programmes—not for benevolent purposes but to expand their influence to secure access and to lock-in strategic leverage.
This debate is not about whether development assistance should be guided by the national interest, as we are all agreed that it must. The question is how best that interest is served in a more unstable and contested world. I hope that the House will agree that a strategic, better funded and disciplined approach to development assistance remains not only compatible with the national interest but essential to it. I beg to move.
Lord McConnell of Glenscorrodale (Lab)
My Lords, I draw attention to my interests in the register, in particular my occasional mediation work for the World Bank and the CHD.
I congratulate the noble Baroness, Lady Featherstone, on not just securing this debate, which is timely and essential, but her excellent introduction that has very clearly laid out the issues in front of us. I am particularly pleased to see so many speakers from these Benches in this debate and so many new Members of your Lordships’ House taking part, including the two maiden speeches that I look forward to with great anticipation.
The new Labour Members of your Lordships’ House taking part in this debate reflects the renewed interest in development, conflict prevention and peacebuilding in the other place, where many of the new Members of Parliament elected in 2024 show a deep interest in these causes. They are the post-2005 generation inspired by the actions of a Labour Government bringing the world together in Gleneagles to secure some of the biggest changes in development and conflict prevention that we had ever seen. We were all proud of that action. When I joined your Lordships’ House in 2010, I was proud to see the new Government build on that approach and the success of the leadership that the Labour Government here had shown. That included the commitment shown by Ministers on the other side, such as the noble Baroness, Lady Sugg, and the noble Lord, Lord Bates, who are participating today.
It was particularly disappointing when, this time last year, our new Labour Government chose to focus only on hard power, to reduce their commitment to soft power and to cut the ODA budget so severely. The cruelty of those cuts and the blunt decision made by the Prime Minister and the Chancellor will be seen in all its glory over the coming months as allocations are announced. It is not too late to change that approach and to recognise that hard power and soft power have to go together. I hope that this will not be the first Labour Government in history to spend less money than the Conservatives on ODA and conflict prevention worldwide.
Of the biggest powers economically and diplomatically in the world, the UK led the debate on defence, diplomacy and development and the need to integrate these three approaches globally when we were in government. We supported the actions of the following Government when we were in opposition. Today countries are not reducing ODA and their commitment to international support; Canada, Italy and Japan are all in the G7 and are all committing to continue their development assistance. Interestingly for today—because the Prime Minister is visiting China—I note that China is increasing its international intervention; we might not agree with the way it does it all the time, but it recognises the strategic importance of that in a world where many powers among the democracies are reducing their support. We should not join that race to the bottom. Whether or not the budget is cut over the coming weeks, within the Foreign Office budget we must prioritise conflict prevention, soft power and peacebuilding. These are vital in a world where disorder and instability are increasingly impacting the lives of everyone, particularly the most vulnerable.
The UK has the academic expertise, the history of government intervention, the cultural institutions and the charitable organisations that are a source of great strength in this area. Our military should be stronger, but it also has great strengths in building peace as well as fighting war. We need a dedicated budget for conflict prevention, a genuine commitment to the women, peace and security agenda, not just warm words, and a strategic commitment to put the UK at the centre of this effort globally, as a trusted and reliable partner. We owe that to the many millions—in fact, hundreds of millions—of children affected by violence and conflict around the world today who need us more than ever.
Lord Bates (Con)
My Lords, I join others in congratulating the noble Baroness, Lady Featherstone, on securing this debate and the way in which she introduced it. Following the noble Lord, Lord McConnell, I was struck again by the strong cross-party consensus that always used to exist in this House on this important issue. That enabled us to project that collective power around the world. I hope we can return to that at some point. I also look forward to hearing the maiden speeches, particularly of the noble Lord, Lord Barber. When I was Minister for International Development, we knew of the work he did in Pakistan in advancing education among young girls. It was a ground-breaking piece of work, and I look forward to hearing his contribution.
I believe we are at an inflexion point. The drastic cuts in overseas aid that are taking effect now may be a political debate for us, but they are a matter of life or death for the poorest. David Miliband called the cuts
“a blow to Britain’s proud reputation as a global humanitarian and development leader”.
They not only harm our national standing but undermine the health of our international institutions and risk destroying the critical humanitarian infrastructure it has taken decades to put in place. Last year, overseas aid was £14 billion. Next year, it will be £9.2 billion—the largest cash reduction in our history. At a time when the need has never been greater this century, the UK’s contribution to addressing that need has never been lower this century.
The World Food Programme has seen the number of those dependent on emergency food aid increase from 135 million to 318 million in five years, yet the Government have announced that they are cutting the WFP budget by 29%. The International Committee of the Red Cross is wrestling with the devastating effects of 130 armed conflicts around the world—twice as many as 15 years ago—yet the Government have cut its budget and are also cutting the budgets for other conflict prevention work. Those conflicts are causing mass movements of populations. The UNHCR has identified that as many as 117 million people may have been displaced—the greatest number since World War II —yet we are cutting the funding for organisations caring for those people at this time. Disease is on the increase around the world, yet we are cutting our contribution to Gavi, the Vaccination Alliance by 24%. It has been a brilliant initiative, saving millions of lives, and the ONE Campaign has estimated that this alone will cost around 600,000 lives.
If the Government insist on implementing these cuts, it will not only cost lives but diminish our reputation abroad and undermine our security at home. That was the view of Dame Anneliese Dodds MP, who courageously resigned as International Development Minister last year rather than implement the cuts. In a resignation letter to the Prime Minister, she said:
“Ultimately, these cuts will remove food and healthcare from desperate people—deeply harming the UK’s reputation”.
She is not alone. That used to be the position of Rachel Reeves, when she was shadow Chancellor. In a passionate speech in the House of Commons, speaking about the then Government’s decision to reduce aid from 0.7% to 0.5%, she said:
“If this cut goes through this evening and the House votes for it, it will diminish Britain. It will reduce our power and influence for good in the world, and it will undermine our security here at home too”.—[Official Report, Commons, 13/7/21; col. 220.]
She was right.
Often through mere accident of birth, many of us have had the enormous privilege to live in the best country on earth—the sixth richest nation economically. We have immense hard power as a nuclear weapons state and great diplomatic power as a permanent member of the UN Security Council, and our cultural soft power is admired around the world. But with great power comes great responsibility—a responsibility to protect and to honour our promises, especially to the world’s poorest.
Baroness D’Souza (CB)
My Lords, my thanks also go to the noble Baroness, Lady Featherstone, for picking up this really important issue. I too look forward immensely to the maiden speeches.
It is generally accepted that Britain has, in the past, excelled in soft power, punching above its weight. But we live in a world of scarcity and increasing conflict, as we have heard, and the UK’s strengths in this area are diminishing due to severe budget cuts. Creative solutions are necessary to off-set the potentially adverse effects.
For many decades, the chief engines driving soft power have been fourfold: the FCDO, the British Council, the BBC World Service and diplomacy. The mechanisms for delivering what can be defined as achieving strategic international priorities through work with the public overseas include cultural exchange, cultural diplomacy and broadcasting. The UK is fortunate in having a number of different assets and channels that reinforce its soft power. However, the wide range of approaches carries the risk of strategic incoherence. A more specific risk is that the different roles and methods of all the organisations involved—often NGOs—must be thoroughly understood if their soft power programmes are to be effective and acceptable to the recipient communities.
For example, the British Council puts emphasis on the use of culture to develop a multilayered network of relations—a modus operandi that has been honed since its establishment. In more recent years, however, the British Council has been called on to deliver projects on international development. For example, by 2018, £136 million of its total FCDO grant in aid of £168 million was spent on development activities in eligible countries. This detracts from its unique soft power strengths.
The BBC World Service has a much narrower focus, in seeking to provide
“the most trusted, relevant and high quality international news in the world”.
Again, in recent years, the transfer of funding to the licence fee, although now partly reversed, has had a severe effect on the breadth of World Service coverage. Furthermore, the BBC’s impact depends on the perception of editorial independence. This has been challenged by the Government’s emphasis on the strategic importance of a given region for the UK, leading to the Government taking part in the decision-making process.
Although much of the UK’s soft power is relatively independent of government, giving it strength, the tendency has been to bring organisations and their methodologies closer to government. The FCDO’s public diplomacy board now incorporates UK Trade & Investment, DfID, the DCMS, the MoD and the DfES, among other departments. The lack of co-ordination between these bodies has resulted in a degree of competition between them and a consequent reduction in the opportunities for cultural exchange.
What remains is the outstanding issue: the urgent need for a far-reaching strategy, together with effective co-ordination between the different actors. The UK, despite its intention to become the world leader in soft power, has in fact dropped to third place, after the US and China. The answer lies not so much in massive additional funds but in a serious focus on strategic alignment of our external policies in the national interest.
Baroness Hyde of Bemerton (Lab) (Maiden Speech)
My Lords, I am profoundly grateful to have the opportunity to speak for the first time in your Lordships’ House. Indeed, I am profoundly grateful simply to be here. It is really not a normal trajectory from Cox Green comprehensive to here. I am deeply thankful to the incredible staff of this place—Black Rod, the doorkeepers, the librarians, the clerks and so many others who have been generous, patient and kind in their welcome. I am grateful to my supporters, the noble Baroness, Lady Twycross, and the noble Lord, Lord Katz, for their encouragement and guidance. I am also grateful to my noble friends Lady Royall, Lady Smith of Basildon and Lord Kennedy of Southwark, and many others who have offered the same from all sides of your Lordships’ House.
I owe an enormous debt of thanks to people across the Labour movement who have mentored, challenged and shaped me. I cannot name everybody but I will single out the Fabian Women’s Network and the Labour Women’s Network for their life-changing sisterhood, without whom I would not be chair of the Fabian Society nor in your Lordships’ House.
Of course, I must thank my brilliant, endlessly patient husband and my twin boys, who make everything possible, even on the darkest of days.
Soft power, conflict resolution and diplomacy are rooted fundamentally in relationships and curiosity about how we live together well in all our glorious diversity. Indeed, my own life story has been shaped again and again by people with whom at first glance I appeared to have little in common.
I have spent over 20 years living and working around Caledonian Road—the Cally—a tough but extraordinary neighbourhood with some of the best people ever. I spent many of those years living on the Bemerton Estate, and I chose the title “Baroness Hyde of Bemerton” so that I would never, ever forget where I came from nor lose sight of whom I am here to serve and to ensure a functioning democracy for.
But let us go back. I was born on the banks of the Thames to a student and an NHS worker, and I want to thank my parents for raising me in a home where public service mattered and where working hard, putting others before yourself and collective endeavour were not abstract ideals but daily practice. They taught me that we achieve far more together than we can ever achieve on our own.
When I was 12, I experienced a significant bereavement through suicide, and that loss has undoubtedly shaped my life. In this House I intend to use my lived experience of suicides to help build a world in which they are vanishingly rare. There is much good work in the suicide prevention space and yet there is clearly more still to do.
I had a difficult time in adolescence and as a young woman, and there were many times when I was pretty unwell. But, as Rebecca Lucy Taylor might say,
“now I see it clear with every passing of each year.
I deserve to be here”.
The arts played a huge role in getting me through to the other side of this, and I remain a fierce champion for them—not as an optional pastime for the fortunate few but as a life-changing and often life-saving public good. They are essential—and fun.
I moved to Islington, and between my approximately 6,000 jobs—waitress, receptionist, call centre worker; the list goes on—I became embedded in the Cally community: youth work, homeless night shelters, community organising. The people at All Saints Church, in particular Kim, May, Feulah, Auntie Grace and Pat, took me in and treated me as one of their own.
From that Cally community I saw, time and again, that even in the hardest circumstances people still build connection, still love, still contribute. These lives, marked by poverty, addiction and struggle, changed me for ever through their grace, generosity and hospitality.
Prisons loomed large over these communities in every sense: nearby were HMP Pentonville and, back then, HMP Holloway. In 2008 I began working in Holloway with women whose children had been removed from them, and I spent the next decade working in and around prisons before undertaking a prison-related PhD.
Prison work led to me getting involved in politics, and I will use my time in this place to work for prisons and a justice system that ensures fairness for victims, and that rebuilds and restores and does not perpetuate or exacerbate harms.
To return to the subject of this debate, how we live together—generously and well—is one of the defining questions of our time. Long-held narratives fracture; truths have become flexible. Many people have felt, although this is changing, that things are not working for them, and desperation sets in.
When in pain and despair, that impulse to withdraw—to build walls—is an entirely understandable one, personally, nationally and internationally. Yet being isolated and surrounded by only those we agree with, who look and sound like us, diminishes our experience of what it is to be human and our ability to live in peace.
Internationally, these are somewhat unchartered times. Therefore, I draw on the words of the explorer Ernest Shackleton for inspiration. He said: optimism is moral courage.
So let us screw up our courage, and let us invest in, and utilise, our soft power as our morals and our optimism demand. Let us in every sphere keep connecting, keep listening and keep hoping.
As Nick Cave taught me, hope
“is adversarial. It is the warrior emotion that can lay waste to cynicism. Each redemptive or loving act, as small as you like … keeps the devil down in the hole. It says the world and its inhabitants have value and are worth defending. It says the world is worth believing in”.
I wholeheartedly agree.
I will do my very best to serve the people and communities of this country while I am in this place. I will get things wrong, I know. But while I am here, I will always give my very best as I act justly, love mercy and walk humbly. It is the honour of my life to do so—and to do so as a Labour Peer.
Baroness Alexander of Cleveden (Lab)
Follow that, as they say. I begin my remarks by congratulating my noble friend Lady Hyde on an excellent maiden speech. I also look forward to that of the noble Lord, Lord Barber, whom I have known and admired for many years, and who shares a comparable commitment to public service.
My noble friend Lady Hyde has shared with us something of her own rich hinterland, and I want to take a moment to reflect on what she brings to this House. There are many noble Lords who know the pleasures and the pain of leading a think tank, and my noble friend has led the oldest and most venerated of them all in the Fabian Society. But there are very few noble Lords who can match her long experience of our prison system, a prison PhD and working with and for the most vulnerable in our communities. My noble friend’s expertise has been honed by years of working alongside those trying to rebuild their lives. She has lived the how of tackling human trafficking, preventing suicide, reducing violence against women and countering addiction. I suspect that she is not a woman who is going to allow casual claims about a broken Britain to pass unexamined in this place.
My noble friend’s love of the arts and their liberating potential will be a welcome tonic to our sometimes philistine instincts. I feel certain that Sara—not Sarah but Sara—with her own deep commitment rooted in her rich faith life, her values and her convictions, will both challenge and inspire your Lordships’ House in the years to come. I know I speak for the whole House when I say that my noble friend Lady Hyde is very welcome indeed.
I thank the Liberal Democrats for tabling this Motion. The Minister replying today, the noble Lord, Lord Lemos, is a former distinguished deputy chair of the British Council. I currently serve in that role, and it is what I want to focus on today.
This morning the Prime Minister met the Chinese President, so it is fitting to start with that familiar Chinese proverb about tree planting: the best time to plant a tree was 20 years ago and the second-best time is now. Soft power is like a tree. Its success is measured in decades and not in a single season. The British Council is a tree that we planted 90 years ago to nurture soft power. But today, by simply focusing on the season, we risk allowing it to wither. This tree has weathered the storms of fascism, war, the rise of the United Nations, the Cold War, the fall of Berlin, the pandemic and the fracturing of the rules-based order. The tree bends with the winds of geopolitical change, but the soft power purpose remains connection, trust and understanding. The British Council is not about military power or high diplomacy; it is about links that last.
Our British history—the history of empire, its rise and fall—makes this country a place of fascination, frustration, anger and fidelity for people around the world: people who want to know Britain better. We used to know this. Our enemies and our friends know this, but since the crash, the council has had a miserable time. In the last 20 years, the government grant to the council has, in essence, been flat, so it has halved in real terms. Meanwhile, the budget of its sponsor department, the FCDO, has grown by more than 50%. In a global context, the financial support for the council’s French and German counterparts is four to six times what we see in this country.
However, during Covid, the Conservative Government extended a loan. Conservative Ministers knew that that loan was not repayable from income; that is why no repayment plan was set at that time. Five years on, and many years of qualified accounts later, the Covid loan is still unresolved. The council offered its art collection—worth £200 million—to the Government to pay down the loan. There was no response. The council has therefore shed 17% of its staff, and the remaining 8,000 at home and around the world worry about their futures and the redundancies to come.
Meanwhile, the council carries on as a tree whose roots are constantly being pulled up by the Government. Last January, the then Permanent Secretary said, “Come up with a recovery plan, work with the Treasury and we will then sort the loan”. In August, the council delivered the plan and officials said, “Sorry, we need another report. We’ll commission EY”. In November, they said, “Sorry, we need another report; this time, we we’re going commission Deloitte”. By December, the NAO had decided that it wanted to get in on the act, and it is commissioning a report, too. Rumour now has it that yet another consultant’s report is to be required before we agree a recovery plan.
I commend to noble Lords what their own official of choice—the noble Baroness, Lady Casey— recently called the “grip and fix” theory of governing. Gripping is the task of Ministers, and fixing means dealing once and for all with that Covid legacy. If the loan remains, it simply kicks the can down the road.
I conclude with three possible solutions for disposing of the £200 million loan. The first is that the Government accept the art collection in payment. After all, HMRC is for ever doing this for artwork in lieu of tax liabilities. Secondly, the FCDO could use its underspend to pay down the loan. Two years ago, it was over £1 billion; last year, it was more than £380 million. Thirdly, the Government could allocate a fraction of the £1.5 billion extra package for the arts that they announced last week. None of this requires cannibalising development assistance. So far, we have landed nothing, so a significant resizing of the British Council is coming. That is inevitable, but my plea is, let us grip and fix.
I want to close by thanking the many noble Lords in all parts of the House who have been part of those efforts. It is time for the Government to nourish the soft power tree that this country planted 90 years ago.
Baroness Sugg (Con)
My Lords, with the world we live in defined by geopolitical competition, protracted conflicts and crises, and shrinking civic space, the United Kingdom’s development partnership assistance remains one of our most powerful assets. I am grateful to the noble Baroness, Lady Featherstone, for giving us the opportunity to have this debate, and for her introduction, which made such a strong case for continued investment in development. It was a pleasure to hear the maiden speech of the noble Baroness, Lady Hyde. It is clear that she is going to bring much passion to your Lordships’ House, and I look forward to hearing the maiden speech of the noble Lord, Lord Barber. I know that this House will benefit from his considerable expertise in development, diplomacy and delivery.
Beyond alleviating poverty and responding to humanitarian need, UK development partnerships shape political relationships, build long-term trust, and reinforce the norms and institutions that underpin international peace and security. When aligned with foreign policy objectives, development partnerships strengthen conflict prevention, support inclusive political settlements and enhance the UK’s soft power by demonstrating commitment to international law, human rights and multilateral co-operation. It is through these sustained partnerships—often built over decades—that the UK earns credibility, influence and the ability to convene and lead at moments of diplomatic significance.
I will focus on women, peace and security and how the UK should use its upcoming presidency of the United Nations Security Council. I declare my interest as chair of the charity, Plan International UK.
I welcome the Foreign Secretary’s statement that women, peace and security sits at the heart of UK foreign policy. Next month’s presidency of the UNSC is one of the first opportunities to act on this commitment on the global stage. This is more than a procedural moment; it is a diplomatic opportunity that speaks directly to how the UK exercises influence in a contested world and how development partnership functions as a core instrument of our diplomacy, our conflict prevention efforts and our soft power.
The UK’s long-standing role as penholder on WPS gives us both credibility and responsibility. At a time of constrained development budgets and growing geopolitical competition, our challenge is to use our development partnerships more strategically to convene, to shape norms and to strengthen peace. The UNSC presidency offers a clear opportunity for the UK to translate long-term development commitments into immediate diplomatic impact by embedding WPS principles into the Security Council’s ways of working, from agenda-setting to briefings and outcomes. This matters because the evidence is clear: peace processes are more credible and more durable when women participate meaningfully. Development partnerships that support women peacebuilders, protect civil society space and strengthen local resilience directly contribute to conflict prevention and resolution. When the UK elevates these perspectives at the Security Council, it is not engaging in symbolism; it is improving the quality of decision-making and strengthening the council’s effectiveness. This leadership is particularly important at a moment of backlash against gender equality in multilateral forums. Resistance to gender-responsive language has already diluted mandates on civil protection, peacebuilding and conflict prevention.
The Protect Progress coalition, a campaign that is focusing on countering the rollback on women and girls rights, has suggested a number of events that would support the UK to deliver on its commitment to women and girls: a UK presidency signature event focused on securing women’s safe and meaningful participation and protection in all levels of decision making; a Foreign Secretary-led high-level ministerial meeting under the Arria formula focusing on the safe and meaningful participation of women in peace dialogue and processes in conflict contexts; and a formal council meeting on Sudan with a very strong gender lens—particularly important as women have, in essence, been cut out of the discussions here so far.
There are a number of other sensible ideas, including, importantly, a suggestion that the UK presidency should place a strong emphasis on systematic follow-up to recommendations emerging from previous Security Council meetings and briefings, particularly on women, peace and security. This would help move towards accountability and more effective, outcome-orientated decision-making. I have shared these suggestions with the Minister in advance of this debate, and I hope he and the department will consider them carefully.
I would be grateful if in his response the Minister could outline the steps that the Government will take on women, peace and security in the upcoming presidency of the UN Security Council. By placing women, peace and security at the core of our diplomatic engagement, the UK can demonstrate leadership that is effective, values-driven and grounded in the realities of conflict—reinforcing peace, strengthening multilateralism and exercising soft power where it matters most.
Baroness Hussein-Ece (LD)
My Lords, I declare an interest as the co-chair of the All-Party Parliamentary Group on Global Sexual and Reproductive Health and Rights, and I thank my noble friend Lady Featherstone for her excellent introduction to this debate. I also pay tribute to the noble Baroness, Lady Hyde, for her excellent maiden speech; as a former Islington councillor also, who knows the Cally very well, I look forward to her contributions in the future.
For decades, the UK has been seen and expected to play a key role in peacebuilding and post-conflict recovery. Through diplomatic mediation and development funding, Britain was looked to as a stabilising force in fragile regions and countries, but today, in a volatile world, that influence appears to be fading just when it is needed. Instead of leading peace talks, supporting institution building and fostering economic recovery, the UK seems to have stepped back on its crucial role of using its soft power. While everyone understands why the UK is under pressure to increase its defence spending, it has been argued that cutting the UK ODA is not the best way to promote security and stability.
The FCDO has historically emphasised the importance of including women in peacebuilding efforts, recognising how this is crucial for sustainable peace and prosperity. Development-led soft power is, and continues to be, an investment in global stability and in the UK’s long-term national interest.
I would also like to focus on women and girls, as the noble Baroness, Lady Sugg, has just done. Support from the UK has helped deliver remarkable progress for women and girls, including a 40% decline in global maternal mortality between 2000 and 2023, according to a joint United Nations report published last year. At a time of pushback on women’s rights, the UK’s commitment to sexual and reproductive health rights, especially maternal health, and its leadership in advocating for the rights and choices for women and girls, is needed now more than ever.
There are clear links between the UK’s support for global SRHR, as part of its development work, and both conflict resolution and the exercise of soft power and diplomacy. Globally, we have led on enormous progress and we cannot allow pushback and retreat on these commitments. Just because the United States has, we do not have to.
A good example is the UK’s support for the United Nations Population Fund’s supplies partnership, which is a pooled fund that is the largest procurer of reproductive health commodities for the public sector. This programme provides a critical lifeline to women and girls in many of the world’s lowest-income countries. In 2024 alone, it helped prevent nearly 10 million unintended pregnancies and more than 200,000 maternal and newborn deaths. Can the Minister, in his response, reassure me that the Government remain committed to ensuring that women and girls remain at the centre of both foreign and international development priorities?
Peacebuilding is also about prevention. Addressing poverty, inequality, discrimination and injustice is a long-term investment that must be protected. I will close my remarks by touching on the wider implications of what we have heard, and some have mentioned, in Mark Carney’s speech, described by many as bold and brave. We were reminded recently by the United Nations Secretary-General that the rule of law is a cornerstone of global peace and security for smaller and less powerful countries, and those suffering from historical inequities and the damaging legacies of colonial rule. International law is a lifeline promising equal treatment, sovereignty, dignity and justice.
It is worth reflecting that the rules-based international order did not just erode gradually. For many in the non-western world, it collapsed when western Governments showed that the rules do not always apply when the violator is an ally. The catastrophe, for example, in Gaza did not just expose a weakness in the system; it revealed what the system is. For several years, many countries, especially in the global South, have argued that the world did not merely fail to restrain the occupying Government’s actions; it funded them, vetoed accountability, ignored legal standards and actively criminalised dissent. International law was seen to be selectively suspended. That was seen as a real point of no return in recent years: not simply because Donald Trump threatens to violate the sovereignty of Greenland, but because the precedent was set in full view of the world. This reinforces the need, more than ever, for the United Kingdom to show leadership and underline its commitment and obligations to international law, and to be seen to be doing this, while redoubling efforts on soft power and diplomacy.
Lord Barber of Chittlehampton (Lab) (Maiden Speech)
My Lords, I would like to thank the noble Baroness, Lady Featherstone, for introducing this important debate, and all the preceding speakers, many of whose speeches were absolutely brilliant. I particularly congratulate my noble friend on her wonderful maiden speech. She is a very hard act to follow.
Last week I showed AI a picture of this Chamber. Its response: “A room with some people in it”. There was nothing about the magnificent Pugin interior, nothing about the historic controversies that that have echoed through this Chamber and nothing about the numerous Members on all sides from whom I have learned so much over the years. All of which makes this, for me, an infinitely more daunting and more humbling moment than AI will ever understand.
I take this opportunity to thank my supporters, my noble friends Lady Chapman and Lady Hunter, for their wisdom and support. Everyone, including the Lord Speaker in the last month of his distinguished term of office, my noble friends Lady Smith of Basildon and Lord Kennedy of Southwark, Garter King of Arms, Black Rod, the Clerk of the Parliaments, the doorkeepers, the clerks and the librarians, has been so welcoming and generous, and I am profoundly grateful to all of them.
This is also a rare opportunity to pay tribute to successive Education Ministers, who have given me exceptional opportunities to contribute to our school system over 20 or 30 years: the noble Lords, Lord Baker and Lord Gove, the noble Baronesses, Lady Shephard and Lady Morris, and my noble friend Lord Blunkett, among others. I salute their vision, their courage and their combined impact on our schools. The day we published our White Paper Excellence in Schools in July 1997, my noble friend Lord Blunkett taught me a powerful lesson. He said, “A White Paper, however well written, Michael, is worthless unless it visibly changes the lives of children for the better”. The follow-through after the headlines has to be rigorous.
It was that lesson that I took with me to No. 10 in 2001 when the Prime Minister, Tony Blair, invited me to set up the original Prime Minister’s delivery unit. Its task was to ensure follow-through across the public services, and the acid test for every proposal was what measurable difference it would make, and how soon. It turned out to be a global innovation.
As a patriot, I realise that these are challenging times. This is a dangerous world and we do need to be strong. Even as the son of loving parents who were committed Quakers and pacifists, I strongly support the case for strengthening our hard power by urgently building the capacity of our Armed Forces and security services.
I favour with equal strength enhancing Britain’s capacity to influence the world through soft power, as we have heard about this afternoon. It is the combination of hard and soft power that makes Britain unique. It is our superpower. It is our military and nuclear capability as well as our creative industries, world-leading universities, the BBC World Service, the British Council, Harry Potter and the Premier League. One telling fact is that 59 current world leaders were educated at UK universities—just short of 66 in the US and more than twice the number in France. That counts. On soft power, no other country can match us.
Building our hard power will help us deter and resist the obvious current threats. Building our soft power will help us resolve and prevent conflict in the first place. We need both, but how? When a conflict is in the headlines, we act, but what happens when it drops out of the headlines? At those moments, we cannot afford to abandon weak or failing states. We should help them and work with them to build capacity to deliver the stability, security and basic services that people crave.
For example, in 2009, the Taliban came dangerously close to Islamabad. Through that dark time, Britain and Pakistan collaborated on military and intelligence issues. That was hard power. Meanwhile, David Miliband, the then Foreign Secretary, asked me to help Pakistan rebuild its basic public services. Over the next decade, one visit turned into 50. Successive Prime Ministers—Brown, Cameron and May—actively supported this work. That was soft power. I do not claim that Pakistan solved all its problems—far from it—but its education and health systems improved, its poverty alleviation through the pandemic was exemplary and, crucially, it is a safer, more resilient country today than it was in 2009.
In late 2023, the noble Lord, Lord Cameron, asked me whether we might do something similar in Palestine. Since 2024, with the active support of successive Foreign Secretaries Cameron, Lammy and Cooper, I have been Britain’s—unpaid, I hasten to add—envoy on Palestinian governance. Working with the excellent Palestinian Prime Minister, Mohammad Mustafa, we are taking the first, very small steps towards a Palestinian state with the rule of law.
If I learned anything from my time in No. 10, it was never to lose focus on delivery, whatever the distractions. I should add at this point that I have also always been a strong and active supporter of the State of Israel and the British Jewish community, especially during my time as a councillor in Hackney. A capable Palestinian state with the rule of law is in everyone’s interests. That work has only just begun.
Climbing the mountain ahead looks daunting. The exercise of soft power is never a soft option. We, the British, know how to build trusting relationships, and we can be determined and skilful. Bill Bryson says that, when the British are asked how they are, they say that they “mustn’t grumble”. Even so, as we heard from my noble friend, at our best, we are good at optimism too. Anyone can do easy things; this is the time to embrace difficult things and to unleash our unique capacity to combine hard and soft power—the solutions are to be found there. Hard power or soft power? Both. Palestine or Israel? Both. Clear-eyed realism or incurable optimism? Both. The road to hell is paved with false dichotomies.
Baroness Liddell of Coatdyke (Lab)
My Lords, it is a rare privilege to hear such excellent maiden speeches as those we have heard today—inspiring maiden speeches that make us proud to be part of this House and what it can achieve. It has been quite inspiring to listen to two people who have come here and who were probably absolutely terrified when they were delivering their maiden speeches. Even for those of us who have migrated from the other end of the Corridor, it is always terrifying to make a maiden speech, but I do not think that I have ever heard two such speeches that were so absolutely wonderful.
As I am following my noble friend Lord Barber, I had a little look at his past life. He has the kind of CV that makes you wonder how he fitted in life, because he has done so much in so many different places. His speciality is the effectiveness of government. As he said, he worked for David Blunkett—my noble friend Lord Blunkett—and for Tony Blair when he was Prime Minister. He set up the Delivery Unit in No. 10—innovative work that attracted the attention of the IMF and the World Bank. I was a Minister at that time, and I saw the difference that was beginning to be made by the work that he had put in.
I hope that he enjoys the House of Lords. His seminal book, How to Run a Government: So that Citizens Benefit and Taxpayers Don’t Go Crazy, should be compulsory reading on both sides of the House. He went on to have a very successful career in the private sector before setting up Delivery Associates, which allows him to work with leaders across the developed and developing world; he told us about some of that in his maiden speech. What he said about Palestine was particularly moving, because people do not often praise both sides whenever they are talking about such troubled countries. We can learn a lot from him.
My noble friend has worked with Governments all around the world, including that of my own favourite place, Australia—but more on that later. His work in Pakistan embodies the toughest part of his mission. He is right: soft power has to go together with hard power. If you do not have hard power, you are going to get run over, and that is something that we have to avoid.
He has reviewed efficiency and public value and has even developed a new measurement of public value. If that was not enough, he is now the chancellor of the University of Exeter, and, lo and behold, he also has a hobby: he is the chair of Somerset County Cricket Club. I have been to a cricket match only once; frankly, watching paint dry was much more exciting. Unfortunately, I was with the cricket-obsessed Prime Minister of Australia; I kept asking if I could go, as I found it a rather long one. In addition, my noble friend is a member of the FA’s performance advisory group.
If anyone knows the way forward for our economy, it is my noble friend Lord Barber. I welcome him to this House and his contribution to the subject of this debate. He is so right: hard power and soft power can frequently go hand in hand, and he is here to steer us through these difficult times. I thank him very much for his maiden speech.
I have nothing like as distinguished a career as my noble friend Lord Barber. When I left university, I became the economist of the Scottish Trades Union Congress. I was called the head of the economic department but, given that there was nobody else in the economic department, my job was making the tea and occasionally vacuuming in the morning. It was a critical time for North Sea oil; it was in its infancy, and the traditional industries of coal, iron, steel and shipbuilding were suffering.
One of the reasons why I am interested in soft power is that I am interested in getting the proper kind of investment into countries, particularly when people do not necessarily understand it. Inward investment was at the heart of what the Scottish TUC was doing, and it was not an easy path. Few international investors knew anything about Scotland. Some saw potential, not least the oil and gas drillers, but there was a stumbling block in the way. It was called the “managing director’s wife syndrome”; some noble Lords who have done international development will know about that. Sexism was rampant in the 1970s. The wives knew nothing about the country and did not fancy moving to a dull and wet place, so soft power had to be developed. There were terrific films of lovely places where they could live, featuring beautiful schools with exam results that then beat most of the world and, of course, historic castles. It began to work, and I began to learn a lesson about how you sell your country.
I have never lost my interest in inward investment. As a Minister and then as a diplomat, I was probably profoundly boring on it, but we see all over Britain the change that inward investment can bring, and soft power plays a big part in its success. Try as I might, I have never forgotten the “managing director’s wife syndrome”, formed out of scepticism and a lack of knowledge about quality of life. When, decades later, I became the high commissioner to Australia, I was able to employ the lessons that I had learned from soft power and presenting a Britain that is dynamic, attractive and highly skilled. I told my team that, when they went out to present to companies, they had to view inward investment as the key to what they were doing. I insisted that they take with them somebody from UK Trade & Investment—as it was in those days—Visit Britain and the British Council, and it worked.
My noble friend Lady Alexander has already talked about the British Council. The sheer impact it had on education and soft power was absolutely amazing. Thousands of young Australians came here because of projects that had been developed by the British Council. I found it a fantastic opportunity to go out and meet these young people. Then, when they came back, they were really inspirational. But I am worried about there not being a full understanding of the economic benefits.
My noble friend Lady Alexander knows the British Council well. She was also the vice-chancellor of Dundee University. She was out selling what was so important to us: education and its opportunities. What noble Lords probably do not know is that she comes from a family of missionaries, so she knows the different kinds of soft power that can really influence people as easily as possible.
I will leave noble Lords with a very quick story about magpies. Magpies are murder in Australia. They are much bigger than other magpies, the sweet little birds we have here. They come down and poke your head, and it is horrible. Kids go to school with ice cream cartons on their head because it is so horrible. Tony Blair, in one of his first speeches in Australia as Prime Minister, talked about magpies. We found out then that he had lived in Australia as a young boy. His father was a lecturer and he had had his run-ins with magpies. It turned the whole debate about Tony Blair around, because I could hear people saying, “He is one of us; he understands what this country is like”. That is the kind of soft power that we need to use to get more inward investment.
Baroness Northover (LD)
My Lords, I too thank my noble friend for securing this debate and for opening it so effectively. She and I had the great privilege to be DfID Ministers in the coalition, when the UK finally honoured the commitment to spend 0.7% of GNI on aid. That does indeed now seem a long time ago, when there was a great deal of cross-party agreement—as we see reflected here today, in fact. It is wonderful to add the noble Baroness, Lady Hyde, and the noble Lord, Lord Barber, to our ranks here on this commitment of ours to international development.
Speaking of another noble Peer, I think back to the UN high-level panel of over 20 years ago, on which the noble Lord, Lord Hannay, served. This identified development as a key to security. As the ONE Campaign and others have pointed out, countries with the largest development needs face the greatest risk of conflict, and now the international rules-based order, imperfect as it was, as noted by Mark Carney and others, has been fractured and, possibly, worse. It now indeed seems that might is right. Trump allows Russia to take parts of Ukraine, seemingly because he identifies this as Russia’s sphere, and feels free to claim Canada and Greenland. But we do not need to follow Trump’s lead.
The UK’s development aid, as others have said, was a key to its soft power. We worked with Governments, civil society and multilateral institutions, building the trust that diplomacy alone could not secure. But then Boris Johnson destroyed DfID. The Tories cut the aid budget, using much of what was left in the UK. Now, Trump has shut USAID and cancelled 80% of its foreign aid contracts. He has shredded US support for multilateral institutions, those very institutions required for the balance that the noble Lord, Lord Barber, spoke of in relation to the Middle East. In the past, the UK has helped fill the gaps when Republicans have cut aid, especially when they slashed assistance on reproductive health and rights, so vital to women and girls worldwide. But that is not happening now. We note the growing global scepticism about whether the UK, along with the US, France and Germany, will deliver on its promises. The British Council’s Global Perceptions 2025 report notes how countries in east Asia and the global South are now rising in its indices.
The Government launched the UK Soft Power Council in January 2025. Three days ago, just before this debate, extremely abridged minutes from meetings in July and October 2025 were published. In July, there was a discussion of general strategy. Might the noble Lord expand on this? What did the experts recommend? In lovely “Yes Minister” fashion, the minutes of the October meeting noted:
“Members discussed the evolution of the role of the SPC, sharing thoughts on upcoming opportunities and challenges.”
I bet they did.
Our creative industries are still held back by Brexit damage. The BBC and the BBC World Service are under attack. Our higher education sector is hampered by the lack of welcome that this Government give—as Governments so often do—to international students, and especially to staff, with visa and health costs hugely out of line internationally. We may have educated many Heads of State, as the noble Lord, Lord Barber, has just mentioned—but are we doing so now?
There is no restoration of the ODA money that, for example, went into the Jenner Institute for Ebola vaccines, which then meant that we were at the forefront in vaccine development when Covid struck. As Malaria No More points out, the UK has been a global leader in medical science; I declare an interest as a council member at the London School of Hygiene & Tropical Medicine. Those from the UK have helped to set global health agendas. We have rejoined Horizon Europe, but it will take a while before the damage is repaired. Just because we have had strengths in these areas does not mean that that will continue. They need to be supported and cultivated.
Labour pledged at the election to strengthen diplomacy and soft power. It said it would rebuild Britain’s international development reputation. I am surprised, despite his depth of experience, that the noble Lord, Lord Lemos, as a Whip, has been detailed to respond to this debate rather than his noble friend the departmental Minister, the person who holds the levers here. There is much to do, and there is little sign of it being done. I hope that the noble Lord can persuade me otherwise when he responds.
Lord Browne of Ladyton (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Northover. It is an equal pleasure to have the opportunity to join in the thanks and congratulations to the noble Baroness, Lady Featherstone, on securing this debate and her opening of it. I also join in the congratulations to my noble friends Lady Hyde of Bemerton and Lord Barber of Chittlehampton on excellent maiden speeches. The best compliment I can give them is that it took them only five minutes to get the ear of your Lordships’ House; that is quite an achievement.
On addressing your Lordships’ House for the final time before my retirement, as I am doing today, I feel not merely the traditional mixed feelings, but a positive cacophony of discordant emotions. First, of course, comes immense gratitude to all the staff of this House—doorkeepers, Library, catering and facilities teams, clerks and innumerable others—whose work makes this place function, and makes the work of those fortunate enough to be Members of this place an enormous pleasure as well as a privilege.
Secondly, there is sadness in leaving behind so many excellent colleagues from across your Lordships’ House, and in no longer being able to lay one’s hand on not merely an answer to any conceivable question but one often provided by a noble Lord or noble Baroness whose life’s work has afforded them expertise of unparalleled depth.
There is also a now faint but none the less enduring surprise at the turns of a political career that led me into the other place somewhat unexpectedly in 1997 and gave me the honour of serving in several ministerial and Cabinet posts, including as Secretary of State for Defence. The wise counsel I received from distinguished military officers and the extraordinary example of our service men and women will always remain my outstanding memories of public service. Then, in 2010, I was asked to serve in your Lordships’ House by the then Prime Minister, which I accepted—on the proviso, I have to say, that I could vote for reform of this place and, potentially, for my own abolition.
In that cacophony, my predominant emotion in making these final remarks is trepidation, not for myself but for the direction in which geopolitical currents are pulling us. In considering the situation when I entered the other place, and surveying the world today, there is no question that the values for which Britain stands and the system of international norms that guaranteed their long continuity face far more entrenched and concerted challenge. The question of how we face this situation is implicit in the Motion before your Lordships’ House this afternoon.
As I have had occasion to say during previous proceedings, it is clear that our strategic adversaries plan to fill any vacuum left by a western retreat from global engagement. In this context, aid matters for three reasons. First, we have a humanitarian duty to help those suffering from appalling poverty, conflict, natural disasters or climate change. Secondly, we are, in the long-term, defined by what we do as a country rather than by our aspirations. Thirdly, even by the most cynical calculus of self-interest, foreign aid enhances the UK’s soft power and promotes peace. It makes conditions less fertile for terrorism and, in some cases, keeps frozen conflicts from kindling into flame. In this sense, foreign aid should be defined as national security spending, rather than just as empathy translated into hard currency.
In addition, foreign aid and development partnership assistance often functions as an early-warning system, alerting us to the prospect of an outbreak of conflict or terrorist violence. While USAID is shuttered and all major European powers, including the UK, cut aid budgets and retrench, what are our adversaries doing?
This year marks the 70th anniversary of Chinese engagement with the African continent. This celebration will, in effect, amplify the influence they have secured through debt diplomacy and see the unfolding of a well-financed programme—two years in the planning—of initiatives to boost their soft power.
Russia is also seeking to fill the vacuum created by the retreat of the western powers. Its Africa Corps provides military and security support in Libya, the Central African Republic, Sudan and Mali; its state-owned energy company has co-operation agreements with more than 20 African nations and nuclear agreements with five; and Russian Railways has been retained by five African nations.
While the BBC World Service has discontinued its Arabic broadcasting and the Voice of America sheds most of its staff, Sputnik Radio replaces it—remarkably, in one case at least, on the very same frequency abandoned by the BBC. It has a new editorial hub in Ethiopia, broadcasting in French, English, Amharic and other languages. The voice of democracy, pluralism and liberalism is being muffled and replaced by a narrative designed to erode confidence in Britain and its allies. That cannot be seen as anything other than a retreat, however necessary the fiscal decisions were that have necessitated it.
If the rules-based international order is not dead, it is certainly moribund. To extend that medical metaphor a little further, it is clear that the only hope of alleviation in the medium term lies in a transplant—replacing the current occupant of the White House with another. However, we have to concede that it is likely that this era of great power competition will outlast President Trump. In that context, I believe our soft power is something we cannot afford to sacrifice. I welcome the Government’s commitment to restoring ODA spending to 0.7% when circumstances allow, but given that the Independent Commission for Aid Impact estimates that it could fall to as low as 0.24% by 2027, we must be clear about what it is we are sacrificing. The humanitarian impact of ODA cuts was explored a couple of weeks ago in your Lordships’ House, so I need not press that any further, but we are also sacrificing a key strategic advantage.
I said earlier that I feel trepidation when looking at the global picture, and I am conscious that I have painted a somewhat bleak picture, but a precondition of a genuinely optimistic prognosis is a clear-eyed and sober diagnosis. I am optimistic because the UK has enormous cultural capital, and a record of extraordinary scientific innovation and sustained military and diplomatic excellence. But we are a medium-sized power in a world of great power competition. That is a difficult path to walk, but in my retirement, I will be trusting in the surefootedness of my noble friends on the Front Bench and colleagues from all sides of the House.
I began by thanking the staff of the House and the doorkeepers who were there to wave me in when I was elevated to your Lordships’ House in 2010. In my 16 years in your Lordships’ House, I have been afforded the opportunity to work towards multilateral nuclear disarmament, and to advocate for net zero and, I hope, for greater equity and inclusion across a swathe of government policy in a way that would otherwise have been impossible. As the doorkeepers of your Lordships’ House wave me out today, I am, and will remain, grateful for those many doors that membership of your Lordships’ House has opened for me.
Lord St John of Bletso (CB)
My Lords, we shall deeply miss the wisdom of the noble Lord, Lord Browne of Ladyton, who has served both Houses with great distinction. He has knowledge in foreign affairs and defence. We have met on numerous occasions, in airports and all over the world. He speaks with such experience, and he will be sorely missed in your Lordships’ House. Obviously, I will be giving my valedictory speech soon, as an outgoing hereditary, but that is another point.
I thank the noble Baroness, Lady Featherstone, for introducing this topical debate. I add my congratulations to the noble Baroness, Lady Hyde of Bemerton, and the noble Lord, Lord Barber, on their outstanding and moving maiden speeches.
I will focus my brief remarks on how UK development partnership assistance has been an effective diplomatic tool and an assistant in conflict prevention and soft power. I will devote my remarks purely to Africa. Clearly, the recent budget costs have caused a huge strain on the effectiveness of our development programmes. I add my critical voice.
I would prefer, in my brief few words, to add a few more positive notes on some of the more successful initiatives in Africa. Africa poses both a challenge and an opportunity. With over 60% of the population under the age of 25, Africa is too frequently viewed through the narrow lens of conflict, crisis and governance challenges. However, digital public infrastructure has strengthened governance in countries such as Rwanda and Kenya, reducing corruption and improving service delivery. These reforms have been supported by UK technical assistance. In Kenya, the mobile money platform M-PESA has revolutionised financial inclusion and demonstrated how technology can enhance social stability. Here, UK-supported regulatory and innovation systems have helped to enable this success. Clearly, artificial intelligence has the potential to dramatically improve outcomes in healthcare, education and climate resilience. The UK is well positioned to support this transition.
Through development partnerships, we can help African nations build ethical AI frameworks, local data capacity and skills pipelines, ensuring AI empowers rather than exploits. However, the risk remains that AI could displace jobs faster than the new ones that are created. I join in supporting the UK Soft Power Council, particularly with its focus on Africa. Its promise lies in leveraging education, technology and AI-enabled soft power. However, delivery will depend on sustained investment and clear execution. I am concerned that there has been an overemphasis on short-term objectives, particularly migration controls, at the expense of long-term demographic and digital investments. Soft power cannot be transactional.
Briefly, on conflict resolution, our development partnership assistance has been very effective in Sierra Leone, where sustained diplomatic engagement, aid and security sector reform have helped to underpin a durable peace; and in Somalia, where UK support has strengthened state capacity and mediation efforts. However, elsewhere, progress has fallen far short of expectations, particularly in Sudan and parts of the Sahel, where reductions in funding and fragmented international engagement have weakened early-warning conflict prevention and stabilisation efforts, allowing crises to escalate rather than be contained.
Finally, through the Commonwealth, the UK has been and continues to act as an early and discrete support in conflict prevention, election monitoring and demographic resilience across its members in Africa, using trusted networks and shared institutions to defuse tensions before they escalate.
My five minutes is up. Africa’s demographic surge and digital future will substantially shape the global order. Whether the future is stable, prosperous and co-operative depends partly on how seriously we take diplomacy today. If we can combine long-term commitments, local partnerships and leadership on ethical digital transformation, our development assistance will continue to be strategically indispensable.
Lord Forbes of Newcastle (Lab)
My Lords, I thank the noble Baroness, Lady Featherstone, for securing this debate. I fear that my contribution will be a mere shadow of the exemplary exposition of the challenges and issues in this policy area which was set out so ably at the start of this discussion.
I congratulate my noble friends Lady Hyde of Bemerton and Lord Barber of Chittlehampton on their magnificent maiden speeches. They demonstrated not only passion and acuity of mind but a strong moral purpose and compass. I know that they will both provide immense service to this House in the years to come. My noble friend Lord Barber, with his love of cricket, brings with him a capacity for endless patience, which in my brief two weeks here I have learned is something of a need in your Lordships’ House. Last week, when a number of us made our maiden speeches from these Benches, we were dubbed “the quartet.” Having seen my noble friend Lady Hyde carrying a guitar around already in this House, I think that we may already have found our accompanist.
I also pay tribute to my noble friend Lord Browne on his final speech to your Lordships’ House and thank him for his service to the Labour Party, to this House and to our nation. It was definitely the most gracious and generous valedictory speech that I have heard in this Chamber today.
The international environment is increasingly volatile. We have conflict in Ukraine and the Middle East. We have trade wars. We have a decline in multilateral aid. We have a rise in new technologies and the spread of populism. This is all contributing to an increasingly challenging global future. The answer is seen by some as the greater exercise of hard power. There is much hard power on display in the world at present. We see coercion and extortion undertaken by global superpowers as a stick with which to beat others into submission. However, if hard power is a stick, then soft power—the ability to achieve goals through willing attraction—is the carrot. Without stretching this metaphor too far, I hope, I suggest that we have many carrots in our soft power larder. Universities and their scientific research, professional qualifications and regulatory regimes, cultural history and assets, the beauty of our countryside, the magnetism of our cities, and our sporting achievements and prowess are all essential in how the UK is seen and therefore able to act in the world.
However, the UK’s status as a trusted international actor is not guaranteed. Strategic rivals such as Russia and China are investing heavily in soft power and exerting influence over multilateral institutions and globally significant regions such as Africa, south Asia and the Indo-Pacific. At the same time, we see the whole-scale withdrawal of the United States from this arena, so it is more vital than ever that we leverage UK soft power to our national advantage. Therefore, I welcome strongly the establishment of the UK Soft Power Council and look forward to it building a critical mass of institutions, organisations and sectors around a clear set of priorities.
We also need to do more to join up international development approaches and funding with a diplomatic strategy, our defence and foreign policy and our approach to international trade. We need a genuinely co-ordinated and coherent narrative about what Britain stands for in a modern age and how our approach to international affairs is more strongly linked to domestic support for this agenda.
Through the usual lens, international development is seen as a reflection of moral purpose and virtue. It is seen by many people as an act of international charity, but unfortunately the evidence from polling is that the public, especially in difficult times as now, think that charity should begin at home. We therefore need to widen the argument for why international development, both multilateral and unilateral, is essential to our nation’s security. That means supporting areas in times of conflict to reduce the forced migration of people, avoiding the misery, heartbreak and trauma that many face of having to leave home and homeland.
We need to be smart about the use of our resources. I understand the significance to many of 0.7%, 0.5% or 0.3% of GDP, but I remain unconvinced that spend alone is the most important factor of success. We should instead look at leveraging our genuine and unique strengths in the UK international development sector in post-conflict recovery, infrastructure design and delivery, capacity building at a local level, especially in skills, and project management and effective use of resources. This approach should guide our next steps, and I believe that the future of this area should be grounded in values of fairness, equality, respect for the law and, above all, an ambition for democracy, peace, prosperity and opportunity for all.
Baroness Hodgson of Abinger (Con)
My Lords, I declare my interests as co-chair of the All-Party Parliamentary Group on Women, Peace and Security, a member of the steering board of the Preventing Sexual Violence in Conflict Initiative and chair of the Afghan Women’s Support Forum. I congratulate the noble Baroness, Lady Featherstone, on introducing this timely debate today in such an excellent fashion. I also congratulate the noble Baroness, Lady Hyde, and the noble Lord, Lord Barber, on their excellent maiden speeches, and I pay tribute to the noble Lord, Lord Browne. I am so sorry to hear that he is retiring. I pay tribute to the huge contribution that he has made to political life and to his service to this country over many years.
The UK has enjoyed a high reputation for diplomacy and, although it is no longer a great military power, it had a leading reputation for soft power and development aid. We rank as the world’s sixth-largest economy. Therefore, we have a duty to help the poorest across the world. Since President Trump’s return to office in January 2025, we have seen the US cancel much of its aid. To its shame, the UK appears to have followed suit, slashing our aid budget to 0.3%. The Government argue that the reason for this is that we need more money for defence, and few would argue against increasing defence spending at this dangerous time. However, what we need is security for the UK, and security will not be achieved by defence alone but needs a combination of diplomacy, development and defence, as the noble Baroness, Lady Featherstone, said in her wonderful introduction. The defence uplift does not have to be financed at the cost of international development. This is a political choice the Government are making. While we spent around £15.37 billion in 2023 on development, this will be reduced to around £9 billion in 2027-28, with 16% spent last year in the UK on asylum seekers, and all this at a time when UK cuts have left people destitute across the world.
I am concerned about this Government’s stated approach to development through partnership, particularly in Africa, where, according to the Government, countries now do not want to see us as donors. Many African countries are very rich in natural resources, but the benefit from those resources too often ends up in the pockets of the few. What are the Government doing to address the endemic corruption in many of those countries? I am concerned that a choice seems to have been made mostly to finance multilaterals. Of course, Gavi and the Global Fund are worthy, but why are we choosing to be at the leading edge of donors to them? Often, those organisations also take a slice of development money too. To make a real difference, funding needs to be to the grassroots, so please let us cut back some of the multilateral funding and spend the money where it can make most impact; for example, on locally led women’s organisations and projects such as demining work by Halo and MAG.
There remains enormous gender inequality in many of those African countries, and the fact is that the predominantly male leaders turn a blind eye to issues such as FGM, child marriage and violence against women. We need to continue putting women and girls at the heart of development, both to stop violence against them and because we all recognise that empowering women at a community level is good for all, including a country’s economy.
There is no doubt that poverty creates conflict and conflict creates poverty. Focus, therefore, needs to be on conflict prevention and resolution. Studies show that for every £1 invested in prevention, as much as £100 can be saved, as well as preventing the misery caused by conflict. The Red Cross reports that there are more than 130 active conflicts in the world today, as the noble Lord, Lord Bates, has already said—more than double the number 15 years ago—with civilians bearing the brunt of attacks.
The ground-breaking UN Security Council resolution recognised the disproportionate effect on women and girls. It also advocated including women in peace processes. Empirical evidence shows that this makes peace more durable, legitimate and effective, and 35% more likely to last at least 15 years—and yet, look at the situation today. On Donald Trump’s peace board, none of the executive members are women, and of the 19 members at the Davos launch, there was only one woman.
There are so many negotiations centred around the Middle East, yet the International Centre for Sustainability states:
“Across the Middle East, women are being systematically pushed out of public life through law, custom, and state power”.
In Syria, Gaza, Israel, Russia and Ukraine you only see the men. The sidelining of the UN is contributing to this. We need the UN more than ever, but it needs to be made more effective through the reform, and I hope that the UK will play a leading part.
International development aid is an essential tool of soft power. Why are this Government not supporting the Women, Peace and Security agenda, which would help women in conflict countries, thus contributing to stability? We should not forget that overseas development is not charity. It is an investment in a safer, healthier and more peaceful world.
Baroness Goudie (Lab)
My Lords, I congratulate my noble friends Lady Hyde and Lord Barber on their magnificent speeches on such an important subject which is close to all our hearts, especially at this time. I am extremely sad that my noble friend Lord Browne is leaving the House and retiring. We were friends before he came to Westminster, so it is a very sad day for me, and for all of us, that he is leaving, and I hope that we will always be in touch.
I am grateful to the noble Baroness, Lady Featherstone, for bringing this debate before the House because it asks a simple but important question: what role does United Kingdom development partnership assistance play in how we are seen in the world? We have been promised over the last few months that we will be told what the new role is going to look like, but we have yet to see this on paper. It has been put off and off.
Britain has the ability to prevent conflict rather than respond to it after the damage is done. For many years, development assistance has been one of the United Kingdom’s great strengths. We were and should continue to be the leaders in this. It has rarely made headlines, but it has built trust, credibility and long-term relationships in places that diplomacy alone cannot reach. When we talk about soft power, we often think of culture, language or broadcasting. Look what has happened to our broadcasting. We are no longer a power through the World Service. We have cut back and cut back. We have cut the number of foreign correspondents in the BBC. There are hardly any foreign correspondents in the BBC, and there are going to be further cuts. There are also the cuts to the British Council. All these are part of Britain’s soft power.
For many communities around the world, Britain is known through a clinic that has stayed open, a girls’ school that has continued through conflict, or a peace process that has held. That is soft power in the best and most practical form. Development partnerships work because they are not transactional. They are built over time, grounded in shared effort and local leadership. They allow the United Kingdom to listen as well as to speak, and to be present long after the cameras have moved on, which we know matters for conflict prevention.
Conflict does not emerge in a vacuum. It grows where institutions collapse, where inequality deepens, where young people see no future and where women are excluded from decision-making. Development assistance addresses those conditions directly. It supports education, livelihoods, health systems and inclusive government, which are the foundation that makes peace sustainable. When they are in place, a country’s GDP and exports strengthen and women are healthy and part of its leadership.
As many have said today, we are going backwards at the moment. No women are seen at any peace table. I have been assured by Ministers here that local women are there, but we have not seen them. We have not seen any notes. It is absolutely vital that we agree and sign up to having many women—local women—at the peace table. None of that has been seen in the last two years. We know of the women leaders in Ukraine: they have come here and been to America. They have sat outside the door. They should be there, as the women in Sudan were there and the women in Northern Ireland were insistent that they were there. We accepted that, but we have gone backwards on this issue.
There is good evidence that peacebuilding and prevention are cost effective. By one estimate, each £1 invested in conflict prevention today saves £16 in costs that would occur due to war, insecurity and humanitarian crises down the line. Modest investments in mediation, reconciliation and community-level peacebuilding can prevent conflicts that would otherwise cost lives and require greater humanitarian or military spending later.
UK-supported peace processes in places such as Colombia and the Philippines show that sustained engagement can be achieved. The Commons IDC warned that slashing aid undermines our conflict-prevention capacity and thus our national security—it is a two-way process. UK aid has supported women’s participation in the peace process, protection from sexual violence, access to education and economic independence. There are countless positive stories, from the eradication of Ebola in west Africa—the UK made a large contribution to this—to the millions of girls in South Africa who gained schooling through the DfID programme. These are not marginal issues. We know that, when women are meaningfully involved in peacebuilding, peace lasts longer and communities recover more quickly.
Lord Oates (LD)
My Lords, I join others in congratulating my noble friend Lady Featherstone on securing this debate and on her eloquent opening speech, and I congratulate the noble Baroness, Lady Hyde, and the noble Lord, Lord Barber, on their powerful maiden speeches. I appreciated their focus on optimism. As both a Liberal Democrat and a Tottenham fan, I can fairly say that I embody the spirit of inexhaustible, sometimes ill-advised, optimism. I am devastated to hear the news that the noble Lord, Lord Browne of Ladyton, is retiring. He has been immensely kind to me during my time in the House. I have learned a huge amount from him, and we will all miss him hugely.
I declare my interests as chief executive of United Against Malnutrition & Hunger and co-chair of the All-Party Parliamentary Group for Africa. I will focus my remarks, as the noble Lord, Lord St John of Bletso, did, on the role of UK development partnerships in Africa specifically. My first visit to Africa was at the age of 15, when I spent a month in Ethiopia during the 1984-85 famine. I later lived and worked for some years in southern Africa. Those experiences have shaped my life and my politics and taught me what can be achieved when the United Kingdom chooses to lead in partnership with others. That is why I was proud to work in the coalition Government, who met the UN target of spending 0.7% of GNI on development assistance. It was morally right to do so but also in Britain’s interest: it strengthened our reputation, our influence and our security. We built on the work of previous Governments to sustain and develop strong partnerships in Africa, which made great progress against extreme poverty and hunger and in furthering development.
Much of that progress is now reversing in the face of huge cuts to development support around the world. That matters because of the human costs—because of the millions of women who will be denied access to sexual and reproductive health services; because of the children who are already contracting HIV as mother-to-child transmission rises in the face of wholesale cuts of HIV services; because of the dream of the defeat of HIV which recedes with every cut; and because of the 2 million children who will die of malnutrition this year. It matters because of all this human tragedy, but it also matters because Africa’s trajectory will shape the UK and Europe more than any other region in the decades ahead.
Africa is not peripheral to British foreign policy; it is central to our security and our prosperity. As my noble friend Lady Featherstone told the House, by 2050 Africa’s population is projected to increase by over 1 billion to reach 2.5 billion, which will represent a quarter of the world. This could result in a demographic dividend driving prosperity in both Africa and Europe, but without investment in Africa’s people it risks delivering instability and conflict rather than opportunity.
That risk is intensified by Africa’s unsustainable debt burden, which is sucking resources out of the continent, crowding out spending on health, education and nutrition, weakening growth and eroding trust in states. The UK should be leading on debt restructuring, transparency and innovations such as debt swaps linked to health, education or nutrition outcomes. In the light of the severe cuts they have made to development partnership support, it is incumbent on the UK Government to provide leadership in this sphere rather than yet more excuses for inaction.
Development partnership assistance is also critical in conflict prevention and migration management. Conflict, food insecurity and economic collapse drive irregular migration. Chronic child malnutrition, worsened by climate shocks, damages learning and productivity, weakening economies and increasing instability. UK investment in agriculture and climate resilience and in combating malnutrition is a strategic imperative. We should sustain support for proven interventions such as UNICEF’s Child Nutrition Fund, pioneered with UK support—a perfect example of innovation and partnership in action. We need to support world-leading UK science that strengthens food systems and resilience instead of cutting funding that offers benefit to both us and our partners in Africa.
In a competitive world, partnerships anchored in health, debt sustainability and food security can help us rebuild the UK’s reputation and influence, so sadly squandered by the previous Government. But doing so depends on us restoring trust that we are a reliable partner. We need to understand that, as the noble Baroness, Lady Hodgson, said, development partnership support is not charity but an investment in our security, prosperity and influence. Retreating from this space will not save money but simply pass on far higher costs to future Governments and taxpayers.
Lord Purvis of Tweed (LD)
My Lords, it is a particular pleasure to immediately follow my noble friend and to agree with his compelling arguments for UK-Africa relations. I also agree with his remarks regarding optimism. I am a Scottish liberal, and therefore when you have exhausted pessimism, there is only optimism left.
I am very grateful to my noble friend Lady Featherstone for securing this debate and for the way in which she so clearly presented the case. I hope the House will forgive me for saying that we are very lucky on these Benches to have her among us, with the record and the commitment of delivery that she has brought.
The House has also been very lucky to hear two outstanding maiden speeches today from the noble Baroness, Lady Hyde, and the noble Lord, Lord Barber, and we look forward to their future contributions. However, this afternoon was bittersweet because we learned that we will no longer hear contributions from the noble Lord, Lord Browne. He has been a friend across Benches to many people. He and I have joked in the conversations that we have grabbed when we have both been in the country, and I, like my noble friend Lord Oates, have learned a great deal from the noble Lord. He served Kilmarnock with great distinction in the House of Commons and served us as a public servant in this House very well. He will be greatly missed.
When she introduced the debate, my noble friend gave a very clear argument for why development partnerships are in our interests both abroad and at home, especially in conflict prevention. That is why it simply makes no sense whatever to cut this work to the bone, as the Government are doing, when the need is greater, as my noble friend Lady Hussein-Ece said.
A relationship becomes a partnership when it is trusted, predictable and reliable. But our partnerships have been systematically undermined in recent years by a whiplash of ministerial changes that mean that, in the last decade, the average lifespan of a UK Minister for Africa has not been longer than nine months. Devastatingly, there have been rushed changes such as abolishing DfID and slashing development expertise to the bone, often mid-contract and mid-programme, at a critical time when our partners know that their relationship with the UK is critical for them to get closer to meeting the global goals. We abandoned them by ending bilateral programmes—proven to work—in their entirety, often hobbling multilateral bodies on the way by cutting UK contributions.
When the last Government and this Government chose to cut development to the lowest share of GNI in 50 years, they first felt it was necessary to misrepresent what it was. The last Government called it the greatest “cashpoint in the sky”, and this Government say that Britain is no longer a “charity”. It never was. It undermines the hard-working officials who have been development workers building partnerships over years to say that, at the end of the day, they were just charity workers.
First you undermine it, then you can wring your hands when you say that the public do not support it, and you can cut it. Most perniciously, you frame the argument as a choice between development and defence. It is a false choice, but it is worse than that; it is a strategic error to say that there should be a choice in the first place. But even if there is the choice to do that, it simply ignores the law. We still have the 2002 Act when it comes to the objectives of development partnerships, and we have the 2015 Act on scale.
Scale is important. In the excellent debate from the noble Lord, Lord Bates, earlier this month, the Minister for Development said that she did not believe that less investment leads to
“less action, less impact and fewer development outcomes”.—[Official Report, 13/1/26; col. 1674.]
But it is interesting that, in the Government’s Budget in March, the case for cutting development for those most in need in the world was that investment levels do not link with impact and better outcomes. Apparently, that is the only line of the Budget where that applies. Apparently, more investment is needed to meet the Government’s child poverty targets for Manchester but less is irrelevant when it comes to doing the same thing for Malawi.
I hope the Minister can explain to us in clear terms that, after the UK pulled out of water and sanitary health programmes and cut WASH by 75%, we have determined that there has been no impact whatever, because no one is telling us that. In fact, we know that the impact of that has been disproportionate on women and girls. Can the Minister say that it has not been disproportionate for women and girls? When the Government have actively deprioritised education programmes, can the Minister repeat that this is having no impact?
I ask this because we know the facts and we have all met those who have told us about the impacts. The UK was one of the few countries to have met the UN target of 0.7%. When we pulled out, often mid-programme and mid-contract, no one else had the sufficient scale to fill the gap. It has left many of our partners desperate to try to fill the gaps in other ways.
The deep irony of the current negotiations in the US Congress between the House and the Senate is that the proposed budget, which may well come about, would restore US development programmes, which could lead to the prospect that the Labour Government have cut the budget the most of any OECD country. That surely cannot be right for this country.
The Government are asking us now—perhaps the Minister will say it when he winds up—to reimagine development, but that is what we thought the review of the noble Baroness, Lady Shafik, was all about. It has never seen the light of day. Now, the Government are asking us to reimagine development to fit a cut budget, rather than thinking about what is needed and then setting a budget. I agree with the noble Lord, Lord Forbes, that one of the virtues of soft power is that around the world we respect the rule of law. That is absolutely right. We have the law for 0.7% on our statute books here. Respecting the law on development would be a good start, before we start saying that other countries need to respect the rule of law.
We have been told that we will return to the law when the fiscal circumstances allow. Now, the Development Minister has regarded the UN target as not valid. Hidden in the spending review—the previous Government’s and this Government’s—is the fine print saying that when the Government have got close to meeting the fiscal circumstances for the development rules, they have changed them. We are now on the fourth iteration of the fiscal rules for meeting the targets. Are the Government still operating to fiscal rules? If they are saying that the fiscal rules will not be met at the end of this Parliament, they are admitting that they will not be met for the budget as a whole.
Parliament and the public know the impact that value for money in aid development has because we have an Independent Commission for Aid Impact. We do not have to listen to what a Minister might think: we are able to rely on an independent—I stress, independent—commission that reviews all elements of UK development partnerships and reports to Parliament and the public on their impact. Judging by what the Minister told the Development Committee last week, it seems that the Government are going to abolish it, DOGE style. Will the Minister make it clear in winding up that we will not abolish ICAI and that we will keep it as a vital resource for transparency?
Finally, all the speakers today have said that the need is greater than ever and partnerships are more important than ever, but this Labour Government, who have never met a UN target, could be leaving a lower level of aid than it inherited—indeed, the lowest share ever reported in development statistics. When the need is greater than ever and partnerships are more important than ever, that is not the best record, if we are going to be seen as a soft-power nation around the world. Depressingly, the Official Opposition are now committed to reducing it even further. This is wrong for our moral compass around the world, wrong for our security, wrong for our safety, and wrong for our soft power and our relationships abroad. It is mostly wrong, however, for the people who are greatest in need, and we are letting them down.
Lord Callanan (Con)
My Lords, I join all sides of the House in thanking the noble Baroness, Lady Featherstone, for securing this important debate today. We have heard some excellent speeches, none more so than those from our two maiden entrants. First, the noble Baroness, Lady Hyde of Bemerton, told us where Bemerton is; then the noble Lord, Lord Barber, of the splendidly named Chittlehampton, did not tell us where that is, but Google tells me that it is in North Devon, with a population of 820. If it is half as nice as its name, I am sure it is a wonderful place. Both made splendid contributions to your Lordships’ House today, and I am sure they will continue to do that in the years to come.
It was also an unwelcome surprise to hear that today’s was the final, valedictory contribution from the noble Lord, Lord Browne of Ladyton. I did not know that he was intending to retire. He will be a great loss to the House. I think it is fair to say that we have not agreed on much over my time in government and now on the Opposition Front Bench, but he is a formidable parliamentarian, always difficult to argue with and against, who contributed across a whole range of subjects with great vigour and ability. He will be sorely missed. I think it was Chris Mullin, a party colleague of the noble Lord, who said it was better
“to go while people are still asking ‘why’ rather than ‘when’”.
That is very definitely the case with the noble Lord. He will be missed by the House.
As the sixth-largest economy, the United Kingdom has an important role internationally. Through close working with our international partners, we can and should influence the direction of global politics to promote our core values of freedom and democracy. In our increasingly unstable world, that role is more important than ever. In Iran, we have seen mass protests against the oppressive regime that have been met with unspeakable brutality. In Ukraine, Putin continues to wage his illegal war against a sovereign, democratic nation that has every right to decide its own future.
Under the previous Conservative Government, the UK stepped up to the challenge of the international crises that we faced at the time, supporting the people of Ukraine with military and humanitarian aid—I am delighted to see the current Government continuing that—and establishing the Homes for Ukraine scheme. We supported Hong Kongers in the face of oppression by the Chinese state—I hope the Prime Minister is continuing to raise their plight in his current visit—and we have supported many Afghans who worked with us in the wake of the Taliban’s return to power.
Alongside that specific support, in the face of international crises and in the context of the serious fiscal challenge of the Covid pandemic, we continued to deliver official development assistance, although at the lower rate of 0.5% of gross national income—which I am sure will disappoint the noble Lord, Lord Purvis—with the top three recipients of UK country-specific bilateral ODA in 2024 being Ukraine, Afghanistan and Ethiopia.
The Official Opposition recognise that Britain can and should play its part internationally, not simply because it benefits those living in developing countries—of course, it does—but because it is in our own interests to do so. But we have to be wiser about how we go about this spending. Too often, organisations that receive UK government support have been found to be supporting activities that contradict our own objectives.
I have raised this before: in 2024, the UN Relief and Works Agency for Palestine Refugees in the Near East sacked nine members of staff who it said “may have been involved” in the 7 October 2023 attacks on Israel. When British taxpayers’ money is spent in support of organisations that have been forced to sack individuals who may have been involved in genocidal terrorist attacks, our international reputation is harmed. Indeed, these incidents damage trust in the Government’s due diligence processes when making decisions about overseas aid. I recognise that a lot of this went on when we were in power, but we suspended funding to UNRWA, which has now been resumed by this Government. So will the Minister set out what steps the Government have taken following the 2024 UNRWA case to improve due diligence in respect of some of that overseas spending? Does the FCDO have any concerns about the department’s existing spending on overseas aid?
While the examples of UK action on the international stage are concrete and were welcomed by those who benefited, the concept of soft power is, of course, much harder to define. Those who benefited from the Afghan resettlement scheme, the Ukrainians who have seen the UK support them as they defend their own country, or the Hong Kongers who have been given the opportunity to build a new life here in the UK with greater protection from the Chinese state, all know what we have done for them. But more generally, our soft power is hard to measure. Will the Minister confirm whether his department has a way of measuring our soft power? How is this monitored and have the Government set themselves targets against those metrics to grow our soft power? Without some way of measuring success, it becomes very difficult to evaluate the impact of changes made by this Government.
In 2025, the Government established the UK Soft Power Council with great fanfare. When it was established, we were told that it would meet four times a year and that it would provide concrete and actionable proposals to support the Government. Around the same time, the noble Baroness, Lady Chapman, the Minister, told the noble Earl, Lord Clancarty, that the UK Soft Power Council would have a “minimal budget”.
So, could the Minister, when he replies, give the House a sense of the successes of the UK Soft Power Council to date? How often has it met? Is the attendance at these meetings published? If not, does the Government have any intention of doing so? The minutes that are published tell the public almost nothing: I think that could do with significant improvement. What concrete and actionable proposals has the council provided to the Government since its establishment?
Given, as I said, that this was a flagship announcement from the Government in January 2025—made around six months after they came to office—could the Minister please explain whether, in his view, the Soft Power Council has delivered on the Government's ambitious plans for it to,
“re-imagine Britain’s role on the world stage”
and
“reinvigorate alliances and forge new partnerships”?
In conclusion, I of course thank all noble Lords for their contributions to this important debate, which has brought the importance of the UK’s reputation on the world stage to the fore. Although there are differences of opinion on the best way to strengthen the UK’s influence on the international stage, I can say with confidence that we are all united in our support for a stronger and more confident Britain that is able to promote justice, peace, freedom and democracy across the world.
Lord in Waiting/Government Whip (Lord Lemos) (Lab)
My Lords, I join with others in congratulating the two new Peers on their maiden speeches. It is with great pleasure that I welcome my noble friend Lady Hyde of Bemerton to her place in your Lordships’ House and congratulate her on a really inspiring and wonderful maiden speech. I am delighted to hear that she has such a long-standing and impressive commitment to prison. As it also one of my interests, we are both, if I can put it like this, alumni of the prison system and I look forward to collaborating with her on that. We already know from the poem she quoted in her maiden speech that she deserves to be here.
I also congratulate my noble friend Lord Barber of—I have to pause to get it right, in the way that the noble Lord, Lord Callanan did—Chittlehampton on his excellent maiden speech. I thank the noble Lord for all his work, but particularly in recent times as the UK envoy for Palestinian Authority governance and for his support to the Palestinian Authority to build its delivery and governance capabilities to progress the vital reform agenda. I have been an admirer of my noble friend Lord Barber for many, many years—decades, in fact—from a distance and I very much look forward to working with him now.
I would go so far as to say I adore my noble friend Lady Liddell, but I deplore her attitude to cricket—as I am sure my noble friend Lord Barber does, too, so we will have to work on her together.
On behalf, I think, of the whole House, I pay tribute to the noble Lord, Lord Browne of Ladyton. I knew this was going to be his last contribution in your Lordships’ House, but he, in typical fashion, did not want any fuss and did not want it labelled a formal valedictory—which characterises the sort of person he is and why we have come to respect him so much. I want to thank him for his outstanding work as a parliamentarian serving your Lordships’ House, and also for his 29 years in the House of Commons. His personal and political qualities ensured that he served in the Cabinet of two Prime Ministers of the last Labour Government.
He has successfully been able to be both loyal to his party and to Parliament and a genuinely original thinker. His reputation is as someone kind and generous to all, from the most junior staff to the most senior. On a personal note, my first appearance at this Dispatch Box was to answer a Question from my noble friend Lord Browne of Ladyton. He laid great stress on the fact that it was my first Question, with the result that everyone was nice to me, including, if I may say, the noble Lord, Lord Callanan, who indeed was again today. Your Lordships’ House will be diminished without him, but we wish him and his family the very best, and I particularly want to applaud his departing comments about optimism, which I must say I share.
I am grateful, as all contributors have been, to the noble Baroness, Lady Featherstone, for securing this debate. I pay tribute to her long-standing commitment and passion, and to her delivery and achievements in this area of development as Minister and in other ways.
I am also grateful to all noble Lords who have contributed to this debate. I share with the noble Lord, Lord Callanan, the feeling that there is a shared sense of commitment and responsibility across your Lordships’ House in this area. There are of course differences of opinion, but there is also a strong consensus about the importance of this work and the key priorities that we have as a nation.
Noble Lords do not need me to remind them that we live in a time of, as it was characterised in the national security strategy, radical uncertainty; a number of noble Lords discussed that, including the noble Baroness, Lady Featherstone. The Government make no apology for making a positive and definitive choice to strengthen our hard-power capabilities in pursuit of national security and the national interest. I very much agree with my noble friends Lord Browne and Lady Liddell that hard-power and soft-power capabilities go together, and I entirely agree with the comment by my noble friend Lord Barber that together they represent a superpower.
I do not intend to make a partisan speech, but I will just say that this Government have greatly enhanced the UK’s national reputation by the standards of recent UK Governments. I also say to the noble Baroness, Lady Northover, that my noble friend Lady Chapman is in Africa doing her job and I am here doing mine.
As a number of noble Lords have acknowledged, the UK has deep expertise and experience in development, conflict prevention and resolution, as well as in soft power. Our long-standing track record in these areas gives us significant convening power alongside our direct and multilateral delivery. The world’s problems are interconnected, as the noble Baroness, Lady Featherstone, said, and therefore our responses must be interdependent, mutually reinforcing and more strategic. I entirely agree with the noble Baroness, Lady Hodgson, that security will not be achieved by defence alone, although we all agree that defence and security are extremely important.
I begin by confirming that this Government’s commitment to international development remains firm, but we feel, perhaps contrary to what was suggested by the noble Lord, Lord Purvis, that it is time for a new approach. The last few decades have seen significant reductions in extreme poverty, which was an overarching goal for the last Labour Government. At the same time, humanitarian need—particularly humanitarian need that arises from conflict and indeed climate change, which perhaps has not been mentioned so often today—is rising, while resources come under increasing pressure not just in this country but across the globe. We are also seeing international humanitarian law facing renewed challenges. I emphasise that the context in which the Government intend to set out our plans in this area reflect that changed context, and it is an important backdrop to our conceptual and policy thinking in this area.
A number of noble Lords, including the noble Lords, Lord McConnell and Lord Bates, mentioned the cuts that have been made to the official development assistance budget. As I think everyone in your Lordships’ House knows, there will be further announcements about allocations in the coming weeks.
At a time when resources are challenged, we need to prioritise. That is why we are sharpening our focus on three big development priorities: humanitarian need, health and climate change. We are backing multilateral development organisations—which I note that the noble Lord, Lord Purvis, supported—because we believe that that is how we make the biggest difference and achieve the greatest impact; it is something that the noble Lord laid a lot of emphasis on. We are significant contributors to Gavi, the Global Fund, the World Bank’s IDA programme and the African Development Fund. The latter is an African-led organisation; I emphasise that because we believe that these partnerships need local as well as international leadership.
We know that multilateralism is not perfect, so we are championing much-needed reform, including the UN Secretary-General’s UN80 Initiative. The noble Baroness, Lady Hodgson, and the noble Lord, Lord Callanan, mentioned the need to improve the performance of some multilateral institutions, and we strongly support that.
We also strongly support the work of the UN’s Emergency Relief Coordinator, and the impressive humanitarian reset that Tom Fletcher has put in hand. The noble Lord, Lord Bates, kindly invited me to a briefing that I think sounds absolutely terrific. He also acknowledged the history of others in that place, including my noble friend Lady Amos, who I think was here earlier. That is a very important and impressive part of what we are supporting, particularly Fletcher’s commitment to what he called “hyper-prioritisation”—that is something that I really want to get across.
The principles behind the Government’s important strategic shift in development reflect the changed world; I know that this has been set out in other contexts, but this is the context for today’s conversation. We want to move from being a donor to being an investor; from service delivery to strengthening systems in government; from global delivery to more local delivery; and from giving grants to providing expertise. That is what our partners want to see; they are ambitious to move beyond aid.
The noble Lord, Lord St John, and the noble Lord, Lord Oates, talked about Africa with their great expertise, and they drew our attention to the opportunities of the big demographic, digital and other changes that are going on there. Those are the countries that want to move beyond aid. It is through these multilateral partnerships—with respect, I do not agree with the noble Baroness, Lady Hodgson, on this point—that we maximise the impact of every pound that we put in, as well as the many strengths and capabilities that the UK brings to the table, from financial to scientific and technical expertise. Those areas of expertise will be worth more than money.
Lord Purvis of Tweed (LD)
Can the Minister provide clarity on the move from being a donor to an investor? Before the cuts, what proportion of UK ODA was purely a donation and not linked to a partnership programme with the country that we were working with?
Lord Lemos (Lab)
As I have said, we will set out the context and the decisions that surround ODA funding. However, I stress to the noble Lord that we still have, and we will continue to have, country-based programmes. That is still an important part of the mix. If he was asking me to characterise some other change, I do not have much more to add. Turing to conflict and diplomacy—
Lord Purvis of Tweed (LD)
Can the Minister clarify where the donations came from? If there were any, what proportion of UK ODA was from donations? The Minister said that we have gone from a donor model to an investor model, but there were no donations.
Lord Lemos (Lab)
I do not think I have anything to add. There is a long history of the use of the term “donor” to characterise providers of overseas aid, but we are not debating that now, if the noble Lord will forgive me. I do not really recognise the characterisation he is putting forward.
A number of noble Lords mentioned conflict and diplomacy. Conflict in the world, as we all know, has become ever more deadly and complex, and the UK’s diplomatic, development and security levers are more than the sum of their parts. We are working very closely alongside our international partners, old and new, wherever we can. This work expands effort to prevent conflicts as well as to resolve them.
A number of noble Lords stressed the need for conflict prevention, and that too is part of what the Government are committed to. We want to stabilise fragile places for the long term, not just to respond to conflicts once they have arisen. We also want to protect our shared security online—that has not had much attention in this debate, but it is important nevertheless—and improve our ability to identify and assess risk and strengthen the systems. We need to issue early warnings of conflict—a point that my noble friend Lord Browne emphasised.
Above all, our commitment is to save lives. We also want to uphold international law. We want to break the vicious cycles that blight so many lives with appalling violence and cause people to flee their homes. We must work to strengthen democratic structures and civil society organisations in exactly the way that my noble friend Lord Barber has been working in Palestine. This commitment to both preventing and helping to resolve conflicts and stabilising the situation sits alongside our efforts to target life-saving humanitarian relief in a deeply troubling world. The UK remains a leading humanitarian actor, and we will continue to support those in crisis, especially in Ukraine, Gaza and Sudan.
The noble Lord, Lord Callanan, asked me to set out the Government’s approach to UNRWA and Palestine, and I am very happy to do so. Following the US-led ceasefire agreement, there have been some improvements in the level of aid co-ordinated by the UN entering Gaza. It remains insufficient and needs upscaling rapidly to ease the suffering. The UK has provided £81 million of humanitarian and early recovery support as part of our £116 million programme for Palestine this financial year. The UK is doing all we can to alleviate suffering. Quantifying how much UK aid has entered Gaza is difficult due to the complex operating environment. Despite the restrictions on access, we know that UK aid is having an impact. The Foreign Secretary met UNRWA Commissioner-General Lazzarini in November and was clear that the UK continues to support UNRWA politically and financially, recognising its vital role in delivering essential services such as health and education to millions of Palestinian refugees across the region. This financial year the UK has committed £27 million, which will enable UNRWA to scale up life-saving aid including food, water, shelter and medical care for Gazans facing famine conditions.
A number of noble Lords mentioned women and children. The UK is a long-standing leader in preventing sexual violence in conflict, and we are setting a gold standard globally for engaging survivors through our survivor advisory group and survivor champions. The International Alliance on Preventing Sexual Violence in Conflict, which the UK helped to create, remains at the forefront of global action to prevent sexual violence. Importantly, as well as supporting services we are backing global efforts to make sure that perpetrators of appalling violence are held to account.
The noble Baroness, Lady Sugg, kindly warned me of her question—so I am prepared to answer it—about what the UK will do during our presidency of the UN Security Council. I can confirm that we will embed women, peace and security considerations across the council’s work. As the Foreign Secretary set out in the high-level event commemorating the 25th anniversary, which the noble Baroness referred to, the UK is committed to amplifying women’s voices, participation in building peace, stepping up efforts to end impunity for sexual crimes in conflict, and ensuring that our humanitarian work goes further to address the particular impact of crisis on women and girls. This work will be underpinned by the UK’s refreshed approach to women, peace and security, including our ongoing work to strengthen delivery, accountability and cross-government co-ordination.
Lastly, on conflict, I draw attention to something that I do not think anyone has mentioned, which is our amazing worldwide demining and action groups, the Halo Trust and the Mines Advisory Group. The UK has done more than any other country on demining, and it represents an extremely important building block in conflict, security and stabilisation.
I turn to soft power. The UK regularly appears near the top of the league tables on soft power, but we are not complacent and we are obviously aware of the rise of other global actors. Soft power is about people-to-people relationships, going beyond government to government, as the noble Lord, Lord St John, and others noted, and our soft power assets allow us to reach the people that government finds it difficult to reach. We will be saying more about the links between development soft power and ensuring the UK’s security when we publish the soft power strategy later this year, which I hope will answer some of the questions that noble Lords have asked. Our work in soft power, as a number of noble Lords have emphasised, is stressed by the British Council, and I should declare my interest as the longest-standing trustee of the British Council for many years.
Baroness Northover (LD)
My Lords, I realise that the Minister is running out of time, but can he assure us that he will write to us with the answers to questions that he has been unable to give in his speech?
Lord Lemos (Lab)
Of course.
On the British Council, I am sure that we will continue to work on the problems raised by the noble Baroness, Lady Alexander, and I stress the Government’s commitment to it. I also draw attention to the fact that the Government increased the budget of the BBC World Service by £32 million. I also want to draw attention to the international education strategy, which a number of noble Lords mentioned.
We recognise that we cannot do everything, but we have a clear sense of what we are trying to achieve, which I think is shared around the House, and we are in pursuit of the more peaceful and prosperous future that people everywhere want to see.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
My Lords, I much regret that the time allotted has run out, but we might allow just a couple of minutes for the noble Baroness.
Baroness Featherstone (LD)
I am very grateful. I thank everyone for such brilliant speeches—there is such knowledge in this House; it makes me so proud of everybody here. To the noble Baroness, Lady Hyde, I say that I was a designer before I came here, and my studio was at 7 Caledonian Road. I just wanted her to know that. I have an anecdote for the noble Lord, Lord Barber, about our ability to send potentates’ and dictators’ children to private school, but I will tell him that privately.
Lastly, I want to thank the noble Lord, Lord Browne, who has been so kind and so wonderful to everyone. There was not a little “V” by his name on the speakers’ list—he is even too modest to tell us it was his valedictory speech.
I just want to say to the Government that this debate asks that “this House takes note”, but I sometimes feel that in such debates, we, the contributors, get it, but I want the Government to get it. We have been forced to look at our defence spending by our friend in the White House; let us look at our spending on soft power too. Let us not wait for catastrophic world events and wars; let us move now and let us lead on prevention and peacebuilding. I thank all noble Lords for such brilliant contributions.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
My Lords, my name will be mud because I have allowed this to overrun for two minutes, which is absolutely impossible in your Lordships’ House. But the question now is that this Motion be agreed to.